<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
----------------
HEIN-WERNER CORPORATION
(NAME OF ISSUER)
----------------
423002 10 4
COMMON STOCK, $1.00 PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
----------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
SUSAN F. MARRINAN
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
SNAP-ON INCORPORATED
2801 80TH STREET
KENOSHA, WISCONSIN 53141-1410
(414) 656-5200
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
WILLIAM R. KUNKEL, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
APRIL 27, 1998
(DATE OF EVENT WHICH REQUIRES FILING OF STATEMENT ON SCHEDULE 13D)
_____________
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 statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
================================================================================
<PAGE> 2
- ---------------------- -----------------
CUSIP No. 423002 10 4 13D Page 2 of 7 Pages
- ---------------------- -----------------
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS: SNAP-ON INCORPORATED
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS: 39-0622040
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.
(a) [ ] (b) [ ]
- --------------------------------------------------------------------------------
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:
STATE OF DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NONE
--------------------------------------------------------
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY NONE
OWNED BY --------------------------------------------------------
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON NONE
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
NONE
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
NONE. SEE ITEM 5
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES []
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0% SEE ITEM 5
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
HC AND CO
- --------------------------------------------------------------------------------
<PAGE> 3
- ---------------------- -----------------
CUSIP No. 423002 10 4 13D Page 3 of 7 Pages
- ---------------------- -----------------
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS: SNAP-ON PACE COMPANY
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS: 39-1928875
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.
(a) [ ] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
STATE OF WISCONSIN
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NONE
--------------------------------------------------------
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY NONE
OWNED BY --------------------------------------------------------
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON NONE
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
NONE
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
NONE. SEE ITEM 5
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES []
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0% SEE ITEM 5
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE> 4
Item 1. Security and Issuer.
This statement on Schedule 13D (this "Statement" or the "Schedule 13D")
relates to the common stock, par value $1.00 per share (the "Common Stock"),
including the associated common share purchase rights (the "Rights" and,
together with the Common Stock, the "Shares"), of Hein-Werner Corporation, a
Wisconsin corporation (the "Company"). The address of the Company's principal
executive offices is 2120 Pewaukee Road, Waukesha, Wisconsin 53188.
The item numbers and responses thereto below are in accordance with the
requirements of Schedule 13D.
Item 2. Identity and Background.
(a) - (c), (f) This Statement is being filed by Snap-on Incorporated, a
Delaware corporation ("Parent"), and Snap-on Pace Company, a Wisconsin
corporation ("Purchaser") and an indirect wholly-owned subsidiary of Parent.
The information set forth in the "INTRODUCTION" and "Section 9 -- Certain
Information Concerning Parent and Purchaser" of Purchaser's Offer to Purchase
dated May 4, 1998 (the "Offer to Purchase"), a copy of which is attached hereto
as Exhibit (2)(a), is incorporated herein by reference. Unless otherwise
defined herein, all capitalized terms used in this Statement shall have the
meanings attributed to them in the Offer to Purchase. The name, business
address, present principal occupation or employment, the material occupations,
positions, offices or employments for the past five years and citizenship of
each director and executive officer of Parent and Purchaser and the name,
principal business and address of any corporation or other organization in
which such occupations, positions, offices and employments are or were carried
on are set forth in Schedule I of the Offer to Purchase and are incorporated
herein by reference.
(d) - (e) During the past five years, neither Purchaser nor Parent nor, to
the best knowledge of Purchaser and Parent, any of the persons listed in
Schedule I of the Offer to Purchase have been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The information set forth in "Section 10 -- Source and Amount of Funds"
and "Section 12 -- Purpose of the Offer and the Merger; Plans for the Company;
Other Matters" of the Offer to Purchase is incorporated herein by reference.
Item 4. Purpose of the Transaction.
(a) - (g), (j) The information set forth in the "INTRODUCTION," "Section
11 -- Background of the Offer; the Merger Agreement and Certain Other
Agreements" and "Section 12 -- Purpose of the Offer and the Merger; Plans for
the Company; Other Matters" of the Offer to Purchase is incorporated herein by
reference.
(h) - (i), (j) The information set forth in "Section 7 -- Effect of the
Offer on the Market for the Shares; Exchange Listing; Exchange Act
Registration; Margin Regulations" of the Offer to Purchase is incorporated
herein by reference.
<PAGE> 5
Except as set forth in this Item 4, neither Parent nor Purchaser has any
plans or proposals which relate to or would result in any of the actions
specified in clauses (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) On April 27, 1998, Parent and Purchaser entered into a Stock Option
Agreement (the "Stock Option Agreement") with the Company, pursuant to which
the Company granted to Purchaser an irrevocable option to purchase that number
of shares of Common Stock (the "Option Shares") that when added to the number
of Shares owned by Purchaser and its affiliates immediately following the
consummation of the Offer, shall constitute 90% of the Shares then outstanding
on a fully diluted basis. The Stock Option Agreement is described more fully
in Section 11 of the Offer to Purchase. The information set forth in
"Introduction," "Section 9 -- Certain Information Concerning Parent and the
Purchaser," "Section 11 -- Background of the Offer; the Merger Agreement and
Certain Other Agreements" and "Section 12 -- Purpose of the Offer and the
Merger; Plans for the Company; Other Matters" of the Offer to Purchase is
incorporated herein by reference.
(b) Except as set forth above in paragraph (a) of this Item 5 with
respect to the various agreements among Parent, Purchaser and the Company
regarding the Option Shares, neither Parent or Purchaser nor, to the best of
their knowledge, any person listed in Schedule I to the Offer to Purchase,
which is incorporated by reference herein, presently has sole or shared power
to vote, direct the vote, dispose or direct the disposition of any Shares that
may be deemed beneficially owned by Parent or Purchaser.
(c) Except as set forth in this Item 5, neither Parent nor Purchaser has
effected any transactions in the Shares during the past 60 days.
(d) - (e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
The information set forth in the "INTRODUCTION," "Section 9 -- Certain
Information Concerning Parent and the Purchaser," "Section 10 -- Source and
Amount of Funds," "Section 11 -- Background of the Offer; the Merger Agreement
and Certain Other Agreements," "Section 12 -- Purpose of the Offer and the
Merger; Plans for the Company; Other Matters" and "Section 16 -- Fees and
Expenses" of the Offer to Purchase is incorporated herein by reference.
<PAGE> 6
Item 7. Material to be Filed as Exhibits.
The following documents are being filed as exhibits to this Statement and
are each incorporated by reference herein.
(1)(a) Letter Agreement Establishing Line of Credit, dated as of November
15, 1994, by and between Parent and Firstar Bank Milwaukee, N.A.
(including the Form of Line of Credit Note).
(1)(b) Amendment to line of Credit Agreement and Note, dated as of
September 21, 1995 by and between Parent and Firstar Bank Milwaukee,
N.A.
(1)(c) Second Amendment to Line of Credit Agreement and Note, dated as of
March 12, 1997 by and between Parent and Firstar Bank Milwaukee,
N.A.
(1)(d) Third Amendment to Line of Credit Agreement and Note, dated as of
April 14, 1995 by and between Parent and Firstar Bank Milwaukee,
N.A.
(1)(e) Letter Agreement Establishing Unsecured Line of Credit, dated as of
April 30, 1998, by and between Parent and First National Bank of
Chicago (including the Master Note, dated as of April 30, 1998, by
and between Parent and First National Bank of Chicago).
(2)(a) Offer to Purchase dated May 4, 1998.
(2)(b) Agreement and Plan of Merger, dated as of April 27, 1998, by and
among Parent, the Purchaser and the Company.
(3)(a) Stock Option Agreement, dated as of April 27, 1998, by and among
Parent, the Purchaser and the Company.
(3)(c) Joint Filing Agreement, dated as of May 4, 1998 by and between
Parent and Purchaser.
<PAGE> 7
SIGNATURES
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.
Dated: May 4, 1998
SNAP-ON PACE COMPANY
By: /s/ SUSAN F. MARRINAN
--------------------------
Name: Susan F. Marrinan
Title: Vice President
SNAP-ON INCORPORATED
By: /s/ DONALD S. HUML
--------------------------
Name: Donald S. Huml
Title: Senior Vice President
<PAGE> 8
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------- -------
(1)(a) Letter Agreement Establishing Line of Credit, dated as of November 15,
1994, by and between Parent and Firstar Bank Milwaukee, N.A.
(including the Form of Line of Credit Note).
(1)(b) Amendment to line of Credit Agreement and Note, dated as of September
21, 1995 by and between Parent and Firstar Bank Milwaukee, N.A.
(1)(c) Second Amendment to Line of Credit Agreement and Note, dated as of
March 12, 1997 by and between Parent and Firstar Bank Milwaukee, N.A.
(1)(d) Third Amendment to Line of Credit Agreement and Note, dated as of
April 14, 1995 by and between Parent and Firstar Bank Milwaukee, N.A.
(1)(e) Letter Agreement Establishing Unsecured Line of Credit, dated as of
April 30, 1998, by and between Parent and First National Bank of
Chicago (including the Master Note, dated as of April 30, 1998, by
and between Parent and First National Bank of Chicago).
(2)(a) Offer to Purchase dated May 4, 1998.
(2)(b) Agreement and Plan of Merger, dated as of April 27, 1998, by and
among Parent, the Purchaser and the Company.
(3)(a) Stock Option Agreement, dated as of April 27, 1998, by and among
Parent, the Purchaser and the Company.
(3)(b) Joint Filing Agreement, dated as of May 4, 1998 by and between Parent
and Purchaser.
<PAGE> 1
Exhibit (1)(a)
[FIRSTAR LETTERHEAD]
November 15, 1994
Mr. Denis J. Loverine
Treasurer
Snap-On Incorporated
2801 - 80th Street
Kenosha, Wisconsin 53141-1410
Dear Denis:
We are pleased to establish a Ten Million Dollar ($10,000,000) line of
credit for your current use.
This letter will serve to confirm our understanding regarding the line
of credit.
1. All loans made by us to you under the line of credit will be
evidenced by a single promissory note of Snap-On Incorporated, payable on
demand, dated as of the date hereof, in the form of Exhibit A attached hereto
and made a part hereof, in the form of Exhibit A attached hereto and made a
part hereof, executed by you and delivered to us prior to our making
any advances under the line of credit.
2. Prior to our making any advances to you under the line of credit,
you will deliver to us such evidence of your authority to enter into the
transactions contemplated hereby as will be satisfactory to us.
3. You shall provide us with quarterly management prepared consolidated
financial statements within 45 days of the end of each quarter and annual
audited consolidated financial statements prepared by an accounting firm
mutually acceptable to you and us within 120 days of the end of each fiscal
year.
4. Subject to the terms hereof, we will make loans to you under the
line of credit by depositing in your account number 111516-704 the amount of
the advance requested by you on your oral, written, telephonic or wire request.
You may likewise make payments on account of principal or interest on your
borrowings under the line of credit by oral, written, telephonic or wire
instruction to us to charge your account identified above. We will advise
you of charges to your account within thirty (30) days after they are made.
5. Either party may terminate this agreement at any time.
6. This line of credit replaces and cancels your previous line of
credit with us in the amount of $20,000,000.
Denis J. Loverine
November 15, 1994
Page 2
If the foregoing is acceptable, please sign a copy of this letter
enclosed for that purpose and return it to us within seven days of the date
hereof.
Very truly yours,
FIRSTAR BANK MILWAUKEE, N.A.
By: /s/ F.R. Dengel
---------------------------------
F.R. Dengel
Vice President
ACCEPTED:
SNAP-ON INCORPORATED
By: /s/ Denis J. Loverine
-----------------------------------
Title: Treasurer
-------------------------------
<PAGE> 2
EXHIBIT A
FORM OF LINE OF CREDIT NOTE
$[________________] [_____________]
FOR VALUE RECEIVED, the undersigned SNAP-ON INCORPORATED ("Borrower")
promises to pay to the order of FIRSTAR BANK MILWAUKEE, N.A. ("Bank"), at any of
its offices in Milwaukee, Wisconsin, _______ Dollars, or such lesser amount as
may be outstanding hereunder from time to time, ON DEMAND. Unless otherwise
agreed between the Borrower and the Bank, advances outstanding hereunder shall
bear interest at a rate equal to the Bank's announced prime rate in effect from
time to time, with the rate hereon changing as and when such prime rate changes
("Variable Rate Advances"). Interest on Variable Rate Advances shall be
payable monthly beginning ______ and continuing on the first day of each month
thereafter until demand by the Bank, when all principal and interest shall be
due and payable. Variable Rate Advances may be repaid at any time, without
premium.
At the election of the Borrower, advances hereunder in the minimum
principal amount of $ shall bear interest at such fixed rate and for such
term as may be quoted by the Bank and agreed to by the Borrower ("Fixed Rate
Advances"). Interest on any Fixed Rate Advance shall be payable on the last day
of the quoted term applicable to such Fixed Rate Advance (or on such other dates
as may be agreed to by the Borrower and the Bank) and on demand, when all
principal and interest shall be due and payable. Upon the expiration of the term
of any Fixed Rate Advance, the principal amount thereof shall become a Variable
Rate Advance unless a new Fixed Rate Advance is agreed to by the Borrower and
the Bank. In the event the Borrower repays a Fixed Rate Advance prior to the end
of the quoted term applicable to such Fixed Rate Advance, the borrower shall
reimburse the Bank for all expenses or fees incurred by the Bank as a result of
such prepayment.
Interest on Variable Rate Advances and Fixed Rate Advances will be
computed for the actual number of days principal is unpaid, using a daily factor
obtained by dividing the stated interest rate by 360. Principal and interest not
paid when due shall bear interest from and after the due date until paid at a
rate of 2% per annum above the bank's announced prime rate in an effect from
time to time.
The Bank is authorized to charge payments due hereunder against any
account of the Borrower with the Bank.
The unpaid principal balance of this Note, together with all interest
accrued hereon, shall become immediately due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby waived,
if any of the following events shall occur: The Borrower shall: (a) become
insolvent; or (b) be unable, or admit in writing its inability to pay its debts
as they mature; or (c) make a general assignment for the benefit of creditors or
to an agent authorized to liquidate any substantial amount of its property; or
(d) become the subject of an "Order for Relief" as said term is defined under
the United States Bankruptcy Code; or (e) file an answer to a creditor's
petition (admitting the material allegations thereof) for reorganization or to
effect a plan or other
<PAGE> 3
arrangement with creditors; or (f) apply to a court for the appointment of a
receiver for any of its assets; or (g) have a receiver appointed for any of its
assets (with or without the consent of the Borrower) and such receiver shall
not be discharged within 60 days after his appointment; or (h) otherwise become
the subject of an insolvency proceeding or an out-of-court settlement with its
creditors.
Borrower grants the holder a security interest and lien in any credit
balance or other money now or hereafter owed any Borrower by holder, and, in
addition, agrees that holder may, at any time after an occurrence of an event of
default, without notice or demand, set off against any such credit balance or
other money any amount unpaid under this Note.
Borrower represents and warrants that it is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, the execution, delivery and performance under this Note are
within Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and are not in contravention of the terms of Borrower's
articles of incorporation, by-laws, or any resolution of its board of directors.
Borrower warrants and represents that the execution, delivery and performance
under this Note are not in contravention of law and do not conflict with any
indenture, agreement or undertaking to which Borrower is a party or is otherwise
bound.
All Borrowers, indorsers, sureties and guarantors agree to pay all
costs of collection, including reasonable attorneys' fees and legal expenses,
and waive presentment, protest, demand, and notice of dishonor.
This Note shall be governed by the internal laws of the State of
Wisconsin, except to the extent superseded by Federal law.
This Note is issued under a Line of Credit Letter Agreement dated the
date hereof, to which reference is made for a statement of the terms and
conditions under which loans evidenced hereby were or may be made.
SNAP-ON INCORPORATED
EXHIBIT A
By: ________________________
Title_______________________
EXHIBIT A
By: ________________________
Title_______________________
<PAGE> 1
Exhibit (1)(b)
September 21, 1995
Mr. Denis J. Loverine
Treasurer
Snap-On Incorporated
2801 - 80th Street
Kenosha, Wisconsin 53141-1410
RE: Amendment to Line of Credit Agreement and Note
Dear Denis:
Please refer to the line of credit letter agreement and accompanying
note dated November 15, 1994, establishing a $10,000,000 line of credit at
Firstar Bank Milwaukee, N.A. for Snap-On Incorporated. You have requested that
Firstar Bank increase the amount available under the line of credit from
$10,000,000 to $20,000,000.
By this letter, we hereby amend the above-referenced line of credit
agreement and note to delete all reference to "$10,000,000" (whether or not
numerically) and to substitute "$20,000,000" each place the amount appears in
the letter agreement and note. In all other respects, the terms of the letter
agreement and note shall continue as originally set forth. This is an
amendment, not a novation.
Please indicate your agreement by signing where indicated below and
returning this letter to the undersigned.
Very truly yours,
/s/ F.R. Dengel
F.R. Dengel
Vice President
Accepted and agreed to:
SNAP-ON INCORPORATED
By: /s/ Denis J. Loverine
-------------------------
Title: Treasurer
----------------------
By:
-------------------------
Title:
----------------------
<PAGE> 1
Exhibit (1)(c)
[FIRSTAR BANK MILWAUKEE, N.A. LETTERHEAD]
March 12, 1997
Mr. Denis J. Loverine
Treasurer
Snap-On Incorporated
2801-80th Street
Kenosha, Wisconsin 53141-1410
RE: Second Amendment to Line of Credit Agreement and Note
Dear Denis:
Please refer to the line of credit agreement and accompanying note dated
November 15, 1994, as amended, establishing a $20,000,000 line of credit at
Firstar Bank Milwaukee, N.A. for Snap-On Incorporated. You have requested that
Firstar Bank increase the ammount available under the line of credit from
$20,000,000 to $27,500,000.
By this letter, we hereby amend the above-referenced line of credit
agreement and note to delete all references to "$20,000,000" (whether or not
numerically) and to substitute "27,500,000" each place the amount appears in
the letter agreement and note. In all other respects, the terms of the letter
agreement and note shall continue as orignally set forth. This is an
amendment, not a novation.
Please indicate your agreement by signing where indicated below and
returning this letter to the undersigned.
Very truly yours,
/s/ R. Bruce Anthony
R. Bruce Anthony
Officer
Accepted and agreed to:
SNAP-ON INCORPORATED
By: /s/ Denis J. Loverine
------------------------
Title: Treasurer
---------------------
By:
------------------------
Title:
---------------------
<PAGE> 1
Exhibit (1)(d)
[FIRSTAR BANK MILWAUKEE, N.A. LETTERHEAD]
April 14, 1997
Mr. Denis J. Loverine
Treasurer
Snap-on Incorporated
2801 80th Street
Kenosha, WI 53141-1410
RE: Third Amendment to Line of Credit Agreement and Note
Dear Denis:
Please refer to the line of credit letter agreement and accompanying
note dated November 15, 1994, as amended, establishing a $27,500,000 line of
credit at Firstar Bank Milwaukee, N.A. for Snap-on Incorporated. You have
requested Firstar Bank increase the amount available under the line of credit
from $27,500,000 to $31,000,000.
By this letter, we hereby amend the above-referenced line of credit
agreement and note to delete all references to $27,500,000 (whether or not
numerically) and to substitute $31,000,000 each place the amount appears in the
letter agreement and note. In all other respects, the terms of the letter
agreement and note shall continue as originally set forth. This is an
amendment, not a novation.
Please indicate your agreement by signing where indicated below and
returning this letter to the undersigned.
Sincerely,
/s/ R. Bruce Anthony
R. Bruce Anthony
Commercial Banking Officer
Accepted and agreed to:
SNAP-ON INCORPORATED
By: /s/ Denis J. Loverine
--------------------------------
Title: Treasurer
------------------------------
<PAGE> 1
Exhibit (1)(e)
[FIRST CHICAGO LETTERHEAD]
April 30, 1998
Snap-On Incorporated
10801 Corporate Drive
Kenosha, WI 53141-1430
Attention: Denis J. Loverine
Treasurer
Dear Denis:
We are pleased to establish an unsecured line of credit in your favor in the
amount of $50,000,000, which shall continue from April 30, 1998 through April
29, 1999 unless you or we elect to terminate it earlier by advising the other.
Loans under this line of credit will be evidenced and governed by our standard
form of master note (copy attached), and will bear interest, at your option,
at:
(a) a rate equal to our corporate base rate of interest announced by us from
time to time, changing when and as our corporate base rate changes, with
interest computed on the basis of actual days elapsed on a 365/6 - day
year basis and payable on the last day of each month and on demand; or
(b) subject to availability and for a maturity to be agreed upon, at such
other fixed rate as we may mutually agree upon from time to time.
You agree that you will not use the proceeds of any credit extended under this
line of credit for the purpose of repaying principal, interest or dividends on
any security issued by you and underwritten, distributed or placed by First
Chicago Capital Markets, Inc.
This line of credit shall be effective when you have signed and returned to us a
copy of this letter and may be terminated by you or by us at any time effective
upon the giving of advice to the other party and in the sole discretion of the
party electing to terminate. Prior to borrowing under this line of credit you
will supply us with an executed master note and satisfactory corporate
resolutions and incumbency certificates. This letter supersedes and replaces
the previous letter dated as of October 16, 1997.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Deborah E. Stevens
-------------------------------
Title: Authorized Agent
----------------------------
Accepted and agreed to:
SNAP-ON INCORPORATED
By: /s/ Denis J. Loverine
-------------------------
Title: Treasurer
---------------------
Date: 4-30-98
----------------------
<PAGE> 2
MASTER NOTE
(FIXED AND FLOATING RATES)
$50,000,000 Chicago, Illinois
Date: April 30, 1998
FOR VALUE RECEIVED, Snap-On (the "Borrower") promises to pay to the order of
THE FIRST NATIONAL BANK OF CHICAGO (the "Bank"), in lawful money of the
United States at the office of the Bank at One First National Plaza, Chicago,
Illinois, or as the Bank may otherwise direct, the lesser of fifty million
dollars ($50,000,000) or the aggregate outstanding unpaid principal amount of
loans evidenced hereby ("loans"), together with interest as provided below.
Any person authorized to borrow on behalf of the Borrower (an "Authorized
Representative", as designated by the Borrower using the format contained in
Exhibit A) may request a loan by telephone or facsimile. The Borrower agrees
that the Bank is authorized to honor requests which it believes, in
good faith, to emanate from an Authorized Representative, whether in fact that
be the case or not.
Loans may bear interest at either a fixed rate ("fixed rate loans") or a
floating rate ("floating rate loans"). Loans shall be floating rate loans
unless the Bank and the Borrower agree to a fixed rate for a specific maturity
at or before the time of borrowing. Fixed rate loans shall be payable at
maturity and floating rate loans shall be payable on demand. Interest on each
fixed rate loan shall be payable upon the maturity of such fixed rate loan and,
in the case of a fixed rate loan with an original maturity in excess of three
months, interest shall also be payable on the last day of each three-month
interval while such fixed rate loan is outstanding. Floating rate loans shall
bear interest at a rate equal to the corporate base rate of interest announced
by the Bank from time to time, changing when and as the corporate base rate
changes. Interest on floating rate loans shall be payable on the last day of
each month on demand. A fixed rate loan not paid at maturity (whether by
acceleration or otherwise) and a floating rate loan not paid on demand shall
bear interest at a rate equal to the sum of the corporate base rate of
interest announced by the Bank from time to time, plus 1% per annum, changing
when and as the corporate base rate changes.
Each payment of principal or interest hereunder shall be made in immediately
available funds. If any payment shall become due and payable on a Saturday,
Sunday or legal holiday under the laws of Illinois, such payment shall be made
on the next succeeding business day in Illinois and any such extended time of
the payment of principal or interest shall be included in computing interest.
All interest on floating rate loans hereunder shall be computed for the actual
number of
<PAGE> 3
days elapsed an a 365/6 day year basis and all interest on fixed rate
loans shall be completed for the actual number of days elapsed an a 360 day
year basis. The Borrower hereby authorizes the Bank to deposit the proceeds of
loans to, and to charge payments of prinicpal and interest against, the
Borrower's deposit account with the Bank.
A fixed rate loan may not be prepaid prior to the agreed maturity of the loan
without the written consent of the Bank. If, for any reason, any payment of a
fixed rate loan occurs prior to maturity of such loan, the Borrower will
indemnify the Bank for any loss or cost which the Bank determines is
attributable to such payment, including, without limitation, any loss or cost
in liquidating or employing deposits acquired to fund or maintain such fixed
rate loan. Loans bearing interest at a rate related to the corporate base rate
may be prepaid by the Borrower, without premium or penalty.
The Borrower hereby authorizes the Bank to record loans, maturities,
repayments, interest rates and payment dates on the schedule attached to this
note or otherwise in accordance with the Bank's usual practice. The obligation
of the Borrower to repay each loan made hereunder shall be absolute and
unconditional notwithstanding any failure of the Bank to enter such amounts
on such schedule or to receive written confirmation of the transaction from the
Borrower. If the Bank requests a written confirmation of a requested loan, the
Borrower will confirm the terms of each loan by mailing a confirmation letter
to the Bank signed by any Authorized Reprensentative. If the Bank elects to
confirm the terms of a loan to the Borrower, the Borrower will notify the
Bank in writing within 10 days after the Borrower's receipt of such
confirmation if it believes such confirmation to be inaccurate. In the event of
disagreement as to the terms of a transaction, the Bank's records shall
govern, absent manifest error.
If any change in any law, rule, regulation or directive (including, without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) imposes any condition the result of which is to increase the cost to
the Bank of making, funding or maintaining any fixed rate loan or reduces
any amount receivable by the Bank hereunder in connection with a fixed rate
loan, the Borrower shall pay the Bank the amount of such increased expense
incurred or the reduction in any amount received which the Bank determines is
attributable to making, funding and maintaining the fixed rate loans.
The Bank may elect to sell participations in or assign its rights under loans.
The Borrower agrees that if it fails to pay any loan when due, any purchaser of
an interest in such loan shall be entitled to seek enforcement of this note if
the purchaser is permitted to do so pursuant to the terms of the participation
agreement between the Bank and such purchaser.
The Borrower hereby authorizes the Bank and any other holder of an interest in
this note (a "holder") to disclose confidential information relating to the
financial condition or operations of
2
<PAGE> 4
the Borrower (i) to any affiliate of the Bank, (ii) to legal counsel,
accountants, and other professional advisors to the Bank (iii) to regulatory
officials, (iv) as requested or required by law, regulation, or legal process
or (v) in connection with any legal proceeding to which the Bank or any other
holder is a party.
Nothing in this note shall constitute a commitment to make loans to the
Borrower. In addition to, and without limitation of, any rights of the Bank
under applicable law, if any amount payable hereunder is not paid when due,
there is any material adverse change in the Borrower's or any guarantor's
financial condition, there is a default under any agreement governing
indebtedness of the Borrower or any guarantor, any petition is filed by or
against the Borrower or any guarantor under the Federal Bankruptcy Code or
similar state law or if the Borrower or any guarantor becomes insolvent,
howsoever evidenced, the Bank may declare all unpaid principal and interest on
fixed rate loans and unpaid fees immediately due and payable and any
indebtedness from the Bank to the Borrower may be offset and applied toward the
payment of all unpaid principal, interest and fees payable hereunder, whether
or not such amounts, or any part thereof, shall then be due. The Borrower
expressly waives any presentment, demand, protest or notice in connection with
this note now, or hereafter, required by applicable law and agrees to pay all
reasonable costs and expenses of collection.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAW (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF ILLINOIS, GIVING EFFECT, HOWEVER, TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS. THE BORROWER AND THE BANK EACH HEREBY WAIVE TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS NOTE OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
SNAP-ON INCORPORATED
By: /s/ Denis J. Loverine
----------------------------------
Title: Treasurer 6-17-97
-------------------------------
3
<PAGE> 5
SCHEDULE
to be attached and become a part of
the Master Note dated April 30, 1998
executed by Snap-on Incorporated
and payable to
The First National Bank of Chicago
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Unpaid Initials
Amount Principal of
Date Amount of Balance Person
of of Interest Principal of Making
Transaction Loan Maturity Rate Payment Note Notation
----------- ---- -------- ---- ------- ---- ------
</TABLE>
4
<PAGE> 1
Exhibit (2)(a)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON SHARE PURCHASE RIGHTS)
OF
HEIN-WERNER CORPORATION
BY
SNAP-ON PACE COMPANY
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
SNAP-ON INCORPORATED
AT
$12.60 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, JUNE 1, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER
OF SHARES REPRESENTING AT LEAST 66 2/3% OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED
IN THIS OFFER TO PURCHASE. SEE SECTION 14.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S SHAREHOLDERS, AND
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER ALL OF THEIR SHARES.
------------------------
IMPORTANT
Any shareholder who desires to tender all or any portion of his Shares
should either (1) complete and sign the Letter of Transmittal or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal, mail
or deliver it 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 tender such Shares pursuant to the procedures for book-entry
transfer set forth in Section 2 or (2) request his broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for him. Any
shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if he desires to tender
such Shares.
