<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __________________)*
GUARDSMAN PRODUCTS, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $1.00 Par Value
(Including the Associated Preferred Stock Purchase Rights)
- --------------------------------------------------------------------------------
(Title of Class of Securities)
401489 10 9
- --------------------------------------------------------------------------------
(CUSIP Number)
Douglas W. Huemme Copy to:
Chairman, President and CEO Catherine L. Bridge, Esq.
LP Acquisition Corporation Barnes & Thornburg
Lilly Industries, Inc. 11 S. Meridian Street, Suite 1313
733 S. West Street Indianapolis, Indiana 46204
Indianapolis, Indiana 46225 (317) 638-1313
(317) 687-6701
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 4, 1996
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [x]. (A fee
is not required only if the filing person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
PAGE 1 OF 9
<PAGE> 2
CUSIP No. 401489 10 9 SCHEDULE 13D Page 2 of 9 Pages
--------------------- -------- --------
(1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
LP Acquisition Corporation
35-197697
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(2) Check the Appropriate Box if a Member of a Group* (a) [ ]
(b) [ X ]
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(3) SEC Use Only
---------------------------------------------------------------------
(4) SOURCE OF FUNDS* AF
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
---------------------------------------------------------------------
(6) Citizenship or Place of Organization Delaware
---------------------------------------------------------------------
(7) Sole Voting Power 5
Number of
Shares --------------------------------------------------------
Beneficially (8) Shared Voting Power 4,952,020**
Owned by
Each --------------------------------------------------------
Reporting (9) Sole Dispositive Power 5
Person With
--------------------------------------------------------
(10) Shared Dispositive Power 0
--------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
4,952,025**
---------------------------------------------------------------------
(12) Check Box if Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
---------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
51.3% of the Shares outstanding as of February 28, 1996.**
---------------------------------------------------------------------
(14) Type of Reporting Person*
CO
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** On March 4, 1996, Lilly Industries, Inc. ("Parent"), an Indiana
corporation and the sole shareholder of LP Acquisition
Corporation ("Purchaser"), entered into Letter Agreements
(collectively, the "Stockholder Agreements") with each of Irwin W.
Uran, James L. Sadler and John H. Sadler (collectively, the "Principal
Stockholders") pursuant to which the Principal Stockholders have each
agreed to validly tender in the Offer, and not withdraw, all Shares
beneficially owned by him and to vote his Shares in favor of the
Merger and against any action or arrangement which would interfere
with the successful consummation of the Merger and each has executed
and delivered to the Parent an irrevocable proxy to this effect. The
"Shares" consist of shares of common stock, $1.00 par value, of the
Issuer, and the associated Preferred Stock Purchase Rights issued
pursuant to the Rights Agreement, dated as of August 8, 1986, as
amended, between the Issuer and Chemical Bank, as Rights Agent. As of
March 4, 1996, the Principal Stockholders owned 4,952,020 Shares in
the aggregate, assuming the exercise of options to acquire 7,880
Shares held by James L. Sadler. The Stockholder Agreements and the
Merger are described more fully in the Introduction and Section 12
("Purpose of the Offer, the Merger Agreement and Letter Agreements")
of the Offer to Purchase, dated March 8, 1996 (the "Offer to
Purchase"), attached hereto as Exhibit 3, and the Stockholder
Agreements are attached hereto as Exhibits 13, 14 and 15. In addition,
Parent has owned 5 shares since prior to 1995.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
CUSIP No. 401489 10 9 SCHEDULE 13D Page 3 of 9 Pages
--------------------- -------- --------
(1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Lilly Industries, Inc.
35-0471010
---------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group* (a) [ ]
(b) [ x ]
---------------------------------------------------------------------
(3) SEC Use Only
---------------------------------------------------------------------
(4) SOURCE OF FUNDS* BK
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) Citizenship or Place of Organization Indiana
---------------------------------------------------------------------
(7) Sole Voting Power 5
Number of
Shares --------------------------------------------------------
Beneficially (8) Shared Voting Power 4,952,020**
Owned by
Each --------------------------------------------------------
Reporting (9) Sole Dispositive Power 5
Person With
--------------------------------------------------------
(10) Shared Dispositive Power 0
--------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
4,952,025**
---------------------------------------------------------------------
(12) Check Box if Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
---------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
51.3% of the Shares outstanding as of February 28, 1996.**
---------------------------------------------------------------------
(14) Type of Reporting Person*
CO, HC
---------------------------------------------------------------------
** On March 4, 1996, Lilly Industries, Inc. ("Parent"), an Indiana
corporation and the sole shareholder of LP Acquisition Corporation
("Purchaser"), entered into Letter Agreements (collectively, the
"Stockholder Agreements") with each of Irwin W. Uran, James L. Sadler
and John H. Sadler (collectively, the "Principal Stockholders")
pursuant to which the Principal Stockholders have each agreed to
validly tender in the Offer, and not withdraw, all Shares beneficially
owned by him and to vote his Shares in favor of the Merger and against
any action or arrangement which would interfere with the successful
consummation of the Merger and each has executed and delivered to the
Parent an irrevocable proxy to this effect. The "Shares" consist of
shares of common stock, $1.00 par value, of the Issuer, and the
associated Preferred Stock Purchase Rights issued pursuant to the
Rights Agreement, dated as of August 8, 1986, as amended, between the
Issuer and Chemical Bank, as Rights Agent. As of March 4, 1996, the
Principal Stockholders owned 4,952,020 Shares in the aggregate,
assuming the exercise of options to acquire 7,880 Shares held by James
L. Sadler. The Stockholder Agreements and the Merger are described
more fully in the Introduction and Section 12 ("Purpose of the Offer,
the Merger Agreement and Letter Agreements") of the Offer to Purchase,
dated March 8, 1996 (the "Offer to Purchase"), attached hereto as
Exhibit 3, and the Stockholder Agreements are attached hereto as
Exhibits 13, 14 and 15. In addition, Parent has owned 5 shares since
prior to 1995
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 4
ITEM 1. SECURITY AND ISSUER.
Title of Security: Common Stock, $1.00 Par Value
(Including the Associated Preferred Stock
Purchase Rights)
Issuer: Guardsman Products, Inc.
3033 Orchard Vista Drive, S.E., Suite 200
Post Office Box 1521
Grand Rapids, Michigan 49501
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c), (f) This Statement is being filed by the Purchaser and
Parent. The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase, and Schedule I
thereto, annexed hereto as Exhibit 3 is incorporated herein by reference.
(d) and (e) During the last five years, neither the Purchaser,
Parent, nor any persons controlling the Purchaser or Parent, nor, to the best
knowledge of the Purchaser or Parent, any of the persons listed on Schedule I
to the Offer to Purchase, (i) has been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors) or (ii) was a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, Federal or State securities laws or finding any violation of such
laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth in Section 10 ("Source and Amounts of
Funds") of the Offer to Purchase annexed hereto as Exhibit 3 and the Commitment
Letter, dated February 8, 1996, between Parent and NBD Bank, N.A., as amended
by the First Amendment, dated March 4, 1996, annexed hereto as Exhibit 2 are
incorporated herein by reference.
ITEM 4. PURPOSE OF TRANSACTION.
(a)-(g), (j) The information set forth in the Introduction, Section
11 ("Contacts with the Company; Background of the Offer"), Section 12 ("Purpose
of the Offer, the Merger Agreement and Letter Agreements") and Section 13
("Dividends and Distributions") of the Offer to Purchase annexed hereto as
Exhibit 3 is incorporated herein by reference.
(h)-(i) The information set forth in Section 7 ("Effect of the Offer
on the Market for the Shares; Stock Exchange Listing; Registration Under the
Exchange Act") of the Offer to Purchase annexed hereto as Exhibit 3 is
incorporated herein by reference.
Page 4 of 9
<PAGE> 5
ITEM 5. INTEREST IN SECURITIES THE ISSUER.
(a), (c) The information set forth in the Introduction, Section 9
("Certain Information Concerning the Purchaser and Parent") and Section 12
("Purpose of the Offer, the Merger Agreement and Letter Agreements") of the
Offer to Purchase annexed hereto as Exhibit 3 is incorporated herein by
reference.
(b) On March 4, 1996, Parent entered into Letter Agreements
(collectively, the "Stockholder Agreements") with each of Irwin W. Uran, James
L. Sadler and John H. Sadler (collectively, the "Principal Stockholders")
pursuant to which the Principal Stockholders have each agreed to validly tender
in the Offer, and not withdraw, all Shares beneficially owned by him and to
vote his Shares in favor of the Merger and against any action or arrangement
which would interfere with the successful consummation of the Merger and each
has executed and delivered to the Parent an irrevocable proxy to this effect.
As of March 4, 1996, the Principal Stockholders owned 4,952,020 Shares in the
aggregate, assuming the exercise of options to acquire 7,880 Shares held by
James L. Sadler. The Stockholder Agreements and the Merger are described more
fully in the Introduction and Section 12 ("Purpose of the Offer, the Merger
Agreement and Letter Agreements") of the Offer to Purchase, dated March 8, 1996
(the "Offer to Purchase"), attached hereto as Exhibit 3, and the Stockholder
Agreements are attached hereto as Exhibits 13, 14 and 15. In addition, Parent
has owned 5 shares since prior to 1995.
<TABLE>
<S> <C>
Purchaser:
Sole Voting Power: 5
Shared Voting Power: 4,952,020*
Sole Dispositive Power: 5
Shared Dispositive Power: 0
Parent:
Sole Voting Power: 5
Shared Voting Power: 4,952,020*
Sole Dispositive Power: 5
Shared Dispositive Power: 0
</TABLE>
* As of March 4, 1996.
(d) The Principal Stockholders have the right to receive or the
power to direct the receipt of dividends from, or the proceeds of the sale of,
such securities, subject to the terms of the Stockholder Agreements. Each of
the Principal Stockholders owns more than 5% of the outstanding Shares.
(e) Not applicable.
Page 5 of 9
<PAGE> 6
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Contacts with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer,
the Merger Agreement and Letter Agreements") of the Offer to Purchase annexed
hereto as Exhibit 3 is incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following material is filed as exhibits:
1. Agreement, dated as of March 4, 1996, between
Purchaser and Parent relating to the joint filing of
this Schedule 13D.
2. Commitment Letter, dated February 8, 1996, between
Parent and NBD Bank, N.A., as amended by the First
Amendment, dated March 4, 1996.
3. Offer to Purchase, dated March 8, 1996.
4. Letter of Transmittal.
5. Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9
6. Notice of Guaranteed Delivery.
7. Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
8. Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
9. Text of Press Release, dated March 4, 1996.
10. Summary Advertisement, dated March 8, 1996.
11. Confidentiality Agreement, dated December 13, 1995,
between Parent and Guardsman Products, Inc.
Page 6 of 9
<PAGE> 7
12. Merger Agreement, dated March 4, 1996, by and between
Parent, Purchaser and Guardsman Products, Inc.
13. Letter Agreement, dated March 4, 1996, between Parent
and Irwin W. Uran.
14. Letter Agreement, dated March 4, 1996, between Parent
and James L. Sadler.
15. Letter Agreement, dated March 4, 1996, between Parent
and John H. Sadler.
16. Amendment No. 2 to Rights Agreement, dated as of
March 4, 1996, between Guardsman Products, Inc. and
Chemical Bank, as Rights Agent.
17. Acknowledgement by James L. Sadler of the termination
of certain rights upon the purchase of Shares owned
by him in the Offer or the Merger.
18. Acknowledgement by John H. Sadler of the termination
of certain rights upon the purchase of Shares owned
by him in the Offer or the Merger.
Page 7 of 9
<PAGE> 8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
March 8, 1996
LP ACQUISITION CORPORATION
By: /s/ Douglas W. Huemme
----------------------------
Name: Douglas W. Huemme
Title: President and Chief Executive Officer
LILLY INDUSTRIES, INC.
By: /s/ Douglas W. Huemme
----------------------------
Name: Douglas W. Huemme
Title: President and Chief Executive Officer
Page 8 of 9
<PAGE> 9
13D EXHIBIT INDEX
EXHIBIT DESCRIPTION
1. Agreement, dated as of March 4, 1996, between Purchaser and
Parent relating to the joint filing of this Schedule 13D.
2. Commitment Letter, dated February 8, 1996, between Parent and
NBD Bank, N.A., as amended by First Amendment, dated March 4,
1996.
3. Offer to Purchase, dated March 8, 1996.
4. Letter of Transmittal.
5. Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9
6. Notice of Guaranteed Delivery.
7. Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
8. Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
9. Text of Press Release, dated March 4, 1996.
10. Summary Advertisement, dated March 8, 1996.
11. Confidentiality Agreement, dated December 13, 1995, between
Parent and Guardsman Products, Inc.
12. Merger Agreement, dated March 4, 1996, by and between Parent,
Purchaser and Guardsman Products, Inc.
13. Letter Agreement, dated March 4, 1996, between Parent and
Irwin W. Uran.
14. Letter Agreement, dated March 4, 1996, between Parent and
James L. Sadler.
15. Letter Agreement, dated March 4, 1996, between Parent and John
H. Sadler.
16. Amendment No. 2 to Rights Agreement, dated as of March 4,
1996, between Guardsman Products, Inc. and Chemical Bank, as
Rights Agent.
17. Acknowledgement by James L. Sadler of the termination of
certain rights upon the purchase of Shares owned by him in the
Offer or the Merger.
18. Acknowledgement by John H. Sadler of the termination of
certain rights upon the purchase of Shares owned by him in the
Offer or the Merger.
Page 9 of 9
<PAGE> 1
EXHIBIT 99.1
AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into this 4th day of
March, 1996, between Lilly Industries, Inc., an Indiana corporation ("Parent"),
and LP Acquisition Corporation, a Delaware corporation and wholly-owned
subsidiary of Parent ("Purchaser").
W I T N E S S E T H
WHEREAS, Parent and Purchaser have entered into a Merger Agreement
with Guardsman Products, Inc., a Delaware corporation ("Issuer"), pursuant to
which (i) Purchaser will offer to purchase all outstanding shares common stock,
$1.00 par value per share (the "Shares"), of Guardsman Products, Inc. (the
"Issuer"), and the associated Preferred Stock Purchase Rights (the "Rights")
issued pursuant to the Rights Agreement, dated as of August 8, 1986, as
amended, between the Issuer and Chemical Bank, as Rights Agent, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated March
8, 1996 (the "Offer"), and (ii) following the consummation of the Offer and
the satisfaction or waiver of certain conditions, the Purchaser will be merged
with and into the Issuer, with the Issuer surviving the merger (as such, the
"Surviving Corporation") as a wholly owned subsidiary of Parent (the "Merger").
(Unless the context otherwise requires, all references to Shares shall include
the Rights.); and
WHEREAS, Parent has entered into Letter Agreements (collectively, the
"Stockholder Agreements") with each of Irwin W. Uran, James L. Sadler and John
H. Sadler (collectively, the "Principal Stockholders") pursuant to which the
Principal Stockholders have each agreed to validly tender in the Offer, and
not withdraw, all Shares beneficially owned by him and to vote his Shares in
favor of the Merger and against any action or arrangement which would
interfere with the successful consummation of the Merger and each has executed
and delivered to the Parent an irrevocable proxy to this effect.
NOW, THEREFORE, in consideration of their mutual promises contained
herein, and intending to be legally bound, Parent and Purchaser agree as
follows:
1. Pursuant to Rule 13d-1 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), Parent and Purchaser agree to jointly
prepare and file a Schedule 13D with the Securities Exchange Commission ("SEC")
and the New York Stock Exchange, and to deliver a copy of such Schedule 13D to
the Issuer.
2. Parent hereby represents and warrants to Purchaser that the
information provided in the Schedule 13D concerning Parent is complete and
accurate to the best knowledge of Parent.
3. Purchaser hereby represents and warrants to Parent that the
information provided in the Schedule 13D concerning Purchaser is complete and
accurate to the best knowledge of Purchaser.
<PAGE> 2
4. Parent and Purchaser agree to jointly file any and all
amendments to the Schedule 13D required by the Exchange Act, and the rules and
regulations thereunder.
EXECUTED and ENTERED as of the date first written above.
LP ACQUISITION CORPORATION
By: /s/ Douglas W. Huemme
----------------------------
Name: Douglas W. Huemme
Title: President and Chief Executive Officer
LILLY INDUSTRIES, INC.
By: /s/ Douglas W. Huemme
----------------------------
Name: Douglas W. Huemme
Title: President and Chief Executive Officer
-2-
<PAGE> 1
EXHIBIT 99.2
February 8, 1996
Lilly Industries, Inc.
733 South West Street
Indianapolis, Indiana 46225
Attention: Douglas W. Huemme, Chairman
President and Chief Executive Officer
Dear Mr. Huemme:
Lilly Industries, Inc. (the "Borrower") has requested credit facilities
(the "Facilities") in the aggregate principal amount of $300,000,000 (the
"Aggregate Commitment").
The Borrower has indicated that it intends to acquire a company which you
have identified to us and which you and we have described by the code name
"Sentry" (herein, the "Company") pursuant to a two-step acquisition. The first
step will consist of an all cash tender offer by means of an offer to purchase
(as amended from time to time, the "Tender Offer") to be made by a newly formed
subsidiary (the "Acquisition Sub") of the Borrower for all of the outstanding
common stock of Company (the "Stock") for total consideration in form and
amount acceptable to the Lenders (as defined below). Prior to the making of
the Tender Offer, Acquisition Sub and the Company shall have entered into a
definitive plan and agreement of merger (the "Merger Agreement") to merge
Acquisition Sub and the Company, subject to shareholder approval by the
shareholders of Acquisition Sub and the Company (the "Merger") (the Tender
Offer and the Merger, collectively the "Acquisition"). The Tender Offer will
be conditioned on the tender and purchase of at least a majority, on a fully
diluted basis, of the shares of stock of the Company (or any greater number of
shares as may be required under applicable state law or the Company's
Certificate of Incorporation or by-laws to vote for and effect a merger of the
Company and Acquisition Sub). The second step of the Acquisition will consist
of the Merger. The definitive legal structure of the Tender Offer and Merger
have not yet been determined and must be satisfactory to the Lenders.
NBD Bank, N.A. is pleased to provide you with a financing commitment for,
and to agree to act as administrative agent bank (the "Agent") in connection
with, the entire amount of the Facilities on the terms and conditions set forth
in the term sheet attached hereto ("Term Sheet") and subject to the conditions
set forth in this letter. First Chicago Capital Markets, Inc. (the
"Arranger"), an affiliate of the Agent, is pleased to provide you with its
undertaking to syndicate all or a portion of the Facilities to a syndicate of
lenders (collectively, including NBD Bank, N.A., the "Lenders"). While the
Agent's agreement herein is to provide the entire amount of the Facilities on a
fully underwritten basis, the
<PAGE> 2
CONTINUING OUR LETTER OF FEBRUARY 8, 1996
SHEET NO. 2
Arranger reserves the right to syndicate all or a portion of the Facilities to
additional Lenders with a corresponding reduction in the Agent's commitment.
Each of the Agent and the Arranger has reviewed (i) certain summary
historical financial statements of the Borrower, dated as of and for the three
and twelve-month periods ended November 30, 1995 and (ii) historical financial
statements of the Company as set forth on SEC Form 10- Q as of and for the
fiscal quarter ended September 30, 1995, which statements were prepared by the
Borrower and the Company, respectively. Neither the Agent nor the Arranger has
had the opportunity to complete its due diligence review, inspection, and
evaluation of the assets and liabilities of the Borrower and the Company and
their respective subsidiaries, and their respective financial condition and
prospects. The Agent's commitment and the Arranger's undertaking are,
therefore, subject to their respective satisfaction with the foregoing and to
their continuing satisfaction therewith and the satisfaction of such other due
diligence investigation as may be necessary for their respective evaluation of
the transaction described herein.
The Borrower agrees to (i) reimburse the Agent and the Arranger for all
out-of-pocket expenses (including the fees of outside counsel and time charges
for inside counsel) incurred in connection with this Commitment Letter, the
transactions contemplated hereby and the Agent's and the Arranger's on-going
due diligence in connection therewith, including without limitation travel
expenses and costs incurred in connection with the preparation, negotiation,
execution, administration, syndication, and enforcement of any document
relating to this transaction and its role hereunder, (ii) indemnify and hold
harmless the Agent, the Arranger, the Lenders and their respective officers,
employees, agents and directors (collectively, the "Indemnified Persons")
against any and all losses, claims, damages, or liabilities of every kind
whatsoever to which the Indemnified Persons may become subject in connection in
any way with the transaction which is the subject of this Commitment Letter,
including without limitation expenses incurred in connection with investigating
or defending against any liability or action whether or not a party thereto,
except to the extent any of the foregoing is found in a final judgment by a
court of competent jurisdiction to have arisen solely from such Indemnified
Person's gross negligence or willful misconduct; and (iii) assert no claim
against any Indemnified Persons seeking consequential damages on any theory of
liability in connection in any way with the transaction which is the subject of
this Commitment Letter. The obligations described in this paragraph are
independent of all other obligations of the Borrower hereunder and under the
Loan Documents, shall survive the expiration, revocation or termination of this
Commitment Letter, and shall be payable whether or not the financing
transactions contemplated by this Commitment Letter shall close. The Agent's
and the Arranger's respective obligations under this Commitment Letter are
enforceable solely by the party signing this Commitment Letter and may not be
relied upon by any other person. For purposes of enforcing this indemnity, the
Borrower irrevocably submits to the non-exclusive
<PAGE> 3
CONTINUING OUR LETTER OF FEBRUARY 8, 1996
SHEET NO. 3
jurisdiction of any court in which a claim arising out of or relating to the
services provided under this Commitment Letter is properly brought against the
Agent, the Arranger, or the Lenders and irrevocably waives any objection as to
venue or inconvenient forum. IF THIS COMMITMENT LETTER, THE TERM SHEET, THE
FEE LETTER (DEFINED BELOW), OR ANY ACT, OMISSION OR EVENT DESCRIBED IN THIS
PARAGRAPH BECOMES THE SUBJECT OF A DISPUTE, THE PARTIES HERETO ALL HEREBY WAIVE
TRIAL BY JURY. The Borrower agrees not to settle any claim, litigation or
proceeding relating to this transaction (whether or not the Agent or the
Arranger is a party thereto) unless such settlement releases all Indemnified
Persons from any and all liability in respect of such transaction.
The Agent's commitment and the Arranger's undertaking are subject to (i)
the preparation, execution, and delivery of a mutually acceptable credit
agreement ("Credit Agreement") and other loan documents (collectively, the
"Loan Documents") incorporating, without limitation, substantially the terms
and the conditions outlined herein and in the Term Sheet; (ii) the Agent's and
the Arranger's respective determination that (a) there is an absence of a
material adverse change in the business, condition (financial or otherwise),
operations, performance, properties, or prospects of either (x) the Borrower
and its subsidiaries taken as a whole or (y) the Company and its subsidiaries
taken as a whole from that reflected in the respective financial statements
described in the first sentence of the fourth paragraph of this letter; and (b)
there is an absence of any material adverse change prior to closing in primary
and secondary loan syndication markets or capital markets generally.
The Arranger will manage all aspects of the syndication, including,
without limitation, decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of the fees
discussed herein among the Lenders. Upon the Arranger's acceptance of any such
commitment from a Lender, the Agent shall be relieved of its commitment to fund
such amount. To assist the Arranger in its syndication efforts, the Borrower
shall (a) provide and cause its advisors and management of the Company to
provide the Arranger upon request with all information deemed reasonably
necessary by it to complete successfully the syndication, including, without
limitation, all information and projections prepared by the Borrower or on the
Borrower's behalf relating to the transactions contemplated hereby; and (b)
cause its advisors and the management of the Company to actively participate in
both the preparation of an information package regarding the operations and
prospects of the Borrower and the Company and the presentation of the
information to prospective Lenders.
After the Borrower has publicly announced the transaction, the Borrower
authorizes each of the Agent and the Arranger to answer inquiries from banking
and financial services
<PAGE> 4
CONTINUING OUR LETTER OF FEBRUARY 8, 1996
SHEET NO. 4
trade media with respect to the Facilities. By its acceptance hereof, the
Borrower hereby authorizes each of the Agent and the Arranger, at their
respective sole expense but without any prior approval by the Borrower, to
publish such tombstones and give such other general publicity to the Facilities
as each may from time to time determine in its sole discretion, provided that
neither the Agent nor the Arranger will issue any press release with respect to
the Facilities without the approval of the Borrower. The foregoing
authorization shall remain in effect unless the Borrower notifies each in
writing that such authorization is revoked.
Please indicate your acceptance of this commitment by the Agent and
undertaking by the Arranger in the space indicated below and return a copy of
this letter so executed to the Agent. This commitment and undertaking will
expire at 5 p.m. (Indianapolis time) February 15, 1996 unless on or prior to
such time the Agent shall have received a copy of this letter executed by the
Borrower together with the fees required under paragraph 1(a) of the Agent's
Fee Letter of even date herewith (the "Fee Letter"). Notwithstanding timely
acceptance of the commitment pursuant to the preceding sentence, the commitment
will automatically terminate unless definitive Loan Documents are executed on
or before May 15, 1996. In addition, the Borrower may terminate this
commitment upon five days' written notice to the Agent, provided that such
termination will not (i) relieve the Borrower of its obligation to pay any
amounts already accrued under the terms hereof or of the Fee Letter or (ii)
affect the obligations of the Borrower under numbered paragraph 4 of the Fee
Letter. By its acceptance hereof, the Borrower agrees to pay the Agent and the
Arranger the fees described in the Fee Letter.
By accepting delivery of this Commitment Letter, the Fee Letter and the
Term Sheet, the Borrower hereby agrees that, prior to executing this Commitment
Letter, the Borrower will not disclose either expressly or impliedly, without
the Agent's and the Arranger's consent, to any person any of the terms of this
Commitment Letter, the Fee Letter or Term Sheet, or the fact that this
Commitment Letter, the Fee Letter or Term Sheet or the financing proposal
represented thereby exists except that the Borrower may disclose any of the
foregoing to the Company, to any employee, financial advisor (but not to a
financial advisor which might be a provider of senior debt in this transaction)
or attorney of the Borrower or the Company to whom, in each case, it is
necessary to disclose such information so long as the Company and any such
employee, advisor or attorney is directed to observe this confidentiality
obligation. Upon the Borrower's execution of this Commitment Letter, the
Borrower may make public disclosure of the existence and the amount of the
commitment; and the Borrower may file with any applicable governmental
authority a copy of the Commitment Letter, or make such other disclosures if
such disclosure is, in the opinion of the Borrower's counsel, required by law.
If the Borrower
<PAGE> 5
CONTINUING OUR LETTER OF FEBRUARY 8, 1996
SHEET NO. 5
does not accept this commitment, the Borrower is to immediately return this
Commitment Letter, the Fee Letter and the Term Sheet (and all copies of the
foregoing) to the Agent.
This Commitment Letter and Term Sheet supersede any and all prior
versions thereof. This Commitment Letter shall be governed by the internal
laws of the State of Indiana, and may only be amended by a writing signed by
all parties hereto.
Very truly yours,
NBD BANK, N.A.,
individually and as Agent
By: /s/ Robert D. Lowrie
--------------------------------------
Title: Senior Vice President
-----------------------------------
FIRST CHICAGO CAPITAL MARKETS, INC.,
as Arranger
By: /s/ Jacqueline Hopkins
--------------------------------------
Title: Vice President
-----------------------------------
Accepted and agreed:
LILLY INDUSTRIES, INC.
By: /s/ Douglas W. Huemme
------------------------
Title: CH., Pres., & CEO
---------------------
Date: 2/15/96
----------------------
<PAGE> 6
March 4, 1996
Lilly Industries, Inc.
733 South West Street
Indianapolis, Indiana 46225
Attention: Douglas W. Huemme, Chairman
President and Chief Executive Officer
Dear Mr. Huemme:
This is in reference to our commitment letter addressed to you dated
February 8, 1996 (the "Commitment Letter") for credit facilities in the
aggregate principal amount of $300,000,000. You have asked that we modify
certain provisions set forth in the Commitment Letter and attached term sheet
(the "Term Sheet"). We hereby amend the Commitment Letter and Term Sheet as
follows:
1. The second and third sentences of the fourth paragraph of the Commitment
Letter are deleted and replaced with the following:
"The Agent and the Arranger have conducted substantial due diligence
review, inspection, and evaluation of the assets and liabilities of the
Borrower and the Company and their respective subsidiaries, and their
respective financial condition and prospects, and are satisfied with the
results to date of such due diligence. The Agent's commitment and the
Arranger's undertaking remain, however, subject to (i) the fulfillment of
the specific conditions precedent set forth in this Commitment Letter and
in the Term Sheet (both as modified by the terms of this letter amendment
to the Commitment Letter and Term Sheet dated March 4, 1996) and (ii)
their respective determinations that no information received after March
4, 1996 as to due diligence matters investigated prior to such date
indicates a change in the results of such prior due diligence
investigation which would have a Company Material Adverse Effect (as
defined in the Merger Agreement)."
2. The Term Sheet dated February 8, 1996 is deleted and replaced with the
Term Sheet dated March 4, 1996, a copy of which is attached hereto.
<PAGE> 7
Continuing our letter of March 4, 1996
Sheet No. 2
Except as expressly set forth herein, all other terms and provisions of
the Commitment Letter, the Term Sheet and the Fee Letter delivered in
connection therewith shall remain unchanged and are hereby ratified and
confirmed by the parties hereto.
Very truly yours,
NBD BANK, N.A.,
individually and as Agent
By: /s/ Robert D. Lowrie
------------------------------------
Title: Senior Vice President
---------------------------------
FIRST CHICAGO CAPITAL MARKETS, INC.,
as Arranger
By: /s/ Jacqueline Hopkins
------------------------------------
Title: Vice President
---------------------------------
Accepted and agreed:
LILLY INDUSTRIES, INC.
By: /s/ Roman J. Klusas
--------------------------
Title: Vice President & Chief Financial Officer
----------------------------------------
Date: 3/4/96
--------------------
<PAGE> 8
TERM SHEET
LILLY INDUSTRIES, INC.
MARCH 4, 1996
This Term Sheet is delivered together with a letter amendment to Commitment
Letter and Term Sheet of even date herewith. Capitalized terms used herein
shall have the meanings set forth in the Commitment Letter dated February 8,
1996, as amended by the aforementioned amendment.
THE FACILITIES
Borrower: Lilly Industries, Inc.
Guarantors: All direct and indirect domestic subsidiaries of
the Borrower.
Amount: $300,000,000 (the "Aggregate Commitment") comprised of
Loans and letters of credit under the facilities
described below.
Arranger: First Chicago Capital Markets, Inc.
Administrative Agent: NBD Bank, N.A. (the "Agent")
Lenders: A group of lenders to be determined (collectively,
together with the Agent in its capacity as lender, the
"Lenders").
Documentation: The Facilities will be evidenced by a Credit Agreement,
notes, guaranties, security agreements and other Loan
Documents mutually satisfactory to the Borrower and
the Lenders.
Syndication
Management: The Arranger will manage all aspects of the syndication
including, without limitation, the timing of offers to
potential Lenders, the amounts offered to potential
Lenders, the acceptance of commitments and
the compensation provided, all as set forth in the
Commitment Letter.
FACILITY A: TERM LOAN A
Amount: $175,000,000 (the "Facility A Commitment").
The Arranger, in its discretion, may reallocate
a portion of the Facility A Commitment to Facility B,
or vice versa.
Purpose: To provide funds for the purchase of "Sentry" pursuant
to the Acquisition and for payment of expenses
incurred in connection with the Acquisition.
Maturity: Six years from the Closing Date.
First Chicago Capital Markets, Inc. Page 1 NBD Bank, N.A.
<PAGE> 9
Amortization: Quarterly installments of principal in amounts to be
determined.
FACILITY B: TERM LOAN B
Amount: $50,000,000 (the "Facility B Commitment"). The
Arranger, in its discretion, may reallocate a
portion of the Facility B Commitment to Facility A, or
vice versa.
Purpose: To provide funds for the purchase of "Sentry" pursuant
to the Acquisition and for payment of expenses
incurred in connection with the Acquisition.
Maturity: Up to seven and one-half years from the Closing Date.
Amortization: Quarterly installments of principal in amounts to be
determined.
FACILITY C: REVOLVING CREDIT/LETTER OF CREDIT FACILITY
Amount: $75,000,000 (the "Facility C Commitment")
Purpose: To provide funds for the purchase of "Sentry" pursuant
to the Acquisition and for payment of expenses
incurred in connection with the Acquisition and for
general corporate purposes of the Borrower and its
subsidiaries, with a $5,000,000 sublimit for letters of
credit.
Maturity: Six years from the date of closing of the Facilities
(the "Closing Date").
Borrowing Base: The aggregate outstanding amount of Loans and letters
of credit under Facility C shall not at any
time exceed the Borrowing Base. The Borrowing Base
shall be comprised of percentages (to be negotiated) of
eligible inventory and of eligible accounts receivable.
Eligibility criteria are to be determined. At any time
when Level 6 pricing is in effect, the Borrowing Base
limitation and the requirements to deliver Borrowing
Base reports shall be suspended (until such time, if
any, as Level 6 pricing is no longer in effect).
Letters of Credit: Standby letters of credit will be issued by NBD Bank,
N.A. for the account of the Borrower in an
aggregate stated amount not to exceed $5,000,000.
Lenders will hold pro rata risk participations in each
letter of credit.
First Chicago Capital Markets, Inc. Page 2 NBD Bank, N.A.
<PAGE> 10
FEES
The Borrower will pay the following fees:
Commitment Fee: A commitment fee in the amount set forth on Exhibit A
on the average daily unborrowed portion of the
Facility C Commitment payable quarterly in arrears to
the Lenders (including the Agent) ratably from the
Closing Date until termination of the Facility C
Commitment.
Agent and
Other Fees: Such fees payable to the Arranger and the Agent as are
specified in the fee letter among the Agent, the
Arranger, and the Borrower.
L/C Fees: In connection with each letter of credit issued under
Facility C, a letter of credit fee at a rate equal to
the Applicable Margin for Eurodollar Loans as set
forth on Exhibit A on the undrawn stated amount of each
letter of credit, payable quarterly in arrears to the
Agent for the account of the Lenders. In addition, a
letter of credit fronting fee payable to NBD Bank, N.A.
in its capacity as issuer in the amount set forth in
the Agent's Fee Letter and, in connection with the
issuance of or any draw under any letter of credit,
customary processing and other fees.
INTEREST RATES
At the Borrower's option:
Term Loan A and Revolver:
ABR plus the Applicable Margin
Eurodollar Rate plus the Applicable Margin
Term Loan B:
ABR plus 1.25% per annum
Eurodollar Rate plus 2.25% per annum
"ABR" means the Alternate Base Rate and is the larger
of the Prime Rate or the federal funds rate plus
0.50% per annum.
"Applicable Margin" is based on the ratio of the
Borrower's total indebtedness to EBITDA (except during
the first six months of the Facilities), all as set
forth on Exhibit A.
First Chicago Capital Markets, Inc. Page 3 NBD Bank, N.A.
<PAGE> 11
"Eurodollar Rate" means the average of the rates
offered by the Reference Lenders in the London
interbank market for deposits in the amount of, and for
a maturity corresponding to, the Agent's portion of the
loan, as adjusted for maximum statutory reserves.
"Prime Rate" means the rate of interest announced by
the Agent from time to time as its prime rate, changing
when and as said prime rate changes.
Eurodollar Rate interest periods shall be one, two,
three, or six months. Interest shall be payable in
arrears on the last day of each interest period and, in
the case of an interest period longer than three
months, quarterly, and upon any prepayment. Interest
and fees will be computed for actual days elapsed on a
360-day year basis.
The Credit Agreement will include customary provisions
relating to yield protection, availability, and
capital adequacy. After default, the interest rate
will be equal to the ABR plus 2% per annum.
The Eurodollar Rate will not be made available, at the
Agent's sole option, for the first 90 days following
the initial funding of the loans.
SECURITY
Each of the Facilities will be secured by a first perfected security interest
in all of the Borrower's assets other than real estate (with a negative pledge
on the Borrower's real estate) and, through secured guaranties, in all of its
direct and indirect domestic subsidiaries' assets (including, without
limitation, any domestic subsidiaries comprised of assets acquired in the
Acquisition). The assets of the Borrower to be pledged as collateral will
include all of the stock of all of its direct and indirect domestic
subsidiaries. In addition to the foregoing, the Borrower will pledge as
collateral 65% of the stock of all of its direct and indirect foreign
subsidiaries. The collateral will secure interest rate swaps or hedge
obligations owing to any Lender.
PREPAYMENTS
Mandatory--
Sale of Assets: Upon the sale, transfer, or other disposition of any
assets (other than the sale of inventory in the
ordinary course of business), permitted under the
Credit Agreement, the Borrower shall make a mandatory
prepayment in an amount equal to 100% of the proceeds
(net of income taxes and expenses of
First Chicago Capital Markets, Inc. Page 4 NBD Bank, N.A.
<PAGE> 12
sale) realized from any such sale, transfer, or other
disposition, which shall be applied pro rata to
Facilities A and B until paid in full.
