<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO
SECTION 14(C) OF THE SECURITIES EXCHANGE ACT OF 1934
CHECK THE APPROPRIATE BOX:
[_] PRELIMINARY INFORMATION STATEMENT
[X] DEFINITIVE INFORMATION STATEMENT
JOSLYN CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
JOSLYN CORPORATION
(NAME OF PERSON FILING THE INFORMATION STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[_] $125 PER EXCHANGE ACT RULE O-11(C)(1)(II), OR 14C-5(G).
[X] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14C-5(G) AND O-11.
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<TABLE>
<CAPTION>
TITLE OF EACH AGGREGATE
CLASS OF NUMBER OF PER UNIT PRICE OR OTHER PROPOSED
SECURITIES TO SECURITIES UNDERLYING VALUE OF MAXIMUM
WHICH TO WHICH TRANSACTION COMPUTED AGGREGATE
TRANSACTION TRANSACTION PURSUANT TO EXCHANGE VALUE OF AMOUNT OF
APPLIES APPLIES ACT RULE O-11 TRANSACTION FILING FEE
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<S> <C> <C> <C> <C>
Common Stock,
par value
$1.25
per share 1,712,062 $34.00 $58,210,108.00 $11,642.02
</TABLE>
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
Amount Previously Paid: $11,642.02 Filing Party: Danaher Corporation,
TK Acquisition
Corporation
Form, Schedule or Registration Date Filed: July 24, 1995, August
Statement No.: Schedule 14D-1 21, 1995
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<PAGE>
JOSLYN CORPORATION
NOTICE OF ACTION BY SHAREHOLDERS
TO BE TAKEN BY
WRITTEN CONSENT WITHOUT A MEETING
To the Shareholders of
Joslyn Corporation:
NOTICE IS HEREBY GIVEN, in accordance with Section 7.10 of the Illinois
Business Corporation Act (the "IBCA"), that TK Acquisition Corporation, a
Delaware corporation ("the Purchaser"), as the holder of approximately 76% of
the outstanding shares of Common Stock, par value $1.25 per share (the
"Shares"), of Joslyn Corporation (the "Company"), intends to approve the
merger of the Purchaser with and into the Company (the "Merger") by written
consent in lieu of a meeting. Pursuant to the IBCA, the Purchaser, as the
owner of more than two-thirds of the Shares, has sufficient voting power to
approve the Merger; thus the vote of shareholders other than the Purchaser
will not be necessary to approve the action and will not be sought. The Merger
is expected to be consummated on October 31, 1995.
The Merger will be effected pursuant to an Agreement and Plan of Merger,
dated as of August 20, 1995 (the "Merger Agreement"), among the Company,
Danaher Corporation, a Delaware corporation ("Parent"), DH Holdings Corp., a
Delaware corporation and a wholly owned subsidiary of Parent and the sole
stockholder of the Purchaser ("DH Holdings"), and the Purchaser. The Company
will be the corporation that survives the Merger (the "Surviving
Corporation"). In the Merger, (i) each outstanding Share (except for Shares
then owned beneficially or of record by Parent or the Purchaser or any other
subsidiary of Parent, Shares as to which appraisal rights have been properly
exercised under the IBCA and Shares held in the Company's treasury) will be
converted into the right to receive $34.00 in cash, without interest thereon,
upon surrender of the certificate representing such Share (the "Merger
Consideration"), (ii) each Share which is then owned beneficially or of record
by Parent or the Purchaser or any other subsidiary of Parent shall be
cancelled and retired and cease to exist, without any conversion thereof, and
(iii) each Share held in the Company's treasury shall be cancelled and retired
and cease to exist without any conversion thereof. As used herein, unless the
context otherwise requires, "Share" and "Shares" shall be deemed to include
the associated Common Stock Purchase Rights. Each share of common stock, par
value $.01 per share, of the Purchaser issued and outstanding shall be
converted into and exchangeable for one fully paid and non-assessable share of
common stock, par value $1.25 per share, of the Surviving Corporation. After
the effective date of the Merger, the Shares will cease to be quoted on the
NASDAQ National Market and will cease to be registered under the Securities
Act of 1934, as amended.
Under the IBCA, any shareholder of record immediately prior to the Merger
may, in lieu of accepting the Merger Consideration, dissent from the Merger
and seek an appraisal of such shareholder's Shares (exclusive of any element
of value arising from the expectation or accomplishment of the Merger),
provided such shareholder complies with the provisions of Section 11.70 of the
IBCA. Written notice will be sent to shareholders promptly after the corporate
action described above has been taken, in accordance with Section 7.10 of the
IBCA and informing them of the procedures to be taken if they wish to effect
appraisal rights pursuant to Section 11.70 of the IBCA. In order to perfect
appraisal rights, a former shareholder must make a written demand for such
appraisal on the Surviving Corporation within 30 days of the mailing of such
notice.
TK Acquisition Corporation
October 10, 1995
<PAGE>
INFORMATION STATEMENT
CONCERNING THE MERGER OF
TK ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF DANAHER CORPORATION
WITH AND INTO
JOSLYN CORPORATION
AT A PRICE OF $34.00 PER SHARE
---------------
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
---------------
INTRODUCTION
This Information Statement is being furnished to the holders of outstanding
shares of Common Stock, par value $1.25 per share, of Joslyn Corporation, an
Illinois corporation (the "Company"), as of the Record Date (as defined below)
in connection with the proposed merger (the "Merger") of TK Acquisition
Corporation, a Delaware corporation (the "Purchaser"), with and into the
Company. The Company will be the corporation that survives the Merger (the
"Surviving Corporation"). This Information Statement is first being furnished
to the Company's shareholders on or about October 10, 1995.
The Merger will be effected pursuant to an Agreement and Plan of Merger,
dated as of August 20, 1995 (the "Merger Agreement"), among the Company,
Danaher Corporation, a Delaware corporation ("Parent"), DH Holdings Corp., a
Delaware corporation and a wholly owned subsidiary of Parent and the sole
stockholder of the Purchaser ("DH Holdings"), and the Purchaser. In the
Merger, (i) each outstanding share of Common Stock, par value $1.25 per share,
of the Company (a "Share") (except for Shares then owned beneficially or of
record by Parent or the Purchaser or any other subsidiary of Parent, Shares as
to which appraisal rights have been properly exercised under the Illinois
Business Corporation Act (the "IBCA") and Shares held in the Company's
treasury) will be converted into the right to receive $34.00 in cash, without
interest thereon, upon surrender of the certificate representing such Share
(the "Merger Consideration"), (ii) each Share which is then owned beneficially
or of record by Parent or the Purchaser or any other subsidiary of Parent
shall be cancelled and retired and cease to exist, without any conversion
thereof, and (iii) each Share held in the Company's treasury shall be
cancelled and retired and cease to exist without any conversion thereof. As
used herein, unless the context otherwise requires, "Share" and "Shares" shall
include the associated Common Stock Purchase Rights. Each share of common
stock, par value $.01 per share ("Purchaser Common Stock"), of the Purchaser
issued and outstanding shall be converted into and exchangeable for one fully
paid and non-assessable share of common stock, par value $1.25 per share, of
the Surviving Corporation. The regular dividend on the Shares of $.30 which
was declared on July 19, 1995 was paid on September 15, 1995 to shareholders
who were of record on August 25, 1995. After the effective date of the Merger
(the "Effective Time"), the Shares will cease to be quoted on the NASDAQ
National Market and will cease to be registered under the Securities Act of
1934, as amended.
YOU ARE URGED TO REVIEW THIS INFORMATION STATEMENT CAREFULLY TO DECIDE
WHETHER TO ACCEPT THE MERGER CONSIDERATION OR TO EXERCISE APPRAISAL RIGHTS
PURSUANT TO THE IBCA. AFTER THE MERGER, A NOTICE OF THE EFFECTIVENESS OF THE
MERGER (THE "NOTICE OF MERGER") WILL BE SENT TO YOU, TOGETHER WITH INFORMATION
ON HOW TO EITHER ACCEPT THE MERGER CONSIDERATION OR EXERCISE APPRAISAL RIGHTS.
AT THAT TIME, IF YOU WISH TO ACCEPT THE MERGER CONSIDERATION, YOU WILL NEED TO
COMPLETE, EXECUTE AND SEND A LETTER OF TRANSMITTAL, TOGETHER WITH CERTIFICATES
REPRESENTING YOUR SHARES, TO BANK OF AMERICA ILLINOIS, AS DISBURSING AGENT FOR
THE MERGER (THE "DISBURSING AGENT"), IN ACCORDANCE WITH THE INSTRUCTIONS SET
FORTH IN THE LETTER OF TRANSMITTAL. IF YOU WISH TO EXERCISE APPRAISAL RIGHTS
PURSUANT TO THE IBCA, YOU WILL NEED, WITHIN 30 DAYS OF THE DATE OF THE MAILING
OF THE NOTICE OF MERGER, TO
<PAGE>
DELIVER TO THE COMPANY A WRITTEN DEMAND FOR A JUDICIAL APPRAISAL OF THE FAIR
VALUE OF YOUR SHARES AND OTHERWISE COMPLY WITH THE APPLICABLE PROVISIONS OF
THE IBCA. SEE "APPRAISAL RIGHTS" BELOW AND THE TEXT OF SECTIONS 11.65 AND
11.70 OF THE IBCA ATTACHED AS EXHIBIT A TO THIS INFORMATION STATEMENT.
The record date for shareholders entitled to notice of or entitled to give
consent to the Merger is October 10, 1995 (the "Record Date"). As of the
Record Date, there were issued and outstanding 7,195,240 Shares. Each Share is
entitled to one vote. On the Record Date, the Purchaser owned 5,483,178
Shares, which accounted for approximately 76% of the voting power of the
outstanding Shares. Pursuant to the IBCA, the Purchaser, as the owner of more
than two-thirds of the voting power of the Shares, plans to approve the Merger
by written consent on or after October 30, 1995. Other than such written
consent, no further action by the shareholders of the Company will be
necessary to approve or consummate the Merger and no such approval will be
sought. The Company will not hold a meeting of the shareholders of the Company
in connection with the Merger. The Merger is expected to be consummated on
October 31, 1995.
Shareholders of the Company should have already received copies of the
Purchaser's Offer to Purchase, dated July 24, 1995, the related blue Letter of
Transmittal, the Supplement to the Offer to Purchase, dated August 22, 1995
(the "Supplement"), and the related green Letter of Transmittal (collectively,
the "Offer to Purchase") and the Company's Solicitation and Recommendation
Statement on Schedule 14D-9, dated August 4, 1995, as amended by Amendment No.
3, dated August 22, 1995 (collectively, the "Schedule 14D-9"). The Tender
Offer Statement on Schedule 14D-1, which includes the Offer to Purchase and
was filed by the Purchaser with the Securities and Exchange Commission (the
"Commission") on July 24, 1995 (the "Schedule 14D-1"), and all amendments
thereto and the Schedule 14D-9, which was filed by the Company with the
Commission on August 4, 1995, and all amendments thereto, may be obtained from
the Commission, upon payment of the Commission's customary charges, by writing
to its principal office at 450 5th Street, N.W., Judiciary Plaza, Room 1024,
Washington, D.C. 20549. Such materials are also available for inspection and
copying at the principal office of the Commission at the address set forth
immediately above, at the Commission's regional offices at Seven World Trade
Center, 13th Floor, New York, New York 10048 and CitiCorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and at the offices of
NASDAQ Operations, 1735 K Street, N.W., Washington, D.C. 20006.
EACH HOLDER OF RECORD OF SHARES IS URGED TO READ CAREFULLY THE INFORMATION
CONTAINED IN THE OFFER TO PURCHASE, THE SCHEDULE 14D-9 AND THIS INFORMATION
STATEMENT, INCLUDING EXHIBIT A HERETO, IN CONSIDERING WHETHER TO ACCEPT THE
MERGER CONSIDERATION OR TO SEEK AN APPRAISAL OF HIS SHARES PURSUANT TO THE
IBCA. SHAREHOLDERS ARE URGED TO RETAIN THESE MATERIALS TO ASSIST IN A
DETERMINATION AS TO WHETHER TO ASSERT APPRAISAL RIGHTS UNDER THE IBCA.
The principal executive offices of the Company are located at 30 South
Wacker Drive, Chicago, Illinois 60606, and its telephone number is (312) 454-
2900.
The principal executive offices of the Purchaser are located at 1250 24th
Street, N.W., Suite 800, Washington, D.C. 20037, and its telephone number is
(202) 828-0850.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS INFORMATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
THE DISBURSING AGENT FOR THE MERGER IS:
BANK OF AMERICA ILLINOIS
231 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60697
(800) 962-9324
The date of this Information Statement is October 10, 1995
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY................................................................... 1
Background and Purpose of the Merger and Offer.......................... 1
Price Range of the Shares; Dividends.................................... 1
Source and Amount of Funds.............................................. 2
Accounting Treatment of the Merger...................................... 2
Certain Federal Income Tax Consequences................................. 2
Certain Legal Matters; Required Regulatory Approvals.................... 3
Purpose of the Offer; Plans for the Company............................. 4
The Company's Response; Third-Party Advice.............................. 5
CERTAIN EFFECTS OF THE MERGER............................................. 6
THE MERGER AGREEMENT...................................................... 6
APPRAISAL RIGHTS.......................................................... 18
CERTAIN INFORMATION CONCERNING THE COMPANY................................ 20
CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER................... 22
THE COMPANY'S FINANCIAL ADVISORS.......................................... 23
CONTACTS BETWEEN THE COMPANY AND PARENT AND THE PURCHASER................. 24
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............ 34
INTEREST OF CERTAIN PERSONS IN THE MERGER................................. 34
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 35
EXHIBIT A--ILLINOIS BUSINESS CORPORATION ACT SECTIONS 11.65 AND 11.70..... A-1
EXHIBIT B--FAIRNESS OPINION OF GOLDMAN, SACHS & CO. .................... . B-1
</TABLE>
<PAGE>
SUMMARY
BACKGROUND AND PURPOSE OF THE MERGER AND OFFER
On July 24, 1995, the Purchaser commenced a tender offer (the "Offer") for
any and all outstanding Shares at $32 per Share, net to the seller in cash,
without interest thereon. On August 20, 1995, the Company, Parent, DH Holdings
and the Purchaser entered into the Merger Agreement, pursuant to which the
Purchaser agreed to amend and supplement the Offer to provide for, among other
things, an increased purchase price of $34 per Share, net to the seller in
cash. The Merger Agreement provides that following the completion of the Offer
and the satisfaction of certain conditions, the Purchaser will be merged with
and into the Company and each issued and outstanding Share (other than Shares
held in the treasury of the Company or Shares held by Parent, the Purchaser or
any other subsidiary of Parent and other than Shares held by shareholders who
perfect appraisal rights under the IBCA) will be converted into the right to
receive the Merger Consideration. For additional information relating to the
background of the Offer and the Merger and a more comprehensive description of
the Merger Agreement, see "Contacts Between the Company and Parent and the
Purchaser," "Purpose of the Offer; Plans for the Company" and "The Merger
Agreement" below. A copy of the Merger Agreement was filed as Exhibit
11(a)(10) to the Purchaser's Schedule 14D-1.
The Offer expired at 12:00 midnight, New York City time, on Friday,
September 1, 1995. As a result of the purchase of Shares pursuant to the
Offer, and the contribution to the Purchaser of 613,550 Shares previously
acquired by DH Holdings, the Purchaser became the beneficial owner of
approximately 76% of the Shares outstanding.
Under the IBCA, approval of the Merger requires the affirmative vote of the
holders of at least two-thirds of the outstanding Shares. Since the Purchaser
owns more than two-thirds of the outstanding Shares, under the IBCA the
Purchaser owns the requisite number of Shares to approve the Merger.
Therefore, the vote of other shareholders of the Company will not be required
and will not be sought.
The Merger is subject to the satisfaction of certain conditions. See "The
Merger Agreement--Conditions to the Obligations of Parent, the Purchaser and
the Company" and "The Merger Agreement--Conditions to the Obligations of the
Company" below.
PRICE RANGE OF THE SHARES; DIVIDENDS
The Shares are listed and traded on the NASDAQ National Market System (the
"NASDAQ-NMS") under the symbol "JOSL". The following table sets forth, for
fiscal years 1993 and 1994, the high and low bid market price quotations for
the Shares as reported in the Company's Annual Report on Form 10-K for the
year ended December 31, 1994 (the "Company's 1994 10-K") and the cash
dividends per common share, and for fiscal year 1995 the high and low sales
prices for the Shares on the NASDAQ-NMS as reported by published financial
sources and the cash dividends per common share.
JOSLYN CORPORATION
<TABLE>
<CAPTION>
CASH
HIGH LOW DIVIDENDS
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<S> <C> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1993
First Quarter.................................... $27 $23 1/4 $.29
Second Quarter................................... 28 22 1/2 .29
Third Quarter.................................... 27 1/2 24 3/4 .29
Fourth Quarter................................... 25 23 1/2 .29
FISCAL YEAR ENDED DECEMBER 31, 1994
First Quarter.................................... $25 1/4 $22 3/4 $.30
Second Quarter................................... 25 23 .30
Third Quarter.................................... 31 25 .30
Fourth Quarter................................... 27 24 3/4 .30
FISCAL YEAR ENDED DECEMBER 31, 1995
First Quarter.................................... $27 3/4 $24 1/2 $.30
Second Quarter................................... 26 1/2 24 1/2 .30
Third Quarter.................................... 38 1/4 24 3/4 .30
</TABLE>
<PAGE>
On July 7, 1995, the last full day of trading prior to the delivery of the
letter proposing the acquisition of the Company by Parent, the closing sales
price per Share reported on the NASDAQ-NMS (the "NASDAQ Closing Price") was
$24 3/4. On July 21, 1995, the last full day of trading prior to the
announcement of the Offer, the NASDAQ Closing Price was $35.
