==============================================================================
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
-----------------------
TRIMAS CORPORATION
(Exact name of Subject Company)
MASCOTECH, INC.
MASCOTECH ACQUISITION, INC.
(Bidders)
-----------------------
Common Stock, $.01 Par Value
(Title of Class of Securities)
-----------------------
896215100
(CUSIP Number of Class of Securities)
-----------------------
David B. Liner, Esq.
MascoTech, Inc.
21001 Van Born Road
Taylor, Michigan 48180
(313) 274-7405
(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
-----------------------
With Copies to:
David W. Ferguson, Esq. Jerome M. Schwartz, Esq.
Davis Polk & Wardwell Dickinson, Wright, Moon, Van Dusen & Freeman
450 Lexington Avenue 500 Woodward Avenue, Suite 4000
New York, New York 10017 Detroit, Michigan 48226
(212) 450-4000 (313) 223-3628
CALCULATION OF FILING FEE
================================================================================
Transaction Valuation* Amount of Filing Fee**
$912,927,132 $182,585
================================================================================
* Calculated by multiplying $34.50, the per share tender offer price,
by 26,461,656, the sum of the number of shares of Common Stock
sought in the Offer and the 327,647 shares of Common Stock subject
to options that will be vested and exercisable as of January 16,
1998.
** Calculated as 1/50 of 1% of the transaction value.
[ ] 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
or Schedule and the date of its filing.
Amount Previously Paid: _____________ Filing Party: __________________
Form or Registration No.: ___________ Date Filed: ____________________
- --------------------------------------------------------------------------------
This Tender Offer Statement on Schedule 14D-1 filed by MascoTech, Inc.
("Parent"), a Delaware corporation and MascoTech Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Purchaser"), relates to
the offer by Purchaser to purchase all of the issued and outstanding shares (the
"Shares") of common stock, $.01 par value per share, of TriMas Corporation, a
Delaware corporation, at a price of $34.50 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated December 17, 1997 (the "Offer to Purchase") and in the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively.
Item 1. Security and Subject Company
(a) The name of the subject company is TriMas Corporation (the "Company"),
a Delaware corporation, which has its principal executive offices at 315 East
Eisenhower Parkway, Ann Arbor, Michigan 48108.
(b) The exact title of the class of equity securities being sought is
shares of Common Stock, $.01 par value per share, of the Company. As of December
15, 1997, there were 41,325,118 Shares issued and outstanding and approximately
2,500 holders of record. The information set forth under "Introduction" in the
Offer to Purchase is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market is set forth in "The Tender Offer--Price Range of Shares; Dividends" of
the Offer to Purchase and is incorporated herein by reference.
Item 2. Identity and Background
(a)-(d) and (g) This Statement is filed by Parent and Purchaser. The
information set forth under "Introduction", "The Tender Offer--Certain
Information Concerning Parent and Purchaser", "The Tender Offer--Certain
Information Concerning Masco Corporation" and Schedules I, II and III of the
Offer to Purchase is incorporated herein by reference.
(e) and (f) During the last five years, neither Parent nor Purchaser nor,
to the best knowledge of Parent and Purchaser, either Masco Corporation or any
of the persons listed in Schedules I, II and III of the Offer to Purchase has
been (i) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) 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.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company
(a) The information set forth under "Special Factors--Background of the
Offer", "Special Factors--The Merger Agreement", "Special Factors--Interests of
Certain Persons in the Offer and the Merger", "The Tender Offer--Certain
Information Concerning Parent and Purchaser" and "The Tender Offer--Certain
Information Concerning Masco Corporation" in the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth under "Introduction", "Special
Factors--Background of the Offer", "Special Factors--Purpose and Structure of
the Offer and the Merger; Reasons of Parent for the Offer and the Merger",
"Special Factors--Plans for the Company After the Offer and the Merger",
"Special Factors--The Merger Agreement", "The Tender Offer--Certain Information
Concerning the Company" and "The Tender Offer-- Certain Information Concerning
Parent and Purchaser" of the Offer to Purchase is incorporated herein by
reference.
Item 4. Source and Amount of Funds or Other Consideration
(a)-(c) The information set forth under "The Tender Offer--Financing of the
Offer and the Merger" of the Offer to Purchase is incorporated herein by
reference.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder
(a)-(e) The information set forth under "Introduction", "Special
Factors--Background of the Offer", "Special Factors--Purpose and Structure of
the Offer and the Merger; Reasons of Parent for the Offer and the Merger",
"Special Factors--Plans for the Company After the Offer and the Merger",
"Special Factors--The Merger Agreement", "The Tender Offer--Certain Information
Concerning the Company", "The Tender Offer--Financing of the Offer and the
Merger" and "The Tender Offer--Dividends and Distributions" of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth under "Special Factors--Plans for the
Company After the Offer and the Merger and "The Tender Offer--Certain Effects of
the Offer" of the Offer to Purchase is incorporated herein by reference.
Item 6. Interest in Securities of the Subject Company
The information set forth under "Special Factors--Interests of Certain
Persons in the Offer and the Merger", "The Tender Offer--Certain Information
Concerning the Company", "The Tender Offer--Certain Information Concerning
Parent and Purchaser", "The Tender Offer--Certain Information Concerning Masco
Corporation" and Schedules I, II and III of the Offer to Purchase is
incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities
The information set forth under "Introduction", "Special
Factors--Background of the Offer", "Special Factors--Purpose and Structure of
the Offer and the Merger; Reasons of Parent for the Offer and the Merger",
"Special Factors--Plans for the Company After the Offer and the Merger",
"Special Factors--The Merger Agreement", "Special Factors--Interests of Certain
Persons in the Offer and the Merger", "The Tender Offer--Certain Information
Concerning the Company", "The Tender Offer--Certain Information Concerning
Parent and Purchaser", and "The Tender Offer--Certain Information Concerning
Masco Corporation" 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", "Special Factors--Opinion
of Financial Advisor to the Special Committee", "Special Factors--Opinion of
Financial Advisor to Parent" and "The Tender Offer--Fees and Expenses" of the
Offer to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders
Parent's Consolidated Financial Statements and related Notes thereto
included in Parent's Form 10-K for the fiscal year ended December 31, 1996 and
the information set forth under "The Tender Offer--Certain Information
Concerning Parent and Purchaser" are incorporated herein by reference.
Item 10. Additional Information
(a) Not applicable.
(b) and (c) The information set forth under "The Tender Offer--Certain
Legal Matters" of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth under "The Tender Offer--Certain Effects of
the Offer" of the Offer to Purchase is incorporated herein by reference.
(e) The information set forth under "The Tender Offer--Certain Legal
Matters" of the Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and Letter of
Transmittal and the Agreement and Plan of Merger, dated as of December 10, 1997,
as amended by Amendment No. 1 dated as of December 15, 1997, among the Company,
Parent and Purchaser, copies of which are attached hereto as Exhibits (a)(1),
(a)(2) and (c)(3), is incorporated herein by reference.
Item 11. Material to Be Filed as Exhibits
(a)(1) Offer to Purchase dated December 17, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from Salomon Smith Barney 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) Summary Advertisement as published in The Wall Street Journal on
December 17, 1997.
(a)(8) Text of Press Release issued by Parent and the Company on December
11, 1997.
(a)(9) Text of Press Release issued by Parent on December 17, 1997.
(b)(1) Commitment Letter (including the related term sheet), dated December
10, 1997, from The First
National Bank of Chicago, Bank of America NT and NationsBank N.A.
(c)(1) Registration Agreement, dated as of December 27, 1988, among the
Company, Masco Corporation and Parent (incorporated by reference to
the Company's Annual Report on Form 10-K for the year ended December
31, 1992). Amendment dated as of April 21, 1992 (incorporated by
reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996). Amendment dated as of January 5, 1993
(incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1992). Amendment dated as of
May 26, 1994 (incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994). Amendment
dated as of May 15, 1996 (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996).
(c)(2) Stock Repurchase Agreement, dated as of December 27, 1988, among
Masco Corporation, Parent and the Company (incorporated by reference
to Exhibit 10(d) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992).
(c)(3) Agreement and Plan of Merger, dated as of December 10, 1997, as
amended by Amendment No. 1 dated as of December 15, 1997, among the
Company, Parent and Purchaser (included as Annex A to the Offer to
Purchase, Exhibit (a)(1) to this Schedule 14D-1).
(c)(4) Form of President's Agreement.
(c)(5) Form of Executive Agreement.
(c)(6) Form of Management Agreement.
(c)(7) Corporate Services Agreement, dated as of December 27, 1988, between
Masco Corporation and the Company (incorporated by reference to
Exhibit 10(b) to the Company's Annual Report on Form 10- K for the
year ended December 31, 1992).
(c)(8) Corporate Opportunities Agreement, dated as of December 27, 1988,
among Masco Corporation, Parent and the Company (incorporated by
reference to Exhibit 10(c) to the Company's Annual Report on Form
10-K for the year ended December 31, 1992).
(c)(9) Assumption and Indemnification Agreement, dated as of December 27,
1988, between Parent and the Company (incorporated by reference to
Exhibit 10(a) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992).
(c)(10) Confidentiality Agreement, dated December 2, 1997, between the
Company and Parent.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Complaint filed in Sapsowitz v. Manoogian et al. (Court of Chancery
of the State of Delaware in and for New Castle County, filed
December 11, 1997).
(g)(2) Complaint filed in Blue v. TriMas Corporation et al. (Court of
Chancery of the State of Delaware in and for New Castle County, filed
December 11, 1997).
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.
December 17, 1997 MASCOTECH, INC.
By: /s/ David B. Liner
--------------------------------------------
Name: David B. Liner
Title: Vice President and Corporate Counsel
MASCOTECH ACQUISITION, INC.
By: /s/ David B. Liner
--------------------------------------------
Name: David B. Liner
Title: Secretary
EXHIBIT INDEX
Exhibit No.
-----------
(a)(1) Offer to Purchase dated December 17, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from Salomon Smith Barney 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) Summary Advertisement as published in The Wall Street
Journal on December 17, 1997.
(a)(8) Text of Press Release issued by Parent and the Company on
December 11, 1997.
(a)(9) Text of Press Release issued by Parent on December 17, 1997.
(b)(1) Commitment Letter (including the related term sheet), dated
December 10, 1997, from The First National Bank of Chicago,
Bank of America NT and NationsBank N.A.
(c)(4) Form of President's Agreement.
(c)(5) Form of Executive Agreement.
(c)(6) Form of Management Agreement.
(c)(10) Confidentiality Agreement, dated December 2, 1997, between
the Company and Parent.
(g)(1) Complaint filed in Sapsowitz v. Manoogian et al. (Court of
Chancery in the State of Delaware in and for New Castle
County, filed December 11, 1997).
(g)(2) Complaint filed in Blue v. TriMas Corporation et al. (Court
of Chancery of the State of Delaware in and for New Castle
County, filed December 11, 1997).
Exhibit (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
TriMas Corporation
at
$34.50 Net Per Share
by
MascoTech Acquisition, Inc.
a wholly owned subsidiary of
MascoTech, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JANUARY 16, 1998, UNLESS THE OFFER IS EXTENDED.
The Board of Directors of TriMas Corporation (the "Company")
has unanimously determined that the Offer and the Merger (as defined herein)
are fair to, and in the best interests of, the holders of Shares (as defined
herein) (other than MascoTech, Inc. ("Parent"), its Chief Executive Officer
and Masco Corporation), and recommends that stockholders accept the Offer and
tender their Shares pursuant to the Offer. The unanimous vote of the Board of
Directors of the Company (the "Company Board") is based upon, among other
things, the unanimous recommendation of the Offer by the Oversight Committee
of the Board of Directors (the "Special Committee") comprised entirely of
non-management independent directors.
The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer such
number of the then issued and outstanding shares (the "Shares") of Common
Stock, par value $.01 per share, of the Company (not including shares tendered
by Parent, its subsidiaries or its Chief Executive Officer or by Masco
Corporation), which represents at least a majority of the then issued and
outstanding Shares (excluding for purposes of this calculation all Shares
owned by Parent, its subsidiaries or its Chief Executive Officer or by Masco
Corporation and all Shares that may not be tendered pursuant to the Offer
because they are subject to restrictions under the Company Stock Plans (as
defined herein)) (the "Minimum Condition"). The Minimum Condition may not be
waived without the approval of the Company and the Special Committee. See
"The Tender Offer--Certain Conditions of the Offer."
IMPORTANT
Any stockholder who desires to tender all or any portion of
such stockholder's Shares should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) that accompanies this Offer to Purchase
in accordance with the instructions in such Letter of Transmittal, have such
stockholder's signature thereon guaranteed if required by Instruction 1 to
such Letter of Transmittal, and mail or deliver the Letter of Transmittal (or
such facsimile) together with the certificate(s) ("Share Certificates")
representing the tendered Shares and any other required documents to The Bank
of New York (the "Depositary") (at the Depositary's address set forth on the
back cover of this Offer to Purchase) or tender such stockholder's Shares
pursuant to the procedure for book-entry transfer set forth in "The Tender
Offer--Procedures for Accepting the Offer and Tendering Shares" or (2) request
such stockholder's broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for such stockholder. A stockholder whose
Shares are registered in the name of a broker, dealer, bank, trust company or
other nominee must contact such broker, dealer, bank, trust company or other
nominee if such stockholder desires to tender such Shares.
A stockholder who desires to tender such stockholder's Shares
and whose Share Certificates are not immediately available, or who cannot
comply with the procedure for book-entry transfer on a timely basis, or who
cannot deliver all required documents to the Depositary prior to the
expiration of the Offer, may tender such Shares by following the procedures for
guaranteed delivery set forth under the caption "The Tender Offer--Procedures
for Accepting the Offer and Tendering Shares."
Questions or requests for assistance may be directed to D.F.
King & Co., Inc. (the "Information Agent") or Smith Barney Inc. (now
associated with Salomon Brothers Inc and collectively with Salomon Brothers
Inc doing business as Salomon Smith Barney and sometimes referred to herein as
the "Dealer Manager") at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and other related materials may
be obtained from the Information Agent or the Dealer Manager.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE
ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------
The Dealer Manager for the Offer is:
Salomon Smith Barney
December 17, 1997
TABLE OF CONTENTS
Page
INTRODUCTION............................................................... 1
SPECIAL FACTORS............................................................ 3
Background of the Offer................................................. 3
Recommendation of the Special Committee and the Company Board;
Fairness of the Offer and the Merger................................. 6
Opinion of Financial Advisor to the Special Committee................... 8
Opinion of Financial Advisor to Parent.................................. 13
Position of Parent and Purchaser Regarding Fairness of the Offer and
the Merger........................................................... 16
Purpose and Structure of the Offer and the Merger; Reasons of Parent for
the Offer and the Merger............................................. 17
Plans for the Company after the Offer and the Merger.................... 18
Rights of Stockholders in the Offer and the Merger...................... 19
The Merger Agreement.................................................... 19
Confidentiality Agreement............................................... 27
Interests of Certain Persons in the Offer and the Merger................ 27
THE TENDER OFFER........................................................... 30
Terms of the Offer...................................................... 30
Acceptance for Payment and Payment for Shares........................... 32
Procedures for Accepting the Offer and Tendering Shares................. 33
Withdrawal Rights....................................................... 36
Certain Federal Income Tax Consequences................................. 36
Price Range of Shares; Dividends........................................ 37
Certain Information Concerning the Company.............................. 38
Certain Information Concerning Parent and Purchaser..................... 42
Certain Information Concerning Masco Corporation........................ 43
Financing of the Offer and the Merger................................... 44
Dividends and Distributions............................................. 45
Certain Effects of the Offer............................................ 46
Certain Conditions of the Offer......................................... 47
Certain Legal Matters................................................... 49
Certain Litigation...................................................... 51
Fees and Expenses....................................................... 51
Miscellaneous........................................................... 52
SCHEDULES AND ANNEXES
SCHEDULE I - Directors and Executive Officers of the Company
SCHEDULE II - Directors and Executive Officers of Parent and Purchaser
SCHEDULE III - Directors and Executive Officers of Masco Corporation
ANNEX A - Agreement and Plan of Merger
ANNEX B - Opinion of BT Wolfensohn
ANNEX C - Rights of Dissenting Stockholders under the Delaware General
Corporation Law
ANNEX D - Audited Financial Statements (and Related Notes) for the
Company for the Years Ended December 31, 1995 and December
31, 1996
ANNEX E - Unaudited Financial Statements (and Related Notes) for the
Company for the Three-Month and Nine-Month Periods Ended
September 30, 1997
To the Holders of Common Stock of
TriMas Corporation
INTRODUCTION
MascoTech Acquisition, Inc. ("Purchaser"), a Delaware
corporation and a wholly owned subsidiary of MascoTech, Inc. ("Parent"),
hereby offers to purchase any and all issued and outstanding shares (the
"Shares") of common stock, par value $.01 per share (the "Common Stock"), of
TriMas Corporation (the "Company"), a Delaware corporation, at a price of
$34.50 per Share, net to the seller in cash (the "Offer Price"), upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which together constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage
fees or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by Purchaser pursuant to the Offer. Parent or Purchaser will pay all
charges and expenses of the Dealer Manager, The Bank of New York ("BONY" or
the "Depositary") and D.F. King & Co., Inc. ("D.F. King" or the "Information
Agent") incurred in connection with the Offer. See "The Tender Offer--Fees
and Expenses."
As of December 15, 1997, Parent beneficially owned 15,191,109
of the 41,325,118 outstanding Shares, representing approximately 36.76% of the
Shares then outstanding. In addition, as of that date, Masco Corporation and
the Chief Executive Officer of Parent beneficially owned approximately 3.83%
and 4.36%, respectively, of the Shares then outstanding.
The Company Board has unanimously determined that the Offer and
the Merger are fair to, and in the best interests of, the holders of Shares
(other than Parent, its Chief Executive Officer and Masco Corporation), and
recommends that stockholders accept the Offer and tender their Shares pursuant
to the Offer. The unanimous vote of the Company Board is based upon, among
other things, the unanimous recommendation of the Offer by the Special
Committee.
BT Wolfensohn has delivered to the Special Committee its
written opinion as investment bankers that, as of the date of such opinion and
based on and subject to the matters stated in such opinion, the consideration
to be paid in the Offer and the Merger is fair to the holders of Shares (other
than Parent, its Chief Executive Officer and Masco Corporation) from a
financial point of view. See "Special Factors--Opinion of Financial Advisor
to the Special Committee" for further information concerning the opinion of BT
Wolfensohn.
Parent has been informed that Masco Corporation and Mr. Richard
A. Manoogian, Parent's Chairman and Chief Executive Officer, intend to tender
all Shares beneficially owned by them pursuant to the Offer. The Company has
been advised that all of its directors and executive officers intend to tender
or cause the tender of substantially all of their Shares pursuant to the Offer.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders
herewith.
The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer such
number of the then issued and outstanding Shares (not including Shares
tendered by Parent, its subsidiaries or its Chief Executive Officer or by
Masco Corporation), which represents at least a majority of the then issued
and outstanding Shares (excluding for purposes of this calculation all Shares
owned by Parent, its subsidiaries or its Chief Executive Officer or by Masco
Corporation and all Shares that may not be tendered pursuant to the Offer
because they are subject to restrictions under the Company Stock Plans) (the
"Minimum Condition"). The Minimum Condition may not be waived without the
approval of the Company and the Special Committee. See "The Tender
Offer--Certain Conditions of the Offer."
The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of December 10, 1997, as amended by Amendment No. 1 dated as
of December 15, 1997 (as so amended, the "Merger Agreement"), among Parent,
Purchaser and the Company. The Offer is not conditioned on obtaining
financing. The Merger Agreement provides that, among other things, as
promptly as practicable after the purchase of Shares pursuant to the Offer and
the satisfaction (or waiver, to the extent permissible under the Merger
Agreement) of the other conditions set forth in the Merger Agreement, in
accordance with the Delaware General Corporation Law (the "DGCL"), Purchaser
will be merged with and into the Company (the "Merger"), with the Company
continuing as the surviving corporation (the "Surviving Corporation"). At the
effective time of the Merger (the "Effective Time"), subject to the terms and
conditions of the Merger Agreement, each Share outstanding immediately prior
to the Effective Time (other than Shares held in the treasury of the Company,
Shares owned by Parent or its subsidiaries or Shares as to which appraisal
rights have been exercised) shall be converted into the right to receive the
per Share price paid in the Offer in cash, without interest (the "Merger
Consideration"). The Merger Agreement is more fully described in "Special
Factors--The Merger Agreement."
The Merger is subject to the satisfaction or waiver of certain
conditions, including, if required by the DGCL, the approval and adoption of
the Merger Agreement by the requisite vote of the stockholders of the Company.
See "Special Factors--The Merger Agreement." The Merger is not conditioned on
obtaining financing. Under the Company's Certificate of Incorporation and the
DGCL, the affirmative vote of a majority of the outstanding Shares is required
to approve and adopt the Merger Agreement and the Merger. If Parent and
Purchaser own a majority of the outstanding Shares as a result of the Offer or
otherwise, Parent and Purchaser would have sufficient voting power to and
would approve the Merger without the affirmative vote of any other stockholder
of the Company. If Parent and Purchaser own 90% or more of the outstanding
Shares as a result of the Offer or otherwise, Purchaser will effect the Merger
pursuant to the short-form merger provisions of the DGCL, without prior notice
to, or any action by, any other stockholder of the Company.
No appraisal rights are available in connection with the Offer;
however, stockholders of the Company who have not tendered their Shares in the
Offer will have appraisal rights in connection with the Merger regardless of
whether the Merger is consummated with or without a vote of the Company's
stockholders. Such appraisal rights are described in "Special Factors--Rights
of Stockholders in the Offer and the Merger."
As of the close of business on December 15, 1997, there were
outstanding 41,325,118 Shares (including 854,880 Shares subject to
restrictions under the Company Stock Plans) and options to purchase an
aggregate of 506,047 Shares at an average exercise price of $9.03 per Share
(of which 327,647 were exercisable). As of the close of business on December
15, 1997, Masco Corporation beneficially owned 1,583,708 Shares, Parent
beneficially owned 15,191,109 Shares and Mr. Manoogian beneficially owned
1,801,852 Shares. Based upon the foregoing, Parent believes that the Minimum
Condition will be satisfied if at least 10,946,785 Shares (other than Shares
held by Parent, its subsidiaries or its Chief Executive Officer or by Masco
Corporation) are validly tendered and not withdrawn prior to the Expiration
Date (as defined herein) (assuming that no options on Shares are exercised
prior to the Expiration Date).
On December 10, 1997, the Company Board declared a dividend of
$.07 per Share payable on January 7, 1998 to holders of record of Shares on
December 29, 1997. Holders of record of Shares on the record date for this
dividend will be entitled to receive this dividend whether or not they tender
their Shares pursuant to the Offer, and no adjustment will be made to the
Offer Price or to any other terms of the Offer as a result of the payment of
this dividend.
This Offer to Purchase and the related Letter of Transmittal
contain important information about the Offer that should be read before any
decision is made with respect to the Offer.
SPECIAL FACTORS
Bagkground of the Offer
Effective October 1, 1988, Parent acquired securities of the
Company in exchange for various businesses and cash. In a related
transaction, Masco Corporation, which prior to that acquisition had an equity
ownership interest in the Company, purchased for cash additional Shares. The
Company became a public corporation in February 1989 when approximately 28% of
the then outstanding Shares were distributed by Masco Corporation to its
stockholders as a special dividend. After the special dividend, Parent was
the Company's largest stockholder. The Special Committee, comprised of
directors who were not present or former officers or directors of Parent or
Masco Corporation, was established in 1988 as an oversight committee to review
certain transactions among or between the Company, Parent and Masco
Corporation from the standpoint of their fairness to the Company and its public
stockholders.
Over the course of the last two years, representatives of the
Company and Parent have had general conversations from time to time concerning
strategic alternatives available to the Company and with respect to Parent's
investment in the Company.
At a meeting of the Company Board on May 14, 1997, Richard A.
Manoogian, Chairman and Chief Executive Officer of Parent and Chairman of the
Company Board advised the Company Board that Parent was considering its
options with respect to its investment in the Company. Mr. Manoogian
indicated that these options included the possible dividend or sale by Parent
of its Shares, a possible business combination between Parent and the Company
or the continuation of the status quo. Mr. Manoogian indicated that Parent
would advise the Company Board upon completion of its review.
On September 10, 1997, Mr. Manoogian, at a meeting of the
Company Board, indicated that Parent was interested in proposing a business
combination with the Company in which the Company's stockholders would receive
a combination of cash and Parent securities. Mr. Manoogian identified
possible benefits that could result from such a business combination of the
two companies, including marketing, management and product synergies.
At the September 10 meeting, the Company Board authorized the
Special Committee to consider any proposal that the Company might receive
from Parent with respect to a business combination; to negotiate with Parent as
to any such proposal; and to report back to the Company Board its
recommendations as to the Proposal. The Special Committee was also authorized
to retain advisors. The Special Committee retained Dickinson, Wright, Moon,
Van Dusen & Freeman as its legal advisors and BT Wolfensohn as its financial
advisors.
On September 24, Parent sent to the Company a written proposal
for a business combination in which both Parent and the Company would merge
into a new Delaware corporation that the parties referred to as Phoenix. In
the proposed merger, each Share held by stockholders other than Parent was to
be converted into the right to receive, at the holder's election, either
$33.00 in cash or one share of Phoenix common stock, with proration so that
the aggregate amount of cash paid to holders of Shares would be approximately
$435 million, representing, according to Parent's letter, approximately 50% of
the aggregate value of the transaction for stockholders other than Parent.
Each share of Parent common stock was to be converted into the right to
receive 0.75 of a share of Phoenix common stock. The letter stated that the
offer was structured in a way which Parent believed should produce a value to
the Company's stockholders in excess of $33.00 per Share. The transaction was
to be structured as a tax-free exchange for the Company's stockholders, except
to the extent that they received cash for their Shares. In its letter, Parent
stated that it was prepared to discuss any aspect of the proposal and to
negotiate a definitive agreement, including appropriate protections for key
Company employees. Parent also stated that its proposal was not conditioned
on obtaining financing. Parent anticipated that the future dividend on Phoenix
common stock would produce a yield approximately equal to the current dividend
yield on Parent common stock. Parent also stated that it had no interest in
selling its interest in the Company or in any transaction that would result
in such a sale.
In late September, BT Wolfensohn met with Salomon Smith Barney,
Parent's financial advisors, to discuss the financial aspects of the proposal.
On October 1, the Special Committee and BT Wolfensohn met with
representatives of Parent and Salomon Smith Barney to discuss the proposal.
Also present at the meeting were Brian P. Campbell, President of the Company,
and other senior officers of the Company. Representatives of Parent expressed
their view that the proposal would afford greater liquidity to the Company's
stockholders, since the public float of Phoenix would be greater than the
Company's current public float. The members of the Special Committee stated
that they did not consider the proposal attractive. They believed it was
uncertain that the Phoenix shares would trade at the multiple anticipated by
Parent and that the cash portion of the proposed merger consideration did not
represent a sufficient premium to the stockholders of the Company.
At the October 1 meeting, representatives of the Special
Committee also suggested that the parties should enter into a confidentiality
agreement containing provisions limiting Parent's ability to buy additional
Shares without the Company's approval. Representatives of Parent indicated
their view that no confidentiality agreement was needed, in light of the
information that Parent already had with respect to the Company. The Parent
representatives again stated that Parent had no interest in selling its Shares.
Early in October, BT Wolfensohn continued its review of
information relating to Parent. The Special Committee and BT Wolfensohn also
discussed with senior officers of the Company Parent's September 24 proposal
and certain pro forma information relating to Parent. They also discussed
certain tax and legal aspects of the proposal with Parent's officers and legal
and financial advisors. At a meeting on October 9, the Special Committee
determined that it could not recommend Parent's September 24 proposal as being
in the best interests of the unaffiliated stockholders of the Company. The
Special Committee so advised Parent by letter dated October 9.
Also early in October, Parent's counsel delivered a draft
merger agreement to the Special Committee's counsel and other representatives.
However, the parties never pursued discussions on the terms of this draft.
At a meeting on October 13 between representatives of BT
Wolfensohn and Salomon Smith Barney, representatives of BT Wolfensohn
reiterated, among other factors, the Special Committee's concerns as to the
levels at which Phoenix stock would trade under Parent's proposed structure.
On October 21, representatives of Salomon Smith Barney and BT
Wolfensohn met to discuss, among other things, comparable companies, precedent
transactions, and discounted cash flow methodologies and underlying
assumptions related to the valuation of the Company. Due to the lack of a
confidentiality agreement, the representatives limited the conversation to
methodologies and assumptions and did not discuss resulting valuation
parameters.
In late October, at the direction of Parent, a representative
of Salomon Smith Barney informed a representative of BT Wolfensohn that Parent
wished to make a revised proposal that would address the issues noted by the
Special Committee with respect to the September 24 proposal. At a meeting on
October 31 that included the Special Committee and representatives of Parent
and the Company and their respective financial advisors, representatives of
Parent presented a revised proposal in which from 50% to 60% of the aggregate
consideration was to be in the form of cash at $33.00 per Share, with the
remainder of the consideration to consist of shares of a mandatory convertible
preferred stock ("CPS") convertible into shares of Phoenix common stock. The
CPS was to be mandatorily convertible into Phoenix common stock no later than
one year from the date of issue with an indicated market value of at least
$36.00, if, at the time of conversion, Phoenix common stock was trading at
$28.80 or more. If Phoenix shares were trading at less than $28.80 per share,
1.25 Phoenix common shares would be issued upon conversion of a CPS share. If
Phoenix shares were trading at $36.00 or higher at the time of conversion, one
common share of Phoenix would be issued on conversion. The Special Committee
and representatives of BT Wolfensohn stated their view that the revised
proposal offered limited protection for the per share value of the equity
component of the transaction consideration offered to the Company's
stockholders, while (as under the previous Parent proposal) still exposing the
Company's stockholders to the risk that Phoenix shares would not trade at a
price-earnings multiple necessary to achieve the $28.80 per share valuation
that would be needed for the equity component of the proposal to be valued at
$36.00.
After consultation with BT Wolfensohn, the Special Committee
concluded that there was a reasonable likelihood that Phoenix stock would
trade at less than $28.80 per share. At the conclusion of the meeting, the
Special Committee rejected the revised proposal. Parent's Chief Executive
Officer suggested that, in the interest of further consideration of a possible
transaction, the Special Committee might suggest a transaction to Parent that
would be acceptable to the Special Committee.
BT Wolfensohn, with guidance from the Special Committee,
developed a counterproposal, the terms of which were approved by the Special
Committee on November 7. On November 7, representatives of BT Wolfensohn met
with representatives of Salomon Smith Barney, and indicated that the Special
Committee could recommend an alternative proposal with greater value
protection, with 60% of the aggregate consideration in the form of cash at
$37.50 per Share, and 40% in the form of preferred stock, with terms intended
to produce a value of $37.50 per Share. Representatives of the Special
Committee also proposed that the Company should have the ability to terminate
the transaction if a better offer were made by a third party, and that in any
such case Parent should be required to sell its interest in the Company to the
third party.
On November 10, at the direction of Parent, a representative of
Salomon Smith Barney advised a representative of BT Wolfensohn that Parent had
no interest in the proposed alternative, and that Parent was not willing to
agree to sell its Shares to a third party and was evaluating alternative
transaction structures.
On November 18, Mr. Manoogian, the Chairman and Chief Executive
Officer of Parent, in a telephone conversation with Helmut Stern, a member of
the Special Committee, indicated Parent's willingness to consider proposing an
all-cash transaction and requested a meeting on November 21 to see whether a
mutually acceptable all-cash transaction was possible. After consulting with
the Special Committee's legal and financial advisors, Mr. Stern, on behalf of
the Special Committee, met with Mr. Manoogian and Timothy Wadhams,
Vice-President, Controller and Treasurer of Parent, on November 21. At that
meeting, Mr. Manoogian indicated that Parent was prepared to offer an all-cash
transaction at $33.00 per Share. Mr. Stern said that he could support a
transaction at $36.00 per Share. After further discussion and negotiation,
Mr. Manoogian said Parent would be prepared to pay $34.50 per Share. Herbert
S. Amster, the other member of the Special Committee, joined the meeting at
this point by telephone. After considering the proposal together, Mr. Stern
and Mr. Amster advised Mr. Manoogian that they were prepared to recommend a
transaction at that price, assuming the other terms and conditions of the
transaction agreement were satisfactory.
On November 24, Parent's counsel delivered a draft merger
agreement to the Special Committee's counsel and other representatives.
Discussions as to the terms of the agreement continued through December 10.
In the course of those discussions, Parent agreed, among other things: to
condition the Offer on satisfaction of the Minimum Condition; to reduce the
number of conditions to the Offer; to reduce the representations and warranties
to be made by the Company; to lower the fee it had requested in the draft
merger agreement if the Company Board were to change its recommendation of the
Offer; and to provide that such fee would be payable only upon consummation of
a competing offer. Parent also agreed to a confidentiality agreement, under
which it agreed that it and its representatives would hold non-public
information received from the Company in confidence, although it would be
permitted to make disclosures required in connection with a transaction under
applicable securities laws and consistent with applicable fiduciary duties.
At a meeting on December 9, the Special Committee reviewed the
proposed transaction and Merger Agreement with the Special Committee's legal
and financial advisors. At a meeting on December 10, after being advised that
the Board of Parent had approved the proposed transaction, after further
consideration of the proposed transaction and Merger Agreement and after BT
Wolfensohn expressed its opinion that, as of the date of such opinion and
based on and subject to the matters stated therein, the consideration to be
received by the Company's stockholders in the Offer and the Merger was fair,
from a financial point of view, to such holders (other than Parent, its Chief
Executive Officer and Masco Corporation), the Special Committee unanimously
determined to recommend the proposed transaction to the Company Board. Also
on the afternoon of December 10, the Company Board unanimously approved the
Merger Agreement. The Merger Agreement was signed that evening and the
transaction was announced on the morning of December 11. An amendment to the
Merger Agreement relating to clarification of technical matters was signed on
December 15, 1997.
Recommendation of the Special Committee and the Company Board; Fairness of the
Offer and the Merger
Recommendation of the Special Committee and the Company Board
On December 10, 1997, the Special Committee unanimously
determined that the terms of the Offer and the Merger are fair to and in the
best interests of the Company's stockholders (other than Parent, its Chief
Executive Officer and Masco Corporation), and unanimously voted to recommend
that the Company Board approve and adopt the Merger Agreement and approve the
transactions contemplated thereby, including the Offer and the Merger.
On December 10, 1997, the Company Board unanimously (i)
determined that the terms of the Offer and the Merger are fair to and in the
best interests of the Company's stockholders (other than Parent, its Chief
Executive Officer and Masco Corporation), (ii) approved the Merger Agreement
and authorized the execution and delivery thereof, and (iii) recommended that
the stockholders of the Company accept the Offer and tender their Shares
pursuant to the Offer. Prior to participating in the determinations and
recommendations of the Company Board, the directors of the Company Board who
are also directors or officers of Parent or Masco Corporation identified their
affiliations with Parent and Masco Corporation and noted that as a result of
such affiliations they had a potential conflict of interest.
Fairness of the Offer and the Merger
Special Committee. In reaching its determinations referred to
above, the Special Committee considered the factors listed below, each of
which, in the view of the Special Committee, supported such determinations.
The following discussion of the factors considered by the Special Committee is
not intended to be exhaustive but summarizes the material factors considered.
(i) The fact that the per Share price to be paid in the Offer
and the Merger was above the all-time high price at which the Shares
have traded and represents a premium of approximately 30% over the
weighted average closing price of the Shares for the year ended
December 5, 1997, a premium of approximately 13% over the closing
price of the Shares on December 10 (the day before the transaction was
announced) and a premium of approximately 17% over the closing price
of the Shares on November 5, 1997 (approximately one month before the
Special Committee's recommendation).
(ii) The fact that the per Share price to be received in the
Offer and the Merger is payable in cash, thereby eliminating any
uncertainties in valuing the consideration.
(iii) The Company's stockholder profile, the percentage of the
outstanding Shares owned by Parent, its Chief Executive Officer and
Masco Corporation, the absence of contractual restrictions on the
acquisition of additional Shares by Parent, and Parent's stated
unwillingness to sell its Shares to a third party, all of which led
the Special Committee to conclude that exploration of a business
combination with a third party was not practicable.
(iv) The Special Committee's belief that the per Share price to
be paid in the Offer and the Merger was fair in light of the financial
condition, results of operations, business and prospects of the
Company as a separate company.
(v) Current and historical market prices and trading history of
the Common Stock (including the relatively low trading volume of the
Shares).
(vi) The arm's-length negotiations between the Special Committee
and its representatives and Parent and its representatives, including
that the negotiations resulted in (a) an increase in the price at
which Parent was prepared to acquire the Shares and a change in the
structure of the transaction and the form of consideration such that
the Company's stockholders will now receive all cash for their Shares,
and (b) the Special Committee's belief that $34.50 was the highest
price that could be obtained from Parent under the circumstances.
(vii) The opinion of BT Wolfensohn, dated December 10, 1997, that,
as of the date of the opinion and based on and subject to certain
matters stated in the opinion, the consideration to be paid in the
Offer and the Merger is fair to holders of the Shares (other than
Parent, its Chief Executive Officer and Masco Corporation) from a
financial point of view, and the analyses presented to the Special
Committee by BT Wolfensohn with respect thereto. See "Special
Factors--Opinion of Financial Advisor to the Special Committee."
(viii) The fact that the Minimum Condition requires that the Offer
not be consummated unless at least a majority of the Shares that can
be tendered and that are not held by Parent, its Chief Executive
Officer or Masco Corporation are validly tendered pursuant to the
Offer and not withdrawn.
(ix) The terms of the Offer, the Merger and the Merger Agreement,
including provisions that without the consent of the Company and the
Special Committee, (a) the Minimum Condition may not be waived by the
Purchaser, (b) the Merger Agreement may not be amended, and (c)
certain other changes (such as the addition of new conditions) may not
be made in the Offer.
(x) The provision of the Merger Agreement permitting the Company
to negotiate with third parties that make unsolicited Acquisition
Proposals (as defined in the Merger Agreement) if there is a
reasonable likelihood that the directors' fiduciary duties would
otherwise be breached.
(xi) The termination provisions of the Merger Agreement, under
which, if the Company changes its recommendation of the Offer in light
of a more favorable Acquisition Proposal and Parent terminates the
Merger Agreement, the Company would pay a breakup fee of $10 million
only if the Company enters into an agreement with respect to an
Acquisition Proposal within 12 months of the termination of the Merger
Agreement and the Acquisition Proposal is actually consummated.
(xii) The availability of dissenters' rights for stockholders
under the DGCL in connection with the Merger.
(xiii) The likelihood that the Offer and the Merger will be
consummated in light of (a) the facts that the Offer and the Merger
are not subject to any financing condition, that Parent has
represented that the funds necessary to consummate the Offer and
Merger will be available and that Parent has provided the Special
Committee with copies of written financing commitments with respect to
the Offer and the Merger, and (b) the limited nature of the other
conditions to the Offer and the Merger.
Company Board. In reaching its determinations referred to
above, the Company Board considered the following factors: (i) the
determinations and recommendations of the Special Committee; (ii) the factors
referred to above as having been taken into account by the Special Committee;
and (iii) the fact that the Offer Price, the Merger Consideration and the
terms and conditions of the Merger Agreement were the result of arm's-length
negotiations between the Special Committee and Parent.
The description set forth above of the factors considered by
the Company Board is not intended to be exhaustive, but summarizes all the
factors considered. The members of the Company Board, including the members
of the Special Committee, evaluated the Offer and the Merger in light of their
knowledge of the business, financial condition and prospects of the Company,
and based upon the advice of financial and legal advisors. In light of the
number and variety of factors that the Company Board and the Special Committee
considered in connection with their evaluation of the Offer and the Merger,
neither the Company Board nor the Special Committee found it practicable to
assign relative or specific weights to the foregoing factors, and,
accordingly, neither the Company Board nor the Special Committee did so.
Individual members of the Company Board and the Special Committee may have
given differing weights to different factors and may have viewed certain
factors more positively or negatively than others.