Excess Cash Flow: Upon delivery of its audited financial statements
in each year commencing with the fiscal year ending
November 30, 1996, the Borrower shall make a mandatory
prepayment in an amount equal to (i) at any time when
the Leverage Ratio is 3.0 to 1.0 or greater, 80% and
(ii) at any other time (subject to the following
proviso), 50%, of the Excess Cash Flow (as hereinafter
defined), if positive, for the most recently ended
fiscal year, which shall be applied pro rata to
Facilities A and B until paid in full, provided that,
if the Leverage Ratio as reflected in the audited
financial statements would qualify the Borrower for
Level 6 pricing, no mandatory prepayment shall be
required for such year. "Excess Cash Flow" means, for
any period of determination, for the Borrower and its
subsidiaries on a consolidated basis: (a) the sum of
(i) net income plus (ii) amortization, depreciation,
and other non-cash charges; minus (b) the sum of (i)
capital expenditures, (ii) principal payments made on
all indebtedness for borrowed money (exclusive of
mandatory prepayments made for Excess Cash Flow during
such period), (iii) any increase or decrease (as the
case may be), as of the last day of a fiscal year from
the last day of the previous fiscal year in the excess
of current assets over current liabilities and (iv) any
cash dividends paid by the Borrower in accordance with
the terms of the Credit Agreement.
Debt or Equity
Issuance: Upon the issuance of any subordinated indebtedness,
common stock, preferred stock, warrant, or other
equity (excluding any stock issued pursuant to stock
option or other employee benefit plans, within limits
to be negotiated), the Borrower shall make a mandatory
prepayment equal to (i) in the case of indebtedness,
100% and (ii) in the case of equity, 75%, of the
proceeds thereof, which shall be applied pro rata to
Facilities A and B until paid in full.
Voluntary
Prepayments: Facility A and Facility B may be prepaid in whole or in
part without premium on one day's notice, provided that
such payments will be in amounts of at least $5,000,000
and multiples of $1,000,000 in excess thereof; and the
Facility C Commitment may be permanently reduced
without premium on one day's notice, provided such
payments will be in an amount of at least $5,000,000
and multiples of $1,000,000 in excess thereof.
First Chicago Capital Markets, Inc. Page 5 NBD Bank, N.A.
<PAGE> 13
Allocation of
Prepayments: Any mandatory prepayments which are not accepted by the
Lenders under Facility A shall be paid to the Lenders
under Facility B until Facility B is paid in full. Any
mandatory prepayments which are not accepted by the
Lenders under Facility B shall be paid to the Lenders
under Facility A until Facility A is paid in full. All
prepayments to be applied to either of Facilities A or
B shall be applied to the principal installments
thereof in the inverse order of maturity.
CONDITIONS OF LENDING
The Loan Documents shall be in form and substance acceptable to the Lenders.
The Credit Agreement shall include, without limitation, conditions precedent,
representations and warranties, covenants, events of default, indemnification
(of the Agent, the Arranger, and the Lenders), and other provisions customary
for such financings.
CONDITIONS PRECEDENT
Usual conditions to each loan (including absence of default or unmatured
default, lack of material adverse change from (i) in the case of the Borrower
and its subsidiaries taken as a whole, November 30, 1995, (ii) in the case of
the Company and its subsidiaries taken as a whole, December 31, 1995 and (iii)
in the case of the Company, the Borrower and their respective subsidiaries
taken as a whole on a combined basis after giving effect to the Acquisition,
that reflected in the consolidated pro forma financial statements to be
delivered to the Agent prior to the Closing Date. Additional conditions
precedent to initial loan will include without limitation those set forth
below.
Initial Funding: Initial funding shall occur no later than May 15, 1996.
Approval: Evidence satisfactory to the Agent and the Required
Lenders (defined below) that the Borrower's directors
and the Company's directors and shareholders shall
have approved the Acquisition; and all regulatory and
legal approvals for the Acquisition shall have been
obtained, including, without limitation, any filings
required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
Litigation: Absence of injunction or temporary restraining order
which, in the judgment of the Agent or the Required
Lenders, would prohibit the making of the loans or the
consummation of the Acquisition; and absence of
litigation which would reasonably be expected to result
in a material adverse effect on (i) the Borrower and
its subsidiaries, taken as a whole or (ii) the Company
and its subsidiaries, taken as a whole.
First Chicago Capital Markets, Inc. Page 6 NBD Bank, N.A.
<PAGE> 14
Due Diligence: The Agent and the Arranger have conducted substantial
due diligence review, inspection, and evaluation of
the assets and liabilities of the Borrower and the
Company and their respective subsidiaries, and their
respective financial condition and prospects, and are
satisfied with the results to date of such due
diligence. The obligations of the Lenders to make the
initial loan remain, however, subject to the Agent's
and the Arranger's determination that no information
received after March 4, 1996 as to due diligence
matters investigated prior to such date indicates a
change in the results of such prior due diligence
investigation which would have a Company Material
Adverse Effect (as defined in the Merger Agreement).
All financial, accounting, and tax aspects of the
Acquisition must be acceptable.
Tender Offer: The terms of the tender offer shall be substantially
as set forth in the draft tender offer documents
delivered to the Agent and the Arranger on March 4,
1996, and the tender offer shall not be amended (except
with respect to the expiration date thereof, which
shall not be extended past a date which would allow the
initial funding for the purpose of purchasing tendered
shares to take place by May 15, 1996, or other minor
amendments of a type to be agreed upon by the Agent and
the Borrower) without the consent of the Required
Lenders. Without limiting the foregoing, the Lenders'
obligation to fund shall be conditioned upon the
tendering of a majority of the shares of stock of the
Company (or any greater number of shares as may be
required under applicable state law or the Company's
certificate of incorporation or by-laws to vote for and
effect the merger).
Merger Agreement: The Merger Agreement shall be in the form delivered to
the Agent and the Arranger on March 4, 1996 (which form
specifies cash consideraton of $23.00 per share for the
common stock of the Company), the representations and
warranties in the Merger Agreement shall be true and
correct on the date of the Acquisition closing (except
for failures of such representations and warranties to
be true and correct which could not, individually or in
the aggregate, reasonably be expected to result in a
Company Material Adverse Effect), and the conditions
therein shall have been satisfied and the Required
Lenders must have received an opinion of counsel
satisfactory to the Required Lenders as to the
enforceability of the Merger Agreement and its
compliance with all applicable law.
Financial Statements: The Agent and the Required Lenders shall have received
such information as the Agent may reasonably request
to confirm
First Chicago Capital Markets, Inc. Page 7 NBD Bank, N.A.
<PAGE> 15
the tax, legal, and business assumptions made in the
pro forma financial statements provided to the
Agent and the Required Lenders.
Fairness Opinion: Receipt of copy of a fairness opinion from the
Borrower's investment banker addressed to the
Borrower's board of directors, relating to the terms of
the Acquisition.
Valuation: The Agent and the Required Lenders shall have received a
certificate from the chief financial officer of the
Borrower in form reasonably satisfactory to them
supporting the conclusions that after giving effect to
the Acquisition, the Borrower and its subsidiaries
(including, without limitation, the Company), on a
consolidated basis, are solvent and will be solvent
subsequent to incurring the indebtedness in connection
with the Acquisition, will be able to pay their debts
and liabilities as they become due, and will not be
left with unreasonably small capital with which to
engage in their businesses.
Environment: The Agent and the Arranger have received environmental
review reports as to certain environmental hazards and
liabilities affecting the Borrower's and the Company's
consolidated assets and are satisfied with the results
of such reports and with the Borrower's plans with
respect thereto. The obligations of the Lenders to
make the initial loan remain, however, subject to the
Agent's and the Arranger's determination that no
information received after March 4, 1996 as to such
environmental hazards or liabilities investigated prior
to such date indicates a change in the results of such
prior environmental investigation which would have a
Company Material Adverse Effect.
Existing Facilities: Prepayment of all obligations under existing
loan facilities of the Borrower or the Company (other
than those under the Facilities).
Legal: All legal (including tax implications) and regulatory
matters shall be satisfactory to the Required Lenders.
Regulations: Compliance with all applicable requirements of
Regulations G, T, U, and X of the Board of Governors
of the Federal Reserve System.
No Default; No Material
Adverse Change: No default or unmatured default shall exist on the
funding date and no material adverse change in the
business, condition (financial or otherwise),
operations, performance, properties, or prospects of
(i) the Borrower and its subsidiaries, taken as a
First Chicago Capital Markets, Inc. Page 8 NBD Bank, N.A.
<PAGE> 16
whole, since November 30, 1995 or (ii) the Company and
its subsidiaries, taken as a whole, since December
31, 1995, shall have occurred.
Customary Documents: Receipt of other customary closing documentation
including, without limitation, legal opinions of
the Borrower's counsel, acceptable to the Agent.
COVENANTS
Covenants: The Credit Agreement will contain customary covenants
including, without limitation, restrictions
(subject to exceptions, as appropriate, to be
negotiated) on the following:
- liens and encumbrances
- dividends/restricted payments (dividends will be
permitted unless the payment thereof would
cause the violation of other covenants)
- guarantees
- sale and leaseback transactions
- sale of assets
- consolidations and mergers
- investments and acquisitions
- capital expenditures
- loans and advances
- indebtedness and additional indebtedness
- compliance with pension, environmental, and
other laws
- operating leases
- transactions with affiliates
- changes in line of business
- hedging of interest rates
- prepayment of other debt
- permit inspection of records and assets
Financial Covenants: The Credit Agreement will contain financial covenants
containing limitations to be negotiated including,
without limitation, covenants pertaining to:
**[COVENANT LEVELS?]**
- leverage ratio (defined as the ratio of total
funded indebtedness to EBITDA)
- interest coverage
- fixed charge coverage (defined as the ratio of
(i) EBITDA minus capital expenditures to (ii) the
sum of interest expense plus scheduled principal
payments plus taxes plus rental expense plus
dividends paid)
First Chicago Capital Markets, Inc. Page 9 NBD Bank, N.A.
<PAGE> 17
REPRESENTATIONS AND WARRANTIES
Usual representations and warranties in connection with each loan shall be
included in the Credit Agreement including, but not limited to, absence of
material adverse change, absence of material litigation, absence of default or
unmatured default, representations regarding environmental issues, priority of
the Lenders' liens, compliance with all material requirements of law and
contracts, and compliance with Regulations G, T, U, and X.
DEFAULTS
Customary events of default including, without limitation, cross-default to
occurrence of a default (whether or not resulting in acceleration) under any
other agreement governing indebtedness of the Borrower or any of its
subsidiaries and change of control.
ASSIGNMENTS AND PARTICIPATIONS
Permitted subject to approval of the Agent and the Borrower (such approval not
to be unreasonably withheld) in minimum amounts of $5,000,000.
REQUIRED LENDERS
Defined as Lenders holding 66-2/3% of the Aggregate Commitment or, if the
Aggregate Commitment has been terminated, 66-2/3% of the outstanding Loans and
participations in letters of credit.
OTHER
This commitment is, and the Loan Documents will be, governed by the law of the
State of Indiana. This term sheet is intended as an outline only and does not
purport to summarize all the conditions, covenants, representations,
warranties, and other provisions which would be contained in definitive legal
documentation for the financing contemplated hereby. The commitment of the
Agent and the other Lenders is subject to negotiation and execution of
definitive Loan Documents in form and substance satisfactory to the Agent and
the other Lenders and their respective counsel.
First Chicago Capital Markets, Inc. Page 10 NBD Bank, N.A.
<PAGE> 18
EXHIBIT A
INTEREST RATES--APPLICABLE MARGIN
The Applicable Margin is determined by the ratio of (a) total indebtedness
(including contingent liabilities) to (b) EBITDA (the "Leverage Ratio") as per
the following schedule:
<TABLE>
<CAPTION>
APPLICABLE MARGIN
-----------------------------------------------------------------------------------------------
COMMITMENT
LEVERAGE ABR EURODOLLAR FEE
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Level 1 > 3.5 0.75% 1.75% 0.50%
Level 2 > 3.0 to less than or equal to 3.5 0.50% 1.50% 0.50%
Level 3 > 2.5 to less than or equal to 3.0 0.25% 1.25% 0.375%
Level 4 > 2.0 to less than or equal to 2.5 0 1.00% 0.375%
Level 5 > 1.5 to less than or equal to 2.0 0 0.75% 0.375%
Level 6 less than or equal to 1.5 0 0.50% 0.25%
</TABLE>
provided that, notwithstanding the then-current Leverage Ratio, Level 1 pricing
shall be in effect on Facilities A and C for the first six months following the
Closing Date.
"EBITDA" means the sum of consolidated net income plus, to the extent deducted
in determining consolidated net income, taxes paid or accrued, minus
extraordinary gains, plus extraordinary losses, plus total interest expense,
plus depreciation, plus amortization.
First Chicago Capital Markets, Inc. Page 11 NBD Bank, N.A.
<PAGE> 1
EXHIBIT 99.3
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GUARDSMAN PRODUCTS, INC.
AT
$23.00 NET PER SHARE
BY
LP ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
LILLY INDUSTRIES, INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 4, 1996, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF GUARDSMAN PRODUCTS, INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED
THAT (1) THE CONSIDERATION TO BE PAID FOR EACH SHARE IN THE OFFER AND THE MERGER
IS FAIR TO THE STOCKHOLDERS OF THE COMPANY AND (2) THE OFFER AND MERGER ARE IN
THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND, SUBJECT TO THE
FIDUCIARY DUTIES OF THE BOARD, RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES. THREE STOCKHOLDERS BENEFICIALLY
HOLDING APPROXIMATELY 48% OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS
HAVE ENTERED INTO AGREEMENTS WITH PARENT PURSUANT TO WHICH THEY HAVE AGREED,
AMONG OTHER THINGS, TO TENDER THEIR SHARES PURSUANT TO THE OFFER AS MORE FULLY
DESCRIBED HEREIN.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF ALL OUTSTANDING SHARES ON A
FULLY DILUTED BASIS.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME ON THURSDAY, APRIL 4, 1996, UNLESS EXTENDED.
-------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal or a
facsimile copy thereof in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal or such facsimile and any other required documents to the Depositary
and either deliver the certificates for such Shares to the Depositary along with
the Letter of Transmittal or facsimile or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 or (2) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder having Shares registered in the
name of a broker, dealer, bank, trust company or other nominee must contact such
broker, dealer, bank, trust company or other nominee if such stockholder desires
to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedure for guaranteed delivery set forth in
Section 2, including the Notice of Guaranteed Delivery.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at the address and telephone
number set forth on the back cover of this Offer to Purchase.
-------------------------
The Information Agent for the Offer is:
MORROW & CO., INC.
March 8, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
1. Terms of the Offer................................................................ 2
2. Procedure for Tendering Shares.................................................... 4
3. Withdrawal Rights................................................................. 6
4. Acceptance for Payment and Payment................................................ 7
5. Certain Federal Income Tax Consequences........................................... 8
6. Price Range of the Shares; Dividends on the Shares................................ 9
7. Effect of the Offer on the Market for the Shares; Stock Exchange Listing;
Registration Under the Exchange Act............................................... 9
8. Certain Information Concerning the Company........................................ 10
9. Certain Information Concerning the Purchaser and Parent........................... 13
10. Source and Amount of Funds........................................................ 15
11. Contacts with the Company; Background of the Offer................................ 16
12. Purpose of the Offer, the Merger Agreement and Letter Agreements.................. 17
13. Dividends and Distributions....................................................... 26
14. Certain Conditions of the Offer................................................... 27
15. Certain Legal Matters; Regulatory Approvals....................................... 28
16. Fees and Expenses................................................................. 31
17. Miscellaneous..................................................................... 31
</TABLE>
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<PAGE> 3
To the Holders of Common Stock
of Guardsman Products, Inc.
INTRODUCTION
LP Acquisition Corporation, a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Lilly Industries, Inc., an Indiana corporation
("Parent"), hereby offers to purchase all outstanding shares of Common Stock,
par value $1.00 per share (the "Shares"), of Guardsman Products, Inc., a
Delaware corporation (the "Company") and the associated Preferred Stock Purchase
Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of
August 8, 1986, as amended, between the Company and Chemical Bank, as Rights
Agent (the "Rights Agreement"), at a purchase price of $23.00 per Share (and
associated Right), net to the seller in cash (the "Offer Price"), without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). Unless the context otherwise requires, all references to Shares shall
include the Rights. All references to the Rights shall include all benefits that
may inure to the holders of the Rights pursuant to the Rights Agreement,
including the right to receive any payment due upon the redemption of the
Rights.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of First Chicago Trust Company of New
York, which is acting as the Depositary (the "Depositary"), and Morrow & Co.,
Inc., which is acting as Information Agent (the "Information Agent"), incurred
in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT (1) THE CONSIDERATION TO
BE PAID FOR EACH SHARE IN THE OFFER AND THE MERGER IS FAIR TO THE STOCKHOLDERS
OF THE COMPANY AND (2) THE OFFER AND MERGER ARE OTHERWISE IN THE BEST INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS AND, SUBJECT TO THE FIDUCIARY DUTIES OF THE
BOARD, RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER
THEIR SHARES.
Goldman Sachs & Co., the Company's financial advisor ("Advisor"), has
delivered to the Board of Directors of the Company its written opinion to the
effect that, as of the date of such opinion and based on certain matters
described in such opinion, the $23.00 per Share in cash to be offered to the
holders of the Shares in each of the Offer and the Merger is fair to such
holders. Such opinion is attached to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to
stockholders of the Company herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE NUMBER OF
SHARES OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). SEE
SECTIONS 1, 14 AND 15. THREE STOCKHOLDERS BENEFICIALLY HOLDING APPROXIMATELY 48%
OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS HAVE ENTERED INTO AGREEMENTS
WITH PARENT PURSUANT TO WHICH THEY HAVE AGREED, AMONG OTHER THINGS, TO TENDER
THEIR SHARES PURSUANT TO THE OFFER AS MORE FULLY DESCRIBED HEREIN.
The Offer is being made pursuant to the Merger Agreement, dated as of March
4, 1996 (the "Merger Agreement"), among Parent, the Purchaser and the Company
pursuant to which, following the consummation of the Offer and the satisfaction
or waiver of certain conditions, the Purchaser will be merged with and into the
Company, with the Company surviving the merger (as such, the "Surviving
Corporation") as a wholly owned subsidiary of Parent (the "Merger"). In the
Merger, each outstanding Share (other than Shares held by (i) Parent, the
Purchaser or any wholly-owned subsidiary of the Parent or Purchaser or in the
treasury of the Company or by any wholly-owned subsidiary of the Company or (ii)
stockholders, if any, who are
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<PAGE> 4
entitled to and who properly exercise dissenters' rights under Delaware law)
will be converted into the right to receive the per Share price paid in the
Offer in cash, without interest (the "Merger Consideration"). See Section 12.
The Merger is subject to a number of conditions, including approval by
stockholders of the Company, if such approval is required by applicable law. In
the event the Purchaser acquires 90% or more of the outstanding Shares pursuant
to the Offer or otherwise, the Purchaser would be able to effect the Merger
pursuant to the short-form merger provisions of the Delaware General Corporation
Law (the "DGCL"), without prior notice to, or any action by, any other
stockholder of the Company. See Section 12.
The Company has informed the Purchaser that, as of February 28, 1996, there
were 9,638,663 Shares issued and outstanding and 597,970 Shares reserved for
issuance upon the exercise of outstanding stock options. Accordingly, the
Purchaser believes that the Minimum Condition will be satisfied, based on the
foregoing assumptions, if approximately 5,118,817 shares are validly tendered
and not withdrawn prior to the Expiration Date (as defined below). If the
Minimum Condition is satisfied and the Purchaser accepts for payment Shares
tendered pursuant to the Offer, the Purchaser will be able to elect a majority
of the members of the Company's Board of Directors and to effect the Merger
without the affirmative vote of any other stockholder of the Company.
Parent has entered into letter agreements (each a "Letter Agreement") with
each of the following stockholders of the Company: Irwin W. Uran, James L.
Sadler, a director of the Company, and John H. Sadler, the brother of James L.
Sadler (collectively, the "Principal Stockholders"). Pursuant to the Letter
Agreements, each Principal Stockholder has agreed, among other things, to tender
and not withdraw all Shares beneficially owned by him, not to sell, transfer or
grant any voting rights with respect to any of his Shares, not to purchase
additional shares while the Merger Agreement is in effect and to vote all of his
Shares in favor of the Merger and against any action or arrangement which would
interfere with the successful completion of the Offer or Merger. The Letter
Agreements will remain in effect until the transactions contemplated by the
Merger Agreement are successfully completed or until the Merger Agreement is
terminated by Parent or the Company in accordance with its terms. Based on
representations made by the Principal Stockholders to Parent and the Purchaser
as of the date of the Letter Agreements, the principal Stockholders collectively
own 4,952,020 Shares (including options to acquire 7,880 Shares), or
approximately 48% of the total outstanding Shares on a fully diluted basis.
The Merger Agreement and the Letter Agreements are more fully described in
Section 12. Certain Federal income tax consequences of the sale of Shares
pursuant to the Offer and the exchange of Shares for the Merger Consideration
pursuant to the Merger are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "Expiration Date" means 12:00 Midnight, New York City time, on Thursday,
April 4, 1996, unless and until the Purchaser shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
The Offer is subject to certain conditions set forth in Section 14,
including satisfaction of the Minimum Condition and the expiration or
termination of the waiting period applicable to the Purchaser's acquisition of
Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"). If any such condition is not satisfied
the Purchaser may (1) terminate the Offer and return all tendered Shares to
tendering stockholders, (2) extend the Offer and, subject to withdrawal rights
as set forth in Section 3, retain all such Shares until the expiration of the
Offer as so extended, (3) waive such
2
<PAGE> 5
condition and, subject to any requirements to extend the period of time during
which the Offer is open, purchase all Shares validly tendered by the Expiration
Date and not withdrawn or (4) delay acceptance for payment of or payment for
Shares, subject to applicable law, until satisfaction or waiver of the
conditions to the Offer and subject to the right of the Purchaser to extend the
Offer as set forth below and in Section 12. The Purchaser has agreed that,
without the prior written consent of the Company, the Purchaser will not (1)
decrease the price per Share or change the form of consideration payable in the
Offer, (2) decrease the number of Shares sought, (3) amend or waive satisfaction
of the Minimum Condition or (4) impose conditions to the Offer in addition to
those set forth in Section 14 or amend any other term of the Offer in any manner
adverse to the holders of Shares. In the Merger Agreement, the Purchaser has
agreed, subject to the conditions in Section 14 and its rights under the Offer,
to accept for payment Shares validly tendered and not properly withdrawn as soon
as practicable after the later of (1) the Expiration Date, and (2) the
satisfaction or waiver of the conditions set forth in Section 14. For a
description of the Purchaser's right to extend the period of time during which
the Offer is open, and to amend, delay or terminate the Offer, see Sections 12
and 14. There can be no assurance that the Purchaser will exercise its right to
extend the Offer.
Any extension, waiver, amendment or termination of the Offer will be
followed as promptly as practicable by public announcement. In the case of an
extension, Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires that the announcement be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(d) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1 under the Exchange
Act, which requires that a bidder pay the consideration offered or return the
securities deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Condition, which cannot be waived without the
Company's consent), the Purchaser will disseminate additional tender offer
materials and extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following material changes in the terms of the Offer or
information concerning the Offer, other than a change in price or a change in
the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in price or a change in the
percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination to stockholders. If prior
to the Expiration Date, the Purchaser should decide to increase the price per
share being offered in the Offer, such increase will be applicable to all
stockholders whose shares are accepted for payment pursuant to the Offer. As
used in this Offer to Purchase, "business day" means any day other than a
Saturday, Sunday or a federal holiday and consists of the time period from 12:01
a.m. through 12 midnight, New York City time as computed in accordance with Rule
14d-1 under the Exchange Act.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of the Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares
3
<PAGE> 6
and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (1) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or an
Agent's Message (as defined below) in connection with a book-entry delivery of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase and either certificates for tendered Shares must be
received by the Depositary at one of such addresses or such Shares must be
delivered pursuant to the procedure for book-entry transfer set forth below (and
a Book-Entry Confirmation (as defined below) received by the Depositary), in
each case prior to the Expiration Date, or (2) the tendering stockholder must
comply with the guaranteed delivery procedure set forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company, Midwest Securities Trust Company and Philadelphia
Depository Trust Company (the "Book-Entry Transfer Facilities") for purposes of
the Offer within two business days after the date of this Offer. Any financial
institution that is a participant in any of the Book-Entry Transfer Facilities'
systems may make book-entry delivery of Shares by causing a Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with such Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedure
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against such participant.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (1) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
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<PAGE> 7
the Letter of Transmittal or (2) such Shares are tendered for the account of a
firm that is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. (the "NASD"), or a commercial
bank, trust company or savings institution having an office or correspondent in
the United States (each, an "Eligible Institution"). In all other cases, all
signatures on the Letters of Transmittal must be guaranteed by a recognized
member of a Medallion Signature Guaranty Program or by an Eligible Institution.
See Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be issued to a person other than
the registered holder of the certificates surrendered, the tendered certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed as specified above. See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser is received by
the Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message) and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (1) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (2) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and (3) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder irrevocably appoints designees of the Purchaser as such
stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after March 4, 1996. All such proxies shall be considered
coupled with an interest in the
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<PAGE> 8
tendered Shares. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts for payment Shares tendered by such stockholder as
provided herein. Upon such acceptance for payment, all prior powers of attorney
and proxies given by such stockholder with respect to such Shares or other
securities or rights will, without further action, be revoked and no subsequent
powers of attorney and proxies may be given (and, if given, will not be deemed
effective). The designees of the Purchaser will thereby be empowered to exercise
voting and other rights with respect to such Shares or other securities or
rights in respect of any annual, special or adjourned meeting of the Company's
stockholders, or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise voting and other rights with
respect to such Shares and other securities or rights, including voting at any
meeting of stockholders then scheduled.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in any tender with respect to any particular Shares,
whether or not similar defects or irregularities are waived in the case of other
Shares. No tender of Shares will be deemed to have been validly made until all
defects or irregularities relating thereto have been cured or waived. None of
the Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must provide the Depositary with such stockholder's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalties of perjury that such TIN is correct and that such stockholder is
not subject to backup withholding. Certain stockholders (including, among
others, all corporations and certain foreign individuals and entities) are not
subject to backup withholding. If a stockholder does not provide its correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on such stockholder and payment of cash to
such stockholder pursuant to the Offer may be subject to backup withholding of
31%. All stockholders surrendering Shares pursuant to the Offer should complete
and sign the main signature box and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to the Purchaser and the Depositary). Non-corporate
foreign stockholders should complete and sign the main signature box and a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 10 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after May 6, 1996.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an
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<PAGE> 9
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed in a manner required by Section 2 hereof. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 2, any notice of withdrawal must also specify the name and number of the
account at the appropriate Book Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with such Book Entry Transfer Facility's
procedures. Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for any
purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 as soon as practicable after the later of (1) the
Expiration Date, and (2) the satisfaction or waiver of the conditions set forth
in Section 14. For a description of the Purchaser's right to terminate the Offer
and not accept for payment or pay for Shares or to delay acceptance for payment
or payment for Shares, see Sections 12 and 14.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message) and (3) any other
documents required by the Letter of Transmittal. The per Share consideration
paid to any stockholder pursuant to the Offer will be the highest per Share
consideration paid to any other stockholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, certificates for any such Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, such Shares will be credited to an account
7
<PAGE> 10
maintained at the appropriate Book-Entry Transfer Facility), as promptly as
practicable after the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more direct or indirect wholly owned
subsidiaries of Parent, the right to purchase Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of the right to
receive cash by stockholders of the Company pursuant to the Merger) will be
taxable transactions for Federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be taxable transactions
under applicable state, local, foreign and other tax laws. For Federal income
tax purposes, a tendering stockholder will generally recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer (or to be received pursuant to the Merger) and the
aggregate tax basis in the Shares tendered by the stockholder and purchased
pursuant to the Offer (or cancelled pursuant to the Merger). Gain or loss will
be calculated separately for each block of Shares tendered and purchased
pursuant to the Offer (or cancelled pursuant to the Merger).
Under current law, the maximum federal tax rate applicable to long-term
capital gains recognized by an individual is 28%, and the maximum Federal tax
rate applicable to ordinary income (including dividends and short-term capital
gains recognized by individuals) is 39.6%. The maximum Federal tax rate
applicable to all capital gains and ordinary income recognized by a corporation
is 35%. It is possible that legislation may be enacted that would reduce the
maximum federal tax rate applicable to long-term capital gains, possibly with
retroactive effect. It is not possible to predict whether or in what form any
such legislation may be enacted.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless the stockholder provides its TIN
and certifies that such number is correct or properly certifies that it is
awaiting a TIN. A stockholder that does not furnish its TIN may be subject to a
penalty imposed by the IRS. Each stockholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN VIEW OF ITS INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES
TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN
INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
8
<PAGE> 11
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are listed and traded on the NYSE under the symbol "GPI." The
following table sets forth, for each of the periods indicated, the high and low
last reported sales prices and dividends paid per Share as published in
financial sources.
<TABLE>
<CAPTION>
SALES PRICE
-------------
LOW HIGH DIVIDEND
---- ---- ---------
<S> <C> <C> <C>
1994
First Quarter.................................... $12 1/8 $16 5/8 $0.08
Second Quarter................................... 9 12 3/4 0.08
Third Quarter.................................... 9 12 3/8 0.08
Fourth Quarter................................... 10 1/8 12 7/8 0.08
1995
First Quarter.................................... 9 7/8 12 5/8 0.08
Second Quarter................................... 12 13 0.08
Third Quarter.................................... 12 3/4 15 1/4 0.08
Fourth Quarter................................... 11 1/4 14 1/4 0.08
1996
First Quarter
(through March 6, 1996)....................... 13 1/4 22 7/8 0.09
</TABLE>
On March 1, 1996, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported closing sale
price of the Shares was $20 3/4 per Share. On March 7, 1996, the last full day
of trading before the commencement of the Offer, the reported closing sale price
of the Shares on the NYSE was $22 3/4 per Share. STOCKHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
Pursuant to the Merger Agreement, the Company has agreed not to declare,
set aside, or pay any additional dividend or other distribution in respect of
the Shares until the consummation of the Merger, except for the normal quarterly
cash dividend for the first quarter of 1996 in the amount of $0.09 per Share
payable on or about March 21, 1996 to stockholders of record on March 7, 1996.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTING;
REGISTRATION UNDER THE EXCHANGE ACT
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of Shares, which could adversely affect the liquidity and market value of the
remaining Shares held by the stockholders other than the Purchaser. The
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause future
market prices to be greater or less than the Offer Price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing and
may, therefore, be delisted from such exchange. According to the NYSE's
published guidelines, the NYSE could consider delisting the Shares if, among
other things, the number of publicly-held Shares (excluding Shares held by
officers, directors, their immediate families and other concentrated holdings of
10% or more) were less than 600,000, there were less than 1,200 holders of at
least 100 shares or the aggregate market value of the publicly-held Shares
(excluding Shares held by officers, directors, their immediate families and
other concentrated holdings of 10% or more) were less than $5 million. If, as a
result of the purchase of Shares pursuant to the Offer, the Shares no longer
meet the requirements of the NYSE for continued listing and the listing of
Shares is discontinued, the market for the Shares could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
trade on another securities exchange or in the over-the-counter market and that
price quotations for the Shares would be reported by such exchange or through
NASDAQ or other sources. The extent of the public market for the Shares and
availability of such quotations would, however, depend upon such factors as the
number of holders and the aggregate market value of the publicly-held Shares at
such time, the interest in maintaining a market in the
9
<PAGE> 12
Shares on the part of securities firms, the possible termination of registration
of the Shares under the Exchange Act and other factors.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares. Depending upon factors similar to those
described above regarding listing and market quotations, the Shares might no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated if the Shares are not listed on a national
securities exchange and there are less than 300 holders of record. Termination
of the registration of the Shares under the Exchange Act would substantially
reduce the information required to be furnished by the Company to holders of
Shares and to the Securities and Exchange Commission (the "Commission") and
would make certain of the provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy or information statement in connection with stockholder
action and the related requirement of an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Shares. Furthermore,
"affiliates" of the Company and persons holding "restricted securities" of the
Company may be deprived of the ability to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be "margin securities" or eligible for listing on a securities
exchange or NASDAQ reporting. It is the current intention of Parent to
deregister the Shares after consummation of the Offer if the requirements for
termination of registration are met.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
at 3033 Orchard Vista Drive, S.E., Suite 200, Post Office Box 1521, Grand
Rapids, Michigan 49501. According to the Company's Annual Report on Form 10-K (a
"Form 10-K") for the year ended December 31, 1994, the Company operates in two
primary industries: coatings and consumer products. The coatings group develops
and produces industrial coatings primarily for sale to manufacturers of wood and
metal products. Coatings products include paints, varnishes, enamels and
lacquers which are used to finish wood household furniture, metal office
furniture, appliances, agricultural/construction equipment, wood paneling,
kitchen cabinets and a variety of other products. Coatings are sold primarily to
durable goods manufacturers. Additionally, the coatings group manufacturers
resins for internal use and external sales. The Company's consumer products
group markets and distributes a broad line of home care products such as
One-Wipe and Mighty Duster(R) Dust Cloths, One-Wipe Bathroom Cleaner, Guardsman
Furniture Polish, Afta Cleaning Products, Fabri-Coate Fabric Protection
Products, Chip Clip Products and Goof-Off Latex Paint Remover. In addition, this
group manufacturers and distributes a variety of proprietary after-market
automotive maintenance products and industrial lubricants.
10
<PAGE> 13
Summary Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company and its
subsidiaries excerpted or derived from the information contained in the
Company's Form 10-K for the year ended December 31, 1994 and the audited
consolidated financial statements of the Company provided by the Company to
Parent which will be filed by the Company with the Commission on Form 8-K
promptly after the date hereof. More comprehensive financial information is
included in such reports and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and such other documents and all the financial information
(including any related notes) contained therein. Such reports and other
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information." Neither
Parent nor the Purchaser assumes any responsibility for the financial
information set forth below.
GUARDSMAN PRODUCTS, INC.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Net sales......................................... $ 250,574 $ 201,888 $ 177,806 $ 152,197 $ 140,927
Income, net of income taxes....................... 1,432* 5,903 4,671 1,978 956
Income per common share........................... .15* .70 .60 .27 .13
Cash dividends per common share................... .33 .32 .32 .41 .50
Summary Of Financial Position:
Total assets...................................... $ 148,049 $ 137,052 $ 96,954 $ 83,494 $ 79,777
Long-term debt, net of current maturities......... 27,757 27,805 19,013 14,464 9,568
Stockholders' equity.............................. 63,817 64,426 45,362 42,200 44,002
Working capital................................... 45,498 42,373 33,796 28,818 25,112
Other Supplemental Information:
Number of employees............................... 1,060 1,109 860 791 757
Average shares outstanding........................ 9,515,199 8,464,639 7,849,101 7,433,416 7,370,900
Industry Segment Operations (Audited and In
Thousands)
Net Sales:
Coatings Group.................................... $ 194,095 $ 155,967 $ 133,216 $ 116,768 $ 107,131
Consumer Products Group........................... 56,506 46,042 44,618 35,480 33,906
--------- --------- --------- --------- ---------
250,601 202,009 177,834 152,248 141,037
Inter-segment sales............................... (27) (121) (28) (51) (110)
--------- --------- --------- --------- ---------
Consolidated net sales............................ $ 250,574 $ 201,888 $ 177,806 $ 152,197 $ 140,927
========= ========= ========= ========= =========
Operating Profit:
Coatings Group.................................... $ 1,414** $ 8,738 $ 7,053 $ 3,973 $ 1,895
Consumer Products Group........................... 6,681 5,533 5,524 4,323 4,502
--------- --------- --------- --------- ---------
8,095 14,271 12,577 8,296 6,397
Corporate expenses-net............................ (3,871) (3,618) (4,417) (4,611) (3,931)
Interest expense.................................. (2,131) (1,188) (991) (703) (1,026)
Costs of pooling of interests..................... (529)
Investment income................................. 587 374 376 372 425
--------- --------- --------- --------- ---------
Income before income taxes........................ $ 2,680 $ 9,839 $ 7,016 $ 3,354 $ 1,865
========= ========= ========= ========= =========
Identifiable Assets:
Coatings Group.................................... $ 107,834 $ 102,593 $ 66,642 $ 56,141 $ 53,980
Consumer Products Group........................... 28,563 25,475 20,092 16,165 16,079
Corporate......................................... 11,652 8,984 10,220 11,188 9,718
--------- --------- --------- --------- ---------
Total............................................. $ 148,049 $ 137,052 $ 96,954 $ 83,494 $ 79,777
========= ========= ========= ========= =========
</TABLE>
- -------------------------
* Includes restructuring charges which decreased net income by $6,635 or $.70
per share.
