<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934
------------------------
GREENFIELD INDUSTRIES, INC.
(Name of Subject Company)
KENNAMETAL ACQUISITION CORP.
KENNAMETAL INC.
(Bidders)
------------------------
<TABLE>
<S> <C>
COMMON STOCK, PAR VALUE
$0.01 PER SHARE 395058 10 0
(Title of Class of Securities) (CUSIP Number of Class of Securities)
</TABLE>
------------------------
DAVID T. COFER, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
KENNAMETAL INC.
STATE ROUTE 981 SOUTH
P.O. BOX 231
LATROBE, PENNSYLVANIA 15650
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Bidders)
------------------------
Copies to:
LEWIS U. DAVIS, JR.
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
ONE OXFORD CENTRE
301 GRANT STREET, 20TH FLOOR
PITTSBURGH, PENNSYLVANIA
15219-1410
------------------------
<TABLE>
<CAPTION>
CALCULATION OF FILING FEE
================================================================================================
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
- ------------------------------------------------------------------------------------------------
$744,106,158.00 $148,821.23
================================================================================================
</TABLE>
* Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of 19,581,741 shares of common stock, par value
$0.01 per share (the "Shares"), at a price per Share of $38.00 in cash.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
of schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: None Filing Party: Not Applicable
Form or Registration
No.: Not Applicable Date Filed: Not Applicable
</TABLE>
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<PAGE> 2
CUSIP NO. 395058 10 0 14D-1
1 NAME OF REPORTING PERSONS: Kennametal Acquisition Corp.
S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSONS: 23-2928364
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ X ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(e) OR 2(f): N/A [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: State of Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON NONE
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES N/A [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A [ ]
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON CO
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2
<PAGE> 3
CUSIP NO. 395058 10 0 14D-1
1 NAME OF REPORTING PERSONS: Kennametal Inc.
S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSONS: 25-0900168
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ X ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(e) OR 2(f): N/A [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION: Commonwealth of Pennsylvania
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON NONE
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES N/A [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A [ ]
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10 TYPE OF REPORTING PERSON CO
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3
<PAGE> 4
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 is filed by Kennametal
Acquisition Corp., a Delaware corporation ("Purchaser"), and Kennametal Inc., a
Pennsylvania corporation ("Parent") and the owner of all of the outstanding
capital stock of Purchaser, in connection with the offer by Purchaser to
purchase all outstanding shares of common stock, par value $0.01 per Share,
including the associated preferred stock purchase rights issued pursuant to the
Restated Rights Agreement dated as of February 6, 1996, as amended on October
10, 1997, between the Company and First Chicago Trust Company of New York, as
Rights Agent (the "Shares"), of Greenfield Industries, Inc., a Delaware
corporation (the "Company"), at $38.00 per Share, net to the seller in cash,
without interest thereon, less any required withholding taxes, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated October
17, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal and
any amendments or supplements thereto, copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively (which collectively constitute the
"Offer").
The item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Greenfield Industries, Inc., a
Delaware corporation (the "Company"). The address of the Company's principal
executive offices is 2743 Perimeter Parkway, Building 100, Suite 100, Augusta,
Georgia 30909.
(b) The information set forth on the cover page and under "Introduction" in
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by Purchaser and Parent. The information set forth
on the cover page, under "Introduction," in Section 9 and in Schedule I of the
Offer to Purchase is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS, OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) The information set forth in Section 11 of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth under "Introduction" and in Sections 11 and
12 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) - (b) The information set forth in Section 10 of the Offer to Purchase
is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a) - (e) The information set forth in Section 12 of the Offer to Purchase
is incorporated herein by reference.
(f) - (g) The information set forth in Section 7 of the Offer to Purchase
is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) - (b) The information set forth under "Introduction" and in Sections 9,
11 and 12 of the Offer to Purchase is incorporated herein by reference.
4
<PAGE> 5
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
The information set forth under "Introduction" and in Sections 9, 11, 12
and 13 of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth under "Introduction" and in Section 16 of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth under "Introduction" and in Sections 11 and
12 of the Offer to Purchase is incorporated herein by reference.
(b) - (c), (e) The information set forth in Section 15 of the Offer to
Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C> <C>
(a) (1) Offer to Purchase, dated October 17, 1997.
(a) (2) Letter of Transmittal.
(a) (3) Notice of Guaranteed Delivery.
(a) (4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a) (5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a) (6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
(a) (7) Text of Joint Press Release, dated October 12, 1997, issued by Kennametal Inc. and
Greenfield Industries, Inc.
(a) (8) Advertisement, dated October 17, 1997.
(a) (9) Text of Press Release, dated October 17, 1997, issued by Kennametal Inc.
(b) (1) Commitment Letter, dated October 14, 1997.
(c) (1) Agreement and Plan of Merger, dated as of October 10, 1997, among Kennametal Inc.,
Kennametal Acquisition Corp. (formerly known as Palmer Acquisition Corp.) and
Greenfield Industries, Inc.
(c) (2) Confidentiality Letter dated August 13, 1997.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
5
<PAGE> 6
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: October 17, 1997
KENNAMETAL INC.
By: /s/ ROBERT L. MCGEEHAN
------------------------------------
Name: Robert L. McGeehan
Title: President and
Chief Executive Officer
KENNAMETAL ACQUISITION CORP.
By: /s/ ROBERT L. MCGEEHAN
------------------------------------
Name: Robert L. McGeehan
Title: President and Chief
Executive Officer
6
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
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<S> <C> <C> <C>
(a) (1) Offer to Purchase, dated October 17, 1997.
(a) (2) Letter of Transmittal.
(a) (3) Notice of Guaranteed Delivery.
(a) (4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a) (5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a) (6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a) (7) Text of Joint Press Release, dated October 12, 1997, issued by Kennametal Inc.
and Greenfield Industries, Inc.
(a) (8) Advertisement, dated October 17, 1997.
(a) (9) Text of Press Release, dated October 17, 1997, issued by Kennametal Inc.
(b) (1) Commitment Letter, dated October 14, 1997.
(c) (1) Agreement and Plan of Merger, dated as of October 10, 1997, among Kennametal
Inc., Kennametal Acquisition Corp. (formerly known as Palmer Acquisition
Corp.) and Greenfield Industries, Inc.
(c) (2) Confidentiality Letter dated August 13, 1997.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
<PAGE> 8
EXHIBIT (a)(1)
OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GREENFIELD INDUSTRIES, INC.
AT
$38.00 NET PER SHARE IN CASH
BY
KENNAMETAL ACQUISITION CORP.
a wholly-owned subsidiary of
KENNAMETAL INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME ON FRIDAY, NOVEMBER 14, 1997, UNLESS THE OFFER IS EXTENDED.
------------------------
THE BOARD OF DIRECTORS OF GREENFIELD INDUSTRIES, INC. (THE "COMPANY") (i) HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AT THE OFFER PRICE AND THE MERGER, (ii) DETERMINED
THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND THE STOCKHOLDERS AND (iii) RECOMMENDED THAT THE
STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES, INCLUDING THE ASSOCIATED
PREFERRED STOCK PURCHASE RIGHTS, TO PURCHASER AND APPROVE AND ADOPT THE MERGER
AGREEMENT AND THE MERGER, IF REQUIRED.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED
AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE SHARES REPRESENTING A MAJORITY OF
THE SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS OF THE COMPANY'S COMMON
STOCK ON THE DATE OF PURCHASE. THE OFFER ALSO IS SUBJECT TO CERTAIN OTHER
CONDITIONS, WHICH ARE SET FORTH IN THIS OFFER TO PURCHASE. SEE THE INTRODUCTION
AND SECTIONS 1 AND 14 OF THIS OFFER TO PURCHASE.
------------------------
IMPORTANT
Any stockholder wishing to tender all or a portion of such stockholder's
shares of common stock, par value $0.01 per share, including the associated
preferred stock purchase rights (the "Shares"), of the Company should either (1)
complete and sign the Letter of Transmittal (or a manually signed facsimile
thereof) in accordance with the instructions in the Letter of Transmittal, mail
or deliver it and any other required documents to the Depositary (as defined
herein) and either deliver the certificates for those Shares to the Depositary
along with the Letter of Transmittal or tender those Shares pursuant to the
procedures for book-entry transfer set forth in Section 3 hereof, or (2) request
such stockholder's broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for the stockholder. Any stockholder whose
Shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact that broker, dealer, commercial bank,
trust company or other nominee if the stockholder wishes to tender such Shares.
Any stockholder who wishes to tender Shares and whose certificates
representing those Shares are not immediately available or who cannot comply
with the procedure for book-entry transfer on a timely basis should tender those
Shares by following the procedures for guaranteed delivery set forth in Section
3 hereof.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other related materials may be directed to the
Information Agent or to brokers, dealers, commercial banks and trust companies.
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
October 17, 1997
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
INTRODUCTION............................................................................ 1
1. Terms of the Offer................................................................ 2
2. Acceptance for Payment and Payment for Shares..................................... 4
3. Procedure for Tendering Shares.................................................... 5
4. Withdrawal Rights................................................................. 8
5. Certain Federal Income Tax Consequences of the Offer and the Merger............... 9
6. Price Range of the Shares; Dividends on the Shares................................ 10
7. Effect of the Offer on the Market for the Shares; Nasdaq Quotation and Exchange
Act Registration and Margin Regulations........................................... 10
8. Certain Information Concerning the Company........................................ 11
9. Certain Information Concerning Purchaser and Parent............................... 14
10. Source and Amount of Funds........................................................ 15
11. Background of the Offer........................................................... 16
12. Purpose of the Offer and the Merger; Plans for the Company; the Merger Agreement;
the Confidentiality Agreement; Appraisal Rights; Exemption of Offer and Merger
from Effect of Rights Agreement................................................... 18
13. Dividends and Distributions....................................................... 29
14. Certain Conditions of the Offer................................................... 29
15. Certain Legal Matters............................................................. 31
16. Fees and Expenses................................................................. 33
17. Miscellaneous..................................................................... 33
SCHEDULE I.............................................................................. I-1
</TABLE>
i
<PAGE> 10
TO ALL HOLDERS OF COMMON STOCK OF
GREENFIELD INDUSTRIES, INC.:
INTRODUCTION
Kennametal Acquisition Corp., a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of Kennametal Inc., a Pennsylvania corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $0.01 per share, including the associated preferred stock purchase
rights (the "Rights") issued pursuant to the Restated Rights Agreement, dated as
of February 6, 1996, as amended October 10, 1997 (the "Rights Agreement") by and
between the Company and First Chicago Trust Company of New York, as Rights Agent
(the "Shares"), of Greenfield Industries, Inc., a Delaware corporation (the
"Company"), at a purchase price of $38.00 per Share (such amount, or any greater
amount per share paid pursuant to the Offer (as defined below), being
hereinafter referred to as the "Offer Price"), net to the seller in cash,
without interest thereon, less any required withholding taxes, upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of October 10, 1997 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the making of
the Offer by Purchaser and further provides that, as soon as practicable after
completion of the Offer and the satisfaction or waiver of the conditions set
forth therein, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company surviving the merger as a direct wholly-owned
subsidiary of Parent. Pursuant to the Merger, each outstanding Share (other than
(i) Shares owned by Parent, Purchaser or any direct or indirect wholly-owned
subsidiaries of the Company or Shares of Common Stock of the Company held in the
Company's treasury and (ii) Shares held by holders who shall have properly
exercised their appraisal rights under the Delaware General Corporation Law (the
"DGCL")) immediately prior to the Effective Time (as defined in the Merger
Agreement), will be converted into the right to receive the Offer Price, in
cash, without interest thereon, less any required withholding of taxes, upon the
surrender of certificates formerly representing such Shares (the "Merger
Consideration").
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") (I) HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AT THE OFFER PRICE AND THE MERGER, (II) DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND THE HOLDERS OF SHARES (THE "STOCKHOLDERS") AND (III) RECOMMENDED
THAT THE STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES TO PURCHASER AND
APPROVE AND ADOPT THE MERGER AGREEMENT AND THE MERGER, IF REQUIRED.
CREDIT SUISSE FIRST BOSTON CORPORATION, THE COMPANY'S FINANCIAL ADVISOR
("CSFB"), HAS DELIVERED TO THE BOARD ITS WRITTEN OPINION, DATED OCTOBER 10,
1997, TO THE EFFECT THAT AS OF SUCH DATE AND BASED UPON THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITS OF REVIEW AS SET FORTH IN SUCH OPINION, THE OFFER
PRICE AND THE MERGER CONSIDERATION TO BE RECEIVED BY THE STOCKHOLDERS PURSUANT
TO THE OFFER AND THE MERGER, ARE FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH
STOCKHOLDERS. A COPY OF THE WRITTEN OPINION OF CSFB, WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND CERTAIN LIMITATIONS ON THE SCOPE OF
REVIEW UNDERTAKEN BY CSFB, IS CONTAINED IN THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9")
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN
CONNECTION WITH THE OFFER, A COPY OF WHICH IS BEING FURNISHED TO THE
STOCKHOLDERS CONCURRENTLY WITH THIS OFFER TO PURCHASE.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS HEREINAFTER DEFINED)
SHARES REPRESENTING NOT LESS THAN A MAJORITY OF THE SHARES THEN OUTSTANDING ON A
FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION"). THE OFFER
ALSO IS SUBJECT TO CERTAIN OTHER CONDITIONS. THE PURCHASER RESERVES THE RIGHT
(SUBJECT TO OBTAINING THE EXPRESS WRITTEN CONSENT OF THE COMPANY AND THE
APPLICABLE RULES OF THE COMMISSION), WHICH IT PRESENTLY HAS NO INTENTION OF
EXERCISING, TO WAIVE OR REDUCE THE MINIMUM CONDITION. SEE SECTIONS 1 AND 14.
<PAGE> 11
THE OFFER IS NOT CONDITIONED ON OBTAINING FINANCING. SEE SECTION 10.
The Company has informed Purchaser that, as of October 10, 1997, 16,445,312
Shares were issued and outstanding and 1,208,875 Shares were reserved for
issuance principally pursuant to outstanding stock options and warrants granted
by the Company to employees and directors. In addition, approximately 2,787,879
Shares are issuable upon the conversion of the 6% Convertible Preferred
Securities, Term Income Deferrable Equity Securities of Greenfield Capital
Trust, a wholly-owned subsidiary of the Company (the "6% Convertible Preferred
Securities"). As a result, as of such date, the Minimum Condition would be
satisfied if Purchaser acquired 10,221,034 Shares, representing a majority of
the then outstanding, fully diluted Shares.
The 6% Convertible Preferred Securities are currently convertible into
Shares at a conversion price of $41.25 per Share. Under the terms of the 6%
Convertible Preferred Securities, however, the occurrence of a "Fundamental
Change" (as defined in the applicable documents governing such 6% Convertible
Preferred Securities) at the present time will result in a conversion price
adjustment to be determined by the Company. As a result of the Merger, a
"Non-Stock Fundamental Change" (as defined in the applicable documents governing
such 6% Convertible Preferred Securities) will occur, and all 6% Convertible
Preferred Securities will represent the right to receive such cash as would be
received by such holder of the 6% Convertible Preferred Securities if such
securities had been converted to Shares immediately prior to the Merger at an
adjusted conversion price, which is expected to be $36.05 per Share. Thus,
following the Merger, each $50.00 in liquidation value of the 6% Convertible
Preferred Securities will represent the right to receive an amount of cash which
is expected to be $52.70.
The consummation of the Merger is subject to the satisfaction or waiver of
a number of conditions, including, if required, the approval of the Merger by
the requisite vote or consent of the Stockholders. Under the DGCL, the
stockholder vote necessary to approve the Merger will be the affirmative vote of
at least a majority of the outstanding Shares, including Shares held by
Purchaser and its affiliates. If the Minimum Condition is satisfied and
Purchaser purchases at least a majority of the outstanding Shares in the Offer,
Purchaser will be able to effect the Merger without the affirmative vote of any
other Stockholder. Pursuant to the Merger Agreement, Parent and Purchaser have
agreed to vote the Shares acquired by them pursuant to the Offer in favor of the
Merger. If at least 90% of the outstanding Shares are purchased in the Offer,
the Purchaser will be able to effect a short-form merger under Section 253 of
the DGCL without a vote of Stockholders. See Section 12.
The Merger Agreement is more fully described in Section 12 below. Certain
federal income tax consequences of the sale of Shares pursuant to the Offer are
described in Section 5 below.
Tendering Stockholders who have Shares registered in their names will not
be charged brokerage fees or commissions or, except as set forth in Instruction
6 to the Letter of Transmittal, transfer taxes on the purchase of Shares
pursuant to the Offer or the Merger. Purchaser will pay all charges and expenses
of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), as the
dealer manager (the "Dealer Manager"), ChaseMellon Shareholder Services, L.L.C.,
as the depositary (the "Depositary"), and Georgeson & Company Inc., as the
information agent (the "Information Agent"), in connection with the Offer. See
Section 16.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for (and thereby
purchase) all the outstanding Shares validly tendered and not withdrawn in
accordance with Section 4 below prior to the Expiration Date. As used in the
Offer, the term "Expiration Date" means 12:00 midnight, New York City time, on
Friday, November 14, 1997, unless and until Purchaser, in accordance with the
terms of the Offer and the Merger Agreement, shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
means the latest time and date at which the Offer, as so extended, expires. As
2
<PAGE> 12
used in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1(c)(6) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition. The Offer also is subject to certain other conditions set
forth in Section 14 below. Pursuant to the terms of the Merger Agreement,
Purchaser expressly reserves the right (but will not be obligated) to waive any
or all of the conditions of the Offer (other than the Minimum Condition) without
the prior written consent of the Company. Pursuant to the Merger Agreement,
Purchaser may, without the consent of the Company, (i) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Commission or the staff thereof applicable to the Offer, (ii) extend the Offer
on one or more occasions for up to ten business days for each such extension
beyond the then scheduled expiration date (the initial scheduled expiration date
being 20 business days following the commencement of the Offer), if at the then
scheduled expiration date of the Offer any of the conditions to Purchaser's
obligation to accept for payment and pay for the Shares shall not be satisfied
or waived, until such time as such conditions are satisfied or waived (and, at
the request of the Company, Purchaser will, subject to Purchaser's right to
terminate the Merger Agreement, extend the Offer for additional periods, unless
the only conditions not satisfied or earlier waived on the then scheduled
expiration date are one or more of the Minimum Condition and certain other
conditions, provided that (A) if the only condition not satisfied is the Minimum
Condition, the satisfaction or waiver of all other conditions will have been
publicly disclosed at least five business days before termination of the Offer
and (B) if certain conditions have not been satisfied and the failure to so
satisfy such conditions can be remedied, the Offer will not be terminated unless
the failure is not remedied within 30 calendar days after Purchaser has
furnished the Company written notice of such failure) and (iii) extend the Offer
for an aggregate period of not more than five business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) above
if there have not been tendered a sufficient number of Shares so that the Merger
may be effected without a meeting of the Stockholders in accordance with Section
253 of the DGCL.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right, subject to applicable law, to extend the period of time during which
the Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. There can be
no assurance that Purchaser will extend the Offer. Purchaser also expressly
reserves the right, subject to applicable law (including applicable rules and
regulations of the Commission) and the terms of the Merger Agreement, at any
time or from time to time, to (i) delay acceptance for payment of, or payment
for, any Shares, regardless of whether the Shares were theretofore accepted for
payment, or to terminate the Offer and not accept for payment or pay for any
Shares not theretofore accepted for payment or paid for, upon the occurrence of
any of the conditions specified in Section 14 below by giving oral or written
notice of such delay in payment or termination to the Depositary, (ii) waive any
conditions (other than the Minimum Condition) and, subject to complying with the
terms of the Merger Agreement and the applicable rules and regulations of the
Commission, to waive the Minimum Condition, to accept for payment and pay for
all Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn, (iii) extend the Offer and, subject to the right of Stockholders to
withdraw Shares until the Expiration Date, to retain Shares that have been
tendered for the period or periods for which the Offer is extended or (iv)
subject to complying with the terms of the Merger Agreement and the applicable
rules and regulations of the Commission, to amend the Offer, by giving oral or
written notice to the Depositary. Any extension, delay in payment, termination
or amendment will be followed as promptly as practicable by public announcement,
the announcement in the case of an extension to be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which Purchaser may
choose to make any public announcement, Purchaser will have no obligation to
publish, advertise or otherwise communicate any such announcement, other than by
issuing a release to the Dow Jones News Service or as otherwise required by law.
The reservation by Purchaser of the right to delay acceptance for payment of, or
payment for, Shares is subject to the provisions of Rule 14e-1(c) under the
Exchange Act, which requires that Purchaser pay consideration offered or return
the Shares deposited by or on behalf of Stockholders promptly after the
termination or withdrawal of the Offer. The Purchaser shall not have any
obligation to pay interest on the purchase price for tendered Shares whether or
not the Purchaser exercises its right to extend the Offer.
3
<PAGE> 13
Pursuant to the Merger Agreement, Purchaser expressly reserves the right,
subject to compliance with the Exchange Act, to modify the terms of the Offer,
except that without the written consent of the Company, Purchaser shall not (i)
reduce the maximum number of Shares to be purchased in the Offer or the Minimum
Condition, (ii) reduce the price per Share payable in the Offer, (iii) change
the form of consideration to be paid in the Offer, (iv) impose additional
conditions to the Offer or modify the conditions in the Offer in a manner
adverse to the holders of Shares or (v) amend any other term of the Offer in a
manner adverse to the holders of the Shares except that Purchaser may, in its
sole discretion, without the consent of the Company, waive satisfaction of any
condition of the Offer (other than the Minimum Condition). Assuming the prior
satisfaction or waiver of the conditions to the Offer, Purchaser will accept for
payment, and pay for, in accordance with the terms of the Offer, Shares validly
tendered and not withdrawn pursuant to the Offer, as soon as practicable, after
the Expiration Date.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will promptly disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. If Purchaser
decides to increase or, subject to the consent of the Company, to decrease the
consideration in the Offer, to make a change in the percentage of Shares sought
or, subject to the consent of the Company, to change or waive the Minimum
Condition and, if at the time that notice of any such change or waiver is first
published, sent or given to Stockholders, the Offer is scheduled to expire at
any time earlier than the tenth business day after (and including) the date of
that notice, the Offer will be extended at least until the expiration of that
period of ten business days.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition, the expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder (the "HSR Act") and the other conditions set forth in
Section 14. Subject to the terms and conditions contained in the Merger
Agreement, Purchaser reserves the right (but shall not be obligated) to waive
any or all of such conditions.
The Company has provided Purchaser with its stockholder list and security
position listings for the purpose of disseminating the Offer to Stockholders.
This Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's stockholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Merger Agreement and
the Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), Purchaser will accept for
payment and will pay for all Shares that are validly tendered on or prior to the
Expiration Date, and not properly withdrawn in accordance with Section 4 below,
promptly after the later to occur of (i) the Expiration Date, (ii) the
expiration or termination of any applicable waiting periods under the HSR Act
and (iii) the satisfaction or waiver of the conditions to the Offer set forth in
Section 14. All questions as to the satisfaction of such terms and conditions
will be determined by Purchaser in its sole discretion. Subject to the
applicable rules of the Commission and the Merger Agreement, Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares in
order to comply, in whole or in part, with any other applicable law or
government regulation. Any such delays will be effected in compliance with Rule
14e-1(c) under the Exchange Act (relating to a bidder's obligation to pay for or
return tendered securities promptly after the termination or withdrawal of such
bidder's offer). See Section 14 below.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing (or a timely Book-Entry Confirmation (as defined in Section 3 below)
with respect to) such Shares, (ii) a Letter of Transmittal (or a manually signed
facsimile
4
<PAGE> 14
thereof), properly completed and duly executed with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below), and (iii) any other documents required by the Letter of
Transmittal. See Section 3 below.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility (as defined in Section 3 below) to, and received by, the
Depositary and forming part of a Book-Entry Confirmation, which states that (i)
such Book-Entry Transfer Facility has received an express acknowledgment from
the participant in such Book-Entry Transfer Facility tendering Shares which are
the subject of such Book-Entry Confirmation, (ii) such participant has received
and agrees to be bound by the terms of the Letter of Transmittal, and (iii)
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered to Purchaser and not
withdrawn, if and when Purchaser gives oral or written notice to the Depositary
of Purchaser's acceptance of such Shares. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering Stockholders for the purpose
of receiving payment from Purchaser and transmitting payment to tendering
Stockholders. Upon the deposit of funds with the Depositary for the purpose of
making payments to tendering Stockholders, Purchaser's obligation to make such
payment will be satisfied, and tendering Stockholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer.
If, for any reason, acceptance for payment of any Shares tendered pursuant
to the Offer is delayed, or Purchaser is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to Purchaser's rights
under the Offer (but subject to Rule 14e-1(c) under the Exchange Act), the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn, except to the extent that the tendering
Stockholders are entitled to exercise, and duly exercise, withdrawal rights as
described in Section 4 below. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE PURCHASE PRICE OF SHARES TO BE PAID BY PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the Offer
for any reason or if certificates are submitted for more Shares than are
tendered, certificates for Shares not purchased or tendered will be returned
pursuant to the instructions of the tendering Stockholder without expense to the
tendering Stockholder (or, in the case of Shares delivered by book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility
pursuant to the procedures set forth in Section 3 below, the Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility) as promptly as practicable following the expiration or termination of
the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay the increased
consideration for all Shares purchased pursuant to the Offer, whether or not
such Shares were tendered prior to the increase in consideration.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to Parent, or to one or more direct wholly-owned subsidiaries
of Parent, the right to purchase Shares tendered pursuant to the Offer, but any
such transfer or assignment will not relieve Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering Stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURE FOR TENDERING SHARES
Valid Tenders. For a Stockholder validly to tender pursuant to the Offer,
either (i) a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date and either (a) certificates evidencing
Shares must be received by the Depositary at any such address prior to the
Expiration Date or (b) the Shares must be delivered pursuant to the procedures
for book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the
5
<PAGE> 15
Depositary prior to the Expiration Date; or (ii) the tendering Stockholder must
comply with the guaranteed delivery procedures set forth below. No alternative,
conditional or contingent tenders will be accepted.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (each, a "Book-Entry Transfer Facility" and, collectively, the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that is
a participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account at a Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility, the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering Stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF CERTIFICATES EVIDENCING SHARES, THE LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY
BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDERS, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. DELIVERY OF THE LETTER OF
TRANSMITTAL AND ACCOMPANYING SHARES WILL BE DEEMED EFFECTIVE, AND RISK OF LOSS
WITH RESPECT TO SUCH LETTER OF TRANSMITTAL AND ACCOMPANYING CERTIFICATE(S) WILL
PASS, ONLY WHEN SUCH LETTER OF TRANSMITTAL AND ACCOMPANYING CERTIFICATE(S) ARE
OFFICIALLY RECEIVED BY THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal; or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program or
by any other "eligible guarantor institution," as such term is defined in Rule
17Ad-15 under the Exchange Act (each, an "Eligible Institution"). In all other
cases, all signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 1 of the Letter of Transmittal. If the
certificates representing Shares are registered in the name of a person other
than the signer of the Letter of Transmittal or if payment is to be made or
certificates for Shares not tendered or not accepted for payment are to be
returned to a person other than the registered holder of the certificates
surrendered, then the tendered certificates evidencing Shares must be endorsed
or accompanied by appropriate stock powers, in each case signed exactly as the
name or names of the registered holder or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as described
above and as provided in the Letter of Transmittal. See Instructions 1 and 5 of
the Letter of Transmittal.
Guaranteed Delivery. If a Stockholder desires to tender Shares pursuant to
the Offer and such Stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed
6
<PAGE> 16
on a timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such Stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary (as provided below) prior to the Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer (or a Book-Entry Confirmation with respect to all such tendered
Shares) together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other documents required by the Letter of Transmittal are
received by the Depositary within three New York Stock Exchange, Inc.
("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mailed to the Depositary and must include
a guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE THEREOF) IS TIMELY RECEIVED BY THE DEPOSITARY.
Notwithstanding any other provision of this Offer to Purchase, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, a Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and duly executed,
with any required signature guarantees and any other documents required by the
Letter of Transmittal (or in the case of a book-entry transfer, an Agent's
Message). Accordingly, tendering Stockholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations are
actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of Purchaser's counsel,
be unlawful. Purchaser also reserves the absolute right to waive any defect or
irregularity in any tender of any Shares of any particular Stockholder whether
or not similar defects or irregularities are waived in the case of other
Stockholders. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and its instructions) will be final
and binding on all parties. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
None of Purchaser, Parent, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification.
Backup Federal Income Tax Withholding. To prevent backup federal income
tax withholding of 31% of the payments made to Stockholders with respect to the
purchase price of Shares purchased pursuant to the Offer, a Stockholder must
provide the Depositary with his or her correct taxpayer identification number
and certify that he or she is not subject to backup federal income tax
withholding by completing the Substitute Form W-9 included in the Letter of
Transmittal. See Instruction 10 of the Letter of Transmittal. See Section 5
below.
Appointment as Proxy. By executing a Letter of Transmittal, a tendering
Stockholder irrevocably appoints designees of Purchaser as such Stockholder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
Stockholder's rights with respect to Shares tendered by such Stockholder and
accepted for payment by Purchaser and with respect to any and all other Shares
or other securities issued or issuable in respect of those Shares, on or after
the date of the Offer. All such
7
<PAGE> 17
powers of attorney and proxies will be considered coupled with an interest in
the tendered Shares. Such appointment will be effective when, and only to the
extent that, Purchaser accepts such purchased Shares for payment. Upon
acceptance for payment, all prior powers of attorney, proxies or consents given
by the Stockholder with respect to the Shares (and any other Shares or other
securities so issued in respect of such purchased Shares) will be revoked,
without further action, and no subsequent powers of attorney and proxies may be
given (and, if given, will not be deemed effective) by the Stockholder. The
designees of Purchaser will be empowered to exercise all voting and other rights
of the Stockholder with respect to such Shares (and any other Shares or
securities so issued in respect of such purchased Shares) as they in their sole
discretion may deem proper, including, without limitation, in respect of any
annual or special meeting of the Stockholders, or any adjournment or
postponement of any such meeting, or in connection with any action by written
consent in lieu of any such meeting or otherwise (including any such meeting or
action by written consent to approve the Merger). Purchaser reserves the
absolute right to require that, in order for Shares to be validly tendered,
immediately upon Purchaser's acceptance for payment of the Shares, Purchaser
must be able to exercise full voting and other rights of a record and beneficial
owner with respect to the Shares, including voting at any meeting of
Stockholders then scheduled. Such powers of attorney and proxies will be
irrevocable and will be granted in consideration of the acceptance for payment
of such Shares in accordance with the terms of the Offer.
THE TENDER OF SHARES PURSUANT TO ANY OF THE PROCEDURES DESCRIBED ABOVE WILL
CONSTITUTE THE TENDERING STOCKHOLDERS' ACCEPTANCE OF THE TERMS AND CONDITIONS OF
THE OFFER.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by
Purchaser pursuant to the Offer, may also be withdrawn at any time after
December 15, 1997. If Purchaser extends the Offer, is delayed in its acceptance
for payment of or payment for Shares or is unable to purchase or pay for Shares
for any reason then, without prejudice to the rights of Purchaser, tendered
Shares may be retained by the Depositary on behalf of Purchaser and may not be
withdrawn, except to the extent that tendering Stockholders are entitled to
withdrawal rights as set forth in this Section 4. The reservation by Purchaser
of the right to delay the acceptance or purchase of or payment for Shares is
subject to the provisions of Rule 14e-1(c) under the Exchange Act, which
requires Purchaser to pay the consideration offered or return the Shares
deposited by or on behalf of Stockholders promptly after the termination or
withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered the Shares. If certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the tendering Stockholder must also submit to the
Depositary the serial numbers shown on the particular certificates evidencing
the Shares to be withdrawn, and the signature on the notice of withdrawal must
be guaranteed by an Eligible Institution (except in the case of Shares tendered
for the account of an Eligible Institution). If Shares have been tendered
pursuant to the procedure for book-entry transfer set forth in Section 3 above,
the notice of withdrawal must also specify the name and number of the account at
the applicable Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding on all parties. No withdrawal of
Shares will be deemed to have been properly made until all defects and
irregularities have been cured or waived. None of Parent, Purchaser, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failing to give such notification.
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<PAGE> 18
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 above.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following discussion is a summary of the material federal income tax
consequences of the Offer and Merger to holders of Shares who hold the Shares as
capital assets. The discussion set forth below is for general information only
and may not apply to certain categories of holders of Shares subject to special
treatment under the Internal Revenue Code of 1986, as amended (the "Code"), such
as foreign holders and holders who acquired such Shares pursuant to the exercise
of employee stock options or otherwise as compensation. This summary is based
upon laws, regulations, rulings and decisions currently in effect, all of which
are subject to change, retroactively or prospectively, and to possibly differing
interpretations.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for federal income tax purposes to the Stockholders
receiving such cash. Each Stockholder will recognize gain or loss measured by
the difference between such Stockholder's adjusted tax basis for the Shares
owned by such Stockholder and the amount of cash received therefor.
Provided that the Shares are held as capital assets, the gain or loss
recognized in connection with the exchange of such Shares for cash contemplated
by the Offer and Merger will be capital in nature. If such Shares have been held
for more than eighteen months, the gain or loss will be long-term capital gain
or loss for federal income tax purposes, subject to a maximum federal tax rate
of 20% in the case of individual Stockholders. If such Shares have been held for
more than one year but not more than eighteen months, the gain will be mid-term
gain for federal income tax purposes, subject to a maximum federal tax rate of
28% in the case of individual Stockholders.
Under the Code, a Stockholder may be subject, under certain circumstances,
to backup withholding at a 31% rate with respect to the amount of cash received
pursuant to the Offer or Merger unless such Stockholder provides proof of an
applicable exemption or a correct taxpayer identification number, and otherwise
complies with applicable requirements of the backup withholding rules. Any
amounts withheld under the backup withholding rules are not an additional tax
and may be refunded or credited against the holder's federal income tax
liability, provided the required information is furnished to the Internal
Revenue Service.
THE ABOVE DISCUSSION MAY NOT APPLY TO CERTAIN CATEGORIES OF STOCKHOLDERS
SUBJECT TO SPECIAL TREATMENT UNDER THE CODE, SUCH AS FOREIGN STOCKHOLDERS AND
STOCKHOLDERS WHOSE SHARES WERE ACQUIRED PURSUANT TO THE EXERCISE OF AN EMPLOYEE
STOCK OPTION OR OTHERWISE AS COMPENSATION. STOCKHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE OFFER
AND THE MERGER, INCLUDING ANY FEDERAL, STATE, LOCAL OR OTHER TAX CONSEQUENCES
(INCLUDING ANY TAX RETURN FILING OR OTHER TAX REPORTING REQUIREMENTS) OF THE
OFFER AND THE MERGER.
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<PAGE> 19
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are quoted on the Nasdaq National Market under the symbol
"GFII." The following table sets forth, for each of the periods indicated, the
high and low sales price per Share as reported on the Nasdaq National Market.
The prices set forth below are as reported in published financial sources and do
not include retail mark-ups, markdowns or commissions:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1997
First Quarter........................................................ $33 1/2 $21 5/8
Second Quarter....................................................... 27 5/8 19 3/8
Third Quarter........................................................ 29 3/4 24 1/4
Fourth Quarter (through October 16).................................. 37 5/8 28 3/8
YEAR ENDED DECEMBER 31, 1996
First Quarter........................................................ $34 5/8 $28 1/4
Second Quarter....................................................... 40 1/4 33
Third Quarter........................................................ 34 22 1/2
Fourth Quarter....................................................... 31 3/4 24
YEAR ENDED DECEMBER 31, 1995
First Quarter........................................................ $28 1/4 $20 3/4
Second Quarter....................................................... 30 27 1/2
Third Quarter........................................................ 35 1/2 28 1/2
Fourth Quarter....................................................... 32 3/4 27 1/2
</TABLE>
On October 10, 1997, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the reported closing sale
price per Share as reported on the Nasdaq National Market was $32 3/16. On
October 16, 1997, the last full trading day prior to the date of this Offer to
Purchase, the reported closing sale price per Share on the Nasdaq National
Market was $37 1/2. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES.
The Company has paid cash dividends on the Shares during the periods set
forth above. The Merger Agreement provides that, without the prior written
consent of Parent, the Company will not declare, set aside for payment or pay
any dividend, or make any other actual, constructive or deemed distribution in
respect of any capital stock, including the Shares, or otherwise make any
payments to Stockholders in their capacity as such, other than the declaration
and payment of any regular quarterly cash dividend on the Shares and except for
dividends by a wholly-owned subsidiary of the Company. See Section 13.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ QUOTATION AND
EXCHANGE ACT REGISTRATION AND MARGIN REGULATIONS.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of Stockholders, which
could adversely affect the liquidity and market value of the remaining Shares
held by Stockholders other than Purchaser. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
the Shares or whether such reduction would cause future market prices to be
greater or less than the Offer Price.