The Company Board, including the members of the Special
Committee, believes that the Offer and the Merger are procedurally fair
because, among other things: (i) the Special Committee consisted entirely of
non-management Independent Directors appointed to represent the interests of
the stockholders other than Parent, its Chief Executive Officer or Masco
Corporation; (ii) the Special Committee retained and was advised by
independent legal counsel; (iii) the Special Committee retained BT Wolfensohn
as its independent financial advisor to assist it in evaluating a potential
transaction with Parent and received advice from BT Wolfensohn; (iv) the
Minimum Condition which may not be waived by Purchaser without the consent of
the Special Committee and the Company and which has the effect of requiring
that in order for the Offer to be successful, a majority of the Shares that
can be tendered (other than those Shares held by Parent, its subsidiaries, its
Chief Executive Officer and Masco Corporation) must be tendered; (v) the
Special Committee engaged in extensive deliberations in evaluating the Offer
and the Merger and alternatives thereto; and (vi) the fact that the $34.50 per
Share price and the other terms and conditions of the Merger Agreement
resulted from active arm's-length bargaining between the Special Committee and
its representatives, on the one hand, and Parent and its representatives, on
the other hand. The Company's executive officers (other than executive
officers who are also directors of the Company) have not been asked to make a
recommendation as to the Offer or the Merger.
Opinion of Financial Advisor to the Special Committee
The Special Committee engaged BT Wolfensohn to act as its
financial advisor in connection with the proposed Merger Agreement. On
December 10, 1997, at a meeting of the Special Committee held to evaluate the
proposed Offer and Merger, BT Wolfensohn rendered to the Special Committee an
oral opinion (subsequently confirmed by delivery of a written opinion dated
December 10, 1997) to the effect that, as of such date and based upon and
subject to certain matters stated in such opinion, the consideration to be
paid in the Offer and the Merger is fair to the holders of Shares (other than
Parent, its Chief Executive Officer and Masco Corporation) from a financial
point of view. No limitations were imposed by the Special Committee with
respect to the investigations made or the procedures followed by BT Wolfensohn
in rendering its opinion.
The full text of the written opinion of BT Wolfensohn dated
December 10, 1997, which sets forth the assumptions made, matters considered
and limitations of the review undertaken, is attached as Annex B hereto and is
incorporated herein by reference. BT Wolfensohn's opinion is directed to the
Special Committee, is limited to the fairness, from a financial point of view,
of the cash consideration to be received in the Offer and the Merger by the
Company's stockholders (other than Parent, its Chief Executive Officer and
Masco Corporation), and is not a recommendation to such stockholders as
regards the Offer and the Merger. The summary of the opinion of BT Wolfensohn
set forth herein is qualified in its entirety by reference to the full text of
such opinion. Stockholders are urged to read the entire opinion carefully.
In connection with BT Wolfensohn's role as financial advisor to
the Special Committee, and in arriving at its opinion, BT Wolfensohn reviewed
certain publicly available financial and other information concerning the
Company and certain internal analyses and other information furnished to it by
the Company. BT Wolfensohn also held discussions with members of the senior
management of the Company regarding the Company's business and prospects. In
addition, BT Wolfensohn (i) reviewed the reported prices and trading activity
for the Shares, (ii) compared certain financial and stock market information
for the Company with similar information for certain companies whose
securities are publicly traded, (iii) reviewed the financial terms of certain
recent business combinations which it deemed comparable in whole or in part,
(iv) reviewed the terms of the Merger Agreement and certain related documents
and (v) performed such other studies and analyses and considered such other
factors as it deemed appropriate.
As described in its opinion, BT Wolfensohn did not assume
responsibility for independent verification of, and did not independently
verify, any information, whether publicly available or furnished to it,
concerning the Company, including, without limitation, any financial
information, forecasts or projections considered in connection with the
rendering of its opinion. Accordingly, for purposes of its opinion, BT
Wolfensohn assumed and relied upon the accuracy and completeness of all such
information and BT Wolfensohn did not conduct a physical inspection of any of
the properties or assets, and did not prepare or obtain any independent
evaluation or appraisal of any of the assets or liabilities, of the Company.
With respect to the financial forecasts and projections made available to BT
Wolfensohn and used in its analyses, BT Wolfensohn assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the management of the Company as to the matters covered
thereby. In rendering its opinion, BT Wolfensohn expressed no view as to the
reasonableness of such forecasts and projections or the assumptions on which
they are based. BT Wolfensohn relied, with the permission of the Special
Committee, on Parent's statements that it has no interest in any transaction
that would result in the sale of Shares owned by it. BT Wolfensohn was not
requested or authorized to solicit, and did not solicit, interest from any
party with respect to an acquisition of the outstanding Shares, the Company or
its constituent businesses. In addition, BT Wolfensohn was informed by Parent
that Parent has no intention to pursue a sale of the Company after
consummating the Merger pursuant to the Merger Agreement.
BT Wolfensohn's opinion is necessarily based upon economic,
market and other conditions as in effect on, and the information made
available to it as of, the date of the opinion. For purposes of rendering its
opinion, BT Wolfensohn assumed that the transactions contemplated by the
Merger Agreement will be consummated on the terms and subject to the
conditions described therein, and that all conditions to such transactions
will be satisfied without waiver of such conditions. Although BT Wolfensohn
evaluated the cash consideration to be paid in the Offer and the Merger from a
financial point of view, BT Wolfensohn was not asked to and did not recommend
the specific consideration payable in the Offer and the Merger, which was
determined through negotiations between Parent and the Special Committee.
The following is a summary of the material analyses and factors
considered by BT Wolfensohn in connection with its opinion to the Special
Committee dated December 10, 1997.
Selected Public Company Trading and Financial Information. BT
Wolfensohn compared certain historical and projected financial information for
the Company with similar information for 15 publicly held diversified
industrial companies (the "Composite Group"): Aeroquip-Vickers Inc., Barnes
Group Incorporated, Blount International, Inc., Cincinnati Milacron, Inc.,
Cooper Industries, Inc., Danaher Corporation, Dover Corporation, Federal Signal
Corporation, GenCorp Inc., Illinois Tool Works, Inc., Kaydon Corporation, Mark
IV Industries, Inc., Pentair, Inc., Regal-Beloit Corporation, and Teleflex,
Inc. The Company is a diversified manufacturer of proprietary products.
For each company in the Composite Group, BT Wolfensohn
calculated (a) enterprise value as a multiple of latest 12 months' ("LTM")
revenues, earnings before interest, taxes, depreciation and amortization
("EBITDA"), and earnings before interest and taxes ("EBIT"), in each case as
of September 30, 1997, as well as (b) equity market values as a multiple of
LTM net income (that is, earnings after income taxes) as of September 30, 1997,
as multiples of estimates of earnings per share ("EPS") for calendar years
1997 and 1998, and as a multiple of book value. Such multiples were based on
closing Share prices on December 5, 1997. Estimates of net income and EPS for
the Composite Group were based on analysts' estimates as reported by I/B/E/S,
a market research database, and estimates of net income for the Company were
based on internal estimates by Company management. This analysis indicated
Composite Group multiples of enterprise value ranging from 0.8x to 3.4x (with
a median of 1.4x) LTM revenues, 6.2x to 13.6x (with a median of 8.5x) LTM
EBITDA, and 8.5x to 16.7x (with a median of 11.3x) LTM EBIT; and equity value
multiples of 12.2x to 24.9x (with a median of 15.7x) LTM net income, 12.7x to
23.9x (with a median of 16.3x) 1997 estimated EPS, 11.5x to 21.6x (with a
median of 14.4x) 1998 estimated EPS, and 2.0x to 5.2x (with a median of 3.3x)
book value. BT Wolfensohn compared these ranges to the equivalent multiples
for the Company implied by the cash consideration to be received in the Offer
and the Merger by the Company's stockholders other than Parent and its
subsidiaries: enterprise value as 2.1x LTM revenues, 10.0x LTM EBITDA and
12.2x LTM EBIT, each as of September 30, 1997; and equity market value as
20.5x LTM net income as of September 30, 1997, 19.6x estimated 1997 EPS, 18.0x
estimated 1998 EPS and 2.7x book value. In addition, BT Wolfensohn calculated
implied prices for the Shares based on the multiples for the Composite Group.
These implied Share prices ranged from $13.89 to $54.81 (with a median of
$23.33) based on LTM revenues; $21.82 to $46.30 (with a median of $29.43)
based on LTM EBITDA; $24.32 to $46.52 (with a median of $31.90) based on LTM
EBIT; $20.45 to $41.74 (with a median of $26.32) based on LTM net income;
$22.35 to $42.06 (with a median of $28.69) based on 1997 estimated EPS; $22.08
to $41.47 (with a median of $27.65) based on 1998 estimated EPS; and $25.89 to
$67.30 (with a median of $42.71) based on book value. BT Wolfensohn compared
these implied prices to the cash consideration to be received in the Offer and
the Merger by the Company's stockholders (other than Parent and its
subsidiaries).
Selected Merger and Acquisition Transactions. BT Wolfensohn
reviewed the purchase price and implied transaction multiples in 14 merger and
acquisition transactions involving diversified industrial companies (the
"Selected Industry Transactions"), consisting of (acquiror/target; date
announced): Kennametal, Inc./Greenfield Industries (October 10, 1997), Applied
Power Inc./Versa Technologies Inc. (August 28, 1997), Constellation Capital
Partners/Imo Industries Inc. (July 25, 1997), United Dominion Industries
Ltd./Core Industries (June 16, 1997), Koch Engineering Co./Glitsch
International Inc. (May 12, 1997), Regal-Beloit Corp./Marathon Electric
Manufacturing (February 26, 1997), Precision Castparts/NEFLO Corp. (July 1,
1996), Varlen Corp./Brenco Inc. (June 14, 1996), Allegheny Ludlum
Corp./Teledyne Inc. (April 2, 1996), Danaher Corp./Acme-Cleveland Corp. (March
7, 1996), Farnell Electronics PLC/Premier Industrial Corp. (January 22, 1996),
Tomkins PLC/Gates Corp. (December 12, 1995), Textron Inc./Elco Industries Inc.
(September 12, 1995), and Mark IV Industries Inc./Purolator Products Co.
(October 3, 1994). All multiples were based on publicly available information
at the time of announcement of such transaction. This analysis indicated (a)
ranges of enterprise value as a multiple of LTM revenues of 0.7x to 3.3x (with
a median of 1.1x), LTM EBITDA of 7.1x to 14.8x (with a median of 8.7x), and
LTM EBIT of 9.1x to 16.3x (with a median of 12.4x), in each case as of
September 30, 1997, and (b) ranges of equity value as a multiple of LTM net
income of 12.7x to 26.8x (with a median of 17.5x), and as a multiple of book
value of 1.6x to 5.7x (with a median of 2.4x). BT Wolfensohn compared these
ranges to the equivalent multiples for the Company implied by the cash
consideration to be received in the Offer and the Merger by the Company's
stockholders (other than Parent and its subsidiaries): enterprise value as
2.1x LTM revenues, 10.0x LTM EBITDA and 12.2x LTM EBIT, each as of September
30, 1997; and equity market value as 20.5x LTM net income and 2.7x book value
as of September 30, 1997.
BT Wolfensohn calculated implied prices for Shares based on the
multiples for the Selected Industry Transactions. These implied Share prices
ranged from $12.32 to $53.24 (with a median of $18.61) based on LTM revenues;
$24.79 to $50.28 (with a median of $30.09) based on LTM EBITDA; $25.94 to
$45.44 (with a median of $34.88) based on LTM EBIT; $21.29 to $44.92 (with a
median of $29.33) based on LTM net income; and $20.71 to $73.77 (with a median
of $31.06) based on book value. BT Wolfensohn compared these implied prices
to the proposed consideration to be received in the Offer and the Merger by
the Company's stockholders (other than Parent and its subsidiaries).
Premium Analysis. BT Wolfensohn compared the premiums paid in
22 transactions (the "Selected Premium Transactions") having a transaction
valuation over $100 million and where the bidder owned at least 40% of the
outstanding shares prior to the transaction, consisting of: Rexel S.A./Rexel
Inc. (August 29, 1997), Anthem Inc./Accordia Inc. (May 2, 1997), Samsung
Electronics Co. Ltd./AST Research Inc. (January 30, 1997), Zurich
Versicherungs GmbH/Zurich Reinsurance Centre (January 13, 1997), Novartis
AG/Systemix Inc. (May 27, 1996), Berkshire Hathaway Inc./GEICO Corporation
(August 25, 1995), COBE Laboratories/REN Corporation - USA (July 14, 1995),
BIC S.A./Bic Corporation (May 15, 1995), McCaw Cellular Communications/LIN
Broadcasting (April 7, 1995), Club Mediterranee S.A./Club Med Inc. (April 5,
1995), Conseco Inc./CCP Insurance Inc. (February 27, 1995), Arcadian
Corp./Arcadian Partners L.P. (January 18, 1995), WMX Technologies
Inc./Chemical Waste Management Inc. (July 28, 1994), Rust International
Inc./Brand Companies Inc. (November 13, 1992), American Maize-Products
Co./American Fructose Corp. (September 9, 1992), Leucadia National
Corporation/PHLCORP Inc. (August 17, 1992), Tele-Communications Inc./United
Artists Entertainment (May 1, 1991), BHP Holdings (USA) Inc./Hamilton Oil
Corporation (February 6, 1991), Murphy Oil Corporation/Ocean Drilling &
Exploration (January 3, 1991), Fuji Heavy Industries Ltd./Subaru of America
Inc. (January 16, 1990), Renault Vehicules Industriels/Mack Trucks Inc. (July
6, 1990), and American Express Company/Shearson Lehman Brothers Holdings
(March 2, 1990). The premiums paid in the Selected Premium Transactions (i)
based on the target company's closing stock price four weeks prior to the
public announcement of such transactions, ranged from 1.1% to 59.2% (with a
median of 25.5%); (ii) based on the target's closing stock price one week
prior to the public announcement, ranged from 8.0% to 69.6% (with a median of
20.8%), and (iii) based on the target's closing stock price one day prior to
the public announcement, ranged from (0.8%) to 65.9% (with a median of 17.2%).
BT Wolfensohn also reviewed the historical trading prices and
trading volumes for the Shares. This review indicated that the consideration
to be received in the Offer and the Merger by the Company's stockholders (other
than Parent and its subsidiaries) represents a premium of 10.8% to the closing
price on December 5, 1997 ($31.13); a premium of 11.3% to the closing price on
November 28, 1997 ($31.00); and a premium of 16.7% to the closing price on
November 5, 1997 ($29.56); as well as a premium of 9.1% to the 52-week high
for the period ended December 5, 1997 ($31.63); a premium of 56.8% to the
52-week low for the period ended December 5, 1997 ($22.00); and a premium of
30.3% to the one-year weighted average closing price of the Shares for the
period ended December 5, 1997 ($26.48). In addition, BT Wolfensohn noted in
its oral presentation that the proposed consideration represented a premium of
12.6% to the closing price on December 10, 1997 ($30.63) and a premium of
15.0% to the closing price on November 21, 1997 ($30.00), the date on which
the parties arrived at a price of $34.50 per Share.
Discounted Cash Flow Analysis. BT Wolfensohn performed a
discounted cash flow ("DCF") analysis of the Company based on financial
projections for the period 1997 to 2002, utilizing both internal estimates of
Company management ("Case 1") and certain adjustments to such internal
estimates ("Case 2"). In both cases, annual revenue growth for the period was
assumed to be 7.5%, and BT Wolfensohn assumed discount rates ranging from
10.5% to 12.5% based on its assessment of the Company's cost of capital. Case
1 assumed an EBIT margin in 2002 of 20.2%, implying an annual EBIT growth rate
of 10.8% for the period 1997 to 2002. Case 2 assumed an EBIT margin in 2002
of 17.4% (that is, unchanged from the present level), implying an annual EBIT
growth rate of 7.5% for the period.
DCF analysis is a method of estimating the present value of the
stand-alone unlevered cash flows that the Company would be expected to
generate if it performed in accordance with certain projections. BT Wolfensohn
calculated DCF values as the sum of (1) the projected unlevered free cash
flows for the Company for the years 1997 through 2002, plus (2) the terminal
value of the Company calculated as of the end of 2002, expressed as a function
of either (a) an EBITDA value multiple (the "EBITDA Multiple Method"), or (b)
a perpetuity value in the year 2002 (the "Perpetuity Value Method"). In the
EBITDA Multiple Method, BT Wolfensohn estimated the terminal value of the
Company in 2002 by applying multiples of 8.0x, 9.0x and 10.0x to projected
2002 EBITDA. In the Perpetuity Value Method, BT Wolfensohn estimated the
terminal value of the Company in 2002 assuming that it would generate growth
in unlevered free cash flows of 3.0%, 4.0% or 5.0% into perpetuity. In
addition, the projected net cash balance (cash less outstanding debt) of the
Company as of December 31, 1997 was included in determining the per Share
valuation ranges.
Under Case 1, BT Wolfensohn calculated implied DCF valuations
for the Company ranging from $32.96 to $42.11 per Share using the EBITDA
Multiple Method and from $25.80 to $41.68 using the Perpetuity Value Method.
Under Case 2, BT Wolfensohn calculated implied DCF valuations for the Company
ranging from $29.51 to $37.57 per Share using the EBITDA Multiple Method and
from $22.80 to $36.43 using the Perpetuity Value Method. BT Wolfensohn
considered these ranges in light of the proposed consideration to be received
in the Offer and the Merger by the Company's stockholders (other than Parent
and its subsidiaries).
Other Considerations. In connection with its opinion, BT
Wolfensohn also considered, among other things, (i) the historical and pro
forma financial profile of the Company, (ii) the ownership profile of the
Company, (iii) the liquidity of the Shares, (iv) movements in the price of
Shares relative to movements in the S&P 500 Index and the common stock of the
Composite Group, (v) the historical relationship between the price of Shares
and their trading volume, (vi) analysts' reports, including earnings
estimates, with respect to the Company and (vii) the projected pro forma
results of the combination of Parent and the Company. BT Wolfensohn also took
notice that other alternatives to the proposed transaction, including
retaining the status quo of Company ownership, engaging in a recapitalization
or seeking to enter into a transaction with a third party, were unlikely or
difficult to achieve under the circumstances, given that Parent, Parent's
Chief Executive Officer and Masco Corporation held, in the aggregate,
approximately 45% of the Shares, and the stated unwillingness of Parent to
sell its interest in the Company.
The summary set forth above does not purport to be a complete
description of the opinion of BT Wolfensohn to the Special Committee or the
financial analyses performed and factors considered by BT Wolfensohn in
connection with its opinion. A copy of BT Wolfensohn's written presentation
to the Company Board with respect to its opinion has been filed as an exhibit
to the Schedule 13E-3 and may be inspected, copied and obtained in the manner
specified in "The Tender Offer--Certain Information Concerning Parent and
Purchaser." BT Wolfensohn's opinion and financial analyses were only one of
many factors considered by the Special Committee in its evaluation of the
Offer and the Merger and should not be viewed as determinative of the views of
the Special Committee with respect to the Offer or the Merger or the
consideration to be received in the Offer and the Merger by the Company's
stockholders (other than Parent, its Chief Executive Officer and Masco
Corporation).
The preparation of a fairness opinion is a complex analytic
process involving various determinations as to the most appropriate and
relevant methods of financial analyses and the application of those methods to
the particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. BT Wolfensohn believes that its analyses
and the summary set forth above must be considered as a whole and that
selecting portions of its analyses, without considering all analyses, or
selecting portions of the above summary, without considering all factors and
analyses, could create a misleading or incomplete view of the processes
underlying such analyses and opinion. In performing its analyses, BT
Wolfensohn made numerous assumptions with respect to industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of the Company.
No company, transaction or business used in such analyses as a
comparison is identical to the Company or the Offer or Merger, nor is an
evaluation of the results of such analyses entirely mathematical; rather, such
analyses involve complex considerations and judgments concerning financial and
operating characteristics and other factors that could affect the acquisition,
public trading or other values of the companies, business segments or
transactions being analyzed. The estimates contained in such analyses and the
ranges of valuations resulting from any particular analysis are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than those suggested by such analyses.
In addition, analyses relating to the value of businesses or securities do not
purport to be appraisals or to reflect the prices at which businesses or
securities actually may be sold. Accordingly, such analyses and estimates are
inherently subject to substantial uncertainty.
BT Wolfensohn is a nationally recognized investment banking
firm and, as a customary part of its investment banking business, is engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, private placements and valuations
for estate, corporate and other purposes. The Special Committee selected BT
Wolfensohn to serve as its financial advisor based on BT Wolfensohn's
qualifications, expertise, reputation, and knowledge of the Company.
Pursuant to a letter agreement, dated September 24, 1997 among the Special
Committee, the Company and BT Wolfensohn, the Company agreed to pay BT
Wolfensohn a fee of $250,000 upon the execution of the letter agreement,
$250,000 upon the expiration of 90 days from the date of such execution if
discussions regarding a transaction were continuing, and $1,250,000 upon
delivery by BT Wolfensohn of a fairness opinion. Upon consummation of the
transactions contemplated by the Merger Agreement, the Company will pay BT
Wolfensohn an aggregate financial advisory fee equal to 0.45% of the total
consideration to be received in the Offer and the Merger by the Company's
stockholders and option holders other than Parent, its Chief Executive Officer
and Masco Corporation, reduced by the amount of any fees previously paid
pursuant to the letter agreement. In addition, the Company has agreed to
reimburse BT Wolfensohn for its reasonable out-of-pocket expenses, including
reasonable fees and disbursements of counsel, and to indemnify BT Wolfensohn
and certain related parties against certain liabilities, including certain
liabilities under the federal securities laws, relating to, or arising out of,
its engagement.
BT Wolfensohn is engaged in the merger and acquisition and
client advisory business of Bankers Trust (together with its affiliates, the
"BT Group") and, for legal and regulatory purposes, is a division of BT Alex.
Brown Incorporated, a registered broker-dealer and member of the New York
Stock Exchange (the "NYSE"). In the ordinary course of business, members of
the BT Group may actively trade in the securities and other instruments and
obligations of the Company for their own accounts and for the accounts of
their customers. Accordingly, the BT Group may at any time hold a long or
short position in such securities, instruments and obligations.
Opinion of Financial Advisor to Parent
Smith Barney Inc. (now associated with Salomon Brothers Inc and
collectively with Salomon Brothers Inc doing business as Salomon Smith Barney)
was retained by Parent to act as its financial advisor in connection with the
Offer and the Merger. In connection with such engagement, Parent requested
that Salomon Smith Barney evaluate the fairness, from a financial point of
view, to Parent of the consideration to be paid by Parent in the Offer and the
Merger. On December 10, 1997, at a meeting of the Board of Directors of
Parent held to evaluate the proposed Offer and Merger, Salomon Smith Barney
delivered an oral opinion (which opinion was subsequently confirmed by
delivery of a written opinion dated December 10, 1997) to the effect that, as
of the date of such opinion and based on and subject to certain matters stated
therein, the $34.50 per Share cash consideration to be paid in the Offer and
the Merger was fair, from a financial point of view, to Parent.
In arriving at its opinion, Salomon Smith Barney reviewed the
Merger Agreement and held discussions with certain senior officers, directors
and other representatives and advisors of Parent and certain senior officers
and other representatives and advisors of the Company concerning the
businesses, operations and prospects of Parent and the Company. Salomon Smith
Barney examined certain publicly available business and financial information
relating to Parent and the Company as well as certain financial forecasts and
other information and data for Parent and the Company which were provided to
or otherwise discussed with Salomon Smith Barney by the respective managements
of Parent and the Company, including information relating to certain strategic
implications and operational benefits anticipated by the management of Parent
to result from the Merger. Salomon Smith Barney reviewed the financial terms
of the Offer and the Merger as set forth in the Merger Agreement in relation
to, among other things: current and historical market prices and trading
volumes of the Shares; the historical and projected earnings and other
operating data of the Company; and the capitalization and financial condition
of the Company. Salomon Smith Barney also evaluated the potential pro forma
financial impact of the Offer and the Merger on Parent. In addition to the
foregoing, Salomon Smith Barney conducted such other analyses and examinations
and considered such other financial, economic and market criteria as Salomon
Smith Barney deemed appropriate in arriving at its opinion. Salomon Smith
Barney's opinion was necessarily based upon information available, and
financial, stock market and other conditions and circumstances existing and
disclosed, to Salomon Smith Barney as of the date of its opinion.
In rendering its opinion, Salomon Smith Barney assumed and
relied, without independent verification, upon the accuracy and completeness
of all financial and other information and data publicly available or
furnished to or otherwise reviewed by or discussed with Salomon Smith Barney.
With respect to financial forecasts and other information and data provided to
or otherwise reviewed by or discussed with Salomon Smith Barney, the
managements of Parent and the Company advised Salomon Smith Barney that such
forecasts and other information and data had been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
respective managements of Parent and the Company as to the future financial
performance of Parent and the Company and the best currently available
estimates and judgments of the management of Parent as to the strategic
implications and operational benefits anticipated to result from the Merger.
Salomon Smith Barney did not make and was not provided with an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of Parent or the Company nor did Salomon Smith Barney make any physical
inspection of the properties or assets of Parent or the Company. Salomon
Smith Barney was not requested to consider, and Salomon Smith Barney's opinion
does not address, the relative merits of the Offer and the Merger as compared
to any alternative business strategies that might exist for Parent or the
effect of any other transaction in which Parent might engage. Although
Salomon Smith Barney evaluated the $34.50 per Share cash consideration to be
paid in the Offer and the Merger from a financial point of view, Salomon Smith
Barney was not asked to and did not recommend the specific consideration
payable in the Offer and the Merger, which was determined through negotiation
between Parent and the Special Committee. No other limitations were imposed
by Parent on Salomon Smith Barney with respect to the investigations made or
procedures followed by Salomon Smith Barney in rendering its opinion.
The opinion of Salomon Smith Barney is directed to the Board of
Directors of Parent and relates only to the fairness of the $34.50 per Share
cash consideration to be paid in the Offer and the Merger from a financial
point of view to Parent, does not address any other aspect of the Offer or the
Merger or related transactions and does not constitute a recommendation to any
stockholder of the Company. Salomon Smith Barney was not engaged to, and did
not, evaluate the fairness of the Offer and the Merger to any stockholders of
the Company, and the description of its opinion contained in this Offer to
Purchase is included solely to conform with the requirements of Schedule 13E-3.
In preparing its opinion, Salomon Smith Barney performed a
variety of financial and comparative analyses, including those described
below, and provided the Board of Directors of Parent with a written
presentation with respect to such analyses. The summary of such analyses does
not purport to be a complete description of the analyses underlying Salomon
Smith Barney's opinion or presentation to the Board of Directors of Parent.
The preparation of a fairness opinion is a complex analytic process involving
various determinations as to the most appropriate and relevant methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. Accordingly, Salomon Smith Barney believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and factors, without considering all analyses and factors, could
create a misleading or incomplete view of the processes underlying such
analyses and opinion. In its analyses, Salomon Smith Barney made numerous
assumptions with respect to Parent, the Company, industry performance, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of Parent. The estimates contained in such
analyses and the valuation ranges resulting from any particular analysis are
not necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by such analyses. In addition, analyses relating to the value of businesses
or securities do not purport to be appraisals or to reflect the prices at
which businesses or securities actually may be sold. Accordingly, such
analyses and estimates are inherently subject to substantial uncertainty.
Salomon Smith Barney's opinion and analyses were only one of many factors
considered by the Board of Directors of Parent in its evaluation of the Offer
and the Merger and should not be viewed as determinative of the views of the
Board of Directors or management of Parent with respect to the proposed Offer
or Merger or the $34.50 per Share cash consideration to be paid in the Offer
and the Merger.
Selected Company Analysis. Using publicly available
information, Salomon Smith Barney analyzed, among other things, the market
values and trading multiples of the Company and nine selected publicly traded
companies in the manufacturing industry, consisting of: Blount International,
Inc., Cooper Industries, Inc., Cincinnati Milacron Inc., Federal Signal
Corporation, Kaydon Corporation, Mark IV Industries, Inc., Pentair Inc.,
Regal-Beloit Corporation and Teleflex Inc. (collectively, the "Selected
Companies"). Salomon Smith Barney compared market values as multiples of,
among other things, estimated calendar 1997 and 1998 earnings per share
("EPS"), and adjusted market values (equity market value, plus net debt (total
debt less cash), the book value of preferred stock and minority interests) as
multiples of, among other things, LTM and estimated calendar 1998 EBITDA and
EBIT. EPS estimates for the Selected Companies were based on published
estimates of equity research analysts as reported by Institutional Brokers
Estimate System and EPS estimates for the Company were based on internal
estimates of the management of the Company. All multiples were based on
closing stock prices on December 9, 1997. Applying multiples for the Selected
Companies of estimated calendar 1997 and 1998 EPS, LTM EBITDA and EBIT, and
estimated calendar 1998 EBITDA and EBIT of 13.2x to 21.5x, 11.6x to 18.3x,
7.2x to 10.5x, 9.4 to 14.7x, 6.6x to 9.3x and 8.5x to 12.4x, respectively, to
corresponding financial data for the Company resulted in an equity reference
range for the Company of approximately $25.41 to $37.96 per Share, as compared
to the cash consideration to be paid in the Offer and the Merger of $34.50 per
Share.
Selected Merger and Acquisition Transactions Analysis. Using
publicly available information, Salomon Smith Barney reviewed the implied
transaction multiples paid in the following 18 selected transactions in the
manufacturing industry (acquiror/target): Kennametal, Inc./Greenfield
Industries, Inc.; Applied Power, Inc./Versa Technologies, Inc.; Constellation
Capital Partners LLC/IMO Industries Inc.; United Dominion Industries Ltd./Core
Industries Inc.; BT Industries AB/The Raymond Corporation; Thyssen AG/Giddings
& Lewis, Inc.; Durco International Inc./BW/IP Inc.; ITT Industries,
Inc./Goulds Pumps, Inc.; Tomkins Plc/Stant Corporation; Investcorp/Falcon
Building Products, Inc.; Regal-Beloit Corporation/Marathon Electronic
Manufacturing Corporation; Precision Castparts Corp./NEWFLO Corp.; Varlen
Corp./Brenco, Inc.; Allegheny Ludlum Corp./Teledyne Inc.; Danaher
Corp./Acme-Cleveland Corp.; Farnell Electronics plc/Premier Industrial Corp.;
Textron Inc./Elco Industries Inc.; and Mark IV Industries, Inc./Purolater
Products Co. (collectively, the "Selected Transactions"). Salomon Smith
Barney compared purchase prices as multiples of, among other things, LTM EPS,
and transaction values as multiples of, among other things, LTM and one-year
forward EBITDA and EBIT. Applying multiples for the Selected Transactions of
LTM EPS, EBITDA and EBIT of 12.2x to 24.8x, 7.1x to 15.4x and 9.1x to 16.3x,
respectively, to corresponding financial data for the Company for the LTM, and
one-year forward EBITDA and EBIT of 6.3x to 13.8x and 8.0x to 14.5x,
respectively, to corresponding financial data for the Company for estimated
calendar 1998, resulted in an equity reference range for the Company of
approximately $24.76 to $48.08 per Share, as compared to the cash
consideration to be paid in the Offer and the Merger of $34.50 per Share.
No company or business used in the "Selected Company Analysis"
or "Selected Merger and Acquisition Transactions Analysis" as a comparison is
identical to the Company or the Offer and the Merger. Accordingly, an
analysis of the results of the foregoing is not entirely mathematical; rather,
it involves complex considerations and judgments concerning differences in
financial and operating characteristics and other factors that could affect
the acquisition, public trading or other values of the Selected Companies, the
Selected Transactions or the business segment, company or transaction to which
they are being compared.
Discounted Cash Flow Analysis. Salomon Smith Barney performed
a discounted cash flow analysis of the projected free cash flow of the Company
for fiscal years 1998 through 2002, based on internal estimates of the
management of the Company. The stand-alone discounted cash flow analysis of
the Company was determined by (i) adding (x) the present value of projected
free cash flows over the five-year period from 1998 to 2002 and (y) the
present value of the estimated terminal value of the Company in year 2002 and
(ii) subtracting the current net debt of the Company. The range of estimated
terminal values for the Company at the end of the five-year period was
calculated by applying terminal value multiples of 8.0x to 10.0x to the
projected 2002 EBITDA of the Company. The cash flows and terminal values of
the Company were then discounted to present value using discount rates ranging
from 11% to 13%. Utilizing such terminal multiples and discount rates, this
analysis resulted in an equity reference range for the Company of
approximately $33.64 to $42.97 per Share, as compared to the $34.50 per Share
cash consideration to be paid in the Offer and the Merger.
Pro Forma Merger Analysis. Salomon Smith Barney analyzed
certain pro forma effects resulting from the Offer and the Merger, including,
among other things, the impact of the Merger on the estimated EPS of Parent
for the fiscal years ended 1997 and 1998, based on internal estimates of the
management of Parent. The results of the pro forma merger analysis suggested
that the Merger could be accretive to Parent's EPS in each of the fiscal years
analyzed. The actual results achieved by the combined company may vary from
projected results and the variations may be material.
Other Factors and Comparative Analyses. In rendering its
opinion, Salomon Smith Barney considered certain other factors and conducted
certain other comparative analyses, including, among other things, a review of
(i) the premiums paid in selected affiliated party transactions effected since
1989 in which the acquiror owned an equity interest in the target company of
less than 50%, (ii) historical and projected financial results of Parent and
the Company and (iii) the history of trading prices and volume for the Shares
and the relationship among movements in the prices of the Shares and the
common stock of Parent, movements in the prices of the common stock of the
Selected Companies and movements in the S&P Industrial 400 Index.
Copies of Salomon Smith Barney's opinion and written
presentation to Parent's Board of Directors have been filed as exhibits to the
Schedule 13E-3 and may be inspected, copied and obtained in the manner
specified in "The Tender Offer--Certain Information Concerning Parent and
Purchaser."
See "The Tender Offer--Fees and Expenses" for a description of
Parent's fee arrangement with Salomon Smith Barney.
Salomon Smith Barney has advised Parent that, in the ordinary
course of business, Salomon Smith Barney and its affiliates may actively trade
or hold the securities of Parent and the Company for their own account or for
the accounts of customers and, accordingly, may at any time hold a long or
short position in such securities. Salomon Smith Barney has in the past
provided investment banking services to Parent unrelated to the proposed Offer
and Merger, for which services Salomon Smith Barney has received compensation.
In addition, Salomon Smith Barney and its affiliates (including Travelers
Group Inc. and its affiliates) may maintain relationships with Parent and the
Company.
Salomon Smith Barney is an internationally recognized
investment banking firm and was selected by Parent based on its experience,
expertise and familiarity with Parent and its business. Salomon Smith Barney
regularly engages in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive bids, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
Position of Parent and Purchaser Regarding Fairness of the Offer and the Merger
Parent and Purchaser believe that the consideration to be
received by the Company's stockholders pursuant to the Offer and the Merger is
fair to such stockholders. Parent and Purchaser base their belief on the
following facts: (i) the fact that the Special Committee concluded that the
Offer and the Merger are fair to, and in the best interests of, the Company's
stockholders (other than Parent, its Chief Executive Officer or Masco
Corporation), (ii) notwithstanding the fact that BT Wolfensohn's opinion was
addressed to the Special Committee and that neither Parent nor Purchaser is
entitled to rely on such opinion, the fact that the Special Committee received
an opinion from BT Wolfensohn that, as of the date of such opinion and based
on and subject to certain matters stated in such opinion, the consideration to
be paid in the Offer and the Merger is fair to the holders of Shares (other
than Parent, its Chief Executive Officer and Masco Corporation) from a
financial point of view, (iii) the fact that the Minimum Condition requires
that the Offer not be consummated unless at least a majority of the Shares
that can be tendered and that are not held by Parent, its subsidiaries or its
Chief Executive Officer or by Masco Corporation are validly tendered pursuant
to the Offer and not withdrawn, (iv) the fact that the historical and
projected financial performance of the Company and its financial results, (v)
the fact that the per Share price to be paid in the Offer and the Merger was
above the all-time high price at which the Shares have traded and represents a
premium of approximately 30% over the weighted average closing price of the
Shares for the year ended December 5, 1997, a premium of approximately 13%
over the closing price of the Shares on December 10 (the day before the
transaction was announced) and a premium of approximately 17% over the closing
price of the Shares on November 5, 1997 (approximately one month before the
Special Committee's recommendation), (vi) the fact that the same consideration
will be paid in both the Offer and the Merger, (vii) the Offer and the Merger
will each provide consideration to the Company's stockholders entirely in cash
and (viii) the other factors enumerated by the Special Committee as supporting
their recommendation of the Offer and the Merger. Parent and Purchaser did
not find it practicable to assign, nor did they assign, relative weights to
the individual factors considered in reaching its conclusion as to fairness.
In light of the nature of the Company's business, Parent and Purchaser did not
deem net book value or liquidation value to be relevant indicators of the
value of the Shares.
Purpose and Structure of the Offer and the Merger; Reasons of Parent for the
Offer and the Merger
The purpose of the Offer and the Merger is for Parent and
Purchaser to increase Parent's and Purchaser's ownership of Shares from
approximately 36.76% to 100%. Upon consummation of the Merger, the Company
will become a direct wholly owned subsidiary of Parent. The acquisition of
the Shares not owned by Parent and its subsidiaries has been structured as a
cash tender offer followed by a cash merger in order to effect a prompt and
orderly transfer of ownership of the Company from the Company's public
stockholders to Parent and Purchaser and provide such stockholders with cash
for all of their Shares.
Under the DGCL, the approval of the Company Board and the
affirmative vote of the holders of a majority of the issued and outstanding
Shares are required to approve and adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger. The Company Board
has approved and adopted the Merger Agreement and the transactions
contemplated thereby, and 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.
In the Merger Agreement, the Company has agreed, if required,
to cause a meeting of its stockholders as soon as reasonably practicable after
consummation of the Offer for the purpose of voting on the approval and
adoption of the Merger and the Merger Agreement and to use its commercially
reasonable best efforts to obtain such approval and adoption. If Parent and
Purchaser own a majority of the outstanding Shares as a result of the Offer
or otherwise, Parent and Purchaser would have sufficient voting power to and
would approve the Merger without the affirmative vote of any other stockholder
of the Company. If Parent and Purchaser own 90% or more of the outstanding
Shares as a result of the Offer or otherwise, Purchaser will effect the Merger
pursuant to the short-form merger provisions of the DGCL, without prior notice
to, or any action by, any other stockholder of the Company. Parent and
Purchaser have agreed to vote their Shares in favor of the Merger.
Parent decided to pursue the transaction at this time for
several reasons. Two of Parent's key strategic objectives are to expand its
advanced metalworking capabilities into additional transportation-related and
other markets and to create more value for its stockholders from its affiliate
investments. Parent believes that the Merger advances both of these
objectives.
A substantial portion of the Company's diversified industrial
products are manufactured by metalworking technologies that are complementary
to Parent's advanced metalworking capabilities. The Merger will permit the
two companies to share research, technology and expertise to the benefit of
both companies. In addition, approximately one-half of the Company's sales,
including its trailer hitch and accessory products, are to
transportation-related markets for aerospace, construction, off-road vehicle,
recreational, marine and other applications, and only a small percentage of
the Company's total sales are directed to automotive original equipment
manufacturers or their suppliers. Parent's advanced metalworking products,
which account for approximately 75% of its total revenues, are also sold
to transportation-related markets but principally for automotive light vehicle
applications. The acquisition of the Company will significantly increase
Parent's sales to transportation-related markets and at the same time reduce
the dependence of Parent's operating results on the automotive industry, which
has historically been cyclical. Parent also believes that the acquisition of
the Company should provide opportunities to expand sales of certain of its
products to the Company's customers and to expand sales of certain of the
Company's products to Parent's customers.
Parent has reviewed on an ongoing basis its various affiliate
investments with the objective of maximizing the value of these investments
for its stockholders. In analyzing its alternatives related to its investment
in the Company, Parent concluded that maintaining its current level of
investment in the Company was not an attractive alternative since Parent's
current ownership of approximately 37% of the Shares results in the inclusion
in Parent's after-tax earnings of an equal percentage of the Company's
earnings, but with taxes on those earnings also accrued by Parent. In
addition, the Company's dividend distributions to Parent represent
substantially less than 37% of the Company's cash flow. Parent also
considered the alternatives of a third party sale of its Shares or the
distribution to Parent's stockholders of its Shares to be unattractive since
either transaction would result in a tax to Parent in excess of $180 million
(valuing Parent's equity interest in the Company for this purpose at the Offer
Price).
Plans for the Company after the Offer and the Merger
Pursuant to the Merger Agreement, upon completion of the Offer,
Parent and Purchaser intend to effect the Merger in accordance with the terms
of the Merger Agreement. See "Special Factors--The Merger Agreement."
After the Merger, it is expected that Mr. Manoogian, who is
currently Chairman and Chief Executive Officer of Parent and Chairman of the
Company, will serve as Chairman of the combined company, Mr. Frank M.