** Includes pretax restructuring charges of $10,458.
11
<PAGE> 14
PROJECTED FINANCIAL INFORMATION. IN THE COURSE OF DISCUSSION BETWEEN
REPRESENTATIVES OF PARENT AND THE COMPANY (SEE SECTION 11), THE COMPANY PROVIDED
PARENT WITH PROJECTED FINANCIAL INFORMATION FOR EACH FISCAL YEAR ENDING THROUGH
DECEMBER 31, 1998. SUCH INFORMATION WAS A RESULT OF THE COMPANY'S ANNUAL BUDGET
PROCESS, AND IT WAS NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE
WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS. THE
INFORMATION WAS NOT PREPARED WITH THE ASSISTANCE OF, OR REVIEWED BY, INDEPENDENT
ACCOUNTANTS, AND IS INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE IT WAS
PROVIDED TO PARENT. NEITHER PARENT, THE PURCHASER, THE COMPANY NOR THE
INFORMATION AGENT ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS,
ACCURACY OR COMPLETENESS OF THESE PROJECTIONS. WHILE PRESENTED WITH NUMERICAL
SPECIFICITY, THESE PROJECTIONS ARE BASED UPON A VARIETY OF ASSUMPTIONS RELATING
TO THE BUSINESSES OF THE COMPANY THAT MAY NOT BE REALIZED AND ARE SUBJECT TO
SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE
CONTROL OF THE COMPANY AND, THEREFORE, THESE PROJECTIONS ARE INHERENTLY
IMPRECISE, AND THERE CAN BE NO ASSURANCE THAT PROJECTED FINANCIAL RESULTS WILL
BE REALIZED. SET FORTH BELOW IS CERTAIN SELECTED CONSOLIDATED FINANCIAL
INFORMATION WITH RESPECT TO THE COMPANY AND ITS SUBSIDIARIES INCLUDED IN THE
PROJECTED FINANCIAL INFORMATION SHOWN TO PARENT BY THE COMPANY. THE INCLUSION OF
SUCH PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT PARENT, THE
PURCHASER, THE COMPANY, OR ANY OF THEIR RESPECTIVE ADVISORS OR ANY OTHER PARTY
WHO RECEIVES SUCH INFORMATION CONSIDERS IT AS AN ACCURATE PREDICTION OF FUTURE
EVENTS.
GUARDSMAN PRODUCTS, INC.
SELECTED PROJECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDING DECEMBER 31
--------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Net sales..................................................... $265,350 $290,000 $315,000
Gross profit.................................................. 91,500 101,100 112,700
Earnings before interest and taxes............................ 17,300 19,000 22,000
</TABLE>
Available Information. The Company is subject to the reporting requirements
of the Exchange Act and, in accordance therewith, is required to file reports
and other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, the principal holders of
the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities of the Commission located at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located in the Citicorp Center, 500 West Madison Street (Suite 1400),
Chicago, Illinois 60661-2511 and Seven World Trade Center, Suite 1300, New York,
New York 10048. Copies should be obtainable, by mail, upon payment of the
Commission's customary charges, by writing to the Commissions's principal office
at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material should also be
available for inspection at the library of the NYSE, 20 Broad Street, New York,
New York 10005.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
12
<PAGE> 15
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation and wholly owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of the Purchaser are
located at 733 South West Street, Indianapolis, Indiana 46225. All outstanding
shares of capital stock of the Purchaser are owned by Parent. Until immediately
prior to the time the Purchaser purchases Shares pursuant to the Offer, it is
not anticipated that the Purchaser will have any significant assets or
liabilities or engage in activities other than those incident to its formation
and capitalization and the transactions contemplated by the Offer. Because the
Purchaser is a newly formed corporation and has minimal assets and
capitalization, no meaningful financial information regarding the Purchaser is
available.
Parent is an Indiana corporation with its principal office located at 733
South West Street, Indianapolis, Indiana 46225. The Parent's business is the
formulation, manufacture and sale of industrial coatings. Parent's products
include liquid and powder coatings, used by a variety of manufacturers to coat
wood, metal, plastics and glass substrates. The Parent's principal products are:
wood coatings for furniture, building products, and cabinets; coil coatings for
residential siding components, appliances, and metal buildings; specialty
coatings for a variety of metal products and fiberglass reinforced products;
powder coatings for a variety of metal products; and glass coatings for mirrors.
The name, business address, present principal occupation or employment,
five-year employment history and citizenship of each of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I.
Summary Financial Information. Set forth on the following page is certain
selected consolidated financial information with respect to Parent and its
subsidiaries excerpted or derived from the information contained in Parent's
Form 10-K for the year ended November 30, 1995, which is incorporated by
reference herein. More comprehensive financial information is included in such
reports and other documents filed by Parent with the Commission, and the
following summary is qualified in its entirety by reference to such reports and
such other documents and all the financial information (including any related
notes) contained therein. Such reports and other documents should be available
for inspection and copies thereof should be obtainable in the manner set forth
below under "Available Information."
[The balance of this page was
intentionally left blank]
13
<PAGE> 16
LILLY INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
-----------------------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Operations:
Net sales............................... $328,345 $331,306 $284,325 $236,476 $220,508
Cost of products sold................... 219,899 214,809 189,111 152,480 150,669
Selling, administrative, research and
development expenses................. 73,058 74,480 65,644 61,158 57,527
Income taxes............................ 13,510 16,350 11,784 9,201 4,417
Net income.............................. 20,264 23,302 16,155 12,706 6,357
Per Share Data:(1)
Net income.............................. .88 1.00 .70 .55 .27
Cash dividends.......................... .310 .267 .238 .223 .214
Book value.............................. 4.86 4.38 3.60 3.16 3.16
Average number of shares and equivalent
shares outstanding(2)................ 23,100 23,250 23,123 23,189 23,499
Shares outstanding at year end.......... 22,502 22,710 22,517 22,226 23,480
Price range of Class A stock............ 15-11 18-11 3/4 15 7/8-9 3/8 9 3/4-5 5/8 6 1/8-4 1/8
Other Data:
Working capital......................... 35,505 41,604 33,270 27,131 30,405
Current ratio........................... 1.9:1 1.8:1 1.9:1 2.0:1 2.0:1
Total assets............................ 183,582 190,252 167,044 117,049 127,342
Additions to property and
equipment(3)......................... 15,599 6,693 7,598 3,262 1,928
Depreciation............................ 4,251 4,637 3,746 3,965 4,038
Cash dividends.......................... 7,041 6,049 5,327 5,104 5,005
Long-term debt.......................... 21,200 28,026 40,621 10,361 16,638
Stockholders' equity.................... 109,374 99,424 81,128 70,125 74,187
Return on average equity................ 19.4% 25.8% 21.4% 17.6% 8.6%
Return on sales before minority
stockholders' interests.............. 6.2% 7.0% 5.7% 5.4% 2.9%
</TABLE>
- -------------------------
(1) Adjusted for all stock splits and stock dividends through November 30, 1995,
inclusive. Prices are rounded to nearest 1/8.
(2) Used to calculate net income per share.
(3) Excludes effect of acquisitions.
Certain Transactions. Except as described in this Offer to Purchase,
neither the Purchaser nor Parent (together, the "Corporate Entities") or, to the
best knowledge of the Corporate Entities, any of the persons listed in Schedule
I or any associate or majority-owned subsidiary of the Corporate Entities or any
of the persons so listed, beneficially owns any equity security of the Company
(except that the Parent beneficially owns five Shares), and none of the
Corporate Entities, any of the other persons referred to above, or any of the
respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the Company
during the past 60 days.
Except as described in this Offer to Purchase, (1) there have not been any
contracts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of
14
<PAGE> 17
the Corporate Entities, any of the persons listed in Schedule I, on the one
hand, and the Company or any of its directors, officers or affiliates, on the
other hand, that are required to be disclosed pursuant to the rules and
regulations of the Commission and (2) none of the Corporate Entities or, to the
best knowledge of the Corporate Entities, any of the persons listed in Schedule
I has any contract, arrangement, understanding or relationship with any person
with respect to any securities of the Company.
During the last five years none of the Corporate Entities or, to the best
knowledge of Corporate Entities, any of the persons listed in Schedule I (a) has
been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (b) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, Federal or state securities
laws or finding any violation of such laws.
Available Information. Parent is subject to the reporting requirements of
the Exchange Act and, in accordance therewith, is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning
Parent's directors and officers, their remuneration, the principal holders of
Parent's securities and any material interest of such persons in transactions
with Parent is required to be disclosed in proxy statements distributed to
Parent's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
Commission, and copies thereof should be obtainable from the Commission, in the
same manner as set forth with respect to information concerning the Company in
Section 8. Such material should also be available for inspection at the library
of the NYSE, 20 Broad Street, New York, New York 10005.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer and to pay fees and expenses related to
the Offer and the Merger is estimated to be approximately $240 million. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
a capital contribution that will be made by Parent (or by a subsidiary of
Parent) to the Purchaser.
NBD Bank, N.A. ("NBD") has entered into a written commitment with the
Parent (the "Commitment Letter") dated February 8, 1996, as amended by a letter
amendment dated March 4, 1996, to provide up to $300 million (the "Aggregate
Commitment") through three credit facilities (the "Facilities") to be used by
Parent to provide funds for the purchase of the Company, payment of expenses in
connection with the acquisition and for refinancing of existing indebtedness of
Parent and the Company with an aggregate outstanding principal balance of
approximately $56 million. NBD has retained the right to syndicate all or a
portion of the Facilities to additional lenders. First Chicago Capital Corp., an
affiliate of NBD (the "Arranger"), will provide the syndication services.
The Facility A Term Loan Commitment (the "Facility A Commitment") in the
principal amount of $175 million matures six years from the date of closing of
the Facilities (the "Loan Closing Date") with quarterly installments of
principal in amounts which have not yet been determined. Interest on
indebtedness outstanding under the Facility A Commitment will be payable at a
rate per annum equal to, at Parent's election, either (i) the greater of the (a)
prime rate charged by NBD from time to time, or (b) the federal funds rate plus
0.50% per annum (the "ABR Rate"), or (ii) the Eurodollar Rate, plus in the case
of each of (i) and (ii), an additional amount (the "Applicable Margin") based on
the ratio of Parent's total indebtedness to EBITDA (the "Leverage Ratio"). In
the case of ABR loans, the Applicable Margin ranges from .75% to 0% and, in the
case of Eurodollar loans, ranges from 1.75% to .50%.
The Facility B Term Loan Commitment (the "Facility B Commitment") in the
principal amount of $50 million matures 7 1/2 years from the Loan Closing Date,
with quarterly installments of principal in amounts which have not yet been
determined. Interest on indebtedness outstanding under the Facility B Commitment
will be payable at a rate per annum equal to, at Parent's election, either (i)
the ABR Rate plus 1.25% or (ii) the Eurodollar rate plus 2.25%.
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The Facility C Revolving Credit/Letter of Credit Facility (the "Facility C
Commitment") in the amount of $75,000,000 matures six years from the Loan
Closing Date. Interest is payable on the indebtedness outstanding under the
Facility C Commitment at a rate per annum determined in the same manner as with
respect to the Facility A Commitment. The aggregate outstanding amount of loans
and letters of credit under the Facility C Commitment may not exceed the
borrowing base which will consist of percentages (to be negotiated) of eligible
inventory and eligible accounts receivable, provided, however, that after the
first six months following the Loan Closing Date, Parent's borrowing base
limitation will be suspended for Facility C loans if the Leverage Ratio is equal
to or less than 1.5.
The Facilities will be secured by a first perfected security interest in
all of Parent's assets other than real estate (with a negative pledge on the
real estate of Parent) and, through secured guarantees, in all of its direct and
indirect domestic subsidiaries' assets other than real estate (with a negative
pledge on the real estate of such subsidiaries), including the assets of the
Surviving Corporation. The assets of the Parent to be pledged as collateral will
include all of the stock of its direct and indirect domestic subsidiaries and
65% of the stock of all of its direct or indirect foreign subsidiaries.
Conditions to funding of the Facilities include, among other matters, (1)
absence of material adverse change, (2) absence of an injunction or order which
would prohibit the making of the Loans or the consummation of the Offer or
Merger, (3) determination by NBD and the Arranger that no information received
after March 4, 1996 as to due diligence matters, including but not limited to,
environmental matters, investigated prior to that date indicates a change in the
results of such prior due diligence investigation which would have a Company
Adverse Effect (as defined in the Merger Agreement), (4) satisfactory evidence
of the solvency of Parent on a going forward basis after consummation of the
Offer and Merger, and (5) other customary conditions. The Commitment Letter
provides that the definitive loan documents will include customary
representations, warranties and covenants, including financial covenants which
have not yet been negotiated.
Pursuant to the Commitment Letter, Purchaser has agreed, regardless whether
the Commitment Letter is revoked or terminated or whether or not the financing
transactions contemplated by the Commitment Letter close, to reimburse NBD and
the Arranger for all out of pocket expenses incurred by NBD and the Arranger in
connection with the Commitment Letter, the transactions contemplated thereby and
the on-going due diligence investigation of NBD and the Arranger in connection
therewith and to indemnify NBD, the Arranger, the lenders and their respective
officers, employees, agents and directors against any losses, claims, damages or
liabilities (including, but not limited to, costs of defense and investigation)
to which they may become subject in connection with the transaction contemplated
by the Commitment Letter.
The obligations of the Agent and the Arranger in the Commitment Letter are
subject to the execution and delivery of mutually agreeable loan documents
incorporating the terms and conditions contained in the Commitment Letter, the
absence of a material adverse change with respect to Parent and its subsidiaries
and the Company and its subsidiaries and the absence of a material adverse
change in the loan syndication markets or capital markets generally.
The Commitment Letter provides that the commitments in respect of the
facilities will terminate on May 15, 1996 unless definitive loan documents are
executed on or before that date.
The foregoing description of the Commitment Letter is qualified in its
entirety by reference to the text of the Commitment Letter, a copy of which has
been filed as an exhibit to the Schedule 14D-1 of the Purchaser and the Parent
relating to the Offer (the "Schedule 14D-1").
Parent expects that it will repay any amounts borrowed under the Facilities
with cash flow from operations and/or with proceeds from public or private sales
of debt or equity securities.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
On October 22, 1995, Douglas W. Huemme, Chairman, President and Chief
Executive Officer of Parent, had a casual conversation with Paul K. Gaston,
Chairman of the Board of the Company, at a trade association meeting in which
Mr. Huemme indicated that Parent might have an interest in discussing a possible
acquisition of the Company by Parent.
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Parent continued to indicate that it was interested in pursuing a possible
acquisition of the Company and on December 13, 1995 Parent and the Company
executed a confidentiality agreement pursuant to which Parent agreed to hold in
confidence all information concerning the Company and its subsidiaries.
Following the execution of this letter, representatives of the Parent met with
Charles E. Bennett, President and Chief Executive Officer of the Company, in
order to continue exploring a possible acquisition of the Company.
At the regularly scheduled Board of Directors meeting on January 12, 1996,
management first introduced the possibility of pursuing the acquisition of the
Company. On January 16, 1996, representatives of Parent and the Company had
another meeting during the course of which Parent commenced its financial due
diligence review of the Company. On January 25, 1996, Parent submitted a letter
to Goldman, Sachs & Co., investment banker for the Company, indicating its
preliminary non-binding interest in pursuing an acquisition of the Company in
the range of $22.00 to $23.50 per share. At a special meeting of Parent's Board
of Directors on January 30, 1996, Parent's management gave its Board an overview
of the Company acquisition opportunity and the Board adopted a resolution
authorizing the executive officers to negotiate for the acquisition of Company
for a purchase price in the range of $22.00 to $23.50 per Share in cash. By
letter dated February 1, 1996, Goldman, Sachs & Co. invited Parent to submit on
or before February 23, 1996, a definitive proposal to acquire the Company.
Throughout February, Parent and its representatives continued their due
diligence review of the Company, including visits to all of the Company's U.S.
plants. Representatives of Parent and the Company had several conversations
during this period concerning the terms and conditions of a possible acquisition
transaction but no agreement was reached as to price or other terms.
On February 13, 1996, the Company announced that it was investigating a
possible sale of the Company and that it had authorized management to engage in
discussions with selected companies which had expressed an interest in such an
acquisition. The announcement also cautioned that no offer had been made for the
Company, no definitive agreement with respect to any offer had been reached and
that there could be no assurance that such an offer would be made or definitive
agreement entered into.
On February 22, 1996, Parent submitted to Goldman, Sachs & Co. a proposal
to acquire the Company at a purchase price of $23.00 per Share, subject to Board
approval and the execution of lock up agreements with the Principal
Stockholders. During the next week Parent and the Company negotiated the terms
of the Merger Agreement. At a special meeting of the Board of Directors of
Parent on March 4, 1996, the Board of Directors approved the acquisition of all
of the Shares of the Company at $23.00 per Share and the merger of the Purchaser
with and into the Company. Thereafter, the parties executed the Merger Agreement
and the Letter Agreements and publicly announced the transaction during the
afternoon of March 4, 1996.
12. PURPOSE OF THE OFFER, THE MERGER AGREEMENT AND LETTER AGREEMENTS
The purpose of the Offer is to acquire control of the entire equity
interest in the Company. Following the Offer, the Purchaser and Parent intend to
acquire any remaining equity interest in the Company not acquired in the Offer
by consummating the Merger.
The Merger Agreement
The following is a summary of certain provisions of the Merger Agreement, a
copy of which is filed as an Exhibit to the Schedule 14D-1 and is incorporated
herein by reference. The Merger Agreement may be examined, and copies may be
obtained as set forth in Section 9 above. Such summary is qualified in its
entirety by reference to the Merger Agreement.
The Offer. The Merger Agreement provides that Parent will take all
necessary actions (including providing adequate financing) to cause the
Purchaser to commence the Offer as soon as practicable, but in no event later
than five business days from the date of the Merger Agreement. The obligation of
the Purchaser to accept for payment (and thereby purchase) any Shares tendered
pursuant to the Offer is subject to the conditions set forth in Annex I to the
Merger Agreement (the "Offer Conditions"). See the Section entitled "Certain
Conditions of the Offer" below. The Purchaser may waive, in its sole discretion,
any Offer Condition
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other than the Minimum Condition. Subject only to the Offer Conditions, the
Purchaser has agreed to accept payment for and purchase, as soon as permitted by
the terms of the Offer, all Shares validly tendered and not withdrawn prior to
the expiration of the Offer. Without the prior written consent of the Company,
the Purchaser will not decrease the Offer Price, decrease the number of Shares
being sought in the Offer, change the form of consideration payable in the
Offer, amend or waive satisfaction of the Minimum Condition, add additional
conditions to the Offer or amend any other term of the Offer in any manner
adverse to the holders of Shares. Parent and the Purchaser have also agreed that
the Purchaser will not terminate or withdraw the Offer or extend its expiration
date unless at the expiration date of the Offer the Offer Conditions have not
been satisfied or earlier waived, provided, however that Purchaser shall be
allowed to extend the Offer for up to a total of 10 days.
Upon payment by the Purchaser for Shares purchased pursuant to the Offer
constituting at least a majority of the outstanding Shares on a fully diluted
basis, the Company, at Parent's request, will take all necessary actions to
cause its Board of Directors to include a number of Parent's designees such that
the designees constitute a percentage of the Board as nearly equal as
practicable to the percentage of outstanding Shares beneficially owned by Parent
(which will be at least a majority of the Board). The necessary actions of the
Company may include accepting resignations of certain incumbent directors or
increasing the size of the Board. The Company has agreed to use its best
reasonable efforts not to increase the size of the Board above twelve members,
and the Parent has agreed that the Company may retain at least three incumbent
directors until the Effective Time. Upon written request by the Purchaser, the
Company has agreed to use its reasonable best efforts to cause the designees of
the Purchaser to constitute a percentage as nearly equal as practicable to the
percentage of representation on the Board of Directors on (i) each committee of
the Board of Directors; (ii) the board of directors of each subsidiary of the
Company; and (iii) each committee of such subsidiaries' boards of directors.
After the time that the Purchaser's designees constitute at least a
majority of the Board and until the Effective Time, any amendment or termination
of the Merger Agreement by the Company or its Board of Directors, any extension
by the Company or its Board of the time of performance of any obligations or
other acts of the Purchaser or Parent or waiver of the Company's rights under
the Merger Agreement, or any consent, approval or recommendation of the Company
or its Board required under the Merger Agreement, will (if there are any then
serving directors not affiliated with or designated by Parent) require the
approval of a majority of the directors of the Company then in office who are
not affiliated with Parent and were not designated by Parent.
The Merger. The Merger Agreement provides that at the Effective Time,
subject to the terms and conditions thereof, the Purchaser will be merged with
and into the Company, which will be the Surviving Corporation. The name of the
Surviving Corporation will be "Guardsman Products, Inc." Pursuant to the Merger,
the Certificate of Incorporation and By-laws of the Purchaser will be the
Certificate of Incorporation and By-laws of the Surviving Corporation until
thereafter amended as provided by law. The directors of the Purchaser at the
Effective Time will become the directors of the Surviving Corporation until
their respective successors are duly elected and qualified. The officers of the
Company at the Effective Time will continue as the officers of the Surviving
Corporation until their respective successors are duly elected and qualified.
The Merger will have the effects set forth in the General Corporation Law of the
State of Delaware (the "DGCL").
Conversion of Shares. The Merger Agreement provides that at the Effective
Time, each outstanding Share will be converted into the right to receive the
Merger Consideration (or any higher price per Share paid in the Offer), other
than (i) Shares held by the Parent, the Purchaser or any wholly owned subsidiary
of Parent or the Purchaser, or in the treasury of the Company, or by any wholly
owned subsidiary of the Company, which Shares, by virtue of the Merger and
without any action on the part of the holder thereof, will be canceled and
retired and will cease to exist with no payment being made with respect thereto,
and (ii) Shares held by stockholders who exercise their statutory appraisal
rights as described below. At the Effective Time, each issued and outstanding
share of capital stock of the Purchaser will be converted into one validly
issued, fully paid and nonassessable share of Common Stock, par value $1.00 per
share, of the Surviving Corporation.
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The Merger Agreement further provides that any Shares outstanding
immediately before the Effective Time and held by a stockholder who has not
voted in favor of or consented to the Merger in writing and who complies with
all the provisions of the DGCL concerning the right of holders of shares of
capital stock to dissent from the Merger and require appraisal of their shares
(a "Dissenting Stockholder") will not be converted into the right to receive the
Merger Consideration as described above but instead will be converted, at the
Effective Time, by virtue of the Merger and without any further action, into the
right to receive any consideration that may be determined to be due to the
Dissenting Stockholder pursuant to the DGCL; provided, that Shares outstanding
immediately before the Effective Time and held by a Dissenting Stockholder who,
after the Effective Time, fails to perfect or withdraws or loses the Dissenting
Stockholder's right to appraisal, in either case pursuant to the DGCL, will be
deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration, without interest or dividends thereon. The Company may
not, without the prior written consent of the Purchaser, voluntarily make any
payment with respect to, or settle or offer to settle, any demands for appraisal
of Shares by Dissenting Stockholders.
Stockholder's Meeting. The Company has agreed to convene a meeting of the
holders of the Shares, as promptly as practicable after Purchaser's purchase of
and payment for Shares pursuant to the Offer, to consider and vote upon the
adoption of the Merger Agreement, if such a meeting is required by applicable
law. The Company has agreed that in the proxy statement with respect to the
meeting, the Company will, through its Board, and subject to the fiduciary
obligations of the Board under applicable law, recommend that stockholders of
the Company vote in favor of approval of the Merger and adoption of the Merger
Agreement. Parent has agreed that at any stockholders' meeting, it will vote or
cause all of the Shares then owned by it, the Purchaser or any of its other
subsidiaries to be voted in favor of approval and adoption of the Merger
Agreement.
Conditions to the Merger. The obligations of each party to effect the
Merger are subject to the satisfaction or, if permissible, waiver on or before
the Effective Time of each of the following conditions: (i) the Purchaser must
have accepted for payment and paid for Shares pursuant to the Offer in
accordance with the terms of the Offer, except that this condition will be
deemed to have been satisfied with respect to the obligation of Parent and the
Purchaser to effect the Merger if the Purchaser fails to accept for payment or
pay for Shares pursuant to the Offer in violation of the terms of the Offer;
(ii) the vote of the stockholders of the Company necessary to consummate the
transactions contemplated by the Merger Agreement must have been obtained, if
required by applicable law; (iii) there must not have been any statute, rule, or
regulation promulgated, enacted, entered or enforced, or any other legally
binding, final and nonappealable action taken, by any domestic, foreign or
supranational government or governmental, administrative, or regulatory
authority or agency of competent jurisdiction or by any court or tribunal of
competent jurisdiction, domestic, foreign or supranational, that in any of the
foregoing cases has the effect of making illegal or directly or indirectly
restraining, prohibiting or restricting the consummation of the Merger and (iv)
any waiting period applicable to the Merger under the HSR Act shall have
terminated or expired.
Interim Operations of the Company. In the Merger Agreement, the Company has
agreed that, except as expressly provided in the Merger Agreement or consented
to in writing by Parent, from the date of the Merger Agreement to the Effective
Time, (i) the business of the Company and its subsidiaries will be conducted
only in the ordinary and usual course of business consistent with past practice,
and (ii) the Company will not, nor will it permit any of its subsidiaries to:
(a) amend or propose to amend its certificate or articles of
incorporation or by-laws (or similar constituent documents);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights), except for Shares issued upon exercise of stock
options outstanding as of the date of the Merger Agreement or pursuant to
the existing terms of the Rights Agreement (as defined below), or amend any
of the terms of any such securities or agreements
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outstanding as of the date of the Merger Agreement, except as specifically
contemplated by the Merger Agreement;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, or redeem or otherwise acquire any of its securities or any
securities of its subsidiaries, except that the Company will be allowed to
pay normal quarterly cash dividends for the first quarter of 1996 in the
amount of $.09 per Share payable on or about March 21, 1996 to stockholders
of record on March 7, 1996;
(d) (1) incur or assume or prepay any long-term or short-term debt or
issue any debt securities except for borrowings under existing lines of
credit in the ordinary course of business; (2) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently
or otherwise) for the obligations of any other person except for
obligations of wholly owned subsidiaries of the Company; (3) make any
loans, advances or capital contributions to, or investments in, any other
person (other than to wholly owned subsidiaries of the Company or customary
loans or advances to employees in the ordinary course of business
consistent with past practice and in amounts not material to the maker of
such loan or advance); (4) pledge or otherwise encumber shares of capital
stock of the Company or any of its subsidiaries; or (5) mortgage or pledge
any of its material assets, tangible or intangible, or create or suffer to
exist any lien thereupon, excluding Permitted Liens as defined in the
Merger Agreement;
(e) except as may be required by law or as contemplated by the Merger
Agreement, enter into, adopt or amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase agreement, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust (except
for trusts to be established pursuant to the Company's directors'
retirement plan), plan, fund or other arrangement for the benefit or
welfare of any director, officer or employee in any manner, or (except for
normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company, and as required under
existing agreements) increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the date of the
Merger Agreement (including, without limitation, the granting of stock
options, stock appreciation rights or performance units);
(f) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or any assets which in the aggregate are material to the
Company and its subsidiaries taken as a whole, or enter into any commitment
or transaction outside the ordinary course of business consistent with past
practice or which would be material to the Company and its subsidiaries
taken as a whole;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles (after consultation with Parent as
to the effect of any such change), change any of the accounting principles
or practices used by it;
(h) (1) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (2) enter into any
contract or agreement other than in the ordinary course of business
consistent with past practice which would be material to the Company and
its subsidiaries taken as a whole; or (3) enter into or amend any contract,
agreement, commitment or arrangement providing for the taking of any action
that would be prohibited hereunder;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off
notes or accounts receivable other than in the ordinary course of business;
(j) make any tax election or settle or compromise any federal, state
or local income tax liability or assent to the extension of time for
collection or assessment of any federal, state or local tax (provided that
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the Company and its subsidiaries may extend the time for filing 1995 tax
returns in accordance with past practice);
(k) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in, or contemplated
by, the consolidated financial statements (or the notes thereto) of the
Company and its subsidiaries or incurred in the ordinary course of business
consistent with past practice;
(l) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby or material to the
Company and its subsidiaries taken as a whole, except for contemplated
settlements with insurance carriers concerning environmental liabilities as
disclosed to Parent (after consultation with Parent prior to finalizing
such settlements); or
(m) take, or agree in writing or otherwise to take, any of the
foregoing actions or take, or omit to take, any action that would make any
of the representations or warranties of the Company contained in the Merger
Agreement untrue or incorrect in any material respect as of the date when
made or would result in any of the Offer Conditions not being satisfied.
Stock Option Plans. The Merger Agreement provides that, as of the Effective
Time, the Company shall take, and Parent shall cause the Company to take, such
actions to provide that by virtue of the Merger and without any action on the
part of the holders thereof, each option to purchase Shares (the "Option") that
is outstanding immediately before the Effective Time will be canceled and, in
consideration of such cancellation, each holder of an Option will receive in
cash an amount equal to the product of (i) the excess, if any, by which $23.00
exceeds the exercise price of the Option and (ii) the number of Shares subject
to the Option. Except as provided in the Merger Agreement or as otherwise agreed
by the Company, Parent and the Purchaser, the plans under which the Options were
granted (the "Option Plans") will terminate as of the Effective Time and the
provisions in any other plan, program or arrangement, providing for the issuance
or grant by the Company or any of its subsidiaries of any interest in respect of
the capital stock of the Company or any of its subsidiaries will be deleted as
of the Effective Time. In addition, (except as provided in the Merger Agreement
or as otherwise agreed by the Company, Parent and the Purchaser) following the
Effective Time no holder of Options or any participant in the Option Plans or
any other such plans, programs or arrangements will have any right thereunder to
acquire any equity securities of the Company, the Surviving Corporation or any
subsidiary thereof.
Amendment of Rights Agreement. The Company has issued Rights pursuant to
the Rights Agreement between the Company and Chemical Bank (formerly
Manufacturers Hanover Trust Company), as Rights Agent. The Company and the
Rights Agent have amended the Rights Agreement pursuant to Amendment No. 2 to
Rights Agreement dated as of March 4, 1996, a copy of which is filed as an
Exhibit to the Schedule 14D-1 and is incorporated herein by reference. The
amendment provides that neither Parent nor the Purchaser will become an
"Acquiring Person," that no "Stock Acquisition Date" or "Distribution Date" (as
those terms are defined in the Rights Agreement) will occur and that Section 11
and Section 13 of the Rights Agreement will not be triggered, as a result of the
announcement, commencement or consummation of the Offer, the execution or
delivery or the Merger Agreement or any amendment thereto, the consummation of
the Merger, or the consummation of any other transactions contemplated by the
Merger Agreement. Under the Merger Agreement, the Company has agreed that,
unless required to do so by court order or to fulfill fiduciary obligations, the
Company will not redeem the Rights or amend or terminate the Rights Agreement
before consummation of the Merger. As a result of Amendment No. 2 to the Rights
Plan, the Company does not contemplate that any of the outstanding Rights will
be redeemed.
No Solicitation. The Company has agreed, and has agreed to direct its
officers, directors, employees, representatives and agents to, immediately cease
any existing discussions and negotiations with any parties conducted heretofore
with respect to any proposal relating to an Acquisition Transaction (as defined
below). The Company has agreed that before the Effective Time it will not, and
it will not authorize or permit any of its subsidiaries or any of its or its
subsidiaries' directors, officers, employees, agents, or representatives,
directly or indirectly, to, solicit, initiate, facilitate or encourage
(including by way of furnishing or disclosing nonpublic
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information) any inquiries or the making of any proposal with respect to any
acquisition of all or substantially all of the Company by means of a merger,
consolidation or other business combination involving the Company or its
subsidiaries or acquisition of all or substantially all of the assets or capital
stock of the Company and its subsidiaries taken as a whole (an "Acquisition
Transaction"), or, subject to the proviso below, negotiate, explore or otherwise
engage in substantive communications in any way with any person (other than
Parent, the Purchaser or their respective directors, officers, employees, agents
and representatives) with respect to any Acquisition Transaction, or enter into
any agreement, arrangement or understanding requiring it to abandon, terminate
or fail to consummate the Merger or any other transactions contemplated by the
Merger Agreement; provided, that, notwithstanding the foregoing, the Company
may, in response to an unsolicited written proposal with respect to an
Acquisition Transaction from a third party reasonably believed to have the
financial capability to consummate an Acquisition Transaction, furnish
information to, and negotiate, explore, or otherwise engage in substantive
discussions with, such third party, in each case if the Company's Board of
Directors determines in good faith by a majority vote, after consultation with
its financial advisors and after receipt of the written advice of the outside
legal counsel of the Company, that such action is required by applicable law
(including fiduciary principles thereof). In addition, the Company has agreed to
immediately advise Parent in writing of the receipt of any inquiries or
proposals relating to an Acquisition Transaction and any actions taken pursuant
to an inquiry or proposal.
Standstill Arrangement. Under the Merger Agreement, Parent has agreed that,
for a period of three years from the date of the Merger Agreement, it will not,
directly or indirectly, except pursuant to the Merger Agreement: (i) acquire or
agree, offer, seek or propose to acquire, or cause to be acquired, ownership of
any of the Company's assets or businesses or any voting securities issued by the
Company or any other rights or options to acquire that ownership (including from
a third party); (ii) seek or propose to influence or control the Company's
management or policies; or (iii) enter into any discussions, negotiations,
arrangements or understandings with any third party with respect to any of the
foregoing.
Indemnification; Directors' and Officers' Insurance. The Merger Agreement
provides that from and after the purchase of Shares pursuant to the Offer,
Parent will indemnify, defend and hold harmless, and will cause the Surviving
Corporation (including, if necessary, providing the Surviving Corporation with
sufficient funds) to indemnify, defend and hold harmless, the present and former
directors (including the Company's Advisory Director), officers, employees and
agents of the Company and its subsidiaries against all losses, claims, damages,
expenses or liabilities arising out of actions or omissions or alleged actions
or omissions occurring at or before the Effective Time to the same extent and on
the same terms and conditions (including with respect to advancement of
expenses) provided for in the Company's Certificate of Incorporation and Bylaws
and agreements in effect at the date of the Merger Agreement (to the extent
consistent with applicable law). Further, Parent has agreed that for six years
after the Effective Time, Parent will cause to be maintained in effect the
current policies of directors' and officers' liability insurance maintained by
the Company, or other similar insurance no less favorable in scope, amount and
type of coverage, with respect to claims arising from facts or events that
occurred before the Effective Time; provided, however, that Parent will not be
obligated to make annual premium payments for such insurance to the extent the
premiums exceed 175% of the annual premiums paid as of the date of the Merger
Agreement by the Company for such insurance (the "Maximum Amount"). If the
amount of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, Parent and the Surviving Corporation will
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Amount.
Letter Agreement Indemnification. In the Letter Agreements, and as a
condition to obtaining the same, Parent has agreed to indemnify and hold
harmless the stockholder signatories thereto from and against any and all claims
by third parties or Parent (and its affiliates), judgments, fines, penalties,
liabilities, fees and expenses (including, without limitation, reasonable
attorneys' fees) that may be asserted against or incurred by such stockholder
signatories in connection with their entering into the Letter Agreements or
their compliance with the terms thereof, provided that such indemnity does not
protect the stockholder signatories against (i) any violations of law (other
than violations alleged to have occurred as a result of their compliance with
the terms and conditions of the Letter Agreements) or (ii) any breach by the
stockholder signatories of
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their commitments in the Letter Agreements. In the Merger Agreement, the Company
has agreed to indemnify and hold Parent harmless from and against any liability,
cost, or expense (including reasonable attorneys' fees) incurred by it in
providing the indemnification required under the Letter Agreements; provided,
however, that the foregoing indemnity of the Company will terminate upon the
purchase of Shares by Parent pursuant to the Offer.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, the Company's organization, capitalization,
authority to enter into the Merger Agreement and to consummate the transactions
contemplated thereby, potential conflicts, consent and approvals, public
filings, absence of certain events, undisclosed liabilities, litigation,
compliance with laws, tax matters, termination, severance and employment
agreements, employee benefit plans, environmental matters, assets (including
real property and intellectual property), broker's fees, labor matters and
information set forth in the Schedule 14D-9. None of the representations or
warranties in the Merger Agreement will survive the Effective Time of the
Merger.
Access; Confidentiality. The Company has agreed to give Parent and its
authorized representatives, including its legal counsel, environmental and other
consultants, financial advisors, banks, financial institutions, accountants,
auditors and others, during normal business hours until the Effective Time, full
access to all facilities, personnel and operations and to all books and records
of the Company and its subsidiaries to inspect and evaluate the Company and its
operations. In addition, during that same period the Company has agreed to cause
its officers and the officers of its subsidiaries to give Parent any financial
and operating information regarding the Company and its subsidiaries that Parent
may request. Pursuant to a Confidentiality Agreement between the Company and
Parent dated December 13, 1995, Parent has agreed to hold in confidence all
information concerning the Company and its subsidiaries and not to use that
information in any way detrimental to the Company. A copy of the Confidentiality
Agreement is filed as an Exhibit to the Schedule 14D-1 and is incorporated
herein by reference.
