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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GENERAL HOUSEWARES CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
GENERAL HOUSEWARES CORP.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
4,031,364 (as of August 15, 1999)
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
$28.75 (cash merger consideration)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$115,901,715.00 (line (3) multiplied by line (2))
- --------------------------------------------------------------------------------
(5) Total fee paid:
$23,180.34 (1/50 of 1% of line (4)) (Fee paid by wire transfer on
August 24, 1999)
- --------------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
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GENERAL HOUSEWARES CORP. LOGO
TO THE STOCKHOLDERS OF GENERAL HOUSEWARES CORP.
A MERGER PROPOSAL -- YOUR VOTE IS VERY IMPORTANT
General Housewares' board of directors unanimously approved a merger
agreement between CCPC Acquisition Corp. and General Housewares Corp. The
proposed transaction involves the merger of GHC Acquisition Corp., a newly
formed company owned by CCPC Acquisition, with and into General Housewares with
General Housewares surviving the merger. Effectively, the merger will enable
CCPC Acquisition to acquire all of General Housewares' outstanding shares of
common stock. CCPC Acquisition is an affiliate of Borden, Inc., and Borden has
guaranteed the payment to General Housewares stockholders in the merger.
In the merger, each of your shares of General Housewares common stock will
be exchanged for $28.75 in cash. In order to complete the merger, the merger
agreement must be adopted by the holders of a majority of outstanding shares of
General Housewares common stock. The merger is also subject to obtaining
antitrust approval, as well as other conditions.
After considering a number of factors, including the opinion of its
investment banker, Wasserstein Perella & Co., Inc., your board of directors
unanimously approved the merger agreement and the merger. In addition, the board
declared the merger advisable, fair to and in the best interests of General
Housewares stockholders. General Housewares' board of directors unanimously
recommends that you vote to adopt the merger agreement.
This proxy statement provides you with detailed information concerning
General Housewares, CCPC Acquisition and the merger. Please give all of the
information contained in this proxy statement your careful attention.
The date, time and place of the special meeting is:
Thursday, October 21, 1999
10:00 a.m. (local time)
Chicago Room
Hilton Chicago O'Hare Airport
Chicago, Illinois
Please use this opportunity to take part in the affairs of General
Housewares by voting on the adoption of the merger agreement. Whether or not you
plan to attend the meeting, please complete, sign, date and return the
accompanying proxy in the enclosed self-addressed stamped envelope. Returning
your proxy does NOT deprive you of your right to attend the meeting and to vote
your shares in person. YOUR VOTE IS IMPORTANT.
On behalf of the board of directors, I thank you for your support and
appreciate your consideration of this matter.
/s/ Paul A. Saxton
Paul A. Saxton
Chairman, President and Chief Executive
Officer
This proxy statement is dated September 21, 1999 and was first mailed to
stockholders on or about September 22, 1999.
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GENERAL HOUSEWARES CORP. LOGO
GENERAL HOUSEWARES CORP.
1536 BEECH STREET
P.O. BOX 4066
TERRE HAUTE, IN 47804
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Notice is hereby given that a special meeting of stockholders of General
Housewares Corp. will be held on Thursday, October 21, 1999, at 10:00 a.m.,
local time, at the Hilton Chicago O'Hare Airport, Chicago, Illinois, for the
following purposes:
1. To consider and vote upon a proposal to adopt the Agreement and
Plan of Merger, dated as of August 2, 1999, as amended, among CCPC
Acquisition Corp., General Housewares and GHC Acquisition Corp., pursuant
to which GHC Acquisition will merge with and into General Housewares and
General Housewares will survive the merger. In the merger, holders of
outstanding shares of the common stock (other than General Housewares, CCPC
Acquisition, GHC Acquisition and their subsidiaries, and holders who
properly exercise their appraisal rights), par value $0.33 1/3 per share,
of General Housewares will be entitled to receive $28.75 in cash for each
share of General Housewares common stock held by them. Adoption of the
merger agreement will also constitute approval of the merger and the other
transactions contemplated by the merger agreement.
2. To transact such other business as may properly come before the
special meeting or any adjournment thereof.
These items of business are described in the attached proxy statement. Only
stockholders of record at the close of business on September 20, 1999, the
record date, are entitled to receive notice of and to vote at the special
meeting. You may vote in person at the special meeting, even if you have
returned a proxy.
By order of the Board of Directors
/s/ Paul A. Saxton
Paul A. Saxton
Chairman, President and Chief
Executive Officer
September 21, 1999
Whether or not you plan to attend the meeting, please complete, sign, date
and return the accompanying proxy in the enclosed self-addressed stamped
envelope. Returning your proxy does NOT deprive you of your right to attend the
meeting and to vote your shares in person.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
QUESTIONS AND ANSWERS ABOUT GENERAL HOUSEWARES' MERGER
AND THE SPECIAL MEETING OF STOCKHOLDERS................... 4
SUMMARY..................................................... 6
Special factors........................................... 6
The merger agreement...................................... 8
Dissenters' rights of appraisal........................... 10
THE PARTIES................................................. 11
SPECIAL FACTORS............................................. 12
Background of the merger.................................. 12
Recommendation of General Housewares' board of directors
and fairness of the merger............................. 13
Opinion of Wasserstein Perella & Co., Inc., financial
advisor to General Housewares.......................... 15
Interests of certain persons in the merger and certain
relationships.......................................... 19
Regulatory requirements and third-party consents.......... 21
Accounting treatment...................................... 21
Federal income tax consequences of the merger............. 21
Fees and expenses......................................... 22
INFORMATION CONCERNING THE SPECIAL MEETING.................. 23
Proxy statement........................................... 23
Time, place and date...................................... 23
Purpose of the special meeting............................ 23
Stockholder record date for the special meeting........... 23
Vote of General Housewares stockholders required for
adoption of the merger agreement....................... 23
Proxies................................................... 24
LITIGATION.................................................. 26
THE MERGER AGREEMENT........................................ 27
General; merger consideration............................. 27
Stockholders' meeting..................................... 27
Dissenting shares......................................... 27
Treatment of stock options................................ 28
Closing; effective time................................... 28
Cancellation of shares.................................... 28
Exchange of certificates for merger consideration......... 28
Transfers................................................. 28
Right to revise structure of merger....................... 28
Officers.................................................. 29
Representations and warranties............................ 29
Conduct of business prior to the merger................... 29
Acquisition proposals..................................... 31
Certain other covenants and agreements.................... 31
Conditions of the proposed merger......................... 33
Termination............................................... 34
Termination fee........................................... 35
Amendment and waiver...................................... 35
DISSENTERS' RIGHTS OF APPRAISAL............................. 36
GENERAL HOUSEWARES CORP. SELECTED FINANCIAL DATA............ 39
MARKET FOR THE COMMON STOCK................................. 41
General Housewares common stock market price and dividend
information............................................ 41
Market price of General Housewares common stock........... 41
SECURITIES OWNERSHIP........................................ 42
INDEPENDENT ACCOUNTANTS..................................... 43
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
STOCKHOLDER PROPOSALS....................................... 43
WHERE YOU CAN FIND MORE INFORMATION......................... 43
OTHER BUSINESS.............................................. 44
FORWARD-LOOKING STATEMENTS.................................. 44
Annex A -- Agreement and Plan of Merger
Annex B -- Opinion of Wasserstein Perella & Co., Inc.
Annex C -- Section 262 of the Delaware General Corporation
Law
</TABLE>
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QUESTIONS AND ANSWERS ABOUT GENERAL HOUSEWARES' MERGER
AND THE SPECIAL MEETING OF STOCKHOLDERS
Q. WHY IS GENERAL HOUSEWARES MERGING?
A. General Housewares is merging with a newly formed company, which is a
subsidiary of CCPC Acquisition, in order to enable CCPC Acquisition to
acquire all of General Housewares' outstanding shares of common stock. CCPC
Acquisition is the holder of a controlling interest in CCPC Holding Company,
Inc. ("CCPC"), a leading manufacturer and marketer of housewares, including
bakeware, dinnerware and rangetop cookware, with products sold in the United
States and in over 30 foreign countries. CCPC's brands include Corning
Ware(R), Pyrex(R), Corelle(R), Revere Ware(R) and Visions(R).
Q. WHAT WILL I RECEIVE IN THE MERGER?
A. If the merger is completed, you will be entitled to receive $28.75 in cash
for each share of General Housewares common stock that you own.
Q. WHAT WILL HAPPEN TO GENERAL HOUSEWARES AFTER THE MERGER?
A. General Housewares will be owned by CCPC Acquisition or one of its direct or
indirect majority-owned subsidiaries.
Q. WHY IS THE BOARD OF DIRECTORS RECOMMENDING THAT I VOTE FOR THE MERGER
AGREEMENT?
A. After considering a number of factors, including the opinion of its
investment banker, Wasserstein Perella & Co., Inc., your board of directors
unanimously believes that the terms of the merger agreement are advisable,
fair to and in the best interests of stockholders.
Q. WHAT DO I NEED TO DO NOW?
A. Mail your signed proxy card in the enclosed return envelope as soon as
possible, so that your shares will be represented at the special meeting.
Q. SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A. No. After the merger is completed, we will send you written instructions for
surrendering your share certificates and receiving the cash payment, less any
applicable withholding taxes.
Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A. Your broker will vote your shares only if you provide instructions on how to
vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares.
Q. MAY I CHANGE MY VOTE?
A. Yes. Just send the Secretary of General Housewares a written revocation
notice or a later-dated, signed proxy card before the special meeting or
attend the special meeting and vote.
Q. WHO MAY VOTE ON THE MERGER?
A. All stockholders of record as of the close of business on September 20, 1999
may vote. You are entitled to one vote per share of General Housewares common
stock that you owned on the record date. For the merger to occur, the holders
of at least a majority of the outstanding shares must approve the merger
agreement and the merger.
Q. WHEN AND WHERE IS THE SPECIAL MEETING?
A. The special meeting will be held on Thursday, October 21, 1999, at 10:00
a.m., local time, at the Chicago Room, Hilton Chicago O'Hare Airport,
Chicago, Illinois.
Q. WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A. We will complete the merger when all of the conditions to its completion are
satisfied or waived. The merger will become effective when we file a
certificate of merger with the Secretary of State of the State of
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Delaware. We are working toward completing the merger as quickly as possible
and hope to complete the merger promptly after the special meeting during the
fourth quarter of 1999.
Q. WHAT ELSE WILL HAPPEN AT THE MEETING?
A. We know of no other matters, other than as described in the "Notice of
Special Meeting," which are to come before the special meeting.
Q. WHAT RIGHTS DO I HAVE IF I OPPOSE THE MERGER?
A. You may dissent from the merger and seek appraisal of the fair market value
of your shares by complying with all of the Delaware law procedures explained
on pages 36 to 38.
Q. WHAT IF THE MERGER IS NOT COMPLETED?
A. It is possible the merger will not be completed. That might happen if, for
example, General Housewares stockholders do not adopt the merger agreement.
Should that occur, neither CCPC Acquisition nor any third party is under any
obligation to make or consider any alternative proposals regarding the
purchase of the shares of General Housewares common stock.
Q. WHO CAN ANSWER MY QUESTIONS?
A. If you have questions about the merger or need additional copies of this
proxy statement, please call Morrow & Co., Inc., a professional soliciting
organization retained by General Housewares, at 1-800-662-5200. If you have
any questions about General Housewares' operations, please call Raymond J.
Kulla at (812) 232-1000.
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SUMMARY
This summary may not contain all of the information that is important to
you. You should read carefully this entire document and the other documents we
refer to for a more complete understanding of the merger and other transactions
contemplated by General Housewares and CCPC Acquisition. In particular, you
should read the documents attached to this proxy statement, including the merger
agreement, which is attached as Annex A. In addition, we incorporate by
reference important business and financial information about General Housewares
into this proxy statement. You may obtain the information incorporated by
reference into this proxy statement without charge by following the instructions
in the section entitled "Where You Can Find More Information" on page 43 of this
proxy statement.
SPECIAL FACTORS
Purpose, background and effects of the merger and related transactions
The purpose of the merger is to enable CCPC Acquisition to acquire the
entire outstanding equity interest in General Housewares for a cash payment of
$28.75 per share. Upon completion of the merger, General Housewares, as the
surviving corporation, will become a subsidiary of CCPC Acquisition or one of
its direct or indirect subsidiaries.
Recommendation of General Housewares' board of directors
After considering a number of factors, including the opinion of Wasserstein
Perella & Co, Inc., General Housewares' board of directors has unanimously
approved the merger agreement and the merger and recommends that you vote to
adopt the merger agreement and approve the merger. The board of directors has
unanimously determined that the merger is fair to and in the best interests of
General Housewares stockholders and declared that the terms and provisions of
the merger agreement (including the $28.75 per share cash consideration) are
advisable.
Factors considered by the board of directors
In reaching its decision to recommend adoption of the merger agreement and
approval of the merger, the board of directors considered a number of factors,
including the following:
- a comparison of the historical market prices of General Housewares common
stock with the per share price offered by CCPC Acquisition and the fact
that the $28.75 per share price represents a:
- 43.3% premium over the closing price of General Housewares common stock
one day prior to the last trading day before the merger was announced
- 48.9% premium over the closing price of General Housewares common stock
30 days prior to the last trading day before the merger was announced
- 120.1% premium over the closing price of General Housewares common stock
60 days prior to the last trading day before the merger was announced
- 165.9% premium over the closing price of General Housewares common stock
on April 12, 1999, the day General Housewares received a non-binding
preliminary proposal from a third party to acquire General Housewares
- the opinion of Wasserstein Perella addressed to General Housewares' board
of directors that, as of August 1, 1999, the $28.75 per share cash
consideration to be received by General Housewares common stockholders in
connection with the merger was fair to those stockholders (other than
CCPC Acquisition and GHC Acquisition) from a financial point of view
- CCPC Acquisition's proposal was the highest price obtained on completion
of a process in which a number of parties were contacted by Wasserstein
Perella, on behalf of General Housewares, in an effort to elicit third
party proposals to acquire General Housewares and maximize stockholder
value
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- General Housewares' business, condition and prospects as well as current
industry, economic and market conditions
- the merger agreement's provisions permitting the board of directors,
under certain circumstances, to terminate the merger agreement in order
to accept an alternative proposal financially superior to General
Housewares stockholders, subject to certain conditions, including General
Housewares' payment of a $4.25 million termination fee to CCPC
Acquisition
Wasserstein Perella & Co., Inc. fairness opinion
Wasserstein Perella rendered to the board of directors of General
Housewares its oral opinion (subsequently confirmed in writing) that, as of
August 1, 1999, based upon and subject to the assumptions made, matters
considered and limits of review set forth in the opinion, the $28.75 per share
cash consideration to be received by General Housewares stockholders in
connection with the merger was fair to the stockholders (other than CCPC
Acquisition and GHC Acquisition and the holders of dissenting shares) from a
financial point of view. Wasserstein Perella's opinion is attached as Annex B at
the end of this proxy statement. Please read the opinion carefully.
Interests of certain persons in the merger
All of General Housewares' officers and directors own shares of General
Housewares common stock and/or hold options to purchase the common stock and, to
that extent, their interest in the merger is the same as yours. In accordance
with the terms of the merger agreement, all options held by General Housewares
employees will be cashed out in the merger. You should note that some of General
Housewares' officers and directors have relationships or interests in the merger
that are different from your interests as a stockholder or that may present a
conflict of interest. For a description of these interests, see pages 19 to 21.
Accounting treatment
General Housewares has been advised by CCPC Acquisition that CCPC
Acquisition intends to treat the merger as a "purchase" for accounting and
financial reporting purposes. See page 21.
U.S. federal income tax consequences of the merger
The receipt of cash for shares of General Housewares common stock pursuant
to the merger will be a taxable transaction for U.S. federal income tax
purposes. See pages 21 to 22.
General Housewares stockholders must approve the merger
Holders of a majority of the outstanding shares of General Housewares
common stock must approve the merger agreement in order for the merger to be
consummated. At the special meeting on Thursday, October 21, 1999, you are
entitled to one vote per share of General Housewares common stock that you owned
on September 20, 1999.
Regulatory approvals required to complete the merger
The merger is subject to antitrust laws. General Housewares and CCPC
Acquisition have made the required filings with the Department of Justice and
the Federal Trade Commission (the "FTC") and have received notice from the FTC
on September 2, 1999 of the early termination of the waiting period of the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Department of
Justice, FTC or a government, state or private person may challenge the merger
at any time before its completion.
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THE MERGER AGREEMENT
The merger consideration
If the merger is completed, you will be entitled to receive $28.75 in cash
for each of your shares of General Housewares common stock.
Conditions to completion of the merger
The obligations of General Housewares, CCPC Acquisition and GHC Acquisition
to complete the merger are subject to the prior satisfaction or waiver of
various conditions. These conditions are described in detail on pages 33 and 34
and include, among others, the following:
- General Housewares stockholders must adopt the merger agreement and
approve the merger
- no law, statute or injunction or other order preventing the completion of
the merger or making the merger illegal may be in effect
- the applicable waiting period under the antitrust laws must expire or be
terminated
- the respective representations and warranties of General Housewares, CCPC
Acquisition and GHC Acquisition in the merger agreement must be true and
correct in all material respects as certified by an officer of each of
General Housewares and CCPC Acquisition, respectively
- General Housewares and CCPC Acquisition must certify their performance
and compliance in all material respects with their respective agreements
in the merger agreement
- all material governmental consents, orders and approvals legally required
to complete the merger must be obtained and in effect
- no action or proceeding may be brought by any governmental entity seeking
an injunction or other order preventing the completion of the merger or
making the merger illegal
- no Distribution Date or Stock Acquisition Date may occur as defined under
General Housewares' Rights Agreement with First Chicago Trust Company of
New York, dated as of November 10, 1998, as amended
Termination of the merger agreement
The merger agreement may be terminated under certain circumstances at any
time before the completion of the merger, as summarized below.
The merger agreement may be terminated by the mutual written consent of
General Housewares and CCPC Acquisition.
In addition, the merger agreement may be terminated by either General
Housewares or CCPC Acquisition if:
- a governmental authority has issued a final and nonappealable order
prohibiting the merger
- General Housewares stockholders do not adopt the merger agreement
- the merger is not completed on or before November 30, 1999
CCPC Acquisition may terminate the merger agreement if General Housewares
has breached in any material respect any of its representations, warranties,
covenants or other obligations in the merger agreement and that breach is not
remedied or cannot be remedied within 30 days of notice of such breach.
General Housewares may terminate the merger agreement if CCPC Acquisition
or GHC Acquisition has breached in any material respect any of their respective
representations, warranties, covenants or other obligations in the merger
agreement and that breach is not remedied or cannot be remedied within 30 days
of notice of such breach. General Housewares also may terminate the merger
agreement prior to the approval of
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General Housewares stockholders upon five business days' prior irrevocable
written notice to CCPC Acquisition, in order to accept an unsolicited proposal
for an acquisition transaction of the nature specified in the merger agreement
for which all necessary financing is committed, and which, if accepted, is
reasonably likely to be consummated and is financially superior to General
Housewares stockholders than the merger with GHC Acquisition taking into account
all legal, financial and regulatory aspects of the proposal, provided that (A)
such notice includes a copy of any documentation and otherwise specifies all
material information relating to the superior proposal, (B) during the five
business day period, General Housewares negotiates with CCPC Acquisition in good
faith in order to determine if the third party proposal remains a superior
proposal after taking into account any revised proposal by CCPC Acquisition and
(C) General Housewares pays CCPC Acquisition a $4.25 million termination fee.
Furthermore, CCPC Acquisition may terminate the merger agreement and
receive payment of the $4.25 million termination fee from General Housewares if
General Housewares' board of directors takes either of the following actions:
- withdraws or materially adversely modifies or fails to reconfirm its
approval and recommendation of the merger within 10 days of a request for
reconfirmation by CCPC Acquisition
- approves or recommends any alternative proposal relating to an
acquisition transaction of the nature specified in the merger agreement
and involving General Housewares and a party other than CCPC Acquisition
In the event that (A) any person (other than CCPC Acquisition, GHC
Acquisition or any of their affiliates) has made, publicly or to General
Housewares, a proposal for, or expressed an interest in, a business combination
transaction of the nature specified in the merger agreement, (B) the agreement
is terminated by either CCPC Acquisition because General Housewares is in breach
in any material respect of its material obligations under the merger agreement
(which is not remedied or not capable of being remedied within 30 days) or by
either party because General Housewares stockholders did not approve the merger
agreement, and (C) not later than 12 months after the termination of the merger
agreement, either General Housewares enters into an agreement with respect to a
business combination transaction of the nature specified in the merger
agreement, which is later consummated, or a business combination transaction of
the nature specified in the merger agreement occurs, then CCPC Acquisition will
be entitled to receive a $4.25 million termination fee from General Housewares.
No other negotiations involving General Housewares
General Housewares has agreed, subject to certain exceptions, until the
merger is completed or the merger agreement is terminated, not to initiate,
solicit, encourage or facilitate offers, inquiries or proposals with respect to,
or furnish any information relating to, or participate in any negotiations or
discussions concerning any proposal for an acquisition transaction of the nature
specified in the merger agreement involving General Housewares and a party other
than CCPC Acquisition or GHC Acquisition. However, General Housewares may
furnish information concerning General Housewares, pursuant to an appropriate
confidentiality agreement, to any person and negotiate with any person with
respect to an unsolicited proposal for an acquisition transaction if the person
has submitted a bona fide written proposal, for which all necessary financing is
committed in full or reasonably likely to be obtained, and which, if accepted,
is reasonably likely to be consummated and is financially superior to General
Housewares stockholders than the merger with GHC Acquisition taking into account
all legal, financial and regulatory aspects of the proposal. General Housewares
cannot waive any provision of a "standstill" agreement, provided that, if
specifically requested, General Housewares may waive the provisions of any
"standstill" agreement with any person to the extent necessary to permit the
person to submit a proposal for an acquisition transaction that the board of
directors believes, in its good faith judgment based on information contained in
the request, is reasonably likely to result in a superior proposal.
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DISSENTERS' RIGHTS OF APPRAISAL
Any stockholder who does not wish to accept the $28.75 per share cash
consideration in the merger has the right under Delaware law to have the "fair
value" of his, her or its shares determined by the Delaware Chancery Court. This
"right of appraisal" is subject to a number of restrictions and technical
requirements. Generally, in order to exercise appraisal rights:
- you must not vote in favor of the merger and
- you must make a written demand for appraisal in compliance with Delaware
law before the vote on the merger
Merely voting against the merger will not protect your right of appraisal.
Annex C to this proxy statement contains the Delaware statutory provision
relating to your right of appraisal. Failure to follow all of the steps required
by this provision will result in the loss of your right of appraisal. The
Delaware law requirements for exercising appraisal rights are explained on pages
36 to 38 of this proxy statement.
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THE PARTIES
GENERAL HOUSEWARES CORP.
General Housewares Corp., a Delaware corporation, markets and distributes
consumer durable goods, concentrating on product categories in which, through
market share, product innovation or brand image, it is considered a leader.
Through the acquisition and/or development of products that deliver unexpected
value, simplify and enhance a task or redefine a task, General Housewares
believes that it is able to establish such a leadership position. General
Housewares pursues such a position in the following product categories: cutlery,
kitchen/household tools, precision cutting tools and barbecue tools. Among
General Housewares' key brands are Chicago Cutlery(R), OXO(R) kitchen/household
tools, Olfa precision cutting tools, Grilla Gear(R) outdoor accessories and
OLO(R) rolling scissors.
The principal executive office of General Housewares Corp. is located at
1536 Beech Street, P.O. Box 4066, Terre Haute, IN 47804, and the telephone
number at such office is (812) 232-1000.
CCPC ACQUISITION CORP., GHC ACQUISITION CORP. AND BORDEN, INC.
GHC Acquisition Corp., a Delaware corporation, is a subsidiary of CCPC
Acquisition Corp. CCPC Acquisition, a Delaware corporation controlled by
affiliates of the investment firm Kohlberg, Kravis Roberts & Co., L.P., is the
holder of approximately 89% of the common stock of CCPC Acquisition. CCPC
Acquisition is a leading manufacturer and marketer of housewares, including
bakeware, dinnerware and rangetop cookware, with products sold in the United
States and in over 30 foreign countries. CCPC Acquisition's brands include
Corning Ware(R), Pyrex(R), Corelle(R), Revere Ware(R) and Visions(R).
Borden, Inc., a New Jersey corporation and an affiliate of CCPC
Acquisition, has guaranteed the obligations of CCPC Acquisition and GHC
Acquisition to pay the merger consideration under the merger agreement, among
other things. Borden is engaged primarily in manufacturing, processing,
purchasing and distributing specialty chemicals and consumer adhesives, and
providing infrastructure management services, with production facilities located
throughout the United States and in many foreign countries.
The principal executive office of each of CCPC Acquisition Corp. and GHC
Acquisition Corp. is located at 2711 Centerville Road, Suite 202, Wilmington,
Delaware 19808, and the telephone number at each of such offices is (302)
633-7800. The principal executive office of Borden, Inc. is located at 180 East
Broad Street, 30th Floor, Columbus, Ohio 43215-3799, and the telephone number at
such office is (614) 225-4000.
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SPECIAL FACTORS
BACKGROUND OF THE MERGER
On April 12, 1999, General Housewares received a non-binding preliminary
proposal from a third party not affiliated with CCPC Acquisition for the
acquisition of all of the outstanding stock of General Housewares.