The high and low sales prices per Share on the NASDAQ-NMS reported by
published financial sources from July 24, 1995, the date of the Offer to
Purchase, through August 21, 1995, the date of the Supplement amending the
Offer, were $38.25 and $33.875, respectively. On August 18, 1995, the last
full trading day prior to the announcement of the execution of the Merger
Agreement, the NASDAQ Closing Price was $36. On August 21, 1995, the last full
trading day prior to the mailing of the Supplement, the NASDAQ Closing Price
was $34.25. On September 1, 1995, the date on which the Offer expired, the
NASDAQ Closing Price was $33 7/8.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of the
Shares pursuant to the Offer and the Merger and to pay fees and expenses
related to the Offer and the Merger is estimated to be approximately $240
million. The Purchaser plans to obtain all funds needed for the Offer and the
Merger through a capital contribution from Parent. Parent plans to obtain
funds for such capital contribution through its existing Credit Agreement,
dated as of September 7, 1990, as amended, among Parent and the banks listed
therein (the "Credit Facility"), and through a committed credit line provided
by Bank of America Illinois (the "Committed Line"). The Credit Facility
provides for revolving credit of up to $200 million for general corporate
purposes through August 1, 1997. Prior to the Offer, there was no outstanding
indebtedness under the Credit Facility. Loans under the Credit Facility bear
interest at one of the following rates, as selected by Parent on the date of
borrowing: (i) the Base Rate (as defined in the Credit Facility); (ii) the
Adjusted CD Rate (as defined in the Credit Facility); or (iii) the Eurodollar
Rate (as defined in the Credit Facility) plus, in the case of (ii) and (iii),
a margin (ranging from 1/4 of one percent to 3/4 of one percent) based on the
leverage ratio of Parent at the end of the fiscal quarter most recently then
ended. As of the date hereof, the applicable margin would be 1/4 of one
percent, which margin is expected to increase to 3/8 of one percent based on
the pro forma capitalization of Parent after the Offer and the Merger. The
effective interest rate as of the date hereof would be approximately 6.25%.
The Credit Facility contains covenants relating to, among other things, the
maintenance of working capital, net worth, debt levels and interest coverage
and restrictions on the payment of dividends. The members of the bank group
providing the Credit Facility are Bankers Trust Company, Bank of America
Illinois, First Chicago Corp., The Chase Manhattan Bank (National
Association), Toronto Dominion Bank, Credit Suisse, Bank of Nova Scotia,
Industrial Bank of Japan, Bank of Tokyo, Chemical Banking Corporation, Credit
Lyonnais, NationsBank Corporation and Dresdner Bank Aktiengesellschaft. The
Committed Line provides for credit of up to $50 million through a date 364
days following execution of final credit documentation, but in no event later
than August 31, 1996, under substantially the same terms and conditions as the
Credit Facility.
In the Merger Agreement, each of Parent and the Purchaser has represented
that it has available to it the funds necessary to consummate the Offer and
the Merger and the transactions contemplated thereby.
ACCOUNTING TREATMENT OF THE MERGER
The purchase method of accounting will be used to account for the Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The summary of tax consequences set forth below is for general information
only and is based on the law as currently in effect. The tax treatment of each
shareholder will depend in part upon such shareholder's
2
<PAGE>
particular situation. The receipt of cash for Shares pursuant to the Merger or
the exercise of appraisal rights will be a taxable transaction for federal
income tax purposes and may also be a taxable transaction under applicable
state, local, foreign and other tax laws. For federal income tax purposes
under the Internal Revenue Code of 1986, as amended, each selling or
exchanging shareholder would generally recognize gain or loss equal to the
difference between the amount of cash received (other than the portion of any
amounts received pursuant to a shareholder's statutory rights of appraisal
that are denominated as interest, which is taxable as ordinary income) and
such shareholder's tax basis in such shareholder's Shares. For federal income
tax purposes, such gain or loss will be capital gain or loss (assuming the
Shares are held as a capital asset by such shareholder) and any such capital
gain or loss will be long-term if, as of the date the Purchaser accepted the
Shares for payment pursuant to the Offer or the Effective Time, as the case
may be, the Shares were held for more than one year or will be short-term if,
as of such date, the Shares were held for one year or less.
The foregoing discussion may not be applicable to certain types of
shareholders, including, without limitation, shareholders who acquired Shares
pursuant to the exercise of employee stock options or otherwise as
compensation, individuals who are not citizens or residents of the United
States and foreign corporations, or entities that are otherwise subject to
special tax treatment under the Internal Revenue Code of 1986, as amended
(such as insurance companies, tax-exempt entities and regulated investment
companies).
A bill recently passed the United States House of Representatives and is
pending before the United States Senate to reduce the effective tax rates
applicable to net long-term capital gains. These proposals would apply
generally to transactions effected after December 31, 1994. In addition, for
taxable years beginning after December 31, 1995, the proposals would further
limit the deduction for long-term capital losses. Therefore, if these
proposals were enacted into law, gains from the sale or conversion of Shares
pursuant to the Merger or the exercise of appraisal rights which constituted
long-term capital gains would generally be taxed at reduced effective tax
rates. However, there can be no assurance that these or other proposals will
be enacted and, if enacted, the effective dates of the proposals or the
particular type of transactions or assets to which the proposals apply could
be modified. Shareholders of the Company should consult their tax advisors
about the impact of this proposed legislation.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH SHAREHOLDER IS URGED TO CONSULT SUCH SHAREHOLDER'S TAX
ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO SUCH SHAREHOLDER OF THE
MERGER, INCLUDING, WITHOUT LIMITATION, THE APPLICABILITY AND EFFECT OF
FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS
State Anti-Takeover Statutes. The Board of Directors of the Company (the
"Board") adopted resolutions on August 20, 1995 which have the effect of
exempting the Offer and Merger from certain provisions of the IBCA which
regulate business combinations with interested shareholders (the "Business
Combination Law").
Litigation. On July 20, 1995, a stockholder action was commenced against the
Company and certain of its directors in the Circuit Court of Cook County,
Illinois (County Department, Chancery Division). The action generally seeks,
among other things, a judgment: (a) declaring the action to be a proper class
action, (b) ordering the individual defendants to carry out their fiduciary
duties to the plaintiff and to other shareholders of the Company by announcing
their intention to (i) cooperate with any person having a bona fide interest
in proposing transactions to maximize shareholder value; (ii) undertake an
appropriate evaluation of the Company's worth as an acquisition candidate;
(iii) take steps to enhance the Company's attractiveness as an acquisition
candidate; (iv) take appropriate steps to create an auction of the Company;
(v) act independently so that interests of public shareholders will be
protected; and (vi) adequately ensure that no conflicts of interest exist
between their interests and their fiduciary obligation to maximize shareholder
value, (c) ordering the defendants to account for damages as a result of the
matters alleged, (d) awarding costs, and (e) granting such other relief as may
be just and proper.
On July 24, 1995, the Purchaser commenced litigation against the Company in
the United States District Court for the Northern District of Illinois
seeking, among other things, a preliminary injunction (i) enjoining the
3
<PAGE>
operation of the provisions of the Rights Agreement, dated as of February 10,
1988 and amended as of September 2, 1994, between the Company and The First
National Bank of Chicago, an Illinois banking corporation, as Rights Agent
(the "Rights Agreement") purporting to require approval by the Continuing
Directors for redeeming the Rights or taking certain actions with respect to
the Rights and the Rights Agreement and (ii) enjoining the Board from treating
the tender of shares to Purchaser prior to its acceptance of such shares for
purchase, the receipt of authorizations for the calling of a special meeting,
and the obtaining of revocable proxies or consents to vote shares as vesting
beneficial ownership of such shares in the Purchaser for purposes of Section
7.85 of the IBCA. In addition, the Purchaser's lawsuit sought, among other
things, to prohibit the Board from breaching its fiduciary duties to the
Company and its shareholders, through issuance of an order (i) compelling the
Board to redeem the Rights or to make the Rights inapplicable to the Offer and
the Merger; (ii) enjoining the Board from using Illinois' business combination
statutes to interfere with or prevent the Offer and Merger; (iii) compelling
the Board to approve the Offer and the Merger for purposes of Illinois law;
(iv) declaring that no state laws other than those of Illinois that purport to
regulate business combinations of the Company apply to the Offer and Merger;
(v) enjoining the Company from instituting proceedings in any other court or
forum concerning or related to the Offer and Merger and (vi) enjoining the
Board from taking any other steps to interfere with or prevent the Offer and
Merger.
On August 24, 1995, the United States District Court for the Northern
District of Illinois entered an order approving the parties' stipulation
voluntarily dismissing, without prejudice and without costs, the above-
described lawsuit brought by Parent and the Purchaser against the Company.
Antitrust. Parent filed, on July 24, 1995, with the Federal Trade Commission
and the Antitrust Division of the Department of Justice a Premerger
Notification and Report Form in connection with the purchase of Shares
pursuant to the Offer. The waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") applicable to the Offer
expired at 11:59 p.m., New York City time, on August 8, 1995. After the
Purchaser has approved the Merger, the Company and the Purchaser will be
required to file Articles of Merger with the Secretary of State of the State
of Illinois pursuant to Section 11.25 of the IBCA, and the Surviving
Corporation will be required to file a Certificate of Merger with the
Secretary of State of the State of Delaware pursuant to Section 252(c) of the
Delaware General Corporation Law (the "DGCL"). None of the Company, Parent or
the Purchaser is aware of any other federal or state regulatory requirements
that must be complied with or approvals that must be obtained in connection
with the Merger.
PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
Purpose of the Offer
The purpose of the Offer and the Merger is to acquire control of, and the
entire equity interest in, the Company. The Purchaser currently intends, as
described above, to approve the Merger. The purpose of the Merger is to
acquire all Shares not tendered and purchased pursuant to the Offer or
otherwise. Pursuant to the Merger, each then outstanding Share (other than
Shares owned by Parent or any of its wholly owned subsidiaries, Shares held in
the treasury of the Company, and Shares held by shareholders who perfect
appraisal rights under the IBCA) will be converted into the right to receive
cash in the same amount as received per Share in the Offer, and the Company
will become a wholly owned subsidiary of Parent.
Plans for the Company
Parent does not have any current plans to dispose of any businesses or other
assets of the Company or to effect any changes in its operations. Parent
intends to conduct a further review of the Company and its subsidiaries and
their respective assets, businesses, corporate structure, capitalization,
operations, properties, policies, management and personnel and to integrate
the Company's principal subsidiaries into Parent's Process/Environmental
Controls Group. After such review, it is possible that Parent might modify its
current plans not to dispose of any businesses or other assets of the Company
and not to effect any changes in the Company's operations other than as
described above.
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Pursuant to the Merger Agreement, following the purchase of Shares pursuant
to the Offer, the Board amended the Company's By-Laws to provide that the
number of directors shall be no less than seven and no more than twelve
persons, and that such number shall be nine until the Effective Time. The
Board then elected six nominees of the Purchaser as directors, and three
incumbent directors resigned. See "The Merger Agreement--The Amended Offer"
below.
THE COMPANY'S RESPONSE; THIRD-PARTY ADVICE
Prior to the consummation of the Offer, the Board determined unanimously
that the Offer and the Merger are fair to and in the best interest of the
shareholders of the Company (other than Parent and its subsidiaries) and
recommended in the Schedule 14D-9 that all shareholders of the Company accept
the Offer and tender all of their Shares pursuant to the Offer.
The Board's recommendation was based in part upon an opinion received by the
Board from Goldman, Sachs & Co. ("Goldman Sachs") that, based upon and subject
to the matters set forth therein, as of August 20, 1995 the $34 per Share in
cash to be received by the holders of Shares (other than Parent and its
subsidiaries) in the Offer and the Merger pursuant to the Merger Agreement is
fair to such holders. A copy of the written opinion of Goldman Sachs is
attached as Exhibit B hereto. Shareholders are urged to read the text of such
opinion in its entirety for a statement of matters considered, assumptions
made and the scope of review of Goldman Sachs. The Company has not requested
Goldman Sachs to confirm its opinion as of the date hereof and Goldman Sachs
has not confirmed its opinion as of the date hereof or undertaken after the
date of the opinion any further review in connection with such opinion.
For a discussion of the Company's arrangements with Goldman Sachs with
respect to the Offer and the Merger, see "The Company's Financial Advisors"
below.
In reaching its conclusions, the Board also considered a number of other
factors, including, without limitation, the following:
(i) the financial and other terms and conditions of the Offer and the
Merger Agreement and the course of negotiations with respect thereto;
(ii) the $34 per Share price to be received by the Company's shareholders
in both the Offer and the Merger, which represents a substantial premium
over the closing market price of $24.75 per Share on July 7, 1995, the last
full trading day before Parent publicly proposed to acquire the Company for
$32 per Share;
(iii) that no other potential acquiror or strategic partner had expressed
an interest in engaging in a business combination that would likely be on
terms as favorable to the Company's shareholders as those of the Offer and
Merger, and the views of management and Goldman Sachs as to the likelihood
that any such superior transaction would occur;
(iv) the recent and historical trading prices and price/earnings
multiples for the Shares, together with the amount of trading liquidity of
the Shares;
(v) the historical financial condition, results of operations, business
and prospects of the Company, together with current industry, economic and
market conditions;
(vi) the Company's strategic plans and prospects as an independent
company;
(vii) the recent and historical trading prices of the Shares, and the
ratios at which shares of similar companies had been trading;
(viii) the level of trading liquidity for the Shares;
(ix) the Company's ability to accept a superior offer (subject to certain
restrictions and fees);
(x) the likelihood that the closing conditions to the Offer and the
Merger would be satisfied;
(xi) the costs and management distraction that would result from a
contest for control of the Company;
(xii) the recommendation of the Company's management; and
(xiii) the active and direct role of the Board in consideration of
Parent's proposal and various alternatives at numerous meetings.
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CERTAIN EFFECTS OF THE MERGER
At the Effective Time, the Purchaser will be merged with and into the
Company, and the Company shall be the Surviving Corporation and shall continue
its corporate existence under the laws of the State of Illinois. At the
Effective Time, the separate existence of the Purchaser shall cease. The
Surviving Corporation shall retain the name of the Company and shall possess
all the rights, privileges, immunities, powers and franchises of the Purchaser
and the Company and shall by operation of law become liable for all the debts,
liabilities and duties of the Purchaser and the Company. Subject to the
provisions of the Merger Agreement relating to indemnification, the Articles
of Incorporation of the Company in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended in accordance with provisions thereof and as provided by
law, except that such Articles of Incorporation will be amended to reduce the
authorized capital stock of the Surviving Corporation to 1,100 shares of
common stock, par value $1.25 per share. Subject to the provisions of the
Merger Agreement relating to indemnification, the By-Laws of the Company in
effect immediately prior to the Effective Time shall be the By-Laws of the
Surviving Corporation until thereafter amended, altered or repealed as
provided therein and by law. The directors of the Purchaser and the officers
of the Company immediately prior to the Effective Time shall be the directors
and officers, respectively, of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and By-Laws of the Surviving
Corporation.
As a result of the Merger, the Shares will no longer be publicly traded and
Parent will become the sole shareholder of the Surviving Corporation.
Following the Merger, the shareholders will no longer have an opportunity to
continue their interests in the Company as an ongoing corporation and
therefore will not share in its future earnings and potential growth.
Trading in the Shares on the NASDAQ-NMS will cease immediately following the
Effective Time. At the Effective Time, the Shares will be delisted from the
NASDAQ-NMS. Registration of the Shares under the Exchange Act also will be
terminated, as will the ongoing disclosure requirements thereunder.
Shareholders who properly perfect their statutory appraisal rights under and
in accordance with Section 11.70 of the IBCA will have the right to seek
appraisal of their Shares. See "Appraisal Rights" for a statement of the
appraisal rights of shareholders and a description of the procedures to be
followed to obtain appraisal of the Shares.
THE MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement, a copy of which was filed as Exhibit 11(a)(10) to Amendment No. 5
to the Schedule 14D-1, filed with the Commission on August 21, 1995. Such
Exhibit should be available for inspection and copies should be obtainable, in
the manner set forth in the Introduction hereto (except that it will not be
available at the regional offices of the Commission).
The Amended Offer. In the Merger Agreement, Parent and the Purchaser agree,
among other things, to amend and supplement the Offer to provide that (i) the
purchase price offered pursuant to the Offer will be increased to $34.00 per
Share, (ii) the obligations of the Purchaser and Parent to consummate the
Offer and to accept for payment and purchase the Shares tendered shall be
subject only to the conditions set forth in Annex A to the Merger Agreement
(the "Offer Conditions"), and (iii) the expiration date of the Offer will be
extended at least until midnight, New York City time, on Friday, September 1,
1995, unless further extended. The Purchaser shall not, without the Company's
prior written consent, (i) reduce the price per Share or the number of Shares
sought to be purchased or modify the form of consideration to be received by
holders of the Shares in the Offer, (ii) waive or modify the Offer Condition
which states that there must be validly tendered and not properly withdrawn
prior to the expiration of the Offer that number of Shares which, when
aggregated with the Shares currently owned by Parent and any of its
subsidiaries, represents at least two-thirds of the Shares on a fully-
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diluted basis (the "Minimum Condition") or (iii) impose additional conditions
to the Offer or amend any term of the Offer in a manner adverse to the holders
of the Shares. Subject only to the Offer Conditions, the Purchaser shall, and
Parent shall cause the Purchaser to, pay for all of the Shares validly
tendered and not withdrawn pursuant to the Offer as soon as legally
permissible.