Depending upon the number of shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq
National Market (the top tier market of The Nasdaq Stock Market), which requires
that an issuer have (i)(A) at least 750,000 publicly held shares, (B) at least
400 holders of round lots, (C) a market value of publicly held shares of at
least $5 million, (D) a minimum bid price per share of $1, and (E) net tangible
assets of at least $4 million or (ii)(A) at least 1.1 million publicly held
shares, (B) at least 400 holders of round lots, (C) a market value of publicly
held shares of at least $15 million, (D) a market capitalization of at least $50
million or total
10
<PAGE> 20
assets and total revenue of at least $50 million (each for the most recently
completed fiscal year or two of the last three most recently completed fiscal
years), (E) a minimum bid price per share of $5, and (F) at least four
registered and active market makers for the Shares. If these standards are not
met, the Shares might nevertheless continue to be included in The Nasdaq Stock
Market with quotations published in the Nasdaq "additional list" or in one of
the "local lists," but if (i) the number of round lot holders of the Shares were
to fall below 300, (ii) the number of publicly held Shares were to fall below
500,000, (iii) the market value of such shares were to fall below $1 million, or
(iv) there were not at least two registered and active market makers for the
Shares, the NASD's rules provide that the Shares would no longer be "qualified"
for Nasdaq reporting and Nasdaq would cease to provide any quotations. Shares
held directly or indirectly by directors, officers or beneficial owners of more
than 10% of the Shares outstanding are not considered as being publicly held for
this purpose. According to the Company, as of October 10, 1997, there were
approximately 128 holders of record of Shares and 16,445,312 Shares were
outstanding. If, as a result of the purchase of Shares pursuant to the Offer,
the Shares no longer meet the requirements of the NASD for continued inclusion
in the Nasdaq National Market or The Nasdaq Stock Market, as the case may be,
the market for Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for quotation through Nasdaq and the Shares are no longer included in The Nasdaq
Stock Market, it is possible that, prior to the Effective Time, the Shares would
continue to trade in the over-the-counter market and that price quotations would
be reported by other sources. The extent of the public market for the Shares and
the availability of such quotation would, however, depend upon the number of
holders of Shares remaining at such time, the interests in maintaining a market
in Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act, as described below, and other
factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would, subject to Section
15(d) of the Exchange Act, substantially reduce the information required to be
furnished by the Company to its Stockholders and to the Commission, and would
make certain provisions of the Exchange Act no longer applicable to the Company,
such as the short-swing profit recovery provisions of Section 16(b) of the
Exchange Act, the requirement of furnishing a proxy or information statement
pursuant to Section 14(a) or (c) of the Exchange Act in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders, and the requirements of Rule 13e-3 under the Exchange
Act with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, as amended, may be impaired or eliminated.
The Purchaser intends to seek to cause the Company to apply for delisting
of the Shares from the Nasdaq National Market and termination of registration of
the Shares under the Exchange Act as soon after the completion of the Offer as
the requirements for such delisting and/or termination are met. If registration
of the Shares is not terminated prior to the Merger, then the registration of
the Shares under the Exchange Act will be terminated following the consummation
of the Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is one of the four largest manufacturers of expendable cutting
tools and related products used primarily in industrial applications, and is the
largest North American producer of expendable rotary cutting tools, which
constitutes the majority of the Company's sales, and a leading supplier of
circuit board drills and
11
<PAGE> 21
certain oilfield equipment on a worldwide basis. The Company's products are sold
in six principal markets-- industrial, electronics, energy and construction,
engineered products, consumer and marine.
Selected Consolidated Financial Data. Set forth below is certain selected
consolidated financial data with respect to the Company and its consolidated
subsidiaries excerpted or derived from financial information contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 (the
"Company Form 10-K"), and the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997 (the "Company Form 10-Q"). More comprehensive
financial information is included in the Company Form 10-K, the Company Form
10-Q and other documents filed by the Company with the Commission. The financial
information that follows is qualified by reference to the Company Form 10-K, the
Company Form 10-Q and such other documents, including the financial statements
and related notes contained therein. The Company Form 10-K, the Company Form
10-Q and such other documents should be available for inspection and copies
thereof should be obtainable from the offices of the Commission in the manner
set forth below.
GREENFIELD INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, (UNAUDITED)
-------------------------------- --------------------
1996 1995 1994 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales............................. $510,094 $420,188 $271,787 $279,644 $262,719
Gross profit.......................... 152,891 132,030 90,813 83,250 82,255
Operating income...................... 59,947 61,078 39,284 32,505 35,933
Net income............................ 26,189 31,465 22,009 13,564 16,926
Earnings per common share:
Primary............................. 1.60 1.94 1.35 0.83 1.04
Fully diluted....................... 1.59 -- -- 0.82 1.02
Dividends per common share............ 0.17 0.13 0.09 0.10 0.08
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30,
1997 AT DECEMBER 31,
(UNAUDITED) 1996
----------- ---------------
<S> <C> <C>
BALANCE SHEET DATA
Total current assets............................................... $ 280,208 $ 245,613
Total assets....................................................... 629,419 562,644
Total current liabilities.......................................... 76,058 58,316
Total liabilities.................................................. 301,945 246,916
Company-obligated, mandatorily redeemable convertible preferred
securities of subsidiary Greenfield Capital Trust, holding solely
the Company's Convertible Junior Subordinated Debentures........... 115,000 115,000
Total stockholders' equity......................................... 212,474 200,728
</TABLE>
Other Information. The Company is subject to the information filing
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.
Information as of particular dates, concerning the Company's directors and
officers, their remuneration, 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 other matters is required to be described in
proxy statements distributed to the Company's Stockholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for
inspection and copying at prescribed rates at the regional offices of the
Commission located
12
<PAGE> 22
at Seven World Trade Center, 13th Floor, New York, New York 10048, and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
this material may also be obtained by mail, upon payment of the Commission's
customary fees, from the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a site on the World
Wide Web at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. Such information should also be on file at the Nasdaq
National Market, 1735 K Street, N.W., Washington, D.C. 20006.
Except as otherwise provided in this Offer to Purchase, the information
concerning the Company contained in this Offer to Purchase, including financial
information, has been taken from or based upon records on file with the
Commission and other publicly available information. Although neither Purchaser
nor Parent has any knowledge that any such information is untrue, neither
Purchaser nor Parent takes any responsibility for the accuracy or completeness
of such information or for any failure by the Company to disclose events that
may have occurred or may affect the significance or accuracy of such
information.
Certain Projected Financial Information. In the course of its discussions
with Parent described in Section 11, the Company provided Parent and its
financial advisors with certain business and financial information which Parent
believes was not publicly available. Such information included, among other
things, certain financial projections for 1997 and 1998 (the "Company
Projections") prepared by management of the Company as a long-range plan. The
Company Projections do not take into account any of the potential effects of the
transactions contemplated by the Offer and the Merger. The Company does not as a
matter of course publicly disclose internal projections as to future revenues,
earnings or financial condition.
The following is a summary of the Company projections. The Company
Projections reflect net sales ranging from $568.6 million to $576.6 million for
calendar year 1997 and $636.0 million for calendar year 1998, earnings before
interest and taxes ranging from $62.6 million to $70 million for calendar year
1997 and $91.6 million for calendar year 1998, net income ranging from $26
million to $30 million for calendar year 1997 and $43.8 million for calendar
year 1998, primary earnings per share ranging from $1.58 to $1.83 for calendar
year 1997 and $2.67 for calendar year 1998, and fully diluted earnings per share
ranging from $1.56 to $1.78 for calendar year 1997 and $2.50 for calendar year
1998. The Company informed Parent that the Company Projections for calendar year
1997 do not give effect to certain anticipated restructuring and rearrangement
plans which would require a one-time restructuring charge ranging from $10.3
million to $12.3 million and periodic rearrangement expenses of approximately
$2.0 million.
THE COMPANY PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE
OR COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDE
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS. THE
COMPANY PROJECTIONS ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE SUCH
INFORMATION WAS PROVIDED TO PARENT. NONE OF PARENT, PURCHASER OR ANY PARTY TO
WHOM THE COMPANY PROJECTIONS WERE PROVIDED ASSUMES ANY RESPONSIBILITY FOR THE
ACCURACY OF SUCH INFORMATION. WHILE PRESENTED WITH NUMERICAL SPECIFICITY, THESE
COMPANY PROJECTIONS ARE BASED UPON A VARIETY OF ASSUMPTIONS RELATING TO THE
BUSINESSES OF THE COMPANY WHICH, THOUGH PARENT HAS BEEN ADVISED WERE CONSIDERED
REASONABLE BY THE COMPANY AT THE TIME THEY WERE FURNISHED TO PARENT, MAY NOT BE
REALIZED AND ARE SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF
WHICH ARE BEYOND THE CONTROL OF THE COMPANY. THERE CAN BE NO ASSURANCE THAT THE
COMPANY PROJECTIONS WILL BE REALIZED, AND ACTUAL RESULTS MAY VARY MATERIALLY
FROM THOSE SHOWN. THE COMPANY PROJECTIONS HAVE NOT BEEN EXAMINED OR COMPILED BY
THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS. FOR THESE REASONS, AS WELL AS THE
BASES ON WHICH SUCH PROJECTIONS WERE COMPILED, THERE CAN BE NO ASSURANCE THAT
SUCH PROJECTIONS WILL BE REALIZED, OR THAT ACTUAL RESULTS WILL NOT BE HIGHER OR
LOWER THAN THOSE ESTIMATED. THE INCLUSION OF SUCH PROJECTIONS HEREIN SHOULD NOT
BE REGARDED AS AN INDICATION THAT PARENT,
13
<PAGE> 23
PURCHASER OR ANY OTHER PARTY WHO RECEIVED SUCH INFORMATION CONSIDERS IT AN
ACCURATE PREDICTION OF FUTURE EVENTS.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, a Delaware corporation, was organized to acquire all of the
outstanding Shares pursuant to the Offer and the Merger and has not conducted
any unrelated activities since its organization. All of the outstanding capital
stock of Purchaser is owned directly by Parent. The address of the principal
executive offices of Purchaser and Parent is State Route 981 South, P.O. Box
231, Latrobe, Pennsylvania 15650.
Parent was incorporated in Pennsylvania in 1943. Parent and its
subsidiaries manufacture, purchase and distribute a broad range of tools,
tooling systems, supplies and services for the metalworking, mining and highway
construction industries. Parent specializes in developing and manufacturing
metalworking tools and wear-resistant parts using a specialized type of powder
metallurgy. While many of Parent's products are similar in composition, sales
are classified into three markets: metalworking, industrial supply, and mining
and construction.
Set forth below is certain selected consolidated financial information with
respect to Parent and its consolidated subsidiaries excerpted from Parent's
Annual Report on Form 10-K for the fiscal year ended June 30, 1997 (the "Parent
Form 10-K"). More comprehensive financial information is included in such
reports and other documents filed by Parent with the Commission. The following
summary is qualified in its entirety by reference to such reports and other
documents and all financial information (including any related notes) contained
therein which are incorporated herein by reference. Such reports and other
documents are available for inspection and copies are obtainable in the manner
set forth in Section 8 above with respect to information about Parent in Section
9.
KENNAMETAL INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------------------
1997 1996 1995
---------- ---------- --------
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net sales............................................... $1,156,343 $1,079,963 $983,873
Gross profit............................................ 487,928 454,490 423,006
Operating income........................................ 127,025 121,851 126,973
Net income.............................................. 72,032 69,732 68,294
Earnings per share...................................... 2.71 2.62 2.58
Dividends per share..................................... 0.66 0.60 0.60
<CAPTION>
AT JUNE 30,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
BALANCE SHEET DATA
Total current assets.................................... $457,879 $436,464
Total assets............................................ 869,309 799,491
Total current liabilities............................... 282,002 218,813
Total liabilities....................................... 400,562 348,042
Total shareholders' equity.............................. 459,068 438,949
</TABLE>
Parent is subject to the information filing 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. Information, as of particular dates,
concerning Parent's directors and officers, their remuneration, stock options
granted to them, the principal holders of Parent's securities, any material
interests of such persons in transactions with Parent and other matters is
required to be described in proxy statements distributed to Parent's
shareholders and filed with the Commission. These reports, proxy
14
<PAGE> 24
statements and other information are available for inspection and copies are
obtainable in the manner set forth in Section 8 above except that, with respect
to Parent, such information should also be on file at the New York Stock
Exchange, Inc., 200 Broad Street, New York, New York 10005.
Except as described in this Offer to Purchase, during the last five years,
none of Purchaser, Parent or, to the best knowledge of Purchaser or Parent, any
of the persons listed in Schedule I hereto (i) has been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) or (ii) was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws. The name, business address, present principal occupation or employment,
five-year employment history and citizenship of each director and executive
officer of Purchaser and Parent are set forth in Schedule I.
None of Purchaser or Parent or, to the best knowledge of Purchaser or
Parent, any of the persons listed in Schedule I or any associate or
majority-owned subsidiary of any such person, beneficially owns or has a right
to acquire any equity security of the Company and except as described in this
Offer to Purchase, none of Purchaser, Parent or, to the best knowledge of
Purchaser or Parent, any of the other persons referred to above, or any of the
respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the Company
during the past 60 days.
Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent or, to the best knowledge of Purchaser or Parent, any of the persons
listed in Schedule I has any contract, arrangement, understanding or
relationship (whether or not legally enforceable) with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies; (ii) there have been no contacts, negotiations or
transactions between Purchaser, Parent or any of their respective subsidiaries
or, to the best knowledge of Purchaser or Parent, any of the persons listed on
Schedule I on the one hand, and the Company or any of its directors, officers or
affiliates, on the other hand, that are required to be disclosed pursuant to the
rules and regulations of the Commission.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required to purchase all Shares on a fully
diluted basis is approximately $780 million. Purchaser estimates that the total
amount of funds required to consummate the Offer and Merger, to refinance
certain of the Company's and Parent's existing indebtedness, and to pay related
fees and expenses will be approximately $1.1 billion. Although the Offer is not
conditioned upon any financing arrangements, Parent's current revolving credit
facility only provides for borrowings not to exceed $150 million in the
aggregate.
Parent intends to obtain the funds necessary for the foregoing and for
Parent's, the Company's and their respective subsidiaries' working capital and
capital expenditure requirements and general corporate purposes through
borrowings from several financial institutions pursuant to a new credit facility
to be entered into between the Parent and such financial institutions.
BankBoston, N.A., BancBoston Securities, Inc., Deutsche Bank AG, New York Branch
and/or Cayman Islands Branch, Mellon Bank, N.A. and PNC Bank, National
Association (collectively the "Arrangers") entered into a Commitment Letter
dated October 14, 1997 (the "Commitment Letter"), pursuant to which the Parent
would enter into a new credit facility providing for up to $1.4 billion in the
aggregate in the form of (i) a revolving credit facility of up to $1.4 billion
initially (the "Revolving Credit Facility") with, on the effective date of the
Merger, an automatic reduction of the Revolving Credit Facility by an amount
(the "Term Loan Aggregate Amount") equal to $500 million (or, if less, the
aggregate amount of the Revolving Credit Facility on such date) and (ii) a term
loan facility of up to the Term Loan Aggregate Amount (the "Term Loan Facility,"
and together with the Revolving Credit Facility, the "Facilities") with a single
draw available on the effective date of the Merger. The Facilities will mature
upon the earlier to occur of (i) 150 days after Parent has consummated the Offer
or (ii) termination or abandonment of the acquisition of the Company, except
that, in the event that the effective date of the Merger has occured on or
before the maturity date, the maturity date will be automatically extended to
the twentieth Quarterly Amortization Date (as defined therein).
15
<PAGE> 25
Proceeds from borrowings under the Facilities will be used: (i) to finance
the acquisition of the Company and to pay transaction costs associated
therewith, (ii) to refinance certain indebtedness of the Company, Parent and
their respective subsidiaries, (iii) to pay fees and expenses associated with
the Facilities (and, in the case of the Term Loan Facility, to repay advances
under the Revolving Credit Facility that were used for the foregoing purposes)
and (iv) to meet working capital requirements, capital expenditures, and for
general corporate purposes. Loans will principally bear interest during any
particular interest period at the election of Parent at (i) LIBOR (as determined
by the Mellon Bank, N.A., the "Administrative Agent," in accordance with its
customary practices) plus margin or (ii) the Adjusted Base Rate (the greater of
the Federal Funds rate plus 0.50% or the announced prime rate of the
Administrative Agent) plus margin, the margins of which will vary from 0% to
0.50% for Adjusted Base Rate loans and 0.50% to 1.625% for LIBOR loans depending
on Parent's then applicable total debt-to-EBITDA ratio, and whether Parent has
obtained an investment grade rating on its senior unsecured long-term debt or
issued at least $350 million in common equity or equity equivalents. Interest
will be payable monthly in arrears for Adjusted Base Rate loans at the end of
each applicable interest period. In addition to such interest payments, Parent
will be required to pay an ongoing commitment fee on the unused portion of the
Commitment, the amount of which will vary from 0.10% to 0.35% depending on the
factors which determine the margin. Accrued commitment fees will be payable
monthly in arrears.
The Facilities will be secured by (i) a first priority security interest in
(A) 100% of the stock of all direct and (if required by the Arrangers) indirect
domestic subsidiaries of Parent, including Purchaser and after the Merger, the
Company, (B) entire interest held by Parent in the Capital Stock of JLK Direct
Distribution Inc. ("JLK") commencing December 1997 (excluding immaterial
domestic subsidiaries satisfactory to the Arrangers) and (C) 65% of the stock of
direct and (if required by the Arrangers) indirect foreign subsidiaries of
Parent including, without limitation, 65% of the capital stock of Kennametal
Hertel AG (but excluding immaterial foreign subsidiaries satisfactory to the
Arrangers) and (ii) the guaranty of each direct and (if required by the
Arrangers) indirect domestic subsidiary of Parent, other than (A) JLK, (B)
immaterial domestic subsidiaries of Parent satisfactory to the Arrangers and (C)
the Company and its subsidiaries prior to the effective date of the Merger.
Parent will also provide a negative pledge covenant and double negative pledge
covenant on all of its properties as well as all properties of its direct and
indirect domestic and foreign subsidiaries, subject to certain exceptions. The
foregoing security interests will be released promptly following a request by
Parent in the event that no Event of Default (as defined therein) or unmatured
Event of Default is continuing and either (i) Parent's senior unsecured
long-term debt is rated investment grade by S&P and by Moody's or (ii) at the
end of each of two consecutive fiscal quarters, Parent's Total Leverage Ratio
(as defined therein) is less than 3.0.
The entering into of the new Facilities is subject to various conditions,
including the negotiation and execution of a credit agreement and other
documentation satisfactory to the Arrangers, satisfactory capitalization of
Parent, the Company and their subsidiaries, absence of a material adverse
change, accuracy of representations and warranties and acquisition of a
sufficient number of Shares to assure approval of the Merger. This description
of the Commitment Letter is not intended to be a complete description of the
terms and conditions thereof and is qualified by reference to the full text
thereof which is incorporated herein by reference and copies of which have been
filed as an exhibit to the Tender Offer Statement on Schedule 14D-1 filed by
Parent and the Purchaser with the Commission in connection with the Offer (the
"Schedule 14D-1"). All capitalized terms which are used in this Section and not
otherwise defined shall have the meanings ascribed to them in the Commitment
Letter. The Commitment Letter may be examined, and copies may be obtained, as
set forth in Section 9.
Although the Parent is considering refinancing approximately $400 million
which it would borrow under the Facilities with a subsequent offering of equity
and equity derivative securities, no final decision has been made. Such decision
when made will be based on Parent's review from time to time of the advisability
of particular actions, as well as on prevailing interest rates and financial and
other economic conditions. Any such offering will be made only by means of a
prospectus.
11. BACKGROUND OF THE OFFER
Parent had previously identified the Company as a potential acquisition
candidate. In April 1997, Parent's Vice President--Corporate Business
Development met with the Company's Vice President, Corporate Development, and
raised Parent's interest in a possible acquisition of the Company. In June 1997,
the Company's
16
<PAGE> 26
President and Chief Executive Officer, Paul W. Jones, met with Parent's
President and Chief Executive Officer, Robert L. McGeehan, and discussed
Parent's interest in a possible acquisition of the Company.
Thereafter, several discussions occurred between managements of Parent and
the Company, including a meeting in July 1997 between Mr. Jones, Mr. McGeehan
and Parent's Chairman of the Board, William R. Newlin, in which Parent
reiterated its interest in a possible acquisition of the Company. Parent
indicated that it was willing to structure an acquisition on an all-cash basis,
and requested access to non-public information concerning the Company. Mr.
McGeehan and members of managements of Parent and the Company also engaged in
negotiations of the terms for a confidentiality agreement and, on or about
August 13, 1997, a confidentiality agreement was executed by Parent and the
Company.
On August 19 and 20, 1997, members of Parent's management met with members
of the Company's management to obtain and discuss certain non-public information
regarding the Company. Parent subsequently requested that it be granted access
to additional non-public information as well as to the Company's operating
facilities as part of Parent's acquisition due diligence. Several discussions
occurred between certain members of Parent's management and certain members of
the Company's management regarding this request. On September 8, 1997, Mr.
Newlin and Mr. McGeehan met with Mr. Jones, were informed by the Company that
other companies were also interested in acquiring the Company, discussed
Parent's request for additional due diligence and discussed the terms for an
acquisition of the Company by Parent.
On September 14, 1997, Parent delivered to the Company a written
preliminary indication of interest to acquire the Company for $37 per share in
cash subject to certain conditions, including Parent's completion to its
satisfaction of due diligence, along with a proposed form of merger agreement.
From September 16, 1997, through September 21, 1997, various discussions
occurred between certain members of Parent's management and Parent's counsel,
and certain members of the Company's management and representatives of CSFB
regarding Parent's indication of interest and its due diligence request. On
September 19, 1997, Mr. Newlin and Mr. McGeehan met with Mr. Jones and a
representative of CSFB to discuss further this matter and they were informed
that Parent would be permitted to meet with various members of the Company's
management and to engage in additional due diligence at the Company's
headquarters and at certain of the Company's operating facilities.
Following additional discussions among certain members of Parent's
management and counsel with certain members of the Company's management and
representatives of CSFB, various members of Parent's management, counsel,
independent public accountants, and Merrill Lynch, Parent's financial advisor,
obtained access to additional non-public information and met with various
members of management of the Company at the Company's headquarters, selected
operating facilities and elsewhere from September 23, 1997, through September
30, 1997. Following this period, at various times, certain members of Parent's
management and Parent's counsel requested and received additional non-public
information regarding the Company. In addition, during this period Parent's
counsel and the Company's counsel engaged in negotiations concerning the form of
a merger agreement.
On October 6, 1997, Parent was informed that representatives of CSFB would
be receiving final acquisition proposals from interested parties on October 8,
1997. During the afternoon of October 8, 1997, Mr. Newlin contacted a
representative of CSFB and proposed that Parent acquire the Company for $36 per
share in cash, subject to resolution of certain material terms in the draft
merger agreement, and Mr. McGeehan similarly informed Mr. Jones of Parent's
proposal. Thereafter, a representative of CSFB informed representatives of
Merrill Lynch that Parent's proposal was inadequate. On the evening of October
8, 1997, a representative of CSFB contacted Mr. Newlin and discussed Parent's
proposal. The representative of CSFB informed Mr. Newlin that Parent's proposal
was inadequate and engaged in negotiations with Mr. Newlin regarding pricing for
the acquisition of the Company. On the morning of October 9, 1997, Mr. Newlin
called the representative of CSFB and increased Parent's proposal to acquire the
Company to $38 per share in cash subject to resolution of certain material terms
in the draft merger agreement. Following this discussion, Parent's counsel
engaged in additional negotiations with the Company's counsel which were
concluded after the close of business on October 10, 1997, at which time the
Merger Agreement was executed.
17
<PAGE> 27
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; THE CONFIDENTIALITY AGREEMENT; APPRAISAL RIGHTS; EXEMPTION OF
OFFER AND MERGER FROM EFFECT OF RIGHTS AGREEMENT
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer is for Parent to acquire control of, and the
entire equity interest in, the Company. The purpose of the Merger is for Parent
to acquire all Shares not purchased pursuant to the Offer. Upon consummation of
the Merger, the Company will become a wholly-owned subsidiary of Parent.
Under the DGCL, the approval of the Board and the affirmative vote of the
holders of a majority of the outstanding Shares is required to approve and adopt
the Merger Agreement and the transactions contemplated thereby, including the
Merger. The Board has unanimously approved and adopted the Merger Agreement and
the transactions contemplated thereby. Thus, the only remaining required
corporate action of the Company is the approval and adoption of the Merger
Agreement and the transactions contemplated thereby by the affirmative vote of
the holders of a majority of the Shares outstanding. ACCORDINGLY, IF THE MINIMUM
CONDITION IS SATISFIED, PURCHASER WILL HAVE SUFFICIENT VOTING POWER TO CAUSE THE
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER.
However, the DGCL also provides that if a parent company owns at least 90%
of each class of stock of a subsidiary, the parent company can effect a
short-form merger with that subsidiary without the action of the other
stockholders of the subsidiary. Accordingly, if as a result of the Offer or
otherwise, the Purchaser acquires or controls the voting power of at least 90%
of the outstanding Shares, the Purchaser could, and intends to, effect the
Merger without prior notice to, or any action by, any other Stockholder of the
Company.
In the Merger Agreement, the Company has agreed, if necessary, to convene a
meeting of Stockholders as promptly as practicable following the consummation of
the Offer for the purpose of considering and taking action on the Merger
Agreement and the transactions contemplated thereby. Parent and Purchaser have
agreed that all Shares owned by them will be voted in favor of the Merger
Agreement and the transactions contemplated thereby.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE STOCKHOLDERS. ANY SUCH SOLICITATION WHICH THE COMPANY, PARENT OR PURCHASER
MIGHT MAKE WOULD BE MADE ONLY PURSUANT TO SEPARATE PROXY OR SOLICITATION
MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT,
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
PLANS FOR THE COMPANY
Upon consummation of the Merger, Parent intends to continue to review the
combined company and its assets, businesses, operations, properties, policies,
corporate structure, capitalization and management and consider if any changes
would be desirable in light of the circumstances then existing. Upon
consummation of the Merger, Parent also intends to continue to identify
synergies and cost savings.
Except as noted in this Offer to Purchase, neither Parent nor Purchaser has
any present plans or proposals that would result in an extraordinary corporate
transaction, such as a reorganization, liquidation, or sale or transfer of a
material amount of assets, involving the Company or any of its subsidiaries, or
any material changes in the Company's corporate structure, its Board or
business.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified by reference to the full text of the Merger
Agreement, which is incorporated by reference and a copy of which has been filed
with the Commission as an exhibit to the Schedule 14D-1. Capitalized terms used
and not defined herein have the respective meanings assigned to them in the
Merger Agreement. The Merger Agreement may be examined, and copies obtained, as
set forth in Section 8.
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The Offer. The Merger Agreement provides that Purchaser will commence the
Offer no later than five business days after the date of the initial public
announcement of the Merger. Purchaser has agreed to accept for payment Shares
which have been validly tendered and not withdrawn pursuant to the Offer at the
earliest time following the Expiration Date (at which time all conditions to the
Offer (the "Offer Conditions") will have been satisfied or waived by the
Purchaser). The obligation of Purchaser to accept for payment, purchase and pay
for Shares is subject only to such Offer Conditions and the Minimum Condition
(any of which may be waived in whole or in part by the Purchaser except for the
Minimum Condition), without the prior written consent of the Company. Pursuant
to the Merger Agreement, Purchaser reserved the right, subject to compliance
with the Exchange Act, to modify the terms and conditions of the Offer,
provided, however, that without the written consent of the Company, Purchaser
may not (i) decrease the Per Share Amount payable in the Offer (i.e., the Offer
Price), (ii) change the form of consideration to be paid in the Offer, (iii)
reduce the maximum number of Shares to be purchased in the Offer or the Minimum
Condition, (iv) impose conditions to the Offer in addition to the Offer
Conditions or which modify the Offer Conditions in a manner adverse to the
holders of the Shares, or (v) amend any other term of the Offer in a manner
adverse to the holders of Shares provided, however, that nothing contained in
the Merger Agreement prohibits Purchaser from waiving satisfaction of any
condition of the Offer other than the Minimum Condition. Purchaser may, without
the consent of the Company, (i) extend the Offer on one or more occasions for up
to ten business days for each such extension beyond the then scheduled
expiration date of the Offer (the initial scheduled expiration date being 20
business days following the commencement of the Offer), if at the scheduled
expiration date of the Offer any of the conditions to Purchaser's obligation to
accept for payment and pay for the Shares shall not be satisfied or waived,
until such time as such conditions are satisfied or waived and, at the Company's
request and subject to Purchaser's right to terminate the Merger Agreement as
provided therein, Purchaser will extend the Offer for additional periods, unless
the only conditions not satisfied or waived on the scheduled expiration date are
one or more of the Minimum Condition and certain of the Offer Conditions,
provided that (A) if the only condition not satisfied is the Minimum Condition,
the satisfaction or waiver of all other conditions will have been publicly
disclosed at least five business days before termination of the Offer and (B) if
certain conditions have not been satisfied and the failure to so satisfy can be
remedied, the Offer will not be terminated unless the failure is not remedied
within 30 calendar days after Purchaser has furnished the Company written notice
of such failure, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Commission or the staff thereof
applicable to the Offer and (iii) extend the Offer for an aggregate period of
not more than five business days beyond the latest expiration date permitted
under clause (i) or (ii) above if a sufficient number of Shares have not been
tendered so that the Merger could be effected without a meeting of the Company's
Stockholders in accordance with Section 253 of the DGCL.
Board Representation. The Merger Agreement provides that, promptly upon
Purchaser's acquisition of a majority of the outstanding Shares pursuant to the
Offer, either (i) a majority of the members of the Board will resign, and the
remaining members of the Board will fill such vacancies with persons designated
by the Purchaser or (ii) the size of the Board will be expanded and the
vacancies will be filled with persons designated by the Purchaser such that
Purchaser's designees will constitute a majority of the members of the Board. In
either case, at all times thereafter through the Effective Time a majority of
the members of the Board will be persons designated by the Purchaser.
The Company's obligation to appoint designees to the Board will be subject
to Section 14(f) of the Exchange Act ("Section 14(f)") and Rule 14f-1 ("Rule
14f-1") promulgated thereunder and the Company has agreed to take all actions
required by Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under the Merger Agreement and will include in its Schedule 14D-9 such
information with respect to the Company and its officers and directors as
Section 14(f) and Rule 14f-1 require to fulfill such obligations. Parent and
Purchaser have agreed to supply information to the Company and will be solely
responsible for any information with respect to either of them and their
respective nominees, officers, directors and affiliates as required by Section
14(f) and Rule 14f-1.
Following election of Purchaser's designees to the Board prior to the
Effective Time, any amendment of the Merger Agreement, the amended and restated
certificate 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
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performance of any of the obligations or other acts of Parent or Purchaser under
the Merger Agreement, or any waiver of any of the Company's rights thereunder,
will require the approval of a majority of the directors of the Company then in
office who are directors as of the date of the Merger Agreement or persons
designated by such directors who were neither designated by Purchaser nor
employees of the Company ("Continuing Directors"). Prior to the Effective Time,
the Company and Purchaser agree to use all reasonable efforts to ensure that the
Board at all times includes at least three Continuing Directors. At the
Effective Time, the directors of the Purchaser on such date will be the
directors of the Surviving Corporation.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof and in accordance with DGCL, at the Effective Time,
the Purchaser will be merged with and into the Company, the separate corporate
existence of Purchaser will cease and the Company will be the surviving
corporation (the "Surviving Corporation").
Consideration to be Paid in the Merger. The Merger Agreement provides
that, at the Effective Time, by virtue of the Merger and without any action on
the part of the Stockholders or the holders of any shares of capital stock of
Purchaser, (i) each Share (excluding Shares owned by the Company's direct or
indirect wholly-owned Subsidiaries or Company Common Stock held in treasury or
by Parent Companies, and the Dissenting Stockholders) will be canceled and
converted into the right to receive the Merger Consideration, without interest
thereon, less any required withholding of taxes, upon the surrender of the
certificate formerly representing the Share, (ii) each Share issued and
outstanding and owned by any of the Parent Companies or any of the Company's
direct or indirect wholly-owned Subsidiaries or authorized but unissued shares
of Company Common Stock held in the treasury of the Company immediately prior to
the Effective Time of the Merger will cease to be outstanding, be canceled and
retired without payment of any consideration therefor and cease to exist and
(iii) each share of common stock of Purchaser that is issued and outstanding
immediately prior to the Effective Time will be converted into one validly
issued, fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
Dissenting Shares. To the extent required by the DGCL, Shares that are
issued and outstanding immediately prior to the Effective Time and that are held
by Stockholders who dissent from the Merger and require appraisal of such Shares
in accordance with Section 262 of the DGCL (or any successor provision thereof)
("Dissenting Shares"), will not be converted into the right to receive the
Merger Consideration. The Dissenting Shares, however, will become entitled to
receive such consideration as may be determined to be due such Dissenting
Stockholder under the DGCL; provided however, that if any Dissenting Stockholder
subsequently withdraws his or her demand for appraisal or fails to establish or
perfect or otherwise loses such holder's appraisal rights as provided by
applicable law, then such Dissenting Stockholder will forfeit the right to
appraisal of such Shares and such Shares will thereupon be deemed to have been
converted, as of the Effective Time, into the right to receive the Merger
Consideration, without interest. The Company has agreed to promptly notify
Parent and Purchaser of any written demands or withdrawals of demands for
appraisal and any other related instruments received by the Company, as well as
the opportunity to direct all negotiations and proceedings with respect to any
such demands for appraisal. The Company has agreed that it will not, except with
the prior written consent of Parent, voluntarily make any payment with respect
to any demands for appraisal or settle, offer or otherwise negotiate to settle
any demand.
Company Stock Options. The Merger Agreement provides that each warrant to
purchase shares of the Company's common stock and each option granted to a
Company employee, consultant or director pursuant to the Company's Amended and
Restated Employee Stock Option Plan, as amended, the Amended and Restated 1993
Directors Non-Qualified Stock Option Plan or the Amended and Restated 1995
Directors Non-Qualified Stock Option Plan (each such warrant and option
hereinafter is referred to as an "Option"), that is outstanding immediately
prior to the Effective Time, whether or not then exercisable or vested, with
respect to which, as of the Effective Time, the Per Share Amount exceeds the
exercise price per share will, effective as of immediately prior to the
Effective Time, be canceled in exchange for a single lump sum cash payment equal
to the product of (i) the number of shares of the Company's common stock subject
to the Option and (ii) the excess of the Per Share Amount over the exercise
price of such Option. In addition, each Option that is outstanding immediately
prior to the Effective Time, whether or not then exercisable or vested, will,
effective as of the Effective Time, with respect to which, as of the Effective
Time, the Per Share Amount does not exceed the exercise price per share,
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will, effective as of immediately prior to the Effective Time, be canceled and
no payments will be made with respect thereto. The Merger Agreement also
provides that, immediately prior to the Effective Time, each share of the
Company's common stock previously issued in the form of restricted stock issued
pursuant to the Company's Amended and Restated 1995 Restricted Stock Bonus Plan
will fully vest and all restrictions thereon will be removed, and each share of
the Company's common stock previously issued in the form of awards of Time-Lapse
Restricted Stock, Performance-Contingent Restricted Stock and Performance Shares
pursuant to the Company's Amended and Restated 1995 Equity Incentive Plan and
which, as of immediately prior to the Effective Time, have been earned in
accordance with the provisions of such plan, will fully vest, and all
restrictions thereon will be removed with any unearned awards under such plan to
be canceled except for the issuance of 1,600 shares, which the Board may, in its
discretion, determine to issue and vest.
6% Convertible Preferred Securities. Parent and Purchaser shall assume the
Company's obligations with respect to the 6% Convertible Preferred Securities,
including without limitation, complying with the applicable provisions of (i)
the Indenture, dated as of April 1, 1996, between the Company and the Bank of
New York, as trustee, with respect to the Company's 6% Convertible Junior
Subordinated Deferrable Interest Debentures Due 2016, (ii) the Amended and
Restated Declaration of Trust of Greenfield Capital Trust, dated as of April 1,
1996, and (iii) the Preferred Securities Guarantee Agreement between the Company
and the Bank of New York dated as of April 24, 1996.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
by the Company and its Subsidiaries with respect to (i) corporate organization,
good standing and corporate power, (ii) capitalization, (iii) corporate
authority to enter into the Merger Agreement (iv) consents and approvals, (v)
accuracy of Commission reports and financial statements, (vi) absence of certain
changes or events, (vii) litigation and liabilities, (viii) accuracy of
information supplied by the Company for the Offer Documents, Schedule 14D-9, the
Rule 14f-1 Information Statement and the Proxy Statement, and any amendments or
supplements thereto, (ix) ERISA matters, (x) brokers' and finders' fees and
expenses, (xi) obtaining the opinions of financial advisors as to the fairness
of the cash consideration to be received by the Stockholders pursuant to the
Offer from a financial point of view, (xii) compliance with laws and permits,
(xiii) takeover statutes, (xiv) amendments to the Rights Agreement, (xv)
contracts and (xvi) changes in equity interest.
Parent and Purchaser have also made certain representations and warranties
with respect to (i) corporate organization, good standing and corporate power,
(ii) corporate authority to enter into the Merger Agreement, (iii) consents and
approvals, (iv) brokers' and finders' fees and expenses and (v) financing.
No representations and warranties made by the Company, Parent or Purchaser
will survive beyond the earlier of (i) termination of the Merger Agreement or,
(ii) the Effective Time, in the case of the representations and warranties of
Parent or Purchaser or the purchase of Shares by Purchaser pursuant to the
Offer, in the case of representations or warranties of the Company. The
Confidentiality Agreement (as defined below) will survive any termination of the
Merger Agreement and the provisions of such agreement will apply to all
information and material delivered by any party thereunder.