On April 21, 1999, General Housewares' board of directors approved the
engagement of Wasserstein Perella & Co., Inc. as financial advisor to General
Housewares.
On May 10, 1999, Wasserstein Perella reviewed with the board its
preliminary views regarding the valuation of General Housewares and its
assessment of the April 12, 1999 non-binding preliminary proposal. After
considering presentations by Wasserstein Perella, General Housewares' management
and outside legal counsel, the board concluded that it would not pursue the
April 12, 1999 proposal. The board, however, directed Wasserstein Perella to
continue to study General Housewares' businesses and to advise the board as to
the strategic alternatives available to General Housewares.
On May 26, 1999, John A. Bricker, Jr., who is a principal of Sandera
Capital Management, the general partner of Sandera Partners, and who became a
director of General Housewares on November 17, 1998 when Sandera Partners owned
approximately 13.4% of General Housewares common stock, resigned his
directorship, citing differences with the board of directors relating to the
April 12, 1999 proposal, and publicly announced his resignation and the nature
of his differences with the board of directors.
On June 4, 1999, General Housewares received an unsolicited expression of
interest from Helen of Troy Limited relating to the acquisition of General
Housewares.
The board of directors of General Housewares met again on June 8, 1999 and
June 9, 1999. At these meetings, Wasserstein Perella reviewed with the board of
directors the strategic alternatives available to General Housewares and its
views regarding management's plans and preliminary valuations of General
Housewares. After extensive discussions, the board of directors authorized
Wasserstein Perella to seek proposals for the acquisition of General Housewares
from third parties including the parties that had expressed an interest in an
acquisition of General Housewares on April 12 and June 4. The board also
appointed a special committee of two independent directors to monitor the
process being undertaken by Wasserstein Perella.
Sandera Partners filed an amended Schedule 13D with the Securities and
Exchange Commission reflecting a sale of 496,999 shares of General Housewares
common stock on June 18, 1999. Helen of Troy Limited then filed a Schedule 13D
indicating that it purchased 496,999 shares of common stock in an after-hours
transaction for $20.00 per share on June 18, 1999. The closing price on the New
York Stock Exchange for General Housewares common stock on June 18, 1999 was
$15.25.
General Housewares entered into confidentiality agreements and furnished
information to five parties interested in acquiring General Housewares in June
and July 1999. During this time, General Housewares' management and
representatives of Wasserstein Perella held various meetings with interested
parties regarding General Housewares' operations and the terms of a possible
transaction, and the interested parties and their representatives conducted due
diligence reviews of General Housewares. Management and Wasserstein Perella had
numerous conferences with the special committee of the board and contacts with
its members during this period regarding the status of the process.
On July 29, 1999, the deadline set by Wasserstein Perella for the
submission of definitive proposals, General Housewares received proposals from
three parties, including CCPC Acquisition, regarding the purchase of all of the
outstanding General Housewares common stock for cash.
On July 29 and July 30, 1999, General Housewares, Wasserstein Perella and
General Housewares' outside legal counsel reviewed and evaluated the terms
proposed by each of the three parties with members of the special committee.
Wasserstein Perella also discussed with the two companies, submitting the two
highest per share offers, the terms and conditions each was prepared to offer to
acquire General Housewares. On Friday, July 30, 1999, CCPC Acquisition agreed to
raise its proposed price to $28.75 per share, but only if
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<PAGE> 15
General Housewares would negotiate exclusively with CCPC Acquisition regarding a
definitive merger agreement over the weekend and the merger agreement contained
acceptable provisions regarding non-solicitation of third party proposals and
termination fees. CCPC Acquisition's final offer of $28.75 per share in cash
represented the highest proposed price received by General Housewares.
The special committee instructed Wasserstein Perella and General
Housewares' outside legal counsel to engage in further discussions over the
weekend with CCPC Acquisition regarding the specific terms of its proposal.
From July 30 through August 1, 1999, General Housewares and CCPC
Acquisition and their respective legal counsel negotiated the terms and
conditions of the proposed merger agreement.
On August 1, 1999, General Housewares' board of directors met and reviewed
with management, Wasserstein Perella and General Housewares' outside legal
counsel the proposals received from each of the three bidders and the additional
discussions and merger agreement negotiations with CCPC Acquisition.
The board reviewed the process it initiated to seek expressions of interest
for General Housewares and the publicity and public speculation concerning
possible strategic alternatives for General Housewares. The board considered,
among other things, the opinion of Wasserstein Perella, as of August 1, 1999,
and subject to the factors and assumptions set forth therein, the fact that the
$28.75 per share cash consideration to be paid to General Housewares common
stockholders (other than CCPC Acquisition and GHC Acquisition, and the holders
of dissenting shares) was fair to those stockholders from a financial point of
view. General Housewares' legal counsel reviewed in detail the principal terms
and conditions of the proposed merger agreement with CCPC Acquisition and
relevant aspects of applicable law regarding the fiduciary duties of General
Housewares' board of directors in connection with the merger. After considering
the presentation and opinion of Wasserstein Perella and the presentation of
outside legal counsel, the board of directors determined that the proposed
merger agreement with CCPC Acquisition is advisable and its terms are fair to
and in the best interests of the stockholders of General Housewares.
Accordingly, the board of directors approved the merger agreement and authorized
General Housewares' management to finalize with CCPC Acquisition the terms of
the merger agreement.
After completion of the final negotiations between General Housewares and
CCPC Acquisition, the parties executed the merger agreement early on the morning
of August 2, 1999.
Shortly thereafter and prior to the opening of the New York Stock Exchange
on August 2, 1999, General Housewares and CCPC Acquisition publicly announced
the transaction.
RECOMMENDATION OF GENERAL HOUSEWARES' BOARD OF DIRECTORS AND FAIRNESS OF THE
MERGER
At a special meeting on August 1, 1999, after considering a number of
factors, including Wasserstein Perella's opinion, General Housewares' board of
directors determined that the merger agreement is advisable and the merger is
fair to and in the best interests of General Housewares stockholders.
Accordingly, the board of directors unanimously approved the merger agreement
and recommends that General Housewares stockholders adopt the merger agreement
and approve the merger contemplated by the merger agreement.
Factors considered by the board of directors
In determining to approve the merger agreement and recommend that
stockholders adopt it, the board of directors considered the following factors,
each of which the board of directors concluded supported its determination:
- Wasserstein Perella opinion. The board of directors considered
Wasserstein Perella's financial presentation and its oral opinion as of
August 1, 1999 (subsequently confirmed in writing) that, as of that date
and subject to the factors and assumptions set forth therein, the $28.75
per share cash consideration to be received by General Housewares common
stockholders in the merger was fair from a financial point of view to
those stockholders (other than CCPC Acquisition and GHC Acquisition). The
full text of Wasserstein Perella's written opinion, which sets forth the
assumptions made, matters
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<PAGE> 16
considered and limits of review described to the board of directors, is
attached as Annex B to this proxy statement. Stockholders should read
Wasserstein Perella's opinion carefully.
- Merger consideration. The board of directors considered the terms of CCPC
Acquisition's proposal, including the facts that:
- CCPC Acquisition's $28.75 per share cash proposal was the highest price
obtained on completion of a process in which a number of parties were
contacted by Wasserstein Perella in an effort to elicit third party
proposals to acquire General Housewares and to maximize stockholder
value
- CCPC Acquisition's proposal was not subject to any financing condition
and there was a high likelihood that the proposed acquisition would be
consummated in light of the experience, reputation and financial
capabilities of CCPC Acquisition
- the terms of the merger agreement were determined through arm's-length
negotiations between General Housewares and its legal and financial
advisors on the one hand, and representatives of CCPC Acquisition on the
other
- Market price and premium. The board of directors considered the
historical market prices of General Housewares common stock and noted
that $28.75 per share represents a:
- 43.3% premium over the $20.06 closing price of General Housewares common
stock on July 29, 1999, one day prior to the last trading day before the
merger was announced;
- 48.9% premium over the $19.31 closing price of General Housewares common
stock on July 1, 1999, 30 days prior to the last trading day before the
merger was announced;
- 120.1% premium over the $13.06 closing price of General Housewares
common stock on June 1, 1999, 60 days prior to the last trading day
before the merger was announced; and
- 165.9% premium over the $10.81 closing price of General Housewares
common stock on April 12, 1999, the day General Housewares received the
first non-binding preliminary proposal from a third party to acquire
General Housewares
- General Housewares' business, condition and prospects. The board
considered information with respect to:
- General Housewares' financial condition, results of operations,
business, competitive position, and business strategy, on both a
historical and a prospective basis, as well as current industry,
economic and market conditions.
- General Housewares' prospects if it were to remain independent,
including the risks inherent in remaining independent, and the prospects
of General Housewares going forward as an independent company
- the possible alternatives to the merger (including the possibility of
continuing to operate General Housewares as an independent entity), the
range of possible benefits to General Housewares' stockholders of such
alternatives and the timing and likelihood of accomplishing the goal of
any such alternatives
- the fact that since public disclosure on May 26, 1999 General Housewares
had received and rejected a non-binding preliminary proposal, there was
general speculation about possible strategic alternatives that General
Housewares might pursue
- Terms of the merger agreement. The board of directors also considered the
terms of the merger agreement, including the fact that General
Housewares:
- may furnish, pursuant to an appropriate confidentiality agreement,
confidential information about its operations to, and enter into
negotiations with, a third party making an unsolicited proposal for an
alternative acquisition transaction, if the third party has submitted a
proposal for which all necessary financing is committed or reasonably
likely to be obtained, and which, if accepted, is reasonably
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<PAGE> 17
likely to be consummated and is financially superior to General Housewares
stockholders compared to the merger, subject to certain conditions
- may waive the provisions of any standstill agreement if specifically
requested by a potential acquiror and the board determines such a waiver
is necessary to allow a person to submit a proposal for an acquisition
transaction which the board believes, in its good faith judgment, is
reasonably likely to result in a superior proposal, subject to certain
conditions
- may, prior to stockholder approval, terminate the merger agreement and
accept an unsolicited proposal for an alternative acquisition
transaction which is financially superior to General Housewares
stockholders compared to the merger, subject to certain conditions,
including an obligation to negotiate further with CCPC Acquisition and
the payment of a $4.25 million termination fee to CCPC Acquisition
- Availability of dissenters' rights. The board of directors also
considered the fact that dissenters' rights of appraisal will be
available to stockholders under Delaware law.
- Interests of various parties in the merger. General Housewares' directors
were aware that some of General Housewares' directors and officers have
relationships and interests in the merger that differ from the interests
of General Housewares stockholders. See "Interests of certain persons in
the merger and certain relationships" on pages 19 to 21.
The board of directors considered the fact that if the merger is
consummated, General Housewares stockholders will not participate in the future
growth of General Housewares. Because of the risks and uncertainties associated
with General Housewares' future prospects and general market conditions, the
board of directors concluded that this detriment was not quantifiable but was
generally outweighed by the cash consideration to be paid to the stockholders in
the merger.
In view of the wide variety of factors considered in connection with its
evaluation of the merger and the merger agreement, the board of directors did
not find it practicable to, and did not attempt to, quantify, rank or otherwise
assign relative weights to the specific factors it considered in reaching its
determinations.
OPINION OF WASSERSTEIN PERELLA & CO., INC., FINANCIAL ADVISOR TO GENERAL
HOUSEWARES
General Housewares' board of directors retained Wasserstein Perella & Co.,
Inc. to provide requested investment banking advice and services in connection
with the merger, including rendering its opinion as to the fairness, from a
financial point of view, of the consideration to be received by the stockholders
of General Housewares.
On August 1, 1999, Wasserstein Perella orally delivered its opinion to
General Housewares' board of directors, which it later confirmed in a written
opinion, dated August 1, 1999, to the effect that, as of the date of the opinion
and based upon specific assumptions, the $28.75 per share cash consideration to
be received by the stockholders of General Housewares in the merger is fair,
from a financial point of view, to such stockholders. Wasserstein Perella also
presented to General Housewares' board of directors the analyses described
below.
A COPY OF WASSERSTEIN PERELLA'S WRITTEN OPINION IS ATTACHED AS ANNEX B TO
THIS PROXY STATEMENT. STOCKHOLDERS ARE URGED TO READ THE WASSERSTEIN PERELLA
OPINION IN ITS ENTIRETY FOR INFORMATION ABOUT THE PROCEDURES FOLLOWED,
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS OF THE REVIEW BY WASSERSTEIN
PERELLA IN RENDERING ITS OPINION. REFERENCES TO WASSERSTEIN PERELLA'S OPINION IN
THIS PROXY STATEMENT AND THE SUMMARY OF WASSERSTEIN PERELLA'S OPINION IN THIS
SECTION OF THE PROXY STATEMENT ARE QUALIFIED BY REFERENCE TO THE FULL TEXT OF
WASSERSTEIN PERELLA'S OPINION, WHICH IS INCORPORATED IN THIS PROXY STATEMENT BY
REFERENCE. WASSERSTEIN PERELLA'S OPINION ONLY ADDRESSES THE FAIRNESS, FROM A
FINANCIAL POINT OF VIEW, OF THE CASH CONSIDERATION TO BE RECEIVED BY THE
STOCKHOLDERS OF GENERAL HOUSEWARES AND IT DOES NOT ADDRESS ANY OTHER ASPECT OF
THE MERGER. WASSERSTEIN PERELLA'S OPINION DOES NOT CONSTITUTE A RECOMMENDATION
TO STOCKHOLDERS TO VOTE IN FAVOR OF THE MERGER AND STOCKHOLDERS SHOULD NOT RELY
UPON IT AS A RECOMMENDATION.
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<PAGE> 18
In arriving at its opinion, Wasserstein Perella reviewed, among other
things,
- the merger agreement;
- publicly available business and financial information relating to General
Housewares which Wasserstein Perella deemed to be relevant;
- internal non-public financial and operating information, including
certain budgeted cashflow information and analyses prepared by or on
behalf of General Housewares and provided orally or in writing by or on
behalf of the management of General Housewares to Wasserstein Perella for
purposes of its analysis;
- financial and stock market data relating to General Housewares, and
compared this data with similar data for other companies, the securities
of which are publicly traded, that Wasserstein Perella deemed to be
relevant; and
- the financial terms of the merger, and compared its terms with the
financial terms of other transactions in the housewares industry which
Wasserstein Perella deemed to be relevant to its inquiry.
Wasserstein Perella had discussions with the management of General
Housewares and its representatives about General Housewares' business,
operations, assets, financial condition and future prospects. Wasserstein
Perella also performed such studies, analyses and investigations and reviewed
other information as it considered appropriate for purposes of arriving at and
preparing its opinion.
In conducting its analysis and arriving at its opinion, Wasserstein Perella
assumed and relied upon the accuracy and completeness of all financial and other
information that was provided to or discussed with it or was publicly available,
and did not assume any responsibility for independently verifying this
information. Wasserstein Perella also relied upon the reasonableness and
accuracy of the financial information and analyses provided to them and assumed
that all financial information and analyses provided by General Housewares were
prepared in good faith and on bases reflecting the best currently available
judgments and estimates of General Housewares' management.
Wasserstein Perella did not express any opinion with respect to such
financial information and analyses or the assumptions upon which they are based.
In addition, Wasserstein Perella did not review any of the books and records of
General Housewares, except as described above, or assume any responsibility for
conducting a physical inspection of the properties or facilities of General
Housewares, or for making or obtaining an independent valuation or appraisal of
the assets or liabilities of General Housewares, and Wasserstein Perella was not
provided with any such independent valuation or appraisal. Wasserstein Perella
also assumed that the transactions described in the merger agreement would be
consummated on the terms set forth in the merger agreement, without material
waiver or modification.
Wasserstein Perella's opinion necessarily was based on economic and market
conditions and other circumstances as they existed and could be evaluated by
Wasserstein Perella on the date of its opinion.
Summary and analysis of the merger
During the August 1, 1999 meeting with General Housewares' board of
directors, Wasserstein Perella reviewed financial, industry and market
information about General Housewares, and the procedures used in arriving at,
and the analyses underlying, Wasserstein Perella's opinion. The following
describes the material analyses performed by Wasserstein Perella relating to its
opinion and presented to the board of directors. The preparation of a fairness
opinion is a complex process that is not purely mathematical and is not
necessarily susceptible to partial analyses or summary description. Stockholders
are encouraged to review Wasserstein Perella's entire opinion.
Selected housewares company trading analysis
To analyze the relative public market valuations of other selected
housewares companies, Wasserstein Perella analyzed the stock price performance
and operating performance of Home Products International,
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<PAGE> 19
Lifetime Hoan, Mikasa, National Presto Industries and Salton. Wasserstein
Perella calculated market trading multiples for each of these companies based on
their (1) market values as a multiple of last twelve months ("LTM") net income
and LTM book value, (2) adjusted market value as a multiple of LTM sales, LTM
earnings before interest, taxes, depreciation and amortization ("EBITDA") and
LTM earnings before interest and taxes ("EBIT"), (3) market values as a multiple
of next fiscal year ("NFY") net income and NFY book value and (4) adjusted
market value as a multiple of NFY sales, NFY EBITDA and NFY EBIT.
Based on these calculations, Wasserstein Perella noted that the range of
market value multiples was 5.5x to 14.1x for LTM net income, 5.0x to 8.4x for
NFY net income, 1.1x to 4.6x for LTM book value and 0.9x to 2.2x for NFY book
value. The range of adjusted market value multiples was 0.5x to 1.0x for LTM
sales, 0.6x to 0.9x for NFY sales, 2.7x to 6.6x for LTM EBITDA, 4.2x to 4.7x for
NFY EBITDA, 3.0x to 8.6x for LTM EBIT and 4.7x to 7.0x for NFY EBIT. Based on
this range of market value multiples and adjusted market value multiples,
Wasserstein Perella noted that the cash consideration to be received by the
stockholders of General Housewares was within or above the foregoing valuation
range and that this fact supported a determination that such cash consideration
was fair to the stockholders.
Review of housewares company acquisitions
Wasserstein Perella reviewed publicly available financial and other
information for the following recently announced business combinations in the
housewares industry: All-Clad Holdings/Waterford Wedgewood, Oneida/Libbey
(recently terminated), American Safety Razor/JW Childs Equity Partners,
Rival/Holmes Products, Sarah Michaels/Dial Corporation, DEP Corp./Henkel,
Johnson Products/Carson, Black & Decker Household Products/Windmere Durable
Hldgs., All-Clad Holdings/U.S. Equity Partners L.P., Bausch & Lomb Skin
Care/Andrew Jergens, Calphalon/Newell, Signature Brands/Sunbeam, Bristol-Myers
Squibb (Ban)/Chattem Inc., Jafra Cosmetics/Clayton Dubilier, SC Johnson
Brands/Reckitt & Colman, Aveda Co./ Estee Lauder Co., Curver/Rubbermaid, Pavion
Limited/AM Cosmetics, Tyco International/INBRAND, Hazeline (Glaxo
Wellcome)/Unilever, Armor All/Clorox, Laboratoires Lutsia/Boots,
Graco/Rubbermaid, Reckitt & Colman (Personal Products)/JW Childs Associates LP
and St. Ives Laboratories/Alberto-Culver Co. In reviewing each of these
transactions, Wasserstein Perella calculated the adjusted purchase price as a
multiple of the acquired company's LTM net sales, LTM EBITDA, LTM EBIT and LTM
net income for each of these transactions for the calendar year in which these
transactions were announced, based on the latest publicly available information
at the time of each of these transactions.
Based on these calculations, Wasserstein Perella noted that the range of
implied multiples of the adjusted purchase price for these transactions was 0.6x
to 2.9x for LTM net sales, 6.4x to 20.4x for LTM EBITDA, 6.7x to 34.9x for LTM
EBIT and 10.2x to 47.6x of LTM net income for the calendar year in which the
applicable transaction was announced. Based on this range of implied adjusted
purchase price multiples, Wasserstein Perella noted that the cash consideration
to be received by the stockholders of General Housewares was within or above the
foregoing valuation range and that this fact supported a determination that such
cash consideration was fair to the stockholders.
Discounted cash flow analysis
Wasserstein Perella performed a discounted cash flow ("DCF") analysis of
General Housewares' business. A DCF analysis is a traditional valuation
methodology used to derive a valuation of a corporate entity by capitalizing the
estimated future earnings and calculating the estimated future unlevered free
cash flows of such corporate entity and discounting such aggregate results back
to a present value. Wasserstein Perella's DCF analysis considered the projected
operating performance of General Housewares for fiscal years 2000 through 2006
using financial projections for General Housewares' future performance through
fiscal year 2003 provided by General Housewares' management and then
extrapolating this data through fiscal year 2006. Wasserstein Perella also
performed a DCF analysis using a sensitivity case that modified specific
assumptions made by General Housewares' management in preparing their financial
projections.
Wasserstein Perella aggregated the present value of the cash flows from
2000 through 2006 with the present value of a range of terminal values. All cash
flows were discounted at rates ranging from 10.0% to
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12.0%. The terminal values were computed using a range of multiples of 5.0x to
8.0x for fiscal year 2006 EBITDA. Wasserstein Perella arrived at these discount
rates based on its judgment of the weighted average cost of capital of selected
publicly-traded housewares companies, and arrived at these terminal values based
on its review of the trading characteristics of the common stock of selected
publicly-traded housewares companies. Wasserstein Perella's analysis of the
management case indicated a range of values for the General Housewares common
stock of $21.63 to $35.96 per share, and the sensitivity case indicated a range
of values for the General Housewares common stock of $24.64 to $40.55 per share.
Based on this range of implied share prices, Wasserstein Perella noted that the
cash consideration to be received by the stockholders of General Housewares was
within the foregoing valuation range and that this fact supported a
determination that such cash consideration was fair to the stockholders.
Premiums analysis
Wasserstein Perella reviewed 36 announced transactions from January 7, 1999
through July 8, 1999 involving the merger of publicly-held companies, where
transaction values ranged from $75 million to $150 million, to derive a range of
premiums paid over the public trading prices one day, 30 days and 60 days before
the announcement of each transaction. In connection with this analysis,
Wasserstein Perella noted, among other things, that (1) the reasons for, and
circumstances surrounding, each of the analyzed transactions were diverse, (2)
the characteristics of the companies involved were not necessarily comparable to
those of General Housewares, (3) premiums fluctuated based on perceived growth,
synergies, strategic value, the type of consideration utilized in the
transaction, information in the securities markets and other factors and (4)
this analysis was less relevant than the other analyses performed by Wasserstein
Perella in connection with the merger.
Wasserstein Perella's premiums analyses indicated that the medians of
premiums paid in the transactions over the public per share trading prices one
day, 30 days and 60 days before the announcement were 29.1%, 36.5% and 44.0%,
respectively, and that the means of premiums paid in the transactions over the
public per share trading prices one day, 30 days and 60 days before the
announcement were 38.8%, 42.8%, and 53.8%. Wasserstein Perella noted that the
cash consideration to be received by the stockholders of General Housewares was
above the foregoing average premiums and that this fact supported a
determination that such cash consideration was fair to the stockholders.
Summary
The preceding summary is not a complete description of the analyses
performed by Wasserstein Perella or its presentations to General Housewares'
board of directors. Wasserstein Perella believes that its analyses must be
considered as a whole and that selecting portions of its analyses and the
factors considered by it, without considering all factors and analyses, could
create a misleading view of the process underlying its analyses set forth in its
opinion. In performing its analyses, Wasserstein Perella made numerous
macroeconomic, operating and financial assumptions with respect to industry
performance, general business, regulatory and economic conditions and other
matters, many of which are beyond the control of General Housewares. Any
estimates incorporated in the analyses performed by Wasserstein Perella are not
necessarily indicative of actual past or future results or values, which may be
significantly more or less favorable than these estimates. Estimated values do
not purport to be appraisals and do not necessarily reflect the prices at which
housewares companies may be sold. Because these estimates are inherently subject
to uncertainty, Wasserstein Perella does not assume any responsibility for their
accuracy. No company or transaction analyzed for comparative purposes is
identical to General Housewares or the merger. Accordingly, an analysis of
comparative companies and comparative business combinations is not simply
mathematical, but rather involves complex considerations and judgments
concerning financial and operating characteristics of the companies involved and
other factors that affect value.
Wasserstein Perella concluded that, in its judgment, including the full
range of its analyses described above, the $28.75 per share cash consideration
to be received by the stockholders of General Housewares is fair, from a
financial point of view, to such stockholders.
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<PAGE> 21
Wasserstein Perella is an investment banking firm engaged in, among other
things, the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. General Housewares' board of
directors selected Wasserstein Perella as its financial advisor because
Wasserstein Perella is an internationally recognized investment banking firm,
and members of Wasserstein Perella have substantial experience in transactions
such as the merger and in the valuation of companies.
General Housewares agreed to pay Wasserstein Perella (1) a financial
advisory fee of $100,000 and (2) a percentage-based transaction fee contingent
upon the successful consummation of the merger, against which the financial
advisory fee will be credited. Pursuant thereto, the payment due upon
consummation of the merger with GHC Acquisition will be approximately $1.7
million. In addition, General Housewares agreed to reimburse Wasserstein Perella
for its reasonable out-of-pocket expenses related to its engagement, including
the reasonable fees and expenses of counsel, whether or not the merger is
consummated. General Housewares also has agreed to indemnify Wasserstein Perella
and specified related persons against specific liabilities relating to or
arising out of its engagement, including specific liabilities under the federal
securities laws.
In the ordinary course of its business, Wasserstein Perella may actively
trade the securities of CCPC Acquisition Corp. (or its affiliates) and, before
completion of the merger, General Housewares for the accounts of Wasserstein
Perella and for the accounts of its customers and, accordingly, may at any time
hold a long or short position in such securities.