In the Merger Agreement, the Company consents to the amended Offer and
represents and warrants that the Board (at a meeting duly called and held at
which a quorum was present) as part of its approval of the Merger Agreement,
has unanimously (i) approved the making of the Offer, (ii) determined that
each of the Offer and the Merger is fair to, and in the best interests of, the
shareholders of the Company and (iii) resolved, subject to the terms and
conditions of the Merger Agreement, to recommend acceptance of the Offer and
approval and adoption of the Merger Agreement by the shareholders of the
Company (to the extent such approval and adoption is required by applicable
law). Under the Merger Agreement, the Board will not withdraw, modify or amend
such recommendation except to the extent that, after taking into account the
advice of counsel to the Company, it concludes that such withdrawal,
modification or amendment is legally required in the proper exercise of its
fiduciary duties. If, however, the Board withdraws, modifies or amends such
recommendation after receiving a Superior Proposal (as defined below in
"Termination"), then such withdrawal, modification or amendment may be made
only at a time that is after the second business day after Parent has received
written notice from the Company advising Parent of the Company's receipt of a
Superior Proposal, specifying the material terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal.
The Merger Agreement provides that, promptly (subject to any applicable
requirements under Section 14(f) of the Exchange Act) upon the purchase by the
Purchaser of the Shares pursuant to the Offer, the Board shall amend its By-
Laws to provide that the number of directors shall be no less than seven and
no more than twelve persons, Steven M. Rales, Mitchell P. Rales, George M.
Sherman, Patrick W. Allender, C. Scott Brannan and James H. Ditkoff shall be
elected by the Board as additional directors of the Company (or, if any such
persons shall be unavailable, other persons designated by the Purchaser and
reasonably acceptable to the Independent Directors (defined as directors of
the Company then in office who are neither designated by the Purchaser nor
otherwise affiliated with Parent or the Purchaser and are not employees of the
Company or any of its Subsidiaries)) and William E. Bendix, James M. Reed and
Lawrence G. Wolski shall resign as directors of the Company, and thereafter
until the Effective Time (a) the total number of directors of the Company
shall be nine; (b) the Purchaser shall be entitled to designate up to six
directors; and (c) the Board shall have at least three Independent Directors.
Following the election or appointment of the Purchaser's designees and prior
to the Effective Time, any amendment to the Merger Agreement or of the
Articles of Incorporation or By-Laws of the Company, any 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 and any waiver of any of the Company's rights under the Merger
Agreement will require the concurrence of a majority of the Independent
Directors.
The Merger. The Merger Agreement provides that, at the Effective Time, the
Purchaser will be merged with and into the Company, and the Company shall be
the Surviving Corporation and shall continue its corporate existence under the
laws of the State of Illinois. At the Effective Time, the separate existence
of the Purchaser shall cease. The Surviving Corporation shall retain the name
of the Company and shall possess all the rights, privileges, immunities,
powers and franchises of the Purchaser and the Company and shall by operation
of law become liable for all the debts, liabilities and duties of the
Purchaser and the Company. Subject to the provisions of the Merger Agreement
relating to indemnification, the Articles of Incorporation of the Company in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with provisions thereof and as provided by law, except that such
Articles of Incorporation will be amended to reduce the authorized capital
stock of the Surviving Corporation to 1,100 shares of common stock, par value
$1.25 per share. Subject to the provisions of the Merger Agreement relating to
indemnification, the By-Laws of the Company in effect immediately prior to the
Effective Time shall be the By-Laws of the Surviving Corporation until
thereafter amended, altered or repealed as provided therein and by law. The
directors of the Purchaser and the officers of the Company immediately prior
to the Effective Time shall be
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the directors and officers, respectively, of the Surviving Corporation, each
to hold office in accordance with the Articles of Incorporation and By-Laws of
the Surviving Corporation.
Conversion of Shares. Pursuant to the Merger Agreement, each Share issued
and outstanding immediately prior to the Effective Time (except for Shares
then owned beneficially or of record by Parent or the Purchaser or any other
subsidiary of Parent and except for Dissenting Shares (as defined below)),
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive the Merger
Consideration in cash payable to the holder thereof, without interest thereon,
upon surrender of the certificate representing such Share. Each Share issued
and outstanding immediately prior to the Effective Time which is then owned
beneficially or of record by Parent or the Purchaser or any other subsidiary
of Parent shall, by virtue of the Merger and without any action on the part of
the holder thereof, be cancelled and retired and cease to exist, without any
conversion thereof. Each Share issued and held in the Company's treasury
immediately prior to the Effective Time shall, by virtue of the Merger, be
cancelled and retired and cease to exist, without any conversion thereof. At
the Effective Time, the holders of certificates representing Shares shall
cease to have any rights as shareholders of the Company, except such rights,
if any, as they may have pursuant to the IBCA, and, except as aforesaid, their
sole right shall be the right to receive cash as aforesaid.
Dissenting Shares. Notwithstanding anything in the Merger Agreement to the
contrary, any Shares which are outstanding immediately prior to the Effective
Time and which are held by shareholders who have not voted such Shares in
favor of the approval and adoption of the Merger Agreement and who shall have
properly demanded appraisal of such Shares in the manner provided in Section
11.70 of the IBCA ("Dissenting Shares"), if applicable, shall not be converted
into or be exchangeable for the right to receive the Merger Consideration, but
the holders thereof shall be entitled to payment of the appraised value of
such Shares in accordance with the provisions of Section 11.70 of the IBCA;
provided, however, that (i) if any holder of Dissenting Shares shall
subsequently deliver a written withdrawal of his or her demand for appraisal
of such Shares, or (ii) if any holder fails to establish his or her
entitlement to appraisal rights as provided in Sections 11.65 and 11.70 of the
IBCA, or (iii) if any such holder shall, for any other reason, become
ineligible for such appraisal, then such holder shall forfeit the right to
appraisal of such Shares and each such Share shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the Effective
Time, the right to receive the Merger Consideration, without any interest
thereon. The Company shall not settle or compromise any claim for dissenters'
rights prior to the Effective Time without the prior written consent of Parent
and the Purchaser.
For a description of appraisal rights with respect to the Merger, see
"Appraisal Rights" below and the text of Sections 11.65 and 11.70 of the IBCA
contained in Exhibit A hereto.
Purchaser Common Stock. Each share of Purchaser Common Stock issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and exchangeable for one fully paid and non-assessable share of common
stock, par value $1.25 per share ("Surviving Corporation Common Stock"), of
the Surviving Corporation. From and after the Effective Time, each outstanding
certificate theretofore representing shares of Purchaser Common Stock shall be
deemed for all purposes to evidence ownership of and to represent the same
number of shares of Surviving Corporation Common Stock.
Employee Stock Options. Subject to and in accordance with the terms of the
applicable stock option plan of the Company and any related option agreement,
immediately prior to the Effective Time, each holder of an outstanding option
to purchase Shares granted under any employee stock option plan of the
Company, other than a Cancelled Option (as defined below) or any other option
with a stock appreciation right exercisable upon a change of control of the
Company, whether or not then exercisable, shall be entitled to receive from
the Surviving Corporation for each Share subject to such option an amount in
cash equal to the excess, if any, of the Merger Consideration over the per
Share exercise price of such option without interest thereon, subject to all
applicable tax withholding requirements. Subject to and in accordance with the
terms of the Joslyn Corporation Non-Employee Director Stock Plan and any
related option agreement, with respect to each stock option for 1,000 Shares
granted within the six month period preceding the closing of the Merger (the
"Closing"), each at an
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exercise price of $24.75 per Share, to each non-employee director who is
subject to the provisions of Sections 16(a) and 16(b) of the Exchange Act,
Parent shall provide each such non-employee director with an option to
purchase 1,000 shares of Parent's Common Stock (the "Substitute Options").
Each Substitute Option shall (a) be in substitution for, and cancellation of,
such stock options granted under the applicable stock option plan of the
Company (the "Cancelled Options"); (b) be in the form attached to the Merger
Agreement as Annex C; and (c) be immediately exercisable in full at an
exercise price of $22.625 per share of Parent's Common Stock. Subject to the
foregoing, each option or other equity award with respect to Shares
outstanding at the Effective Time under any stock option or other equity plan,
program or agreement of the Company shall automatically terminate and be
cancelled upon consummation of the Merger. Parent shall cause the Surviving
Corporation to make all payments required under this paragraph.
Adjustment of Merger Consideration. The Merger Agreement provides that in
the event of any reclassification, recapitalization, stock split or stock
dividend with respect to the Shares (or if a record date with respect to any
of the foregoing shall occur) prior to the Effective Time, appropriate and
proportionate adjustments, if any, shall be made to the amount of Merger
Consideration per Share, and all references to the Merger Consideration in the
Merger Agreement shall be deemed to be to the Merger Consideration as so
adjusted.
Representations and Warranties. The Merger Agreement contains
representations and warranties by the Company with respect to, among other
things, its organization, its capitalization, its authority to enter into the
Merger Agreement, its recommendation of the Merger, required consents and
approvals with respect to the Merger, the absence of conflicts upon execution
and delivery of the Merger Agreement, compliance by the Company with
applicable law, its filings with the Commission, its financial statements, the
information supplied by the Company in connection with the Offer, the
Company's employee benefit plans and other compensation arrangements, the
absence of certain changes in its business, the absence of certain litigation
with respect to the Company, the inapplicability of the Rights Agreement to
the Offer and the Merger, tax matters relating to the Company, environmental
matters, and compliance with the Business Combination Law.
The Merger Agreement also contains representations and warranties by Parent,
DH Holdings and the Purchaser with respect to, among other things, their
organization, Parent's capitalization, their authority to enter into the
Merger Agreement, required consents and approvals with respect to the Merger
Agreement, the information supplied by them in connection with the Offer and
their ability to finance the purchase of the Shares.
Covenants of the Company. In the Merger Agreement, the Company has
covenanted and agreed that, among other things, during the period from the
date of the Merger Agreement to the Effective Time, the Company and its
subsidiaries will each conduct its operations in all material respects
according to its ordinary and usual course of business, and will use
reasonable efforts to preserve intact its business organization and to
maintain satisfactory relationships with suppliers, distributors, customers
and others having business relationships with it. The Company will promptly
advise Parent in writing of any change in the Company's or any of its
subsidiaries' business or financial condition which is materially adverse to
the Company and its subsidiaries taken as a whole, and will confer on a
regular and frequent basis with representatives of Parent to report upon the
status of operations. Without limiting the generality of the foregoing, and
except as otherwise expressly contemplated by the Merger Agreement, prior to
the Effective Time, neither the Company nor any of its subsidiaries will,
without the prior written consent of Parent, (i) amend its Articles of
Incorporation or By-Laws (or equivalent instruments); (ii) authorize for
issuance, issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of additional options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any shares of
capital stock of any class or any securities convertible into shares of
capital stock of any class, except as required by any employee benefit or
stock option plan or agreement existing as of the date of the Merger
Agreement; (iii) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or redeem or otherwise acquire any shares of its capital stock; provided,
however, that the Company may declare and pay to holders of Shares regular
quarterly dividends of not more
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than $0.30 per Share; and provided, further, that any of the Company's
subsidiaries may declare, set aside or pay any dividend or other distribution
with respect to their capital stock; (iv) (x) create, incur, assume, maintain
or permit to exist any long-term debt (including obligations in respect of
capital leases); (y) except in the ordinary course of business and consistent
with past practices, assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations
of any person other than any subsidiary of the Company; or (z) make any loans,
advances or capital contributions to, or investments in, any person other than
any of the subsidiaries of the Company, except for loans or advances to
employees or customers in the ordinary course of business and consistent with
past practices; (v) except in the ordinary course of business or as has been
disclosed, sell, transfer, mortgage or otherwise dispose of or encumber, any
business, subsidiary, assets that are material to the Company and its
subsidiaries taken as a whole, or fixed assets that have a value on the
Company's books, either individually or in the aggregate, in excess of
$500,000; (vi) settle or compromise any pending or threatened suit, action or
claim in which the amount involved is greater than $500,000 or which is
material to the Company and its subsidiaries taken as a whole or which relates
to the transactions contemplated by the Merger Agreement or modify, amend or
terminate any contracts involving in excess of $500,000 or waive, release or
assign any right or claim involving in excess of $500,000; (vii) make any
material tax election or permit any material insurance policy naming it as a
beneficiary or a loss payable payee to be cancelled or terminated, in each
case without notice to Parent; (viii) grant any material increase in the
compensation payable or to become payable to any of its officers or employees
or establish, adopt, enter into, make any new grants or awards under, be
obligated to grant any awards under, or amend, any collective bargaining
(except as required by law), bonus, profit sharing, thrift, compensation,
stock option or other equity, pension, retirement, incentive or deferred
compensation, employment, retention, termination, severance, health, life or
other welfare, fringe or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors, officers or
employees, or grant or pay any benefit not required by any existing plan or
arrangement; (ix) change in any material respect any of the accounting
principles used by it, unless required by generally accepted accounting
principles; (x) acquire any business or capital stock, merge or consolidate
with any other person or sell, encumber or otherwise transfer any business or
material portion thereof; or (xi) agree to do any of the foregoing.
Access to Information. From the date of the Merger Agreement to the
Effective Time, but subject to applicable confidentiality agreements creating
obligations to others and excluding information provided to the Board with
respect to the Offer, the Company shall, and shall cause its subsidiaries,
officers, directors, employees, auditors and other agents to, afford the
officers, employees, auditors and other agents of Parent, and to
representatives of and advisors to financing sources, reasonable access during
normal business hours to its officers, employees, agents, properties, offices,
plants and other facilities and to all books, records and contracts, and shall
furnish Parent and such financing sources with all financial, operating and
other data and information as Parent, through its officers, employees or
agents, or such financing sources may from time to time reasonably request.
The Company will promptly furnish to Parent, at Parent's expense and subject
to the Confidentiality Agreement, a copy of each material document filed or
received by it pursuant to the federal securities laws or federal or state tax
laws or any Environmental Laws, and of such other documents as Parent may
reasonably request.
Shareholder Approval. Pursuant to the Merger Agreement, if required by
applicable law in order to consummate the Merger, as soon as practicable
following the purchase of the Shares pursuant to the Offer, the Company,
acting through the Board, shall, in accordance with applicable law, except to
the extent that the Board, after taking into account the advice of counsel to
the Company, concludes that any action is required in the proper exercise of
its fiduciary duties, take all steps necessary duly to call, set a record date
for, give notice of, convene and hold a meeting of its shareholders as soon as
practicable for the purpose of adopting and approving the Merger Agreement and
the transactions contemplated thereby. At such meeting, Parent and the
Purchaser will each vote, or cause to be voted, all Shares acquired in the
Offer or otherwise beneficially owned by it or any of its subsidiaries on the
record date for such meeting, in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated thereby.
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The Company will, if required by law for the consummation of the Merger,
prepare and file a Proxy Statement with the Commission, and shall use all
reasonable efforts to obtain and furnish the information required to be
included by it in the Proxy Statement and, after consultation with Parent, to
respond promptly to any comments made by the Commission with respect to the
Proxy Statement and any preliminary version thereof and to cause the Proxy
Statement to be mailed to its shareholders at the earliest practicable time
following the purchase of the Shares pursuant to the Offer. The Board and the
Board of Directors of Parent and the Purchaser have each determined that the
Merger is advisable and in the best interests of shareholders of their
respective companies and, except to the extent that the Board, after taking
into account the advice of counsel to the Company, concludes that any action
is required in the proper exercise of its fiduciary duties, the Board will
(i) recommend to shareholders the adoption and approval of the Merger
Agreement and the transactions contemplated thereby and the other matters to
be submitted to shareholders in connection therewith and (ii) use all
reasonable efforts to obtain the necessary approvals by shareholders of the
Merger Agreement and the transactions contemplated thereby.
Notwithstanding the foregoing, in the event that after the closing of the
Offer the Purchaser shall be the owner of at least 90 percent of the
outstanding Shares, the parties to the Merger Agreement shall take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer and compliance with the
applicable provisions of the IBCA and any applicable rules of the Commission,
without a meeting of shareholders of the Company, if practicable, in
accordance with Section 253 of the DGCL and Section 11.30 of the IBCA.
Reasonable Efforts. Subject to the terms and conditions of the Merger
Agreement and the fiduciary duties of the Board, each of the parties to the
Merger Agreement has agreed to use all reasonable efforts consistent with
applicable legal requirements to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary or proper and advisable under
applicable laws and regulations to ensure that the Offer Conditions and the
conditions to the Merger Agreement are satisfied and to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by the Merger Agreement.
Consents. The Merger Agreement provides that Parent and the Company each
shall use all reasonable efforts to obtain all material consents of third
parties and governmental authorities, and to make all governmental filings,
necessary for the consummation of the transactions contemplated by the Merger
Agreement.
Public Announcements. Parent and the Company will consult with each other
before issuing any press release or otherwise making any public statements
with respect to the Offer or the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except
as may be required by law or by obligations pursuant to any listing agreement
with any securities exchange.
Consent of DH Holdings. DH Holdings, as the sole shareholder of the
Purchaser, by executing the Merger Agreement has consented to the execution
and delivery of the Merger Agreement by the Purchaser and the consummation of
the Merger and the other transactions contemplated thereby and such consent
shall be treated for all purposes as a vote duly cast at a meeting of the
shareholders of the Purchaser held for such purpose.