Amendment. Subject to applicable law, the Company, Parent and the Purchaser
may amend or supplement the Merger Agreement at any time before the Effective
Time by a written instrument signed by each of them. If the stockholders of the
Company have approved the Merger Agreement, the parties may not amend or
supplement the Merger Agreement to reduce the Merger Consideration, to change
the form of consideration, or to effect any other change that materially
adversely affects the rights of those stockholders, without the stockholders'
further approval. In addition, following the election or appointment of Parent's
designees to constitute a majority of the Company's directors, any amendment or
termination of the Merger Agreement by the Company or its Board, any extension
by the Company or its Board of the time of the performance of any obligation of
Parent or Purchaser or waiver of any rights of the Company under the Merger
Agreement, or any consent, approval or recommendation of the Company or Board
required under the Merger Agreement, will require the approval of a majority of
the directors of the Company then in office who are not affiliated with and were
not designated by Parent (if there are any then serving directors not affiliated
with or designated by Parent).
Termination. (i) The Merger Agreement may be terminated, and the Merger may
be abandoned notwithstanding approval thereof by the stockholders of the Company
(in which case the Offer will also be abandoned unless the Purchaser has already
purchased Shares pursuant thereto) at any time before the Effective Time, (a) by
mutual written consent of Parent and the Company, (b) by either Parent or the
Company if, without any material breach by the terminating party of its
obligations under the Merger Agreement, the purchase of Shares pursuant to the
Offer has not occurred on or before May 31, 1996 (or, if Parent or the Company
receives a request for additional information under the HSR Act, the earlier of
(1) July 31, 1996, or (2) the earliest date following the expiration of the
waiting period under the HSR Act, as extended by such request, on which the
Purchaser may purchase Shares pursuant to the terms of the Offer and the
applicable rules and regulations of the Commission), which dates the parties to
the Merger Agreement may extend by their mutual written consent, (c) by Parent
or the Company if the Offer expires or is terminated or withdrawn pursuant to
its terms without any Shares being purchased thereunder, except that Parent may
not terminate the Merger Agreement if Parent's or the Purchaser's termination
of, or failure to accept for payment or pay for any Shares tendered pursuant to,
the Offer does not follow the occurrence, or
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<PAGE> 26
failure to occur, of any Offering Condition or is otherwise in violation of the
terms of the Offer or the Merger Agreement, or (d) by either Parent or the
Company if any court of competent jurisdiction in the United States or other
governmental body in the United States has issued an order (other than a
temporary restraining order), decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the purchase of Shares pursuant
to the Offer or the Merger, and such order, decree, ruling or other action has
become final and nonappealable; provided, that the party seeking to terminate
the Merger Agreement generally must have used its reasonable best efforts to
remove or lift the order, decree or ruling.
(ii) In addition, the Merger Agreement may be terminated and the Offer and
the Merger may be abandoned by Parent at any time prior to the purchase of
Shares pursuant to the Offer, if (a) the representations or warranties of the
Company contained in the Merger Agreement are not true and correct at and as of
any date prior to the Expiration Date as if made at and as of such time, except
for (i) failures to be true and correct as could not, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse Effect
and (ii) failures to comply as are capable of being and are cured (other than by
mere disclosure of the breach) within 10 days after written notice from the
Purchaser to the Company of such failure; (b) the Company has failed to comply
with its obligations under the Merger Agreement, except for (i) failures to so
comply as could not, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect and (ii) failures to comply as are
capable of being and are cured within 10 days after written notice from the
Purchaser to the Company of such failure; (c) the Board shall (i) withdraw its
recommendation or approval in respect of the Merger Agreement or Offer or (ii)
modify or change its recommendation or approval in respect of the Merger
Agreement, the Offer or the Merger in a manner adverse to Parent; or (d) the
Board shall have recommended any proposal other than by Parent or the Purchaser
in respect of an Acquisition Transaction.
(iii) The Merger Agreement may be terminated and the Merger may be
abandoned by the Company, (a) at any time prior to the purchase of Shares
pursuant to the Offer upon receipt of an Acquisition Transaction proposal that
contains no financing condition which the Board in good faith determines in the
exercise of its fiduciary duties (based as to legal matters on the written
opinion of legal counsel and after consultation with its financial advisor) it
is required to accept by applicable law including the fiduciary principles
thereof or (b) at any time prior to the Effective Time if (i) the
representations and warranties of Parent or the Purchaser contained in the
Merger Agreement are not true and correct as if made at and as of such time,
except for (A) failures to be true and correct as could not, individually or in
the aggregate, reasonably be expected to result in a Parent Material Adverse
Effect and (B) failures to comply as are capable of being and are cured (other
than by mere disclosure of the breach) within 10 days after written notice from
the Company to Parent of such failure; or (ii) Parent or the Purchaser has
failed to comply with their respective obligations under the Merger Agreement,
except for (X) failures to so comply as could not, individually or in the
aggregate, reasonably be expected to result in a Parent Material Adverse Effect
and (Y) failures to comply as are capable of being and are cured within 10 days
after written notice from the Company to Parent of such failure.
(iv) If the Merger Agreement is terminated as provided in subsections
(i)-(iii) above, the Merger will be deemed abandoned, the Merger Agreement will
become void (except for certain provisions concerning confidentiality, Parent's
standstill undertaking, the payment of expenses and the Company's
indemnification with respect to the Letter Agreements) and no party will have
any liability to or claim against any other party, except for any willful or bad
faith breach of the Merger Agreement and except as follows. In the event that
following receipt by the Company of an Acquisition Transaction proposal the
Merger Agreement is terminated by Parent pursuant to Subsection (ii)(c) or (d)
above or by the Company pursuant to Subsection (iii)(a) above, the Company has
agreed to promptly pay to Parent (but in any event within three business days
after termination) the sum of $3,000,000, provided that no fee shall be payable
if Parent or the Purchaser shall be in a material breach of any of its material
representations, warranties or obligations hereunder as of the date of
termination. If such fee is payable and within 365 days after such termination
an Acquisition Transaction is consummated, the Company shall promptly pay to
Parent (but in any event within three business days after the consummation of
the Acquisition Transaction) the additional sum of $5,000,000.
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<PAGE> 27
"Company Material Adverse Effect" means a material adverse effect on the
business, operations, assets, condition (financial or otherwise), results of
operations or prospects of the Company and its subsidiaries taken as a whole.
"Parent Material Adverse Effect" means a material adverse effect on Parent's or
the Purchaser's ability to perform their respective obligations pursuant to the
Merger Agreement or to consummate the Offer and Merger.
Timing. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by the Purchaser pursuant to the Offer. Although Parent and the
Purchaser have agreed to cause the Merger to be consummated on the terms
described above, there can be no assurance as to the timing of the Merger.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
may have certain rights pursuant to the provisions of Section 262 of the DGCL to
dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer Price or the market value of the Shares,
including asset values and the investment value of the Shares. The value so
determined could be more or less than the Offer Price or the Merger
Consideration.
If any stockholder who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses the right to appraisal, as
provided in the DGCL, the Shares of such stockholder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A stockholder may
withdraw a demand for appraisal by delivery to Parent of a written withdrawal of
the demand for appraisal and acceptance of the Merger.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR PERFECTING
APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
stockholders be filed with the Commission and disclosed to minority stockholders
prior to consummation of the Merger.
Other Matters. Upon obtaining control of the Company, Parent plans to
integrate the business and technology of the Company with the Parent's existing
operations and estimates that, during the next twelve to twenty-four months, the
combined companies will realize synergistic integration savings in excess of $20
million annually. There can, of course, be no assurance that Parent will be able
to achieve this result. Parent will seek to realize these savings while
maintaining and enhancing customer service and support. In the course of
conducting its due diligence investigation of the Company, Parent has identified
possible means of achieving these objectives including reduction of the costs
associated with raw material purchases and consolidation of the sales,
technical, engineering, administrative and manufacturing functions and
production facilities of the combined companies. Parent will be able to
formulate more definitive plans in this regard only after it has an opportunity
to conduct a detailed review of the Company and its assets, operations,
management and personnel.
Except as otherwise described in this Offer to Purchase, the Purchaser and
Parent have no current plans or proposals that would relate to, or result in,
any extraordinary corporate transaction involving the Company, such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries,
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, any change in the Company's capitalization or any other material
change in the Company's business, corporate structure or personnel.
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The Letter Agreements; Acknowledgments
The following is a summary of certain provisions of the Letter Agreements,
a copy of each of which has been filed as an Exhibit to the Schedule 14D-1 and
is incorporated herein by reference. The Letter Agreements may be examined, and
copies may be obtained, as set forth in Section 9 above. Such summary is
qualified in its entirety by reference to the forms of Letter Agreements.
The Parent has also entered into a Letter Agreement with each Principal
Stockholder. Each Letter Agreement contains a representation by the Principal
Stockholder as to his beneficial ownership of a specified number of Shares
(including outstanding options to purchase Shares). Each Principal Stockholder
has agreed to validly tender into the Offer, and not withdraw, all Shares
beneficially owned by him, not to sell, transfer or grant any voting rights,
with respect to, any of his Shares and not to purchase additional Shares while
the Merger Agreement is in effect. Each of the Principal Stockholders has also
agreed to vote his Shares in favor of the Merger and against any action or
arrangement which would interfere with the successful consummation of the Merger
and has executed and delivered to Purchaser an irrevocable proxy to this effect.
The Principal Stockholders have also agreed not to solicit or encourage the
making of any other proposal intended to lead to the acquisition of their Shares
or any other extraordinary transaction involving the Company and to notify the
Parent if any inquiry or solicitation is made to them concerning any such
transaction. The Parent has agreed to indemnify each of the Principal
Stockholders from and against any and all claims by third parties, judgments,
fines, penalties, liabilities, fees and expenses (including, without limitation,
reasonable attorneys' fees) that may be asserted against them or incurred by
them in connection with their entering into the Letter Agreement or their
compliance with the terms hereof, provided that such indemnity would not protect
them against (i) any violations of law (other than violations alleged to have
occurred as a result of their compliance with the terms and conditions of the
Letter Agreement) or (ii) any breaches by them of their commitments in the
Letter Agreement. The Letter Agreements will remain in effect until the
transactions contemplated by the Merger Agreement are successfully completed or
until the Merger Agreement is terminated by Parent or the Company in accordance
with its terms.
Each of James L. Sadler and John H. Sadler have delivered an acknowledgment
to Purchaser to the effect that certain provisions of the Agreement and Plan of
Merger relating to the merger of Moline Paint Manufacturing Co. into a
subsidiary of the Company providing for the payment of certain contingent
amounts to him will terminate upon the purchase of his Shares pursuant to the
Offer or Merger.
13. DIVIDENDS AND DISTRIBUTIONS
If on or after the date of the Merger Agreement, the Company should (i)
split, combine or otherwise change the Shares or its capitalization, (ii) issue
or sell any additional securities of the Company or otherwise cause an increase
in the number of outstanding securities of the Company (except for Shares
issuable upon the exercise of employee stock options outstanding on the date of
the Merger Agreement) or (iii) acquire currently outstanding Shares or otherwise
cause a reduction in the number of outstanding Shares, then, without prejudice
to the Purchaser's rights under Sections 1 and 14, the Purchaser in its sole
discretion, subject to the terms of the Merger Agreement, may make such
adjustments as it deems appropriate in the Offer Price and other terms of the
Offer.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any dividend on the Shares or make any distribution (including,
without limitation, cash dividends (except that the Company will be allowed to
pay normal quarterly cash dividends for the first quarter of 1996 in the amount
of $.09 per Share payable on or about March 21, 1996 to stockholders of record
or March 7, 1996), the issuance of additional Shares pursuant to a stock
dividend or stock split, the issuance of other securities or the issuance of
rights for the purchase of any securities) with respect to the Shares that is
payable or distributable to stockholders of record on a date prior to the
transfer to the name of the Purchaser or its nominee or transferee on the
Company's stock transfer records of the Shares purchased pursuant to the Offer,
then, without prejudice to the Purchaser's rights under Sections 1 and 14, (a)
the Offer Price may, in the sole discretion of the Purchaser, be reduced by the
amount of any such cash dividend or cash distribution and (b) the whole of any
such non-cash dividend, distribution or issuance to be received by the tendering
stockholders will (i) be received and held by
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<PAGE> 29
the tendering stockholder and tendered to the Depositary for the account of the
Purchaser, accompanied by appropriate documentation of transfer, or (ii) at the
direction of the Purchaser, be exercised for the benefit of the Purchaser, in
which case the proceeds of such exercise will be promptly remitted to the
Purchaser. Pending such remittance and subject to applicable law, the Purchaser
will be entitled to all rights and privileges as owner of any such dividend,
distribution or right and may withhold the entire Offer Price or deduct from the
Offer Price the amount or value thereof, as determined by the Purchaser in its
sole discretion.
Section 7.1 of the Merger Agreement prohibits the Company from taking any
of the foregoing actions without the prior written consent of Parent.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Purchaser shall not
accept Shares for Payment if the Minimum Condition shall not have been
satisfied, which condition may not be waived without the Company's consent, and
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and (subject to any such rules or regulations) may delay the acceptance for
payment of any tendered Shares and (except as provided by the Merger Agreement)
amend or terminate the Offer as to any shares not then paid for if (i) any
applicable waiting period under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer or (ii) at any time after the
date of the Merger Agreement and before the time of payment for any such Shares
(whether or not any Shares have theretofore been accepted for payment), any of
the following conditions exists:
(a) there shall be in effect as of the Expiration Date (as defined
herein) an injunction or other order, decree, judgment or ruling by a court
of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission of competent jurisdiction or a statute,
rule, regulation, executive order or other action shall have been
promulgated, enacted, taken or threatened by a governmental authority or a
governmental, regulatory or administrative agency or commission of
competent jurisdiction which in any such case (i) restrains or prohibits
the making or consummation of the Offer or the consummation of the Merger,
(ii) results in a significant delay in or significantly restricts the
ability of the Purchaser, or renders the Purchaser unable, to accept for
payment, pay for or purchase Shares sufficient to satisfy the Minimum
Condition in the Offer or the remaining Shares outstanding in the Merger
(other than as a result of the exercise of dissenters' rights and other
than for delays or restrictions that are not material to Parent and the
Purchaser), (iii) prohibits or restricts the ownership or operation by
Parent or the Purchaser (or any of their respective affiliates or
subsidiaries) of any portion of its or the Company's business or assets
which is material to the business of the Company and its subsidiaries or of
Parent and its subsidiaries or compels Parent or the Purchaser (or any of
their respective affiliates or subsidiaries) to dispose of or hold separate
any portion of its or the Company's business or assets which is material to
the business of the Company and its subsidiaries or of Parent and its
subsidiaries, (iv) imposes material limitations on the ability of the
Purchaser effectively to acquire or to hold or to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
the Shares purchased by the Purchaser on all matters properly presented to
the stockholders of the Company, (v) imposes any material limitations on
the ability of Parent or the Purchaser or any of their respective
affiliates or subsidiaries effectively to control in any material respect
the business and operations of the Company and its subsidiaries, or (vi)
which otherwise would materially adversely affect the Company and its
subsidiaries taken as a whole; provided, however, that Parent and the
Purchaser shall have complied with Section 7.4 of the Merger Agreement; or
(b) the Merger Agreement shall have been terminated by the Company,
Parent or the Purchaser in accordance with its terms; or
(c) the representations or warranties of the Company contained in the
Merger Agreement shall not be true and correct when made or on the
Expiration Date as if made as of such date, except for (i) failures to be
true and correct as could not, individually or in the aggregate, reasonably
be expected to
27
<PAGE> 30
result in a Company Material Adverse Effect and (ii) failures to comply as
are capable of being and are cured (other than by mere disclosure of the
breach) within 10 days after written notice from the Purchaser to the
Company of such failure (in which case the Expiration Date shall be
extended to the end of such cure period or, if earlier, the date of cure);
or
(d) the Company shall have failed to comply with its obligations under
the Merger Agreement, except for (i) failures to so comply as could not,
individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect and (ii) failures to comply as are capable
of being and are cured within 10 days after written notice from the
Purchaser to the Company of such failure (in which case the Expiration Date
shall be extended to the end of such cure period or, if earlier, the date
of cure); or
(e) there shall have occurred on or after the date of the Merger
Agreement and be continuing any development or developments with respect to
the Company or its subsidiaries which individually or in the aggregate have
had or constitute a Company Material Adverse Effect, other than
developments affecting generally the industries and businesses in which the
Company and its subsidiaries operate; or
(f) there shall have occurred and be continuing (i) any general
suspension of, or limitation on prices for, trading in securities on any
national securities exchange or the over-the-counter market, (ii) a
declaration of, a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) the
commencement of a war, armed hostilities or other international or national
calamity directly involving the United States, (iv) from the date of this
Merger Agreement through the date of termination or expiration of the
Offer, a decline of at least 25 percent in the Standard & Poor's 500 Index,
(v) any limitation by any U.S. governmental authority or agency that
materially affects generally the extension of credit by banks or other
financial institutions or (vi) in the case of any of the foregoing existing
at the time of the execution of the Merger Agreement, a material
acceleration or worsening thereof; or
(g) Parent, the Purchaser and the Company shall have agreed that the
Purchaser shall amend the Offer to terminate the Offer or postpone the
payment for Shares pursuant thereto.
The foregoing conditions, other than Minimum Condition, are for the sole
benefit of Parent and the Purchaser and may be asserted by Parent or the
Purchaser regardless of the circumstances (including any action or inaction by
Parent or the Purchaser) giving rise to any such conditions and, except as
provided in the Merger Agreement, may be waived by Parent or the Purchaser in
whole or in part at any time and from time to time in their sole discretion in
each case subject to the terms of the Merger Agreement. The failure by Parent or
the Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right and each such right will be deemed an ongoing
right which may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
Based on a review of publicly available filings made by the Company with
the Commission and other publicly available information concerning the Company,
neither the Purchaser nor Parent is aware of any license or regulatory permit
that appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the Purchaser's
acquisition of Shares as contemplated herein or of any approval or other action,
except as otherwise described in this Section 15, by any governmental entity
that would be required for the acquisition or ownership of Shares by the
Purchaser as contemplated herein. Should any such approval or other action be
required, the Purchaser and Parent currently contemplate that such approval or
other action will be sought. While the Purchaser does not presently intend to
delay the acceptance for payment of or payment for Shares tendered pursuant to
the Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or such other actions
were not taken. The Purchaser's obligations under the Offer to accept for
payment and
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<PAGE> 31
pay for Shares are subject to certain conditions including conditions relating
to certain of the legal matters discussed in this Section 15. See Section 14.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's Board of Directors has approved the Merger
Agreement, the Purchaser's acquisition of Shares pursuant to the Offer and the
Letter Agreements and, therefore, Section 203 of DGCL is inapplicable to the
Merger and the Letter Agreements.
Based on information supplied by the Company, the Purchaser does not
believe that any state takeover statutes purport to apply to the Offer or the
Merger. Neither the Purchaser nor Parent has currently complied with any state
takeover statute or regulation. The Purchaser reserves the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and an appropriate court does not determine that it is inapplicable
or invalid as applied to the Offer or the Merger, the Purchaser might be
required to file certain information with, or to receive approvals from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer or the Merger. In such case, the Purchaser may not be
obliged to accept for payment or pay for any Shares tendered pursuant to the
Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar day waiting period following the filing by Parent of a
Notification and Report Form with respect to the Offer, unless Parent receives a
request for additional information or documentary material from the Antitrust
Division of the Department of Justice (the "Antitrust Division") or the Federal
Trade Commission (the "FTC") or unless early termination of the waiting period
is granted. Parent has made such filing. If, within the initial 15-day waiting
period, either the Antitrust Division or the FTC requests additional information
or material from Parent concerning the Offer, the waiting period will be
extended and would expire at 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance by Parent with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or the
FTC raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of the transactions such as the Purchaser's proposed
acquisition of the Company. At any time before or after the
29
<PAGE> 32
Purchaser's purchase of Shares pursuant to the Offer, the Antitrust Division or
FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the Merger or seeking the
divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of Parent or its subsidiaries, or the Company or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. There can be no assurance that a challenge to
the Offer on antitrust grounds will not be made or, if such a challenge is made,
of the results thereof.
Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral.
The security arrangements for the financing described in Section 10 of this
Offer to Purchase will be negotiated by Parent and NBD. Such financing may be
directly or indirectly secured by the Shares or other securities which
constitute margin stock. Pursuant to the Margin Regulations, the maximum loan
value of margin stock is presently 50% of its current market value, which in the
case of credit used to purchase securities, means the total cost of purchase of
such securities. The loan value of collateral other than margin stock is the
amount that a lender would in good faith lend against such collateral without
regard to other loan or collateral arrangements such lender might have. It is
Parent's intention that all financing for the Offer and the Merger be in full
compliance with the Margin Regulations, and Parent believes that direct or
indirect margin stock and other collateral having an aggregate loan value in
excess of the entire amount of the financing will be available to comply fully
with the Margin Regulations.
Investment Canada Act. The Company conducts business in Canada. The
Investment Canada Act governs the acquisition of control of Canadian businesses
by non-Canadians, meaning generally individuals who are not Canadians or
business entities not ultimately controlled by Canadians. Depending on the size
or nature of the Canadian business acquired, the acquisition of control will
require compliance with either a notification procedure or review procedure, and
in the latter case, the acquisition will only be allowed if it is deemed to be
of net benefit to Canada. Indirect acquisitions of Canadian businesses with
assets of between Cdn. $5,000,000 and $50,000,000, where the assets of Canadian
businesses represent 50% or less of the value of the assets involved in the
total international transaction, are subject only to the notification procedure.
Under amendments to the Investment Canada Act related to the U.S./Canada Free
Trade Agreement and the North American Free Trade Agreement ("NAFTA"), indirect
investments involving investors from countries participating in NAFTA are not
reviewable. Although not defined in the Investment Canada Act, an indirect
acquisition is the acquisition of control of a Canadian business through the
acquisition of control of its parent outside Canada.
As a result of NAFTA, and because the Company has advised the Purchaser
that the assets of the Company's Canadian subsidiary represent less than 50% of
the value of the total assets of the Company and its subsidiaries, the review
procedure is not applicable to the Purchaser's acquisition of the Shares. The
Purchaser intends to file a notice of its acquisition of Shares with the
appropriate Canadian governmental agency and to seek approval of such
acquisition, if required.
Foreign Laws. The Company and certain of its subsidiaries conduct business
in other foreign countries where regulatory filings or approvals may be required
in connection with the consummation of the Offer and the Merger. Certain of such
filings, if required, may not be completed and certain of such approvals, if
required, may not be obtained, prior to the expiration of the Offer. However,
there is no present intention to delay the acceptance for payment of or the
payment for Shares pursuant to the Offer or consummation of the Merger pending
the completion of such filings and obtaining such approvals. There is no
assurance that any such approvals would be obtained or that adverse consequences
to Parent's or the Company's business might not result from a failure to obtain
such approvals or conditions that might be imposed in connection therewith.
30
<PAGE> 33
16. FEES AND EXPENSES
Except as described below, neither the Purchaser nor Parent will pay any
fees or commissions to any broker or dealer or other person in connection with
the solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers,
banks and trust companies will be reimbursed by the Purchaser upon request for
customary mailing and handling expenses incurred by them in forwarding material
to their customers.
A.G. Edwards & Sons, Inc. has been retained as a financial advisor to
Parent and will be paid an aggregate fee of $1,250,000 if the acquisition by
Parent of the Company is completed or a time and effort fee of $125,000 if the
acquisition is not completed. A.G. Edwards & Sons, Inc. will also be reimbursed
for its out-of-pocket expenses (including legal fees) and will be indemnified in
connection with certain liabilities in connection with its engagement, including
certain liabilities under the Federal securities laws.
The Purchaser has retained Morrow & Co., Inc. to act as the Information
Agent and First Chicago Trust Company of New York to act as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be reimbursed
for certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the Federal securities laws.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction the securities, blue sky or other laws of
which require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of the Purchaser by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer. In addition, the Company has filed with
the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act,
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Sections 8 and 9 (except that they will not be available at the regional offices
of the Commission).
LP ACQUISITION CORPORATION
March 8, 1996
31
<PAGE> 34
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of Parent
and certain other information are set forth below. Unless otherwise indicated
below, the address of each director and officer is c/o 733 S. West Street,
Indianapolis, Indiana 46225, and each occupation set forth below an individual's
name refers to employment with Parent. All directors and officers listed below
are citizens of the United States.
<TABLE>
<S> <C>
H. J. (JACK) BAKER................. Mr. Baker has served as a director of Parent since 1985
Director and has served as the Chairman of the Board of BMW
Constructors, Inc., 1740 West Michigan Street,
Indianapolis, Indiana 46222, an industrial mechanical
contractor, since prior to 1991. Mr. Baker is also a
director of two publicly-held corporations (other than
Parent): First Indiana Corporation, 135 North
Pennsylvania Street, Indianapolis, Indiana 46204, and
The Somerset Group, Inc., 135 North Pennsylvania Street,
Suite 2800, Indianapolis, Indiana 46204.
LARRY H. DALTON.................... Mr. Dalton has served as Vice President -- Operations
Vice President -- Operations and Manufacturing of Parent since July, 1994. Prior to
and Manufacturing his current position with Parent, Mr. Dalton served as
General Manager of Parent's Indianapolis Division from
prior to 1991 to July, 1994.
WILLIAM C. DORRIS.................. Mr. Dorris has served as a director of Parent since
Director and Vice 1989. He has served as Vice President -- Corporate
President -- Corporate Development Development of Parent since July, 1994. Prior to his
current position with Parent, Mr. Dorris served as
General Manager of Parent's Dallas Division from 1993 to
July, 1994; as General Manager of Parent's Templeton
Division from 1991 to July, 1994; and as General Manager
of Parent's High Point Division from prior to 1991 to
July, 1994.
DOUGLAS W. HUEMME.................. Mr. Huemme has served as a director of Parent since
Chairman of the Board, President 1990. He has served as Chairman, President and Chief
and Chief Executive Officer Executive Officer of Parent since July, 1991; and as
President and Chief Operating Officer of Parent from
prior to 1991 to July, 1991. Mr. Huemme is also a
director of two publicly-held corporations (other than
Parent): First Indiana Corporation, 135 North
Pennsylvania Street, Indianapolis, Indiana 46204, and
The Somerset Group, Inc., 135 North Pennsylvania Street,
Suite 2800, Indianapolis, Indiana 46204.
ROMAN J. KLUSAS.................... Mr. Klusas has served as a director of Parent since
Director, Vice President, Chief 1988. He has served as Vice President, Chief Financial
Financial Officer and Secretary Officer and Secretary of Parent since prior to 1991.
</TABLE>
I-1
<PAGE> 35
<TABLE>
<S> <C>
ROBERT H. McKINNEY................. Mr. McKinney has served as a director of Parent since
Director 1985; as Chairman and Chief Executive Officer of The
Somerset Group, Inc., 135 North Pennsylvania Street,
Suite 2800, Indianapolis, Indiana 46204 (or its
predecessor), since prior to 1991; and as Chairman and
Chief Executive Officer of First Indiana Corporation,
135 North Pennsylvania Street, Indianapolis, Indiana
46204, since prior to 1991. Mr. McKinney is a retired
partner of the law firm of Bose, McKinney & Evans, 135
North Pennsylvania Street, Suite 2700, Indianapolis,
Indiana 46204. He is also a director of two
publicly-held corporations (other than Parent): First
Indiana Corporation, 135 North Pennsylvania Street,
Indianapolis, Indiana 46204, and The Somerset Group,
Inc., 135 North Pennsylvania Street, Suite 2800,
Indianapolis, Indiana 46204.
KENNETH L. MILLS................... Mr. Mills has served as Director of Corporate Accounting
Director of Corporate Accounting of Parent since October, 1993; and as Assistant
and Assistant Secretary Secretary of Parent since prior to 1991. He has also
served Parent as Treasurer from prior to 1991 to
October, 1993.
HARRY MORRISON, Ph.D............... Mr. Morrison has served as a director of Parent since
Director 1995 and as the Dean of the School of Science, Purdue
University, West Lafayette, Indiana 47907, since 1992.
Prior to serving as the Dean of the School of Science,
he served as Head of the Chemistry Department, Purdue
University from prior to 1991 to 1992. Mr. Morrison has
also served as a chemical consultant for: Great Lakes
Chemical Corporation, One Great Lakes Boulevard, P.O.
Box 2200, West Lafayette, Indiana 47906 (1991 to 1993),
American Cyanamid Company, Inc., 1 Cyanamid Plaza,
Wayne, New Jersey 07470 (1993), Bristol-Myers Squibb
Company, Inc., 345 Park Avenue, New York, New York 10154
(1991) and Ciba-Geigy Corporation, 540 White Plains
Road, Tarrytown, New York 10591 (1991).
JOHN D. PETERSON................... Mr. Peterson has served as a director of Parent since
Director 1964 and as Chairman of City Securities Corporation, 135
North Pennsylvania Street, Suite 2200, Indianapolis,
Indiana 46204, a securities dealer, since prior to 1991.
He is also a director of two publicly-held corporations
(other than Parent): Duke Realty Investments, Inc., 8888
Keystone Crossing, Suite 1200, Indianapolis, Indiana
46240, and Capital Industries, Inc., 8900 Keystone
Crossing, Indianapolis, Indiana 46240.
THOMAS E. REILLY, JR............... Mr. Reilly, Jr. has served as a director of Parent since
Director 1981 and as Chairman and Chief Executive Officer of
Reilly Industries, Inc., 300 North Meridian Street,
Suite 1500, Indianapolis, Indiana 46204, a diversified
chemical manufacturing firm, since prior to 1991. He is
also the director of one publicly-held corporation
(other than Parent): NBD Bancorp, Inc., 611 Woodward
Avenue, Detroit, Michigan 48226.
</TABLE>
I-2
<PAGE> 36
<TABLE>
<S> <C>
VAN P. SMITH....................... Mr. Smith has served as a director of Parent since 1985
Director and as Chairman of Ontario Corporation, 123 East Adams
Street, Muncie, Indiana 47305, a manufacturer of
precision components for semiconductor process
equipment, since prior to 1991. Mr. Smith is also the
director of four publicly-held corporations (other than
Parent): CINergy Corporation, 139 East 4th Street,
Cincinnati, Ohio 45202, PSI Energy, Inc., 1000 East Main
Street, Plainfield, Indiana 46168, Meridian Mutual
Insurance Company, P. O. Box 1980, Indianapolis, Indiana
46206, and Meridian Insurance Group, Inc., P. O. Box
1980, Indianapolis, Indiana 46206.
RICHARD A. STEELE.................. Mr. Steele has served as a director of Parent since
Director 1981. He is the retired President and Chief Executive
Officer of Citizens Gas and Coke Utility, 2020 North
Meridian Street, Indianapolis, Indiana 46202, a gas
distribution utility, since prior to 1991.
</TABLE>
I-3
<PAGE> 37
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of Purchaser
and certain other information are set forth below. Unless otherwise indicated
below, the address of each director and officer is c/o 733 S. West Street,
Indianapolis, Indiana 46225, and each occupation set forth below an individual's
name refers to employment with Purchaser. All directors and officers listed
below are citizens of the United States.
<TABLE>
<S> <C>
DOUGLAS W. HUEMME.................. Mr. Huemme has served as Chairman of the Board,
Chairman of the Board, President President and Chief Executive Officer of the Purchaser
and Chief Executive Officer since its incorporation in February, 1996. Mr. Huemme
has served as a director of Parent since 1990. He has
served as Chairman, President and Chief Executive
Officer of Parent since July, 1991; and as President and
Chief Operating Officer of Parent from prior to 1991 to
July, 1991. Mr. Huemme is also a director of two
publicly-held corporations (other than Parent): First
Indiana Corporation, 135 North Pennsylvania Street,
Indianapolis, Indiana 46204, and The Somerset Group,
Inc., 135 North Pennsylvania Street, Suite 2800,
Indianapolis, Indiana 46204.
ROMAN J. KLUSAS.................... Mr. Klusas has served as Vice President, Chief Financial
Director, Vice President, Chief Officer and Secretary and a director of the Purchaser
Financial Officer and Secretary since its incorporation in February, 1996. Mr. Klusas
has served as a director of Parent since 1988. He has
served as Vice President, Chief Financial Officer and
Secretary of Parent since prior to 1991.
KENNETH L. MILLS................... Mr. Mills has served as Director of Corporate Accounting
Director of Corporate Accounting and Assistant Secretary and a director of the Purchaser
and Assistant Secretary since its incorporation in February, 1996. Mr. Mills has
served as Director of Corporate Accounting of Parent
since October, 1993; and as Assistant Secretary of
Parent since prior to 1991. He has also served Parent as
Treasurer from prior to 1991 to October, 1993.
</TABLE>
I-4
<PAGE> 38
[BACK COVER]
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or his
or her broker, dealer, commercial bank or other nominee to the Depositary at one
of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
Facsimile Transmission
(For Eligible Institutions
By Mail: Only): By Hand or Overnight Courier:
<S> <C> <C>
Tenders & Exchanges (201) 222-4720 Tenders & Exchanges
P.O. Box 2559 or 14 Wall Street
Suite 4660-Guardsman (201) 222-4721 8th Floor, Suite 4680-Guardsman
Jersey City, New Jersey New York, New York 10005
07303-2559
</TABLE>
Confirm Receipt of Notice of Guaranteed Delivery:
(201) 222-4707
Any questions or requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Information Agent at its telephone numbers and location listed
below. You may also contact your broker, dealer, commercial bank or trust
company or nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 556-9061
Banks and Brokerage Firms, please call
(800) 662-5200
<PAGE> 1
EXHIBIT 99.4
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GUARDSMAN PRODUCTS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 8, 1996
BY
LP ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
LILLY INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 4, 1996, UNLESS EXTENDED
THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES AND ANY OTHER REQUIRED
DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH STOCKHOLDER OF THE COMPANY OR HIS
OR HER BROKER, DEALER, BANK OR OTHER NOMINEE TO THE DEPOSITORY AT ONE OF ITS
ADDRESSES SET FORTH BELOW.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
<S> <C>
By Mail: By Hand or Overnight Courier:
Tenders & Exchanges Tenders & Exchanges
P.O. Box 2559-Suite 4660-Guardsman 14 Wall Street, Suite 4680-Guardsman
Jersey City, New Jersey 07303-2559 8th Floor
New York, New York 10005
</TABLE>
<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- -----------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
ON SHARE CERTIFICATE(S) AND SHARES TENDERED.) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED BY NUMBER OF
CERTIFICATE SHARE SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
------------------- ------------------- -------------------
------------------- ------------------- -------------------
------------------- ------------------- -------------------
------------------- ------------------- -------------------
------------------- ------------------- -------------------
TOTAL SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described above are being tendered. See
Instruction 4.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at its telephone number and location listed
below. You may contact your broker, dealer, commercial bank or trust company or
nominee for assistance concerning the Offer to Purchase.
The Information Agent for the Offer is:
MORROW & COMPANY, INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms, please call:
(800) 662-5200
<PAGE> 2
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in Section 2 of the
Offer to Purchase) is utilized, if delivery of Shares (as defined below) is to
be made by book-entry transfer to an account maintained by the Depositary at The
Depository Trust Company, Midwest Securities Trust Company or Philadelphia
Depository Trust Company (each, a "Book-Entry Transfer Facility") pursuant to
the procedures set forth in Section 2 of the Offer to Purchase. Stockholders who
deliver Shares by book-entry transfer are referred to herein as "Book-Entry
Stockholders" and other stockholders are referred to herein as "Certificate
Stockholders." Stockholders whose certificates for Shares are not immediately
available or who cannot deliver either the certificates for, or a Book-Entry
Confirmation (as defined in Section 2 of the Offer to Purchase) with respect to,
their Shares and all other documents required hereby to the Depositary prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase) must
tender their Shares in accordance with the guaranteed delivery procedures set
forth in Section 2 of the Offer to Purchase. See Instruction 2. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITORY.
<PAGE> 3
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
- --------------------------------------------------------------------------
Check Box of Book-Entry Transfer Facility:
(CHECK ONE) / / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number
- --------------------------- Transaction Code Number
- -------------------------------
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s):
- --------------------------------------------------------------------------------
Window Ticket Number (if any):
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
- --------------------------------------------------------------------------
Name of Institution That Guaranteed Delivery:
- --------------------------------------------------------------------------------
If delivery is by Book-Entry Transfer check box of Book-Entry Transfer Facility:
(CHECK ONE) / / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number
- --------------------------- Transaction Code Number
- -------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to LP Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Lilly Industries,
Inc., an Indiana corporation ("Parent"), the above-described shares of common
stock, par value $1.00 per share (the "Shares"), of Guardsman Products, Inc.
(the "Company"), and the associated Preferred Stock Purchase Rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of August 8, 1986,
as amended, between the Company and Chemical Bank, as Rights Agent, pursuant to
the Purchaser's offer to purchase all outstanding Shares (and associated Rights)
at a price of $23.00 per Share (and associated Right), net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Purchaser's Offer to Purchase, dated March 8, 1996 (the "Offer to
Purchase"), and this Letter of Transmittal (which, together with any amendments
or supplements thereto or hereto, collectively constitute the "Offer"), receipt
of which is hereby acknowledged. Unless the context otherwise requires, all
references to Shares shall include the Rights.