Conduct of Business Pending the Merger. The Company has agreed that during
the period from October 10, 1997 (the date of the Merger Agreement) to the
Effective Time, the Company will, and will cause each of its Subsidiaries to,
conduct its operations according to its ordinary and usual course of business
consistent with past practice and use all commercially reasonable efforts to
preserve intact its current business organization, keep available the services
of its current employees and preserve its relationships with customers,
suppliers and others having significant dealings with it. Except as otherwise
permitted in the Merger Agreement, the Company has further agreed that prior to
the Effective Time, neither the Company, nor any of its Subsidiaries will,
without the prior written consent of Parent, (i) (except for shares to be issued
or delivered pursuant to the Company's Stock Plans for options outstanding on
the date of the Merger Agreement) issue, deliver, sell, dispose of, pledge or
otherwise encumber, or authorize or propose the issuance, sale, disposition or
pledge or other encumbrance of, (A) any additional securities (including the
Shares) or rights convertible into, exchangeable for, or evidencing the right to
subscribe for any shares of capital stock, or any rights, warrants, options,
calls, commitments or any other agreements of any character to purchase or
acquire any shares of capital stock or securities or rights convertible
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into, or evidencing the right to subscribe for, any shares of capital stock or
any other securities in respect of, in lieu of, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock, or (B) any other
securities in respect of, in lieu of, or in substitution for, Shares outstanding
on the date of the Merger Agreement, (ii) redeem, purchase, or otherwise
acquire, any shares of outstanding capital stock, including the Shares, or any
rights, warrants or options to acquire any such Shares or other securities
(except for Shares of restricted stock forfeitable under the terms of any of the
Stock Plans), (iii) split, combine, subdivide, or reclassify any Shares or
declare, set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any capital stock, including
the Shares, or otherwise make any payments to Stockholders in their capacity as
such (other than the declaration and payment of any regular quarterly cash
dividend on the Shares and except for dividends by a wholly-owned Subsidiary),
(iv) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger), (v) adopt any
amendments to its certificate or articles of incorporation or bylaws or alter by
merger, liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of any Subsidiary of the Company, (vi) make any
acquisition by means of merger, consolidation or otherwise, or disposition
(other than acquisitions or dispositions of assets in the ordinary course of
business consistent with past practice), of assets or securities, or mortgage or
otherwise encumber or subject to lien any of its assets or properties, other
than in the ordinary course of business consistent with past practice, (vii)
other than in the ordinary course of business consistent with past practice,
incur any indebtedness for borrowed money or sell any debt securities or
guarantee any such indebtedness or make any loans, advances or capital
contributions to, or investments in, any other person, other than to the Company
or any wholly-owned subsidiary of the Company or, except as set forth in the
Merger Agreement, make any further commitments for capital expenditures in
excess of $500,000 individually, or $3,000,000 in the aggregate, (viii) grant
any material increases in the compensation of any of its directors, officers or
key employees, except in the ordinary course of business and in accordance with
past practice, (ix) pay or agree to pay any pension, retirement allowance or
other employee benefit not contemplated or required by any existing benefit,
severance, termination, pension or employment plans, agreements or arrangements
as in effect on the date of the Merger Agreement to any past or present officer
or director of the Company, (x) enter into any new or materially amend any
existing employment, severance or termination agreements with any director or
officer of the Company, (xi) except in the ordinary course of business
consistent with past practice, or as may be required to comply with applicable
law, become obligated under any new pension plan, welfare plan, multiemployer
plan, employee benefit plan, severance plan, benefit arrangement, or similar
plan or arrangement, which was not in existence on the date of the Merger
Agreement, or amend any such plan or arrangement if such amendment would have
the effect of materially enhancing any benefits thereunder, (xii) settle or
compromise any material claims or litigation or, except in the ordinary course
of business, modify, amend or terminate, any material contracts or waive,
release or assign any material rights or claims, (xiii) make any material
change, other than in the ordinary course of business consistent with past
practice or as required by applicable law, regulation or, change in generally
accepted accounting principles, in accounting policies or procedures applied by
the Company (including tax accounting policies and procedures), (xiv) except as
required by applicable law or regulation, make any tax election or permit any
insurance policy naming it as beneficiary or a loss payable payee to be
cancelled or terminated, (xv) amend or alter the Rights Agreement in a manner
adverse to Parent's, Purchaser's or the Company's ability to commence or
consummate the transactions contemplated by the Merger Agreement, or (xvi)
authorize or enter into a contract or other agreement to do any of the
foregoing.
No Solicitation. The Merger Agreement provides that the Company, its
affiliates and their respective officers, directors, employees, representatives
and agents will immediately cease any existing discussions or negotiations, if
any, with any parties conducted with respect to any Takeover Proposal (as
hereafter defined). Prior to the consummation of the Offer, the Company, its
Subsidiaries, directors, employees, representatives and agents may, directly or
indirectly, furnish information and access, in each case only in response to a
Third Party Proposal made after the date of the Merger Agreement which was not
initiated, solicited or encouraged by the Company or any of its affiliates or
their respective officers, directors, employees, representatives or agents
(pursuant to appropriate confidentiality agreements the benefit of the terms of
which, if more favorable than the confidentiality agreement with Parent, will be
extended to Parent), and may participate in discussions and negotiate with such
entity or group concerning any Takeover Proposal if a majority of the Company's
Board
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determines, in its good faith judgment, based on the opinion of independent
legal counsel to the Company, that failing to take such action would constitute
a breach of the Board's fiduciary obligations to the Stockholders under
applicable law. The Company will promptly notify Parent if any such proposal or
offer, or any inquiry or contact with any person with respect thereto, is made
and will, in any such notice to Parent, indicate in reasonable detail the
identity of the offeror and the terms and conditions of any proposal or offer,
or any such inquiry or contact. The Company must keep Parent promptly advised of
all developments which could reasonably be expected to culminate in the Board
withdrawing, modifying or amending its recommendation of the Offer, the Merger
and other transactions contemplated thereby. Except as set forth in the Merger
Agreement, neither the Company or any of its affiliates, nor any of its or their
respective officers, directors, employees, representatives or agents, will,
directly or indirectly, encourage, solicit, participate in or initiate
negotiations with, or provide any information to, any corporation, partnership,
person, or other entity or group (other than Parent and Purchaser, any affiliate
or associate of Parent and Purchaser, or any designees of Parent or Purchaser)
concerning any Takeover Proposal. The Merger Agreement provides that nothing
contained therein shall prevent the Company or the Board from taking and
disclosing to the Stockholders a position contemplated by Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Stockholders with respect to any Third Party Proposal if (i) in the good faith
judgment of the Board, following receipt of advice from outside counsel, such
disclosure is required by reason of the Board's fiduciary duties to the
Stockholders under applicable law, and (ii) the Company will have provided
Parent and Purchaser with as much advance notice of its position and proposed
disclosure as is possible under the circumstances; provided, however, that
neither the Company nor its Board nor any committee thereof will, except as
provided in the Merger Agreement, withdraw or modify or propose to withdraw or
modify, its position with respect to the Offer, the Merger or the Merger
Agreement or approve or recommend, or propose to approve or recommend, any
Takeover Proposal. For purposes of the Merger Agreement, a "Third Party
Proposal" means an unsolicited, bona-fide proposal from a third party which
proposal was not solicited by or on behalf of the Company in violation of the
Merger Agreement and which, the Board determines in good faith and upon the
advice of a financial advisor of nationally recognized reputation, has the
capacity and is reasonably likely to consummate a Superior Proposal. For
purposes of the Merger Agreement, a "Takeover Proposal" means any tender or
exchange offer, proposal for a merger, consolidation or other business
combination involving the Company or any Significant Subsidiary of the Company,
or any proposal or offer to acquire in any manner a substantial equity interest
in or a substantial portion of the assets of the Company or its Significant
Subsidiaries (other than as contemplated by the Merger Agreement).
Conditions to the Offer. Pursuant to the Merger Agreement, Purchaser is
not obligated to accept for payment any Shares until the expiration of all
applicable waiting periods under the HSR Act and satisfaction of the Minimum
Condition. In addition, Purchaser is not required to accept for payment or pay
for, or may delay the acceptance for payment of or payment for, any Shares
tendered pursuant to the Offer or may, subject to the terms of the Merger
Agreement, terminate or amend the Offer if, on or after October 10, 1997, and at
or before the time of payment for any such Shares, any of the following events
occurs (or become known to Parent) and remains in effect: (a) there has occurred
and is continuing as of the then scheduled expiration date of the Offer (i) any
general suspension of trading in, or limitation on prices for, securities on the
New York Stock Exchange or the Nasdaq National Market, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or any limitation by federal or state authorities on the extension
of credit by lending institutions, or a disruption of or material adverse change
in either the syndication market for credit facilities or the financial, banking
or capital markets, (iii) a commencement or escalation of a war, armed
hostilities or other international or national calamity directly involving the
United States, (iv) any material limitation (whether or not mandatory) by any
governmental or regulatory authority, agency or commission, domestic or foreign
("Governmental Entity"), on the extension of credit by banks or other lending
institutions in the United States, (v) or in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; (b)(i) the Company has breached or failed to perform in
any material respect any of its obligations, covenants or agreements under the
Merger Agreement, (ii) any representation or warranty of the Company set forth
in the Merger Agreement which is qualified by materiality is not true and
correct as of the date of the Merger Agreement and as of the then scheduled
expiration date of the Offer as though made on and as of the then scheduled
expiration date of the Offer or (iii) any representation or warranty of the
Company set forth in the Merger Agreement which is not qualified by materiality
is not true and correct in all material respects, as of
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the date of the Merger Agreement and as of the then scheduled expiration date of
the Offer as though made on and as of the then scheduled expiration date of the
Offer, except in the case of clause (ii) and (iii) above for representations and
warranties which by their terms speak only as of another date, which
representations and warranties, if qualified by materiality, will not have been
true and correct as of such other date; (c) any court or Governmental Entity
will have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order which is in
effect and which (i) restricts (other than restrictions which in the aggregate
do not have a Material Adverse Effect on Parent, Purchaser or the Company or
which do not materially restrict the ability of Parent and Purchaser to
consummate the Offer and the Merger as originally contemplated by Parent and
Purchaser), prevents or prohibits consummation of the Offer or the Merger (ii)
prohibits or limits (other than limits which in the aggregate do not have a
Material Adverse Effect on Parent, Purchaser or the Company or which do not
materially limit the ability of Parent to own and operate all of the business
and assets of Parent and the Company after the consummation of the transactions
contemplated by the Offer and the Merger Agreement), the ownership or operation
by the Company, Parent or any of their subsidiaries of all or any material
portion of the business or assets of the Company and its subsidiaries taken as a
whole, or as a result of the Offer or the Merger compels the Company, Parent or
any of their subsidiaries to dispose of or hold separate all or any material
portion of their respective business or assets, (iii) imposes limitations (other
than limits which in the aggregate do not have a Material Adverse Effect on
Parent, Purchaser or the Company or which do not materially limit the ability of
Parent to own and operate all of the business and assets of Parent and the
Company after the consummation of the transactions contemplated by the Offer and
the Merger Agreement) on the ability of Parent or any subsidiary of Parent to
exercise effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to the
Offer or otherwise on all matters properly presented to the Stockholders
including, without limitation, the approval and adoption of the Merger Agreement
and the transactions contemplated thereby, (iv) requires divestiture by Parent
or any affiliate of Parent of any Shares or (v) otherwise materially adversely
affects the financial condition, business or results of operations of the
Company and its subsidiaries taken as a whole; (d) all consents, registrations,
approvals, permits, authorizations, notices, reports or other filings required
to be obtained or made by the Company, Parent or Purchaser with or from any
governmental entity in connection with the execution and delivery of the Merger
Agreement, the Offer and the consummation of the transactions contemplated by
the Merger Agreement will not have been made or obtained as of the then
scheduled expiration date of the Offer (other than the failure to receive any
consent, registration, approval, permit or authorization or to make any notice,
report or filing that, in the aggregate, is not reasonably likely to have a
Material Adverse Effect on Parent, Purchaser or the Company, or would not
prevent the consummation of the Offer or the Merger); (e) any change or
development in the financial condition, properties, business, results of
operations or prospects of the Company and its Subsidiaries that, individually
or in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect; (f) the Board (or a special committee thereof) withdraws or amends, or
modifies in a manner adverse to Parent and Purchaser its recommendation of the
Offer or the Merger, or endorses, approves or recommends any Superior Proposal;
or (g) the Merger Agreement has been terminated by the Company, Parent or
Purchaser in accordance with its terms or such parties have reached an agreement
or understanding in writing providing for termination or amendment of the Offer
or delay in payment for the Shares. A "Material Adverse Effect" shall mean any
adverse change(s) in the financial condition, properties, business, results of
operations or prospects of the Company or any of its subsidiaries or Parent or
any of its subsidiaries, as the case may be, which individually or in the
aggregate is or are material to the Company and its subsidiaries, taken as a
whole, or Parent and its subsidiaries, taken as a whole, as the case may be,
other than (i) any change or effect arising out of general economic conditions
or (ii) any change or effect which the Company or Parent, as the case may be,
has disclosed in writing, prior to the date of the Merger Agreement, to Parent
or the Company, as the case may be, has occurred or is likely to occur.
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Parent and Purchaser, and may be asserted by Parent or Purchaser
or may be waived by Parent or Purchaser, in whole or in part, at any time and
from time to time in its sole discretion. The failure by Parent or Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
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circumstances and each such right shall be deemed an ongoing right and may be
asserted at any time and from time to time.
Conditions to the Merger. The Merger Agreement provides that the
obligation of each party to effect the Merger is subject to the satisfaction at
or prior to the Effective Time of the following conditions: (a) to the extent
required by applicable law, the Company Stockholder Approval will have been
obtained in accordance with applicable law and the Company's amended and
restated certificate of incorporation; provided that Parent and Purchaser will
vote all of their Shares in favor of the Merger; (b) no statute, rule,
regulation, executive order, decree, ruling or injunction or other order issued
by any court, governmental or regulatory agency of competent jurisdiction
directing that the transactions contemplated by the Merger Agreement not be
consummated; provided, however, that prior to invoking this condition each party
will use its best efforts to have any such decree, ruling, injunction or order
vacated; (c) all governmental consents, orders and approvals legally required
for the consummation of the Merger and the transactions contemplated thereby
have been obtained and be in effect at the Effective Time (unless the failure to
obtain any such consent would not reasonably be expected to have a Material
Adverse Effect on Parent and its Subsidiaries, as a whole (assuming the Merger
had taken place)), and the waiting periods under the HSR Act will have expired
or have been terminated; and (d) Purchaser has purchased all Shares tendered
pursuant to the Offer.
Termination. The Merger Agreement may be terminated and the Offer and
Merger may be abandoned at any time prior to the Effective Time by the mutual
written consent of Parent and the Company. In addition, the Merger Agreement may
be terminated as follows:
(1) by Parent or the Company if (i) any governmental or regulatory
agency located or having jurisdiction within the United States or any
country or economic region in which either the Company or Parent, directly
or indirectly, has material assets or operations will have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, the Shares pursuant to the Offer or Merger and such order,
decree or ruling or other action will have become final and nonappealable;
provided, that Parent will, if necessary to prevent the taking of such
action or the enaction, enforcement, promulgation, amendment, issuance or
application of any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction, offer to accept an order to divest such of
the Company's or Parent's assets and businesses as may be necessary to
forestall such injunction or order and to hold separate such assets and
business pending such divestiture, but only if the amount of such
businesses and assets is not material to the assets or profitability of
Parent and its subsidiaries taken as a whole, or (ii) due to an occurrence
or circumstance which would result in a failure to satisfy any of the Offer
Conditions, Purchaser fails to pay for the Shares pursuant to the Offer on
or before the Outside Date, unless such failure results from or is caused
by the failure of the party seeking to terminate the Merger Agreement to
perform in any material respect any of its respective covenants or
agreements in the Merger Agreement. As defined in the Merger Agreement, an
"Outside Date" means the later of (not to exeed 180 days) (A) 90 days from
the date of the Merger Agreement, or (B) the date on which either the
applicable HSR Act waiting period expires or been terminated or the final
terms of a consent decree between Parent and the Antitrust Division of the
Department of Justice (the "Antitrust Division") (the "Consenting Parties")
with respect to the Offer and Merger has been agreed to by the Consenting
Parties, or an order of a federal district court finding that the Merger
does not violate the federal antitrust laws will have been issued or the
Antitrust Division will have otherwise authorized Parent to acquire Shares
pursuant to the Offer.
(2) at any time prior to the Effective Time, by action of the
Company's Board: (a) if (i) the Company, based on the advice of outside
legal counsel to the Company that such action is necessary in order for the
Board to comply with its fiduciary duties under applicable law, subject to
complying with the terms of the Merger Agreement, enters into a binding
written agreement concerning a transaction that constitutes a Superior
Proposal (as hereafter defined) if prior thereto, the Company notifies
Parent in writing that it intends to enter into such an agreement and (ii)
Parent does not make, within two business days of receipt of the Company's
written notification of its intention to enter into a binding agreement for
a Superior Proposal, an offer to enter into an amendment to the Merger
Agreement such that the Board determines, in good faith after consultation
with its financial advisors, that the Merger Agreement as so amended is at
least as favorable, from a financial point of view, to the Stockholders as
the Superior Proposal. The Company further
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<PAGE> 35
agreed (A) that it will not enter into a binding agreement with respect to
clause (i) in the preceding sentence until at least the third business day
after it has provided the notice to Parent required thereby and (B) to
notify Parent promptly of its intention to enter into a written agreement
referred to in its notification will change at any time after giving such
notification. For purposes of the Merger Agreement, the term "Superior
Proposal" means a Third Party Proposal to acquire all of the outstanding
Shares pursuant to a tender offer or a merger, or to purchase all or
substantially all of the assets of the Company, on terms which a majority
of the members of the Board determines in its good faith reasonable
judgment (based on the advice of its financial and legal advisors) to be
more favorable to the Company and its Stockholders than the transactions
contemplated by the Merger Agreement; (b) if (i) Purchaser has (x) failed
to commence the Offer within five business days following the date of the
initial public announcement of the Offer, (y) failed to pay for the Shares
pursuant to the Offer as provided in the Merger Agreement or (z) terminated
the Offer without purchasing Shares pursuant to the Offer, or (ii) there
has been a material breach by Parent or Purchaser of any representation,
warranty, covenant or agreement contained in the Merger Agreement which is
not curable or, if curable, is not cured within 30 calendar days after
written notice of such breach is given by the Company to the breaching
party.
(3) at any time prior to the Effective Time, by action of the Board of
Directors of Parent if (i) the Board of Directors of the Company has
withdrawn or adversely modified its approval or recommendation of the
Merger Agreement or failed to reconfirm its recommendation of the Merger
Agreement within five business days after a written request by Parent to do
so, (ii) there has been a breach by the Company of any representation,
warranty, covenant, or agreement contained in the Merger Agreement that is
not curable or, if curable, is not cured within 30 calendar days after
written notice of such breach is given by Parent to the party committing
such breach, or (iii) on a scheduled expiration date all conditions to
Purchaser's obligation to accept for payment and pay for the Shares
pursuant to the offer will have been satisfied or waived other than the
Minimum Condition, and Purchaser terminates the Offer without purchasing
Shares pursuant to the Offer (provided that the satisfaction or waiver of
all other conditions will have been publicly disclosed at least five
business days prior to termination of the Offer), or (iv) Purchaser has
otherwise terminated the Offer in accordance with the terms of the Merger
Agreement without purchasing Shares pursuant to the Offer.
Fees and Expenses. The Merger Agreement provides that, except as described
below, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated by the Merger Agreement will be paid by the
party incurring the expenses. Pursuant to the Merger Agreement, in the event
that the Merger Agreement is terminated and the Merger is abandoned, the Merger
Agreement and the obligations thereunder will become void (except for those
obligations relating to termination, fees and expenses and confidentiality),
with no liability on the part of any party to the Merger Agreement or such
party's directors, officers, employees, agents, legal and financial advisors or
other representatives. In the event that the Merger Agreement is terminated by
the Company in the circumstances described in clause (2)(a) of the preceding
section entitled, "Termination," or by the Parent in the circumstances described
in clause (3)(i) of such section, the Company shall promptly, but in no event
later than two days after the date of such termination or event, pay Parent a
termination fee of $30 million. In addition, in the event that prior to the
termination of the Merger Agreement any person or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) makes a Third Party Proposal and within
six months following the date of such Third Party Proposal, such person or group
acquires, directly or indirectly, the Company, a substantial portion of its
assets or more than 50% of the Company's then outstanding common stock for a per
share consideration (or equivalent thereof) having a value greater than the Per
Share Amount to be paid under the Merger Agreement, then the Company will
promptly pay, within one day of such event, a termination fee of $30 million.
Parent has agreed to pay the Company all of the Company's out-of-pocket
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby, including fees of its printer, consultants, attorneys,
accountants and financial and other advisors, not to exceed $5 million if the
Merger Agreement is terminated by Parent pursuant to clause (3)(iii) or by the
Company pursuant to clause (2)(b) of the preceding section entitled,
"Termination." Such expenses are payable promptly and in any event no later than
two business days after the date such termination or event shall have occurred.
The Company has agreed to pay Parent all of
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<PAGE> 36
Parent's or Purchaser's out-of-pocket expenses incurred in connection with the
Merger Agreement and the transactions contemplated thereby, including the fees
and expenses of its printer, consultants, attorneys, accountants, financial
advisors and other advisors, not to exceed $5 million, if the Merger Agreement
is terminated by Parent or Purchaser pursuant to clause (3)(ii) of the preceding
section entitled, "Termination." Such expenses are payable promptly and in any
event no later than two business days after the date such events shall have
occurred.
Indemnification. The Merger Agreement provides that the certificate of
incorporation and bylaws of the Surviving Corporation will contain the
provisions with respect to indemnification set forth in the amended and restated
certificate of incorporation and bylaws of the Company on the date of the Merger
Agreement, which provisions will not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors, officers, employees or agents of the Company
with respect to actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by the Merger
Agreement), unless such modification is required by law; provided, however, that
in the event that any claims are asserted or made within a six-year period, all
rights to indemnification in respect of any such claims will continue until
disposition of such claims.
The Merger Agreement further provides that for a period of not less than
six years Parent will cause to be maintained in effect for the Company's present
or former directors or officers or other employees covered by the Company's
insurance policies prior to the Effective Time (the "Indemnified Parties"), the
current policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by the Company and the Company's subsidiaries
with respect to matters occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated in the Merger Agreement),
provided that Parent may substitute therefor policies of substantially the same
coverage containing terms and conditions that are no less advantageous to the
Indemnified Parties and provided further that such substitution does not result
in gaps in coverage with respect to matters occurring prior to the Effective
Time. The Merger Agreement provides that the indemnification provisions are for
the benefit of the Indemnified Parties and is binding on all successors and
assigns of Parent, Purchaser, the Company and the Surviving Corporation.
Consents, Approvals, Filings. The Merger Agreement provides that subject
to the terms of the Merger Agreement, each of the parties thereto will use their
respective best efforts, and will cooperate with each other to obtain as
promptly as practicable all governmental and third party authorizations,
approvals, consents or waivers, including, without limitation, approvals with
respect to the HSR Act, required in order to consummate the transactions
contemplated by the Merger Agreement, the Offer and the Merger.
Employee Benefit Matters. The Merger Agreement provides that, for a period
of one year following the Effective Time, Parent will provide employee benefit
plans and programs for the benefit of the employees of the Company and its
Subsidiaries (other than those employees covered by collective bargaining
agreements) that are in the aggregate no less favorable than the employee
benefit plans and programs offered to such employees immediately prior to the
Closing (excluding plans or programs which provide for the issuance of Shares or
options on Shares). In addition, the Merger Agreement provides that employees
covered by collective bargaining agreements will be provided with such benefits
as will be required under the terms of any applicable collective bargaining
agreement.
Parent has also agreed to cause the Surviving Corporation to honor and
perform (without modification) the written employment agreements, severance
agreements and other agreements of the Company, as in effect as of the date of
the Merger Agreement. Parent agreed that, after the Effective Time, the
Surviving Corporation or its subsidiaries will pay all amounts provided under
all contracts and agreements of the Company and its subsidiaries and all benefit
obligations of the Company and its subsidiaries, including, without limitation,
the change in control agreements entered into between the Company and its
subsidiaries and their officers (the "Change in Control Agreements") (or honor
the provisions of the Change in Control Agreements in the case where no payment
by the Surviving Corporation or its subsidiaries is required) conditioned on a
change in control of the Company in accordance with the terms of such Change in
Control Agreements.
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Amendment. Subject to the applicable provisions of the DGCL and certain
other provisions of the Merger Agreement, at any time prior to the Effective
Time, the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained in the Merger
Agreement or in any document, certificate or writing delivered pursuant thereto,
or (iii) waive compliance by the other party with any of the conditions or
agreements contained in the Merger Agreement. Any agreement to amend the Merger
Agreement on the part of any party must be set forth in writing and signed on
behalf of such party. The failure of either party to assert any of its rights
under the Merger Agreement shall not act as a waiver of such rights.
CONFIDENTIALITY AGREEMENT
On August 13, 1997, the Company and Parent signed a confidentiality and
standstill agreement (the "Confidentiality Agreement") providing that, subject
to the terms of the agreement, each company will keep confidential certain
non-public information furnished by the other. In addition, under the terms of
the Confidentiality Agreement, and subject to certain limitations, Parent agreed
that, without the prior written consent of the Company, (1) for a period of
three years, neither it nor its affiliates or representatives will solicit to
employ any of the current officers or key employees of the Company with whom
Parent has had contact or who were specifically identified to Parent during the
course of its investigation of the Company and (2) for a period of two years,
neither it nor its affiliates or representatives will (a) effect or seek, offer
or propose (whether publicly or otherwise) to effect, or cause or participate in
or in any way assist any other person to effect or seek, offer or propose
(whether publicly or otherwise) to effect or participate in (i) any acquisition
of any securities (or beneficial ownership thereof) or assets of the Company or
any of its subsidiaries; (ii) any tender or exchange offer, merger or other
business combination involving the Company or any of its subsidiaries; (iii) any
recapitalization, restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the Company or any of its subsidiaries; or (iv) any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Commission) or consents to vote any voting securities of the Company; (b) form,
join or in any way participate in a "group" (as defined under the Exchange Act);
(c) otherwise act, alone or in concert with others, to seek to control or
influence the management, Board or policies of the Company; (d) take any action
which might force the Company to make a public announcement regarding any of the
types of matters set forth in (a) above; or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing.
APPRAISAL RIGHTS
Holders of Shares do not have dissenters' rights as a result of the Offer.
However, if the Merger is consummated, holders of Shares will have certain
rights pursuant to the provisions of Section 262 of the DGCL to dissent and
demand appraisal of, and to receive payment in cash of the fair value of, their
Shares. If the statutory procedures have been complied with, such rights could
lead to a judicial determination of the fair value required to be paid in cash
to such dissenting holders for their Shares. Any such judicial determination of
the fair value of Shares could be based upon considerations other than or in
addition to the Offer Price, the Merger Consideration or the market value of the
Shares, including asset values and the investment value of the Shares. The value
so determined could be more or less than the Offer Price or the Merger
Consideration.
Dissenting Shares will not be converted into the right to receive the
Merger Consideration, but the holders of Dissenting Shares will be entitled to
receive such consideration as shall be determined pursuant to the DGCL;
provided, however, that if any such holder shall have failed to perfect or shall
withdraw his demand for appraisal or otherwise lose his right to appraisal and
payment under the DGCL, such holder will forfeit the right to appraisal and such
Shares will thereupon be deemed to have been converted, as of the Effective
Time, into the right to receive the Merger Consideration, without interest, less
any withholding taxes, and such Shares shall no longer be Dissenting Shares.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
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FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Appraisal rights cannot be exercised at this time. Stockholders who will be
entitled to appraisal rights, if any, in connection with the Merger will receive
additional information concerning any available appraisal rights and the
procedures to be followed in connection therewith before such Stockholders have
to take any action relating thereto.
EXEMPTION OF OFFER AND MERGER FROM EFFECT OF RIGHTS AGREEMENT
The Company has represented in the Merger Agreement that it has amended the
Rights Agreement to provide, among other things, that Parent and Purchaser will
not be deemed an "Acquiring Person" (as defined in the Rights Agreement), and
that the Rights will not separate from the Shares as a result of entering into
the Merger Agreement, commencing or consummating the Offer or consummating the
Merger pursuant to the terms of the Merger Agreement.
13. DIVIDENDS AND DISTRIBUTIONS
Except as otherwise provided in the Merger Agreement or the schedules
thereto, the Company has agreed that prior to the Effective Time neither it nor
any of its Subsidiaries, as the case may be, will, without the prior consent of
Parent, (i) except for shares to be issued or delivered pursuant to the
Company's Stock Plans for options outstanding on the date of the Merger
Agreement, issue, deliver, sell, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition, pledge or other
encumbrance of any additional shares of capital stock of any class, including
the Shares, or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of capital stock, or any
rights, warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any shares of capital stock or any securities
or rights convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of capital stock, or any other securities in respect
of, in lieu of or in substitution for, Shares outstanding on the date of the
Merger Agreement or (ii) purchase, redeem or otherwise acquire, or propose any
of the foregoing with respect to any of the Company's outstanding capital stock,
including the Shares, or any rights, warrants or options to acquire any such
Shares, except for shares of restricted stock forfeitable under the terms of any
of the Company's Stock Plans or other securities, (iii) split, combine,
subdivide or reclassify any Shares or declare, set aside for payment or pay any
dividends on, or make any other actual, constructive or deemed distributions in
respect of any of the Company's capital stock, including the Shares, or
otherwise make any payments to Stockholders, except for the declaration and
payment of any regular quarterly cash dividend on the Shares and for dividends
by a wholly-owned Subsidiary of the Company.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment, subject to any applicable rules and regulations
of the Commission, including Rule 14e-1(c) under the Exchange Act, any Shares
until (i) the expiration of all applicable waiting periods under the HSR Act and
(ii) the Minimum Condition shall have been satisfied. In addition, Purchaser
shall not be required to accept for payment or pay for, or may delay the
acceptance for payment of or for, any Shares tendered pursuant to the Offer or
may, subject to the provisions of the Merger Agreement, terminate or amend the
Offer on or after October 10, 1997, and at or before the time of payment for any
of such Shares, if any of the following events shall occur (or become known to
Parent) and remain in effect:
(a) there shall have occurred and be continuing as of the then
scheduled expiration date of the Offer (1) any general suspension of
trading in, or limitation on prices for, trading in securities on the NYSE
or the Nasdaq National Market, (2) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, or any
limitation by federal or state authorities on the extension of credit by
lending institutions, or a disruption of or material adverse change in the
syndication market for credit facilities or the financial, banking or
capital markets, (3) a commencement or escalation of a war, armed
hostilities or other international or national calamity directly involving
the United States, (4) any material limitation (whether or not mandatory)
by any Governmental Entity, on the extension of credit by
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banks or other lending institutions in the United States, or (5) in the
case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof;
(b)(i) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Merger Agreement; (ii) any representation and warranty of the Company set
forth in the Merger Agreement which is qualified as to materiality shall
not have been true and correct as of the date of the Merger Agreement and
as of the then scheduled expiration date of the Offer as though made on and
as of the then scheduled expiration date of the Offer or (iii) any
representation and warranty of the Company which is not so qualified as to
materiality shall not have been true and correct in all material respects
as of the date of the Merger Agreement and as of the then scheduled
expiration date of the Offer as though made on and as of the then scheduled
expiration date of the Offer, except in the case of clauses (ii) and (iii),
for representations and warranties which by their terms speak only as of
another date, which representations and warranties, if qualified by
materiality, shall not have been true and correct as of such date and, if
not qualified, shall not have been true and correct in all material
respects as of such other date;
(c) any court or Governmental Entity issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction
or other order which is in effect and which (i) restricts (other than
restrictions which in the aggregate do not have a Material Adverse Effect
on Parent, Purchaser or the Company or which do not materially restrict the
ability of Parent and Purchaser to consummate the Offer and the Merger as
originally contemplated by Parent and Purchaser), prevents or prohibits
consummation of the Offer or the Merger, (ii) prohibits or limits (other
than limits which in the aggregate do not have a Material Adverse Effect on
Parent, Purchaser or the Company or which do not materially limit the
ability of Parent to own and operate all of the businesses and assets of
Parent and the Company after the consummation of the transactions
contemplated by the Offer and the Merger Agreement) the ownership or
operation by the Company, Parent or any of their subsidiaries of all or any
material portion of the business or assets of the Company and its
Subsidiaries taken as a whole, or as a result of the Offer or the Merger
compels the Company, Parent or any of their subsidiaries to dispose of or
hold separate all or any material portion of their respective business or
assets, (iii) imposes limitations (other than limits which in the aggregate
do not have a Material Adverse Effect on Parent, Purchaser or the Company
or which do not materially limit the ability of Parent to own and operate
all of the business and assets of Parent and the Company after the
consummation of the transactions contemplated by the Offer and the Merger
Agreement) on the ability of Parent or any subsidiary of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer or otherwise on all matters properly presented to the
Stockholders including, without limitation, the approval and adoption of
the Merger Agreement and the transactions contemplated thereby, accepted
for payment pursuant to the Offer;
(d) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Parent or Purchaser with or from any Governmental Entity in
connection with the execution and delivery of the Merger Agreement, the
Offer and the consummation of the transactions contemplated by the Merger
Agreement shall not have been obtained or made as of the then scheduled
expiration date of the Offer (unless such failure to receive any consent,
registration, approval, permit or authorization to make any notice, report
or other filing that, in the aggregate, is not reasonably likely to have a
Material Adverse Effect on Parent, Purchaser or the Company or would not
prevent consummation of the Offer or the Merger);
(e) any change in the financial condition, properties, business,
results of operations or prospects of the Company and its Subsidiaries that
individually or in the aggregate has had or is reasonably likely to have a
Material Adverse Effect;
(f) the Company's Board of Directors (or a special committee thereof)
has withdrawn or modified in a manner adverse to Parent or Purchaser its
recommendation of the Offer or the Merger, or has endorsed, approved or
recommended any Superior Proposal; or
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(g) the Merger Agreement shall have been terminated by Company, Parent
or Purchaser in accordance with its terms, or the Offer shall have been
amended or terminated pursuant to a written agreement between Parent or
Purchaser and the Company.
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Parent and Purchaser, and may be asserted by Parent or Purchaser
or may be waived by Parent or Purchaser, in whole or in part, at any time and
from time to time in its sole discretion. The failure by Parent or Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation, neither Purchaser nor Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated in this Offer to Purchase or
of any approval or other action by any governmental authority that would be
required for the acquisition or ownership of Shares by Purchaser as contemplated
in this Offer to Purchase. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under "State Takeover Laws" and
"Foreign Approvals." While Purchaser does not currently intend to delay the
acceptance for payment of Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
action, if needed, would be obtained or would be obtained without substantial
conditions or that adverse consequences might not result to the business of the
Company, Purchaser or Parent or that certain parts of the businesses of the
Company, Purchaser or Parent might not have to be disposed of in the event that
such approvals were not obtained or any other actions were not taken.
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions. See Section 14.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares by Purchaser pursuant to the Offer is
subject to such requirements. See Section 2.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares under the Offer may not be consummated until the expiration of a
15-calendar-day waiting period following the filing of a Notification and Report
Form with respect to the Offer (the "HSR Filing") by Parent. Such filing was
made on October 15, 1997, and the waiting period with respect to the Offer will
expire at 11:59 p.m., New York City time, on October 30, 1997, unless early
termination of the waiting period is granted or Parent receives a request for
additional information or documentary material prior thereto. Pursuant to the
HSR Act, Parent is expected to request early termination of the waiting period
applicable to the Offer. There can be no assurances, however, that the 15-day
waiting period under the HSR Act will be terminated early. If, within such
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or material from Parent concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance by Parent with
such request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. The
Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirements imposed by the HSR Act with
respect to the Offer have been satisfied. See Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before or after the
31
<PAGE> 41
Purchaser's acquisition of Shares, either the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or otherwise seeking divestiture of Shares acquired
by the Purchaser or divestiture of substantial assets of Parent or its
subsidiaries. Private parties and state attorneys general may also bring legal
action under the antitrust laws under certain circumstances. Based upon an
examination of publicly available information relating to the businesses in
which Parent and the Company are engaged, Parent and the Purchaser believe that
the acquisition of Shares by Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisitions of Shares by the Purchaser on antitrust grounds will not be made
or, if such a challenge is made, of the result.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in those states.
In Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that the laws were applicable
only under certain conditions.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Purchaser will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws are applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See Section 14.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval of either the business combination or the
transaction that resulted in the stockholder becoming an "interested
stockholder." The Company has represented in the Merger Agreement that it
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, and has taken all necessary steps to render
Section 203 of the DGCL inapplicable to the Merger Agreement, Offer and the
Merger and the transactions contemplated thereby.
Foreign Approvals. According to publicly available information, the
Company also owns property and/or conducts business in a number of other
countries and jurisdictions, including Germany, Mexico, Italy, Switzerland,
Canada, Israel and the United Kingdom. In connection with the acquisition of the
Shares pursuant to the Offer, the laws of certain foreign countries and
jurisdictions may require the filing of information with, or the obtaining of
the approval of, governmental authorities in such countries and jurisdictions.
In addition, the waiting period prior to consummation of the Offer associated
with such filings or approvals may extend beyond the scheduled Expiration Date.
However, there is no present intention to delay the acceptance for payment of or
the payment for Shares pursuant to the Offer pending the completion of such
filings and the obtaining of such approvals. The governments in such countries
and jurisdictions might also attempt to impose additional conditions on the
Company's operations conducted in such countries and jurisdictions as a result
of the acquisition of the Shares pursuant to the Offer or the Merger. There can
be no assurance that the Purchaser will be able to cause the Company or its
subsidiaries to satisfy or comply with such laws or that compliance or
32
<PAGE> 42
noncompliance will not have adverse consequences for the Company or any
subsidiary after purchase of the Shares pursuant to the Offer or the Merger.
Germany. The Company has informed the Purchaser that the Company conducts
certain operations in Germany. The acquisition of the Company by the Purchaser
would therefore have an effect within the area of application of the German Act
Against Restraints of Competition (the "AARC") pursuant to Section 98, paragraph
2 of the AARC. Consequently, the proposed acquisition constitutes a merger
subject to merger control by the German Federal Cartel Office ("FCO"). As the
consolidated world-wide turnover of the Purchaser in the financial year ended
June 30, 1997, exceeded DM 2 billion, the proposed acquisition must be notified
to the FCO prior to completion and a filing is therefore being submitted to the
FCO. Under the AARC, the substantive test for clearance is whether the notified
merger will create or strengthen a dominant market position and, if so, whether
any such dominance is likely to be outweighed by any countervailing competitive
benefits from the Merger. After filing the pre-merger notification, completion
of the proposed acquisition will need to be suspended until either (i) the
applicable waiting periods under the AARC have expired without the FCO having
prohibited the acquisition, or (ii) the FCO has notified the parties that the
conditions for prohibiting the proposed acquisition are not fulfilled.