Any shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in Section
2.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests 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, the Depositary, or to brokers, dealers, commercial banks
or trust companies. A shareholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
------------------------
The Information Agent for the Offer is:
MORROW & CO., INC.
May 4, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION................................................ 1
THE OFFER................................................... 3
1. Terms of the Offer................................. 3
2. Procedure for Tendering Shares..................... 4
3. Withdrawal Rights.................................. 7
4. Acceptance for Payment and Payment................. 8
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;
Exchange Listing; Exchange Act Registration; Margin
Regulations......................................... 9
8. Certain Information Concerning the Company......... 10
9. Certain Information Concerning Parent and the
Purchaser............................................ 12
10. Source and Amount of Funds......................... 13
11. Background of the Offer; The Merger Agreement and
Certain Other Agreements.............................. 13
12. Purpose of the Offer and the Merger; Plans for the
Company; Other Matters................................ 24
13. Dividends and Distributions........................ 26
14. Conditions of the Offer............................ 26
15. Certain Legal Matters.............................. 28
16. Fees and Expenses.................................. 31
17. Miscellaneous...................................... 31
SCHEDULE I--Directors and Executive Officers of Parent and
the Purchaser............................................. I-1
</TABLE>
<PAGE> 3
To the Holders of Common Stock of
HEIN-WERNER CORPORATION:
INTRODUCTION
Snap-on Pace Company, a Wisconsin corporation (the "Purchaser") and an
indirect wholly-owned subsidiary of Snap-on Incorporated, a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of Common Stock,
par value $1.00 per share (the "Common Stock"), including the associated common
share purchase rights (the "Rights" and, together with the Common Stock, the
"Shares"), issued pursuant to the Rights Agreement (as defined below), of
Hein-Werner Corporation, a Wisconsin corporation (the "Company"), at $12.60 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in this Offer to Purchase and in the related Letter of Transmittal
(which, together with any amendments or supplements hereto or thereto,
collectively constitute the "Offer").
Tendering shareholders 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 Firstar Trust Company, which is
acting as the Depositary (the "Depositary"), and Morrow & Co., Inc., which is
acting as the Information Agent (the "Information Agent"), incurred in
connection with the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of April 27, 1998 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company pursuant to which, as soon as practicable after the
completion of the Offer and satisfaction or waiver of all conditions to the
Merger (as defined below), the Purchaser will be merged with and into the
Company (the "Merger") and the Company will become an indirect wholly-owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each Share then outstanding (other than Shares held by Parent, the
Purchaser, any wholly-owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly-owned subsidiary of the Company, and by
shareholders who perfect their dissenters' rights under Wisconsin law) will be
converted into the right to receive $12.60 in cash or any higher price per Share
paid in the Offer (the "Offer Price"), without interest thereon. The Merger
Agreement is more fully described in Section 11.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER
OF SHARES REPRESENTING AT LEAST 66 2/3% OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO OTHER
TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 14.
IN CONNECTION WITH THE MERGER AGREEMENT, PARENT AND THE PURCHASER ENTERED
INTO A STOCK OPTION AGREEMENT WITH THE COMPANY. UPON THE TERMS AND CONDITIONS
SET FORTH IN THE STOCK OPTION AGREEMENT, THE COMPANY GRANTED TO THE PURCHASER AN
IRREVOCABLE OPTION TO PURCHASE FROM THE COMPANY AT THE OFFER PRICE NEWLY ISSUED
SHARES IN AN AMOUNT EQUAL TO THE NUMBER OF SHARES THAT, WHEN ADDED TO THE NUMBER
OF SHARES OWNED BY THE PURCHASER AND ITS AFFILIATES IMMEDIATELY FOLLOWING
CONSUMMATION OF THE OFFER, SHALL CONSTITUTE 90% OF THE SHARES THEN OUTSTANDING
ON A FULLY DILUTED BASIS (GIVING EFFECT TO THE ISSUANCE OF SUCH SHARES). THE
STOCK OPTION AGREEMENT IS DESCRIBED MORE FULLY IN SECTION 11.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S SHAREHOLDERS, AND
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER ALL OF THEIR SHARES. SEE SECTION 11.
Credit Suisse First Boston ("CSFB"), the Company's financial 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, the cash consideration to be
received in the Offer and the Merger, based upon and subject to the assumptions
and limitations set forth in such opinion, by the Company's shareholders is fair
to such shareholders from a financial point of view. Such opinion is set forth
in full as an annex to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to shareholders of
the Company herewith.
<PAGE> 4
The Merger Agreement provides that, except as provided therein, following
satisfaction or waiver of all of the conditions to the Offer and subject to the
terms and conditions thereof, the Purchaser will accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer as soon as
practicable after the Expiration Date.
Pursuant to the Merger Agreement, the Company has agreed to take all action
necessary under the Wisconsin Business Corporation Law (the "WBCL") and its
Articles of Incorporation and By-laws to convene a meeting of its shareholders
promptly following consummation of the Offer to consider and vote on the Merger.
If the Purchaser owns at least 90% of the outstanding Shares, approval of the
Merger can be obtained without the affirmative vote of any other shareholder of
the Company. See Section 15.
On April 27, 1998, Parent and the Purchaser entered into a Stock Option
Agreement with the Company. Pursuant to the Stock Option Agreement, if the
Purchaser owns at least 66 2/3% but less than 90% of the outstanding Shares, the
Purchaser may exercise an irrevocable option to purchase from the Company at the
Offer Price newly issued Shares in an amount equal to the number of Shares that,
when added to the number of Shares owned by the Purchaser and its affiliates
immediately following consummation of the Offer, shall constitute 90% of the
Shares then outstanding on a fully diluted basis (giving effect to the issuance
of the Option Shares). The Stock Option Agreement is described more fully in
Section 11.
The Purchaser presently intends to seek to cause the Company to make an
application for the termination of the registration of the Shares under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as
possible after the purchase of all validly tendered Shares pursuant to the Offer
if the requirements for termination of registration are met. See Section 7.
The Minimum Condition requires that the number of Shares validly tendered
and not withdrawn prior to the expiration of the Offer represent at least
66 2/3% of the Shares outstanding on a fully diluted basis. According to the
Company, as of April 27, 1998, there were 2,918,899 Shares issued and
outstanding, and there were outstanding options and warrants to purchase an
aggregate of 101,847 Shares. The Merger Agreement provides, among other things,
that the Company will not, without the prior written consent of Parent, issue
any additional Shares (except on the exercise of outstanding options, including
pursuant to the Stock Option Agreement, and as otherwise permitted under the
Merger Agreement). Based on the foregoing and assuming that all outstanding
options and warrants are exercised, the Minimum Condition will be satisfied if
2,013,831 Shares are validly tendered and not withdrawn prior to the expiration
of the Offer. If the Minimum Condition is satisfied (and the option under the
Stock Option Agreement is exercised, if necessary), Parent would be able to
effect the Merger without the affirmative vote of any other shareholder of the
Company.
The Company has distributed one Right for each outstanding Share pursuant
to the Rights Agreement, dated as of May 9, 1989, between the Company and
Firstar Trust Company (f/k/a First Wisconsin Trust Company), as Rights Agent, as
amended (the "Rights Agreement"). Based on the information disclosed by the
Company, the Company has irrevocably taken all actions necessary to make the
Rights Agreement and the Rights inapplicable to (i) the Offer and Merger and
(ii) the Stock Option Agreement and the transactions contemplated thereby.
The Merger Agreement provides that, promptly upon the payment by the
Purchaser for Shares pursuant to the Offer, and from time to time thereafter,
the Purchaser will be entitled to designate such number of directors, rounded up
to the next whole number, to the Board of Directors of the Company as will give
it representation equal to the product of the total number of directors on the
Board (giving effect to the directors designated by the Purchaser) multiplied by
the percentage that the aggregate number of Shares beneficially owned by the
Purchaser or its affiliates bears to the total number of Shares then
outstanding. In the Merger Agreement, the Company has agreed, upon the request
of the Purchaser, to promptly take all actions necessary to cause the
Purchaser's designees to be so elected, including, if necessary, promptly
increasing the size of the Board of Directors of the Company or securing the
resignation of one or more directors, or both. However, prior to the Effective
Time, the Board of Directors of the Company shall always have at least two
members who are neither officers, directors, shareholders or designees of the
Purchaser or any of its affiliates ("Purchaser Insiders"). If the number of
directors who are not Purchaser Insiders is reduced below
2
<PAGE> 5
two for any reason prior to the Effective Time, then the remaining directors who
are not Purchaser Insiders (or if there is only one director who is not a
Purchaser Insider, the remaining director who is not a Purchaser Insider) shall
be entitled to designate a person (or persons) to fill such vacancy (or
vacancies) who is not an officer, director, shareholder or designee of the
Purchaser or any of its affiliates and who shall be a director not deemed to be
a Purchaser Insider for all purposes of the Merger Agreement. At such time, the
Company shall, if requested by the Purchaser, also cause persons designated by
the Purchaser to constitute at least the same percentage (rounded up to the next
whole number) as is on the Board of Directors of the Company of each committee
of the Board of Directors of the Company; provided, however, that prior to the
Effective Time each committee of the Board of Directors of the Company shall
have at least one member who is not a Purchaser Insider. See Section 11.
The Purchaser estimates that the total funds required to purchase all
Shares validly tendered pursuant to the Offer, consummate the Merger and pay all
related costs and expenses will be approximately $44 million, including the
repayment of certain of the Company's indebtedness. The Purchaser will obtain
such funds from Parent by means of capital contributions, loans or a combination
thereof. Parent plans to obtain the funds for such capital contributions or
loans from available borrowings and working capital. See Section 10.
The information contained in this Offer to Purchase concerning the Company
was supplied by the Company, and Parent and the Purchaser take no responsibility
for the accuracy of such information. The information contained in this Offer to
Purchase concerning the Offer, the Merger, Parent and the Purchaser was supplied
by Parent and the Purchaser, and the Company takes no responsibility for the
accuracy of such information.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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 of
this Offer to Purchase. The term "Expiration Date" shall mean 12:00 Midnight,
New York City time, on Monday, June 1, 1998, unless and until the Purchaser, in
accordance with the terms of the Merger Agreement, shall have extended the
period of time for which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
the Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition and the expiration or termination of all waiting periods
imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the regulations thereunder (the "HSR Act"). See Section 14. If such
conditions are not satisfied prior to the Expiration Date, the Purchaser
reserves the right (but shall not be obligated) to (i) decline to purchase any
of the Shares tendered, subject to the terms of the Merger Agreement, (ii) waive
any of the conditions to the Offer, to the extent permitted by the provisions of
the Merger Agreement, and, subject to complying with applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"),
purchase all Shares validly tendered or (iii) amend the Offer or postpone the
acceptance for payment of tendered shares.
Subject to the terms of the Merger Agreement, if, on the initial scheduled
Expiration Date of the Offer, the sole condition remaining unsatisfied is the
failure of the waiting period under the HSR Act to have expired or been
terminated, the Purchaser shall, and Parent shall cause the Purchaser to, extend
the Expiration Date from time to time until two business days after the
expiration of the waiting period under the HSR Act. The rights reserved by the
Purchaser in this paragraph are in addition to the Purchaser's rights to amend
the Offer or postpone the acceptance for payment of tendered shares as described
in Section 14. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued no later than 9:00 a.m., New York City time,
on the
3
<PAGE> 6
next business day after the previously scheduled Expiration Date in accordance
with the public announcement requirements of Rule 14d-4(c) under the Exchange
Act. Without limiting the obligation of the Purchaser under such Rule or the
manner in which the Purchaser may choose to make any public announcement, the
Purchaser currently intends to make announcements by issuing a release to the
Dow Jones News Service.
The Merger Agreement provides that, without the prior written consent of
the Company, the Purchaser will not decrease the Offer Price or change the form
of consideration payable in the Offer, decrease the number of Shares sought to
be purchased pursuant to the Offer or amend any other term of the Offer in any
manner adverse to the holders of Shares.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to 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 shareholders are
entitled to withdrawal rights as described in Section 3. However, the ability of
the Purchaser to delay the payment for Shares which the Purchaser has accepted
for payment is limited by Rule 14e-l(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If 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,
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 the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In a public
release, the Commission has stated that in its view an offer must remain open
for a minimum period of time following a material change in the terms of the
Offer and that waiver of a material condition, such as the Minimum Condition, is
a material change in the terms of the Offer. The release states that an offer
should remain open for a minimum of five business days from the date a material
change is first published, sent or given to security holders and that, if
material changes are made with respect to information not materially less
significant than the offer price and the number of shares being sought, a
minimum of ten business days may be required to allow adequate dissemination and
investor response. The requirement to extend the Offer will not apply to the
extent that the number of business days remaining between the occurrence of the
change and the then-scheduled Expiration Date equals or exceeds the minimum
extension period that would be required because of such amendment. As used in
this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed by the Purchaser to record holders of Shares and will be
furnished by the Purchaser to brokers, dealers, banks and similar persons whose
names, or the names of whose nominees, appear on the shareholder 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 Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as defined below), and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the
4
<PAGE> 7
Depositary), in each case prior to the Expiration Date or (ii) the tendering
shareholder must comply with the guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company and the Philadelphia Depository Trust Company (each, a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase. 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 that Book-Entry Transfer Facility's
procedure for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at 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, 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 shareholder must comply with the guaranteed delivery procedures
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 term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of the Book Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution" and, collectively, "Eligible Institutions"). In
all other cases, all signatures on Letters of Transmittal must be guaranteed by
an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made or
certificates for Shares not tendered or not accepted for payment are to be
returned to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer
5
<PAGE> 8
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
shareholder's tender may be effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all physically tendered Shares, in proper
form for transfer (or a Book-Entry Confirmation with respect to all such
Shares), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the New York Stock Exchange (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 (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above, the
tendering shareholder will irrevocably appoint designees of the Purchaser, and
each of them, as such shareholder'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 shareholder's rights with respect to the Shares tendered
by such shareholder 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 May 4, 1998. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such shareholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
shareholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such shareholder (and, if
given, will not be deemed effective). The designees of the Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
such Shares and other securities or rights, including, without limitation, in
respect of any annual, special or adjourned meeting of the Company's
shareholders, actions by written consent in lieu of any such meeting 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 full voting, consent and other rights with
respect to such Shares and other related securities or rights, including voting
at any meeting of shareholders.
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 of any Shares determined by it not to be in proper form or
the acceptance for payment of, or payment for which
6
<PAGE> 9
may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right, subject to the provisions of the Merger Agreement,
to waive any of the conditions of the Offer or any defect or irregularity in the
tender of any Shares of any particular shareholder, whether or not similar
defects or irregularities are waived in the case of other shareholders. 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 U.S. federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder'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 shareholder is not subject to backup withholding. If a
shareholder does not provide such shareholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such shareholder and payment of cash to such shareholder
pursuant to the Offer may be subject to backup withholding of 31%. All
shareholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to the Purchaser and the Depositary). Certain shareholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Foreign shareholders, if
exempt, should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 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 Thursday, July 2, 1998.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission of the notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant to
the procedures for book-entry transfer as set forth in Section 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 purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 any time on or 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.
7
<PAGE> 10
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, promptly
after the Expiration Date, for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 3. All
determinations concerning the satisfaction of such terms and conditions will be
within the Purchaser's reasonable discretion, which determinations will be final
and binding. See Sections 1 and 14. The Purchaser expressly reserves the right,
in its sole discretion, to delay acceptance for payment of or payment for Shares
in order to comply in whole or in part with any applicable law, including,
without limitation, the HSR Act. Any such delays will be effected in compliance
with Rule 14e-l(c) under the Exchange Act (relating to a bidder's obligation to
pay for or return tendered securities promptly after the termination or
withdrawal of such bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or a timely Book-Entry Confirmation with respect thereto), (ii) a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and (iii) any other documents required
by the Letter of Transmittal. The per Share consideration paid to any
shareholder pursuant to the Offer will be the highest per Share consideration
paid to any other shareholder 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 shareholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, 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 (including such rights as are set forth in Sections 1 and 14) (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent tendering shareholders 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 for any
reason, certificates for any such Shares will be returned, without expense to
the tendering shareholder (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 procedures set forth in Section 2, such Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of the
Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and also may be a
taxable transaction under state, local or foreign tax laws. Accordingly, a
shareholder who tenders Shares in the Offer or receives cash in exchange for
Shares in the Merger (including as a result of perfecting his dissenters' rights
under the WBCL) will recognize gain or loss for federal income tax purposes
equal to the difference, if any, between the amount of cash received and the
shareholder's tax basis in the Shares sold. Gain or loss will be determined
separately for each block of Shares (i.e., Shares acquired at the same time and
price) exchanged pursuant to the Offer or the Merger. Such gain or loss
generally will be capital gain or loss if the Shares disposed of were held as
capital assets by the shareholder, and will be long-term capital gain or loss if
the Shares disposed of were held for more than one year at the date of sale or
the Expiration Date (in the case of the Offer) or on the date of the Merger (in
the case of the Merger), as the case may be. In addition, the Taxpayer Relief
Act of 1997 could affect the federal
8
<PAGE> 11
income tax consequences of the Offer and Merger in that, among other things, it
reduces the maximum rate of federal income tax on capital gains of individual
taxpayers for capital assets held more than 18 months. Shares held less than one
year may be subject to ordinary income tax rates of up to 39.6% for individuals.
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the Offer and the Merger without regard to
the particular facts and circumstances of each shareholder of the Company and is
based on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Department Regulations issued pursuant thereto and published
rulings and court decisions in effect as of the date hereof, all of which are
subject to change, possibly with retroactive effect. Special tax consequences
not described herein may be applicable to certain shareholders subject to
special tax treatment (including insurance companies, tax-exempt organizations,
financial institutions or broker dealers, foreign shareholders and shareholders
who have acquired their Shares pursuant to the exercise of employee stock
options or otherwise as compensation). ALL SHAREHOLDERS SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO SPECIFIC TAX EFFECTS APPLICABLE TO THEM OF THE OFFER
AND THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE
MINIMUM TAX AND ANY STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES.
The Shares are currently listed on the American Stock Exchange (the "AMEX")
under the symbol "HNW." The following table sets forth, for each of the periods
indicated, the high and low closing sales price per Share on the AMEX.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1996:
First Quarter.................................... $6.375 $4.250
Second Quarter................................... 8.750 5.813
Third Quarter.................................... 8.000 5.750
Fourth Quarter................................... 7.250 6.250
1997:
First Quarter.................................... $7.500 $6.375
Second Quarter................................... 8.250 6.375
Third Quarter.................................... 8.375 7.250
Fourth Quarter................................... 8.375 6.875
1998:
First Quarter.................................... $8.000 $6.625
Second Quarter (through May 1, 1998)............. 12.563 6.625
</TABLE>
On April 27, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent and
Purchaser, the closing sales price of the Shares on the AMEX was $8.250 per
Share. On May 1, 1998, the last full trading day prior to the commencement of
the Offer, the closing sales price of the Shares on the AMEX was $12.438 per
Share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
SHARES.
The Company paid a 5% stock dividend on (i) January 24, 1997 to
shareholders of record on January 3, 1997 and (ii) January 23, 1998 to
shareholders of record on January 2, 1998. The Company's current credit
agreement contains a restriction against the payment of cash dividends. The
Merger Agreement provides that, without the prior written consent of Parent, the
Company will not declare, set aside or pay any dividend on or make any other
distribution in respect of its capital stock. See Section 11.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and, depending upon the number of Shares so purchased,
could adversely effect the liquidity and market value of the remaining Shares
held by the public.
9
<PAGE> 12
Exchange Listing. The Shares are currently listed on the AMEX. Depending
upon the aggregate market value of Shares not acquired pursuant to the Offer and
the number of Shares held by other parties, the Shares may no longer meet the
requirements for continued listing on the AMEX and may be delisted from the
AMEX. AMEX-published guidelines indicate that the AMEX would consider delisting
the Shares in the event that, among other things, the number of record holders
of 100 or more Shares fell below 300, the number of publicly held Shares
(exclusive of concentrated holdings and those of officers and directors) fell
below 200,000 or the aggregate market value of the publicly held Shares fell
below $1.0 million. As of March 27, 1998, there were 568 holders of record of
Shares, holding 2,908,899 Shares.
If the AMEX 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 by other
sources. If the Shares were to trade on another exchange or market, the extent
of the public market for the Shares and availability of such quotations would
depend upon such factors as the number of holders of Shares and the aggregate
market value of the Shares remaining publicly held at such time, the interest of
securities firms in maintaining a market in the Shares, the possible termination
of registration of the Shares under the Exchange Act, as described below, and
other factors.
Exchange Act Registration. The Shares currently are registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its shareholders and to the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement
pursuant to Section 14(a) in connection with shareholders' meetings and the
related requirement of furnishing an annual report to shareholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Company. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144 or
Rule 144A promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), may be impaired or eliminated. If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be "margin
securities" or be eligible for continued listing on the AMEX.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be listed on the AMEX and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin regulations
of the Federal Reserve Board and therefore could no longer be used as collateral
for loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected
Consolidated Financial Data," has been furnished by the Company or has been
taken from or based upon publicly available documents and records on file with
the Commission and other public sources. Neither Parent nor the Purchaser
assumes responsibility for the accuracy or completeness of the information
concerning the Company contained in such documents and records or for any
failure by the Company to disclose events which may have occurred or may affect
the significance or accuracy of any such information but which are unknown to
Parent or the Purchaser.
The Company designs, manufactures, markets and sells proprietary collision
repair equipment worldwide, with operations centered in North America and in
Europe. The Company is a Wisconsin corporation with its
10
<PAGE> 13
principal executive offices at 2120 Pewaukee Road, Waukesha, Wisconsin. The
telephone number of the Company at such location is (414) 542-6611.
Selected Consolidated Financial Data. Set forth below is certain selected
consolidated financial data with respect to the Company, excerpted or derived
from the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997, as filed with the Commission pursuant to the Exchange Act.
More comprehensive financial information is included in such report and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such report and other documents and
all of the financial information (including any related notes) contained
therein. Such report and other documents may be inspected and copies may be
obtained from the Commission in the manner set forth under "Available
Information" below.
HEIN-WERNER CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31,
-----------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income Statement of Data
Net sales from continuing operations......... $39,037 $41,696 $41,819 $36,615 $33,515
Net income (loss) from continuing
operations................................ 1,337 1,908 892 281 (1,622)
Net income (loss)............................ 6,299 2,176 1,013 827 (1,576)
Earnings per share from continuing
operations-basic.......................... 0.46 0.66 0.31 0.10 (0.56)
Earnings per share-basic..................... 2.17 0.75 0.35 0.29 (0.55)
Earnings per share from continuing
operations-diluted........................ 0.42 0.57 0.26 0.08 (0.56)(1)
Earnings per share-diluted................... 1.96 0.69 0.32 0.24 (0.55)(1)
</TABLE>
- ---------------
(1) Diluted earnings per share was anti-dilutive for this period.
Per share data has been restated to give effect to stock dividends paid through
January 23, 1998.
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
Total assets.................................. $37,348 $45,598 $49,657 $46,101 $45,345
Long-term debt, excluding current
installments............................... 310 10,161 10,902 13,256 14,071
Cash dividends declared per common share...... $ -- $ -- $ -- $ -- $ --
</TABLE>
Available Information. The Company is subject to the informational
requirements of the Exchange Act, and in accordance therewith, files reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, Suite 1300, New
York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates by writing to the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
In addition, such reports, proxy statements and other information concerning the
Company can be inspected at the library of the AMEX, 86 Trinity Place, New York,
N.Y. 10006. The Commission maintains a Web site (located at http://www.sec.gov)
which includes reports, proxy statements and other information filed
electronically by registrants with the Commission.
11
<PAGE> 14
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER.
Parent is a leading manufacturer and distributor of high-quality hand
tools, power tools, tool storage products, diagnostics equipment, shop
equipment, emissions/safety equipment, collision repair equipment and systems,
diagnostics software, business management software for automotive repair shops
and related products and services. Parent's mission is to create value by
providing innovative solutions to the transportation service and industrial
markets worldwide; therefore, Parent's products and services are used mainly by
professional technicians and managers in vehicle service and industrial
applications. Customers include professional technicians, independent automotive
repair and body shops, franchised service centers, specialty repair shops,
automotive dealerships, vehicle manufacturers, industrial and government
entities and other professional tool and equipment users.
The Purchaser is a newly incorporated Wisconsin corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. All of the outstanding
capital stock of the Purchaser is owned indirectly 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 and the
Merger.
The principal offices of the Purchaser and Parent are located at 10801
Corporate Drive, Kenosha, Wisconsin 53141-1430. The telephone number of Parent
and the Purchaser at such location is (414) 656-5200.
Except as set forth in this Offer to Purchase, neither the Purchaser,
Parent, any of their respective affiliates nor, to the best of their knowledge,
any of the persons listed on Schedule I, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies. The Company and certain subsidiaries of Parent have from
time to time engaged in commercial transactions in the ordinary course of their
respective businesses. On December 30, 1996, John Bean Company, a subsidiary of
Parent, and the Company entered into an exclusive, multi-year contract, pursuant
to which the Company's Winona Van Norman Division agreed to manufacture certain
brake lathes, stands and accessories for John Bean Company. Such contract
resulted in revenues to the Company of approximately $557,000 during fiscal
1997. The Company sold the Winona Van Norman division on August 28, 1997. Except
as set forth in this Offer to Purchase, neither the Purchaser nor Parent, nor to
the best of the knowledge of the Purchaser and Parent, any of the persons listed
on Schedule I, has entered into any transaction with the Company, or any of the
Company's affiliates which are corporations, since the commencement of the
Company's third full fiscal year preceding the date of this Statement, the
aggregate amount of which was equal to or greater than one percent of the
consolidated revenues of the Company for (i) the fiscal year in which such
transaction occurred, or (ii) the portion of the current fiscal year which has
occurred if the transaction occurred in such year. Except as set forth in this
Offer to Purchase, neither the Purchaser, Parent, any of their respective
affiliates, nor, to the best of their knowledge, any of the persons listed on
Schedule I, has had, since December 31, 1994, any business relationships or
transactions with the Company or any of its executive officers, directors or
affiliates that would require reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, since December 31, 1994, there
have been no contacts, negotiations or transactions between the Purchaser,
Parent, any of their respective affiliates or, to the best of their knowledge,
any of the persons listed on Schedule I, and the Company or its affiliates
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer of
a material amount of assets.
Additional information concerning Parent is set forth in Parent's Annual
Report on Form 10-K for the fiscal year ended January 3, 1998, which report may
be obtained from the Commission in the manner set forth under "Available
Information," below.
Available Information. Parent is subject to the informational requirements
of the Exchange Act, and in accordance therewith, files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities
12
<PAGE> 15
of the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and
Suite 1400, Citicorp Center, 14th Floor, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can also be obtained at prescribed rates
by writing to the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, such
reports, proxy statements and other information concerning Parent can be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005. The Commission maintains a Web site (located at
http://www.sec.gov) which includes reports, proxy statements and other
information filed electronically by registrants with the Commission.
10. SOURCE AND AMOUNT OF FUNDS.
The Purchaser estimates that the total funds required to purchase all
Shares validly tendered pursuant to the Offer, consummate the Merger and pay all
related costs and expenses will be approximately $44 million, including the
repayment of certain of the Company's indebtedness. The Purchaser will obtain
such funds from Parent by means of capital contributions, loans or a combination
thereof. Parent plans to obtain the funds for such capital contributions or
loans from available borrowings under Parent's existing unsecured lines of
credit with Firstar Bank Milwaukee, N.A. (the "Firstar Line of Credit") and The
First National Bank of Chicago (the "'FNBC Line of Credit"), which provide for
maximum borrowings in an aggregate principal amount of up to $31 million and $50
million, respectively.
Advances under the Firstar Line of Credit bear interest, at Parent's
election, at a rate equal to either (i) the bank's announced prime rate in
effect from time to time, payable monthly until demand or (ii) a fixed rate and
for such term as may be quoted by the bank and agreed to by Parent. The Firstar
Line of Credit may be terminated by either party at any time. Advances under the
FNBC Line of Credit bear interest, at Parent's election, at a rate equal to
either (i) the bank's corporate base rate announced from time to time, payable
monthly and on demand or (ii) subject to availability and for a maturity to be
agreed upon, such other fixed rate as the parties may mutually agree upon. The
FNBC Line of Credit may be terminated by either party at any time. No plans or
arrangements have been made to refinance or repay borrowings under the Firstar
Line of Credit or the FNBC Line of Credit. It is anticipated that any borrowings
incurred by Parent in connection with the Offer will be repaid from internally
generated funds of Parent, the Purchaser and the Company and/or refinanced in
the private or public markets.
11. BACKGROUND OF THE OFFER; THE MERGER AGREEMENT AND CERTAIN OTHER AGREEMENTS.
The following description was prepared by Parent and the Company.