Hennessey, who is currently Executive Vice President of Masco Corporation,
will become Vice Chairman and Chief Executive Officer of the combined company,
Mr. Lee M. Gardner, who is currently President of Parent, will become Co-Chief
Operating Officer of the combined company, Mr. Campbell, who is currently
President of the Company, will become Co-Chief Operating Officer of the
combined company and Mr. Wadhams, who is currently a Vice President of Parent,
will become Senior Vice President and Chief Financial Officer of the combined
company.
The Merger Agreement provides that, effective upon the
acceptance for payment by Purchaser of any Shares pursuant to the Offer and
subject to the terms of the Merger Agreement, Parent will be entitled to
designate one additional director to serve on the Company Board (which will
result in Parent's designees representing a majority of the Company Board).
The Merger Agreement also provides that, effective upon such acceptance for
payment and subject to the terms of the Merger Agreement, Parent will be
entitled to designate persons that will constitute a majority of (a) each
committee of the Company Board (other than the Special Committee or any other
committee established to take action under the Merger Agreement), (b) each
board of directors of each subsidiary of the Company and (c) each committee of
each such board.
Except as otherwise described in this Offer to Purchase and
except for the transactions contemplated by the Merger Agreement, Parent has
no current plans or proposals which relate to or would result in: (a) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company; (b) a sale or transfer of a material amount
of assets of the Company; (c) any change in the management of the Company or
any change in any material term of the employment contract of any executive
officer; or (d) any other material change in the Company's corporate structure
or business.
Nevertheless, Parent may initiate a review of the Company and
its assets, corporate structure, capitalization, operations, properties,
policies, management and personnel to determine what changes, if any, would be
desirable following the Merger in order best to organize and integrate the
activities of the Company and Parent. In particular, Parent expressly
reserves the right to make any changes that it deems necessary or appropriate
in light of its review or in light of future developments.
Rights of Stockholders in the Offer and the Merger
No appraisal rights are available in connection with the Offer.
If the Merger is consummated, however, stockholders of the Company who have
not tendered their Shares in the Offer will have certain rights under the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. Stockholders who perfect such rights by complying
with the procedures set forth in Section 262 of the DGCL ("Section 262") will
have the fair market value of their Shares (exclusive of any element of value
arising from the accomplishment or expectation of the Merger) determined by
the Delaware Court of Chancery and will be entitled to receive a cash payment
equal to such fair value from the Surviving Corporation. In addition, such
dissenting stockholders will be entitled to receive payment of a fair rate of
interest from the date of consummation of the Merger on the amount determined
to be the fair value of their Shares. In determining the fair value of the
Shares, the court is required to take into account all relevant factors.
Accordingly, such determination could be based upon considerations other than,
or in addition to, the market value of the Shares, including, among other
things, the Company's asset values and earning capacity. The value so
determined could be more or less than the per Share consideration to be paid
in the Offer and the Merger.
THE FOREGOING SUMMARY IS NOT A COMPLETE STATEMENT OF APPRAISAL
RIGHTS UNDER THE DGCL AND IS QUALIFIED IN ITS ENTIRETY BY THE FULL TEXT OF
SECTION 262 INCLUDED HEREWITH IN ANNEX C. FAILURE TO FOLLOW THE STEPS
REQUIRED BY SECTION 262 FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS
OF SUCH RIGHTS.
The Merger Agreement
The following is a summary of the material provisions of the
Merger Agreement, a copy of which is attached as Annex A to this Offer to
Purchase. The summary is qualified in its entirety by reference to the Merger
Agreement. Stockholders are urged to read the Merger Agreement in its
entirety.
The Offer
The Merger Agreement provides for the commencement of the Offer
as promptly as practicable after the date thereof, but in no event later than
five business days following the public announcement of the terms of the Merger
Agreement. The Merger Agreement also provides that the obligation of
Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer is subject to the satisfaction or waiver of the Minimum Condition and
certain other conditions that are described in "The Tender Offer--Certain
Conditions of the Offer." Pursuant to the Merger Agreement, Purchaser
generally has the right to waive any condition to the Offer and to make any
change in the terms or conditions of the Offer. However, Purchaser has agreed
in the Merger Agreement that, without the prior written consent of the Company
and approval of the Special Committee, Purchaser will not waive the Minimum
Condition and will not make any change in the Offer which changes the form of
consideration to be paid or decreases the price per Share or the number of
Shares sought in the Offer or which imposes conditions to the Offer in
addition to those set forth in "The Tender Offer--Certain Conditions of the
Offer." Purchaser has also agreed in the Merger Agreement that if on any
scheduled expiration date of the Offer all conditions to the Offer shall not
have been satisfied or waived, it will extend the Offer until at least the
60th day after commencement of the Offer. The Company has agreed in the
Merger Agreement that Purchaser will have the right to extend the Offer (for
not more than an aggregate of five business days) from time to time without
the consent of the Company. The Company has also agreed in the Merger
Agreement that if on any scheduled expiration date of the Offer all conditions
to the Offer (including the Minimum Condition) shall have been satisfied but
the sum of (i) the number of Shares tendered (and not withdrawn) pursuant to
the Offer plus (ii) the number of Shares held by Parent, its subsidiaries and
its Chief Executive Officer and by Masco Corporation that have not been
tendered pursuant to the Offer represent less than 90% of the outstanding
Shares, on a fully-diluted basis (excluding for this purpose any right to
acquire Shares that may not be exercised within 60 days from the applicable
date), Purchaser may extend the Offer without the consent of the Company (for
not more than an aggregate of 10 business days) in order to permit Purchaser
to solicit the tender of additional Shares pursuant to the Offer.
The Merger Agreement also provides that, effective upon the
acceptance for payment by Purchaser of any Shares pursuant to the Offer,
Parent will be entitled to designate one additional director to serve on the
Company Board (which will result in Parent's designees representing a majority
of the Company Board). In furtherance thereof, the Company has agreed to take
all action necessary to cause Parent's designee to be appointed to the Company
Board, including, without limitation, increasing the number of directors and,
if necessary, seeking and accepting the resignation of an incumbent director
and will use its commercially reasonable best efforts to cause such director
to be approved as a director of the Company by at least two-thirds of the
directors of the Company. Effective upon such acceptance for payment, the
Company will use its commercially reasonable best efforts to cause persons
designated by Parent to constitute a majority of (a) each committee of such
Board (other than the Special Committee or any other committee established to
take action under the Merger Agreement), (b) each board of directors of each
subsidiary of the Company and (c) each committee of each such board (in each
case to the extent of the Company's ability to elect such persons).
Notwithstanding the foregoing, prior to the Effective Time, the Company will
use its commercially reasonable best efforts to ensure that all of the members
of the Company Board and such boards and committees as of the date hereof who
are not employees of the Company will remain members of the Company Board and
such boards and committees.
The Merger
The Merger Agreement provides that as promptly as practicable
after all conditions to the Merger set forth therein have been satisfied or,
to the extent permitted thereunder, waived, Purchaser will be merged with and
into the Company in accordance with the DGCL. As a result of the Merger, the
separate existence of Purchaser will cease and the Company will continue as
the Surviving Corporation. At the Effective Time, each Share outstanding
immediately prior to the Effective Time (other than Shares held in the
treasury of the Company, Shares owned by Parent and its subsidiaries or Shares
as to which appraisal rights have been exercised) will be converted into the
right to receive the Merger Consideration.
The Surviving Corporation will be entitled to deduct and
withhold from the consideration otherwise payable to any person pursuant to
the Merger Agreement such amounts as it is required to deduct and withhold
with respect to the making of such payment under any provision of federal,
state, local or foreign tax law. To the extent that amounts are so withheld
by the Surviving Corporation, such withheld amounts shall be treated for all
purposes of the Merger Agreement as having been paid to the holder of the
Shares in respect of which such deduction and withholding was made by the
Surviving Corporation.
Stock Options and Restricted Stock Awards
Immediately prior to the Effective Time, each option to
purchase Shares outstanding under any employee stock option or compensation
plan or arrangement of the Company, whether or not exercisable, and whether or
not vested, shall be canceled, and in consideration thereof, the Surviving
Corporation will pay to the holder of each such option promptly after the
Effective Time an amount in cash determined by multiplying (i) the excess, if
any, of the amount of the Merger Consideration over the applicable per Share
exercise price of such option by (ii) the number of Shares such holder could
have purchased (assuming full vesting of all options) had such holder exercised
such option in full immediately prior to the Effective Time.
At the Effective Time, the holder of each Share subject to an
award of restricted stock under the Company's 1995 Long Term Stock Incentive
Plan or 1988 Restricted Stock Incentive Plan (the "Company Stock Plans"), or
any predecessor plan thereto (such Plans and any predecessor plans being
hereinafter referred to as a "Plan") as to which the Restricted Period (as
defined in the Company Stock Plans) has not lapsed on or prior to the Effective
Time (the "Restricted Shares") will be entitled to receive in exchange for
each such Share and in lieu of the Merger Consideration, the number of shares
of common stock of Parent (the "Parent Restricted Shares") equal to the
quotient obtained by dividing (i) the Merger Consideration by (ii) the average
of the closing sale prices of a share of common stock of Parent as reported on
the NYSE Composite Tape on each of the last twenty trading days ending on the
trading day immediately preceding the date on which the Effective Time occurs;
provided that, if the aggregate number of Parent Restricted Shares to be
issued under any applicable award is not evenly divisible by the number of
dates on which restrictions on such award is scheduled to lapse, the aggregate
number of Parent Restricted Shares to be issued under such award will be
rounded up to the nearest whole number of Shares that is evenly divisible by
the number of dates on which restrictions on the applicable award are
scheduled to lapse. Such Parent Restricted Shares will be subject to all the
terms and conditions, including, without limitation, the remaining Restricted
Period, as were applicable to the original Restricted Shares pursuant to the
applicable award agreement (as defined in the Company Stock Plans) under the
respective Plan.
Immediately prior to the Effective Time, each "Phantom Share"
subject to an "Award of Phantom Shares" under a phantom share award agreement
with the Company as to which the Restricted Period has not lapsed on or prior
to the Effective Time will be canceled, and the Company (or one or more of its
subsidiaries) will issue in exchange for each such Phantom Share an award of
phantom shares of Parent (the "Parent Phantom Shares") equal to the quotient
obtained by dividing (i) the Merger Consideration by (ii) the average of the
closing sale prices of a Parent Share as reported on the NYSE Composite Tape
on each of the last twenty trading days ending on the trading day immediately
preceding the date on which the Effective Time occurs; provided that, if the
aggregate number of Parent Phantom Shares to be issued under any applicable
award is not evenly divisible by the number of dates on which restrictions on
such award is scheduled to lapse, the aggregate number of Parent Phantom Shares
to be issued under such award will be rounded up to the nearest whole number
of Shares that is evenly divisible by the number of dates on which
restrictions on the applicable award are scheduled to lapse. Such Parent
Phantom Shares will be subject to all the terms and conditions, including,
without limitation, the remaining Restricted Period, as were applicable to the
original Award of Phantom Shares pursuant to the applicable Phantom Share
Award Agreement.
Prior to the Effective Time, each of the Company and Parent
will use its commercially reasonable best efforts to obtain such consents, if
any, as may be necessary to give effect to the transactions contemplated by the
immediately preceding three paragraphs. In addition, prior to the Effective
Time, the Company will make any amendments to the terms of such stock option,
restricted stock or other compensation plans or arrangements that may be
necessary to give effect to the transactions contemplated by the immediately
preceding three paragraphs to the extent permitted under applicable law and
without stockholder or other third party approval. The Company has
represented to Parent and Purchaser that, except as set forth in a disclosure
schedule, neither the execution of the Merger Agreement nor the consummation
of the transactions contemplated thereby will cause the acceleration of
vesting or lapsing of restrictions with respect to any restricted stock award
or phantom share award or other benefit under any restricted stock of the
Company other than employee stock options that are being treated as provided
in the first paragraph of "Stock Options and Restricted Stock Awards." Except
as contemplated by this paragraph or the immediately preceding three
paragraphs, the Company has agreed that it will not, after the date of the
Merger Agreement, without the written consent of Parent, amend any outstanding
options to purchase Shares (including accelerating the vesting or
exercisability of such options) or the terms of grant of any Restricted Shares
(including accelerating the schedule for the lapsing of restrictions
applicable thereto). The Merger Agreement also provides that, notwithstanding
any other provision of this paragraph or the immediately preceding three
paragraphs, any payment of money or other applicable consideration provided
for therein may be withheld in respect of any stock award until necessary
consents are obtained.
Representations and Warranties
The Merger Agreement contains various customary representations
and warranties of the parties thereto, including, without limitation,
representations by the Company, Parent and Purchaser as to corporate status,
the authorization and the enforceability of the Merger Agreement against each
such party, and absence of contravention due to execution and performance
under the Merger Agreement, by the Company as to its capitalization,
compliance with law, the accuracy of financial statements and filings with the
Commission, absence of undisclosed material liabilities, and the absence of
certain changes or events concerning the Company's business from September 30,
1997 to the date of the Merger Agreement, and by Parent as to the receipt of a
financing commitment. The representations and warranties contained in the
Merger Agreement will not survive the Effective Time.
Covenants
The Merger Agreement contains various customary covenants of
the parties thereto. A description of certain of these covenants follows:
Conduct of Business Covenant. Pursuant to the Merger Agreement, the
Company has covenanted and agreed that, from the date of the Merger
Agreement until the Effective Time, except as set forth in a disclosure
schedule or as consented to in writing by Parent, the Company and its
subsidiaries will conduct their business in the ordinary course consistent
with past practice and will use their commercially reasonable best efforts
to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers
and employees. Without limiting the generality of the foregoing, from the
date of the Merger Agreement until the Effective Time, except as set forth
in a disclosure schedule or as consented to in writing by Parent, the
Company has agreed that it: (a) will not adopt or propose any change in its
certificate of incorporation or bylaws; (b) will not, and will not permit
any of its subsidiaries to, (i) merge or consolidate with any other person
if such other person would constitute a "significant subsidiary" of the
Company (as defined in Section 1-02 of Regulation S-X) other than mergers
between the Company and one or more of its subsidiaries or between one or
more subsidiaries of the Company), (ii) acquire a material amount of assets
of any other person where, if such assets were held by a separate entity,
such entity would be a "significant subsidiary" of the Company or (iii)
enter into any merger, consolidation or acquisition transaction the
consummation of which would, or would reasonably be expected to, impede,
interfere with, prevent or materially delay the Merger; (c) will not, and
will not permit any of its subsidiaries to, sell, lease, license or
otherwise dispose of any assets or property that are material to the
Company and its subsidiaries taken as a whole except (i) pursuant to
existing contracts or commitments and (ii) in the ordinary course of
business consistent with past practice; (d) will not, and will not permit
any of its subsidiaries to, split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock, other than (i) regular quarterly cash dividends on
the Shares not in excess of $.07 per Share and (ii) dividends and
distributions by a wholly owned subsidiary of the Company, or redeem,
repurchase or otherwise acquire any of its securities; (e) will not, and
will not permit any of its subsidiaries to, except for normal changes or
increases in the ordinary course of business consistent with past practices
and that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company and its subsidiaries taken
as a whole, (i) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or employee benefit plan, agreement, trust, plan,
fund or other arrangement for the benefit and welfare of any director,
officer or employee, (ii) without the consent of a majority of the entire
Company Board, increase in any manner the compensation, annual bonus or
fringe benefits of any of the individuals who have entered into employment
contracts with the Company since September 30, 1997 or (iii) pay any
benefit not required by any existing plan or arrangement; and (f) will not,
and will not permit any of its subsidiaries to, agree or commit to do any
of the foregoing.
No Solicitation Covenant. Neither the Company nor any of its
subsidiaries shall (whether directly or indirectly through advisors, agents
or other intermediaries) authorize or permit any of its or their officers,
directors, agents, representatives, advisors or subsidiaries to, (i)
solicit, initiate or take any action to facilitate the submission of
inquiries, proposals or offers from any Third Party (as defined below)
relating to (A) any acquisition or purchase of 15% or more of the
consolidated assets of the Company and its subsidiaries or of any equity
securities of the Company or any of its subsidiaries, (B) any tender offer
(including a self tender offer) or exchange offer for equity securities of
the Company or any of its subsidiaries, (C) any merger, consolidation,
business combination, sale of substantially all assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company, or
any of its subsidiaries whose assets, individually or in the aggregate,
constitute more than 15% of the consolidated assets of the Company, other
than the transactions contemplated by the Merger Agreement, or (D) any
other transaction the consummation of which would, or would reasonably be
expected to, impede, interfere with, prevent or materially delay the Merger
or which would, or would reasonably be expected to, materially dilute the
benefits to Parent of the transactions contemplated by the Merger Agreement
(each of (A) through (D), an "Acquisition Proposal"), or agree to or
endorse any Acquisition Proposal, or (ii) enter into or participate in any
discussions or negotiations regarding any of the foregoing, or furnish to
any Third Party any information with respect to its business, properties or
assets, or otherwise cooperate in any way with, or knowingly assist or
participate in, facilitate or encourage, any effort or attempt by any Third
Party to do or seek any of the foregoing; provided that the foregoing shall
not prohibit the Company (either directly or indirectly through advisors,
agents or other intermediaries), following receipt of a bona fide
Acquisition Proposal, from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14d-9 or Rule 14e-2(a) under the 1934 Act or
otherwise making disclosure to its stockholders, (ii) failing to make or
withdrawing or modifying its recommendation of the Offer, the Merger and
the Merger Agreement, (iii) furnishing non-public information with respect
to the Company and its subsidiaries to a Third Party who has made an
Acquisition Proposal pursuant to a customary and reasonable confidentiality
agreement and (iv) participating in negotiations regarding such Acquisition
Proposal but in each case referred to in the foregoing clauses (i), (ii),
(iii) and (iv) only to the extent that the Company Board, acting with the
recommendation of the Special Committee, shall have determined, after
consultation with outside counsel, that there is a reasonable likelihood
that such action is required to prevent the Company Board from breaching
its fiduciary duties to the stockholders of the Company under applicable
law; provided, further, that (A) the Company Board shall not take any of
the foregoing actions until reasonable notice of its intent to take such
action shall have been given to Parent, and (B) if the Company Board
receives an Acquisition Proposal, then the Company shall promptly inform
Parent of the terms and conditions of such proposal (including the terms
and conditions of any amendment to such proposal) and the identity of the
person making it. As used in the Merger Agreement, the term "Third Party"
means any person or "group", as described in Rule 13d-5(b) promulgated
under the 1934 Act, other than Parent or any of its affiliates (including
Purchaser).
Company Stockholder Meeting. Pursuant to the Merger Agreement, the
Company will, if required by applicable law in order to consummate the
Merger, cause a meeting of its stockholders (the "Company Stockholder
Meeting") to be duly called and held as soon as reasonably practicable
after consummation of the Offer for the purpose of voting on the approval
and adoption of the Merger Agreement and the Merger. Parent has agreed to
vote all Shares beneficially owned by it in favor of adoption of the Merger
Agreement at the Company Stockholder Meeting. If Parent, Purchaser or any
other subsidiary of Parent shall acquire at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, the parties to the Merger
Agreement have agreed, at the request of Parent, to take all necessary and
appropriate action to cause the Merger to be effective as soon as
practicable after the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer without a meeting of stockholders of the
Company in accordance with Section 253 of the DGCL.
Indemnification and Insurance. The Merger Agreement provides that
Parent will cause the Surviving Corporation to, and the Surviving
Corporation will, indemnify and hold harmless the present and former
officers and directors of the Company in respect of acts or omissions
occurring prior to the Effective Time to the fullest extent permitted under
the Company's certificate of incorporation and bylaws in effect on the date
of the Merger Agreement. The Merger Agreement also provides that, for six
years after the Effective Time, Parent will cause the Surviving Corporation
to use its best efforts to provide officers' and directors' liability
insurance in respect of acts or omissions occurring prior to the Effective
Time covering each such person currently covered by the Company's officers'
and directors' liability insurance policy (the "Covered Employees") on
terms with respect to coverage and amount no less favorable than those of
such policy in effect on the date of the Merger Agreement; provided that in
satisfying its obligation under this paragraph, Parent shall not be
obligated to cause the Surviving Corporation to pay premiums in excess of
200% of the amount per annum the Company paid in its last full fiscal year,
which amount was disclosed to Parent prior to the date of the Merger
Agreement. The parties to the Merger Agreement have agreed that the
provisions of this paragraph are for the benefit of and may be enforced
after the Effective Time by the Covered Employees.
Reasonable Best Efforts. Pursuant to the terms and conditions of the
Merger Agreement and subject to the fiduciary duties under applicable law
of the directors of the Company or of the directors constituting the
Special Committee (as determined by such directors in good faith after
consultation with legal counsel), each party to the Merger Agreement has
agreed to use its commercially reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by the Merger Agreement.
Public Announcements. The Merger Agreement provides that Parent and the
Company will consult with each other before issuing any press release or
making any public statement with respect to the Merger Agreement and the
transactions contemplated thereby and, except as may be required by
applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation.
Conditions of the Offer
See "The Tender Offer--Certain Conditions of the Offer."
Conditions to the Merger
The Merger Agreement provides that the obligations of the
Company, Parent and Purchaser to consummate the Merger are subject to the
satisfaction of the following conditions: (a) Purchaser shall have purchased
Shares pursuant to the Offer; (b) if required by the DGCL, the Merger
Agreement and the Merger shall have been approved and adopted by the
stockholders of the Company in accordance with the DGCL; (c) any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
and the rules promulgated thereunder by the Federal Trade Commission (the
"FTC") (the "HSR Act"), relating to the Merger shall have expired; and (d) no
provision of any applicable law or regulation and no judgment, injunction,
order or decree shall prohibit the consummation of the Merger.
Termination
The Merger Agreement provides that the Merger Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time (notwithstanding any approval of the Merger Agreement by the stockholders
of the Company):
(a) by mutual written consent of the Company (with the approval
of the Special Committee) and Parent;
(b) by either the Company or Parent, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining
the Company or Parent from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and
nonappealable;
(c) by either the Company or Parent, if Shares have not been
accepted for payment pursuant to the Offer on or prior to the date 60
days after commencement of the Offer; provided that (i) neither party
will have the right to terminate the Merger Agreement under this
subparagraph during any extension period referred to under "The Offer"
above; and (ii) the right to terminate the Merger Agreement pursuant
to this paragraph (c) shall not be available to any party whose
failure to fulfill any of its obligations under the Merger Agreement
results in the failure of the Offer to be consummated;
(d) prior to the acceptance for payment of Shares pursuant to the
Offer, by the Company, if (i) any of the representations and
warranties of Parent or Purchaser contained in the Merger Agreement
that are qualified as to materiality were untrue or incorrect when
made or have since become, and at the time of termination remain,
incorrect (except that with respect to representations and warranties
which are made as of a specified date, such right of termination will
apply only if such representations or warranties were untrue or
incorrect as of such specified date) or any of the representations and
warranties of Parent or Purchaser that are not so qualified as to
materiality were untrue or incorrect in any material respect when made
or have since become, and at the time of determination remain,
incorrect in any material respect (except that with respect to
representations and warranties which are made as of a specified date,
such right of termination shall apply only if such representations or
warranties were untrue or incorrect in any material respect as of such
date); provided that the Company may not terminate the Merger
Agreement pursuant to this clause (i) if the Company had knowledge as
of the date of the Merger Agreement that the relevant representation
or warranty was untrue or incorrect as of that date; or (ii) Parent
or Purchaser shall have breached or failed to comply in any material
respect with any of their respective obligations under the Merger
Agreement; provided that if such breach is curable by the breaching
party and so long as the breaching party continues to exercise its
reasonable best efforts to cure such breach, the Company shall not
have the right to terminate the Merger Agreement pursuant to this
paragraph (d) until the date 30 days after notice by the Company to
the breaching party of such breach; or
(e) prior to the acceptance for payment of Shares pursuant to the
Offer, by Parent if (i) any of the representations and warranties of
the Company contained in the Merger Agreement that are qualified as to
materiality were untrue or incorrect when made or have since become,
and at the time of termination remain, incorrect (except that with
respect to representations and warranties which are made as of a
specified date, such right of termination shall apply only if such
representations or warranties were untrue or incorrect as of such
specified date) or any of the representations and warranties of the
Company that are not so qualified as to materiality were untrue or
incorrect in any material respect when made or have since become, and
at the time of determination remain, incorrect in any material respect
(except that with respect to those representations and warranties
which are made as of a specified date, such right of termination shall
apply only if such representations or warranties were untrue and
incorrect in any material respect as of such date) and the failure of
any such representations and warranties to be true and correct would,
individually or in the aggregate, have a reasonable probability of
having a material adverse effect on the Company or of preventing (or
materially delaying) the consummation of the Offer; provided that
Parent may not terminate the Merger Agreement pursuant to this clause
(i) if Parent had knowledge as of the date of the Merger Agreement
that the relevant representation or warranty was untrue or incorrect
as of that date; (ii) there shall have been a breach of any covenant
or agreement on the part of the Company contained in the Merger
Agreement which would, individually or in the aggregate, have a
reasonable probability of having a material adverse effect on the
Company and its subsidiaries taken as a whole or which would,
individually or in the aggregate, have a reasonable probability of
preventing (or materially delaying) the consummation of the Offer,
which shall not have been cured prior to 30 days after notice by the
Company to Parent of such breach; or (iii) the Company Board (with the
approval of the Special Committee) shall have withdrawn or modified
(including by amendment of the Schedule 14D-9) in a manner adverse to
Parent its approval or recommendation of the Offer, the Merger
Agreement or the Merger and shall not have reinstated such approval or
recommendation within three business days thereof, shall have approved
or recommended another offer or transaction, or shall have resolved to
effect any of the foregoing.
Effect of Termination
The Merger Agreement provides that if the Merger Agreement is
terminated, it will become void and of no effect with no liability on the part
of any party thereto, except for liability or damages resulting from a willful
and material breach by a party of any covenant or agreement contained in the
Merger Agreement, except that the agreements contained in this paragraph and
under "Certain Fees and Expenses" and relating to governing law and
jurisdiction shall survive the termination of the Merger Agreement.
Certain Fees and Expenses
Except as provided below, all costs and expenses incurred in
connection with the Merger Agreement shall be paid by the party incurring such
cost or expense. The Merger Agreement provides that so long as neither Parent
nor Purchaser shall have materially breached its representations, warranties
or obligations under the Merger Agreement, the Company will pay Parent a fee
in immediately available funds equal to $10 million as provided below if (i)
the Merger Agreement is terminated by Parent pursuant to clause (iii) of
paragraph (e) under "Termination" above, (ii) the withdrawal or modification
of the recommendation of the Board or Directors of the Company or the Special
Committee shall be made in connection with or as a result of an Acquisition
Proposal by a Third Party and (iii) within 12 months after termination of the
Merger Agreement, the Company enters into an agreement to consummate an
Acquisition Proposal with any Third Party and such Acquisition Proposal shall
subsequently be consummated. Pursuant to the Merger Agreement, such fee will
be payable upon consummation of such Acquisition Proposal (whether or not the
Acquisition Proposal (or the Third Party making the Acquisition Proposal) is
the same as the Acquisition Proposal (or the Third Party making the
Acquisition Proposal) at the time of the withdrawal or modification of such
recommendation).
The Merger Agreement also provides that so long as neither
Parent nor Purchaser shall have materially breached its representations,
warranties or obligations under the Merger Agreement, the Company will pay
Parent up to $5 million of Parent's reasonable out-of-pocket expenses incurred
in connection with the transactions contemplated by the Merger Agreement
promptly, but in no event later than two business days, after Parent
terminates the Merger Agreement pursuant to clause (i) or (ii) of paragraph
(e) under "Termination" above.
The Merger Agreement further provides that so long as the
Company shall not have materially breached its representations, warranties or
obligations under the Merger Agreement, Parent will pay the Company up to $5
million of the Company's reasonable out-of-pocket expenses incurred in
connection with the transactions contemplated by the Merger Agreement
promptly, but in no event later than two business days, after the Company
terminates the Merger Agreement pursuant to paragraph (d) under "Termination"
above.
Amendments and Waivers
Any provision of the Merger Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company, Parent and
Purchaser or, in the case of a waiver, by the party against whom the waiver is
to be effective; provided that after the adoption of the Merger Agreement by
the Company's stockholders, no such amendment or waiver shall, without the
further approval of such stockholders, alter or change the amount or kind of
consideration to be received in exchange for Shares or (ii) any of the terms
or conditions of the Merger Agreement if such alteration or change would
adversely affect the holders of Shares. The approval of the Special Committee
shall be required for any consent referred to in "The Offer" above, any
amendment or modification of the Merger Agreement, any extension by the
Company of the time for the performance of any obligations or other acts of
Parent or Purchaser other than as set forth in the Merger Agreement and any
waiver of any of the Company's rights under the Merger Agreement.
Confidentiality Agreement
On December 2, 1997, Parent and the Company entered into a
confidentiality agreement (the "Confidentiality Agreement"), under which the
Company agreed to provide certain confidential information relating to its
operations to Parent. Pursuant to the Confidentiality Agreement, Parent
agreed that Parent and its representatives would hold non-public information
received from the Company under the Confidentiality Agreement in confidence,
except to the extent that disclosure is required in connection with a
transaction under applicable securities laws and is consistent with applicable
fiduciary duties. A copy of the Confidentiality Agreement is filed as an
exhibit to the Schedule 14D-1 and incorporated herein by reference, and the
foregoing summary of the Confidentiality Agreement is qualified in its
entirety by reference thereto.
Interests of Certain Persons in the Offer and the Merger
In considering the recommendation of the Company Board,
stockholders of the Company should be aware that certain members of the
Company Board have certain interests that present actual or potential
conflicts of interest in connection with the Offer and the Merger. The
Special Committee and the Company Board were aware of these actual or
potential conflicts of interest and considered them in connection with such
recommendation.
Employment Agreements
On December 9, 1997, the Company Board approved the entry into
employment agreements with (i) the President of the Company (the "President's
Agreement"), (ii) four officers of the Company (the "Executive Agreements")
and (iii) eight management employees of the Company (the "Management
Agreements") (collectively, the "New Employment Agreements"). Copies of forms
of the President's Agreement, the Executive Agreements and the Management
Agreements are filed as exhibits to the Schedule 14D-1 and incorporated herein
by reference, and the following summary of the New Employment Agreements is
qualified in its entirety by reference thereto.
Under the President's Agreement and the Executive Agreements,
the Company would agree to employ Mr. Campbell and each of the parties to the
Executive Agreements (the "Executives") in senior management positions with
the Company for a term ending on March 8, 2001 (the "President/Executive
Contract Employment Period"). Under the Management Agreements, the Company
would agree to employ each of the parties to the Management Agreements (the
"Managers") for a term ending on March 8, 2000 (the "Management Contract
Employment Period" and each of the Management Contract Employment Period and
the President/Executive Contract Employment Period being referred to as a
"Contract Employment Period").
The President's Agreement provides that Mr. Campbell shall be
paid a minimum annual compensation of $528,000, which may be increased
consistent with the annual merit increases granted to other comparably
compensated employees of the Company, plus a bonus for 1997 and 1998 in an
amount not less than $285,000 and for the years 1999 and 2000 in an amount
commensurate with other comparably compensated employees of the Company but
not less than 90% of Mr. Campbell's 1998 bonus amount. Each of the Executive
Agreements and the Management Agreements also provide for annual compensation
amounts that may be increased consistent with the annual merit increases
granted to other comparably compensated employees of the Company.
The Executive Agreements provide for a minimum bonus amount for
1997 and 1998. For the years 1999 and 2000, the Executive Agreements provide
for payment to each Executive of a bonus amount commensurate with other
comparably compensated employees of the Company but not less than 90% of such
Executive's 1998 bonus amount. The Management Agreements provide that each
Manager will be entitled to such bonus as the Company Board may award in its
discretion.
Under the terms of the New Employment Agreements, Mr. Campbell,
the Executives and the Managers (collectively, the "Employees", or
individually, an "Employee") are also entitled to insurance coverage under the
Company's group insurance plans and health benefit plans as well as certain
other employee benefit plans of the Company. If the Company terminates
employment of an Employee Without Cause (as defined in the applicable
agreement) or if the Employee voluntarily terminates employment for Good
Reason (as defined in the applicable agreement) on or before March 8, 2003,
the Company will pay to the Employee an amount in cash (the "Termination
Payment") equal to such Employee's base annual compensation (the sum of base
annual salary at the highest rate in effect during the year of the termination
plus the applicable bonus compensation) multiplied by the number of years
(including fractions of years) remaining in the applicable Contract Employment
Period, but such amount shall not be less than one year of base annual
compensation. The Company shall also pay all legal fees and expenses incurred
as a result of enforcing any right or benefit provided in the New Employment
Agreements as well as up to $30,000 for outplacement services to assist in
finding new employment. Additionally, the Company shall maintain insurance
for the Employees and their dependents for a period of time after termination
of employment. Any unvested options granted prior to February 28, 1998 shall
immediately vest upon such termination. All unvested stock awards granted
prior to February 28, 1998, in such circumstances, will continue to vest in
accordance with their normal vesting schedule through June 30, 2001 under the
President's Agreement and the Executive Agreements (or June 30, 2000, in the
case of the Management Agreements) if the termination date occurs before March
8, 2000 (or March 8, 1999 in the case of the Management Agreements). If,
under such circumstances, the termination date occurs on or after March 8,
2000 under the President's Agreement and the Executive Agreements (or on or
after March 8, 1999 in the case of the Management Agreements), such stock
awards will continue to vest in accordance with their normal vesting schedule
until the last day of the end of the fifteenth month following the Employee's
termination date. Such stock awards which have not vested in accordance with
their terms at the end of the above relevant periods are forfeited to the
Company.
If an Employee is terminated Without Cause or leaves for Good
Reason prior to March 31, 1999, and if, in addition, any payment received from
the Company would be deemed an "excess parachute payment" under the applicable
provisions of the Internal Revenue Code (the "Code"), the Employee will
receive, in addition to any Termination Payment, an amount sufficient to
offset the additional taxes imposed on the Employee by reason of such payments
received from the Company being deemed an "excess parachute payment." Other
than as described in the preceding sentence, if any payment received from the
Company under the New Employment Agreements would be deemed an "excess
parachute payment" under applicable provisions of the Code, the amount received
under the New Employment Agreements will be reduced to the largest amount
which is below the threshold for the imposition of the excise tax on the
Employee and the disallowance of the deduction to the Company of such payments
under the Code.
The New Employment Agreements contain a non-competition
provision which would prohibit an Employee from engaging in any Business
Activities (as defined in the New Employment Agreements) in a geographic area
in which, or with a customer to whom, the products or services of the Company
have been distributed or provided during the period commencing two years prior
to the date of the New Employment Agreements. The restrictions continue until
the last vesting date to which an Employee is entitled to stock awards as
described above.
Beneficial Ownership of the Shares
Schedules I, II and III of this Offer to Purchase set forth
information concerning beneficial ownership of the Shares as of December 10,
1997 by each of the directors and executive officers of the Company, Parent and
Purchaser and Masco Corporation, respectively.
Parent has been informed that Mr. Manoogian intends to tender
all Shares beneficially owned by him pursuant to the Offer. The Company has
been advised that all of its directors and executive officers intend to tender
or cause the tender of substantially all of their Shares pursuant to the Offer.
Related Party Transactions
Effective October 1, 1988, the Company acquired various
businesses and cash from Parent in exchange for securities of the Company. In
a related transaction, Masco Corporation, which prior to such acquisition had
an equity ownership interest in the Company, purchased for cash additional
Shares. The Company became a public corporation in February 1989 when
approximately 28% of the then outstanding Shares was distributed by Masco
Corporation to its stockholders as a special dividend. As part of these
transactions, the Company entered into certain agreements with Masco
Corporation and Parent, which are described below. As of December 15, 1997,
Masco Corporation and Parent owned approximately 3.83% and 36.76%,
respectively, of the outstanding Shares.
Under an Assumption and Indemnification Agreement, the Company
assumed, and agreed to indemnify Parent against, all of the liabilities and
obligations of the Parent's businesses that the Company acquired, including
claims and litigation resulting from events which occurred prior to October 1,
1988, but excluding certain income tax and other specified liabilities.
Under a Corporate Services Agreement, Masco Corporation
provides the Company and its subsidiaries with use of Masco Corporation's data
processing equipment and services, certain research and development services,
corporate administrative staff and other support services in return for the
Company's payment of an annual base service fee of .8% of its consolidated
annual net sales, subject to certain adjustments. This agreement also
provides for various license rights and the confidential treatment of certain
information which may arise from Masco Corporation's performance of research
and development services on behalf of the Company. The Company paid Masco
Corporation $3.3 million for 1996 under the Corporate Services Agreement,
which is terminable by the Company at any time upon at least 90 days notice
and by Masco Corporation at the end of any calendar year upon at least 180
days notice.
The Company, Masco Corporation and Parent have entered into a
Corporate Opportunities Agreement to address potential conflicts of interest
with respect to future business opportunities. This agreement materially
restricts the Company's ability to enter into businesses in which Masco
Corporation or Parent are engaged without their respective consents. This
agreement will continue in effect until at least two years after the
termination of the Corporate Services Agreement and thereafter will be renewed
automatically for one-year periods, subject to termination by any party at
least 90 days prior to any such scheduled renewal date.
Under a Stock Repurchase Agreement, which expires in December
1998, Masco Corporation and Parent have the right to sell to the Company, at
approximate fair market value, Shares following the occurrence of certain
events that would result in an increase in their respective ownership
percentage of the then outstanding Shares. Such events include repurchases
of Shares initiated by the Company or any of its subsidiaries, and
reacquisitions of Shares through forfeitures of Shares previously awarded by
the Company pursuant to its employee stock incentive plans. In each case, the
Company has control over the amount of Shares it would ultimately acquire,
including Shares subject to repurchase under the Stock Repurchase Agreement.
The aforementioned rights expire 30 days from the date notice of an event is
given by the Company and neither Masco Corporation nor Parent have ever
exercised their right to sell Shares to the Company.
The Company acquired several businesses from Masco Corporation
in 1990. As part of the transaction, Masco Corporation agreed to indemnify
the Company against certain liabilities of the acquired business. In 1993,
the Company purchased a business from Parent for a purchase price of $60
million plus an additional future payment contingent upon the future level of
profitability of the acquired business. The Company made this contingent
payment, which was approximately $7 million, to Parent during 1997. As part
of the transaction, Parent agreed to indemnify the Company against certain
liabilities of the acquired business.
Subject to certain conditions, and upon request, the Company
has agreed to file registration statements under the federal securities laws
to permit the sale in public offerings of the Shares held by Masco Corporation
and Parent.
The Company participates with Masco Corporation and Parent in a
number of national purchasing programs which enable each of them to obtain
favorable terms from certain of their service and product suppliers. From
time to time, sales of products and services and other transactions may occur
among the Company, Masco Corporation and Parent. During 1996, as a result of
such sales and transactions, the Company paid approximately $0.4 million to
Parent, and Masco Corporation and Parent paid approximately $1 million and $4
million, respectively, to the Company. Ownership of securities and various
other relationships and incentive arrangements may result in conflicts of
interest in the Company's dealings with Masco Corporation, Parent and others.
Masco Corporation is the largest stockholder of Parent and may be deemed to be
a controlling person. Three of the six Directors of the Company are persons
affiliated with Masco Corporation and Parent. Mr. Manoogian, who beneficially
owns 4.36% of the Shares and is the Company's Chairman of the Board, is also
the Chairman of the Board and Chief Executive Officer of both Masco
Corporation and Parent. Messrs. Gargaro and Morgan, who are Directors of the
Company, are also Directors of Parent. Mr. Morgan is a Director of Masco
Corporation, and Mr. Gargaro is the Secretary of Parent and the Vice President
and Secretary of Masco Corporation. Certain officers and other key employees
of the Company receive benefits based upon the value of the common stock of
Masco Corporation, Parent and the Company under incentive compensation plans
established by Masco Corporation and Parent. Such benefits include options to
purchase and long-term restricted stock incentive awards of common stock of
Masco Corporation and Parent under plans comparable to the Company's plans.
Management of Parent After the Merger
After the Merger, it is expected that Mr. Manoogian, who is
currently Chairman and Chief Executive Officer of Parent and Chairman of the
Company, will serve as Chairman of the combined company, Mr. Hennessey, who
is currently Executive Vice President of Masco Corporation, will become Vice
Chairman and Chief Executive Officer of the combined company, Mr. Gardner, who
is currently President of Parent, will become Co-Chief Operating Officer of
the combined company, Mr. Campbell, who is currently President of the Company,
will become Co-Chief Operating Officer of the combined company and Mr.
Wadhams, who is currently a Vice President of Parent, will become Senior Vice
President and Chief Financial Officer of the combined company.
Fees of the Special Committee
As of the date of this Offer to Purchase, Mr. Stern and Mr.