16. FEES AND EXPENSES
Merrill Lynch is acting as Dealer Manager in connection with the Offer and
is acting as financial advisor to Parent in connection with the Offer and the
Merger. Parent has agreed to pay Merrill Lynch for its services an advisory fee
of $1 million which became payable upon the execution of the Merger Agreement,
and a transaction fee of not more than $4 million (less any fees theretofore
paid), payable upon consummation of an Acquisition Transaction. "Acquisition
Transaction" has been defined to include (i) any merger, consolidation,
reorganization or other business combination pursuant to which the business of
the Company is combined with that of Parent or one of its affiliates, (ii) the
acquisition, directly or indirectly, by Parent or one of its affiliates by way
of a tender or exchange offer, negotiated purchase or other means of at least
50% of the then outstanding capital stock of the Company, (iii) the acquisition,
directly or indirectly, by Parent or one of its affiliates of all or a
substantial portion of the assets of, or of any right to all or a substantial
portion of the revenues or income of, the Company or (iv) the acquisition,
directly or indirectly, by Parent or one of its affiliates of control of the
Company otherwise than through the acquisition of the Company's voting capital
stock. Parent has agreed to reimburse Merrill Lynch for its reasonable
out-of-pocket expenses, including the reasonable fees and expenses of legal
counsel incurred in connection with its engagement. Parent and Purchaser agree
to indemnify Merrill Lynch and certain related persons against certain
liabilities and expenses in connection with its engagement, including certain
liabilities under the federal securities laws. Merrill Lynch and its affiliates
have in the past provided financial services to both Parent and the Company
unrelated to the proposed Offer and Merger, for which services Merrill Lynch and
such affiliates have received compensation. In the ordinary course of business,
Merrill Lynch and its affiliates may actively trade the debt and equity
securities of Parent and the Company for their own account and for the accounts
of customers and, accordingly, may at any time hold a long or short position in
such securities.
Purchaser has retained Georgeson & Company Inc. to act as the Information
Agent, and ChaseMellon Shareholder Services, L.L.C. to act as the Depositary, in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the federal securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions
to any broker or dealer or other person for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by Purchaser for customary mailing and handling expenses
incurred by them in forwarding the offering materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with
33
<PAGE> 43
the securities, blue sky or other laws of the jurisdiction. However, Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in that
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers that are licensed under the laws of the jurisdiction.
Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule
14d-1 under the Exchange Act containing certain additional information with
respect to the Offer. The Schedule and any amendments to the Schedule, including
exhibits, may be examined and copies may be obtained from the principal office
of the Commission in the manner set forth in Section 8 above (except that they
will not be available at the regional offices of the Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THE OFFER TO PURCHASE OR
IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, THE INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
KENNAMETAL ACQUISITION CORP.
October 17, 1997
34
<PAGE> 44
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, the business address of each such person is c/o
Kennametal Inc., State Route 981 South, P.O. Box 231, Latrobe, Pennsylvania
15650, and each such person is a citizen of the United States.
William R. Newlin............. Chairman of the Board since 1996 and Director
since 1982. Managing Director of Buchanan
Ingersoll Professional Corporation (attorneys
at law). Managing General Partner of CEO
Venture Funds (private venture capital funds).
Director of Black Box Corporation, National
City Bank of Pennsylvania, Parker/Hunter
Incorporated, the Pittsburgh High Technology
Council and CME Information Services, Inc. and
Chairman of the Board of JLK Direct
Distribution Inc.
Richard C. Alberding.......... Director since 1982. Retired, having served as
Executive Vice President, Marketing and
International, of Hewlett-Packard Company (a
designer and manufacturer of electronic
products for measurement and computation).
Director of Walker Interactive Systems, Inc.,
Sybase, Inc., Digital Microwave Corp., Paging
Network, Inc., Quickturn Design Systems, Inc.,
Digital Link Corporation, Storm Technology Inc.
and JLK Direct Distribution Inc.
Quentin C. McKenna............ Director since 1971. Served as Chairman of the
Board of Directors of the Corporation until
1996. Also served as President until July 1989
and as Chief Executive Officer until October
1991. Director of Interlake Corporation.
A. Peter Held................. Director since 1995. President of Cooper Power
Tools Division of Cooper Industries, Inc. (a
manufacturer and marketer of industrial power
tools), having served as Vice President and
General Manager International of its Champion
Spark Plug Division from 1992 to 1994, and as
Vice President International Operations of its
Cooper Hand Tools Division until 1992.
Aloysius T. McLaughlin, Jr.... Director since 1986. Retired, having served as
Vice Chairman of Dick Corporation (a general
contractor) from 1993 to 1995 and as President
and Chief Operating Officer from 1985 until
1993. Director of JLK Direct Distribution Inc.
Larry Yost.................... Director since 1987. Senior Vice President,
President, Automotive, and Acting President,
Heavy Vehicle Systems, Rockwell International
Corporation (a provider of components for heavy
vehicles), having previously served as
President, Heavy Vehicle Systems, Rockwell
International Corporation from November 1994
until March 1997 and as Senior Vice President
of the Operations Group of Allen-Bradley
Company until November 1994.
Peter B. Bartlett............. Director since 1975. General Partner of Brown
Brothers Harriman & Co. (private bankers).
Director of Erie Indemnity Company, Erie Family
Life Insurance Company and Erie Insurance
Company.
I-1
<PAGE> 45
Warren H. Hollinshead......... Director since 1990. Retired, having served as
Executive Vice President of Westinghouse
Electric Corporation (a technology-based
manufacturing, communications and services
company) during 1994, having previously served
as Executive Vice President--Chief Financial
Officer from January 1991 until March 1994.
Robert L. McGeehan............ Director since 1989. President of Parent since
July 1989 and Chief Executive Officer since
October 1991. Served as Director of
Metalworking Systems Division from 1988 to
1989, and as General Manager of Machining
Systems Division from 1985 to 1988. Director of
JLK Direct Distribution Inc.
David B. Arnold............... Vice President since 1979. Chief Technical
Officer since 1988.
David T. Cofer................ Vice President since 1986. Secretary and
General Counsel since 1982.
Richard C. Hendricks.......... Vice President since 1982. Director of
Corporate Business Development since 1992.
General Manager of the Mining and Metallurgical
Division from 1990 to 1992.
H. Patrick Mahanes, Jr........ Vice President since 1987. Named Chief
Operating Officer in 1995. Director of
Operations from 1991 to 1995.
Richard J. Orwig.............. Vice President since 1987. Named Chief
Financial and Administrative Officer in 1994.
Director of Administration from 1991 to 1994.
Michael W. Ruprich............ President and Director of JLK Direct
Distribution Inc. and J&L America, Inc. since
April 1997. Served as Director of Global
Marketing and Sales from 1996 to April 1997.
Vice President of Kennametal Inc. and
President, J&L America Inc. from 1994 to 1996.
General Manager of J&L from 1993 to 1994.
National Sales and Marketing Manager from 1992
to 1993. General Manager-East Coast Region from
1990 to 1992.
A. David Tilstone............. Vice President since July 1997, and Director of
Global Marketing since April 1997. Served as
Manager of Business Development, Asia Pacific
in 1994 and Director of Asia Pacific Operations
from 1995-1997.
I-2
<PAGE> 46
B. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Purchaser. The
business address of each such person is c/o Kennametal Inc., State Route 981
South, P.O. Box 231, Latrobe, Pennsylvania 15650, and each such person is a
citizen of the United States.
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
William R. Newlin(1)............... Director.
Robert L. McGeehan(1).............. Director, Chief Executive Officer and President.
David T. Cofer(1).................. Vice President, Secretary and General Counsel.
James E. Morrison.................. Vice President and Treasurer. Vice President of Parent
since 1994 and Treasurer of Parent since 1987.
</TABLE>
- ---------
(1) See information under "Directors and Executive Officers of Parent."
I-3
<PAGE> 47
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each Stockholder or
his or her broker, dealer, commercial bank, trust company or other nominee to
the Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Courier:
P.O. Box 3301 (For Eligible Institutions 120 Broadway--13th floor
South Hackensack, New Jersey Only) New York, New York 10271
07606 (201) 329-8936 Attn: Reorganization
Attn: Reorganization Confirm by Telephone: Department
Department (201) 296-4209
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
(LOGO)
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
(800) 223-2064 (toll free)
BANKERS AND BROKERS CALL COLLECT:
(212) 440-9800
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281-1314
(212) 449-8209 (call collect)
<PAGE> 48
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GREENFIELD INDUSTRIES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED OCTOBER 17, 1997
BY
KENNAMETAL ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
KENNAMETAL INC.
===============================================================================
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 14, 1997,
UNLESS THE OFFER IS EXTENDED.
===============================================================================
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail:
P.O. Box 3301
South Hackensack, New Jersey 07606
Attn: Reorganization Department
By Facsimile:
(For Eligible Institutions Only)
(201) 329-8936
Confirm by Telephone
(201) 296-4209
By Hand/Overnight Courier:
120 Broadway--13th Floor
New York, New York 10271
Attn: Reorganization Department
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE NUMBER OF SHARES NUMBER OF
(PLEASE FILL_IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATES REPRESENTED BY SHARES
APPEAR(S) ON THE CERTIFICATE(S)) NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
- -------------------------------------------------------------------------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
TOTAL SHARES:
- -------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Stockholders delivering Shares by Book-Entry Transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to the
Depositary are being tendered. See Instruction 4.
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 49
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Greenfield Industries, Inc. (the "Stockholders") if
certificates evidencing Shares ("Certificates") are to be forwarded with this
Letter of Transmittal or if delivery of Shares is to be made by book-entry
transfer to an account maintained by ChaseMellon Shareholder Services, L.L.C.
(the "Depositary") at The Depository Trust Company ("DTC") or the Philadelphia
Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase (as
defined below).
Stockholders whose Certificates are not immediately available or who cannot
deliver either their Certificates for, or a Book-Entry Confirmation (as defined
in Section 3 of the Offer to Purchase) with respect to, their Shares and all
other required documents to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) may tender their Shares according
to the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. See Instruction 2 hereof. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution:__________________________________________________
Check Box of Book-Entry Transfer Facility:
[ ] DTC [ ] PDTC
Account Number:_________________________________________________________________
Transaction Code Number:________________________________________________________
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):________________________________________________
Window Ticket Number (if any):__________________________________________________
Date of Execution of Notice of Guaranteed Delivery:_____________________________
Name of Institution Which Guaranteed Delivery:__________________________________
If delivered by book-entry transfer, check box of applicable Book-Entry Transfer
Facility:
[ ] DTC [ ] PDTC
Account Number:_________________________________________________________________
Transaction Code Number:________________________________________________________
<PAGE> 50
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Kennametal Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly-owned subsidiary of Kennametal Inc., a
Pennsylvania corporation ("Parent"), the above-described shares of common stock,
par value $0.01 per share, including the associated preferred stock purchase
rights (the "Rights"), issued pursuant to the Restated Rights Agreement dated as
of February 6, 1996, as amended on October 10, 1997 (the "Rights Agreement")
between Greenfield Industries, Inc., a Delaware corporation (the "Company"), and
First Chicago Trust Company of New York, as Rights Agent (the "Shares"), of the
Company for $38.00 per Share, net to the seller in cash, without interest
thereon, less any required withholding taxes, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated October 17, 1997 (the "Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with any amendments or supplements thereto,
constitute the "Offer"). The undersigned understands that Purchaser reserves the
right to transfer or assign, in whole or from time to time in part, to Parent or
to one or more other wholly-owned subsidiaries of Parent, the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not prejudice the rights of tendering Stockholders
to receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered with this Letter of Transmittal in accordance with the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms or conditions of any such extension or amendment), the
undersigned hereby sells, assigns, and transfers to, or upon the order of,
Purchaser all right, title and interest in and to all of the Shares that are
being tendered hereby and any and all other Shares or other securities issued or
issuable in respect to such Shares on or after October 10, 1997 (a
"Distribution"), and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and any Distributions), with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Certificates evidencing such Shares (and any Distributions), or
transfer ownership of such Shares (and all Distributions) on the account books
maintained by a Book-Entry Transfer Facility together, in any such case, with
all accompanying evidences of transfer and authenticity to, or upon the order
of, Purchaser, upon receipt by the Depositary as the undersigned's agent, of the
purchase price with respect to such Shares; (ii) present such Shares (and any
Distributions) for transfer on the books of the Company; and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject to
the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to all
Shares tendered hereby and accepted for payment and paid for by Purchaser (and
any Distributions), including, without limitation, the right to vote such Shares
(and any Distributions) in such manner as each such attorney and proxy or his
substitute shall, in his sole discretion deem proper. All such powers of
attorney and proxies, being deemed to be irrevocable, shall be considered
coupled with an interest in the Shares tendered with this Letter of Transmittal.
Such appointment will be effective if, when, and only to the extent that,
Purchaser accepts such Shares for payment pursuant to the Offer. Upon such
acceptance for payment, all prior powers of attorney, proxies and consents given
by the undersigned with respect to such Shares (and any Distributions) will be
revoked, without further action, and no subsequent powers of attorney and
proxies may be given with respect thereto (and, if given, will be deemed
ineffective). The designees of Purchaser will, with respect to the Shares (and
any Distributions) for which such appointment is effective, be empowered to
exercise all voting and other rights of the undersigned with respect to such
Shares (and any Distributions) as they in their sole discretion may deem proper.
Purchaser reserves the absolute right to require that, in order for Shares to be
deemed validly tendered, immediately upon the acceptance for payment of such
Shares, Purchaser or its designees are able to exercise full voting rights with
respect to such Shares (and any Distributions), including voting at any meeting
of Stockholders then scheduled.
<PAGE> 51
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions). The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of Shares tendered hereby (and any Distributions). In addition, the
undersigned shall promptly remit and transfer to the Depositary for the account
of Purchaser any and all Distributions issued to the undersigned on or after
October 10, 1997, in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof, as
determined by Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
instructions to this Letter of Transmittal will constitute a binding agreement
between the undersigned and Purchaser with respect to such Shares, upon the
terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Purchaser, may not be required to accept for payment any
of the Shares tendered hereby.
Unless otherwise indicated in this Letter of Transmittal under "Special
Payment Instructions," please issue the check for the purchase price and return
any Certificates evidencing Shares not purchased or not tendered, in the name(s)
of the registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price of all Shares purchased and return
any Certificates evidencing Shares not tendered or not purchased (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the "Special Payment Instructions" and the "Special Delivery Instructions"
are completed, please issue the check for the purchase price of all Shares
purchased and return any such Certificates evidencing Shares not tendered or not
purchased (and accompanying documents, as appropriate) in the name(s) of, and
deliver such check and return such Certificates (and accompanying documents, as
appropriate) to the person(s) so indicated. Unless otherwise indicated in this
Letter of Transmittal under "Special Payment Instructions," in the case of a
book-entry delivery of Shares, please credit the account maintained by the
undersigned at the Book-Entry Transfer Facility indicated above with respect to
any Shares not purchased. The undersigned recognizes that Purchaser has no
obligation pursuant to the "Special Payment Instructions" to transfer any Shares
from the name of the registered holder(s) if Purchaser does not accept for
payment any of the Shares tendered hereby.
[ ] CHECK HERE IF ANY OF THE CERTIFICATES EVIDENCING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates:_____________
<PAGE> 52
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares are not tendered or not
purchased and/or the check for the purchase price of Shares accepted for payment
are to be issued in the name of someone other than the undersigned, or if Shares
delivered by book-entry transfer that are not purchased are to be returned by
credit of an account maintained at a Book-Entry Transfer Facility, other than
the account indicated above.
Issue check and/or certificate(s) to:
Name:___________________________________________________________________________
(Please Type or Print)
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
________________________________________________________________________________
(Tax Identification or Social Security Number)
(Also complete Substitute Form W-9)
Credit unpurchased Shares delivered by book-entry transfer to the Book-Entry
Transfer Facility account set forth below:
[ ] DTC [ ] PDTC
(check one)
----------------------------------------------
(DTC/PDTC Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to be
sent to someone other than the undersigned or to the undersigned at an address
other than that shown above.
Mail check and/or Certificate(s) to:
Name:___________________________________________________________________________
(Please Type or Print)
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
________________________________________________________________________________
(Tax Identification or Social Security Number)
<PAGE> 53
IMPORTANT
STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 ON REVERSE
________________________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S) )
________________________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S) )
Dated: ______________________________ , 1997
(Must be signed by registered holder(s) as name(s) appear(s) on the Certificate
or on a security position listing or by person(s) authorized to become
registered holder(s) by Certificates and documents transmitted herewith. If
signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers or corporations or others acting in a fiduciary or
representative capacity, please provide the following information. See
Instruction 5.)
Name(s)_________________________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity (Full Title)___________________________________________________________
(SEE INSTRUCTION 5)
Address_________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No._____________________________________________
_____________________________________________
(HOME)
_____________________________________________
(BUSINESS)
Taxpayer Identification or Social Security No.__________________________________
(Complete Substitute Form W-9 on Reverse Side)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
________________________________________________________________________________
(AUTHORIZED SIGNATURE(S))
________________________________________________________________________________
(NAME)
________________________________________________________________________________
(NAME OF FIRM)
________________________________________________________________________________
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(AREA CODE AND TELEPHONE NO.)
Dated: ______________________________ , 1997
<PAGE> 54
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, no
signature guarantee is required on this Letter of Transmittal (a) if this Letter
of Transmittal is signed by the registered holder(s) (which term, for the
purposes of this document, includes any participant in any of the Book-Entry
Facilities' systems whose name appears on a security position listing as the
owner of the Shares) of Shares tendered herewith and such registered holder has
not completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on this Letter of Transmittal or (b) if
such Shares are tendered for the account of a financial institution (including
most commercial banks, savings and loan associations and brokerage houses) that
is a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program or by any other "eligible guarantor institution," as such term
is defined in the Securities Exchange Act of 1934, as amended (each, an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be Guaranteed by an Eligible Institution. See Instruction 5. If
the Certificates are registered in the name of a person other than the signer of
this Letter of Transmittal, or if payment is to be made or delivered to, or
Certificates evidencing unpurchased Shares are to be issued or returned to, a
person other than the registered owner, then the tendered Certificates must be
endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
Certificates, with the signatures on the Certificates or stock powers guaranteed
by an Eligible Institution as provided in this Letter of Transmittal. See
Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
Stockholders if Certificates evidencing Shares are to be forwarded with this
Letter of Transmittal or if delivery of Shares is to be made pursuant to the
procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase. For a Stockholder to validly tender Shares pursuant to the Offer,
either (a) a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees and
any other required documents, must be received by the Depositary at one of its
addresses set forth in this Letter of Transmittal on or prior to the Expiration
Date (as defined in the Offer to Purchase) and either (i) Certificates for
tendered Shares must be received by the Depositary at one of those addresses on
or prior to the Expiration Date or (ii) Shares must be delivered pursuant to the
procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase and a Book-Entry Confirmation must be received by the Depositary on or
prior to the Expiration Date or (b) the tendering Stockholder must comply with
the guaranteed delivery procedures set forth below and in Section 3 of the Offer
to Purchase.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer on or prior to the Expiration
Date may tender their Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) tender
must be made by or through an Eligible Institution, (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by Purchaser, must be received by the Depositary prior to the
Expiration Date, and (iii) Certificates representing all tendered Shares in
proper form for transfer, or a Book-Entry Confirmation with respect to all the
tendered Shares, together with a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in Section 2 of the Offer
to Purchase) in connection with a book-entry transfer and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within three New York Stock Exchange trading days after the date of such Notice
of Guaranteed Delivery. If Certificates are forwarded separately to the
Depositary, a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) must accompany each delivery.
THE METHOD OF DELIVERY OF CERTIFICATES EVIDENCING SHARES, THIS LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY, THROUGH ANY
BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDERS AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. DELIVERY OF THE LETTER OF
TRANSMITTAL AND ACCOMPANYING SHARES WILL BE DEEMED EFFECTIVE, AND RISK OF LOSS
WITH RESPECT TO THIS LETTER OF TRANSMITTAL AND ACCOMPANYING CERTIFICATE(S) WILL
PASS, ONLY WHEN THIS LETTER OF TRANSMITTAL AND ACCOMPANYING CERTIFICATE(S) ARE
OFFICIALLY RECEIVED BY THE DEPOSITARY.
<PAGE> 55
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering Stockholders, by execution of
this Letter of Transmittal (or a manually signed facsimile thereof), waive any
right to receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal is
inadequate, the information required under "Description of Shares Tendered"
should be listed on a separate signed schedule attached to this Letter of
Transmittal.
4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary with this Letter of Transmittal are to
be tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, a new Certificate for the
remainder of the Shares that were evidenced by your old Certificate(s) will be
sent, without expense, to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Payment Instructions" or
the box entitled "Special Delivery Instructions" on this Letter of Transmittal,
as soon as practicable after the expiration or termination of the Offer. All
Shares represented by Certificate(s) delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
Certificates.
If this Letter of Transmittal or any Certificates or instruments of
transfer are signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, that person should so indicate when signing, and
proper evidence satisfactory to Purchaser of that person's authority to so act
must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on the Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures on
the Certificate(s) or instruments of transfer must be Guaranteed by an Eligible
Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price of any Shares purchased is to be made to, or (in the
circumstances permitted hereby) if Certificates for Shares not tendered or not
purchased are to be registered in the name of, any person other than the
registered holder(s), or if tendered Certificates are registered in the name of
any person other than the person(s) signing this Letter of Transmittal, the
amount of any transfer taxes (whether imposed on the registered holder(s), such
other person or otherwise) payable on account of the transfer to such other
person will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes or exemption
therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF
TRANSMITTAL.
<PAGE> 56
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or a Certificate evidencing
Shares not tendered or not purchased is to be issued in the name of a person
other than the persons signing this Letter of Transmittal or if such check or
any such Certificate is to be sent to someone other than the persons signing
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal must be completed. If any
tendered Shares are not purchased for any reason and the Shares are delivered by
a Book-Entry Transfer Facility, the Shares will be credited to an account
maintained at the appropriate Book-Entry Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent (as defined below) at its
address or telephone number set forth below and requests for additional copies
of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed
Delivery and the Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 may be directed to the Information Agent or brokers,
dealers, commercial banks and trust companies and such materials will be
furnished at Purchaser's expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by
Purchaser (subject to certain limitations in the Merger Agreement (as defined in
the Offer to Purchase)), in whole or in part, at any time or from time to time,
in Purchaser's sole discretion.
10. BACKUP WITHHOLDING TAX. Each tendering Stockholder is required to
provide the Depositary with a Correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below
and to certify under penalties of perjury, that such number is correct and that
the Stockholder is not subject to backup withholding or federal income tax.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering Stockholder to a penalty and 31% federal income tax withholding on the
payment of the purchase price for the Shares. If the tendering Stockholder has
not been issued a TIN and has applied for a TIN or intends to apply for a TIN in
the near future, the tendering Stockholder should check the box in Part III of
the Substitute Form W-9 and sign and date both the Substitute Form W-9 and the
"Certificate of Awaiting Taxpayer Identification." If the Stockholder has
indicated in the box in Part III that a TIN has been applied for and the
Depositary is not provided with a TIN by the time of payment, the Depositary
will withhold 31% of all payments of the purchase price, if any, made thereafter
pursuant to the Offer until a TIN is provided to the Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost, destroyed or stolen, the Stockholder should promptly
notify the Depositary by checking the box immediately preceding the special
payment/special delivery instructions and indicating the number of Shares lost.
The Stockholders will then be instructed as to the steps that must be taken in
order to replace the Certificate(s). This Letter of Transmittal and related
documents cannot be processed until the procedures for replacing lost or
destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
THEREOF (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND
ANY OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
<PAGE> 57
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Stockholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
such Stockholder's correct TIN on Substitute Form W-9 below. If such Stockholder
is an individual, the TIN is his social security number. If the tendering
Stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future, the Stockholder should so indicate on the
Substitute Form W-9. See Instruction 10. If the Depositary is not provided with
the correct TIN, the Stockholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to the Stockholder
with respect to Shares purchased pursuant to the Offer may be subject to backup
federal income tax withholding at a 31% rate.
Certain Stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "exempt" across the
face of, and by signing and dating, the Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, that Stockholder must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Forms for such statements can be obtained from the
Depositary. See the enclosed Guidelines for Certificates of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the Stockholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Stockholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below certifying that the TIN provided on Substitute Form W-9 is
correct (or that the Stockholder is awaiting a TIN) and that (1) the Stockholder
has not been notified by the Internal Revenue Service that he is subject to
backup withholding as a result of a failure to report all interest or dividends
or (2) the Internal Revenue Service has notified the Stockholder that he is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Stockholder is required to give the Depositary the Social Security
Number or Employer Identification Number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
<PAGE> 58
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN IN THE BOX AT THE RIGHT AND PART III--Social Security
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW. Number OR Employer
Identification Number
DEPARTMENT OF THE
TREASURY ----------------------------
INTERNAL REVENUE SERVICE (If awaiting TIN, write "Applied
for")
---------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR PART II--For Payees exempt from backup withholding, see the enclosed Guidelines for
TAXPAYER IDENTIFICATION Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as
NUMBER (TIN) instructed therein.
- ------------------------------------------------------------------------------------------------------------------------------
CERTIFICATION--Under the penalties of perjury, I certify that:
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to
me); and
(2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service ("IRS") that
I am subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has notified me that
I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to
backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the
IRS that you are subject to backup withholding, you receive another notification from the IRS that you were no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the enclosed guidelines).
- ------------------------------------------------------------------------------------------------------------------------------
SIGNATURE_______________________________________________________________________________________ DATE ____________________
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN
THE BOX IN PART III OF THE SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number by the time of payment, 31% of all
payments of the purchase price pursuant to the Offer made to me thereafter will
be withheld until I provide a number.
SIGNATURE ______________________________________________ DATE ________________
- -------------------------------------------------------------------------------
<PAGE> 59
The Information Agent for the Offer is:
(LOGO)
GEORGESON & COMPANY INC.
<TABLE>
<S> <C>
Wall Street Plaza
New York, New York 10005
(800) 223-2064 (toll free)
Banks and Brokers Call Collect:
(212) 440-9800
</TABLE>
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281-1314
(212) 449-8209 (Call Collect)
October 17, 1997
<PAGE> 60
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GREENFIELD INDUSTRIES, INC.
AT
$38.00 NET PER SHARE
BY
KENNAMETAL ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
KENNAMETAL INC.
================================================================================
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, NOVEMBER 14, 1997, UNLESS THE OFFER IS EXTENDED.
================================================================================
This Notice of Guaranteed Delivery or a notice substantially equivalent
hereto must be used to accept the Offer (as defined below) if certificates
representing the common stock, par value $0.01 per share, including the
associated preferred stock purchase rights (the "Rights"), issued pursuant to
the Restated Rights Agreement dated as of February 6, 1996, as amended on
October 10, 1997 (the "Rights Agreement"), between Greenfield Industries, Inc.,
a Delaware corporation (the "Company"), and First Chicago Trust Company of New
York, as Rights Agent (the "Shares"), of the Company are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach ChaseMellon
Shareholder Services, L.L.C. (the "Depositary") prior to the Expiration Date (as
defined in the Offer to Purchase). This Notice of Guaranteed Delivery may be
delivered by hand or transmitted by facsimile transmission or mail to the
Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail:
P.O. Box 3301
South Hackensack, New Jersey 07606
Attn:
Reorganization Department
By Facsimile:
(For Eligible Institutions Only)
(201) 329-8936
Confirm by Telephone
(201) 296-4209
By Hand/Overnight Courier:
120 Broadway--13th Floor
New York, New York 10271
Attn:
Reorganization Department
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to the Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE> 61
Ladies and Gentlemen:
The undersigned hereby tenders to Kennametal Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Kennametal Inc., a Pennsylvania
corporation, the below-described Shares, including the associated preferred
stock purchase rights (the "Rights"), issued pursuant to the Restated Rights
Agreement dated as of February 6, 1996, as amended on October 10, 1997 (the
"Rights Agreement"), between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Shares"), pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated October 17,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of each of which is hereby acknowledged.
Number of Shares:____________________________________
Certificate Nos. (if available):_____________________
_____________________________________________________
Check one box if Shares will be tendered
by book-entry transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:______________________________________
Date:_________________________________________ , 1997
Name(s) of Record Holder(s):_________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
(Please Type or Print)
Address(es):_________________________________________
_____________________________________________________
(Zip Code)
Area Code and Tel. No.:______________________________
Signature(s):________________________________________
_____________________________________________________
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program or
by any other "eligible guarantor institution," as such term is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees
to deliver to the Depositary the certificates evidencing the Shares tendered
hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in
Section 3 of the Offer to Purchase) with respect to such Shares, in either case
together with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees or an
Agent's Message (as defined in Section 2 of the Offer to Purchase) in connection
with a book-entry transfer, and any other documents required by the Letter of
Transmittal, all within three New York Stock Exchange trading days after the
date hereof.
Name of Firm:________________________________________
Address:_____________________________________________
_____________________________________________________
(Zip Code)
Area Code and Tel. No.:______________________________
_____________________________________________________
(Authorized Signature)
Name:________________________________________________
(Please Type or Print)
Title:_______________________________________________
Date:________________________________________________
NOTE: DO NOT SEND CERTIFICATES EVIDENCING SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD ONLY BE SENT TOGETHER WITH YOUR
LETTER OF TRANSMITTAL.
<PAGE> 62
EXHIBIT (a)(4)
OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GREENFIELD INDUSTRIES, INC.
AT
$38.00 NET PER SHARE
BY
KENNAMETAL ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
KENNAMETAL INC.
===============================================================================
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, NOVEMBER 14, 1997, UNLESS THE OFFER IS EXTENDED.
===============================================================================
October 17, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by Kennametal Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly-owned subsidiary of Kennametal Inc., a
Pennsylvania corporation ("Parent"), to act as Dealer Manager in connection with
Purchaser's offer to purchase all outstanding shares of common stock, par value
$0.01 per share, including the associated preferred stock purchase rights (the
"Rights"), issued pursuant to the Restated Rights Agreement dated as of February
6, 1996, as amended on October 10, 1997 (the "Rights Agreement"), between
Greenfield Industries, Inc., a Delaware corporation (the "Company"), and First
Chicago Trust Company of New York, as Rights Agent (the "Shares"), of the
Company at a purchase price of $38.00 per Share (such amount, or any greater
amount per Share paid pursuant to the Offer (as defined below), being
hereinafter referred to as the "Offer Price"), net to the seller in cash,
without interest thereon, less any required withholding taxes, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated October
17, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any amendments or supplements, thereto, constitute the
"Offer") enclosed herewith. Please furnish copies of the enclosed material to
those of your clients for whose accounts you hold Shares in your name or in the
name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE SHARES REPRESENTING A
MAJORITY OF THE SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS OF THE
COMPANY'S COMMON STOCK ON THE DATE OF PURCHASE. THE OFFER ALSO IS SUBJECT TO
CERTAIN OTHER CONDITIONS WHICH ARE SET FORTH IN THE OFFER TO PURCHASE. SEE THE
INTRODUCTION AND SECTIONS 1 AND 14 OF THE OFFER TO PURCHASE.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase dated October 17, 1997.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Manually signed facsimile copies of the Letter
of Transmittal may be used to tender Shares.
3. A letter to stockholders of the Company from Donald E. Nickelson,
Chairman of the Board of the Company, and Paul W. Jones, President and
Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company.
<PAGE> 63
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if neither of the two procedures for tendering Shares set forth
in the Offer to Purchase can be completed on a timely basis.
5. A printed form of letter that may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominees, with space provided for obtaining such clients' instructions
regarding the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 14, 1997, UNLESS THE
OFFER IS EXTENDED.
Please note the following:
1. The tender price is $38.00 per Share, net to the seller in cash,
without interest thereon.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, November 14, 1997, unless the Offer is extended.
3. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions
of any such extension or amendment), Purchaser will purchase, by accepting
for payment, and will pay for all outstanding Shares validly tendered on or
prior to the Expiration Date, and not properly withdrawn, promptly after
the later to occur of (i) the Expiration Date (as defined in the Offer to
Purchase) and (ii) the satisfaction or waiver of the conditions to the
Offer set forth in Section 14 of the Offer to Purchase.
4. Tendering stockholders who have Shares registered in their names
will not be charged brokerage fees or commissions or, except as otherwise
provided in Instruction 6 of the Letter of Transmittal, transfer taxes on
the purchase of Shares by Purchaser pursuant to the Offer. However, backup
federal income tax withholding at a rate of 31% may be required, unless an
exemption applies or unless the required taxpayer identification
information is provided. See Instruction 10 of the Letter of Transmittal.
5. The Board of Directors of the Company (i) has unanimously approved
the Merger Agreement and the transactions contemplated thereby, including
the Offer at the Offer Price and the Merger, (ii) determined that the terms
of the Offer and the Merger are fair to, and in the best interests of, the
Company and the holders of Shares (the "Stockholders"), and (iii)
recommended that the Stockholders accept the Offer, tender their Shares to
Purchaser and approve and adopt the Merger Agreement and the Merger, if
required.
6. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates for (or a
timely Book-Entry Confirmation (as defined in Section 3 to the Offer to
Purchase) with respect to) such Shares, (b) the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed
with any required signature guarantees or an Agent's Message (as defined in
Section 2 of the Offer to Purchase) in connection with a book-entry
transfer, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment to all tendering Stockholders may not be
made at the same time depending upon when certificates for Shares or
Book-Entry Confirmation with respect to Shares are actually received by the
Depositary.
In order to take advantage of the Offer, (a) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) with
any required signature guarantees or an Agent's Message in connection with a
book-entry transfer or other required documents should be sent to the Depositary
and (b) certificates representing the tendered Shares or a timely Book-Entry
Confirmation with respect to such Shares should be delivered to the Depositary
in accordance with the instructions set forth in the Letter of Transmittal and
in the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date (as defined in
the Offer to Purchase), a tender may be effected by following the guaranteed
delivery procedures specified in Section 3 of the Offer to Purchase.
-2-
<PAGE> 64
Neither Purchaser nor Parent will pay any fees or commissions to any broker
or dealer or other person for soliciting tenders of Shares pursuant to the Offer
(other than the Dealer Manager and the Depositary as described in the Offer to
Purchase). Purchaser will, however, upon request, reimburse you for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to your clients. Purchaser will pay or cause to be paid any transfer
taxes payable on the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Merrill Lynch & Co., the Dealer Manager for the Offer, at World Financial
Center, North Tower, New York, New York 10281-1314, (212) 449-8209 or Georgeson
& Company Inc., the Information Agent for the Offer, at Wall Street Plaza, New
York, New York 10005, 1-(800)-223-2064.
Requests for copies of the enclosed materials may also be directed to the
Dealer Manager or the Information Agent at the above addresses and telephone
numbers.
Very truly yours,
MERRILL LYNCH & CO.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON, THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE DEALER
MANAGER, THE DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT
ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
-3-
<PAGE> 65
EXHIBIT (a)(5)
OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GREENFIELD INDUSTRIES, INC.
AT
$38.00 NET PER SHARE
BY
KENNAMETAL ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
KENNAMETAL INC.
===============================================================================
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, NOVEMBER 14, 1997, UNLESS THE OFFER IS EXTENDED.
===============================================================================
October 17, 1997
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated October 17,
1997 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the "Offer") in
connection with the offer by Kennametal Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly-owned subsidiary of Kennametal Inc., a
Pennsylvania corporation, to purchase all outstanding shares of common stock,
par value $0.01 per share, including the associated preferred stock purchase
rights (the"Rights"), issued pursuant to the Restated Rights Agreement dated as
of February 6, 1996, as amended on October 10, 1997 (the "Rights Agreement"),
between Greenfield Industries, Inc., a Delaware corporation (the "Company"), and
First Chicago Trust Company of New York, as Rights Agent (the "Shares"), of the
Company at a purchase price of $38.00 per Share (such amount, or any greater
amount per Share paid pursuant to the Offer, being hereinafter referred to as
the "Offer Price"), net to the seller in cash, without interest thereon, less
any required withholding taxes, upon the terms and subject to the conditions set
forth in the Offer. Holders of Shares whose certificates for such Shares are not
immediately available or who cannot deliver their certificates and all other
required documents to the Depositary (as defined in the Offer to Purchase) or
complete the procedures for book-entry transfer prior to the Expiration Date (as
defined in the Offer to Purchase) must tender their Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instruction as to whether you wish to have us
tender, on your behalf, any or all Shares held by us for your account pursuant
to the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $38.00 per Share, net to the seller in cash,
without interest thereon.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, November 14, 1997, unless the Offer is extended.
3. The Offer is being made for all outstanding Shares of the Company's
common stock on the date of purchase.
4. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date, Shares
representing a majority of the Shares then outstanding on a fully diluted
<PAGE> 66
basis of the Company's common stock on the date of the purchase. The Offer
also is subject to certain other conditions, which are set forth in the
Offer to Purchase.
5. Tendering stockholders who have Shares registered in their names
will not be charged brokerage fees or commissions or, except as otherwise
provided in Instruction 6 of the Letter of Transmittal, transfer taxes on
the purchase of Shares by Purchaser pursuant to the Offer. However, backup
federal income tax withholding at a rate of 31% may be required, unless an
exemption applies or unless the required taxpayer identification
information is provided. See Instruction 10 of the Letter of Transmittal.
6. THE BOARD OF DIRECTORS OF THE COMPANY (i) HAS UNANIMOUSLY APPROVED
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE OFFER AT THE OFFER PRICE AND THE MERGER, (ii) DETERMINED THAT THE TERMS
OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTEREST OF, THE
COMPANY AND THE HOLDERS OF SHARES (THE "STOCKHOLDERS"), AND (iii)
RECOMMENDED THAT THE STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES TO
PURCHASER AND APPROVE AND ADOPT THE MERGER AGREEMENT AND THE MERGER, IF
REQUIRED.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates for (or a
timely Book-Entry Confirmation (as defined in Section 3 to the Offer to
Purchase) with respect to) such Shares, (b) the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed
with any required signature guarantees or an Agent's Message (as defined in
Section 2 of the Offer to Purchase) in connection with a book-entry
transfer, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment to all tendering Stockholders may not be
made at the same time depending upon when certificates for Shares or
Book-Entry Confirmation with respect to Shares are actually received by the
Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form below. If you authorize the tender of your Shares,
all such Shares will be tendered unless otherwise specified on the instruction
form. An envelope to return your instructions to us is enclosed herewith. YOUR
INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A
TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser may,
in its discretion, take such action as it may deem necessary to make the Offer
to Stockholders in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of Purchaser by one or more registered brokers or dealers that
are licensed under the laws of such jurisdiction.