Information about the Company was provided by the Company and neither the
Purchaser nor Parent takes any responsibility for the accuracy or completeness
of any information regarding meetings or discussions in which the Purchaser,
Parent or their representatives did not participate.
BACKGROUND OF THE OFFER
From time to time over the last several years, Robert A. Cornog, Chairman,
President and Chief Executive Officer of Parent, contacted Joseph L. Dindorf,
President and Chief Executive Officer of the Company, to express Parent's
interest in exploring the possibility of a business combination with the
Company. On these occasions, Mr. Dindorf indicated that the Company was not then
considering a sale or other extraordinary corporate transaction.
In early 1996, Parent and the Company began preliminary discussions
regarding the possibility of a potential business combination and, in connection
therewith, entered into a confidentiality agreement under which Parent was
furnished with certain limited financial and business information concerning the
Company. During the period from November 1995 through April 1996,
representatives of Parent held various discussions with Mr. Dindorf during which
Mr. Dindorf responded to various questions from representatives of Parent. In
July 1996, the Company and Parent agreed to terminate these preliminary
discussions.
13
<PAGE> 16
Prior to and following the termination of the foregoing discussions, the
Company analyzed various potential strategic options that might be available to
the Company, including possible divestitures of one or more of its operating
divisions and possible business combinations or alliances with other
manufacturing companies. In 1997, pursuant to the Company's long-range
restructuring plan, the Company sold its Great Bend Industries Division and its
Winona Van Norman Division, used the proceeds of such divestitures to pay off
virtually all of its debt and hired an outside consultant to assist the Company
with strategic planning and the evaluation of acquisition candidates.
On March 3, 1998, Mr. Cornog called Mr. Dindorf to express Parent's renewed
interest in exploring a possible business combination with the Company and his
willingness to meet and discuss the terms of such a possible transaction. Mr.
Dindorf reiterated that the Company was not considering a sale and declined to
meet with Mr. Cornog, but said he would discuss with the Board of Directors of
the Company the possibility of having a meeting. Following this conversation,
Mr. Cornog sent Mr. Dindorf a letter again expressing Parent's interest
regarding a potential business combination with the Company.
On March 12, 1998, a meeting of the Board of Directors of the Company was
held during which Mr. Dindorf informed the Company's Board of Directors of his
conversation with Mr. Cornog. After reviewing various matters, including the
Company's recent financial performance and its long-range strategic plan, the
Board of Directors of the Company directed Mr. Dindorf to advise Parent that the
Company was not currently interested in pursuing a business combination and that
the Board of Directors of the Company had determined that it was in the best
long-term interests of the Company's shareholders for the Company to carry out
its long-range restructuring plan. On March 19, 1998, Mr. Dindorf reported to
representatives of Parent the decision of the Company's Board of Directors.
On March 27, 1998, notwithstanding the Company's prior communication, Mr.
Cornog telephoned Mr. Dindorf and expressed a strong interest in Parent
effecting a business combination with the Company at a significant premium above
the Company's current market price. After discussing the matter with the
Company's directors, Mr. Dindorf agreed to a meeting with Mr. Cornog. On March
30, 1998, Messrs. Cornog and Dindorf met and discussed a variety of issues
regarding a possible business combination, including a preliminary range of
possible values. At the conclusion of the meeting, Mr. Dindorf agreed to convene
a meeting of the Company's Board of Directors to consider Parent's expression of
interest.
On April 3, 1998, the Company's Board of Directors received a letter from
Parent setting forth a preliminary proposal pursuant to which Parent would
acquire all of the shares of the Company for $11.75 per share in cash. On that
same day, the Board of Directors of the Company met and reviewed with management
and the Company's outside counsel, Foley & Lardner, the options available to the
Company. At the conclusion of the meeting, the Board of Directors of the Company
directed management to retain Credit Suisse First Boston Corporation ("CSFB") as
the Company's financial advisor to assist the Board in evaluating Parent's offer
and to explore the Company's strategic alternatives.
During the course of the next several days, CSFB met with the Company's
management to review various alternatives available to the Company and also
compiled, with the assistance of the Company's management, a list of entities
that, in addition to Parent, may have an interest in effecting a business
combination with the Company. Thereafter, CSFB contacted the various entities
identified by Company management and CSFB to determine their interest in
effecting a business combination with the Company. Following several preliminary
discussions, each of the entities contacted ultimately advised CSFB that it was
not presently interested in pursuing such a business combination. During this
time, CSFB also engaged in discussions with Parent's financial advisors
regarding a potential transaction with Parent.
On April 15, 1998, the Board of Directors of the Company met to discuss the
status of discussions with the various parties contacted by CSFB as well as the
discussions between Parent and the Company. CSFB and the Company's management
reviewed with the directors the steps taken to date. At this meeting, CSFB
reported to the Board of Directors on various financial analyses it had
undertaken, and Foley & Lardner reviewed with the directors their fiduciary
duties in connection with the consideration of a business combination. At the
conclusion of the meeting, the Board authorized the Company and its
representatives to pursue a negotiated transaction with Parent and Foley &
Lardner was directed to prepare a draft merger
14
<PAGE> 17
agreement for transmittal to Parent providing for Parent's acquisition of the
Company for cash. On April 17, 1998, a draft of such an agreement was provided
to Parent. At the April 15 meeting, the Board of Directors also approved the
extension of employment and severance agreements to selected key employees of
the Company.
Thereafter, representatives of Parent and representatives of the Company as
well as Parent's and the Company's respective legal and financial advisors
continued to discuss a possible business combination and negotiate the terms of
a definitive merger agreement. During this period, the Company's management kept
the Board of Directors of the Company informed of the ongoing discussions.
On April 22, 1998, the Board of Directors of the Company met and CSFB and
Foley & Lardner updated the Board on the status of discussions between
representatives of Parent and the Company. In addition, Foley & Lardner reviewed
with the Board the principal terms of the draft agreement that had been provided
to Parent.
Beginning on April 23, 1998 and through the afternoon of April 27, 1998,
representatives of the Company and the Company's legal advisors met with
representatives of Parent and Parent's legal advisors to negotiate the terms of
a definitive merger agreement and the related agreements. Following execution of
a confidentiality agreement, on April 23, 1998, representatives of Parent met
with certain members of senior management of the Company to discuss certain due
diligence matters. The negotiations among the parties culminated on April 27,
1998 in the Company and Parent agreeing upon a form of definitive merger
agreement and related agreements, subject to approval of the Company's Board of
Directors. On the same date, after agreement was reached on a definitive merger
agreement, Parent and Mr. Dindorf agreed upon the form of a definitive
employment and consulting agreement pursuant to which Mr. Dindorf would remain
employed by the Company following the consummation of the transactions
contemplated by the Merger Agreement.
Later on April 27, 1998, the Board of Directors of the Company met and
reviewed with counsel the final terms of the Merger Agreement, the Stock Option
Agreement and the Employment and Consulting Agreement. Counsel also reviewed
with the directors their fiduciary obligations in connection with the
consideration of a transaction such as the one proposed with Parent. At the
April 27 meeting, CSFB delivered its written opinion to the Company's Board of
Directors to the effect that, as of such date and based upon and subject to the
various considerations set forth in such opinion, the proposed cash purchase
price of $12.60 per share to be received by the shareholders of the Company in
the Offer and the Merger was fair to such shareholders from a financial point of
view. The Board then discussed the presentations it had received at this and
other Board meetings and unanimously approved the Merger Agreement and the Stock
Option Agreement and the transactions contemplated thereby, and authorized their
execution. The Board of Directors also unanimously approved the Employment and
Consulting Agreement as well as an amendment to the Change of Control Agreement
between the Company and Mr. Dindorf in order to facilitate Mr. Dindorf's
entering into the Employment and Consulting Agreement.
On April 27, 1998, the Merger Agreement, the Stock Option Agreement, the
Employment and Consulting Agreement and various other transaction documents were
executed.
Following execution of the foregoing documents, a joint press release
announcing the execution of the definitive agreements was issued by Parent and
the Company on April 28, 1998.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement
which is incorporated herein by reference and a copy of which has been filed
with the Commission as an exhibit to the Schedule 14D-1. The Merger Agreement
may be examined and copies may be obtained at the places and in the manner set
forth in Section 9 of this Offer to Purchase. Capitalized terms used but not
defined in this summary of the Merger Agreement have the meanings given to such
terms in the Merger Agreement.
The Offer. The Merger Agreement provides that the Purchaser will, and
Parent will cause the Purchaser to, commence (within the meaning of Rule
14d-2(a) of the Exchange Act) as promptly as practicable, but in
15
<PAGE> 18
any event not later than May 4, 1998, the Offer for any and all outstanding
Shares not owned by the Purchaser at the Offer Price applicable to such Shares,
net to the seller in cash. The initial expiration date for the Offer is the
twentieth business day from and after the date the Offer is commenced, including
the date of commencement as the first business day in accordance with Rule 14d-2
under the Exchange Act. The obligation of Parent and the Purchaser to accept for
payment or pay for any Shares tendered pursuant to the Offer is subject only to
(i) there being validly tendered and not withdrawn prior to the expiration of
the Offer, that number of Shares which represents at least 66 2/3% of the Shares
outstanding on a fully diluted basis (without giving pro forma effect to the
potential issuance of any Shares issuable under the Stock Option Agreement) (the
"Minimum Condition") and (ii) the satisfaction or waiver of the other conditions
set forth in the conditions set forth in Annex I to the Merger Agreement
(together with the Minimum Condition, the "Conditions of the Offer"). Without
the prior written consent of the Company, the Purchaser will not (i) decrease
the Offer Price or change the form of consideration payable in the Offer, (ii)
decrease the number of Shares sought to be purchased in the Offer or (iii) amend
any other term of the Offer in any manner adverse to the holders of any Shares;
provided, however, that if on the initial scheduled Expiration Date, the sole
condition remaining unsatisfied is the failure of the waiting period under the
HSR Act, to have expired or been terminated, the Purchaser shall, and Parent
shall cause the Purchaser to, extend the expiration date from time to time until
two business days after the expiration or termination of the waiting period
under the HSR Act.
Subject to the terms of the Offer and the Merger Agreement and the
satisfaction or waiver of all the Conditions of the Offer as of the Expiration
Date, the Purchaser will accept for payment and pay for all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
the Expiration Date.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof and in accordance with the applicable provisions of the WBCL,
at the Effective Time, the Purchaser will be merged with and into the Company.
Following the Merger, the separate corporate existence of the Purchaser will
cease and the Company will continue as the Surviving Corporation; provided,
however, that upon the mutual agreement of Parent and the Company, the Merger
may be structured so that the Company will be merged with and into the
Purchaser, with Purchaser continuing as the Surviving Corporation. The Merger
will be effected by the filing at the time of Closing of appropriate articles of
merger relating to the Merger with the Department of Financial Institutions of
the State of Wisconsin.
The Merger Agreement provides that, at the Effective Time, by virtue of the
Merger and without any action on the part of Parent, the Purchaser, the Company
or the holders thereof, the Shares will be converted into the right to receive
the Offer Price in cash, without interest thereon, as soon as is reasonably
practicable upon surrender of the certificate formerly representing such Shares
(other than any Shares held by Parent, the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser, 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 cancelled and
retired and shall cease to exist with no payment being made with respect
thereto, and other than Dissenting Shares). At the Effective Time, each share of
common stock, par value $1.00 per share, of the Purchaser issued and outstanding
immediately prior to the Effective Time will, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become one validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation. Notwithstanding the foregoing, if Parent and the
Company agree to restructure the Merger (as described in the immediately
preceding paragraph), then the outstanding shares of the Purchaser's common
stock will not be affected in any manner by virtue of the Merger.
The Merger Agreement provides that the articles of incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, will be the
articles of incorporation of the Surviving Corporation, until thereafter amended
in accordance with the provisions thereof and the WBCL. The by-laws of the
Purchaser in effect at the Effective Time will be the by-laws of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and the WBCL.
Vote Required to Approve the Merger. The Merger Agreement provides that if
required by the Company's articles of incorporation and/or applicable law in
order to consummate the Merger, the Company,
16
<PAGE> 19
acting through its Board of Directors, will, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special meeting of the
Company's shareholders as soon as practicable following the Acceptance Date for
the purpose of considering and taking action upon the Merger Agreement; (ii)
promptly prepare and file with the Commission a preliminary information or proxy
statement relating to the Merger and the Merger Agreement and (x) obtain and
furnish the information required to be included by the Commission in the Proxy
Statement (as hereinafter defined) and, after consultation with Parent, respond
promptly to any comments made by the Commission with respect to the preliminary
proxy statement and, subject to compliance with Commission rules and
regulations, cause a notice of a special meeting and a definitive information or
proxy statement (the "Proxy Statement") to be mailed to the shareholders of the
Company no later than the time required by applicable law and the articles of
incorporation and the by-laws of the Company, and (y) to obtain the necessary
approvals of the Merger and the Merger Agreement by the shareholders of the
Company; and (iii) subject to the provisions of the Merger Agreement, include in
the Proxy Statement the recommendation of the Board of Directors of the Company
that the shareholders of the Company vote in favor of the approval of the Merger
and the adoption of the Merger Agreement. Pursuant to the Stock Option
Agreement, if the Purchaser owns at least 66 2/3% but less than 90% of the
outstanding Shares, the Purchaser may exercise an irrevocable option to purchase
from the Company at the Offer Price newly issued Shares in an amount equal to
the number of Shares that, when added to the number of Shares owned by the
Purchaser and its affiliates immediately following consummation of the Offer,
shall constitute 90% of the Shares then outstanding on a fully diluted basis
(giving effect to the issuance of the Option Shares). If the Purchaser owns 90%
of the outstanding Shares, approval of the Merger can be obtained without the
affirmative vote of any other shareholder of the Company.
In the event that (i) Parent, the Purchaser or any other subsidiary of
Parent acquires in the aggregate at least 90% of the outstanding Shares pursuant
to the Offer (including as a result of the exercise of the Stock Option
Agreement) and prior transactions and (ii) Parent and the Company restructure
the Merger so that the Company will be merged with and into the Purchaser, the
parties to the Merger Agreement will, subject to certain conditions, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer without a meeting of the shareholders of the
Company, in accordance with Section 180.1104 of the WBCL.
Conditions to the Merger. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger and the transactions
contemplated thereby, if the Offer shall have been consummated, are subject to
the satisfaction or waiver in writing, at or before the Effective Time, of
certain conditions, including: (i) to the extent required under the Company's
articles of incorporation or applicable law, the shareholders of the Company
shall have duly approved the transactions contemplated by the Merger Agreement;
(ii) the consummation of the Merger shall not be restrained, enjoined or
prohibited by any order, judgment, decree, injunction or ruling of a court of
competent jurisdiction or any Governmental Entity, and there shall not have been
any statute, rule or regulation enacted, promulgated or deemed applicable to the
Merger by any Governmental Entity which prevents the consummation of the Merger;
and (iii) the Purchaser shall have accepted for payment and paid for Shares
tendered pursuant to the Offer in accordance with the terms of the Merger
Agreement (however, this condition is not applicable to the obligations of
Parent or the Purchaser if the Purchaser fails to accept for payment or pay for
Shares tendered pursuant to the Offer in violation of the terms of the Offer).
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties. These include representations and
warranties by the Company with respect to, among other things, (i) organization,
qualification and subsidiaries, (ii) articles of incorporation and by-laws,
(iii) capitalization, (iv) authority, (v) no conflict, required filings and
consents, (vi) SEC reports and financial statements, (vii) information, (viii)
tax matters, (ix) no litigation, (x) compliance with applicable laws, (xi) labor
matters, (xii) employee benefit plans, (xiii) intellectual property, (xiv)
certain events, (xv) certain approvals, (xvi) brokers, (xvii) opinion of
financial advisor, (xviii) rights agreement, (xix) title to assets, (xx)
buildings and equipment, (xxi) vote required, (xxii) certain agreements, (xxiii)
applicability of articles of incorporation and (xiv) contracts.
17
<PAGE> 20
Parent and the Purchaser also have made certain representations and
warranties with respect to, among other things, (i) organization and
qualification, (ii) authority, (iii) no conflict, required filings and consents,
(iv) information, (v) adequate financing, (vi) brokers, (vii) the Purchaser and
(viii) share ownership.
Directors. The Merger Agreement provides that promptly upon the payment by
the Purchaser for Shares pursuant to the Offer, and from time to time
thereafter, the Purchaser will be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on the Board
of Directors of the Company (determined after giving effect to the directors
designated by the Purchaser pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by the
Purchaser or its affiliates bears to the total number of Shares then
outstanding, and the Company will, subject to compliance with Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, upon request of the
Purchaser, promptly take all actions necessary to cause the Purchaser's
designees to be so elected, including, if necessary, promptly increasing the
size of the Board of Directors of the Company or seeking the resignations of one
or more existing directors, or both; provided, however, that prior to the
Effective Time, the Board of Directors of the Company will always have at least
two members who are neither officers, directors, shareholders or designees of
the Purchaser or any of its affiliates ("Purchaser Insiders"). If the number of
directors who are not Purchaser Insiders is reduced below two for any reason
prior to the Effective Time, then the remaining directors who are not Purchaser
Insiders (or if there is only one director who is not a Purchaser Insider, the
remaining director who is not a Purchaser Insider) will be entitled to designate
a person (or persons) to fill such vacancy (or vacancies) who is not an officer,
director, shareholder or designee of the Purchaser or any of its affiliates and
who will be a director not deemed to be a Purchaser Insider for all purposes of
the Merger Agreement. At such time, the Company will, if requested by the
Purchaser, also cause persons designated by the Purchaser to constitute at least
the same percentage (rounded up to the next whole number) as is on the Board of
Directors of the Company of each committee of the Board of Directors of the
Company; provided, however, that prior to the Effective Time each committee of
the Board of Directors of the Company shall have at least one member who is not
a Purchaser Insider. The Company's obligation to appoint the Purchaser's
designees to the Board of Directors of the Company is subject to Section 14(f)
of the Exchange Act and Rule 14f-1 thereunder. The Company will promptly take
all actions required pursuant to such Section and Rule in order to fulfill its
obligations. From and after the election or appointment of the Purchaser's
designees and prior to the Effective Time, any amendment or termination of the
Merger Agreement by the Company, any extension by the Company 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 under the Merger Agreement,
or any other action taken by the Board of Directors of the Company in connection
with the Merger Agreement, will require the concurrence of a majority of the
directors of the Company then in office who are not Purchaser Insiders.
Indemnification and Insurance. The Merger Agreement provides as follows:
(a) The Purchaser and Parent agree that for a period of six years from
the Acceptance Date, the Purchaser will maintain all rights to
indemnification now existing in favor of the current or former directors,
officers, employees, fiduciaries and agents of the Company as provided in
the Company's articles of incorporation and by-laws or otherwise in effect
under any agreement on the date of the Merger Agreement. In addition, the
Purchaser and Parent agree that the articles of incorporation and by-laws
of the Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Company's articles of incorporation and
by-laws on the date of the Merger Agreement, which provisions will not be
amended, repealed or otherwise modified for a period of six years after the
Acceptance Date in any manner that would adversely affect the rights
thereunder of individuals who at any time prior to the Effective Time were
directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including without limitation,
the transactions contemplated by the Merger Agreement), unless such
modification is required by law. Notwithstanding the six-year period
specified in the foregoing sentences, in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification
in respect of any such claim or claims shall continue until disposition of
any and all such claims.
18
<PAGE> 21
(b) The Surviving Corporation will at all times exercise the powers
granted to it by its articles of incorporation, its by-laws, and by
applicable law to indemnify and hold harmless to the fullest extent
possible present or former directors, officers, employees, fiduciaries and
agents of the Company against any threatened or actual claim, action, suit,
proceeding or investigation made against them arising from their service in
such capacities (or service in such capacities for another enterprise at
the request of the Company) prior to, and including the Acceptance Date,
including, without limitation, with respect to matters relating to the
Merger Agreement.
(c) In addition to the foregoing, Parent agrees that the Company and,
from and after the Acceptance Date, the Surviving Corporation shall cause
to be maintained in effect for not less than six years from the Acceptance
Date, the current policies of the directors' and officers' liability
insurance maintained by the Company with respect to matters occurring at or
prior to the Effective Time (including, without limitation, the
transactions contemplated by the Merger Agreement); provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
provided, further, that the Surviving Corporation will not be required to
pay an annual premium in excess of 200% of the last annual premium paid by
the Company prior to the date of the Merger Agreement and if the Surviving
Corporation is unable to obtain the insurance required by this paragraph it
will obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount.
Covenants. The Merger Agreement contains various covenants of the parties
thereto, including covenants as to, among other things, the conduct of the
business of the Company, as described in further detail below, during the period
from the date of the Merger Agreement to the Closing Date or termination of the
Merger Agreement.
Conduct of Business of the Company. Except as required by the Merger
Agreement or with the prior written consent of Parent, during the period from
the date of the Merger Agreement to the Effective Time, the Company will and
will cause each of its subsidiaries to conduct its operations only in the
ordinary course of business consistent with past practice and will use its
commercially reasonable efforts and will cause each of its subsidiaries to use
its commercially reasonable efforts, to preserve intact the business
organization of the Company and each of its subsidiaries, to use, operate,
maintain and repair all of its assets and properties in a normal business manner
consistent with past practice, to keep available the services of its and their
present officers and key employees and to preserve the goodwill of those having
business relationships with the Company and to conduct business with suppliers,
customers, creditors and others having business relationships with the Company
in the best interests of the Company. Without limiting the generality of the
foregoing, and except as otherwise required or contemplated by the Merger
Agreement or the Stock Option Agreement, the Company will not, and will not
permit any of its subsidiaries to, prior to the Effective Time, without the
prior written consent of Parent: (a) adopt any amendment to its charter or
by-laws or comparable organizational documents; (b) issue, reissue or sell or
authorize the issuance, reissuance or sale of additional shares of capital stock
of any class, or shares convertible into capital stock of any class, or any
rights, warrants or options to acquire any convertible shares or capital stock,
other than the issuance of Shares pursuant to Options outstanding on the date of
the Merger Agreement or pursuant to the Stock Option Agreement; (c) declare, set
aside or pay any dividend or other distribution (whether in cash, shares or
property or any combination thereof) in respect of any class or series of its
capital stock other than between any of the Company and any subsidiary which is
wholly-owned by the Company; (d) split, combine, subdivide, reclassify or
directly or indirectly redeem, purchase or otherwise acquire, recapitalize or
reclassify, or propose to redeem or purchase or otherwise acquire, any shares of
its capital stock or any of its other shares or liquidate in whole or in part;
(e) except for (i) increases in salary, wages and benefits of non-executive
officers or employees of the Company or its subsidiaries in the ordinary course
of business consistent with past practice, (ii) increases in salary, wages and
benefits granted to officers and employees of the Company or its subsidiaries in
conjunction with new hires in the ordinary course of business consistent with
past practice or (iii) increases in salary, wages and benefits to employees of
the Company or its subsidiaries pursuant to collective bargaining agreements
entered into in the ordinary course of business consistent with past practice,
(A) increase the
19
<PAGE> 22
compensation or fringe benefits payable or to become payable to its directors,
officers or key employees (whether from the Company or any of its subsidiaries),
(B) pay any benefit not required by any existing plan or arrangement (including,
without limitation, the granting of stock options, stock appreciation rights,
shares of restricted stock or performance units), (C) grant any severance or
termination pay to (except pursuant to existing agreements, plans or policies
and as required by such agreements, plans or policies) any director, officer or
other key employee of the Company or any of its subsidiaries, (D) enter into or
modify any employment or severance agreement with any director, officer or other
key employee of the Company or any of its subsidiaries or (E) establish, adopt,
enter into, or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock or company benefit plans for the
benefit or welfare of any directors, officers or current or former employees,
except in each case to the extent required by applicable law or regulation; (f)
(i) sell, lease, transfer or assign any of its assets, tangible or intangible,
other than for a fair consideration in the ordinary course of business and other
than the disposition of obsolete or unusable property, (ii) enter into any
contract (other than purchase and sales orders in the ordinary course of
business in accordance with past practice) involving more than $25,000 without
the consent of Parent (which consent shall not be unreasonably withheld), (iii)
accelerate, terminate, modify in any material respect, or cancel any contract
(other than purchase and sales orders and other than in the ordinary course of
business in accordance with past practice) involving more than $25,000 to which
the Company is a party or by which it is bound without the consent of Parent
(which consent shall not be unreasonably withheld), (iv) make any capital
expenditure (or series of related capital expenditures) involving either more
than $25,000 (unless such expenditure is identified in the current business plan
of the Company as disclosed to Parent) or outside the ordinary course of
business, (v) delay or postpone the payment of accounts payable and other
liabilities outside the ordinary course of business, (vi) cancel, compromise,
waive or release any right or claim (or series of related rights and claims) not
covered by the reserves or accruals relating to such claim in the Company's
December 31, 1997 consolidated balance sheet either involving more than $25,000
or outside the ordinary course of business without the consent of Parent (which
consent shall not be unreasonably withheld), (vii) grant any license or
sublicense of any rights under or with respect to any intellectual property
other than in the ordinary course of business or (viii) enter into any contract
or agreement with any affiliate of the Company, except for transactions in the
ordinary course of business upon commercially reasonable terms; (g) (i) incur,
assume or prepay any long-term debt or incur or assume any short-term debt,
except that the Company and its subsidiaries may incur, assume or prepay debt in
the ordinary course of business consistent with past practice under existing
lines of credit, (ii) pay, discharge, settle or satisfy any other claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course of business
consistent with past practice, (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person or (iv) make any loans, advances or capital
contributions to, or investments in, any other person except in the ordinary
course of business consistent with past practice and except for loans, advances,
capital contributions or investments between any subsidiary wholly-owned by the
Company and the Company or another subsidiary wholly-owned by the Company; or
(h) agree in writing or otherwise to take any of the foregoing actions.
No Solicitation. Pursuant to the Merger Agreement, the Company covenanted
and agreed with Parent and the Purchaser that neither the Company nor any of its
subsidiaries has any agreement, arrangement or understanding with any potential
acquiror that, directly or indirectly, would be violated, or require any
payments, by reason of the execution, delivery and/or consummation of the Merger
Agreement and the Stock Option Agreement. The Company will, will cause its
subsidiaries to, and will use its commercially reasonable efforts to cause the
officers, directors, employees, investment bankers, attorneys and other agents
and representatives of the Company and its subsidiaries to, immediately cease
any existing activities, information exchanges, discussions or negotiations with
any person (including a "person" as defined in Section 13(d)(3) of the Exchange
Act) other than Parent or the Purchaser (a "Third Party") heretofore conducted
with respect to any Acquisition Transaction (as defined below). The Company
shall not, shall cause its subsidiaries not to, and shall use its commercially
reasonable efforts to cause the officers, directors, employees, investment
bankers, attorneys and other agents and representatives of the Company and its
subsidiaries not to, directly or indirectly, (x) solicit, initiate, continue,
facilitate or encourage (including by way of furnishing or disclosing non-public
information) any inquiries, proposals or offers from any Third Party with
respect to, or that could
20
<PAGE> 23
reasonably be expected to lead to, any acquisition or purchase of all or any
significant portion of the assets or business of, or any significant equity
interest in (including by way of a tender offer), or any merger, consolidation
or business combination with, or any similar transaction involving, the Company
or any of its subsidiaries (the foregoing being referred to collectively as an
"Acquisition Transaction"), or (y) negotiate or otherwise communicate in any way
with any Third Party with respect to any Acquisition Transaction or enter into,
approve or recommend any agreement, arrangement or understanding requiring the
Company to abandon, terminate or fail to consummate the Offer and/or the Merger
or any other transaction contemplated thereby or by the Stock Option Agreement.
Notwithstanding anything to the contrary in the foregoing, the Company may in
response to an unsolicited written proposal with respect to an Acquisition
Transaction involving the acquisition of all of the Shares (or all or
substantially all of the assets of the Company and its subsidiaries) from a
Third Party, furnish or disclose non-public information to such Third Party and
negotiate or otherwise communicate with such Third Party, in each case only if
(A) the Board of Directors of the Company (after consultation with its outside
legal counsel and independent financial advisors) determines in good faith that
such proposal would reasonably be likely to be more favorable to the Company and
its shareholders than the transactions contemplated by the Merger Agreement (the
proposal with respect to an Acquisition Transaction meeting the requirements of
clause (A), a "Superior Proposal"), (B) prior to furnishing or disclosing any
non-public information to, or entering into discussions or negotiations with,
such Third Party, the Company receives from such Third Party a customary
confidentiality agreement similar in all material respects to the
confidentiality agreement between Parent and the Company, and (C) the Company
advises Parent of all such non-public information delivered to such Third Party
prior to such delivery; provided, however, that the Company shall not enter into
a definitive agreement with respect to a Superior Proposal unless the Company
first complies with the immediately following paragraph, including the last
sentence thereof, and then unless the Company concurrently terminates the Merger
Agreement in accordance with the terms thereof.