No Solicitation. Neither the Company nor any of its subsidiaries nor any of
their respective officers, directors, employees, agents or representatives
(including, without limitation, investment bankers, attorneys and accountants)
shall, directly or indirectly, (a) solicit, initiate or encourage or (b) enter
into any discussions or negotiations with, in any way continue any discussions
or negotiations commenced before the date of the Merger Agreement with, or
disclose directly or indirectly any information not customarily disclosed
concerning its business and properties to, or afford any access to its
properties, books and records to, any corporation, partnership or other person
or group in connection with any possible proposal (an "Acquisition Proposal")
regarding a sale of the Company's capital stock or a merger, consolidation or
sale or spin-off of all or a substantial portion of the assets of the Company
or any subsidiary of the Company which is material to the Company and its
subsidiaries taken as a whole, or a liquidation or a recapitalization of the
Company, or any similar transaction; provided that (x) in response to an
Acquisition Proposal made without such solicitation,
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initiation or encouragement, the Company may (to the extent that the Board,
after taking into account the advice of counsel to the Company, concludes that
any of the following actions is required in the proper exercise of its
fiduciary duties) (i) furnish information with respect to the Company to any
person pursuant to a confidentiality agreement no more favorable to such
person than the Confidentiality Agreement is to Parent and (ii) participate in
negotiations regarding such Acquisition Proposal and (y) the Board shall be
free to take and disclose any position with respect to a third party offer
pursuant to Rules l4d-9 and l4e-2 under the Exchange Act and to make such
disclosures to the Company's shareholders, which, upon the advice of the
Company's counsel, are required by applicable law. The Company will notify
Parent immediately, orally and in writing, if any discussions or negotiations
are sought to be initiated, any inquiry or proposal is made, or any such
information is requested, with respect to an Acquisition Proposal or potential
Acquisition Proposal or if any Acquisition Proposal is received or if the
Company has been informed that an Acquisition Proposal is forthcoming, and
will include in such notification the identity of the other party or parties
and the material terms and conditions of any such request, inquiry or
Acquisition Proposal. The Company will keep Parent informed in reasonable
detail of the status (including amendments or proposed amendments) of any such
request, inquiry or Acquisition Proposal.
Indemnification; Insurance. Pursuant to the Merger Agreement, for a period
of six years after the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of the Company and its
subsidiaries (collectively, the "Indemnified Parties") from and against, and
pay or reimburse the Indemnified Parties for, all losses, obligations,
expenses, claims, damages or liabilities (whether or not resulting from third-
party claims and including interest, penalties, out-of-pocket expenses and
attorneys' fees incurred in the investigation or defense of any of the same or
in asserting any of their rights under the Merger Agreement) resulting from or
arising out of actions or omissions occurring on or prior to the Effective
Time (including, without limitation, the transactions contemplated by the
Merger Agreement) to the full extent permitted or required under applicable
law and, in the case of indemnification by the Surviving Corporation, to the
extent permitted under the provisions of the Articles of Incorporation and the
By-Laws of the Company, each as in effect at the date of the Merger Agreement
(which provisions shall not be amended in any manner which adversely affects
any Indemnified Party, for a period of six years), including provisions
relating to advances of expenses incurred in the defense of any action or
suit; provided that in the event any claim or claims are asserted or made
within such six-year period, all rights to indemnification in respect of each
such claim shall continue until final disposition of such claim. Without
limiting the foregoing, in any case in which approval by the Surviving
Corporation is required to effectuate any indemnification, Parent shall cause
the Surviving Corporation to direct, at the election of the Indemnified Party,
that the determination of any such approval shall be made by independent
counsel selected by the Indemnified Party.
Any Indemnified Party wishing to claim indemnification under the Merger
Agreement shall provide notice to Parent promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought,
provided that failure to provide such notice shall not relieve Parent or the
Surviving Corporation of its obligations under the Merger Agreement except to
the extent that Parent or the Surviving Corporation is materially prejudiced
thereby, and the Indemnified Party shall permit Parent (at Parent's expense)
to assume the defense of any claim or any litigation resulting therefrom;
provided that (i) counsel for Parent who shall conduct the defense of such
claim or litigation shall be reasonably satisfactory to the Indemnified Party,
and the Indemnified Party may participate in such defense at such Indemnified
Party's expense, and (ii) the omission by any Indemnified Party to give notice
as provided in the Merger Agreement shall not relieve Parent of its
indemnification obligation under the Merger Agreement except to the extent
that such omission results in a failure of actual notice to Parent and Parent
is materially damaged as a result of such failure to give notice. Parent shall
not, in the defense of any such claim or litigation, except with the consent
of the Indemnified Party, consent to entry of any judgment or enter into any
settlement that provides for injunctive or other nonmonetary relief affecting
the Indemnified Party or that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability with respect to such claim or litigation. In the
event that Parent does not accept the defense of any matter as above provided,
or counsel for the Indemnified Parties advises that there are issues which
raise conflicts of interest between Parent or the
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Surviving Corporation and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and Parent or the Surviving Corporation
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; provided that Parent
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld). In any event,
Parent and the Indemnified Parties shall cooperate in the defense of any
action or claim subject to the Merger Agreement and the records of each shall
be available to the other with respect to such defense.
For not less than six years after the Effective Time, Parent and the
Purchaser shall maintain in effect directors' and officers' liability
insurance covering the Indemnified Parties who are currently covered by the
Company's existing directors' and officers' liability insurance, on terms and
conditions no less favorable to such directors and officers than those in
effect on the date hereof; provided that in no event shall Parent be required
to expend in any one year an amount in excess of 150% of the annual premiums
currently paid by the Company for such insurance; and, provided, further, that
if the annual premiums of such insurance coverage exceed such amount, Parent
shall be obligated to obtain a policy with the greatest coverage available for
a cost not exceeding such amount.
Employee Benefits; Severance Agreements. Under the Merger Agreement, Parent
agrees to maintain, or cause the Surviving Corporation to maintain, until
December 31, 1996, employee benefit plans which, in the aggregate, will
provide benefits to the employees of the Company and its subsidiaries that are
substantially comparable, in the aggregate, to those provided to such
employees under the employee benefit plans of the Company in effect on the
date of the Merger Agreement, and, after December 31, 1996, will provide such
employees with benefits that are consistent with those provided to other
employees of Parent. To the extent that any employee of the Company or its
subsidiaries is to be covered by any employee benefit plan of Parent or its
subsidiaries, such employee shall, for the purposes of eligibility and vesting
(but not accrual of benefits under such plans), be credited with his or her
years of service with the Company or its subsidiaries as of the Effective Time
and with years of service with prior employers to the extent service with
prior employers is taken into account under corresponding plans of the Company
or its subsidiaries. With respect to any employee of the Company or its
subsidiaries who becomes eligible to participate in any medical plan of Parent
or its subsidiaries (but without creating any obligation in Parent or its
subsidiaries to increase the medical conditions covered by any such medical
plan of Parent or its subsidiaries), (a) no condition that would have been
covered under the applicable medical plan of the Company in which such
employee participated immediately prior to the change in coverage shall be
excluded as a pre-existing condition from coverage under any medical plan of
Parent or its subsidiaries and (b) amounts paid before such participation by
such employee of the Company under the applicable medical plan of the Company
with respect to the plan year in which such participation commences shall be
taken into account in applying deductibles and maximum out-of-pocket limits
applicable under the medical plan of Parent with respect to the balance of
such plan year to the same extent as if such amounts had been paid under such
medical plan of Parent.
Parent shall honor, or cause the Company to honor, effective upon the
consummation of the Offer, the Company's obligations under the Company's
existing severance agreements dated as of September 16, 1994 with Messrs.
Diehl, Koprowski and Wolski. With respect to other employees, Parent shall
honor, or shall cause the Company to honor, effective upon the consummation of
the Offer, the Company's Severance Plan for the Corporate Staff and the
Severance Policy for Corporate Managers (such plan and policy, the "Severance
Policies") as in effect on the date of the Merger Agreement, including the
provisions of the Severance Policies relating to amendment or termination of
the Severance Policies. The Company represents and warrants that correct
copies of the Severance Policies have been filed as exhibits to its filings
with the Commission. Parent acknowledges that consummation of the Offer will
constitute a "Change in Control" under such severance agreements and the
Severance Policies.
Stock Options. Prior to the acquisition of Shares pursuant to the Offer, the
Company will make all necessary and appropriate adjustments to (including
without limitation an adjustment, reasonably satisfactory to the Purchaser, in
the number of Shares subject to outstanding options and in the option prices
per Share to reflect
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the change in the number of Shares that will be outstanding following the
Merger), and shall use all reasonable efforts to obtain all necessary consents
with respect to, all of the Company's employee stock options other than any
Cancelled Options, in order that such stock options may be cancelled and
settled by the Company as described above under "Employee Stock Options."
Transfer Taxes. The Surviving Corporation shall pay certain transfer taxes
payable in connection with the Merger and shall be responsible for the
preparation and filing of certain required tax returns with respect to such
taxes.
Anti-takeover Statutes. If any "fair price," "moratorium," "control share
acquisition" or other form of anti-takeover statute is or shall become
applicable to the Offer, Merger or other transactions contemplated by the
Merger Agreement, the Company and the members of the Board will grant such
approvals and take such actions as are necessary so that the Offer, Merger and
other transactions contemplated by the Merger Agreement may be consummated as
promptly as practicable on the terms contemplated by the Merger Agreement and
otherwise act to eliminate or minimize the effects of any such anti-takeover
statute on the transactions contemplated thereby.
No Amendment to the Rights Agreement. In the Merger Agreement, the Company
covenants and agrees that so long as the Merger Agreement is in effect, it
will not amend the Rights Agreement or redeem the Rights or terminate the
Rights Agreement prior to the Effective Date, except as expressly contemplated
by the Merger Agreement.
Notification of Certain Matters. The Company will give prompt notice to
Parent and the Purchaser, and Parent and the Purchaser will give prompt notice
to the Company, of (a) the occurrence or non-occurrence of any event likely to
cause (i) any representation or warranty contained in the Merger Agreement to
be untrue or inaccurate in any material respect, and (ii) any failure of the
Company, or of Parent, DH Holdings or the Purchaser, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied under the Merger Agreement; provided, however, that the
delivery of any such notice will not limit or otherwise affect the remedies
available under the Merger Agreement to the party receiving such notice and
(b) any communication (written or oral) received by any director or officer of
the Company from any person that alleges any noncompliance with Environmental
Laws or any Environmental Liability on the part of the Company or any of its
subsidiaries that is material to the Company and its subsidiaries taken as a
whole.
Disposition of Litigation. Each of Parent, the Purchaser and the Company
agrees promptly to use all reasonable efforts to withdraw (and shall not
refile) all pending litigation between the parties.
Proxy Contest. Parent and the Purchaser agree to withdraw (and not refile)
the Schedule 14A filed with the Commission relating to the calling of a
special meeting for, among other things, the removal of the directors of the
Company.
Stock Exchange Listing. Parent shall use all reasonable efforts to list on
the New York Stock Exchange, upon official notice of issuance, the shares of
common stock of Parent to be issued upon exercise of the Substitute Options.
Conditions to the Obligations of Parent, the Purchaser and the Company. The
respective obligations of each party to the Merger Agreement to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time
of the following conditions: (a) the Purchaser shall have purchased all Shares
duly tendered and not withdrawn pursuant to the terms of the Offer and subject
to the terms thereof; provided that the obligation of Parent and the Purchaser
to effect the Merger shall not be conditioned on the fulfillment of this
condition if the failure of the Purchaser to purchase the Shares pursuant to
the Offer shall have constituted a breach of the Offer or of the Merger
Agreement; (b) there shall not be in effect any statute, rule or regulation
enacted, promulgated or deemed applicable by any governmental authority of
competent jurisdiction that makes consummation of the Merger illegal and no
temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the
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Merger shall be in effect; provided, however, that each of the parties shall
use all reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any injunction or other
order that may be entered; (c) if required by the Company's Articles of
Incorporation or the IBCA, the Merger Agreement shall have been approved and
adopted by the affirmative vote of the holders of the requisite number of
Shares in accordance with the Articles of Incorporation and By-Laws of the
Company and the IBCA.
Conditions to the Obligations of the Company. The obligation of the Company
pursuant to the Merger Agreement to consummate the Merger is also subject to
Parent or the Purchaser having made all filings required prior to the Closing
with respect to, and having paid to the proper taxing authorities or made
adequate provision for the payment of, all transfer taxes payable in
connection with the Merger.
Termination. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time, whether before or after approval by the
shareholders of the Company: (a) by mutual consent of the Board of Directors
of Parent and the Board; (b) by action of the Board of Directors of Parent or
action of the Board if at least that number of Shares required by the Minimum
Condition shall not have been purchased in the Offer on or before November 20,
1995, or the Merger shall not have been consummated on or before February 20,
1996, provided, however, that the Board of Directors of Parent shall have no
right to terminate the Merger Agreement after the consummation of the Offer;
and provided, further, that the right to terminate the Merger Agreement shall
not be available to any party whose failure to fulfill any obligation under
the Merger Agreement has been the cause of, or resulted in, the failure of the
Offer or the Merger, as the case may be, to occur on or before the aforesaid
dates; (c) by either Parent or the Company if the Offer shall expire or
terminate in accordance with its terms without any Shares having been
purchased thereunder and, in the case of termination by Parent, the Purchaser
shall not have been required by the terms of the Offer or the Merger Agreement
to purchase any Shares pursuant to the Offer; (d) by the Company if (i) the
Purchaser shall not timely amend the Offer as provided in the Merger Agreement
or (ii) Parent, DH Holdings or the Purchaser shall fail to comply in any
material respect with any of its covenants or agreements required to be
complied with by it before the date of such termination and such failure to
comply shall not be cured within four business days following receipt by
Parent from the Company of written notice of such failure and demand for cure;
(e) by either Parent, the Purchaser or the Company, if any court of competent
jurisdiction in the United States or other governmental agency of competent
jurisdiction shall have issued an order, decree or ruling or taken any other
action restraining, permanently enjoining or otherwise prohibiting the
consummation of the Offer or the Merger, and such order, decree, ruling or
other action shall have become final and non-appealable; (f) by the Company if
prior to the purchase of Shares pursuant to the Offer, and after receipt of a
Superior Proposal (defined in the Merger Agreement as a proposal to acquire,
directly or indirectly, more than 50% of the Shares or all or any substantial
portion of the consolidated assets of the Company and its subsidiaries and on
terms which the Board determines in its good faith judgment, based on the
advice of Goldman Sachs, to be more favorable to the Company's shareholders
than the Offer and the Merger taken together) and at a time that is after the
second business day after Parent has received written notice from the Company
advising Parent of the Company's receipt of a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal and identifying
the person making such Superior Proposal, the Board or any committee thereof
(x) shall have withdrawn or modified in a manner adverse to the Purchaser or
Parent, and in a manner consistent with the Merger Agreement, (including as to
timing and contents of notice to Parent with respect to any Superior Proposal)
its approval or recommendation of the Offer, the Merger Agreement, the Merger
or any other transaction contemplated by any of the foregoing or (y) shall
have recommended a Superior Proposal, or (z) shall have resolved to do any of
the foregoing; provided, however, that such termination under this clause (f)
shall not be effective until the Company has made payment to DH Holdings of
the Fee (as defined below) required to be paid pursuant to the Merger
Agreement and has paid to Parent $1.5 million for Expenses (as defined below)
(Parent agrees to refund any excess of such amount over actual Expenses) or
deposited with a mutually acceptable escrow agent $1.5 million for
reimbursement to Parent, DH Holdings and the Purchaser of Expenses; or (g) by
the Company, upon approval of the Board, if, prior to the purchase of Shares
pursuant to the Offer, the Board shall have withdrawn or modified in a manner
adverse to the Purchaser or Parent, and in a manner consistent with the Merger
Agreement (including as to timing and contents of notice to Parent with
respect to any Superior Proposal), its approval or recommendation of the
Offer, the
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Merger Agreement or the Merger in order to approve the execution by the
Company of a definitive agreement providing for the acquisition of the Company
or its assets or Shares pursuant to a Superior Proposal; provided, however,
that such termination under this clause (g) shall not be effective until the
Company has made payment to DH Holdings of the Fee required to be paid or
deposited with a mutually acceptable escrow agent $1.5 million for
reimbursement to Parent, DH Holdings and the Purchaser of Expenses (Parent
agrees to refund any excess of such amount paid over actual Expenses).
In the event of termination of the Merger Agreement and abandonment of the
Merger by Parent, the Purchaser or the Company, written notice thereof shall
forthwith be given to the others, and the Merger Agreement shall terminate and
the Merger shall be abandoned, without further action by any of the parties
thereto. The Purchaser agrees that any termination by Parent shall be
conclusively binding upon it, whether given expressly on its behalf or not,
and the Company shall have no further obligation with respect to it. If the
Merger Agreement is terminated, no party thereto shall have any liability or
further obligation to any other party to the Merger Agreement, provided that
any termination shall be without prejudice to the rights of any party thereto
arising out of breach by any other party of any covenant or agreement
contained in the Merger Agreement, and provided further that certain
obligations set forth in the Merger Agreement shall in any event survive any
termination.