-2-
<PAGE> 67
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GREENFIELD INDUSTRIES, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase, dated October 17, 1997, and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, constitute the
"Offer") in connection with the offer by Kennametal Acquisition Corp., a
Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Kennametal
Inc., a Pennsylvania corporation, to purchase all outstanding shares of common
stock, par value $0.01 per share, including the associated preferred stock
purchase rights (the"Rights"), issued pursuant to the Restated Rights Agreement
dated as of February 6, 1996, as amended on October 10, 1997 (the "Rights
Agreement"), between Greenfield Industries, Inc., a Delaware corporation (the
"Company"), and First Chicago Trust Company of New York, as Rights Agent (the
"Shares"), of the Company at a purchase price of $38.00 per Share, net to the
seller in cash, without interest thereon, less any required withholding taxes,
upon the terms and subject to the conditions set forth in the Offer.
This will instruct you to tender to Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to be Tendered*:
____________________________________ Shares
Certificate Nos. (if available):_____________________
_____________________________________________________
Account Number:______________________________________
Dated:___________________________________________1997
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
SIGN HERE
- ------------------------------------------------------
- ------------------------------------------------------
SIGNATURE(S)
- ------------------------------------------------------
- ------------------------------------------------------
PLEASE TYPE OR PRINT NAME(S) HERE
- ------------------------------------------------------
- ------------------------------------------------------
PLEASE TYPE OR PRINT ADDRESS(ES) HERE
- ------------------------------------------------------
- ------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
- ------------------------------------------------------
- ------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
-3-
<PAGE> 68
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ---------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor (2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person (3)
for a designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee (1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner (1)
account that is not a
legal or valid trust
under State law
8. Sole proprietorship The owner (4)
account
- ---------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
9. A valid trust, estate, The legal entity (Do
or pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.) (5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the name
of a public entity
(such as a State or
local government,
school district or
prison) that receives
agricultural program
payments
- ---------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 69
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under Section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- Payments described in Section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under Section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045 and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 5% on any portion of
an underpayment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 70
EXHIBIT (a)(7)
<TABLE>
<S> <C> <C>
Contacts: FOR KENNAMETAL FOR GREENFIELD
Frank P. Simpkins (Investors) Gary L. Weller
412-539-4617 706-650-4218
Charles T. Glazer (Media)
412-539-4618
</TABLE>
FOR IMMEDIATE RELEASE
Kennametal Inc. to Acquire Greenfield Industries, Inc. in Transaction Valued at
Approximately $1 Billion
Acquisition to Enhance Kennametal's Position as a Manufacturer
and Distributor of Consumable Tools and Other Related Products to
Customers in Metalworking and Other Industries Worldwide
All-Cash Tender Offer for Greenfield's Common Stock at $38.00 Per
Share to Commence on or Prior to October 20, 1997
LATROBE, PENNSYLVANIA and AUGUSTA, GEORGIA, October 12, 1997--Kennametal
Inc. (NYSE: KMT) and Greenfield Industries, Inc. (NASDAQ: GFII) today jointly
announced the signing of a definitive merger agreement under which Kennametal
will acquire Greenfield in a transaction valued at approximately $1 billion.
Under the terms of the agreement, which has been approved by the Boards of
Directors of both companies, Kennametal will commence an all-cash tender offer
on or prior to October 20, 1997 to acquire all of Greenfield's common stock for
$38.00 per share, representing a premium of 18 percent over Greenfield's closing
price of $32 3/16 on Friday, October 10, 1997. As of September 30, 1997,
Greenfield had approximately 16.4 million shares outstanding. Under the terms of
the agreement, Kennametal also will assume Greenfield's outstanding debt and
convertible preferred securities, which have a current combined value of
approximately $320 million.
"The acquisition will significantly enhance Kennametal's competitive
position as a global leader in the metalworking consumable tooling industry by
forming an alliance of the two companies' complementary manufacturing
capabilities, product lines and sales channels," said Robert L. McGeehan,
president and chief executive officer of Kennametal. "Moreover, the transaction
serves as an important step in our long-term strategy to provide the market with
the most complete offering of products and services to meet customers'
metalworking needs. Greenfield will bring to Kennametal valuable new products
with strong brand-name recognition, and will provide access to markets and
customers not currently reached by Kennametal."
Paul W. Jones, president and chief executive officer of Greenfield,
commented, "Joining forces with Kennametal is a unique and exciting opportunity
for all Greenfield shareholders, customers and employees. The strengths of both
organizations in our respective markets will position Kennametal to be the
leading provider of high-quality cutting tools to our customers on a worldwide
basis. Kennametal, which is the North American leader and has excellent market
positions in Europe and Asia Pacific, will be strengthened by Greenfield's broad
product offering and reputation for service. Furthermore, Kennametal has
world-class materials science and other technical capabilities that will be
utilized by many of Greenfield's operations, allowing them to expand into and
serve markets and customers in ways not possible before."
In the course of conducting extensive due diligence, Kennametal was
provided with Greenfield's internal financial projections for 1997 and 1998.
These projections anticipate sales of approximately $577 million for 1997 and
approximately $636 million for 1998. Greenfield's fully diluted earnings per
share, before any possible restructuring charges, are expected to be in a range
of $1.56 to $1.78 for 1997. These projections, as well as Greenfield's
expectation that its earnings will improve significantly in 1998, were taken
into consideration in determining Kennametal's offer.
<PAGE> 71
"We greatly value Greenfield's management, brands and products and believe
the true fundamentals of their business have been obscured by
slower-than-expected improvements in certain operations," said Mr. McGeehan. "We
look forward to working in combination with Greenfield's management to help us
fulfill our strategic vision for the combined enterprises."
Greenfield will continue to operate under its current name as a subsidiary
of Kennametal. Mr. Jones will continue in his capacity as president and CEO of
Greenfield and will report to Mr. McGeehan.
Mr. McGeehan added, "We will continue to strive to be the customer's first
choice for metalworking tools, supplies and technical support through our
direct-sales organization and JLK operation, which serves customers through
catalogs, showrooms and integrated supply programs. We view Greenfield's
products and distributor network as excellent additions to these existing
efforts."
Kennametal said it will finance the acquisition initially through its new
revolving credit agreement. Completion of the acquisition, which is subject to
customary regulatory approvals in the United States and certain other countries,
is expected to occur by year-end.
Merrill Lynch & Co. served as the financial advisor to Kennametal. Credit
Suisse First Boston and NationsBanc Capital Markets, Inc. served as financial
advisors to Greenfield.
Greenfield Industries, Inc. is a leading worldwide manufacturer of
consumable cutting tools and related products used in a variety of industrial,
electronics, energy and construction, engineered and consumer markets.
Greenfield also manufactures and sells various products for the marine industry.
The company, which has 5,100 employees, had sales of $520 million in 1996.
Kennametal Inc. markets, manufactures and distributes a broad range of
tools and industrial supplies and accessories for the metalworking, mining and
highway construction industries. With more than 7,500 employees worldwide and
sales of approximately $1.2 billion for the year ended June 30, 1997, Kennametal
is one of the world's leading producers and suppliers of cutting tools and
wear-resistant parts made of cemented carbides and other hard materials.
This Press Release contains certain "forward-looking statements," as
defined in Section 21E of the Securities Exchange Act of 1934, concerning
Kennametal's and Greenfield's operations and performance, including, in
particular, Greenfield's future results of operations. These statements are
based upon a number of assumptions and estimates which are inherently subject to
significant uncertainties and contingencies which are not controllable and
actual results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to vary
include general economic and market conditions in North America and Europe and
to a lesser extent Asia Pacific, conditions in stock and debt markets,
successful integration of Kennametal and Greenfield and restructurings.
KENNAMETAL INC. FACT SHEET
Kennametal Inc. is a marketer, manufacturer and distributor of a broad
range of tools and industrial supplies for the metalworking, mining and highway
construction industries. Kennametal is one of the world's leading producers of
cutting tools and wear-resistant parts made of cemented carbides and other hard
materials.
- METALWORKING. Kennametal is a world leader in the metalworking market,
with a No. 1 market position in North America and a No. 2 market position
in Europe. Using its proprietary carbide technology, the company produces
metalcutting inserts and other tools used by manufacturers in a wide
range of industries, including automotive, aerospace, construction and
farm machinery, factory equipment, fabricated parts, engines, turbines,
and oil and gas equipment. A key element of Kennametal's multi-channel
distribution strategy is its direct sales organization including 350
sales engineers who are adept at solving customers' machining problems.
In addition to its industry leading positions in North America and
Europe, Kennametal has a growing position in Asia Pacific, the world's
fastest-growing and potentially largest metal-working market. The
<PAGE> 72
company has invested in a new $20 million state-of-the-art facility in
Shanghai, China, and has an extensive sales force in the region.
- INDUSTRIAL SUPPLY. Kennametal's industrial supply business is the
fastest-growing area of the company. With a focus on metalworking,
industrial supply provides customers with complete one-stop shopping for
their metalworking and machining needs, by combining Kennametal's
products with products and supplies not manufactured by Kennametal. The
products are distributed through the company's JLK Direct Distribution
Inc. (JLK) subsidiary, which was recently formed to better focus the
company's efforts in capitalizing on opportunities in industrial supply.
- MINING AND HIGHWAY CONSTRUCTION. Kennametal is the world leader in
mining and highway construction tools. Kennametal leads the way with
advanced technology and expert application advice in both traditional
markets, such as North America and Europe, and in emerging economies,
such as China, South America and Eastern Europe.
<TABLE>
<S> <C>
Corporate Name: Kennametal Inc. (NYSE: KMT)
Chairman: William R. Newlin
President and CEO: Robert L. McGeehan
Annual Sales Revenues: $1.2 billion in fiscal 1997
Number of Employees: 7,500 worldwide
Corporate Headquarters: Latrobe, Pennsylvania
Corporate Milestones: IPO of JLK Direct Distribution Inc. - 1997
$34 million World Headquarters - 1997
Acquisition of Hertel, Furth, Germany - 1993
$30 million corporate research center - 1991
</TABLE>
GREENFIELD INDUSTRIES, INC. FACT SHEET
Greenfield Industries is a leading manufacturer of consumable cutting tools
and related products, sold under some of the best-known brand names in the
metalworking industry. Its operations fall into six key areas:
- INDUSTRIAL PRODUCTS. The Industrial Products Group, the company's
largest segment representing approximately 55 percent of sales, produces
a wide range of cutting tool products made of high-speed steel and
tungsten carbide, for customers in a variety of industries. The company
is the leading manufacturer of industrial drill bits, taps and dies and
fixed limit gages in North America. Its brand names include Greenfield
Tap & Die, Cleveland Twist Drill, Putnam, Chicago-Latrobe, Vermont Tap &
Die, Eclipse, Metcut, Threads, Inc. and Metal Removal, among others.
- ENERGY & CONSTRUCTION PRODUCTS. Greenfield's Energy and Construction
Products Group manufactures products used in oil and gas drilling, mining
and highway resurfacing. The company is the largest independent supplier
of oil field compacts in the United States.
- ELECTRONICS PRODUCTS. The Electronics Products Group manufactures
carbide drills, endmills and routers used to make printed circuit boards
for the electronics industry, and is the world's leading manufacturer of
circuit board drills.
- ENGINEERED PRODUCTS. The Engineered Products Group manufactures
"made-to-order" tungsten-carbide parts for demanding wear applications,
such as plastics processing, tool and die manufacturing, and petroleum
flow control.
- CONSUMER PRODUCTS. Greenfield's Consumer Products Group manufactures
cutting tools, drill bits, saw blades and other tools for builders,
contractors, mechanics and "do-it-yourselfers," and has been the
exclusive supplier of Craftsman drill bits to Sears since 1930.
<PAGE> 73
- MARINE PRODUCTS. The Marine Products Group manufactures a variety of
marine products such as Rule bilge pumps, Danforth anchors and compasses.
<TABLE>
<S> <C>
Corporate Name: Greenfield Industries, Inc. (Nasdaq: GFII)
President and CEO: Paul W. Jones
Annual Sales Revenues: $520 million in 1996
Number of Employees: 5,100 worldwide
Corporate Headquarters: Augusta, Georgia
Corporate Milestones: IPO of Greenfield Industries - 1993
Secondary Offering - 1994
Acquisition of Cleveland Twist Drill - 1994
Acquisition of Rule Industries - 1996
</TABLE>
<PAGE> 74
Exhibit (a)(8)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
October 17, 1997, and the related Letter of Transmittal and is not being made
to, and tenders will not be accepted from or on behalf of, holders of Shares
in any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. If the
securities laws of any jurisdiction require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of Kennametal
Acquisition Corp. by Merrill Lynch & Co. or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Greenfield Industries, Inc.
at
$38.00 Net Per Share in Cash
by
Kennametal Acquisition Corp.
A Wholly-Owned Subsidiary of
Kennametal Inc.
Kennametal Acquisition Corp., a Delaware corporation (the "Purchaser") and
a wholly-owned subsidiary of Kennametal Inc., a Pennsylvania corporation
("Parent"), is offering to purchase all outstanding shares of Common Stock, par
value $0.01 per share, including the associated preferred stock purchase rights
(the "Rights") issued pursuant to the Restated Rights Agreement, dated as of
February 6, 1996, as amended October 10, 1997, by and between the Company and
First Chicago Trust Company of New York, as Rights Agent (the "Shares"), of
Greenfield Industries, Inc., a Delaware corporation (the "Company"), at a
purchase price of $38.00 per Share (such amount, or any greater amount per
share paid pursuant to the Offer (as defined below), being hereinafter referred
to as the "Offer Price"), net to the seller in cash, without interest thereon
less any required withholding taxes, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated October 17, 1997, and the
related Letter of Transmittal (which together constitute the "Offer"). See the
Offer to Purchase for capitalized terms used but not defined herein.
The Offer is not conditioned on obtaining financing.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 14, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined below)
Shares representing not less than a majority of the Shares then outstanding on
a fully diluted basis on the date of purchase (the "Minimum Condition") and
(ii) the expiration or termination of any applicable waiting periods imposed by
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. See
Sections 1 and 14 of the Offer to Purchase.
The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of October 10, 1997 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. The Merger Agreement provides, among other things,
for the commencement of the Offer by Purchaser and further provides that, after
the purchase of Shares pursuant to the Offer and subject to the satisfaction or
waiver of certain conditions set forth therein, Purchaser will be merged with
and into the Company (the "Merger"), with the Company surviving the Merger as a
direct wholly-owned subsidiary of Parent. Pursuant to the Merger, each
outstanding Share (other than, (i) Shares owned by Parent, Purchaser or any
direct or indirect wholly-owned subsidiaries of Parent or the Company or Shares
held in the Company's treasury and (ii) Shares held by holders who have
properly exercised their appraisal rights under the Delaware General
Corporation Law (the "DGCL")) immediately prior to the Effective Time (as
defined in the Merger Agreement), will be converted into the right to receive
the Offer Price, in cash, without interest thereon, less any required
withholding of taxes, upon the surrender of certificates formerly representing
such Shares.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS, (i) UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AT THE OFFER PRICE AND THE MERGER, (ii) DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY AND THE HOLDERS OF SHARES (THE "STOCKHOLDERS"), AND (iii)
RECOMMENDED THAT THE STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES TO
PURCHASER AND APPROVE AND ADOPT THE MERGER AGREEMENT AND THE MERGER, IF
REQUIRED.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered to Purchaser and not
withdrawn on or prior to the Expiration Date if, as and when Purchaser gives
oral or written notice to ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") of Purchaser's acceptance for payment of such Shares. Upon the
terms and subject to the conditions of the Offer, payment for Shares accepted
for payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
Stockholders for the purpose of receiving payment from Purchaser and
transmitting payments to tendering Stockholders. Upon the deposit of funds with
the Depositary for the purpose of making payments to tendering Stockholders,
Purchaser's obligation to make such payment will be satisfied, and tendering
Stockholders must thereafter look solely to the Depositary for payments of
amounts owed to them by reason of the acceptance for payment of Shares pursuant
to the Offer.
<PAGE> 75
Pursuant to the terms of the Merger Agreement, Purchaser expressly
reserves the right (but will not be obligated) to waive any or all of the
conditions of the Offer (other than the Minimum Condition) without the prior
written consent of the Company. Pursuant to the Merger Agreement, Purchaser
may, without the consent of the Company, (i) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "Commission") or the staff thereof applicable to
the Offer, (ii) extend the Offer on one or more occasions for up to ten
business days for each such extension beyond the then scheduled Expiration
Date, if at the then scheduled Expiration Date of the Offer any of the
conditions to Purchaser's obligation to accept for payment and pay for the
Shares shall not be satisfied or waived, until such time as such conditions are
satisfied or waived (and, at the request of the Company, Purchaser will,
subject to Purchaser's right to terminate the Merger Agreement, extend the
Offer for additional periods, unless the only conditions not satisfied or
waived on the then scheduled Expiration Date are one or more of the Minimum
Condition and certain other conditions, provided that (A) if the only condition
not satisfied is the Minimum Condition, the satisfaction or waiver of all other
conditions will have been publicly disclosed at least five business days before
termination of the Offer and (B) if certain conditions have not been satisfied
and the failure to so satisfy can be remedied, the Offer will not be terminated
unless the failure is not remedied within 30 calendar days after Purchaser has
furnished the Company written notice of such failure), and (iii) extend the
Offer for an aggregate period of not more than five business days beyond the
latest Expiration Date that would otherwise be permitted under clause (i) or
(ii) above if there have not been tendered a sufficient number of Shares so
that the Merger may be effected without a meeting of the Stockholders in
accordance with Section 253 of the DGCL.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right, subject to applicable law, to extend the period of time during which
the Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. There can be
no assurance that Purchaser will extend the Offer. Purchaser also expressly
reserves the right, subject to applicable law (including applicable rules and
regulations of the Commission) and the terms of the Merger Agreement, at any
time or from time to time, to (i) delay acceptance for payment of, or payment
for, any Shares, regardless of whether the Shares were theretofore accepted for
payment, or to terminate the Offer and not accept for payment or pay for any
Shares not theretofore accepted for payment or paid for, upon the occurrence of
any of the conditions specified in Section 14 of the Offer to Purchase by
giving oral or written notice of such delay in payment or termination to the
Depositary, (ii) waive any conditions (other than the Minimum Condition) and,
subject to complying with the terms of the Merger Agreement and the applicable
rules and regulations of the Commission, to accept for payment and pay for all
Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn, (iii) extend the Offer and, subject to the right of Stockholders to
withdraw Shares until the Expiration Date, to retain Shares that have been
tendered for the period or periods for which the Offer is extended, and (iv)
amend the Offer, by giving oral or written notice to the Depositary. Any
extension, delay in payment, termination or amendment will be followed as
promptly as practicable by public announcement, the announcement in the case of
an extension to be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such announcement, other than by issuing a release to
the Dow Jones News Service or as otherwise required by law. The reservation by
Purchaser of the right to delay acceptance for payment of, or payment for,
Shares is subject to the provisions of Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which requires that
Purchaser pay consideration offered or return the Shares deposited by or on
behalf of Stockholders promptly after the termination or withdrawal of the
Offer. The Purchaser shall not have any obligation to pay interest on the
purchase price for tendered Shares whether or not the Purchaser exercises its
right to extend the Offer.
Pursuant to the terms of the Merger Agreement, Purchaser expressly
reserves the right, subject to applicable law, to modify the terms of the
Offer, except that, without the written consent of the Company, Purchaser shall
not, (i) reduce the maximum number of Shares to be purchased in the Offer or
the Minimum Condition, (ii) reduce the price per Share payable in the Offer,
(iii) change the form of consideration to be paid in the Offer, (iv) impose
additional conditions to the Offer or modify the conditions in the Offer in a
manner adverse to the holders of the Shares, or (v) amend any other term of the
Offer in a manner adverse to the holders of the Shares except that Purchaser
may, in its sole discretion, without the consent of the Company, waive
satisfaction of any condition of the Offer (other than the Minimum Condition).
Assuming the prior satisfaction or waiver of the conditions of the Offer,
Purchaser will accept for payment, and pay for, in accordance with the terms of
the Offer, Shares validly tendered and not properly withdrawn pursuant to the
Offer promptly after the Expiration Date.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Friday, November 14, 1997, unless and until Purchaser, in accordance with the
terms of the Offer and the Merger Agreement, shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
means the latest time and date at which the Offer, as so extended, expires.
<PAGE> 76
If any tendered Shares are not accepted for payment pursuant to the Offer
for any reason or if certificates are submitted for more Shares than are
tendered, certificates for such Shares not purchased or tendered will be
returned pursuant to the instructions of the tendering Stockholder without
expense to the tendering Stockholder (or, in the case of Shares delivered by
book-entry transfer within a Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3 of the Offer to Purchase, such Shares will be
credited to an account maintained within such Book-Entry Transfer Facility) as
promptly as practicable following the expiration or termination of the Offer.
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in Section 4 of the Offer to Purchase. Shares tendered
pursuant to the Offer may be withdrawn pursuant to the procedures set forth in
Section 4 of the Offer to Purchase at any time prior to the Expiration Date
and, unless theretofore accepted for payment and paid for by Purchaser pursuant
to the Offer, may also be withdrawn at any time after December 15, 1997. If
Purchaser extends the Offer, is delayed in its acceptance for payment of or
payment for Shares or is unable to pay for Shares for any reason, then, without
prejudice to Purchaser's rights under the Offer, tendered Shares may be
retained by the Depositary, on behalf of Purchaser and may not be withdrawn,
except to the extent that tendering Stockholders are entitled to withdrawal
rights as described in Section 4 of the Offer to Purchase. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE OF SHARES BE PAID BY
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the persons who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder, if different from that of the person who tendered such
Shares. If certificates evidencing Shares to be withdrawn have been delivered
or otherwise identified to the Depositary, then, prior to the physical release
of such certificates, the tendering Stockholder must also submit to the
Depositary the serial numbers shown on the particular certificates evidencing
the Shares to be withdrawn, and the signature on the notice of withdrawal must
be guaranteed by an Eligible Institution (as defined below), (except in the
case of Shares tendered for the account of an Eligible Institution). If Shares
have been tendered pursuant to the procedure for book-entry transfer set forth
in Section 3 of the Offer to Purchase, the notice of withdrawal must also
specify the name and number of the account at the applicable Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures. An Eligible Institution is
a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program or any
other "eligible guarantor institution" (as such term is defined in Rule 17Ad-15
under the Exchange Act).
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Exchange Act is contained in the Offer
to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with its stockholder list and security
position listings for the purpose of disseminating the Offer to Stockholders.
The Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's Stockholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
STOCKHOLDERS ARE URGED TO READ THE OFFER TO PURCHASE AND THE RELATED
LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR SHARES
PURSUANT TO THE OFFER.
Questions and requests for assistance or for copies of the Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery or other
related materials may be directed to the Information Agent or the Dealer
Manager at their respective addresses and telephone numbers set forth below.
Holders of Shares may also contact brokers, dealers, commercial bankers and
trust companies for additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery or other related materials.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212)440-9800
ALL OTHERS CALL TOLL-FREE:(800) 223-2014
The Dealer Manager for the Offer is:
[MERRILL LYNCH & CO. LOGO]
World Financial Center
North Tower
New York, New York 10281-1314
(212)449-8209 (Call Collect)
October 17, 1997
<PAGE> 77
EXHIBIT (a)(9)
October 17, 1997
Immediate
KENNAMETAL COMMENCES ALL-CASH TENDER
OFFER FOR GREENFIELD INDUSTRIES SHARES
LATROBE, PA, OCTOBER 17, 1997--Kennametal Inc. (KMT:NYSE) today commenced its
previously announced all-cash tender offer for all of the outstanding shares of
Greenfield Industries, Inc. (NASDAQ:GFII) at a price of $38.00 per share. The
tender offer is scheduled to expire at 12:00 midnight New York City time on
November 14, 1997, unless extended.
The complete terms and conditions are set forth in the Offer to Purchase, copies
of which are available by contacting the information agent, Georgeson & Company
Inc. (1-800-848-3155).
Merrill Lynch & Co. is the dealer manager for the offer.
Kennametal and Greenfield each filed its Premerger Notification and Report Form
with the Federal Trade Commission and the Antitrust Division of the Department
of Justice under the Hart-Scott-Rodino Act.
Kennametal Inc. markets, manufactures and distributes a broad range of tools and
industrial supplies and accessories for the metalworking, mining and highway
construction industries. With more than 7,500 employees worldwide and sales of
approximately $1.2 billion for the fiscal year ended June 30, 1997, Kennametal
is one of the world's leading producers and suppliers of cutting tools and
wear-resistant parts made from cemented carbides and other hard materials.
# # # #
<PAGE> 78
EXHIBIT (b)(1)
October 14, 1997
Mr. James E. Morrison
Vice President and Treasurer
Kennametal Inc.
State Route 981 South
P.O. Box 231
Latrobe, Pennsylvania 15650-0231
COMMITMENT LETTER
Dear Jim:
You have advised BankBoston, N.A. and BancBoston Securities Inc.
(collectively, "BankBoston"), Deutsche Bank AG, New York Branch and/or Cayman
Islands Branch (collectively, "Deutsche"), Mellon Bank, N.A. ("Mellon") and PNC
Bank, National Association ("PNC") (BankBoston, Deutsche, Mellon and PNC,
collectively, the "Arrangers") that Kennametal Inc. ("Kennametal") wishes to
pursue the acquisition of 100% of the capital stock of Greenfield Industries,
Inc. ("Greenfield"). You have requested that the four Arrangers extend, or
arrange for the extension of, credit facilities of up to $1,400,000,000 (the
"Facilities"), a portion of which would be used by Kennametal for the
acquisition of capital stock of Greenfield and refinancing of certain
outstanding debt obligations of Kennametal and Greenfield, and the balance of
which would be used to meet the companies' working capital requirements and for
general corporate purposes.
The Arrangers are pleased to advise you that, on the terms and subject to
the conditions set forth or referred to herein or in the attached Term Sheet
(which forms a part of this letter and is incorporated herein by reference), the
Arrangers are willing to provide the following shares of the aggregate
Facilities: BankBoston, $350,000,000; Deutsche, $350,000,000; Mellon,
$350,000,000; PNC, $350,000,000. The Arrangers shall have the right to
reallocate their respective shares among themselves with the consent of each
Arranger. Each Arranger is providing its share with a view to syndication to
other financial institutions mutually satisfactory to the Arrangers and
Kennametal. Mellon will act as Administrative Agent for the lenders under the
Facilities, and the other three Arrangers will each be a Syndication Agent.
The Arrangers will not be obligated to enter into or make any loans or
extend any credit under the Facilities unless and until all the conditions set
forth, referred to, or incorporated herein, have been satisfied. The Facilities
will be made available pursuant to loan agreements and related agreements and
documents (collectively, the "Documentation") in form and substance satisfactory
to each Arranger, which Documentation will reflect the terms and conditions set
forth, referred to or incorporated herein and such additional representations,
warranties, conditions, covenants and other terms and provisions as, in the
opinion of each Arranger, are appropriate in this transaction.
The Arrangers shall be entitled to compensation as provided in the Term
Sheet, and shall also be entitled to compensation as provided in the Origination
Fee Letter of even date herewith.
Whether or not the transactions contemplated hereby are closed, Kennametal
agrees to pay the reasonable out-of-pocket expenses of each of the Arrangers,
including the reasonable fees and expenses of Reed Smith Shaw & McClay LLP, as
counsel for the Administrative Agent, and any local counsel and other experts
engaged by the Administrative Agent, in connection with the development of this
letter, the Engagement Letter referred to below, the Documentation, and the
financing contemplated hereby (it being understood that the foregoing shall not
entitle any Arranger other than the Administrative Agent to be reimbursed for
legal expenses (except to the extent, if any, such Arranger engages local
counsel at the request of the Administrative Agent)). Kennametal further agrees
to indemnify and hold harmless each Arranger and its affiliates and each
director, officer, employee and agent thereof (the "Indemnified Parties"), and
each of them, from and against any and all losses, claims, damages, expenses or
liabilities to which any thereof may become subject, insofar as such losses,
claims,
<PAGE> 79
damages, expenses or liabilities (or actions, suits or proceedings, including
any inquiry or investigation or claims in respect thereof) arise out of, in any
way relate to, or result from a claim in respect of this letter, the Engagement
Letter, the transactions described herein or the financing contemplated hereby
(whether or not any Indemnified Party is a party to any action or proceeding out
of which any such losses, claims, damages, expenses or liabilities arise), and
to reimburse the Indemnified Parties, upon demand, for any reasonable legal or
other expenses incurred by any thereof in or in connection with investigating,
preparing to defend, defending or otherwise participating in any such claim,
action or proceeding related to any such loss, claim, damage or liability,
except that Kennametal shall not be obligated to indemnify, hold harmless or
reimburse an Indemnified Party for any such losses, claims, damages, expenses or
liabilities to the extent that the same resulted from the gross negligence or
willful misconduct of the Indemnified Party seeking such indemnity.
Neither the contents nor the existence of this letter (including the
Origination Fee Letter) may be disclosed by Kennametal to any third party orally
or in writing until it has been accepted; provided, however, that such
disclosure may be made to Kennametal's legal counsel and financial advisors
(subject to the same requirement of confidentiality) for the sole purpose of
reviewing the same. Without limitation of other rights and remedies any Arranger
may have, in the event of such disclosure Kennametal shall be deemed to have
accepted and agreed to the provisions hereof and of the Origination Fee Letter,
and fees shall be earned and payable accordingly. No Arranger will be
responsible or liable to any person (other than Kennametal) for any damages
which may be alleged as a result of the existence or contents hereof.
In accordance with normal practice relating to syndication of facilities
such as the Facilities, an information package containing relevant information
about Kennametal, Greenfield, and their respective affiliates and the proposed
transaction will be provided to the Arrangers by or on behalf of Kennametal at
Kennametal's expense. Each Arranger is hereby authorized to distribute such
package and any and all other such information respecting Kennametal,
Greenfield, their respective affiliates and the proposed transaction as from
time to time delivered to, or otherwise in the possession of, any Arranger, to
any such prospective syndicate members or participants (who shall in each case
be subject to the prior written consent of Kennametal), and is hereby also
authorized to make further distribution of such information and materials
following syndication. Kennametal agrees that it will, at its expense, use all
reasonable efforts to cooperate with such syndication effort; without
limitation, Kennametal shall cause appropriate officers, representatives and
experts of Kennametal and Greenfield to meet with prospective syndicate members
or participants from time to time as reasonably requested by any Arranger.
Each Arranger agrees to take reasonable precautions to maintain the
confidentiality of information designated in writing by Kennametal as
confidential and provided to it by Kennametal in connection with this letter and
the financing contemplated hereby; provided, however, that any Arranger may
disclose such information (i) at the request of any bank regulatory authority or
other governmental agency or authority or in connection with an examination of
such Arranger by any such governmental agency or authority, (ii) pursuant to
subpoena or other judicial process, (iii) to the extent such Arranger is
required (or believes in good faith, following receipt of advice of counsel,
that it is required) to do so in accordance with any applicable law, (iv) to
such Arranger's independent auditors and other professional advisors, (v) in
connection with the enforcement of any of such Arranger's rights under or in
connection with this letter or the Documentation, (vi) to the extent that such
information becomes publicly available other than by breach of this Agreement,
or becomes available to such Arranger on a non-confidential basis from a source
other than Kennametal, (vii) to any other Arranger, and (viii) to any actual or
potential participant or syndicate member; so long as, in the case of clauses
(iv) and (viii), such person has been notified that, by receiving any such
confidential information, it is subject to the foregoing confidentiality
requirement to the same extent as the Arrangers.
The commitment represented by this letter will terminate at 10:00 p.m.
(local time in Pittsburgh, Pennsylvania) on October 15, 1997, unless Mellon, as
Administrative Agent, has received prior to that time Kennametal's written
acceptance or unless this letter has been deemed accepted pursuant to the terms
hereof. If this letter is accepted or deemed accepted on or before its
expiration in accordance with the preceding sentence, such commitment will
nonetheless terminate at 7:00 p.m. (local time in Pittsburgh, Pennsylvania) on
December 30, 1997 unless definitive Documentation, satisfactory in form and
substance to each Arranger, shall have been entered into and closing thereunder
shall have occurred on or prior to such time. Upon your acceptance of
2
<PAGE> 80
this letter, the engagement letter dated September 29, 1997 from the Arrangers
to Kennametal (the "Engagement Letter") shall be of no further force or effect.
The rights and obligations of the Arrangers in connection with this letter
are several and not joint, and nothing herein shall be deemed to create a
partnership or joint venture between the Arrangers or to constitute any Arranger
as agent for any other Arranger.
The parties understand and agree that Kennametal, by accepting this
commitment letter, is under no obligation to consummate the financing proposed
hereby.
This letter may be executed by the parties hereof on one or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same agreement. No person other than Kennametal and the
Arrangers shall be entitled to the benefit hereof or to rely hereon (except for
the Indemnified Parties, who shall be entitled to the benefit hereof to the
extent set forth above).
If you are in agreement with the foregoing, please sign where indicated
below and return the enclosed copy of this letter and of the Origination Fee
Letter to Mellon, as Administrative Agent. Upon receipt of such copy hereof,
duly signed by Kennametal, the undertakings of the Arrangers and Kennametal
hereunder shall become effective to the extent and in the manner provided
herein. This letter shall be governed by the laws of the Commonwealth of
Pennsylvania.
We welcome this opportunity to assist you in connection with this potential
transaction and look forward to working with you in an attempt to accomplish its
successful conclusion.
Very truly yours,
<TABLE>
<S> <C>
BANKBOSTON, N.A. MELLON BANK, N.A.
By /s/ M. PAULA ZAIKEN By /s/ MARK E. DOWNS
------------------------------------------- ---------------------------------------------
M. Paula Zaiken Mark E. Downs
BANCBOSTON SECURITIES INC. PNC BANK, NATIONAL ASSOCIATION
By /s/ J. PETER MITCHELL By /s/ LAWRENCE W. JACOBS
------------------------------------------- ---------------------------------------------
J. Peter Mitchell Lawrence W. Jacobs
DEUTSCHE BANK AG, NEW YORK BRANCH
and/or CAYMAN ISLAND BRANCH
By /s/ HANS-JOSEF THIELE
-------------------------------------------
Hans-Josef Thiele
By /s/ STEPHAN A. WIEDEMANN
-------------------------------------------
Stephan A. Wiedemann
The foregoing is hereby accepted and agreed as of this 15th day of October, 1997:
KENNAMETAL INC.
By /s/ JAMES E. MORRISON
------------------------------------------
James E. Morrison
Vice President and Treasurer
</TABLE>
3
<PAGE> 81
KENNAMETAL INC.
================================================================================
KENNAMETAL INC.
UP TO US$1,400,000,000 IN SENIOR CREDIT FACILITIES
TERM SHEET
OCTOBER 14, 1997
BORROWER: Kennametal Inc. ("Kennametal" or the "Borrower").
PROPOSED ACQUISITION: Kennametal proposes to acquire (the "Acquisition")
all of the common stock of Greenfield Industries,
Inc., a Delaware corporation ("Greenfield").
Kennametal and Kennametal Acquisition Corp.
(formerly named Palmer Acquisition Corp.), a
wholly-owned Delaware subsidiary of Kennametal
formed for the purpose of effecting the Acquisition
("Merger Sub") have entered into an Agreement and
Plan of Merger dated as of October 10, 1997 with
Greenfield (the "Merger Agreement"), pursuant to
which Merger Sub will make a tender offer for all
of the shares of common stock of Greenfield. If 90%
or more of the Greenfield common shares are
tendered, Merger Sub will promptly effect a merger
with Greenfield under Delaware GCL sec.253. If less
than 90% but more than 50% (an amount sufficient to
assure required shareholder approval of the Merger)
of the Greenfield common shares are tendered,
Merger Sub and Greenfield will proceed as quickly
and diligently as possible to effect a merger under
Delaware GCL sec.251. In either case, Merger Sub
will merge (the "Merger") with and into Greenfield,
Greenfield being the surviving corporation. As used
herein, "Acquisition Date" means the date on which
Kennametal acquires the Greenfield common stock
tendered pursuant to such tender offer, and "Merger
Date" means the date of consummation of the Merger.
SYNDICATION AGENTS: BankBoston, N.A.
Deutsche Bank AG, New York Branch
PNC Bank, National Association
ADMINISTRATIVE AGENT: Mellon Bank, N.A. The Syndication Agents and the
Administrative Agent are collectively referred to
as the "Arrangers."
LENDERS: A syndicate of financial institutions arranged by
the Arrangers (the "Lenders"), which Lenders shall
be reasonably satisfactory to Kennametal and to the
Administrative Agent.
SENIOR CREDIT FACILITIES: Up to U.S. $1,400,000,000 in the aggregate,
comprised of a Revolving Credit Facility and a Term
Loan Facility (collectively, the "Senior Credit
Facilities" or the "Facilities").
REVOLVING CREDIT FACILITY:
AMOUNT: Initially, up to U.S. $1,400,000,000. On the Merger
Date, the aggregate amount of the Revolving Credit
Facility will automatically be reduced by an amount
(the "Term Loan Aggregate Amount") equal to
$500,000,000
<PAGE> 82
KENNAMETAL INC.
================================================================================
(or, if less, the aggregate amount of the Revolving
Credit Facility on such date).
AVAILABILITY: On and after the Acquisition Date, subject to the
terms and conditions hereof, in multiple draws to
but excluding the Maturity Date. One business days'
notice for Adjusted Base Rate Loans and three
business days' notice for LIBOR loans. Each
borrowing must be in the amount of $5,000,000 or
integral multiples of $500,000 in excess thereof.