INTERESTS OF CERTAIN PERSONS IN THE MERGER AND CERTAIN RELATIONSHIPS
In considering the recommendation of General Housewares' board of directors
with respect to the merger, stockholders should be aware that various members of
the board of directors and General Housewares' management have interests that
may present them with actual, potential, or the appearance of potential
conflicts of interest in connection with the merger. The board of directors was
aware of these potential or actual conflicts of interest and considered them
along with other matters described in detail in the section of this proxy
statement entitled "Special Factors -- Recommendation of General Housewares'
board of directors and fairness of the merger" on page 13.
The merger agreement also provides that the current officers of General
Housewares will be the initial officers of the surviving corporation.
General Housewares' executive officers and directors currently own of
record an aggregate of 251,594 shares of General Housewares common stock,
representing approximately 6.2% of the total outstanding shares.
In addition, General Housewares' executive officers own options to purchase
an aggregate of 119,534 shares of General Housewares common stock at exercise
prices ranging from $9.25 to $13.75. General Housewares' incentive plan provides
that these options vest upon a change in control of General Housewares such as
the proposed merger with CCPC Acquisition. Under the terms of the merger
agreement, the options will be cancelled in the merger in exchange for an amount
of cash equal to the positive difference between $28.75 and the applicable
exercise price per share. Upon the cash-out of all options at the effective time
of the merger, General Housewares expects that the following executive officers
will receive the following cash payments for their options:
<TABLE>
<CAPTION>
NAME AMOUNT
- ---- --------
<S> <C>
Gordon H. Brown.......................................... $313,500
Bradley A. Kelsheimer.................................... $ 37,500
Raymond J. Kulla......................................... $341,000
Alexander T. Lee......................................... $109,375
Teresa A. Mager.......................................... $119,875
Paul A. Saxton........................................... $782,760
Mark S. Scales........................................... $356,938
</TABLE>
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General Housewares' executive officers and directors currently own an
aggregate of 121,500 restricted shares of General Housewares common stock,
representing approximately 3.0% of the total outstanding shares. General
Housewares' incentive plan provides that all restrictions on the restricted
stock lapse upon a change in control of General Housewares such as the proposed
merger with CCPC Acquisition. Accordingly, at the effective time of the merger,
all restrictions on the restricted stock will lapse and these unrestricted
shares of General Housewares common stock will be converted into the right to
receive $28.75 per share cash merger consideration. The following table sets
forth those executive officers and directors of General Housewares holding
shares of restricted stock and the amounts of cash they will receive in exchange
for these shares in the merger:
<TABLE>
<CAPTION>
NAME AMOUNT
- ---- --------
<S> <C>
Gordon H. Brown.......................................... $345,000
Bradley A. Kelsheimer.................................... $345,000
Raymond J. Kulla......................................... $431,250
Alexander T. Lee......................................... $646,875
Teresa A. Mager.......................................... $129,375
Paul A. Saxton........................................... $862,500
Mark S. Scales........................................... $646,875
Charles E. Bradley....................................... $ 14,375
Thomas L. Francis........................................ $ 14,375
Joseph Hinsey IV......................................... $ 14,375
Richard E. Lundin........................................ $ 14,375
Ann Manix................................................ $ 14,375
Phillip A. Ranney........................................ $ 14,375
</TABLE>
The merger agreement provides that the surviving corporation will,
following completion of the merger, indemnify all past and present officers and
directors of General Housewares to the same extent and in the same manner as
these persons are indemnified by General Housewares under General Housewares'
charter and bylaws. This indemnification covers any acts or omissions of these
officers and directors occurring prior to the effective time of the merger. The
merger agreement also provides that for six years following completion of the
merger, the surviving corporation will provide directors' and officers'
liability insurance coverage to General Housewares' current officers and
directors with substantially the same coverage as General Housewares' existing
policy. However, the surviving corporation will not be required to pay an annual
premium for the directors' and officers' insurance in excess of 150% of the last
annual premium paid prior to the date of the merger agreement but in that case
will purchase as much coverage as possible for that amount.
General Housewares has employment agreements with Gordon H. Brown, Teresa
A. Mager, Bradley A. Kelsheimer, Alex Lee, Mark S. Scales, Paul A. Saxton and
Raymond J. Kulla. These agreements were under review by General Housewares'
board of directors and the compensation committee of the board of directors
during June and July 1999 and were amended on August 1, 1999. (The form of
amended employment agreement is attached as an exhibit to General Housewares
Quarterly Report for the period ended June 30, 1999.) Under the agreements, as
amended, the consummation of the merger would constitute a "change of control"
and would entitle the employees covered by these agreements to a lump sum
payment equal to three years' base salary at the rate in effect immediately
prior to the effective time of the merger plus the continuation of benefits
(including supplemental executive retirement benefits) for three years, subject
to certain conditions, if their employment is terminated by General Housewares
other than for just cause or by the employee for good reason during the first
year after the "change of control." If employment is terminated by General
Housewares other than for just cause or by the employee for good reason during
the second or third year after the "change of control," the employees covered by
these agreements would be entitled to a lump sum payment equal to two years'
base salary at the rate in effect immediately prior to the effective time of the
merger plus the continuation of benefits (including supplemental executive
retirement benefits) for two years, subject to certain conditions. Additionally,
the employment agreements of Messrs. Brown and Saxton provide for the
continuation of supplemental executive retirement plan benefits for four years
following a "change of control." Payments to each employee under these
agreements are limited to those payments which
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<PAGE> 23
would be deductible by General Housewares under sec. 280G of the Internal
Revenue Code of 1986, as amended. CCPC Acquisition is in the process of
negotiating a new employment agreement to supersede the previous employment
agreement with Alex Lee. General Housewares also intends to pay its employees,
including its officers, pro-rated bonuses earned under General Housewares' 1999
bonus plan at or prior to the effective time of the merger, subject to certain
conditions.
REGULATORY REQUIREMENTS AND THIRD-PARTY CONSENTS
In connection with the merger, CCPC Acquisition and General Housewares are
required to file documents under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended. In addition, the parties must make various filings,
provide notices and/or obtain approvals under various federal and state
securities laws. Finally, General Housewares must file the certificate of merger
with the Secretary of State of the State of Delaware.
Under the Hart-Scott-Rodino Act and the related rules of the FTC, certain
acquisition transactions may not be completed unless selected information has
been furnished to the Antitrust Division of the Department of Justice and the
FTC and prescribed waiting period requirements have been satisfied. One
condition to completion of the merger is the expiration or termination of all
applicable Hart-Scott-Rodino Act waiting periods.
Under the Hart-Scott-Rodino Act, both CCPC Acquisition and General
Housewares filed the necessary documents with the Justice Department and the FTC
in connection with the merger. Under this statute, the parties may not complete
the merger until a 30-calendar day waiting period following the filings has
expired. On September 2, 1999, the parties received notice from the FTC of the
early termination of the waiting period of the Hart-Scott-Rodino Act.
Except as discussed above, General Housewares does not believe that any
material regulatory approvals or third-party consents will be required in
connection with the merger.
ACCOUNTING TREATMENT
General Housewares has been advised by CCPC Acquisition that CCPC
Acquisition intends to treat the merger as a "purchase" for accounting and
financial reporting purposes. Consequently, the aggregate merger consideration
paid in connection with the merger will be allocated to General Housewares'
assets and liabilities based upon their fair values, with any excess being
treated as goodwill.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary of certain United States federal income tax
consequences of the merger to stockholders of General Housewares whose shares of
General Housewares common stock would be converted to the right to receive cash
pursuant to the merger. The discussion is for general information only and does
not purport to consider all aspects of United States federal income taxation
that might be relevant to stockholders of General Housewares. The discussion is
based on current law which is subject to change possibly with retroactive
effect. The discussion applies only to stockholders who hold shares of General
Housewares common stock as capital assets, and may not apply to shares of
General Housewares common stock received pursuant to the exercise of employee
stock options or otherwise as compensation, or to certain types of stockholders
(such as insurance companies, tax-exempt organizations, financial institutions
and broker-dealers) who may be subject to special rules. This discussion does
not discuss the tax consequences to any stockholder of General Housewares who,
for United States federal income tax purposes, is a non-resident alien
individual, foreign corporation, foreign partnership or foreign estate or trust,
and does not address any aspect of state, local or foreign tax laws.
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<PAGE> 24
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER SHOULD CONSULT
SUCH STOCKHOLDER'S TAX ADVISOR REGARDING THE APPLICABILITY OF THE RULES
DISCUSSED BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS TO SUCH
STOCKHOLDER OF THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN
TAX LAWS.
The receipt of cash for shares of General Housewares common stock pursuant
to the merger will be a taxable transaction for United States federal income tax
purposes. In general, a stockholder who surrenders shares of General Housewares
common stock for cash pursuant to the merger will recognize capital gain or loss
for United States federal income tax purposes equal to the difference, if any,
between the amount of cash received and such stockholder's adjusted tax basis in
the shares of General Housewares common stock surrendered. Gain or loss will be
determined separately for each block of shares (i.e., shares acquired at the
same cost in a single transaction) surrendered for cash pursuant to the merger.
Such gain or loss will be long-term capital gain or loss provided that a
stockholder's holding period for such shares is more than 12 months at the time
of the consummation of the merger. Capital gains of individuals derived in
respect of capital assets held for more than one year are eligible for reduced
rates of taxation. There are limitations on the deductibility of capital losses.
FEES AND EXPENSES
Whether or not the merger is completed and except as stated in this
section, all fees and expenses incurred in connection with the merger will be
paid by the party incurring the fees and expenses.
As discussed above, General Housewares has agreed to pay CCPC Acquisition a
$4.25 million termination fee if the merger agreement is terminated under
certain circumstances.
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<PAGE> 25
INFORMATION CONCERNING THE SPECIAL MEETING
PROXY STATEMENT
This proxy statement is being furnished to you in connection with the
solicitation of proxies by General Housewares' board of directors in connection
with the proposed merger with CCPC Acquisition.
This proxy statement is first being mailed to stockholders of General
Housewares on or about September 22, 1999.
General Housewares' board of directors has unanimously determined that the
merger agreement and the merger are advisable, fair to and in the best interests
of General Housewares and its stockholders, has approved the merger agreement
and unanimously recommends a vote FOR the adoption of the merger agreement.
TIME, PLACE AND DATE
The special meeting of stockholders of General Housewares is scheduled to
be held as follows:
Thursday, October 21, 1999
10:00 a.m. (local time)
Chicago Room
Hilton Chicago O'Hare Airport
Chicago, Illinois
PURPOSE OF THE SPECIAL MEETING
The special meeting is being held so that stockholders of General
Housewares may consider and vote upon a proposal to adopt the merger agreement
and to transact any other business that properly comes before the special
meeting or any adjournment of such meeting. Adoption of the merger agreement
will also constitute approval of the merger with CCPC Acquisition and the other
transactions contemplated by the merger agreement.
If the stockholders of General Housewares adopt the merger agreement, GHC
Acquisition will merge with and into General Housewares and General Housewares
will survive the merger. Holders of General Housewares common stock will be
entitled to receive $28.75 in cash for each share of General Housewares common
stock that they own. This cash merger consideration will not be paid in exchange
for shares of General Housewares common stock which are held in the treasury of
General Housewares, owned by CCPC Acquisition or GHC Acquisition, or held by
dissenting stockholders.
STOCKHOLDER RECORD DATE FOR THE SPECIAL MEETING
General Housewares' board of directors has fixed the close of business on
September 20, 1999, as the record date for determination of General Housewares
stockholders entitled to notice of and entitled to vote at the special meeting.
Only stockholders of record at the close of business on the record date will be
entitled to notice of and entitled to vote at the special meeting. At the close
of business on the record date, there were 4,049,098 shares of General
Housewares common stock outstanding, held by approximately 467 holders of
record.
VOTE OF GENERAL HOUSEWARES STOCKHOLDERS REQUIRED FOR ADOPTION OF THE MERGER
AGREEMENT
A majority of the voting power of the outstanding shares of General
Housewares common stock entitled to vote at the special meeting must be
represented, either in person or by proxy, to constitute a quorum at the special
meeting. Broker non-votes and shares as to which a stockholder abstains in
person or by proxy will be included in determining whether there is a quorum at
the special meeting. Broker non-votes are shares held by brokers or nominees
that are represented at a meeting but with respect to which the broker is not
empowered to vote on a particular matter.
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<PAGE> 26
As of the close of business on the record date and excluding shares
underlying stock options, General Housewares' directors and executive officers
and their affiliates may be deemed to be the beneficial owners of, and have the
power to vote 251,594 outstanding shares of General Housewares common stock
representing approximately 6.2% of the then outstanding shares of General
Housewares common stock. General Housewares believes that each of its directors
and executive officers intends to vote FOR the adoption of the merger agreement.
In order for the merger to be consummated, the holders of a majority of the
outstanding shares of General Housewares common stock must adopt the merger
agreement. Stockholders are entitled to one vote for each share of General
Housewares common stock owned on the record date on each proposal to be
presented to stockholders at the special meeting.
PROXIES
All shares of General Housewares common stock represented by properly
executed proxies received before or at the special meeting will, unless the
proxies are revoked, be voted in accordance with the instructions indicated
thereon. If no instructions are indicated on a properly executed proxy, the
shares will be voted FOR adoption of the merger agreement. You are urged to mark
the box on the proxy to indicate how to vote your shares.
In the event that a quorum is not present at the time the special meeting
is convened, or if for any other reason General Housewares believes that
additional time should be allowed for the solicitation of proxies, General
Housewares may adjourn the special meeting with or without a vote of the
stockholders. If General Housewares proposes to adjourn the special meeting by a
vote of the stockholders, the persons named in the enclosed form of proxy will
vote all shares for which they have voting authority in favor of an adjournment.
If a properly executed proxy is returned and the stockholder has abstained
from voting on adoption of the merger agreement, the General Housewares common
stock represented by the proxy will be considered present at the special meeting
for purposes of determining a quorum, but will not be considered to have been
voted in favor of adoption of the merger agreement. Similarly, if an executed
proxy is returned by a broker holding shares of General Housewares common stock
in street name which indicates that the broker does not have discretionary
authority to vote on adoption of the merger agreement, the shares will be
considered present at the meeting for purposes of determining the presence of a
quorum but will not be considered to have been voted in favor of adoption of the
merger agreement. Your broker will vote your shares only if you provide
instructions on how to vote by following the information provided to you by your
broker.
Because adoption of the merger agreement and approval of the merger require
the affirmative vote of the holders of a majority of the outstanding shares of
General Housewares common stock, as of the record date, abstentions, failures to
vote and broker non-votes will have the same effect as a vote against adoption
of the merger agreement and approval of the merger.
General Housewares does not expect that any matter other than adoption of
the merger agreement will be brought before the special meeting. If, however,
other matters are properly presented, the persons named as proxies will vote in
accordance with their judgment with respect to those matters, unless authority
to do so is withheld in the proxy.
You may revoke your proxy at any time before it is voted by:
- sending a written revocation notice to the Secretary of General
Housewares at:
General Housewares Corp.
Attn: Secretary
1536 Beech Street
P.O. Box 4066
Terre Haute, IN 47804
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<PAGE> 27
- granting a subsequent proxy; or
- appearing in person and voting at the special meeting, however,
attendance at the special meeting will not in and of itself constitute
revocation of a proxy.
General Housewares will bear the expenses incurred in connection with the
printing and mailing of this proxy statement. In addition to solicitation by use
of the mails, proxies may be solicited from General Housewares stockholders by
directors, officers and employees of General Housewares in person or by
telephone, telegram or other means of communication. Such directors, officers
and employers will not be additionally compensated, but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation. General
Housewares has retained Morrow & Co., Inc. at an approximate cost of $5,000 plus
reimbursement of expenses, to assist in the solicitation of proxies. General
Housewares and Morrow & Co., Inc. will also request banks, brokers and other
intermediaries holding shares beneficially owned by others to send this proxy to
and obtain proxies from the beneficial owners and will reimburse the holders for
their reasonable expenses in so doing.
YOU SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXIES. A
TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK CERTIFICATES FOR
GENERAL HOUSEWARES COMMON STOCK WILL BE MAILED TO YOU AS SOON AS PRACTICABLE
AFTER COMPLETION OF THE MERGER.
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LITIGATION
On June 2, 1999 a shareholder filed suit against General Housewares and its
directors challenging the board of directors' decision that it would not pursue
the April 12, 1999 non-binding preliminary proposal from a third party to
acquire General Housewares. Two additional shareholder lawsuits raising the same
allegations were filed on June 3 and June 7, 1999. These lawsuits were filed in
the Court of Chancery of the State of Delaware and are captioned: Goldstein v.
Saxton, et al., Del.Ch., C.A. No. 17192NC (filed June 2, 1999) (the "Goldstein
Action"), Great Neck Capital Appreciation Investment Partnership v. Saxon [sic],
et al., Del. Ch., C.A. No. 17196, and The Barry Family Limited Partnership of
California v. General Housewares Corp., et al., Del. Ch., C.A. No. 17196 .
General Housewares and its directors have moved to dismiss the Goldstein Action,
and the complaints in the other two suits have net yet been served upon the
Company or the directors. One month after the Delaware lawsuits were filed, two
other shareholders filed suit in the Vigo County Superior Court for the State of
Indiana: Bloom v. Saxton, Vigo Superior Ct., C. No. 84D01-9908-CP-1104 (the
"Indiana Action"). The Indiana Action, like the Delaware lawsuits, challenges
the board of directors' decision not to pursue the April 12, 1999 non-binding
preliminary proposal from a third party. General Housewares and its directors
have received an extension of time to respond to the complaint in the Indiana
action. All of the foregoing lawsuits were filed prior to the announcement of
the execution of the merger agreement. General Housewares and its directors
intend to vigorously defend each of these lawsuits.
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<PAGE> 29
THE MERGER AGREEMENT
The following describes some aspects of the proposed merger, including
material provisions of the merger agreement. The following description of the
merger does not purport to be complete and is qualified in its entirety by
reference to the merger agreement, a copy of which is attached as Annex A to
this proxy statement and is incorporated herein by reference. We urge
stockholders to read the merger agreement carefully.
GENERAL; MERGER CONSIDERATION
The terms of the merger are set forth in the merger agreement. The merger
agreement was unanimously approved by your board and signed by General
Housewares and CCPC Acquisition as of August 2, 1999. Pursuant to the terms and
conditions of the merger agreement, at the effective time, GHC Acquisition will
be merged with and into General Housewares. General Housewares will be the
surviving corporation in the merger and will become a subsidiary of CCPC
Acquisition. As a result of the merger, each share of common stock issued and
outstanding immediately prior to the effective time (other than common stock
already owned by CCPC Acquisition or GHC Acquisition or any of their or General
Housewares' wholly-owned subsidiaries, common stock owned as treasury stock by
General Housewares and shares of common stock as to which dissenters' rights of
appraisal have been perfected) shall be converted into the right to receive
$28.75 in cash, without any interest thereon, subject to withholding taxes (the
"merger consideration"). Borden has guaranteed the payment of the merger
consideration to General Housewares' stockholders.
STOCKHOLDERS' MEETING
General Housewares agreed to cause a special meeting of its stockholders to
be duly called and held as soon as practicable for the purpose of voting on the
approval and adoption of the merger agreement. In connection with the special
stockholders' meeting, the General Housewares board agreed to include in this
proxy statement its unanimous recommendation to General Housewares stockholders
that they vote in favor of the merger agreement, unless, in the opinion of the
board after consultation with counsel, the inclusion of the recommendation would
be inconsistent with the board's fiduciary duties to General Housewares'
stockholders under applicable law. The board also agreed to obtain and furnish
all information required to be included in this proxy statement and, after
consultation with CCPC Acquisition and GHC Acquisition, to file this proxy
statement confidentially with the Securities and Exchange Commission and mail
this proxy statement to General Housewares stockholders at the earliest
practicable time. Unless the merger agreement has been earlier terminated, the
board must call the special meeting and prepare and mail this proxy statement
even if it withdraws or makes an adverse change in its recommendation of the
approval and adoption of the merger agreement. The withdrawal of the board's
recommendation would give CCPC Acquisition the right to terminate the merger
agreement and require General Housewares to pay the $4.25 million termination
fee. See "-- Termination" and "-- Termination Fee" on pages 34 and 35,
respectively.
DISSENTING SHARES
In the merger, stockholders of General Housewares have appraisal rights
under Section 262 of the Delaware General Corporation Law. If you do not vote in
favor of or consent to the merger and you exercise your appraisal rights and
comply with the requirements of Section 262, the shares of common stock you own
will not be converted into the right to receive the merger consideration at the
effective time of the merger. Instead, you will receive the appraised value of
your shares of common stock, which may be more or less than $28.75 per share. If
after the effective time of the merger you fail to comply with the requirements
of Section 262, your shares will be converted into the right to receive the
merger consideration without any interest thereon, less any required withholding
taxes, and remain outstanding following the merger. At the effective time of the
merger, you will not have any rights (including voting rights and rights to
dividends or distributions) with respect to your shares other than rights
provided by Section 262. For a summary of the requirements that a stockholder
must follow in order to exercise his or her appraisal rights, see "Dissenters'
Rights of Appraisal" on page 36.
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<PAGE> 30
TREATMENT OF STOCK OPTIONS
Immediately prior to the effective time of the merger, all outstanding
General Housewares stock options will become fully exercisable. At the effective
time of the merger, these stock options will be canceled. As soon as practicable
thereafter, holders of stock options will receive an amount in cash equal to
$28.75 less the exercise price of the stock option multiplied by the number of
shares of common stock subject to the stock option (less any applicable
withholding taxes).
CLOSING; EFFECTIVE TIME
The closing of the merger will take place on the second business day
following the satisfaction or waiver of the conditions to the merger set forth
in the merger agreement or such other time as General Housewares and CCPC
Acquisition may agree. Concurrently with the closing, General Housewares and
CCPC Acquisition will cause a certificate of merger to be executed and filed
with the Secretary of State of the State of Delaware. The merger will become
effective at the time the certificate of merger is duly filed with the Secretary
of State of the State of Delaware or at such later time agreed by the parties
and established under the certificate of merger. See "-- Conditions of the
Proposed Merger" and "Special Factors -- Regulatory Requirements and Third-Party
Consents" on pages 33 and 21, respectively.
CANCELLATION OF SHARES
At the effective time of the merger and without any action on the part of
GHC Acquisition, General Housewares or any holders of General Housewares common
stock, all shares of common stock of General Housewares will no longer be
outstanding and will be canceled and retired and will cease to exist, and each
certificate formerly representing any of such shares (other than shares as to
which dissenters' rights of appraisal have been perfected) will thereafter
represent only the right to receive the merger consideration without any
interest and less any required withholding taxes.
EXCHANGE OF CERTIFICATES FOR MERGER CONSIDERATION
First Chicago Trust Company of New York has been appointed agent to receive
the funds necessary to make payments to General Housewares stockholders upon
surrender of their stock certificates. Upon surrender of a stock certificate to
the agent together with a duly executed letter of transmittal and any other
required documents, each stockholder will be entitled to receive in exchange
therefor the merger consideration that the stockholder has the right to receive
pursuant to the provisions of the merger agreement. No interest will be paid on
any amount payable upon surrender of the certificates.
TRANSFERS
After the effective time of the merger, the stock transfer books of General
Housewares will be closed and thereafter there will be no further registration
of transfers of shares of common stock on the records of General Housewares.
RIGHT TO REVISE STRUCTURE OF MERGER
At CCPC Acquisition's election, the merger may alternatively be structured
so that General Housewares is merged into another direct or indirect
majority-owned subsidiary of CCPC Acquisition, or another direct or indirect
majority-owned subsidiary of CCPC Acquisition is merged into General Housewares;
provided that no change may (a) alter or change the amount or kind of merger
consideration or the treatment of the holders of stock options, (b) materially
impede or delay consummation of the merger, (c) release CCPC Acquisition from
any of its obligations under the merger agreement or (d) adversely affect the
rights of General Housewares and its shareholders under the merger agreement.
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<PAGE> 31
OFFICERS
After the effective time of the merger, the officers of General Housewares
at the effective time of the merger will remain officers of General Housewares
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with General
Housewares' certificate of incorporation and bylaws.
REPRESENTATIONS AND WARRANTIES
Mutual representations and warranties.
The merger agreement contains various representations and warranties of the
parties relating to and including, among other things: (a) organization and
similar corporate matters; (b) authorization, execution, delivery, performance
and enforceability of the merger agreement and related matters; (c) conflicts
under governing documents, required consents or approvals, and violations of any
agreements or law; (d) information supplied in this proxy statement; and (e)
brokers.
Additional representations and warranties of General Housewares.
General Housewares has made additional representations relating to: (a)
capitalization; (b) filings with the Securities and Exchange Commission and
financial statements; (c) absence of certain changes or events; (d) litigation
and legal compliance; (e) tax returns and other tax matters; (f) employee
benefit plans and labor matters; (g) environmental laws and regulations; (h)
intellectual property; (i) year 2000 compliance; (j) contracts; (k) insurance;
(l) opinion of Wasserstein Perella; (m) customers and distributors (n) action of
General Housewares' board of directors and (o) the Rights Agreement with First
Chicago Trust Company of New York.
Additional representations and warranties of CCPC Acquisition and GHC
Acquisition.