The Merger Agreement provides that the Company will promptly (but in any
event within one business day of the Company becoming aware of same) advise
Parent of the receipt by the Company, any of its subsidiaries or any of the
Company's investment bankers, attorneys or other agents or representatives of
any inquires or proposals relating to an Acquisition Transaction and any actions
taken pursuant to the immediately preceding paragraph. The Company shall
promptly (but in any event within one business day of the Company becoming aware
of same) provide Parent with a copy of any such inquiry or proposal in writing
and a written statement with respect to any such inquiries or proposals not in
writing, which statement shall include the identity of the parties making such
inquiries or proposal and the material terms thereof and will update Parent on
an ongoing basis, or upon Parent's reasonable request, of the status thereof;
provided, however, that the Company shall not be obligated to provide a copy of,
or a written statement with respect to, any such inquiry if the Board of
Directors of the Company determines in good faith, after consultation with
outside legal counsel, that not providing such copy or written statement is
necessary to allow the Board of Directors of the Company to fulfill its
fiduciary duties to the shareholders of the Company under applicable law. For
the avoidance of doubt, the Company has agreed that it will not terminate the
Merger Agreement and enter into any agreement with respect to an Acquisition
Transaction unless and until Parent has been given the opportunity at least two
business days prior to the entering into of such agreement to match the terms of
such agreement.
Termination. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned at any time prior to the Effective Time,
whether or not approval thereof by the shareholders of the Company has been
obtained:
(a) by the mutual written consent of Parent, the Purchaser and the
Company prior to the date on which Parent's designees constitute a majority
of the Board of Directors of the Company; or
(b) by the Company if the Company is not in material breach of any of
its representations, warranties, covenants or arrangements contained in the
Merger Agreement and the Stock Option Agreement and if (i) the Purchaser
fails to commence the Offer as provided in the Merger Agreement, (ii) the
Purchaser shall not have accepted for payment and paid for Shares pursuant
to the Offer in accordance with the terms thereof on or before August 31,
1998 or (iii) the Purchaser fails to purchase validly tendered Shares in
violation of the terms of the Offer or the Merger Agreement; or
21
<PAGE> 24
(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 terminate the Merger
Agreement upon the termination or withdrawal of the Offer if Parent's or
the Purchaser's termination or withdrawal of the Offer is not in violation
of the terms of the Merger Agreement or the Offer; or
(d) by Parent or the Company if any court or other governmental entity
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
judgment, decree, injunction, ruling or other action is final and
nonappealable; or
(e) by the Company if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of the Merger Agreement, (i) there
occurs, on the part of Parent or the Purchaser, a material breach of any
representation, warranty, covenant or agreement contained in the Merger
Agreement which is not curable or, if curable, is not cured within 30 days
after written notice of such breach is given by the Company to the party
committing the breach, except in any case, such failures which are not
reasonably likely to affect adversely Parent's or the Purchaser's ability
to complete the Offer or the Merger or (ii) the Company enters into a
definitive agreement with respect to a Superior Proposal as permitted under
the Merger Agreement and after complying with the provisions of the Merger
Agreement and making the payments described under "Fees and Expenses"
below; or
(f) by Parent if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of the Merger Agreement, (i) there shall
have occurred, on the part of the Company, a breach of any representation,
warranty, covenant or agreement contained in the Merger Agreement which
individually, or in the aggregate, if not cured would be reasonably likely
to have a Material Adverse Effect on the Company and which is not curable
or, if curable, is not cured within the later of (x) 30 days after written
notice of such breach is given by Parent to the Company and (y) the
satisfaction of all conditions to the Offer not related to such breach or
(ii) the Board of Directors of the Company or committee thereof shall have
withdrawn or modified (or shall have resolved to withdraw or modify), in a
manner adverse to Parent, its approval or recommendation of the Merger
Agreement or any of the transactions contemplated thereby and the Board of
Directors of the Company and such committee shall not have fully reinstated
such approval or recommendations within three business days after a request
by Parent to so reinstate or shall have recommended (or resolved to
recommend) an Acquisition Transaction (other than the Offer and Merger) to
the shareholders of the Company; or
(g) by Parent if it is not in material breach of its obligation
hereunder or under the Offer and no Shares have been purchased pursuant to
the Offer on or before August 31, 1998.
Fees and Expenses. The Merger Agreement provides that, except as described
below, whether or not the Merger is consummated, all costs and expenses incurred
in connection with the Offer, the Merger Agreement, the Stock Option Agreement
and the transactions contemplated by the Merger Agreement and the Stock Option
Agreement will be paid by the party incurring such expenses.
Pursuant to the terms of the Merger Agreement, (i) in the event the Merger
Agreement is terminated pursuant to subsection (e)(ii) under "Termination" above
or (ii) in the event that (x) any person shall have publicly disclosed a
proposal regarding an Acquisition Transaction and (y) following such disclosure,
either (a) August 31, 1998 occurs without the shareholder approval of the Merger
being obtained (other than as a result of a material breach of the Merger
Agreement by Parent or the Purchaser that has not been cured within the time
period set forth in the Merger Agreement) or (b) the Company breaches (prior to
the time that the designees of the Purchaser constitute a majority of the Board
of Directors of the Company) any of its material obligations under the Merger
Agreement and does not cure such breach within the time period set forth in the
Merger Agreement or (c) the Merger Agreement is terminated pursuant to
subsection (f)(ii) under "Termination" above and (z) not later than twelve
months after any such termination the Company shall have entered into a
definitive agreement for an Acquisition Transaction, or an Acquisition
Transaction shall have been consummated, then the Company shall pay to an
account designated by Parent a termination fee, in immediately available funds,
of $1,000,000 (the "Termination Fee") and shall reimburse Parent for all
22
<PAGE> 25
out-of-pocket fees and expenses (but in no event greater than $350,000)
reasonably incurred by Parent and the Purchaser in connection with the Merger
Agreement, the Offer and the Merger. The Termination Fee and any reimbursement
of expenses shall be paid prior to, and shall be a condition to the
effectiveness of, any termination of the Merger Agreement referred to in clause
(i) above or on the next business day after the earlier of such Acquisition
Transaction being consummated or a definitive agreement for such Acquisition
Transaction being entered into if such fee and expenses are payable as a result
of clause (ii) above.
Employee Benefit Arrangements. The Merger Agreement provides that:
(a) Following the Effective Time and through December 31, 1999, the
Purchaser will provide employee benefit plans and programs for the benefit
of employees of the Company and its subsidiaries (excluding plans or
programs which provide for issuance of Shares or options on Shares) that
are of reasonably equivalent value to such employees as compared with the
Company Benefit Plans (as defined in the Merger Agreement), subject to
applicable governmental rules and regulations. All service credited to each
employee by the Company or any of its subsidiaries through the Effective
Time shall be recognized by the Purchaser for purposes of eligibility and
vesting (but not benefit accrual) under any employee benefit plan provided
by the Purchaser for the benefit of the employees.
(b) Parent will cause the Surviving Corporation to honor (without
modification) and assume all written employment agreements with individual
employees, severance agreements with individual employees and other
comparable agreements with individual employees of the Company or any of
its subsidiaries, all as in effect on the date of the Merger Agreement.
(c) The Purchaser will maintain in effect the Company severance
plan/program (as specified in the employee handbook) for a period of two
years immediately following the Effective Time and the Company severance
plan/program will not be terminated or adversely amended during such
two-year period.
(d) The Company will cause the interest of each of the employees of
the Company and its subsidiaries as of the Acceptance Date in the
Hein-Werner Retirement and Savings Plan and Trust to be fully vested and
nonforfeitable as of the Acceptance Date.
(e) For a period of 18 months following the Effective Time, Parent
shall cause the Surviving Corporation to continue to provide medical
insurance, at COBRA premium rates, to O. Friend, a current director of the
Company.
STOCK OPTION AGREEMENT
The following is a summary of certain provisions of the Stock Option
Agreement. This summary is not a complete description of the terms and
conditions of the Stock Option Agreement and is qualified in its entirety by
reference to the full text of Stock Option Agreement, which is incorporated
herein by reference and a copy of which has been filed with the Commission as an
exhibit to the Schedule 14D-1. The Stock Option Agreement may be examined and
copies may be obtained at the place and in the manner set forth in Section 9 of
this Offer to Purchase.
Purchase of Shares. On the terms and subject to the conditions set forth in
the Stock Option Agreement, the Company agreed to issue and sell to Parent that
number of newly issued Shares (the "Option Shares") equal to the number of
Shares that, when added to the number of Shares owned by the Purchaser and its
affiliates immediately following the consummation of the Offer, constitutes 90%
of the outstanding Shares on a fully-diluted basis (giving effect to the
issuance of the Option Shares), at a per share purchase price equal to the Offer
Price. The closing of such sale of Shares shall occur at any one time after the
acceptance for payment by Purchaser of the Shares constituting at least 66 2/3%
but less than 90% of the Shares then outstanding on a fully diluted basis but
prior to the earliest to occur of (x) the Effective Time and (y) the termination
of the Merger Agreement in accordance with the terms thereof.
Conditions to Closing. The obligation of the Company to deliver the Option
Shares upon the Purchaser's exercise of its option is subject to the following
conditions: (a) all waiting periods under the HSR Act
23
<PAGE> 26
applicable to the issuance and delivery of the Option Shares pursuant to the
Stock Option Agreement shall have expired or been terminated and (b) there shall
be no preliminary or permanent injunction or other final, nonappealable judgment
by any court of competent jurisdiction restricting, preventing or prohibiting
the issuance and delivery of the Option Shares.
Covenants of the Company. Pursuant to the Stock Option Agreement, the
Company covenants and agrees to use its commercially reasonable efforts to take,
or cause to be taken, all appropriate action, and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws to consummate
and make effective the transactions contemplated thereunder, including, without
limitation, using all reasonable efforts to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Entities.
Certain Representations and Warranties. In connection with the Stock Option
Agreement, the Company made certain customary representations and warranties to
Parent and the Purchaser, including with respect to (i) authorization,
reservation and validity of the issuance of the Option Shares pursuant to such
agreement and the absence of encumbrances on and in respect of such Shares and
(ii) the Company's due organization, valid existence and requisite corporate
powers. In connection with the Stock Option Agreement, Parent and the Purchaser
made certain customary representations and warranties to the Company, including
with respect to (i) authority to enter into and perform their obligations under
the Stock Option Agreement, (ii) due organization, valid existence and requisite
corporate powers and (iii) the investment intent of Parent and the Purchaser.
Termination. The Stock Option Agreement terminates automatically at the
earlier of (x) the Effective Time and (y) the termination of the Merger
Agreement in accordance with the terms and conditions thereof.
EMPLOYMENT AND CONSULTING AGREEMENT
The following is a summary of certain provisions of the Employment and
Consulting Agreement, dated as of April 27, 1998 (the "Employment and Consulting
Agreement"), by and among Parent, the Company and Joseph L. Dindorf, President
and Chief Executive Officer of the Company. This summary is qualified in its
entirety by reference to the Employment and Consulting Agreement, which is
incorporated herein by reference and which has been filed with the Commission as
an exhibit to the Schedule 14D-1. The Employment and Consulting Agreement may be
examined and copies may be obtained at the place and in the manner set forth in
Section 9 of this Offer to Purchase.
Parent requested, as an inducement for Parent and the Purchaser to enter
into the Merger Agreement, that Joseph L. Dindorf, President and Chief Executive
Officer of the Company, enter into an Employment and Consulting Agreement (the
"Employment and Consulting Agreement") with Parent and the Company. Such
agreement, which was entered into on April 27, 1998, provides for Mr. Dindorf's
employment by the Company from the Acceptance Date until December 31, 1998 and
for Mr. Dindorf to serve as a consultant thereafter until December 31, 2000. Mr.
Dindorf is entitled to a base salary of $25,000 per month through December 31,
1998 and consulting fees at the annual rate of $250,000 for the year 1999 and at
the annual rate of $200,000 for the year 2000. Mr. Dindorf is also entitled to
certain fringe benefits. If there is a termination of Mr. Dindorf's services
under the Employment and Consulting Agreement by Mr. Dindorf for good reason or
by Parent other than by reason of (i) death, (ii) disability or (iii) for cause
(as such terms are defined in the Employment and Consulting Agreement), Mr.
Dindorf will be entitled to a severance payment equal to the aggregate of all
unpaid amounts he would have been entitled to receive under the Employment and
Consulting Agreement as if he had continued in the employ of the Company and/or
had continued to provide consulting services to the Company for the remainder of
the employment and/or consulting terms, and he will continue to be entitled to
receive the insurance coverage provided to him and his dependents prior to his
termination for a certain period.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; OTHER MATTERS.
The purpose of the Offer, the Merger, the Merger Agreement and the Stock
Option Agreement is for Parent to acquire control of, and the entire equity
interest in, the Company. Upon consummation of the
24
<PAGE> 27
Merger, the Company will become an indirect wholly-owned subsidiary of Parent.
The Offer is intended to increase the likelihood that the Merger will be
effected.
Plans for the Company
Parent is conducting a detailed review of the Company and its assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel and will consider, subject to the terms of the Merger
Agreement, what, if any, changes would be desirable in light of the
circumstances which exist upon completion of the Offer. Such changes could
include changes in the Company's business, corporate structure, charter, bylaws,
capitalization, Board of Directors, management or dividend policy, although,
except as noted in this Offer to Purchase, Parent has no current plans with
respect to any of such matters.
Except as described in this Offer to Purchase, neither Parent nor the
Purchaser has any present plans or proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of assets, involving
the Company or any material changes in the Company's corporate structure,
business or composition of its management or personnel.
Other Matters
Shareholder Approval. Under the WBCL and the Company's Articles of
Incorporation, the approval of the Board of Directors of the Company and the
affirmative vote of the holders of 66 2/3% of the voting power of the
outstanding Shares are required to approve and adopt the Merger Agreement and
the transactions contemplated thereby, including the Merger. See Section 15.
The Company's Board of Directors has unanimously approved the Offer, the
Merger and the Merger Agreement and the transactions contemplated thereby.
Unless the Merger is consummated pursuant to the short-form merger provisions
under the WBCL described below (in which case no further corporate action by the
shareholders of the Company will be required to complete the Merger), the only
remaining required corporate action of the Company will be the approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the affirmative vote of the holders of 66 2/3% of the voting power of the
outstanding Shares, subject to Section 180.1150 of the WBCL. See Section 15.
Pursuant to the Merger Agreement, the Company has agreed to take all action
necessary under the WBCL and its Articles of Incorporation and By-laws to
convene a meeting of its shareholders promptly following consummation of the
Offer to consider and vote on the Merger. If the Purchaser owns at least 90% of
the outstanding Shares, approval of the Merger can be obtained without the
affirmative vote of any other shareholder of the Company. If the Purchaser owns
at least 66 2/3% but less than 90% of the outstanding Shares, pursuant to the
Stock Option Agreement, the Purchaser may exercise an option to purchase from
the Company at the Offer Price newly issued Shares in an amount equal to the
number of Shares that, when added to the number of Shares owned by the Purchaser
and its affiliates immediately following consummation of the Offer, shall
constitute 90% of the Shares then outstanding on a fully diluted basis (giving
effect to the issuance of such Shares). See Section 11.
Short Form Merger. Pursuant to the Merger Agreement, upon the mutual
agreement of Parent and the Company, the Merger may be structured so that the
Company will be merged with and into the Purchaser, with the Purchaser
continuing as the Surviving Corporation. If the Merger is so structured, under
Section 180.1104 of the WBCL, and the Purchaser owns at least 90% of the
outstanding Shares, the Purchaser will be able to approve the Merger without a
vote of the Company's shareholders. In such event, the Purchaser anticipates
that it will take all necessary and appropriate action to cause the Merger to
become effective as soon as reasonably practicable after such acquisition
without a meeting of the Company's shareholders.
Dissenters' Rights. While no dissenters' rights are available in connection
with the Offer, Sections 180.1301 through 180.1331 of the WBCL may provide
dissenters' rights to holders of the Shares, subject to the procedures described
therein, to object to the Merger and demand payment of the "fair value" of their
Shares in cash in connection with the consummation of the Merger. Dissenters'
rights are available if the Merger is a "business combination" (as defined in
Section 180.1130(3) of the WBCL), or if the Shares are
25
<PAGE> 28
not registered on a national securities exchange or quoted on the National
Association of Securities Dealers, Inc. automated quotations system on the
record date for notice of the shareholders' meeting held to vote on the Merger.
The Merger will not be a "business combination" if it is consummated as a
Short-Form Merger or, if at the time of the Merger, the Company does not have a
class of equity securities held of record by 500 or more persons or there are
less than 100 Wisconsin residents who are shareholders of record with unlimited
voting rights. If the Merger is not a "business combination" and dissenters'
rights are available because the Shares are not registered on an exchange or
quoted on Nasdaq, the "fair value" of the Shares will be determined as of the
time immediately prior to the Merger and will exclude, if equitable, any
appreciation or depreciation in the value of the Shares in anticipation of the
Merger. If the Merger is a "business combination" and dissenters' rights are
available, the "fair value" of the Shares will be determined pursuant to Section
180.1130(9)(a) of the WBCL with reference to the public market price of the
Shares if available, or otherwise as determined in good faith by the Company's
Board of Directors. The "fair value", as so determined, could be more or less
than the value per Share to be paid pursuant to the Offer and the Merger.
The foregoing summary of the rights of dissenting shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise their dissenters' rights in connection with
the Merger. The preservation and exercise of dissenters' rights are conditioned
on strict adherence to the applicable provisions of the WBCL.
Rule 13e-3. The Merger would have to comply with any applicable federal law
operative at the time. 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. Rule 13e-3 requires, among other things,
that certain financial information concerning the Company, and certain
information relating to the fairness of the proposed transaction and the
consideration offered to minority shareholders in such a transaction, be filed
with the Commission and disclosed to minority shareholders prior to consummation
of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that, prior to the
purchase of Shares by Purchaser pursuant to the Offer, without the prior written
consent of Parent, the Company will not (i) issue, reissue or sell or authorize
the issuance, reissuance or sale of additional shares of capital stock of any
class, or shares convertible into capital stock of any class, or any rights,
warrants or options to acquire any convertible shares or capital stock, other
than the issuance of Shares pursuant to Options outstanding on the date of the
Merger Agreement or pursuant to the Stock Option Agreement; (ii) declare, set
aside or pay any dividend or other distribution (whether in cash, shares or
property or any combination thereof) in respect of any class or series of its
capital stock other than between any of the Company and any Subsidiary which is
wholly-owned by the Company; or (iii) split, combine, subdivide, reclassify or
directly or indirectly redeem, purchase or otherwise acquire, recapitalize or
reclassify, or propose to redeem or purchase or otherwise acquire, any shares of
its capital stock, or any of its other shares or liquidate in whole or in part.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, the Purchaser shall not
be required to accept for payment or pay for any tendered Shares if (i) any
applicable waiting period under the HSR Act has not expired or terminated or
(ii) the Minimum Condition has not been satisfied, and the Purchaser may,
subject to the terms of the Merger Agreement, amend the Offer or postpone the
acceptance for payment of tendered Shares if at any time on or after the date of
the Merger Agreement and on or before the Expiration Date, any of the following
events shall occur:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent or the
Company (i) seeking to prohibit or impose any material limitations on
Parent's or the Purchaser's ownership or operation (or that of Parent's
subsidiaries or affiliates) of any or a material portion of their or the
Company's businesses or assets, or to compel Parent or the Purchaser or
Parent's subsidiaries and affiliates to dispose of or hold separate any
material portion of the business or assets of the Company or Parent and
Parent's subsidiaries, in each case taken as a whole, (ii) challenging
26
<PAGE> 29
the acquisition by Parent or the Purchaser of any Shares under the Offer,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger, or the performance of any of the other transactions
contemplated by the Merger Agreement or the Stock Option Agreement, or
seeking to obtain from the Company, Parent or the Purchaser any damages
that are material in relation to the Company, (iii) seeking to impose
material limitations on the ability of the Purchaser, or render the
Purchaser unable, to accept for payment, pay for or purchase, some or all
of the Shares pursuant to the Offer, the Merger or the Stock Option
Agreement, or (iv) seeking to impose material limitations on the ability of
the Purchaser or Parent effectively to exercise full rights of ownership of
the Shares, including, without limitation, the right to vote the Shares
purchased by it on all matters properly presented to the Company's
shareholders; or
(b) any Law is enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger or the transactions contemplated by
the Stock Option Agreement, or any other action is taken by any
Governmental Entity, other than the application to the Offer, the Merger or
the transactions contemplated by the Stock Option Agreement of applicable
waiting periods under the HSR Act, that results, directly or indirectly, in
any of the consequences referred to in clauses (i) through (iv) of
paragraph (a) above; or
(c) (i) the Board of Directors of the Company or any committee thereof
withdraws or modifies in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger, the Merger Agreement
or the Stock Option Agreement or approves or recommends any Acquisition
Transaction, or (ii) the Company enters into any agreement to consummate
any Acquisition Transaction; or
(d) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to Material Adverse Effect
are not true and correct, or any such representations and warranties that
are not so qualified are not true and correct in any respect (when taken
together with all other failures of such representations and warranties to
be true and correct) that would have a Material Adverse Effect on the
Company, in each case at the date of the Merger Agreement or at the
scheduled expiration of the Offer (as though made as of such date, except
that those representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date); or
(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
(f) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant to be performed or complied with by
it under the Merger Agreement or the Stock Option Agreement other than any
failure which would not have, either individually or in the aggregate, a
Material Adverse Effect on the Company; or
(g) any person acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act) of at least 20% of the outstanding
Shares (other than any person not required to file a Schedule 13D under the
rules promulgated under the Exchange Act or other than pursuant to the
Stock Option Agreement); or
(h) there shall have occurred, and continued to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the
New York Stock Exchange or the American Stock Exchange, (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States, (iii) a commencement of a war, armed hostilities or
other national or international calamity directly involving the United
States (other than an action involving solely United Nations' personnel or
support of United Nations' personnel), or (iv) in the case of any of the
events described in the foregoing clauses (i) through (iii) existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such condition (including any action or
inaction by Parent or the Purchaser not in violation of the Merger Agreement)
and 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.
27
<PAGE> 30
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.
15. CERTAIN LEGAL MATTERS.
Except as described in this Section 15, based on information provided by
the Company, none of the Company, the Purchaser or 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 by a domestic or foreign governmental, administrative
or regulatory agency or authority that would be required or desirable for the
acquisition and ownership of the Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required or desirable, the Purchaser
and Parent presently contemplate that such approval or other action will be
sought, except as described below under "State Takeover Laws." While, except as
otherwise described in this Offer to Purchase, 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 or other substantial conditions complied with in the
event that such approvals were not obtained or such other actions were not taken
or in order to obtain any such approval or other action. If certain types of
adverse action are taken with respect to the matters discussed below, the
Purchaser could decline to accept for payment or pay for any Shares tendered.
See Section 14 for certain conditions to the Offer, including conditions with
respect to governmental actions.
(a) State Takeover Laws.
A number of states within 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, shareholders,
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, with respect to those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
prior approval of the remaining shareholders, provided that such laws were
applicable only under certain conditions.
Section 180.1140 through 180.1144 of the WBCL (the "Wisconsin Business
Combination Law") prohibit certain business combinations between a resident
domestic corporation (such as the Company) and an "interested stockholder"
(defined generally as any person who beneficially owns, directly or indirectly,
10% of the outstanding voting stock of a domestic corporation or who is an
affiliate or associate of the corporation and beneficially owned 10% of the
voting stock within the last three years) for a period of three years after the
date on which the person became an interested stockholder unless, among other
exceptions, the acquisition of the shares or the business combination has been
approved by the board of directors of the resident domestic corporation prior to
the date on which the interested stockholder became an interested stockholder.
Although the acquisition of the Shares pursuant to the Merger after the purchase
of Shares in the Offer would involve a business combination between a resident
domestic corporation and an interested stockholder, the Company's execution of
the Merger Agreement, which provides for the Offer and the Merger, was
unanimously approved by the Board of Directors of the Company prior to the date
on which the Purchaser will become an interested stockholder. Accordingly, the
Wisconsin Business Combination Law is inapplicable to the Offer and the Merger.
Section 180.1150 of the WBCL contains "Control Share" provisions limiting,
under certain circumstances, the voting power of a shareholder that holds in
excess of 20% of the voting power of certain
28
<PAGE> 31
corporations. As a result, Shares held by the Purchaser that constitute in
excess of 20% of the voting power in the election of directors of the Company
will be limited to 10% of the full voting power of such Shares. However,
pursuant to the Stock Option Agreement, if the Purchaser owns at least 66 2/3%
but less than 90% of the outstanding Shares, the Purchaser may exercise an
option to purchase from the Company at the Offer Price newly issued Shares in an
amount equal to the number of Shares that, when added to the number of Shares
owned by the Purchaser and its affiliates immediately following consummation of
the Offer, shall constitute 90% of the Shares then outstanding on a fully
diluted basis (giving effect to the issuance of such Shares). If the Purchaser
owns at least 90% of the outstanding Shares, approval of the Merger can be
obtained without the affirmative vote of any other shareholder of the Company.
Section 180.1130 through 180.1134 of the WBCL (the "Wisconsin Fair Price
Law") generally provide, with certain exceptions, that "business combinations"
involving an "issuing public corporation" (a Wisconsin corporation like the
Company which has a class of equity securities held of record by more than 500
persons and at least 100 shareholders of record who are residents of Wisconsin)
and a "significant shareholder" (defined generally as any person that is the
beneficial owner, either directly or indirectly, of 10% or more of the voting
power of the outstanding voting shares of the issuing public corporation) be
approved by the affirmative vote of at least 80% of the voting power of the
issuing public corporation's stock and at least 66 2/3% of the voting power of
the corporation's stock not beneficially owned by the significant shareholder,
in each case voting together as a group, unless certain "fair price" conditions
set out in Section 180.1132 of the WBCL are satisfied. The amount to be paid for
each Share in both the Offer and pursuant to the Merger satisfies each of the
conditions of Section 180.1132 of the WBCL. Accordingly, the restrictions
contained in the Wisconsin Fair Price Law are not applicable to the Offer and
the Merger. In addition, if the Merger is consummated as a short form merger,
the Merger will not be a "business combination" under, and will not be subject
to the provisions of, the Wisconsin Fair Price Law.
Based on information supplied by the Company's representations in the
Merger Agreement, the Purchaser does not believe that any other state takeover
statutes apply to the Offer or the Merger. See Section 12. Neither the Purchaser
nor Parent has currently complied with any such 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 obligated to accept for
payment or pay for any Shares tendered pursuant to the Offer. See Section 14.
(b) Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission (the "FTC") and certain waiting period requirements have been
satisfied.
Parent and the Company expect to file their Notification and Report Forms
with respect to the Offer under the HSR Act on or about May 8, 1998. The waiting
period under the HSR Act with respect to the Offer will expire at 11:59 p.m.,
New York City time, on the 15th day after the date Parent's form is filed unless
early termination of the waiting period is granted. However, the Antitrust
Division or the FTC may extend the waiting period by requesting additional
information or documentary material from Parent or the Company. If such a
request is made, such waiting period will expire at 11:59 p.m., New York City
time, on the tenth day after substantial compliance by Parent with such request.
Only one extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may be
extended only by court order or with the consent of Parent. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the 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
29
<PAGE> 32
may agree to delay consummation of the transaction while such negotiations
continue. The Purchaser will not accept for payment Shares tendered pursuant to
the Offer unless and until the waiting period requirements imposed by the HSR
Act with respect to the Offer have been satisfied. See Section 14.
As discussed below, the HSR Act requirements with respect to the Merger
will not apply if certain conditions are met. In particular, the Merger may not
be consummated until 30 calendar days after receipt by the Antitrust Division
and the FTC of the Notification and Report Forms of both Parent and the Company
unless the Purchaser acquires 50% or more of the outstanding Shares pursuant to
the Offer (which would be the case if the Minimum Condition were satisfied) or
the 30-day period is earlier terminated by the Antitrust Division and the FTC.
Within such 30-day period, the Antitrust Division or the FTC may request
additional information or documentary materials from Parent and/or the Company.
The Merger may not be consummated until 20 days after such requests are
substantially complied with by both Parent and the Company. Thereafter, the
waiting periods may be extended only by court order or with the consent of
Parent and the Company.
The FTC and the Antitrust Division periodically review the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before or after the
Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares pursuant
to the Offer or otherwise or seeking divestiture of Shares acquired by the
Purchaser or divestiture of substantial assets of Parent or its subsidiaries.
Private parties, as well as state governments, may also bring legal action under
the antitrust laws under certain circumstances. Based upon an examination of
publicly available information relating to the businesses in which Parent and
the Company are engaged, Parent and the Purchaser believe that the acquisition
of Shares by the Purchaser will not violate the antitrust laws. Nevertheless,
there can be no assurance that a challenge to the Offer or other acquisition of
Shares by the Purchaser on antitrust grounds will not be made or, if such a
challenge is made, of the result. See Section 14 for certain conditions to the
Offer, including conditions with respect to litigation and certain governmental
actions.