MATURITY DATE: Earliest to occur of (i) 150 days after the
Acquisition Date or (ii) termination or abandonment
by the Borrower of the Acquisition; provided,
however, that in the event that the Merger Date
occurs on or before the Maturity Date, the Maturity
Date will automatically be extended to the
twentieth Quarterly Amortization Date (as defined
below).
USE OF PROCEEDS: (a) Up to U.S.$1,250,000,000 in the aggregate of
the Revolving Credit Facility and the Term Loan
Facility may be used on the Acquisition Date and
the Merger Date (i) to fund the Acquisition and to
pay transaction costs associated therewith, (ii) to
refinance indebtedness of Kennametal, Greenfield
and their respective subsidiaries, and (iii) to pay
fees and expenses associated with the Senior Credit
Facilities (and, in the case of the Term Loan
Facility, to repay advances under the Revolving
Credit Facility that were used for the foregoing
purposes).
(b) The balance of the Revolving Credit Facility
may be used for working capital, capital
expenditures and general corporate purposes of the
Borrower from time to time on and after the
Acquisition Date.
SWINGLINE SUBFACILITY: The Borrower may receive advances under the
Revolving Credit Facility in the form of swingline
loans, which shall be made by the Administrative
Agent, as swingline lender, and which shall be
participated in by each of the Lenders at the
swingline lender's discretion from time to time.
Swingline loans shall be made from time to time on
same day notice. The amount of the swingline
sublimit will be satisfactory to the Arrangers.
Outstanding swingline loans shall not be counted as
usage of the facility for purposes of calculating
the commitment fee (but shall be counted for
purposes of calculating availability). Other terms
and conditions of the swingline subfacility to be
satisfactory to the Arrangers.
LETTER OF CREDIT
SUBFACILITY: A sublimit in an amount to be determined will be
available for the issuance of standby (and, if
agreed by Kennametal and the Arrangers, trade)
letters of credit. Letters of credit will be issued
by the Administrative Agent, as issuing bank, and
automatically participated in by each Lender.
Letters of credit outstanding on the Closing Date
may be deemed issued under this facility, if agreed
by the Arrangers. In addition to letter of credit
fees payable by the Borrower to each Lender, as set
forth in the attached pricing grid, the Borrower
shall pay to the issuing bank for its own account a
facing fee as described in the attached pricing
grid and its ordinary and customary fees for
issuance, drawing, amendment and the like. The
Borrower will be unconditionally obligated to
reimburse draws on, and Lenders will be
unconditionally obligated to participate in, each
Letter of Credit. The issuing bank, as such, will
be indemnified by the Borrower and
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<PAGE> 83
KENNAMETAL INC.
================================================================================
by each Lender. Terms and conditions of the
subfacility otherwise will be satisfactory to the
Arrangers.
COMPETITIVE BID
SUBFACILITY: In the event that Kennametal's senior unsecured
long-term debt is rated investment grade by S&P and
by Moody's, at Kennametal's request up to
$150,000,000 of the Revolving Credit Facility will
be available on a competitive bid basis from
Lenders who, in their respective sole discretion,
elect to lend on a competitive bid basis.
Competitive bid loans will be due and payable on
the agreed maturity date therefor and will not be
subject to optional prepayment. Outstanding
competitive bid loans shall not be counted as usage
of the facility for purposes of calculating the
commitment fee (but shall be counted for purposes
of calculating availability). The Administrative
Agent will be entitled to a fee (to be specified in
the Documentation) from each Lender which submits a
bid solicited by the Borrower under the competitive
bid subfacility. Other terms and conditions of the
subfacility to be satisfactory to the Arrangers.
TERM LOAN FACILITY:
AMOUNT: Up to the Term Loan Aggregate Amount (as defined
above).
AVAILABILITY: A single draw on the Merger Date, subject to the
terms and conditions hereof. One business days'
notice for Adjusted Base Rate Loans and three
business days' notice for LIBOR loans. The Term
Loan Aggregate Amount must be borrowed in whole, if
borrowed at all, and may not be borrowed in part.
MATURITY DATE: As per Revolving Credit Facility
AMORTIZATION: As per the table below. As used herein, "Quarterly
Amortization Date" means (i) the last Business Day
of the month in which the Merger Date occurs, and
(ii) the last Business Day of every third month
thereafter.
<TABLE>
<CAPTION>
Quarterly Amortization Date Amortization
--------------------------- ------------
<S> <C>
Each of First through Fourth
(inclusive) Zero
Each of Fifth through Eighth
(inclusive) $25,000,000
Each of Ninth through Sixteenth
(inclusive) $31,250,000
Each of Seventeenth through $37,500,000
Twentieth (inclusive)
</TABLE>
In the event that the Term Loan Aggregate Amount is
less than $500,000,000 (which is the sum of the
scheduled installments set forth in the above
table), the difference shall be applied ratably to
the scheduled installments set forth in the above
table.
USE OF PROCEEDS: As per paragraph (a) under "Revolving Credit
Facility--Use of Proceeds" above.
VOLUNTARY PREPAYMENT: Term Loans may be prepaid and permanently reduced
in minimum amounts of U.S. $10,000,000 and in
integral multiples thereof at any time upon three
Business Days' prior written notice, subject to
customary breakfunding indemnity for LIBOR-based
borrowings. Partial prepayments of the Term Loans
will be applied pro rata to the remaining unpaid
scheduled amortization payments.
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<PAGE> 84
KENNAMETAL INC.
================================================================================
The Borrower may (i) permanently reduce the
Revolving Credit Facility in a minimum amount of
U.S. $10,000,000 and in integral multiples of U.S.
$1,000,000 in excess thereof without penalty, or
(ii) terminate the Revolving Credit Facility at any
time upon five business days' prior written notice.
Prepayments of Revolving Credit Loans shall be
subject to customary breakfunding indemnity for
LIBOR-based borrowings. Loans bearing interest at a
rate determined by reference to the Adjusted Base
Rate may be prepaid on one business days' prior
notice.
MANDATORY PREPAYMENT: Mandatory prepayments of the Senior Credit
Facilities shall be made (without premium or
penalty, but subject to customary breakfunding
indemnity in the event LIBOR-based borrowings are
prepaid) from 100% of the net proceeds of: (i)
certain permitted asset sales (including, without
limitation, all permitted sales for cash of capital
stock of JLK Direct Distribution Inc., a
majority-owned subsidiary of Kennametal (referred
to herein as "Distribution")) and insurance
recoveries, (ii) permitted debt issuances, and
(iii) equity issuances (including without
limitation, all permitted issuances for cash of
capital stock of Distribution). All mandatory
prepayments shall be applied first to the
outstanding Term Loans and then (unless
Kennametal's senior unsecured long-term debt is
rated investment grade by S&P and by Moody's) to
any outstandings under the Revolving Credit
Facility with a corresponding reduction in the
Revolving Credit commitments. Such prepayments of
the Term Loans will be applied to the remaining
unpaid scheduled amortization payments in inverse
order of scheduled maturity.
Mandatory prepayments equal to 50% of Excess Cash
Flow (to be defined) shall be applied first to the
outstanding Term Loans and then (unless
Kennametal's senior unsecured long-term debt is
rated investment grade by S&P and by Moody's) to
any outstandings under the Revolving Credit
Facility with a corresponding reduction in the
Revolving Credit commitments. Such prepayments of
the Term Loans will be applied to the remaining
unpaid scheduled amortization payments in inverse
order of scheduled maturity.
SECURITY:
1. A first priority security interest in (a) 100%
of the stock of all direct and (if required by
the Arrangers) indirect domestic subsidiaries of
Kennametal (which shall include without
limitation Merger Sub before the Merger and
Greenfield (as surviving entity in the Merger)
after the Merger, but not stock of Greenfield
before the Merger), as well as the entire equity
interest (currently approximately 80%) held by
Kennametal in Distribution (excluding immaterial
domestic subsidiaries satisfactory to the
Arrangers) and (b) 65% of the stock of direct
and (if required by the Arrangers) indirect
foreign subsidiaries of Kennametal, including
without limitation 65% of the capital stock
Kennametal Hertel AG ("Hertel") (but excluding
immaterial foreign subsidiaries satisfactory to
the Arrangers). The stock of Distribution need
not be pledged until the end of the blackout
period under the existing blackout agreement
with the underwriters of Distributions' stock,
which expires in December 1997.
-4-
<PAGE> 85
KENNAMETAL INC.
================================================================================
2. Guaranty by each direct and (if required by the
Arrangers) indirect domestic subsidiary of
Kennametal, excluding (i) Distribution, (ii)
immaterial domestic subsidiaries satisfactory to
the Arrangers, and (iii) Greenfield and its
subsidiaries before the Merger.
In addition, Kennametal shall provide a negative
pledge covenant and double negative pledge covenant
on all its properties as well as all properties of
its direct and indirect domestic and foreign
subsidiaries. Such covenants shall contain
exceptions to accommodate allowed foreign
subsidiary debt (but such exceptions shall not
extend to any liens actually granted pursuant to
such agreements).
The Documentation will provide that the foregoing
security interests will be released promptly
following request by Kennametal in the event that
no Event of Default or unmatured Event of Default
is continuing and either (i) Kennametal's senior
unsecured long-term debt is rated investment grade
by S&P and by Moody's or (ii) at the end of each of
two consecutive fiscal quarters, Kennametal's Total
Leverage Ratio (i.e., Total Debt divided by EBITDA
on a rolling four quarters basis) is less than 3.0.
PAST DUE (DEFAULT RATE)
INTEREST: Adjusted Base Rate plus 2.00%.
COMMITMENT FEES, INTEREST
RATES, LETTER OF CREDIT
FEES: Commitment fees and interest rate margins, and
letter of credit fees are outlined in the attached
pricing grid. All commitment fees, interest and
letter of credit fees will be based on a year of
360 days and actual days elapsed, except that
interest based on Adjusted Base Rate will be based
on a year of 365 or 366 days and actual days
elapsed.
Adjusted Base Rate: Greater of the (a) announced
Prime rate of the Administrative Agent or (b)
Federal Funds rate plus 0.50%.
LIBOR: As determined by the Administrative Agent in
accordance with its customary procedures. Advances
to be made with interest periods of one, two, three
and six months, subject to availability, with three
business days notice. Limits to be determined shall
be placed on the amount and number of LIBOR
tranches.
PAYMENT DATES: Interest on loans bearing interest based on the
Adjusted Base Rate shall be due and payable monthly
in arrears. Interest on loans bearing interest
based on LIBOR shall be due and payable on the last
day of the applicable LIBOR period and, in the case
of a LIBOR period of more than three months, on the
last day of the third month of such period.
Commitment fee, letter of credit fees and the like
will be due and payable monthly in arrears.
UNDERWRITING AND OTHER
FEES: As set forth separately.
INCREASED COSTS/CHANGE OF
CIRCUMSTANCES/FUNDING LOSS/
INDEMNIFICATION: Documentation for each facility will contain
customary provisions protecting the Lenders in the
event of unavailability of funding, illegality,
-5-
<PAGE> 86
KENNAMETAL INC.
================================================================================
increased costs, withholding tax grossup, capital
adequacy and funding losses, as well as a general
indemnification.
INTEREST RATE PROTECTION: No less than 50% of the aggregate amount of the
outstanding Term Loan Facility will be
satisfactorily hedged for not less than three
years, on terms and conditions acceptable to the
Arrangers. Such hedge may be secured if by a
Lender.
CURRENCY RISK PROTECTION: Currency hedging arrangements with terms and
conditions satisfactory to the Arrangers, to be
determined.
REPRESENTATIONS AND
WARRANTIES: Representations and warranties deemed appropriate
by the Arrangers, including but not limited to the
following:
1. Corporate existence.
2. Corporate and government authorization; no
contravention; binding effect.
3. Financial statements and condition;
projections; solvency.
4. No material adverse change.
5. Environmental and ERISA matters.
6. Compliance with laws.
7. Labor matters.
8. No material litigation.
9. Taxes.
10. Full disclosure.
11. Commitments and contingencies.
12. Ownership and control.
13. Title to property.
14. Truth of representations made in the Merger
Agreement, etc.
15. Solvency, etc.
CONDITIONS PRECEDENT:
CLOSING: Conditions for funding the Senior Credit Facilities
on the Acquisition Date and the Merger Date (the
initial funding date being referred to herein
sometimes as the "Closing Date") shall be as deemed
appropriate by the Arrangers, including but not
limited to the following (references to
"satisfactory" meaning satisfactory to the
Arrangers after review):
1. Execution and delivery of satisfactory
Documentation as well as execution of other
ancillary Documentation including, but not
limited to legal opinions from counsel to the
Borrower and the Guarantors (who shall be
satisfactory to the Arrangers).
2. Receipt of any necessary regulatory approvals.
3. Any other necessary governmental and third
party notices, filings, consents, and approvals
shall have been made or obtained. No conflict
shall exist between the Acquisition and any
law, contract or agreement, and the Arrangers
shall have received assurances satisfactory to
them of the foregoing (including without
limitation opinions of counsel).
4. The Acquisition and the Merger shall be in
compliance in all material respects with all
laws, and Arrangers shall be satisfied that
there shall be no material legal or contractual
impediment to the Merger. The Acquisition Date
shall have occurred not later than December 30,
-6-
<PAGE> 87
KENNAMETAL INC.
================================================================================
1997. In the case of the Term Loans, the Merger
Date shall have occurred and the Maturity Date
shall not have occurred. No material amount of
existing Kennametal and Greenfield debt will be
subject to acceleration, mandatory prepayment
or the like before the Closing Date.
5. The Acquisition and the Merger Agreement shall
have received the affirmative support of the
Board of Directors of Greenfield (as
constituted before the change in composition
noted in the following sentence), and such
Board of Directors shall have recommended
acceptance of the Acquisition and shall not
have withdrawn such recommendation. A majority
of the Board of Directors of Greenfield shall
be nominees of Kennametal (or the
Administrative Agent shall have received
assurances satisfactory to it that such
condition will be satisfied forthwith after the
initial funding).
6. At least 50% of the shares of outstanding
Greenfield common stock (and, in any event, an
amount sufficient to assure approval of the
Merger under all applicable corporation laws,
takeover statutes and the like) shall have been
tendered to Merger Sub for purchase pursuant to
the contemplated tender offer and shall be
purchased concurrently with the initial
funding. Upon consummation of the Merger,
Kennametal shall own all of the outstanding
capital stock of Greenfield, free of all liens
and adverse claims, and there shall be no
outstanding options, warrants, conversion or
exchange rights or the like which may in any
circumstances obligate Greenfield to issue any
shares of its capital stock.
7. The loans made under the Facilities shall at
all times be in full compliance with the
Federal Reserve Board margin regulations.
8. All conditions of the Merger Agreement shall
have been satisfied (without giving effect to
any amendment or waiver not approved in writing
by the Arrangers) except for funding pursuant
to the Documentation.
9. Satisfactory transaction consideration
including, but not limited to a maximum
purchase price for the stock of Greenfield (it
being understood that the purchase price of $38
per share set forth in the Merger Agreement is
satisfactory).
10. Cancellation and repayment in full of the
existing Kennametal and Greenfield indebtedness
and preferred stock, as the case may be,
subject to certain baskets to be determined (it
being understood that the Documentation may
require refinancing of certain existing
indebtedness and/or preferred stock by way of
covenant to be satisfied after the Closing
Date, rather than by way of condition precedent
to initial funding).
11. Satisfactory capitalization of Kennametal,
Greenfield and their subsidiaries individually
and collectively.
12. Delivery to Arrangers by Kennametal of current
projections and proforma financial statements
("Projections"), prepared by Kennametal,
covering the periods through the maturity of
the Facilities, in scope comparable to those
delivered by Kennametal to Arrangers
under cover of letter dated October 13, 1997,
which Projections shall not show a financial
condition, results of operations or cash flows
for
-7-
<PAGE> 88
KENNAMETAL INC.
================================================================================
any date or period materially less favorable
(in the good faith judgment of an Arranger)
than shown in such October 13, 1997
projections. Kennametal shall warrant, among
other things, that such Projections (including
the assumptions and estimates underlying such
Projections) are reasonable, consistent with
the Documentation and represent Kennametal's
best judgment on such matters; that no
statements or conclusions in any of such
Projections are based upon or include
information known to Kennametal to be
materially misleading or which fail to take
into account material information known to
Kennametal regarding the matters reported
therein; and that nothing has come to the
attention of Kennametal which would lead it to
believe that such Projections will not be
attained or exceeded.
13. No actions, suit, investigation, litigation or
proceeding pending or threatened in any court,
arbitrator, government body shall be pending or
threatened which (a) seeks to challenge,
prevent or declare illegal any transaction
contemplated hereby, or (b) which could have a
material adverse effect on the business,
condition (financial or otherwise), operations,
properties, prospects of the Borrower,
Greenfield or its and their subsidiaries taken
as a whole , or (c) or in the judgment of the
Lenders, could materially adversely affect the
Lenders, the Facilities or the ability of the
Borrower or Greenfield to perform their
obligations thereunder or under the Merger
Agreement.
14. No event of default (or event which with the
giving of notice or the passage of time or both
would constitute an event of default) under any
of the Documentation; and the representations
and warranties of the Borrower shall be true
and correct prior to and after giving effect to
each funding.
15. Satisfactory creation, perfection and priority
of all liens and security interests in the
stock to be pledged.
16. Evidence of customary insurance, including
without limitation, business interruption,
product and other liability, casualty, workers'
compensation and umbrella.
17. No material adverse change in the business,
operations, condition (financial or otherwise)
or prospects of Kennametal and its subsidiaries
from 6/30/97 or Greenfield and its subsidiaries
from 12/31/96.
18. No limitations on the ability of subsidiaries
to pay dividends to the Borrower, make
intercompany loans to the Borrower or otherwise
upstream cash flow to the Borrower.
19. All fees and expenses required to be paid by
the Borrower or Greenfield on or before the
Closing Date shall have been paid.
20. Arrangers shall have received all such
representations, warranties, opinions of
counsel, consents, waivers, financing
statement, financing statement searches,
insurance certificates and policies (disclosing
the Lenders' interests as they may appear),
officers' certificates, and the like, in each
case which the Arrangers may have requested,
and shall have found the same to be
satisfactory.
ALL BORROWINGS: Conditions deemed appropriate by the Lenders,
including but not limited to the following:
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<PAGE> 89
KENNAMETAL INC.
================================================================================
1. Absence of default or unmatured default.
2. Continued accuracy, as of such date, of
representations and warranties, including but
not limited to no material adverse change.
3. Timely receipt of borrowing notice or Letter of
Credit application, as appropriate.
COVENANTS: Covenants with respect to the Borrower and
subsidiaries as deemed appropriate by the
Arrangers, including but not limited to the
following:
AFFIRMATIVE:
1. Quarterly unaudited financial statements, annual
audited consolidated financial statements
accompanied by a satisfactory certification by
certified public accountants acceptable to the
Arrangers, an annual budget; notices covering
covenant compliance, events of default and
litigation, and other matters; quarterly
compliance certificates.
2. Maintenance of property; insurance coverage;
continuation and nature of business; maintenance
of Kennametal fiscal year for Kennametal and for
the consolidated entity after the merger with
Greenfield; filing of tax returns; payment of
taxes and other charges and priority claims,
etc.
3. Maintenance of existence and corporate
structure.
4. Compliance with laws, including ERISA and
environmental regulations.
5. Visitation and inspection of books and records,
including the right to reasonably request
periodic audits of the Borrower's assets;
further information on reasonable request.
RESTRICTIVE:
1. Limitation on the disposition of assets.
Without limiting the generality of the
foregoing, Kennametal shall retain at least 65%
of the common stock (by economic interest and
by voting interest) in Distribution.
2. Limitation on loans, advances and investments
(including downstreaming to subsidiaries).
3. Limitation on transactions with affiliates (it
being understood that the existing contracts,
arrangements, transactions and dealings with
Distribution shall not be prohibited).
4. Limitations on additional debt (including
subsidiary debt), leases and contingent
obligations including but not limited to
guarantees. Such limitations on additional debt
will contain exceptions satisfactory to the
Arrangers relating to indebtedness of foreign
subsidiaries.
5. Limitation on acquisitions and mergers.
6. Limitations on dividends and other
distributions, including but not limited to
repurchases of capital stock.
7. Limitation on liens.
8. Limitation on negative pledge clauses, dividend
restrictions on subsidiaries, restrictions on
amendment of the Documentation.
9. Use of proceeds as per the Term Sheet and in
compliance with law; compliance with margin
rules. Without limiting the generality of the
foregoing, Kennametal shall not acquire any
Class A common stock of Distribution before the
Merger.
10. Consummation of Acquisition, no amendments to
Merger Agreement without consent of the
Arrangers, etc.
-9-
<PAGE> 90
KENNAMETAL INC.
================================================================================
Distribution shall initially be a "restricted
subsidiary." Kennametal may from time to time elect
to designate Distribution to be an "unrestricted
subsidiary," provided that such designation would
not cause Kennametal to violate the financial
covenants (and would not have caused such a
violation after giving effect on a pro forma basis
to such designation). An "unrestricted subsidiary"
will generally be excluded from the restrictive
covenants applicable to Kennametal (and,
accordingly, an "unrestricted subsidiary" will not
be subject to the restriction on incurrence of
debt, provided that no credit support may be
provided for such debt by Kennametal or a
restricted subsidiary). However, loans, advances
and investments will be restricted substantially
more strictly to an unrestricted subsidiary than to
a restricted subsidiary, and Kennametal will not be
credited with assets and cash flow of an
unrestricted subsidiary for purposes of calculating
compliance with financial tests.
FINANCIAL: Accounting principles for purposes of covenant
compliance will be based on the same accounting
principles used by Kennametal in preparing its
6/30/97 financial statements. EBITDA for all
purposes of financial covenants will be determined
on a rolling four quarters basis. Financial
covenants will be as deemed appropriate by the
Arrangers, and are presently anticipated by the
Arrangers to be structured in accordance with the
following:
TOTAL LEVERAGE RATIO: Total Debt divided by EBITDA measured at the end of
each fiscal quarter and at fiscal year-end. Maximum
permitted levels to be determined, and such levels
will step down over time.
FIXED CHARGE COVERAGE: EBITDA less CAPEX divided by the sum of principal
payments and interest expense measured at the end
of each fiscal quarter and at fiscal year-end.
Minimum permitted levels to be determined, and such
levels will step up over time.
CONSOLIDATED NET WORTH: Beginning at approximately 90% of Consolidated Net
Worth at Closing Date, increasing by 50% of
Consolidated Net Income thereafter and will be
unreduced by any Consolidated Net Losses. The
covenant level will be increased by 100% of the net
proceeds of any equity issuance.
EVENTS OF DEFAULT: Events of Default as deemed appropriate by the
Arrangers. These shall include without limitation a
change of control default, defined in a manner
satisfactory to the Arrangers.
ASSIGNMENTS: Assignments will be allowed only with the written
consent of Kennametal and the Administrative Agent,
other than to an affiliate of the assigning Lender,
to another Lender or to a Federal Reserve Bank.
Minimum assignments will be U.S. $10,000,000.
Kennametal's and the Administrative Agent's consent
to assignments shall not be unreasonably withheld.
A customary recordation fee shall be payable to the
Administrative Agent for each Assignment.
Participations will be permitted with limited
voting rights.
REQUIRED BANKS: Waivers and amendments will require the consent of
Lenders holding greater than 50% of aggregate
commitments except that changes in rate,
-10-
<PAGE> 91
KENNAMETAL INC.
================================================================================
amount, maturity and certain other customary
matters will require consent of all Lenders.
EXPENSES: The Borrower shall pay all reasonable out-of-pocket
costs and expenses incurred by each Arranger in
connection with the due diligence, negotiation,
syndication, preparation and execution of any
engagement letter, commitment letter and the
Documentation for the Facilities (including
reasonable fees and expenses of counsel for the
Administrative Agent, and of other local counsel
and other experts, if any, engaged by the
Administrative Agent, it being understood that the
foregoing shall not entitle any Lender other than
the Administrative Agent to be reimbursed for legal
expenses, except to the extent, if any, such
Arranger engages local counsel at the request of
the Administrative Agent). The Borrower shall also
be responsible for all expenses of the
Administrative Agent in connection with
administration of the Facilities, any amendments or
waivers, and all expenses of the Administrative
Agent and each Lender in connection with
enforcement or preservation of rights under or in
connection with the Documentation or any commitment
letter.
GOVERNING LAW: Commonwealth of Pennsylvania
-11-
<PAGE> 92
KENNAMETAL INC.
<TABLE>
<CAPTION>
ADJUSTED
LIBOR BASE RATE COMMITMENT
LEVEL DEBT/EBITDA MARGIN MARGIN FEE
----------------------- ------------------- ----- --------- ----------
<S> <C> <C> <C> <C>
I...................... >4.5 1.625% 0.500% 0.350%
II..................... <= 4.5 but >4.0 1.375% 0.250% 0.300%
III*................... <= 4.0 but >3.5 1.125% 0.000% 0.250%*
IV..................... <= 3.5 but >3.0 0.875% 0.000% 0.250%
V...................... <= 3.0 but >2.5 0.750% 0.000% 0.200%
VI..................... <= 2.5 but >2.0 0.625% 0.000% 0.150%
VII.................... <= 2.0 0.500% 0.000% 0.100%
</TABLE>
Letter of Credit Facing Fee: 1/8 of 1% per annum.
Standby Letters of Credit are priced in accordance with the applicable
LIBOR margin.
* For six months after closing, only Levels I, II and III will be available to
Kennametal; provided, however, that pricing will not be limited to Levels I,
II and III and will conform to the entire pricing grid if, during such six
month period, Kennametal either (a) obtains an investment grade rating on its
senior unsecured long-term debt, or (b) issues at least $350 million in common
equity or equity equivalents. "Equity equivalents" for this purpose means
equity-linked hybrid securities properly accounted for by Kennametal as
mandatorily redeemable preferred stock (not maturing earlier than the
Facilities).
Commencing six months after closing, pricing will no longer be limited to
Levels I, II and III and will conform to the entire pricing grid.
-12-
<PAGE> 93
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
KENNAMETAL INC.,
PALMER ACQUISITION CORP.
AND
GREENFIELD INDUSTRIES, INC.
<PAGE> 94
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I
THE OFFER
1.1 The Offer...................................................................... 1
1.2 Company Action................................................................. 2
ARTICLE II
THE MERGER; EFFECTIVE TIME; CLOSING
2.1 The Merger..................................................................... 3
2.2 Effective Time................................................................. 3
2.3 Closing........................................................................ 3
ARTICLE III
SURVIVING CORPORATION
3.1 Articles of Incorporation...................................................... 4
3.2 By-Laws........................................................................ 4
3.3 Directors...................................................................... 4
3.4 Officers....................................................................... 4
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGER
4.1 Share Consideration for the Merger; Conversion or Cancellation of Shares in the
Merger......................................................................... 4
4.2 Stockholder Approval........................................................... 4
4.3 Payment for Shares in the Merger............................................... 5
4.4 No Further Ownership Rights in Company Common Stock............................ 6
4.5 Stock Options and Other Plans.................................................. 6
4.6 Convertible Preferred Securities............................................... 7
4.7 Dissenting Stockholders........................................................ 7
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Corporate Organization and Qualification....................................... 7
5.2 Capitalization................................................................. 7
5.3 Authority Relative to This Agreement........................................... 8
5.4 Consents and Approvals; No Violation........................................... 8
5.5 SEC Reports; Financial Statements.............................................. 9
5.6 Absence of Certain Changes or Events........................................... 9
5.7 Litigation and Liabilities..................................................... 9
5.8 Information Supplied........................................................... 10
5.9 ERISA Matters.................................................................. 10
5.10 Brokers and Finders............................................................ 11
5.11 Opinions of Financial Advisors................................................. 11
5.12 Compliance with Laws; Permits.................................................. 11
5.13 Takeover Statutes.............................................................. 11
5.14 Rights Plan.................................................................... 12
5.15 Contracts...................................................................... 12
5.16 Changes in Equity Interests.................................................... 12
</TABLE>
i
<PAGE> 95
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
6.1 Corporate Organization and Qualification....................................... 12
6.2 Authority Relative to This Agreement........................................... 12
6.3 Consents and Approvals: No Violation........................................... 12
6.4 Brokers and Finders............................................................ 13
6.5 Financing...................................................................... 13
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1 Conduct of Business of the Company............................................. 13
7.2 No Solicitation of Transactions................................................ 14
7.3 Approvals and Consents; Cooperation............................................ 15
7.4 Further Assurances............................................................. 15
7.5 Access to Information.......................................................... 16
7.6 Publicity...................................................................... 16
7.7 Indemnification of Directors and Officers...................................... 16
7.8 Employees...................................................................... 17
7.9 Notification of Certain Matters................................................ 17
7.10 Company Board.................................................................. 17
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 Conditions to Each Party's Obligations to Effect the Merger.................... 18
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.1 Termination by Mutual Consent.................................................. 18
9.2 Termination by Either Parent or the Company.................................... 18
9.3 Termination by the Company..................................................... 19
9.4 Termination by Parent.......................................................... 19
9.5 Effect of Termination and Abandonment.......................................... 20
9.6 Extension; Waiver.............................................................. 20
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 Payment of Expenses............................................................ 20
10.2 Survival of Representations and Warranties; Survival of Confidentiality........ 20
10.3 Modification or Amendment...................................................... 21
10.4 Waiver of Conditions........................................................... 21
10.5 Counterparts................................................................... 21
10.6 Governing Law.................................................................. 21
10.7 Notices........................................................................ 21
10.8 Entire Agreement; Assignment................................................... 22
10.9 Parties in Interest............................................................ 22
10.10 Certain Definitions............................................................ 22
10.11 Specific Performance........................................................... 23
10.12 Obligation of Parent........................................................... 23
10.13 Validity....................................................................... 23
10.14 Captions....................................................................... 23
ANNEX A
Annex A........................................................................ A-1
</TABLE>
ii
<PAGE> 96
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of October 10,
1997, by and among Kennametal Inc., a Pennsylvania corporation ("Parent"),
Palmer Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent ("Purchaser"), and Greenfield Industries, Inc., a Delaware corporation
(the "Company").
RECITALS
WHEREAS, the Board of Directors of the Company, has, subject to the
conditions of this Agreement, unanimously determined that each of the Offer and
the Merger (each as defined below) is in the best interests of the stockholders
of the Company and approved and adopted this Agreement and the transactions
contemplated hereby; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser shall make a
tender offer (the "Offer") to acquire all of the outstanding shares of Common
Stock, par value $0.01 per share (the "Company Common Stock"), of the Company,
together with the associated Rights (as defined in Section 10.10) (the
"Shares"), at a price of $38 per Share (such amount, or any greater amount per
share paid pursuant to the Offer, being hereinafter referred to as the "Per
Share Amount"), net to the seller in cash, without interest thereon, in
accordance with the terms and subject to the conditions of this Agreement; and
WHEREAS, Parent, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, Parent,
Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
1.1 THE OFFER.
(a) Subject to the terms and conditions of this Agreement, Purchaser shall
commence, within the meaning of Rule 14d-2 of the Securities Exchange Act of
1934, as amended, the Offer as promptly as practicable, but in no event later
than the fifth business day after the date of initial public announcement of
this Agreement. Purchaser shall accept for payment Shares which have been
validly tendered and not withdrawn pursuant to the Offer at the earliest time
following expiration of the Offer that all conditions to the Offer, as set forth
on Annex A (the "Offer Conditions"), shall have been satisfied or waived by
Purchaser. The obligation of Purchaser to accept for payment, purchase and pay
for Shares tendered pursuant to the Offer shall be subject only to such Offer
Conditions and to the further condition that a number of Shares representing not
less than a majority of the Shares then outstanding on a fully diluted basis
shall have been validly tendered and not withdrawn prior to the final expiration
date of the Offer (the "Minimum Condition") (any of which may be waived in whole
or in part by the Purchaser in its sole discretion, provided that, without the
express written consent of the Company, Purchaser may not waive the Minimum
Condition). Purchaser expressly reserves the right, subject to compliance with
the Exchange Act, to modify the terms of the Offer, except that, unless
previously approved by the Company in writing, no change in the Offer may be
made (i) which decreases the Per Share Amount payable in the Offer, (ii) which
changes the form of consideration to be paid in the Offer, (iii) which reduces
the maximum number of Shares to be purchased in the Offer or the Minimum
Condition, (iv) which imposes conditions to the Offer in addition to the Offer
Conditions or which modifies the Offer Conditions in a manner adverse to the
holders of Shares or (v) which amends any other term of the Offer in a manner
adverse to the holders of the Shares, provided, however, that nothing contained
herein shall prohibit Purchaser, in its sole discretion without the consent of
the Company, from waiving satisfaction of any condition of this Offer other than
the Minimum Condition. Notwithstanding the foregoing, Purchaser may, without the
consent of the Company, (i) extend the Offer on one or more occasions for up to
ten business days for each such extension beyond the then scheduled expiration
date (the initial scheduled expiration date being 20 business days following
commencement of the
<PAGE> 97
Offer), if at the then scheduled expiration date of the Offer any of the
conditions to Purchaser's obligation to accept for payment and pay for the
Shares shall not be satisfied or waived, until such time as such conditions are
satisfied or waived (and, at the request of the Company, Purchaser shall,
subject to Purchaser's right to terminate this Agreement pursuant to Article IX,
extend the Offer for additional periods, unless the only conditions not
satisfied or earlier waived on the then scheduled expiration date are one or
more of the Minimum Condition and the conditions set forth in paragraph (b) of
the Offer Conditions , provided that (x) if the only condition not satisfied is
the Minimum Condition, the satisfaction or waiver of all other conditions shall
have been publicly disclosed at least five business days before termination of
the Offer and (y) if paragraph (b) of the Offer Conditions has not been
satisfied and the failure to so satisfy can be remedied, the Offer shall not be
terminated unless the failure is not remedied within 30 calendar days after
Purchaser has furnished the Company written notice of such failure) and (ii)
extend the Offer for any period required by any rule, regulation, interpretation
or position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer and (iii) extend the Offer for an aggregate
period of not more than 5 business days beyond the latest expiration date that
would otherwise be permitted under clause (i) or (ii) of this sentence if there
shall not have been tendered sufficient Shares so that the Merger could be
effected without a meeting of the Company's stockholders in accordance with
Section 253 of the Delaware General Corporation Law (the "DGCL"). Subject to the
terms and conditions of the Offer and this Agreement, Purchaser shall pay for
all Shares validly tendered and not withdrawn pursuant to the Offer that
Purchaser becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) As soon as practicable on the date of commencement of the Offer, Parent
or Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1
with respect to the Offer (together with any supplement or amendments thereto,
the "Offer Documents"). The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws except that no
representation or warranty is made by Parent or Purchaser with respect to
information supplied by or on behalf of the Company or any of its stockholders
for inclusion or incorporation in the Offer Documents. Parent or Purchaser and
the Company each agree promptly to correct any information provided by them for
use in the Offer Documents if and to the extent that it shall have become false
or misleading in any material respect and Purchaser further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. To the extent
practicable, the Company and its counsel shall be given an opportunity to review
and comment upon the Offer Documents and any amendments thereto prior to the
filing thereof with the SEC. The Company shall cooperate with Parent and
Purchaser in responding to any comments received from the SEC with respect to
the Offer Documents and amending the Offer Documents in response to such
comments.
1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and represents
that its Board of Directors, including all of the disinterested directors, at a
meeting duly called and held, has, subject to the terms and conditions set forth
herein, (i) unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, (ii) determined that
the terms of the Offer and the Merger are fair to, and in the best interests of,
the Company and its stockholders and, (iii) resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares thereunder to
Purchaser pursuant to the Offer and approve and adopt this Agreement and the
Merger; provided, that such recommendation may be withdrawn, modified or amended
if the Company reasonably determines in good faith, based on the advice of
outside legal counsel to the Company, that such action is necessary in order for
the Board of Directors of the Company to comply with its fiduciary duties under
applicable law. The Company hereby consents to the inclusion in the Offer
Documents of the recommendations of the Board of Directors described in this
Section 1.2(a).
(b) The Company hereby agrees to file with the SEC as soon as practicable
on the date of commencement of the Offer a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") containing the recommendation described in Section 1.2(a). The
Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws, except that no representation is made by the
Company with respect to information supplied by Parent or
2
<PAGE> 98
Purchaser in writing for inclusion in the Schedule 14D-9. The Company, Parent
and Purchaser each agree promptly to correct any information provided by them
for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to the holders of Shares, in each case as and to
the extent required by applicable federal securities laws. Notwithstanding
anything to the contrary in this Agreement, the Board of Directors may withdraw,
modify or amend its recommendation if the Company reasonably determines in good
faith, based on the advice of outside legal counsel to the Company, that such
action is necessary in order for the Board of Directors of the Company to comply
with its fiduciary duties under applicable law. To the extent practicable,
Parent and its counsel shall be given an opportunity to review and comment upon
the Schedule 14D-9 and any amendments thereto prior to the filing thereof with
the SEC.
(c) The Company shall cooperate in the dissemination of the Offer Documents
to the stockholders of the Company. Without limiting the foregoing, in
connection with the Offer, the Company will promptly furnish Purchaser with
mailing labels, security position listings and any available listing or computer
files containing the names and addresses of the record holders of the Shares as
of a recent date and of those persons becoming record holders subsequent to such
date and shall furnish Purchaser with such additional information and assistance
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) as Purchaser or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of applicable law, and except for such steps
as are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Merger, Purchaser and its affiliates, associates,
agents and advisors shall use the information contained in any such labels,
listings and files only in connection with the Offer and the Merger, and, if
this Agreement shall be terminated, will upon request of the Company, deliver,
and will use its best efforts to cause its agents promptly to deliver, to the
Company all copies of such information then in their possession.
ARTICLE II
THE MERGER; EFFECTIVE TIME; CLOSING
2.1 THE MERGER. Subject to the terms and conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 2.2), the Company and Purchaser shall
consummate a merger (the "Merger") in which (a) Purchaser shall be merged with
and into the Company and the separate corporate existence of Purchaser shall
thereupon cease, (b) the Company shall be the surviving corporation in the
Merger and shall continue to be governed by the laws of the State of Delaware,
and (c) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. The corporation surviving the Merger is sometimes hereinafter referred
to as the "Surviving Corporation." The Merger shall have the effects set forth
in Section 259 of the DGCL.