Amster, the two members of the Special Committee, each has earned a fee in the
aggregate amount of $72,000 as compensation for his service on the Special
Committee.
Aggregate Annual Compensation of the Executive Officers of the
Company
As of the date of this Offer to Purchase, the aggregate annual
base salary of the executive officers of the Company was $1,060,500. The
aggregate expected bonus payment to be made to the executive officers of the
Company for fiscal year 1997 is approximately $506,000.
THE TENDER OFFER
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
such extension or amendment), Purchaser will accept for payment and pay for
all Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn as permitted by "The Tender Offer--Withdrawal Rights." The term
"Expiration Date" means 12:00 midnight, New York City time, on Friday, January
16, 1998, unless and until Purchaser, in its sole discretion (but subject to
the terms and conditions of the Merger Agreement), shall have extended the
period during which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended
by Purchaser, shall expire.
Purchaser expressly reserves the right, in its sole discretion
(but subject to the terms and conditions of the Merger Agreement), at any time
and from time to time, to extend for any reason the period of time during which
the Offer is open, including the occurrence of any of the conditions specified
in "The Tender Offer--Certain Conditions of the Offer," by giving oral or
written notice of such extension to the Depositary. During any such
extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the rights of a tendering stockholder to
withdraw such stockholder's Shares. See "The Tender Offer--Withdrawal Rights."
Subject to the applicable regulations of the Commission,
Purchaser also expressly reserves the right, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), at any time and
from time to time, (i) to delay acceptance for payment of, or, regardless of
whether such Shares were theretofore accepted for payment, payment for, any
Shares, pending receipt of any regulatory approval specified in "The Tender
Offer--Certain Legal Matters," (ii) to terminate the Offer and not accept for
payment any Shares upon the occurrence of any of the conditions specified in
"The Tender Offer--Certain Conditions of the Offer" and (iii) to waive any
condition, or otherwise amend the Offer in any respect, by giving oral or
written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. Purchaser
acknowledges that (i) Rule 14e-1(c) under the 1934 Act requires Purchaser to
pay the consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer and (ii) Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the first sentence of this paragraph), any Shares upon the occurrence of any
of the conditions specified in "The Tender Offer--Certain Conditions of the
Offer" without extending the period of time during which the Offer is open.
The Merger Agreement provides that Purchaser will have the
right to extend the Offer (for not more than an aggregate of five business
days) from time to time without the consent of the Company or the Special
Committee. Purchaser has agreed that it will not otherwise, without the prior
consent of the Company and the Special Committee, extend the Offer.
Notwithstanding the foregoing, Purchaser has agreed in the Merger Agreement
that, if on any scheduled expiration date of the Offer any of the conditions
to Purchaser's obligations to accept Shares for payment are not satisfied or
waived, Purchaser will extend the Offer for at least 60 days after commencement
of the Offer until such time as such conditions are satisfied or waived. In
addition, the Merger Agreement provides that, if on any scheduled expiration
date of the Offer all conditions to the Offer (including the Minimum
Condition) have been satisfied or waived but the sum of (i) the number of
Shares tendered (and not withdrawn) pursuant to the Offer plus (ii) the number
of Shares held by Parent, its subsidiaries and its Chief Executive Officer and
by Masco Corporation that have not been tendered pursuant to the Offer
represent less than 90% of the outstanding Shares, on a fully-diluted basis
(excluding for this purpose any right to acquire Shares that may not be
exercised within 60 days from the applicable date), Purchaser will have the
right to extend the Offer without the consent of the Company or the Special
Committee (for not more than an aggregate of 10 business days) in order to
permit Purchaser to solicit the tender of additional Shares pursuant to the
Offer.
In addition, Purchaser has agreed in the Merger Agreement that,
without the prior written consent of the Company and the Special Committee,
Purchaser will not waive the Minimum Condition and will not make any change in
the Offer which changes the form of consideration to be paid or decreases the
price per Share or the number of Shares sought in the Offer or which imposes
conditions to the Offer in addition to those set forth in "The Tender
Offer--Certain Conditions of the Offer."
Any such extension, delay, termination, waiver or amendment
will be followed as promptly as practicable by public announcement thereof,
such announcement in the case of an extension to be made no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Subject to applicable law (including Rules
14d-4(c), 14d-6(d) and 14e-1 under the 1934 Act, which require that material
changes be promptly disseminated to stockholders in a manner reasonably
designed to inform them of such changes) and without limiting the manner in
which Purchaser may choose to make any public announcement, Purchaser shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a press release to the Dow Jones
News Service.
If Purchaser makes a material change in the terms of the Offer
or the information concerning the Offer, or if it waives a material condition
of the Offer, Purchaser will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the 1934 Act.
Subject to the terms of the Merger Agreement, if, prior to the
Expiration Date, Purchaser should decide to decrease the number of Shares
being sought or to increase or decrease the consideration being offered in the
Offer, such decrease in the number of Shares being sought or such increase or
decrease in the consideration being offered will be applicable to all
stockholders whose Shares are accepted for payment pursuant to the Offer and,
if at the time notice of any such decrease in the number of Shares being
sought or such increase or decrease in the consideration being offered is
first published, sent or given to holders of such Shares, the Offer is
scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended at least until the
expiration of such ten business day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or United States
federal holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
Consummation of the Offer is conditioned upon satisfaction of
the Minimum Condition and the other conditions specified in "--Certain
Conditions of the Offer."
The Company has provided Purchaser with the Company's
stockholder list and security position listings for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase and the
related Letter of Transmittal will be mailed to record holders of Shares whose
names appear on the Company's stockholder list and will be furnished, for
subsequent transmittal to beneficial owners of Shares, to brokers, dealers,
commercial banks, trust companies, and similar persons whose names, or the
names of whose nominees, appear on the stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing.
Acceptance for Payment and Payment for Shares
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 will
pay for, all Shares validly tendered prior to the Expiration Date and not
properly withdrawn, promptly after the latest to occur of (i) the Expiration
Date and (ii) the satisfaction or waiver of the conditions to the Offer set
forth in "The Tender Offer-- Certain Conditions of the Offer."
In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (A) the certificates evidencing such Shares (the "Share
Certificates") or timely confirmation (a "Book-Entry Confirmation") of a
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company or the Philadelphia Depositary Trust Company (each, a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in "The Tender
Offer--Procedures for Accepting the Offer and Tendering Shares," (B) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message (as defined below) in lieu of the
Letter of Transmittal and (C) any other documents required under the Letter of
Transmittal.
For purposes of the Offer, Purchaser will be deemed to have
accepted for payment (and thereby purchased) Shares validly tendered and not
properly withdrawn as, if and when Purchaser gives oral or written notice to
the Depositary of Purchaser's acceptance for payment of such Shares pursuant
to the Offer. 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 payments from
Purchaser and transmitting such payments to tendering stockholders whose
Shares have been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST
ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING
SUCH PAYMENT.
If any tendered Shares are not accepted for payment for any
reason pursuant to the terms and conditions of the Offer, or if Share
Certificates are submitted evidencing more Shares than are tendered, Share
Certificates evidencing unpurchased Shares will be returned, without expense
to the tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility
pursuant to the procedure set forth in "The Tender Offer--Procedures for
Accepting the Offer and Tendering Shares," such Shares will be credited to an
account maintained at such Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
If, prior to the Expiration Date, Purchaser shall increase the
consideration offered to any holders of Shares pursuant to the Offer, such
increased consideration shall be paid to all holders of Shares that are
purchased pursuant to the Offer, whether or not such Shares were tendered
prior to such increase in consideration.
Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, to one or more of its affiliates, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transaction 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.
Procedures for Accepting the Offer and Tendering Shares
In order for a holder of Shares to tender validly Shares
pursuant to the Offer, the Letter of Transmittal (or a 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 in
lieu of the Letter of Transmittal) and any other documents required by the
Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either (i)
the Share Certificates evidencing tendered Shares must be received by the
Depositary at such address or such Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry
Confirmation must be received by the Depositary (including an Agent's Message
if the tendering stockholder has not delivered a Letter of Transmittal), in
each case prior to the Expiration Date, or (ii) the tendering stockholder must
comply with the guaranteed delivery procedures described below. The term
"Agent's Message" means a message, transmitted by a Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such
book-entry confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that Purchaser may enforce
such agreement against such participant.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, 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.
Book-Entry Transfer
The Depositary will establish accounts with respect to the
Shares at 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 the system of any Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at
such 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 at a Book-Entry Transfer Facility,
either the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must, in any case, 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, or the tendering stockholder must comply with the guaranteed
delivery procedure described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees
Signatures on all Letters of Transmittal must be guaranteed by
a firm which is a member of the Medallion Signature Guarantee Program, or by
any other "eligible guarantor institution", as such term is defined in Rule
17Ad-15 under the 1934 Act (each of the foregoing referred to as an "Eligible
Institution"), except in cases where Shares are tendered (i) by a registered
holder of Shares who has not completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on
the Letter of Transmittal or (ii) for the account of an Eligible Institution.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Share
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Share Certificate must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed by an Eligible Institution. See Instructions 1 and 5 of the Letter
of Transmittal.
Guaranteed Delivery
If a stockholder desires to tender Shares pursuant to the Offer
and the Share Certificates evidencing such stockholder's Shares are not
immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered; provided that all the following conditions are
satisfied:
(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 made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided
below; and
(iii) the Share Certificates (or a Book-Entry Confirmation)
evidencing all tendered Shares, in proper form for transfer, in each
case together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature
guarantees, and any other documents required by the Letter of
Transmittal are received by the Depositary within three NYSE trading
days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or
mail or transmitted by telegram or facsimile transmission to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in the form of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of the Share Certificates evidencing such Shares, or a Book-Entry
Confirmation of the delivery of such Shares, and the Letter of Transmittal (or
a facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by the Letter of
Transmittal.
Determination of Validity
All questions as to the validity, form, eligibility (including
time of receipt) and acceptance for payment of any tender of Shares 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 and all tenders determined by it not to be in proper form or the
acceptance for payment of which may, in the opinion of its counsel, be
unlawful. Subject to the terms of the Merger Agreement, Purchaser also
reserves the absolute right to waive any condition of the Offer or any defect
or irregularity in the tender of any Shares of any particular stockholder,
whether or not similar defects or irregularities are waived in the case of
other stockholders. 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, 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. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will
be final and binding.
Other Requirements
By executing the Letter of Transmittal as set forth above, a
tendering stockholder irrevocably appoints designees of Purchaser as such
stockholder's 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 the 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 such Shares on or after December
17, 1997). All such proxies shall 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 Shares for payment. Upon such acceptance
for payment, all prior proxies given by such stockholder with respect to such
Shares (and such other Shares and securities) will be revoked without further
action, and no subsequent proxies may be given nor any subsequent written
consent executed by such stockholder (and, if given or executed, will not be
deemed to be effective) with respect thereto. The designees of Purchaser
will, with respect to the Shares for which the appointment is effective, be
empowered to exercise all voting and other rights of such stockholder as they
in their sole discretion may deem proper at any annual or special meeting of
the Company's stockholders or any adjournment or postponement thereof, by
written consent in lieu of any such meeting or otherwise. Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's payment for such Shares, Purchaser must be able
to exercise full voting rights with respect to such Shares.
The acceptance for payment by Purchaser of Shares pursuant to
any of the procedures described above will constitute a binding agreement
between the tendering stockholder and Purchaser upon the terms and subject to
the conditions of the Offer.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT
TO PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED
PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH
SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER OR SOCIAL SECURITY
NUMBER OR CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL
INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF
TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH RESPECT TO A STOCKHOLDER, THE
DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH
STOCKHOLDER. SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
Withdrawal Rights
Tenders of the Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after February 15,
1998. If Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares or is unable to accept Shares for payment pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer, the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
that tendering stockholders are entitled to withdrawal rights as described
herein.
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 page 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 of such Shares, if different
from that of the person who tendered such Shares. If Share Certificates
evidencing Shares to be withdrawn have been delivered or otherwise identified
to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such Shares have been
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
"The Tender Offer--Procedures for Accepting the Offer and Tendering Shares,"
any notice of withdrawal must specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Shares.
All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding. None of
Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be under duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
Any Shares properly withdrawn will thereafter be deemed not to
have been validly tendered for purposes of the Offer. However, withdrawn
Shares may be re-tendered at any time prior to the Expiration Date by following
one of the procedures described in "The Tender Offer--Procedures for Accepting
the Offer and Tendering Shares."
Certain Federal Income Tax Consequences
The summary of Federal income tax consequences set forth below
is for general information only and is based on Purchaser's understanding of
the law as currently in effect. The tax consequences to each stockholder will
depend in part upon such stockholder's particular situation. Special tax
consequences not described herein may be applicable to particular classes of
taxpayers, such as financial institutions, broker-dealers, persons who are not
citizens or residents of the United States and stockholders who acquired their
Shares through the exercise of an employee stock option or otherwise as
compensation. ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS
TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM,
INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY
STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS.
The receipt of cash for Shares pursuant to the Offer will be a
taxable transaction for Federal income tax purposes under the Code, and may
also be a taxable transaction under applicable state, local or foreign income
and other tax laws. Generally, for Federal income tax purposes, a tendering
stockholder will recognize gain or loss in an amount equal to the difference
between the cash received by the stockholder pursuant to the Offer and the
stockholder's adjusted tax basis in the Shares tendered by the stockholder and
purchased pursuant to the Offer. For Federal income tax purposes, such gain
or loss will be a capital gain or loss if the Shares are a capital asset in
the hands of the stockholder. Stockholders are urged to consult with their own
tax advisors concerning the treatment of capital gain or loss for Federal
income tax purposes (including the possibility of a reduced tax rate on
certain capital gains and the limitations on the deductibility of capital
loss).
A stockholder that tenders Shares may be subject to 31% backup
withholding unless the stockholder provides its Taxpayer Identification Number
("TIN") and certifies that such number is correct or properly certifies that it
is awaiting a TIN, or unless an exemption applies. A stockholder who does not
furnish its TIN may be subject to a penalty imposed by the IRS. See "The
Tender Offer--Procedures for Accepting the Offer and Tendering Shares."
If backup withholding applies to a stockholder, the Depositary
is required to withhold 31% from payments to such stockholder. Backup
withholding is not an additional tax. Rather, the amount of the backup
withholding can be credited against the Federal income tax liability of the
person subject to the backup withholding; provided that the required
information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
appropriate income tax return.
The receipt of cash by stockholders pursuant to the Merger
should result in Federal income tax consequences to such stockholders similar
to those described above.
Price Range of Shares; Dividends
The NYSE is the principal market on which the Shares are traded
(under the symbol TMS). The following table indicates the high and low sale
prices for Common Stock as reported on the NYSE Composite Tape and Common
Stock dividends declared for the periods indicated.
<TABLE>
<CAPTION>
Market Price
------------------- Dividend
High Low Declared
------ ------ --------
<S> <C> <C> <C>
1995
First Quarter.................... $22.75 $19.63 $0.04
Second Quarter................... 24.25 20.25 0.05
Third Quarter.................... 25.50 20.00 0.05
Fourth Quarter................... 22.25 18.38 0.05
----
Total.......................... $0.19
====
1996
First Quarter.................... $24.38 $16.88 $0.05
Second Quarter................... 25.50 20.88 0.06
Third Quarter.................... 24.25 19.88 0.06
Fourth Quarter................... 25.50 22.38 0.06
----
Total.......................... $0.23
====
1997
First Quarter.................... $24.75 $22.00 $0.06
Second Quarter................... 31.00 22.75 0.07
Third Quarter.................... 31.56 27.06 0.07
Fourth Quarter (through
December 16, 1997)............. 34.31 28.38 0.07
-----
Total.......................... $0.27
=====
</TABLE>
On December 15, 1997 there were approximately 2,500 holders of
record of Common Stock and 41,325,118 outstanding Shares.
On December 10, 1997, the last full day of trading before the
public announcement of the execution of the Merger Agreement, the closing
price of Common Stock on the NYSE Composite Tape was $30.63 per Share. On
December 16, 1997, the last full day of trading before the commencement of the
Offer, the closing price of Common Stock on the NYSE Composite Tape was $34.19
per Share. Stockholders are urged to obtain a current market quotation for
the Shares.
The Facilities (as defined herein) will contain a number of
financial covenants that may limit the ability of Parent or the Company to pay
dividends. See "--Financing of the Offer and the Merger".
Certain Information Concerning the Company
Except as otherwise set forth herein, the information
concerning the Company contained in this Offer to Purchase, including
financial information, has been furnished by the Company or has been taken
from or based upon publicly available documents and records on file with the
Commission and other public sources.
General
The Company is a Delaware corporation with its principal
offices located at 315 East Eisenhower Parkway, Ann Arbor, Michigan 48108.
The Company is primarily engaged in the manufacture of industrial container
closures, specialty dispensing and packaging products, pressurized gas
cylinders, specialty industrial gaskets, towing systems products, specialty
fasteners, specialty products for fiberglass insulation, specialty tapes and
precision cutting tools.
The name, citizenship, business address, principal occupation
or employment and five-year employment history for each of the directors and
executive officers of the Company and certain other information are set forth
in Schedule I hereto.
The Company is subject to the informational filing requirements
of the 1934 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. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the Commission's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Information regarding the public reference facilities may be obtained from the
Commission by telephoning 1-800-SEC-0330. The Company's filings are also
available to the public on the SEC Internet site (http://www.sec.gov). Copies
of such materials may also be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Certain reports and other information concerning the
Company may also be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
Financial Information
Set forth below is certain selected financial information
relating to the Company which has been excerpted or derived from the audited
financial statements contained in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 (the "Form 10-K") and the unaudited
financial statements contained in the Company's September 30, 1997 Form 10-Q,
which financial statements are attached hereto as Annex D and Annex E,
respectively. The financial information that follows is qualified in its
entirety by reference to such reports and other documents may be examined and
copies may be obtained from the offices of the Commission in the manner set
forth above.
<TABLE>
<CAPTION>
(In Thousands Except Per Share Amounts)
Nine Months Nine Months
Ended September Ended September
30, 1997 30, 1996 1996(A) 1995
--------------- --------------- --------- ---------
(unaudited) (audited)
<S> <C> <C> <C> <C>
Net sales..................... $515,660 $457,520 $600,230 $553,490
Operating profit.............. 88,660 79,680 104,290 98,680
Net Income.................... 55,150 46,390 61,360 56,020
Earnings per Share:
Primary...................... 1.37 1.25 1.66 1.51
Fully diluted................ 1.33 1.17 1.55 1.42
Dividends declared per Share.. 0.20 0.07 0.23 0.19
At end of period:
Working capital.............. 247,810 210,000 203,440 197,460
Total assets................. 727,090 672,300 696,670 616,360
Long-term debt............... 71,630 183,550 187,120 187,200
Shareholders' equity......... 541,400 378,780 390,450 338,670
</TABLE>
- ----------
(A) Reflects the acquisition of four businesses in 1996.
The ratio of earnings to fixed charges for the Company's fiscal
years 1996 and 1995 was 9.3 and 7.2, respectively. The ratio of earnings
to fixed charges for the Company's nine months ended September 30, 1997 and
three months ended September 30, 1997 was 17.3 and 18.2, respectively. As
of December 31, 1996 and September 30, 1997, the book value of the Company
per Share was $10.66 and $13.10, respectively.
Certain Projections
The Company does not, as a matter of course, make public any
forecasts as to its future financial performance. However, in connection with
Parent's review of the transactions contemplated by the Offer and the Merger,
the Company has provided Parent with certain non-public information concerning
the Company and its subsidiaries. Such information included, among other
things, the Company's projections of consolidated net revenues, net earnings
before interest and taxes ("EBIT") and net income for the Company for the
fiscal years 1997 through 2002.
The information provided to Parent by the Company (the
"Projections") discloses, among other things, the following:
<TABLE>
<CAPTION>
(In Thousands)
Forecast Forecast Forecast Forecast Forecast Forecast
FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Revenue. $664,983 $716,480 $767,590 $832,164 $892,106 $954,495
EBIT........ 115,006 124,899 139,668 158,477 175,569 193,131
Net Income.. 72,461 80,592 91,880 106,047 119,484 133,691
</TABLE>
The Projections reflect the Company's forecast of its
consolidated net revenue, EBIT and net income on a stand-alone basis and
without reflecting any potential synergies from the acquisition of the
Company by Parent and Purchaser.
The projections were prepared solely for internal use and not
with a view to public disclosure or compliance with the published guidelines
of the Commission or the American Institute of Certified Public Accountants
regarding projections and were not prepared with the assistance of, or
reviewed by, independent accountants. Such projections are included by
Purchaser in this Offer to Purchase solely because such information was
furnished to Parent and Purchaser by the Company. None of Parent, Purchaser,
the Company, BT Wolfensohn, Salomon Smith Barney or any other party to whom
the projections were provided assumes any responsibility for the validity,
reasonableness, accuracy or completeness of the projections. The projections
were not prepared in accordance with generally accepted accounting principles
and were not audited or reviewed by any independent accounting firm, nor did
any such firm perform any other services with respect thereto. While
presented with numerical specificity, the projections are based on a variety of
assumptions relating to the businesses of the Company, industry performance,
general business and economic conditions and other matters which are
inherently subject to significant uncertainties and contingencies, many of
which are beyond the Company's control. These assumptions involve judgments
with respect to, among other things, future economic and competitive
conditions, inflation rates and future business conditions. Therefore, such
projections are inherently imprecise and there can be no assurance that they
will prove to be reliable. Also, actual future results may vary materially
from those shown in the projections. None of Parent, Purchaser, the Company,
BT Wolfensohn or Salomon Smith Barney is under any obligation to or has any
intention to update the projections at any future time.
Purchases of Shares by the Company
Except as set forth below, the Company has not purchased any
Shares since January 1, 1995.
<TABLE>
<CAPTION>
Amount of Shares Range of Prices Average
Purchased Paid Purchase Price
---------------- --------------- --------------
<S> <C> <C> <C>
1995
First Quarter............. 0 -- --
Second Quarter............ 0 -- --
Third Quarter............. 20,000 $21.25-22.00 $21.63
Fourth Quarter............ 30,000 $19.00-21.25 $19.87
1996
First Quarter............. 42,300 $18.13-22.75 $21.82
Second Quarter............ 58,800 $21.25-25.38 $23.48
Third Quarter............. 13,100 $22.25-23.38 $23.23
Fourth Quarter............ 300 $23.38 $23.38
1997
First Quarter............. 57,700 $22.13-23.75 $23.28
Second Quarter............ 10,000 $27.88 $27.88
Third Quarter............. 19,000 $27.25-28.38 $27.74
Fourth Quarter (through
December 16, 1997)..... 0 -- --
</TABLE>
Certain Information Concerning Parent and Purchaser
Parent is a Delaware corporation with its principal offices
located at 21001 Van Born Road, Taylor, Michigan 48180. Parent is a
leading supplier of metalworked and aftermarket products for the
transportation industry.
Purchaser is a Delaware corporation established on December 4,
1997 and has not carried on any activities other than the execution of the
Merger Agreement. Its principal offices are located at 21001 Van Born Road,
Taylor, Michigan 48180. Purchaser is a direct wholly owned subsidiary of
Parent.
The name, citizenship, business address, principal occupation
or employment and five-year employment history for each of the directors and
executive officers of Parent and Purchaser and certain other information are
set forth in Schedule II hereto.
As of December 15, 1997, Parent beneficially owned 15,191,109
of the 41,325,118 outstanding Shares, representing approximately 36.76% of the
Shares then outstanding.
Except as described in this Offer to Purchase, (i) none of
Parent, Purchaser nor, to the best knowledge of Parent and Purchaser, any of
the persons listed in Schedule II to this Offer to Purchase or any associate or
majority-owned subsidiary of Parent or Purchaser or any of the persons so
listed beneficially owns or has any right to acquire, directly or indirectly,
any Shares and (ii) none of Parent, Purchaser nor, to the best knowledge of
Parent and Purchaser, any of the persons or entities referred to above nor any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement or as otherwise
described in this Offer to Purchase, none of Parent, Purchaser nor, to the
best knowledge of Parent and Purchaser, any of the persons listed in Schedule
II to this Offer to Purchase, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or voting of such
securities, finder's fees, joint ventures, loan or option arrangements, puts
or call, guarantees of loans, guaranties against loss, guaranties of profits,
division of profits or loss or the giving or withholding of proxies. Except
as set forth in this Offer to Purchase, since January 1, 1995, none of Parent,
Purchaser nor, to the best knowledge of Parent and Purchaser, any of the
persons listed on Schedule II hereto, has had any business relationship or
transaction with the Company or any of its executive officers, directors or
affiliates that is required to be reported under the rules and regulations of
the Commission applicable to the Offer. Except as set forth in this Offer to
Purchase, since January 1, 1995, there have been no contacts, negotiations or
transactions between Parent or any of its subsidiaries or, to the best
knowledge of Parent, any of the persons listed in Schedule II to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
Parent is subject to the informational filing requirements of
the 1934 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. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the Commission's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Information regarding the public reference facilities may be obtained from the
Commission by telephoning 1-800-SEC-0330. Parent's filings are also available
to the public on the SEC Internet site (http://www.sec.gov). Copies of such
materials may also be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Certain reports and other information concerning Parent may also be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
Certain Information Concerning Masco Corporation
Masco Corporation is a Delaware corporation with its principal
offices located at 21001 Van Born Road, Taylor, Michigan 48180. Masco
Corporation is engaged principally in the manufacture, sale and installation of
home improvement and building products.
The name, citizenship, business address, principal occupation
or employment and five-year employment history for each of the directors and
executive officers of Masco Corporation and certain other information are set
forth in Schedule III hereto.
As of December 15, 1997, Masco Corporation beneficially owned
1,583,708 of the 41,325,118 outstanding Shares, representing approximately
3.83% of the Shares then outstanding. As of December 15, 1997, Masco
Corporation beneficially owned 7,824,690 of the 47,463,616 outstanding shares
of Parent common stock, representing approximately 16.49% of the shares of
Parent common stock then outstanding.
Except as described in this Offer to Purchase, (i) none of
Masco Corporation nor, to the best knowledge of Masco Corporation, any of the
persons listed in Schedule III to this Offer to Purchase or any associate or
majority-owned subsidiary of Masco Corporation or any of the persons so listed
beneficially owns or has any right to acquire, directly or indirectly, any
Shares and (ii) none of Masco Corporation nor, to the best knowledge of Masco
Corporation, any of the persons or entities referred to above nor any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement or as otherwise
described in this Offer to Purchase, none of Masco Corporation nor, to the
best knowledge of Masco Corporation, any of the persons listed in Schedule III
to this Offer to Purchase, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or voting of such
securities, finder's fees, joint ventures, loan or option arrangements, puts
or call, guarantees of loans, guaranties against loss, guaranties of profits,
division of profits or loss or the giving or withholding of proxies. Except
as set forth in this Offer to Purchase, since January 1, 1995, none of Masco
Corporation nor, to the best knowledge of Masco Corporation, any of the
persons listed on Schedule III hereto, has had any business relationship or
transaction with the Company or any of its executive officers, directors or
affiliates that is required to be reported under the rules and regulations of
the Commission applicable to the Offer. Except as set forth in this Offer to
Purchase, since January 1, 1995, there have been no contacts, negotiations or
transactions between Masco Corporation or any of its subsidiaries or, to the
best knowledge of Masco Corporation, any of the persons listed in Schedule III
to this Offer to Purchase, on the one hand, and the Company or its affiliates,
on the other hand, concerning a merger, consolidation or acquisition, tender
offer or other acquisition of securities, an election of directors or a sale
or other transfer of a material amount of assets.
Masco Corporation is subject to the informational filing
requirements of the 1934 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. Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
regional offices located at Seven World Trade Center, Suite 1300, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Information regarding the public reference
facilities may be obtained from the Commission by telephoning 1-800-SEC-0330.
Masco Corporation's filings are also available to the public on the SEC
Internet site (http://www.sec.gov). Copies of such materials may also be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Certain
reports and other information concerning Masco Corporation may also be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
Financing of the Offer and the Merger
The total amount of funds required by Purchaser to consummate
the Offer and the Merger and to pay related fees and expenses is estimated to
be approximately $900,000,000. The Offer and the Merger are not conditioned
on obtaining financing. Purchaser expects that it will obtain such funds from
capital contributions to Purchaser by Parent. Parent has received a letter
(together with the related term sheet, the "Commitment Letter"), dated
December 10, 1997, from The First National Bank of Chicago ("FNB"), Bank of
America NT&SA ("BOA") and NationsBank, N.A. ("NationsBank") pursuant to which
such banks have committed to provide Parent with financing in an aggregate
amount of up to $1.3 billion. A copy of the Commitment Letter is filed as an
exhibit to the Schedule 14D-1 and incorporated herein by reference, and the
following summary of the Commitment Letter (including the related term sheet)
is qualified in its entirety by reference thereto.
The commitments of the lenders, which are several and not
joint, will be allocated between a revolving credit facility (the "Revolving
Credit Facility") in the amount of $800 million and a tender offer and merger
facility (the "Term Loan Facility" and together with the Revolving Credit
Facility, the "Facilities") in the amount of $500 million. The proceeds of
the Facilities will be used to finance the Offer and the Merger, and the
proceeds of the Revolving Credit Facility will also be used to provide funds
to Parent and its subsidiaries for general corporate purposes. All borrowings
under the Facilities will mature on November 15, 2003. Under the Facilities,
FNB will serve as administrative agent and documentation agent, and BOA and
NationsBank will serve as co-syndication agents. All or a portion of the
Facilities may be syndicated prior to the closing of the financing.
The Facilities will permit Parent to borrow, at Parent's
option, at the base rate, the Eurodollar rate and the Eurocurrency rate plus
the margin, if any, applicable to such rate. The applicable margin on
Eurodollar and Eurocurrency loans under the Facilities will vary between .225%
and 1.000% depending on Parent's total debt to EBITDA ratio; there will be no
margin on base rate loans. In addition, Parent will pay a facility fee on the
revolving credit commitment, irrespective of usage, that will vary between
.150% and .250% depending on Parent's total debt to EBITDA ratio. Initial
pricing under the Facilities will be at an all-in cost (margin plus facility
fee) of 1.125% over the applicable Eurocurrency or Eurodollar rate which will
not be reduced to below 1.125% until at least three months after the closing
of the financing or below 1.000% until at least six months after the closing
of the financing. The Revolving Credit Facility will include a multicurrency
subfacility in an amount of $200,000,000, a letter of credit subfacility in an
amount of $150,000,000, a swingline facility in an amount of $25,000,000 and a
competitive bid facility that will be available to Parent only when its senior
debt to EBITDA ratio is less than 3.0 to 1.0. The credit agreement relating
to the Facilities will contain customary representations, warranties and
covenants, including certain covenants which may limit the ability of Parent
or the Company to pay dividends.
The commitments are contingent upon (a) the execution of the
Merger Agreement, (b) the preparation, execution and delivery of a credit
agreement and other loan documents that incorporate substantially the terms and
conditions of the Commitment Letter, (c) the determination by at least two of
the three agents that there is an absence of a Material Adverse Change (as
defined below) from that reflected in their respective financial statements
as of and for the period ended September 30, 1997; (d) the determination by at
least two of the three agents with respect to the initial funding to purchase
the Shares pursuant to the Offer that there is an absence of any event,
occurrence, development or state of circumstances or facts which has had or
has a reasonable probability of having, individually or in the aggregate, a
material adverse effect on the Company (a "Company Material Adverse Change");
and (e) the determination by two of the three arrangers that there has been no
(i) general suspension of trading in, or limitation on prices for, securities
on the NYSE or in the over-the-counter market, (ii) declaration of a banking
moratorium by Federal or New York or Michigan authorities or any general
suspension of payments in respect of lenders that regularly participate in the
United States market in loans to large corporations, (iii) material limitation
by any governmental authority (including a court) that materially affects the
extension of credit generally by lenders that regularly participate in the
United States market in loans to large corporations, (iv) commencement of a
war involving the United States or any commencement of armed hostilities or
other national or international calamity involving the United States that has
a material adverse effect on bank syndication or financial markets in the
United States, or (v) in the case of any of the foregoing occurrences existing
on or at the time of the commencement of the Offer, a material acceleration or
worsening thereof. For purposes of the Facilities, "Material Adverse Change"
means any event, occurrence, development or state of circumstances or facts
which has had or has a reasonable probability of having, individually or in
the aggregate, a material adverse effect on Parent and its consolidated
subsidiaries (including the Company and its consolidated subsidiaries, to the
extent owned by Parent, which, with respect to the funding to purchase the
Shares acquired pursuant to the Offer, would take into effect the Shares to be
purchased) taken as a whole.
Borrowings under the Facilities to finance the Offer are
contingent on satisfaction or waiver of certain conditions, including, without
limitation, the following: (a) the satisfaction of the conditions of the Offer
described in "The Tender Offer--Certain Conditions of the Offer," (b) the
absence of any default or event of default under the Facilities and the
nonoccurrence of a Material Adverse Change, (c) the absence of a material
adverse effect on the Company, (d) the receipt by the agents of evidence that,
after giving effect to the Offer and the Merger, Parent and its subsidiaries
will be solvent subsequent to incurring the indebtedness in connection with
the Offer and the Merger, will be able to pay their debts as they become due
and will not be left with unreasonably small capital, (e) the representations
and warranties of the Company contained in the Merger Agreement being true and
correct (except for inaccuracies or omissions which do not singly or in the
aggregate constitute a material adverse effect on the Company) and (f) there
being no material breach under the Merger Agreement.
Borrowings under the Facilities to finance the Merger are
contingent on satisfaction or waiver of certain conditions, including, without
limitation, the following: (a) the Merger having become effective in
accordance with applicable law and its terms and (b) the absence of any
default or event of default under the Facilities and the nonoccurrence of a
Material Adverse Change.
After the Merger, all obligations of Parent under the
Facilities will be guaranteed by all present and future domestic direct and
indirect significant subsidiaries (within the meaning of Regulation S-X) of
Parent (including the Company after the Merger). The guaranty of any such
subsidiary will be automatically released upon the sale of such subsidiary by
Parent if all cash proceeds of the sale are applied to prepay loans under the
Term Loan Facility, or if all such loans have been paid in full, loans under
the Revolving Credit Facility. The obligations of Parent under the Facilities
will be unsecured except that stock of the Company owned by Parent or
Purchaser will be pledged at the time of the initial funding to finance the
purchase of the stock of the Company pursuant to the Offer if permissible
under Regulation U, or, otherwise, at the time of the Merger. After
consummation of the Merger, the pledge of the Company's stock will be released
if Parent's implied or actual senior unsecured debt is rated BB+ or equivalent
by Standard & Poor's or Moody's or Parent's Senior Debt to EBITDA ratio is less
than 2.5 to 1.0.
Parent anticipates that its obligations under the Facilities
will be repaid from a variety of sources, including, without limitation, funds
generated internally by Parent and its subsidiaries (including, following the
Merger, funds generated by the Company), bank refinancing, proceeds from the
potential disposition of non-operating assets and the public or private sale
of debt or equity securities. The source and allocation of various methods of
repayment will be determined and may be modified by Parent based on market
conditions and such other factors as Parent may deem appropriate.
Dividends and Distributions
On December 10, 1997, the Company Board declared a dividend of
$.07 per Share payable on January 7, 1998 to holders of record of Shares on
December 29, 1997. Holders of record of the Shares on the record date for
such dividend will be entitled to receive such dividend whether or not they
tender their Shares pursuant to the Offer, and no adjustment will be made to
the Offer Price or to any other terms of the Offer as a result of the payment
of such dividend to such stockholders.
If, subsequent to the date of the Merger Agreement but prior to
the Effective Time, the Company changes the number of Shares outstanding as a
result of any stock split, stock dividend, recapitalization or similar
transaction, then appropriate adjustments shall be made in all amounts payable
pursuant to the Merger Agreement, including, without limitation, the Offer
Price, the Merger Consideration and any amounts or numbers of units payable
pursuant to "Special Factors--The Merger Agreement--Stock Options and
Restricted Stock Awards."
Certain Effects of the Offer
Market for the Shares
The purchase of Shares pursuant to the Offer will reduce the
number of holders of Shares and the number of Shares that might otherwise
trade publicly and could adversely affect the liquidity and market value of the
remaining Shares held by the public.
Stock Quotation
Depending upon the number of Shares purchased pursuant to the
Offer, the Shares may no longer meet the standards for continued listing on
the NYSE. According to the NYSE's published guidelines, the Shares would not
be eligible for continued listing if, among other things, the number of Shares
publicly held falls below 600,000, the number of beneficial holders of Shares
falls below 1,200 (holding at least 100 Shares) or the aggregate market value
of such publicly held Shares does not exceed $5,000,000. If, as a result of
the purchase of Shares pursuant to the Offer, the Merger or otherwise, the
Shares no longer meet the requirements of the NYSE for continued listing, the
listing of the Shares might be discontinued and, in such event, the market for
the Shares could be adversely affected. In the event the Shares were no
longer eligible for listing on the NYSE, quotations might still be available
from other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
holders of such Shares remaining at such time, the interest in maintaining a
market in such Shares on the part of securities firms, the possible
termination of registration of such Shares under the 1934 Act as described
below and other factors.
Exchange Act Registration
The Shares are currently registered under Section 12(b) of the
1934 Act. Registration of the Shares under the 1934 Act may be terminated
upon application of the Company to the Commission if the Shares are not listed
on a national securities exchange and held by 300 or more holders of record.
Termination of registration of the Shares under the 1934 Act would
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 1934 Act no longer applicable to the Company, such as the short-swing
profit recovery provisions of Section 16(b) of the 1934 Act, the requirement
of furnishing a proxy statement pursuant to Section 14(a) of the 1934 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 1934 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, may be
impaired or eliminated. If registration of the Shares under the 1934 Act were
terminated, the Shares would no longer be "margin securities" or be eligible
for listing on the NYSE. Parent and Purchaser currently intend to seek to
cause the Company to terminate the registration of the Shares under the 1934
Act as soon after consummation of the Offer as the requirements for
termination of registration are met.
Margin Regulations
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. In any event, the Shares will cease
to be "margin securities" if registration of the Shares under the 1934 Act is
terminated.
Increased Interest in Net Book Value and Net Earnings of the
Company
If the Offer is consummated, the direct and indirect interest
of Parent in the Company's net book value and net earnings will increase in
proportion to the number of Shares acquired in the Offer. Following
consummation of the Merger, Parent's direct and indirect interest in such
items will increase to 100%, and the Company will be a wholly owned subsidiary
of Parent. Accordingly, Parent and its subsidiaries will be entitled to all
benefits resulting from that interest, including all income generated by the
Company's operations, and any future increase in the Company's value and the
right to elect all members of the Company Board. Similarly, Parent will also
bear the risk of losses generated by the Company's operations and any decrease
in the value of the Company after the Merger. Furthermore, after the Merger,
pre-Merger stockholders (other than Parent) will not have the opportunity to
participate directly in the earnings and growth of the Company and will not
face the risk of losses generated by the Company's operations or decline in
the value of the Company.
If all of the outstanding Shares are purchased pursuant to the
Offer, Parent's beneficial interest in the net book value (shareholders'
equity) at September 30, 1997 and net earnings of the Company for the nine
months ended September 30, 1997, as reflected in the Company's September 30,
1997 Form 10-Q, would increase to 100% or $541,400,000 and $55,150,000,
respectively.