Each of CCPC Acquisition and GHC Acquisition has made additional
representations relating to: (a) no prior activities of GHC Acquisition; (b) the
financial condition of CCPC Acquisition; and (c) the sufficiency of funds
available to acquire all the shares of General Housewares common stock.
CONDUCT OF BUSINESS PRIOR TO THE MERGER
General Housewares has covenanted and agreed, as to itself and each of its
subsidiaries that, except as specified in its disclosure schedules to CCPC
Acquisition or as contemplated by the merger agreement, after the date of the
merger agreement and prior to the effective time of the merger (unless CCPC
Acquisition shall otherwise approve in writing):
- it and its subsidiaries will conduct their businesses in the ordinary and
usual course of business and in a manner consistent with past practice
and with no less diligence and effort than would be applied in the
absence of the merger agreement;
- it and its subsidiaries will seek to preserve their business
organizations intact, to keep available the services of their current
officers and employees and preserve their existing relationships with
distributors, customers, suppliers and other persons with which they have
business dealings such that goodwill and ongoing business will not be
impaired in any material respect;
- it will not amend or modify its certificate of incorporation or bylaws or
alter in any fashion the corporate structure or ownership of any active
subsidiary;
- it will not split, combine, subdivide or reclassify any shares or
declare, set aside for payment or pay any dividend other than (1) the
declaration and payment of regular annual cash dividends in accordance
with past dividend policy not in excess of $0.32 per share per year pro
rated to reflect the earliest anticipated effective time of the merger
and (2) dividends on the capital stock of any wholly owned subsidiary;
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<PAGE> 32
- neither it nor its subsidiaries will, among other things, issue, deliver
or sell any shares of capital stock or any securities convertible into
any shares of its capital stock, or any rights, warrants or options to
acquire any shares of capital stock except for shares to be issued or
delivered under outstanding option agreements and restricted stock awards
pursuant to General Housewares' incentive compensation plan or its
employee stock purchase plan;
- neither it nor its subsidiaries will adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization;
- neither it nor its subsidiaries will make any material acquisition or
material disposition of assets or securities;
- neither it nor any of its subsidiaries, other than in the ordinary course
of business consistent with past practice, will incur any indebtedness or
guarantee or otherwise become liable in respect of any indebtedness or
make any loans, advances or capital contributions to, or investments in,
any other person, other than to General Housewares or a wholly-owned
subsidiary;
- neither it nor its subsidiaries will change accounting policies except as
required by law or under generally accepted accounting principles;
- neither it nor its subsidiaries will make or change in any material
respect any material tax election, file any amended tax return, make or
change in any material respect any method of accounting with respect to
taxes or settle or compromise any proceeding with respect to any material
tax liability except as required by law or the applicable taxing
authority;
- neither it nor its subsidiaries will pay, discharge or satisfy any
material claims, liabilities or obligations, other than the payment,
discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved
against in the financial statements of General Housewares or incurred in
the ordinary course of business and consistent with past practice and to
the extent required to be paid, discharged or satisfied pursuant to the
terms of any contract in existence on the date of the merger agreement;
- neither it nor its subsidiaries will settle or offer to settle any
claims, complaints or lawsuits relating to pending shareholder litigation
or any other claims, complaints or proceedings other than in the ordinary
course of business and consistent with past practice or not otherwise
material;
- neither it nor its subsidiaries may authorize any single or related group
of capital expenditures in excess of specified amounts or which exceed,
in the aggregate, $1,200,000;
- neither it nor its subsidiaries may amend or modify in any material
respect any material existing intellectual property license, execute any
new material intellectual property license, or sell or encumber any of
their intellectual property, in whole or in part;
- neither it nor its subsidiaries may increase the compensation of any
directors, officers or key employees in excess of ten percent of each
such individual's annual rate of compensation;
- neither it nor its subsidiaries may pay or agree to pay any pension,
retirement allowance or other employee benefit to any current or former
employee, director or officer not required to be paid by any existing
benefit plan or other agreement;
- neither it nor its subsidiaries may engage in any material transaction or
directly or indirectly enter into any agreement, arrangement or
understanding with an affiliate, other than wholly-owned subsidiaries;
- neither it nor its subsidiaries may enter into any new or materially
amend any existing employment or severance or termination agreement with
any employee, director or officer;
- neither it nor its subsidiaries may become obligated under, among other
things, any new employee benefit plan or amend any existing employee
benefit plan if such amendment would have the effect of enhancing any
benefits thereunder, except as may be required to comply with applicable
law;
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- neither it nor any of its subsidiaries will take or agree to take any
action that would cause any of its representations and warranties in the
merger agreement to become untrue and incorrect in any material respect;
and
- neither it nor any of its subsidiaries will authorize, recommend,
propose, announce an intention to or otherwise commit or agree to take
any of the foregoing actions.
ACQUISITION PROPOSALS
Under the merger agreement, General Housewares agreed not to, and not to
permit its subsidiaries, and their respective directors, officers, employees,
financial and other advisors, agents, affiliates and other representatives to
initiate, solicit, encourage or facilitate offers, inquiries or proposals with
respect to, or furnish any information relating to, or participate in any
negotiations or discussions concerning, any merger, reorganization, share
exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving General Housewares or any of its
subsidiaries, or any purchase or sale of more than 25% of the assets (including
stock of subsidiaries) of General Housewares and its subsidiaries, taken as a
whole, or any purchase or sale of, or tender or exchange offer for, more than
25% of the equity securities of General Housewares or any of its subsidiaries
(an "Acquisition Proposal"). However, the merger agreement provides that the
General Housewares board may furnish information concerning General Housewares
to any person with respect to an unsolicited Acquisition Proposal pursuant to a
confidentiality agreement with terms not substantially less favorable in the
aggregate to General Housewares than those in the confidentiality agreement
between General Housewares and CCPC Acquisition and negotiate with a person
concerning an Acquisition Proposal, if the person has submitted a bona fide
written Acquisition Proposal, for which all necessary financing is committed in
full or reasonably likely to be obtained, and which, if accepted, is reasonably
likely to be consummated and would be financially superior to General Housewares
stockholders than the merger with GHC Acquisition taking into account all legal,
financial and regulatory aspects of the proposal (a "Superior Proposal"). If
specifically requested, General Housewares may waive the provisions of any
"standstill" agreement with any person to the extent necessary to permit the
person to submit an Acquisition Proposal that the board believes, in its good
faith judgment based on information contained in the request, is reasonably
likely to result in a Superior Proposal.
General Housewares must promptly notify CCPC Acquisition of any inquiries,
proposals or offers, information requests, discussions or negotiations related
to an Acquisition Proposal. The notice must indicate the name of the person and
the material terms, conditions and other aspects of the inquiry, proposal,
offer, request, discussions or negotiations, including a copy of any written
Acquisition Proposal. General Housewares then must promptly inform CCPC
Acquisition of any material developments related to an Acquisition Proposal.
General Housewares also agreed to immediately cease and to cause to be
terminated any activities, discussions or negotiations conducted on or prior to
the date of the merger agreement with any parties other than CCPC Acquisition.
CERTAIN OTHER COVENANTS AND AGREEMENTS
Reasonable efforts
Upon the terms and subject to the conditions of the merger agreement, each
of the parties to the merger agreement agreed to use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under law to consummate and make effective
the transactions contemplated by the merger agreement, including, using all
reasonable efforts to obtain all necessary or appropriate waivers, consents and
approvals, to effect all necessary registrations, filings and submissions, and
to lift any injunction or other legal bar to the merger. General Housewares is
not obligated to undertake any of the foregoing if, in the opinion of the board
of directors after consultation with its counsel, such actions would be
inconsistent with the board's fiduciary duties to General Housewares'
stockholders under applicable law.
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Access to information
The merger agreement provides that, until the effective time, General
Housewares will, and will cause the representatives of General Housewares to,
afford the representatives of CCPC Acquisition reasonable access at all
reasonable times to the personnel, properties, books and records of General
Housewares and its subsidiaries, and shall furnish CCPC Acquisition with all
information concerning its business, properties and personnel as CCPC
Acquisition may reasonably request. Until the effective time, General Housewares
will provide CCPC Acquisition with monthly financial statements in the form
customarily prepared for internal purposes. CCPC Acquisition will remain subject
to the terms of a confidentiality agreement with General Housewares dated June
15, 1999. No investigation pursuant to this provision shall affect any
representation or warranty in the merger agreement of any party or any condition
to the obligations of the parties.
Indemnification of directors and officers; directors and officers' insurance
All rights to indemnification by General Housewares now existing in favor
of each present and former director or officer of General Housewares or its
subsidiaries as provided in General Housewares' certificate of incorporation or
bylaws, in each case as in effect on the date of the merger agreement, will
survive indefinitely following the proposed merger provided that amendments or
modifications may be made if they would not adversely affect the rights of such
individuals or if they are required by law. CCPC Acquisition will cause to be
maintained in effect for six years from the effective time the current
directors' and officers' liability and fiduciary liability insurance (provided
that policies of substantially the same coverage containing terms and conditions
which are no less advantageous, in any material respect, may be substituted)
with respect to matters occurring prior to the effective time. However, in no
event will CCPC Acquisition be required to expend more than an amount per year
equal to 150% of current annual premiums paid by General Housewares for such
insurance although it will be obligated to obtain a policy with the greatest
coverage available for a cost not exceeding such amount.
Employees
CCPC Acquisition agreed that, for a period commencing at the effective time
and ending on December 31, 2000, it would provide employee benefit plans,
programs, arrangements and policies (other than those related to equity
securities of General Housewares) for the benefit of employees of General
Housewares and its subsidiaries that, in the aggregate, are no less favorable to
the employees than the benefits currently provided under General Housewares'
current employee benefit plans, programs, arrangements and policies. All service
credited to each employee by General Housewares through the effective time will
be recognized by CCPC Acquisition for all purposes, including for purposes of
eligibility, vesting and benefit accruals under any employee benefit plan
provided by CCPC Acquisition for the benefit of the employees. CCPC Acquisition
also specifically agreed to honor and assume certain employment agreements,
executive termination agreements and individual benefit arrangements as in
effect at the effective time, including the employment agreements described in
the section of this proxy statement entitled "Special Factors -- Interests of
certain persons in the merger and certain relationships" on page 19.
Notification of certain matters
The merger agreement provides that General Housewares give prompt notice to
CCPC Acquisition, and CCPC Acquisition give prompt notice to General Housewares,
of (a) the occurrence, or nonoccurrence, of any event which causes any
representation or warranty contained in the merger agreement to be untrue or
inaccurate in any material respect at or prior to the effective time of the
merger and (b) any failure or inability by General Housewares or CCPC
Acquisition to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it.
Publicity
General Housewares and CCPC Acquisition agreed to consult with each other
and mutually agree upon any press releases or public announcements pertaining to
the merger or the other transactions contemplated by
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the merger agreement. General Housewares and CCPC Acquisition further agreed not
to issue any such press releases or make any public announcements without prior
consultation and agreement, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange.
Certain financing matters
General Housewares agreed to provide, and to cause its subsidiaries and its
and their respective officers, employees and advisors to provide, all necessary
cooperation reasonably requested in connection with the arrangement of any
financing to be consummated at or after the merger. General Housewares, however,
will not be required to incur any out-of-pocket expenses or make any binding
commitments with respect to any financing until after the consummation of the
merger.
Rights plan
General Housewares agreed not to amend, modify or waive any provision of
its Rights Agreement with First Chicago Trust Company of New York, dated as of
November 10, 1998, as amended, or to take any action to redeem the rights issued
pursuant to the Rights Agreement or render the rights inapplicable to any
transaction other than the transactions to be effected pursuant to the merger
agreement, which is reasonably likely to reduce the likelihood of or delay the
consummation of the merger, or result in any increase in the costs or decrease
in the benefits to CCPC Acquisition of the merger, or affect the capitalization
of CCPC Acquisition or any of its affiliates after the merger. For a description
of General Housewares' rights plan, see General Housewares' Registration
Statement on Form 8-A and amendments on Form 8-A/A, filed with the Securities
and Exchange Commission.
CONDITIONS OF THE PROPOSED MERGER
The obligation of each of CCPC Acquisition, GHC Acquisition and General
Housewares to effect the merger is conditioned on the following:
- the approval of the merger by the requisite vote of the stockholders of
General Housewares
- no law, statute, rule, regulation, executive order, decree, ruling or
injunction or other order of a court or governmental or regulatory agency
being in effect which prohibits or makes illegal the merger
- the expiration or termination of the waiting period applicable to the
consummation of the merger under the Hart-Scott-Rodino Act
- the other party's representations and warranties, either as qualified or
in all material respects, being true and correct as of the date of the
effective time of the merger or as of date of the merger agreement, as
specified in the merger agreement, and the receipt of a certificate from
an officer of such party to that effect
- the performance and compliance in all material respects by the other
party of its obligations under the merger agreement on or prior to the
effective time of the merger as certified by an appropriate officer of
such party
- the receipt and effectiveness of all governmental consents, orders and
approvals required for the consummation of the merger and the other
transactions provided for in the merger agreement, except where the
failure to obtain any such consent would not reasonably be expected to
have a material adverse effect on General Housewares or on the financial
condition, business, results of operations, assets or liabilities of CCPC
Acquisition and its subsidiaries, taken as a whole
- no action or proceeding having been brought or threatened by any
governmental entity seeking any executive order, decree, ruling or
injunction or other order of a court or governmental or regulatory entity
which prohibits or makes illegal the merger or any of the other
transactions provided for in the merger agreement
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- no "Distribution Date" or "Stock Acquisition Date" (each as defined in
General Housewares' Rights Agreement with First Chicago Trust Company of
New York, dated as of November 10, 1998, as amended) having occurred
TERMINATION
The merger agreement may be terminated:
(a) at any time prior to the effective time of the proposed merger, by
the mutual written consent of General Housewares and CCPC Acquisition;
(b) by CCPC Acquisition or General Housewares, if any court of
competent jurisdiction or other governmental entity has issued an order,
decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the proposed merger, and the order,
decree, ruling or other action shall have become final and nonappealable;
(c) by CCPC Acquisition or General Housewares, if the merger agreement
and the proposed merger with CCPC Acquisition fail to be approved and
adopted by the General Housewares stockholders at the special meeting;
(d) by CCPC Acquisition or General Housewares, if the proposed merger
with CCPC Acquisition is not consummated on or before November 30, 1999,
provided that the terminating party has not failed to fulfill any
obligation under the merger agreement which has been the primary cause of
the failure to consummate the merger on or before that date until ten
business days after such failure has been cured;
(e) by CCPC Acquisition if General Housewares failed to perform in any
material respect any of its material obligations under the merger agreement
and the failure to perform is not cured, or is incapable of being cured,
within 30 days after the receipt by General Housewares of written notice of
the failure;
(f) by CCPC Acquisition if any of General Housewares' representations
or warranties contained in the merger agreement are not true and correct in
all material respects and the failure to be true and correct is not cured,
or is incapable of being cured, within 30 days after the receipt by General
Housewares of written notice of such failure to be true and correct;
(g) by CCPC Acquisition if General Housewares' board of directors
withdraws or materially modifies or changes its recommendation of the
merger agreement or the merger in a manner adverse to CCPC Acquisition or
GHC Acquisition or fails to reconfirm its recommendation within 10 days of
CCPC Acquisition's request or if General Housewares' board of directors
approves or recommends another Acquisition Proposal;
(h) by General Housewares if CCPC Acquisition or GHC Acquisition
failed to perform in any material respect any of their material obligations
under the merger agreement and the failure to perform is not cured, or is
incapable of being cured, within 30 days after the receipt by CCPC
Acquisition of written notice of the failure;
(i) by General Housewares if any of CCPC Acquisition's representations
or warranties contained in the merger agreement are not true and correct in
all material respects and the failure to be true and correct is not cured,
or is incapable of being cured, within 30 days after the receipt by CCPC
Acquisition of written notice of such failure to be true and correct; or
(j) by General Housewares prior to stockholder approval, upon five
business days' prior irrevocable written notice to CCPC Acquisition, in
order to accept an unsolicited Superior Proposal for which all necessary
financing is committed, provided that (A) the notice must include a copy of
any proposed or definitive documentation relating to such Superior Proposal
(including all financing documentation), and shall otherwise specify all
material terms, conditions and other information with respect to the
Superior Proposal, (B) prior to termination, General Housewares shall, if
requested by CCPC Acquisition in connection with any revised proposal CCPC
Acquisition might make, negotiate in good faith for five business days with
CCPC Acquisition, and the third party proposal remains a Superior Proposal
after
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taking into account any revised proposal by CCPC Acquisition made during
the five business day period, and (C) General Housewares pays CCPC
Acquisition the $4.25 million termination fee.
TERMINATION FEE
In the event of the termination of the merger agreement, the merger
agreement is voided and has no further effect except pursuant to the provisions
described in the following paragraph. There is no liability on the part of any
party upon such termination except for liability for any breach of the merger
agreement and except as otherwise provided in the merger agreement.
If General Housewares exercises its right to terminate the agreement under
clause (j) under the section entitled "-- Termination" above or if CCPC
Acquisition exercises its right to terminate the agreement under clause (g)
under the section entitled "-- Termination" above, General Housewares will pay
to CCPC Acquisition a $4.25 million termination fee. In addition, if the
agreement is terminated by either party under clause (c) under the section
entitled "-- Termination" above or by CCPC Acquisition Corporation under clause
(e) under the section entitled "-- Termination" above, then General Housewares
must pay CCPC Acquisition the $4.25 million termination fee if a party other
than CCPC Acquisition or GHC Acquisition has made, publicly or to General
Housewares, a proposal for, or expressed an interest in, a transaction that
would result in the acquisition by any person of beneficial ownership of more
than 50% of General Housewares common stock or the sale or disposition of more
than 50% of the assets of General Housewares or that would cause the holders of
General Housewares common stock immediately prior to the transaction to acquire
or hold securities with less than 50% of the voting power of the capital stock
of the ultimate parent entity immediately following consummation of the
transaction (a "Third Party Acquisition") and within twelve months of the
termination, General Housewares enters into an agreement with respect to any
Third Party Acquisition, which is later consummated, or any Third Party
Acquisition occurs.
AMENDMENT AND WAIVER
Subject to the provisions of applicable law, any provision of the merger
agreement may be amended or modified at any time prior to the effective time of
the merger by means of a written agreement executed and delivered by duly
authorized officers of the respective parties. After the approval of the merger
agreement by General Housewares stockholders, no amendment may be made to the
merger agreement which by law requires the consent of the stockholders unless
such consent is obtained.
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DISSENTERS' RIGHTS OF APPRAISAL
Under Section 262 of the Delaware General Corporation Law, any holder of
General Housewares common stock who does not wish to accept the merger
consideration may dissent from the merger and elect to have the fair value of
the stockholder's shares of General Housewares common stock (exclusive of any
element of value arising from the accomplishment or expectation of the merger)
judicially determined and paid to the stockholder in cash, together with a fair
rate of interest, if any, provided that the stockholder complies with the
provisions of Section 262 of the Delaware General Corporation Law. The following
discussion is not a complete statement of the law pertaining to appraisal rights
under Delaware law, and is qualified in its entirety by the full text of Section
262, which is provided in its entirety as Annex C to this proxy statement. All
references in Section 262 and in this summary to a "stockholder" are to the
record holder of the shares of common stock as to which appraisal rights are
asserted. A person having a beneficial interest in shares of common stock held
of record in the name of another person, such as a broker or nominee, must act
promptly to cause the record holder to follow properly the steps summarized
below and in a timely manner to perfect appraisal rights.
Under Section 262, where a proposed merger is to be submitted for approval
at a meeting of stockholders, as in the case of the special meeting, the
corporation, not less than 20 days prior to the meeting, must notify each of its
stockholders entitled to appraisal rights that the appraisal rights are
available and include in the notice a copy of Section 262. This proxy statement
shall constitute the notice to the holders of common stock, and the applicable
Delaware law provisions are attached to this proxy statement as Annex C. Any
stockholder who wishes to exercise appraisal rights or who wishes to preserve
the right to do so should review carefully the following discussion and Annex C
to this proxy statement because failure to comply with the procedures specified
in Section 262 timely and properly will result in the loss of appraisal rights.
Moreover, because of the complexity of the procedures for exercising the right
to seek appraisal of the common stock, General Housewares believes that
stockholders who consider exercising these rights should seek the advice of
counsel.
Any holder of common stock wishing to exercise the right to dissent from
the merger and demand appraisal under Section 262 must satisfy each of the
following conditions:
- The stockholder must deliver to General Housewares a written demand for
appraisal of the stockholder's shares before the vote on the merger
agreement at the special meeting, which demand will be sufficient if it
reasonably informs General Housewares of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of the
holder's shares;
- The stockholder must not vote its shares of common stock in favor of the
merger agreement. Because a proxy which does not contain voting
instructions will, unless revoked, be voted in favor of the merger
agreement, a stockholder who votes by proxy and who wishes to exercise
appraisal rights must vote against the merger agreement or abstain from
voting on the merger agreement; and
- The stockholder must continuously hold the shares from the date of making
the demand through the effective time. Accordingly, a stockholder who is
the record holder of shares of common stock on the date the written
demand for appraisal is made but who thereafter transfers the shares
prior to the effective time will lose any right to appraisal in respect
of that stockholder's shares.
Neither voting (in person or by proxy) against, abstaining from voting on
or failing to vote on the proposal to approve and adopt the merger agreement
will constitute a written demand for appraisal within the meaning of Section
262. The written demand for appraisal must be in addition to and separate from
any such proxy or vote.
Only a holder of record of shares of common stock issued and outstanding
immediately prior to the effective time is entitled to assert appraisal rights
for the shares of common stock registered in that holder's name. A demand for
appraisal should be executed by or on behalf of the stockholder of record, fully
and correctly, as that stockholder's name appears on the stock certificates,
should specify the stockholder's name and mailing address, the number of shares
of common stock owned and that the stockholder intends thereby to demand
appraisal of the stockholder's common stock. If the shares are owned of record
in a fiduciary capacity,
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such as by a trustee, guardian or custodian, execution of the demand should be
made in that capacity, and if the shares are owned of record by more than one
person as in a joint tenancy or tenancy in common, the demand should be executed
by or on behalf of all owners. An authorized agent, including one or more joint
owners, may execute a demand for appraisal on behalf of a stockholder; however,
the agent must identify the record owner or owners and expressly disclose the
fact that, in executing the demand, the agent is acting as agent for the owner
or owners. A record holder such as a broker who holds shares as nominee for
several beneficial owners may exercise appraisal rights with respect to the
shares held for one or more beneficial owners while not exercising these rights
with respect to the shares held for other beneficial owners; in that case, the
written demand should set forth the number of shares as to which appraisal is
sought, and where no number of shares is expressly mentioned the demand will be
presumed to cover all shares held in the name of the record owner. Stockholders
who hold their shares in brokerage accounts or other nominee forms and who wish
to exercise appraisal rights are urged to consult with their brokers to
determine the appropriate procedures for the making of a demand for appraisal by
a nominee.
A stockholder who elects to exercise appraisal rights under Section 262
should mail or deliver a written demand to: General Housewares Corp., 1536 Beech
Street, P.O. Box 4066, Terre Haute, IN 47804, Attention: Secretary.
Within 10 days after the effective time, the surviving corporation must
send a notice as to the effectiveness of the merger to each former stockholder
of General Housewares who has made a written demand for appraisal in accordance
with Section 262 and who has not voted in favor of the merger agreement. Within
120 days after the effective time, but not thereafter, either the surviving
corporation or any dissenting stockholder who has complied with the requirements
of Section 262 may file a petition in the Delaware Chancery Court demanding a
determination of the value of the shares of common stock held by all dissenting
stockholders. General Housewares is under no obligation to and has no present
intent to file a petition for appraisal, and stockholders seeking to exercise
appraisal rights should not assume that the surviving corporation will file such
a petition or that the surviving corporation will initiate any negotiations with
respect to the fair value of such shares. Accordingly, stockholders who desire
to have their shares appraised should initiate any petitions necessary for the
perfection of their appraisal rights within the time periods and in the manner
prescribed in Section 262. Inasmuch as General Housewares has no obligation to
file such a petition, the failure of a stockholder to do so within the period
specified could nullify that stockholder's previous written demand for
appraisal. In any event, at any time within 60 days after the effective time (or
at any time thereafter with the written consent of General Housewares), any
stockholder who has demanded appraisal has the right to withdraw the demand and
to accept payment of the merger consideration. Under the merger agreement,
General Housewares has agreed to give CCPC Acquisition prompt notice of any
demands for appraisal received by it, withdrawals of these demands, and any
other instruments served in accordance with Delaware law and received by General
Housewares and relating thereto. CCPC Acquisition shall direct all negotiations
and proceedings with respect to demands for appraisal under Delaware law.
General Housewares shall not, except with the prior written consent of CCPC
Acquisition, make any payment with respect to any demands for appraisal, or
offer to settle, or settle, any such demands.
Within 120 days after the effective time, any stockholder who has complied
with the provisions of Section 262 to that point in time will be entitled to
receive from the surviving corporation, upon written request, a statement
setting forth the aggregate number of shares not voted in favor of the merger
agreement and with respect to which demands for appraisal have been received and
the aggregate number of holders of these shares. The surviving corporation must
mail the statement to the stockholder within 10 days of receipt of the request
or within 10 days after expiration of the period for delivery of demands for
appraisals under Section 262, whichever is later.