Subject to and effective upon acceptance for payment of Shares tendered
herewith in accordance with the terms of the Offer (including, if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby (and any and all other Shares or other securities
or rights issued or issuable in respect of such Shares on or after March 4,
1996) and irrevocably constitutes and appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to such Shares
(and any such other Shares or securities or rights), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) deliver certificates for such Shares (and any
such other Shares or securities or rights) or transfer ownership of such Shares
(and any such other Shares or securities or rights) on the account books
maintained by a Book-Entry Transfer Facility together, in any such case, with
all accompanying evidences of transfer and authenticity to, or upon the order
of, the Purchaser, (b) present such Shares (and any such other Shares or
securities or rights) for transfer on the Company's books, and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any such other Shares or securities or rights), all in accordance
with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares (and any and all Shares or other securities or rights issued or issuable
in respect of such Shares on or after March 4, 1996), and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances. The
undersigned will, upon request, execute any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the tendered Shares (and any such other Shares or
other securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned hereby irrevocably appoints Douglas W. Huemme and Roman J.
Klusas, in their respective capacities as officers of the Purchaser, and any
individual who shall hereafter succeed to any such office of the Purchaser, and
each of them, and any other designees of the Purchaser, the attorneys-in-fact
and proxies of the undersigned, each with full power of substitution, to vote at
any annual, special or adjourned meeting of the Company's stockholders or
otherwise in such manner as each such attorney and proxy or his substitute shall
in his sole discretion deem proper with respect to, to execute any written
<PAGE> 4
consent concerning any matter as each such attorney and proxy or his substitute
shall in his sole discretion deem proper with respect to, and to otherwise act
as each such attorney and proxy or his substitute shall in his sole discretion
deem proper with respect to, all the Shares tendered hereby that have been
accepted for payment by the Purchaser prior to the time any such action is taken
and with respect to which the undersigned is entitled to vote (and with respect
to any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after March 4, 1996). This appointment is effective
when, and only to the extent that, the Purchaser accepts for payment such Shares
as provided in the Offer to Purchase. This power of attorney and proxy are
irrevocable and are granted in consideration of the acceptance for payment of
such Shares in accordance with the terms of the Offer. Such acceptance for
payment shall, without further action, revoke all prior powers of attorney and
proxies appointed by the undersigned at any time with respect to such Shares
(and any such other Shares or securities or rights) and no subsequent powers of
attorney or proxies will be appointed by the undersigned, or be effective, with
respect thereto. The undersigned recognizes that under certain conditions set
forth in the Offer to Purchase, the Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer. The
undersigned recognizes that under certain conditions set forth in the Offer to
Purchase, the Purchaser may not be required to accept for payment any of the
Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and any accompanying documents, as appropriate) in the
name of, and deliver such check and/or return such certificates (and any
accompanying documents, as appropriate) to, the person or persons so indicated.
The undersigned recognizes that the Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
<PAGE> 5
- ---------------------------------------------------------------
- ---------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
SEE INSTRUCTIONS 1, 5, 6 AND 7
To be completed ONLY if
certificates for Shares not tendered
or not accepted for payment and/or the
check for the purchase price of Shares
accepted for payment are to be issued
in the name of someone other than the
undersigned.
Issue / / Check / / Certificate(s)
to:
Name:
(PLEASE PRINT)
Address:
(INCLUDE ZIP CODE)
(TAX IDENTIFICATION OR SOCIAL SECURITY
NUMBER)*
* SEE SUBSTITUTE FORM W-9 ON REVERSE
SIDE
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGN HERE
(Also Complete Substitute Form W-9 on Reverse Side)
Sign Here:
- --------------------------------------------------------------------------------
Sign Here:
- --------------------------------------------------------------------------------
(Signature(s) of Stockholder(s))
Dated: , 1996
(MUST BE SIGNED BY REGISTERED HOLDER(S) AS NAME(S) APPEAR(S) ON THE
CERTIFICATE(S) FOR THE SHARES OR ON A SECURITY POSITION LISTING OR BY
PERSON(S) AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND
DOCUMENTS TRANSMITTED HEREWITH. IF SIGNATURE IS BY TRUSTEES, EXECUTORS,
ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS OF CORPORATIONS OR
OTHERS ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE PROVIDE THE
FOLLOWING INFORMATION AND SEE INSTRUCTION 5).
Name(s):
(Please Print or Type)
Capacity (full title):
Address:
Area Code and Telephone No.:
Tax Identification or Social Security No.*
*Complete Substitute Form W-9 on Reverse Side
GUARANTEE OF SIGNATURE(S)
(If Required -- See Instructions 1 and 5)
Authorized Signature:
------------------------------------------------------------------------------
Name:
------------------------------------------------------------------------------
(Please Print or Type)
Name of Firm:
------------------------------------------------------------------------------
Address:
------------------------------------------------------------------------------
(Include Zip Code)
Area Code & Telephone No.:
------------------------------------------------------------------------------
Dated: , 1996
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
SEE INSTRUCTIONS 1, 5 AND 7
To be completed ONLY if
certificates for Shares not tendered
or not accepted for payment and/or the
check for the purchase price of Shares
accepted for payment are to be sent to
someone other than the undersigned or
to the undersigned at an address other
than that indicated above.
Send / / Check / / Certificate(s)
to:
Name:
Address: (PLEASE PRINT)
(INCLUDE ZIP CODE)
<PAGE> 6
(REVERSE SIDE)
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signature. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm that is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., or a commercial bank, trust company or
savings institution having an office or correspondent in the United States
(each, an "Eligible Institution") or by a recognized member of a Medallion
Signature Guarantee Program. No signature guarantee is required on this Letter
of Transmittal (a) if this Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares) of Shares tendered herewith, unless
such holder(s) has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the reverse
side of this Letter of Transmittal, or (b) if such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if delivery of Shares is to be made pursuant to the
procedures for book-entry transfer set forth in Section 2 of the Offer to
Purchase. For a stockholder validly to tender Shares pursuant to the Offer,
either (a) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees (or an
Agent's Message) and any other required documents, must be received by the
Depositary at one of its addresses set forth herein prior to the Expiration Date
and either (i) certificates for tendered Shares must be received by the
Depositary at one of such addresses prior to the Expiration Date or (ii) Shares
must be delivered pursuant to the procedures for book-entry transfer set forth
herein and a Book-Entry Confirmation must be received by the Depositary prior to
the Expiration Date or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below and in Section 2 of the Offer to
Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. Pursuant to such
procedures, (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser must be received by the
Depositary prior to the Expiration Date, and (c) the certificates for all
physically delivered Shares or a Book-Entry Confirmation with respect to all
tendered Shares, as well as a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees (or,
in the case of a book-entry transfer, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three New York Stock Exchange, Inc. trading days after the
date of execution of the Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares tendered should be listed on a separate schedule and attached hereto.
4. Partial Tenders (Not applicable to stockholders who tender by book-entry
transfer.) If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares that are to be tendered in the
box entitled "Number of Shares Tendered." In any such case, new certificate(s)
for the remainder of the Shares that were evidenced by the old certificate(s)
will be sent to the registered holder, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Shares represented by certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letters of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
to, a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution or by
a recognized member of a Medallion Signature Guarantee Program.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of certificates listed, the certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution or by a recognized member of a Medallion Signature
Guarantee Program.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not
<PAGE> 7
tendered or accepted for payment are to be registered in the name of, any
persons other than the registered holder(s), or if tendered certificates are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such other person) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued to, a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal or to
an address other than that shown in the box entitled "Description of Shares
Tendered" on the reverse side of this Letter of Transmittal, the appropriate
boxes on this Letter of Transmittal should be completed. See Instructions 1, 5,
and 6.
8. Requests for Assistance or Additional Copies. Requests for additional
copies of the Offer to Purchase, this Letter of Transmittal, the Notice of
Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 should be directed to the
Information Agent at its address set forth below. Questions or requests for
assistance may also be directed to the Information Agent.
9. Waiver of Conditions. Subject to the terms of the Offer, the Purchaser
reserves the absolute right in its sole discretion to waive any of the specified
conditions of the Offer, in whole or in part, or any defect or irregularity in
tender with regard to any Shares tendered.
10. Substitute Form W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"), generally
the stockholder's social security or employer identification number, on
Substitute Form W-9, which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, whether he or she is subject to
backup withholding of federal income tax. If a tendering stockholder is subject
to backup withholding, he or she must cross out item (2) of the Certification
Box on Substitute Form W-9. Failure to provide the information on Substitute
Form W-9 may subject the tendering stockholder to 31% federal income tax
withholding on the payment of the purchase price. If the tendering stockholder
has not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, he or she should write "Applied For" in the space
provided for the TIN in Part I, sign and date the Substitute Form W-9 and sign
and date the Certificate of Awaiting Taxpayer Identification Number. If "Applied
For" is written in Part I and the Depositary is not provided with a TIN within
60 days, the Depositary will withhold 31% of payments for surrendered Shares
thereafter until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY, TOGETHER WITH CERTIFICATES (OR BOOK-ENTRY CONFIRMATION) AND ALL OTHER
REQUIRED DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE
EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under federal tax law, a stockholder whose tendered Shares are accepted for
payment is required to provide the Depositary (as payor) with such stockholder's
correct TIN on Substitute Form W-9 below. If such stockholder is an individual,
the TIN is such stockholder's Social Security Number. If the Depositary is not
provided with the correct TIN or an adequate basis for exemption, the
stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such stockholder with respect to
Shares purchased pursuant to the Offer may be subject to backup withholding in
an amount equal to 31% of the gross proceeds resulting from the Offer.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit an IRS Form W-8, signed under penalties
of perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his or her correct TIN by completing the
Substitute Form W-9 contained herein, certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and
that (1) the stockholder is exempt from backup withholding, (2) the stockholder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of failure to report all interest or
dividends, or (3) the Internal Revenue service has notified the stockholder that
he or she is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional guidance on which number to
report. If the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, he or she
should write "Applied For" in the space provided for the TIN in Part I, sign and
date the Substitute Form W-9 and sign and date the Certificate of Awaiting
Taxpayer Identification Number. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% of all payments of the purchase price until a TIN is provided to
the Depositary.
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<PAGE> 8
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN IN
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW: Social Security Number or
PAYOR'S REQUEST FOR Employer Identification
TAXPAYER IDENTIFICATION Number
NUMBER (TIN) (If Awaiting TIN write "Applied
for")
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
-----------------------------------------------------------------------
NAME (Please Print) PART II--For Payees NOT subject to
---------------------------------- backup withholding, see the
ADDRESS enclosed "Guidelines for
---------------------------------- Certification of Taxpayer
CITY STATE ZIP CODE Identification Number on
Substitute Form W-9" and complete
as instructed therein.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding or, (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
SIGNATURE DATE , 1996
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). Also see instructions in the
enclosed Guidelines.
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
IN PART I OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under the penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Officer or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within sixty (60) days, 31%
of all reportable payments made to me thereafter will be withheld until I
provide a number.
SIGNATURE DATE , 1996
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
Questions and requests for assistance or additional copies of the Offer
to Purchase, this Letter of Transmittal and other tender offer materials
may be directed to the Information Agent as set forth below.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms, please call:
(800) 662-5200
<PAGE> 1
EXHIBIT 99.5
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
PURPOSE OF FORM. -- A person who is required to file an information return
with the Internal Revenue Service ("IRS") must obtain your correct taxpayer
identification number ("TIN") to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an IRA. Use Form W-9 to furnish
your correct TIN to the requester (the person asking you to furnish your TIN)
and, when applicable, (1) to certify that the TIN you are furnishing is correct
(or that you are waiting for a number to be issued), (2) to certify that you are
not subject to backup withholding, and (3) to claim exemption from backup
withholding if you are an exempt payee. Furnishing your correct TIN and making
the appropriate certifications will prevent certain payments from being subject
to backup withholding.
NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN W-9 TO REQUEST YOUR TIN,
YOU MUST USE THE REQUESTER'S FORM.
HOW TO OBTAIN A TIN. -- If you do not have a TIN, apply for one
immediately. To apply, get Form SS-5, Application for a Social Security Card
(for individuals), from your local office of the Social Security Administration,
or Form SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your local IRS office.
To complete Form W-9 if you do not have a TIN, write "Applied for" in the
space for the TIN in Part 1, sign and date the form, and give it to the
requester. Generally, you will then have 60 days to obtain a TIN and furnish it
to the requester. If the requester does not receive your TIN within 60 days,
backup withholding, if applicable, will begin and continue until you furnish
your TIN to the requester. For reportable interest or dividend payments, the
payor must exercise one of the following options concerning backup withholding
during this 60-day period. Under option (1), a payor must backup withhold on any
withdrawals you make from your account after 7 business days after the requester
receives this form back from you. Under option (2), the payor must backup
withhold on any reportable interest or dividend payments made to your account,
regardless of whether you make any withdrawals. The backup withholding under
option (2) must begin no later than 7 business days after the requester receives
this form back. Under option (2), the payor is required to refund the amounts
withheld if your certified TIN is received within the 60-day period and you were
not subject to backup withholding during that period.
NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED
FOR A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date the form, and give it to the requester.
WHAT IS BACKUP WITHHOLDING? -- Persons making certain payments to you after
1992 are required to withhold and pay to the IRS 31% of such payments under
certain conditions. This is called "backup withholding." Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, nonemployee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
(1) You do not furnish your TIN to the requester, or
(2) The IRS notifies the requester that you furnished an incorrect
TIN, or
(3) You are notified by the IRS that you are subject to backup
withholding because you failed to report all your interest and dividends on
your tax return (for reportable interest and dividends only), or
(4) You do not certify to the requester that you are not subject to
backup withholding under 3 above (for reportable interest and dividend
accounts opened after 1983 only), or
(5) You do not certify your TIN. This applies only to reportable
interest, dividend, broker, or barter exchange accounts opened after 1983,
or broker accounts considered inactive in 1983.
Except as explained in 5 above, other reportable payments are subject to
backup withholding only if 1 or 2 above applies. Certain payees and payments are
exempt from backup withholding and information reporting. See Payees and
Payments Exempt From Backup Withholding, below, and Exempt Payees and Payments
under Signing the Certification, below, if you are an exempt payee.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. -- The following is a
list of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are exempt
except as listed in item (9). For broker transactions, payees listed in items
(1) through (13) and a person registered under the Investment Advisers Act of
1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States,
or any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the
United States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed
in the most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section
4947.
Payments of dividend and patronage dividends generally not subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include
the following:
- Payments of interest on obligations issued by individuals.
NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYOR'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYOR.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid by you.
<PAGE> 2
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and the regulations under those sections.
PENALTIES
FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS. -- If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
NAME: -- If you are an individual, you must generally provide the name
shown on your social security card. However, if you have changed your last name,
for instance, due to marriage, without informing the Social Security
Administration of the name change, please enter your first name, the last name
shown on your social security card, and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name or "doing business
as" name on the business name line. Enter your name(s) as shown on your social
security card and/or as it was used to apply for your EIN on Form SS-4.
SIGNING THE CERTIFICATION
(1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. -- You are required to furnish
your correct TIN, but you are not required to sign the certification.
(2) INTEREST, DIVIDEND, BROKER, AND BARTER EXCHANGE ACCOUNTS OPENED AFTER
1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. -- You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item 2 in the certification before signing the form.
(3) REAL ESTATE TRANSACTIONS. -- You must sign the certification. You may
cross out item 2 of the certification.
(4) OTHER PAYMENTS. -- You are required to furnish your correct TIN, but
you are not required to sign the certification unless you have been notified of
an incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
(5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, OR IRA CONTRIBUTIONS. -- You are required to furnish your correct TIN,
but you are not required to sign the certification.
(6) EXEMPT PAYEES AND PAYMENTS. -- If you are exempt from backup
withholding, you should complete this form to avoid possible erroneous backup
withholding. Enter your correct TIN in Part I, write "EXEMPT" in the block in
Part II, and sign and date the form. If you are a nonresident alien or foreign
entity not subject to backup withholding, give the requester a complete Form
W-8, Certificate of Foreign Status.
(7) TIN "APPLIED FOR." -- Follow the instructions under How To Obtain a
TIN, on page 1, and sign and date this form.
SIGNATURE: -- For a joint account, only the person whose TIN is shown in
Part I should sign.
PRIVACY ACT NOTICE: -- Section 6109 requires you to furnish your correct
TIN to persons who must file information returns with the IRS to report
interest, dividends, and certain other income paid to you, mortgage interest you
paid, the acquisition or abandonment of secured property, or contributions you
made to an IRA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. You must provide your TIN whether or not
you are required to file a tax return. Payors must generally withhold 31% of
taxable interest, dividends, and certain other payments to a payee who does not
furnish a TIN to a payor. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
GIVE THE NAME AND
FOR THIS TYPE SOCIAL SECURITY
OF ACCOUNT: NUMBER OF:
- ----------------------------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-trustee(1)
trust (grantor is also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under state law
5. Sole proprietorship The owner(3)
<CAPTION>
- ----------------------------------------------------------------
GIVE THE NAME AND
FOR THIS TYPE EMPLOYER IDENTIFICATION
OF ACCOUNT: NUMBER OF:
- ----------------------------------------------------------------
<C> <S> <C>
6. Sole proprietorship The owner(3)
7. A valid trust, estate or Legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or
other tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state
or local government, school
district, or prison) that
receives agricultural program
payments
</TABLE>
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE> 1
EXHIBIT 99.6
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GUARDSMAN PRODUCTS, INC.
(Not To Be Used For Signature Guarantees)
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates representing shares of common stock, $1.00 par
value per share (the "Shares"), of Guardsman Products, Inc., a Delaware
corporation (the "Company"), and the associated Preferred Stock Purchase Rights
(the "Rights") issued pursuant to the Rights Agreement, dated as of August 8,
1986, as amended, between the Company and Chemical Bank, as Rights Agent, are
not immediately available or if the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase). (Unless the context otherwise requires, all references
to Shares shall include the Rights.) Such form may be delivered by hand or
transmitted by telegram or facsimile transmission or mailed to the Depositary
and must include a guarantee by an Eligible Institution (as defined in Section 2
of the Offer to Purchase). See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Hand or By Overnight
By Mail: By Facsimile Transmission: Courier:
<S> <C> <C>
Tenders & Exchanges (201) 222-4720 Tenders & Exchanges
P.O. Box 2559 or 14 Wall Street
Suite 4660-Guardsman (201) 222-4721 Suite 4680-Guardsman
Jersey City, New Jersey 8th Floor
07303-2559 New York, New York 10005
</TABLE>
Confirm Receipt of Notice of Guaranteed Delivery by Telephone
(201) 222-4707
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution or by a recognized member of a Medallion
Signature Guarantee Program under the instructions thereto, such signature
guarantee must appear in the applicable space provided in the signature box on
the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to LP Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Lilly Industries,
Inc., an Indiana corporation, upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase, dated March 8, 1996 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"), receipt
of which is hereby acknowledged, Shares pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holders:
Share Certificate Numbers (if available): --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- Please Type or Print
--------------------------------------------
If Shares will be delivered by book-entry Address(es)
transfer, check one box: --------------------------------------------
/ / The Depository Trust Company Zip Code
/ / Midwest Securities Trust Company --------------------------------------------
/ / Philadelphia Depository Trust Company Area Code and Telephone No.
--------------------------------------------
--------------------------------------------
--------------------------------------------
Account Number (Signatures)
Dated: , 1996 Dated: , 1996
---------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a commercial bank or trust company or savings institution
having an office or correspondent in the United States or a member firm of a
registered national securities exchange or a member of the National Association
of Securities Dealers, Inc. (each, an "Eligible Institution"), hereby guarantees
to deliver to the Depositary either the certificates representing the Shares
tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as
defined in Section 2 of the Offer to Purchase) of a transfer of such Shares, in
any such case together with a properly completed and duly executed Letter of
Transmittal, or a manually signed facsimile thereof, with any required signature
guarantees, or an Agent's Message, and any other documents required by the
Letter of Transmittal within three New York Stock Exchange, Inc. trading days
after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
Name of Firm:
----------------------------- ----------------------------------
Authorized Signature
Address: Name:
---------------------------------- -----------------------------
Please Type or Print
----------------------------------
Zip Code
Title:
Area Code and ----------------------------
Telephone Number
--------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER
OF TRANSMITTAL.
<PAGE> 1
EXHIBIT 99.7
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GUARDSMAN PRODUCTS, INC.
AT
$23.00 NET PER SHARE
BY
LP ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
LILLY INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, APRIL 4, 1996, UNLESS EXTENDED.
March 8, 1996
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We are enclosing the materials listed below in connection with the offer by
LP Acquisition Corporation, a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Lilly Industries, Inc., an Indiana corporation
("Parent"), to purchase all outstanding shares of common stock, par value $1.00
per share (the "Shares"), of Guardsman Products, Inc., a Delaware corporation
(the "Company"), and the associated Preferred Stock Purchase Rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of August 8, 1986,
as amended, between the Company and Chemical Bank, as Rights Agent, at $23.00
per Share (and associated Right), net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Purchaser's Offer
to Purchase, dated March 8, 1996 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, together with any supplements or amendments
thereto, collectively constitute the "Offer"). Unless the context otherwise
requires, all references to Shares shall include the Rights.
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase;
2. Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
3. The Letter to Stockholders of the Company from the Chairman of the
Company accompanied by the Company's Solicitation/Recommendation Statement
on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to First Chicago Trust Company of New
York, as the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, APRIL 4, 1996, UNLESS EXTENDED.
<PAGE> 2
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which would represent at least a majority of the number of Shares
outstanding on a fully diluted basis. Three stockholders beneficially holding
approximately 48% of the outstanding Shares on a fully diluted basis have
entered into agreements with Parent pursuant to which they have agreed, among
other things, to tender their Shares pursuant to the Offer as more completely
described in the Offer to Purchase.
The Board of Directors of the Company has, by unanimous vote of all
directors present, approved the Offer and the Merger (as defined below) and
determined that the Offer and the Merger, taken together, are fair to, and in
the best interests of, the stockholders of the Company and, subject to the
fiduciary duties of the Board, recommends that stockholders of the Company
accept the Offer and tender their Shares.
The Offer is being made pursuant to the Merger Agreement, dated as of March
4, 1996 (the "Merger Agreement"), between Parent, the Purchaser and the Company
pursuant to which, following the consummation of the Offer and the satisfaction
or waiver of certain conditions, the Purchaser will be merged with and into the
Company, with the Company surviving the merger as a wholly owned subsidiary of
Parent (the "Merger"). In the Merger, each outstanding Share (other than Shares
owned by (i) Parent or the Purchaser or by any wholly-owned subsidiary of Parent
or Purchaser or in the treasury of the Company or by any wholly-owned subsidiary
of the Company or (ii) stockholders, if any, who are entitled to and who
properly exercise appraisal rights under Delaware law) will be converted into
the right to receive $23.00 per Share, without interest, as set forth in the
Merger Agreement and described in the Offer to Purchase.
In order to accept the Offer, a duly executed and properly completed Letter
of Transmittal with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry delivery of
shares, and any other required documents should be sent to the Depositary and
either Share certificates representing the tendered Shares should be delivered
to the Depositary, or such Shares should be tendered by book-entry transfer into
the Depositary's account maintained at one of the Book-Entry Transfer Facilities
(as described in Section 2 of the Offer to Purchase), all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share certificates or other required documents on or prior to the
Expiration Date (as defined in the Offer to Purchase) or comply with the
book-entry transfer procedures on a timely basis, a tender may be effected by
following the guaranteed delivery procedures specified in Section 2 of the Offer
to Purchase.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than as described in the Offer to
Purchase) in connection with the solicitation of tenders of Shares pursuant to
the Offer. You will be reimbursed upon request for customary mailing and
handling expenses incurred by you in forwarding the enclosed offering materials
to your customers.
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent at the addresses and telephone numbers set
forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
MORROW & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY OR THE
INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON
BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
EXHIBIT 99.8
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GUARDSMAN PRODUCTS, INC.
AT
$23.00 NET PER SHARE
BY
LP ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
LILLY INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, APRIL 4, 1996, UNLESS EXTENDED.
March 8, 1996
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated March 8,
1996 (the "Offer to Purchase"), and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to an offer by LP Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Lilly Industries,
Inc., an Indiana corporation ("Parent"), to purchase shares of common stock, par
value $1.00 per share (the "Shares"), of Guardsman Products, Inc., a Delaware
corporation (the "Company"), and the associated Preferred Stock Purchase Rights
(the "Rights") issued pursuant to the Rights Agreement, dated as of August 8,
1986, as amended, between the Company and Chemical Bank, as Rights Agent, at
$23.00 per Share (and associated Right), net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer.
(Unless the context otherwise requires, all references to Shares shall include
the Rights.) Also enclosed is the Letter to Stockholders of the Company from the
Chairman of the Company accompanied by the Company's Solicitation/Recommendation
Statement on Schedule 14D-9.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The tender price is $23.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
the Offer.
2. The Board of Directors of the Company has, by unanimous vote of all
directors present, approved the Offer and the Merger (as defined below) and
determined that the Offer and the Merger, taken together, are fair to, and
in the best interests of, the stockholders of the Company and, subject to
the fiduciary duties of the Board, recommends that the stockholders of the
Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
<PAGE> 2
4. The Offer is being made pursuant to the Merger Agreement, dated as
of March 4, 1996 (the "Merger Agreement"), between Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer
and the satisfaction or waiver of certain conditions, the Purchaser will be
merged with and into the Company, with the Company surviving the merger as
a wholly owned subsidiary of Parent (the "Merger"). In the Merger, each
outstanding Share (other than Shares owned by (i) Parent or the Purchaser
or by any wholly-owned subsidiary of Parent or Purchaser or in the treasury
of the Company or by any wholly-owned subsidiary of the Company or (ii)
stockholders, if any, who are entitled to and who properly exercise
appraisal rights under Delaware law) will be converted into the right to
receive $23.00 per Share, without interest, as set forth in the Merger
Agreement and described in the Offer to Purchase.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which would represent at least a majority of the
number of Shares outstanding on a fully diluted basis. Three stockholders
beneficially holding approximately 48% of the outstanding Shares on a fully
diluted basis have entered into agreements with Parent pursuant to which
they have agreed, among other things, to tender their Shares pursuant to
the Offer as more completely described in the Offer to Purchase.
6. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Thursday, April 4, 1996, unless the Offer is extended by
the Purchaser. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (or timely Book-Entry
Confirmation of a transfer of such Shares as described in Section 2 of the
Offer to Purchase), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees,
or an Agent's Message (as defined in the Offer to Purchase) in connection
with a book-entry delivery and any other documents required by the Letter
of Transmittal.
7. The Purchaser will pay any stock transfer taxes with respect to the
transfer and sale of Shares to it or its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by one or more registered brokers
or dealers licensed under the laws of such jurisdictions.
If you wish to have us tender any of or all your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
set forth on the following page. An envelope to return your instructions to us
is enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise specified below. Your instructions to us should be
forwarded promptly to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GUARDSMAN PRODUCTS, INC.
BY
LP ACQUISITION CORPORATION
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase, dated March 8, 1996, of LP Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Lilly Industries, Inc., an Indiana
corporation, and the related Letter of Transmittal, relating to shares of common
stock, par value $1.00 per share (the "Shares"), of Guardsman Products, Inc., a
Delaware corporation (the "Company"), and the associated Preferred Stock
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of August 8, 1986, as amended, between the Company and Chemical Bank, as Rights
Agent. Unless the context otherwise requires, all references to Shares shall
include the Rights.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned on the terms and conditions set forth in such Offer
to Purchase and the related Letter of Transmittal.
NUMBER OF SHARES TO BE TENDERED*
SHARES
------------------------------------------------------
------------------------------------------------------
Signature(s)
------------------------------------------------------
------------------------------------------------------
Please Print Name(s)
------------------------------------------------------
------------------------------------------------------
Address (Include Zip Code)
------------------------------------------------------
------------------------------------------------------
Area Code and Telephone Number
------------------------------------------------------
------------------------------------------------------
Taxpayer Identification or Social Security No.
Dated: , 1996
- ------------------------------
* I (We) understand that if I (we) sign this instruction form without indicating
a lesser number of Shares in the space above, all Shares held by you for my
(our) account will be tendered.
<PAGE> 1
EXHIBIT 99.9
Lilly Industries, Inc. and Guardsman Products, Inc. Execute
Definitive agreement
INDIANAPOLIS--March 4, 1996--Douglas W. Huemme, Chairman, President
and Chief Executive Officer of Lilly Industries, Inc. (NYSE:LI) and Paul K.
Gaston, Chairman of the Board of Guardsman Products, Inc. (NYSE:GPI) today
jointly announced that Lilly and Guardsman have signed a definitive agreement
pursuant to which Lilly will acquire all of the outstanding common stock of
Guardsman for a cash purchase price of $23.00 per share or approximately $235
million in the aggregate. The agreement was approved by the unanimous vote of
all members of the Board of Directors of each company in attendance at today's
meetings.
Under the terms of the agreement, Lilly, through a wholly-owned
subsidiary, will make a cash tender offer for all Guardsman shares at a price
of $23.00 per share in cash, and upon successful completion of the tender
offer, the stock not tendered will be cashed out at $23.00 per share in a
statutory merger. Guardsman's three largest stockholders, collectively
representing approximately 50% of Guardsman's outstanding shares, have entered
into separate agreements with Lilly supporting the transaction. The
transaction remains subject to regulatory approval and certain other
conditions. Lilly will finance the transaction through bank financings, for
which firm commitments have been obtained.
Douglas W. Huemme, Chairman, President and Chief Executive Officer of
Lilly stated, "The acquisition of Guardsman is consistent with and accelerates
Lilly's stated goal of achieving annual sales of $500 million." Mr. Huemme
stated, "He expects the combined companies, within twelve to twenty-four
months, will realize synergistic integration savings in excess of $20 million
annually." Mr. Huemme further stated, "The growth opportunities
<PAGE> 2
from the integration of Lilly's and Guardsman's business and technology are
significant and represent added value for both customers and shareholders."
Paul K. Gaston, Chairman of the Board of Guardsman, stated that
Guardsman's decision to pursue a business combination with Lilly "resulted from
our long-standing efforts to obtain maximum value for our stockholders."
Guardsman Products, Inc. is a leading producer of customized industrial
coatings and a supplier of diversified consumer products with 1995 sales of
approximately $251 million. Founded in 1915, Guardsman presently has
manufacturing facilities in eight states and Canada, and operations in the
United Kingdom.
Lilly Industries, Inc., headquartered in Indianapolis, Indiana, is one
of the ten largest North American manufacturers of industrial coatings and
specialty chemical products and had fiscal 1995 sales of approximately $328
million. Lilly supplies coatings and specialty chemical products worldwide
from fourteen domestic and five international locations.
CONTACT: Lilly Industries, Inc., Indianapolis
Douglas W. Huemme/Roman J. Klusas, 317/687-6702
or
Guardsman Products, Inc.
Paul K. Gaston or Jeffrey Lambert, 616/957-2600
-2-
<PAGE> 1
EXHIBIT 99.10
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase, dated March 8, 1996, and the related Letter of
Transmittal, and is being made to all holders of Shares; provided that this
Offer is not being made to, nor will tenders be accepted from or on behalf of,
holders of Shares in any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. In those jurisdictions where securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed made on behalf of LP Acquisition Corporation by one or more registered
brokers or dealers licensed under the laws of such jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GUARDSMAN PRODUCTS, INC.
AT
$23.00 NET PER SHARE
BY
LP ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
LILLY INDUSTRIES, INC.
LP Acquisition Corporation, a Delaware corporation (the "Purchaser")
and a wholly-owned subsidiary of Lilly Industries, Inc., an Indiana corporation
("Parent"), is offering to purchase all outstanding shares of common stock, par
value $1.00 per share (the "Shares"), of Guardsman Products, Inc., a Delaware
corporation (the "Company"), and the associated Preferred Stock Purchase Rights
(the "Rights") issued pursuant to the Rights Agreement, dated as of August 8,
1986 (the "Rights Agreement"), as amended, between the Company and Chemical
Bank, as Rights Agent, at a purchase price of $23.00 per Share (and associated
Right), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated March 8,
1996 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any supplements or amendments, collectively constitute
the "Offer"). Unless the context otherwise requires, all references to Shares
herein and in the Offer to Purchase shall include the Rights and all references
to the Rights shall include all benefits that may inure to holders of the
Rights pursuant to the Rights Agreement, including the right to receive any
payment due upon the redemption of the Rights.
================================================================================
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, APRIL 4, 1996, UNLESS THE OFFER IS EXTENDED.
================================================================================
<PAGE> 2
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE
OFFER TO PURCHASE) THAT NUMBER OF SHARES THAT WOULD REPRESENT AT LEAST A
MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION"). THREE STOCKHOLDERS OF THE COMPANY BENEFICIALLY HOLDING
APPROXIMATELY 48% OF THE OUTSTANDING SHARES, ON A FULLY DILUTED BASIS, HAVE
ENTERED INTO AGREEMENTS WITH PARENT PURSUANT TO WHICH THEY HAVE AGREED, AMONG
OTHER THINGS, TO TENDER THEIR SHARES PURSUANT TO THE OFFER AS MORE FULLY
DESCRIBED HEREIN.
The Offer is being made pursuant to a Merger Agreement, dated as of
March 4, 1996 (the "Merger Agreement"), among Parent, the Purchaser and the
Company. The Merger Agreement provides that, among other things, the Purchaser
will make the Offer and that following the purchase of Shares pursuant to the
Offer and the satisfaction or waiver of certain other conditions set forth in
the Merger Agreement and in accordance with relevant provisions of the Delaware
General Corporation Law, the Purchaser will be merged with and into the Company
(the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation and will be a wholly-owned subsidiary of
Parent. At the effective time of the Merger (the "Effective Time"), each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares owned by (i) Parent or the Purchaser or by any wholly-owned subsidiary
of Parent or Purchaser or in the treasury of the Company or by any wholly-owned
subsidiary of the Company or (ii) stockholders, if any, who are entitled to and
who properly exercise appraisal rights in accordance with the Delaware General
Corporation Law) will be converted into the right to receive cash in an amount
equal to the price per Share paid in the Offer (without interest).
As referenced above, Parent has entered into agreements (each, a
"Letter Agreement") with the three largest stockholders of the Company (the
"Principal Stockholders"). Pursuant to the Letter Agreements, each Principal
Stockholder has agreed, among other things, to validly tender in the Offer, and
not withdraw, all Shares beneficially owned by him, not to sell, transfer or
grant any voting rights with respect to any of his Shares and not to purchase
additional Shares while the Merger Agreement is in effect. Each Principal
Stockholder has also agreed to vote his Shares in favor of the Merger and
against any action or arrangement which would interfere with the successful
consummation of the Merger and has executed and delivered to Parent an
irrevocable proxy to this effect. The Letter Agreements cover 4,952,020 Shares
(including presently exercisable options to acquire 7,880 Shares) in the
aggregate owned by the Principal Stockholders, representing approximately 48%
of the outstanding Shares on a fully diluted basis. The Letter Agreements will
remain in effect until the transactions contemplated by the Merger Agreement
are successfully completed or until the Merger Agreement is terminated by
Parent or the Company in accordance with its terms.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER, DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO THE
STOCKHOLDERS OF THE COMPANY AND ARE IN THE BEST INTERESTS OF THE STOCKHOLDERS
OF THE COMPANY AND, SUBJECT TO
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<PAGE> 3
THE FIDUCIARY DUTIES OF THE BOARD, RECOMMENDS ACCEPTANCE OF THE OFFER AND
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER BY THE
STOCKHOLDERS OF THE COMPANY.
The Offer is subject to certain conditions set forth in the Offer to
Purchase, including satisfaction of the Minimum Condition and the expiration or
termination of the waiting period applicable to the Purchaser's acquisition of
Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. Subject to the terms of the Merger
Agreement, if any such condition is not satisfied, the Purchaser may terminate
the Offer and return all tendered Shares to tendering stockholders; extend the
Offer and, subject to withdrawal rights as set forth in the Offer to Purchase,
retain all such Shares until the expiration of the Offer as so extended; or
delay acceptance for payment of or payment for Shares, subject to applicable
law, until satisfaction or waiver of the conditions to the Offer and subject to
the right of the Purchaser to extend the Offer as set forth in the Offer to
Purchase. The Purchaser may unilaterally waive any of the conditions (except
the Minimum Condition) to the Offer in whole or in part at any time in its sole
discretion.
The Purchaser reserves the right, at any time or from time to time in
accordance with the terms of the Merger Agreement, to extend the period of time
during which the Offer is open by giving oral or written notice of such
extension to First Chicago Trust Company of New York (the "Depositary"). Any
such extension will be followed as promptly as practicable by a public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled date on which the Offer was to
expire. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the right of a tendering
stockholder to withdraw such stockholder's Shares.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment, and thereby purchased, Shares validly tendered to the
Purchaser and not withdrawn as, if and when Purchaser gives oral or written
notice to the Depositary of its acceptance of such Shares for payment pursuant
to the Offer. Payment for Shares purchased pursuant to the Offer will be made
by deposit of the purchase price therefor with the Depositary, which shall act
as agent for tendering stockholders for the purpose of receiving payment from
the Purchaser and transmitting payment to validly tendering stockholders.