German AARC. According to the German Act Against Restraints of Competition
(the "AARC"), the acquisition of Shares by Purchaser pursuant to the Offer may
be subject to German pre-merger control. Notice of a transaction subject to
German pre-merger control must be provided before consummation to the German
Federal Cartel Office (the "FCO"), and may not be effected until antitrust
review has been completed and no objections raised. During a statutory one-month
period following the filing, the FCO must either come to a final decision as to
the compatibility of the transaction with the German market, or inform the
parties in writing that it has initiated an in-depth review of the transaction.
In most instances to date, the FCO has completed antitrust review and given
clearance to the respective transactions before the end of the one-month period.
However, there can be no assurance that the review of the purchase of Shares
pursuant to the Offer will also be completed within one month following the
filing.
If the FCO is not in a position to come to a final decision within the
one-month period, it will have to inform the parties before the end of such
period in writing that it has initiated an in-depth review of the transaction.
Should the FCO fail to give such information to the parties before the end of
the one-month period, the transaction is treated as if it had been given
clearance. Provided that the FCO has informed the parties about the initiation
of the in-depth review within such period, a review period of four months in
total (beginning with the original filing) becomes applicable to the
transaction. In most instances to date, where a four-month review period became
applicable to a transaction, the FCO has completed antitrust review and given
clearance to the respective transaction before the end of such period. There can
be no assurance, however, that if the four-month period becomes applicable to
the purchase of Shares pursuant to the Offer, antitrust review by the FCO will
be completed before the end of such period.
In the course of its reviews, the FCO will examine whether the proposed
acquisition of Shares by the Purchaser pursuant to the Offer would create a
dominant market position or strengthen an already-existing dominant position in
Germany. If the FCO makes such a finding, it will act to prohibit the
transaction. Based upon an examination of information available to Parent
relating to the businesses in which Parent, the
30
<PAGE> 33
Company and their respective subsidiaries are engaged. Parent and the Purchaser
believe that there is no ground for such a finding. Nevertheless, there can be
no assurance that the FCO will not take a different point of view.
Other Foreign Laws. According to publicly available information, the
Company also owns property and conducts business in a number of other countries
and jurisdictions, including the United Kingdom, Italy and France. In connection
with the acquisition of the Shares pursuant to the Offer, the laws of certain
foreign countries and jurisdictions may require the filing of information with,
or the obtaining of the approval of, governmental authorities in such countries
and jurisdictions. In addition, the waiting period prior to consummation of the
Offer associated with such filings or approvals may extend beyond the scheduled
Expiration Date.
The governments in such countries and jurisdictions might attempt to impose
additional conditions on the Company's operations conducted in such countries
and jurisdictions as a result of the acquisition of the Shares pursuant to the
Offer or the Merger. There can be no assurance that the Purchaser will be able
to cause the Company or its subsidiaries to satisfy or comply with such laws or
that compliance or noncompliance will not have adverse consequences for the
Company or any subsidiary after purchase of the Shares pursuant to the Offer or
the Merger.
(c) Federal Reserve Board Regulations. Regulations 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. All financing for the Offer
will be in full compliance with the Margin Regulations.
16. FEES AND EXPENSES.
The Purchaser has retained Morrow & Co., Inc. to act as the Information
Agent and Firstar Trust Company to act as the Depositary in connection with the
Offer. Such firms each will receive reasonable and customary compensation for
their services. The Purchaser has also agreed to reimburse each such firm for
certain reasonable out-of-pocket expenses and to indemnify each such firm
against certain liabilities and expenses in connection with their services,
including certain liabilities under the federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Information Agent) for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, banks and trust companies will
be reimbursed by the Purchaser for customary mailing and handling expenses
incurred by them in forwarding material to their customers.
17. MISCELLANEOUS.
The Offer is being made to all holders of Shares other than the Company.
The Purchaser is not aware of any jurisdiction in which the making of the Offer
or the tender of Shares in connection therewith would not be in compliance with
the laws of such jurisdiction. If the Purchaser becomes aware of any
jurisdiction in which the making of the Offer would not be in compliance with
applicable law, the Purchaser will make a good faith effort to comply with any
such law. If, after such good faith effort, the Purchaser cannot comply with any
such law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in 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 jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of Parent or the Purchaser not contained herein or in
the Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
31
<PAGE> 34
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. The Schedule 14D-1 and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
offices of the Commission in the manner set forth in Section 8 of this Offer to
Purchase (except that they will not be available at the regional offices of the
Commission).
SNAP-ON PACE COMPANY
May 4, 1998
32
<PAGE> 35
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT AND THE PURCHASER
I. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, business address and present principal occupation or employment,
and material occupations, positions, offices or employments for the past five
years of each director and executive officer of Parent. Unless otherwise
indicated, each such person is a citizen of the United States of America and the
business address of each such person is c/o Snap-on Incorporated, 10801
Corporate Drive, Kenosha, Wisconsin 53141-1430. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Parent. Unless otherwise indicated, each such person has held his or her present
occupation as set forth below, or has been an executive officer at Parent, or
the organization indicated, for the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- ----------------------------------------------
<S> <C>
Robert A. Cornog............... Chairman, President and Chief Executive Officer since July
1991. A Director since 1982.
Branko M. Beronja.............. President -- Diagnostics since February 1998. Senior Vice
President -- Diagnostics, North America from April 1996 to
February 1998. President -- North American Operations from
April 1994 to April 1996, and Vice President -- Sales, North
America from August 1989 to April 1994. A Director since
January 1997.
Frederick D. Hay............... Senior Vice President -- Transportation since February 1996.
Prior to joining Snap-on, he was President of the Interior
Systems and Components Division of UT Automotive, a business
unit of United Technologies Corporation, from December 1989
to January 1996.
Donald S. Huml................. Senior Vice President -- Finance and Chief Financial Officer
since August 1994. Prior to joining Snap-on, he was Vice
President and Chief Financial Officer of Saint-Gobain
Corporation from December 1990 to August 1994.
Michael F. Montemurro.......... Senior Vice President -- Financial Services and
Administration since August 1994. Senior Vice President --
Financial Services, Administration and Chief Financial
Officer from April 1994 to August 1994. Senior Vice
President -- Finance and Chief Financial Officer from March
1990 to April 1994.
Jay H. Schnabel................ Senior Vice President -- Europe since April 1996. Senior
Vice President -- Diagnostics from April 1994 to April 1996.
Senior Vice President -- Administration from April 1990 to
April 1994. A Director since August 1989.
Neil T. Smith.................. Controller since November 1997. Financial Controller from
June 1997 to November 1997. Director of Financial Analysis
and Planning from December 1994 to May 1997. Prior to
joining Snap-on, he was Director of Finance for the Nielsen
Marketing Research Division of Dun and Bradstreet
Corporation from January 1991 to December 1994.
Susan F. Marrinan.............. Vice President, Secretary and General Counsel since January
1992.
Donald W. Brinckman............ Director since 1992. Mr. Brinckman is the founder of
Safety-Kleen Corporation and has been Chairman of its Board
of Directors since 1994. He served as Chief Executive
Officer of Safety-Kleen from 1968 to 1994 and again since
August, 1997. He also served as President of Safety-Kleen
from 1991 to 1993. Safety-Kleen is a recycler of automotive
and industrial hazardous and nonhazardous fluids. Mr.
Brinckman also serves as a Director of Paychex, Inc.
</TABLE>
I-1
<PAGE> 36
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- ----------------------------------------------
<S> <C>
Bruce S. Chelberg.............. Director since 1993. Mr. Chelberg has been Chairman of the
Board and Chief Executive Officer of Whitman Corporation, a
consumer goods company, since 1992. He has served on
Whitman's Board since 1988. Mr. Chelberg also serves as a
Director of First Midwest Bancorp, Inc., and Northfield
Laboratories, Inc.
Roxanne J. Decyk............... Director since 1993. Ms. Decyk has been a strategy and
business development consultant since April, 1997, and from
1994 to 1997 served as Vice President-Corporate Planning for
Amoco Corporation, a petroleum products company. She was
Vice President-Marketing and Sales-Polymers of Amoco
Chemical Company from 1993 to 1994, and Vice
President-Commercial and Industrial Sales from 1991 to 1993.
Ms. Decyk also serves as a Director of Material Sciences
Corporation.
Leonard A. Hadley.............. Director since 1997. Mr. Hadley has been Chairman and Chief
Executive Officer of Maytag Corporation, a manufacturer of
appliances, since 1993 and was its President and Chief
Operating Officer since 1991. He also serves as a Director
of Deere & Company.
Arthur L. Kelly................ Director since 1978. Mr. Kelly has been the managing partner
of KEL Enterprises L.P., a holding and investment company,
since 1982. He also is a Director of Bayerische Motoren
Werke (BMW) A.G., Deere & Company, Nalco Chemical Company,
The Northern Trust Corporation and Thyssen Industrie A.G.
George W. Mead................. Director since 1985. Mr. Mead has been Chairman of the Board
of Consolidated Papers, Inc., a maker of paper products,
since 1971. He was Chief Executive Officer of Consolidated
Papers from 1971 through 1993.
Edward H. Rensi................ Director since 1992. Mr. Rensi has been a consultant and
retired President and Chief Executive Officer of McDonald's
U.S.A., a food service organization, since July, 1997. He
served as McDonald's U.S.A. President and Chief Operating
Officer from 1984 to 1991 and as President and Chief
Executive Officer from 1991 to 1997. He also serves as a
Director of International Speedway Corporation.
Richard F. Teerlink............ Director since 1997. Mr. Teerlink has been Chairman of
Harley-Davidson, Inc., a manufacturer of motorcycles, since
1996, and served as its Chief Executive Officer from 1989 to
1997 and President from 1987 to 1997. He also serves as a
Director of Johnson Controls, Inc.
</TABLE>
II. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name, business address and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years of each director and executive officer of the Purchaser. Unless
otherwise indicated, each such person is a citizen of the United States of
America and the business address of each such person is c/o Snap-on Incorporated
10801 Corporate Drive, Kenosha, Wisconsin 53141-1430. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- ----------------------------------------------
<S> <C>
Branko M. Beronja.............. Director and President of the Purchaser.
President -- Diagnostics since February 1998. Senior Vice
President -- Diagnostics, North America from April 1996 to
February 1998. President -- North American Operations from
April 1994 to April 1996, and Vice President -- Sales, North
America from August 1989 to April 1994. A Director since
January 1997.
Susan F. Marrinan.............. Vice President and Secretary of the Purchaser. Vice
President, Secretary and General Counsel since January 1992.
Denis J. Loverine.............. Treasurer of the Purchaser. Treasurer of Parent since
September 1990.
</TABLE>
I-2
<PAGE> 37
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each shareholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
FIRSTAR TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Mail or Courier:
Firstar Trust Company Firstar Trust Company Firstar Trust Company
P.O. Box 2077 Corporate Trust Services Corporate Trust Services
Milwaukee, WI 53201 1555 N. RiverCenter Drive 1555 N. RiverCenter Drive
Suite 301 Suite 301
Milwaukee, WI 53212 Milwaukee, WI 53212
Attention: William Caruso
</TABLE>
By Hand in New York City:
IBJ Schroder Bank & Trust Company
One State Street Plaza
Subcellar One
New York, NY 10004
Attention: Securities Processing Window
Facsimile Copy Number:
(414) 276-4226
(For Eligible Institutions Only)
For Confirmation Telephone:
(414) 905-5004
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 location and telephone numbers set
forth below. Shareholders may also contact their broker, dealer, commercial bank
or trust company for assistance concerning 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
(Call Collect)
or
Banks & Brokers Call Toll Free 1-800-662-5200
All Others Call Toll Free 1-800-566-9061
<PAGE> 1
Exhibit (2)(b)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 27, 1998 (this
"Agreement"), by and among Snap-on Incorporated, a Delaware company ("Parent"),
Snap-on Pace Company, a Wisconsin corporation and a wholly-owned subsidiary of
Parent (the "Purchaser"), and Hein-Werner Corporation, a Wisconsin corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the acquisition of the Company by the Purchaser
on the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
the Purchaser to make a tender offer (as it may be amended as permitted under
this Agreement, the "Offer") to purchase all of the issued and outstanding
shares of common stock, $1.00 par value per share, of the Company (the "Common
Shares" or "Shares") (including the associated Common Share Purchase Rights
(the "Rights") issued pursuant to the Rights Agreement, dated as of May 9,
1989, between the Company and Firstar Trust Company (f/k/a First Wisconsin
Trust Company), as Rights Agent (the "Rights Agreement")), at a price per
Common Share of $12.60 net to the seller in cash (such price, or any higher
price per Share paid in the Offer, the "Offer Price"); and
WHEREAS, the Board of Directors of the Company has approved this
Agreement, the Offer and the Merger (as hereinafter defined), has determined
that the Offer and the Merger are fair and in the best interests of the
Company's shareholders, and is recommending that the shareholders of the
Company accept the Offer and tender all their Shares; and
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the merger of the Purchaser with and into the
Company, as set forth below (the "Merger"), in accordance with the Wisconsin
Business Corporation Law (the "WBCL") and upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
Share not owned directly or indirectly by Parent, the Purchaser or the Company
will be converted into the right to receive the Offer Price in cash; and
WHEREAS, as a further inducement to the parties to enter into this
Agreement, Parent, the Purchaser and the Company have entered into a Stock
Option Agreement, dated the date hereof (the "Stock Option Agreement"),
pursuant to which the Company has granted to the Purchaser an option to
purchase newly issued Common Shares under certain circumstances; and
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows:
<PAGE> 2
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) So long as none of the events set forth in clauses (a) through
(h) of Annex I hereto shall have occurred or exist, the Purchaser shall, and
Parent shall cause the Purchaser to, commence (within the meaning of Rule
14d-2(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) as promptly as practicable after the date hereof, but in any event not
later than May 4, 1998, the Offer for any and all outstanding Shares not owned
by the Purchaser at the Offer Price applicable to such Shares, net to the
seller in cash. The initial expiration date for the Offer shall be the
twentieth business day from and after the date the Offer is commenced,
including the date of commencement as the first business day in accordance with
Rule 14d-2 under the Exchange Act (the "Expiration Date"). As promptly as
practicable, the Purchaser shall file with the Securities and Exchange
Commission (the "SEC") the Purchaser's Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1" and together with the documents therein pursuant to which
the Offer will be made, and with any supplements or amendments thereto, the
"Offer Documents"), which shall contain (as an exhibit thereto) the Purchaser's
Offer to Purchase (the "Offer to Purchase") which shall be mailed to the
holders of Shares with respect to the Offer. The obligation of Parent and the
Purchaser to accept for payment or pay for any Shares tendered pursuant to the
Offer will be subject only to there being validly tendered and not withdrawn
prior to the expiration of the Offer, that number of Shares which represents at
least 66-2/3% of the Shares outstanding on a fully diluted basis (without
giving pro forma effect to the potential issuance of any Shares issuable under
the Stock Option Agreement) (the "Minimum Condition") and to the satisfaction
or waiver of the other conditions set forth in Annex I hereto ("fully diluted
basis" means issued and outstanding Shares and Shares subject to issuance under
outstanding employee stock options). Without the prior written consent of the
Company, the Purchaser shall not (i) decrease the Offer Price or change the
form of consideration payable in the Offer, (ii) decrease the number of Shares
sought to be purchased in the Offer, or (iii) amend any other term of the Offer
in any manner adverse to the holders of any Shares; provided, however, that if
on the initial scheduled Expiration Date, the sole condition remaining
unsatisfied is the failure of the waiting period under the HSR Act (as
hereinafter defined) to have expired or been terminated, the Purchaser shall,
and Parent shall cause the Purchaser to, extend the expiration date from time
to time until two business days after the expiration of the waiting period
under the HSR Act.
(b) Subject to the terms of the Offer and this Agreement and the
satisfaction or waiver of all the conditions of the Offer set forth in Annex I
hereto as of the Expiration Date, the Purchaser will accept for payment and pay
for all Shares validly tendered and not withdrawn pursuant to the Offer as soon
as practicable after the Expiration Date.
(c) The Offer Documents will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading,
-2-
<PAGE> 3
except that no representation is made by Parent or the Purchaser with respect
to information supplied by the Company in writing for inclusion in the Offer
Documents. No representation, warranty or covenant is made or shall be made
herein by the Company with respect to information contained in the Offer
Documents other than information supplied by the Company in writing expressly
for inclusion in the Offer Documents. 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 Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and the
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
the Company's shareholders, in each case as and to the extent required by
applicable federal securities laws. Each of Parent and the Purchaser agrees to
give the Company a reasonable opportunity to review and comment upon any Offer
Document to be filed with the SEC prior to any such filing and to provide in
writing any comments each may receive from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments.
SECTION 1.02 Company Actions.
(a) Currently with the commencement of the Offer, the Company
shall file with the SEC and mail to the holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (together with any amendments or supplements thereto, the "Schedule
14D-9"). The Schedule 14D-9 will set forth, and the Company hereby represents,
that the Board of Directors of the Company, at a meeting duly called and held,
has unanimously (i) determined that the Offer and the Merger are fair to and in
the best interests of the Company and its shareholders, (ii) approved this
Agreement, the Stock Option Agreement and the transactions contemplated hereby
and thereby, including the Offer and the Merger, in accordance with the
applicable provisions of the WBCL, and (iii) resolved to recommend that the
Company's shareholders accept the Offer, tender their Shares thereunder to the
Purchaser and approve and adopt this Agreement and the Merger; provided,
however, that such recommendation may be withdrawn, modified or amended to the
extent that the Board of Directors of the Company determines in good faith,
after consultation with outside counsel, that taking such action is necessary
in the exercise of its fiduciary obligations under applicable Law (as
hereinafter defined).
(b) The Schedule 14D-9 will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by the
Company with respect to information supplied by Parent or the Purchaser in
writing for inclusion in the Schedule 14D-9. No representation, warranty or
covenant is made or shall be made herein by Parent or the Purchaser with
respect to information contained in the Schedule 14D-9 other than information
supplied by Parent and/or the Purchaser in writing expressly for inclusion in
the Schedule 14D-9. 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, 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 Shareholders, in each case as
-3-
<PAGE> 4
and to the extent required by applicable federal securities laws. The Company
agrees to give each of Parent and the Purchaser a reasonable opportunity to
review and comment upon the Schedule 14D-9 to be filed with the SEC prior to
such filing and to provide in writing any comments the Company may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly upon receipt
of such comments.
(c) In connection with the Offer, the Company will promptly
furnish the Purchaser with such information and assistance as the Purchaser or
its agents or representatives may reasonably request in connection with
communicating the Offer to the record and beneficial holders of the Shares,
including, without limitation, mailing labels, its shareholders list, security
position listings and non-objecting beneficial owners list, if any, or a
computer file containing the names and addresses of all recordholders of Common
Shares as of a recent date, and shall furnish the Purchaser with such
additional information (including, but not limited to, updated lists of holders
of Common Shares and their addresses, mailing labels and lists of security
positions). Subject to the requirements of applicable Law, and except for such
actions as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, Parent and the
Purchaser and each of their affiliates, associates, partners, employees, agents
and advisors shall hold in confidence the information contained in such labels,
shareholders list, security position listings, non-objecting beneficial owners
list and the information referred to in the preceding sentence, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated in accordance with its terms, shall deliver promptly to
the Company all copies of such information (and any copies, compilations or
extracts thereof or based thereon) then in their possession or under their
control.
SECTION 1.03 Directors.
(a) Promptly upon the payment by the Purchaser for Shares pursuant
to the Offer, and from time to time thereafter, the Purchaser shall be entitled
to designate such number of directors, rounded up to the next whole number, on
the Board of Directors of the Company as is equal to the product of the total
number of directors on the Board of Directors of the Company (determined after
giving effect to the directors designated by the Purchaser pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by the Purchaser or its affiliates bears to the total number
of Shares then outstanding, and the Company shall, subject to compliance with
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, upon
request of the Purchaser, promptly take all actions necessary to cause the
Purchaser's designees to be so elected, including, if necessary, promptly
increasing the size of the Board of Directors of the Company or seeking the
resignations of one or more existing directors, or both; provided, however,
that prior to the Effective Time (as defined in Section 2.02) the Board of
Directors of the Company shall always have at least two members who are neither
officers, directors, shareholders or designees of the Purchaser or any of its
affiliates ("Purchaser Insiders"). If the number of directors who are not
Purchaser Insiders is reduced below two for any reason prior to the Effective
Time, then the remaining directors who are not Purchaser Insiders (or if there
is only one director who is not a Purchaser Insider, the remaining director who
is not a Purchaser Insider) shall be entitled to designate a person (or
persons) to fill such vacancy (or vacancies) who is not an officer, director,
shareholder or designee of the Purchaser or any of its affiliates and who shall
be a director not deemed to be a Purchaser Insider for all purposes of this
Agreement. At such time, the Company
-4-
<PAGE> 5
shall, if requested by the Purchaser, also cause persons designated by the
Purchaser to constitute at least the same percentage (rounded up to the next
whole number) as is on the Board of Directors of the Company of each committee
of the Board of Directors of the Company; provided, however, that prior to the
Effective Time each committee of the Board of Directors of the Company shall
have at least one member who is not a Purchaser Insider.
(b) The Company's obligation to appoint the Purchaser's designees
to the Board of Directors of the Company shall be subject to Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder. The Company shall promptly take
all actions required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.03, including mailing to the shareholders of
the Company the information required by Section 14(f) and Rule 14f-1 as is
necessary to enable the Purchaser's designees to be elected to the Board of
Directors of the Company, and shall include in the Schedule 14D-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 1.03. Parent will supply in writing any information with respect
to itself and its officers, directors and affiliates required by such Section
and Rule to the Company.
(c) From and after the election or appointment of the Purchaser's
designees pursuant to this Section 1.03 and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, any extension by the
Company 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 other action taken by the Board of Directors of the Company in
connection with this Agreement, will require the concurrence of a majority of
the directors of the Company then in office who are not Purchaser Insiders.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the WBCL, at the Effective Time (as
defined in Section 2.02) the Purchaser shall be merged with and into the
Company. Following the Merger, the separate corporate existence of the
Purchaser shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation"). Upon the mutual agreement of Parent
and the Company, the Merger may be structured so that the Company shall be
merged with and into the Purchaser, with the Purchaser continuing as the
Surviving Corporation; provided, however, that the Company shall be deemed not
to have breached any of its representations, warranties or covenants herein if
and to the extent such breach would have been attributable to such agreement.
SECTION 2.02 Effective Time; Closing. As soon as practicable after
the satisfaction or waiver of the conditions set forth in Article VII hereof,
the appropriate parties hereto shall execute in the manner required by the WBCL
and file with the Wisconsin Department of Financial Institutions appropriate
articles of merger relating to the Merger, and the parties shall take such
other and further actions as may be required by Law to make the Merger
effective. The time the Merger
-5-
<PAGE> 6
becomes effective in accordance with applicable Law is referred to as the
Effective Time. On the business day immediately preceding such filing, a
closing shall be held at the offices of Foley & Lardner, 777 East Wisconsin
Avenue, Milwaukee, WI 53202-5367, unless another date or place is agreed to in
writing by the parties hereto, for the purpose of confirming the satisfaction
or waiver, as the case may be, of the conditions set forth in Article VII.
SECTION 2.03 Effects of the Merger. The Merger shall have the
effects set forth in Section 180.1106 of the WBCL.
SECTION 2.04 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) Subject to Section 6.11(a) hereof, the articles of
incorporation of the Purchaser, as in effect immediately prior to the Effective
Time, shall be the articles of incorporation of the Surviving Corporation until
thereafter amended in accordance with the provisions thereof and hereof and
applicable Law.
(b) Subject to Section 6.11(a) hereof, the by-laws of the
Purchaser in effect immediately prior to the Effective Time shall be the
by-laws of the Surviving Corporation until thereafter amended in accordance
with the provisions thereof and hereof and applicable Law.
SECTION 2.05 Directors. 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.
SECTION 2.06 Officers. 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 2.07 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that consistent
with the terms of this Agreement any further assignments or assurances in law
or any other acts are necessary or desirable (i) to vest, perfect or confirm,
of record or otherwise, in the Surviving Corporation, title to and possession
of any property or right of either the Company or its Subsidiaries (as
hereinafter defined) acquired or to be acquired by reason of, or as a result
of, the Merger, or (ii) otherwise to carry out the purposes of this Agreement,
then, subject to the terms and conditions of this Agreement, each of the
Company and its Subsidiaries, and their officers and directors shall be deemed
to have granted to the Surviving Corporation an irrevocable power of attorney
to execute and deliver all such deeds, assignments and assurances in law and to
do all acts necessary or proper to vest, perfect or confirm title to and
possession of such property or rights in the Surviving Corporation and
otherwise to carry out the purposes of this Agreement; and the officers and
directors of the Surviving Corporation are fully authorized in the name of
either the Company or its Subsidiaries to take any and all such action.
SECTION 2.08 Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holders thereof, each
Share issued and outstanding immediately prior to the Effective Time (other
than any Shares held by Parent, the Purchaser, any wholly-owned
-6-
<PAGE> 7
subsidiary of Parent or the Purchaser, 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 Dissenting Shares (as defined in Section 3.01)) shall
be converted into the right to receive in cash the Offer Price (the "Merger
Price"), payable to the holder thereof, without interest thereon, in accordance
with Article III.
SECTION 2.09 Purchaser Common Stock. Each share of common stock, par
value $1.00 per share, of the Purchaser issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into one share of common
stock of the Surviving Corporation. Each certificate evidencing ownership of
any such shares shall, following the Merger, evidence ownership of the same
number of shares of common stock of the Surviving Corporation. Notwithstanding
the foregoing, if Parent and the Company agree to restructure the Merger as
provided in Section 2.01 hereof, then the Purchaser's common stock shall not be
affected in any manner by virtue of the Merger.
SECTION 2.10 Company Option Plan. The Company shall take all actions
necessary so that, immediately following the Acceptance Date (as defined in
Section 6.11), (a) each outstanding option to purchase Common Shares (an
"Option") granted under the Company's 1987 Stock Option and Incentive Plan (the
"Option Plan"), whether or not then exercisable or vested, shall become fully
exercisable and vested, (b) each Option which is then outstanding shall be
cancelled and (c) in consideration of such cancellation, and except to the
extent that Parent or the Purchaser and the holder of any such Option otherwise
agree, immediately following the Acceptance Date, the Company, pursuant to the
terms of the Option Plan, shall promptly pay to such holders of Options an
amount in respect thereof equal to the product of (i) the excess of the Offer
Price over the exercise price thereof and (ii) the number of Common Shares
subject thereto (such payment to be net of taxes required by Law to be withheld
with respect thereto).
SECTION 2.11 Shareholders' Meeting.
(a) If required by the Company's articles of incorporation and/or
applicable Law in order to consummate the Merger, the Company, acting through
its Board of Directors, shall, in accordance with applicable Law:
(i) duly call, give notice of, convene and hold a special
meeting of the Company's shareholders (the "Shareholders' Meeting") as
soon as practicable following the acceptance for payment of and
payment for Shares by the Purchaser pursuant to the Offer for the
purpose of considering and taking action upon this Agreement;
(ii) promptly prepare and file with the SEC a preliminary
information or proxy statement relating to the Merger and this
Agreement and (x) obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, respond promptly to any comments
made by the SEC with respect to the preliminary information or proxy
statement and, subject to compliance with SEC rules and regulations,
cause a notice of a special meeting and a definitive information or
proxy statement (the "Proxy Statement") to be mailed to the
-7-
<PAGE> 8
shareholders of the Company no later than the time required by
applicable Law and the articles of incorporation and the by-laws of
the Company, and (y) to obtain the necessary approvals of the Merger
and this Agreement by the Shareholders; and
(iii) subject to Section 1.02(a), include in the Proxy
Statement the recommendation of the Board of Directors of the Company
that the shareholders of the Company vote in favor of the approval of
the Merger and the adoption of this Agreement.
(b) Parent and the Purchaser will furnish to the Company the
information relating to Parent and the Purchaser required under the Exchange
Act and the rules and regulations thereunder to be set forth in the Proxy
Statement.
(c) The Company shall consult with Parent and the Purchaser with
respect to the Proxy Statement (and any amendments or supplements thereto) and
shall afford Parent and the Purchaser reasonable opportunity to comment thereon
prior to its finalization. If, at any time prior to the Shareholder's Meeting,
any event shall occur relating to the Company or the transactions contemplated
by this Agreement which should be set forth in an amendment or a supplement to
the Proxy Statement, the Company will promptly notify in writing Parent and the
Purchaser of such event. In such case, the Company, with the cooperation of
Parent and the Purchaser, will promptly prepare and mail such amendment or
supplement and the Company shall consult with Parent and the Purchaser with
respect to such amendment or supplement and shall afford Parent and the
Purchaser reasonable opportunity to comment thereon prior to such mailing. The
Company agrees to notify Parent and the Purchaser at least three (3) days prior
to the mailing of the Proxy Statement (or any amendment or supplement thereto)
to the shareholders of the Company.