A stockholder timely filing a petition for appraisal with the Court of
Chancery must deliver a copy to the surviving corporation, which will then be
obligated within 20 days to provide the Delaware Court of Chancery with a duly
verified list containing the names and addresses of all stockholders who have
demanded appraisal of their shares. After notice to these stockholders, the
Delaware Court of Chancery is empowered to conduct a hearing on the petition to
determine which stockholders are entitled to appraisal rights. The Delaware
Court of Chancery may require stockholders who have demanded an appraisal for
their shares and who hold stock
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represented by certificates to submit their certificates to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings, and
if any stockholder fails to comply with the requirement, the Delaware Court of
Chancery may dismiss the proceedings as to that stockholder.
After determining the stockholders entitled to an appraisal, the Delaware
Court of Chancery will appraise the "fair value" of their shares, exclusive of
any element of value arising from the accomplishment or expectation of the
merger, together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. The costs of the action may be
determined by the Delaware Chancery Court and taxed upon the parties as the
Delaware Chancery Court deems equitable. Upon application of a dissenting
stockholder, the Delaware Chancery Court may also order that all or a portion of
the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, be charged pro rata against the value of all of
the shares entitled to appraisal. STOCKHOLDERS CONSIDERING SEEKING APPRAISAL
SHOULD BE AWARE THAT THE FAIR VALUE OF THEIR SHARES AS DETERMINED UNDER SECTION
262 COULD BE MORE THAN, THE SAME AS OR LESS THAN THE MERGER CONSIDERATION THEY
WOULD RECEIVE UNDER THE MERGER AGREEMENT IF THEY DID NOT SEEK APPRAISAL OF THEIR
SHARES. STOCKHOLDERS SHOULD ALSO BE AWARE THAT INVESTMENT BANKING OPINIONS ARE
NOT OPINIONS AS TO FAIR VALUE UNDER SECTION 262.
In determining fair value and, if applicable, a fair rate of interest, the
Delaware Chancery Court is to take into account all relevant factors. In
Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that
could be considered in determining fair value in an appraisal proceeding,
stating that "proof of value by any techniques or methods that are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered, and that "fair price obviously requires
consideration of all relevant factors involving the value of a company." The
Delaware Supreme Court stated that, in making this determination of fair value,
the court must consider market value, asset value, dividends, earnings
prospects, the nature of the enterprise and any other facts that could be
ascertained as of the date of the merger that throw any light on future
prospects of the merged corporation. In Weinberger, the Delaware Supreme Court
stated that"elements of future value, including the nature of the enterprise,
that are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered." Section 262 provides that fair value
is to be "exclusive of any element of value arising from the accomplishment or
expectation of the merger."
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the effective time, be entitled to vote the shares
subject to the demand for any purpose or be entitled to the payment of dividends
or other distributions on those shares (except dividends or other distributions
payable to holders of record of shares as of a record date prior to the
effective time).
Any stockholder may withdraw its demand for appraisal and accept the merger
consideration by delivering to the surviving corporation a written withdrawal of
the stockholder's demand for appraisal, except that (1) any such attempt to
withdraw made more than 60 days after the effective time will require written
approval of the surviving corporation and (2) no appraisal proceeding in the
Delaware Chancery Court shall be dismissed as to any stockholder without the
approval of the Delaware Chancery Court, and such approval may be conditioned
upon such terms as the Delaware Chancery Court deems just. If the surviving
corporation does not approve a stockholder's request to withdraw a demand for
appraisal when such approval is required or if the Delaware Chancery Court does
not approve the dismissal of an appraisal proceeding, the stockholder would be
entitled to receive only the appraised value determined in any such appraisal
proceeding, which value could be lower than the value of the merger
consideration.
FAILURE TO COMPLY STRICTLY WITH ALL OF THE PROCEDURES SET FORTH IN SECTION
262 WILL RESULT IN THE LOSS OF A STOCKHOLDER'S STATUTORY APPRAISAL RIGHTS.
CONSEQUENTLY, ANY STOCKHOLDER WISHING TO EXERCISE APPRAISAL RIGHTS IS URGED TO
CONSULT LEGAL COUNSEL BEFORE ATTEMPTING TO EXERCISE SUCH RIGHTS.
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GENERAL HOUSEWARES CORP. SELECTED FINANCIAL DATA
The selected financial information included in the table below for each of
the five years in the period ended December 31, 1998 has been derived from and
is qualified in its entirety by the audited financial statements of General
Housewares, including those incorporated into this proxy statement by reference
to General Housewares' Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, available as described below under "Where You Can Find More
Information" on page 43. The selected financial data presented below for the six
months ended June 30, 1998 and 1999 and as of June 30, 1998 and 1999 have been
derived from, and should be read in conjunction with, the unaudited interim
financial statements of General Housewares incorporated into this proxy
statement by reference to General Housewares' Quarterly Report on Form 10-Q for
the six months ended June 30, 1999, available as described below under "Where
You Can Find More Information" on page 43. In the opinion of General Housewares,
such unaudited interim financial statements have been prepared on the same basis
as the audited financial statements and include all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of the
results of operations for the interim periods.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
(UNAUDITED) FISCAL YEAR ENDED DECEMBER 31,
----------------- --------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------- ------- ------- -------- -------- -------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales..................................... $46,705 $41,944 $97,031 $104,531 $105,479 $119,340 $97,729
Operating income (loss)....................... (746) (3,121) 3,068 4,476 (107) 7,080 6,637
Interest expense, net......................... 679 1,208 2,299 2,749 2,751 3,115 1,699
Income (loss) before income taxes and
extraordinary item.......................... (1,425) (4,329) 769 1,727 (2,858) 3,965 4,938
Income taxes (benefit)........................ (599) (1,427) 730 1,065 (842) 1,679 2,188
Income (loss) before extraordinary item....... (826) (2,902) 39 662 (2,016) 2,286 2,750
Extraordinary item, net of income tax
benefit..................................... -- -- -- -- (619) -- --
Net income (loss)............................. $ (826) $(2,902) $ 39 $ 662 $ (2,635) $ 2,286 $ 2,750
Average number of diluted common shares
outstanding including common stock
equivalents................................. 3,867 3,818 3,915 3,810 3,759 3,769 3,440
Income (loss) before extraordinary item per
common share (basic and diluted)............ $ (0.21) $ (0.76) $ 0.01 $ 0.17 $ (0.54) $ 0.61 $ 0.80
Extraordinary item, net of income tax benefit
per common share (basic and diluted)........ -- -- -- -- (0.16) -- --
Net income (loss) per common share (basic and
diluted).................................... $ (0.21) $ (0.76) $ 0.01 $ 0.17 $ (0.70) $ 0.61 $ 0.80
Dividends per common share.................... -- $ 0.16 $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.32
Financial Summary.............................
Total assets.................................. $79,880 $82,325 $80,234 $ 90,764 $ 95,279 $104,610 $98,358
Total debt.................................... $24,759 $28,082 $23,359 $ 32,554 $ 32,765 $ 39,201 $34,313
Net worth..................................... $47,108 $44,622 $47,289 $ 48,271 $ 48,490 $ 51,848 $50,255
</TABLE>
Effective September 1, 1994, General Housewares purchased the assets of
Normandy, the enamel on steel cookware business of National Housewares, Inc.
Effective October 1, 1994, General Housewares purchased the assets of the Olfa
Products Group. The acquisitions contributed to the increase in net sales from
1994 to 1995.
Effective August 1, 1996, General Housewares sold its Sidney Division. The
sale contributed to the decreases in net sales from 1995 to 1996 and from 1996
to 1997. Restructuring charges incurred in conjunction with the sale are
reflected in 1996.
Effective March 31, 1998, General Housewares sold its Enamelware Division.
The sale contributed to the decrease in net sales from 1997 to 1998.
Restructuring charges incurred in conjunction with the sale are reflected in
1998.
In connection with CCPC Acquisition's due diligence review of General
Housewares and during the course of negotiations between CCPC Acquisition and
General Housewares and their respective advisors, General Housewares provided
CCPC Acquisition with certain projections of future operating performance of
39
<PAGE> 42
General Housewares which are not publicly available. The information provided to
CCPC Acquisition included financial projections for General Housewares as an
independent company (without regard to impact of the proposed merger), including
projections of gross profit of $47,964,000 and $56,100,000 and net income of
$5,338,000 and $7,545,000 for the fiscal years 1999 and 2000, respectively.
These projections are included in this proxy statement only because they
were made available to CCPC Acquisition by or on behalf of General Housewares,
and General Housewares and CCPC Acquisition wish to make the same information
available to the General Housewares stockholders. The inclusion of the
projections should not be interpreted as suggesting that CCPC Acquisition
considered the projections reliable or relied on the projections in evaluating
the merger. Projected data furnished to CCPC Acquisition with respect to periods
after fiscal year 2000 and other scenarios have not been summarized due to the
fact that such data was even more speculative and even less reliable.
The projections were prepared for internal use only and were not prepared
with a view to public disclosure or compliance with the guidelines established
by the Securities and Exchange Commission or the American Institute of Certified
Public Accountants regarding projections and forecasts. The projections were not
intended to be a forecast of financial results and are not guarantees of
performance. They involve risks and are based upon a variety of assumptions
relating to the business of General Housewares, industry performance, general
business and economic conditions and other matters and are subject to
significant uncertainties and contingencies, many of which are beyond General
Housewares' and CCPC Acquisition's control. Therefore, such projections are
inherently imprecise, and there can be no assurances that any such projections
will be realized or that actual results will not differ significantly from those
set forth above.
Neither General Housewares nor CCPC Acquisition nor any of their respective
directors or financial advisors accepts any responsibility for such projections
or the bases or assumptions on which they were prepared.
40
<PAGE> 43
MARKET FOR THE COMMON STOCK
GENERAL HOUSEWARES COMMON STOCK MARKET PRICE AND DIVIDEND INFORMATION
General Housewares common stock is traded on the New York Stock Exchange
under the symbol "GHW". The following tables show the per share high and low
sales prices reported in the consolidated transaction reporting system for
transactions in the common stock for the fiscal year periods indicated. In 1997
and 1998, General Housewares paid quarterly dividends of $.08 per share. In
September 1998, General Housewares announced that, beginning with the first
quarter 1999, it would no longer pay cash dividends.
MARKET PRICE OF GENERAL HOUSEWARES COMMON STOCK
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR 1997
First Quarter............................................... $10.88 $ 9.25
Second Quarter.............................................. 10.13 8.50
Third Quarter............................................... 10.75 8.56
Fourth Quarter.............................................. 10.50 8.75
FISCAL YEAR 1998
First Quarter............................................... $11.88 $10.38
Second Quarter.............................................. 11.13 9.38
Third Quarter............................................... 11.13 8.44
Fourth Quarter.............................................. 12.06 7.75
FISCAL YEAR 1999
First Quarter............................................... $14.13 $10.38
Second Quarter.............................................. 19.75 10.25
Third Quarter through September 17, 1999.................... 27.87 19.12
</TABLE>
On July 30, 1999, the last full trading day prior to the day on which the
execution of the merger agreement was publicly announced, the closing price for
General Housewares common stock was $20.50.
On September 17, 1999, the closing price for the General Housewares common
stock was $27.87.
The market price for General Housewares common stock is subject to
fluctuation and stockholders are urged to obtain current market quotations. No
assurance can be given as to the future price of or market for General
Housewares common stock.
41
<PAGE> 44
SECURITIES OWNERSHIP
The following table sets forth selected information believed by General
Housewares to be accurate based on information provided to it concerning the
beneficial ownership of General Housewares common stock by each stockholder who
is known by General Housewares to own beneficially in excess of 5% of the
outstanding General Housewares common stock and by each director, General
Housewares' chief executive officer, each of General Housewares' other four most
highly compensated executive officers and all executive officers and directors
as a group, in each case as of September 15, 1999. Except as otherwise
indicated, all persons listed below have (A) sole voting power and investment
power with respect to their shares, except to the extent that authority is
shared by spouses under applicable law, and (B) record and beneficial ownership
with respect to their shares. The shares and percentages set forth below include
shares of General Housewares common stock which were outstanding or issuable
within 60 days upon the exercise of options outstanding as of September 15,
1999.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED OF CLASS
------------------------ ------------ --------
<S> <C> <C>
Dimension Fund Advisors, Inc.(1)............................ 228,910 5.7%
Gabelli Funds(2)............................................ 587,400 14.5%
Helen of Troy Limited(3).................................... 536,999 13.3%
Steel Partners II, L.P.(4).................................. 220,200 5.4%
Charles E. Bradley.......................................... 5,600 *
Thomas L. Francis........................................... 5,217 *
Joseph Hinsey IV............................................ 4,062 *
Richard E. Lundin........................................... 3,000 *
Ann Manix................................................... 3,000 *
Phillip A. Ranney........................................... 4,834 *
Paul A. Saxton(5)........................................... 138,546 3.4%
Gordon H. Brown(6).......................................... 35,861 *
Raymond J. Kulla(6)......................................... 38,333 *
Alexander T. Lee(7)......................................... 36,000 *
Mark S. Scales(8)........................................... 52,310 1.3%
Directors and Executive Officers as a Group(5)(6)(7)(8)..... 334,629 8.3%
</TABLE>
- ---------------
* Less than 1% of class
(1) Address: 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401
(2) Address: One Corporate Center, Rye, New York 10580.
(3) Address: 6827 Market Street, El Paso, Texas 79915.
(4) Address: 150 East 52nd Street, 21st Floor, New York, New York 10022.
(5) Includes 44,334 shares which may be acquired through stock options
exercisable on September 15, 1999 or which would become exercisable within
60 days of that date.
(6) Includes 15,333 shares which may be acquired through stock options
exercisable on September 15, 1999 or which would become exercisable within
60 days of that date.
(7) Includes 6,000 shares which may be acquired through stock options
exercisable on September 15, 1999 or which would become exercisable within
60 days of that date.
(8) Includes 17,133 shares which may be acquired through stock options
exercisable on September 15, 1999 or which would become exercisable within
60 days of that date.
42
<PAGE> 45
INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers, L.L.P. has served as General
Housewares' independent auditors since 1967. The consolidated financial
statements of General Housewares for the fiscal year ended December 31, 1998,
incorporated by reference to General Housewares' Annual Report on Form 10-K have
been audited by PricewaterhouseCoopers, as stated in its report appearing in the
Form 10-K. General Housewares expects that representatives of
PricewaterhouseCoopers will be present at the special meeting and will both
respond to appropriate questions from General Housewares stockholders and make a
statement, if they so desire.
STOCKHOLDER PROPOSALS
If the merger is consummated, there will be no stockholders of General
Housewares, other than CCPC Acquisition, and no public participation in any
future meetings of stockholders of General Housewares. However, if the merger is
not consummated, General Housewares stockholders will continue to be entitled to
attend and participate in General Housewares stockholders' meetings, and, in
accordance with Rule 14a-8 under the Exchange Act and General Housewares bylaws,
any stockholder may present proposals for consideration at the next annual
meeting of the stockholders of General Housewares.
Proposals received from stockholders are given careful consideration by
General Housewares and are eligible for consideration for inclusion in the proxy
statement for the 2000 annual meeting of the stockholders if they are received
by General Housewares on or before November 30, 1999. You should send any
proposal to General Housewares, Attention: Secretary, 1536 Beech Street, P. O.
Box 4066, Terre Haute, IN 47804. In order for proposals submitted by
stockholders not submitted in accordance with Rule 14a-8 to be timely within the
meaning of Rule 14a-4(c) under the Exchange Act, the proposal must be submitted
so that it is received no later than February 11, 2000 and no earlier than
December 31, 1999.
WHERE YOU CAN FIND MORE INFORMATION
The SEC allows General Housewares to "incorporate by reference" information
into this proxy statement, which means that it can disclose important
information by referring you to another document filed separately with the SEC.
The following documents are incorporated by reference in this proxy statement
and are deemed to be a part of this proxy statement, except for any information
superseded by information contained directly in this proxy statement:
<TABLE>
<CAPTION>
GENERAL HOUSEWARES SEC FILINGS PERIOD OR DATE OF REPORT
- ------------------------------ ----------------------------
<S> <C>
Annual Report on Form 10-K.................................. Year ended December 31, 1998
Quarterly Report on Form 10-Q
as amended by the Report on Form 10-Q/A................... Quarter ended March 31, 1999
Quarterly Report on Form 10-Q............................... Quarter ended June 30, 1999
Registration Statement on Form 8-A.......................... Filed January 22, 1999
Amended Registration Statement on Form 8-A/A................ Filed on June 25, 1999
Amended Registration Statement on Form 8-A/A................ Filed on August 6, 1999
Current Report on Form 8-K.................................. Filed on May 28, 1999
Current Report on Form 8-K.................................. Filed on June 25, 1999
Current Report on Form 8-K.................................. Filed on August 4, 1999
</TABLE>
We incorporate by reference additional documents that General Housewares
may file with the SEC after the date of this proxy statement and before the
special meeting. These include periodic reports, such as Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as
proxy statements or other soliciting material. The information contained in any
of those documents will be considered a part of this proxy statement from the
date the document is filed and will supplement or amend the information
contained in this proxy statement.
43
<PAGE> 46
General Housewares undertakes to provide by first class mail, without
charge and within one business day of receipt of any request, to any person to
whom a copy of this proxy statement has been delivered, a copy of any or all
documents referred to above which have been incorporated by reference in this
proxy statement, other than exhibits to those documents (unless the exhibits are
specifically incorporated by reference into those documents). Please direct
requests for copies of documents to:
Raymond J. Kulla, Esq.
General Housewares Corp.
1536 Beech Street
P. O. Box 4066
Terre Haute, IN 47804
Tel: (812) 232-1000
General Housewares is currently subject to the information requirements of
the Exchange Act, and accordingly General Housewares files periodic reports,
proxy statements and other information with the SEC relating to its business,
financial and other matters. You may obtain copies of these documents at
prescribed rates, at the public reference facilities maintained by the SEC at:
<TABLE>
<S> <C> <C>
Room 1024 500 West Madison Street 7 World Trade Center
450 Fifth Street, N.W Suite 1400 Suite 1300
Judiciary Plaza Chicago, Illinois 60661 New York, New York 10048
Washington, D.C. 20549
</TABLE>
For further information concerning the SEC's public reference rooms, you
may call the SEC at 1-800-SEC-0330. You may also access some of this information
on the World Wide Web through the SEC's Internet address at
"http://www.sec.gov."
OTHER BUSINESS
The board of directors does not know of any other matters to be presented
for action at the special meeting other than as set forth in this proxy
statement. If any other business should properly come before the meeting, the
persons named in the accompanying form of proxy intend to vote thereon in
accordance with their best judgment unless they are directed by a proxy to do
otherwise.
FORWARD-LOOKING STATEMENTS
All statements contained in this proxy statement and in the documents
incorporated by reference into this proxy statement that are not historical
facts, including, but not limited to, statements regarding the pending merger
and General Housewares' plans for future development and operation of its
business, are based on current expectations. These statements are
forward-looking in nature and involve a number of known and unknown risks and
uncertainties. Actual results may differ materially. General Housewares wishes
to caution readers not to place undue reliance on any such forward-looking
statements, which statements are made pursuant to the Private Securities
Litigation Reform Act of 1995 and, as such, speak only as of the date made.
Statements regarding parties other than General Housewares are based upon
representations of such other parties.
44
<PAGE> 47
ANNEX A
Conformed as per Amendment No. 1 to the Agreement and Plan of Merger, dated as
of August 24, 1999, by and among CCPC Acquisition Corp., GHC Acquisition Corp.
and General Housewares Corp.
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CCPC ACQUISITION CORP.,
GHC ACQUISITION CORP.
AND
GENERAL HOUSEWARES CORP.
DATED AS OF
AUGUST 2, 1999
<PAGE> 48
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS.................................................... A-1
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING......................... A-1
1.1 The Merger........................................... A-1
1.2 Effective Time....................................... A-1
1.3 Closing.............................................. A-1
1.4 Right to Revise Structure of Merger.................. A-1
ARTICLE II
SURVIVING CORPORATION....................................... A-2
2.1 Certificate of Incorporation......................... A-2
2.2 By-Laws.............................................. A-2
2.3 Directors............................................ A-2
2.4 Officers............................................. A-2
ARTICLE III
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES
IN THE MERGER............................................. A-2
3.1 Share Consideration for the Merger; Conversion or
Cancellation of Shares in the Merger................. A-2
3.2 Stockholders' Meeting................................ A-3
3.3 Dissenting Shares.................................... A-3
3.4 Payment for Shares in the Merger..................... A-3
3.5 Transfer of Shares After the Effective Time.......... A-4
3.6 Stock Options........................................ A-5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... A-5
4.1 Corporate Organization and Qualification............. A-5
4.2 Capitalization....................................... A-5
4.3 Authority Relative to This Agreement................. A-6
4.4 Consents and Approvals; No Violation................. A-7
4.5 SEC Reports; Financial Statements.................... A-7
4.6 Absence of Certain Changes or Events................. A-8
4.7 Litigation; Compliance............................... A-8
4.8 Proxy Statement; Offer Documents..................... A-8
4.9 Taxes................................................ A-9
4.10 Employee Benefit Plans; Labor Matters............... A-9
4.11 Environmental Laws and Regulations.................. A-10
4.12 Intellectual Property............................... A-11
4.13 Year 2000 Compliance................................ A-11
4.14 Contracts........................................... A-11
4.15 Insurance........................................... A-12
4.16 Brokers and Finders................................. A-12
4.17 Opinion of Financial Advisors....................... A-12
4.18 Customers and Distributors.......................... A-12
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO.......... A-12
5.1 Corporate Organization and Qualification............. A-12
5.2 Authority Relative to This Agreement................. A-12
5.3 Consents and Approvals; No Violation................. A-13
5.4 Parent Financial Condition........................... A-13
</TABLE>
A-ii
<PAGE> 49
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
5.5 Proxy Statement...................................... A-13
5.6 Financing............................................ A-13
5.7 Interim Operations of Newco.......................... A-14
5.8 Brokers and Finders.................................. A-14
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS......................... A-14
6.1 Conduct of Business of the Company................... A-14
6.2 Acquisition Proposals................................ A-16
6.3 Reasonable Efforts................................... A-17
6.4 Access to Information................................ A-17
6.5 Publicity............................................ A-18
6.6 Indemnification of Directors and Officers............ A-18
6.7 Employees............................................ A-18
6.8 Certain Financing Matters............................ A-19
6.9 Notification of Certain Matters...................... A-19
6.10 Rights Agreement.................................... A-19
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER.................... A-19
7.1 Condition to Each Party's Obligations to Effect the
Merger............................................... A-19
7.2 Conditions to the Company's Obligations to Effect the
Merger............................................... A-19
7.3 Conditions to the Parent's and Newco's Obligations to
Effect the Merger.................................... A-20
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER.............................. A-20
8.1 Termination by Mutual Consent........................ A-20
8.2 Termination by Either Parent or the Company.......... A-20
8.3 Termination by Parent................................ A-21
8.4 Termination by the Company........................... A-21
8.5 Effect of Termination................................ A-21
8.6 Extension; Waiver.................................... A-22
ARTICLE IX
MISCELLANEOUS AND GENERAL................................... A-22
9.1 Payment of Expenses.................................. A-22
9.2 Survival of Representations and Warranties; Survival
of Confidentiality................................... A-22
9.3 Modification or Amendment............................ A-22
9.4 Waiver of Conditions................................. A-22
9.5 Counterparts; Facsimile.............................. A-23
9.6 Governing Law........................................ A-23
9.7 Notices.............................................. A-23
9.8 Entire Agreement; Assignment......................... A-24
9.9 Parties in Interest.................................. A-24
9.10 Certain Definitions................................. A-24
9.11 Obligation of Parent................................ A-24
9.12 Validity............................................ A-24
9.13 Captions............................................ A-24
9.14 Interpretation...................................... A-24
9.15 Severability........................................ A-25
9.16 Specific Performance................................ A-25
</TABLE>
A-iii
<PAGE> 50
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of August 2,
1999, by and among CCPC Acquisition Corp, a Delaware corporation ("Parent"), GHC
Acquisition Corp., a Delaware corporation, and General Housewares Corp., a
Delaware corporation (the "Company").
RECITALS
WHEREAS, the Board of Directors of the Company, including all of the
disinterested directors of the Company, has, subject to the conditions of this
Agreement, unanimously declared and determined that the Merger (as defined
below) is advisable, fair to and in the best interests of the stockholders of
the Company and approved and adopted this Agreement and the transactions
contemplated hereby; and
WHEREAS, promptly following the execution of this Agreement by Parent and
the Company, Parent will form a majority-owned subsidiary corporation under the
laws of the State of Delaware ("Newco") which will become a party to this
Agreement;
WHEREAS, Parent, Newco (upon its execution hereof) and the Company desire
to make certain representations, warranties, covenants and agreements in
connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, Parent,
Newco (upon its execution hereof) and the Company hereby agree as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2), the Company and Newco shall
consummate a merger (the "Merger") in which (a) Newco shall be merged with and
into the Company and the separate corporate existence of Newco shall thereupon
cease, (b) the Company shall be the successor or surviving corporation in the
Merger and shall continue to be governed by the laws of the State of Delaware,
and (c) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers, franchises, debts, liabilities and duties shall
continue unaffected by the Merger. The corporation surviving the Merger is
sometimes hereinafter referred to as the "Surviving Corporation." The Merger
shall have the effects set forth in the General Corporation Law of the State of
Delaware (the "DGCL").