Under no circumstances will interest on the purchase price for Shares be paid
by the Purchaser. In all cases, payment for Shares purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of certificates
for such Shares (or a confirmation of book-entry transfer of such Shares into
the Depositary's account at one of the Book-Entry Transfer Facilities (as
defined in, and pursuant to the procedure set forth in, the Offer to
Purchase)), a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase)
and any other documents required by the Letter of Transmittal.
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<PAGE> 4
Tenders of Shares made pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time prior
to 12:00 Midnight, New York City time on Thursday, April 4, 1996 (or such later
date as may apply in case the Offer is extended in accordance with the terms of
the Merger Agreement) and, unless theretofore accepted for payment as provided
in the Offer to Purchase, withdrawn at any time after May 6, 1996. To be
effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth in the Offer to Purchase and must specify the name of the person
having tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of the Shares to be withdrawn,
if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution (as defined in
the Offer to Purchase), the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution or a recognized member of a Medallion
Signature Guaranty Program. If Shares have been delivered pursuant to the
procedures for book-entry transfer as set forth in the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at
the appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures. Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures for tendering Shares described in the Offer to
Purchase at any time prior to the Expiration Date. All questions as to the
form and validity (including time of receipt) of notices of withdrawal will be
determined by the Purchaser, in its sole discretion, whose determination will
be final and binding.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference.
The Company has agreed to provide the Purchaser with the Company's
stockholder list and security position listings for the purpose of
disseminating the Offer to holders of the Shares. The Offer to Purchase and
the related Letter of Transmittal will be mailed to record holders of Shares
and furnished to brokers, banks and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
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<PAGE> 5
Questions, requests for assistance and requests for copies of the
Offer to Purchase, the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at the Purchaser's expense. The Purchaser
will not pay any fees or commissions to any broker or dealer or any other
person (other than the Information Agent) in connection with the solicitation
of tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms, please call:
(800) 662-5200
March 8, 1996
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<PAGE> 1
EXHIBIT 99.11
CONFIDENTIALITY AGREEMENT
An interest has been indicated by the undersigned parties (the
"Parties") to receive non-public and confidential information ("evaluation
material") relating to a potential purchase, investment, partnership, venture,
licensing, or other agreement ("possible agreement") between the companies.
In consideration of the opportunity to receive this information, the
Parties agree to observe the following conditions as a binding and contractual
obligation of confidentiality.
1. All information obtained by either party through the
evaluation process shall be treated as confidential and will be used solely for
investigating a possible agreement. It is agreed that the Parties shall limit
disclosure of any evaluation material to those individuals within the Parties'
organization having a need to know such information. The Parties agree not to
use in any way or disclose, directly or indirectly, any evaluation material to
any third party without receiving prior written authorizations from the other
party. The Party receiving the information shall not, however, be liable for
any disclosure or use of information:
(a) that was known to the receiving party prior to
receiving the information under this Agreement;
(b) that was generally available to the public before the
receiving party received the information under this
Agreement;
(c) that was received from a third party having no
obligations to either of the parties to this
Agreement to hold the information in confidence;
(d) that has been in the public domain or becomes
generally available through no act or failure to act
on the part of the party receiving the information;
or
(e) after December 31, 1998.
2. The Parties will, and will cause their representatives to,
refrain from disclosing to any person either the fact that discussions or
negotiations are taking place concerning a possible agreement or any of the
terms, conditions or other facts with respect to any such possible agreement,
including the status thereof.
3. At the request of either party, or in the event that it is
decided not to proceed with the possible agreement which is the subject of
this agreement within a reasonable time, the Parties shall promptly redeliver
all written evaluation material and any other written material containing or
reflecting any information in the evaluation material and will not retain any
copies, extracts or other reproductions in whole or in part of such written
material. Also, all documents, memoranda, notes and other writings whatsoever
based on the information in the
<PAGE> 2
evaluation material shall be destroyed, and such destruction shall be certified
in writing to the other party by an authorized officer supervising such
destruction.
4. The Parties agree they will not solicit to employ or do
business with any of the other party's current employees or sales
representatives so long as they are employed or otherwise doing business during
the period in which there are discussions conducted pursuant hereto and for a
period of one year thereafter without obtaining the prior written consent of
the other party.
5. The Parties agree that any evaluation material (either written
or oral) will be used solely for the purpose of evaluating a possible agreement
and will not be used in any way detrimental to the other party.
6. The Parties agree that for a period of three years from the
date of this agreement, neither party will make an unsolicited public offer for
any interest in the other, unless there is a pending offer for the other party
by another, or offers have been solicited by the party from others.
7. In the event of a breach of this Agreement by one party, the
other party may be entitled, in addition to all other rights and remedies
available to it under applicable law, to injunctive relief restraining such
breach, and/or to enforce specific performance of the provisions of this
Agreement.
LILLY INDUSTRIES, INC. GUARDSMAN PRODUCTS, INC.
Officer /s/ Roman J. Klusas Officer /s/ Charles E. Bennett
------------------------------- ------------------------------
Roman J. Klusas, Vice President Charles E. Bennett, President
and Chief Financial Officer and Chief Executive Officer
Date December 13, 1995 Date December 13, 1995
---------------------------------- --------------------------------
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<PAGE> 1
EXHIBIT 99.12
MERGER AGREEMENT
BY AND AMONG
LILLY INDUSTRIES, INC.
("PARENT"),
LP ACQUISITION CORP.,
("PURCHASER")
AND
GUARDSMAN PRODUCTS, INC.
("COMPANY")
DATED AS OF
MARCH 4, 1996
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 4, 1996 (the "Agreement"),
by and among GUARDSMAN PRODUCTS, INC., a Delaware corporation (the "Company"),
LP ACQUISITION CORPORATION, a Delaware corporation (the "Purchaser"), and LILLY
INDUSTRIES, INC., an Indiana corporation ("Parent"). The Company and the
Purchaser are hereinafter sometimes collectively referred to as the
"Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of Parent, the Purchaser and the Company
have each approved the acquisition of the Company by Parent upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of Directors of
Parent, the Purchaser and the Company have each approved the merger of the
Purchaser with and into the Company in accordance with the terms of this
Agreement and the General Corporation Law of the State of Delaware (the "DGCL")
and with any other applicable law;
WHEREAS, the Board of Directors of the Company (the "Board") has, in light
of and subject to the terms and conditions set forth herein, (i) determined
that (x) the consideration to be paid for each Share in the Offer and the
Merger (as such terms are hereinafter defined) is fair to the stockholders of
the Company, and (y) the Offer and the Merger are otherwise in the best
interests of the Company and its stockholders, and (ii) resolved to approve and
adopt this Agreement and the transactions contemplated hereby and to recommend
acceptance of the Offer and approval and adoption by the stockholders of the
Company of this Agreement; and
WHEREAS, as a condition to Parent's willingness to enter into this
Agreement and make the Offer, Parent and certain stockholders of the Company
are simultaneously entering into and delivering letter agreements, dated the
date hereof, pursuant to which such stockholders have agreed, among other
things, to tender all the Shares beneficially owned by them into the Offer (the
"Letter Agreements").
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
<PAGE> 3
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article IX hereof and none of the events set
forth in Annex I hereto shall have occurred and be existing, as promptly
as practicable (but in no event later than five business days from the
date hereof) Purchaser shall commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (including the rules
and regulations promulgated thereunder, the "Exchange Act")), and Parent
shall cause the Purchaser to commence and shall provide adequate financing
for, an offer to purchase all outstanding shares of Common Stock, par
value $1.00 per share (the "Shares"), of the Company (which shall include
the Shares held pursuant to the Escrow Agreement referenced in Section 5.2
hereof), including the associated Preferred Stock Purchase Rights issued
pursuant to the Rights Agreement dated as of August 8, 1986, as amended
(the "Rights Agreement") between the Company and Chemical Bank, as Rights
Agent (the "Rights"), at a price of $23.00 per Share net to the seller in
cash (the "Offer") and, subject to the conditions of the Offer, shall use
all reasonable efforts to consummate the Offer. Except where the context
otherwise requires, all references herein to the Shares shall include the
associated Rights. The obligation of the Purchaser to consummate the
Offer and to accept for payment and to pay for any Shares tendered
pursuant thereto shall be subject to only those conditions set forth in
Annex I hereto. The parties agree that, except for the Minimum Condition,
the conditions set forth in Annex I are for the sole benefit of the
Purchaser and may be asserted by the Purchaser regardless of the
circumstances giving rise to any such condition or, except as provided in
this Agreement, may be waived by the Purchaser, in whole or in part, at
any time and from time to time in its sole discretion, in each case
subject to the terms of this Agreement. The failure by the Purchaser at
any time to exercise any of the foregoing rights will not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances will not be deemed a waiver with
respect to other facts or circumstances, and each such right will be
deemed an ongoing right that may be asserted at any time and from time to
time. The Company agrees that no Shares held by the Company or its
subsidiaries will be tendered in the Offer.
(b) Without the prior written consent of the Company, the
Purchaser shall not (i) decrease the price per Share or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares
sought, (iii) amend or waive satisfaction of the Minimum Condition (as
defined in Annex I) or (iv) impose additional conditions to the
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<PAGE> 4
Offer or amend any other term of the Offer in any manner adverse
to the holders of Shares. Upon the terms and subject to the
conditions of the Offer, the Purchaser will accept for payment and
purchase, as soon as permitted under the terms of the Offer, all
Shares validly tendered and not withdrawn prior to the expiration
of the Offer (it being agreed that the Offer shall expire as soon
as is permissible under the Exchange Act and the rules and
regulations of the New York Stock Exchange, Inc., subject to
subsection (d) and Section 9.1(b) below). The Purchaser reserves
the right to increase the price per Share payable in the Offer.
(c) Each of Parent and the Purchaser, on the one hand, and
the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the documents filed by
Parent and the Purchaser with the Securities and Exchange
Commission (the "SEC") in connection with the Offer (the "Offer
Documents") if and to the extent that it shall have become false
or misleading in any material respect, and Parent and the
Purchaser further agree to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be
disseminated to stockholders of the Company, in each case as and
to the extent required by applicable federal securities laws.
(d) Parent and the Purchaser agree that the Purchaser shall
not terminate or withdraw the Offer or extend the expiration date
of the Offer unless at the expiration date of the Offer the
conditions to the Offer described in Annex I hereto shall not have
been satisfied or earlier waived; provided, however, that
Purchaser shall be allowed to extend the Offer for up to a total
of 10 days.
SECTION 1.2. COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer
and represents that (i) the Board, at a meeting duly called and
held, has, in light of and subject to the terms and conditions set
forth herein, unanimously (x) determined that the consideration to
be paid for each Share in the Offer and the Merger is fair to the
stockholders of the Company and the Offer and the Merger are
otherwise in the best interests of the Company and its
stockholders and (y) approved and adopted this Agreement and the
transactions contemplated hereby, including the Offer and the
Merger, and resolved to recommend acceptance of the Offer and
approval and adoption of this Agreement and the Merger and the
other transactions contemplated hereby by the stockholders of the
Company and (ii) Goldman Sachs & Co., the Company's financial
advisor, has rendered to the Board its opinion that the
consideration to be received by the stockholders of the Company
pursuant to the Offer and the Merger is fair to such stockholders.
(b) The Company hereby agrees promptly to prepare and, after
review by the Purchaser, to file with the SEC and to mail to its
stockholders, a
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<PAGE> 5
Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (together with any amendments or supplements
thereto, the "Schedule 14D-9") containing the recommendation
described in Section 1.2(a) hereof and to disseminate the Schedule
14D-9 as required by Rule 14d-9 promulgated under the Exchange
Act; provided, however, that, subject to the provisions of Article
IX, such recommendation may be withdrawn, modified or amended to
the extent that the Board deems it necessary to do so in the
exercise of its fiduciary and other legal obligations after being
so advised in writing by outside counsel. Each of the Company, on
the one hand, and Parent and the Purchaser, on the other hand,
agree promptly to correct any information provided by either of
them for use in the Schedule 14D-9 if and to the extent that it
shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and to
be disseminated to the stockholders of the Company, in each case
as and to the extent required by applicable federal securities
laws.
(c) In connection with the Offer, the Company will promptly
furnish the Purchaser with mailing labels, security position
listings and any available listing or computer files containing
the names and addresses of the record holders of Shares as of the
most recent practicable date and will furnish the Purchaser with
such information (which subject to applicable law shall be held in
confidence) and assistance as the Purchaser or its agents or
representatives may reasonably request in connection with the
preparation of the Offer and communicating the Offer to the record
and beneficial holders of the Shares.
SECTION 1.3. DIRECTORS.
(a) Subject to compliance with the DGCL, the Company's
Certificate of Incorporation and other applicable law, promptly
upon the payment by the Purchaser for Shares purchased pursuant to
the Offer constituting at least a majority of the outstanding
Shares, and from time to time thereafter, the Company shall, upon
request of Parent, promptly take all actions necessary to cause
the Board to include a number of Parent's designees such that
Parent's designees constitute a percentage of the Board as nearly
equal as practicable to the percentage of the outstanding Shares
beneficially owned by Parent (which shall be at least a majority
of the Board). Such necessary actions may include accepting the
resignations of those incumbent directors designated by the
Company or increasing the size of the Board and causing Parent's
designees to be elected; provided, however, that the Company shall
use its reasonable best effort to comply with the foregoing
without increasing the size of the Board above twelve members; and
provided, further, that Parent agrees that the Company may retain,
and the Parent shall cause to be retained, at least three
incumbent directors on the Board prior to the Effective Time (as
hereinafter defined). If any of the
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<PAGE> 6
incumbent directors become unavailable or unwilling to serve for
any reason, Parent shall cause such vacancy or vacancies to be
promptly filled by other incumbent directors willing to serve in
such capacity, or their designees. The date on which Purchaser's
designees constitute at least a majority of the Board is herein
referred to as the "Control Date." Upon written request by the
Purchaser, the Company will use its reasonable best efforts to
cause the designees of the Purchaser to constitute a percentage as
nearly equal as practicable to the percentage of representation on
the Board of Directors after giving effect to this Section 1.3 on
(i) each committee of the Board of Directors; (ii) the board of
directors of each subsidiary of the Company; and (iii) each
committee of such subsidiaries' boards of directors.
(b) In satisfying its obligations to appoint Parent's
designees to the Board, the Company shall comply with Section
14(f) of the Exchange Act and Rule 14f-1 thereunder, if
applicable. The Company shall promptly take all actions required
pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.3 and shall include in the
Schedule l4D-9 such information with respect to the Company and
its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.3.
Parent will supply to the Company complete and accurate
information with respect to itself and its officers, directors and
affiliates required by such Section and Rule.
(c) Following the election or appointment of Parent's
designees pursuant to this Section 1.3 and prior to the Effective
Time, any amendment or termination of this Agreement by the
Company or the Board, any extension by the Company or the Board of
the time for the performance of any of the obligations or other
acts of Parent or the Purchaser or waiver of any of the Company's
rights hereunder, or any consent, approval or recommendation of
the Company or Board required hereunder, will (if there are any
then serving directors not affiliated with or designated by
Parent) require the concurrence of, and shall be effective if and
only if approved by, a majority of the directors of the Company
then in office who are not affiliated with Parent and were not
designated by Parent.
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER.
(a) In accordance with the provisions of this Agreement and
the DGCL, at the Effective Time, the Purchaser shall be merged
with and into the
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<PAGE> 7
Company (the "Merger"), and the Company shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of
Delaware. At the Effective Time the separate existence of the Purchaser
shall cease. At the election of Parent or the Purchaser, any direct or
indirect wholly-owned subsidiary of Parent may be substituted for the
Purchaser as a constituent corporation in the Merger.
(b) The name of the Surviving Corporation shall be "Guardsman
Products, Inc."
(c) The Merger shall have the effects on the Company and the
Purchaser as Constituent Corporations of the Merger as provided under
the DGCL. As of the Effective Time, the Company shall be a wholly-owned
direct or indirect subsidiary of Parent.
SECTION 2.2. EFFECTIVE TIME. The Merger shall become effective at the
time of filing of, or at such later time specified in, a certificate of merger
(the "Certificate of Merger") (or, if applicable, a certificate of ownership
and merger), in the form required by and executed in accordance with the DGCL,
filed with the Secretary of State of the State of Delaware (the "Delaware
Secretary of State") in accordance with the provisions of Section 251 of the
DGCL (or in the event Section 3.4 hereof is applicable, Section 253 of the
DGCL). The date and time when the Merger shall become effective is herein
referred to as the "Effective Time."
SECTION 2.3. CERTIFICATE OF INCORPORATION AND BY-LAWS OF SURVIVING
CORPORATION. Subject to Section 2.1 (b), the Certificate of Incorporation and
By-Laws of the Purchaser shall be the Certificate of Incorporation and By-Laws
of the Surviving Corporation until thereafter amended as provided by law.
SECTION 2.4. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
(a) Subject to applicable law, the directors of the Purchaser
immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier
death, resignation or removal.
(b) The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office until their respective successors are
duly elected and qualified, or their earlier death, resignation or
removal.
SECTION 2.5. FURTHER ASSURANCES. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any
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<PAGE> 8
of the rights, properties or assets of either of the Constituent Corporations
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of each of the Constituent Corporations
or otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out this Agreement in accordance with its terms.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1. EFFECT ON SHARES AND THE PURCHASER'S CAPITAL STOCK.
(a) As of the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, each Share issued
and outstanding immediately prior to the Effective Time (other than any
Shares held by Parent, the Purchaser or any wholly-owned subsidiary of
Parent or the Purchaser or in the treasury of the Company or by any
wholly-owned subsidiary of the Company, which Shares, by virtue of the
Merger and without any action on the part of the holder thereof, shall be
canceled and retired and shall cease to exist with no payment being made
with respect thereto, and other than any Dissenting Shares (as hereinafter
defined)) shall be converted into the right to receive $23.00 net to the
holder in cash or any higher price per Share paid in the Offer (the
"Merger Price"), payable to the holder thereof, without interest thereon,
as set forth in Section 4.2 hereof.
(b) As of the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, each share of
capital stock of the Purchaser issued and outstanding immediately prior to
the Effective Time shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $1.00 per share, of the
Surviving Corporation.
SECTION 3.2. COMPANY OPTION PLANS.
(a) As of the Effective Time, the Company shall take, and
Parent shall cause the Company to take, such actions to provide that by
virtue of the Merger and without any action on the part of the holders
thereof, each option to purchase Shares (the "Option") that is outstanding
immediately before the Effective Time shall be cancelled and, in
consideration of such cancellation, each holder of an Option shall receive
an amount equal to the product of (i) the excess, if any, by
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which the Merger Price exceeds the exercise price of the Option and
(ii) the number of Shares subject thereto, such amount to be paid to the
holder in cash on the Effective Date of the Merger as set forth in Section
4.2 hereof.
(b) Except as provided herein or as otherwise agreed to by
the parties (i) the Option Plans shall terminate as of the Effective Time
and the provisions in any other plan, program or arrangement, providing
for the issuance or grant by the Company or any of its subsidiaries of any
interest in respect of the capital stock of the Company or any of its
subsidiaries shall be deleted as of the Effective Time and (ii) following
the Effective Time no holder of Options or any participant in the Option
Plans or any other such plans, programs or arrangements shall have any
right thereunder to acquire any equity securities of the Company, the
Surviving Corporation or any subsidiary thereof.
SECTION 3.3. STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through the Board, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting")
as soon as practicable following the purchase of and payment
for Shares by the Purchaser pursuant to the Offer for the
purpose of considering and adopting this Agreement and such
other matters as may be necessary to consummate the
transactions contemplated herein;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to the matters to be considered at the
Special Meeting pursuant to this Agreement and use its
reasonable best efforts (x) to obtain and furnish the
information required to be included by the SEC in the Proxy
Statement (as hereinafter defined) and, after consultation
with Parent, to respond promptly to any comments made by the
SEC with respect to the preliminary proxy statement and to
cause a definitive proxy statement (the "Proxy Statement")
to be mailed to its stockholders and (y) to obtain the
necessary approvals of this Agreement and such other matters
as may be necessary to consummate the transactions
contemplated hereby by its stockholders; and
(iii) subject to the fiduciary obligations of the Board
under applicable law as advised by outside counsel, include
in the Proxy Statement the recommendation of the Board that
stockholders of the Company vote in favor of the approval of
the Merger and adoption of this Agreement and such other
matters as may be necessary to consummate the transactions
contemplated hereby.
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<PAGE> 10
(b) Parent agrees that it will vote, or cause to be voted,
all of the Shares then owned by it, the Purchaser or any of its
other subsidiaries in favor of the approval and adoption of this
Agreement and such other matters as may be necessary to consummate
the transactions contemplated hereby.
SECTION 3.4. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
Section 3.3 hereof, in the event that Parent, the Purchaser or any other
subsidiary of Parent shall acquire at least 90 percent of the outstanding
Shares pursuant to the Offer or otherwise, the parties hereto agree to take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the acceptance for payment and purchase of Shares by
the Purchaser pursuant to the Offer without a meeting of stockholders of the
Company in accordance with Section 253 of the DGCL.
SECTION 3.5. CONSUMMATION OF THE MERGER. As soon as practicable after
the satisfaction or waiver of the conditions set forth in Article VIII hereof,
the Surviving Corporation shall execute in the manner required by the DGCL and
file with the Delaware Secretary of State the Certificate of Merger (or, in the
event Section 3.4 hereof is applicable, the Purchaser shall execute in the
manner required by the DGCL and file with the Delaware Secretary of State a
certificate of ownership and merger), and the parties shall take such other and
further actions as may be required by law to make the Merger effective as
promptly as is practicable.
ARTICLE IV
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 4.1. DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such Shares in
accordance with Section 262 of the DGCL, if such Section 262 provides for
appraisal rights for such Shares in the Merger ("Dissenting Shares"), shall not
be converted into the right to receive the Merger Price, as provided in Section
3.1 hereof, unless and until such holder fails to perfect or withdraws or
otherwise loses such holder's right to appraisal and payment under the DGCL.
If, after the Effective Time, any such holder fails to perfect or withdraws or
loses such holder's right to appraisal, such Dissenting Shares shall thereupon
be treated as if they had been converted as of the Effective Time into the
right to receive the Merger Price to which such holder is entitled, without
interest or dividends thereon. The Company shall give Parent prompt notice of
any demands received by the Company for appraisal of Shares and Parent shall
have the right to participate in all negotiations and proceedings with respect
to such demands. The Company shall not, except with the prior written consent
of Parent, make any voluntary payment with respect to, or settle or offer to
settle, any such demands.
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<PAGE> 11
SECTION 4.2. PAYMENT FOR SHARES; STOCK OPTIONS.
(a) From and after the Effective Time, a bank or trust
company designated by Parent and reasonably acceptable to the
Company shall act as paying agent (the "Paying Agent") in
effecting the payment of the Merger Price for certificates (the
"Certificates") formerly representing Shares and entitled to
payment of the Merger Price pursuant to Section 3.1 hereof. At
the Effective Time and from time to time thereafter, Parent or the
Purchaser shall deposit, or cause to be deposited, in trust with
the Paying Agent sufficient funds to permit the Paying Agent to
make the payments contemplated by this Section 4.2 and Section
3.2.
(b) Promptly after the Effective Time, Parent shall cause the
Paying Agent to mail to each record holder of Certificates that
immediately prior to the Effective Time represented Shares (other
than Certificates representing Shares held by Parent or the
Purchaser, any wholly-owned subsidiary of Parent or the Purchaser
or in the treasury of the Company or by any wholly-owned
subsidiary of the Company) a form of letter of transmittal which
shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent and instructions
for use in surrendering such Certificates and receiving the Merger
Price therefor. Upon the surrender of each such Certificate, the
Paying Agent shall pay the holder of such Certificate in exchange
therefor cash in an amount equal to the Merger Price multiplied by
the number of Shares formerly represented by such Certificate, and
such Certificate shall forthwith be canceled. Until so
surrendered, each such Certificate (other than Certificates
representing Dissenting Shares and Certificates representing
Shares held by Parent or the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser or in the treasury of the
Company or by any wholly-owned subsidiary of the Company) shall
represent solely the right to receive the aggregate Merger Price
relating thereto. No interest shall be paid or accrued on such
Merger Price.
(c) Promptly following the date which is nine months after
the Effective Time, the Paying Agent shall deliver to Parent all
cash, Certificates and other documents in its possession relating
to the transactions described in this Agreement, and the Paying
Agent's duties shall terminate. Thereafter, each holder of a
Certificate formerly representing a Share (other than Certificates
representing Dissenting Shares and Certificates representing
Shares held by Parent or the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser or in the treasury of the
Company or by any wholly-owned subsidiary of the Company) may
surrender such Certificate to Parent and (subject to applicable
abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price relating
thereto, without any interest or dividends thereon. Neither
Parent, the Purchaser nor the Surviving Corporation will be liable
to any holder
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<PAGE> 12
of Shares for any amount paid to a public official in accordance
with applicable abandoned property, escheat or similar laws.
(d) The Merger Price shall be net to each holder of
Certificates in cash, subject to reduction only for any applicable
federal back-up withholding or, as set forth in Section 4.2(e),
stock transfer taxes payable by such holder.
(e) If payment of cash in respect of any Certificate is to be
made to a person other than the person in whose name such
Certificate is registered, it shall be a condition to such payment
that the Certificate so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other
taxes required by reason of such payment in a name other than that
of the registered holder of the Certificate surrendered or shall
have established to the satisfaction of Parent or the Paying Agent
that such tax either has been paid or is not payable.
(f) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any
Shares which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates formerly
representing Shares (other than Certificates representing Shares
held by Parent or the Purchaser, any wholly-owned subsidiary of
Parent or the Purchaser or in the treasury of the Company or by
any wholly-owned subsidiary of the Company) are presented to
Parent, the Surviving Corporation or the Paying Agent, they shall
be surrendered and canceled in return for the payment of the
aggregate Merger Price relating thereto, without interest, as
provided in this Article IV, subject to applicable law in the case
of Dissenting Shares.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as
follows, except as previously disclosed by the Company to Parent and the
Purchaser in a Disclosure Letter dated of even date herewith, including the
materials referenced therein (the "Disclosure Letter"):
SECTION 5.1. ORGANIZATION. The Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdictions of incorporation and the Company and each
of its subsidiaries has all requisite corporate power and authority to own,
lease and operate their respective properties and to carry on their respective
businesses as now being conducted. The Company and each of its subsidiaries is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted
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<PAGE> 13
by it makes such qualification necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, assets, condition (financial or otherwise), results of
operations or prospects of the Company and its subsidiaries taken as a whole (a
"Company Material Adverse Effect"). Copies of the Certificate of Incorporation
and Bylaws of the Company and the articles or certificate of incorporation and
bylaws of each of its subsidiaries, including all amendments, have been
delivered to Parent and the Purchaser and such copies are accurate and
complete. The Company owns directly or indirectly all of the outstanding
capital stock of each of its subsidiaries, free and clear of any claim, lien or
encumbrance.
SECTION 5.2. CAPITALIZATION. The authorized capital stock of the Company
consists of 30,000,000 Shares and 1,000,000 shares of preferred stock, par
value $1.00 per share ("Company Preferred Stock"). As of February 28, 1996,
there were 9,599,775 Shares and no shares of Company Preferred Stock issued and
outstanding, 38,888 Shares (which for purposes of this Agreement shall be
deemed outstanding) held pursuant to the Escrow Agreement dated as of January
30, 1995, by and among the Company, Michael P. Connolly and First of America
Bank-Michigan, as Escrow Agent (a copy of which has been provided by the
Company to Parent and the Purchaser), and no Shares or shares of Company
Preferred Stock held in the Company's treasury. As of February 28, 1996, there
were outstanding options to purchase 597,970 Shares under the Option Plans and
the Company has provided to Parent and the Purchaser an accurate summary of
such Options, including applicable exercise prices, terms and conditions.
Except for the Rights granted pursuant to the Rights Agreement, and Options
under the Option Plans (which shall be cancelled as provided in Section 3.2(a)
hereof), there are not as of the date hereof, and at all times thereafter
through the Effective Date there will not be, any existing options, warrants,
calls, subscriptions, or other rights or other agreements or commitments
obligating the Company or any of its subsidiaries to issue, transfer, sell or
vote any shares of capital stock of the Company or any of its subsidiaries or
any other securities convertible into or evidencing the right to subscribe for
any such shares. All issued and outstanding Shares, and all outstanding shares
of capital stock of each subsidiary, are duly authorized and validly issued,
fully paid, nonassessable and free of preemptive rights with respect thereto.
SECTION 5.3. AUTHORITY. The Company has full corporate power and
authority to execute and deliver this Agreement and, subject to the approval of
its stockholders, if required, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized and
approved by the Board, and other than the approval by its stockholders, if
required, no other corporate proceedings are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming this Agreement constitutes a legal, valid and binding agreement of the
other parties hereto, it constitutes a legal, valid and binding agreement of
the Company, enforceable against it in accordance with its terms. The
affirmative vote of holders of a majority of the Shares is the only vote of
holders of any class or series of the Company's capital stock necessary to
approve the Merger.
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<PAGE> 14
SECTION 5.4. NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will
(i) violate any provision of its or any of its subsidiaries'
articles or certificate of incorporation or by-laws, (ii) result
in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default, or give rise to any
right of termination, cancellation or acceleration or any right
which becomes effective upon the occurrence of a merger,
consolidation or change in control or ownership, under, any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture or other instrument of indebtedness for money borrowed
to which the Company or any of its subsidiaries is a party, or by
which the Company or any of its subsidiaries or any of their
respective properties is bound, or (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of
time or both) a default, or give rise to any right of termination,
cancellation or acceleration or any right which becomes effective
upon the occurrence of a merger, consolidation or change in
control or ownership, under, any of the terms, conditions or
provisions of any license, franchise, permit or agreement to which
the Company or any of its subsidiaries is a party, or by which the
Company or any of its subsidiaries or any of their respective
properties is bound, or (iv) violate any statute, rule,
regulation, order or decree of any public body or authority by
which the Company or any of its subsidiaries or any of their
respective properties is bound, excluding from the foregoing
clauses (ii), (iii) and (iv) violations, breaches, defaults or
rights which either would not individually or in the aggregate
have a Company Material Adverse Effect or materially impair the
Company's ability to consummate the transactions contemplated
hereby or for which the Company has received or, prior to the
consummation of the Offer, shall have received appropriate
consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is
required in connection with the execution and delivery of this
Agreement by the Company, or the consummation by the Company of
the transactions contemplated hereby, except (i) expiration of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (ii) in connection, or in
compliance, with the provisions of the Exchange Act, (iii) the
filing of the Certificate of Merger with the Delaware Secretary of
State, (iv) such filings and consents as may be required under
any environmental law pertaining to any notification, disclosure
or required approval triggered by the Merger or the transactions
contemplated by this Agreement, (v) filing with, and approval of,
the New York Stock Exchange, Inc. and the SEC with respect to the
delisting and deregistration of the Shares and (vi) such other
consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings not obtained or made prior
to the
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<PAGE> 15
consummation of the Offer the failure of which to be obtained or
made would not, individually or in the aggregate, have a Company
Material Adverse Effect, or materially impair the Company's
ability to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
SECTION 5.5. SEC DOCUMENTS; FINANCIAL STATEMENTS.
(a) The Company has made available to Parent and the
Purchaser accurate and complete copies of each registration
statement, report, proxy statement, information statement or
schedule, together with all amendments thereto, that were required
to be filed with the SEC by the Company since January 1, 1993 (the
"SEC Documents"), each of which was timely filed with the SEC. As
of their respective dates, the Company's SEC Documents complied,
or will comply, in all material respects with the applicable
requirements of the Securities Act of 1933, as amended, and the
Exchange Act, as the case may be, and none of such SEC Documents
contained, or will contain, any untrue statement of a material
fact or omitted, or will omit, to state a material fact required
to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were or are made,
not misleading.
(b) Neither the Company nor any of its subsidiaries, nor any
of their respective assets, businesses, or operations, is a party
to, or is bound or affected by, or receives benefits under any
contract or agreement or amendment thereto, that in each case was
required to be filed as an exhibit to a Form 10-K that has not
been, or timely will not be, filed as an exhibit to an SEC
Document.
(c) As of their respective dates, the consolidated financial
statements of the Company included in the SEC Documents were, or
will be, prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods
(except as may be indicated therein or in the notes thereto) and
fairly presented, or will fairly present, the Company's
consolidated financial position and that of its consolidated
subsidiaries as at the dates thereof and the consolidated results
of their operations and statements of cash flows for the periods
then ended (subject, in the case of unaudited statements, to the
lack of footnotes thereto, to normal year-end audit adjustments
and to any other adjustments described therein).
SECTION 5.6. ABSENCE OF CERTAIN CHANGES; NO UNDISCLOSED LIABILITIES.
(a) Except as disclosed or reflected in the SEC Documents or
disclosed in the Disclosure Letter, since December 31, 1995, the
Company has not (i) incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, or
suffered any event or occurrence which, individually or in the
aggregate, would have a Company Material Adverse Effect or (ii)
made
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<PAGE> 16
any changes in accounting methods, principles or practices or
(iii) declared, set aside or paid any dividend or other
distribution with respect to its capital stock, other than regular
quarterly cash dividends at a rate not exceeding $0.09 per Share
per quarter, payable on the Company's customary dividend payment
dates. Since December 31, 1995, each of the Company and its
subsidiaries has conducted its operations according to its
ordinary course of business consistent with past practice.
(b) Except as and to the extent disclosed by the Company in
the SEC Documents or disclosed in the Disclosure Letter, as of
December 31, 1995, neither the Company nor any of its subsidiaries
had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that was required by generally
accepted accounting principles to be reflected on a consolidated
balance sheet of the Company and its subsidiaries (including the
notes thereto) or which would have, individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 5.7. LITIGATION. Except as disclosed by the Company in the SEC
Documents, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries or any of their respective properties or assets before any
court or governmental entity which, individually or in the aggregate, would
have a Company Material Adverse Effect or prevent or delay the consummation of
the transactions contemplated by this Agreement, nor, to the knowledge of the
Company, are there any facts that are reasonably likely to give rise to any
such suit, claim, action, proceeding or investigation. Neither the Company nor
any of its subsidiaries is subject to any outstanding order, writ, injunction
or decree which, insofar as can be reasonably foreseen, individually or in the
aggregate, in the future would have a Company Material Adverse Effect or would
prevent or delay the consummation of the transactions contemplated hereby.
SECTION 5.8. COMPLIANCE WITH APPLICABLE LAW. Except as disclosed by the
Company in the SEC Documents, the Company and its subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
governmental entities necessary for the lawful conduct of their respective
businesses (the "Company Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Except as disclosed by the Company in the SEC Documents, the Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply would not, individually or in the aggregate,
have a Company Material Adverse Effect. Except as disclosed by the Company in
the SEC Documents, the businesses of the Company and its subsidiaries have not
been and are not being conducted in violation of any law, ordinance or
regulation of any governmental entity except for violations or possible
violations which individually or in the aggregate do not, and, insofar as
reasonably can be foreseen, in the future will not, have a Company Material
Adverse Effect. Except as disclosed by the Company in the SEC Documents, no
investigation or review by any governmental entity with respect to the Company
or any of its subsidiaries is pending or,
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<PAGE> 17
to the knowledge of the Company, threatened nor, to the knowledge of the
Company, has any governmental entity indicated an intention to conduct the
same, other than, in each case, those which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
SECTION 5.9. TAXES. Each of the Company and its subsidiaries has filed,
or caused to be filed, all federal, state, local and foreign income and other
material tax returns required to be filed by it, has paid or withheld, or
caused to be paid or withheld, all taxes of any nature whatsoever, with any
related penalties, interest and liabilities (any of the foregoing being
referred to herein as a "Tax"), that are shown on such tax returns as due and
payable, or otherwise required to be paid, other than such Taxes as are being
contested in good faith and for which adequate reserves have been established,
except where the failure so to file or pay would not, individually or in the
aggregate, have a Company Material Adverse Effect. The Company and each of its
subsidiaries have paid or will timely pay all Taxes due with respect to any
period ending on or prior to the date Shares are purchased pursuant to the
Offer, or where the payment of Taxes is not yet due, have established, or with
respect to Taxes incurred after the date hereof will timely establish in
accordance with past practices, an adequate accrual in accordance with
generally accepted accounting practices, except for failures to pay or accrue
that would not, individually or in the aggregate, have a Company Material
Adverse Effect. There are no material claims, assessments or audits pending,
or to the Company's knowledge threatened, against the Company or its
subsidiaries for any alleged deficiency in any Tax, and the Company does not
know of any threatened Tax claims or assessments against the Company or any of
its subsidiaries which if upheld could, individually or on the aggregate, have
a Company Material Adverse Effect. None of the Company or any of its
subsidiaries has made an election to be treated as a "consenting corporation"
under Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"). There is no material deferred inter-company gain within the meaning of
the Treasury Regulations promulgated under Section 1502 of the Code. There are
no waivers or extensions of any applicable statute of limitations to assess any
Taxes. All returns filed with respect to Taxes are true and correct in all
material respects. There are no outstanding requests for any extension of time
within which to file any return or within which to pay any Taxes shown to be
due on any return. There are no liens for any Taxes upon the assets of the
Company or any of its subsidiaries (other than statutory liens for Taxes not
yet due and payable and liens for real estate taxes being contested in good
faith) which individually or in the aggregate could have a Company Material
Adverse Effect. Neither the Company nor any of its subsidiaries is a party to,
is bound by or has any obligation under, a tax sharing or tax allocation
agreement or arrangement for the allocation, apportionment, sharing,
indemnification or payment of taxes.