Certain Conditions of the Offer
Notwithstanding any other provision of the Offer, Purchaser (x)
shall not be required to accept for payment or, subject to any applicable
rules and regulations of the Commission, including Rule 14e-1(c) promulgated
under the 1934 Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay
for any Shares, (y) may delay the acceptance for payment of or payment for any
Shares or (z) subject to the terms of the Merger Agreement, may terminate or
amend the Offer as to any Shares not then paid for if (a) the Minimum
Condition shall not have been satisfied, (b) any applicable waiting period
under the HSR Act shall not have expired or been terminated or (c) at any time
prior to the acceptance for payment of Shares pursuant to the Offer, any of
the following conditions exist or shall occur:
(i) there shall have occurred (a) any general suspension of
trading in, or limitation on prices for, securities on the NYSE or in
the over-the-counter market, (b) any declaration of a banking
moratorium by Federal or New York or Michigan authorities or general
suspension of payments in respect of lenders that regularly
participate in the United States market in loans to large
corporations, (c) any material limitation by any Federal, state or
local government or any court, administrative or regulatory agency or
commission or other governmental authority or agency in the United
States that materially affects the extension of credit generally by
lenders that regularly participate in the United States market in
loans to large corporations, (d) any commencement of a war involving
the United States or any commencement of armed hostilities or other
national or international calamity involving the United States that
has a material adverse effect on bank syndication or financial markets
in the United States or (e) in the case of any of the foregoing
occurrences existing on or at the time of the commencement of the
Offer, a material acceleration or worsening thereof; or
(ii) there shall be pending any action or proceeding (or any
investigation or other inquiry that might result in such an action or
proceeding) by any governmental authority or administrative agency
before any governmental authority, administrative agency or court of
competent jurisdiction, domestic or foreign, or there shall be in
effect any judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, or any other
legal restraint, (a) preventing or seeking to prevent consummation of
the Offer, the Merger or the other transactions contemplated by the
Merger Agreement, (b) prohibiting or seeking to prohibit or limiting
or seeking to limit Parent or Purchaser from exercising any material
rights and privileges pertaining to the ownership of the Shares or (c)
compelling or seeking to compel any party or any of its subsidiaries
to dispose of or hold separate all or any portion of the business or
assets of Parent or the Company or any of their respective
subsidiaries that is material in relation to the consolidated business
or assets of Parent and its subsidiaries or the Company and its
subsidiaries, in each case as a result of the Offer, the Merger or the
other transactions contemplated by the Merger Agreement; or
(iii) any event, occurrence, development or state of circumstances
or facts which has had or has a reasonable probability of having,
individually or in the aggregate, a material adverse effect on the
Company; or
(iv) it shall have been publicly disclosed or Parent shall have
otherwise learned that (a) any person or "group" (as defined in
Section 13(d)(3) of the 1934 Act) other than Parent and its affiliates
shall have acquired beneficial ownership of more than 20% of the
Shares, through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of more than
20% of the Shares unless such Shares shall have been tendered pursuant
to the Offer and not withdrawn or (b) any person or group shall have
entered into a definitive agreement or an agreement in principle with
respect to a merger, consolidation or other business combination with
the Company; or
(v) Parent, Purchaser or the Company or their affiliates shall have
failed to make any filings with or to obtain any approvals or
authorizations from any governmental body, agency, official or
authority (other than under the HSR Act) or any applicable waiting
period related thereto shall not have expired or been terminated,
which filings, approvals or authorizations (or the expiration of such
waiting periods) are legally required to be obtained or made by them
(or to have expired or terminated) prior to the consummation of the
Offer and which, if not obtained or made (or expired or terminated)
would, individually or in the aggregate, have a reasonable probability
of having a material adverse effect on Parent or the Company; or
(vi) (a) the Company shall have failed to perform in all material
respects all of its obligations under the Merger Agreement required to be
performed by it at or prior to the time Shares are accepted for payment
pursuant to the Offer or (b) except for such inaccuracies or omissions
the consequences of which do not singly or in the aggregate constitute
a material adverse effect on the Company, the representations and
warranties of the Company contained in the Merger Agreement shall not
be true in all respects at and as of the time Shares are accepted for
payment pursuant to the Offer as if made at and as of such time
(except as to those representations and warranties which are made as
of a specified date, which shall be true and correct as of such date);
or
(vii) the Merger Agreement shall have been terminated in accordance
with its terms; or
(viii) the Company Board shall have withdrawn or modified its
recommendation of the Offer or the Merger;
which, in the reasonable judgment of Parent in any such case,
and regardless of the circumstances (including any action or omission by
Parent) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
Certain Legal Matters
General
Except as described in this Section, based on its review of
publicly available filings of the Company with the Commission and other
publicly available information regarding the Company, neither Parent nor
Purchaser 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 acquisitions of Shares
(and/or the indirect acquisition of the stock of the Company's subsidiaries)
as contemplated herein or of any approval or other action by or with any
domestic, foreign, or international government authority or administrative or
regulatory agency that would be required for the acquisition of ownership of
the Shares (and/or the indirect acquisition of the stock of the Company's
subsidiaries) by Purchaser. Should any such approval or other action be
required, Parent and Purchaser currently contemplate that such approval or
other action will be sought. While, except as otherwise expressly described
in this Section, Purchaser does not presently intend to delay the acceptance
for payment of or payment for Shares tendered pursuant to the Offer pending
the outcome of any such matter, there can be no assurance that any such
approval or other action, if needed, would be obtained without substantial
conditions or that failure to obtain any such approval or other action might
not result in consequences adverse to the Company's business or that certain
parts of the Company's business might not have to be divested if such
approvals were not obtained or such other actions were not taken, any of which
could cause Purchaser to decline to accept for payment or pay for any Shares
tendered. Purchaser's obligations to accept for payment or pay for the Shares
tendered pursuant to the Offer is subject to the conditions set forth in this
Offer to Purchase, including the conditions referred to above in this
paragraph and certain conditions with respect to litigation and governmental
action. See "The Tender Offer--Certain Conditions of the Offer."
Antitrust
Under the HSR Act, certain transactions (including certain
transactions involving the proposed acquisition of in excess of 15%, 25% and
50% of the equity interest of a target corporation) 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. Since consummation of the
Offer would result in the ownership by Parent and its subsidiaries of more
than 50% of the equity of the Company, the acquisition of Shares by Purchaser
pursuant to the Offer is subject to such requirements.
Parent and the Company expect to file the required Notification
and Report Forms (the "Forms") with respect to the Offer and the Merger with
the Antitrust Division and the FTC as promptly as reasonably practicable after
the date hereof. The statutory waiting period applicable to the purchase of
Shares pursuant to the Offer will expire on the fifteenth calendar day after
the day Parent files its Form. However, prior to such date, the Antitrust
Division or the FTC may extend the waiting period by requesting additional
information or documentary material relevant to the acquisition. If such a
request is made, the waiting period will be extended until 11:59 P.M., New
York City time, on the tenth day after Parent certifies to the Antitrust
Division or the FTC, as the case may be, that it has substantially complied
with such request. Thereafter, the waiting period can be extended only by
court order.
A request will be made pursuant to the HSR Act for early
termination of the waiting period applicable to the Offer. There can be no
assurance, however, that the 15-day HSR Act waiting period will be terminated
early or will not be extended.
The FTC and the Antitrust Division frequently scrutinize the
legality under the antitrust laws of transactions such as the proposed
acquisition of Shares by Purchaser pursuant to the Offer. At any time before
or after the purchase of Shares pursuant to the Offer by Purchaser, the FTC or
the Antitrust Division could take such action under the antitrust laws as it
deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of Shares pursuant to the Offer or seeking the divestiture
of Shares purchased by Purchaser or the divestiture of substantial assets of
Parent, the Company or their respective subsidiaries. Private parties and
state attorneys general may also bring legal action under federal or state
antitrust laws under certain circumstances. Based upon an examination of
information available to Parent relating to the businesses in which Parent, the
Company and their respective subsidiaries are engaged, Parent and Purchaser
believe that neither the Offer nor the Merger will violate the antitrust laws.
Nevertheless, there can be no assurance what the result will be if a challenge
is made. See "The Tender Offer-- Certain Conditions of the Offer."
Federal Republic of Germany. The Company has advised Purchaser
that it has interests in certain properties in the Federal Republic of
Germany. The Act Against Restraint of Competition of the Federal Republic of
Germany (the "GWB Act") provides for notice of certain transactions deemed to
be mergers to be filed with the German Cartel Office. Under the GWB Act, the
Cartel Office may issue a prohibition order with respect to any direct or
substantial effect of the acquisition of Shares pursuant to the Offer if it
determines that a market-dominating position in the Federal Republic of
Germany would be created or strengthened as a result of the acquisition of
Shares pursuant to the Offer. The Cartel Office could order any appropriate
remedies designed to eliminate or restrict any anti-competitive effects in the
Federal Republic of Germany resulting from such a transaction. Based on
information currently available to it, Purchaser believes that it is required
to make a filing with the German Cartel Office pursuant to the GWB Act.
On December 15, 1997, Parent made the required filing under the
GWB Act with respect to the Offer with the German Cartel Office. The
statutory waiting period applicable to the purchase of Shares pursuant to the
Offer will expire at the close of business on January 15, 1997, unless the
German Cartel Office grants early termination of the waiting period or
requests an extension of the waiting period. If the German Cartel Office
requests an extension, the waiting period will expire at the close of business
on April 15, 1997, unless the German Cartel Office terminates the waiting
period prior to such date. Thereafter, the waiting period can be extended
only by court order.
Environmental
Under the New Jersey Industrial Site Recovery Act ("ISRA"),
with respect to its facilities in New Jersey, the Company will, on or prior to
the Effective Time, be required to make certain filings with the New Jersey
Department of Environmental Protection.
State Takeover Laws
As a Delaware corporation, the Company is subject to Section
203 ("Section 203") of the DGCL. Section 203 generally prohibits a
corporation which has voting stock traded on a national securities exchange
from engaging in certain business combinations, including a merger, sale of
substantial assets, loan or substantial issuance of stock, with an interested
stockholder (defined as the owner of 15% or more of the corporation's voting
stock), or an interested stockholder's affiliates or associates, for a
three-year period beginning on the date the interested stockholder acquires
15% or more of the outstanding voting stock of the corporation. The
restrictions on business combinations do not apply if prior to such date, the
board of directors gives prior approval to the business combination or the
transaction in which the 15% ownership level is exceeded. The restrictions of
Section 203 are inapplicable to the Offer and the Merger because (i) Parent
has owned its Shares for more than three years and (ii) the Company Board
approved the transaction which resulted in Parent becoming an interested
stockholder of the Company prior to the date of such transaction and has
approved this transaction.
A number of other states have adopted laws and regulations
applicable to attempts to acquire securities of corporations which are
incorporated, or have substantial assets, stockholders, principal executive
offices or principal places of business, or whose business operations
otherwise have substantial economic effects, in such states. In Edgar v. MITE
Corp., the Supreme Court of the United States invalidated on constitutional
grounds the Illinois Business Takeover Statute, which as a matter of state
securities law, make takeovers of corporations meeting certain requirements
more difficult. In 1987, however, in CTS Corp. v. Dynamics Corp. of America,
the Supreme Court held that the State of Indiana may, as a matter of corporate
law and, in particular, with respect to those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders. The state law before the Supreme
Court was by its terms applicable only to corporations that had a substantial
number of stockholders in the state and were incorporated there.
Purchaser has not currently complied with any such state
takeover statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer
or the Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, Purchaser might
be required to file certain information with, or to receive approvals from,
the relevant state authorities, and Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer or the Merger. See "The Tender Offer--Certain
Conditions of the Offer."
Certain Litigation
Parent, the Company and the Company's directors have been named
as defendants in five purported class actions, each filed on or about December
11, 1997, purportedly on behalf of the stockholders of the Company in the
Chancery Court of Delaware (the "Actions"). The complaints in the Actions
allege breach of fiduciary duty on the part of the defendants arising out of
execution of the Merger Agreement and seek declaratory and injunctive relief
barring defendants and their counsel, agents, employees and all persons acting
under, in concert with, or for them, from proceeding with, consummating, or
closing the Offer and the Merger, as well as damages in an unspecified amount.
Complaints in two of the five Actions have been served and copies of these
complaints are filed as exhibits to the Schedule 14D-1 and incorporated herein
by reference, and the foregoing summary of the Actions is qualified in its
entirety by reference thereto. Parent and the Company believe that all of the
Actions are without merit.
Fees and Expenses
Except as set forth below, Parent and Purchaser will not pay
any fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer.
Pursuant to the terms of Salomon Smith Barney's engagement,
Parent has agreed to pay Salomon Smith Barney for its services as financial
advisor and Dealer Manager in connection with the Offer and the Merger an
aggregate fee of $4,000,000. Parent has also agreed to reimburse Salomon
Smith Barney for its reasonable travel and other out-of-pocket expenses,
including those incurred in connection with Salomon Smith Barney's activities
as Dealer Manager and the fees and expenses of its legal counsel, and to
indemnify Salomon Smith Barney and certain related parties against certain
liabilities, including liabilities under the federal securities laws, arising
out of Salomon Smith Barney's engagement.
Parent and Purchaser have retained D.F. King to be the
Information Agent and The Bank of New York to be the Depositary in connection
with the Offer. The Information Agent may contact holders of Shares by mail,
telephone, telecopy, telegraph and personal interview and may request banks,
brokers, dealers and other nominee stockholders to forward materials relating
to the Offer to beneficial owners.
As compensation for acting as Information Agent in connection
with the Offer, D.F. King will be paid a fee of $7,500 and will also be
reimbursed for certain out-of-pocket expenses and may be indemnified against
certain liabilities and expenses in connection with the Offer, including
certain liabilities under the federal securities laws. Purchaser will pay the
Depositary reasonable and customary compensation for its services in
connection with the Offer, plus reimbursement for out-of-pocket expenses, and
will indemnify the Depositary against certain liabilities and expenses in
connection therewith, including certain liabilities under federal securities
laws. Brokers, dealers, commercial banks and trust companies will be
reimbursed by Purchaser for customary handling and mailing expenses incurred
by them in forwarding material to their customers.
The following is an estimate of fees and expenses to be
incurred in connection with the Offer:
<TABLE>
<S> <C>
Fees and Expenses to Be Paid by Parent:
Financial Advisor/Dealer Manager.................... $4,060,000
Legal............................................... 500,000
Printing............................................ 20,000
Advertising......................................... 125,000
Filing.............................................. 185,000
Depositary.......................................... 25,000
Information Agent (including mailing)............... 27,500
Financing........................................... 8,000,000
Miscellaneous....................................... 50,000
-----------
Total..................................... $12,992,500
===========
Fees and Expenses to Be Paid by the Company:
Financial Advisor to Special Committee.............. $ 4,500,000
Legal............................................... 400,000
Special Committee................................... 170,000
Miscellaneous....................................... 25,000
-----------
Total..................................... $ 5,095,000
===========
</TABLE>
Miscellaneous
The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. Purchaser is not aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent
Purchaser becomes aware of any state law that would limit the class of
offerees in the Offer, subject to the terms of the Merger Agreement, Purchaser
will amend the Offer and, depending on the timing of such amendment, if any,
will extend the Offer to provide adequate dissemination of such information to
holders of Shares prior to the expiration of the Offer. In any jurisdiction
the securities, blue sky or other laws of which require the Offer to be made
by a licensed broker or dealer, the Offer is being made on behalf of Purchaser
by the Dealer Manager or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser has filed with the Commission a Tender Offer
Statement on Schedule 14D-1 and a Transaction Statement on Schedule 13E-3,
pursuant to Rules 14d-1 and 13e-3, respectively, under the 1934 Act, together
with exhibits furnishing certain additional information with respect to the
Offer, and may file amendments thereto. In addition, the Company has filed
with the Commission a Solicitation/Recommendation Statement on Schedule 14D-9,
together with exhibits, pursuant to Rule 14d-9 under the 1934 Act, setting
forth the recommendations of the Company Board and the Special Committee with
respect to the Offer and the reasons for such recommendations and furnishing
certain additional related information. A copy of such documents, and any
amendments thereto, may be examined at, and copies may be obtained from the
Commission (but not the regional offices of the Commission) in the manner set
forth under "--Certain Information Concerning Parent and Purchaser" above.
December 17, 1997 MASCOTECH ACQUISITION, INC.
Manually signed facsimile copies of the Letter of Transmittal
will be accepted. The Letter of Transmittal, Share Certificates and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, commercial bank, trust company
or other nominee to the Depositary at its addresses set forth below.
<TABLE>
<S> <C> <C>
The Depositary for the Offer is:
The Bank of New York
By Facsimile
By Mail: (For Eligible Institutions Only): By Overnight Courier:
Tender & Exchange Department (215) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm Facsimile by Telephone Receive and Deliver Window
New York, New York 10286-1248 1-800-507-9357 New York, New York 10286
By Hand:
Tender & Exchange Department
101 Barclay Street
Receive and Deliver Window
New York, New York 10286
-------------------------
</TABLE>
Stockholders should contact the Information Agent, the Dealer
Manager or their broker, dealer, commercial bank or trust company for
assistance concerning the Offer. Additional copies of this Offer to Purchase,
the Letter of Transmittal and other related materials may also be obtained
from the Information Agent or the Dealer Manager.
<TABLE>
<S> <C> <C>
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Toll Free: (800) 290-6424
Banks and Brokers Call Collect:
(212) 269-5550
The Dealer Manager for the Offer is:
Salomon Smith Barney
388 Greenwich Street
New York, New York 10013
(212) 816-7406
SCHEDULES
AND
ANNEXES
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth (i) the name, current business
or residence address and present principal occupation or employment, (ii)
material occupations, positions, offices or employments and business addresses
thereof for the past five years and (iii) information as to beneficial
ownership of Shares of each director and executive officer of the Company.
Each of the Company's directors and officers is a citizen of the United
States. Except as otherwise indicated, the business address of each director
and executive officer of the Company is 315 East Eisenhower Parkway, Ann
Arbor, Michigan 48108. Except as otherwise indicated, each occupation set
forth opposite a person's name refers to employment with the Company. Other
than Mr. Manoogian, who beneficially owns approximately 4.4% of the
outstanding Shares, Mr. Campbell, who beneficially owns approximately 3.4% of
the outstanding Shares, and Mr. Stern, who beneficially owns approximately
1.2% of the outstanding Shares, no director or executive officer of the
Company beneficially owns more than 1% of the outstanding Shares. Directors
of the Company are indicated with an asterisk.
</TABLE>
<TABLE>
<CAPTION>
Beneficial
Name, Citizenship Present Principal Occupation or Employment; Material Positions Ownership of
and Current Business Address Held During the Past Five Years and Business Addresses Thereof Shares
---------------------------- -------------------------------------------------------------- ------------
<S> <C> <C>
*Herbert S. Amster................. Chairman, Industrial Technology Institute, a 22,500
Industrial Technology Institute manufacturing research organization.
2901 Hubbard
Ann Arbor, Michigan 48106
*Brian P. Campbell................. President. 1,407,727(1)
Peter C. DeChants.................. Vice President and Treasurer. 63,950(2)
*Eugene A. Gargaro, Jr............. Vice President and Secretary of Masco Corporation since 109,876(3)
1993. Until 1993, a member in the law firm of
Dykema Gossett PLLC, 400 Renaissance Center,
Detroit, Michigan 48243.
*Richard A. Manoogian.............. Chairman of the Board and Chief Executive Officer of 1,801,852(4)
Masco Corporation and of Parent and Chairman of the
Board of the Company. Director of First Chicago NBD
Corp. and MSX International, Inc.
William E. Meyers.................. Vice President - Controller. 75,096(5)
*John A. Morgan.................... Partner, Morgan Lewis Githens & Ahn, Inc., investment 8,000
Morgan Lewis Githens & Ahn, Inc. bankers. Director of Allied Digital Technologies
767 Fifth Avenue, 8th Floor Corp., Furnishings International Inc., Parent and the
New York, New York 10153 Company.
Douglas P. Roosa................... Vice President - Administration since 1996. Previously 6,320(6)
employed by Coopers & Lybrand L.L.P., 400
Renaissance Center, Detroit, Michigan 48243.
*Helmut F. Stern................... President, Arcanum Corporation, a private research and 510,000(7)
Arcanum Corporation development company.
P.O. Box 1482
Ann Arbor, Michigan 48106
</TABLE>
(1) Includes (a) the right to acquire 220,000 Shares upon exercise of stock
options, (b) 87,602 unvested restricted stock award Shares, (c) 7,000
Shares held by a trust for which Mr. Campbell serves as trustee and as to
which he disclaims beneficial ownership, (d) 224 Shares held by Mr.
Campbell's wife as custodian for Mr. Campbell's daughter and by Mr.
Campbell's daughter and (e) 26,065 Shares owned by a charitable foundation
for which Mr. Campbell serves as a director and as to which Mr. Campbell
disclaims beneficial ownership.
(2) Includes the right to acquire 24,000 Shares upon exercise of stock
options, and 22,000 unvested restricted stock award Shares.
(3) Includes (a) 40,192 Shares owned by charitable foundations for which Mr.
Gargaro serves as director, (b) 11,684 Shares held by trusts for which Mr.
Gargaro serves as a trustee and (c) 8,000 Shares held by Mr. Gargaro's
wife and children, as to all of which Mr. Gargaro disclaims beneficial
ownership.
(4) Includes 33,008 Shares owned by charitable foundations for which Mr.
Manoogian serves as a director and as to which he disclaims beneficial
ownership.
(5) Includes the right to acquire 15,189 Shares upon exercise of stock
options, and 24,465 unvested restricted stock award Shares.
(6) Includes 5,820 unvested restricted stock award Shares.
(7) Includes 10,000 Shares held by Mr. Stern's spouse.
SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
The following table sets forth (i) the name, current business
or residence address and present principal occupation or employment, (ii)
material occupations, positions, offices or employments and business addresses
thereof for the past five years and (iii) information as to beneficial
ownership of Shares of each director and executive officer of Parent and
Purchaser. Each of Parent's and Purchaser's directors and officers is a
citizen of the United States. Except as otherwise indicated, the business
address of each director and executive officer of Parent and Purchaser is
21001 Van Born Road, Taylor, Michigan 48180. Except as otherwise indicated,
each occupation set forth opposite a person's name refers to employment with
Parent. Other than Mr. Manoogian, who beneficially owns approximately 4.4% of
the outstanding Shares, no director or executive officer of Parent or
Purchaser beneficially owns more than 1% of the outstanding Shares.
Directors of Parent are indicated with an asterisk.
<TABLE>
<CAPTION>
Beneficial
Name, Citizenship Present Principal Occupation or Employment; Material Positions Ownership of
and Current Business Address Held During the Past Five Years and Business Addresses Thereof Shares
---------------------------- -------------------------------------------------------------- ------------
<S> <C> <C>
*Peter A. Dow........................ Private investor. Until 1993, President, Chief 10,000(1)
191 Ridge Road Operating Officer and Chairman of the Executive
Grosse Pointe Farms, Committee of Campbell-Ewald, advertising firm,
Michigan 48236 30400 Van Dyke, Warren, Michigan 48093. From
1993-95, Vice Chairman of Campbell-Ewald.
*Roger T. Fridholm................... President of St. Clair Group, Inc., a private investment 4(2)
St. Clair Group, Inc. company.
15840 Lakeview
Grosse Pointe, Michigan 48230
Lee M. Gardner....................... President and Chief Operating Officer. President and 0
Director of Purchaser.
*Eugene A. Gargaro, Jr............... Vice President and Secretary of Masco Corporation 109,876(3)
since 1993. Until 1993, a member in the law firm of
Dykema Gossett PLLC, 400 Renaissance Center,
Detroit, Michigan 48243.
*William K. Howenstein............... Executive Vice President of Thyssen Inc., N.A., and 0
Thyssen Inc., N.A. President of TMX Division of Thyssen Inc., N.A.
400 Renaissance Center, Suite 3900 since March 1997. Until March 1997, President of
Detroit, Michigan 48243 Copper and Brass Sales, Inc.
*Richard A. Manoogian................ Chairman of the Board and Chief Executive Officer of 1,801,852(4)
Masco Corporation and of Parent and Chairman of
the Board of the Company. Director of First Chicago
NBD Corp. and MSX International, Inc.
*John A. Morgan...................... Partner, Morgan Lewis Githens & Ahn, Inc., investment 8,000
Morgan Lewis Githens & Ahn, Inc. bankers. Director of Allied Digital Technologies
767 Fifth Avenue, 8th Floor Corp., Furnishings International Inc., Parent and the
New York, New York 10153 Company.
Timothy Wadhams...................... Vice President - Controller and Treasurer. Vice 45,484
President - Treasurer and Director of Purchaser.
</TABLE>
(1) Includes 3,000 Shares held by a family limited partnership in which Mr.
Dow holds a 10% interest.
(2) All Shares attributed to Mr. Fridholm are owned by his wife.
(3) Includes (a) 40,192 Shares owned by a charitable foundation for which Mr.
Gargaro serves as director, (b) 11,684 Shares held by trusts for which Mr.
Gargaro serves as a trustee and (c) 8,000 Shares held by Mr. Gargaro's
wife and children, as to all of which Mr. Gargaro disclaims beneficial
ownership.
(4) Includes 33,008 Shares owned by charitable foundations for which Mr.
Manoogian serves as a director and as to which he disclaims beneficial
ownership.
SCHEDULE III
DIRECTORS AND EXECUTIVE OFFICERS OF
MASCO CORPORATION
The following table sets forth (i) the name, current business
or residence address and present principal occupation or employment, (ii)
material occupations, positions, offices or employments and business addresses
thereof for the past five years and (iii) information as to beneficial
ownership of Shares of each director and executive officer of Masco
Corporation. Each of Masco Corporation's directors and officers is a citizen
of the United States. Except as otherwise indicated, the business address of
each director and executive officer of Masco Corporation is 21001 Van Born
Road, Taylor, Michigan 48180. Except as otherwise indicated, each occupation
set forth opposite a person's name refers to employment with Masco
Corporation. Other than Mr. Manoogian, who beneficially owns approximately
4.4% of the outstanding Shares, no director or executive officer of Masco
Corporation beneficially owns more than 1% of the outstanding Shares.
Directors of Masco Corporation are indicated with an asterisk.
<TABLE>
<CAPTION>
Beneficial
Name, Citizenship Present Principal Occupation or Employment; Material Positions Ownership of
and Current Business Address Held During the Past Five Years and Business Addresses Thereof Shares
---------------------------- -------------------------------------------------------------- ------------
<S> <C> <C>
Dr. Lillian Bauder................... Vice President - Corporate Affairs since 1996. 8
Previously, President and Chief Executive Officer of
Cranbrook Educational Community, 1221 N.
Woodward Avenue, Bloomfield Hills, Michigan
48304.
David A. Doran....................... Vice President - Taxes. 57,000
Daniel R. Foley...................... Vice President - Human Resources since 1996. 0
Previously, Vice President - Human Resources of
Parent from 1994 to 1996; President of Executive
Business Partners, Inc., 3399 Robinwood Drive, Ann
Arbor, Michigan 48103, from 1992 to 1994. From
1991 to 1992, Vice President - Administration and
General Counsel to Domino's Pizza, Inc., 24 Frank
Lloyd Wright Drive, Ann Arbor, Michigan 48106.
Eugene A. Gargaro.................... Vice President and Secretary since 1993. Formerly, a 109,876(1)
member of the law firm, Dykema Gossett PLLC, 400
Renaissance Center, Detroit, Michigan 48243.
Frank M. Hennessey................... Executive Vice President since 1995. Previously Vice 0
President - Strategic Planning.
*Joseph L. Hudson, Jr................ Trustee of the Hudson-Webber Foundation. Chairman 0
Hudson-Webber Foundation of Hudson-Webber Foundation until 1996. Director
333 West Fort, Suite 1310 of NBD Bank.
Detroit, Michigan 48226
*Verne G. Istock..................... Chairman, President and Chief Executive Officer of 0
First Chicago NBD Corporation First Chicago NBD Corporation since 1994. Vice
One First National Plaza Chairman and director of NBD Bank and its parent,
Chicago, Illinois 60670 NBD Bancorp, from 1985 until 1994.
Raymond F. Kennedy................... President and Chief Operating Officer. 10,000
*Mary Ann Krey....................... Chairman and Chief Executive Officer of Krey 0
Krey Distributing Company Distributing Company, beverage distribution firm.
150 Turner Boulevard
St. Peters, Missouri 63376
John R. Leekley...................... Senior Vice President and General Counsel. 14,650(2)
*Wayne B. Lyon....................... Chairman, President and Chief Executive Officer of 102,668(3)
Lifestyle Furnishings LifeStyle Furnishings International Ltd. (since 1996).
International Ltd. President and Chief Operating Officer of Masco
1300 National Highway Corporation from 1985 until 1996. Director of
Thomasville, Comerica Incorporated, Furnishings International
North Carolina 27360 Inc., Payless Cashways, Inc. and Emco Limited.
*Richard A. Manoogian................ Chairman of the Board and Chief Executive Officer of 1,801,852(4)
Masco Corporation and of Parent and Chairman of
the Board of the Company. Director of First Chicago
NBD Corp. and MSX International, Inc.
*John A. Morgan...................... Partner, Morgan Lewis Githens & Ahn, Inc., investment 8,000
Morgan Lewis Githens & Ahn, Inc. bankers. Director of Allied Digital Technologies
767 Fifth Avenue, 8th Floor Corp., Furnishings International Inc., Parent and the
New York, New York 10153 Company.
Richard G. Mosteller................. Senior Vice President - Finance. 0
Robert B. Rosowski................... Vice President - Controller and Treasurer. 20,510
*Arman Simone........................ Retired President of Simone Corporation, commercial 2,880
8511 Rogues Road builders and developers.
Warrenton, Virginia 22186
*Peter W. Stroh...................... Chairman of the Board and Chief Executive Officer of 0
The Stroh Companies, Inc. The Stroh Companies, Inc.
100 River Place
Detroit, Michigan 48207
Samuel Valenti, III.................. Vice President - Investments. 19,200
</TABLE>
- ---------------
(1) Includes (a) 40,192 Shares owned by charitable foundations for which Mr.
Gargaro serves as director, (b) 11,684 Shares held by trusts for which Mr.
Gargaro serves as a trustee and (c) 8,000 Shares held by Mr. Gargaro's
wife and children, as to all of which Mr. Gargaro disclaims beneficial
ownership.
(2) All Shares attributed to Mr. Leekley are held by a trust for which Mr.
Leekley serves as a trustee. Mr. Leekley disclaims beneficial ownership
of all Shares.
(3) Includes (a) 7,184 Shares owned by a foundation for which Mr. Lyon serves
as a director, (b) 3,000 Shares held by trusts for which Mr. Lyon
serves as a trustee, (c) 800 Shares owned by a trust for the benefit of
Mrs. Lyon and (d) 11,684 Shares owned by a trust of which Mrs. Lyon
is a trustee, as to all of which Mr. Lyon disclaims beneficial
ownership.
(4) Includes 33,008 Shares owned by charitable foundations for which Mr.
Manoogian serves as a director and as to which he disclaims beneficial
ownership.
ANNEX A
AGREEMENT AND PLAN OF MERGER
dated as of
December 10, 1997
as amended by Amendment No. 1 dated as of December 15, 1997
among
TRIMAS CORPORATION,
MASCOTECH, INC.
and
MASCOTECH ACQUISITION, INC.
TABLE OF CONTENTS
Page
----
ARTICLE 1
The Offer
Section 1.01. The Offer.................................................A - 1
Section 1.02. Company Action............................................A - 2
Section 1.03. Directors.................................................A - 3
ARTICLE 2
The Merger
Section 2.01. The Merger................................................A - 3
Section 2.02. Conversion of Shares......................................A - 4
Section 2.03. Surrender and Payment.....................................A - 4
Section 2.04. Dissenting Shares.........................................A - 5
Section 2.05. Stock Options and Restricted Stock Awards.................A - 5
Section 2.06. Withholding Rights........................................A - 6
Section 2.07. Changes in Company Shares.................................A - 6
ARTICLE 3
The Surviving Corporation
Section 3.01. Certificate of Incorporation..............................A - 7
Section 3.02. Bylaws....................................................A - 7
Section 3.03. Directors and Officers....................................A - 7
ARTICLE 4
Representations and Warranties of the Company
Section 4.01. Corporate Existence and Power.............................A - 7
Section 4.02. Corporate Authorization...................................A - 7
Section 4.03. Governmental Authorization................................A - 8
Section 4.04. Non-Contravention.........................................A - 8
Section 4.05. Capitalization............................................A - 8
Section 4.06. Subsidiaries..............................................A - 8
Section 4.07. SEC Filings...............................................A - 9
Section 4.08. Financial Statements......................................A - 9
Section 4.09. Disclosure Documents......................................A - 9
Section 4.10. Absence of Certain Changes...............................A - 10
Section 4.11. No Undisclosed Material Liabilities......................A - 11
Section 4.12. Compliance with Laws and Court Orders....................A - 11
Section 4.13. Brokers' Fees............................................A - 11
ARTICLE 5
Representations and Warranties of Buyer
Section 5.01. Corporate Existence and Power; Ownership of Company
Stock....................................................A - 12
Section 5.02. Corporate Authorization..................................A - 12
Section 5.03. Governmental Authorization...............................A - 12
Section 5.04. Non-Contravention........................................A - 12
Section 5.05. Disclosure Documents.....................................A - 13
Section 5.06. Brokers' Fees............................................A - 13
Section 5.07. Financing................................................A - 13
ARTICLE 6
Covenants of the Company
Section 6.01. Conduct of the Company...................................A - 13
Section 6.02. Stockholder Meeting; Proxy Material......................A - 14
Section 6.03. Access to Information....................................A - 14
Section 6.04. No Solicitation..........................................A - 15
Section 6.05. Notices of Certain Events................................A - 15
ARTICLE 7
Covenants of Buyer
Section 7.01. Obligations of Merger Sub................................A - 16
Section 7.02. Voting of Shares.........................................A - 16
Section 7.03. Indemnification and Insurance............................A - 16
Section 7.04. SEC Filings..............................................A - 16
ARTICLE 8
Covenants of the Parties
Section 8.01. Best Efforts.............................................A - 17
Section 8.02. Certain Filings..........................................A - 17
Section 8.03. Public Announcements.....................................A - 17
Section 8.04. Further Assurances.......................................A - 17
Section 8.05. Merger Without Meeting of Stockholders...................A - 17
ARTICLE 9
Conditions to the Merger
Section 9.01. Conditions to the Obligations of Each Party..............A - 17
ARTICLE 10
Termination
Section 10.01. Termination.............................................A - 18
Section 10.02. Effect of Termination...................................A - 19
Section 10.03. Certain Fees............................................A - 19
ARTICLE 11
Miscellaneous
Section 11.01. Notices.................................................A - 20
Section 11.02. Survival................................................A - 21
Section 11.03. Amendments; No Waivers..................................A - 21
Section 11.04. Successors and Assigns..................................A - 21
Section 11.05. Parties in Interest.....................................A - 21
Section 11.06. Governing Law...........................................A - 21
Section 11.07. Jurisdiction............................................A - 22
Section 11.08. Counterparts; Effectiveness.............................A - 22
Section 11.09. Entire Agreement........................................A - 22
Section 11.10. Captions................................................A - 22
Section 11.11. Severability............................................A - 22
Section 11.12. Definitions.............................................A - 22
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 10, 1997 as
amended by Amendment No. 1 dated as of December 15, 1997 among TriMas
Corporation, a Delaware corporation (the "Company"), MascoTech, Inc., a
Delaware corporation ("Buyer"), and MascoTech Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Buyer ("Merger Sub").
WHEREAS, as of the date hereof Buyer and its subsidiaries own
an aggregate of 15,191,109 of the outstanding shares of common stock, $.01 par
value per share (the "Shares"), of the Company;
WHEREAS, Buyer and Merger Sub wish to consummate the
transactions contemplated by this Agreement pursuant to which, subject to the
terms and conditions set forth in this Agreement, Merger Sub will merge with
and into the Company and the Company will become a wholly owned subsidiary of
Buyer;
WHEREAS, the Board of Directors of the Company (at a meeting
duly called and held, and acting on the unanimous recommendation of the
Oversight Committee of the Board of Directors of the Company comprised
entirely of non-management independent directors (the "Company Special
Committee")), has unanimously approved this Agreement and the transactions
contemplated hereby and has unanimously determined that each of the Offer and
the Merger (as defined herein) are fair to, and in the best interests of, the
holders of Shares and recommended the acceptance of the Offer and approval and
adoption of this Agreement by the stockholders of the Company; and
WHEREAS, the Board of Directors of Buyer (at a meeting duly
called and held, and acting on the unanimous recommendation of a special
committee of the Board of Directors of Buyer comprised entirely of
non-management independent directors (the "Buyer Oversight Committee")), has
unanimously approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE 1
The Offer
Section 1.1. The Offer. (a) Provided that nothing shall
have occurred that would result in a failure to satisfy any of the
conditions set forth in Annex I hereto, Merger Sub shall, as promptly as
practicable after the date hereof, but in no event later than five business
days following the public announcement of the terms of this Agreement,
commence an offer (the "Offer") to purchase any and all of the outstanding
Shares at a price of $34.50 per Share, net to the seller in cash. The
Offer shall be subject to the condition that there shall be validly
tendered (and not withdrawn) in accordance with the terms of the Offer,
prior to the expiration date of the Offer, that number of Shares (not
including Shares tendered by Buyer, its subsidiaries or its Chief Executive
Officer or by Masco Corporation) which represents at least a majority of
the outstanding Shares (excluding for purposes of this calculation all
Shares owned by Buyer, its subsidiaries and its Chief Executive Officer or
by Masco Corporation and all Shares that may not be tendered pursuant to
the Offer because they are subject to restrictions under the Company Stock
Plans, as defined in Section 2.05(b) herein) (the "Minimum Condition") and
to the other conditions set forth in Annex I hereto. Notwithstanding the
foregoing, Merger Sub expressly reserves the right to waive any of the
conditions to the Offer and to make any change in the terms or conditions
of the Offer; provided that without the prior written consent of the
Company, Merger Sub shall not waive the Minimum Condition and shall not
make any change in the Offer which changes the form of consideration to be
paid or decreases the price per Share, except as provided in Section 2.07
herein, or the number of Shares sought in the Offer or which imposes
conditions to the Offer in addition to those set forth in Annex I. Merger
Sub shall have the right to extend the Offer (for not more than an
aggregate of five business days (as defined in Rule 14d-1 under the
Securities Exchange Act of 1934 (the "1934 Act"))) from time to time
without the consent of the Company. In addition to the rights set forth in
the two preceding sentences, if on any scheduled expiration date of the
Offer all conditions to the Offer shall not have been satisfied or waived,
Merger Sub shall extend the Offer from time to time until such conditions
have been satisfied or waived; provided that Merger Sub shall have no
obligation to extend the Offer beyond the date 60 days after commencement
of the Offer. If on any scheduled expiration date of the Offer all
conditions to the Offer (including the Minimum Condition) shall have been
satisfied but the sum of (i) the number of Shares tendered (and not
withdrawn) pursuant to the Offer plus (ii) the number of Shares held by
Buyer, its subsidiaries and its Chief Executive Officer and by Masco
Corporation that have not been tendered pursuant to the Offer represent
less than 90% of the outstanding Shares, on a fully-diluted basis
(excluding for this purpose any right to acquire Shares that may not be
exercised within 60 days from the applicable date), Merger Sub shall also
have the right to extend the Offer from time to time without the consent of
the Company (for not more than an aggregate of 10 business days) in order
to permit Merger Sub to solicit the tender of additional Shares pursuant to
the Offer. Subject to the foregoing and to the terms and conditions of the
Offer, Merger Sub agrees to pay, as promptly as reasonably practicable
after the expiration of the Offer, for all Shares properly tendered and not
withdrawn pursuant to the Offer that Merger Sub is obligated to purchase.
(b) As soon as practicable on the date of commencement of
the Offer, Merger Sub shall file with the Securities and Exchange
Commission (the "SEC") a Rule 13E-3 Transaction Statement on Schedule 13E-3
(the "Schedule 13E-3") and a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer. The Schedule 13E-3 and the
Schedule 14D-1, together with the related offer to purchase and the form of
the related letter of transmittal, are hereinafter collectively referred to
as the "Offer Documents". Merger Sub and the Company each agrees promptly
to correct any information provided by it for use in the Offer Documents if
and to the extent that it shall have become false or misleading in any
material respect. Merger Sub 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. The Company and its
counsel shall be given an opportunity to review and comment on the Schedule
14D-1 and the Schedule 13E-3 prior to their being filed with the SEC.
Section 1.2. Company Action. (a) The Company hereby consents
to the Offer and represents that its Board of Directors, at a meeting duly
called and held and acting on the unanimous recommendation of the Company
Special Committee, has (i) unanimously determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair
to and in the best interest of the Company's stockholders, (ii) unanimously
approved this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, and (iii) unanimously resolved to recommend acceptance
of the Offer and approval and adoption of this Agreement and the Merger by its
stockholders. The Company further represents that BT Wolfensohn has delivered
to the Company Special Committee its written opinion that the consideration to
be paid in the Offer and the Merger is fair to the holders of Shares (other
than Buyer, its Chief Executive Officer and Masco Corporation) from a
financial point of view. The Company has been advised that all of its
directors and executive officers intend to tender or cause the tender of
substantially all of their Shares pursuant to the Offer. The Company will
promptly furnish Buyer with a list of its stockholders, mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, in each case true and correct as of the most recent
practicable date, and will provide to Buyer such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Buyer may
reasonably request in connection with the Offer. Except for such steps as are
reasonably necessary to disseminate the Offer Documents and any other
documents as are reasonably necessary in connection with the Offer and the
other transactions contemplated by this Agreement, Buyer and Merger Sub shall
hold in confidence the information contained in any of such lists, labels and
files and the additional information referred to in the preceding sentence,
will use such information only in connection with the Offer and the Merger
and, if this Agreement is terminated, will, upon request, deliver to the
Company all such written information and any copies or extracts thereof then
in its possession; provided that it is expressly understood that this sentence
shall not limit any rights that Buyer or its affiliates may have under
applicable law to obtain and use a list of stockholders of the Company or any
other information pertaining to the Company.