1.2 Effective Time. Parent, Newco and the Company will cause an
appropriate Certificate of Merger (the "Certificate of Merger") to be executed
and filed on the date of the Closing (as defined in Section 1.3) (or on such
other date as Parent and the Company may agree) with the Secretary of State of
the State of Delaware as provided in the DGCL. The Merger shall become effective
on the date and time on which the Certificate of Merger has been duly filed with
Secretary of State of the State of Delaware 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."
1.3 Closing. The closing of the Merger (the "Closing") shall take place
(a) at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York at 10:00 a.m. on the second business day following the date on
which the last of the conditions set forth in Article VII hereof shall be
fulfilled or waived in accordance with this Agreement or (b) at such other
place, time and date as Parent and the Company may agree.
1.4 Right to Revise Structure of Merger. At Parent's election, the Merger
may alternatively be structured so that the Company is merged with and into
another direct or indirect majority-owned subsidiary of Parent or Newco or
another direct or indirect majority-owned subsidiary of Parent is merged with
and into the Company; provided, however, that no such change shall (i) alter or
change the amount or kind of the
A-1
<PAGE> 51
consideration to be issued to the Company's stockholders in the Merger as set
forth in Article III hereof or the treatment of the holders of the Options, (ii)
materially impede or delay consummation of the Merger, (iii) release Parent from
any of its obligations hereunder or (iv) adversely affect the rights of the
Company and its shareholders hereunder. In the event of such an election, the
Company agrees to execute such appropriate documentation as may be reasonably
requested by Parent to reflect such election.
ARTICLE II
SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall upon the
Effective Time be amended and restated in full to read as set forth in Exhibit
A, and as so amended and restated shall be the Certificate of Incorporation of
the Surviving Corporation.
2.2 By-Laws. The By-Laws of Newco, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving Corporation.
2.3 Directors. The directors of Newco at the Effective Time shall, from
and after the Effective Time, be the initial directors of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-Laws.
2.4 Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the initial officers of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-Laws.
ARTICLE III
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
3.1 Share Consideration for the Merger; Conversion or Cancellation of
Shares in the Merger. At the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Newco, the Company, the Surviving Corporation
or the holders of any capital stock thereof:
(a) Each share of common stock, par value $0.33 1/3 per share of the
Company ("Shares") issued and outstanding immediately prior to the
Effective Time (other than Shares owned by Parent, Newco or any direct or
indirect wholly owned subsidiary of Parent (collectively, "Parent
Companies") or any of the Company's direct or indirect wholly owned
subsidiaries or held in the treasury of the Company and other than any
Dissenting Shares (as hereinafter defined in Section 3.3)) shall, by virtue
of the Merger and without any action on the part of Newco, the Company or
the holder thereof, be cancelled and extinguished and converted into the
right to receive, pursuant to Section 3.4, $28.75 in cash (the "Merger
Consideration"), payable to the holder thereof, without interest thereon,
less any required withholding of taxes, upon the surrender of the
certificate formerly representing such Share.
(b) At the Effective Time, each Share issued and outstanding and owned
by any of the Parent Companies or any of the Company's direct or indirect
wholly owned subsidiaries or held in the treasury of the Company
immediately prior to the Effective Time shall cease to be outstanding, be
cancelled and retired without payment of any consideration therefor and
cease to exist.
(c) At the Effective Time, each share of capital stock of Newco issued
and outstanding immediately prior to the Effective Time shall be converted
into one validly issued, fully paid and nonassessable identical share of
capital stock of the Surviving Corporation.
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3.2 Stockholders' Meeting. The Company, acting through the Board of
Directors, shall:
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Stockholders Meeting"), to be held as soon as
practicable after the date hereof, for the purpose of considering and
taking action upon this Agreement;
(ii) include in the Proxy Statement (as hereinafter defined in
Section 4.8) (x) the opinion of the Company Financial Advisor referred
to in Section 4.17 and (y) the recommendation of the Board of Directors
that stockholders of the Company vote in favor of the approval and
adoption of this Agreement unless, in the opinion of the Board of
Directors after consultation with its counsel, the inclusion of such
recommendation would be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law; and
(iii) obtain and furnish the information required to be included by
it in the Proxy Statement and, after consultation with Parent and Newco,
file the Proxy Statement confidentially with the SEC, respond promptly
to any comments made by the SEC with respect to the Proxy Statement and
any preliminary version thereof, provided, however, that all such
filings and responses shall be subject to Parent's prior consent, not to
be unreasonably withheld and cause the Proxy Statement to be mailed to
its stockholders at the earliest practicable time following the date
hereof.
At such meeting, Parent, Newco and their affiliates will vote all Shares
owned by them in favor of approval and adoption of this Agreement and the
transactions contemplated hereby.
Subject to its right to terminate this Agreement in accordance with its
terms, the Company shall be required to take the actions specified in Sections
3.2(i) and (iii), and satisfy all its other obligations under this Agreement,
whether or not the Board of Directors of the Company withdraws or makes an
adverse change in its recommendation that stockholders of the Company vote in
favor of the approval and adoption of this Agreement after the date hereof.
3.3 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, Shares
that are issued and outstanding immediately prior to the Effective Time and
which are held by stockholders who have not voted in favor of or consented
to the Merger and who shall have delivered a written demand for appraisal
of such Shares in the time and manner provided in Section 262 of the DGCL
and shall not have failed to perfect or shall not have effectively
withdrawn or lost their rights to appraisal and payment under the DGCL (the
"Dissenting Shares") shall not be converted into the right to receive the
Merger Consideration, but shall be entitled to receive the consideration as
shall be determined pursuant to Section 262 of the DGCL; provided, however,
that if such holder shall have failed to perfect or shall have effectively
withdrawn or lost his, her or its right to appraisal and payment under the
DGCL, such holder's Shares shall thereupon be deemed to have been
converted, at the Effective Time, into the right to receive the Merger
Consideration, without any interest thereon, less any required withholding
taxes.
(b) The Company shall give Parent (i) prompt notice and copies of any
demands for appraisal pursuant to Section 262 of the DGCL received by the
Company, withdrawals of such demands, and any other instruments served or
sent pursuant to the DGCL and received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the DGCL. The Company shall not, except with
the prior written consent of Parent, make any payment with respect to any
such demands for appraisal or offer to settle or settle any such demands.
3.4 Payment for Shares in the Merger. The manner of making payment for
Shares in the Merger shall be as follows:
(a) At the Effective Time, Parent shall make available to First
Chicago Trust Company of New York (the "Exchange Agent"), or such other
exchange agent selected by Parent and reasonably acceptable to the Company
for the benefit of the holders of Shares, the funds necessary to make the
payments contemplated by Section 3.1 (the "Exchange Fund"). Such funds may
be invested by the
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Exchange Agent as directed by Parent, provided that such investments shall
be in obligations of or guaranteed by the United States of America, in
commercial paper obligations rated A-1 or P-1 or better by Moody's
Investors Service, Inc. or Standard & Poor's Rating Services, respectively,
or in deposit accounts, certificates of deposit, bank repurchase or reverse
repurchase agreements or banker's acceptances of, or Eurodollar time
deposits purchased from, commercial banks with capital exceeding $500
million. Any net profit resulting from, or interest or income produced by,
such investments will be payable to the Surviving Corporation or Parent, as
Parent directs. The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Merger Consideration out of the Exchange Fund.
The Exchange Fund shall not be used for any other purpose.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record (other than holders of
certificates for Shares referred to in Section 3.1(c)) of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") (i) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of the Certificates for payment therefor. Upon
surrender of Certificates for cancellation to the Exchange Agent, together
with such letter of transmittal duly executed and any other required
documents, the holder of such Certificates shall be entitled to receive for
each of the Shares represented by such Certificates the Merger
Consideration, without any interest thereon, less any required withholding
of taxes, and the Certificates so surrendered shall forthwith be cancelled.
Until so surrendered, such Certificates shall upon and following the
Effective Time represent solely the right to receive the Merger
Consideration with respect to each of the Shares represented thereby. If
payment is to be made to a person other than the person in whose name a
Certificate so surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of the Certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this
Section 3.4(b), each Certificate (other than Certificates representing
Shares held in the Company's treasury or by Newco, or by Parent or any
other direct or indirect wholly-owned subsidiary of the Company or Parent)
shall upon and following the Effective Time represent for all purposes only
the right to receive, for each Share represented thereby, the Merger
Consideration.
(c) Any portion of the Exchange Fund made available to the Exchange
Agent which remains unclaimed by the former stockholders of the Company for
one year after the Effective Time shall be delivered to the Surviving
Corporation, upon demand of the Surviving Corporation, and any former
stockholders of the Company shall thereafter look only to the Surviving
Corporation for payment of their claim for the Merger Consideration for the
Shares. If any Certificates shall not have been surrendered immediately
prior to the date on which any Merger Consideration in respect of such
certificate would escheat to or become the property of any governmental
entity, any such Merger Consideration shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interest of any person previously entitled thereto.
Notwithstanding the foregoing, none of the Surviving Corporation, Parent or
the Exchange 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.
3.5 Transfer of Shares After the Effective Time. No transfers of Shares
shall be made on the stock transfer books of the Company after the close of
business on the day of the Effective Time. From and after the Effective Time,
the holders of Certificates evidencing ownership of 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. All cash paid upon the surrender for exchange of the Certificates in
accordance with the terms of this Article shall be deemed to have been in full
satisfaction of all rights pertaining to the Shares theretofore represented by
such Certificates.
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3.6 Stock Options.
(a) Immediately prior to the Effective Time, each option ("Option")
which has been granted under the 1993 or 1997 Key Employees Incentive Plans
or any predecessor plans thereto (together, the "Option Plans") and is
outstanding at the Effective Time, whether or not then exercisable, shall
be (or, if not previously vested and exercisable, shall become) vested and
exercisable and such Options immediately thereafter shall be canceled by
the Company, and each holder of a canceled Option shall be entitled to
receive at the Effective Time or as soon as practicable thereafter from the
Company in consideration for the cancellation of such Option an amount in
cash equal to the product of (i) the number of Shares previously subject to
such Option and (ii) the excess, if any, of the Merger Consideration over
the exercise price per share of Shares previously subject to such Option,
less any applicable withholding taxes.
(b) The Company shall (i) take all actions necessary and appropriate
so that all stock or other equity based plans maintained with respect to
the Shares, including, without limitation, the plans listed in Section
4.10(a) hereof ("Option Plans"), shall terminate as of the Effective Time
and that any other Company Plan (as hereinafter defined in Section 4.10)
(including the Company Employee Stock Purchase 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 amended to
provide that no further issuances, transfer or grants shall be permitted as
of the Effective Time, and (ii) provide 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. Prior to the Effective Time, the Company shall use
reasonable best efforts to (x) obtain all necessary consents from, and
provide (in a form acceptable to Parent) any required notices to, holders
of Options and (y) amend the terms of the applicable Option Plan and the
Company Employee Stock Purchase Plan, in each case as is necessary to give
effect to the provision of this paragraph (b).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Newco that:
4.1 Corporate Organization and Qualification. Each of the Company and its
subsidiaries (as hereinafter defined in Section 9.10) is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and is qualified and in good standing
as a foreign corporation in each jurisdiction where the properties owned, leased
or operated or the business conducted by it require such qualification, except
where failure to so qualify or be in good standing would not have a Material
Adverse Effect (as hereinafter defined in Section 9.10). Each of the Company and
its subsidiaries has all requisite power and authority (corporate or otherwise)
to own, lease and operate its properties and to carry on its business as it is
now being conducted except where failure to have such power and authority would
not have a Material Adverse Effect. The Company has heretofore made available to
Parent complete and correct copies of its Restated Certificate of Incorporation
and By-Laws.
4.2 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
10,000,000 Shares of which, as of June 30, 1999, 4,030,412 Shares were
issued and outstanding and 277,760 Shares were held in the treasury of the
Company and (ii) 1,000,000 shares of preferred stock, par value $1.00 per
share, none of which is issued or outstanding and 40,000 shares of which
are designated as Series A Junior Participating Preferred Stock. All of the
outstanding shares of capital stock of the Company have been duly
authorized, validly issued and are fully paid and nonassessable and were
not issued in violation of, and are not entitled to, preemptive rights. As
of June 30, 1999, 198,439 Shares were reserved for issuance upon exercise
of outstanding options pursuant to the Option Plans (with an average
exercise price of $11.87 for all such options), all of which Shares are
issuable at an exercise price less than the Merger Consideration. No Shares
have been issued (including from treasury) since June 30, 1999 except for
any issued pursuant to
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the options described above or up to 5,000 Shares in the aggregate issued
under the Employee Stock Purchase Plan. Except as set forth above, no
shares of capital stock or other equity securities of the Company are
issued, reserved for issuance or outstanding. None of the subsidiaries of
the Company owns any of the capital stock of the Company. Except as set
forth on Schedule 4.2, as of the date hereof all outstanding shares of
capital stock of the Company's subsidiaries are owned of record and
beneficially by the Company or a direct or indirect wholly owned subsidiary
of the Company, free and clear of all liens, charges, encumbrances, claims
and options of any nature. Except as set forth above and on Schedule 4.2
and except for the Rights, there are not as of the date hereof any
outstanding or authorized options, warrants, calls, rights (including
preemptive rights), commitments, understandings, or any other agreements of
any character which the Company or any of its subsidiaries is a party to,
or may be bound by, requiring it to issue, transfer, sell, purchase,
redeem, make any payment in respect of or acquire any shares of capital
stock or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of capital stock of the
Company or any of its subsidiaries.
(b) As of June 30, 1999, the outstanding aggregate indebtedness of the
Company and its subsidiaries for borrowed money did not exceed $25 million.
There are no outstanding bonds, debentures, notes or other indebtedness or
other securities 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.
(c) Except as set forth on Schedule 4.2(c), there are no voting trusts
or other agreements to which the Company or any of its subsidiaries is a
party with respect to the voting of the capital stock of the Company or any
of its subsidiaries.
(d) Schedule 4.2(d) sets forth, as of the date hereof, to the
knowledge of the Company: each person or group (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (i) who has beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of more than 5% of the outstanding
Company Common Stock; and the number of Shares that such person or group
has asserted are beneficially owned by it, or (ii) who has made any filing
under the HSR Act with respect to the Company or the Shares since January
1, 1998.
4.3 Authority Relative to This Agreement.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than, with respect
to the Merger, the approval and adoption of this Agreement by the
stockholders of the Company, including Newco, in accordance with Section
251 of the DGCL). This Agreement has been duly and validly executed and
delivered by the Company and, assuming this Agreement constitutes the valid
and binding agreement of Parent and Newco, constitutes the valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement hereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(b) The Board of Directors of the Company, at a meeting duly called
and held, has by unanimous vote of the entire Board of Directors (i)
declared and determined that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable, fair to and in
the best interests of the stockholders of the Company and has taken all
corporate action required to be taken by the Board of Directors for the
consummation of the Merger and the other transactions contemplated herein,
including but not limited to all actions required to render the provisions
of Section 203 of the DGCL restricting business combinations with
"interested stockholders" inapplicable to such transactions, (ii) approved
this
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Agreement and the Merger and the other transactions contemplated hereby and
(iii) recommended that the stockholders of the Company approve and adopt
this Agreement and the Merger.
(c) The Company has amended the Rights Agreement, dated as of November
10, 1998, by and between the Company and First Chicago Trust Company of New
York, as amended by the Amendment dated as of June 24, 1999 (the "Rights
Agreement"), to ensure that (i) neither a "Distribution Date" nor a "Stock
Acquisition Date" will occur (and no such event has occurred prior to the
date hereof); (ii) none of Parent, Newco or any of their "Affiliates" or
"Associates" will be deemed to be an "Acquiring Person" (as defined in the
Rights Agreement); (iii) no provisions of Section 11 or Section 13 of the
Rights Agreement will be triggered, by reason of the execution and delivery
of this Agreement or the consummation of the transactions contemplated
hereby and (iv) the Rights will expire immediately prior to the Effective
Time.
(d) The affirmative vote of a majority of the voting power of the
outstanding Shares in favor of the approval and adoption of this Agreement
(the "Company Stockholder Approval") is the only vote of the holders of any
class or series of the Company's or its subsidiaries' securities necessary
to approve this Agreement, the Merger and the other transactions
contemplated hereby.
4.4 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement nor the performance by the Company (and its
subsidiaries) of its obligations herein nor the consummation by the Company of
the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective Certificate of Incorporation or
By-Laws of the Company or any of its subsidiaries; (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority or any other person or entity, except (i)
in connection with the applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) pursuant to
the applicable requirements of the Exchange Act, (iii) the filing of the
Certificate of Merger pursuant to the DGCL and appropriate documents with the
relevant authorities of other states in which the Company or any of its
subsidiaries is authorized to do business, (iv) required filings with and
notifications to the New York Stock Exchange (the "NYSE") or, (v) as may be
required by any applicable state securities or "blue sky" laws or state takeover
laws; (c) except as set forth in Schedule 4.4(c), result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, modification, cancellation or
acceleration or lien or other charge or encumbrance) under, or give rise to any
purchase or put right or other imposition of any obligation or loss of any
benefit under, any of the terms, conditions or provisions of any note, permit,
concession, franchise, license, agreement or other instrument or obligation to
which the Company or any of its subsidiaries or any of their assets may be bound
(any of the foregoing, a "Contract"), or (d) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in this
Section 4.4 are duly and timely obtained or made and, with respect to the
Merger, the approval of this Agreement by the Company's stockholders has been
obtained, violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to the Company or any of its subsidiaries or to any of
their respective assets, except in the case of clauses (b), (c) and (d), as
would not, individually or in the aggregate, have a Material Adverse Effect.
4.5 SEC Reports; Financial Statements.
(a) Except as set forth in Schedule 4.5(a), the Company has filed all
forms, reports and documents required to be filed by it with the SEC since
January 1, 1998 pursuant to the federal securities laws and the SEC rules
and regulations thereunder, all of which, including in each case all
exhibits and schedules thereto and documents incorporated by reference
therein (collectively, the "Company SEC Reports") as of their respective
dates, complied in all material respects with all applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act") and the
Exchange Act. None of the Company SEC Reports, including, without
limitation, any financial statements or schedules included therein, as of
their respective dates, 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. None of the
Company's subsidiaries has been required to file any reports, schedules,
forms, statements or other documents with the SEC.
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(b) The consolidated balance sheets and the related consolidated
statements of operations, comprehensive income (loss), stockholders' equity
and cash flows (including the related notes thereto) of the Company
included in the Company SEC Reports, as of their respective dates, complied
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles
("GAAP") applied on a basis consistent with prior periods (except as
otherwise noted therein), and present fairly, in all material respects, the
consolidated financial position of the Company and its consolidated
subsidiaries as of their respective dates, and the consolidated results of
their operations and their cash flows for the periods presented therein
(subject, in the case of the unaudited interim financial statements, to
normal year-end adjustments which would not, individually or in the
aggregate, have a Material Adverse Effect).
(c) Except as set forth in the Company's financial statements included
in the Company SEC Reports filed since January 1, 1999 and prior to the
date hereof (the "Current SEC Reports"), and except as incurred in the
ordinary course of business since the date of such financial statements or
disclosed on Schedule 4.5(c), neither the Company nor any of its
subsidiaries has any liabilities or obligations that would be required to
be set forth on a balance sheet prepared in accordance with GAAP other than
those which, individually or in the aggregate, would not have a Material
Adverse Effect.
4.6 Absence of Certain Changes or Events. Except as specifically disclosed
in the Current SEC Reports, as set forth with reasonable specificity in the
schedules to this Agreement or as specifically contemplated by this Agreement,
since March 31, 1999, (i) the Company has conducted its business in all material
respects only in the ordinary course consistent with past practice, (ii) there
has not been any condition, event or occurrence which, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect and (iii) no actions have been taken, which if taken after the date
hereof, would constitute a material breach of the provisions of Section 6.1.
4.7 Litigation; Compliance.
(a) Except as set forth on Schedule 4.7, the Current SEC Reports
accurately disclose in all material respects all actions, claims, suits,
proceedings and governmental investigations pending or, to the knowledge of
the Company, threatened, which (i) are required to be disclosed therein by
the Exchange Act or (ii) individually or in the aggregate are reasonably
likely to have a Material Adverse Effect. No judgment, decree, injunction,
rule or order of any governmental entity or arbitrator is outstanding
against the Company that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(b) The conduct of the business of each of the Company and its
subsidiaries complies, and during the past three years has complied, with
all laws, statutes, rules, regulations, orders, writs, injunctions, and
decrees applicable thereto, except for failures so to comply, if any, that,
individually or in the aggregate, would not have a Material Adverse Effect.
(c) Except for any of the following that would not, individually or in
the aggregate, have a Material Adverse Effect: (i) each of the Company and
its subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, approvals and orders from governmental entities
(collectively, the "Company Permits"), that are necessary to own, lease and
operate the properties of the Company and its subsidiaries and to carry on
their business as owned, leased, operated or carried on as of the date of
this Agreement; (ii) the Company Permits are in full force and effect; and
(iii) there is no action, proceeding or investigation pending or, to the
knowledge of the Company, threatened regarding suspension or cancellation
of any of the Company Permits.
4.8 Proxy Statement; Offer Documents. Any proxy or similar materials
distributed to the Company's stockholders in connection with the Merger,
including any amendments or supplements thereto and any information incorporated
by reference therein (the "Proxy Statement") will comply in all material
respects with applicable federal securities laws, and the Proxy Statement will
not, at the time that it or any amendment or supplement thereto is mailed to the
Company's stockholders, at the time of the Stockholders Meeting or at
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the Effective Time, contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Stockholders
Meeting which has become false or misleading except that no representation is
made by the Company with respect to information supplied by Newco or Parent in
writing for inclusion in the Proxy Statement.
4.9 Taxes. Except as set forth on Schedule 4.9, the Company and its
subsidiaries have filed when due or will cause to be filed when due, all
Federal, state, local and foreign Tax Returns, declarations, statements,
reports, schedules, forms and information returns and any amendments thereto
that any of them is required to file ("Tax Returns") other than those Tax
Returns the failure of which to file would not have a Material Adverse Effect
and have paid all taxes shown on those returns. All such Tax Returns are, or
will be at the time of filing, true, complete and correct in all respects except
as would not have a Material Adverse Effect. The Company and its subsidiaries
have paid (or have had paid on their behalf), or where payment is not yet due,
have established (or have established on their behalf and for their sole benefit
and recourse), or will establish or cause to be established on or before the
Effective Time, an adequate accrual for the payment of, all material Taxes (as
hereinafter defined in Section 9.10) (other than deferred Taxes reflecting
differences between the book and tax bases in assets and liabilities) with
respect to any period (or portion thereof) ending prior to or as of the
Effective Time. Except as set forth in Schedule 4.9, no audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Return of the Company or its subsidiaries as to which
any taxing authority has asserted in writing any claim, other than claims,
which, individually or in the aggregate, would not have a Material Adverse
Effect. Except as set forth on Schedule 4.9, neither the Company nor its
subsidiaries have received any written notice of deficiency or assessment from
any taxing authority with respect to Taxes, which have not been fully paid or
finally settled. Neither the Company nor any of its subsidiaries has any
liability for any Taxes of any person under Treasury Regulation section 1.1502-6
(or any comparable state, local or foreign law), as a transferee or successor,
by contract or otherwise, except as would not result in a Material Adverse
Effect. Except as disclosed in the Schedules hereto, neither the Company nor its
subsidiaries is required to make any payments to directors, officers or
employees, including as a result of the transactions contemplated by this
Agreement, which would be subject to Section 162(m) of the Code.
4.10 Employee Benefit Plans; Labor Matters.
(a) Schedule 4.10(a) contains a true and complete list of each
"employee benefit plan" (within the meaning of section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including,
without limitation, multiemployer plans within the meaning of ERISA section
3(37)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs or policies, whether or not subject to ERISA (including any
funding mechanism therefor now in effect or required in the future as a
result of the transactions contemplated by this Agreement or otherwise),
oral or written under which any employee or former employee of the Company
or its subsidiaries has any present or future right to material benefits or
under which the Company or its subsidiaries has any material present or
future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plans". With
respect to the Company Plans, except as set forth in Schedule 4.10(b) or
the Current SEC Reports: (i) each Company Plan intended to be qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), has received a favorable determination letter from the Internal
Revenue Service (the "IRS") that it is so qualified and nothing has
occurred since the date of such letter that is reasonably likely to affect
the qualified status of such Company Plan; (ii) each Company Plan has been
operated in all material respects in accordance with its terms and the
requirements of applicable law; (iii) neither the Company nor any of its
subsidiaries has incurred any direct or indirect liability under, arising
out of or by operation of Title IV of ERISA, in connection with the
termination of, or withdrawal from, any Company Plan or other retirement
plan or arrangement and no fact or event exists that is reasonably likely
to give rise to any liability, except as would not, individually or in the
aggregate, have a Material Adverse Effect.
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Except as set forth in Schedule 4.10(b) or the Current SEC Reports, the
aggregate accumulated benefit obligations of each Company Plan subject to
Title IV of ERISA (as of the date of the most recent actuarial valuation
prepared for such Company Plan) do not exceed the fair market value of the
assets of such Company Plan (as of the date of such valuation).
(b) With respect to each Company Plan, the Company has made or will
make available to Parent a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the
extent applicable: (i) the most recent determination letter, if applicable;
(ii) any summary plan description by the Company or its subsidiaries to
their employees concerning the extent of the benefits provided under a
Company Plan; and (iii) for the most recent year, if applicable, (A) the
Form 5500 and attached schedules and (B) actuarial valuation reports.