SECTION 5.10. TERMINATION, SEVERANCE AND EMPLOYMENT AGREEMENTS. The
Company has provided to Parent and the Purchaser a complete and accurate list
of each (a) employment or severance agreement not terminable without material
liability or obligation (either individually or collectively) on 60 days' or
less notice; (b) agreement with any director, executive officer or other key
employee of the Company (i) the benefits of which are contingent, or the terms
of which are materially altered, on the occurrence of a transaction involving
the Company of the nature of any of the transactions contemplated by this
Agreement or relating to an actual or
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<PAGE> 18
potential change in control of the Company or (ii) providing any term of
employment or other compensation guarantee or extending severance benefits or
other benefits after termination not comparable to benefits available to
employees of the Company generally; (c) agreement, plan or arrangement under
which any person may receive payments that may be subject to tax imposed by
Section 4999 of the Code or included in the determination of such person's
"parachute payment" under Section 280G of the Code; and (d) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Except as previously
disclosed to Parent and the Purchaser in the Disclosure Letter, since December
31, 1995, neither the Company nor any of its subsidiaries has entered into or
amended any employment or severance agreement with any director, executive
officer or other key employee of the Company or granted any severance or
termination pay to any director, executive officer or key employee of the
Company.
SECTION 5.11. EMPLOYEE BENEFIT PLANS; ERISA.
(a) Except as previously disclosed to Parent and the
Purchaser, (i) each "employee benefit plan" (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), and all other employee benefit, bonus,
incentive, stock option (or other equity-based), severance, change
in control, welfare (including post-retirement medical and life
insurance) and fringe benefit plans (whether or not subject to
ERISA) maintained or sponsored by the Company or its subsidiaries
or any trade or business, whether or not incorporated, that would
be deemed a "single employer" within the meaning of Section 4001
of ERISA (an "ERISA Affiliate"), for the benefit of any employee
or former employee of the Company or any of its ERISA Affiliates
(the "Plans") is, and has been operated in accordance with its
terms and in compliance (including the making of governmental
filings) with all applicable Laws, including ERISA and the
applicable provisions of the Code, except for failures that would
not, individually or in the aggregate, have a Company Material
Adverse Effect, (ii) each of the Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified,
(iii) no "reportable event," as such term is defined in Section
4043(c) of ERISA (for which the 30-day notice requirement to the
Pension Benefit Guaranty Corporation ("PBGC") has not been
waived), has occurred with respect to any Plan that is subject to
Title IV of ERISA which presents a risk of liability to any
governmental entity or other person which, individually or in the
aggregate, would have a Company Material Adverse Effect, and (iv)
there are no pending, or to the Company's knowledge threatened,
claims (other than routine claims for benefits) by, on behalf of
or against, any of the Plans or any trusts related thereto which
would, individually or in the aggregate, have a Company Material
Adverse Effect. No Plan is a "multiemployer plan" (within the
meaning
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of ERISA) nor has the Company or any ERISA Affiliate ever
contributed or been required to contribute to any multiemployer
plan.
(b) (i) No Plan has incurred an "accumulated fund deficiency"
(as defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived and (ii) neither the Company nor any ERISA
Affiliate has incurred any liability under Title IV of ERISA
except for required premium payments to the PBGC, which payments
have been made when due, and no events have occurred which are
reasonably likely to give rise to any liability of the Company or
an ERISA Affiliate under Title IV of ERISA or which could
reasonably be anticipated to result in any claims being made
against Purchaser by the PBGC, in any such case, which presents a
risk of liability which would, individually or in the aggregate,
have a Company Material Adverse Effect.
(c) With respect to each Plan that is subject to Title IV of
ERISA, (i) the Company has provided to Parent and the Purchaser
copies of the most recent actuarial valuation report prepared for
such Plan prior to the date hereof, (ii) the assets and
liabilities in respect of the accrued benefits as set forth in the
most recent actuarial valuation report prepared by the Plan's
actuary fairly presented the funded status of such Plan in all
material respects, and (iii) since the date of such valuation
report there has been no adverse change in the funded status of
any such Plan which would, individually or in the aggregate, have
a Company Material Adverse Effect.
(d) Neither the Company nor any ERISA Affiliate has failed to
make any contribution or payment to any Plan which has resulted or
could result in the imposition of a lien or the posting of a bond
or other security under ERISA or the Code which would have a
Company Material Adverse Effect.
(e) Except as provided for in this Agreement or as disclosed
in the Disclosure Letter, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or
former employee or officer of the Company or any ERISA Affiliate
to severance pay, unemployment compensation or any other payment,
or (ii) accelerate the time of payment or vesting or increase the
amount of compensation due any such employee or officer.
SECTION 5.12. ENVIRONMENTAL MATTERS. The Company and each of its
subsidiaries has obtained and is in compliance with the terms and conditions of
all required permits, licenses, registrations and other authorizations required
under Environmental Laws (as hereinafter defined), except for failures which
would not, individually or in the aggregate, have a Company Material Adverse
Effect. No asbestos in a friable condition, equipment containing
polychlorinated biphenyls, leaking underground or above-ground storage tanks,
or Hazardous Substance (as hereinafter defined), is contained in or located at
any facility currently, or was contained or located at any facility previously,
owned, leased or controlled by the Company or
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any of its subsidiaries, except for any of the foregoing that would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company and each of its subsidiaries is in compliance with all applicable
Environmental Laws, except for failures to comply which would not, individually
or in the aggregate, have a Company Material Adverse Effect. The Company has
fully disclosed all past and present noncompliance with, or liability under,
Environmental Laws, and all past discharges, emissions, leaks, releases or
disposals of any substance or waste regulated under or defined by Environmental
Laws that have formed or could reasonably be expected to form the basis of any
claim, action, suit, proceeding, hearing or investigation under any applicable
Environmental Laws which, in any such case, individually or in the aggregate,
would have a Company Material Adverse Effect. Neither the Company nor any of
its subsidiaries has received notice of any past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans that have
resulted in or threaten to result in any common law or legal liability, or
otherwise form the basis of any claim, action, suit, proceeding, hearing or
investigation under, any applicable Environmental Laws, which would,
individually or in the aggregate, have a Company Material Adverse Effect. For
purposes of this Section 5.12, (a) "Environmental Laws" mean applicable
federal, state, local and foreign laws, regulations and codes relating in any
respect to pollution or protection or the environment and (b) "Hazardous
Substances" means any toxic, caustic, or otherwise dangerous substance (whether
or not regulated under federal, state or local environmental statutes, rules,
ordinances, or orders), including (i) "hazardous substance" as defined in 42
U.S.C. Section 9601, and (ii) petroleum products, derivatives, byproducts and
other hydrocarbons.
SECTION 5.13. ASSETS; REAL PROPERTY; INTELLECTUAL PROPERTY.
(a) The Company and its subsidiaries own or have rights to
use all assets necessary to permit the Company and its
subsidiaries to conduct their business as it is currently being
conducted except where the failure to own or have the right to use
such assets would not, individually or in the aggregate, have or
constitute a Company Material Adverse Effect.
(b) Except as previously disclosed to Parent and the
Purchaser, the Company has, either directly or through its
subsidiaries, (i) good, valid and marketable or indefeasible title
to all real property material to its business operations, free and
clear of any liens, encumbrances, mortgages and security interests
other than Permitted Liens (as hereinafter defined), or (ii)
rights by lease or other agreement to use all such real property.
The term "Permitted Liens" shall mean (i) liens or encumbrances
for water, sewage and similar charges and current taxes and
assessments not yet due and payable or being contested in good
faith, (ii) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar liens or
encumbrances arising or incurred in the ordinary course of
business, (iii) liens, encumbrances, mortgages and security
interests arising or resulting from any action taken by Parent or
the Purchaser, (iv) liens, encumbrances, mortgages and security
interests of record or securing indebtedness described in the SEC
Documents and (v) easements, rights of way,
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restrictions and other similar charges or encumbrances that do not
materially interfere with the ordinary conduct of the Company's
business. All material real property leases under which the
Company or any of its subsidiaries is a lessee or lessor are
valid, binding and enforceable in all material respects in
accordance with their terms, and there are no existing defaults
thereunder which would, individually or in the aggregate, have a
Company Material Adverse Effect.
(c) Neither the Company nor any of its subsidiaries now or in
the past has manufactured or sold products which conflict with or
infringe upon any proprietary rights of others except where such
conflict or infringement would not, individually or in the
aggregate, have or constitute a Company Material Adverse Effect.
To the Company's knowledge, none of the Intellectual Property of
the Company or any of its subsidiaries is infringed or challenged
or threatened in any way, except for infringements, challenges or
threats which would not individually or in the aggregate have or
constitute a Company Material Adverse Effect. "Intellectual
Property" means trademarks, trade names, service marks, service
names, mark registrations, logos, assumed names, copyright
registrations, patents and all applications therefor and all other
similar proprietary rights.
SECTION 5.14. LABOR MATTERS. Neither the Company nor any of its
subsidiaries has, since July 1, 1993, (i) been subject to, or threatened with,
any material strike, lockout or other labor dispute or engaged in any unfair
labor practice, the result of which had or constituted, or could reasonably be
expected to have or constitute, a Company Material Adverse Effect, or (ii)
received notice of any pending petition for certification before the National
Labor Relations Board with respect to any material group of employees of the
Company or any of its subsidiaries who are not currently organized. The
Company has provided to Parent copies of each collective bargaining agreement
to which the Company or any subsidiary is a party.
SECTION 5.15. RIGHTS AGREEMENT. The Board has taken all necessary action
(i) to provide that neither Parent nor the Purchaser will become an "Acquiring
Person," that no "Stock Acquisition Date" or "Distribution Date" (as such terms
are defined in the Rights Agreement) will occur and that Sections 11 and 13 of
the Rights Agreement will not be triggered, in each case as a result of the
announcement, commencement or consummation of the Offer, the execution or
delivery of this Agreement or any amendment hereto, the consummation of the
Merger, or the consummation of any other transactions contemplated hereby or
thereby, and (ii) at the request of Parent or the Purchaser, to redeem the
Rights effective immediately prior to the Purchaser's acceptance of Shares for
purchase pursuant to the Offer.
SECTION 5.16. INFORMATION. None of the Schedule 14D-9, the Proxy
Statement, if any, or any other document filed or to be filed by or on behalf
of the Company with the SEC or any other governmental entity in connection with
the transactions contemplated by this Agreement contained when filed or will,
at the respective times filed with the SEC or other governmental entity and, in
addition, in the case of the Proxy Statement, if any, at the date it or any
amendment or supplement is mailed to stockholders and at the time of any
Special Meeting,
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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
made therein, in light of the circumstances under which they were made, not
misleading; provided that the foregoing shall not apply to information supplied
by Parent or the Purchaser specifically for inclusion or incorporation by
reference in any such document. The Schedule 14D-9 and the Proxy Statement, if
any, will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder. None of the information
supplied by the Company specifically for inclusion or incorporation by
reference in the Offer Documents or in any other document filed or to be filed
by or on behalf of Parent or the Purchaser with the SEC or any other
governmental entity in connection with the transactions contemplated by this
Agreement contains, or will contain, any untrue statement of a material fact
or omits, or will omit, to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
SECTION 5.17. DELAWARE SECTION 203. The Board has taken all appropriate
and necessary action such that the provisions of Section 203 of the DGCL will
not apply to any of the transactions contemplated by this Agreement, including
the Letter Agreements.
SECTION 5.18. BROKER'S FEES. Except for Goldman Sachs & Co., whose fees
are set forth in the engagement letter previously provided by the Company to
Parent, neither the Company nor any of its subsidiaries or any of its directors
or officers has incurred any liability for any broker's fees, commissions, or
financial advisory or finder's fees in connection with any of the transactions
contemplated by this Agreement, and neither the Company nor any of its
subsidiaries or any of its directors or officers has employed any other broker,
finder or financial advisor in connection with any of the transactions
contemplated by this Agreement.
SECTION 5.19. REPRESENTATIONS AND WARRANTIES. None of the information
contained in the representations and warranties of the Company set forth in
this Agreement or in any certificate or writing delivered to Parent or the
Purchaser as contemplated by this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as follows:
SECTION 6.1. ORGANIZATION. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing (to the
extent applicable) under the laws of its state of incorporation and each of
Parent and the Purchaser has all requisite corporate power and
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authority to own, lease and operate its properties and to carry on its business
as now being conducted. Purchaser is a wholly-owned subsidiary of Parent.
SECTION 6.2. AUTHORITY. Each of Parent and the Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized and approved by the Board of Directors of
each of Parent and the Purchaser and by Parent as the sole stockholder of the
Purchaser and no other corporate proceedings are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of Parent
and the Purchaser and, assuming this Agreement constitutes a legal, valid and
binding agreement of the Company, it constitutes a legal, valid and binding
agreement of each of Parent and the Purchaser, enforceable against them in
accordance with its terms.
SECTION 6.3. NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor
compliance by Parent or the Purchaser with, any of the provisions
hereof will (i) violate any provision of their respective articles
or certificates of incorporation or by-laws, (ii) result in a
violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default, or give rise to any right of
termination, cancellation or acceleration or any right which
becomes effective upon the occurrence of a merger, under, any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture or other instrument of indebtedness for money borrowed
to which Parent or the Purchaser is a party, or by which Parent or
the Purchaser or any of their respective properties is bound,
(iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default, or give
rise to any right of termination, cancellation or acceleration or
any right which becomes effective upon the occurrence of a merger,
under any of the terms, conditions or provisions of any license,
franchise, permit or agreement to which Parent or the Purchaser is
a party, or by which Parent or the Purchaser or any of their
respective properties is bound, or (iv) violate any statute, rule,
regulation, order or decree of any public body or authority by
which Parent or the Purchaser or any of its respective properties
is bound, excluding from the foregoing clauses (ii), (iii) and
(iv) violations, breaches, defaults or rights which, either
individually or in the aggregate, would not have a material
adverse effect on Parent's or the Purchaser's ability to perform
their respective obligations pursuant to this Agreement or
consummate the Offer and the Merger (a "Parent Material Adverse
Effect") or for which Parent or the Purchaser has received or,
prior to the consummation of the Offer, shall have received
appropriate consents or waivers.
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(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is
required by Parent or the Purchaser in connection with the
execution and delivery of this Agreement, or the consummation by
Parent or the Purchaser of the transactions contemplated hereby,
except (i) expiration of the waiting period under the HSR Act,
(ii) in connection, or in compliance, with the provisions of the
Exchange Act, (iii) the filing of the Certificate of Merger with
the Delaware Secretary of State, (iv) such filings and consents as
may be required under any environmental law pertaining to any
notification, disclosure or required approval triggered by the
Merger or the transactions contemplated by this Agreement and (v)
such other consents, orders, authorizations, registrations,
declarations and filings not obtained prior to the Effective Time
the failure of which to be obtained or made would not,
individually or in the aggregate, have a Parent Material Adverse
Effect.
SECTION 6.4. INFORMATION. Neither the Offer Documents nor any other
document filed or to be filed by or on behalf of Parent or the Purchaser with
the SEC or any other governmental entity in connection with the transactions
contemplated by this Agreement contained when filed or will, at the respective
times filed with the SEC or other governmental entity, 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 made therein, in
light of the circumstances under which they were made, not misleading; provided
that the foregoing shall not apply to information supplied by the Company
specifically for inclusion or incorporation by reference in any such document.
None of the information supplied by Parent or the Purchaser specifically for
inclusion or incorporation by reference in the Schedule 14D-9, the Proxy
Statement, if any, or any other document filed or to be filed by or on behalf
of the Company with the SEC or any other governmental entity in connection with
the transactions contemplated by this Agreement contains, or will contain, any
untrue statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
SECTION 6.5. FINANCING. The Purchaser has available to it committed
funds sufficient to allow it to timely consummate the transactions contemplated
by this Agreement.
ARTICLE VII
COVENANTS
SECTION 7.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated
by this Agreement or as expressly agreed to in writing by Parent, during the
period from the date hereof to the Effective Date, the Company will not, nor
will it permit any of its subsidiaries to, conduct its operations otherwise
than in the ordinary course of business consistent with past practice. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in
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this Agreement, prior to the Effective Date, the Board will not, without the
prior written consent of Parent or the Purchaser, permit the Company or any of
its subsidiaries to:
(a) amend or propose to amend its certificate or articles of
incorporation or by-laws (or similar constituent documents);
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights
to purchase or otherwise) any stock of any class or any other
securities or equity equivalents (including, without limitation,
any stock options or stock appreciation rights), except for Shares
issued upon exercise of Options outstanding as of the date of this
Agreement (in accordance with their respective terms) or pursuant
to the existing terms of the Rights Agreement, or amend any of the
terms of any such securities or agreements outstanding as of the
date hereof, except as specifically contemplated by this
Agreement;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem or
otherwise acquire any of its securities or any securities of its
subsidiaries; provided, however, that the Company shall be allowed
to pay the normal quarterly cash dividend for the first quarter of
1996 in the amount of $0.09 per Share, payable on or about March
21, 1996 to stockholders of record on March 7, 1996;
(d) (i) incur, assume or prepay any long-term or short-term
debt or issue any debt securities except for borrowing under
existing lines of credit or prepayments in the ordinary course of
business; (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or
otherwise) for any material obligations of any other person except
for obligations of wholly-owned subsidiaries of the Company; (iii)
make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly-owned
subsidiaries of the Company or customary loans or advances to
employees in the ordinary course of business consistent with past
practice and in amounts not material to the maker of such loan or
advance); (iv) pledge or otherwise encumber shares of capital
stock of the Company or any of its subsidiaries; or (v) mortgage
or pledge any of its material assets, tangible or intangible, or
create or suffer to exist any lien thereupon, excluding Permitted
Liens.
(e) except as may be required by law or as contemplated by
this Agreement, enter into, adopt or amend or terminate any bonus,
profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance
unit, stock equivalent, stock purchase agreement,
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pension, retirement, deferred compensation, employment, severance
or other employee benefit agreement, trust (except for the trusts
to be established pursuant to the Company's directors' retirement
plan), plan, fund or other arrangement for the benefit or welfare
of any director, officer or employee in any manner, or (except for
normal increases in the ordinary course of business consistent
with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the
Company, and as required under existing agreements) increase in
any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any plan
and arrangement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock
appreciation rights or performance units);
(f) acquire, sell, lease or dispose of any assets outside the
ordinary course of business or any assets which in the aggregate
are material to the Company and its subsidiaries taken as a whole,
or enter into any commitments, contracts, agreements or
transactions outside the ordinary course of business consistent
with past practice or which would, individually or in the
aggregate, be material to the Company and its subsidiaries taken
as a whole, or modify, amend, terminate or waive any material
rights under any material contract or agreement;
(g) except as may be required as a result of a change in law
or in generally accepted accounting principles (after consultation
with Parent as to the effect of any such change), change any of
the accounting principles or practices used by it;
(h) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof or any equity interest therein;
(ii) enter into any contract or agreement other than in the
ordinary course of business consistent with past practice which
would be material to the Company and its subsidiaries taken as a
whole; or (iii) enter into or amend any contract, agreement,
commitment or arrangement providing for the taking of any action
that would be prohibited hereunder;
(i) revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory
or writing-off notes or accounts receivable other than in the
ordinary course of business;
(j) make any tax election or settle or compromise any
federal, state or local tax liability or assent to the extension
of time for collection or assessment of any federal, state or
local tax (provided the Company and its subsidiaries may extend
the time for filing 1995 tax returns in accordance with past
practice);
(k) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than
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the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the
notes thereto) of the Company and its subsidiaries or incurred in
the ordinary course of business consistent with past practice;
(l) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated hereby
or material to the Company and its subsidiaries take as a whole,
except for the contemplated settlements with insurance carriers
concerning environmental liabilities as disclosed to Parent (and
the Company agrees to consult with Parent prior to finalizing such
settlements);
(m) authorize any new capital expenditure or expenditures
which individually is in excess of $100,000 or in the aggregate
are in excess of $1,000,000; or
(n) take, or agree in writing or otherwise to take, any of
the actions described in Sections 7.1(a) through 7.1(m) or take,
or omit to take, any action which would make any of the
representations or warranties of the Company contained in this
Agreement untrue or incorrect in any material respect as of the
date when made or would result in any of the conditions set forth
in Annex I not being satisfied.
SECTION 7.2. NO SOLICITATION.
(a) The Company shall, and shall direct its officers,
directors, employees, representatives and agents to, immediately
cease any existing discussions and negotiations with any parties
conducted heretofore with respect to any proposal relating to an
Acquisition Transaction. The Company agrees that, prior to the
Effective Time, it shall not, and shall not authorize or permit
any of its subsidiaries or any of its or its subsidiaries'
directors, officers, employees, agents or representatives,
directly or indirectly, to solicit, initiate, facilitate or
encourage (including by way of furnishing or disclosing non-public
information) any inquiries or the making of any proposal with
respect to any acquisition of all or substantially all of the
Company by means of a merger, consolidation or other business
combination involving the Company or its subsidiaries or
acquisition of all or substantially all of the assets or capital
stock of the Company and its subsidiaries taken as a whole (an
"Acquisition Transaction") or, subject to the proviso to this
Section 7.2, negotiate, explore or otherwise engage in substantive
communications in any way with any person (other than Parent, the
Purchaser or their respective directors, officers, employees,
agents and representatives) with respect to any Acquisition
Transaction, or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by
this Agreement; provided that, notwithstanding the foregoing, the
Company may, in response to an unsolicited
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written proposal with respect to an Acquisition Transaction from a
third party reasonably believed to have the financial capability
to consummate an Acquisition Transaction, furnish information to,
and negotiate, explore or otherwise engage in substantive
discussions with, such third party, in each case if the Board
determines in good faith by a majority vote, after consultation
with its financial advisors and after receipt of the written
advice of the outside legal counsel of the Company, that such
action is required by applicable law (including fiduciary
principles thereof).
(b) The Company shall immediately advise Parent in writing of
the receipt of any inquiries or proposals relating to an
Acquisition Transaction and any actions taken pursuant to Section
7.2(a).
SECTION 7.3. ACCESS TO INFORMATION. From the date of this Agreement
until the Effective Time, the Company will give Parent and its authorized
representatives (including counsel, environmental and other consultants,
financial advisors, accountants, banks, financial institutions and auditors)
full access during normal business hours to all facilities, personnel and
operations and to all books and records of the Company and its subsidiaries,
will permit Parent to make such inspections as it may reasonably require and
will cause its officers and those of its subsidiaries to furnish Parent with
such financial and operating data and other information with respect to its
business and properties as Parent may from time to time request. All such
information shall be held in confidence in accordance with the terms of the
Confidentiality Agreement (the "Confidentiality Agreement") between Parent and
the Company dated December 13, 1995, the terms of which are hereby incorporated
herein.
SECTION 7.4. REASONABLE BEST EFFORTS; OTHER ACTIONS. Subject to the
terms and conditions herein provided and applicable law, each of the Company,
Parent and the Purchaser shall use its reasonable best efforts promptly to
take, or cause to be taken, all other actions and do, or cause to be done, all
other things necessary, proper or appropriate under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, using such reasonable best
efforts to (i) obtain all necessary consents, approvals or waivers under its
material contracts, (ii) cooperate in making available information and
personnel to the lenders to Parent and the Purchaser with respect to financing
for the transactions contemplated by this Agreement and (iii) lift any legal
bar to the Merger; provided, however, that the foregoing shall not require
Parent, the Purchaser or any other affiliate of Parent to agree to any action
or restriction which, if imposed by a governmental entity, would constitute a
condition described in paragraph (a) of Annex I to this Agreement. If any
"fair price," "moratorium," "control share acquisition" or other form of
antitakeover statute, regulation, charter provision or contract is or becomes
applicable to the transactions contemplated by this Agreement, the Company will
use its reasonable efforts to grant such approvals and take such actions as are
necessary under such laws, provisions or contracts so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise act to eliminate or
minimize the
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effects of such statute, regulation, provision or contract on the transactions
contemplated by this Agreement.
SECTION 7.5. PUBLIC ANNOUNCEMENTS. Before issuing any press release or
otherwise making any public statements with respect to this Agreement, the
Offer or the Merger, Parent, the Purchaser and the Company will consult with
each other as to its form and substance and shall not issue any such press
release or make any such public statement prior to such consultation, except in
either case as may be required by law or any obligations pursuant to any
listing agreement with any national securities exchange.
SECTION 7.6. NOTIFICATION OF CERTAIN MATTERS. Each of the Company and
Parent shall give prompt notice to the other party of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause either (A) any representation or warranty of any party
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the acceptance for payment of Shares
pursuant to the Offer, (B) any condition set forth in Annex I to be unsatisfied
at any time from the date hereof to the date the Purchaser purchases Shares
pursuant to the Offer or (C) any condition set forth in Article VIII hereof to
be unsatisfied at any time from the date hereof to the Effective Time, and (ii)
any material failure of the Company or Parent, as the case may be, or any
officer, director, employee or agent thereof, to comply with or satisfy 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 7.6 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 7.7. INDEMNIFICATION.
(a) From and after the purchase of Shares pursuant to the
Offer, Parent shall indemnify, defend and hold harmless, and shall
cause the Surviving Corporation (including, if necessary,
providing the Surviving Corporation with sufficient funds) to
indemnify, defend and hold harmless, the present and former
officers, directors (including the Company's Advisory Director),
employees and agents of the Company and its subsidiaries (the
"Indemnified Parties") against all losses, claims, damages,
expenses or liabilities arising out of actions or omissions or
alleged actions or omissions occurring at or prior to the
Effective Time to the same extent and on the same terms and
conditions (including with respect to advancement of expenses)
provided for in the Company's Certificate of Incorporation and
By-Laws and agreements in effect at the date hereof (to the extent
consistent with applicable law).
(b) For a period of six years after the Effective Time,
Parent shall cause to be maintained in effect the current policies
of directors' and officers' liability insurance maintained by the
Company (provided that Parent may substitute therefor policies of
at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims
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arising from facts or events which occurred before the Effective
Time; provided, however, that Parent shall not be obligated to
make annual premium payments for such insurance to the extent such
premiums exceed 175% of the annual premiums paid as of the date
hereof by the Company for such insurance (the "Maximum Amount").
If the amount of the annual premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Parent
and the Surviving Corporation shall maintain the most advantageous
policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Amount.
(c) The provisions of this Section 7.7 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified
Party, and their respective heirs, legal representatives,
successors and assigns.
SECTION 7.8. EXPENSES. Except as set forth in Section 9.6 hereof,
Parent, the Purchaser and the Company shall each bear their respective expenses
incurred in connection with this Agreement, the Offer and the Merger,
including, without limitation, the preparation, execution and performance of
this Agreement and the transactions contemplated hereby, and all fees and
expenses of investment bankers, finders, brokers, agents, representatives,
counsel and accountants.
SECTION 7.9. RIGHTS AGREEMENT. Except as contemplated by Section 5.15
hereof or the last sentence of this Section 7.9, the Company shall not redeem
the Rights or amend or terminate the Rights Agreement prior to the consummation
of the Merger unless required to do so by order of a court of competent
jurisdiction or fiduciary obligation as advised in writing by outside counsel.
The Company will take any necessary further actions to cause the Rights not to
be outstanding upon consummation of the Merger. If requested to do so by
Parent or the Purchaser, the Company shall redeem all outstanding Rights at a
redemption price of $0.05 per Right effective immediately prior to the
acceptance for payment of any Shares by the Purchaser pursuant to the Offer.
SECTION 7.10. STANDSTILL AGREEMENT. For a period of three years from
the date of this Agreement, Parent shall not, directly or indirectly, except
pursuant to this Agreement: (a) acquire or agree, offer, seek or propose to
acquire, or cause to be acquired, ownership of any of the Company's assets or
businesses or any voting securities issued by the Company, or any other rights
or options to acquire that ownership (including from a third party); (b) seek
or propose to influence or control the Company's management or policies; or (c)
enter into any discussions, negotiations, arrangements or understandings with
any third party with respect to any of the foregoing.
SECTION 7.11. LETTER AGREEMENT INDEMNIFICATION. In the Letter
Agreements, and as a condition to obtaining the same, Parent agreed to
indemnify and hold harmless the stockholder signatories thereto from and
against any and all claims by third parties or Parent (and its affiliates),
judgments, fines, penalties, liabilities, fees and expenses (including, without
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<PAGE> 31
limitation, reasonable attorneys' fees) that may be asserted against or
incurred by such stockholder signatories in connection with their entering into
the Letter Agreements or their compliance with the terms thereof, provided that
such indemnity does not protect the stockholder signatories against (i) any
violations of law (other than violations alleged to have occurred as a result
of their compliance with the terms and conditions of the Letter Agreements) or
(ii) any breach by the stockholder signatories of their commitments in the
Letter Agreements. The Company hereby agrees to indemnify and hold Parent
harmless from and against any liability, cost, or expense (including reasonable
attorneys' fees) incurred by it in providing the indemnification required under
the Letter Agreements; provided, however, that the foregoing indemnity of the
Company shall terminate upon the purchase of Shares by Parent pursuant to the
Offer. In the event that any claim is made which gives rise or may give rise
to the Company's obligation to indemnify Parent hereunder, Parent shall
promptly notify the Company and the Company shall be entitled to assume the
defense, settlement or other disposition thereof.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF PARENT,
THE PURCHASER AND THE COMPANY
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or, if permissible, waiver at or prior to the
Effective Time of each of the following conditions:
SECTION 8.1. PURCHASE OF SHARES. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the terms
thereof; provided that this condition shall be deemed to have been satisfied
with respect to the obligation of Parent and the Purchaser to effect the Merger
if the Purchaser fails to accept for payment or pay for Shares pursuant to the
offer in violation of the terms of the Offer.
SECTION 8.2. STOCKHOLDER APPROVAL. The vote of the stockholders of the
Company necessary to consummate the transactions contemplated by this Agreement
shall have been obtained, if required by applicable law.
SECTION 8.3. NO LEGAL IMPEDIMENTS. No statute, rule or regulation shall
have been promulgated, enacted, entered or enforced, and no other legally
binding, final and nonappealable action shall have been taken, by any domestic,
foreign or supranational government or governmental, administrative or
regulatory authority or agency of competent jurisdiction or by any court or
tribunal of competent jurisdiction, domestic, foreign or supranational, that in
any of the foregoing cases has the effect of making illegal or directly or
indirectly restraining, prohibiting or restricting the consummation of the
Merger. Any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired.
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ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.1. TERMINATION. This Agreement may be terminated (and the
Merger contemplated hereby may be abandoned notwithstanding approval thereof by
the stockholders of the Company, in which case the Offer shall also be
abandoned unless the Purchaser has already purchased Shares pursuant thereto)
at any time prior to the Effective Time:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if, without any material
breach of such terminating party of its obligations under this
Agreement, the purchase of Shares pursuant to the Offer shall not
have occurred on or before May 31, 1996 (or, in the event Parent
or the Company receives a request for additional information under
the HSR Act, the earlier of (i) July 31, 1996, or (ii) the
earliest date following the expiration of the waiting period under
the HSR Act, as extended by such request, on which the Purchaser
may purchase shares pursuant to the terms of the Offer and the
applicable rules and regulations of the SEC), which dates may be
extended by mutual written consent of the parties hereto and which
shall automatically be extended in certain instances as provided
in subparagraphs (c) and (d) of the Condition to Offer attached as
Annex I;
(c) by Parent or the Company if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares
being purchased thereunder; provided however, that Parent may not
terminate this Agreement pursuant to this Section 9.1(c) if
Parent's or the Purchaser's termination of, or failure to accept
for payment or pay for any Shares tendered pursuant to, the Offer
does not follow the occurrence, or failure to occur, as the case
may be, of any condition set forth in Annex I hereto or is
otherwise in violation of the terms of the Offer or this
Agreement; or
(d) by either Parent or the Company if any court of competent
jurisdiction in the United States or other governmental body in
the United States shall have issued an order (other than a
temporary restraining order), decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the
purchase of Shares pursuant to the Offer or the Merger, and such
order, decree, ruling or other action shall have become final and
nonappealable; provided that the party seeking to terminate this
Agreement shall have used its reasonable best efforts, subject to
Section 7.4, to remove or lift such order, decree or ruling.
SECTION 9.2. TERMINATION BY PARENT. This Agreement may be terminated and
the Offer and the Merger may be abandoned by Parent, at any time prior to the
purchase of Shares pursuant to the Offer, if (a) the representations or
warranties of the Company contained in this
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<PAGE> 33
Agreement are not true and correct at and as of any date prior to the
expiration date of the Offer as if made at and as of such time, except for (i)
failures to be true and correct as could not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect and (ii)
failures to comply as are capable of being and are cured (other than by mere
disclosure of the breach) within 10 days after written notice from the
Purchaser to the Company of such failure; (b) the Company has failed to comply
with its obligations under this Agreement, except for (i) failures to so comply
as could not, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect and (ii) failures to comply as are
capable of being and are cured within 10 days after written notice from the
Purchaser to the Company of such failure; (c) the Board shall (i) withdraw its
recommendation or approval in respect of this Agreement or Offer or (ii) modify
or change its recommendation or approval in respect of this Agreement, the
Offer or the Merger in a manner adverse to Parent; or (d) the Board shall have
recommended any proposal other than by Parent or the Purchaser in respect of an
Acquisition Transaction.
SECTION 9.3. TERMINATION BY THE COMPANY. This Agreement may be
terminated and the Merger may be abandoned by the Company, (a) at any time
prior to the purchase of Shares pursuant to the Offer upon receipt of an
Acquisition Transaction proposal that contains no financing condition which the
Board in good faith determines in the exercise of its fiduciary duties (based
as to legal matters on the written opinion of legal counsel and after
consultation with its financial advisor) it is required to accept by applicable
law including the fiduciary principles thereof; or (b) at any time prior to the
Effective Time if (i) the representations and warranties of Parent or the
Purchaser contained in this Agreement are not true and correct as if made at
and as of such time, except for (A) failures to be true and correct as could
not, individually or in the aggregate, reasonably be expected to result in a
Parent Material Adverse Effect and (B) failures to comply as are capable of
being and are cured (other than by mere disclosure of the breach) within 10
days after written notice from the Company to Parent of such failure; or (ii)
Parent or the Purchaser has failed to comply with their respective obligations
under this Agreement, except for (X) failures to so comply as could not,
individually or in the aggregate, reasonably be expected to result in a Parent
Material Adverse Effect and (Y) failures to comply as are capable of being and
are cured within 10 days after written notice from the Company to Parent of
such failure.
SECTION 9.4. PROCEDURE FOR TERMINATION. In the event of termination and
abandonment of the Merger and the Offer by Parent or the Merger by the Company
pursuant to this Article IX, written notice thereof shall be given to the
other.
SECTION 9.5. EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to and in accordance with this Article IX, the Merger shall
be deemed abandoned and this Agreement shall forthwith become void, except as
provided in the last sentence of Section 7.3 and in Sections 7.8, 7.10 and 7.11
(which Sections shall survive any termination of this Agreement), without
liability on the part of any party hereto or its affiliates, directors,
officers or stockholders except as provided in Section 9.6 and except for any
willful or bad faith
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<PAGE> 34
default of any obligation or undertaking hereunder, and each of the parties
hereto hereby waives and releases any other claim which may otherwise exist
upon such termination.
SECTION 9.6. TERMINATION FEE. In the event that following receipt by the
Company of an Acquisition Termination proposal this Agreement is terminated by
Parent pursuant to Section 9.2(c) or (d) or by the Company pursuant to Section
9.3(a), the Company shall promptly pay to Parent (but in any event within three
business days after termination) the sum of $3,000,000, provided that no fee
shall be payable if Parent or the Purchaser shall be in material breach of any
of its material representations, warranties or obligations hereunder as of the
date of termination. If such fee is payable and within 365 days after such
termination an Acquisition Transaction is consummated, the Company shall
promptly pay to Parent (but in any event within three business days after the
consummation of the Acquisition Transaction) the additional sum of $5,000,000.
ARTICLE X
DEFINITIONS
SECTION 10.1. TERMS DEFINED IN AGREEMENT. The following terms used
herein shall have the meanings ascribed in the indicated sections.