2.2 EFFECTIVE TIME. Parent, Purchaser and the Company will cause an
appropriate Certificate of Merger (the "Certificate of Merger") to be executed
and filed on the date of the Closing (as defined in Section 2.3) (or on such
other date as Purchaser and the Company may agree) as provided in the DGCL. The
Merger shall become effective upon the latest to occur of (i) the date on which
the Certificate of Merger is filed with the Secretary of State of the State of
Delaware or (ii) such later date as is agreed upon by the parties and specified
in the Certificate of Merger, and the time of such effectiveness is hereinafter
referred to as the "Effective Time."
2.3 CLOSING. The closing of the Merger (the "Closing") shall take place (a)
at the offices of Buchanan Ingersoll Professional Corporation, One Oxford
Centre, 301 Grant Street, Pittsburgh, PA 15219, at 10:00 a.m., local time, on
the first business day following the date on which the last of the conditions
set forth in Article VIII hereof shall be fulfilled or waived in accordance with
this Agreement or (b) at such other place, time and date as Parent and the
Company may agree.
3
<PAGE> 99
ARTICLE III
SURVIVING CORPORATION
3.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation (the
"Certificate of Incorporation") of Purchaser, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation, except that the name of the Surviving Corporation shall be
Greenfield Industries, Inc.
3.2 BY-LAWS. The By-Laws of Purchaser, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving Corporation.
3.3 DIRECTORS. The directors of Purchaser at the Effective Time shall, from
and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
3.4 OFFICERS. The officers of the Company and such other persons as
designated by Parent immediately prior to the Effective Time shall, from and
after the Effective Time, be the officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGER
4.1 SHARE CONSIDERATION FOR THE MERGER; CONVERSION OR CANCELLATION OF SHARES
IN THE MERGER. At the Effective Time, by virtue of the Merger and without any
action on the part of the holders of any Shares or capital stock of Purchaser:
(a) Company Common Stock. Each Share (other than (i) Shares owned by
Parent, Purchaser or any direct or indirect wholly-owned Subsidiary of Parent
(collectively, "Parent Companies") or any of the Company's direct or indirect
wholly-owned Subsidiaries or Company Common Stock held in the treasury of the
Company and (ii) Shares held by Dissenting Stockholders (as defined in Section
4.7 hereof) shall, by virtue of the Merger and without any action on the part of
Purchaser, the Company or the holder thereof, be canceled and extinguished and
converted into the right to receive, pursuant to Section 4.3, the price actually
paid in the Offer in cash (the "Merger Consideration"), payable to the holder
thereof, without interest thereon, less any required withholding of taxes, upon
the surrender of the certificate formerly representing such Share.
(b) Parent and Company Owned Shares. Each Share issued and outstanding and
owned by any of the Parent Companies or any of the Company's direct or indirect
wholly-owned Subsidiaries or authorized but unissued shares of Company Common
Stock held in the treasury of the Company immediately prior to the Effective
Time shall cease to be outstanding, be canceled and retired without payment of
any consideration therefor and cease to exist.
(c) Capital Stock of Purchaser. Each issued and outstanding share of common
stock of Purchaser that is issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
4.2 STOCKHOLDER APPROVAL.
(a) Promptly after the consummation of the Offer, if required by the DGCL
in order to consummate the Merger, the Company, acting through its Board of
Directors, shall, in accordance with applicable law and the Company's
Certificate of Incorporation and By-laws duly call, give notice of and convene a
meeting of the holders of the Company Common Stock (the "Special Stockholders
Meeting") to be held at the earliest practicable date for the purpose of voting
upon this Agreement and the Merger and the Company agrees that this Agreement
and the Merger shall be submitted at such meeting. The Company shall use its
reasonable best efforts to solicit from its stockholders proxies and, subject
always to the fiduciary obligations of the Company's directors
4
<PAGE> 100
under applicable law, shall take all other action necessary and advisable, to
secure the vote of stockholders required by applicable law to obtain the
approval for this Agreement and the Merger. Subject always to the fiduciary
obligations of the Company's directors under applicable law following receipt of
written advice of counsel, the Company agrees that it will include in the Proxy
Statement the recommendation of its Board of Directors that holders of the
Company Common Stock approve and adopt this Agreement and approve the Merger.
Parent and Purchaser will cause all shares of the Company Common Stock owned by
them and their subsidiaries to be voted in favor of the approval and adoption of
this Agreement and the Merger.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the outstanding Company Common Stock, the Company
agrees, at the request of Purchaser, subject to Article VIII, to take all
necessary and appropriate action to cause the Merger to become effective as soon
as reasonably practicable after such acquisition, without a meeting of the
Company's stockholders, in accordance with Section 253 of the DGCL.
(c) If the approval of this Agreement by the holders of the Shares (the
"Company Stockholder Approval") is required by law, the Company will, at
Parent's request, as soon as practicable following the expiration of the Offer,
prepare and file a preliminary Proxy Statement with the SEC and will use its
best efforts to respond to any comments of the SEC or its staff and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. The Company will notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for additional information
and will supply Parent with copies of all correspondence between the Company or
any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Proxy Statement or the Merger. If at any time
prior to the Special Stockholders Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company will promptly prepare and mail to its stockholders such an amendment or
supplement. The Company will not mail any Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects, unless required by law,
rule, regulation or the SEC staff, in the opinion of outside counsel; provided,
that Parent shall identify its objections and fully cooperate with the Company
to create a mutually satisfactory Proxy Statement. In connection with such
preliminary proxy statement, Proxy Statement and any amendment or supplement
thereto, Parent and Purchaser shall promptly provide all information reasonably
requested by the Company.
4.3 PAYMENT FOR SHARES IN THE MERGER. The manner of making payment for Shares
in the Merger shall be as follows:
(a) At the Effective Time, Parent shall make available to ChaseMellon
Shareholder Services, LLC (the "Exchange Agent"), or such other exchange agent
selected by Parent and reasonably acceptable to the Company, for the benefit of
the holders of Shares, the funds necessary to make the payments contemplated by
Section 4.1 (the "Exchange Fund") (it being understood that any and all interest
earned on the Exchange Fund made available to the Exchange Agent pursuant to
this Agreement shall be turned over to Parent). The Exchange Fund shall not be
used for any other purpose.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record (other than holders of
certificates representing Shares referred to in Section 4.1(b)) of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") (i) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent and shall be in a form and have such other provisions as
Parent shall reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates for payment therefor. Upon surrender of
Certificates for cancellation to the Exchange Agent, together with such letter
of transmittal duly executed and any other required documents, the holder of
such Certificates shall be entitled to receive for each of the Shares
represented by such Certificates the Merger Consideration, without any interest
thereon, less any required withholding of taxes, and the Certificates so
surrendered shall forthwith be canceled. Until so surrendered, such Certificates
shall represent solely the right to receive the Merger Consideration with
respect to each of the Shares represented thereby. If payment is to be made to a
person other than the person in whose name a Certificate so surrendered is
registered,
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it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the Certificate surrendered, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 4.3(b), each
Certificate (other than Certificates representing Shares referred to in Section
4.1(b)) shall represent for all purposes only the right to receive, for each
Share represented thereby, the Merger Consideration.
(c) Any portion of the Exchange Fund made available to the Exchange Agent
which remains unclaimed by the former stockholders of the Company six (6) months
after the Effective Time shall be delivered to Parent, upon demand, and any
former stockholders of the Company shall thereafter look only to Parent for
payment of their claim for the Merger Consideration for the Shares, without any
interest thereon. None of Parent, Purchaser, the Company or the Exchange Agent
shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to seven (7) years
after the Effective Time (or immediately prior to such earlier date on which any
payment pursuant to this Article IV would otherwise escheat to or become the
property of any governmental entity), the cash payment in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Parent, free and clear of all claims or interests of any person
previously entitled thereto.
4.4 NO FURTHER OWNERSHIP RIGHTS IN SHARES. All cash paid upon the surrender
of Certificates in accordance with the terms of this Article IV shall be deemed
to have been paid in full satisfaction of all rights pertaining to the Shares
formerly represented by such Certificates. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason except notation
thereon that a stockholder has elected to exercise his right to appraisal
pursuant to the DGCL they shall be canceled and exchanged as provided in this
Article IV.
4.5 STOCK OPTIONS AND OTHER PLANS.
(a) Each warrant to acquire shares of Company Common Stock, and each option
granted to a Company employee, consultant or director pursuant to the Company's
Amended and Restated Employee Stock Option Plan, as amended, the Amended and
Restated 1993 Directors Non-Qualified Stock Option Plan or the 1995 Directors
Non-Qualified Stock Option Plan to acquire shares of Company Common Stock (each
such warrant and option hereinafter is referred to as an "Option") that is
outstanding immediately prior to the Effective Time, whether or not then vested
or exercisable, with respect to which, as of the Effective Time, the Per Share
Amount exceeds the exercise price per share shall, effective as of immediately
prior to the Effective Time, be canceled in exchange for a single lump sum cash
payment equal to the product of (1) the number of shares of Company Common Stock
subject to such Option and (2) the excess of the Per Share Amount over the
exercise price per share of such Option (subject to any applicable withholding
taxes).
(b) Each Option that is outstanding immediately prior to the Effective
Time, whether or not then vested or exercisable, shall, effective as of the
Effective Time, with respect to which, as of the Effective Time, the Per Share
Amount does not exceed the exercise price per share shall, effective as of
immediately prior to the Effective Time, be canceled and no payments shall be
made with respect thereto.
(c) Immediately prior to the Effective Time, each share of Company Common
Stock previously issued in the form of restricted stock pursuant to the
Company's Amended and Restated 1995 Restricted Stock Bonus Plan shall fully vest
and all restrictions thereon shall be removed.
(d) Immediately prior to the Effective Time, each share of Company Common
Stock previously issued in the form of awards of Time-Lapse Restricted Stock,
Performance-Contingent Restricted Stock and Performance Shares pursuant to the
Company's 1995 Equity Incentive Plan and which, as of immediately prior to the
Effective Time, have been earned in accordance with the provisions of such plan,
shall fully vest and all restrictions thereon shall be removed. Except for the
issuance of up to 1,600 Shares which the Board of Directors of the Company
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may in its discretion determine to vest, whether or not earned, all unearned
awards under such plan shall be canceled and no payments shall be made with
respect thereto.
(e) For purposes of this Agreement, the Company's Warrant Agreements,
Amended and Restated Employee Stock Option Plan, as amended, the Amended and
Restated 1993 Directors Non-Qualified Stock Option Plan, the 1995 Directors
Non-Qualified Stock Option Plan, the Amended and Restated 1995 Restricted Stock
Bonus Plan and the 1995 Equity Incentive Plan are referred to collectively
herein as the "Stock Plans".
4.6 CONVERTIBLE PREFERRED SECURITIES. The Company, Parent and Purchaser shall
take, or cause to be taken, all actions necessary to comply with and to cause
Parent and/or Purchaser to assume the Company's obligations with respect to the
6% Convertible Preferred Securities, Term Income Deferrable Equity Securities
(TIDES)(SM), including without limitation, complying with the applicable
provisions of (i) the Indenture, dated as of April 1, 1996, between the Company
and the Bank of New York, as trustee, with respect to the Company's 6%
Convertible Junior Subordinated Deferrable Interest Debentures Due 2016, (ii)
the Amended and Restated Declaration of Trust of Greenfield Capital Trust, dated
as of April 1, 1996, and (iii) the Preferred Securities Guarantee Agreement
among the Company and the Bank of New York dated as of April 24, 1996.
4.7 DISSENTING STOCKHOLDERS. Notwithstanding anything in this Agreement to
the contrary, but only to the extent required by the DGCL, Shares that are
issued and outstanding immediately prior to the Effective Time and are held by
holders of Shares who comply with all the provisions of the DGCL concerning the
right of holders of Shares to dissent from the Merger and require appraisal of
their Shares ("Dissenting Stockholders") shall not be converted into the right
to receive the Merger Consideration but shall become the right to receive such
consideration as may be determined to be due such Dissenting Stockholder
pursuant to the laws of the State of Delaware; provided, however, that (i) if
any Dissenting Stockholder shall subsequently withdraw his or her demand for
appraisal or fail to establish or perfect or otherwise lose his or her appraisal
rights as provided by applicable law, then such Dissenting Stockholder or
Stockholders, as the case may be, shall forfeit the right to appraisal of such
Shares and such Shares shall thereupon be deemed to have been converted into the
right to receive, as of the Effective Time, the Merger Consideration, without
interest. The Company shall give Parent and Purchaser (A) prompt notice of any
written demands for appraisal of Shares, withdrawals of demands for appraisal
and any other related instruments received by the Company, and (B) the
opportunity to direct all negotiations and proceedings with respect to any such
demands for appraisal. The Company will not, except with the prior written
consent of Parent, voluntarily make any payment with respect to any demands for
appraisal or settle, offer or otherwise negotiate to settle any demand.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser that:
5.1 CORPORATE ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries (as defined in Section 10.10) is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and is qualified and in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification, except where
failure to so qualify or be in good standing is not reasonably likely to have a
Material Adverse Effect (as defined in Section 10.10). Each of the Company and
its Subsidiaries has all requisite power and authority (corporate or otherwise)
to own, operate and lease its properties and to carry on its business as it is
now being conducted. The Company has heretofore made available to Parent
complete and correct copies of its and its Subsidiaries' (as defined in Section
10.10) Certificate or Articles of Incorporation and By-Laws or other
organizational documents as in effect on the date hereof. Schedule 5.1 contains
a correct and complete list of each jurisdiction where the Company and each of
its Significant Subsidiaries is organized and qualified to do business.
5.2 CAPITALIZATION. The authorized capital stock of the Company consists of
(i) 100,000,000 shares of Company Common Stock of which, as of September 30,
1997, 16,445,757 Shares were issued and outstanding and (ii) 1,500,000 shares of
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), none of
which is issued or outstanding. Except as set forth on Schedule 5.2, all of the
outstanding shares of capital stock of the
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Company have been duly authorized and validly issued and are fully paid and
nonassessable, with no personal liability attaching to the ownership thereof. As
of September 30, 1997, (i) 2,763,000 shares of Company Common Stock were
reserved for issuance pursuant to the Stock Plans, and (ii) 500,000 shares of
Preferred Stock were reserved for issuance in connection with the Rights. Except
as set forth on Schedule 5.2, all outstanding shares of capital stock of the
Company's Subsidiaries are owned by the Company or a direct or indirect
wholly-owned subsidiary of the Company, free and clear of all liens, charges,
encumbrances, claims and options of any nature. Schedule 5.2 sets forth the
number of Options and shares of restricted stock outstanding and, in the case of
the options, the exercise price thereof. Except as set forth above and on
Schedule 5.2, there are not any outstanding or authorized options, warrants,
calls, rights (including preemptive rights), commitments or any other agreements
of any character which the Company or any of its Subsidiaries is a party to, or
may be bound by, requiring it to issue, transfer, sell, purchase, redeem or
acquire any shares of capital stock or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock of the Company or any of its Subsidiaries. Except as set forth on
Schedule 5.2, the Company does not have outstanding any bonds, debentures, notes
or other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter.
5.3 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) The Company has the requisite corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder to
consummate the transactions contemplated hereby. This Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than, with respect to the Merger, the approval of this Agreement by the
holders of a majority of the Shares , which are the only votes of the holders of
any class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated hereby.) The Company's Board of
Directors, at a meeting duly called and held, has unanimously by vote of all
directors present determined that this Agreement and the transactions
contemplated hereby (including the Offer and the Merger) are in the best
interests of the Company and its stockholders. This Agreement has been duly and
validly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding agreement of each of Parent and Purchaser,
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
(b) The Board of Directors of the Company has duly and validly approved and
taken all corporate action required to be taken by the Board of Directors for
the consummation of the transactions (including the Offer, the acquisition of
Shares pursuant to the Offer and the Merger) contemplated herein in accordance
with the terms hereof, including but not limited to, all actions required to (i)
render the provisions of Section 203 of the DGCL restricting business
combinations with "interested stockholders" inapplicable to such transactions
and (ii) amend the Rights Agreement to provide that certificates with respect to
the Rights will not be distributed and the Rights will not become exercisable as
a result of any of the execution of this Agreement, the commencement or
consummation of the Offer or the consummation of the Merger.
5.4 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and delivery
of this Agreement nor the consummation by the Company of the transactions
contemplated hereby will (a) conflict with or result in any breach of any
provision of the respective Certificates or Articles of Incorporation or By-Laws
of the Company or any of its Significant Subsidiaries; (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (i) in connection with the
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (ii) pursuant to the applicable requirements
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"), (iii) the filing of the
Certificate of Merger pursuant to the DGCL and appropriate documents with the
relevant authorities of other states in which the Company or any of its
subsidiaries is authorized to do business, (iv) as may be required by any
applicable state securities or "blue sky" laws or state takeover laws, (v) such
filings, consents, approvals, orders, registrations and declarations as may be
required under the laws of any foreign country in which the Company or any of
its subsidiaries conducts any business or owns any assets, or (vi) where the
failure to obtain such consent, approval, authorization or permit, or
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to make such filing or notification, would not be reasonably likely to, in the
aggregate, have a Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement; (c) except as set forth in Schedule 5.4(c),
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or lien or other charge or encumbrance) under any
of the terms, conditions or provisions of any note, license, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries or any
of their assets may be bound, except for such violations, breaches and defaults
(or rights of termination, cancellation or acceleration or lien or other charge
or encumbrance) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not be reasonably likely to have a Material
Adverse Effect or prevent, materially delay or materially impair the ability of
the Company to consummate the transactions contemplated by this Agreement; or
(d) assuming the consents, approvals, authorizations or permits and filings or
notifications referred to in this Section 5.4 are duly and timely obtained or
made and, with respect to the Merger, the approval of this Agreement by the
Company's stockholders has been obtained, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of its
Subsidiaries or to any of their respective assets, except for violations which
would not in the aggregate be reasonably likely to have a Material Adverse
Effect or prevent, materially delay or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement.
5.5 SEC REPORTS; FINANCIAL STATEMENTS.
(a) Since January 1, 1996, the Company has filed with the SEC all reports,
forms, schedules and other documents required to be filed by it. The Form 10-K
of the Company for the fiscal year ended December 31, 1996, the Form 10-Q of the
Company for the quarter ended March 31, 1997, the Form 10-Q of the Company for
the quarter ended June 30, 1997, and the Proxy Statement of the Company for the
1997 annual stockholders meeting (collectively, the "Company SEC Reports") did
not contain, and any quarterly or other reports filed after the date hereof will
not contain, as of their respective dates, any untrue statement of a material
fact required to be stated therein or any omission to state a fact necessary to
make any statement of fact contained therein not misleading in any material
respect.
(b) The Company's consolidated statements of operations for the three
fiscal years ended December 31, 1996 and the six months ended June 30, 1997 and
the Company's consolidated balance sheets as of December 31, 1996 and June 30,
1997 (including the related notes thereto), all of which have been heretofore
furnished to Parent, present fairly the consolidated financial position of the
Company and its Subsidiaries and the consolidated results of their operations as
of, and for the periods ended on, the dates specified, in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered except as specifically referred to in such
financial statements (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments).
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the Company
SEC Reports, as set forth on Schedule 5.6 or as contemplated by this Agreement,
since December 31, 1996 the business of the Company has been carried on only in
the ordinary and usual course, and there has not been any change in the
financial condition, properties, business or results of operations of the
Company and its Subsidiaries or any development or combination of developments
of which the Company has knowledge that, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect.
5.7 LITIGATION AND LIABILITIES. Except as set forth on Schedule 5.7 or as
disclosed in the Company SEC Reports, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the best knowledge of the Company, threatened against the Company
or any of its Subsidiaries or (ii) obligations or liabilities, whether or not
accrued, contingent or otherwise and whether or not required to be disclosed in
the Company SEC Reports, or any other facts or circumstances of which the
Company has knowledge that could result in any claims against, or obligations or
liabilities of, the Company or any of its Subsidiaries, except, in the case of
clauses (i) or (ii), for those that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect or prevent or materially
burden or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement. Additionally, there is no judgment,
decree, injunction, rule or order of any court, governmental department,
commission, board, bureau,
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agency, instrumentality or arbitrator outstanding against the Company or the
Subsidiaries having or which is likely to have a Material Adverse Effect.
5.8 INFORMATION SUPPLIED. None of the information supplied by the Company in
writing for inclusion or incorporation by reference in the Offer Documents or
provided by the Company in the Schedule 14D-9 as filed by the Company pursuant
to Rule 14f-1 under the Exchange Act or contained in the Proxy Statement will,
at the respective times that the Offer Documents, the Schedule 14D-9, the Rule
14f-1 Information Statement or the Proxy Statement or any amendments or
supplements thereto are filed with the SEC and are first published or sent or
given to holders of Shares, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
5.9 ERISA MATTERS.
(a) Except as set forth on Schedule 5.9(a), the Company and each Subsidiary
do not, and at any time during the preceding five-year period, did not:
(i) maintain, sponsor, contribute to or have any liability with
respect to any Plans (as defined herein) intended to be qualified under
Section 401(a) of the Code (as defined in Section 10.10);
(ii) maintain, sponsor, contribute to or have any liability with
respect to any Plan that is a defined benefit pension plan or that is
subject to the funding requirements of Section 412 of the Code and Section
302 of ERISA (as defined in Section 10.10), whether or not such Plan has
been terminated, and there has been no complete or partial termination of
any Plan which could result in any material liability to the Company or any
Subsidiary;
(iii) have any obligation to make any deferred compensation payments
or any commitment, whether formal or informal, to create any additional
employee benefit plans, or to modify any existing plan except as may be
required to conform to changes in applicable law;
(iv) contribute to nor have any obligation to contribute to any
multiemployer pension or welfare plan within the meaning of Section 3(37)
of ERISA or with respect to any employee benefit plan of the type described
in Sections 4063 and 4064 of ERISA or in Section 413(c) of the Code (and
regulations promulgated thereunder);
(v) maintain, sponsor, contribute to or have any liability with
respect to any Plan which provides health, life insurance, accident or
other "welfare-type" benefits to current or future retirees, current or
future former employees, current or future former independent contractors,
or the spouses, dependents or beneficiaries thereof, other than in
accordance with Section 4980B of the Code, Sections 601 et. seq. of ERISA,
and/or other applicable continuation coverage law;
(vi) have any Plan which obligates the Company or any of its
Subsidiaries to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change in control", as such term is
defined in Section 280G of the Code;
(vii) have any unfunded liabilities and all required or recommended
(in accordance with historical practices) payments, premiums,
contributions, reimbursements or accruals for all periods ending prior to
or as of the Effective Date shall have been made or properly accrued;
(viii) engage in any transaction with respect to the Plans which could
subject the Company, any of its Subsidiaries, or any trustee or
administrator of the Plans to any tax or penalty (civil or otherwise)
imposed by ERISA, the Code or other applicable law, except those that would
not be likely to have a Material Adverse Effect;
(ix) engage in any prohibited transaction within the meaning of
Section 4975 of the Code or Section 406 of ERISA with respect to any Plan.
(b) Except as set forth on Schedule 5.9(b), the Company and each Subsidiary
is not, and at any time during the preceding five-year period, was not a party
to any actions, investigations, suits or claims with respect to the
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Plans (other than routine claims for benefits) or any fiduciary or other person
dealing with such Plans, except in each such case where the outcome of which
would not be likely to have a Material Adverse Effect. No such actions,
investigations, suits or claims are pending or, to the knowledge of the Company,
threatened and the Company has no knowledge of any facts which could give rise
to or be expected to give rise to any such actions, investigations, suits or
claims, except in each such case where the outcome of which would not be likely
to have a Material Adverse Effect;
(c) For purposes of this Agreement, the term "Plans" shall mean: (i)
employee benefit plans as defined in Section 3(3) of ERISA, whether or not
funded and whether or not terminated, (ii) employment agreements, and (iii)
personnel policies or fringe benefit plans, policies, programs and arrangements,
whether or not subject to ERISA, whether or not funded, whether or not
terminated, and whether or not covering employees residing in the United States,
including without limitation, stock bonus, stock options, stock appreciation
right, stock purchase, "phantom stock," deferred compensation, pension, profit
sharing, savings, severance, bonus, vacation, incentive, travel, and health,
disability and welfare plans. Schedule 5.9 sets forth a true and complete list
of all Plans (as defined below) maintained or sponsored by the Company or any of
its Subsidiaries, contributed to by the Company or any Subsidiary, to which the
Company or any of its Subsidiaries is obligated to contribute or with respect to
which the Company or any of its Subsidiaries has any liability or potential
liability, whether direct or indirect, including all Plans contributed to,
maintained or sponsored by any member of the controlled group of companies,
within the meaning of Sections 414(b) and 414(c) of the Code, of which the
Company and/or any of its Subsidiaries, is or ever was a member (to the extent
that the Company or any of its Subsidiaries has any liability or potential
liability with respect to such Plans). Each Plan and all related trusts,
insurance contracts and funds have been maintained, funded, and administered in
compliance in all material respects with all applicable laws and regulations,
including but not limited to ERISA and the Code except for such violations that
would not be likely to have a Material Adverse Effect.
5.10 BROKERS AND FINDERS. Except for the fees and expenses payable to Credit
Suisse First Boston Corporation and NationsBanc Capital Markets, Inc. (whose
fees and expenses will be paid by the Company in accordance with the Company's
agreement with Credit Suisse First Boston Corporation), a true and complete copy
of which has been furnished to Parent, the Company has not employed any
investment banker, broker, finder, consultant or intermediary in connection with
the transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
5.11 OPINIONS OF FINANCIAL ADVISORS. The Company has received the opinion of
Credit Suisse First Boston Corporation, dated October 10, 1997, a copy of which
has been provided to Parent and Purchaser, to the effect that, as of such date,
the cash consideration to be received by the stockholders of the Company
pursuant to the Offer and the Merger is fair to such stockholders from a
financial point of view.
5.12 COMPLIANCE WITH LAWS; PERMITS. Except as set forth in the Company SEC
Reports and as set forth on Schedule 5.12, the Company and its Subsidiaries (i)
hold all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities (as defined in Annex A) for the lawful conduct of their
respective businesses except where the failure to hold such permits, licenses,
variances, exemptions, orders and approvals would not have a Material Adverse
Effect, and (ii) are in compliance with all applicable laws, statutes,
ordinances, rules, regulations, judgments, orders, injunctions, decrees,
arbitration awards, agency requirements, licenses and permits of any
Governmental Entity except for violations or possible violations that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect. Except as set forth on Schedule 5.12, no investigation or review
by any Governmental Entity with respect to the Company or its Subsidiaries is
pending or, to the knowledge of the Company, threatened, nor has any
Governmental Entity indicated an intention to conduct the same, other than, in
each case, those the outcome of which, as far as reasonably can be foreseen,
will not have a Material Adverse Effect.
5.13 TAKEOVER STATUTES. The Board of Directors of the Company has approved
the Offer, the Merger and this Agreement and such approval is sufficient to
render inapplicable to the Offer, the Merger, this Agreement and the other
transactions contemplated by this Agreement, the provisions of Section 203 of
the DGCL.
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5.14 RIGHTS PLAN. The Company has amended the Rights Agreement to provide,
among other things, that the Parent and the Purchaser shall not be deemed an
Acquiring Person (as defined in the Rights Agreement) and that the Rights will
not separate from the Shares as a result of entering into this Agreement,
commencing or consummating the Offer or consummating the Merger pursuant to the
terms of this Agreement.
5.15 CONTRACTS. Except as filed as an exhibit to the Company SEC Reports or
as set forth on Schedule 5.15, there are no contracts, agreements or other
instruments or obligations that involves the performance of services or delivery
of goods or materials by or to the Company or any Subsidiary of an amount in
excess of $1,000,000.
5.16 CHANGES IN EQUITY INTEREST. Except as set forth on Schedule 5.16, since
June 30, 1997, the Company has not made any changes in the equity interest in
the Company Common Stock or the Company Preferred Stock (collectively, the
Company Stock) including, without limitation, (i) distributions to stockholders
other than the payment of regular quarterly cash dividends, (ii) issuances of
Company Stock other than issuances of Company Common Stock and associated Rights
pursuant to the exercise of vested options under the Stock Plans, (iii)
exchanges or retirements of Company Stock, (iv) grants of options with respect
to Company Stock under the Stock Plans or (v) adoption of any new stock option
plans for Company employees.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser represent and warrant jointly and severally to
the Company that:
6.1 CORPORATE ORGANIZATION AND QUALIFICATION. Each of the Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation and is qualified
and in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification, except where the failure to so qualify or be in such good
standing would not have a Material Adverse Effect.
6.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the Parent and Purchaser
has the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This Agreement
and the consummation by Parent and Purchaser of the transactions contemplated
hereby have been duly and validly authorized by the respective Boards of
Directors of Parent and Purchaser, and no other corporate proceedings on the
part of Parent and Purchaser are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Purchaser and, assuming
this Agreement constitutes the valid and binding agreement of the Company,
constitutes valid and binding agreements of each of Parent and Purchaser,
enforceable against each of them in accordance with its terms.
6.3 CONSENTS AND APPROVALS: NO VIOLATION. Neither the execution and delivery
of this Agreement by Parent or Purchaser nor the consummation by Parent and
Purchaser of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the Articles of Incorporation or the
By-Laws, respectively, of Parent or Purchaser; (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (i) in connection with the
applicable requirements of the HSR Act, (ii) pursuant to the applicable
requirements of the Exchange Act, (iii) the filing of the Certificate of Merger
pursuant to the DGCL and appropriate documents with the relevant authorities of
other states in which Parent is authorized to do business, (iv) as may be
required by any applicable state securities or "blue sky" laws or state takeover
laws, (v) such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Merger or the transactions contemplated by
this Agreement or (vi) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not in
the aggregate have a Material Adverse Effect; (c) except as set forth in
Schedule 6.3(c), result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or lien or other charge or
encumbrance) under any of the terms, conditions or provisions of any note,
license, agreement or other instrument or obligation to which Parent or any of
its Significant Subsidiaries may be bound, except for such violations, breaches
and defaults (or rights of termination,
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cancellation or acceleration or lien or other charge or encumbrance) as to which
requisite waivers or consents have been obtained or which, in the aggregate,
would not have a Material Adverse Effect; or (d) assuming the consents,
approvals, authorizations or permits and filings or notifications referred to in
this Section 6.3 are duly and timely obtained or made, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or any of
its subsidiaries or to any of their respective assets, except for violations
which would not in the aggregate have a Material Adverse Effect.
6.4 BROKERS AND FINDERS. Except for the fees and expenses payable to Merrill
Lynch & Co., Inc. (whose fees and expenses will be paid by Parent or Purchaser
in accordance with the Parent's agreement with such firm), Parent and Purchaser
have not employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or the transactions
contemplated hereby.
6.5 FINANCING. Either Parent or Purchaser will have at the time required
sufficient funds available to purchase all of the Shares outstanding on a fully
diluted basis and to pay all fees and expenses payable by Parent or Purchaser
related to the transactions contemplated by this Agreement.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1 CONDUCT OF BUSINESS OF THE COMPANY.
(a) The Company agrees that during the period from the date of this
Agreement to the Effective Time (unless the other parties shall otherwise agree
in writing and except as otherwise contemplated by this Agreement), the Company
will, and will cause each of its Subsidiaries to, conduct its operations
according to its ordinary and usual course of business consistent with past
practice and use all commercially reasonable efforts to preserve intact its
current business organization, keep available the service of its current
employees and preserve its relationship with customers, suppliers and others
having significant dealings with it. Without limiting the generality of the
foregoing, and except as otherwise permitted in this Agreement or set forth on
Schedule 7.1, prior to the Effective Time, neither the Company nor any of its
Subsidiaries will, without the prior written consent of Parent:
(i) except for shares to be issued or delivered pursuant to the
Company's Stock Plans for options outstanding on the date of this
Agreement, issue, deliver, sell, dispose of, pledge or otherwise encumber,
or authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of capital stock of any class
(including the Shares), or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of
capital stock, or any rights, warrants, options, calls, commitments or any
other agreements of any character to purchase or acquire any shares of
capital stock or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of capital stock,
or (B) any other securities in respect of, in lieu of, or in substitution
for, Shares outstanding on the date hereof;
(ii) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding capital stock,
including the Shares, or any rights, warrants or options to acquire any
such Shares or other Securities (except for shares of restricted stock
forfeitable under the terms of any of the Stock Plans);
(iii) split, combine, subdivide or reclassify any Shares or declare,
set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any capital stock,
including the Shares or otherwise make any payments to stockholders in
their capacity as such, other than the declaration and payment of any
regular quarterly cash dividend on the Shares and except for dividends by a
wholly-owned Subsidiary of the Company;
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(iv) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the
Merger);
(v) adopt any amendments to its Articles or Certificate of
Incorporation or By-Laws or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of any Subsidiary of the Company;
(vi) make any acquisition, by means of merger, consolidation or
otherwise, or disposition (other than acquisitions or disposition of assets
in the ordinary course of business, consistent with past practice), of
assets or securities, or mortgage or otherwise encumber or subject to lien
any of its properties assets or other than in the ordinary course of
business, consistent with past practice;
(vii) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or sell any debt
securities or guarantee any such indebtedness or make any loans, advances
or capital contributions to, or investments in, any other person, other
than to the Company or any wholly-owned subsidiary of the Company, or,
except as set forth on Schedule 7.1(a)(vii), make any further commitments
for capital expenditures in excess of $500,000 individually, or $3,000,000
in the aggregate;
(viii) grant any material increases in the compensation of any of its
directors, officers or key employees, except in the ordinary course of
business and in accordance with past practice;
(ix) pay or agree to pay any pension, retirement allowance or other
employee benefit not required or contemplated by any of the existing
benefit, severance, termination, pension or employment plans, agreements or
arrangements as in effect on the date hereof to any director or officer of
the Company, whether past or present;
(x) enter into any new or materially amend any existing employment or
severance or termination agreement with any such director or officer;
(xi) except in the ordinary course of business consistent with past
practice or as may be required to comply with applicable law, become
obligated under any new pension plan, welfare plan, multiemployer plan,
employee benefit plan, severance plan, benefit arrangement, or similar plan
or arrangement, which was not in existence on the date hereof, or amend any
such plan or arrangement in existence on the date hereof if such amendment
would have the effect of materially enhancing any benefits thereunder;
(xii) settle or compromise any material claims or litigation or,
except in the ordinary and usual course of business, modify, amend or
terminate any of its material contracts or waive, release or assign any
material rights or claims;
(xiii) make any material change, other than in the ordinary course of
business and consistent with past practice or as required by applicable
law, regulation or change in generally accepted accounting principles, in
accounting policies or procedures applied by the Company (including tax
accounting policies and procedures);
(xiv) except as otherwise required by applicable law or regulation,
make any tax election or permit any insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated, except in
the ordinary course of business;
(xv) take any action to amend or alter the Rights Agreement in any
manner adverse to Parent's, Purchaser's or the Company's ability to
commence or consummate the transactions contemplated by this Agreement
pursuant to the terms hereof; or
(xvi) authorize, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
7.2 NO SOLICITATION OF TRANSACTIONS.
(a) The Company, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore
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with respect to any Takeover Proposal (as hereinafter defined). Prior to the
consummation of the Offer, the Company, its Subsidiaries, directors, employees,
representatives and agents may, directly or indirectly, furnish information and
access, in each case only in response to a Third Party Proposal (as hereinafter
defined) made after the date of this Agreement which was not initiated,
solicited or encouraged by the Company or any of its affiliates or any of its or
their respective officers, directors, employees, representatives or agents
(pursuant to appropriate confidentiality agreements the benefit of the terms of
which, if more favorable than the confidentiality agreement in place with the
Parent, shall be extended to the Parent), and may participate in discussions and
negotiate with such entity or group concerning any Takeover Proposal if a
majority of the Board of Directors of the Company determines, in its good faith
judgment, based on the opinion of independent outside legal counsel to the
Company, that failing to take such action would constitute a breach of such
Board's fiduciary obligations to the Company's stockholders under applicable
law. The Company shall promptly notify Parent if any proposal or offer, or any
inquiry or contact with any person with respect thereto, is made and shall, in
any such notice to Parent, indicate in reasonable detail the identity of the
offeror and the terms and conditions of any proposal or offer, or any such
inquiry or contact. The Company shall keep Parent promptly advised of all
developments which could reasonably be expected to culminate in the Board of
Directors withdrawing, modifying or amending its recommendation of the Offer,
the Merger and other transactions contemplated by this Agreement. Except as set
forth in this Section 7.2, neither the Company or any of its affiliates, nor any
of its or their respective officers, directors, employees, representatives or
agents, shall, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent and
Purchaser, any affiliate or associate of Parent and Purchaser, or any designees
of Parent or Purchaser) concerning any Takeover Proposal.
(b) Nothing in this Section 7.2 shall prevent the Company or the Board of
Directors of the Company from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or from making such disclosure to the Company's
stockholders in each case with respect to any Third Party Proposal, if (i) in
the good faith judgment of the Board of Directors of the Company, following
receipt of advice from outside counsel, such disclosure is required by reason of
the Board of Directors' fiduciary duties to the Company's stockholders under
applicable law and (ii) the Company shall have provided Parent and Purchaser
with as much advance notice of its position and proposed disclosure as is
possible under the circumstances; provided, however, that neither the Company
nor its Board of Directors nor any committee thereof shall, except as permitted
by this Section 7.2, withdraw or modify or propose to withdraw or modify, its
position with respect to the Offer, the Merger or this Agreement or approve or
recommend, or propose to approve or recommend, any Takeover Proposal.
For purposes of this Agreement, a "Third Party Proposal" shall mean a bona
fide proposal from a third party, which proposal was not solicited by or on
behalf of the Company in violation of this Section 7.2 and which the Board of
Directors of the Company determines in good faith and upon the advice of a
financial advisor of nationally recognized reputation has the capacity and is
reasonably likely to consummate a Superior Proposal (as defined in Section
9.3(a)). As used in this Agreement, "Takeover Proposal" shall mean any tender or
exchange offer, proposal for a merger, consolidation or other business
combination involving the Company or any Significant Subsidiary of the Company
or any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the assets of, the Company or its Significant
Subsidiaries other than transactions contemplated by this Agreement.