(c) With respect to any Company Plan, except as would not have a
Material Adverse Effect, (i) no actions, suits or claims (other than
routine claims for benefits in the ordinary course) are pending or, to the
knowledge of the Company, threatened and (ii) no written or, to the
knowledge of the Company, oral communication has been received by the
Company from any governmental entity in respect of any Company Plan subject
to Title IV of ERISA concerning the funded status of any such plan or any
transfer of assets and liabilities from any such plan in connection with
the transactions contemplated herein.
(d) Except as set forth in Schedule 4.10(d), no Company Plan exists
that provides for the payments to any present or former employee of the
Company or its subsidiaries of any amount of money or other property or
accelerates or provides any other rights or benefits to any present or
former employee of the Company or its subsidiaries, as a result of the
transactions contemplated by this Agreement, whether or not such payment
would constitute a parachute payment within the meaning of Code section
280G.
(e) Neither the Company nor any of its subsidiaries is a party to any
collective bargaining or other labor union contracts or is the subject of
any proceeding asserting that it or any subsidiary has committed an unfair
labor practice. There is no pending or, to the knowledge of the Company,
threatened labor dispute, strike or work stoppage against the Company or
any of its subsidiaries which would interfere with the respective business
activities of the Company or its subsidiaries. There is no action, suit,
complaint, charge, arbitration, inquiry, proceeding, grievance or
investigation by or before any court, government agency, administrative
agency or commission brought by or on behalf of any employee, prospective
employee, former employee, retiree or other representative of the Company's
employees pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries other than any which would not,
individually or in the aggregate, have a Material Adverse Effect. Neither
the Company nor any of its subsidiaries is a party to or otherwise bound
by, any consent, decree, or citation by any government entity relating to
employees or employment practices.
(f) Except as set forth on Schedule 4.10(f), neither the Company nor
any of its subsidiaries sponsor, maintain or contribute to any Company Plan
that provides post-retirement medical or life insurance benefits to any
present or former employee of the Company or its subsidiaries.
4.11 Environmental Laws and Regulations. Except as publicly disclosed by
the Company in the Current SEC Reports or as set forth in Schedule 4.11, (i) the
Company and each of its subsidiaries is, and has been for the past three years,
in material compliance with all applicable federal, state, local and foreign
statutes, laws, regulations, orders, judgments and decrees relating to pollution
or protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), except for non-compliance that in the
aggregate would not have a Material Adverse Effect and (ii) neither the Company
nor any of its subsidiaries has received written notice of, or, to the knowledge
of the Company, is the subject of, any action, cause of action, claim,
investigation, demand or notice by any person or entity alleging liability or
investigatory or remedial obligations under or non-compliance with any
Environmental Law (an "Environmental Claim") which, in the aggregate, is
reasonably likely to have a Material Adverse Effect. Materials or substances
that are regulated or that could result in liability under Environmental Laws,
including without limitation asbestos, polychlorinated
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biphenyls and petroleum and petroleum products, have not been generated,
transported, treated, stored, disposed of, arranged to be disposed of, or
released by the Company or any of its subsidiaries at, on, from or under any of
the properties or facilities currently owned, leased or otherwise used by the
Company or its subsidiaries in violation of, or in a manner or to a location
that is reasonably likely to give rise to liability under, Environmental Laws
that would, in the aggregate, have a Material Adverse Effect.
4.12 Intellectual Property.
(a) Schedule 4.12(a) sets forth (i) all Intellectual Property material
to the business of the Company and its subsidiaries as currently conducted
that is owned, held or used by the Company or its subsidiaries ("Company
IP") and issued by or registered or filed with, or which has been submitted
to, any governmental entity and (ii) each and every material license,
sublicense, consent-to-use agreement and other agreement concerning Company
IP to which the Company and/or any of its subsidiaries is a party ("IP
Licenses").
(b) Except as disclosed on Schedule 4.12(b) or as would not,
individually or in the aggregate, have a Material Adverse Effect: (i) the
patents and trademark and copyright registrations owned by the Company or
its subsidiaries are, to the knowledge of the Company, valid, enforceable,
unexpired and not abandoned, the Company and/or its subsidiaries owns or
has the right to use all the Company IP, free of encumbrances, and, to the
knowledge of the Company, such Intellectual Property does not infringe upon
or otherwise impair the Intellectual Property of, and is not being
infringed upon or impaired by, any third party; (ii) no judgment, decree,
injunction, rule or order has been rendered or, to the knowledge of the
Company, is threatened by any governmental entity which would limit, cancel
or question the validity of (or the Company's or any subsidiary's right to
own or use) any Company IP; (iii) no action, suit or proceeding is pending,
or to the knowledge of the Company, threatened that seeks to limit, cancel
or question the validity of (or the Company's or any subsidiary's right to
own or use) any Company IP; (iv) the Company has made all filings and
executed all agreements reasonably necessary to maintain its interests in
the Company IP; (v) no party to an IP License is in breach or default
thereunder; and (vi) the transactions contemplated by this Agreement do not
impair or limit the rights of the Company or any of its subsidiaries under
any IP License, or cause any payment to be due or accelerated thereunder.
For the purposes of this Section 4.12, "Intellectual Property" shall means
all U.S., state and foreign intellectual property, including without limitation
all (i) inventions, discoveries, processes, designs and related improvements and
know-how, whether or not patented or patentable; (ii) copyrights and works of
authorship in any media, including computer programs, software, databases,
Internet site content and related items, advertising and promotional materials
(including graphics, and text), designs, proprietary or copyrightable elements
of pictorial, graphic or sculptural works, and all other authors' rights; (iii)
trademarks, service marks, trade names, brand names, corporate names, domain
names, logos, trade dress and all elements thereof, the goodwill of any business
symbolized thereby, and all common-law rights relating thereto; (iv) trade
secrets and other proprietary information; (v) all registrations, applications,
recordings, and licenses or other agreements related to the foregoing; and (vi)
all rights to obtain renewals, extensions, continuations, continuations-in-part,
reissues, divisions or similar legal protections related to the foregoing.
4.13 Year 2000 Compliance. To the knowledge of the Company, except as
would not, individually or in the aggregate, have a Material Adverse Effect, all
computer hardware, software, databases, systems and other computer equipment
owned, held, and/or used by the Company or any of its subsidiaries, can be used
prior to, during and after the calendar year 2000 A.D., and will operate during
each such time period, either on a stand-alone basis, or by interacting or
interoperating with third-party software, without error relating to the
processing, calculating, comparing, sequencing or other use of date data.
4.14 Contracts. Except as set forth on Schedule 4.14, neither the Company
nor any of its subsidiaries is, or has received any notice or has any knowledge
that any other party is, or would with the passage of time or the giving of
notice or both be, in default in any respect under any Contract to which it or
any of its subsidiaries is a party or by which it or any such subsidiary is
bound, except for those defaults which would not, individually or in the
aggregate, have a Material Adverse Effect. Except as set forth in Schedule 4.14
or as disclosed in the Current SEC Reports, neither the Company nor any of its
subsidiaries is subject to or bound
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by (i) any Contract required to be disclosed pursuant to Items 404 or 601 of
Regulation S-K of the SEC, including any Contracts entered into since the
respective dates of the Current SEC Reports, or (ii) any exclusive dealing
arrangement or other Contract containing covenants which limit the ability of
the Company or any subsidiary to compete in any significant line of business as
presently conducted by it or which materially restrict the geographic area in
which, or method by which, the Company or any subsidiary may carry on its
business as presently conducted by it.
4.15 Insurance. The Company and its subsidiaries are insured with
reputable insurers against such risks and in such amounts as the management of
the Company reasonably has determined to be appropriate or as required by law.
All of the insurance policies, binders, or bonds maintained by the Company or
its subsidiaries are in full force and effect; the Company and its subsidiaries
are not in default thereunder; and all claims thereunder have been filed in due
and timely fashion, in each instance except for cases which would not,
individually or in the aggregate, have a Material Adverse Effect.
4.16 Brokers and Finders. Except for the fees and expenses payable to
Wasserstein Perella & Co., Inc., which fees and expenses are reflected in its
agreement with the Company, true and complete copies of which have been
furnished to Parent, the Company has not employed any investment banker, broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any investment
banking, brokerage, finder's or similar fee or commission in connection with
this Agreement or the transactions contemplated hereby.
4.17 Opinion of Financial Advisors. The Company has received the opinion
of Wasserstein Perella & Co., Inc., dated as of the date hereof, to the effect
that, as of such date, the cash consideration to be received by the stockholders
of the Company in the Merger is fair to such stockholders from a financial point
of view, a copy of which opinion has been provided to Parent.
4.18 Customers and Distributors. Schedule 4.18 sets forth a list of the
ten largest customers and distributors of the Company and its subsidiaries
(based on 1998 annual revenues for those businesses currently operated by the
Company). Since April 1, 1999 and prior to the date hereof, except as would not,
individually or in the aggregate, have a Material Adverse Effect, none of such
customers or distributors has terminated or materially reduced its purchases or
orders of the Company's and its subsidiaries' products, nor has any such
customer or distributor specifically indicated that it intends to do so.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
AND NEWCO
Each of Parent and Newco (upon its execution hereof) represent and warrant
jointly and severally to the Company that:
5.1 Corporate Organization and Qualification. Parent is and Newco upon its
execution hereof will be, a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation.
5.2 Authority Relative to This Agreement. Parent has, and upon its
execution hereof, Newco will have, the requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement and the consummation by Parent of the
transactions contemplated hereby have been, and upon its execution hereof, by
Newco of the transactions contemplated hereby will have been, duly and validly
authorized by the respective Boards of Directors of Parent and Newco and
immediately following the execution of this Agreement by Newco it will be
adopted by Parent as sole stockholder of Newco, and no other corporate
proceedings on the part of Parent are, or upon execution hereof by Newco will on
the part of Newco be, necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent, and upon its execution hereof, will have been
duly and validly executed and delivered by Newco and, assuming this Agreement
constitutes the valid and binding agreement of the Company, constitutes valid
and
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binding agreement of Parent, and upon its execution hereof, will constitute
valid and binding agreement of Newco, enforceable against each of them in
accordance with its terms, except that the enforcement hereof may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
5.3 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Parent or Newco nor the performance by Parent and
Newco of their obligations herein or the consummation by Parent and Newco of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the Certificate of Incorporation or the By-Laws,
respectively, of Parent or Newco; (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority or any other person or entity, except (i) in connection
with the applicable requirements of the HSR Act, (ii) pursuant to the applicable
requirements of the Exchange Act, (iii) the filing of the Certificate of Merger
pursuant to the DGCL and appropriate documents with the relevant authorities of
other states in which Parent is authorized to do business, (iv) required filings
with and notifications to the NYSE, and (v) as may be required by any applicable
state securities or "blue sky" laws or state takeover laws, (v) such filings,
consents, approvals, orders, registrations, declarations and filings as may be
required under the laws of any foreign country in which Parent or any of its
subsidiaries conducts any business or owns any assets, (vi) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or the transactions contemplated by this Agreement or
(vii) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not in the aggregate have
a Material Adverse Effect or adversely affect the consummation of the
transactions contemplated hereby; (c) except as set forth in Schedule 5.3(c),
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
modification, cancellation or acceleration or lien or other charge or
encumbrance) under any Contract; or (d) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in this
Section 5.3 are duly and timely obtained or made, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or any of
its subsidiaries or to any of their respective assets, except in the case of
clauses (b), (c) and (d), as would not, individually or in the aggregate, have a
Material Adverse Effect.
5.4 Parent Financial Condition. The only material asset of Parent is its
ownership of approximately 89.5% of the outstanding common stock of CCPC Holding
Company, Inc., a Delaware corporation (formerly known as Corning Consumer
Products Company) ("CCPC"). The consolidated balance sheets and the related
consolidated statements of operations, stockholders equity and cash flows
(including the related notes thereto) of CCPC included in the reports and
documents filed by CCPC with the SEC since January 1, 1999 and prior to the date
hereof, as of their respective dates, complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
(except as otherwise noted therein), and present fairly, in all material
respects, the consolidated financial position of CCPC and its consolidated
subsidiaries as of their respective dates, and the consolidated results of their
operations and their cash flows for the periods presented therein (subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments).
5.5 Proxy Statement. None of the information supplied by Parent or Newco
in writing for inclusion in the Proxy Statement will, at the respective times
that the Proxy Statement or any amendments or supplements thereto are filed with
the SEC and are first published or sent or given to holders of Shares, and in
the case of the Proxy Statement, at the time that it or any amendment or
supplement thereto is mailed to the Company's stockholders, at the time of the
Stockholders' Meeting or at the Effective Time, 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.
5.6 Financing. Borden, Inc. has, and as of closing date, Parent will have,
sufficient funds available to purchase all of the Shares outstanding on a fully
diluted basis and to pay all fees and expenses related to the transactions
contemplated by this Agreement.
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5.7 Interim Operations of Newco. Newco will be formed solely for the
purpose of engaging in the transactions contemplated hereby and will not engage
in any business activities or conduct any operations other than in connection
with the transactions contemplated hereby.
5.8 Brokers and Finders. Except for Goldman, Sachs & Co. (the fees and
expenses of which will be paid by Parent), Parent has not employed any
investment banker, broker, finder, consultant or intermediary in connection with
the transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Conduct of Business of the Company.
(a) The Company agrees that during the period from the date of this
Agreement to the Effective Time (unless the other party shall otherwise
agree in writing and except as otherwise contemplated by this Agreement),
the Company will, and will cause each of its subsidiaries to, conduct its
operations according to its ordinary and usual course of business
consistent with past practice and, to the extent consistent therewith, with
no less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organizations, keep
available the service of its current officers and employees and preserve
its relationships with distributors, customers, suppliers and others having
business dealings with it to the end that goodwill and ongoing businesses
shall not be impaired in any material respect prior to, at, or following
the Effective Time. Without limiting the generality of the foregoing, and
except as otherwise expressly permitted in this Agreement or as set forth
in Schedule 6.1(a), prior to the Effective Time, neither the Company nor
any of its subsidiaries will, without the prior written consent of Parent:
(i) except for shares to be issued or delivered under outstanding
option agreements and restricted stock awards pursuant to the Option
Plans, or pursuant to the Company's Employee Stock Purchase Plan, issue,
deliver, sell, dispose of, pledge or otherwise encumber, or authorize or
propose the issuance, sale, disposition or pledge or other encumbrance
of or redeem, purchase or otherwise acquire, (A) any additional shares
of capital stock of any class (including the Shares) or other ownership
or equity investment, or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of
capital stock, or other ownership or equity investment or any rights,
warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any shares of capital stock or other
ownership or equity investment or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for, any
shares of capital stock or other ownership or equity investment, or (B)
any other securities in respect of, in lieu of, or in substitution for,
Shares outstanding on the date hereof;
(ii) split, combine, subdivide or reclassify any Shares or declare,
set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any Shares or
otherwise make any payments to stockholders in their capacity as such,
other than the declaration and payment of regular annual cash dividends
in accordance with past dividend policy not in excess of $0.32 per share
per year pro rated to reflect the earliest anticipated Effective Time
and except for dividends by a wholly owned subsidiary of the Company;
(iii) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries not
constituting an inactive subsidiary (other than the Merger);
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(iv) adopt any amendments to its Certificate of Incorporation or
By-Laws or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or
ownership of any subsidiary not constituting an inactive subsidiary of
the Company;
(v) make any material acquisition, by means of merger,
consolidation or otherwise, or material disposition, of assets or
securities;
(vi) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or guarantee or
otherwise become liable in respect of any such indebtedness (provided
that any indebtedness incurred after the date hereof shall be prepayable
at any time at the option of the Company without premium or penalty) or
make any loans, advances or capital contributions to, or investments in,
any other person, other than to the Company or any wholly owned
subsidiary of the Company;
(vii) except as may be required as a result of a change in law or
in generally accepted accounting principles, change any of the
accounting practices or principles used by it;
(viii) except as required by law or the applicable taxing
authority, make or change in any material respect any material Tax
election, make or change in any material respect any method of
accounting with respect to Taxes, file any amended Tax Return, or settle
or compromise any proceeding with respect to any material Tax liability;
(ix) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (A) in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
the Company or incurred in the ordinary course of business and
consistent with past practice and (B) to the extent required to be paid,
discharged or satisfied pursuant to the terms of any contract in
existence on the date hereof;
(x) settle or offer to settle any claims, complaints or lawsuits
including (w) Steven Goldstein v. Paul A. Saxton, et al., filed June,
1999, in The Court of Chancery of the State of Delaware in and for New
Castle County, C.A. No. 17192NC, (x) The Barry Family Limited
Partnership of California v. General Housewares Corp., et al., filed
June, 1999, in The Court of Chancery of the State of Delaware in and for
New Castle County, C.S. No. 17202NC and (y) Great Neck Capital
Appreciation Investment Partnership v. Paul A. Saxton, et al., filed
June, 1999, in The Court of the Chancery of the State of Delaware in and
for New Castle County, C.A. No. 17196NC, and (z) Martin Bloom, et. al.
v. Paul A. Saxton, et. al, filed July 2, 1999, in County Vigo, State of
Indiana, C.A. No. 84D01-9907-CP-1104, and any and all suits relating to
the same underlying claims, other than settlements of claims, complaints
or proceedings not specified above in the ordinary course of business
and consistent with past practice or not otherwise material to the
Company and its subsidiaries taken as a whole;
(xi) authorize any single or related group of capital expenditures
in excess of $200,000 (or $850,000 in the case of capital expenditures
relating to Oxo tooling) or capital expenditures which are, in the
aggregate, in excess of $1,200,000 for the Company and its subsidiaries
taken as a whole;
(xii) amend or modify in any material respect or terminate any
material existing IP License, execute any new material IP License, sell,
license or otherwise dispose of, in whole or in part, any Company IP,
and/or subject any Company IP to any material Encumbrance;
(xiii) grant any material increases in the compensation of any of
its directors, officers or key employees, which increases, for each such
individual, shall not exceed ten percent (10%) of each such individual's
annual rate of compensation;
(xiv) pay or agree to pay any pension, retirement allowance or
other employee benefit not required by any of the existing benefit,
severance, termination, pension or employment plans, agreements or
arrangements as in effect on the date hereof to any employee director or
officer, whether past or present;
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(xv) engage in any material transaction with, or enter into any
agreement, arrangement, or understanding with, directly or indirectly,
any of the Company's affiliates, other than the Company or its
wholly-owned subsidiaries, including, without limitation, any
transactions, agreements, arrangements, or understandings with any
affiliate or other person covered under Item 404 of Regulation S-K under
the Securities Act that would be required to be disclosed under such
Item 404;
(xvi) enter into any new or materially amend any existing
employment or severance or termination agreement with any employee,
director or officer;
(xvii) except as may be required to comply with applicable law,
become obligated under any new pension plan, welfare plan, multiemployer
plan, employee benefit plan, severance plan, benefit arrangement, or
similar plan or arrangement, which was not in existence on the date
hereof, or amend any such plan or arrangement in existence on the date
hereof if such amendment would have the effect of enhancing any benefits
thereunder;
(xviii) take or agree to take in writing or otherwise, any action
which would make any of the representations or warranties of the Company
contained in this Agreement untrue and incorrect in any respect that
would cause the condition in Section 7.2(a) not to be satisfied;
(xix) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing.
6.2 Acquisition Proposals.
(a) The Company shall not, and it shall cause its subsidiaries, and
their respective directors, officers, employees, financial and other
advisors, agents, representatives, affiliates and others working on its
behalf or at its direction (collectively, "Company Representatives") not
to, initiate, solicit, encourage or facilitate offers, inquiries or
proposals with respect to, or furnish any information relating to or
participate in any negotiations or discussions concerning, any merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any of its subsidiaries, or any purchase or sale of more
than 25% of the assets (including stock of subsidiaries) of the Company and
its subsidiaries, taken as a whole, or any purchase or sale of, or tender
or exchange offer for, more than 25% of the equity securities of the
Company or any of its subsidiaries (an "Acquisition Proposal"), other than
the transactions to be effected pursuant to this Agreement.
(b) Notwithstanding Section 6.2(a), the Board of Directors of the
Company may, directly or indirectly through Company Representatives: (x)
furnish information concerning the Company and its subsidiaries to any
person with respect to an unsolicited Acquisition Proposal pursuant to an
appropriate confidentiality agreement with terms not substantially less
favorable in the aggregate to the Company than those contained in the
Confidentiality Agreement (as hereinafter defined in Section 6.4) and (y)
negotiate and participate in discussions and negotiations with such person
concerning an Acquisition Proposal, if in either case (x) or (y), such
person has submitted a Superior Proposal (as defined below) to the Company.
In addition, nothing herein shall restrict the Company Board of Directors
from, to the extent required, complying with its disclosure obligations
under Federal securities laws, including Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal,
subject to any rights of Parent to terminate this Agreement and receive
payment of any fee due under Article VIII as a result thereof. Neither the
Company nor any subsidiary of the Company will waive any provision of any
confidentiality or standstill or similar agreement to which it is a party
without the prior written consent of Parent; provided that if specifically
requested by an entity or group, the Company may waive the provisions of
any "standstill" agreements between the Company and any entity or group to
the extent necessary to permit such entity or group to submit an
Acquisition Proposal that the Board of Directors believes, in its good
faith judgment based on information contained in such specific request, is
reasonably likely to result in a Superior Proposal.
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(c) The Company shall notify Parent promptly (and in any event within
one business day) of any inquiries, proposals or offers received by,
information requested from, or discussions or negotiations sought to be
initiated or continued with, it or any Company Representative with respect
to an Acquisition Proposal, indicating in each such notice the name of such
person and the material terms, conditions and other aspects of any such
inquiries, proposals, offers, requests, discussions or negotiations,
including a copy of any written Acquisition Proposal, and shall promptly
(and in any event within one business day) inform Parent of any material
developments with respect thereto. The Company agrees immediately to cease
and to cause to be terminated any activities, discussions or negotiations
conducted on or prior to the date of this Agreement with any parties other
than Parent with respect to any of the foregoing.
(d) For purposes of this Agreement, a "Superior Proposal" means a bona
fide written Acquisition Proposal made by a third party after the date
hereof for which all necessary financing is committed in full or reasonably
likely to be obtained and which, if accepted, is reasonably likely to be
consummated and taking into account all legal, financial and regulatory
aspects of the proposal and the person making such proposal, including the
relative expected consummation date, is financially superior to the holders
of Company Common Stock than the Merger.
6.3 Reasonable Efforts.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto shall use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including
using its reasonable efforts to obtain all necessary or appropriate
waivers, consents and approvals, to effect all necessary registrations,
filings and submissions (including, but not limited to, (i) filings under
the HSR Act and any other submissions requested by the Federal Trade
Commission or Department of Justice and (ii) such filings, consents,
approvals, orders, registrations and declarations as may be required under
the laws of any foreign country in which the Company or any of its
subsidiaries conducts any business or owns any assets) and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed
with the Merger as expeditiously as possible, subject to the other terms
and conditions hereof).
(b) Each of the parties hereto will keep the other party apprised of
the status of matters relating to the completion of the transactions
contemplated hereby. Subject to applicable laws relating to the exchange of
information, each of the Company and Parent shall have the right to review
in advance, and will consult with the other with respect to, all
information relating to the other party and each of their respective
subsidiaries, which appears in any waivers, consents, approvals, orders,
registrations, filings, submissions or declarations made with or written
materials submitted to any third party or government entity in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto agrees to act reasonably and as
promptly as practicable.
(c) Notwithstanding the foregoing, the Company shall not be obligated
to use its reasonable efforts or take any action pursuant to this Section
6.3 if in the opinion of the Board of Directors after consultation with its
counsel such actions would be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law.
6.4 Access to Information. Upon reasonable notice, the Company shall (and
shall cause each of its subsidiaries to) afford to officers, employees, counsel,
accountants and other authorized representatives of Parent ("Representatives"),
in order to evaluate the transactions contemplated by this Agreement, reasonable
access, during normal business hours and upon reasonable notice throughout the
period prior to the Effective Time, to its personnel, properties, books and
records and, during such period, shall (and shall cause each of its subsidiaries
to) furnish promptly to such Representatives all information concerning its
business, properties and personnel as may reasonably be requested, including,
without limitation, a copy of each report, schedule, registration statement and
other document filed by it or its subsidiaries pursuant to the requirements of
federal or state securities laws. Between the date of this Agreement and the
Effective Time, the Company shall provide Parent at the end of each month with
monthly financial statements in the form and at the time any
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such statements are customarily provided for internal reporting purposes, it
being understood that such financial statements are for informational purposes
only and no representation is made with respect thereto. Parent agrees that it
will not, and will cause its Representatives not to, use any information
obtained pursuant to this Section 6.4 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. The
Confidentiality Agreement, dated June 15, 1999 (the "Confidentiality
Agreement"), by and between the Company and Parent shall apply with respect to
information furnished by the Company, its subsidiaries and the Company's
officers, employees, counsel, accountants and other authorized representatives
hereunder. No investigation pursuant to this Section 6.4 or otherwise shall
affect any representations or warranties of the parties herein or the conditions
to the obligations of the parties hereto.
6.5 Publicity. The parties will consult with each other and will mutually
agree upon any press releases or public announcements pertaining to the Merger
or the other transactions contemplated hereby and shall not issue any such press
releases or make any such public announcements prior to such consultation and
agreement, except as may be required by applicable law or by obligations
pursuant to any listing agreement with any national securities exchange, in
which case the party proposing to issue such press release or make such public
announcement shall use its reasonable efforts to consult in good faith with and
obtain the approval of the other party before issuing any such press releases or
making any such public announcements.