<TABLE>
<S> <C>
Acquiring Person ................. 5.15
Acquisition Transaction .......... 7.2 (a)
Agreement ........................ Preamble
Board ............................ Recitals
Certificate of Merger ............ 2.2
Certificates ..................... 4.2 (a)
Code ............................. 5.9
Company .......................... Preamble
Company Material Adverse Effect .. 5.1
Company Permits .................. 5.8
Company Preferred Stock .......... 5.2
Confidentiality Agreement ........ 7.3
Constituent Corporations ......... Preamble
Control Date ..................... 1.3(a)
Delaware Secretary of State ...... 2.2
DGCL ............................. Recitals
Dissenting Shares ................ 4.1
Distribution Date ................ 5.15
Effective Time ................... 2.2
Environmental Laws ............... 5.12
ERISA ............................ 5.11(a)
ERISA Affiliate .................. 5.11(a)
</TABLE>
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<PAGE> 35
<TABLE>
<S> <C>
Exchange Act ..................... 1.1(a)
Hazardous Substances ............. 5.12
HSR Act .......................... 5.4(b)
Including ........................ 11.8
Indemnified Parties .............. 7.7(a)
Intellectual Property ............ 5.13(c)
Letter Agreements ................ Recitals
Maximum Amount ................... 7.7(b)
Merger ........................... 2.1(a)
Merger Price ..................... 3.1(a)
Minimum Condition ................ Annex I
Offer ............................ 1.1(a)
Offer Documents .................. 1.1(c)
Option ........................... 3.2(a)
Parent ........................... Preamble
Parent Material Adverse Effect ... 6.3(a)
Paying Agent ..................... 4.2(a)
PBGC ............................. 5.11(a)
Permitted Liens .................. 5.13(b)
Person ........................... 11.8
Plans ............................ 5.11(a)
Proxy Statement .................. 3.3(a)(ii)
Purchaser ........................ Preamble
Rights ........................... 1.1(a)
Rights Agreement ................. 1.1(a)
Schedule 14D-9 ................... 1.2(b)
SEC .............................. 1.1(c)
SEC Documents .................... 5.5(a)
Shares ........................... 1.1(a)
Special Meeting .................. 3.3(a)(i)
Stock Acquisition Date ........... 5.15
Subsidiary ....................... 11.8
Surviving Corporation ............ 2.1(a)
Tax .............................. 5.9
</TABLE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. AMENDMENT AND MODIFICATION. At any time prior to the
Effective Time, subject to applicable law and the provisions of Section 1.3(c)
hereof, this Agreement may be amended, modified or supplemented only by written
agreement (referring specifically to this Agreement) of Parent, the Purchaser
and the Company with respect to any of the terms
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<PAGE> 36
contained herein; provided, however, that after any approval and adoption of
this Agreement by the stockholders of the Company, no such amendment,
modification or supplementation shall be made which reduces the Merger Price or
the form of consideration therefor or which in any way materially adversely
affects the rights of such stockholders, without the further approval of such
stockholders.
SECTION 11.2. WAIVER. Subject to the provisions of Section 1.3(c), at
any time prior to the Effective Time, Parent and the Purchaser, on the one
hand, and the Company, on the other hand, may (i) extend the time for the
performance of any of the obligations or other acts of the other, (ii) waive
any inaccuracies in the representations and warranties of the other contained
herein or in any documents delivered pursuant hereto and (iii) waive compliance
by the other with any of the agreements or conditions contained herein which
may legally be waived. Any such extension or waiver shall be valid only if set
forth in an instrument in writing specifically referring to this Agreement and
signed on behalf of such party.
SECTION 11.3. SURVIVABILITY; INVESTIGATIONS. The respective
representations and warranties of Parent, the Purchaser and the Company
contained herein or in any certificates or other documents delivered prior to
or as of the Effective Time (i) shall not be deemed waived or otherwise
affected by any investigation made by any party hereto and (ii) shall not
survive beyond the Effective Time. The covenants and agreements of the parties
hereto (including the Surviving Corporation after the Merger) shall survive the
Effective Time without limitation (except for those which, by their terms,
contemplate a shorter survival period).
SECTION 11.4. NOTICES. All notices and other communications hereunder
shall be in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, to the parties at the addresses
specified below (or at such other address for a party as shall be specified by
like notice; provided that notices of a change of address shall be effective
only upon receipt thereof). Any such notice shall be effective upon receipt,
if personally delivered or telecopied, or one day after delivery to a courier
for next day delivery.
(a) if to the Company, to
Guardsman Products, Inc.
3033 Orchard Vista Drive, Suite 200
P.O. Box 1521
Grand Rapids, Michigan 49501
Telecopy: (616) 957-1236
Attention: President and Chief Executive Officer
with a copy to:
Warner Norcross & Judd LLP
900 Old Kent Building
111 Lyon St., N.W.
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<PAGE> 37
Grand Rapids, Michigan 49503-2489
Telecopy: (616) 752-2510
Attention: Tracy T. Larsen, Esq.
(b) if to Parent or the Purchaser, to
Lilly Industries, Inc.
733 South West Street
Indianapolis, Indiana 46225
Telecopy: (317) 687-6702
Attention: Chairman, President and Chief Executive Officer
with a copy to:
Barnes & Thornburg
1313 Merchants Bank Building
Indianapolis, Indiana 46204
Telecopy: (317) 231-7433
Attention: Catherine L. Bridge, Esq.
SECTION 11.5. ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties, provided that Parent may assign the rights and obligations of the
Purchaser under this Agreement to any direct or indirect wholly-owned
subsidiary of Parent, but no such assignment will relieve any party of its
obligations under this Agreement. This Agreement, except for the provisions of
Sections 3.2(a) and 7.7 (which are intended to be for the benefit of the
persons identified therein, and may be enforced by such persons), is not
intended to confer any rights or remedies hereunder upon any other person
except the parties hereto.
SECTION 11.6. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Delaware, except for Section 7.11 above which shall be
governed by the laws of the State of Michigan (regardless of the laws that
might otherwise govern under applicable Delaware (or as to Section 7.11
Michigan) principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.
SECTION 11.7. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 11.8. INTERPRETATION. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties
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<PAGE> 38
and shall not in any way affect the meaning or interpretation of this
Agreement. As used in this Agreement, (i) the term "person" shall mean and
include an individual, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department or agency
thereof; (ii) the term "subsidiary" of any specified corporation shall mean any
corporation of which a majority of the outstanding securities having ordinary
voting power to elect a majority of the board of directors are directly or
indirectly owned by such specified corporation or any other person of which a
majority of the equity interests therein are, directly or indirectly, owned by
such specified corporation; (iii) the term "including" and words of similar
import shall mean "including, without limitation," unless the context otherwise
requires or unless otherwise specified; and (iv) the term "to the knowledge of
the Company" (or words of similar import) shall mean to the knowledge of the
Chairman or any executive officer of the Company.
SECTION 11.9. POST-CONTROL DATE ACTIONS. Notwithstanding anything in
this Agreement to the contrary, from and after the Control Date the Company
shall not be deemed for purposes hereof to be in breach of this Agreement if
such breach was caused by Parent in its capacity as the controlling stockholder
of the Company or by action of the Board taken with the approval of a majority
of Parent's designees thereto.
SECTION 11.10. ENTIRE AGREEMENT. This Agreement, the Disclosure Letter
and the Confidentiality Agreement, embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein and supersedes all prior agreements and understandings
between the parties with respect to such subject matter. There are no
representations, promises, warranties, covenants or undertakings in respect of
such subject matter, other than those expressly set forth or referred to herein
and therein.
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
LILLY INDUSTRIES, INC.
By: /s/ Douglas W. Huemme
-------------------------------------
Name: Douglas W. Huemme
Title: President and CEO
"Parent"
LP ACQUISITION CORPORATION
By: /s/ Douglas W. Huemme
-------------------------------------
Name: Douglas W. Huemme
Title: President and CEO
"Purchaser"
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<PAGE> 39
GUARDSMAN PRODUCTS, INC.
By: /s/ Paul K. Gaston
------------------------------------
Name: Paul K. Gaston
Title: Chairman
"Company"
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<PAGE> 40
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, the Purchaser shall not
accept Shares for payment if the condition that there shall be validly tendered
and not withdrawn prior to the expiration of the Offer a number of Shares which
represents at least a majority of the number of Shares outstanding on a fully
diluted basis (assuming the exercise of all outstanding Options) shall not have
been satisfied (the "Minimum Condition"), which condition may not be waived
without the Company's consent, and shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
l4e-1(c) promulgated under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in this Agreement) amend or terminate the Offer as to any
Shares not then paid for if (i) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer
or (ii) at any time after the date of this Agreement and before the time of
payment for any such Shares (whether or not any Shares have theretofore been
accepted for payment), any of the following conditions exists:
(a) there shall be in effect as of the Expiration Date (as
defined in the Offer Documents) an injunction or other order,
decree, judgment or ruling by a court of competent jurisdiction or
by a governmental, regulatory or administrative agency or
commission of competent jurisdiction or a statute, rule,
regulation, executive order or other action shall have been
promulgated, enacted, taken or threatened by a governmental
authority or a governmental, regulatory or administrative agency
or commission of competent jurisdiction which in any such case (i)
restrains or prohibits the making or consummation of the Offer or
the consummation of the Merger, (ii) results in a significant
delay in or significantly restricts the ability of the Purchaser,
or renders the Purchaser unable, to accept for payment, pay for or
purchase Shares sufficient to satisfy the Minimum Condition in the
Offer or the remaining Shares outstanding in the Merger (other
than as a result of the exercise of dissenters' rights and other
than for delays or restrictions that are not material to Parent
and the Purchaser), (iii) prohibits or restricts the ownership or
operation by Parent or the Purchaser (or any of their respective
affiliates or subsidiaries) of any portion of its or the Company's
business or assets which is material to the business of the
Company and its subsidiaries or of Parent and its subsidiaries or
compels Parent or the Purchaser (or any of their respective
affiliates or subsidiaries) to dispose of or hold separate any
portion of its or the Company's business or assets which is
material to the business of the Company and its subsidiaries or of
Parent and its subsidiaries, (iv) imposes material limitations on
the ability of the Purchaser effectively to acquire or to hold or
to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by the
Purchaser on all matters properly presented to the stockholders of
the Company, (v) imposes any material
<PAGE> 41
limitations on the ability of Parent or the Purchaser or any of
their respective affiliates or subsidiaries effectively to control
in any material respect the business and operations of the Company
and its subsidiaries, or (vi) which otherwise would materially
adversely affect the Company and its subsidiaries taken as a
whole; provided, however, that Parent and the Purchaser shall have
complied with Section 7.4 of this Agreement; or
(b) this Agreement shall have been terminated by the Company,
Parent or the Purchaser in accordance with its terms; or
(c) the representations or warranties of the Company
contained in this Agreement shall not be true and correct when
made or on the Expiration Date as if made as of such date, except
for (i) failures to be true and correct as could not, individually
or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect and (ii) failures to comply as are capable
of being and are cured (other than by mere disclosure of the
breach) within 10 days after written notice from the Purchaser to
the Company of such failure (in which case the Expiration Date
shall be extended to the end of such cure period or, if earlier,
the date of cure); or
(d) the Company shall have failed to comply with its
obligations under this Agreement, except for (i) failures to so
comply as could not, individually or in the aggregate, reasonably
be expected to result in a Company Material Adverse Effect and
(ii) failures to comply as are capable of being and are cured
within 10 days after written notice from the Purchaser to the
Company of such failure (in which case the Expiration Date shall
be extended to the end of such cure period or, if earlier, the
date of cure); or
(e) there shall have occurred on or after the date of this
Agreement and be continuing any development or developments with
respect to the Company or its subsidiaries which individually or
in the aggregate have had or constitute a Company Material
Adverse Effect, other than developments affecting generally the
industries and businesses in which the Company and its
subsidiaries operate; or
(f) there shall have occurred and be continuing (i) any
general suspension of, or limitation on prices for, trading in
securities on any national securities exchange or the
over-the-counter market, (ii) a declaration of, a banking
moratorium or any suspension of payments in respect of banks in
the United States (whether or not mandatory), (iii) the
commencement of a war, armed hostilities or other international or
national calamity directly involving the United States, (iv) from
the date of this Merger Agreement through the date of termination
or expiration of the Offer, a decline of at least 25 percent in
the Standard & Poor's 500 Index, (v) any limitation by any U.S.
governmental
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<PAGE> 42
authority or agency that materially affects generally the extension of
credit by banks or other financial institutions or (vi) in the case of
any of the foregoing existing at the time of the execution of this
Agreement, a material acceleration or worsening thereof; or
(g) Parent, the Purchaser and the Company shall have agreed
that the Purchaser shall amend the Offer to terminate the Offer or
postpone the payment for Shares pursuant thereto.
The foregoing conditions, other than Minimum Condition, are for the sole
benefit of Parent and the Purchaser and may be asserted by Parent or the
Purchaser regardless of the circumstances (including any action or inaction by
Parent or the Purchaser) giving rise to any such conditions and, except as
provided in this Agreement, may be waived by Parent or the Purchaser in whole
or in part at any time and from time to time in their sole discretion in each
case subject to the terms of this Agreement. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
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<PAGE> 1
EXHIBIT 99.13
March 4, 1996
Mr. Irwin Wayne Uran
121 Saratoga Avenue, Apt. #4212
Santa Clara, California 95051
Dear Mr. Uran:
The Board of Directors of Guardsman Products, Inc.
("Guardsman") has been in discussion with Lilly Industries, Inc. ("Lilly")
concerning the acquisition of Guardsman by Lilly. I am very pleased to inform
you that Lilly is prepared to make a firm offer to purchase all of the
outstanding stock of Guardsman at a price of $23.00 per share (the
"Transaction"). The Transaction will be accomplished by a cash tender offer,
to be followed by a merger at the same price, and is detailed in a definitive
agreement intended to be entered into with Guardsman later today.
As I am sure you can appreciate, Lilly and Guardsman have
spent considerable amounts of time and money in pursuing this Transaction and
we both believe it provides an extremely attractive opportunity for all
Guardsman stockholders. However, in situations like this where one or a few
holders own a significant percentage of a company's stock, it is appropriate to
confirm the support of those holders before a transaction is officially agreed
to and announced. In fact, we recognize you as an extremely important
stockholder of Guardsman, and we will not proceed with the Transaction unless
we have your support.
If you do support the Transaction which Guardsman's Board of
Directors has negotiated on behalf of all stockholders, we would ask that, as
an inducement to us to enter into a definitive agreement providing for the
Transaction, you evidence such support by committing to the following:
1. To validly tender into the tender offer, and not withdraw, all shares
of Guardsman stock that you beneficially own, which you represent to
be approximately 3,420,700 shares all of which are owned free and
clear of all liens.
2. If requested by us, to vote all of your shares of Guardsman stock in
favor of the described Transaction, and against any action or
arrangement which would interfere with the successful completion of
the Transaction.
<PAGE> 2
3. To not sell, transfer or grant voting rights with respect to, or agree
to sell, transfer or grant voting rights with respect to, any of your
shares of Guardsman stock other than as part of the Transaction, and
likewise to not purchase any additional shares of Guardsman while the
Transaction is pending.
4. To not solicit or encourage the making of any other proposal intended
to lead to the acquisition of your shares of Guardsman stock or any
other extraordinary transaction involving Guardsman.
In consideration for your entering into this agreement, which
you represent you are free to do without violating any commitments to any other
party, we agree to indemnify you and hold you harmless from and against any and
all claims by third parties or Lilly (and its affiliates), judgments, fines,
penalties, liabilities, fees and expenses (including, without limitation,
reasonable attorneys' fees) that may be asserted against you or incurred by you
in connection with your entering into this letter agreement or your compliance
with the terms hereof, provided that such indemnity would not protect you
against (i) any violations of law (other than violations alleged to have
occurred as a result of your compliance with the terms and conditions of this
letter) or (ii) any breach by you of your commitments in this letter.
To evidence your agreement with the foregoing, and to allow us
to proceed with the contemplated transaction in reliance on such undertakings,
please sign this letter in the place indicated below and sign the proxy
attached to this letter, which proxy is coupled with an interest. Once signed,
this letter will become our binding agreement unless both of us elect to modify
or terminate it in writing. Your commitments will remain in effect until the
described Transaction is successfully completed or the definitive agreement
which we will sign with Guardsman is terminated (either by us or Guardsman) in
accordance with its terms. Unless otherwise agreed by both of us in writing,
our undertaking to indemnify and hold you harmless as set forth in the
immediately preceding paragraph shall survive any termination of this
agreement, the definitive agreement or the tender offer for a period of three
years, although the indemnity will continue to cover any claims that may arise
during that three-year period. This agreement will become void and of no
effect if the referenced definitive agreement is not entered into before March
9, 1996. We thank you for your support.
LILLY INDUSTRIES, INC.
By /s/ Roman J. Klusas
---------------------------
Its Vice President and CFO
----------------------
AGREED AND ACCEPTED AS OF THE
4TH DAY OF MARCH, 1996
/s/ Irwin Wayne Uran
- ---------------------
Irwin Wayne Uran
<PAGE> 3
GUARDSMAN PRODUCTS, INC. PROXY
The undersigned hereby appoints Lilly Industries, Inc., an
Indiana corporation ("Lilly"), as Proxy, with full power of substitution, and
hereby authorizes Lilly to represent and to vote as designated below, all of
the shares of Common Stock of Guardsman Products, Inc. ("Guardsman") which the
undersigned is entitled to vote at any meeting of stockholders, however called,
or with respect to any action proposed to be taken by written consent of the
stockholders of Guardsman.
1. Proposal to approve the merger of LP Acquisition Corporation
("Purchaser") with and into Guardsman according to the terms set forth
in the Agreement and Plan of Merger among Guardsman, Purchaser and
Lilly (the "Merger Agreement").
/X / FOR / / AGAINST
2. Proposals to take any action or make any agreement or arrangement that
would result in a breach of the Merger Agreement by Guardsman.
/ / FOR /X / AGAINST
3. Proposals to take any action or make any agreement or arrangement that
would interfere with or delay the Offer or the Merger (as those terms
are defined in the Merger Agreement).
/ / FOR /X / AGAINST
This Proxy has been executed concurrently with a letter
agreement from the undersigned to Lilly dated as of March 4, 1996 (the "Letter
Agreement"). This Proxy is irrevocable and terminates only upon completion of
the earlier to occur of (i) the revocation of the letter agreement in
accordance with its terms, (ii) the merger of Guardsman and Purchaser pursuant
to the Merger Agreement, (iii) the termination of the Merger Agreement in
accordance with its terms, or (iv) the termination of the Letter Agreement by
Lilly.
Dated: March 4, 1996
Signature: /s/ Irwin Wayne Uran
----------------------
Irwin W. Uran
<PAGE> 1
EXHIBIT 99.14
March 4, 1996
Mr. James L. Sadler
7310 37th Avenue
Moline, Illinois 61265
Dear Mr. Sadler:
The Board of Directors of Guardsman Products, Inc.
("Guardsman") has been in discussion with Lilly Industries, Inc. ("Lilly")
concerning the acquisition of Guardsman by Lilly. I am very pleased to inform
you that Lilly is prepared to make a firm offer to purchase all of the
outstanding stock of Guardsman at a price of $23.00 per share (the
"Transaction"). The Transaction will be accomplished by a cash tender offer,
to be followed by a merger at the same price, and is detailed in a definitive
agreement intended to be entered into with Guardsman later today.
As I am sure you can appreciate, Lilly and Guardsman have
spent considerable amounts of time and money in pursuing this Transaction and
we both believe it provides an extremely attractive opportunity for all
Guardsman stockholders. However, in situations like this where one or a few
holders own a significant percentage of a company's stock, it is appropriate to
confirm the support of those holders before a transaction is officially agreed
to and announced. In fact, we recognize you as an extremely important
stockholder of Guardsman, and we will not proceed with the Transaction unless
we have your support.
If you do support the Transaction which Guardsman's Board of
Directors has negotiated on behalf of all stockholders, we would ask that, as
an inducement to us to enter into a definitive agreement providing for the
Transaction, you evidence such support by committing to the following:
1. To validly tender into the tender offer, and not withdraw, all shares
of Guardsman stock that you beneficially own, which you represent to
be approximately 757,880 shares all of which are owned free and
clear of all liens.
2. If requested by us, to vote all of your shares of Guardsman stock in
favor of the described Transaction, and against any action or
arrangement which would interfere with the successful completion of
the Transaction.
3. To not sell, transfer or grant voting rights with respect to, or agree
to sell, transfer or grant voting rights with respect to, any of your
shares of Guardsman stock other than as part of the Transaction, and
likewise to not purchase any additional shares of Guardsman while the
Transaction is pending.
<PAGE> 2
4. To not solicit or encourage the making of any other proposal intended
to lead to the acquisition of your shares of Guardsman stock or any
other extraordinary transaction involving Guardsman.
In consideration for your entering into this agreement, which
you represent you are free to do without violating any commitments to any other
party, we agree to indemnify you and hold you harmless from and against any and
all claims by third parties or Lilly (and its affiliates), judgments, fines,
penalties, liabilities, fees and expenses (including, without limitation,
reasonable attorneys' fees) that may be asserted against you or incurred by you
in connection with your entering into this letter agreement or your compliance
with the terms hereof, provided that such indemnity would not protect you
against (i) any violations of law (other than violations alleged to have
occurred as a result of your compliance with the terms and conditions of this
letter) or (ii) any breach by you of your commitments in this letter.
To evidence your agreement with the foregoing, and to allow us
to proceed with the contemplated transaction in reliance on such undertakings,
please sign this letter in the place indicated below and sign the proxy
attached to this letter, which proxy is coupled with an interest. Once signed,
this letter will become our binding agreement unless both of us elect to modify
or terminate it in writing. Your commitments will remain in effect until the
described Transaction is successfully completed or the definitive agreement
which we will sign with Guardsman is terminated (either by us or Guardsman) in
accordance with its terms. Unless otherwise agreed by both of us in writing,
our undertaking to indemnify and hold you harmless as set forth in the
immediately preceding paragraph shall survive any termination of this
agreement, the definitive agreement or the tender offer for a period of three
years, although the indemnity will continue to cover any claims that may arise
during that three-year period. This agreement will become void and of no
effect if the referenced definitive agreement is not entered into before March
9, 1996. We thank you for your support.
LILLY INDUSTRIES, INC.
By /s/ Roman J. Klusas
---------------------------
Its Vice President and CFO
-----------------------
AGREED AND ACCEPTED AS OF THE
4TH DAY OF MARCH, 1996
/s/ James L. Sadler
- ------------------------
James L. Sadler
<PAGE> 3
GUARDSMAN PRODUCTS, INC. PROXY
The undersigned hereby appoints Lilly Industries, Inc., an
Indiana corporation ("Lilly"), as Proxy, with full power of substitution, and
hereby authorizes Lilly to represent and to vote as designated below, all of
the shares of Common Stock of Guardsman Products, Inc. ("Guardsman") which the
undersigned is entitled to vote at any meeting of stockholders, however called,
or with respect to any action proposed to be taken by written consent of the
stockholders of Guardsman.
1. Proposal to approve the merger of LP Acquisition Corporation
("Purchaser") with and into Guardsman according to the terms set forth
in the Agreement and Plan of Merger among Guardsman, Purchaser and
Lilly (the "Merger Agreement").
/X / FOR / / AGAINST
2. Proposals to take any action or make any agreement or arrangement that
would result in a breach of the Merger Agreement by Guardsman.
/ / FOR /X / AGAINST
3. Proposals to take any action or make any agreement or arrangement that
would interfere with or delay the Offer or the Merger (as those terms
are defined in the Merger Agreement).
/ / FOR /X / AGAINST
This Proxy has been executed concurrently with a letter
agreement from the undersigned to Lilly dated as of March 4, 1996 (the "Letter
Agreement"). This Proxy is irrevocable and terminates only upon completion of
the earlier to occur of (i) the revocation of the letter agreement in
accordance with its terms, (ii) the merger of Guardsman and Purchaser pursuant
to the Merger Agreement, (iii) the termination of the Merger Agreement in
accordance with its terms, or (iv) the termination of the Letter Agreement by
Lilly.
Dated: March 4, 1996
Signature: /s/ James L. Sadler
--------------------
James L. Sadler
<PAGE> 1
EXHIBIT 99.15
March 4, 1996
Mr. John H. Sadler
5402 24th Avenue
Moline, Illinois 61265
Dear Mr. Sadler:
The Board of Directors of Guardsman Products, Inc.
("Guardsman") has been in discussion with Lilly Industries, Inc. ("Lilly")
concerning the acquisition of Guardsman by Lilly. I am very pleased to inform
you that Lilly is prepared to make a firm offer to purchase all of the
outstanding stock of Guardsman at a price of $23.00 per share (the
"Transaction"). The Transaction will be accomplished by a cash tender offer,
to be followed by a merger at the same price, and is detailed in a definitive
agreement intended to be entered into with Guardsman later today.
As I am sure you can appreciate, Lilly and Guardsman have
spent considerable amounts of time and money in pursuing this Transaction and
we both believe it provides an extremely attractive opportunity for all
Guardsman stockholders. However, in situations like this where one or a few
holders own a significant percentage of a company's stock, it is appropriate to
confirm the support of those holders before a transaction is officially agreed
to and announced. In fact, we recognize you as an extremely important
stockholder of Guardsman, and we will not proceed with the Transaction unless
we have your support.
If you do support the Transaction which Guardsman's Board of
Directors has negotiated on behalf of all stockholders, we would ask that, as
an inducement to us to enter into a definitive agreement providing for the
Transaction, you evidence such support by committing to the following:
1. To validly tender into the tender offer, and not withdraw, all shares
of Guardsman stock that you beneficially own, which you represent to
be approximately 773,440 shares all of which are owned free and
clear of all liens.
2. If requested by us, to vote all of your shares of Guardsman stock in
favor of the described Transaction, and against any action or
arrangement which would interfere with the successful completion of
the Transaction.
3. To not sell, transfer or grant voting rights with respect to, or agree
to sell, transfer or grant voting rights with respect to, any of your
shares of Guardsman
<PAGE> 2
stock other than as part of the Transaction, and likewise to not
purchase any additional shares of Guardsman while the Transaction is
pending.
4. To not solicit or encourage the making of any other proposal intended
to lead to the acquisition of your shares of Guardsman stock or any
other extraordinary transaction involving Guardsman.
In consideration for your entering into this agreement, which
you represent you are free to do without violating any commitments to any other
party, we agree to indemnify you and hold you harmless from and against any and
all claims by third parties or Lilly (and its affiliates), judgments, fines,
penalties, liabilities, fees and expenses (including, without limitation,
reasonable attorneys' fees) that may be asserted against you or incurred by you
in connection with your entering into this letter agreement or your compliance
with the terms hereof, provided that such indemnity would not protect you
against (i) any violations of law (other than violations alleged to have
occurred as a result of your compliance with the terms and conditions of this
letter) or (ii) any breach by you of your commitments in this letter.
To evidence your agreement with the foregoing, and to allow us
to proceed with the contemplated transaction in reliance on such undertakings,
please sign this letter in the place indicated below and sign the proxy
attached to this letter, which proxy is coupled with an interest. Once signed,
this letter will become our binding agreement unless both of us elect to modify
or terminate it in writing. Your commitments will remain in effect until the
described Transaction is successfully completed or the definitive agreement
which we will sign with Guardsman is terminated (either by us or Guardsman) in
accordance with its terms. Unless otherwise agreed by both of us in writing,
our undertaking to indemnify and hold you harmless as set forth in the
immediately preceding paragraph shall survive any termination of this
agreement, the definitive agreement or the tender offer for a period of three
years, although the indemnity will continue to cover any claims that may arise
during that three-year period. This agreement will become void and of no
effect if the referenced definitive agreement is not entered into before March
9, 1996. We thank you for your support.
LILLY INDUSTRIES, INC.
By /s/ Roman J. Klusas
------------------------------
Its Vice President and CFO
--------------------------
AGREED AND ACCEPTED AS OF THE
4TH DAY OF MARCH, 1996
/s/ John H. Sadler
- --------------------
John H. Sadler
<PAGE> 3
John Sadler Ack.
GUARDSMAN PRODUCTS, INC. PROXY
The undersigned hereby appoints Lilly Industries, Inc., an
Indiana corporation ("Lilly"), as Proxy, with full power of substitution, and
hereby authorizes Lilly to represent and to vote as designated below, all of
the shares of Common Stock of Guardsman Products, Inc. ("Guardsman") which the
undersigned is entitled to vote at any meeting of stockholders, however called,
or with respect to any action proposed to be taken by written consent of the
stockholders of Guardsman.
1. Proposal to approve the merger of LP Acquisition Corporation
("Purchaser") with and into Guardsman according to the terms set forth
in the Agreement and Plan of Merger among Guardsman, Purchaser and
Lilly (the "Merger Agreement").
/X/ FOR / / AGAINST
2. Proposals to take any action or make any agreement or arrangement that
would result in a breach of the Merger Agreement by Guardsman.
/ / FOR /X/ AGAINST
3. Proposals to take any action or make any agreement or arrangement that
would interfere with or delay the Offer or the Merger (as those terms
are defined in the Merger Agreement).
/ / FOR /X/ AGAINST
This Proxy has been executed concurrently with a letter
agreement from the undersigned to Lilly dated as of March 4, 1996 (the "Letter
Agreement"). This Proxy is irrevocable and terminates only upon completion of
the earlier to occur of (i) the revocation of the letter agreement in
accordance with its terms, (ii) the merger of Guardsman and Purchaser pursuant
to the Merger Agreement, (iii) the termination of the Merger Agreement in
accordance with its terms, or (iv) the termination of the Letter Agreement by
Lilly.
Dated: March 4, 1996
Signature: /s/ John H. Sadler
--------------------
John H. Sadler
<PAGE> 1
EXHIBIT 99.16
AMENDMENT NO. 2 TO RIGHTS AGREEMENT, dated as of March 4,
1996, between GUARDSMAN PRODUCTS, INC., a Delaware corporation (the "Company"),
and Chemical Bank (formerly Manufacturers Hanover Trust Company) (the "Rights
Agent"), amending the Rights Agreement, dated as of August 8, 1986, as amended,
between the Company and the Rights Agent (the "Rights Agreement").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company has approved an
Agreement and Plan of Merger (the "Merger Agreement") by and among the Company,
Lilly Industries, Inc., an Indiana corporation ("Lilly"), and LP Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Lilly
("LP"), providing for LP to commence an all-cash tender offer for all
outstanding shares of common stock of the Company (the "Offer") and for the
subsequent merger of LP into the Company (the "Merger");
WHEREAS, the Board of Directors of the Company has determined
that the Offer and the Merger are fair to and in the best interests of the
Company and its stockholders;
WHEREAS, the willingness of Lilly and LP to enter into the
Merger Agreement is conditioned on, among other things, the amendment of the
Rights Agreement on the terms set forth herein; and
WHEREAS, Section 26 of the Rights Agreement provides that,
among other things, prior to the Distribution Date and subject to the
restrictions set forth in the penultimate sentence of such Section, the Company
may, and the Rights Agent shall, if the Company so directs, supplement or amend
any provisions of the Rights Agreement without the approval of any holders of
certificates representing shares of Common Stock;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth in the Rights Agreement and this Amendment, the parties
hereby agree as follows:
1. Section 1 of the Rights Agreement is hereby amended
by adding the following definitions thereto:
"Letter Agreements" shall have the meaning set forth in the
Merger Agreement.
"Merger" shall mean the merger of LP into the Company as
contemplated by the Merger Agreement.
"Merger Agreement" shall mean the Agreement and Plan of
Merger, dated as of March 4, 1996, by and among Lilly, LP and the
Company, as the same may be amended in accordance with the terms
thereof.
"Offer" shall have the meaning set forth in the Merger
Agreement.
"LP" shall mean LP Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Lilly,
<PAGE> 2
"Lilly" shall mean Lilly Industries, Inc., an Indiana
corporation.
2. Section 1(a) of the Rights Agreement is hereby
amended by adding to the end thereof the following:
"Notwithstanding anything to the contrary contained herein,
neither Lilly nor LP shall be or become an "Acquiring Person" (and no
Stock Acquisition Date shall occur) as a result of (i) the
announcement, commencement or consummation of the Offer, (ii) the
execution of the Merger Agreement (or any amendment thereto in
accordance with the terms thereof) or the consummation of the
transactions contemplated thereby (including, without limitation, the
Offer and the Merger), or (iii) the execution of the Letter Agreements
or the consummation of the transactions or exercise of any power
contemplated thereby (including, without limitation, the tendering or
voting of shares of Common Stock in the manner contemplated thereby
and the grant of a limited proxy in furtherance thereof)."
3. Section 3(a) of the Rights Agreement is hereby
amended by adding to the end thereof the following:
"Notwithstanding anything to the contrary contained herein, no
Distribution Date shall occur as a result of (i) the announcement,
commencement or consummation of the Offer, (ii) the execution of the
Merger Agreement (or any amendment thereto in accordance with the
terms thereof) or the consummation of the transactions contemplated
thereby (including, without limitation, the Offer and the Merger), or
(iii) the execution of the Letter Agreements or the consummation of
the transactions or exercise of any power contemplated thereby
(including, without limitation, the tendering or voting of shares of
Common Stock in the manner contemplated thereby and the grant of a
limited proxy in furtherance thereof), and no Distribution Date will,
in any event, occur prior to the effective time of the Merger or the
earlier termination of the Merger Agreement."
4. Section 7(a) of the Rights Agreement is hereby
amended by replacing the word "earlier" in its first occurrence with the word
"earliest", by deleting the word "or" immediately prior to the symbol "(ii)",
and by replacing the words "(the earlier of (i) and (ii), being herein referred
to as the "Expiration Date")" with the following:
"and (iii) immediately prior to the effective time of the
Merger (the earliest of (i), (ii) and (iii) being herein referred to
as the "Expiration Date")."
5. Section 11 of the Rights Agreement is hereby amended
by adding to the end thereof the following:
"(n) Notwithstanding anything to the contrary contained
herein, the provisions of this Section 11 will not apply to or be
triggered by (i) the announcement, commencement or consummation of the
Offer, (ii) the execution of the Merger Agreement (or any amendment
thereto in accordance with the terms thereof) or the consummation of
the transactions contemplated thereby (including,
-2-
<PAGE> 3
without limitation, the Offer and the Merger), or (iii) the execution
of the Letter Agreements or the consummation of the transactions or
exercise of any power contemplated thereby (including, without
limitation, the tendering or voting of shares of Common Stock in the
manner contemplated thereby and the grant of a limited proxy in
furtherance thereof)."
6. Section 13 of the Rights Agreement is hereby amended
by adding to the end thereof the following:
"(d) Notwithstanding anything to the contrary contained
herein, the provisions of this Section 13 will not apply to or be
triggered by the execution of the Merger Agreement or any amendment
thereto or the consummation of the transactions contemplated thereby
(including, without limitation, the Merger)."
7. The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Amendment.
8. The term "Agreement" as used in the Rights Agreement
shall be deemed to refer to the Rights Agreement as amended by this Amendment
No. 2.
9. Except as set forth herein, the Rights Agreement
shall remain in full force and effect and shall be otherwise unaffected hereby.
10. This Amendment No. 2 may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to be duly executed, all as of the day and year first above
written.
GUARDSMAN PRODUCTS, INC.
By /s/ Charles E. Bennett
-----------------------------
Its President and CEO
--------------------------
CHEMICAL BANK, as Rights Agent
By /s/ Eric Leason
-----------------------------
Its Vice President
--------------------------
-3-
<PAGE> 1
EXHIBIT 99.17
ACKNOWLEDGMENT
I, James L. Sadler, hereby agree that all past, present or future
rights, actions, causes of action, claims or demands that I may have arising
from Section 4.6 or Section 4.7 (the "Terminated Sections") of the Agreement and
Plan of Merger relating to the merger of Moline Paint Manufacturing Co. into
Guardsman Illinois, Inc., a subsidiary of Guardsman Products, Inc.
("Guardsman"), will terminate upon the purchase of my shares of Guardsman
common stock in the "Offer" or "Merger," as those terms are defined in the
Merger Agreement, dated as of March 4, 1996, between Lilly Industries, Inc. and
Guardsman.
I have read this Acknowledgment, understand it, and am signing it
voluntarily.
/s/ James L. Sadler
------------------------------
James L. Sadler
<PAGE> 1
EXHIBIT 99.18(8)
ACKNOWLEDGMENT
I, John H. Sadler, hereby agree that all past, present or future
rights, actions, causes of action, claims or demands that I may have arising
from Section 4.6 or Section 4.7 (the "Terminated Sections") of the Agreement and
Plan of Merger relating to the merger of Moline Paint Manufacturing Co. into
Guardsman Illinois, Inc., a subsidiary of Guardsman Products, Inc.
("Guardsman"), will terminate upon the purchase of my shares of Guardsman
common stock in the "Offer" or "Merger," as those terms are defined in the
Merger Agreement, dated as of March 4, 1996, between Lilly Industries, Inc. and
Guardsman.
I have read this Acknowledgment, understand it, and am signing it
voluntarily.
/s/ John H. Sadler
-----------------------------
John H. Sadler