Fees and Expenses. Pursuant to the Merger Agreement, in the event that: (a)
any person (including, without limitation, the Company or any affiliate
thereof) or group, other than Parent or any affiliate of Parent, shall have
become the beneficial owner of more than 15% of the then outstanding Shares
and thereafter the Merger Agreement shall have been terminated pursuant to its
terms and within 12 months of such termination a Third Party Acquisition (as
hereinafter defined) shall occur; or (b) any person or group shall have
commenced, publicly proposed or communicated to the Company a proposal that is
publicly disclosed for a tender or exchange offer for more than 30% (or which,
assuming the maximum amount of securities which could be purchased, would
result in any person or group beneficially owning more than 30%) of the then
outstanding Shares or otherwise for the direct or indirect acquisition of the
Company or all or substantially all of its assets for per Share consideration
having a value greater than the per Share amount proposed to be paid pursuant
to the Offer under the Merger Agreement and (i) the Offer shall have remained
open for at least 20 business days, (ii) the Minimum Condition shall not have
been satisfied and (iii) the Merger Agreement shall have been terminated
pursuant to the provisions described in "Termination" above; and (c) the
Merger Agreement is terminated pursuant to clause (f) or (g) of "Termination"
above; then, in any such event, the Company shall pay DH Holdings promptly
(but in no event later than one business day after the first of such events
shall have occurred) a fee of $6 million (the "Fee"), which amount shall be
payable in immediately available funds, plus all Expenses (defined as all out-
of-pocket expenses and fees up to $1.5 million in the aggregate (including,
without limitation, fees and expenses payable to all banks, investment banking
firms, other financial institutions and other persons and their respective
agents and counsel for arranging, committing to provide or providing any
financing for the Offer, the Merger and any transactions contemplated thereby
or structuring the transactions and all fees of counsel, accountants, experts
and consultants to Parent, DH Holdings and the Purchaser, and all printing and
advertising expenses) actually incurred or accrued by either of them or on
their behalf in connection with the transactions, including, without
limitation, litigation related thereto and the financing thereof, and actually
incurred or accrued by banks, investment banking firms, other financial
institutions and other persons and assumed by Parent, DH Holdings or the
Purchaser in connection with the negotiation, preparation, execution and
performance of the Merger Agreement, the structuring and financing of the
Offer, the Merger and any transactions contemplated thereby and any litigation
and any financing commitments or agreements relating thereto); provided that,
in the case described in clause (b) above, if (x) Parent has terminated the
Merger Agreement and (y) the Board or any committee thereof (A) shall not have
withdrawn or modified in a manner adverse to the Purchaser or Parent its
approval or recommendation of the Offer, the Merger Agreement or the Merger,
(B) shall not have approved or recommended the proposal of such person or
group and (C) shall not have resolved to do any of the foregoing, the Company
shall pay to DH Holdings on such termination all Expenses and shall pay the
Fee only if, within 12 months of such termination, a Third Party Acquisition
shall occur.
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"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger, consolidation or other
business combination transaction by any person other than Parent, the
Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by
any Third Party of 50% or more (in book value or market value) of the total
assets of the Company and its subsidiaries, taken as a whole; (iii) the
acquisition by a Third Party of 50% or more of the outstanding Shares whether
by tender offer, exchange offer or otherwise; (iv) the adoption by the Company
of a plan of liquidation or the declaration or payment of an extraordinary
dividend; or (v) the repurchase by the Company or any of its subsidiaries of
50% or more of the outstanding Shares.
Except as set forth above, all costs and expenses incurred in connection
with the Merger and the Offer, the Merger Agreement and any transactions
contemplated thereby shall be paid by the party incurring such expenses,
whether or not any transaction contemplated by the Merger Agreement is
consummated.
In the event that the Company shall fail to pay the Fee or any Expenses when
due, the term "Expenses" shall be deemed to include the costs and expenses
actually incurred or accrued by Parent, DH Holdings and the Purchaser
(including, without limitation, fees and expenses of counsel) in connection
with the collection under and enforcement of the provisions of the Merger
Agreement relating thereto, together with interest on such unpaid Fee and
Expenses, commencing on the date that the Fee or such Expenses became due, at
a rate equal to the rate of interest publicly announced by Citibank, N.A.,
from time to time, in the City of New York, as such bank's Prime Rate plus
1.00%.
Amendment and Modification. Subject to applicable law, the Merger Agreement
may be amended, modified or supplemented only by written agreement of Parent,
DH Holdings, the Purchaser and the Company at any time prior to the Effective
Time with respect to any of the terms contained therein, provided, that after
the Merger Agreement is adopted by the Company's shareholders, no such
amendment or modification shall be made that reduces the amount or changes the
form of the Merger Consideration or otherwise materially and adversely affects
the rights of the Company's shareholders thereunder, without the further
approval of such shareholders.
Waiver of Compliance; Consents. Any failure of Parent, DH Holdings, or the
Purchaser, on the one hand, or the Company, on the other hand, to comply with
any obligation, covenant, agreement or condition in the Merger Agreement, may
be waived by the Company or Parent, respectively, only by a written instrument
signed by the party granting such waiver (and, in the case of the Company,
approved with the concurrence of a majority of the Independent Directors, if
required under the Merger Agreement), but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent
or other failure. Whenever the Merger Agreement requires or permits consent by
or on behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set
forth above. DH Holdings and the Purchaser agree that any consent or waiver of
compliance given by Parent under the Merger Agreement shall be conclusively
binding upon them, whether given expressly on their behalf or not.
Survival of Warranties. Each and every representation and warranty, except
for representations and warranties concerning finders and investment bankers
(if the Merger Agreement is terminated before consummation of the Offer), made
by the Company in Article IV of the Merger Agreement, and every representation
and warranty made by Parent, DH Holdings and the Purchaser in Article V,
except for representations and warranties concerning capitalizations, finders
and (if the Merger Agreement is terminated before consummation of the Offer)
shall expire with, and be terminated and extinguished by, the Merger, or the
termination of the Merger Agreement pursuant to its terms.
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APPRAISAL RIGHTS
Under the IBCA, any shareholder of record immediately prior to the Effective
Time may, in lieu of accepting the Merger Consideration, dissent from the
Merger and seek an appraisal of his Shares (exclusive of any element of value
arising from the accomplishment or expectation of the Merger), provided that
he complies with the provisions of Section 11.70 of the IBCA.
The following is a brief summary of the statutory procedures to be followed
by a dissenting shareholder in order to dissent from the Merger and perfect
appraisal rights under the IBCA. FAILURE TO TAKE ANY NECESSARY STEP MAY RESULT
IN A TERMINATION OR WAIVER OF APPRAISAL RIGHTS UNDER SECTIONS 11.65 AND 11.70
OF THE IBCA. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SECTIONS 11.65 AND 11.70 OF THE IBCA, WHICH ARE
SET FORTH IN THEIR ENTIRETY IN EXHIBIT A HERETO.
Shareholders wishing to assert a right to such appraisal must, on or before
the date that is 30 days from the date of mailing of the Notice of Merger,
deliver a written demand for payment for their Shares to the Surviving
Corporation at the address set forth below.
For purposes of making an appraisal demand, the address of the Surviving
Corporation is:
Joslyn Corporation
30 South Wacker Drive
Chicago, Illinois 60606
Attention: C. Scott Brannan
Secretary
Only a shareholder of record, or a beneficial owner who submits to the
Company the record holder's written consent to the dissent before or at the
same time as the beneficial owner asserts dissenters' rights, is entitled to
assert an appraisal right with respect to the Shares registered in the record
holder's name. Beneficial owners who are not record holders and who wish to
exercise appraisal rights are advised to consult promptly with the appropriate
record holders as to the timely exercise of appraisal rights. A record holder,
such as a broker, who holds Shares as a nominee for others may exercise
appraisal rights with respect to the Shares held for one or more beneficial
owners, while not exercising such rights for other beneficial owners, but only
if such record holder dissents with respect to all Shares owned by any one
beneficial owner. In such a case, the written demand should set forth the name
and address of the beneficial owner on whose behalf the demand is made.
A demand for the appraisal of Shares owned of record by more than one
person, as in a joint tenancy or a tenancy in common, must be executed by or
for all joint owners. An authorized agent, including one or more joint owners,
may execute the demand for appraisal for a former record owner; however, the
agent must identify the former record owner or owners and expressly disclose
the fact that, in executing the demand, such person is acting as agent for the
former record owner. A demand for appraisal signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity must so identify the
persons signing the demand and state that the demand is made in such capacity.
A beneficial owner of Shares whose Shares were held in "street name" and who
desires appraisal should take such actions as may be necessary to ensure that
a timely and proper demand for appraisal is made by the record holder of such
Shares or obtain and submit a written consent from the record holder at or
prior to the time the demand is made, as described above. Shares held through
brokerage firms, banks and other financial institutions are frequently
deposited with and held of record in the name of a nominee of a central
security depositary, such as The Depositary Trust Company, Midwest Securities
Trust Company, Philadelphia Depositary Trust Company, and others. Any
beneficial owner desiring appraisal who held his Shares through a brokerage
firm, bank or other financial institution is responsible for ensuring that
either the demand for appraisal is made by the record holder or that a written
consent from the record holder is obtained and timely submitted.
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Within 10 days after the Effective Time or 30 days after the shareholder
delivers the written demand for payment, whichever is later, the Company is
required to send to the dissenting shareholder its opinion as to the estimated
fair value of the Shares, together with certain financial information
regarding the Company, and either a commitment to pay for the Shares at their
fair value or instructions to the Shareholder to sell his Shares on the market
within 10 days.
If the shareholder disagrees with the Company's opinion as to the estimated
fair value of the Shares or the amount of interest due, he has 30 days to
notify the Company of his own opinion as to the estimated fair value of the
Shares and/or interest due and demand payment for the difference between the
shareholder's estimated fair value and/or interest due and the amount of
payment by the Company or proceeds of sale. If the Company and the dissenting
shareholder cannot agree as to fair value and/or interest due within 60 days
thereafter, the Company must either pay the amount requested by the
shareholder or file a petition in the circuit court of Cook County, requesting
judicial determination of the fair value of and interest due on the Shares. If
such a petition is filed, all dissenting shareholders whose demands remain
unsettled will be made parties to the proceeding.
The Shares will be appraised by the Court at their fair value immediately
before the Effective Time, excluding any appreciation or depreciation in
anticipation of the Merger, unless such exclusion would be inequitable. The
value so determined for the Shares could be the same as or more than the
Merger Consideration, and could be based upon considerations other than, or in
addition to, the price paid in the Merger, the market value of the Shares,
asset value and earning capacity.
In Taxy v. Worden, 536 N.E.2d 901 (Ill. App. 1989), the Illinois Appellate
Court noted that case law establishes that no precise and exact rules for
determining the fair market value of stock exist. The Court went on to say
that "fair value" is determined by an exercise of the court's judgment after
consideration of all relevant factors, which may include the nature of the
business and the history of the enterprise from its inception, the economic
outlook in general and the condition and outlook of the specific industry in
particular, the book value of the stock and the financial condition of the
business, the earning capacity of the company, the dividend-paying capacity of
the company, whether or not the enterprise has goodwill or other intangible
value, sales of the stock and the size of the company to be valued, and the
market price (on an exchange or over the counter) of stocks of corporations in
the same or a similar line of business. It should also be noted that Section
11.65(b) of the IBCA provides that "a shareholder entitled to dissent and
obtain payment for his or her shares under this Section [11.65] may not
challenge the corporate action creating his or her entitlement unless the
action is fraudulent with respect to the shareholder or the corporation or
constitutes a breach of fiduciary duty owed to the shareholder."
The Court will determine all costs of the proceeding, exclusive of fees and
expenses of counsel and experts for the parties, and may assess some or all of
such costs against the Company or any dissenter if it finds that such party's
estimation of the fair value of the Shares was materially above or below the
fair value as determined by the Court. The Court may also assess the fees and
expenses of counsel against the Company if it fails to comply with the
requirements of the IBCA with respect to dissenters' rights, or against any
party who abuses the rights accorded to it under the IBCA. In addition, some
portion of counsel's fees of a dissenting shareholder may be awarded to such
party, out of the expected awards of other dissenters, if the services of such
party's counsel were of substantial benefit to other dissenters.
A failure to vote against the Merger will not constitute a waiver of a
shareholder's appraisal rights. Since shareholders of the Company are not
being asked to vote on the Merger, voting on the Merger will not constitute
notice of demand for appraisal rights under the IBCA.
A former shareholder will effectively lose his right to appraisal if no
demand for appraisal is delivered before the date that is 30 days after the
date of the mailing of the Notice of Merger.
The provisions of IBCA Sections 11.65 and 11.70 are technical in nature and
complex. Shareholders desiring to exercise appraisal rights should consult
counsel, since the failure to comply strictly with the provisions of IBCA
Sections 11.65 and 11.70 may defeat their appraisal rights.
19
<PAGE>
CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is an Illinois corporation with its principal executive offices
located at 30 South Wacker Drive, Chicago, IL 60606.
The selected financial information of the Company and its consolidated
subsidiaries set forth below has been excerpted and derived from the Company's
1994 10-K and the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995 (the "Company's Second Quarter 10-Q") filed with the
Commission pursuant to the Exchange Act and other publicly available
information. More comprehensive financial information is included in the
complete financial statements of the Company contained in the Company's 1994
10-K and the Company's Second Quarter 10-Q on file with the Commission and
such financial statements are incorporated herein by reference. These reports
and other documents may be examined and copies thereof may be obtained in the
manner set forth in the Introduction hereto.
JOSLYN CORPORATION
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
6 MONTHS ENDED JUNE 30, FISCAL YEAR ENDED DEC. 31,
----------------------- -----------------------------------------------------
1995 1994 1994 1993(1) 1992 1991 1990
----------- ----------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales............... $114,069 $108,391 $216,177 $217,707 $217,889 $203,736 $197,006
Income (loss) before
Income Taxes and
Cumulative Effect of
Change in Accounting... 7,855 7,201 (20,430)(1) 22,770 22,408 20,480 (6,990)(3)
Cumulative Effect of
Change in Accounting... -- -- -- -- -- (6,268)(3) (3,067)(1)
Net Income (loss)....... 7,855 7,201 (11,180)(2) 14,870 14,308 6,937 (14,057)(1)
Earnings (loss) per
share.................. 1.10 1.01 (1.57) (2.10) 2.03 0.98 (1.98)(1)
Cash Dividends.......... .60 .60 1.20 1.16 1.13 1.06 1.06
Book Value at End of
Year................... 11.27 13.97 13.03 12.26 12.35
BALANCE SHEET DATA (at
Period End)
Total Assets............ $179,043 $159,987 $177,504 $162,282 $158,159 $149,607 $136,842
Working Capital......... 65,093 76,847 75,959 73,041 64,928 61,664 59,469
Total Shareholders'
Equity................. 84,329 102,477 80,626 99,235 92,097 86,487 87,155
</TABLE>
- --------
(1) The Company adopted SFAS No. 109, "Accounting for Income Taxes," in 1993
and elected to apply it retroactively to 1990.
(2) Includes a charge of $35.0 million before taxes and $21.0 million after
taxes for increased environmental reserves and a charge of $6.2 million
before taxes and $4.1 million after taxes to write down two businesses and
for costs related to the reduction of corporate expense (See Notes 6 and
10 to the Company's financial statements contained in the Company's 1994
10-K).
(3) Relates to accounting change for postretirement medical benefits in 1991.
After entering into the Confidentiality Agreement, the Company provided
certain nonpublic business and financial information regarding the Company to
Parent. This information included estimates and projections of the Company's
future operating performance (the "Projections").
The following information has been excerpted or derived from the materials
provided to Parent, which included projections prepared by compiling data from
profit plans prepared by operating management of the Company's different
business units, as well as adjusted projections prepared by senior management
after applying a contingency factor for downturns in the economy. The
Projections do not give effect to the Offer or the Merger. NONE OF THE
COMPANY, PARENT, THE PURCHASER OR THEIR RESPECTIVE ADVISORS ASSUMES ANY
RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF
THE PROJECTIONS.
20
<PAGE>
JOSLYN CORPORATION
SELECTED FINANCIAL PROJECTIONS
(IN MILLIONS, EXCEPT OPERATING MARGIN AND PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
---------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
OPERATING MANAGEMENT PROJECTIONS
Net Sales............................... $235.6 $261.5 $283.6 $303.6 $325.1
Operating Income........................ $ 28.3 $ 34.9 $ 38.2 $ 42.2 $ 45.9
Operating Margin........................ 12.0% 13.3% 13.5% 13.9% 14.1%
Net Income.............................. $ 16.6 $ 20.1 $ 22.3 $ 24.7 $ 27.0
E.P.S................................... $ 2.31 $ 2.79 $ 3.10 $ 3.43 $ 3.75
SENIOR MANAGEMENT ADJUSTED PROJECTIONS
Net Sales............................... $235.6 $248.5 $269.6 $288.6 $309.1
Net Income.............................. $ 16.6 $ 17.9 $ 19.8 $ 21.8 $ 23.8
E.P.S................................... $ 2.31 $ 2.49 $ 2.75 $ 3.03 $ 3.30
</TABLE>
THE COMPANY DOES NOT AS A MATTER OF COURSE PUBLICLY DISCLOSE PROJECTIONS OR
ESTIMATES AS TO FUTURE REVENUES, EARNINGS, FINANCIAL CONDITION OR OPERATING
PERFORMANCE. THE PROJECTIONS ARE INCLUDED HEREIN ONLY BECAUSE SUCH INFORMATION
WAS FURNISHED TO PARENT AND THE PURCHASER BY THE COMPANY WITHOUT INDEPENDENT
VERIFICATION. THE PROJECTIONS WERE NOT PREPARED (NOR ARE THEY BEING FURNISHED)
WITH A VIEW TO COMPLIANCE WITH THE GUIDELINES ESTABLISHED BY THE SECURITIES
AND EXCHANGE COMMISSION OR THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS.