(b) As soon as practicable on the day that the Offer is
commenced the Company will file with the SEC the Schedule 14D-9 and the
Schedule 13E-3 which shall reflect the recommendations of the Company's
Board of Directors referred to above. The Company and Buyer each agree
promptly to correct any information provided by it for use in the Schedule
14D-9 and the Schedule 13E-3 if and to the extent that it shall have become
false or misleading in any material respect. The Company agrees to take
all steps necessary to cause the Schedule 14D-9 and the Schedule 13E-3, as
the case may be, 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. Buyer and its counsel
shall be given an opportunity to review and comment on the Schedule 14D-9
and the Schedule 13E-3 prior to its being filed with the SEC.
Section 1.3. Directors. Effective upon the acceptance for
payment by Buyer of any Shares pursuant to the Offer, Buyer shall be entitled
to designate one additional director to serve on the Company's Board of
Directors (which shall result in Buyer's designees representing a majority of
the Company's Board of Directors). In furtherance thereof, the Company shall
take all action necessary to cause Buyer's designee to be appointed to the
Company's Board of Directors, including, without limitation, by increasing the
number of directors and, if necessary, seeking and accepting the resignation
of an incumbent director and will use its commercially reasonable best efforts
to cause such director to be approved as a director of the Company by at least
two-thirds of the directors of the Company. Effective upon such acceptance
for payment, the Company will use its commercially reasonable best efforts to
cause persons designated by Buyer to constitute a majority of (A) each
committee of such Board (other than the Company Special Committee or any
committee of such Board established to take action under this Agreement), (B)
each board of directors of each subsidiary of the Company and (C) each
committee of each such board (in each case to the extent of the Company's
ability to elect such persons). Notwithstanding the foregoing, prior to the
Effective Time, the Company shall use its commercially reasonable best efforts
to ensure that all of the members of the Board of Directors of the Company and
such boards and committees as of the date hereof who are not employees of the
Company shall remain members of the Board of Directors and such boards and
committees.
ARTICLE 2
The Merger
Section 2.1. The Merger. (a) At the Effective Time, Merger
Sub shall be merged (the "Merger") with and into the Company in accordance
with the General Corporation Law of the State of Delaware (the "Delaware
Law"), whereupon the separate existence of Merger Sub shall cease, and the
Company shall be the surviving corporation (the "Surviving Corporation").
(b) The closing (the "Closing") of the Merger shall take
place at the offices of Buyer in Taylor, Michigan as promptly as practicable
after all conditions to the Merger set forth herein have been satisfied or, to
the extent permitted hereunder, waived.
(c) As soon as practicable following the Closing, the
Company and Merger Sub will cause a certificate of merger (the "Certificate
of Merger") to be executed and filed with the Secretary of State of the
State of Delaware as provided in Section 251 of the Delaware Law (or, if
permitted, Section 253 of the Delaware Law) and will make all other filings
or recordings required by the Delaware Law in connection with the Merger.
The Merger shall become effective on the date and at the time on which the
Certificate of Merger has been duly filed with the Secretary of State of
the State of Delaware (or at such later time as may be agreed in writing by
the parties hereto and specified in the Certificate of Merger), and such
time is hereinafter referred to as the "Effective Time".
(d) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, assets, powers, privileges and
franchises and be subject to all of the obligations, liabilities,
restrictions and disabilities of the Company and Merger Sub, all as
provided under the Delaware Law. Without limiting the foregoing, the
Surviving Corporation hereby agrees at the Effective Time to assume all
obligations of the Company under each of the employment agreements approved
by the board of directors of the Company on December 10, 1997 as previously
disclosed to Buyer.
Section 2.2. Conversion of Shares. At the Effective Time:
(a) each Share outstanding immediately prior to the
Effective Time shall, except as otherwise provided in Section 2.02(b) or as
provided in Section 2.4 with respect to Shares as to which appraisal rights
have been exercised, be converted into the right to receive $34.50 in cash,
without interest (the "Merger Consideration");
(b) each Share held by the Company as treasury stock or
owned by Buyer or any subsidiary of Buyer immediately prior to the
Effective Time shall be canceled, and no payment shall be made with respect
thereto; and
(c) each share of common stock of Merger Sub outstanding
immediately prior to the Effective Time shall be converted into and become
one share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
Section 2.3. Surrender and Payment. (a) Prior to the
Effective Time, Buyer shall appoint an agent (the "Exchange Agent") reasonably
acceptable to the Company for the purpose of exchanging certificates
representing Shares for the Merger Consideration. Buyer will make available
to the Exchange Agent, as needed, the Merger Consideration to be paid in
respect of the Shares. For purposes of determining the Merger Consideration
to be made available, Buyer shall assume that no holders of Shares will
perfect rights to appraisal of their Shares. Promptly after the Effective
Time, Buyer will send, or will cause the Exchange Agent to send, to each
holder of Shares at the Effective Time a letter of transmittal for use in such
exchange (which shall specify that the delivery shall be effected, and risk of
loss and title shall pass, only upon proper delivery of the certificates
representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to the Exchange
Agent of a certificate or certificates representing such Shares, together
with a properly completed letter of transmittal covering such Shares, will
be entitled to receive the Merger Consideration payable in respect of such
Shares. Until so surrendered, each such certificate shall, after the
Effective Time, represent for all purposes, only the right to receive such
Merger Consideration.
(c) If any portion of the Merger Consideration is to be
paid to a person other than the registered holder of the Shares represented
by the certificate or certificates surrendered in exchange therefor, it
shall be a condition to such payment that the certificate or certificates
so surrendered shall be properly endorsed or otherwise be in proper form
for transfer and that the person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result of such
payment to a person other than the registered holder of such Shares or
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time,
certificates representing Shares are presented to the Surviving
Corporation, they shall be canceled and exchanged for the consideration
provided for, and in accordance with the procedures set forth, in this
Article 2.
(e) Any portion of the Merger Consideration made available
to the Exchange Agent pursuant to this Section 2.3 that remains unclaimed
by the holders of Shares six months after the Effective Time shall be
returned to Buyer, upon demand, and any such holders who have not exchanged
their Shares for the Merger Consideration in accordance with this Section
prior to that time shall thereafter look only to Buyer for payment of the
Merger Consideration in respect of those Shares. Notwithstanding the
foregoing, Buyer shall not be liable to any holder of Shares for any amount
paid to a public official pursuant to applicable abandoned property laws.
Any stockholders of the Company who have not theretofore complied with
Section 2.03(b) shall thereafter look only to the Surviving Corporation for
payment of any claim they may have to receive the Merger Consideration, but
shall have no greater rights against the Surviving Corporation than may be
accorded to general creditors of the Surviving Corporation under the
Delaware Law.
(f) Any portion of the Merger Consideration made available
to the Exchange Agent pursuant to this Section 2.3 to pay for Shares for
which appraisal rights have been perfected shall be returned to Buyer, upon
demand.
Section 2.4. Dissenting Shares. Notwithstanding Section 2.2,
Shares outstanding immediately prior to the Effective Time and held by a
holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares in accordance with the
Delaware Law shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses its right to appraisal. If after the Effective Time such holder fails
to perfect or withdraws or loses its right to appraisal, such Shares shall be
treated as if they had been converted as of the Effective Time into a right to
receive the Merger Consideration. The Company shall give Buyer prompt notice
of any demands received by the Company for appraisal of Shares, and Buyer
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Buyer, make any payment with respect to, or settle or offer to
settle, any such demands.
Section 2.5. Stock Options and Restricted Stock Awards. (a)
Immediately prior to the Effective Time, each option to purchase Shares
outstanding under any employee stock option or compensation plan or
arrangement of the Company, whether or not exercisable, and whether or not
vested, shall be canceled, and in consideration thereof, the Surviving
Corporation shall pay to the holder of each such option promptly after the
Effective Time an amount in cash determined by multiplying (i) the excess, if
any, of the amount of the Merger Consideration over the applicable per Share
exercise price of such option by (ii) the number of Shares such holder could
have purchased (assuming full vesting of all options) had such holder
exercised such option in full immediately prior to the Effective Time.
(b) At the Effective Time, the holder of each Share subject
to an Award of Restricted Stock under the Company's 1995 Long Term Stock
Incentive Plan or 1988 Restricted Stock Incentive Plan (the "Company Stock
Plans"), or any predecessor plan thereto (such Plans and any predecessor
plans being hereinafter referred to as a "Plan") as to which the Restricted
Period has not lapsed on or prior to the Effective Time (the "Restricted
Shares") shall be entitled to receive in exchange for each such Share and
in lieu of the consideration referred to in Section 2.02, the number of
Buyer Shares (the "Buyer Restricted Shares") equal to the quotient obtained
by dividing (i) the Merger Consideration by (ii) the average of the closing
sale prices of a Buyer Share as reported on the New York Stock Exchange
(the "NYSE") Composite Tape on each of the last twenty trading days ending
on the trading day immediately preceding the date on which the Effective
Time occurs, provided that, if the aggregate number of Buyer Restricted
Shares to be issued under any applicable award is not evenly divisible by
the number of dates on which restrictions on such award are scheduled to
lapse, the aggregate number of Buyer Restricted Shares to be issued under
such award shall be rounded up to the nearest whole number of Shares that
is evenly divisible by the number of dates on which restrictions on the
applicable award are scheduled to lapse. Such Buyer Restricted Shares
shall be subject to all the terms and conditions, including, without
limitation, the remaining Restricted Period, as were applicable to the
original Restricted Shares pursuant to the applicable Award Agreement under
the respective Plan. Capitalized terms used in this paragraph and not
otherwise defined in this Agreement shall have the same meanings assigned
to such terms in the applicable Plan.
(c) Immediately prior to the Effective Time, each "Phantom
Share" subject to an Award of Phantom Shares under a Phantom Share Award
Agreement with the Company as to which the Restricted Period has not lapsed
on or prior to the Effective Time shall be canceled, and the Company (or
one or more of its subsidiaries) shall issue in exchange for each such
Phantom Share an award of phantom shares of Buyer (the "Buyer Phantom
Shares") equal to the quotient obtained by dividing (i) the Merger
Consideration by (ii) the average of the closing sale prices of a Buyer
Share as reported on the NYSE Composite Tape on each of the last twenty
trading days ending on the trading day immediately preceding the date on
which the Effective Time occurs, provided that, if the aggregate number of
Buyer Phantom Shares to be issued under any applicable award is not evenly
divisible by the number of dates on which restrictions on such award are
scheduled to lapse, the aggregate number of Buyer Phantom Shares to be
issued under such award shall be rounded up to the nearest whole number of
Shares that is evenly divisible by the number of dates on which
restrictions on the applicable award are scheduled to lapse. Such Buyer
Phantom Shares shall be subject to all the terms and conditions, including,
without limitation, the remaining Restricted Period, as were applicable to
the original Award of Phantom Shares pursuant to the applicable Phantom
Share Award Agreement. Capitalized terms used in this paragraph and not
otherwise defined in this Agreement shall have the same meanings assigned
to such terms in the applicable Phantom Share Award Agreement."
(d) Prior to the Effective Time, each of the Company and
Buyer will use its commercially reasonable best efforts to obtain such
consents, if any, as may be necessary to give effect to the transactions
contemplated by this Section. In addition, prior to the Effective Time,
the Company will make any amendments to the terms of such stock option,
restricted stock or other compensation plans or arrangements that may be
necessary to give effect to the transactions contemplated by this Section
to the extent permitted under applicable law and without stockholder or
other third party approval. Except as set forth in Section 2.5 of the
Company's Disclosure Schedule, the Company represents that neither the
execution of this Agreement nor the consummation of the transactions
contemplated hereby will cause the acceleration of vesting or lapsing of
restrictions with respect to any restricted stock award or phantom share
award or other benefit under any restricted stock plan of the Company other
than employee stock options that are being treated as provided in Section
2.05(a) above. Except as contemplated by this Section 2.05, the Company
will not, after the date hereof, without the written consent of Buyer,
amend any outstanding options to purchase Shares (including accelerating
the vesting or exercisability of such options) or the terms of grant of any
Restricted Shares (including accelerating the schedule for the lapsing of
restrictions applicable thereto). Notwithstanding any other provision of
this Section, any payment of money or other applicable consideration
provided for herein may be withheld in respect of any stock award until
necessary consents are obtained.
Section 2.6. Withholding Rights. The Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable to any person pursuant to this Article such amounts as it is required
to deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. To the extent that
amounts are so withheld by the Surviving Corporation, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was
made by the Surviving Corporation.
Section 2.7. Changes in Company Shares. If, subsequent to the
date of this Agreement but prior to the Effective Time, the Company changes
the number of Shares outstanding as a result of any stock split, stock
dividend, recapitalization or similar transaction, then appropriate
adjustments shall be made in all amounts payable pursuant to this Agreement,
including without limitation the cash consideration payable pursuant to the
Offer, the Merger Consideration and any amounts or numbers of units payable
pursuant to Section 2.05. In addition, if, subsequent to the date of this
Agreement but prior to the Effective Time, Buyer changes the number of
outstanding Buyer Shares as a result of any stock split, stock dividend,
recapitalization or similar transaction, then appropriate adjustments shall be
made in all amounts or numbers of units payable pursuant to Section 2.05.
ARTICLE 3
The Surviving Corporation
Section 3.1. Certificate of Incorporation. The certificate of
incorporation of the Company in effect immediately prior to the Effective Time
shall be the certificate of incorporation of the Surviving Corporation from
and after the Effective Time until amended in accordance with applicable law.
Section 3.2. Bylaws. The bylaws of Merger Sub in effect at
the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law.
Section 3.3. Directors and Officers. (a) From and after the
Effective Time, the board of directors of the Surviving Corporation shall
consist of Eugene A. Gargaro, Jr., Richard A. Manoogian, John A. Morgan and
the additional director appointed and approved as provided in Section 1.03
(or, if no such additional director shall have been appointed and approved,
such other director of the Company designated by Buyer who shall have been
approved as a director of the Company by at least two-thirds of the directors
of the Company prior to the Effective Time). Such directors shall serve until
successors are duly elected or appointed and qualified in accordance with
applicable law.
(b) From and after the Effective Time, the officers of
Merger Sub shall be the officers of the Surviving Corporation. Such
officers shall serve until successors are duly elected or appointed and
qualified in accordance with applicable law.
ARTICLE 4
Representations and Warranties of the Company
The Company represents and warrants to Buyer that, except as
disclosed in writing to Buyer in the Company's Disclosure Schedule or in the
Company's SEC Filings, as defined in Section 4.07(a) below:
Section 4.1. Corporate Existence and Power. The Company (i)
is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and (ii) has all requisite corporate
powers and authority to own, lease and operate its properties and to conduct
its business as now being conducted, except where the failure to have such
power and authority would not, individually or in the aggregate, have a
reasonable probability of having a material adverse effect on the Company.
The Company is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a reasonable probability of having a
material adverse effect on the Company.
Section 4.2. Corporate Authorization. The execution, delivery
and performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby are within the Company's
corporate powers and, except for any required approval by the Company's
stockholders in connection with the consummation of the Merger, have been duly
authorized by all necessary corporate action. This Agreement constitutes a
valid and binding agreement of the Company.
Section 4.3. Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby require no action by or
in respect of, or filing with, any governmental body, agency, official or
authority other than (a) the filing of the Certificate of Merger in accordance
with the Delaware Law; (b) compliance with any applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"); (c)
compliance with any applicable requirements of the 1934 Act; (d) compliance
with any other applicable securities or takeover laws; (e) filings and
approvals under laws of jurisdictions outside of the United States; and (f)
compliance with any other filings, approvals or authorizations which, if not
obtained, would not, individually or in the aggregate, have a reasonable
probability of having a material adverse effect on the Company or materially
impair the ability of the Company to consummate the transactions contemplated
by this Agreement.
Section 4.4. Non-Contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby do not and will not (a)
contravene or conflict with the certificate of incorporation or bylaws of the
Company, (b) assuming compliance with the matters referred to in Section 4.3,
and further assuming the accuracy of the representations and warranties of
Buyer and Merger Sub and their performance of their covenants and agreements
under this Agreement, contravene or conflict with or constitute a violation
of any provision of any law, rule, regulation, judgment, injunction, order or
decree binding upon or applicable to the Company or any of its subsidiaries
which would, in any such case, have a reasonable probability of having a
material adverse effect on the Company, (c) constitute a default under or give
rise to a right of termination, cancellation or acceleration of any right or
obligation of the Company or any of its subsidiaries or to a loss of any
benefit to which the Company or any of its subsidiaries is entitled under any
provision of any agreement or other instrument binding upon the Company or any
of its subsidiaries or any license, franchise, permit, certificate, approval
or other similar authorization held by the Company or any of its subsidiaries
which would, in any such case, have a reasonable probability of having a
material adverse effect on the Company or (d) result in the creation or
imposition of any Lien on any asset of the Company or any of its subsidiaries
which would have a reasonable probability of having a material adverse effect
on the Company. "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset.
Section 4.5. Capitalization. The authorized capital stock of
the Company consists of 100,000,000 Shares and 5,000,000 shares of preferred
stock, $1.00 par value per share. No shares of preferred stock are
outstanding. As of November 30, 1997, there were outstanding 41,325,118
Shares (including 854,880 Shares subject to restrictions under the Company
Stock Plans) and options to purchase an aggregate of 506,047 Shares at an
average exercise price of $9.03 per Share (of which 327,647 were exercisable).
All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable. Except as
set forth in this Section and except for changes since November 30, 1997
resulting from the exercise of employee stock options outstanding on such
date, there are no outstanding (a) shares of capital stock or voting
securities of the Company, (b) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company
or (c) options or other rights to acquire from the Company or other obligation
of the Company to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company. There are no outstanding obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any securities
referred to in clauses (a), (b) or (c) above (collectively referred to as the
"Company Securities").
Section 4.6. Subsidiaries. (a) Each material subsidiary of
the Company (which, for purposes of this Agreement, shall mean the companies
listed on Section 4.06 of the Company's Disclosure Schedule) is a corporation
duly incorporated or an entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
as the case may be, has all powers and authority to own, lease and operate its
properties and to conduct its business as now being conducted, except where
the failure to be so incorporated or organized, existing and in good standing
or to have such power and authority would not individually or in the
aggregate, have a reasonable probability of having a material adverse effect
on the Company. Each subsidiary of the Company is duly qualified to do
business and is in good standing in each jurisdiction where such qualification
is necessary, except for those jurisdictions where failure to be so qualified
and in good standing would not, individually or in the aggregate, have a
reasonable probability of having a material adverse effect on the Company.
(b) All of the outstanding capital stock of, or other
voting securities or ownership interests in, each material subsidiary of
the Company is owned by the Company, directly or indirectly, free and clear
of any Lien and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other voting securities or ownership interests), other than any
restrictions imposed under the Securities Act of 1933 (the "1933 Act") or
applicable state law. Except as set forth in this Section or in Section
4.06 of the Company's Disclosure Schedule and except for qualifying shares,
there are no outstanding (i) shares of capital stock or other voting
securities or ownership interests in any of the Company's material
subsidiaries owned by Persons other than the Company or its wholly owned
subsidiaries, (ii) securities of the Company or any of its subsidiaries
convertible into or exchangeable for shares of capital stock or other
voting securities or ownership interests in any of the Company's material
subsidiaries or (iii) options or other rights to acquire from the Company
or any of its subsidiaries, or other obligation of the Company or any of
its subsidiaries to issue, any capital stock or other voting securities or
equity ownership interests in, or any securities convertible into or
exchangeable for any capital stock or other voting securities or equity
ownership interests in, any of the Company's material subsidiaries. There
are no outstanding obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any of the securities referred to
in clauses (i), (ii) or (iii) above.
Section 4.7. SEC Filings. (a) The Company has made available
to Buyer (i) the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1996 ("Company 10-K"), (ii) its quarterly reports on Form
10-Q for its fiscal quarters ended after December 31, 1996, (iii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company since December 31, 1996 and (iv)
all of its other reports, statements, schedules and registration statements
filed with the SEC since December 31, 1996 (such documents, collectively, the
"Company SEC Filings"). The Company's quarterly report on Form 10-Q for its
fiscal quarter ended September 30, 1997 is referred to herein as the "Company
10-Q".
(b) As of its filing date, each Company SEC Filing filed
pursuant to the 1934 Act did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading.
(c) Each such registration statement, as amended or
supplemented, if applicable, filed pursuant to the 1933 Act within such
period did not, as of the date such statement or amendment became
effective, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
Section 4.8. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements
of the Company included in the Company SEC Filings fairly present, in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements) except that interim financial
statements do not contain all the footnote disclosures required by GAAP. For
purposes of this Agreement, "Balance Sheet" means the consolidated balance
sheet of the Company as of September 30, 1997 set forth in the Company 10-Q
and "Balance Sheet Date" means September 30, 1997.
Section 4.9. Disclosure Documents. (a) Each document required
to be filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"),
including, without limitation, the Schedule 14D-9, the Schedule 13E-3 and the
proxy or information statement of the Company (the "Company Proxy Statement"),
if any, to be filed with the SEC in connection with the Merger, and any
amendments or supplements thereto, will, when filed, comply as to form in all
material respects with the applicable requirements of the 1934 Act.
(b) At the time the Company Proxy Statement, if one is
required, or any amendment or supplement thereto is first mailed to
stockholders of the Company and at the time such stockholders vote on
adoption of this Agreement and the Merger, the Company Proxy Statement, as
supplemented or amended, if applicable, will not contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of
the filing of any Company Disclosure Document (other than the Company Proxy
Statement) or any supplement or amendment thereto and at the time of any
distribution thereof, such Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 4.9(b) will not
apply to statements included in or omissions from the Company Disclosure
Documents based upon information furnished to the Company in writing by
Buyer specifically for use therein.
(c) The information with respect to the Company or any of
its subsidiaries that the Company furnishes to Buyer in writing
specifically for use in the Offer Documents will not, at the time of the
filing thereof, at the time of any distribution thereof and at the time of
consummation of the Offer, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
Section 4.10. Absence of Certain Changes. Except as set forth
in writing in the Company's Disclosure Schedule, since the Balance Sheet Date
and through the date of this Agreement, the business of the Company and its
subsidiaries has been conducted in the ordinary course consistent with past
practices and there has not been:
(a) any event, occurrence, development or state of
circumstances or facts which has had, or would have a reasonable
probability of having, individually or in the aggregate, a material adverse
effect on the Company;
(b) any declaration, setting aside payment of any dividend
or other distribution with respect to any shares of capital stock of the
Company or its subsidiaries (other than (i) regular quarterly dividends on
the Shares at a rate not in excess of $.07 per Share and (ii) dividends and
distributions by a direct or indirect wholly owned subsidiary of the
Company), or any repurchase, redemption or other acquisition by the Company
or any of its subsidiaries of any outstanding shares of capital stock or
other equity securities of, or other equity ownership interests in, the
Company or any of its subsidiaries;
(c) any amendment of any material term of any outstanding
security of the Company or any of its subsidiaries;
(d) any incurrence, assumption or guarantee by the Company
or any of its subsidiaries of any material indebtedness for borrowed money
other than (i) in the ordinary course of business consistent with past
practices, (ii) under credit facilities of the Company or any of its
subsidiaries as in effect as of the date of this Agreement or (iii)
indebtedness of a wholly owned subsidiary of the Company to the Company or
another wholly owned subsidiary of the Company or of the Company to a
wholly owned subsidiary of the Company;
(e) any creation or other incurrence by the Company or any
of its subsidiaries of any material Lien on any material asset other than
in the ordinary course of business consistent with past practices;
(f) any making of any material loan, advance or capital
contributions to or investment in any person other than loans, advances,
capital contributions or investments made (i) in the ordinary course of
business consistent with past practices and (ii) by a wholly owned
subsidiary of the Company to the Company or another wholly owned subsidiary
of the Company or by the Company to a wholly owned subsidiary of the
Company;
(g) any change in any accounting or tax accounting principle
(or the early adoption of a change required under any accounting principle)
by the Company or any of its subsidiaries, except for any such change
required by reason of a concurrent change in GAAP, Regulation S-X
promulgated under the 1934 Act ("Regulation S-X") or applicable law or
regulation; or
(h) any (i) grant of any severance or termination pay to any
director or officer of the Company or any president of any of its material
subsidiaries, (ii) increase in benefits payable to any director or officer
of the Company or any president of any of its material subsidiaries under
any existing severance or termination pay policies or employment
agreements, (iii) entering into of any employment, deferred compensation or
other similar agreement (or any amendment to any such existing agreement)
with any director or officer of the Company or any president of any of its
material subsidiaries or (iv) establishment, adoption or amendment (except
as required by applicable law) of any collective bargaining, bonus, profit
sharing, thrift, pension, retirement, deferred compensation, compensation,
stock option, restricted stock or other benefit plan or arrangement
covering any director or officer of the Company or any president of any of
its material subsidiaries.
Section 4.11. No Undisclosed Material Liabilities. There
are no liabilities of the Company or any of its subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, which would be required to be reflected, reserved for or
disclosed under GAAP in the consolidated financial statements of the
Company, other than:
(a) liabilities or obligations reflected, reserved for or
otherwise provided for in the Balance Sheet;
(b) liabilities or obligations which would not, individually
or in the aggregate, have a reasonable probability of having a material
adverse effect on the Company;
(c) liabilities or obligations under this Agreement; and
(d) liabilities or obligations incurred in the ordinary
course of business since September 30, 1997.
Section 4.12. Compliance with Laws and Court Orders. Except
as set forth in the Company SEC Filings prior to the date hereof, the Company
and each of its subsidiaries is and has been in compliance with and, to the
knowledge of the Company, is not under investigation with respect to and has
not been threatened to be charged with or given notice of any violation of,
any applicable law, rule regulation, judgment, injunction, order or decree,
except for such matters as would not, individually or in the aggregate, have a
reasonable probability of having a material adverse effect on the Company.
Section 4.13. Brokers' Fees. Except for BT Wolfensohn, a copy
of whose engagement agreement has been provided to Buyer, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Company or any of its
subsidiaries who is entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
ARTICLE 5
Representations and Warranties of Buyer
Buyer represents and warrants to the Company that:
Section 5.1. Corporate Existence and Power; Ownership of
Company Stock. (a) Each of Buyer and Merger Sub (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and (ii) has all requisite corporate powers and authority to
own, lease and operate its properties and to conduct its business as now being
conducted, except where the failure to have such power and authority would
not, individually or in the aggregate, have a reasonable probability of having
a material adverse effect on Buyer. Since the date of its incorporation,
Merger Sub has not engaged in any activities other than in connection with or
as contemplated by this Agreement or in connection with arranging any
financing required to consummate the transactions contemplated hereby.
(b) As of the date hereof and immediately prior to the
consummation of the Offer, (i) Buyer beneficially owns and will own
15,191,109 Shares, the Chief Executive Officer of Buyer beneficially owns
and will own 1,801,852 Shares and Masco Corporation beneficially owns and
will own 1,583,708 Shares and (ii) Buyer owns and will own all of the
outstanding shares of Merger Sub.
Section 5.2. Corporate Authorization. The execution, delivery
and performance by Buyer and Merger Sub of this Agreement and the consummation
by Buyer and Merger Sub of the transactions contemplated hereby are within the
corporate powers of Buyer and Merger Sub and have been duly authorized by all
necessary corporate action. Buyer hereby represents that its Board of
Directors, acting on the unanimous recommendation of the Buyer Oversight
Committee, has approved the Agreement and the transactions contemplated
hereby, including, without limitation, the Offer and the Merger. This
Agreement constitutes a valid and binding agreement of each of Buyer and
Merger Sub.
Section 5.3. Governmental Authorization. The execution,
delivery and performance by Buyer and Merger Sub of this Agreement and the
consummation by Buyer and Merger Sub of the transactions contemplated hereby
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority other than (a) the filing of the Certificate of
Merger in accordance with the Delaware Law; (b) compliance with any applicable
requirements of the HSR Act; (c) compliance with any applicable requirements
of the 1934 Act; (d) compliance with any other applicable securities or
takeover laws; (e) filings and approvals under laws of jurisdictions outside
of the United States; and (f) compliance with any other filings, approvals or
authorizations which, if not obtained, would not, individually or in the
aggregate, have a reasonable probability of having a material adverse effect
on Buyer or materially impair the ability of Buyer to consummate the
transactions contemplated by this Agreement.
Section 5.4. Non-Contravention. The execution, delivery and
performance by Buyer and Merger Sub of this Agreement and the consummation by
Buyer and Merger Sub of the transactions contemplated hereby do not and will
not (a) contravene or conflict with the certificate of incorporation or bylaws
of Buyer or Merger Sub, (b) assuming compliance with the matters referred to
in Section 5.3, and further assuming the accuracy of the representations and
warranties of the Company and its performance of its covenants and agreements
under this Agreement, contravene or conflict with or constitute a violation of
any provision of any law, rule, regulation, judgment, injunction, order or
decree binding upon Buyer or Merger Sub, which would, in any case, have a
reasonable probability of having a material adverse effect on Buyer or Merger
Sub or (c) constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of Buyer
or Merger Sub or to a loss of any benefit to which Buyer or Merger Sub is
entitled under any agreement, contract or other instrument binding upon Buyer
or Merger Sub which would, in any such case, have a reasonable probability of
having a material adverse effect on Buyer or Merger Sub.
Section 5.5. Disclosure Documents. (a) The information with
respect to Buyer and its subsidiaries that Buyer furnishes to the Company in
writing specifically for use in any Company Disclosure Document will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading (i) in the case
of the Company Proxy Statement, if such statement is needed, at the time the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to stockholders of the Company and at the time the stockholders vote on
adoption of this Agreement and the Merger, and (ii) in the case of any Company
Disclosure Document (other than the Company Proxy Statement) or any amendment
or supplement thereto, at the time of the filing thereof and at the time of
any distribution thereof.
(b) The Offer Documents, when filed, will comply as to form
in all material respects with the applicable requirements of the 1934 Act
and will not at the time of the filing thereof, at the time of any
distribution thereof or at the time of consummation of the Offer, contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, provided that
this representation and warranty will not apply to statements included in
or omissions from the Offer Documents based upon information furnished to
Buyer or Merger Sub in writing by the Company specifically for use therein.
Section 5.6. Brokers' Fees. Except for Salomon Smith Barney,
whose fees will be paid by Buyer, there is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to
act on behalf of Buyer or any of its subsidiaries who is entitled to any fee
or commission in connection with the transactions contemplated by this
Agreement.
Section 5.7. Financing. Buyer has received and has delivered
to the Company a written financing commitment (the "Financing Commitment")
with respect to the transactions contemplated hereby. Buyer and Merger Sub
are in compliance with the representations, warranties, terms and conditions
set forth in the Financing Commitment and any related documents. At (i) the
time of acceptance for payment of Shares pursuant to the Offer and (ii) the
Effective Time, Buyer shall have the funds necessary to consummate the Offer
and the Merger and the transactions contemplated thereby.
ARTICLE 6
Covenants of the Company
The Company agrees that:
Section 6.1. Conduct of the Company. From the date hereof
until the Effective Time, except as set forth in Section 6.01 of the Company's
Disclosure Schedule or as consented to in writing by Buyer, the Company and
its subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their commercially reasonable best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time, except as set forth in Section 6.01 of the
Company's Disclosure Schedule or as consented to in writing by Buyer:
(a) the Company will not adopt or propose any change in its
certificate of incorporation or bylaws;
(b) except as set forth in Schedule 6.01(b) the Company will
not, and will not permit any of its subsidiaries to, (i) merge or
consolidate with any other person if such other person would constitute a
"significant subsidiary" of the Company (as defined in Section 1-02 of
Regulation S-X) other than mergers between the Company and one or more of
its subsidiaries or between one or more subsidiaries of the Company), (ii)
acquire a material amount of assets of any other person where, if such
assets were held by a separate entity, such entity would be a "significant
subsidiary" of the Company or (iii) enter into any merger, consolidation or
acquisition transaction the consummation of which would, or would
reasonably be expected to, impede, interfere with, prevent or materially
delay the Merger;
(c) except as set forth in Schedule 6.01(c), the Company
will not, and will not permit any of its subsidiaries to, sell, lease,
license or otherwise dispose of any assets or property that are material to
the Company and its subsidiaries taken as a whole except (i) pursuant to
existing contracts or commitments and (ii) in the ordinary course of
business consistent with past practice;
(d) the Company will not, and will not permit any of its
subsidiaries to, split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock, other than (i) regular quarterly cash dividends on
the Shares not in excess of $.07 per Share and (ii) dividends and
distributions by a wholly owned subsidiary of the Company, or redeem,
repurchase or otherwise acquire any of its securities;
(e) except for normal changes or increases in the ordinary
course of business consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company and its subsidiaries taken as a whole, the Company
will not, and will not permit any of its subsidiaries to (i) adopt or amend
any bonus, profit sharing, compensation, severance, termination, stock
option, pension, retirement, deferred compensation, employment or employee
benefit plan, agreement, trust, plan, fund or other arrangement for the
benefit and welfare of any director, officer or employee, (ii) without the
consent of a majority of the entire Board of Directors of the Company,
increase in any manner the compensation, annual bonus or fringe benefits of
any of the individuals who have entered into employment contracts with the
Company since September 30, 1997 or (iii) pay any benefit not required by
any existing plan or arrangement; and
(f) the Company will not, and will not permit any of its
subsidiaries to, agree or commit to do any of the foregoing.
Section 6.2. Stockholder Meeting; Proxy Material. Unless the
Merger is consummated in accordance with Section 253 of the Delaware Law as
contemplated by Section 8.05 herein, and subject to applicable law, the
Company shall cause a meeting of its stockholders (the "Company Stockholder
Meeting") to be duly called and held as soon as reasonably practicable after
consummation of the Offer for the purpose of voting on the approval and
adoption of this Agreement and the Merger. The directors of the Company
shall, subject to their fiduciary duties as determined by them, acting with
the recommendation of the Company Special Committee and after consultation
with outside counsel, recommend approval and adoption of this Agreement and
the Merger by the Company's stockholders. In connection with such meeting,
the Company (a) will promptly prepare and file with the SEC, will use its
commercially reasonable best efforts to have cleared by the SEC and will
thereafter mail to its stockholders as promptly as practicable the Company
Proxy Statement and all other proxy materials for such meeting, (b) will use
its commercially reasonable best efforts to obtain the necessary approvals by
its stockholders of this Agreement and the transactions contemplated hereby
subject to the fiduciary duties under applicable law of the directors of the
Company or of the directors constituting the Company Special Committee (as
determined by such directors in good faith after consultation with legal
counsel) and (c) will otherwise comply with all legal requirements applicable
to such meeting. Notwithstanding anything to the contrary in this Agreement,
if the Board of Directors of the Company or the Company Special Committee
determines, in good faith after consultation with legal counsel in the
exercise of its fiduciary duties under applicable law, to withdraw, modify or
amend its recommendation in favor of the Merger, such withdrawal, modification
or amendment shall not constitute a breach of this Agreement.
Section 6.3. Access to Information. (a) Other than as
provided in Section 6.03 of the Company's Disclosure Schedule, from the date
hereof until the Effective Time, the Company will give Buyer, its counsel,
financial advisors, auditors and other authorized representatives reasonable
access to the offices, properties, books and records of the Company and its
subsidiaries, will furnish to Buyer, its counsel, financial advisors, auditors
and other authorized representatives such financial and operating data and
other information as such persons may reasonably request and will instruct the
Company's employees, counsel and financial advisors to cooperate with Buyer in
its investigation of the business of the Company and its subsidiaries;
provided that no investigation pursuant to this Section shall affect any
representation or warranty given by the Company to Buyer hereunder.
(b) Information obtained by Buyer pursuant to this Section
6.03 shall be subject to the provisions of the confidentiality agreement
between the Company and Buyer, dated December 3, 1997 (the "Confidentiality
Agreement"), which remains in full force and effect, but shall terminate
upon the acceptance for payment of Shares pursuant to the Offer.
Section 6.4. No Solicitation. Neither the Company nor any of
its subsidiaries shall (whether directly or indirectly through advisors,
agents or other intermediaries) authorize or permit any of its or their
officers, directors, agents, representatives, advisors or subsidiaries to, (i)
solicit, initiate or take any action to facilitate the submission of
inquiries, proposals or offers from any Third Party (as defined below)
relating to (A) any acquisition or purchase of 15% or more of the consolidated
assets of the Company and its subsidiaries or of any equity securities of the
Company or any of its subsidiaries, (B) any tender offer (including a self
tender offer) or exchange offer for equity securities of the Company or any of
its subsidiaries, (C) any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company, or any of its subsidiaries whose
assets, individually or in the aggregate, constitute more than 15% of the
consolidated assets of the Company, other than the transactions contemplated
by this Agreement, or (D) any other transaction the consummation of which
would, or would reasonably be expected to, impede, interfere with, prevent or
materially delay the Merger or which would, or would reasonably be expected
to, materially dilute the benefits to Buyer of the transactions contemplated
hereby (each of (A) through (D), an "Acquisition Proposal"), or agree to or
endorse any Acquisition Proposal, or (ii) enter into or participate in any
discussions or negotiations regarding any of the foregoing, or furnish to any
Third Party any information with respect to its business, properties or
assets, or otherwise cooperate in any way with, or knowingly assist or
participate in, facilitate or encourage, any effort or attempt by any Third
Party to do or seek any of the foregoing; provided that the foregoing shall
not prohibit the Company (either directly or indirectly through advisors,
agents or other intermediaries), following receipt of a bona fide Acquisition
Proposal, from (i) taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) under the 1934 Act or otherwise
making disclosure to its stockholders, (ii) failing to make or withdrawing or
modifying its recommendation referred to in Section 6.02, (iii) furnishing
non-public information with respect to the Company and its subsidiaries to the
Third Party who made such Acquisition Proposal pursuant to a customary and
reasonable confidentiality agreement and (iv) participating in negotiations
regarding such Acquisition Proposal but in each case referred to in the
foregoing clauses (i), (ii), (iii) and (iv) only to the extent that the Board
of Directors of the Company, acting with the recommendation of the Company
Special Committee, shall have determined, after consultation with outside
counsel, that there is a reasonable likelihood that such action is required to
prevent the Board of Directors of the Company from breaching its fiduciary
duties to the stockholders of the Company under applicable law; provided,
further, that (A) the Board of Directors of the Company shall not take any of
the foregoing actions until reasonable notice of its intent to take such
action shall have been given to Buyer, and (B) if the Board of Directors of the
Company receives an Acquisition Proposal, then the Company shall promptly
inform Buyer of the terms and conditions of such proposal (including the terms
and conditions of any amendment to such proposal) and the identity of the
person making it. As used in this Agreement, the term "Third Party" means any
person or "group," as described in Rule 13d-5(b) promulgated under the 1934
Act, other than Buyer or any of its affiliates (including Merger Sub).
Section 6.5. Notices of Certain Events. The Company shall
promptly notify Buyer of:
(a) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any material actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting the Company or any of its
subsidiaries or which relate to the consummation of the transactions
contemplated by this Agreement.
ARTICLE 7
Covenants of Buyer
Buyer agrees that:
Section 7.1. Obligations of Merger Sub. (a) Buyer will take
all action necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth
in this Agreement.
(b) Buyer has been informed that Masco Corporation and the
Chief Executive Officer of Buyer each intends to tender all Shares
beneficially owned by such party pursuant to the Offer. Buyer will notify
the Company as soon as reasonably practicable and in any event within one
business day after receipt of any indication that Masco Corporation or the
Chief Executive Officer of Buyer has modified its or his intentions with
respect to tendering Shares pursuant to the Offer.
Section 7.2. Voting of Shares. Buyer agrees to vote all
Shares beneficially owned by it in favor of adoption of this Agreement at the
Company Stockholder Meeting.
Section 7.3. Indemnification and Insurance. Buyer will cause
the Surviving Corporation to, and the Surviving Corporation shall, indemnify
and hold harmless the present and former officers and directors of the Company
in respect of acts or omissions occurring prior to the Effective Time to the
fullest extent permitted under the Company's certificate of incorporation and
bylaws in effect on the date hereof. For six years after the Effective Time,
Buyer will cause the Surviving Corporation to use its best efforts to provide
officers' and directors' liability insurance in respect of acts or omissions
occurring prior to the Effective Time covering each such person currently
covered by the Company's officers' and directors' liability insurance policy
(the "Covered Employees") on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date hereof; provided
that in satisfying its obligation under this Section, Buyer shall not be
obligated to cause the Surviving Corporation to pay premiums in excess of 200%
of the amount per annum the Company paid in its last full fiscal year, which
amount has been disclosed to Buyer prior to the date of this Agreement. The
provisions of this Section are for the benefit of and may be enforced after
the Effective Time by the Covered Employees.