7.3 APPROVALS AND CONSENTS; COOPERATION. Subject to the other provisions of
this Agreement, the parties hereto shall use their respective best efforts, and
cooperate with each other, to obtain as promptly as practicable all governmental
and third party authorizations, approvals, consents or waivers, including,
without limitation, pursuant to the HSR Act, required in order to consummate the
transactions contemplated by this Agreement, including, without limitation, the
Offer and the Merger.
7.4 FURTHER ASSURANCES. Subject to the other provisions of this Agreement,
each of the parties hereto agrees to use its best efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, the Offer and the Merger, which efforts shall include, without
limitation, using their best efforts to prevent any preliminary or permanent
injunction or other
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order by a court of competent jurisdiction or governmental entity relating to
consummating the transactions contemplated by this Agreement, including, without
limitation, under the antitrust laws, and, if issued, to appeal any such
injunction or order through the appellate court or body for the relevant
jurisdiction; provided, however, that Parent shall, if necessary to prevent the
taking of such action, or the enaction, enforcement, promulgation, amendment,
issuance or application of any such statute, rule, regulation, legislation,
interpretation, judgment, order or injunction, offer to accept an order to
divest such of the Company's or Parent's assets and businesses as may be
necessary to forestall such injunction or order and to hold separate such assets
and business pending such divestiture, but only if the amount of such assets and
business is not material to the assets and profitability of Parent and its
subsidiaries taken as a whole. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the parties hereto shall take or cause to be taken all such necessary
action, including, without limitation, the execution and delivery of such
further instruments and documents as may be reasonably requested by the other
party for such purposes or otherwise to consummate and make effective the
transactions contemplated hereby.
7.5 ACCESS TO INFORMATION. Upon reasonable notice, the Company shall (and
shall cause each of its subsidiaries to) afford to officers, employees, counsel,
accountants and other authorized representatives of Parent ("Representatives"),
in order to evaluate the transactions contemplated by this Agreement, reasonable
access, during normal business hours (to the extent feasible without undue
interference with or disruption to the operation of the Company or any of its
subsidiaries) throughout the period prior to the Effective Time, to its
properties, books and records and, during such period, shall (and shall cause
each of its subsidiaries to) furnish promptly to such Representatives all
information concerning its business, properties and personnel as may reasonably
be requested. Parent agrees that it will not, and will cause its Representatives
not to, use any information obtained pursuant to this Section 7.5 for any
purpose unrelated to the consummation of the transactions contemplated by this
Agreement. The Confidentiality Agreement, dated August 13, 1997 (the
"Confidentiality Agreement"), by and between the Company and Parent shall apply
with respect to information furnished by the Company, its subsidiaries and the
Company's officers, employees, counsel, accountants and other authorized
representatives hereunder.
7.6 PUBLICITY. The parties will consult with each other and will mutually
agree upon any press releases or public announcements pertaining to the Offer or
the Merger and shall not issue any such press releases or make any such public
announcements prior to such consultation and agreement, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange, in which case the party proposing to
issue such press release or make such public announcement shall use its
reasonable efforts to consult in good faith with the other party before issuing
any such press releases or making any such public announcements.
7.7 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) The Articles of Incorporation and By-Laws of the Surviving Corporation
shall contain the provisions with respect to indemnification set forth in the
Certificate of Incorporation and By-Laws of the Company on the date of this
Agreement, which provisions shall not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors, officers, employees or agents of the Company
in respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law; 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 any such claim or claims shall continue
until disposition of any and all such claims.
(b) Parent shall cause to be maintained in effect for the Indemnified
Parties (as defined below) for not less than six years the current policies of
directors' and officers' liability insurance and fiduciary liability insurance
maintained by the Company and the Company's subsidiaries with respect to matters
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement); provided, that Parent may
substitute therefor policies of substantially the same coverage containing terms
and conditions which are no less advantageous to the Company's present or former
directors or officers or other employees covered by
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such insurance policies prior to the Effective Time (the "Indemnified Parties")
and provided further that said substitution does not result in any gaps in
coverage with respect to matters occurring prior to the Effective Time.
(c) This Section 7.7 is intended to benefit the Indemnified Parties and
shall be binding on all successors and assigns of Parent, Purchaser, the Company
and the Surviving Corporation.
7.8 EMPLOYEES.
(a) Except as set forth on Schedule 7.8(a), for a period of one year
following the Effective Time, Parent agrees to provide employee benefit plans
and programs for the benefit of employees of the Company and its Subsidiaries
(other than those employees covered by collective bargaining agreements) that
are in the aggregate no less favorable than the employee benefit plans and
programs offered to such employees immediately prior to Closing (excluding plans
or programs which provide for issuance of Shares or options on Shares).
Employees covered by collective bargaining agreements shall be provided with
such benefits as shall be required under the terms of any applicable collective
bargaining agreement.
(b) Parent hereby unconditionally agrees to cause the Surviving Corporation
to honor and perform (without modification) the written employment agreements,
severance agreements and other agreements listed on Schedule 7.8(b), all as in
effect on the date of this Agreement. Parent agrees for itself and its
subsidiaries that after the Effective Time the Surviving Corporation or its
subsidiaries will pay all amounts provided under all contracts and agreements of
the Company and its subsidiaries and all benefit obligations of the Company and
its subsidiaries, including, without limitation, the change in control
agreements entered into between the Company and its subsidiaries and their
officers (the "Change in Control Agreements") (or honor the provisions of the
Change in Control Agreements in the case where no payment by the Surviving
Corporation or its subsidiaries is required) conditioned on a change in control
of the Company, in accordance with the terms of such Change in Control
Agreements.
7.9 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice to
Parent and Purchaser, and Parent and Purchaser shall give prompt notice to the
Company, of (i) the occurrence, or nonoccurrence, of any event the occurrence,
or non-occurrence, of which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect and (ii) any failure of the Company, Parent
or Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder. Each of
the Company, Parent and Purchaser shall give prompt notice to the other parties
of any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
7.10 COMPANY BOARD.
(a) Promptly (but in any event within one business day) upon the purchase
by the Purchaser of a majority of the outstanding Shares pursuant to the Offer,
either (a) a majority of the members of the Board of Directors of the Company
shall resign and the remaining members of the Board of Directors of the Company
shall fill all of the Board positions so vacated with persons designated by the
Purchaser or (b) the size of the Board of Directors of the Company shall be
expanded and the vacant seats filled with persons designated by the Purchaser so
that the Purchaser's designees shall constitute a majority of the members of the
Board of Directors of the Company. In either case, at all times thereafter
through the Effective Time a majority of the members of the Board of Directors
of the Company shall be persons designated by the Purchaser.
(b) The Company's obligation to appoint designees to the Board of Directors
of the Company shall be subject to Section 14(f) of the Exchange Act and Rule
14e-1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to such Section and Rule in order to fulfill its obligations
under this Section 7.10 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14e-1 to fulfill such obligations. Parent or Purchaser
shall supply to the Company and be solely responsible for any information with
respect to either of them and their nominees, officers, directors and affiliates
required by such Section 14(f) and Rule 14e-1.
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(c) Following the election of designees of Purchaser pursuant to this
Section 7.10, prior to the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or By-laws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser or
waiver of any of the Company's rights hereunder shall require the concurrence of
a majority of the directors of the Company then in office who are directors as
of the date hereof or persons designated by such directors and who were neither
designated by Purchaser nor employees of the Company ("Continuing Directors").
Prior to the Effective Time, the Company and Purchaser shall use all reasonable
efforts to ensure that the Company's Board of Directors at all times includes at
least three Continuing Directors.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. To the extent required by applicable law, the
Company Stockholder Approval shall have been duly obtained in accordance with
applicable law and the Certificate of Incorporation of the Company; provided
that Parent and Purchaser shall vote all of their Shares in favor of the Merger.
(b) Injunction. There shall not be in effect any statute, rule,
regulation, executive order, decree, ruling or injunction or other order of a
court or governmental or regulatory agency of competent jurisdiction directing
that the transactions contemplated herein not be consummated; provided, however,
that prior to invoking this condition each party shall use its best efforts to
have any such decree, ruling, injunction or order vacated.
(c) Governmental Filings and Consents. All governmental consents, orders
and approvals legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and be in effect at
the Effective Time, except where the failure to obtain any such consent would
not reasonably be expected to have a Material Adverse Effect on Parent and its
Subsidiaries, considered as whole (assuming the Merger had taken place), and the
waiting periods under the HSR Act shall have expired or been terminated.
(d) The Offer. Purchaser shall have purchased all Shares tendered pursuant
to the Offer.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and the
Offer and the Merger may be abandoned at any time prior to the Effective Time,
by the mutual written consent of Parent and the Company.
9.2 TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement may be
terminated and the Offer and Merger may be abandoned by Parent or the Company if
(i) any governmental or regulatory agency located or having jurisdiction within
the United States or any country or economic region in which either the Company
or Parent, directly or indirectly, has material assets or operations shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance for payment of,
or payment for, shares of Common Stock pursuant to the Offer or the Merger and
such order, decree or ruling or other action shall have become final and
nonappealable; provided, that Parent shall, if necessary to prevent the taking
of such action, or the enaction, enforcement, promulgation, amendment, issuance
or application of any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction, offer to accept an order to divest such of the
Company's or Parent's assets and businesses as may be necessary to forestall
such injunction or order and to hold separate such assets and business pending
such divestiture, but only if the amount of such assets and businesses is not
material to the assets or profitability of Parent and its subsidiaries taken as
a whole; or (ii) due to an occurrence or circumstance which would result in a
failure to satisfy any of the Offer Conditions, Purchaser shall have failed to
pay for Shares pursuant to the Offer on or prior to the Outside Date, unless
such failure has been caused by or results from the failure of the party seeking
to terminate this Agreement to perform in any
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material respect any of its respective covenants or agreements contained in this
Agreement. As used herein, the term "Outside Date" shall mean the latest (not to
exceed 180 days) of (A) 90 days following the date hereof, or (B) the date on
which either the applicable waiting period under the HSR Act shall have expired
or been terminated or the final terms of a consent decree between Parent and the
Antitrust Division of the Department of Justice (the "Antitrust Division") (the
"Consenting Parties"), with respect to the Offer and the Merger have been agreed
to by the Consenting Parties, or an order of a Federal District Court adjudging
that the Merger does not violate the Federal antitrust laws shall have been
issued or the Antitrust Division shall have otherwise authorized the Parent to
acquire Shares pursuant to the Offer.
9.3 TERMINATION BY THE COMPANY. This Agreement may be terminated and the
Offer and the Merger may be abandoned at any time prior to the Effective Time,
by action of the Board of Directors of the Company:
(a) if (i) the Company, based on the advice of outside legal counsel
to the Company that such action is necessary in order for the Board of
Directors of the Company to comply with its fiduciary duties under
applicable law, subject to complying with the terms of this Agreement,
enters into a binding written agreement concerning a transaction that
constitutes a Superior Proposal if, prior thereto, the Company notifies
Parent in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement to such notice and
(ii) Parent does not make, within two business days of receipt of the
Company's written notification of its intention to enter into a binding
agreement for a Superior Proposal, an offer to enter into an amendment to
this Agreement such that the Board of Directors of the Company determines,
in good faith after consultation with its financial advisors, that this
Agreement as so amended is at least as favorable, from a financial point of
view, to the stockholders of the Company as the Superior Proposal. The
Company agrees (A) that it will not enter into a binding agreement referred
to in clause (i) above until at least the third business day after it has
provided the notice to Parent required thereby and (B) to notify Parent
promptly if its intention to enter into a written agreement referred to in
its notification shall change at any time after giving such notification.
For purposes of this Agreement, the term "Superior Proposal" shall
mean a Third Party Proposal to acquire all of the outstanding Shares of the
Company pursuant to a tender offer or a merger, or to purchase all or
substantially all of the assets of the Company, on terms which a majority
of the members of the Board of Directors of the Company determines in its
good faith reasonable judgment (based on the advice of its financial and
legal advisors) to be more favorable to the Company and its stockholders
than the transactions contemplated hereby.
(b) if (i) Purchaser shall have (x) failed to commence the Offer
within five business days following the date of the initial public
announcement of the Offer, (y) failed to pay for any Shares pursuant to the
Offer to the extent required by Section 1.1(a) or (z) terminated the Offer
without purchasing Shares pursuant to the Offer, or (ii) there has been a
material breach by Parent or Purchaser of any representation, warranty,
covenant or agreement contained in this Agreement that is not curable or,
if curable, is not cured within 30 calendar days after written notice of
such breach is given by the Company to the party committing such breach.
9.4 TERMINATION BY PARENT. This Agreement may be terminated and the Offer and
Merger may be abandoned at any time prior to the Effective Time by action of the
Board of Directors of Parent if (i) the Board of Directors of the Company shall
have withdrawn or adversely modified its approval or recommendation of this
Agreement or failed to reconfirm its recommendation of this Agreement within
five business days after a written request by Parent to do so, (ii) there has
been a breach by the Company of any representation, warranty, covenant or
agreement contained in this Agreement that is qualified as to materiality or
there has been a material breach of any other representation, warranty, covenant
or agreement contained in this Agreement, in any case that is not curable or, if
curable, is not cured within 30 calendar days after written notice of such
breach is given by Parent to the party committing such breach, or (iii) on a
scheduled expiration date all conditions to Purchaser's obligation to accept for
payment and pay for Shares pursuant to the Offer shall have been satisfied or
waived other than the Minimum Condition and Purchaser terminates the Offer
without purchasing Shares pursuant to the Offer, provided that the satisfaction
or waiver of all other conditions shall have been publicly disclosed at least
five business days before termination of the Offer, or (iv) Purchaser shall have
otherwise terminated the Offer in
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accordance with the terms of this Agreement, including Annex A, without
purchasing shares pursuant to the Offer.
9.5 EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article IX, this Agreement (other than, with respect
to the parties hereto, the obligations pursuant to this Section 9.5 and Sections
10.1 and 10.2) shall become void and of no effect with no liability on the part
of any party hereto (or of any of its directors, officers, employees, agents,
legal and financial advisors or other representatives).
(b) In the event that (i) this Agreement is terminated by the Company
pursuant to Section 9.3(a) or (ii) this Agreement is terminated by Parent
pursuant to Section 9.4(i), then the Company shall promptly, but in no event
later than two days after the date of such termination or event, pay Parent a
termination fee of $30,000,000.
(c) In the event that, prior to the termination of this Agreement, any
person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
shall have made a Third Party Proposal and within six (6) months following the
date such Third Party Proposal is made, such person or group (other than Parent
or any of its affiliates) shall have acquired, directly or indirectly, the
Company, a substantial portion of its assets or more than 50% of the shares of
Company Common Stock then outstanding, for a per share consideration (or
equivalent thereof), in any such case, having a value greater than the price per
share of Company Common Stock to have been paid pursuant to this Agreement, then
the Company shall promptly, but in no event later than one day after the date of
such event, pay the Parent a termination fee of $30,000,000.
(d) In the event that (i) this Agreement is terminated by Parent pursuant
to section 9.4(iii) or (ii) this Agreement is terminated by the Company pursuant
to Section 9.3(b), then Parent shall promptly, but in no event later than two
days after the date of such termination or event, pay the Company all
out-of-pocket expenses incurred by the Company in connection with this Agreement
and the transactions contemplated hereby, including the fees of its printer,
consultants, attorneys, accountants, financial advisors and other advisors, not
to exceed $5,000,000.
(e) In the event that this Agreement is terminated by the Parent or
Purchaser pursuant to Section 9.4(ii), the Company shall promptly, but in no
event later than two days after the date of such termination or event, pay the
Parent all out-of-pocket expenses incurred by the Parent or Purchaser in
connection with this Agreement and the transactions contemplated hereby,
including the fees and expenses of their printer, consultants, attorneys,
accountants, financial advisors and other advisors, not to exceed $5,000,000.
9.6 EXTENSION; WAIVER. Subject to the applicable provisions of the DGCL and
the provisions of this Agreement, including Section 7.10, at any time prior to
the Effective Time, each of Parent, Purchaser and the Company may (i) extend the
time for the performance of any of the obligations or other acts of the other
party, (ii) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance by the other party with any
of the agreements or conditions contained herein. Any agreement on the part of
either party hereto to any such extension or waiver shall be valid only if set
forth in any instrument in writing signed on behalf of such party. The failure
of either party hereto to assert any of its rights hereunder shall not
constitute a waiver of such rights.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 PAYMENT OF EXPENSES. Whether or not the Offer and the Merger shall be
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby.
10.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SURVIVAL OF CONFIDENTIALITY.
The representations and warranties made herein shall not survive beyond the
earlier of (i) termination of this Agreement or (ii) the Effective Time, in the
case of the representations and warranties of Parent or Purchaser or the
purchase of Shares
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by Purchaser pursuant to the Offer, in the case of the representations and
warranties of the Company. This Section 10.2 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time or the Purchase of Shares by Purchaser pursuant to the
Offer. The Confidentiality Agreement shall survive any termination of this
Agreement and the provisions of such Confidentiality Agreement shall apply to
all information and material delivered by any party hereunder.
10.3 MODIFICATION OR AMENDMENT. Subject to the applicable provisions of the
DGCL and the provisions of this Agreement, including Section 7.10, at any time
prior to the Effective Time, the parties hereto may modify or amend this
Agreement by written agreement executed and delivered by duly authorized
officers of the respective parties.
10.4 WAIVER OF CONDITIONS. Subject to the applicable provisions of the DGCL
and the provisions of this Agreement, including Section 7.10, the conditions to
each of the parties' obligations to consummate the Merger are for the sole
benefit of such party and may be waived by such party in whole or in part.
10.5 COUNTERPARTS. For the convenience of the parties hereto, this Agreement
may be executed in any number of counterparts, each such counterpart being
deemed to be an original instrument, and all such counterparts shall together
constitute the same agreement.
10.6 GOVERNING LAW.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.
(b) Each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (iii) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in any
court other than a Federal or state court sitting in the State of Delaware.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.6.
10.7 NOTICES. Any notice, request, instruction or other document to be given
hereunder by any party to the other parties shall be in writing and delivered
personally or sent by overnight courier with confirmation of next day delivery
or by facsimile transmission (with a confirming copy sent by overnight courier),
as follows:
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(a) If to the Company, to
Greenfield Industries, Inc.
2743 Perimeter Parkway
Building 100, Suite 100
Augusta, GA 30909
Attn: Paul W. Jones
(706) 863-7708 (telephone)
(706) 650-4122 (facsimile)
with a copy to:
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, DC 20037
Attn: Matthew G. Maloney, Esq.
(202) 785-9700 (telephone)
(202) 887-0689 (facsimile)
(b) If to Parent, to
Kennametal Inc.
Route 981 at Westmoreland
County Airport
P.O. Box 231
Latrobe, PA 15650
Attn: David T. Cofer
(412) 539-5206 (telephone)
(412) 539-3839 (facsimile)
with a copy to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219
Attn: Lewis U. Davis, Jr., Esq.
(412) 562-8953 (telephone)
(412) 562-1041 (facsimile)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
10.8 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the Confidentiality
Agreement (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof, and (b) shall not be assigned by operation
of law or otherwise.
10.9 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right to
receive the consideration payable in the Merger pursuant to Article IV hereof is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement;
provided, however, that the provisions of Section 7.7 shall inure to the benefit
of and be enforceable by the Indemnified Parties and the provisions of Section
7.8(b) shall inure to the benefit of and be enforceable by the officers and
directors of the Company.
10.10 CERTAIN DEFINITIONS. As used herein:
(a) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
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(c) "Rights" shall mean any preferred stock purchase rights issued
pursuant to the Restated Rights Agreement, dated as of February 6, 1996, by
and between the Company and First Chicago Trust Company of New York, as
Rights Agent (the "Rights Agreement"), that are issued and outstanding
immediately prior to the Effective Time
(d) "Significant Subsidiary" shall have the meaning ascribed to it
under Rule 1-02 of Regulation S-X of the SEC.
(e) "Subsidiary" shall mean, when used with reference to any entity,
any other entity of which either (i) a majority of the outstanding voting
securities of which are owned directly or indirectly by such entity, or
(ii) an amount of voting securities or other voting ownership is sufficient
to elect at least a majority of its board directors or other governing
body.
(f) "Material Adverse Effect" shall mean any adverse change or changes
in the financial condition, properties, business, results of operations or
prospects of the Company or any of its subsidiaries or Parent or any of its
subsidiaries, as the case may be, which individually or in the aggregate is
or are material to the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, as the case may be, other
than (i) any change or effect arising out of general economic conditions or
(ii) any change or effect which the Company or Parent, as the case may be,
has disclosed in writing, prior to the date hereof, to Parent or the
Company, as the case may be, has occurred or is likely to occur.
10.11 SPECIFIC PERFORMANCE.
(a) The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
(b) It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
10.12 OBLIGATION OF PARENT. Whenever this Agreement requires Purchaser to
take any action, such requirement shall be deemed to include an undertaking on
the part of Parent to take such action and or guarantee of the performance
thereof.
10.13 VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
10.14 CAPTIONS. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
KENNAMETAL INC.
By: /s/ ROBERT L. MCGEEHAN
------------------------------------
Name: Robert L. McGeehan
Title: President
PALMER ACQUISITION CORP.
By: /s/ ROBERT L. MCGEEHAN
------------------------------------
Name: Robert L. McGeehan
Title: President
GREENFIELD INDUSTRIES, INC.
By: /s/ PAUL W. JONES
------------------------------------
Name: Paul W. Jones
Title: President and Chief
Executive Officer
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ANNEX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer and provided that
Purchaser shall not be obligated to accept for payment any Shares until (i)
expiration of all applicable waiting periods under the HSR Act and (ii) the
Minimum Condition shall have been satisfied, Purchaser shall not be required to
accept for payment or pay for, or may delay the acceptance for payment of or
payment for, any Shares tendered pursuant to the Offer, or may, subject to the
terms of the Agreement, terminate or amend the Offer if on or after October 10,
1997, and at or before the time of payment for any of such Shares, any of the
following events shall occur (or become known to Parent) and remain in effect:
(a) there shall have occurred and be continuing as of the then
scheduled expiration date of the Offer (i) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange or the Nasdaq National Market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or any limitation by federal or state authorities on the extension
of credit by lending institutions, or a disruption of or material adverse
change in either the syndication market for credit facilities or the
financial, banking or capital markets, (iii) a commencement or escalation
of a war, armed hostilities or other international or national calamity
directly involving the United States, (iv) any material limitation (whether
or not mandatory) by any governmental or regulatory authority, agency or
commission, domestic or foreign ("Governmental Entity"), on the extension
of credit by banks or other lending institutions in the United States, (v)
or in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(b) (i) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Agreement, (ii) any representation or warranty of the Company set forth in
the Agreement which is qualified by materiality shall not have been true
and correct as of the date of the Agreement and as of the then scheduled
expiration date of the Offer as though made on and as of the then scheduled
expiration date of the Offer or (iii) any representation or warranty of the
Company set forth in the Agreement which is not qualified by materiality
shall not have been true and correct in all material respects as of the
date of this Agreement and as of the then scheduled expiration date of the
Offer as though made on and as of the then scheduled expiration date of the
Offer, except in the case of clauses (ii) and (iii) of this paragraph (b)
for representations and warranties which by their terms speak only as of
another date, which representations and warranties, if qualified by
materiality, shall not have been true and correct as of such date and, if
not qualified, shall not have been true and correct in all material
respects as of such other date;
(c) any court or Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order which is in effect and which (i)
restricts (other than restrictions which in the aggregate do not have a
Material Adverse Effect on Parent, Purchaser or the Company or which do not
materially restrict the ability of Parent and Purchaser to consummate the
Offer and the Merger as originally contemplated by Parent and Purchaser),
prevents or prohibits consummation of the Offer or the Merger, (ii)
prohibits or limits (other than limits which in the aggregate do not have a
Material Adverse Effect on Parent, Purchaser or the Company or which do not
materially limit the ability of Parent to own and operate all of the
business and assets of Parent and the Company after the consummation of the
transactions contemplated by the Offer and the Agreement) the ownership or
operation by the Company, Parent or any of their subsidiaries of all or any
material portion of the business or assets of the Company and its
subsidiaries taken as a whole, or as a result of the Offer or the Merger
compels the Company, Parent or any of their subsidiaries to dispose of or
hold separate all or any material portion of their respective business or
assets, (iii) imposes limitations (other than limits which in the aggregate
do not have a Material Adverse Effect on Parent, Purchaser or the Company
or which do not materially limit the ability of Parent to own and operate
all of the business and assets of Parent and the Company after the
consummation of the transactions contemplated by the Offer and the
Agreement) on the ability of Parent or any subsidiary of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer or
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otherwise on all matters properly presented to the Company's stockholders
including, without limitation, the approval and adoption of the Agreement
and the transactions contemplated thereby, (iv) requires divestiture by
Parent or any affiliate of Parent of any Shares or (v) otherwise materially
adversely affects the financial condition, business or results of
operations of the Company and its subsidiaries taken as a whole;
(d) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Parent or Purchaser with or from any governmental entity in
connection with the execution and delivery of the Agreement, the Offer and
the consummation of the transactions contemplated by the Agreement shall
not have been made or obtained as of the then scheduled expiration date of
the Offer (other than the failure to receive any consent, registration,
approval, permit or authorization or to make any notice, report or other
filing that, in the aggregate, is not reasonably likely to have a Material
Adverse Effect on Parent, Purchaser or the Company, or would not prevent
the consummation of the Offer or the Merger);
(e) any change or development in the financial condition, properties,
business, results of operations or prospects of the Company and its
Subsidiaries that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect;
(f) the Board of Directors of the Company (or a special committee
thereof) shall have withdrawn or amended, or modified in a manner adverse
to Parent and Purchaser its recommendation of the Offer or the Merger, or
shall have endorsed, approved or recommended any Superior Proposal; or
(g) the Agreement shall have been terminated by the Company or Parent
or Purchaser in accordance with its terms or Parent or Purchaser shall have
reached an agreement or understanding in writing with the Company providing
for termination or amendment of the Offer or delay in payment for the
Shares;
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Parent and Purchaser and may be asserted by Parent or Purchaser
or may be waived by Parent or Purchaser, in whole or in part at any time and
from time to time in its sole discretion. The failure by Parent or Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right, the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
A-2
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EXHIBIT (C)(2)
[GREENFIELD LOGO]
August 13, 1997
Mr. Robert L. McGeehan
President and Chief Executive Officer
Kennametal Inc.
P.O. Box 231
Latrobe, PA 15650
Dear Mr. McGeehan:
In connection with your consideration of a possible negotiated transaction
with Greenfield Industries, Inc. and/or its subsidiaries, affiliates or
divisions (collectively, with such subsidiaries, affiliates and divisions, the
"Company"), the Company is prepared to make available to you certain information
concerning the business, financial condition, operations, assets and liabilities
of the Company. As a condition of such information being furnished to you and
your directors, officers, employees, agents or advisors (including, without
limitation, attorneys, accountants, consultants, bankers and financial advisors)
(collectively, "Representatives"), you agree to treat any information concerning
the Company (whether prepared by the Company, its advisors or otherwise and
irrespective of the form of communication) which is furnished to you or to your
Representatives now or in the future by or on behalf of the Company (herein
collectively referred to as the "Evaluation Material") in accordance with the
provisions of this letter agreement, and to take or abstain from taking certain
other actions hereinafter set forth.
The term "Evaluation Material" also shall be deemed to include all notes,
analyses, compilations, studies, interpretations or other documents prepared by
you or your Representatives which contain, reflect or are based upon, in whole
or in part, the information furnished to you or your Representatives pursuant
hereto. The term "Evaluation Material" does not include information which (i) is
or becomes generally available to the public other than as a result of a
disclosure by you or your Representatives in violation of this agreement; (ii)
was within your possession prior to its being furnished to you by or on behalf
of the Company pursuant hereto, provided that the source of such information was
not known by you to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the Company or
any other party with respect to such information; (iii) becomes available to you
on a non-confidential basis from a source other than the Company or any of its
Representatives, provided that such source is not, to your knowledge, bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or any other party with respect to
such information; or (iv) information that was or is developed by you
independently from the information disclosed by the Company or any of its
Representatives.
You hereby agree that you and your Representatives shall use the Evaluation
Material solely for the purpose of evaluating a possible negotiated transaction
between the Company and you, that the Evaluation Material will be kept
confidential and that you and your Representatives will not disclose any of the
Evaluation Material in any manner whatsoever, provided, however, that (i) you
may make any disclosure of such information to which the Company gives its prior
written consent; and (ii) any of such information may be disclosed to your
Representatives who need to know such information for the sole purpose of
evaluating a possible negotiated transaction with the Company, who agree to keep
such information confidential and who are provided with a copy of this letter
agreement and agree to be bound by the terms hereof to the same extent as it
they were parties hereto. In any event, you shall be responsible for any breach
of this letter agreement by any of your Representatives and you agree, at your
sole expense, to take all reasonable measures (including, but not limited to,
court proceedings) to restrain your Representatives from prohibited or
unauthorized disclosure or use of the Evaluation Material.
In addition, you agree that, without prior written consent of the Company,
you and your Representatives will not disclose to any other person the fact that
the Evaluation Material has been made available to you, that
<PAGE> 123
discussions or negotiations are taking place concerning a possible transaction
involving the Company or any of the terms, conditions or other facts with
respect thereto (including the status thereof), provided that you may make such
disclosure if your General Counsel determines, and advises the Company of such
in writing prior thereto, that such disclosure must be made by you in order that
you not commit a violation of law or stock exchange rules and regulations.
Without limiting the generality of the foregoing, you further agree that,
without the prior written consent of the Company, you will not, directly or
indirectly, enter into any agreement, arrangement or understanding, or any
discussions which might lead to such agreement, arrangement or understanding,
with any person regarding a possible transaction involving the Company. The term
"person" as used in this letter agreement shall be broadly interpreted to
include the media and any corporation, partnership, group, individual or other
entity.
In the event that you or any of your Representatives are requested or
required (by oral questions, interrogations, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any of the Evaluation Material, you shall provide
the Company with prompt written notice of any such request or requirement so
that the Company may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this letter agreement. If, in the
absence of a protective order or other remedy or the receipt of a waiver by the
Company, you or any of your Representatives are nonetheless, in the opinion of
your General Counsel, legally compelled to disclose Evaluation Material to any
tribunal or else stand liable for contempt or suffer other censure of penalty,
you or your Representatives may, without liability hereunder, disclose to such
tribunal only that portion of the Evaluation Material which such counsel advises
you is legally required to be disclosed, provided that you exercise your
reasonable best efforts to preserve the confidentiality of the Evaluation
Material, including, without limitation, by cooperating with the Company to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded the Evaluation Material by such
tribunal.
If you decide that you do not wish to proceed with a transaction with the
Company, you will promptly inform the Company of that decision. In that case, or
at any time upon the request of the Company for any reason, you will promptly
deliver to the Company all Evaluation Material (and all copies thereof)
furnished to you or your Representatives by or on behalf of the Company pursuant
hereto. In the event of such a decision or request, all other Evaluation
Material prepared by your or your Representatives shall be destroyed and no copy
thereof shall be retained. Notwithstanding the return or destruction of the
Evaluation Material, you and your Representatives will continue to be bound by
your obligations of confidentiality and other obligations hereunder for a period
of five years after the date this letter is signed by you.
You understand and acknowledge that neither the Company nor any of its
Representatives (including the Company's directors, officers, employees, or
agents) make any representation or warranty, express or implied, as to the
accuracy or completeness of the Evaluation Material. You agree that neither the
Company nor any of its Representatives (including any of the Company's
directors, officers, employees, or agents) shall have any liability to you or to
any of your Representatives relating to or resulting from the use of the
Evaluation Material or any errors therein or omissions therefrom. Only those
representations or warranties which are made in a final definitive agreement
regarding any transactions contemplated hereby, when, as and if executed, and
subject to such limitations and restrictions as may be specified therein, will
have any legal effect.
In consideration of the Evaluation Material being furnished to you, you
hereby agree that, for a period of three years from the date hereof, neither you
nor any of your affiliates will solicit to employ any of the current Officers or
key employees of the Company with whom you have had contact or who were
specifically identified to you during the period of your investigation of the
Company, so long as they are employed by the Company, without obtaining the
prior written consent of the Company.
You agree that, for a period of two years from the date of this letter
agreement, unless such shall have been specifically agreed to in writing by the
Company, neither you nor any of your affiliates (as such term is defined under
the Securities Exchange Act of 1934, as amended (the "1934 Act")) or
Representatives will in any manner, directly or indirectly, (a) effect or seek,
offer or propose (whether publicly or otherwise) to effect, or cause or
participate in or in any way assist any other person to effect or seek, offer or
propose (whether publicly or otherwise) to effect or participate in, (i) any
acquisition of any securities (or beneficial ownership thereof) or
2
<PAGE> 124
assets of the Company or any of its subsidiaries; (ii) any tender or exchange
offer, merger or other business combination involving the Company or any of its
subsidiaries; (iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to the Company or
any of its subsidiaries; or (iv) any "solicitation" of "proxies" (as such terms
are used in the proxy rules of the Securities and Exchange Commission) or
consents to vote any voting securities of the Company; (b) form, join or in any
way participate in a "group" (as defined under the 1934 Act); (c) otherwise act,
alone or in concert with others, to seek to control or influence the management,
Board of Directors or policies of the Company; (d) take any action which might
force the Company to make a public announcement regarding any of the types of
matters set forth in (a) above; or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing.
Notwithstanding anything to the contrary contained herein, you may take any
of the actions set forth in (a)-(e) above without regard to the foregoing
restrictions if any of the following events shall occur: (a) a tender or
exchange offer is made by any person or 13D Group (as hereinafter defined) to
acquire stock representing a majority of the total voting power of all such
securities outstanding; or (b) it is publicly disclosed or you otherwise learn
that stock representing a majority of the combined securities then outstanding
are proposed (in a public announcement or filing) to be acquired by a person or
13D group. As used herein the term "13D Group" shall mean any group of persons
formed for the purpose of acquiring, holding, voting or disposing of stock which
would be required under section 13(d) of the 1934 Act and the rules and
regulations thereunder (as now in effect and based on present interpretations
thereof) to file a statement on schedule 13D with the Securities and Exchange
Commission as a "person" within the meaning of Section 13(d)(3) of the 1934 Act
if such group beneficially owned stock representing more than 5% of the total
combined voting power of all stock then outstanding.
You understand and agree that no contract or agreement providing for any
transaction involving the Company shall be deemed to exist between you and the
Company unless and until a final definitive agreement has been executed and
delivered, and you hereby waive, in advance, any claims (including, without
limitation, breach of contract) in connection with any transaction involving the
Company unless and until you and the Company shall have entered into a final
definitive agreement. You also agree that unless and until a final definitive
agreement regarding a transaction between the Company and you has been executed
and delivered, neither the Company nor you will be under any legal obligation of
any kind whatsoever with respect to such a transaction by virtue of this letter
agreement except for the matters specifically agreed to herein. You further
acknowledge and agree that the Company reserves the right, in its sole
discretion, to reject any and all proposals made by you or any of your
Representatives with regard to a transaction between the Company and you, and to
terminate discussions and negotiations with you at any time. You further
understand that (i) the Company and its Representatives shall be free to conduct
any process for any transaction involving the Company, if and as they in their
sole discretion shall determine (including, without limitation, negotiating with
any other interested parties and entering into a definitive agreement without
prior notice to you or any other person); (ii) any procedures relating to such
process or transaction may be changed at any time without notice to you or any
other person; and (iii) you shall not have any claims whatsoever against the
Company, its Representatives or any of their respective directors, officers,
stockholders, owners, affiliates or agents arising out of or relating to any
transaction involving the Company (other than those as against the parties to a
definitive agreement with you in accordance with the terms thereof) nor, unless
a definitive agreement is entered into with you, against any third party with
whom a transaction is entered into. Neither this paragraph nor any other
provision in this letter agreement can be waived or amended except by written
consent of the Company, which consent shall specifically refer to this paragraph
(or such provision) and explicitly make such waiver or amendment.
It is understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
future exercise thereof or the exercise of any other right, power or privilege
hereunder.
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach of this letter agreement by you or any of your
Representatives and that the Company shall be entitled to equitable relief,
including injunction and specific performance, as a remedy for any such breach.
Such remedies shall not be deemed to be the exclusive remedies for a breach by
you of this letter agreement but shall be in addition to all other remedies
available at law or equity to the Company. In the event of litigation relating
to this letter
3
<PAGE> 125
agreement, if a court of competent jurisdiction determines that you or any of
your Representatives have breached this letter agreement, then you shall be
liable and pay to the Company the reasonable legal fees incurred by the Company
in connection with such litigation, including any appeal therefrom.
During consideration of a possible transaction, you may provide to the
Company and/or its officers, Directors, employees, Agents, or consultants
(collectively Greenfield) certain nonpublic, confidential information concerning
Kennametal Inc. If that occurs, Greenfield agrees that the receipt and use of
such information by Greenfield will be subject to all of the confidentiality
obligations of this letter agreement in the same manner as they are applicable
to receipt and use of the Evaluation Material by you.
This letter agreement is for the benefit of the Company and its directors,
officers, stockholders, owners, affiliates, and agents, and shall be governed by
and construed in accordance with the laws of the State of New York without
regard to such jurisdiction's conflicts of laws principles.
Please confirm your agreement with the foregoing by signing and returning
one copy of this letter to the undersigned, whereupon this letter agreement
shall become a binding agreement between you and the Company.
Very truly yours,
GREENFIELD INDUSTRIES, INC.
By: /s/ GARY L. WELLER
------------------------------------
Name: Gary L. Weller
Executive Vice President &
Chief Financial Officer
KENNAMETAL INC.
Accepted and agreed as of the date first
written above:
By: /s/ ROBERT L. MCGEEHAN
------------------------------------
Name: Robert L. McGeehan
President and Chief Executive
Officer
KENNAMETAL INC.
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