THE PROJECTIONS REFLECT NUMEROUS ASSUMPTIONS, ALL MADE BY COMPANY
MANAGEMENT, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS, ECONOMIC,
MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, ALL OF WHICH ARE DIFFICULT
TO PREDICT AND MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF
WHICH WAS SUBJECT TO APPROVAL BY PARENT OR THE PURCHASER. ACCORDINGLY, THERE
CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS
WILL BE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY DIFFERENT FROM THOSE
CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD
NOT BE REGARDED AS AN INDICATION THAT ANY OF THE COMPANY, PARENT, THE
PURCHASER OR THEIR RESPECTIVE ADVISORS CONSIDERED OR CONSIDER THE PROJECTIONS
TO BE MATERIAL OR A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS
SHOULD NOT BE RELIED ON AS SUCH.
NEITHER THE COMPANY, PARENT, THE PURCHASER NOR ANY OF THEIR ADVISORS HAS
MADE, OR MAKES, ANY REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION
CONTAINED IN THE PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE OR OTHERWISE
REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN
MADE TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR
ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN ERROR.
On July 21, 1995, the Company signed a definitive agreement to sell all the
shares of ADK Pressure Equipment Corporation, one of the Company's non-core
business holdings which had been experiencing widening losses and which had
reported sales of less than $7 million for 1994. In the Company's Second
Quarter 10-Q, the Company estimated that the divestiture would ultimately have
a positive cash flow impact of over $3 million. The sale closed on August 7,
1995.
On June 28, 1995, the Company acquired all of the outstanding common shares
of Cyberex, Inc., a privately held company, for a total purchase price of $22
million. Cyberex is a recognized leading manufacturer of, among
21
<PAGE>
other things, uninterruptible power systems and static transfer switches. On
September 1, 1995, the Company filed a current report on Form 8-K in which it
described the Cyberex acquisition (the "Cyberex 8-K") and its projected effect
on the Company's financial performance. The pro forma financial information
contained in the Cyberex 8-K and in the Company's Second Quarter 10-Q is
incorporated herein by reference. The Cyberex 8-K, the Company's Second
Quarter 10-Q and other documents may be examined and copies thereof may be
obtained in the manner set forth in the Introduction hereto.
The Company is subject to the information and reporting requirements of the
Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the Commission relating
to its business, financial condition and other matters. Certain information as
of particular dates, concerning the Company's business, principal physical
properties, capital structure, material pending legal proceedings, operating
results, financial condition, directors and officers (including, without
limitation, their remuneration and the stock options granted to them), the
principal holders of the Company's securities, any material interests of such
persons in transactions with the Company and certain other matters is required
to be disclosed in proxy statements and annual reports distributed to the
Company's shareholders and filed with the Commission. Such reports, proxy
statements and other information may be inspected and copies may be obtained
from the offices of the Commission in the same manner as set forth in the
Introduction hereto.
CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER
The Purchaser is a newly incorporated Delaware corporation and an indirect
wholly owned subsidiary of Parent which to date has not conducted any business
other than in connection with the Offer and the Merger. The principal
executive offices of Parent and the Purchaser are located at 1250 24th Street,
N.W., Suite 800, Washington, D.C. 20037.
Parent is a Delaware corporation which operates a variety of businesses
through its wholly owned subsidiaries. These businesses are conducted in three
business segments: Tools, Process/Environmental Controls and Transportation.
Parent is the principal manufacturer of Sears, Roebuck and Co.'s Craftsman
line and the National Automotive Parts Association line of mechanics' hand
tools. Parent also manufactures Allen wrenches and Jacobs drill chucks and is
a leading supplier of mechanics' hand tools through Matco Tools. In its
Process/Environmental Controls segment, Parent is a leading producer of leak
detection sensors for underground fuel storage tanks and motion, temperature,
pressure and flow controls devices. Parent's Transportation business
manufactures wheel service equipment, diesel engine retarders and automotive
air conditioning components which are sold under such brand names as Coats,
Ammco and "Jake Brake."
Approximately 34.3% of the outstanding common stock of Parent is
beneficially owned by Equity Group Holdings ("EGH"), a District of Columbia
general partnership of which Steven M. Rales and Mitchell P. Rales, each of
whom is a director and executive officer of Parent and a director of the
Purchaser, are the general partners. Together with certain other shares of
common stock which are beneficially owned by such individuals, such
individuals beneficially own approximately 43.1% of the outstanding common
stock of Parent. EGH is principally engaged in the business of investing in
manufacturing companies, radio broadcasting companies and publicly traded
securities. The principal executive offices of EGH are located at 1250 24th
Street, N.W., Suite 800, Washington, D.C. 20037.
Until immediately prior to the time the Purchaser purchased Shares pursuant
to the Offer, the Purchaser did not 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.
Because the Purchaser is a newly formed corporation and has minimal assets and
capitalization, no meaningful financial information regarding the Purchaser is
available.
Parent is subject to the informational filing requirements of the Exchange
Act and is required to file reports and other information with the Commission
relating to its business, financial condition and other matters.
22
<PAGE>
Information, as of particular dates, concerning Parent's directors and
officers, their remuneration, options granted to them and the principal
holders of Parent's securities is required to be described in proxy statements
distributed to Parent's shareholders and filed with the Commission. Such
reports, proxy statements and other information may be inspected and copies
may be obtained from the offices of the Commission in the same manner as set
forth in the Introduction hereto.
Set forth below is a summary of certain consolidated financial information
with respect to Parent and its subsidiaries excerpted or derived from the
information contained in Parent's Annual Report on Form 10-K for the year
ended December 31, 1994 ("Parent's 1994 10-K"), Parent's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995 ("Parent's Second Quarter 10-Q")
and from certain other financial information regarding Parent. More
comprehensive financial information is included in the complete financial
statements of Parent contained in Parent's 1994 10-K and Parent's Second
Quarter 10-Q on file with the Commission, and such financial statements are
incorporated herein by reference.
DANAHER CORPORATION
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
6 MONTHS ENDED JUNE 30, FISCAL YEAR ENDED DEC. 31,
----------------------- --------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
----------- ----------- ---------- ---------- --------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Revenues............ $ 767,996 $ 607,235 $1,288,684 $1,075,529 $ 955,518 $837,386 $845,316
Income (loss) before
change in accounting
principle (1).......... 49,068 33,794 81,650 53,749 31,601 13,321 35,709
Net Income.............. 49,068 33,794 81,650 17,749 31,601 13,321 35,709
EARNINGS PER SHARE:
Income before change in
accounting principle
(1).................... $ 0.82 $ 0.58 $ 1.40 $ .93 $ .55 $ .24 $ .67
Net Income.............. 0.82 0.58 1.40 $ .31 $ .55 .24 .67
BALANCE SHEET DATA (at
end of period)
Total Assets............ $1,221,294 $ 944,831 $1,134,941 $ 872,472 $ 769,815 $734,955 $744,502
Working Capital......... 43,954 72,424 (7,548) 42,398 17,614 42,267 56,001
Long-term debt.......... 116,547 140,946 116,515 131,350 137,305 182,212 186,105
Total Shareholders'
Equity................. 528,685 401,740 476,100 363,666 348,379 319,252 304,999
</TABLE>
- --------
(1) On January 1, 1993, Parent adopted SFAS No. 106 requiring use of the
accrual method for post-retirement benefits other than pensions.
The Purchaser currently beneficially owns an aggregate of 5,483,178 Shares
which it acquired on various dates from May 29, 1994 to September 12, 1995,
for an aggregate cash consideration of $180,689,543.
THE COMPANY'S FINANCIAL ADVISORS
Pursuant to a letter agreement dated July 19, 1995 but effective as of
September 1, 1994, the Company retained Goldman Sachs as exclusive financial
advisors with respect to the Company's long-term financial strategy,
including, without limitation, any acquisition proposals that the Company may
receive or any other attempts to acquire control of the Company. Pursuant to
such agreement, the Company agreed to pay to Goldman Sachs a fee of $250,000,
which has been paid and will be credited against a transaction fee payable in
the event that at least 15% of the outstanding stock of the Company is
acquired by any person or group, including
23
<PAGE>
the Company, in one or a series of transactions, by means of a tender offer or
merger, private or open market purchases of stock or otherwise, or if all or
substantially all of the assets of the Company are transferred, in one or a
series of transactions, by way of a sale, distribution or liquidation, an
additional fee equal to 0.9% of the aggregate value of all such transactions
as defined in such agreement. Upon the closing of the Offer, the Purchaser
acquired in excess of 15% of the outstanding stock of the Company and Goldman
Sachs became entitled to such fee which was paid on September 18, 1995.
The Company also agreed to reimburse Goldman Sachs periodically for their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of their attorneys, plus any sales, use or similar taxes
(including additions to such taxes, if any) arising in connection with any
matter referred to in the letter agreement and to indemnify Goldman Sachs
against certain liabilities, including liabilities under the federal
securities laws.
In addition, the Company retained Morrow & Co., Inc. ("Morrow") to provide
stock watch/shareholder identification services with respect to the Shares and
related strategic and consulting services and Hill and Knowlton, Inc. ("H&K")
to serve as financial communications counsel to the Company. Pursuant to a
letter agreement dated August 26, 1994, the Company paid Morrow $20,000 upon
the signing of such letter agreement and agreed to reimburse Morrow for
reasonable disbursements incurred in connection with the performance of
services thereunder. After January 26, 1995, the letter agreement between the
Company and Morrow became terminable by either party upon thirty days prior
written notice to the other party. In July 1995, the Company renewed its
arrangement with Morrow and paid Morrow an additional $10,000. Pursuant to a
letter agreement dated July 13, 1995, the Company will pay H&K an advance of
$25,000 against which hourly fees for H&K's services will be charged. The
Company will also reimburse H&K for H&K's reasonable expenses.
Except as described above, neither the Company nor any person acting on its
behalf has retained any person to make solicitations or recommendations to
security holders on its behalf concerning the Offer.
CONTACTS BETWEEN THE COMPANY AND PARENT AND THE PURCHASER
Between May 29, 1994 and August 1, 1994, Parent purchased an aggregate of
204,000 Shares at an average price per Share (excluding mark-ups or
commissions) of $25.57 in open market purchases. On August 2, 1994, Parent
purchased 329,500 Shares at a price per Share (excluding mark-ups or
commissions) of $25.6875. As a result of this purchase, Parent became the
beneficial owner of more than 5 percent of the outstanding shares of the
Company's common stock, requiring Parent to file a Schedule 13D with the
Commission to disclose its holdings in the Company's stock. On August 5, 1994,
Parent purchased an additional 10,000 Shares at a price per Share (excluding
mark-ups or commissions) of $25.8125. On August 11, 1994, George M. Sherman
("Sherman"), President and Chief Executive Officer of Parent, telephoned
William E. Bendix ("Bendix"), a Director of the Company, at Bendix's home.
Sherman and Bendix first became acquainted in early 1993, when Sherman met
Bendix and expressed his possible interest in a business combination between
Parent and Mark Controls Corporation, of which Bendix was, in 1993, Chief
Executive Officer. Sherman informed Bendix that the next day Parent would be
issuing a press release announcing Parent's ownership of 7.6% of the
outstanding Shares.
Although Sherman stated that Parent had acquired the Shares for investment
purposes, Sherman also told Bendix that he had looked at the Company for a
long time, would like to talk to the Company's management about strategy and
asked Bendix for comments about the Company. Bendix referred Sherman to the
Company's management, and offered to telephone the then Chairman of the Board
of the Company, Donald B. Hamister ("Hamister"), on Sherman's behalf. Bendix
phoned Hamister and left a message describing his conversation with Sherman.
On August 12, 1994, Parent filed a Schedule 13D with the Commission.
Concurrently, Parent filed under the HSR Act for clearance to purchase up to
15% of the Company's stock.
24
<PAGE>
Shortly subsequent to the filings by Parent, the Company retained legal and
financial advisors to advise the Board in the event there should be a possible
takeover attempt by, or a negotiated transaction with, Parent or any other
party. Also shortly subsequent to the filings by Parent, the Company received
from a number of parties indications of interest in possible business
combinations with the Company or in acquisitions of one of its businesses in
the event the Board should determine to pursue a transaction. None of such
parties presented a proposal.
On August 29, 1994, the Board met with its legal advisors, who advised the
Board as to its responsibilities in the event of a takeover attempt and in
addition described possible amendments to the Rights Agreement. Following the
August 29, 1994 Board meeting, the members of the Compensation Committee of
the Board met with its legal advisors and executive compensation consultants
to review various issues relating to severance arrangements.
On September 2, 1994 the Board adopted an amendment to the Rights Agreement,
which was reported to the Commission in the Company's Form 8-K Current Report
dated September 9, 1994. The amendment (i) reduced from 20% to 15% (or, in the
case of any person who beneficially owned 15% or more of the Shares as of
September 2, 1994 (an "Existing Holder"), a percentage equal to or greater
than the amount beneficially owned by such Existing Holder on September 2,
1994, plus 1% (the "Increased Percentage")), the beneficial ownership
threshold that results in a person becoming an "Acquiring Person" under the
Rights Agreement and (ii) reduced from 30% to 15% (or, in the case of an
Existing Holder, the Increased Percentage) the percentage of the Shares sought
in a tender offer the commencement of which would result in a distribution of
rights under the Rights Agreement. The amendment also (A) provides that the
"flip-in" provision under the Rights Agreement is operative immediately once
anyone becomes an Acquiring Person (all other triggers to the "flip-in"
provision and certain exceptions are deleted), (B) allows the Board to delay
the distribution of rights certificates if any such tender or exchange offer
has been commenced so long as no one has become an Acquiring Person and (C)
excludes from the definition of "Acquiring Person" anyone who the Board
determines has inadvertently become an Acquiring Person and who promptly
divests a sufficient number of Shares so as to no longer be an Acquiring
Person. The amendment also expanded the circumstances in which the redemption
of the Rights must be approved by a majority of the "continuing directors."
At the September 2, 1994 meeting, the Board also agreed that, in response to
the request of Sherman, Bendix and another director, L. G. Wolski ("Wolski"),
would meet with Sherman on September 22, 1994.
On September 16, 1994, the Board adopted an amendment and restatement of the
Company's By-Laws providing for, among other things, (i) indemnification of
directors, officers, employees and agents of the Company and (ii) a
requirement that a shareholder wishing to make a proposal for shareholder vote
at an Annual Meeting or to nominate a candidate for election to the Board give
prior written notice thereof. The Board also approved certain severance
arrangements for the Company's executive officers, corporate managers and
corporate staff. Such matters were reported to the Commission in the Company's
Form 8-K Current Report dated September 19, 1994 and filed September 20, 1994.
In September, 1994, an investment banker indicated to the Company that an
additional party had indicated to him an interest in the Company. To the
knowledge of the Company, such party has taken no further action.
On October 6, 1994, Parent purchased an additional 70,000 Shares at a price
per Share (excluding markups and commissions) of $26.
In September, 1994 and March, 1995, Patrick W. Allender, Senior Vice
President and Chief Financial Officer of Parent ("Allender"), and Sherman met
with Bendix and Wolski. The purpose of these meetings was for Parent, as a new
large shareholder of the Company, to introduce itself to the Company's top
management and to learn more about the Company and management's plans for it.
25
<PAGE>
On December 7, 1994, Hamister resigned as Chairman of the Board, Bendix
became non-executive Chairman of the Board and Wolski was given the title of
Acting Chief Executive Officer. Wolski replaced retiring Chief Executive
Officer Raymond E. Micheletti ("Micheletti"). Wolski's title was changed to
Chief Executive Officer on July 19, 1995.
At the Annual Meeting held on April 26, 1995, two new independent directors
were elected, replacing Hamister and Micheletti, and four incumbent directors
were re-elected. As a result of the election, the Board had a majority of
independent directors and continued to be chaired by a non-executive Chairman
of the Board.
On June 14, 1995, the Company announced its acquisition of Cyberex, Inc. and
Allender called Wolski to inquire about the acquisition.
On June 30, 1995, Sherman called Bendix to inquire whether the Company might
be receptive to an expression of interest by Parent in a business transaction
between Parent and the Company. Bendix indicated that the Company viewed
itself as an independent company in the future, but that he would discuss the
issue with the rest of the Board members. On July 6, 1995, Bendix called
Sherman and indicated that the Company would always be agreeable to meeting
with the Company's large shareholders to discuss the Company's future and the
Company's reported results, but also that its directors believed in the
Company's future as an independent company. Sherman, on behalf of Parent,
asked for a meeting with the Company's officers and to be provided access to
non-public information concerning the Company upon execution of a
confidentiality agreement with the Company to assist Parent in evaluating its
alternatives with respect to its investment in the Company, including a
possible business combination. On July 7, 1995, Bendix responded to Sherman's
request by indicating that the request would be considered by the Board at its
next meeting scheduled for July 19, 1995.
On July 7, 1995, Sherman telephoned Bendix to inform him that Parent was
interested in pursuing a business combination with the Company. In addition,
Sherman read and telecopied the following letter to Bendix.
July 7, 1995
Mr. William E. Bendix
Chairman of the Board
Joslyn Corporation
30 South Wacker Drive
Chicago, IL 60606
Dear Bill:
As you know, Danaher Corporation has been an investor in Joslyn Corporation
for over a year. We have been impressed with Joslyn's business, which
complements businesses we are engaged in.
When we spoke initially on June 30, 1995 and most recently on July 6 and 7,
1995, I told you that Danaher's management was reviewing what the alternatives
might be with respect to our investment in Joslyn, and might consider
discussing with Danaher's Board of Directors whether to explore a business
combination with Joslyn. Danaher's management and Board of Directors has now
decided to propose a business combination, and we hereby propose a combination
of our companies' businesses in a transaction in which your stockholders would
receive cash for each share of their common stock. Based on our review of
publicly available information about Joslyn, we propose a price of $32 per
share. We think the offer is the appropriate price based on publicly available
information, but we would like to conduct a brief, highly focused due
diligence investigation in order to explore whether a higher price could be
justified.