Section 7.4. SEC Filings. Buyer shall promptly prepare and
file with the SEC under the 1933 Act any Registration Statements on Form S-8
as may be necessary to register Buyer Shares underlying the Buyer Restricted
Shares and shall use its reasonable best efforts to cause any such
Registration Statements on Form S-8 to be declared effective by the SEC as
promptly as practicable. Buyer shall promptly take any action required to be
taken under foreign or state securities or Blue Sky laws in connection with
the issuance of Buyer Restricted Shares.
ARTICLE 8
Covenants of the Parties
The parties hereto agree that:
Section 8.1. Best Efforts. Subject to the terms and
conditions of this Agreement and subject to the fiduciary duties under
applicable law of the directors of the Company or of the directors
constituting the Company Special Committee (as determined by such directors in
good faith after consultation with legal counsel), each party will use its
commercially reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate the transactions
contemplated by this Agreement.
Section 8.2. Certain Filings. The Company and Buyer shall
cooperate with one another (a) in connection with the preparation of the
Company Disclosure Documents and the Offer Documents, (b) in determining
whether any action by or in respect of, or filing with, any governmental body,
agency or official, or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions
contemplated by this Agreement and (c) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing information
required in connection therewith or with the Company Disclosure Documents or
the Offer Documents and seeking timely to obtain any such actions, consents,
approvals or waivers.
Section 8.3. Public Announcements. Buyer and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law or any listing
agreement with any national securities exchange, will not issue any such press
release or make any such public statement prior to such consultation.
Section 8.4. Further Assurances. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company or
Merger Sub, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of the Company or Merger Sub, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all rights, title and interest in, to and under
any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with
the Merger.
Section 8.5. Merger Without Meeting of Stockholders. In the
event that Buyer, Merger Sub or any other subsidiary of Buyer shall acquire at
least 90% of the outstanding Shares pursuant to the Offer or otherwise, the
parties hereto agree, at the request of Buyer, to take all necessary and
appropriate action to cause the Merger to be effective as soon as practicable
after the acceptance for payment and purchase of Shares by the Purchaser
pursuant to the Offer without a meeting of stockholders of the Company in
accordance with Section 253 of the Delaware Law.
ARTICLE 9
Conditions to the Merger
Section 9.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Buyer and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) Merger Sub shall have purchased Shares pursuant to the
Offer;
(b) if required by the Delaware Law, this Agreement and the
Merger shall have been approved and adopted by the stockholders of the
Company in accordance with such Law;
(c) any applicable waiting period under the HSR Act relating
to the Merger shall have expired; and
(d) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of
the Merger.
ARTICLE 10
Termination
Section 10.1. Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written consent of the Company (with the
approval of the Company Special Committee) and Buyer;
(b) by either the Company or Buyer, if there shall be any
law or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining the Company or Buyer from consummating the Merger is entered and
such judgment, injunction, order or decree shall become final and
nonappealable;
(c) by either the Company or Buyer, if Shares have not been
accepted for payment pursuant to the Offer on or prior to the date 60 days
after commencement of the Offer; provided that (i) neither party will have
the right to terminate this Agreement under this Section 10.01(c) during
any extension period referred to in the penultimate sentence of Section
1.01(a); and (ii) the right to terminate this Agreement pursuant to this
Section 10.01(c) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement results in the failure
of the Offer to be consummated;
(d) prior to the acceptance for payment of Shares pursuant
to the Offer, by the Company, if (i) any of the representations and
warranties of Buyer or Merger Sub contained in this Agreement that are
qualified as to materiality were untrue or incorrect when made or have
since become, and at the time of termination remain, incorrect (except that
with respect to representations and warranties which are made as of a
specified date, such right of termination shall apply only if such
representations or warranties were untrue or incorrect as of such specified
date) or any of the representations and warranties of Buyer or Merger Sub
that are not so qualified as to materiality were untrue or incorrect in any
material respect when made or have since become, and at the time of
determination remain, incorrect in any material respect (except that with
respect to representations and warranties which are made as of a specified
date, such right of termination shall apply only if such representations or
warranties were untrue or incorrect in any material respect as of such
date), provided that the Company may not terminate this Agreement pursuant
to this clause (i) if the Company had knowledge as of the date hereof that
the relevant representation or warranty was untrue or incorrect as of that
date; or (ii) Buyer or Merger Sub shall have breached or failed to comply
in any material respect with any of their respective obligations under this
Agreement, provided that if such breach is curable by the breaching party
and so long as the breaching party continues to exercise its reasonable
best efforts to cure such breach, the Company shall not have the right to
terminate the Agreement pursuant to this Section until the date 30 days
after notice by the Company to the breaching party of such breach; or
(e) prior to the acceptance for payment of Shares pursuant
to the Offer, by Buyer if (i) any of the representations and warranties of
the Company contained in this Agreement that are qualified as to
materiality were untrue or incorrect when made or have since become, and at
the time of termination remain, incorrect (except that with respect to
representations and warranties which are made as of a specified date, such
right of termination shall apply only if such representations or warranties
were untrue or incorrect as of such specified date) or any of the
representations and warranties of the Company that are not so qualified as
to materiality were untrue or incorrect in any material respect when made
or have since become, and at the time of determination remain, incorrect in
any material respect (except that with respect to those representations and
warranties which are made as of a specified date, such right of termination
shall apply only if such representations or warranties were untrue and
incorrect in any material respect as of such date) and the failure of any
such representations and warranties to be true and correct would,
individually or in the aggregate, have a reasonable probability of having a
material adverse effect on the Company or of preventing (or materially
delaying) the consummation of the Offer, provided that Buyer may not
terminate this Agreement pursuant to this clause (i) if Buyer had knowledge
as of the date hereof that the relevant representation or warranty was
untrue or incorrect as of that date; (ii) there shall have been a breach
of any covenant or agreement on the part of the Company contained in this
Agreement which would, individually or in the aggregate, have a reasonable
probability of having a material adverse effect on the Company and its
subsidiaries taken as a whole or which would, individually or in the
aggregate, have a reasonable probability of preventing (or materially
delaying) the consummation of the Offer, which shall not have been cured
prior to 30 days after notice by the Company to Buyer of such breach; or
(iii) the Board of Directors of the Company (with the approval of the
Company Special Committee) shall have withdrawn or modified (including by
amendment of the Schedule 14D-9) in a manner adverse to Buyer its approval
or recommendation of the Offer, this Agreement or the Merger and shall not
have reinstated such approval or recommendation within three business days
thereof, shall have approved or recommended another offer or transaction,
or shall have resolved to effect any of the foregoing.
The party desiring to terminate this Agreement pursuant to this
Section (other than pursuant to Section 10.1(a)) shall give notice of such
termination to the other party in accordance with Section 11.1.
Section 10.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 10.1, this Agreement shall become void and of
no effect with no liability on the part of any party hereto, except for
liability or damages resulting from a willful and material breach by a party
of any covenant or agreement contained in this Agreement and except that the
agreements contained in this Section 10.2 and Section 10.03 and Article 11
shall survive the termination hereof.
Section 10.3. Certain Fees. (a) Except as provided in
Section 10.03(b), (c) and (d), all costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
(b) So long as neither the Buyer nor Merger Sub shall have
materially breached its representations, warranties or obligations under
this Agreement, the Company agrees to pay Buyer a fee in immediately
available funds equal to $10 million as provided below if (i) this
Agreement is terminated by Buyer pursuant to Section 10.01(e)(iii), (ii)
the withdrawal or modification of the recommendation of the Board or
Directors of the Company or the Company Special Committee shall be made in
connection with or as a result of an Acquisition Proposal by a Third Party
and (iii) within 12 months after termination of this Agreement, the Company
enters into an agreement to consummate an Acquisition Proposal with any
Third Party and such Acquisition Proposal shall subsequently be
consummated. Such fee shall be payable upon consummation of such
Acquisition Proposal (whether or not the Acquisition Proposal (or the Third
Party making the Acquisition Proposal) is the same as the Acquisition
Proposal (or the Third Party making the Acquisition Proposal) at the time
of the withdrawal or modification of such recommendation).
(c) So long as neither Buyer nor Merger Sub shall have
materially breached its representations, warranties or obligations under
this Agreement, the Company agrees to pay Buyer up to $5 million of Buyer's
reasonable out-of-pocket expenses incurred in connection with the
transactions contemplated by this Agreement promptly, but in no event later
than two business days, after Buyer terminates this Agreement pursuant to
Section 10.01(e)(i) or (ii).
(d) So long as the Company shall not have materially
breached its representations, warranties or obligations under this
Agreement, Buyer agrees to pay the Company up to $5 million of the
Company's reasonable out-of-pocket expenses incurred in connection with the
transactions contemplated by this Agreement promptly, but in no event later
than two business days, after the Company terminates this Agreement
pursuant to Section 10.01(d)(i) or (ii).
ARTICLE 11
Miscellaneous
Section 11.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given,
if to Buyer or Merger Sub, to:
MascoTech, Inc.
21001 Van Born Road
Taylor, Michigan 48180
Attention: David B. Liner, Esq.
Vice President and Corporate Counsel
Telecopy: (313) 742-6136
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: David W. Ferguson, Esq.
Telecopy: (212) 450-4800
if to the Company, to:
TriMas Corporation
315 East Eisenhower Parkway
Ann Arbor, Michigan 48108
Attention: Brian P. Campbell
President
Telecopy: (313) 747-6565
with a copy to:
Dickinson, Wright, Moon, Van Dusen & Freeman
500 Woodward Avenue
Detroit, Michigan 48226
Attention: Jerome M. Schwartz, Esq.
Telecopy: (313) 223-3598
and a copy to:
Helmut F. Stern
Arcanum Corporation
410 Jackson Plaza
Ann Arbor, Michigan 48103
Telecopy: (313) 665-6610
or such other address or telecopy number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified in this
Section and the appropriate telecopy confirmation is received or (b) if given
by any other means, when delivered at the address specified in this Section.
Section 11.2. Survival. The representations, warranties,
covenants and agreements contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time.
Notwithstanding the foregoing, this Section shall not limit any covenant or
agreement of the parties hereto, which by its terms contemplates performance
after the Effective Time.
Section 11.3. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, Buyer and Merger Sub or in the case of a waiver, by
the party against whom the waiver is to be effective; provided that after the
adoption of this Agreement by the stockholders of the Company, no such
amendment or waiver shall, without the further approval of such stockholders,
alter or change (i) the amount or kind of consideration to be received in
exchange for Shares or (ii) any of the terms or conditions of this Agreement
if such alteration or change would adversely affect the holders of Shares.
The approval of the Company Special Committee shall be required for any
consent referred to in Section 1.01, any amendment or modification of this
Agreement, any extension by the Company of the time for the performance of any
obligations or other acts of Buyer or Merger Sub other than as set forth in
this Agreement and any waiver of any of the Company's rights under this
Agreement.
(b) No failure or delay by any party 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 further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 11.4. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto except that
Buyer may transfer or assign, in whole or from time to time in part, to one or
more of its subsidiaries, the right to purchase shares pursuant to the Offer,
but any such transfer or assignment will not relieve Buyer of its obligations
under the Offer or prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
Section 11.5. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement except for Sections 2.03, 2.05, 7.03 and 7.04 (which are
intended to be for the benefit of the persons referred to therein, and may be
enforced by such persons).
Section 11.6. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State of Delaware.
Section 11.7. Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or
in connection with, this Agreement or the transactions contemplated hereby may
be brought in any federal court located in the State of Delaware or any
Delaware state court, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding which
is brought in any such court has been brought in an inconvenient form.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 11.01 shall be deemed effective
service of process on such party.
Section 11.8. Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by all of the other parties
hereto.
Section 11.9. Entire Agreement. This Agreement and the
Confidentiality Agreement constitute the entire agreement among the parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof.
Section 11.10. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 11.11. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
parties. Upon such a determination, the parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby shall be consummated as originally contemplated to the
fullest extent possible.
Section 11.12. Definitions. (a) For purposes of this
Agreement:
"affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by, or under common control
with such person.
"knowledge" of any person which is not an individual means the
actual knowledge of those individuals listed in Section 11.12 of the Company's
Disclosure Schedule.
"material adverse effect" means, when used in connection with
Buyer or the Company, a material adverse effect on the business, operations,
assets, liabilities, financial condition or results of operations of Buyer and
its subsidiaries, taken as a whole, or the Company and its subsidiaries, taken
as a whole, as the case may be.
"officer" means in the case of Buyer and the Company, each
executive officer of Buyer or the Company, as applicable, within the meaning
of Rule 3b-7 of the 1934 Act.
"person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"subsidiary" means, with respect to any person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at any time directly or indirectly owned by such person.
"wholly owned subsidiary" means, with respect to the Company,
any subsidiary of the Company all of the issued and outstanding voting
securities (other than qualifying shares) of which are beneficially owned by
the Company or a wholly owned subsidiary of the Company.
A reference in this Agreement to any statute shall be to such
statute as amended from time to time, and to the rules and regulations
promulgated thereunder.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
1933 Act........................................ 4.6
1934 Act........................................ 1.01
Acquisition Proposal............................ 6.4
affiliate....................................... 11.12
Balance Sheet................................... 4.8
Balance Sheet Date.............................. 4.8
Buyer........................................... Preamble
Buyer Oversight Committee....................... Preamble
Buyer Phantom Shares............................ 2.5
Buyer Restricted Shares......................... 2.5
Certificate of Merger........................... 2.1
Closing......................................... 2.1
Company......................................... Preamble
Company Disclosure Documents.................... 4.9
Company Proxy Statement......................... 4.9
Company SEC Filings............................. 4.7
Company Securities.............................. 4.5
Company Special Committee....................... Preamble
Company Stock Plans............................. 2.5
Company Stockholder Meeting..................... 6.2
Company 10-K.................................... 4.7
Company 10-Q.................................... 4.7
Confidentiality Agreement....................... 6.3
Covered Employees............................... 7.3
Delaware Law.................................... 2.1
Effective Time.................................. 2.1
Exchange Agent.................................. 2.3
Financing Commitment............................ 5.7
GAAP............................................ 4.8
group........................................... 6.4
HSR Act......................................... 4.3
knowledge....................................... 11.12
Lien............................................ 4.4
material adverse effect......................... 11.12
Merger.......................................... 2.1
Merger Consideration............................ 2.2
Merger Sub...................................... Preamble
Minimum Condition............................... 1.1
NYSE............................................ 2.5
Offer........................................... 1.1
Offer Documents................................. 1.1
officer......................................... 11.12
person.......................................... 11.12
Plan............................................ 2.5
Regulation S-X.................................. 4.10
Restricted Shares............................... 2.5
Schedule 13E-3.................................. 1.1
Schedule 14D-1.................................. 1.1
SEC............................................. 1.1
Shares.......................................... Preamble
subsidiary...................................... 11.12
Surviving Corporation........................... 2.1
Third Party..................................... 6.4
wholly owned subsidiary......................... 11.12
</TABLE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
TRIMAS CORPORATION
By: /s/ Peter C. DeChants
--------------------------------------
Name: Peter C. DeChants
Title: Vice President - Treasurer
MASCOTECH, INC.
By: /s/ Timothy Wadhams
--------------------------------------
Name: Timothy Wadhams
Title: Vice President
MASCOTECH ACQUISITION, INC.
By: /s/ Timothy Wadhams
--------------------------------------
Name: Timothy Wadhams
Title: Vice President and Treasurer
ANNEX I
TO ANNEX A
Notwithstanding any other provision of the Offer, Merger Sub
(x) shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) promulgated under
the 1934 Act (relating to Merger Sub's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay
for any Shares, (y) may delay the acceptance for payment of or payment for any
Shares or (z) subject to the terms of the Merger Agreement, may terminate or
amend the Offer as to any Shares not then paid for if (i) the Minimum
Condition shall not have been satisfied, (ii) any applicable waiting period
under the HSR Act shall not have expired or been terminated or (iii) at any
time prior to the acceptance for payment of Shares pursuant to the Offer, any
of the following conditions exist or shall occur:
(a) there shall have occurred any general suspension of
trading in, or limitation on prices for, securities on the NYSE or in the
over-the-counter market, any declaration of a banking moratorium by Federal
or New York or Michigan authorities or general suspension of payments in
respect of lenders that regularly participate in the United States market
in loans to large corporations, any material limitation by any Federal,
state or local government or any court, administrative or regulatory agency
or commission or other governmental authority or agency in the United
States that materially affects the extension of credit generally by lenders
that regularly participate in the United States market in loans to large
corporations, any commencement of a war involving the United States or any
commencement of armed hostilities or other national or international
calamity involving the United States that has a material adverse effect on
bank syndication or financial markets in the United States or in the case
of any of the foregoing occurrences existing on or at the time of the
commencement of the Offer, a material acceleration or worsening thereof; or
(b) there shall be pending any action or proceeding (or any
investigation or other inquiry that might result in such an action or
proceeding) by any governmental authority or administrative agency before
any governmental authority, administrative agency or court of competent
jurisdiction, domestic or foreign, or there shall be in effect any
judgment, decree or order of any governmental authority, administrative
agency or court of competent jurisdiction, or any other legal restraint,
preventing or seeking to prevent consummation of the Offer, the Merger or
the other transactions contemplated by the Merger Agreement, prohibiting or
seeking to prohibit or limiting or seeking to limit Buyer or Merger Sub
from exercising any material rights and privileges pertaining to the
ownership of the Shares or compelling or seeking to compel any party or any
of its subsidiaries to dispose of or hold separate all or any portion of
the business or assets of Buyer or the Company or any of their respective
subsidiaries that is material in relation to the consolidated business or
assets of Buyer and its subsidiaries or the Company and its subsidiaries,
in each case as a result of the Offer, the Merger or the other transactions
contemplated by the Merger Agreement; or
(c) any event, occurrence, development or state of
circumstances or facts which has had or has a reasonable probability of
having, individually or in the aggregate, a material adverse effect on the
Company; or
(c) it shall have been publicly disclosed or Buyer shall
have otherwise learned that any person or "group" (as defined in Section
13(d)(3) of the 1934 Act) other than Buyer and its affiliates shall have
acquired beneficial ownership of more than 20% of the Shares, through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted any option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 20% of the Shares unless such
Shares shall have been tendered pursuant to the Offer and not withdrawn or
any person or group shall have entered into a definitive agreement or an
agreement in principle with respect to a merger, consolidation or other
business combination with the Company; or
(e) Buyer, Merger Sub or the Company or their affiliates
shall have failed to make any filings with or to obtain any approvals or
authorizations from any governmental body, agency, official or authority
(other than under the HSR Act) or any applicable waiting period related
thereto shall not have expired or been terminated, which filings, approvals
or authorizations (or the expiration of such waiting periods) are legally
required to be obtained or made by them (or to have expired or terminated)
prior to the consummation of the Offer and which, if not obtained or made
(or expired or terminated) would, individually or in the aggregate, have a
reasonable probability of having a material adverse effect on Buyer or the
Company;
(f) the Company shall have failed to perform in all material
respects all of its obligations under the Merger Agreement required to be
performed by it at or prior to the time Shares are accepted for payment
pursuant to the Offer or except for such inaccuracies or omissions the
consequences of which do not singly or in the aggregate constitute a
material adverse effect on the Company, the representations and warranties
of the Company contained in the Merger Agreement shall not be true in all
respects at and as of the time Shares are accepted for payment pursuant to
the Offer as if made at and as of such time (except as to those
representations and warranties which are made as of a specified date, which
shall be true and correct as of such date); or
(g) the Merger Agreement shall have been terminated in
accordance with its terms; or
(g) the Board of Directors of the Company shall have
withdrawn or modified its recommendation of the Offer or the Merger;
which, in the reasonable judgment of Buyer in any such case, and regardless
of the circumstances (including any action or omission by Buyer) giving
rise to any such condition, makes it inadvisable to proceed with such
acceptance for payment or payment.
ANNEX B
OPINION OF BT WOLFENSOHN
December 10, 1997
The Oversight Committee of
The Board of Directors
TriMas Corporation
315 East Eisenhower Parkway
Ann Arbor, MI 48108
Gentlemen:
BT Wolfensohn has acted as financial advisor to the Oversight
Committee of the Board of Directors of TriMas Corporation (the "Company") in
connection with the proposed Agreement and Plan of Merger (the "Merger
Agreement"), dated December 10, 1997, among the Company, MascoTech, Inc.
("MascoTech") and Merger Sub, Inc., a wholly owned subsidiary of MascoTech
("Merger Sub"), which provides, among other things, for a cash tender offer
of common stock, par value $.01 per share, of the Company ("Common Stock")
to be followed by a merger of the Merger Sub with and into the Company (the
cash tender offer and the merger collectively, the "Transaction"), as a
result of which the Company will become a wholly owned subsidiary of
MascoTech. As set forth more fully in the Merger Agreement, as a result of
the Transaction each share of the Common Stock not owned directly or
indirectly by the Company or MascoTech, other than shares as to which
dissenters' rights have been perfected, will be purchased for or converted
into the right to receive $34.50 in cash (the "Consideration"). The terms
and conditions of the Transaction are more fully set forth in the Merger
Agreement. We understand that MascoTech, Masco Corporation (MascoTech's
largest shareholder), and Mr. Richard A. Manoogian, who is the Chairman
of MascoTech and of Masco Corporation, own in the aggregate approximately
45% of the outstanding Common Stock.
You have requested BT Wolfensohn's opinion, as investment
bankers, as to the fairness, from a financial point of view, of the
Consideration to be received by the holders of the Common Stock other than
MascoTech, Masco Corporation and Mr. Manoogian (the "Public Shareholders").
In connection with BT Wolfensohn's role as financial advisor to
the Oversight Committee, and in arriving at its opinion, BT Wolfensohn has
reviewed certain publicly available financial and other information concerning
the Company and certain internal analyses and other information furnished to
it by the Company. BT Wolfensohn has also held discussions with members of the
senior management of the Company regarding the Company's business and
prospects. In addition, BT Wolfensohn has (i) reviewed the reported prices and
trading activity for the Common Stock, (ii) compared certain financial and
stock market information for the
Company with similar information for certain companies whose
securities are publicly traded, (iii) reviewed the financial terms of certain
recent business combinations which it deemed comparable in whole or in part,
(iv) reviewed the terms of the Merger Agreement and certain related documents,
and (v) performed such other studies and analyses and considered such other
factors as it deemed appropriate.
BT Wolfensohn has not assumed responsibility for independent
verification of, and has not independently verified, any information, whether
publicly available or furnished to it, concerning the Company, including,
without limitation, any financial information, forecasts or projections
considered in connection with the rendering of its opinion. Accordingly, for
purposes of its opinion, BT Wolfensohn has assumed and relied upon the
accuracy and completeness of all such information and BT Wolfensohn has not
conducted a physical inspection of any of the properties or assets, and has
not prepared or obtained any independent evaluation or appraisal of any of the
assets or liabilities, of the Company. With respect to the financial
forecasts and projections made available to BT Wolfensohn and used in its
analyses, BT Wolfensohn has assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
management of the Company as to the matters covered thereby. In rendering its
opinion, BT Wolfensohn expresses no view as to the reasonableness of such
forecasts and projections or the assumptions on which they are based. We
understand, based on MascoTech's statements, that MascoTech has no interest in
any transaction that would result in the sale of Common Stock owned by it, and
we were not requested or authorized to solicit, and did not solicit, interest
from any party with respect to an acquisition of the outstanding Common Stock,
the Company or its constituent businesses. In addition, we have been informed
by MascoTech that it has no intention to pursue a sale of the Company after
consummating the merger pursuant to the Merger Agreement. BT Wolfensohn's
opinion is necessarily based upon economic, market and other conditions as in
effect on, and the information made available to it as of, the date hereof.
For purposes of rendering its opinion, BT Wolfensohn has
assumed that the Transaction will be consummated on the terms and subject to
the conditions described in the Merger Agreement and that all conditions to
the Transaction will be satisfied without waiver of such conditions.
This opinion is addressed to, and for the use and benefit of,
the Oversight Committee of the Board of Directors of the Company. The Board
of Directors of the Company may rely on the opinion as if the same were
addressed to it. This opinion is not a recommendation to the Public
Shareholders as regards the Transaction or as to whether they should tender
their shares or vote for the merger. This opinion is limited to the fairness,
from a financial point of view, of the Consideration to be received by the
Public Shareholders.
BT Wolfensohn is engaged in the merger and acquisition and
client advisory business of Bankers Trust (together with its affiliates, the
"BT Group") and, for legal and regulatory purposes, is a division of BT Alex.
Brown Incorporated, a registered broker-dealer and member of the New York Stock
Exchange. BT Wolfensohn will be paid a fee for its services as financial
advisor to the Oversight Committee in connection with the Transaction, a
substantial portion of which is contingent upon consummation of the
Transaction. In the ordinary course of business, members of the BT Group may
actively trade in the securities and other instruments and obligations of the
Company for their own accounts and for the accounts of their customers.
Accordingly, the BT Group may at any time hold a long or short position in
such securities, instruments and obligations.
Based upon and subject to the foregoing, it is BT Wolfensohn's
opinion as investment bankers that as of the date hereof the Consideration to
be received by the Public Shareholders pursuant to the Transaction is fair
from a financial point of view.
BT Wolfensohn
ANNEX C
RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE DGCL
In view of the complexity of these provisions of the DGCL, any
stockholder who is considering exercising dissenters' rights should consult
his or her legal advisor.
Statutory Appraisal Procedures. The following is a brief
summary of the statutory procedures to be followed by a holder of Shares at
the Effective Time who does not wish to accept the per Share cash
consideration pursuant to the Merger (a "Remaining Stockholder") in order to
dissent from the Merger and perfect appraisal rights under Delaware law. THIS
SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SECTION 262 OF THE DGCL, THE TEXT OF WHICH IS SET FORTH IN THIS
ANNEX C HERETO. ANY REMAINING STOCKHOLDER CONSIDERING DEMANDING APPRAISAL IS
ADVISED TO CONSULT LEGAL COUNSEL. APPRAISAL RIGHTS WILL NOT BE AVAILABLE
UNLESS AND UNTIL THE MERGER (OR A SIMILAR BUSINESS COMBINATION) IS CONSUMMATED.
Remaining stockholders of record who desire to exercise their
appraisal rights must fully satisfy all of the following conditions. A written
demand for appraisal of Shares must be delivered to the Secretary of the
Company (x) before the taking of the vote on the approval and adoption of the
Merger Agreement if the Merger is not being effected as a "short-form" merger
but, rather, is being consummated following approval thereof at a meeting of
the Company's stockholders (a "long-form merger") or (y) within 20 days after
the date that the Surviving Corporation mails to the Remaining Stockholders a
notice (the "Notice of Merger") to the effect that the Merger is effective and
that appraisal rights are available (and includes in such notice a copy of
Section 262 of the DGCL and any other information required thereby) if the
Merger is being effected as a "short-form" merger without a vote or meeting of
the Company's stockholders. If the Merger is effected as a "long-form" merger,
this written demand for appraisal of Shares must be in addition to and
separate from any proxy or vote abstaining from or against the approval and
adoption of the Merger Agreement, and neither voting against, abstaining from
voting, nor failing to vote on the Merger Agreement will constitute a demand
for appraisal within the meaning of Section 262 of the DGCL. In the case of a
"long-form" merger, any stockholder seeking appraisal rights must hold the
Shares for which appraisal is sought on the date of the making of the demand,
continuously hold such Shares through the Effective Time and otherwise comply
with the provisions of Section 262 of the DGCL.
In the case of both a "short-form" and a "long-form" merger, a
demand for appraisal must be executed by or for the stockholder of record,
fully and correctly, as such stockholder's name appears on the stock
certificates. If Shares are owned of record in a fiduciary capacity, such as
by a trustee, guardian or custodian, such demand must be executed by the
fiduciary. If Shares are owned of record by more than one person, as in a
joint tenancy or tenancy in common, such demand must be executed by all joint
owners. An authorized agent, including an agent for two or more joint owners,
may execute the demand for appraisal for a stockholder of record; however, the
agent must identify the record owner and expressly disclose the fact that in
exercising the demand, he is acting as agent for the record owner.
A record owner, such as a broker, who holds Shares as a nominee
for others, may exercise appraisal rights with respect to the Shares held for
all or less than all beneficial owners of Shares as to which the holder is the
record owner. In such case the written demand must set forth the number of
Shares covered by such demand. Where the number of Shares is not expressly
stated, the demand will be presumed to cover all Shares outstanding in the
name of such record owner. Beneficial owners who are not record owners and who
intend to exercise appraisal rights should instruct the record owner to comply
strictly with the statutory requirements with respect to the exercise of
appraisal rights before the date of any meeting of stockholders of the Company
called to approve the Merger in the case of a "long-form" merger and within 20
days following the mailing of the Notice of Merger in the case of a
"short-form" merger.
Remaining stockholders who elect to exercise appraisal rights
must mail or deliver their written demands to: Secretary, TriMas Corporation,
315 East Eisenhower Parkway, Ann Arbor, Michigan 48108. The written demand for
appraisal should specify the stockholder's name and mailing address, the
number of Shares covered by the demand and that the stockholder is thereby
demanding appraisal of such Shares. In the case of a "long-form" merger, the
Company must, within ten days after the Effective Time, provide notice of the
Effective Time to all stockholders who have complied with Section 262 of the
DGCL and have not voted for approval and adoption of the Merger Agreement.
In the case of a "long-form" merger, Remaining Stockholders
electing to exercise their appraisal rights under Section 262 must not vote
for the approval and adoption of the Merger Agreement or consent thereto in
writing. Voting in favor of the approval and adoption of the Merger Agreement,
or delivering a proxy in connection with the stockholders meeting called to
approve the Merger Agreement (unless the proxy votes against, or expressly
abstains from the vote on, the approval and adoption of the Merger Agreement),
will constitute a waiver of the stockholder's right of appraisal and will
nullify any written demand for appraisal submitted by the stockholder.
Regardless of whether the Merger is effected as a "long-form"
merger or a "short-form" merger, within 120 days after the Effective Time,
either the Company or any stockholder who has complied with the required
conditions of Section 262 and who is otherwise entitled to appraisal rights
may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the Shares of the dissenting stockholders.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Court of Chancery will determine which stockholders are
entitled to appraisal rights and thereafter will appraise the Shares owned by
such stockholders, determining the fair value of such Shares, exclusive of any
element of value arising from the accomplishment or expectation of the Merger,
together with a fair rate of interest to be paid, if any, upon the amount
determined to be the fair value.
The cost of the appraisal proceeding may be determined by the
Delaware Court of Chancery and taxed upon the parties as the Delaware Court of
Chancery deems equitable in the circumstances. Upon application of a
dissenting stockholder, the Delaware Court of Chancery may order that all or a
portion of the expenses incurred by any dissenting stockholder in connection
with the appraisal proceeding, including, without limitation, reasonable
attorneys' fees and the fees and expenses of experts, be charged pro rata
against the value of all Shares entitled to appraisal. In the absence of such
determination or assessment, each party bears its own expenses.
Any Remaining Stockholder who has duly demanded appraisal in
compliance with Section 262 of the DGCL will not, after the Effective Time, be
entitled to vote for any purpose the Shares subject to such demand or to
receive payment of dividends or other distributions on such Shares, except for
dividends or other distributions payable to stockholders of record at a date
prior to the Effective Time.
At any time within 60 days after the Effective Time, any former
holder of Shares shall have the right to withdraw his or her demand for
appraisal and to accept the per Share cash consideration pursuant to the
Merger. After this period, such holder may withdraw his or her demand for
appraisal only with the consent of the Surviving Corporation. If no petition
for appraisal is filed with the Delaware Court of Chancery within 120 days
after the Effective Time, stockholders' rights to appraisal shall cease and
all stockholders shall be entitled to receive the per Share cash consideration
pursuant to the Merger.
Failure to take any required step in connection with the
exercise of appraisal rights may result in the termination or waiver of such
rights.
APPRAISAL RIGHTS CANNOT BE EXERCISED AT THIS TIME. THE
INFORMATION SET FORTH ABOVE IS FOR INFORMATIONAL PURPOSES ONLY WITH RESPECT TO
ALTERNATIVES AVAILABLE TO STOCKHOLDERS IF THE MERGER (OR ANY SIMILAR BUSINESS
COMBINATION) IS CONSUMMATED. STOCKHOLDERS WHO WILL BE ENTITLED TO APPRAISAL
RIGHTS IN CONNECTION WITH THE MERGER WILL RECEIVE ADDITIONAL INFORMATION
CONCERNING APPRAISAL RIGHTS AND THE PROCEDURES TO BE FOLLOWED IN CONNECTION
THEREWITH BEFORE SUCH STOCKHOLDERS HAVE TO TAKE ANY ACTION RELATING THERETO.
STOCKHOLDERS WHO SELL SHARES IN THE OFFER WILL NOT BE ENTITLED TO EXERCISE
APPRAISAL RIGHTS WITH RESPECT THERETO BUT, RATHER, WILL RECEIVE THE PRICE PAID
IN THE OFFER THEREFOR.
General Corporation Law of the State of Delaware
262. Appraisal Rights
(a) Any stockholder of a corporation of this State who holds
shares of stock on the date of the making of a demand pursuant to subsection
(d) of this section with respect to such shares, who continuously holds such
shares through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to Section 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As
used in this section, the word "stockholder" means a holder of record of stock
in a stock corporation and also a member of record of a nonstock corporation;
the words "stock" and "share" mean and include what is ordinarily meant by
those words and also membership or membership interest of a member of a
nonstock corporation; and the words "depository receipt" mean a receipt or
other instrument issued by a depository representing an interest in one or
more shares, or fractions thereof, solely of stock of a corporation, which
stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any
class or series of stock of a constituent corporation in a merger or
consolidation to be effected pursuant to Section 251 (other than a merger
effected pursuant to Section 251(g) of this title), Sections 252, 254, 257,
258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of
stock, which stock, or depository receipts in respect thereof, at the
record date fixed to determine the stockholders entitled to receive
notice of and to vote at the meeting of stockholders to act upon the
agreement of merger or consolidation, were either (i) listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by more
than 2,000 holders; and further provided that no appraisal rights
shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any
class or series of stock of a constituent corporation if the holders
thereof are required by the terms of an agreement of merger or
consolidation pursuant to Sections 251, 252, 254, 257, 258, 263 and
264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository receipts
in respect thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts at
the effective date of the merger or consolidation will be either
listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system
by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a. and
b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a., b.
and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under Section 253 of this title
is not owned by the parent corporation immediately prior to the
merger, appraisal rights shall be available for the shares of the
subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be available for
the shares of any class or series of its stock as a result of an amendment to
its certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or substantially
all of the assets of the corporation. If the certificate of incorporation
contains such a provision, the procedures of this section, including those set
forth in subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, shall notify each of its stockholders who was
such on the record date for such meeting with respect to shares for
which appraisal rights are available pursuant to subsections (b) or
(c) hereof that appraisal rights are available for any or all of the
shares of the constituent corporations, and shall include in such
notice a copy of this section. Each stockholder electing to demand
the appraisal of his shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written
demand for appraisal of his shares. Such demand will be sufficient if
it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who has
complied with this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that the merger
or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
Section 228 or Section 253 of this title, each constituent
corporation, either before the effective date of the merger or
consolidation or within ten days thereafter, shall notify each of the
holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available
for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be
given by the surviving or resulting corporation to all such holders of
any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or
after the effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of
such holder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the
holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the effective
date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or
within 10 days after such effective date; provided, however, that if
such second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection.
An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall
be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date
of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given
prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is
given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the
merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after his written request for such a statement is
received by the surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or resulting
corporation, which shall within 20 days after such service file in the office
of the Register in Chancery in which the petition was filed a duly verified
list containing the names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting corporation. If the
petition shall be filed by the surviving or resulting corporation, the
petition shall be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time and place
fixed for the hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown on the list
at the addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine
the stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders who have
demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining their fair value
exclusive of any element of value arising from the accomplishment or
expectation of the merger or consolidation, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
In determining such fair value, the Court shall take into account all relevant
factors. In determining the fair rate of interest, the Court may consider all
relevant factors, including the rate of interest which the surviving or
resulting corporation would have had to pay to borrow money during the
pendency of the proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the appraisal
proceeding, the Court may, in its discretion, permit discovery or other
pretrial proceedings and may proceed to trial upon the appraisal prior to the
final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
his certificates of stock to the Register in Chancery, if such is required,
may participate fully in all proceedings until it is finally determined that
he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple or
compound, as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and the
case of holders of shares represented by certificates upon the surrender to
the corporation of the certificates representing such stock. The Court's
decree may be enforced as other decrees in the Court of Chancery may be
enforced, whether such surviving or resulting corporation be a corporation of
this State or of any state.
(j) The costs of the proceeding may be determined by the Court
and taxed upon the parties as the Court deems equitable in the circumstances.
Upon application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded his appraisal rights as
provided in subsection (d) of this section shall be entitled to vote such
stock for any purpose or to receive payment of dividends or other
distributions on the stock (except dividends or other distributions payable to
stockholders of record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition for an
appraisal shall be filed within the time provided in subsection (e) of this
section, or if such stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of his demand for an appraisal and an
acceptance of the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in subsection (e) of
this section or thereafter with the written approval of the corporation, then
the right of such stockholder to an appraisal shall cease. Notwithstanding the
foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed
as to any stockholder without the approval of the Court, and such approval may
be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been converted had
they assented to the merger or consolidation shall have the status of
authorized and unissued shares of the surviving or resulting corporation.
ANNEX D
AUDITED FINANCIAL STATEMENTS (AND RELATED NOTES) FOR THE COMPANY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
and Shareholders of TriMas Corporation:
We have audited the accompanying consolidated balance sheets of
TriMas Corporation and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of income and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of TriMas Corporation and subsidiaries as of December 31, 1996 and 1995, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Detroit, Michigan
February 11, 1997
TRIMAS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Years Ended December 31,
--------------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net sales............................................. $600,230,000 $553,490,000 $535,480,000
Cost of sales......................................... (403,380,000) (371,470,000) (361,520,000)
Selling, general and administrative expenses.......... (92,560,000) (83,340,000) (82,560,000)
------------ ------------ ------------
Operating profit..................................... 104,290,000 98,680,000 91,400,000
Interest expense...................................... (10,810,000) (13,530,000) (12,930,000)
Other, net (principally interest income).............. 7,110,000 6,690,000 5,030,000
------------ ------------ ------------
Income before income taxes........................... 100,590,000 91,840,000 83,500,000
Income taxes.......................................... 39,230,000 35,820,000 33,400,000
------------ ------------ ------------
Net income........................................... $ 61,360,000 $ 56,020,000 $ 50,100,000
============ ============ ============
Earnings per common share:
Primary.............................................. $1.66 $1.51 $1.35
===== ===== =====
Fully diluted........................................ $1.55 $1.42 $1.28
===== ===== =====
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
TRIMAS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------------
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $105,890,000 $92,390,000
Receivables................................................... 80,390,000 71,200,000
Inventories................................................... 92,210,000 85,490,000
Other current assets.......................................... 4,130,000 2,510,000
------------ ------------
Total current asset......................................... 282,620,000 251,590,000
Property and equipments........................................ 194,540,000 173,700,000
Excess of cost over net assets of acquired companies 174,710,000 144,860,000
Other assets................................................... 44,800,000 46,210,000
------------ ------------
Total assets.............................................. $696,670,000 $616,360,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................................. $33,750,000 $24,390,000
Other current liabilities..................................... 45,430,000 29,740,000
------------ ------------
Total current liabilities................................... 79,180,000 54,130,000
Deferred income taxes and other................................ 39,920,000 36,360,000
Long-term debt................................................. 187,120,000 187,200,000
------------ ------------
Total liabilities........................................... 306,220,000 277,690,000
------------ ------------
Shareholders' equity:
Common stock, $.01 par value, authorized 100 million shares,
outstanding 36.6 million shares............................. 370,000 370,000
Paid-in capital............................................... 155,690,000 155,430,000
Retained earnings............................................. 238,290,000 185,370,000
Cumulative translation adjustments............................ (3,900,000) (2,500,000)
------------ ------------
Total shareholders' equity.................................. 390,450,000 338,670,000
------------ ------------
Total liabilities and shareholders' equity................ $696,670,000 $616,360,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
TRIMAS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------
1996 1995 1994
----------- ----------- ---------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net income............................................ $61,360,000 $56,020,000 $50,100,000
Adjustments to reconcile net income to net cash
from operations:
Depreciation and amortization..................... 22,930,000 21,480,000 20,580,000
Deferred income taxes............................. 2,100,000 5,560,000 3,210,000
(Increase) decrease in receivables................ (1,460,000) (4,670,000) (7,280,000)
(Increase) decrease in inventories................ (2,430,000) (5,930,000) (2,860,000)
Increase (decrease) in accounts
payable and accrued liabilities................ 7,320,000 (2,500,000) 5,110,000
Other, net........................................ 1,260,000 (3,710,000) (1,190,000)
------------ ----------- ------------
Net cash from operations........................ 91,080,000 66,250,000 67,670,000
------------ ----------- ------------
INVESTMENTS:
Capital expenditures.................................. (26,670,000) (23,470,000) (24,310,000)
Acquisitions, net of cash acquired.................... (27,490,000)
------------ ----------- ------------
Net cash from (used for) investments............ (54,160,000) (23,470,000) (24,310,000)
------------ ----------- ------------
FINANCING:
Long-term debt:
Issuance............................................ 27,920,000
Retirement.......................................... (43,280,000) (51,470,000) (330,000)
Common stock dividends paid........................... (8,060,000) (6,590,000) (5,130,000)
------------ ----------- ------------
Net cash from (used for) financing.............. (23,420,000) (58,060,000) (5,460,000)
------------ ----------- ------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the year...................... 13,500,000 (15,280,000) 37,900,000
At beginning of the year.............................. 92,390,000 107,670,000 69,770,000
------------ ----------- ------------
At end of the year.................................. $105,890,000 $92,390,000 $107,670,000
============ =========== ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
TRIMAS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
TriMas Corporation and its wholly owned subsidiaries (the "Company"). All
significant intercompany transactions have been eliminated.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Affiliates
As of December 31, 1996, MascoTech, Inc.'s common stock
ownership in the Company approximated 41.5 percent, and Masco Corporation's
common stock ownership approximated 4.3 percent. The Company has a corporate
services agreement with Masco Corporation. Under the terms of the agreement,
the Company pays a fee to Masco Corporation for various corporate support
staff, administrative services, and research and development services. Such
fee equals .8 percent of the Company's net sales, subject to certain
adjustments, and totaled $3.3 million, $3.1 million and $3.0 million in 1996,
1995 and 1994.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash equivalents. At
December 31, 1996 the Company had $84.8 million invested in prime commercial
paper of several United States issuers having the highest rating given by one
of the two principal rating agencies.