6.6 Indemnification of Directors and Officers.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification
set forth in the Restated Certificate of Incorporation and By-Laws of the
Company on the date of this Agreement, which provisions thereafter shall
not be amended, repealed or otherwise modified in any manner that would
adversely affect the rights thereunder of individuals who at any time prior
to the Effective Time were directors or officers of the Company in respect
of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law.
(b) Parent shall cause to be maintained in effect for the Indemnified
Parties (as defined below) for not less than six years the current policies
of directors' and officers' liability insurance and fiduciary liability
insurance maintained by the Company and the Company's subsidiaries with
respect to matters occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement);
provided, that Parent may substitute therefor policies of substantially the
same coverage containing terms and conditions which are no less
advantageous, in any material respect, to the Company's present or former
directors, officers, employees, agents or other individuals otherwise
covered by such insurance policies prior to the Effective Time (the
"Indemnified Parties") and provided, further, that in no event shall Parent
be required to expend in any one year an amount in excess of 150% of the
annual premiums currently paid by the Company for such insurance as set
forth on Schedule 6.6(b), although it shall be obligated to obtain a policy
with the greatest coverage available for a cost not exceeding such amount.
(c) This Section 6.6 is intended to benefit the Indemnified Parties
and shall be binding on all successors and assigns of Parent, Newco, the
Company and the Surviving Corporation. Parent hereby guarantees the
performance by the Surviving Corporation of the indemnification and other
obligations pursuant to this Section 6.6 and the Certificate of
Incorporation and By-laws of the Surviving Corporation.
6.7 Employees.
(a) For a period commencing at the Effective Time and ending on
December 31, 2000, Parent shall, or shall cause the Surviving Corporation
to, provide employee benefit plans, programs, arrangements and policies
(other than those related to equity securities of the Company) for the
benefit of employees of the Company and its subsidiaries that in the
aggregate are no less favorable to such employees than the Company Plans.
All service credited to each employee by the Company through the Effective
Time shall be recognized by Parent for all purposes, including for purposes
of eligibility, vesting and benefit accruals under any employee benefit
plan provided by Parent for the benefit of the employees.
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(b) Individual Agreements. Parent shall cause the Surviving
Corporation to honor and assume the employment agreements, executive
termination agreements and individual benefit arrangements listed on
Schedule 6.7(b), all as in effect at the Effective Time.
6.8 Certain Financing Matters. The Company agrees to provide, and will
cause its subsidiaries and its and their respective officers, employees and
advisors to provide, all necessary cooperation reasonably requested in
connection with the arrangement of any financing to be consummated
contemporaneous with or at or after the Merger, including without limitation any
financing to be provided to the Company or any of its subsidiaries by the
Parent; provided, that the Company will not be required to incur any
out-of-pocket expenses or make any binding commitments with respect thereto
until after the consummation of the Merger.
6.9 Notification of Certain Matters. The Company shall give prompt notice
to Parent, and Parent shall give prompt notice to the Company, of (a) the
occurrence or non-occurrence of any event which causes any representation or
warranty of the Company or Parent and Newco, as the case may be, contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (b) any failure or inability of the Company or Parent, as
the case may be, to comply with or satisfy in all material respects any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.9 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
6.10 Rights Agreement. The Company shall not amend, modify or waive any
provision of the Rights Agreement, and shall not take any action to redeem the
Rights or render the Rights inapplicable to any transaction other than the
transactions to be effected pursuant to this Agreement, which is reasonably
likely to reduce the likelihood of or delay the consummation of the Merger, or
result in any increase in the costs or decrease in the benefits to Parent of the
Merger, or affect the capitalization of Parent or any of its affiliates after
the Merger.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been duly adopted
by the stockholders of the Company in accordance with applicable law.
(b) Injunction. There shall not be in effect any law, statute, rule,
regulation, executive order, decree, ruling or injunction or other order of
a court or governmental or regulatory agency of competent jurisdiction
prohibiting or making illegal the transactions contemplated herein.
(c) The applicable waiting period under the HSR Act shall have expired
or been terminated.
7.2 Conditions to the Company's Obligations to Effect the Merger. The
obligations of the Company to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following additional conditions:
(a) The representations and warranties of Parent and Newco contained
in this Agreement shall be true and correct (in all material respects, in
the case of representations and warranties not already qualified as to
materiality by their terms) at and as of the Effective Time as though made
on and as of such date (except (i) for changes specifically permitted by
this Agreement and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and correct
as of such date), and the Company shall have received a certificate of the
President or a Vice President of Parent to the foregoing effect.
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(b) Parent and Newco shall have performed and complied with in all
material respects their obligations under this Agreement to be performed or
complied with on or prior to the Effective Time, and the Company shall have
received a certificate of the President or a Vice President of Parent to
the foregoing effect.
7.3 Conditions to the Parent's and Newco's Obligations to Effect the
Merger. The obligations of Parent and Newco to effect the Merger are subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions:
(a) The representations and warranties of the Company contained in
this Agreement shall be true and correct (in all material respects, in the
case of representations and warranties not already qualified as to
materiality by their terms) at and as of the Effective Time as though made
on and as of such date (except (i) for changes specifically permitted by
this Agreement and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and correct
as of such date), and the Parent shall have received a certificate of the
Chief Executive Officer of the Company to the foregoing effect.
(b) The Company shall have performed and complied with in all material
respects its obligations under this Agreement to be performed or complied
with on or prior to the Effective Time, and Parent shall have received a
certificate of the Chief Executive Officer of the Company to the foregoing
effect.
(c) Governmental Filings and Consents. All governmental consents,
orders and approvals legally required for the consummation of the Merger
and the transactions contemplated hereby shall have been obtained and be in
effect at the Effective Time (including, but not limited to, such approvals
and consents as may be required under the laws of any foreign country in
which the Company or any of its subsidiaries conducts any business or owns
any assets), except where the failure to obtain any such consent would not
reasonably be expected to have a Material Adverse Effect on the Company or
a material adverse effect on the financial condition, business, results of
operations, assets or liabilities of Parent and its subsidiaries, taken as
a whole.
(d) There shall not be any action or proceeding brought or threatened
by any governmental entity seeking any executive order, decree, ruling or
injunction or other order of a court of governmental or regulatory entity
of competent jurisdiction which would have the effect of prohibiting or
making illegal any of the transactions contemplated herein.
(e) Rights Agreement. No Distribution Date or Stock Acquisition Date
(each as defined in the Rights Agreement) shall have occurred.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
8.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, by the
mutual written consent of Parent and the Company.
8.2 Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned by Parent or the Company if (i) any
court of competent jurisdiction in the United States or some other governmental
body or regulatory authority shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and nonappealable or (ii) the Company Stockholder Approval shall
not have been received at the Stockholders Meeting duly called and held, or
(iii) the Effective Time shall not have occurred on or before November 30, 1999
(the "Termination Date"), provided, however, that the right to terminate this
Agreement under this Section 8.2(iii) shall not be available to any party whose
failure to fulfill any obligations under this Agreement has been the primary
cause of the failure of the Effective Time to occur on or before the Termination
Date until ten business days after such failure has been cured.
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8.3 Termination by Parent. This Agreement may be terminated by Parent
prior to the Effective Time, if (i) the Company shall have failed to perform in
any material respect any of its material obligations under this Agreement to be
performed at or prior to such date of termination, which failure to perform is
not cured, or is incapable of being cured, within 30 days after the receipt by
the Company of written notice of such failure, (ii) any representation or
warranty of the Company contained in this Agreement shall not be true and
correct (except for changes permitted by this Agreement and those
representations which address matters only as of a particular date shall remain
true and correct as of such date), except, in any case, such failures to be true
and correct as would not, individually or in the aggregate, result in a failure
of the condition set forth in Section 7.3(a); provided, that such failure to be
true and correct is not cured, or is incapable of being cured, within 30 days
after the receipt by the Company of written notice of such failure, or (iii) the
Board of Directors of the Company withdraws or materially modifies or changes
its recommendation of this Agreement or the Merger in a manner adverse to Parent
or Newco or fails to reconfirm such recommendation if so requested by Parent,
within 10 business days following such request, or approves or recommends
another Acquisition Proposal.
8.4 Termination by the Company. This Agreement may be terminated by the
Company and the Merger may be abandoned at any time prior to the Effective Time
if (i) Newco or Parent shall have failed to perform in any material respect any
of their material obligations under this Agreement to be performed at or prior
to such date of termination, which failure to perform is not cured, or is
incapable of being cured, within 30 days after the receipt by Parent of written
notice of such failure, (ii) any representation or warranty of the Company
contained in this Agreement shall not be true and correct (except for changes
permitted by this Agreement and those representations which address matters only
as of a particular date shall remain true and correct as of such date), except,
in any case, such failures to be true and correct would not, individually or in
the aggregate, result in a failure of the condition set forth in Section 7.2(a);
provided, that such failure to be true and correct is not cured, or is incapable
of being cured, within 30 days after the receipt by Parent of written notice of
such failure or (iii) prior to the Company Stockholder Approval, upon five
business days' prior irrevocable written notice to Parent, in order to accept an
unsolicited Superior Proposal for which all necessary financing is committed;
provided, however, that (A) such notice shall include a copy of any proposed or
definitive documentation relating to such Superior Proposal (including all
financing documentation), and shall otherwise specify all material terms,
conditions and other information with respect thereto, and (B) prior to any such
termination, the Company shall, if requested by Parent in connection with any
revised proposal Parent might make, negotiate in good faith for such five
business day period with Parent, and such third party proposal remains a
Superior Proposal after taking into account any revised proposal by Parent
during such five business day period; and provided, further, that it shall be a
condition to termination pursuant to this Section 8.4(iii) that the Company
shall have made the payment of the fee to Parent required by Section 8.5(b).
8.5 Effect of Termination.
(a) In the event of the termination and abandonment of this Agreement
pursuant to Article VIII, this Agreement shall forthwith become void and
have no effect, without any liability on the part of any party hereto or
its affiliates, directors, officers or stockholders, other than the
provisions of this Section 8.5 and the provisions of Section 9.1 and the
last two sentences of Section 6.4. Nothing contained in this Section 8.5
shall relieve any party from liability for any breach of this Agreement.
(b) If:
(i) this Agreement is terminated by the Company pursuant to Section
8.4(iii) hereof or by Parent pursuant to Section 8.3(iii) hereof, or
(ii) (A) this Agreement is terminated pursuant to Sections 8.2(ii)
or 8.3(i) and (B) a Third Party made a proposal publicly or to the
Company or expressed any interest publicly or to the Company with
respect to any Third Party Acquisition and (C) within twelve months
after any such termination, either (1) the Company enters into an
agreement with respect to any Third Party Acquisition, which is later
consummated or (2) any Third Party Acquisition occurs;
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then the Company shall pay to Parent, within one business day following
the consummation of such Third Party Acquisition, or no later than
concurrently with any termination contemplated by Section 8.4(iii) above
or within one business day after a termination contemplated by Section
8.3(iii), a fee, in cash and in immediately available funds, of $4.25
million (the "Termination Fee"); provided, however, that the Company in
no event shall be obligated to pay more than one Termination Fee with
respect to all such agreements and occurrences and such termination.
"Third Party" means any person other than Parent, Newco or any affiliate
thereof.
"Third Party Acquisition" means any transaction contemplated by the
definition of "Acquisition Proposal" which, together with any related
transactions, would result in (i) the acquisition by any person of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of more than
50% of the Company Common Stock, (ii) the holders of Shares immediately prior to
such transaction(s) acquiring or holding securities in respect of such Shares
with less than 50% of the voting power of the capital stock of the ultimate
parent entity immediately following consummation of such transaction(s), or
(iii) the sale or other disposition of more than 50% of the assets (including
stock of subsidiaries) of the Company and its subsidiaries, taken as a whole.
The Company acknowledges that the provisions contained in this Section 8.5(b)
are an integral part of the transactions contemplated by this Agreement, and
that, without these provisions, Parent and Newco would not enter into this
Agreement.
8.6 Extension; Waiver. At any time prior the Effective Time, each of
Parent, Newco and the Company may (i) extend the time for the performance of any
of the obligations or other acts of the other party, (ii) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of either party hereto to any such extension
or waiver shall be valid only if set forth in any instrument in writing signed
on behalf of such party. The failure or delay of either party hereto to assert
any of its rights hereunder shall not constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Payment of Expenses. Whether or not the Merger shall be consummated,
each party hereto shall pay its own expenses incident to preparing for, entering
into and carrying out this Agreement and the consummation of the transactions
contemplated hereby, provided that the Surviving Corporation shall pay, with
funds of the Company and not with funds provided by any of Parent Companies, any
and all property or transfer taxes imposed on the Surviving Corporation or any
Gains Taxes.
9.2 Survival of Representations and Warranties; Survival of
Confidentiality. The representations and warranties made herein shall not
survive beyond the Effective Time. This Section 9.2 shall not limit any covenant
or agreement of the parties hereto which by its terms contemplates performance
after the Effective Time. The Confidentiality Agreement shall survive any
termination of this Agreement, and the provisions of such Confidentiality
Agreement shall apply to all information and material delivered by any party
hereunder.
9.3 Modification or Amendment. Subject to the applicable provisions of the
DGCL, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after
approval of this Agreement by the stockholders of the Company, no amendment
shall be made which by law requires prior approval of the stockholders of the
Company unless such approval has been obtained.
9.4 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
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9.5 Counterparts; Facsimile. For the convenience of the parties hereto,
this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement. This Agreement may be executed by
facsimile signatures of the parties hereto.
9.6 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.
9.7 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the other parties shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile transmission (with a confirming copy sent by overnight courier),
as follows:
(a) If to the Company, to
Raymond J. Kulla, Esq.
General Housewares Corp.
1536 Beech Street
Terre Haute, Indiana 47804
(812) 232-1000 (telephone)
(812) 232-7016 (telecopier)
with a copy to:
Brian W. Duwe, Esq.
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700 (telephone)
(312) 407-0411 (telecopier)
(b) If to Parent or Newco, to
Phyllis R. Yeatman
CCPC Acquisition Corp.
2711 Centerville Road, Suite 202
Wilmington, Delaware 19808
(302) 633-7800 (telephone)
(302) 633-7808 (telecopies)
with a copy to:
William F. Stoll, Jr.
Borden, Inc.
180 East Broad Street, 30th Floor
Columbus, Ohio 43215-3799
(614) 225-2024 (telephone)
(614) 627-8374 (telecopies)
and a copy to:
David J. Sorkin, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
(212) 455-2000 (telephone)
(212) 455-2502 (telecopier)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
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9.8 Entire Agreement; Assignment. This Agreement and the Confidentiality
Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof. 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 Newco may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any affiliate of Parent; provided, however, that no such assignment
shall relieve Parent from any of its obligations hereunder. 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.
9.9 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right to
receive the consideration payable in the Merger pursuant to Article III hereof
is intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement;
provided, however, that the provisions of Section 6.6 shall inure to the benefit
of and be enforceable by the Indemnified Parties.
9.10 Certain Definitions. As used herein:
(a) "Material Adverse Effect" shall mean (x) with respect to the
Company, any adverse change in the financial condition, business, results
of operations, assets or liabilities of the Company or any of its
subsidiaries, which is material to the Company and its subsidiaries, taken
as a whole, or excluding any changes or effects resulting from general
changes in economic conditions and (y) with respect to the Company or
Parent, any change, circumstance or event that would prevent, or materially
hinder or delay the consummation of the transactions contemplated by this
Agreement by such party and its subsidiaries. Whenever a statement herein
is qualified by, or includes a reference to, whether any facts, events or
circumstances have a Material Adverse Effect, all such facts, events or
circumstances so referenced shall be considered both individually and in
the aggregate, whether or not so expressly indicated in such statement.
(b) "subsidiary" shall mean, when used with reference to any entity,
any corporation a majority of the outstanding voting securities of which
are owned directly or indirectly by such former entity.
(c) "Taxes" shall mean all Federal, state, local and foreign taxes,
customs, duties or similar fees and other assessments of a similar nature,
(whether imposed directly or through withholding), including any interest,
additions to tax, or penalties applicable thereto.
9.11 Obligation of Parent. Whenever this Agreement requires Newco to take
any action, such requirement shall be deemed to include an undertaking on the
part of Parent to cause Newco to take such action and a guarantee of the
performance thereof.
9.12 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
9.13 Captions. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
9.14 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 "business day" shall mean any
day other than a Saturday, a Sunday, or a day on which banking institutions in
New York, New York are authorized or obligated by law or executive order to
close. As used in this Agreement, the term "affiliate(s)" shall have the meaning
set forth in Rule 12b-2 of the Exchange Act. As used in this Agreement, the term
"person" means an individual,
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corporation, partnership, limited liability company, association, trust,
unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act).
9.15 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
9.16 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to the remedy of specific performance of the terms hereof without the
posting of any bond or security, in addition to any other remedy at law or
equity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
GENERAL HOUSEWARES CORP.
By: /s/ PAUL A. SAXTON
----------------------------------
Name: Paul A. Saxton
Title: President and CEO
CCPC ACQUISITION CORP.
By: /s/ PHYLLIS R. YEATMAN
----------------------------------
Name: Phyllis R. Yeatman
Title: President
GHC ACQUISITION CORP.
By: /s/ PHYLLIS R. YEATMAN
----------------------------------
Name: Phyllis R. Yeatman
Title: President
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Borden, Inc., a New Jersey corporation, hereby guarantees the obligations of
Parent and Newco under Article III of the attached Agreement and Plan of Merger,
dated as of August 2, 1999, between CCPC Acquisition Corp. and General
Housewares Corp. (as such terms are defined therein).
BORDEN, INC.
By: /s/ WILLIAM F. STOLL, JR.
----------------------------------
Name: William F. Stoll, Jr.
Title: Senior Vice President
Dated as of August 2, 1999
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ANNEX B
[WASSERSTEIN PERELLA & CO LETTERHEAD]
August 1, 1999
Board of Directors
General Housewares Corp.
1536 Beech Street
Terre Haute, Indiana 47804
Members of the Board of Directors:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the holders of the common stock, par value $.33 1/3
per share (the "Shares"), of General Housewares Corp., a Delaware corporation
(the "Company"), of the $28.75 per Share cash consideration to be received by
such holders pursuant to the terms of the Agreement and Plan of Merger, dated as
of August 1, 1999 (the "Merger Agreement"), among the Company and CCPC
Acquisition Corp., a Delaware corporation ("Parent"). The Merger Agreement
provides for, among other things, a merger of a newly formed wholly-owned
subsidiary of Parent ("Sub") with and into the Company (the "Merger") pursuant
to which each outstanding Share (other than any such Shares held in the treasury
of the Company or owned by Parent, Sub or their respective subsidiaries and
affiliates) will be converted into the right to receive $28.75 per Share in cash
(the "Merger Consideration"). The terms and conditions of the Merger are set
forth in more detail in the Merger Agreement.
In connection with rendering our opinion, we have reviewed the Merger
Agreement. We have also reviewed and analyzed certain publicly-available
business and financial information relating to the Company for recent years and
interim periods to date, as well as certain internal financial and operating
information, including financial forecasts, analyses and projections prepared by
or on behalf of the Company and provided to us for purposes of our analysis, and
we have met with management of the Company to review and discuss such
information and, among other matters, the Company's business, operations,
assets, financial condition and future prospects.
We have reviewed and considered certain financial and stock market data
relating to the Company, and we have compared that data with similar data for
certain other companies, the securities of which are publicly traded, that we
believe may be relevant or comparable in certain respects to the Company or one
or more of its businesses or assets, and we have reviewed and considered the
financial terms of certain recent acquisitions and business combination
transactions in the housewares industry specifically, and in other industries
generally, that we believe to be reasonably comparable to the Merger or
otherwise relevant to our inquiry. We have also performed such other financial
studies, analyses, and investigations and reviewed such other information as we
considered appropriate for purposes of this opinion.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided to or discussed with us or publicly available, and we have
not assumed any responsibility for independent verification of any of such
information. We have also assumed and relied upon the reasonableness and
accuracy of the financial projections, forecasts and analyses provided to us,
and we have assumed that such projections, forecasts and analyses were
reasonably prepared in good faith and on bases reflecting the best currently
available judgments and estimates
[LOGO]
B-1
<PAGE> 77
of the Company's management. We express no opinion with respect to such
projections, forecasts and analyses or the assumptions upon which they are
based. In addition, we have not reviewed any of the books and records of the
Company, or assumed any responsibility for conducting a physical inspection of
the properties or facilities of the Company, or for making or obtaining an
independent valuation or appraisal of the assets or liabilities of the Company,
and no such independent valuation or appraisal was provided to us. We also have
assumed that the transactions described in the Merger Agreement will be
consummated without waiver or modification of any of the material terms or
conditions contained therein by any party thereto. Our opinion is necessarily
based on economic and market conditions and other circumstances as they exist
and can be evaluated by us as of the date hereof.
In the ordinary course of our business, we may actively trade the debt and
equity securities of the Company and Parent (or its affiliates) for our own
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.
We are acting as financial advisor to the Board of Directors of the Company
in connection with the proposed Merger and will receive a fee for our services,
a significant portion of which is contingent upon the consummation of the
Merger.
Our opinion addresses only the fairness, from a financial point of view, to
the stockholders of the Company of the Merger Consideration, and we do not
express any views on any other terms of the Merger. Specifically, our opinion
does not address the Company's underlying business decision to effect the
transactions contemplated by the Merger Agreement.
It is understood that this letter is for the benefit and use of the Board
of Directors of the Company in its consideration of the Merger and, except for
inclusion in its entirety in any registration statement or proxy statement
required to be circulated to stockholders of the Company relating to the Merger,
may not be quoted, referred to or reproduced at any time or in any manner
without our prior written consent. This opinion does not constitute a
recommendation to any stockholder as to how such holder should vote with respect
to the Merger, and should not be relied upon by any stockholder as such.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that, as of the date hereof,
the $28.75 per Share cash consideration to be received by the stockholders of
the Company pursuant to the Merger is fair to such stockholders from a financial
point of view.
Very truly yours,
[SIG]
B-2
<PAGE> 78
ANNEX C
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
SEC. 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to
sec. 251(g) of this title), sec. 252, sec. 254, sec. 257, sec. 258, sec. 263 or
sec. 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the Surviving Corporation
as provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec. 251, sec. 252, sec. 254, sec. 257, sec. 258, sec. 263 and sec. 264 of
this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
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(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
C-2
<PAGE> 80
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
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<PAGE> 81
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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<PAGE> 82
FORM OF PROXY FOLD AND DETACH HERE AND READ THE REVERSE SIDE APPENDIX A
- --------------------------------------------------------------------------------
GENERAL HOUSEWARES CORP.
1536 Beech Street
P.O. Box 4066
Terre Haute, IN 47804
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
OF GENERAL HOUSEWARES CORP. FOR THE
SPECIAL MEETING OF STOCKHOLDERS ON OCTOBER 21, 1999
The undersigned stockholder(s) of General Housewares Corp. ("General
Housewares") hereby appoint(s) Paul A. Saxton and Raymond J. Kulla and each of
them individually, with full power of substitution, the proxy of the undersigned
to vote all shares of Common Stock, par value $0.33 1/3 per share of General
Housewares which the undersigned is entitled, in any capacity, to vote at the
special meeting of stockholders to be held on October 21, 1999 and any and all
adjournments or postponements thereof, with all powers the undersigned would
possess if personally present, as follows:
This proxy, if properly executed and returned, will be voted in
accordance with the instructions appearing on the proxy and at the discretion of
the proxy holders as to any matters that may properly come before the special
meeting. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, THIS PROXY WILL BE VOTED FOR
APPROVAL OF THE PROPOSALS STATED AND AT THE DISCRETION OF THE PROXY HOLDERS AS
TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Please complete, sign and return the proxy card to register your voting
instructions of all shares owned by you.
(Continued, and to be signed and dated on reverse side)
<PAGE> 83
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
- --------------------------------------------------------------------------------
[X] Please mark your votes as in this example.
<TABLE>
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN THE BOARD OF
1. To approve and adopt the Agreement and Plan of Merger [ ] [ ] [ ] DIRECTORS OF
pursuant to which GHC Acquisition Corp. will merge with GENERAL
and into General Housewares and General Housewares will HOUSEWARES
survive the merger. Approval of this proposal will also RECOMMENDS
constitute approval of the transactions contemplated by APPROVAL OF
the merger agreement. THE STATED
PROPOSAL
2. In their discretion, to vote upon all matters incident to FOR AGAINST ABSTAIN
the conduct of the special meeting and such other [ ] [ ] [ ]
matters as may properly come before the special
meeting or any adjournments or postponements thereof.
</TABLE>
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE SPECIAL MEETING
AND THE PROXY STATEMENT DATED SEPTEMBER 21, 1999, RELATING TO THE SPECIAL
MEETING.
- ---------------------------------------
Signature
- ---------------------------------------
Signature if held jointly
- ---------------------------------------
Date
Note: Please sign this proxy exactly as the name appears herein. If shares are
held by joint tenants, both should sign. Attorneys-in-fact, executors,
administrators, trustees, guardians, corporation officers or others signing in a
representative capacity should indicate the capacity in which they are signing.
PLEASE SIGN, DATE, AND MAIL THIS PROXY PROMPTLY IN THE RETURN ENVELOPE whether
or not you expect to attend the special meeting. You may nevertheless vote in
person if you attend.