(d) Parent agrees that it will (i) 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 of the Merger and the adoption of this Agreement and
(ii) take or cause to be taken all additional corporate actions necessary for
the Purchaser to adopt and approve this Agreement and the transactions
contemplated hereby.
SECTION 2.12 Merger Without Meeting of Shareholders. Notwithstanding
Section 2.11, in the event that (i) Parent, the Purchaser or any other
subsidiary of Parent shall have acquired in the aggregate at least 90% of the
outstanding Shares pursuant to the Offer (including as a result of the exercise
of the Stock Option Agreement) and prior transactions and (ii) Parent and the
Company agree to restructure the Merger as provided in Section 2.01, the
parties hereto agree, subject to Article VII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer without a meeting of the Company's
shareholders, in accordance with Section 180.1104 of the WBCL.
SECTION 2.13 Earliest Consummation. Each party hereto shall use its
commercially reasonable efforts to consummate the Merger as soon as
practicable.
-8-
<PAGE> 9
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.01 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 payment for such shares in
accordance with Sections 180.1301 to 180.1331 of the WBCL, if such Sections
provide for dissenters' 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 2.07, unless and until such holder fails to perfect or
withdraws or otherwise loses his or her right to dissent and demand payment
under the WBCL. If, after the Effective Time, any such holder fails to perfect
or withdraws or loses his or her right to demand payment, then 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, if any, to which
such holder is entitled, without interest or dividends thereon, and such Shares
shall no longer be Dissenting Shares. The Company shall give Parent prompt
notice of any demands received by the Company for payment of Shares and, prior
to the Effective Time, Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, make any payment with respect to or settle or offer to settle, any such
demands.
SECTION 3.02 Payment for Shares.
(a) Prior to the commencement of the Offer, Purchaser shall
appoint a United States bank or trust company mutually acceptable to the
Company and Parent to act as paying agent (the "Paying Agent") for the payment
of the Offer Price and the Merger Price. Prior to the payment time thereof,
Parent shall deposit or shall cause to be deposited with the Paying Agent in a
separate fund established for the benefit of the holders of Shares, for payment
upon surrender of the certificates for exchange in accordance with this Article
III, through the Paying Agent (the "Payment Fund"), immediately available funds
in amounts necessary to make the payments pursuant to the Offer, Section 2.08
and this Section 3.02 to holders (other than Shares held by the Company or any
subsidiary of the Company or Parent, Purchaser or any other subsidiary of
Parent, or holders of Dissenting Shares). The Paying Agent shall pay the Offer
Price and the Merger Price out of the Payment Fund.
From time to time at or after the Effective Time, Parent shall take
all lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. Prior to the Effective Time, Parent shall enter
into appropriate commercial arrangements to ensure effectuation of the
immediately preceding sentence. The Paying Agent shall invest the Payment Fund
as directed by Parent or the Purchaser in obligations of, or guaranteed by, the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody's Investor Services or Standard & Poor's Corporation,
respectively, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $200 million,
in each case with maturities not exceeding seven days. Parent shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of the aforementioned investments. All
-9-
<PAGE> 10
earnings thereon shall inure to the benefit of Parent. If for any reason
(including losses) the Payment Fund is inadequate to pay the amounts to which
holders of Shares shall be entitled under Section 2.08 and this Section 3.02,
Parent shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) Promptly after the Effective Time, the Paying Agent shall mail
to each record holder of certificates (the "Certificates") that immediately
prior to the Effective Time represented Shares entitled to payment of the
Merger Price pursuant to Section 2.08 (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, in the
treasury of the Company or by any wholly-owned subsidiary of the Company) (i) a
form of letter of transmittal which shall (x) 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, (y) contain a
representation in a form reasonably satisfactory to Parent as to the good and
marketable title of the Shares held by such holder free and clear of Lien (as
hereinafter defined), and (z) contain such other customary provisions as the
Company and Parent may reasonably specify; and (ii) instructions for use in
surrendering such Certificates and receiving the aggregate Merger Price, in
respect thereof. Upon the surrender of each such certificate and subject to
applicable withholding, the Paying Agent shall (subject to applicable abandoned
property, escheat and similar laws) pay the holder of such Certificate in
respect of Shares, the Merger Price multiplied by the number of Shares formerly
represented by such Certificate, and such Certificate shall forthwith be
cancelled. 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, 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 or dividends shall be
paid or accrued on the Merger Price. If the Merger Price (or any portion
thereof) is to be delivered to any person other than the person in whose name
the Certificate formerly representing such Shares is registered, it shall be a
condition to such right to receive such Merger Price, as applicable, that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person surrendering such Certificates shall pay
to the Paying Agent any transfer or other taxes required by reason of the
payment of the Merger Price to a person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Paying
Agent that such tax has been paid or is not applicable.
(c) Promptly following the first anniversary of the Effective
Time, the Paying Agent shall deliver to the Surviving Corporation 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 may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price, without any interest or
dividends thereon.
(d) 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 are presented to the Surviving
Corporation or the Paying Agent, they shall be surrendered and cancelled in
return for the
-10-
<PAGE> 11
payment of the aggregate Merger Price relating thereto, as provided in this
Article III, subject to applicable law in the case of Dissenting Shares.
(e) Neither the Paying Agent nor any party to this Agreement shall
be liable to any shareholder of the Company or Option holder for any Shares,
any Options, the Merger Price or cash delivered to a public official pursuant
to and in accordance with any abandoned property, escheat or similar law.
(f) The Paying Agent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any
shareholder of the Company or Option holder such amounts as the Company
reasonably and in good faith determines are required to be deducted and
withheld with respect to the making of such payment under the Code (as
hereinafter defined), or any provision of state, local or foreign tax Law. To
the extent that amounts are so withheld by the Paying Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the shareholder or Option holder in respect of which such deduction and
withholding was made by the Paying Agent.
Section 3.03 No Further Rights or Transfers; Cancellation of Treasury
Shares. Except for the surrender of the certificate(s) representing the Common
Shares in exchange for the right to receive the Merger Price with respect to
each Common Share or the perfection of dissenters' rights with respect to the
Dissenting Shares, at and after the Effective Time, the holder of Common Shares
shall cease to have any rights as a shareholder of the Company, and no transfer
of Common Shares shall thereafter be made on the stock transfer books of the
Surviving Corporation. Each Common Share held in the Company's treasury
immediately prior to the Effective Time shall, by virtue of the Merger, be
canceled and retired and cease to exist without any conversion thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser
as follows (with such exceptions thereto as are set forth in the disclosure
statement delivered by the Company to Parent on the date hereof (the "Company
Disclosure Statement") in which each item is specifically referenced to the
Section of Article IV to which it refers):
SECTION 4.01 Organization and Qualification; Subsidiaries. The
Company is a corporation duly organized and validly existing under the laws of
the State of Wisconsin. Each of the Company's subsidiaries (the
"Subsidiaries") is a corporation duly organized and validly existing under the
laws of the jurisdiction of its incorporation. The Company and each of the
Subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failures to have such power or authority, or the
failures to be so qualified, licensed or in good standing, individually, and in
the aggregate, would not have a Material Adverse Effect on the
-11-
<PAGE> 12
Company. The term "Material Adverse Effect on the Company", as used in this
Agreement, means any change in or effect on the business, results of
operations, assets, condition (financial or otherwise) or liabilities of the
Company or any of the Subsidiaries that is materially adverse to the Company
and the Subsidiaries taken as a whole.
SECTION 4.02 Articles of Incorporation and By-Laws. The Company has
heretofore made available to Parent and the Purchaser a complete and correct
copy of the Company's articles of incorporation and the by-laws, each as
amended to the date hereof and a copy of which is set forth in Schedule 4.02 of
the Company Disclosure Statement. Neither the Company nor the Subsidiaries are
in violation of any provision of their respective articles of incorporation or
equivalent organizational document.
SECTION 4.03 Capitalization. The authorized capital stock of the
Company consists of 20,000,000 Common Shares. As of the close of business on
April 24, 1998, there were 2,918,899 Common Shares issued and outstanding. The
Company has no shares of capital stock reserved for issuance, except that, as
of April 24, 1998, there were 101,847 Common Shares reserved for issuance
pursuant to Options granted pursuant to the Option Plan and 3,110,746 Common
Shares reserved for issuance pursuant to the Rights Agreement. No Shares are
held by the Company as treasury shares and no Shares have been acquired by the
Company that are subject to outstanding pledges to secure future payment of the
purchase price therefor. Except as set forth in Schedule 4.03 of the Company
Disclosure Statement, since December 31, 1997, the Company has not issued any
shares of capital stock except pursuant to the exercise of Options outstanding
as of such date and pursuant to other existing Company Benefit Plans (as
hereinafter defined), in each case in accordance with their terms. All the
outstanding Common Shares are, and all Common Shares which may be issued
pursuant to the exercise of outstanding Options and pursuant to the Stock
Option Agreement will be, when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and nonassessable, except
as otherwise provided in Section 180.0622(2)(b) of the WBCL. There are no
bonds, debentures, notes or other indebtedness having general voting rights (or
convertible into Shares having such rights) ("Voting Debt") of the Company or
any of the Subsidiaries issued and outstanding. Except as set forth in this
Section 4.03 or Section 4.03 of the Company Disclosure Statement and except for
the Merger and the Stock Option Agreement, there are no existing options,
warrants, calls, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of the Subsidiaries, obligating the Company or any of the
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest
in, the Company or any of the Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests or obligations of the Company
or any of the Subsidiaries to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment. Except (i) as contemplated by the Merger contemplated by this
Agreement, (ii) for the Company's obligations under the Option Plans and (iii)
for the Company's obligations under the Stock Option Agreement, there are no
outstanding contractual obligations of the Company or any of the Subsidiaries
to repurchase, redeem or otherwise acquire any Common Shares or the capital
stock of the Company or any of the Subsidiaries. Each of the outstanding
shares of capital stock of each of the Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, except as otherwise provided in Section
180.0622(2)(b) of the WBCL, and was not issued in violation of any preemptive
rights, and such shares of the Subsidiaries are owned
-12-
<PAGE> 13
by the Company or by another Subsidiary free and clear of any lien, claim,
option, charge, security interest, limitation, encumbrance and restriction of
any kind (any of the foregoing being a "Lien"). To the knowledge of the
Company, there are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of the Company.
SECTION 4.04 Authority. The Company has all necessary corporate
power and authority to execute and deliver this Agreement and the Stock Option
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Stock Option Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized and
approved by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize or approve
this Agreement or the Stock Option Agreement or to consummate the transactions
contemplated hereby or thereby (other than, with respect to the Merger, the
approval and adoption of the Merger and this Agreement by holders of the Shares
to the extent required by the Company's articles of incorporation and by
applicable Law). This Agreement and the Stock Option Agreement have been duly
and validly executed and delivered by the Company and, assuming the due and
valid authorization, execution and delivery of this Agreement and the Stock
Option Agreement by Parent and the Purchaser, constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to
general principles of equity. The Board of Directors of the Company has, at a
meeting of such Board duly held on April 27, 1998, unanimously approved and
adopted this Agreement, the Stock Option Agreement, the Offer and the Merger
and the other transactions contemplated hereby and thereby, determined that the
Offer Price to be received by the holders of Shares pursuant to the Offer and
the Merger is fair to the holders of the Shares and recommends that the holders
of Shares tender their Shares pursuant to the Offer and approve and adopt this
Agreement and the Merger, subject to the Board's rights under Section 6.09
hereof.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the
Stock Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or thereby or the compliance by the Company
with any of the provisions hereof or thereof will (i) conflict with or violate
the articles of incorporation or by-laws of the Company or the comparable
organizational documents of any of the Subsidiaries, (ii) conflict with or
violate any statute, ordinance, rule, regulation, order, judgment or decree
applicable to the Company or the Subsidiaries, or by which any of them or any
of their respective properties or assets may be bound or affected, or (iii)
result in a violation or breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in any loss of any material benefit, or the creation of any Lien on
any of the property or assets of the Company or any of the Subsidiaries (any of
the foregoing referred to in clause (ii) or this clause (iii) being a
"Violation") pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries or any of their respective properties may be
bound or affected,
-13-
<PAGE> 14
except in the case of the foregoing clauses (ii) or (iii) for any Violation
which, individually and in the aggregate, would not have a Material Adverse
Effect on the Company or would not affect materially and adversely the ability
of the Company to consummate the Merger and the other transactions contemplated
by this Agreement.
(b) None of the execution and delivery of this Agreement or the
Stock Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or thereby or the compliance by the Company
with any of the provisions hereof or thereof will require any consent, waiver,
approval, authorization or permit of, or registration or filing with or
notification to (any of the foregoing being a "Consent"), any government or
subdivision thereof, or any administrative, governmental or regulatory
authority, agency, commission, tribunal or body, domestic, foreign or
supranational (a "Governmental Entity"), except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of articles of
merger pursuant to the WBCL, (iii) compliance with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (iv) such
filings and approvals as may be required by any applicable state securities,
"blue sky" or takeover Laws, and (v) other Consents or filings the failure of
which to obtain or make, individually and in the aggregate, would not have a
Material Adverse Effect on the Company or materially adversely affect the
ability of the Company to consummate the transactions contemplated by this
Agreement and the Stock Option Agreement.
SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements required to
be filed by the Company with the SEC from December 31, 1995 until the date
hereof (the "SEC Reports"). As of their respective dates or, if amended, as of
the date of the last such amendment, the SEC Reports, including, without
limitation, any financial statements or schedules included therein, complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended, and the rules and regulations of the SEC
promulgated thereunder applicable, as the case may be, to such SEC Reports, and
none of the SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which
they were made, not misleading.
(b) The audited consolidated balance sheets as of December 31,
1997, 1996 and 1995 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the four years in the period
ended December 31, 1997 (including the related notes and schedules thereto) of
the Company contained in the Company's Annual Reports on Form 10-K for the
years ended December 31, 1997 and 1996 included in the SEC Reports present
fairly, in all material respects, the consolidated financial position and the
consolidated results of operations and cash flows of the Company and its
consolidated subsidiaries as of the dates or for the periods presented therein
in conformity with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto).
(c) The accounting books and records of the Company and its
Subsidiaries: (i) are in all material respects correct and complete; (ii) are
current in a manner consistent with past practice; and (iii) to the knowledge
of the Company, have recorded therein all the properties, assets and
liabilities
-14-
<PAGE> 15
of the Company and its Subsidiaries (except where the failure to so record
would not violate GAAP as consistently applied by the Company).
SECTION 4.07 Information. None of the information supplied by the
Company in writing specifically for inclusion or incorporation by reference in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) any other document to be filed with the SEC or any other Governmental
Entity in connection with the transactions contemplated by this Agreement (the
"Other Filings") will, at the respective times filed with the SEC or other
Governmental Entity and, in addition, in the case of the Proxy Statement, at
the date it or any amendment or supplement is mailed to the shareholders of the
Company, at the time of the Shareholders' Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by the Company with respect
to statements made therein based on information supplied by Parent or the
Purchaser in writing specifically for inclusion in the Proxy Statement.
SECTION 4.08 Tax Matters.
(a) Tax Returns. For all years for which the applicable statutory
period of limitation has not expired, and except to the extent that failures,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company, (i) the Company has filed all Tax Returns (as hereinafter defined)
that it was required to file and all such Tax Returns were correct and complete
in all material respects, (ii) all Taxes (as hereinafter defined) owed by the
Company (whether or not shown on any Tax Return) have been paid, except for
Taxes as set forth on the balance sheet dated as of December 31, 1997 or which
have arisen after December 31, 1997 in the ordinary course of the Company's
trade or business and (iii) there are no Liens on any of the assets of the
Company that arose in connection with any failure (or alleged failure) to pay
any Tax. In particular, and without in any manner limiting the foregoing and
except to the extent that failures, individually or in the aggregate, would not
have a Material Adverse Effect on the Company, (i) none of the foregoing Tax
Returns contain any position which is or would be subject to penalties under
Section 6662 of the Internal Revenue Code of 1986, as amended (the "Code"), (or
any corresponding provision of state, local or foreign Tax law), (ii) no Tax
deficiencies have been proposed or assessed against the Company, (iii) to the
knowledge of the Company, no issue has been raised in any prior Tax audit of
the Company which, by application of the same or similar principles, could
reasonably be expected upon a future Tax audit of the Company to result in a
proposed deficiency for any period, and (iv) the Company is not liable for any
Taxes attributable to any other person, whether by reason of being a member of
another affiliated group, being a party to a tax sharing agreement, as a
transferee or successor, or otherwise. As used herein, the term "Tax" means
any federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto; and the term "Tax Return" means any
return, declaration, report, claim for refund, or information return or
-15-
<PAGE> 16
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
(b) Other Representations. Except as set forth in Schedule 4.08
of the Company Disclosure Statement, the Company has not (i) filed any consent
or agreement under Section 341(f) of the Code, (ii) applied for any tax ruling
within the last three years, (iii) entered into a closing agreement with any
taxing authority within the last three years, (iv) filed an election under
Section 338(g) or Section 338(h)(10) of the Code (nor has a deemed election
under Section 338(e) of the Code occurred), (v) made any payments, or been a
party to an agreement (including this Agreement) that under any circumstances
could obligate it to make payments, that will not be deductible because of
Section 280G of the Code, or (vi) been a party to any tax allocation or tax
sharing agreement for any year for which the applicable statutory period of
limitations has not expired. Company is not a "United States real property
holding company" within the meaning of Section 897 of the Code.
SECTION 4.09 No Litigation. Except as set forth in Schedule 4.09 of
the Company Disclosure Statement, as of the date hereof, there is no action,
suit, claim, workers compensation claim, arbitration, product warranty claim,
proceeding, investigation or inquiry, whether civil, criminal or administrative
("Litigation"), pending or, to the knowledge of the Company or the
Subsidiaries, threatened against the Company or the Subsidiaries, their
respective businesses or any of their assets, or, to the knowledge of the
Company and if and to the extent the Company is, through indemnity or
otherwise, liable therefor, any of the Company's current or former directors or
officers or any other person whom the Company has agreed to indemnify, as such,
nor does the Company or the Subsidiaries know, or have grounds to know, of any
basis for any Litigation, that would have in all of the cases above,
individually or in the aggregate, a Material Adverse Effect on the Company. As
of date hereof, there are no such actions, suits or proceedings pending or, to
the knowledge of the Company, threatened, against the Company by any person
which question the legality, validity or propriety of the transactions
contemplated by this Agreement. There are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against the Company,
any of its or its properties, assets or business, or, to the knowledge of the
Company, any of the Company's current or former directors or officers or any
other person whom the Company has agreed to indemnify, as such, that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
SECTION 4.10 Compliance With Applicable Laws.
(a) Non-Environmental Matters. The Company and the Subsidiaries
are in compliance with all applicable laws, ordinances, rules or regulations
(collectively, "Laws") and orders, writs, injunctions, judgments, plans or
decrees (collectively, "Orders") (except, in each case, with respect to
environmental matters which are governed by Section 4.10(b) hereof) of any
Governmental Entity, except for such failures to so comply which, individually
and in the aggregate, would not have a Material Adverse Effect on the Company.
The business operations of the Company and the Subsidiaries are not being
conducted in violation of any Law or Order of any Governmental Entity (except,
in each case, with respect to environmental matters which are governed by
Section 4.10(b) hereof), except for possible violations which, individually or
in the aggregate, would not have a Material Adverse Effect on the Company.
-16-
<PAGE> 17
(b) Environmental Matters. Except for the matters identified in
Schedule 4.10 of the Company Disclosure Statement or except as would not
reasonably be expected to have a Material Adverse Effect on the Company, (i) no
real property currently or, to the knowledge of the Company, formerly owned,
leased, operated, managed or controlled by the Company or any Subsidiary has
been contaminated with any Hazardous Substances to an extent or in a manner or
condition now requiring investigation, removal, corrective action, or
remediation, or that could be reasonably likely to result in liability of, or
costs to, the Company or any of the Subsidiaries, under any Environmental Law
(as hereinafter defined), (ii) no judicial or administrative proceeding is
pending or, to the knowledge of the Company, threatened relating to liability
for any off-site disposal or contamination, (iii) there is currently no civil,
criminal, or administrative action, suit, demand, hearing, notice of violation,
investigation, notice or demand letter, or request for information pending, or,
to the knowledge of the Company, threatened, under any Environmental Law
against the Company or any of the Subsidiaries, the Company and the
Subsidiaries have not received in writing any claims or notices alleging
liability under any Environmental Law, and the Company has no knowledge of any
circumstances that would reasonably be expected to result in such claims, (iv)
the Company and each of the Subsidiaries are currently in compliance, and
within the period of applicable statutes of limitation, have complied, with all
applicable Environmental Laws, (v) no property or facility currently or, to the
Company's knowledge as of the date hereof, formerly owned, leased, operated,
managed or controlled by the Company or any of the Subsidiaries is listed or
proposed for listing on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System, both
promulgated under the Comprehensive Environmental Response, Compensation &
Liability Act, as amended, or on any comparable state or foreign list
established under any Environmental Law and (vi) each of the Company and its
Subsidiaries has obtained all environmental, health and safety permits and
governmental authorizations required for its operations, and such permits are
in good standing and each of the Company and its Subsidiaries is in substantial
compliance with all items and conditions thereof. "Environmental Law" means
any applicable federal, national, foreign, state or local Laws relating to
noise, odor, Hazardous Substances, pollution, human health and safety or the
protection of the environment. "Hazardous Substance" means any pollutant,
contaminant or toxic or hazardous substance or constituent that is defined or
regulated by or under authority of any Environmental Law, including without
limitation any petroleum products, asbestos or polychlorinated biphenyls, and
any other substance that can give rise to liability under any Environmental
Law.
SECTION 4.11 Labor Matters.
(a) Certain Agreements. Except as set forth in Schedule 4.11 of
the Company Disclosure Statement, neither the Company nor any Subsidiary is a
party to any collective bargaining agreement. The employment agreements that
have been entered into by either the Company or any Subsidiary are set forth in
Schedule 4.11 of the Company Disclosure Statement.
(b) Labor Disputes. Except as set forth in Schedule 4.11 of the
Company Disclosure Statement and except to the extent that failures,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company: (i) there are no pending or, to the knowledge of the Company,
threatened and unresolved claims by any person against the Company or its
Subsidiaries arising out of any statute, ordinance or regulation relating to
unfair labor practices, discrimination or to employees or employee practices or
occupational or safety and health standards; (ii) there is
-17-
<PAGE> 18
no pending, nor has the Company or its Subsidiaries experienced any, labor
dispute, strike or organized work stoppage within the last three years; and
(iii) to the knowledge of the Company, there is no threatened labor dispute,
strike or organized work stoppage against the Company or its Subsidiaries.
(c) Union Matters. As of the date hereof, except as set forth in
Schedule 4.11 of the Company Disclosure Statement: (i) to the knowledge of the
Company, no union organizing activities are in process or have been proposed or
threatened involving any employees of the Company or its Subsidiaries and (ii)
no petitions have been filed or, to the knowledge of the Company, have been
threatened or proposed to be filed, for union organization or representation or
employees of the Company or its Subsidiaries not presently organized.
SECTION 4.12 Employee Benefit Plans.
(a) Disclosure and Claims. Schedule 4.12 of the Company
Disclosure Statement lists each employee benefit plan (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), each employment contract, stock option, profit sharing, stock
appreciation right, phantom stock, restricted stock, severance, vacation,
termination or other compensation plan, program, arrangement or understanding
maintained or contributed to by the Company or the Subsidiaries, or with
respect to which the Company or any Subsidiary or any Company ERISA Affiliate
(as defined below) could incur material liability (the "Company Benefit
Plans"). The Company has delivered or made available to Parent a true and
complete copy of each material Company Benefit Plan and the most recent Form
5500 (including all attached schedules) filed with respect to each applicable
Company Benefit Plan and the most recent actuarial or financial valuation
reports prepared with respect to any Company Benefit Plan. No Company Benefit
Plan is a "multiemployer plan" (as defined in Section 4001 of ERISA), and
neither the Company nor any Subsidiary has ever contributed nor been obligated
to contribute to any such multiemployer plan. There is no pending or, to the
knowledge of the Company, threatened dispute, controversy, investigation or
claim concerning the Company Benefit Plans other than that would not be
reasonably likely to have a Material Adverse Effect on the Company. "Company
ERISA Affiliate" shall mean any person which, together with the Company, would
be deemed a "single employer" within the meaning of Section 4001 of ERISA.
(b) Determination Letters. The Internal Revenue Service has
issued a favorable determination letter with respect to each Company Benefit
Plan, that is intended to be a "qualified plan" within the meaning of Section
401(a) of the Code, and as of the date thereof, to the knowledge of the
Company, there are no circumstances nor any events that have occurred that
would materially adversely affect the qualified status of any such plan or the
related trust.
(c) Compliance. The Company and the Subsidiaries and the Company
Benefit Plans are in compliance in all material respects with all provisions of
ERISA, the Code and all other laws and regulations applicable to the Company
Benefit Plans. There does not now exist, nor do any circumstances now exist
that could reasonably be expected to result in, any material liability of the
Company or any Subsidiary under (i) Title IV of ERISA, (ii) Section 302 of
ERISA, (iii) Sections 412 and 4971 of the Code, (iv) Section 4980B of the Code
or Sections 502 or 601-608 of ERISA, or (v) any other Laws or Orders with
respect to any Company Benefit Plan, other than claims for
-18-
<PAGE> 19
benefits under such plans. With respect to each Company Benefit Plan subject
to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code: (i)
there does not exist any accumulated funding deficiency within the meaning of
Section 412 of the Code or Section 302 of ERISA, whether or not waived, and
(ii) no reportable event within the meaning of Section 4043(c) of ERISA and no
event described in Section 4062 or 4063 of ERISA has occurred.
(d) Post-Retirement Benefits. No Company Benefit Plan provides
material benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees of the
Company or any Subsidiary beyond their retirement or other termination of
service, other than (i) coverage mandated by applicable Laws, (ii) death
benefits or retirement benefits under any "employee pension benefit plan" as
defined in Section 3(2) of ERISA, (iii) deferred compensation benefits accrued
as liabilities on the books of the Company or a Subsidiary, (iv) benefits the
full cost of which is borne by the current or former employee (or his or her
beneficiary), or (v) medical and dental benefits for former employees (as set
forth in Schedule 4.12 of the Company Disclosure Schedule).
(e) Funding. Except with respect to the Hein-Werner Hourly and
Incentive-Rated Employees' Pension Plan (the "Hourly Plan"), the current value
of the assets of each of the Company Benefit Plans that is subject to Title IV
of ERISA, determined as of the date of the most recently completed actuarial
valuation, exceeds the actuarial present value of benefit obligations as of
such date based upon the actuarial assumptions presently used for funding
purposes in the most recent actuarial report prepared by such Company Benefit
Plan's actuary with respect to such Company Benefit Plan. According to the
most recently completed actuarial valuation with respect to the Hourly Plan, as
of the date of such valuation, the actuarial present value of benefit
obligations under the Hourly Plan exceeded the actuarial value of assets by
$389,902. All contributions or other amounts payable by the Company or its
Subsidiaries as of the Effective Time with respect to each Company Benefit Plan
in respect of current or prior plan years have been either paid or accrued on
the December 31, 1997 consolidated balance sheet of the Company. There are no
material pending or, to the knowledge of the Company, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the Company Benefit Plans or any trusts related thereto.
(f) Other Plan Obligations. To the knowledge of the Company,
neither the Company nor any of its Subsidiaries, nor any Company ERISA
Affiliate, nor any Company Benefit Plan, nor any trust created thereunder, nor
any trustee or administrator thereof has engaged in a transaction in connection
with which the Company or its Subsidiaries or any Company ERISA Affiliate, any
Company Benefit Plan, any such trust, or any trustee or administrator thereof,
or any party dealing with any Company Benefit Plan or any such trust could be
subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code.
SECTION 4.13 Intellectual Property. Except for the matters
identified in Schedule 4.13 of the Company Disclosure Schedule or except as
would not, individually and in the aggregate, have a Material Adverse Effect on
the Company, (i) the Company and each of the Subsidiaries owns, has the right
to acquire or is licensed or otherwise has the right to use (in each case,
clear of any Liens), all Intellectual Property (as defined below) used in or
necessary for the conduct of its business as currently conducted, (ii) no
claims are pending or, to the knowledge of the Company, threatened that
-19-
<PAGE> 20
the Company or any of the Subsidiaries is infringing on or otherwise violating
the rights of any person with regard to any Intellectual Property and (iii) to
the knowledge of the Company, no person is infringing on or otherwise violating
any right of the Company or any of the Subsidiaries with respect to any
Intellectual Property owned by and/or licensed to the Company or the
Subsidiaries. For purposes of this Agreement, "Intellectual Property" shall
mean (i) any invention, United States and foreign patents, pending patent
applications, trade names, trade dress, logos, corporate names, trademarks,
service marks, trademark registrations, service mark registrations, pending
trademark applications, pending service mark applications, registered
copyrights, and pending copyright applications, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith; (ii) proprietary software; and (iii) all trade secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals).