We believe that the transaction we are proposing represents a very
attractive opportunity for your stockholders. The price we are offering
represents a significant premium over today's closing market price of the
Company's common stock--a price that, in our view, already reflects the fact
that Danaher is a substantial owner of Joslyn's shares.
26
<PAGE>
Our offer is not subject to financing, but is subject to the taking of all
necessary actions to eliminate the applicability of, or to satisfy, any anti-
takeover or other defensive provisions contained in the applicable corporate
statutes or in the Company's charter, by-laws and rights agreement.
We are convinced that the combination of our companies will be of great
benefit to Joslyn and its stockholders. We also believe that Joslyn's
employees, customers and suppliers will benefit from the joining of the
complementary strengths of our two companies.
Our financial strength and the complementary nature of the businesses of our
two companies enables us to move forward quickly to negotiate and to close an
Agreement. We are prepared to enter into immediate discussions with you and
your directors, management and advisors to answer any questions you may have
about our offer.
We hope that you and your fellow directors will view this offer as we do--an
excellent opportunity for the stockholders of the Company to realize full
value for their shares to an extent that is not available to them in the
marketplace.
We trust that Joslyn's Board of Directors will give our offer prompt and
serious consideration and will not take any actions that would adversely
affect your stockholders' ability to receive the benefits of our proposed
transaction.
Our sincere desire is to work together with you to reach agreement on a
negotiated transaction which can be presented to your stockholders as the
joint effort of the directors and managements of both companies.
As you can appreciate, it is important that we hear from you as promptly as
practicable with respect to our offer. We look forward to hearing from you and
to working together on this transaction.
Sincerely,
George M. Sherman
On July 10, 1995, Bendix and Wolski telecopied the following letter to
Sherman.
July 10, 1995
Mr. George M. Sherman
President and Chief Executive Officer
Danaher Corporation
1250 24th Street, N.W.--Suite 800
Washington, D.C. 20037
Dear George:
We have received your letter dated July 7, 1995 and have forwarded it to our
board. Your proposal will be considered at our regularly scheduled meeting on
July 19, 1995. Promptly after that meeting, we will either inform you of our
board's response or give you an estimated date for such response.
As you know, we have recently reconstituted our board. It is now comprised
of a majority of independent directors and led by a non-executive chairman. We
would not presume to pre-empt or predict their decision. It is not
presumptuous, however, to offer the following observations:
27
<PAGE>
. In considering your proposal, the board will be weighing it against the
excellent prospects of the Company on an independent, stand-alone basis
as we begin to see the benefits of new programs which are now being
implemented. Anticipated strong second quarter results and the Cyberex
acquisition are but two examples.
. Even if the board were to determine to abandon the Company's independent
status and pursue a business combination, it would first select between a
strategic merger and, as you have proposed, a change-in-control
transaction. The next decision would be how to pursue such a transaction.
In the absence of an unquestionably pre-emptive offer from Danaher, an
exclusive negotiation over a change-in-control transaction is not likely
to occur because of the fiduciary duties of our directors.
. The guiding principle for our directors will be the best interests of our
stockholders. If they determine to pursue a transaction, the Company will
do so vigorously. If they determine to continue down our independent
path, the Company will pursue all appropriate defenses.
Our board will give your proposal a thorough, careful and good faith review
on the 19th. We will respond to you shortly after that meeting.
Sincerely,
William E. Bendix
L.G. Wolski
cc: Board of Directors of Joslyn Corporation
At a meeting held on July 19, 1995, the Board, after consultation with its
legal counsel and Goldman Sachs, its financial advisors, determined that
commencing negotiations with Parent or providing confidential information to
Parent was not then in the best interests of the Company's shareholders. This
decision was communicated by Bendix to Sherman in the following letter which
Bendix faxed to Sherman's office and also read to Sherman (who was
vacationing) in a telephone call later that day. Such letter was made public
through a press release that was issued on July 20, 1995 and a Form 8-K
Current Report that was filed with the Commission on July 20, 1995.
July 19, 1995
Mr. George M. Sherman
President and Chief Executive Officer
Danaher Corporation
1250 24th Street, N.W.--Suite 800
Washington, D.C. 20037
Dear George:
As promised, the Board of Directors of Joslyn Corporation and our financial
advisor, Goldman, Sachs & Co., have reviewed your company's proposal to
acquire Joslyn for $32 per share.
The Board has unanimously concluded that entering into merger discussions
with you or providing confidential information to you is not in the best
interests of Joslyn's shareholders. In reaching this conclusion, the Board has
considered, among other things, Joslyn's prospects as an independent company
and the implications of its new growth strategy, its financial analysis and
the analysis presented by Goldman, Sachs & Co. as well as other alternatives
available to Joslyn.
Sincerely,
William E. Bendix
Lawrence G. Wolski
cc: Board of Directors of Joslyn Corporation
28
<PAGE>
On July 23, 1995, Sherman telephoned Bendix to inform him that the Offer
would commence on July 24. On July 24, 1995, the Purchaser commenced the
Offer, and Sherman called Wolski and summarized Parent's press release as to
the commencement of the Offer and the commencement of the litigation described
below. Parent also, on July 24, telecopied to the Company a copy of Parent's
press release and of the following letter from Sherman to Bendix.
July 24, 1995
Mr. William E. Bendix
Chairman of the Board
Joslyn Corporation
30 South Wacker Drive
Chicago, IL 60606
Dear Bill:
As you know, Danaher Corporation has expressed to you on several occasions
our interest in entering into a business combination with Joslyn Corporation
(the "Company"). On July 7, 1995, Danaher proposed to you a business
combination transaction in which the Company's shareholders would receive $32
in cash for each share of common stock. In the course of our conversations, we
requested access to non-public information concerning the Company, under an
appropriate confidentiality agreement, so that we could explore whether a
higher price would be justified. By your letter dated July 19, you informed us
that the Company's directors had concluded that entering into merger
discussions with Danaher or providing confidential information to Danaher is
not in the best interests of the Company's shareholders.
We are disappointed by the Company's rejection of our proposal to negotiate a
business combination transaction and to our request for access to information.
We fail to see how it could be in the best interests of your shareholders to
reject any further discussion with us.
While we would have preferred to negotiate a transaction with you, we feel
that you have left us no choice but to present a proposal directly to your
shareholders. Accordingly, Danaher and TK Acquisition Corporation, an indirect
wholly owned subsidiary of Danaher, are today commencing a tender offer for
all of the outstanding shares (and the associated common stock purchase
rights) of the Company at a price of $32 net per share in cash. It is our
intention to acquire any shares not purchased in the tender offer in a
subsequent merger for the same cash consideration paid to shareholders in the
tender offer. We would expect customary conditions for a transaction of this
type; however, we have secured the financing necessary to fund our offer.
We believe that an all cash price of $32 net per share for all shares
presents a very attractive opportunity for the Company's shareholders. For the
past three years, the Company's stock has generally traded in the low or mid-
20's. Our offer represents an approximately 30% premium over the closing price
on the last trading day before our July 7 letter proposing to acquire the
Company at $32 per share.
In light of the attractive terms of our offer, we request that the Company's
Board of Directors make appropriate determinations so that the common stock
purchase rights and the restrictions provided in the Illinois Business
Combination Law are rendered inapplicable to our tender offer and subsequent
merger. We would expect that you will not take any other actions that would be
detrimental to the interests of the shareholders. It is our hope that we can
proceed to complete a transaction with a minimum of delay.
Sincerely,
George M. Sherman
29
<PAGE>
Also on July 24, 1995, the Purchaser commenced litigation against the
Company in the United States District Court for the Northern District of
Illinois seeking, among other things, a preliminary injunction (i) enjoining
the operation of the provisions of the Rights Agreement purporting to require
approval by the Continuing Directors for redeeming the Rights or taking
certain actions with respect to the Rights and the Rights Agreement and (ii)
enjoining the Board from treating the tender of shares to the Purchaser prior
to its acceptance of such shares for purchase, the receipt of authorizations
for the calling of a special meeting, and the obtaining of revocable proxies
or consents to vote shares as vesting beneficial ownership of such shares in
the Purchaser for purposes of Section 7.85. In addition, the Purchaser's
lawsuit sought, among other things, to prohibit the Board from breaching its
fiduciary duties to the Company and its shareholders, through issuance of an
order (i) compelling the Board to redeem the Rights or to make the Rights
inapplicable to the Offer and the Merger; (ii) enjoining the Board from using
Illinois' business combination statutes to interfere with or prevent the Offer
and Merger; (iii) compelling the Board to approve the Offer and the Merger for
purposes of the Business Combination Law; (iv) declaring that no state laws
other than those of Illinois that purport to regulate business combinations of
the Company apply to the Offer and Merger; (v) enjoining the Company from
instituting proceedings in any other court or forum concerning or related to
the Offer and Merger and (vi) enjoining the Board from taking any other steps
to interfere with or prevent the Offer and Merger.
On July 26, 1995, the Board met again and, after consultation with its legal
and financial advisors, directed the senior management of the Company to meet
with representatives of Parent for purposes of gathering additional
information prior to taking a position on the Offer. This decision was
communicated by a call from Goldman Sachs to Parent's investment bankers and
also by Bendix to Sherman by the following letter which was faxed to Sherman
later that day. Such letter was made public through a press release that was
issued on July 27, 1995 and a Form 8-K Current Report that was filed with the
Commission on July 31, 1995.
July 27, 1995
Mr. George M. Sherman
President and Chief Executive Officer
Danaher Corporation
1250 24th Street, N.W.--Suite 300
Washington, D.C. 20037
Dear George:
As you know, because Danaher Corporation has now launched a tender offer,
our Board of Directors will shortly be compelled to state a position on the
transaction. In order that the Board can have before it full information
before stating its position, they have asked us and our advisors, among other
things, to meet with you and your advisors. In order to have a meaningful
discussion with you, we would be prepared to provide you with certain highly-
focused, non-public information, subject to an appropriate confidentiality
agreement. Our investment bankers are contacting yours to arrange such a
meeting.
Sincerely,
William E. Bendix
L.G. Wolski
cc: Board of Directors of Joslyn Corporation
30
<PAGE>
At the July 26, 1995 meeting, the Board also took action to defer the
Distribution Date as defined in the Rights Agreement and resolved that, if at
any future time it were to determine to undertake negotiations, prior to
reaching any agreement in principle with any party with respect to a
transaction, disclosure of the possible terms thereof or the parties thereto
would jeopardize continuation of any such negotiations.
On July 28, 1995, Parent entered into a Confidentiality Agreement with the
Company, pursuant to which it generally agreed to treat confidentially any
information (except certain already known or public information) that the
Company or its agents or advisors furnished to Parent or its representatives
(the "Confidentiality Agreement"). A copy of the Confidentiality Agreement is
filed as an exhibit to Amendment No. 3 to the Schedule 14D-1 filed by Parent
and the Purchaser with the Commission, and this summary of the Confidentiality
Agreement is qualified in its entirety by reference to the text of the
agreement. In the Confidentiality Agreement, Parent also agreed, for a period
of six months commencing on the date of the Confidentiality Agreement, to
certain restrictions relating to acquiring additional Shares, soliciting
proxies, initiating shareholder proposals or tender offers, or otherwise
seeking to influence or control the management of the Company. Parent is
permitted, however, to engage in negotiations with the Company in respect of
an acquisition of the Company, to pursue its Offer and to take any and all
actions (including without limitation communications to shareholders, proxy
solicitations, calling of shareholder meetings, and litigation, and any
actions relating to the financing of an offer or a follow-on merger) in
support of any offer, although Parent agreed to stay litigation proceedings
and efforts to seek a meeting of the Company's shareholders and to solicit
proxies or written consents, pending its review of information relating to the
Company and any related discussions and negotiations in respect of a
transaction. The foregoing restrictions terminate in the event the Board
approves or recommends, or resolves to approve or recommend, any third party
acquisition proposal, or, if there is a third party acquisition proposal that
is a tender offer, if the Board, within 10 days following commencement of the
offer, shall not have recommended to shareholders that they reject such offer.
Subsequent to entering into the Confidentiality Agreement, the Company
provided certain business and financial information to Parent and its
representatives, and representatives of Parent met with representatives of the
Company, conducted due diligence with respect to the Company and its
facilities and operations and reviewed various information concerning the
Company supplied to Parent.
Subsequent to the disclosure of the exchange of correspondence between
Bendix and Sherman on July 7 and July 10, the Company received indications of
interest from additional parties in possible business combinations with the
Company. In addition, after the July 19, 1995 Board meeting, Goldman Sachs
made contact with numerous parties to ascertain their interest in discussions
with the Company. After the July 26, 1995 Board meeting, the Company entered
into confidentiality agreements with certain other parties and provided them
with confidential information. Such additional confidentiality agreements are
similar to the Confidentiality Agreement with Parent.
On August 2, 1995, legal counsel for Parent faxed to counsel for the Company
a draft tender offer/merger agreement for consideration in the event that the
Company and Parent got "together on a transaction."
On August 3, 1995, the Board met again with its legal and financial
advisors. During the course of the meeting, representatives of Parent called
to indicate that Parent would require additional time to complete its
investigation before Parent could determine whether, from its perspective, an
offer price higher than $32 per Share could be justified.
Following the August 3, 1995 Board meeting, counsel to the Company called
counsel to Parent and stated that it would be premature, under the
circumstances, to begin discussions of the previously supplied draft tender
offer/merger agreement.
On Friday, August 4, 1995, the Company issued the following press release:
Joslyn Corporation (Nasdaq: JOSL) announced today that its Board of
Directors has recommended that its shareholders reject the $32 per share
tender offer from Danaher Corporation (NYSE: DHR). In a letter
31
<PAGE>
being mailed to Joslyn shareholders, Joslyn Board Chairman Bendix and Chief
Executive Officer Wolski said that the Joslyn Board has not reached a
conclusion that Joslyn should be sold. However, Joslyn is in the midst of
providing further information to Danaher in an effort to cause it to raise
its bid. In addition, Joslyn has entered into confidentiality agreements
with other potentially interested parties and is seeking to develop their
interest in a transaction at higher than $32 per share.
In the following days, Parent continued to conduct due diligence and to
review information concerning the Company.
On August 11, 1995, representatives of Parent once again informed the
Company that they would need additional time before informing the Company
whether Parent would increase its offer price. On August 12, 1995, the Board
met and reconfirmed its recommendation that shareholders reject the Offer. On
Monday, August 14, 1995, the Company issued the following press release:
Joslyn Corporation (NASDAQ:JOSL) announced today that its Board of Directors
has reaffirmed its rejection of Danaher Corporation's offer to acquire Joslyn
Corporation at a price of $32 per share. At its meeting held on August 12, the
Board advised Joslyn shareholders not to tender their shares to Danaher
Corporation and urged shareholders who have tendered their shares to withdraw
them before August 18, 1995, the scheduled expiration date of Danaher's tender
offer.
The full text of the letter to Joslyn shareholders is as follows:
August 14, 1995
To Our Shareholders:
Your Board and management have been working diligently on your behalf. We
are writing to ask you to help us help you.
As we approach the scheduled expiration date of Danaher Corporation's $32
per share cash tender offer, we again urge you to reject Danaher's Offer and
not tender your shares. Since our last letter to you, Danaher has continued
its due diligence investigation. On August 11, 1995, notwithstanding Danaher's
prior commitment to a "brief, highly focused" investigation, Danaher once
again informed us that they would need additional time before telling us
whether Danaher will increase its Offer. We believe Danaher has already seen
everything necessary to satisfy any reasonable due diligence needs and to know
that Joslyn is worth more than $32 per share to Danaher.
On August 12, 1995, the Joslyn Board met again and reconfirmed its
recommendation that you reject the existing Offer for the following reasons:
. Joslyn's business is benefiting from our new strategy and management and
is producing strong operating and financial results. Your Board is
exploring all avenues for maximizing shareholder value, including
possible restructuring transactions and transactions with others.
. Joslyn is continuing to enter into confidentiality agreements and
provide information to other parties potentially interested in a
business combination.
. There are reasons for optimism that Danaher will propose an increased
Offer price. Among other things--
--Danaher itself has stated that its purpose in conducting a due
diligence investigation is to determine if a higher price can be
justified.
--Our analysis indicates that an acquisition by Danaher at a price
significantly higher than $32 would continue to be earnings-enhancing
for them.
32
<PAGE>
Although the Board cannot predict how all this will sort out, one thing
seems clear: you have nothing to gain by tendering into Danaher's Offer prior
to its scheduled expiration on Friday, August 18, 1995. Danaher has indicated
that it will not be able to buy any shares until certain conditions to the
Offer, including those requiring action by the Board, have been satisfied.
Those conditions will not be satisfied by that date. ACCORDINGLY, WE URGE YOU
NOT TO TENDER. AND, IF YOU HAVE ALREADY TENDERED, WE URGE YOU TO WITHDRAW YOUR
SHARES BEFORE AUGUST 18.
Again, help us help you. By not tendering, you will send a message to
Danaher that you demand full value for your shares.
Sincerely,
William E. Bendix
L.G. Wolski
On August 16, 1995, the Board took action by unanimous written consent to
further delay the distribution of separate certificates for Rights granted
pursuant to the Rights Agreement until September 15, 1995, or such earlier or
later time (prior to the occurrence of the Distribution Date) as the Board
shall designate. Such resolution was reported to the Commission in the
Company's Amendment No. 2 to Schedule 14D-9, dated and filed on August 16,
1995.