SECTION 4.14 Certain Events.
(a) Since December 31, 1997, there has not been any Material
Adverse Effect on the Company. In addition, since December 31, 1997, except as
set forth in Schedule 4.14 of the Company Disclosure Statement, the Company and
the Subsidiaries have conducted their businesses only in the ordinary course of
business consistent with past practices and there has not been, directly or
indirectly:
(i) any payment or granting by the Company or any of the
Subsidiaries of any increase in compensation to any director or
executive officer of the Company or, except in the ordinary course of
business and consistent with past practice, any employee of the
Company or the Subsidiaries;
(ii) any granting by the Company or any of the Subsidiaries
to any such director, executive officer or employee of any increase in
severance or termination pay, except as required under employment,
severance or termination agreements or plans in effect prior to the
date of this Agreement;
(iii) any entry by the Company or any of the Subsidiaries
into any employment, severance or termination agreement with any such
director or executive officer;
(iv) any adoption or increase in payments to or benefits
under any Company Benefit Plans;
(v) any change in accounting methods, principles or practices
by the Company and the Subsidiaries, except insofar as may have been
required by a change in GAAP;
(vi) any declaration or payment of any dividend or any
distribution in respect of the capital stock of the Company or any
direct or indirect redemption, purchase or other acquisition of any
such stock of the Company; or
-20-
<PAGE> 21
(vii) any agreement or commitment to do any of the things
described in the preceding clauses (i) through (vi).
(b) Except as set forth in Schedule 4.14 of the Company Disclosure
Statement, since December 31, 1997 and through the date hereof:
(i) no party (including the Company and its Subsidiaries) has
accelerated, terminated, modified in any material respect, or
cancelled any Contract (other than purchase and sales orders in the
ordinary course of business in accordance with past practice)
involving more than $100,000 to which the Company or its Subsidiaries
is a party or by which any of them is bound;
(ii) neither the Company nor any of its Subsidiaries has
(other than in the ordinary course of business) granted any license or
sublicense of any rights under or with respect to any Intellectual
Property;
(iii) neither the Company nor any of Subsidiaries has
experienced any material damage, destruction, or loss (whether or not
covered by insurance) from fire or other casualty to its tangible
property; or
(iv) neither the Company nor any of its Subsidiaries has
entered into a binding commitment to any of the foregoing.
"Contracts" shall mean all of the contracts, agreements and
obligations, written or oral, to which the Company or its Subsidiaries are a
party or by which the Company or its Subsidiaries or any of their respective
assets are bound, including, without limitation, any loan, bond, mortgage,
indenture, lease instrument, franchise or license.
SECTION 4.15 Certain Approvals. The Board of Directors of the
Company has taken appropriate action such that, assuming the accuracy of
Parent's and the Purchaser's representations in Section 5.08 of this Agreement,
the provisions of Sections 180.1140 through 180.1144 of the WBCL will not apply
to any of the transactions contemplated by this Agreement and the Stock Option
Agreement.
SECTION 4.16 Brokers. Except for the engagement of Credit Suisse
First Boston Corporation ("CSFB"), none of the Company, the Subsidiaries, or
any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commission
or finder's fees in connection with the transactions contemplated by this
Agreement or the Stock Option Agreement.
SECTION 4.17 Opinion of Financial Advisor. The Company has received
the written opinion of CSFB, dated April 27, 1998, to the effect that, as of
such date, the cash consideration to be received by the holders of the Common
Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view.
-21-
<PAGE> 22
SECTION 4.18 Rights Agreement. Assuming the accuracy of Parent's and
the Purchaser's representations in Section 5.08 of this Agreement, neither the
execution nor the delivery of this Agreement nor commencement of the Offer will
result in a "Distribution Date" (as defined in the Rights Agreement). The
Company has irrevocably taken all actions necessary to make the Rights
inapplicable to (a) the Offer and the Merger and (b) the Stock Option Agreement
and the transactions contemplated thereby.
SECTION 4.19 Title to Assets. All of the material real property
owned or leased by each of the Company and its Subsidiaries are identified in
the SEC Reports (the "Real Estate"). Each of the Company and its Subsidiaries
owns fee simple or valid leasehold (as the case may be) title to the Real
Estate and has valid title to its other tangible assets and properties which it
owns, free and clear of any and all Liens, except for any such as would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
SECTION 4.20 Buildings and Equipment. Except as set forth in
Schedule 4.20 of the Company Disclosure Statement or except for any such as
would not have a Material Adverse Effect on the Company: (i) neither the
Company nor any of its Subsidiaries has received any written notice from any
Governmental Entity that any of the Buildings or Equipment (each as defined
below) fail to comply with any applicable building and zoning or other similar
Laws in effect at the date hereof which notice is still outstanding and (ii)
the continuation of the Company's and its Subsidiaries' businesses as currently
conducted will not result in the enforcement or the threat of enforcement of
any such Laws. "Buildings" shall mean all buildings, fixtures, structures and
improvements leased or owned by the Company or its Subsidiaries. "Equipment"
shall mean all machinery, equipment, boilers, furniture, fixtures, motor
vehicles, furnishings, parts, tools, office equipment, computers and other
items of tangible personal property owned or used by the Company or its
Subsidiaries.
SECTION 4.21 Vote Required. Assuming the accuracy of Parent's and
the Purchaser's representations in Section 5.08 of this Agreement and subject
to Sections 180.1130-180.1133 of the WBCL, the affirmative vote of the holders
of at least two-thirds (2/3rds) of the outstanding Common Shares entitled to
vote with respect to the Merger is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger, this
Agreement and the transactions contemplated hereby.
SECTION 4.22 Certain Agreements. Except as set forth in Schedule
4.22 of the Company Disclosure Statement, neither the Company nor any of its
Subsidiaries is a party to any oral or written agreement or plan, including any
stock option plan, stock appreciation rights 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 described in Schedule 4.22 of the
Company Disclosure Statement or except for any such as would not result in a
Material Adverse Effect on the Company, the transactions contemplated by this
Agreement will not constitute a "change of control" under, require the consent
from or the giving of notice to any third party pursuant to, or accelerate the
vesting or repurchase rights under, the terms, conditions or provisions of any
loan or credit agreement, note, bond, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which the Company or
its Subsidiaries is a party or by which
-22-
<PAGE> 23
any of them or any of their properties or assets may be bound. Except as set
forth in Schedule 4.22 of the Company Disclosure Statement, there are no
amounts payable by the Company or its Subsidiaries to any officers of the
Company or its Subsidiaries (in their capacity as officers) as a result of the
transactions contemplated by this Agreement and/or any subsequent employment
termination.
SECTION 4.23 Applicability of Articles of Incorporation. The Board
of Directors of the Company has taken such action as may be necessary to ensure
that the supermajority vote provision of Article VII of the Company's articles
of incorporation is inapplicable to the Offer or the Merger, or to this
Agreement or the transactions contemplated hereby.
SECTION 4.24 Contracts. Except as set forth in Section 4.24 of the
Company Disclosure Statement, the Company does not have any Contract in effect
as of the date hereof which purports to limit in any respect the manner in
which, or the localities in which, the Company, its Subsidiaries or any other
entity is entitled to conduct all or any portion of its business. There are no
existing breaches or defaults by the Company or its Subsidiaries, or, to the
knowledge of the Company, any other party to a Contract under any Contract the
effect of which would constitute a Material Adverse Effect on the Company and,
to the knowledge of the Company, no event has occurred which, with the passage
of time or the giving of notice or both, could reasonably be expected to
constitute such a breach or default.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and warrant
to the Company as follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware. The Purchaser is a corporation duly organized and validly existing
under the laws of the State of Wisconsin. Each of Parent and the Purchaser has
the requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect on Parent. The term "Material Adverse Effect on
Parent", as used in this Agreement, means any change in or effect on the
business, results of operations, assets, condition (financial or otherwise) or
liabilities of Parent or any of its subsidiaries that would be materially
adverse to Parent and its subsidiaries taken as a whole, except for any change
or effect resulting from general economic or financial market conditions.
SECTION 5.02 Authority. Each of Parent and the Purchaser has all
necessary corporate power and authority to execute and deliver this Agreement
and the Stock Option Agreement and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this
-23-
<PAGE> 24
Agreement and the Stock Option Agreement by Parent and the Purchaser and the
consummation by Parent and the Purchaser of the transactions contemplated
hereby and thereby have been duly and validly authorized and approved by the
Boards of Directors of Parent and the Purchaser and by the sole shareholder of
the Purchaser and no other corporate proceedings on the part of Parent or the
Purchaser are necessary to authorize or approve this Agreement or the Stock
Option Agreement or to consummate the transactions contemplated hereby or
thereby. Each of this Agreement and the Stock Option Agreement has been duly
executed and delivered by each of Parent and the Purchaser and, assuming the
due and valid authorization, execution and delivery by the Company, constitutes
a valid and binding obligation of each of Parent and the Purchaser enforceable
against each of them in accordance with its respective terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to the enforcement of creditors'
rights generally and (ii) is subject to general principles of equity.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the
Stock Option Agreement by Parent or the Purchaser, the consummation by Parent
or the Purchaser of the transactions contemplated hereby or thereby or the
compliance by Parent or the Purchaser with any of the provisions hereof or
thereof will (i) conflict with or violate the organizational documents of
Parent or the Purchaser, (ii) conflict with or violate any statute, ordinance,
rule, regulation, order, judgment or decree applicable to Parent or the
Purchaser, or any of their subsidiaries, or by which any of them or any of
their respective properties or assets may be bound or affected, or (iii) result
in a Violation pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or the Purchaser, or any of their respective subsidiaries, is a
party or by which any of their respective properties or assets may be bound or
affected, except in the case of the foregoing clauses (ii) and (iii) for any
such Violations which would not have a Material Adverse Effect on Parent or
materially adversely affect the ability of Parent or the Purchaser to
consummate the transactions contemplated by this Agreement and the Stock Option
Agreement.
(b) None of the execution and delivery of this Agreement or the
Stock Option Agreement by Parent and the Purchaser, the consummation by Parent
and the Purchaser of the transactions contemplated hereby or thereby or the
compliance by Parent and the Purchaser with any of the provisions hereof or
thereof will require any Consent of any Governmental Entity, except for (i)
compliance with any applicable requirements of the Exchange Act, (ii) the
filing of articles of merger pursuant to the WBCL, (iii) compliance with the
HSR Act, (iv) such filings and approvals as may be required by any applicable
state securities, "blue sky" or takeover Laws, and (v) other Consents or
filings the failure of which to obtain or make, individually and in the
aggregate, would not have a Material Adverse Effect on Parent or materially
adversely affect the ability of Parent or the Purchaser to consummate the
transactions contemplated by this Agreement or the Stock Option Agreement.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) the Other Filings will, at the respective times filed with the SEC or such
other Governmental Entity and, in addition, in the case of the Proxy Statement,
-24-
<PAGE> 25
at the date it or any amendment or supplement is mailed to shareholders of the
Company, at the time of the Shareholders' Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
SECTION 5.05 Financing. Parent or the Purchaser has available the
funds necessary to consummate the Offer and the Merger and the transactions
contemplated hereby on a timely basis.
SECTION 5.06 Brokers. Except for the engagement of Merrill Lynch &
Co., none of Parent, the Purchaser, or any of their respective subsidiaries,
officers, directors or employees, has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement or the Stock
Option Agreement for or with respect to which the Company is or might be
liable.
SECTION 5.07 Purchaser.
(a) Parent owns all of the outstanding stock of Purchaser; at all
times prior to the Merger, no person other than Parent has owned, or will own,
any of the outstanding stock of Purchaser. Purchaser was formed by Parent
solely for the purpose of engaging in the transactions contemplated by this
Agreement.
(b) There are not as of the date of this Agreement, and there will
not be at the Effective Time, any outstanding or authorized options, warrants,
calls, rights, commitments or any other agreements of any character which
Purchaser is a party to, or may be bound by, requiring it to issue, transfer,
sell, purchase, redeem or acquire any shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for or acquire, any shares of its capital stock.
(c) As of the date of this Agreement and the Effective Time,
except for obligations incurred in connection with this Agreement or the
transactions contemplated hereby, Purchaser has not and will not have incurred,
directly or indirectly through any other corporation, any obligations or
liabilities of any kind or engaged in any activities of any type or kind
whatsoever or entered into any arrangement or arrangements with any person or
entity.
SECTION 5.08 Share Ownership. During the period from September 10,
1987 to the date hereof, neither Parent, the Purchaser nor any of their
affiliates have owned 10% or more of the Shares.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as required
by this Agreement or with the prior written consent of Parent, during the
period from the date of this Agreement to the Effective Time, the Company will
and will cause each of the Subsidiaries to conduct its operations
-25-
<PAGE> 26
only in the ordinary course of business consistent with past practice and will
use its commercially reasonable efforts and will cause each of the Subsidiaries
to use its commercially reasonable efforts, to preserve intact the business
organization of the Company and each of the Subsidiaries, to use, operate,
maintain and repair all of its assets and properties in a normal business
manner consistent with past practice, to keep available the services of its and
their present officers and key employees and to preserve the goodwill of those
having business relationships with it and to conduct business with suppliers,
customers, creditors and others having business relationships with the Company
in the best interests of the Company. Without limiting the generality to the
foregoing, and except as otherwise required or contemplated by this Agreement
or the Stock Option Agreement or as set forth in Section 6.01 of the Company
Disclosure Statement, the Company will not, and will not permit any of the
Subsidiaries to, prior to the Effective Time, without the prior written consent
of Parent:
(a) adopt any amendment to its charter or by-laws or comparable
organizational documents;
(b) issue, reissue or sell or authorize the issuance, reissuance
or sale of additional shares of capital stock of any class, or shares
convertible into capital stock of any class, or any rights, warrants or options
to acquire any convertible shares or capital stock, other than the issuance of
Shares pursuant to Options outstanding on the date of this Agreement or
pursuant to the Stock Option Agreement;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, shares or property or any combination thereof) in respect of
any class or series of its capital stock other than between any of the Company
and any Subsidiary which is wholly-owned by the Company;
(d) split, combine, subdivide, reclassify or directly or
indirectly redeem, purchase or otherwise acquire, recapitalize or reclassify,
or propose to redeem or purchase or otherwise acquire, any shares of its
capital stock, or any of its other shares or liquidate in whole or in part;
(e) except for (A) increases in salary, wages and benefits of
non-executive officers or employees of the Company or the Subsidiaries in the
ordinary course of business consistent with past practice, (B) increases in
salary, wages and benefits granted to officers and employees of the Company or
the Subsidiaries in conjunction with new hires in the ordinary course of
business consistent with past practice, or (C) increases in salary, wages and
benefits to employees of the Company or the Subsidiaries pursuant to collective
bargaining agreements entered into in the ordinary course of business
consistent with past practice, (i) increase the compensation or fringe benefits
payable or to become payable to its directors, officers or key employees
(whether from the Company or any of the Subsidiaries), (ii) pay any benefit not
required by any existing plan or arrangement (including, without limitation,
the granting of stock options, stock appreciation rights, shares of restricted
stock or performance units), (iii) grant any severance or termination pay to
(except pursuant to existing agreements, plans or policies and as required by
such agreements, plans or polices), (iv) enter into or modify any employment or
severance agreement with, any director, officer or other key employee of the
Company or any of the Subsidiaries or (v) establish, adopt, enter into, or
amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock or Company Benefit Plans for the benefit or
welfare of any directors, officers
-26-
<PAGE> 27
or current or former employees, except in each case to the extent required by
applicable Law or regulation;
(f) (i) sell, lease, transfer or assign any of its assets, tangible
or intangible, other than for a fair consideration in the ordinary course of
business and other than the disposition of obsolete or unusable property; (ii)
enter into any Contract (other than purchase and sales orders in the ordinary
course of business in accordance with past practice) involving more than
$25,000 without the consent of Parent (which consent shall not be unreasonably
withheld); (iii) accelerate, terminate, modify in any material respect, or
cancel any Contract (other than purchase and sales orders and other than in the
ordinary course of business in accordance with past practice) involving more
than $25,000 to which the Company is a party or by which any of them is bound
without the consent of Parent (which consent shall not be unreasonably
withheld; (iv) make any capital expenditure (or series of related capital
expenditures) involving either more than $25,000 (unless such expenditure is
identified in the current business plan of the Company as disclosed to Parent)
or outside the ordinary course of business; (v) delay or postpone the payment
of accounts payable and other liabilities outside the ordinary course of
business; (vi) cancel, compromise, waive or release any right or claim (or
series of related rights and claims) not covered by the reserves or accruals
relating to such claim in the Company's December 31, 1997 consolidated balance
sheet either involving more than $25,000 or outside the ordinary course of
business without the consent of Parent (which consent shall not be unreasonably
withheld); (vii) grant any license or sublicense of any rights under or with
respect to any Intellectual Property other than in the ordinary course of
business; or (viii) enter into any contract or agreement with any affiliate of
the Company except for transactions in the ordinary course of business upon
commercially reasonable terms.
(g) (i) incur, assume or pre-pay any long-term debt or incur or
assume any short-term debt, except that the Company and the Subsidiaries may
incur, assume or pre-pay debt in the ordinary course of business consistent
with past practice under existing lines of credit, (ii) pay, discharge, settle
or satisfy as other claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than in the ordinary
course of business consistent with past practice, (iii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, or (iv)
make any loans, advances or capital contributions to, or investments in, any
other person except in the ordinary course of business consistent with past
practice and except for loans, advances, capital contributions or investments
between any Subsidiary wholly-owned by the Company and the Company or another
Subsidiary wholly-owned by the Company; or
(h) agree in writing or otherwise to take any of the foregoing
actions.
SECTION 6.02 Access to Information. From the date hereof until the
Effective Time, the Company will, and will cause the Subsidiaries, and each of
its and their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, (i) provide
Parent and the Purchaser and their respective officers, employees, counsel,
advisors and representatives (collectively, the "Parent Representatives")
access, during normal business hours and upon reasonable notice, to the offices
and other facilities and to the books, records, financial statements and other
documents and materials relating to the financial condition, assets and
liabilities of the Company and the Subsidiaries, and will permit Parent and the
Purchaser to make inspections
-27-
<PAGE> 28
of such as either of them may reasonably require, (ii) cause the Company
Representatives and the Subsidiaries to furnish Parent, the Purchaser and the
Parent Representatives to the extent available with such other information with
respect to the business of the Company and the Subsidiaries as Parent and the
Purchaser may from time to time reasonably request and (iii) confer and consult
with the Parent Representatives, as Parent may reasonably request, to report on
operational matters, financial matters and the general status of ongoing
business operations of the Company; provided, however, that all requests for
such access, inspection, information or consultations pursuant to this Section
6.02 shall be made through the President and Chief Executive Officer of the
Company or such other person as he shall designate in writing to Parent.
Unless otherwise required by Law and except as is necessary to disseminate the
Offer Documents, Parent and the Purchaser will, and will cause the Parent
Representatives to hold any such information in confidence until such time as
such information otherwise becomes publicly available through no wrongful act
of Parent, the Purchaser or the Parent Representative, all as specifically
provided in the confidentiality agreement, dated April 21, 1998, between Parent
and the Company (the "Confidentiality Agreement").
SECTION 6.03 Commercially Reasonable Efforts. Subject to the terms
and conditions herein provided and to applicable legal requirements, so long as
this Agreement has not been terminated, each of the parties hereto agrees to
use its commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, consistent with the fiduciary duties of
such party's respective Board of Directors, and to assist and cooperate with
the other parties hereto in doing, as promptly as practicable, all things
necessary, proper or advisable under applicable Laws and regulations to ensure
that the conditions set forth in Annex I and Article VII are satisfied and to
consummate and make effective the transactions contemplated by the Offer, the
Merger, this Agreement and the Stock Option Agreement, including, without
limitation, to make promptly their respective filings and thereafter to make
any other submissions required under applicable Laws.
In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any
of their respective subsidiaries should be discovered by the Company or Parent,
as the case may be, and which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering party will promptly inform the
other party of such event or circumstance and promptly take all steps necessary
to cause the Offer Documents or the Schedule 14D-9, as the case may be, as so
corrected to be filed with the SEC and to be disseminated to the shareholders
of the Company, in each case as to the extent required by applicable Law. If
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement or the Stock Option
Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement or the Stock Option
Agreement, as the case may be, shall take all such necessary action.
SECTION 6.04 Consents.
(a) Subject to the terms and conditions herein provided, the
Company will (i) take all reasonable steps necessary or desirable, and proceed
diligently and in good faith and use all commercially reasonable efforts to
obtain all approvals required by any Contract to consummate the transactions
contemplated hereby, (ii) take all reasonable steps necessary or desirable, and
proceed diligently and in good faith and use all commercially reasonable
efforts to obtain all approvals, authorizations, and clearances of any
Governmental Entity required of the Company to permit the
-28-
<PAGE> 29
Company to consummate the transactions contemplated hereby, (iii) provide such
other information and communications to such Governmental Entity as such entity
may reasonably request, and (iv) cooperate with Parent in obtaining all
approvals, authorizations and clearances of Governmental Entities and others
required of Parent to consummate the transactions contemplated by this
Agreement or the Stock Option Agreement.
(b) Each of the parties will use its commercially reasonable
efforts to obtain as promptly as practicable all Consents of any Governmental
Entity or any other person required in connection with the consummation of the
transactions contemplated by the Offer, the Merger, this Agreement and the
Stock Option Agreement.
(c) Any party hereto shall promptly inform the others of any
material communication from the United States Federal Trade Commission, the
Department of Justice or any other domestic government or governmental
authority regarding any of the transactions contemplated by this Agreement or
the Stock Option Agreement. If any party or any affiliate thereof receives a
request for additional information or documentary material from any such
government or authority with respect to the transactions contemplated by this
Agreement or the Stock Option Agreement, then such party will endeavor in good
faith to make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request. Parent will advise the Company promptly in respect of any
understandings, undertakings or agreements (oral or written) which Parent
proposes to make or enter into with the Federal Trade Commission, the
Department of Justice or any other domestic or foreign government or
governmental or multinational authority in connection with the transactions
contemplated by this Agreement or the Stock Option Agreement.
SECTION 6.05 Public Announcements. So long as this Agreement is in
effect, Parent, the Purchaser and the Company agree to consult with each other
before issuing any press release or otherwise making any public statement with
respect to the transactions contemplated by this Agreement.
SECTION 6.06 Employee Benefit Arrangements.
(a) Following the Effective Time and through December 31, 1999,
the Purchaser agrees to provide employee benefit plans and programs for the
benefit of employees of the Company and the Subsidiaries (excluding plans or
programs which provide for issuance of Shares or options on Shares) that are of
reasonably equivalent value to such employees as compared with the Company
Benefit Plans, subject to applicable governmental rules and regulations. All
service credited to each employee by the Company or any Subsidiary through the
Effective Time shall be recognized by the Purchaser for purposes of eligibility
and vesting (but not benefit accrual) under any employee benefit plan provided
by the Purchaser for the benefit of the employees.
(b) Parent shall cause the Surviving Corporation to honor (without
modification) and assume all written employment agreements with individual
employees, severance agreements with individual employees and other comparable
agreements with individual employees of the Company or any Subsidiary, all as
in effect on the date of this Agreement (including, without limitation, the
-29-
<PAGE> 30
Consulting Agreement between the Company and J. Queenan), all of which are
listed on Schedule 6.06 of the Company Disclosure Statement.
(c) The Purchaser shall maintain in effect the Company severance
plan/program (as specified in the employee handbook) for a period of two years
immediately following the Effective Time and the Company severance plan/program
shall not be terminated or adversely amended during such two-year period.
(d) The Company shall cause the interest of each of the employees
of the Company and the Subsidiaries as of the Acceptance Date (as hereinafter
defined) in the Hein-Werner Retirement and Savings Plan and Trust to be fully
vested and nonforfeitable as of the Acceptance Date.
(e) For a period of 18 months following the Effective Time, Parent
shall cause the Surviving Corporation to continue to provide medical insurance,
at COBRA premium rates, to O. Friend.
SECTION 6.07 Company Disclosure Statement. The Company has delivered
to Parent the Company Disclosure Statement which shall be accompanied by a
certificate signed by the President and the Secretary of the Company stating
that the Company Disclosure Schedule was delivered pursuant to this Agreement
and is the Company Disclosure Schedule referred to in this Agreement. The
Company Disclosure Schedule is deemed to constitute an integral part of this
Agreement and to modify, as specified, the representations, warranties,
covenants or agreements of the Company contained in this Agreement.
SECTION 6.08 Deliveries of Information. From time to time after the
date of this Agreement and prior to the Effective Time (unless this Agreement
is terminated), the Company shall furnish promptly to Parent:
(a) a copy of each report, schedule and other document filed by
the Company or received by the Company after the date of this Agreement
pursuant to the requirements of federal or state securities Laws promptly after
such documents are available; and
(b) the monthly consolidated financial statements of the Company
(as prepared by the Company in accordance with its normal accounting
procedures) promptly after such financial statements are available.
SECTION 6.09 No Solicitation.
(a) The Company represents and warrants to, and covenants and
agrees with, Parent and the Purchaser that neither the Company nor any of the
Subsidiaries has any agreement, arrangement or understanding with any potential
acquiror that, directly or indirectly, would be violated, or require any
payments, by reason of the execution, delivery and/or consummation of this
Agreement and the Stock Option Agreement. The Company shall, shall cause the
Subsidiaries to, and shall use its commercially reasonable efforts to cause the
officers, directors, employees, investment bankers, attorneys and other agents
and representatives of the Company and the Subsidiaries to, immediately cease
any existing activities, information exchanges, discussions or negotiations
with any person
-30-
<PAGE> 31
(including a "person" as defined in Section 13(d)(3) of the Exchange Act) other
than Parent or the Purchaser (a "Third Party") heretofore conducted with
respect to any Acquisition Transaction (as hereinafter defined). The Company
shall not, shall cause the Subsidiaries not to, and shall use its commercially
reasonable efforts to cause the officers, directors, employees, investment
bankers, attorneys and other agents and representatives of the Company and the
Subsidiaries not to, directly or indirectly, (x) solicit, initiate, continue,
facilitate or encourage (including by way of furnishing or disclosing
non-public information) any inquiries, proposals or offers from any Third Party
with respect to, or that could reasonably be expected to lead to, any
acquisition or purchase of all or any significant portion of the assets or
business of, or any significant equity interest in (including by way of a
tender offer), or any merger, consolidation or business combination with, or
any similar transaction involving, the Company or any of the Subsidiaries (the
foregoing being referred to collectively as an "Acquisition Transaction"), or
(y) negotiate or otherwise communicate in any way with any Third Party with
respect to any Acquisition Transaction or enter into, approve or recommend any
agreement, arrangement or understanding requiring the Company to abandon,
terminate or fail to consummate the Offer and/or the Merger or any other
transaction contemplated hereby or by the Stock Option Agreement.
Notwithstanding anything to the contrary in the foregoing, the Company may in
response to an unsolicited written proposal with respect to an Acquisition
Transaction involving the acquisition of all of the Shares (or all or
substantially all of the assets of the Company and the Subsidiaries) from a
Third Party furnish or disclose non-public information to such Third Party and
negotiate or otherwise communicate with such Third Party, in each case only if
(A) the Board of Directors of the Company (after consultation with its outside
legal counsel and independent financial advisors) determines in good faith that
such proposal would reasonably be likely to be more favorable to the Company
and its shareholders than the transactions contemplated hereby (the proposal
with respect to an Acquisition Transaction meeting the requirements of clause
(A), a "Superior Proposal"), (B) prior to furnishing or disclosing any
non-public information to, or entering into discussions or negotiations with,
such Third Party, the Company receives from such Third Party a customary
confidentiality agreement similar in all material respects to the
Confidentiality Agreement, and (C) the Company advises Parent of all such
non-public information delivered to such Third Party prior to such delivery;
provided, however, that the Company shall not enter into a definitive agreement
with respect to a Superior Proposal unless the Company first complies with
Section 6.09(b) hereof, including the last sentence thereof, and then unless
the Company concurrently terminates this Agreement in accordance with the terms
hereof.
(b) The Company shall promptly (but in any event within one
business day of the Company becoming aware of same) advise Parent of the
receipt by the Company, any of the Subsidiaries or any of the Company's
investment bankers, attorneys or other agents or representatives of any
inquiries or proposals relating to an Acquisition Transaction and any actions
taken pursuant to Section 6.09(a). The Company shall promptly (but in any
event within one business day of the Company becoming aware of same) provide
Parent with a copy of any such inquiry or proposal in writing and a written
statement with respect to any such inquiries or proposals not in writing, which
statement shall include the identity of the parties making such inquiries or
proposal and the material terms thereof and will update Parent on an ongoing
basis, or upon Parent's reasonable request, of the status thereof; provided,
however, that the Company shall not be obligated to provide a copy of, or a
written statement with respect to, any such inquiry if the Board of Directors
of the Company determines in good faith, after consultation with outside legal
counsel, that not providing such copy or written statement is necessary to
allow the Board of Directors of the
-31-
<PAGE> 32
Company to fulfill its fiduciary duties to the shareholders of the Company
under applicable Law. For the avoidance of doubt, the Company agrees that it
will not terminate this Agreement and enter into any agreement with respect an
Acquisition Transaction unless and until Parent has been given the opportunity
at least two business days prior to the entering into such agreement to match
the terms of such agreement.
(c) Nothing contained in this Section 6.09 shall prohibit the
Company from disclosing to its shareholders a position contemplated by Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to its shareholders if, in the good faith judgment of its Board of
Directors, after consultation with outside legal counsel, failure to so
disclose would result in a violation of applicable Law.
SECTION 6.10 Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (i) to cause any representation
or warranty contained in this Agreement or the Stock Option Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof
to the Effective Time or (ii) to cause any covenant, condition or agreement
hereunder or under the Stock Option Agreement not to be complied with or
satisfied in all material respects and (b) any failure of the Company, Parent
or the Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder or
under the Stock Option Agreement in any material respect; provided, however,
that no such notification shall affect the representations or warranties of any
party or the conditions to the obligations of any party hereunder or under the
Stock Option Agreement.
SECTION 6.11 Indemnification and Insurance.
(a) The Purchaser and Parent agree that for a period of six years
from the date the Shares are purchased by Parent or the Purchaser in the Offer
(the "Acceptance Date"), the Purchaser will maintain all rights to
indemnification now existing in favor of the current or former directors,
officers, employees, fiduciaries and agents of the Company as provided in the
Company's articles of incorporation and by-laws or otherwise in effect under
any agreement on the date of this Agreement. In addition, the Purchaser and
Parent agree that the articles of incorporation and by-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Company's articles of incorporation and by-laws on the date
hereof, which provisions shall not be amended, repealed or otherwise modified
for a period of six years after the Acceptance Date in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors or officers of the Company in respect of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement), unless
such modification is required by Law. Notwithstanding the six-year period
specified in the foregoing sentences, in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of any and
all such claims.
(b) The Surviving Corporation will at all times exercise the
powers granted to it by its articles of incorporation, its by-laws, and by
applicable Law to indemnify and hold harmless to the fullest extent possible
present or former directors, officers, employees, fiduciaries and agents of the
-32-
<PAGE> 33
Company against any threatened or actual claim, action, suit, proceeding or
investigation made against them arising from their service in such capacities
(or service in such capacities for another enterprise at the request of the
Company) prior to, and including the Acceptance Date, including, without
limitation, with respect to matters relating to this Agreement.
(c) Parent agrees that the Company and, from and after the
Acceptance Date, the Surviving Corporation shall cause to be maintained in
effect for not less than six years from the Acceptance Date the current
policies of the directors' and officers' liability insurance maintained by the
Company with respect to matters occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement); provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which
are no less advantageous and provided that such substitution shall not result
in any gaps or lapses in coverage with respect to matters occurring prior to
the Effective Time; and provided, further, that the Surviving Corporation shall
not be required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date hereof and if the Surviving
Corporation is unable to obtain the insurance required by this Section 6.11(c)
it shall obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount.
(d) This Section 6.11 is intended to benefit the current and
former directors, officers, employees, fiduciaries and agents of the Company
and shall be binding on all successors and assigns of Parent, the Purchaser,
the Company and the Surviving Corporation.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the
Merger If the Offer Shall Have Been Consummated. The respective obligations of
Parent, the Purchaser and the Company to consummate the Merger if the Offer
shall have been consummated are subject to the satisfaction or waiver in
writing by each party hereto at or before the Effective Time, of each of the
following conditions:
(a) Shareholder Approval. The Shareholders shall have duly
approved the transactions contemplated by this Agreement, to the extent
required pursuant to the requirements of the Company's articles of
incorporation and applicable Law.
(b) Purchase of Shares. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the terms
hereof; provided, that this condition shall be deemed to have been satisfied
with respect to Parent and the Purchaser if the Purchaser fails to accept for
payment or pay for Shares pursuant to the Offer in violation of the terms of
the Offer.
(c) Injunctions; Illegality. The consummation of the Merger shall
not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity, and there shall not have been any statute, rule or regulation
-33-
<PAGE> 34
enacted, promulgated or deemed applicable to the Merger by any Governmental
Entity that prevents the consummation of the Merger.
SECTION 7.02 Condition to Parent's and the Purchaser's Obligation to
Effect the Merger. The obligations of Parent and the Purchaser to consummate
the Merger are further subject to the fulfillment of the condition that all
actions contemplated by Section 2.10 hereto shall have been taken, which may be
waived in whole or in part by Parent or the Purchaser.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, whether or not approval thereof by the shareholders of the Company has
been obtained:
(a) by the mutual written consent of Parent, the Purchaser and the
Company prior to the date on which Parent's designees constitute a majority of
the Board of Directors of the Company; or
(b) by the Company if the Company is not in material breach of any
of its representations, warranties, covenants or arrangements contained in this
Agreement and the Stock Option Agreement and if (i) the Purchaser fails to
commence the Offer as provided in Section 1.01 hereof, (ii) the Purchaser shall
not have accepted for payment and paid for Shares pursuant to the Offer in
accordance with the terms thereof on or before August 31, 1998 or (iii) the
Purchaser fails to purchase validly tendered Shares in violation of the terms
of the Offer or this Agreement; or
(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 terminate this Agreement
pursuant to this Section 8.01(c) upon the termination or withdrawal of the
Offer only if Parent's or the Purchaser's termination or withdrawal of the
Offer is not in violation of the terms of this Agreement or the Offer; or
(d) by Parent or the Company if any court or other Governmental
Entity shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment, decree
injunction, ruling or other action shall have become final and nonappealable;
or
(e) by the Company if, prior to the purchase of Shares pursuant to
the Offer in accordance with the terms of this Agreement, (i) there shall have
occurred, on the part of Parent or the Purchaser, a material breach of any
representation, warranty, covenant or agreement contained in this Agreement
which is not curable or, if curable, is not cured within 30 days after written
notice of such breach is given by the Company to the party committing the
breach, except in any case, such failures which are not reasonably likely to
affect adversely Parent's or the Purchaser's ability to complete the Offer or
the Merger, or (ii) the Company enters into a definitive agreement with respect
-34-
<PAGE> 35
to a Superior Proposal as permitted under Section 6.09(a) hereof and after
complying with the provisions of Section 6.09(b) hereof and making the payments
referred to in Section 8.03(b) hereof; or
(f) by Parent if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of this Agreement, (i) there shall have
occurred, on the part of the Company, a breach of any representation, warranty,
covenant or agreement contained in this Agreement which individually, or in the
aggregate, if not cured would be reasonably likely to have a Material Adverse
Effect on the Company and which is not curable or, if curable, is not cured
within the later of (x) 30 days after written notice of such breach is given by
Parent to the Company and (y) the satisfaction of all conditions to the Offer
not related to such breach or (ii) the Board of Directors of the Company or
committee thereof shall have withdrawn or modified (or shall have resolved to
withdraw or modify), in a manner adverse to Parent, its approval or
recommendation of this Agreement or any of the transactions contemplated hereby
and the Board of Directors of the Company and such committee shall not have
fully reinstated such approval or recommendations within three business days
after a request by Parent to so reinstate or shall have recommended (or
resolved to recommend) an Acquisition Transaction (other than the Offer and
Merger) to the shareholders of the Company; or
(g) by Parent if it is not in material breach of its obligation
hereunder or under the Offer and no Shares shall have been purchased pursuant
to the Offer on or before August 31, 1998.
SECTION 8.02 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
or its directors, officers or shareholders of the Company, other than the
provisions of this Section 8.02, Section 8.03 and the last sentence of Section
6.02, which shall survive any such termination. Nothing contained in this
Section 8.02 shall relieve any party from liability for any breach of this
Agreement or the Confidentiality Agreement.
SECTION 8.03 Fees and Expenses.
(a) Subject to Section 8.03(b), whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Offer, this
Agreement, the Stock Option Agreement and the transactions contemplated by this
Agreement and the Stock Option Agreement shall be paid by the party incurring
such expenses.
(b) Parent and the Company agree that (i) in the event this
Agreement is terminated pursuant to Section 8.01(e)(ii) or (ii) in the event
that (x) any person shall have publicly disclosed a proposal regarding an
Acquisition Transaction and (y) following such disclosure, either (a) August
31, 1998 occurs without the shareholder approval of the Merger being obtained
(other than as a result of a material breach hereof by Parent or the Purchaser
that has not been cured within the time period set forth in Article VIII of
this Agreement) or (b) the Company breaches (prior to the time that the
designees of the Purchaser constitute a majority of the Board of Directors of
the Company) any of its material obligations hereunder and does not cure such
breach within the time period set forth in Article VIII of this Agreement or
(c) the Agreement is terminated pursuant to Section 8.01(f)(ii), and (z) not
later than twelve months after any such termination the Company shall have
entered into a definitive agreement for an Acquisition Transaction, or an
Acquisition
-35-
<PAGE> 36
Transaction shall have been consummated, then the Company shall pay to an
account designated by Parent a termination fee, in immediately available funds,
of $1,000,000 (the "Termination Fee") and shall reimburse Parent for
out-of-pocket fees and expenses (but in no event greater than $350,000)
reasonably incurred by Parent and the Purchaser in connection with this
Agreement, the Offer and the Merger. The Termination Fee and any reimbursement
of expenses shall be paid prior to, and shall be a condition to the
effectiveness of, any termination of this Agreement referred to in clause (i)
above or on the next business day after the earlier of such Acquisition
Transaction being consummated or a definitive agreement for such Acquisition
Transaction being entered into, if such fee and expenses are payable as a
result of clause (ii) above.
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement
may be amended by the Company, Parent and the Purchaser at any time before or
after any approval of this Agreement by the shareholders of the Company but,
after any such approval, no amendment shall be made which decreases the Merger
Price or which adversely affects the rights of the shareholders of the Company
hereunder without the requisite affirmative vote of such shareholders;
provided, however, that this Agreement shall not be amended after the time, if
ever, that the Purchaser's designees constitute a majority of the Board of
Directors of the Company. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any
time prior to the Effective Time, the parties hereto may (i) extend the time
for the performance of any of the obligations or other acts of any other party
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other party or in any document, certificate or writing
delivered pursuant hereto by any other party or (iii) waive compliance with any
of the agreements of any other party or with any conditions to its own
obligations, it being understood that the other conditions set forth in Annex I
may be waived by Parent and the Purchaser without the consent of the Company.
Any agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time.
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments
referred to herein) and the Confidentiality Agreement constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and
thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior
-36-
<PAGE> 37
written consent of the other party. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. This Agreement is not
intended to confer upon any person other than Parent, the Purchaser and the
Company any rights or remedies hereunder.
SECTION 9.03 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by overnight courier or facsimile to
the respective parties as follows:
If to Parent or the Purchaser:
Snap-on Incorporated
10801 Corporate Drive
Kenosha, Wisconsin 53141
Attention: Susan F. Marrinan
Fax: (414) 656-5165
with a copy to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attention: William R. Kunkel
Fax: (312) 407-0411
If to the Company:
Hein-Werner Corporation
2020 Pewaukee Road
Waukesha, Wisconsin 53188
Attention: Joseph L. Dindorf
Fax: (414) 542-7890
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Maurice J. McSweeney
Jay O. Rothman
Fax: (414) 297-4900
-37-
<PAGE> 38
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
SECTION 9.06 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 9.08 Obligation of Parent. Whenever this Agreement requires
the Purchaser or the Surviving Corporation to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause the
Purchaser or the Surviving Corporation to take such action and a guarantee of
the performance thereof.
SECTION 9.09 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person shall mean any
other person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting shares, by contract or otherwise;
(b) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(c) the term "subsidiary" or "subsidiaries" means, with respect to
Parent, the Company or any other person, any corporation, partnership, joint
venture or other legal entity of which Parent, the Company or such other
person, as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, stock or other equity interests the
holders of which are generally entitled to more than 50% of the vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
SECTION 9.10 SPECIFIC PERFORMANCE. THE PARTIES HERETO AGREE THAT
IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS
AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE
OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE
ENTITLED TO AN INJUNCTION OR
-38-
<PAGE> 39
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE UNITED STATES OR ANY STATE
HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY
ARE ENTITLED AT LAW OR IN EQUITY.
SECTION 9.11 Interpretation. Unless the context requires otherwise,
all words used in this Agreement in the singular number shall extend to and
include the plural, all words in the plural number shall extend to and include
the singular, and all words in any gender shall extend to and include all
genders.
SECTION 9.12 No Third Party Beneficiary. Except as provided pursuant
to Section 6.11 hereof, the terms and provisions of this Agreement are intended
solely for the benefit of the parties hereto and their respective successors
and assigns and it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.
-39-
<PAGE> 40
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its respective officer thereunto duly authorized,
all as of the day and year first above written.
SNAP-ON INCORPORATED
("Parent")
By: /s/ Robert A. Cornog
----------------------------
Name: Robert A. Cornog
Title: Chairman, President and Chief
Executive Officer
SNAP-ON PACE COMPANY
(the "Purchaser")
By: /s/ Susan F. Marrinan
----------------------------
Name: Susan F. Marrinan
Title: Vice President and Secretary
HEIN-WERNER CORPORATION
(the "Company")
By: /s/ Joseph L. Dindorf
----------------------------
Name: Joseph L. Dindorf
Title: President and Chief Executive
Officer
-40-
<PAGE> 41
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provisions of the
Offer, the Purchaser shall not be required to accept for payment or pay for any
tendered Shares if (i) any applicable waiting period under the HSR Act has not
expired or terminated or (ii) the Minimum Condition has not been satisfied, and
the Purchaser may, subject to the terms of the Merger Agreement, amend the
Offer or postpone the acceptance for payment of tendered Shares if at any time
on or after the date of the Merger Agreement and before the expiration of the
Offer, any of the following events shall occur:
(a) there shall be threatened or pending any suit, action or
proceeding by a Governmental Entity against the Purchaser, Parent or the
Company (i) seeking to prohibit or impose any material limitations on Parent's
or the Purchaser's ownership or operation (or that of Parent's subsidiaries or
affiliates) of any or a material portion of their or the Company's businesses
or assets, or to compel Parent or the Purchaser or Parent's subsidiaries and
affiliates to dispose of or hold separate any material portion of the business
or assets of the Company or Parent and Parent's subsidiaries, in each case
taken as a whole, (ii) challenging the acquisition by Parent or the Purchaser
of any Shares under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other
transactions contemplated by the Merger Agreement or the Stock Option
Agreement, or seeking to obtain from the Company, Parent or the Purchaser any
damages that are material in relation to the Company, (iii) seeking to impose
material limitations on the ability of the Purchaser, or render the Purchaser
unable, to accept for payment, pay for or purchase some or all of the Shares
pursuant to the Offer, the Merger or the Stock Option Agreement, or (iv)
seeking to impose material limitations on the ability of the Purchaser or
Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it on
all matters properly presented to the Company's shareholders; or
(b) any Law is enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger or the transactions contemplated by the
Stock Option Agreement, or any other action is taken by any Governmental
Entity, other than the application to the Offer, the Merger or the transactions
contemplated by the Stock Option Agreement of applicable waiting periods under
the HSR Act, that results, directly or indirectly, in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above; or
(c) (i) the Board of Directors of the Company or any committee
thereof withdraws or modifies in a manner adverse to Parent or the Purchaser
its approval or recommendation of the Offer, the Merger, the Merger Agreement
or the Stock Option Agreement or approves or recommends any Acquisition
Transaction, or (ii) the Company enters into any agreement to consummate any
Acquisition Transaction; or
(d) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to Material Adverse Effect
are not true and correct, or any such representations and warranties that are
not so qualified are not true and correct in any respect (when taken together
with all other failures of such representations and warranties to be true and
correct) that would have a Material Adverse Effect on the Company, in each case
at the date of the Merger Agreement or at the scheduled expiration of the Offer
(as though made as of such date, except that
I-1
<PAGE> 42
those representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date); or
(e) the Merger Agreement shall have been terminated in accordance
with its terms; or
(f) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant to be performed or complied with by it
under the Merger Agreement or the Stock Option Agreement other than any failure
which would not have, either individually or in the aggregate, a Material
Adverse Effect on the Company; or
(g) any person acquires beneficial ownership (as defined in Rule
13d-3 promulgated under the Exchange Act) of at least 20% of the outstanding
Shares (other than any person not required to file a Schedule 13D under the
rules promulgated under the Exchange Act or other than pursuant to the Stock
Option Agreement); or
(h) there shall have occurred, and continued to exist, (i) any
general suspension of, or limitation on prices for, trading in securities on
the New York Stock Exchange or the American Stock Exchange, (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) a commencement of a war, armed hostilities or other
national or international calamity directly involving the United States (other
than an action involving solely United Nations personnel or support of United
Nations' personnel), or (iv) in the case of any of the events described in the
foregoing clauses (i) through (iii) existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof.
The foregoing conditions are for the sole benefit of Parent and the Purchaser
and may be asserted by Parent or the Purchaser regardless of the circumstances
giving rise to any such condition (including any action or inaction by Parent
or the Purchaser not in violation of the Merger Agreement) and 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. 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.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
I-2
<PAGE> 1
Exhibit (3)(a)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of April 27, 1998 (this "Agreement"),
by and among Snap-on Incorporated, a Delaware corporation ("Parent"), Snap-on
Pace Company, a Wisconsin corporation and a wholly-owned subsidiary of Parent
(the "Purchaser"), and Hein-Werner Corporation, a Wisconsin corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and the Company are entering into an Agreement
and Plan of Merger (as such agreement may hereafter be amended from time to
time, the "Merger Agreement"; capitalized terms used but not defined in this
Agreement shall have the meanings ascribed to them in the Merger Agreement),
which provides, upon the terms and subject to the conditions thereof, for (i)
the commencement by the Purchaser of a tender offer (the "Offer") to purchase,
among other things, all of the issued and outstanding shares of the common
stock, $1.00 par value, of the Company ("Common Stock") at a price per share
equal to the Offer Price and (ii) the subsequent merger of the Purchaser and
the Company (the "Merger"), whereby each share of Common Stock, other than
shares owned directly or indirectly by Parent, the Purchaser or the Company and
other than Dissenting Shares, will be converted into the right to receive in
cash the Offer Price applicable thereto; and
WHEREAS, as a condition to the willingness of the parties to enter
into the Merger Agreement, Parent and the Purchaser have required that the
Company agree, and in order to induce Parent and the Purchaser to enter into
the Merger Agreement, the Company has agreed, to grant the Purchaser an option
to purchase shares of Common Stock, upon the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.1. Grant of Stock Option. Subject to the terms and
conditions set forth herein, the Company hereby grants to the Purchaser an
irrevocable option (the "Stock Option") to purchase that number of newly issued
shares of Common Stock (the "Option Shares") equal to the number of shares of
Common Stock that, when added to the number of shares of Common Stock owned by
the Purchaser and its affiliates immediately following consummation of the
Offer, shall constitute 90%
<PAGE> 2
of the shares of Common Stock then outstanding on a fully diluted basis (giving
effect to the issuance of the Option Shares) at a purchase price per Option
Share equal to the Offer Price.
SECTION 1.2. Exercise of Stock Option. (a) Subject to the conditions
set forth in Section 2.1, the Stock Option may be exercised by the Purchaser,
in whole but not in part, at any one time after the occurrence of the Exercise
Event (as defined below) and prior to the Termination Date (as defined below).
(b) The "Exercise Event" shall occur for purposes of this Agreement
upon the Purchaser's acceptance for payment pursuant to the Offer of shares of
Common Stock constituting at least 66-2/3% but less than 90% of the shares of
Common Stock then outstanding on a fully diluted basis.
(c) Except as provided in the last sentence of this Section 1.2.(c),
the "Termination Date" shall occur for purposes of this Agreement upon the
earliest to occur of:
(i) the Effective Time; and
(ii) the termination of the Merger Agreement in accordance
with the terms and conditions thereof.
Notwithstanding the occurrence of the Termination Date, the Purchaser shall be
entitled to purchase the Option Shares if it has exercised the Stock Option in
accordance with the terms hereof prior to such occurrence, and the occurrence
of the Termination Date shall not affect any rights hereunder which by their
terms do not terminate or expire prior to or as of such date.
(d) In the event the Purchaser wishes to exercise the Stock Option,
the Purchaser shall send to the Company a written notice (an "Exercise Notice",
the date of which notice is referred to herein as the "Notice Date") specifying
the denominations of the certificate or certificates evidencing the Option
Shares which the Purchaser wishes to receive, the place for the closing of the
purchase and sale pursuant to the Stock Option (the "Closing") and a date not
earlier then three (3) business days nor later then ten (10) business days from
the Notice Date for the Closing (the "Closing Date"); provided, however, that
(i) if the Closing cannot be consummated by reason of any applicable Laws or
Orders, the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which such restriction on consummation has
expired or been terminated and (ii) without limiting the foregoing, if prior
notification to or approval of any Governmental Entity is required in
connection with such purchase, the Purchaser and the Company shall promptly
file the required notice or application for approval and shall cooperate in the
expeditious filing of such notice or application, and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date
on which, as the case may be, (A) any required notification period has expired
or been terminated or (B) any required approval has been obtained, and in
either event, any requisite waiting period has expired or been terminated. The
Company shall, within two (2) business days after receipt of the Exercise
Notice, deliver written notice to the Purchaser specifying the number of Option
Shares and the aggregate purchase price therefor.
2
<PAGE> 3
ARTICLE II
CLOSING
SECTION 2.1. Conditions to Closing. The obligation of the Company to
deliver Option Shares upon the exercise of the Stock Option is subject to the
following conditions:
(a) All waiting periods, if any, under the HSR Act applicable to the
issuance and delivery of the Option Shares hereunder shall have expired or have
been terminated; and
(b) There shall be no preliminary or permanent injunction or other
final, non-appealable judgment by a court of competent jurisdiction preventing
or prohibiting the exercise of the Stock Option or the issuance and delivery of
the Option Shares in respect of such exercise.
SECTION 2.2. Closing. (a) At the Closing, (i) the Company shall
deliver to the Purchaser a certificate or certificates evidencing the
applicable number of Option Shares (in the denominations specified in the
Exercise Notice), each such certificate or certificates being duly executed by
the Company and registered in the name of the Purchaser, and (ii) the Purchaser
shall purchase each such Option Share from the Company at the Offer Price.
Payment by the Purchaser of the Offer Price for each of the Option Shares shall
be made by wire transfer of immediately available funds to an account
designated by the Company, in an amount equal to the sum of the product of (i)
the Offer Price and (ii) the total number of Option Shares delivered at the
Closing.
(b) The Company shall pay all expenses, and any and all Federal,
state and local taxes and other charges, that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2.2.
(c) Certificates evidencing Option Shares delivered hereunder may
include legends legally required including the legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
It is understood and agreed that the foregoing legend shall be removed by
delivery of substitute certificate(s) without such legend upon the sale of the
Option Shares pursuant to a registered public offering or Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), or any other sale as
a result of which such legend is no longer required.
SECTION 2.3. Adjustments Upon Changes in Capitalization. In the
event of any change in the number of issued and outstanding shares of Common
Stock by reason of any stock dividend, subdivision, merger, recapitalization,
combination, conversion or exchange of shares, or any other change in the
corporate or capital structure of the Company (including, without limitation,
the declaration or payment of an extraordinary dividend of cash or securities)
which would have the
3
<PAGE> 4
effect of diluting or otherwise adversely affecting the Purchaser's rights and
privileges under this Agreement, the number and kind of the Option Shares and
the consideration payable in respect of the Option Shares shall be
appropriately and equitably adjusted to restore to the Purchaser its rights and
privileges under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser
(except as otherwise disclosed in writing on the date hereof) as follows:
SECTION 3.1. Organization; Authority Relative to this Agreement. The
Company is a corporation duly organized and validly existing under the laws of
the State of Wisconsin. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Company. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due and valid authorization, execution and delivery by Parent and
the Purchaser, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and by general equitable principles.
SECTION 3.2. Authority to Issue Shares. The Company has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof through the Termination Date shall have
reserved, all the Option Shares issuable pursuant to this Agreement. All of the
shares of Common Stock issuable under the Stock Option, upon their issuance and
delivery in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable (except as otherwise
provided in Section 180.0622(2)(b) of the WBCL), will be delivered free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on the Purchaser's voting rights,
charges, adverse rights and other encumbrances of any nature whatsoever (other
than this Agreement) and will not be subject to any preemptive rights. Upon
the delivery to the Purchaser by the Company of a certificate or certificates
evidencing the Option Shares, the Purchaser will receive good, valid and
marketable title to the Option Shares.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1. Further Action. The Company shall use its commercially
reasonable efforts to take, or cause to be taken, all appropriate action, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to consummate and make effective the
4
<PAGE> 5
transactions contemplated hereunder, including, without limitation, using all
reasonable efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser hereby represent and warrant to the Company
as follows:
SECTION 5.1. Organization; Authority Relative to this Agreement.
Each of Parent and the Purchaser is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation. Each of
Parent and the Purchaser has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and the Purchaser and the consummation by Parent and
the Purchaser of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Parent and
the Purchaser. This Agreement has been duly and validly executed and delivered
by Parent and the Purchaser and, assuming the due and valid authorization,
execution and delivery by the Company, constitutes a valid and binding
obligation of Parent and the Purchaser, enforceable against each of Parent and
the Purchaser in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and by general
equitable principles.
SECTION 5.2. Distribution. Any Option Shares the Purchaser purchases
pursuant to this Agreement are being purchased for investment purposes only and
not with a view to any public distribution thereof.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Amendment. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
SECTION 6.2. Waiver. Any party hereto may (a) extend the time for or
waive compliance with the performance of any obligation or other act of any
other party hereto or (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
SECTION 6.3. Fees and Expenses. Except as otherwise provided herein
or in Section 8.03 of the Merger Agreement, all costs, fees and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such expenses.
5
<PAGE> 6
SECTION 6.4. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by telecopy or by overnight courier (providing
proof of delivery) to the respective parties at their addresses as specified in
Section 9.04 of the Merger Agreement.
SECTION 6.5. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner to the fullest extent permitted by applicable Law in order
that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
SECTION 6.6. Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned, in whole or in part, by operation of law or otherwise, by any of the
parties hereto without the prior written consent of the other parties. This
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by, the parties hereto and their respective successors and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing
in this Agreement, express or implied, is intended to confer on any person
other than the parties hereto or their respective successors and permitted
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
SECTION 6.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, without giving
effect to the principles of conflicts of laws thereof.
SECTION 6.8. ENFORCEMENT. THE PARTIES AGREE THAT IRREPARABLE DAMAGE
WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED.
IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS OF THIS AGREEMENT IN ANY COURT OF THE UNITED STATES OR
ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO
WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
SECTION 6.9. Headings. The descriptive headings contained in this
Agreement are included for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 6.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each
6
<PAGE> 7
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 6.11. Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, all as of
the date first written above.
SNAP-ON INCORPORATED
("Parent")
By: /s/ Robert A. Cornog
--------------------------------
Name: Robert A. Cornog
Title: Chairman, President and
Chief Executive Officer
SNAP-ON PACE COMPANY
(the "Purchaser")
By: /s/ Susan F. Marrinan
--------------------------------
Name: Susan F. Marrinan
Title: Vice President and
Secretary
HEIN-WERNER CORPORATION
(the "Company")
By: /s/ Joseph L. Dindorf
--------------------------------
Name: Joseph L. Dindorf
Title: President and Chief
Excecutive Officer
8
<PAGE> 1
EXHIBIT (3)(b)
JOINT FILING AGREEMENT
This will confirm the agreement by and between the undersigned that the
Statement on Schedule 13D (the "Statement") filed on or about this date with
respect to shares of common stock, par value $1.00 per share, of Hein-Werner
Incorporated, a Wisconsin corporation, is being filed on behalf of the
undersigned.
Each of the undersigned hereby acknowledges that pursuant to Rule 13d-1(f)
promulgated under the Securities Exchange Act of 1934, as amended, each person
on whose behalf the Statement is filed is responsible for the timely filing of
such statement and any amendments thereto, and for the completeness and
accuracy of the information concerning such person contained therein, and that
such person is not responsible for the completeness or accuracy of the
information concerning the other persons making the filing, unless such person
knows or has reason to believe that such information is inaccurate.
This Agreement may be executed in one or more counterparts by each of the
undersigned, each of which, taken together, shall constitute one and the same
instrument.
Date: May 4, 1998
SNAP-ON PACE COMPANY
By: /s/ SUSAN F. MARRINAN
-----------------------------
Name: Susan F. Marrinan
Title: Vice President
SNAP-ON INCORPORATED
By: /s/ DONALD S. HUML
-----------------------------
Name: Donald S. Huml
Title: Senior Vice President