On Friday, August 18, 1995, representatives of Parent indicated to
representatives of the Company their willingness to increase the per share
price in a negotiated transaction to $34 per Share if the terms of a
satisfactory merger agreement could be agreed upon. Thereafter, until Sunday,
August 20, 1995, Parent and the Company and their respective representatives
negotiated and discussed the terms of Parent's proposal and the related Merger
Agreement. On Sunday, August 20, 1995, an agreement was reached between the
parties on all terms, including price, of the Merger Agreement, and the Merger
Agreement was executed.
On August 20, 1995, the Board authorized, and the Company executed, an
amendment to the Rights Agreement (the "Rights Agreement Amendment"), which
renders the Rights Agreement inapplicable to the Offer and the Merger by
providing, among other things, that the announcement or making of the Offer,
the acquisition of Shares pursuant to the Offer and the Merger, the execution
of the Merger Agreement, and the other transactions contemplated by the Merger
Agreement will not, among other things, (a) result in Parent or the Purchaser
or any of their affiliates being considered an Acquiring Person or (b) cause
the occurrence of a Distribution Date. The Company has also agreed in the
Merger Agreement that it will not redeem the Rights, amend the Rights
Agreement (other than to delay the Distribution Date or to render the Rights
inapplicable to the Offer and the Merger) or terminate the Rights Agreement
prior to the effectiveness of the Merger, unless required to do so by order of
a court of competent jurisdiction.
On Monday, August 21, 1995, Parent and the Company issued a joint press
release announcing the execution by Parent, DH Holdings, the Purchaser and the
Company of the Merger Agreement and the amendment of the Offer.
The Offer expired at 12:00 midnight, New York City time, on Friday,
September 1, 1995. As a result of the purchase of Shares pursuant to the
Offer, and the contribution to the Purchaser of 613,550 Shares previously
acquired by DH Holdings, the Purchaser became the beneficial owner of
approximately 76% of the Shares outstanding.
Except as described herein, as of the date hereof, (a) there have not been
any material contracts, arrangements, understandings, transactions or
negotiations between the Purchaser or Parent or any of their respective
subsidiaries or affiliates, on the one hand, and the Company or any of its
affiliates, on the other hand, that are required to be disclosed pursuant to
the rules and regulations of the Commission, and (b) none of the Purchaser or
Parent has any contract, arrangement, understanding or relationship with any
person with respect to any securities of the Company. During the consummation
of the Merger, the Purchaser and Parent intend to have ongoing contacts and
negotiations with the Company and its directors, officers and shareholders.
33
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
The following table contains certain information regarding the only persons
known to the Company as of the date of this Information Statement to be
beneficial owners of more than 5% of any class of the Company's voting
securities:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
-------------- ------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock........ TK Acquisition Corporation 5,483,178 76%
1250 24th Street, N.W.
Suite 800
Washington, D.C. 20037
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
No director or executive officer of the Company currently owns, either
beneficially or of record, any Shares, except that John H. Deininger, Richard
C. Osborne and Lawrence A. Reed each holds an option to purchase 1,000 Shares
at $24.75 per Share under the Company's Non-Employee Director Stock Plan and
each of the following persons holds options to purchase the number of Shares
set forth beside his name under the Company's employee benefit plans:
<TABLE>
<CAPTION>
<S> <C>
George W. Diehl....... 17,308
Wayne M. Koprowski.... 20,048
Steven L. Thunander... 23,575
Lawrence G. Wolski.... 29,483
Daniel Dumont......... 5,737
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, DH HOLDINGS AND THE PURCHASER
No director or executive officer of any of Parent, DH Holdings or the
Purchaser currently owns, either beneficially or of record, any Shares. Steven
M. Rales and Mitchell P. Rales, however, as general partners of EGH, which
owns a substantial percentage of the stock of Parent, may have an indirect
ownership of shares of the Company's Common Stock. See "Certain Information
Concerning the Purchaser and Parent" above.
The Company does not know of any arrangements, including any pledge by any
person of securities of the Company, the operation of which may at a
subsequent date result in a change of control of the Company.
INTEREST OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board and the actions of certain
shareholders and officers of the Company with respect to the Merger Agreement
and the transactions contemplated thereby, the shareholders of the Company
should be aware that certain members of the management and the Board have
certain interests in the Merger that may present them with actual or potential
conflicts of interest with respect to the Merger.
Pursuant to the Merger Agreement, Parent has agreed to, and to cause the
Surviving Corporation to, indemnify present and former officers, directors and
employees of the Company and its subsidiaries against all losses, obligations,
expenses, claims, damages or liabilities resulting from or arising out of
actions or omissions occurring on or prior to the Effective Time to the full
extent permitted or required under applicable law for six years after the
Effective Time. Parent has also agreed to cause the Surviving Corporation to
maintain the current policies of directors' and officers' liability insurance,
subject to certain limitations, for six years after the Effective Time. See
"The Merger Agreement--Indemnification; Insurance."
The purchase of the Shares by the Purchaser will result in the accelerated
vesting of stock options and stock appreciation rights under the Company's
benefit plans. Pursuant to the Merger Agreement, each option holder other than
an option holder who is a non-employee director of the Company and those whose
options do not include stock appreciation rights, will receive the Merger
Consideration in exchange for their options. Option
34
<PAGE>
holders who are non-employee directors of the Company will receive substitute
options to purchase common stock of Parent. See "The Merger Agreement--
Employee Stock Options." Parent has agreed to cause the Surviving Corporation
to maintain until December 31, 1996, employee benefit plans which, in the
aggregate, will provide benefits to the employees of the Company and its
subsidiaries that are substantially comparable, in the aggregate, to those
provided to such employees under the employee benefit plans of the Company in
effect on the date of the Merger Agreement, and, after December 31, 1996, will
provide such employees with benefits that are consistent with those provided
to other employees of Parent. The Merger Agreement also provides that, to the
extent that any employee of the Company or its subsidiaries is to be covered
by any employee benefit plan of Parent or its subsidiaries, such employee
shall, for the purposes of eligibility and vesting (but not accrual of
benefits under such plans), be credited with his or her years of service with
the Company or its subsidiaries as of the Effective Time and with years of
service with prior employers to the extent service with prior employers is
taken into account under corresponding plans of the Company or its
subsidiaries. See "The Merger Agreement--Employee Benefits; Severance
Agreements."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the Commission are
incorporated by reference into this Information Statement: the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994 and
Parent's Annual Report on Form 10-K for the fiscal year ended December 31,
1994. The File Numbers for the above-referenced documents are Commission File
No. 0-1252 and Commission File No. 1-8089, respectively. All documents
subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, and prior to the date the written consent is used
to effect the Merger, shall be deemed to be incorporated by reference into
this Information Statement.
Any statement contained herein or in any document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this Information Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed to constitute a part of this Information Statement, except as so
modified or superseded.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Information Statement is delivered,
upon written or oral request of such person and by first class mail or other
equally prompt means within one business day of receipt of such request, a
copy of any and all of the information that has been incorporated by reference
in this Information Statement (not including exhibits to such information
unless such exhibits are specifically incorporated by reference into such
information), including information contained in documents filed subsequent to
October 10, 1995. Such requests for information should be directed to Danaher
Corporation, 1250 24th Street, N.W., Suite 800, Washington, D.C. 20037,
Attention: C. Scott Brannan. The telephone number of Danaher Corporation is
(202) 828-0850.
By Order of the Board of Directors
C. Scott Brannan
Secretary
Chicago, Illinois
October 10, 1995
35
<PAGE>
EXHIBIT A
ILLINOIS BUSINESS CORPORATION ACT
SECTIONS 11.65 AND 11.70
5/11.65 RIGHT TO DISSENT.--(a) A shareholder of a corporation is entitled to
dissent from, and obtain payment for his or her shares in the event of any of
the following corporate actions:
(1) consummation of a plan of merger or consolidation or a plan of share
exchange to which the corporation is a party if (i) shareholder
authorization is required for the merger or consolidation or the share
exchange by Section 11.20 or the articles of incorporation or (ii) the
corporation is a subsidiary that is merged with its parent or another
subsidiary under Section 11.30;
(2) consummation of a sale, lease or exchange of all, or substantially
all, of the property and assets of the corporation other than in the usual
and regular course of business;
(3) an amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of such shares;
(ii) alters or abolishes a right in respect of redemption, including
a provision respecting a sinking fund for the redemption or repurchase,
of such shares;
(iii) in the case of a corporation incorporated prior to January 1,
1982, limits or eliminates cumulative voting rights with respect to
such shares; or
(4) any other corporate action taken pursuant to a shareholder vote if
the articles of incorporation, by-laws, or a resolution of the board of
directors provide that shareholders are entitled to dissent and obtain
payment for their shares in accordance with the procedures set forth in
Section 11.70 or as may be otherwise provided in the articles, by-laws or
resolution.
(b) A shareholder entitled to dissent and obtain payment for his or her
shares under this Section may not challenge the corporate action creating his
or her entitlement unless the action is fraudulent with respect to the
shareholder or the corporation or constitutes a breach of a fiduciary duty
owed to the shareholder.
(c) A record owner of shares may assert dissenters' rights as to fewer than
all the shares recorded in such person's name only if such person dissents
with respect to all shares beneficially owned by any one person and notifies
the corporation in writing of the name and address of each person on whose
behalf the record owner asserts dissenters' rights. The rights of a partial
dissenter are determined as if the shares as to which dissent is made and the
other shares recorded in the names of different shareholders. A beneficial
owner of shares who is not the record owner may assert dissenters' rights as
to shares held on such person's behalf only if the beneficial owner submits to
the corporation the record owner's written consent to the dissent before or at
the same time the beneficial owner asserts dissenters' rights.
5/11.70 PROCEDURE TO DISSENT.--(a) If the corporate action giving rise to
the right to dissent is to be approved at a meeting of shareholders, the
notice of meeting shall inform the shareholders of their right to dissent and
the procedure to dissent. If, prior to the meeting, the corporation furnishes
to the shareholders material information with respect to the transaction that
will objectively enable a shareholder to vote on the transaction and to
determine whether or not to exercise dissenters' rights, a shareholder may
assert dissenters' rights only if the shareholder delivers to the corporation
before the vote is taken a written demand for payment for his or her shares if
the proposed action is consummated, and the shareholder does not vote in favor
of the proposed action.
(b) If the corporate action giving rise to the right to dissent is not to be
approved at a meeting of shareholders, the notice to shareholders describing
the action taken under Section 11.30 or Section 7.10 shall inform the
shareholders of their right to dissent and the procedure to dissent. If, prior
to or concurrently with the notice, the corporation furnishes to the
shareholders material information with respect to the transaction that will
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objectively enable a shareholder to determine whether or not to exercise
dissenters' rights, a shareholder may assert dissenter's rights only if he or
she delivers to the corporation within 30 days from the date of mailing the
notice a written demand for payment for his or her shares.
(c) Within 10 days after the date on which the corporate action giving rise
to the right to dissent is effective or 30 days after the shareholder delivers
to the corporation the written demand for payment, whichever is later, the
corporation shall send each shareholder who has delivered a written demand for
payment a statement setting forth the opinion of the corporation as to the
estimated fair value of the shares, the corporation's latest balance sheet as
of the end of a fiscal year ending not earlier than 16 months before the
delivery of the statement, together with the statement of income for that year
and the latest available interim financial statements, and either a commitment
to pay for the shares of the dissenting shareholder at the estimated fair
value thereof upon transmittal to the corporation of the certificate or
certificates, or other evidence of ownership, with respect to the shares, or
instructions to the dissenting shareholder to sell his or her shares within 10
days after delivery of the corporation's statement to the shareholder. The
corporation may instruct the shareholder to sell only if there is a public
market for the shares at which the shares may be readily sold. If the
shareholder does not sell within that 10 day period after being so instructed
by the corporation, for purposes of this Section the shareholder shall be
deemed to have sold his or her shares at the average closing price of the
shares, if listed on a national exchange, or the average of the bid and asked
price with respect to the shares quoted by a principal market maker, if not
listed on a national exchange, during that 10 day period.
(d) A shareholder who makes written demand for payment under this Section
retains all other rights of a shareholder until those rights are cancelled or
modified by the consummation of the proposed corporate action. Upon
consummation of that action, the corporation shall pay to each dissenter who
transmits to the corporation the certificate or other evidence of ownership of
the shares the amount the corporation estimates to be the fair value of the
shares, plus accrued interest, accompanied by a written explanation of how the
interest was calculated.
(e) If the shareholder does not agree with the opinion of the corporation as
to the estimated fair value of the shares or the amount of interest due, the
shareholder, within 30 days from the delivery of the corporation's statement
of value, shall notify the corporation in writing of the shareholder's
estimated fair value and amount of interest due and demand payment for the
difference between the shareholder's estimate of fair value and interest due
and the amount of the payment by the corporation or the proceeds of sale by
the shareholder, whichever is applicable because of the procedure for which
the corporation opted pursuant to subsection (c).
(f) If, within 60 days from delivery to the corporation of the shareholder
notification of estimate of fair value of the shares and interest due, the
corporation and the dissenting shareholder have not agreed in writing upon the
fair value of the shares and interest due, the corporation shall either pay
the difference in value demanded by the shareholder, with interest, or file a
petition in the circuit court of the county in which either the registered
office or the principal office of the corporation is located, requesting the
court to determine the fair value of the shares and interest due. The
corporation shall make all dissenters, whether or not residents of this State,
whose demands remain unsettled parties to the proceeding as an action against
their shares and all parties shall be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication
as provided by law. Failure of the corporation to commence an action pursuant
to this Section shall not limit or affect the right of the dissenting
shareholders to otherwise commence an action as permitted by law.
(g) The jurisdiction of the court in which the proceeding is commenced under
subsection (f) by a corporation is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the power
described in the order appointing them, or in any amendment to it.
(h) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds that the fair value of his or
her shares, plus interest, exceeds the amount paid by the corporation or the
proceeds of sale by the shareholder, whichever amount is applicable.
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(i) The court, in a proceeding commenced under subsection (f), shall
determine all costs of the proceeding, including the reasonable compensation
and expenses of the appraisers, if any, appointed by the court under
subsection (g), but shall exclude the fees and expenses of counsel and experts
for the respective parties. If the fair value of the shares as determined by
the court materially exceeds the amount which the corporation estimated to be
the fair value of the shares or if no estimate was made in accordance with
subsection (c), then all or any part of the costs may be assessed against the
corporation. If the amount which any dissenter estimated to be the fair value
of the shares materially exceeds the fair value of the shares as determined by
the court, then all or any part of the costs may be assessed against that
dissenter. The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable, as
follows:
(1) Against the corporation and in favor of any or all dissenters if the
court finds that the corporation did not substantially comply with the
requirements of subsections (a), (b),(c), (d), or (f).
(2) Against either the corporation or a dissenter and in favor of any
other party if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this Section.
If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and that the fees
for those services should not be assessed against the corporation, the court
may award to that counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who are benefited. Except as otherwise provided in
this Section, the practice, procedure, judgment and costs shall be governed by
the Code of Civil Procedure.
(j) As used in this Section:
(1) "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the consummation of the corporate action
to which the dissenter objects excluding any appreciation or depreciation
in anticipation of the corporate action, unless exclusion would be
inequitable.
(2) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
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EXHIBIT B
[LETTERHEAD OF GOLDMAN, SACHS & CO.]
August 20, 1995
Board of Directors
Joslyn Corporation
30 South Wacker Drive
Chicago, IL 60606
Gentlemen:
You have requested our opinion as to the fairness to the holders (other than
Danaher Corporation and its subsidiaries ("Danaher")) of the outstanding
shares of common stock, par value $1.25 per share (the "Shares"), of Joslyn
Corporation (the "Company") of the $34.00 per Share in cash proposed to be
paid by Danaher in the Tender Offer and the Merger (as defined below) pursuant
to the Agreement and Plan of Merger dated as of August 20, 1995 among Danaher,
DH Holdings Corp., a wholly-owned subsidiary of Danaher, TK Acquisition
Corporation, also a wholly-owned subsidiary of Danaher, and the Company (the
"Agreement"). The Agreement provides for a tender offer for all of the Shares
(the "Tender Offer") pursuant to which Danaher will pay $34.00 per Share in
cash for each Share accepted. The Agreement further provides that following
completion of the Tender Offer, TK Acquisition Corporation will be merged into
the Company (the "Merger") and each outstanding Share (other than Shares
already owned by Danaher) will be converted into the right to receive $34.00
in cash.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. We are familiar with the Company having acted as its financial
advisor in connection with, and having participated in certain of the
negotiations leading to, the Agreement. We have also provided certain
investment banking services to Danaher from time to time and may do so in the
future. Goldman Sachs is a full service securities Firm and in the course of
its trading activities it may from time to time effect transactions and hold
positions in the securities of the Company and Danaher.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Danaher's Offer to Purchase, dated July 24, 1995; Annual Reports to
Stockholders and Annual Reports on Form 10-K of the Company for the five years
ended December 31, 1994; certain interim reports to
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Joslyn Corporation
August 20, 1995
Page Two
stockholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by its management. We
also have held discussions with members of the senior management of the Company
regarding its past and current business operations, financial condition and
future prospects. In addition, we have reviewed the reported price and trading
activity for the Shares, compared certain financial and stock market information
for the Company with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the electrical products industry specifically
and in other industries generally and performed such other studies and analyses
as we considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In addition, we have not made an independent
evaluation or appraisal of the assets and liabilities of the Company or any of
its subsidiaries and we have not been furnished with any such evaluation or
appraisal.
Based upon the foregoing and such other matters as we consider relevant, it
is our opinion that as of the date hereof the $34.00 per Share in cash to be
received by the holders of Shares (other than Danaher) in the Tender Offer and
the Merger pursuant to the Agreement is fair to such holders.
Very truly yours,
/s/ Goldman, Sachs & Co.
Goldman, Sachs & Co.
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