Receivables
Receivables are presented net of an allowance for doubtful
accounts of $1.9 million and $1.5 million at December 31, 1996 and 1995.
Inventories
Inventories are stated at the lower of cost or net realizable
value, with cost determined principally by use of the first-in, first-out
method.
Property and Equipment
Property and equipment additions, including significant
betterments, are recorded at cost. Upon retirement or disposal of property and
equipment, the cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in income. Maintenance and repair costs are
charged to expense as incurred.
Depreciation and Amortization
Depreciation is computed principally using the straight-line
method over the estimated useful lives of the assets. Annual depreciation
rates are as follows: buildings and land improvements, 2 1/2 to 5 percent, and
machinery and equipment, 6 2/3 to 33 1/3 percent. The excess of cost over net
assets of acquired companies is being amortized using the straight-line method
over the periods estimated to be benefited, not exceeding 40 years. At
December 31, 1996 and 1995, accumulated amortization of the excess of cost
over net assets of acquired companies and other intangible assets was $36.6
million and $31.3 million. Amortization expense was $5.3 million, $5.0 million
and $5.3 million in 1996, 1995 and 1994.
As of each balance sheet date management assesses whether there
has been an impairment in the value of excess of cost over net assets of
acquired companies by comparing anticipated undiscounted future cash flows
from the related operating activities with the carrying value. The factors
considered by management in performing this assessment include current
operating results, trends and prospects, as well as the effects of
obsolescence, demand, competition and other economic factors. Based on this
assessment there was no impairment at December 31, 1996.
Fair Value of Financial Instruments
The carrying values of financial instruments classified in the
balance sheet as current assets and current liabilities approximate fair
values. The fair value of notes receivable, a portion of which is included in
both receivables and other assets, based on discounted cash flows using
current interest rates, approximates the carrying value of $9.6 million at
December 31, 1996.
The carrying amount of borrowings from banks approximates fair
value as the floating rates applicable to this debt generally reflect changes
in overall market interest rates. The fair value of the Company's Convertible
Subordinated Debentures, based on quoted market prices, was $124.8 million at
December 31, 1996 and $112.7 million at December 31, 1995, as compared to the
carrying value on such dates of $115.0 million.
Foreign Currency Translation
Net assets of the Company's operations outside of the United
States are translated into U.S. dollars using current exchange rates with the
effects of translation adjustments deferred and included as a separate
component of shareholders' equity. Revenues and expenses are translated at the
average rates of exchange during the period.
Earnings per Common Share
Primary earnings per common share in 1996, 1995 and 1994 were
calculated on the basis of 37.0 million weighted average common and common
equivalent shares outstanding. Fully diluted earnings per common share in
1996, 1995 and 1994 were calculated on the basis of 42.1 million weighted
average common and common equivalent shares outstanding.
2. Acquisitions
In June 1996 the Company acquired Queensland Towbars Pty. Ltd.
("Queensland"), in July it acquired The Englass Group Limited ("Englass"), and
in the fourth quarter it acquired Heinrich Stolz GmbH ("Stolz") and Beaumont
Bolt & Gasket Co. ("Beaumont"), all for an aggregate $54.2 million of cash and
assumed liabilities. The acquisitions were accounted for as purchases. The
aggregate excess of cost over net assets acquired of $28.8 million is being
amortized on a straight-line basis over 40 years. The results of operations of
the acquired businesses have been included in the consolidated financial
statements from the respective acquisition dates. Additional purchase price
amounts, contingent upon the achievement of specified levels of future
profitability by certain of the businesses, may be payable in 1997. These
payments, if required, will be recorded as additional excess of cost over net
assets of acquired companies.
Englass is a United Kingdom-based supplier of specialty
dispensing and packaging products with applications in toiletry,
pharmaceutical, veterinary, food and consumer household markets. Stolz, based
in Neunkirchen, Germany, manufactures a wide variety of closures for
industrial packaging markets. Queensland is Australia's second largest
manufacturer of vehicle hitches and towing products. Beaumont, based in Texas,
manufactures and distributes specialty metallic and nonmetallic gaskets, and
complementary bolts and fasteners used in the refinery, chemical and
petrochemical industries.
On a pro forma, unaudited basis, as if the 1996 acquisitions
had all occurred as of January 1, 1995, net sales, net income, primary
earnings per common share and fully diluted earnings per common share for 1996
would have been $631.5 million, $63.1 million, $1.71 and $1.59, and net sales,
net income, primary earnings per common share and fully diluted earnings per
common share for 1995 would have been $592.6 million, $57.6 million, $1.56 and
$1.46.
3. Supplemental Cash Flows Information
<TABLE>
<CAPTION>
(In thousands)
For the Years Ended December 31,
---------------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Interest paid..................................................... $10,610 $13,560 $12,110
======= ======= =======
Income taxes paid................................................. $33,180 $30,690 $30,440
======= ======= =======
Significant noncash transactions:
Common stock dividends declared, payable in subsequent
year............................................................. $ 2,200 $ 1,830 $ 1,460
======= ======= =======
Assumption of liabilities as partial consideration for the
assets of companies acquired.................................... $26,720
=======
Increase in obligation, including accrued interest, to
former owner, MascoTech, Inc., of business acquired,
recorded as additional excess of cost over net assets of
acquired companies............................................. $ 5,850
=======
</TABLE>
4. Inventories
<TABLE>
<CAPTION>
(In thousands)
At December 31,
--------------------
1996 1995
------- -------
<S> <C> <C>
Finished goods............... $53,380 $47,490
Work in process.............. 14,340 14,200
Raw material................. 24,490 23,800
------- -------
$92,210 $85,490
======= =======
</TABLE>
5. Property and Equipment
<TABLE>
<CAPTION>
(In thousands)
At December 31,
---------------------
1996 1995
------- -------
<S> <C> <C>
Cost:
Land and land improvements........... $ 14,010 $ 13,380
Buildings............................ 71,260 65,560
Machinery and equipment.............. 240,960 211,540
-------- --------
326,230 290,480
Less accumulated depreciation......... 131,690 116,780
-------- --------
$194,540 $173,700
======== ========
</TABLE>
Depreciation expense was $17.7 million, $16.4 million and
$15.2 million in 1996, 1995 and 1994.
6. Other Current Liabilities
<TABLE>
<CAPTION>
(In thousands)
At December 31,
--------------------
1996 1995
-------- -------
<S> <C> <C>
Employee wages and benefits................................................... $18,570 $16,010
Amount due former owner, MascoTech, Inc., of business acquired................ 5,850
Current income taxes.......................................................... 3,810 1,080
Interest...................................................................... 2,710 2,820
Dividends..................................................................... 2,200 1,830
Property taxes................................................................ 1,930 1,890
Other......................................................................... 10,360 6,110
------- -------
$45,430 $29,740
======== =======
</TABLE>
7. Long-term Debt
<TABLE>
<CAPTION>
(In thousands)
At December 31,
---------------------
1996 1995
------- -------
<S> <C> <C>
Borrowings from banks............................. $68,030 $72,000
5% Convertible Subordinated Debentures Due 2003... 115,000 115,000
Other............................................. 4,260 410
-------- --------
187,290 187,410
Less current maturities........................... 170 210
-------- --------
$187,120 $187,200
======== ========
</TABLE>
At December 31, 1996 borrowings from banks are owing under
the Company's domestic $350.0 million revolving credit facility ($33.0
million), its Pound Sterling20.0 million revolving credit facility in
England ($19.3 million), its DM 30.0 million revolving credit facility in
Germany ($9.0 million) and other borrowing arrangements in Germany ($6.7
million). At December 31, 1995 borrowings from banks were owing under the
domestic facility. The domestic facility permits the Company to borrow
under several different interest rate options, while the foreign facilities
base interest rates on the London Interbank Offered Rate (LIBOR). At
December 31, 1996 the blended interest rate on bank borrowings equaled 5.9
percent. The facilities contain certain restrictive covenants, the most
restrictive of which, at December 31, 1996, required $270.1 million of
shareholders' equity. The Company had available credit of $341.8 million
under its revolving credit facilities at December 31, 1996.
During February 1997 TriMas called for redemption, on March 21,
1997, its outstanding issue of $115.0 million of 5% Convertible Subordinated
Debentures Due 2003. The Debentures are convertible at the option of the
holders through March 20, 1997 into shares of Company common stock at a
conversion price of $22 5/8 per share. The Company currently plans to use
long-term borrowings under its domestic revolving credit facility to redeem
the Debentures. The redemption price for the Debentures will be 103.33 percent
of the principal amount. Any premium and unamortized debt issuance costs
associated with the Debentures redeemed will be recorded as an extraordinary
charge, on an after tax basis, in the first quarter of 1997.
8. Shareholders' Equity
<TABLE>
<CAPTION>
(In thousands)
Cumulative
Retained Translation
Common Stock Paid-in Capital Earnings Adjustments Total
------------ --------------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994..... $370 $154,190 $91,700 ($1,410) $244,850
Net income.................. 50,100 50,100
Common stock dividends...... (5,490) (5,490)
Other....................... 1,020 120 1,140
---- -------- -------- ------- --------
Balance, December 31, 1994... 370 155,210 136,310 (1,290) 290,600
Net income.................. 56,020 56,020
Common stock dividends...... (6,960) (6,960)
Other....................... 220 (1,210) (990)
---- -------- -------- ------- --------
Balance, December 31, 1995... 370 155,430 185,370 (2,500) 338,670
Net income.................. 61,360 61,360
Common stock dividends...... (8,440) (8,440)
Other....................... 260 (1,400) (1,140)
---- -------- -------- ------- --------
Balance, December 31, 1996... $370 $155,690 $238,290 ($3,900) $390,450
==== ======== ======== ======= ========
</TABLE>
On the basis of amounts paid (declared), cash dividends per
common share were $.22 ($.23) in 1996, $.18 ($.19) in 1995 and $.14 ($.15)
in 1994.
Under a Stock Repurchase Agreement which expires in December
1998, Masco Corporation and MascoTech, Inc. have the right to sell to the
Company, at approximate fair market value, shares of Company common stock
following the occurrence of certain events that would result in an increase in
their respective ownership percentage of the then outstanding shares of
Company common stock. Such events include repurchases of Company common stock
initiated by TriMas or any of its subsidiaries, and reacquisitions of Company
common stock through forfeitures of shares previously awarded by the Company
pursuant to its employee stock incentive plans. In each case, TriMas has
control over the amount of Company common stock it would ultimately acquire,
including shares subject to repurchase under the Stock Repurchase Agreement.
The aforementioned rights expire 30 days from the date notice of an event is
given by TriMas and neither Masco Corporation nor MascoTech, Inc. have ever
exercised their right to sell Company common stock to the Company. To the
extent these rights have been exercised at any balance sheet date, the Company
would reclassify from permanent capital an amount representative of the
repurchase obligation.
9. Stock Options and Awards
The Company's stock incentive plans include the TriMas Corporation 1995 Long
Term Stock Incentive Plan, the 1988 Restricted Stock Incentive Plan and the
1988 Stock Option Plan. Company common stock available for grant under these
plans includes the 2,000,000 shares initially established under the 1995 plan,
plus additional shares resulting from certain reacquisitions of shares by the
Company.
The Company granted long-term incentive awards of Company
common stock, net, for 159,071 shares in 1996, 290,588 shares in 1995 and
88,118 shares in 1994, to key employees of the Company. The weighted average
fair value per share, on date of grant, of long-term incentive awards granted
in 1996 and 1995 was $19.66 and $23.21. Compensation expense recorded in 1996,
1995 and 1994 related to long-term incentive awards was $2.2 million, $1.6
million and $1.2 million. The unamortized costs of incentive awards,
aggregating $14.0 million at December 31, 1996, are being amortized over the
ten year vesting periods.
Fixed stock options are granted to key employees of the Company
and have a maximum term of ten years. The exercise price of each fixed option
equals the market price of the Company's common stock on the date of grant.
The options generally vest in installments beginning in the second year and
extending through the eighth year after grant. For the three years ended
December 31, 1996 stock option information is as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Options outstanding, January 1......................... 576,064 594,200 604,000
Options granted:
At option prices per share of $18.38-$25.50........... 16,154 4,864
Weighted average option price per share............... $22.12 $23.35
Options exercised:
At option price per share of $8.88.................... 53,661 23,000 9,800
Options outstanding, December 31:
At option prices per share of $7.50-$8.88............. 517,539 571,200 594,200
Weighted average option price per share............. $8.45 $8.49 $8.50
Weighted average remaining term..................... 3.5 years 4.6 years 5.6 years
At option prices per share of $18.38-$25.50........... 21,018 4,864
Weighted average option price per share............. $22.40 $23.35
Weighted average remaining term..................... 4.3 years 5.3 years
Exercisable, December 31............................... 312,552 260,464 218,000
Weighted average option price per share............... $8.94
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, in accounting for stock based
compensation. Accordingly, no compensation expense has been charged against
income for fixed stock option grants. Had compensation expense been determined
based on the fair value at the 1996 and 1995 grant dates, consistent with the
methodology of Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation, the pro forma effects on the Company's net income
and earnings per share would not have been material.
At December 31, 1996 and 1995, a combined total of 2,011,642
and 2,055,803 shares of Company common stock were available for the granting
of options and incentive awards under the aforementioned plans.
10. Retirement Plans
The Company has noncontributory retirement benefit plans, both
defined benefit plans and profit-sharing and other defined contribution plans,
for most of its employees.
The annual expense for all plans was:
<TABLE>
<CAPTION>
(In thousands)
For the Years Ended December 31,
------------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Defined contribution plans.. $2,480 $3,470 $3,320
Defined benefit plans....... 2,660 1,690 890
------ ------ ------
$5,140 $5,160 $4,210
====== ====== ======
</TABLE>
Contributions to profit-sharing and other defined contribution
plans are generally determined as a percentage of the covered employee's annual
salary.
Defined benefit plans provide retirement benefits for salaried
employees based primarily on years of service and average earnings for the
five highest consecutive years of compensation. Defined benefit plans covering
hourly employees generally provide benefits of stated amounts for each year of
service. These plans are funded based on an actuarial evaluation and review of
the assets, liabilities and requirements of each plan. Plan assets are held by
a trustee and invested principally in cash equivalents and marketable equity
and fixed income instruments.
Net periodic pension cost of defined benefit plans includes the
following components:
<TABLE>
<CAPTION>
(In thousands)
For the Years Ended December 31,
-------------------------------------
1996 1995 1994
------ ------ -------
<S> <C> <C> <C>
Service cost................... $2,670 $2,000 $2,490
Interest cost.................. 3,980 3,570 3,310
Actual (return)/loss on assets. (4,010) (5,360) 1,820
Net amortization and deferral.. 20 1,480 (6,730)
------ ------ ------
$2,660 $1,690 $890
====== ====== ======
</TABLE>
Weighted average rate assumptions used were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Discount rate.................................... 7.5% 7.3% 8.5%
Rate of increase in compensation levels.......... 5.1% 5.1% 5.1%
Expected long-term rate of return on plan assets. 10.6% 10.7% 12.5%
</TABLE>
The following table sets forth the funded status of the defined
benefit plans:
<TABLE>
<CAPTION>
(In thousands)
At December 31,
-----------------------------------------------------------------------
1996 1995
--------------------------------- ---------------------------------
Plans Where Plans Where Plans Where Plans Where
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Exceed Accumulated Benefits Exceed
Benefits Assets Benefits Assets
------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation.......................... $30,850 $12,060 $30,680 $11,530
======= ======= ======= =======
Accumulated benefit obligation..................... $31,220 $14,190 $31,000 $12,960
======= ======= ======= =======
Projected benefit obligation....................... $41,030 $15,270 $39,900 $13,980
Plan assets at fair value........................... 35,660 9,200 33,640 7,790
------- ------- ------- -------
Projected benefit obligation (in excess of) or less
than plan assets................................... (5,370) (6,070) (6,260) (6,190)
Unrecognized net (asset) or obligation.............. (980) 390 (1,160) 420
Unrecognized prior service cost..................... 400 1,680 440 1,670
Unrecognized net (gain) or loss..................... 5,630 3,240 7,910 3,230
Requirement to recognize minimum liability.......... (4,220) (4,300)
Prepaid pension cost or (pension liability)...... $(320) $(4,980) $930 $(5,170)
</TABLE>
The Company provides postretirement health care and life
insurance benefits for certain eligible retired employees under unfunded plans.
Some of the plans have cost-sharing provisions. Net periodic postretirement
benefit costs during 1996, 1995 and 1994 were $1.0 million, $.8 million and $.8
million.
The aggregate accumulated postretirement benefit obligation of
these unfunded plans was $7.1 million at both December 31, 1996 and 1995. The
discount rates used in determining the accumulated postretirement benefit
obligations and the net periodic postretirement benefit costs were 7.5
percent, 7.3 percent and 8.5 percent in 1996, 1995 and 1994. The assumed
health care cost trend rate in 1996 was 12.0 percent, decreasing to an
ultimate rate in the years subsequent to 2001 of seven percent. A one percent
increase in the assumed health care cost trend rates would have increased the
net periodic postretirement benefit cost by $.1 million during 1996 and would
have increased the accumulated postretirement benefit obligation at December
31, 1996 by $.9 million. The Company is amortizing the unrecognized transition
accumulated postretirement benefit obligation and subsequent plan net gains
and losses in accordance with Statement of Financial Accounting Standards No.
106. The accrued postretirement benefit obligation was $3.5 million and $3.1
million at December 31, 1996 and 1995.
11. Business Segment and Geographic Area Information
The Company's operations in its business segments consist principally of
the manufacture and sale of the following:
o Specialty Fasteners: Cold formed fasteners and related metallurgical
processing.
o Towing Systems: Vehicle hitches, jacks, winches, couplers and related
towing accessories.
o Specialty Container Products: Industrial container closures, pressurized
gas cylinders and metallic and nonmetallic baskets.
o Corporate Companies: Specialty drills, cutters and specialized metal
finishing services, and flame-retardant facings and jacketings and
pressure-sensitive tapes.
<TABLE>
<CAPTION>
(In thousands)
For the Years Ended December 31,
----------------------------------------
1996 1995 1994
-------- -------- ---------
<S> <C> <C> <C>
NET SALES
Specialty Fasteners.......................... $141,510 $141,050 $138,720
Towing Systems............................... 189,540 175,000 163,130
Specialty Container Products................. 189,320 165,670 163,880
Corporate Companies.......................... 79,860 71,770 69,750
-------- -------- --------
Total net sales............................ $600,230 $553,490 $535,480
======== ======== ========
OPERATING PROFIT
Specialty Fasteners.......................... $25,740 $27,290 $24,280
Towing Systems............................... 31,480 31,080 25,660
Specialty Container Products................. 42,890 39,040 39,060
Corporate Companies.......................... 11,980 8,420 9,850
-------- -------- --------
Total operating profit..................... 112,090 105,830 98,850
Other income (expense), net................... (3,700) (6,840) (7,900)
General corporate expense..................... (7,800) (7,150) (7,450)
-------- -------- --------
Income before income taxes................. $100,590 $91,840 $83,500
======== ======== ========
IDENTIFIABLE ASSETS AT DECEMBER 31
Specialty Fasteners.......................... $143,060 $146,200 $137,190
Towing Systems............................... 158,840 151,160 148,890
Specialty Container Products................. 231,610 149,790 150,360
Corporate Companies ......................... 57,220 56,230 55,210
Corporate Assets (A)......................... 105,940 112,980 123,490
-------- -------- --------
Total assets............................... $696,670 $616,360 $615,140
======== ======== ========
CAPITAL EXPENDITURES
Specialty Fasteners.......................... $4,500 $10,840 $9,140
Towing Systems............................... 9,160 4,790 6,720
Specialty Container Products................. 23,170 5,780 5,420
Corporate Companies.......................... 2,690 2,030 3,000
Corporate.................................... 10 30 30
-------- -------- --------
Total capital expenditures................. $39,530 (B) $23,470 $24,310
======== ======== ========
DEPRECIATION AND AMORTIZATION
Specialty Fasteners.......................... $7,510 $7,230 $6,970
Towing Systems............................... 6,070 5,610 5,390
Specialty Container Products................. 6,690 6,140 5,790
Corporate Companies.......................... 2,590 2,430 2,360
Corporate.................................... 70 70 70
-------- -------- --------
Total depreciation and amortization........ $22,930 $21,480 $20,580
======== ======== ========
</TABLE>
- ------------
(A) Corporate assets consist primarily of cash and cash equivalents.
(B) Including $12.9 million from businesses acquired.
Sales of the Company's foreign operations equaled $46.0 million,
$33.7 million and $35.2 million in 1996, 1995 and 1994. Identifiable assets of
foreign operations totaled $82.9 million, $32.4 million and $26.5 million at
December 31, 1996, 1995 and 1994. Export sales equaled less than ten percent of
total sales for each of the three years presented.
12. Income Taxes
<TABLE>
<CAPTION>
(In thousands)
For the Years Ended December 31,
------------------------------------
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Income before income taxes:
Domestic...................... $92,990 $86,900 $79,040
Foreign....................... 7,600 4,940 4,460
-------- ------- -------
$100,590 $91,840 $83,500
======== ======= =======
Provision for income taxes:
Federal....................... $29,700 $23,810 $24,240
State and local............... 4,690 4,460 4,100
Foreign....................... 2,740 1,990 1,850
Deferred, principally federal. 2,100 5,560 3,210
-------- ------- -------
$39,230 $35,820 $33,400
======== ======= =======
</TABLE>
The following is a reconciliation of the U.S. federal statutory
tax rate to the effective tax rate:
<TABLE>
<CAPTION>
For the Years Ended December 31,
--------------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
U.S. federal statutory tax rate.................................... 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit.................. 3.0 3.1 3.2
Foreign taxes in excess of U.S. federal tax rate................... 0.1 0.3 0.3
Nondeductible amortization of excess of cost over net assets of
acquired companies................................................ 0.6 0.7 0.8
Other, net......................................................... 0.3 (0.1) 0.7
---- ---- ----
Effective tax rate................................................ 39.0% 39.0% 40.0%
==== ==== ====
</TABLE>
Items that gave rise to deferred taxes:
<TABLE>
<CAPTION>
(In thousands)
At December 31,
-----------------------------------------------------------------
1996 1995
-----------------------------------------------------------------
Deferred Tax Deferred Tax Deferred Tax Deferred Tax
Assets Liabilities Assets Liabilities
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Property and equipment............ $23,940 $22,240
Intangible assets................. 4,960 3,840
Accrued employee benefits......... $2,950 $1,200
Inventory......................... 620 1,080
Other............................. 1,420 4,480 910 3,400
------ ------- ------ -------
$4,990 $33,380 $3,190 $29,480
====== ======= ====== =======
</TABLE>
13. Interim Financial Information (Unaudited)
<TABLE>
<CAPTION>
(In thousands except per share amounts)
-----------------------------------------------------
First Quarter Second Quarter
----------------------- -----------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales.......................................... $147,700 $147,600 $160,200 $151,920
Gross profit....................................... $47,460 $47,600 $53,460 $50,530
Net income......................................... $14,130 $13,440 $17,820 $16,560
Primary earnings per common share.................. $0.38 $0.36 $0.48 $0.45
Fully diluted earnings per common share............ $0.36 $0.34 $0.45 $0.42
Weighted average common and common equivalent
shares outstanding:
Primary......................................... 36,966 36,996 36,983 37,001
Fully diluted................................... 42,067 42,090 42,065 42,088
</TABLE>
<TABLE>
<CAPTION>
Third Quarter Fourth Quarter
---------------------- ----------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C>
Net sales............................................ $149,620 $131,880 $142,710 $122,090
Gross profit......................................... $47,790 $42,520 $48,140 $41,370
Net income........................................... $14,440 $13,220 $14,970 $12,800
Primary earnings per common share.................... $0.39 $0.36 $0.40 $0.35
Fully diluted earnings per common share.............. $0.37 $0.34 $0.38 $0.33
Weighted average common and common equivalent
shares outstanding:
Primary............................................. 36,977 36,998 36,978 36,978
Fully diluted....................................... 42,072 42,080 42,063 42,061
</TABLE>
Earnings per common share in the fourth quarter of 1996 and
1995 were improved by $.06 and $.07, net, resulting from year end adjustments
to estimates recorded earlier in each year. Amounts adjusted include rebates
from raw material suppliers, required year end insurance reserves and incentive
compensation accruals whose final determinations require actual results for the
year. Quarterly earnings per common share amounts for both 1996 and 1995 do not
total to the full year amounts due to rounding.
Quarterly Common Stock Price and Dividend Information
<TABLE>
<CAPTION>
Market Price Dividends
High Low Declared
------- ------- ---------
<S> <C> <C> <C>
1996
- ----
4th Quarter...... $25 1/2 $22 3/8 $0.06
3rd Quarter...... 24 1/4 19 7/8 0.06
2nd Quarter...... 25 1/2 20 7/8 0.06
1st Quarter...... 24 3/8 16 7/8 0.05
1995
- ----
4th Quarter...... $22 1/4 $18 3/8 $0.05
3rd Quarter...... 25 1/2 20 0.05
2nd Quarter...... 24 1/4 20 1/4 0.05
1st Quarter...... 22 3/4 19 5/8 0.04
</TABLE>
ANNEX E
UNAUDITED FINANCIAL STATEMENTS (AND RELATED NOTES) FOR THE COMPANY
FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1997
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
1997 December 31,
(unaudited) 1996
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................... $125,960,000 $105,890,000
Receivables................................................................. 93,400,000 80,390,000
Inventories................................................................. 89,710,000 92,210,000
Other current assets........................................................ 5,260,000 4,130,000
------------ ------------
Total current assets...................................................... 314,330,000 282,620,000
------------ ------------
Property and equipment....................................................... 194,660,000 194,540,000
Excess of cost over net assets of acquired companies......................... 176,970,000 174,710,000
Other assets................................................................. 41,130,000 44,800,000
------------ ------------
Total assets.............................................................. $727,090,000 $696,670,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable............................................................ $29,370,000 $33,750,000
Other current liabilities................................................... 37,150,000 45,430,000
------------ ------------
Total current liabilities................................................. 66,520,000 79,180,000
------------ ------------
Deferred income taxes and other.............................................. 47,540,000 39,920,000
Long-term debt............................................................... 71,630,000 187,120,000
------------ ------------
Total liabilities......................................................... 185,690,000 306,220,000
============ ============
Shareholders' equity:
Common stock, $.01 par value, authorized 100 million shares,
outstanding 41.3 million shares in 1997; 36.6 million shares in 1996........ 410,000 370,000
Paid-in capital.............................................................. 259,330,000 155,690,000
Retained earnings............................................................ 285,180,000 238,290,000
Cumulative translation adjustments........................................... (3,520,000) (3,900,000)
------------ ------------
Total shareholders' equity.................................................. 541,400,000 390,450,000
------------ ------------
Total liabilities and shareholders' equity................................ $727,090,000 $696,670,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated condensed
financial statements
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30, Three Months Ended September 30,
--------------------------------- ----------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales................................. $515,660,000 $457,520,000 $168,600,000 $149,620,000
Cost of sales............................. (349,090,000) (308,810,000) (115,060,000) (101,830,000)
Selling, general and administrative
expenses................................. (77,910,000) (69,030,000) (25,990,000) (23,170,000)
------------ ------------ ------------ ------------
Operating profit......................... 88,660,000 79,680,000 27,550,000 24,620,000
Interest expense.......................... (4,250,000) (8,150,000) (1,230,000) (2,630,000)
Other, net (principally interest income).. 4,540,000 4,520,000 1,860,000 1,680,000
------------ ------------ ------------ ------------
290,000 (3,630,000) 630,000 (950,000)
------------ ------------ ------------ ------------
Income before income taxes................ 88,950,000 76,050,000 28,180,000 23,670,000
Income taxes.............................. 33,800,000 29,660,000 10,750,000 9,230,000
------------ ------------ ------------ ------------
Net income................................ $55,150,000 $46,390,000 $17,430,000 $14,440,000
============ ============ ============ ============
Earnings per common share:
Primary........................... $1.37 $1.25 $0.42 $0.39
===== ===== ===== =====
Fully diluted..................... $1.33 $1.17 $0.42 $0.37
===== ===== ===== =====
Dividends declared per common share.. $0.20 $0.17 $0.07 $0.06
===== ===== ===== =====
Weighted average number of common and
common equivalent shares outstanding:
Primary................................ 40,343,000 36,971,000 41,679,000 36,977,000
========== ========== ========== ==========
Fully diluted.......................... 41,686,000 42,072,000 41,686,000 42,072,000
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated condensed
financial statements
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------
1997 1996
----------- -----------
<S> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net income................................................................. $55,150,000 $46,390,000
Adjustments to reconcile net income to net cash from operations:
Depreciation and amortization............................................ 19,620,000 17,390,000
Deferred income taxes.................................................... 2,250,000 3,100,000
(Increase) decrease in receivables....................................... (11,710,000) (5,580,000)
(Increase) decrease in inventories....................................... 2,500,000 (230,000)
Increase (decrease) in accounts payable and other current liabilities.... (8,320,000) 4,950,000
Other, net............................................................... (1,210,000) (1,290,000)
------------ ------------
Net cash from (used for) operations.................................... 58,280,000 64,730,000
------------ ------------
INVESTMENTS:
Capital expenditures....................................................... (17,860,000) (16,740,000)
Acquisitions, net of cash acquired......................................... (21,470,000)
Contingent acquisition price paid (principally to MascoTech, Inc.)......... (7,450,000)
------------ ------------
Net cash from (used for) investments..................................... (25,310,000) (38,210,000)
------------ ------------
FINANCING:
Long-term debt:
Issuance................................................................. 17,400,000 18,480,000
Retirement............................................................... (22,730,000) (22,200,000)
Common stock dividends paid................................................ (7,570,000) (5,860,000)
------------ ------------
Net cash from (used for) financing....................................... (12,900,000) (9,580,000)
------------ ------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the period......................................... 20,070,000 16,940,000
At beginning of period..................................................... 105,890,000 92,390,000
------------ ------------
At end of period......................................................... $125,960,000 $109,330,000
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Noncash financing transaction:
Conversion of convertible subordinated debentures into common
stock................................................................. $106,000,000
============
</TABLE>
The accompanying notes are an integral part of the consolidated condensed
financial statements
TRIMAS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
A. Basis of Presentation. The accompanying unaudited consolidated condensed
financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included, and such adjustments
are of a normal recurring nature. The year-end condensed balance sheet
data was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 1996.
B. Inventories by component are as follows:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Finished goods........ $48,340,000 $53,380,000
Work in process....... 16,050,000 14,340,000
Raw material.......... 25,320,000 24,490,000
----------- -----------
$89,710,000 $92,210,000
=========== ===========
</TABLE>
C. Property and equipment reflects accumulated depreciation of $143.8 million
and $131.7 million as of September 30, 1997 and December 31, 1996,
respectively.
D. During the first quarter of 1997 the Company announced that
it would redeem for cash its outstanding issue of $115.0 million of 5%
Convertible Subordinated Debentures Due 2003. In March 1997, $9.0
million of Convertible Subordinated Debentures were redeemed for cash.
The remaining $106.0 million of Convertible Subordinated Debentures were
converted into 4.7 million shares of TriMas Corporation common stock at
the conversion price of $22(5)/(8) per share.
Exhibit (a)(2)
Letter of Transmittal
To Tender Shares of Common Stock
of
TriMas Corporation
Pursuant to the Offer to Purchase dated December 17, 1997
of
MascoTech Acquisition, Inc.
a wholly owned subsidiary of
MascoTech, Inc.
- -----------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JANUARY 16, 1998, UNLESS THE OFFER IS EXTENDED.
- -----------------------------------------------------------------------------
The Depositary for the Offer is:
The Bank of New York
<TABLE>
<CAPTION>
<S> <C> <C>
By Facsimile
By Mail: (For Eligible Institutions Only): By Overnight Courier:
Tender & Exchange Department (215) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm Facsimile by Telephone Receive and Deliver Window
New York, New York 10286-1248 1-800-507-9357 New York, New York 10286
By Hand:
Tender & Exchange Department
101 Barclay Street
Receive and Deliver Window
New York, New York 10286
-----------
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates
for Shares (as defined below) are to be forwarded herewith or if delivery of
Shares is to be made by book-entry transfer to the Depositary's account at The
Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company
("PDTC") (each a "Book-Entry Transfer Facility" and collectively, the
"Book-Entry Transfer Facilities") pursuant to the book-entry transfer
procedure described under "The Tender Offer--Procedures for Accepting the
Offer and Tendering Shares" in the Offer to Purchase (as defined below).
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
Stockholders whose certificates evidencing Shares ("Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other documents required hereby to the Depositary prior
to the Expiration Date (as defined under "The Tender Offer--Terms of the
Offer" in the Offer to Purchase) or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis and who wish to tender their
Shares must do so pursuant to the guaranteed delivery procedure described
under "The Tender Offer--Procedures for Accepting the Offer and Tendering
Shares" in the Offer to Purchase. See Instruction 2.
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
=============================================================================================================================
Name(s) and Address(es) of Registered Holder(s) Shares Tendered
(Please fill in, if blank) (Attach additional list if necessary)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Number of Number of
Certificate Shares Represented Shares
Number(s)* by Certificate(s)* Tendered**
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total Shares
- -----------------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to
the Depositary are being tendered. See Instruction 4.
</TABLE>
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution.............................................
Check box of applicable book-entry transfer facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account No..............................................................at
Transaction Code No.....................................................
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s).........................................
Date of Execution of Notice of Guaranteed Delivery......................
Name of Institution which Guaranteed Delivery...........................
If delivery is by book-entry transfer, check box of applicable
book-entry transfer facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account No............................................................at
Transaction Code No.....................................................
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to MascoTech Acquisition, Inc.,
a Delaware corporation ("Purchaser") and a wholly owned subsidiary of
MascoTech, Inc., a Delaware corporation, the above-described shares (the
"Shares") of common stock, par value $.01 per share, of TriMas Corporation, a
Delaware corporation (the "Company"), upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase dated December 17, 1997
(the "Offer to Purchase") and this Letter of Transmittal (which, together with
any amendments or supplements thereto or hereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged. The undersigned
understands that Purchaser reserves the right to transfer or assign, in whole
or from time to time in part, to one or more of its affiliates, the right to
purchase all or any portion of the issued and outstanding Shares tendered
pursuant to the Offer.
Upon the terms of the Offer, subject to, and effective upon,
acceptance for payment of, and payment for, the Shares tendered herewith in
accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to, or upon the order of, Purchaser all right, title and
interest in and to all the Shares that are being tendered hereby and all
dividends, distributions (including, without limitation, distributions of
additional Shares) and rights declared, paid or distributed in respect of such
Shares on or after December 17, 1997 (collectively, "Distributions") other
than the dividend of $.07 per Share declared by the Board of Directors of the
Company on December 10, 1997 and payable on January 7, 1998 to holders of
record of Shares on December 29, 1997, 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 all Distributions, with full power
of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to (i) deliver Share Certificates evidencing
such Shares and all Distributions, or transfer ownership of such Shares and
all Distributions on the account books maintained by a Book-Entry Transfer
Facility, together, in either case, with all accompanying evidences of
transfer and authenticity, to or upon the order of Purchaser, (ii) present
such Shares and all 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 all Distributions, all in accordance with the
terms of the Offer.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to tender, sell, assign and transfer
the Shares tendered hereby and all Distributions, that when such Shares are
accepted for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Shares
and Distributions will be subject to any adverse claim. The undersigned will,
upon request, execute any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby and all Distributions.
In addition, the undersigned shall remit and transfer promptly
to the Depositary for the account of Purchaser all Distributions 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
each such Distribution and may withhold the entire purchase price of the
Shares tendered hereby, or deduct from such purchase price, the amount or
value of such Distribution as determined by Purchaser in its sole discretion.
All authority conferred or agreed to be conferred pursuant to
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 irrevocably appoints Lee M. Gardner and
Timothy Wadhams, and each of them, as the attorneys and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his substitute shall, in his sole discretion,
deem proper and otherwise act (by written consent or otherwise) with respect
to all the Shares tendered hereby which have been accepted for payment by
Purchaser prior to the time of such vote or other action and all Shares and
other securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed
meeting) or consent in lieu of any such meeting or otherwise. This proxy and
power of attorney is coupled with an interest in the Shares tendered hereby,
is irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with other
terms of the Offer. Such acceptance for payment shall revoke all other
proxies and powers of attorney granted by the undersigned at any time with
respect to such Shares (and all Shares and other securities issued in
Distributions in respect of such Shares), and no subsequent proxy or power of
attorney shall be given or written consent executed (and if given or executed,
shall not be effective) by the undersigned with respect thereto. The
undersigned understands that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's acceptance of such Shares for payment,
Purchaser must be able to exercise full voting and other rights with respect
to such Shares, including, without limitation, voting at any meeting of the
Company's stockholders then scheduled.
The undersigned understands that tenders of Shares pursuant to
any one of the procedures described in the Offer to Purchase under "The Tender
Offer--Procedures for Accepting the Offer and Tendering Shares" and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for
payment will constitute a binding agreement between the undersigned and
Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special
Payment Instructions", please issue the check for the purchase price of all
Shares purchased, and return all Share Certificates evidencing Shares not
purchased or not tendered in the name(s) of the registered holder(s) appearing
above under "Description of Shares Tendered". Similarly, unless otherwise
indicated in the box entitled "Special Delivery Instructions", please mail the
check for the purchase price of all Shares purchased and all Share
Certificates evidencing Shares not tendered or not purchased (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing above under "Description of Shares Tendered". In the event that the
boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase
price of all Shares purchased and return all Share Certificates evidencing
Shares not purchased or not tendered in the name(s) of, and mail such check
and Share Certificates to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions", please
credit any Shares tendered hereby and delivered by book-entry transfer, but
which are not purchased by crediting the account at the Book-Entry Transfer
Facility designated above. 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) thereof if Purchaser does not
purchase any of the Shares tendered hereby.
- ----------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 5, 6 and 7)
To be completed ONLY if the check for the
purchase price of Shares or Share Certificates
evidencing Shares not tendered or not purchased to be
issued in the name of someone other than the
undersigned, or if Shares tendered hereby and
delivered by book-entry transfer are to be returned by
credit to an account at one of the Book-Entry Transfer
Facilities other than that designated above.
Mail [ ] Check
[ ] Share Certificate(s) to:
Name......................................................
(Please Print)
Address...................................................
..........................................................
(Zip Code)
..........................................................
Taxpayer Identification or Social Security Number
(See Substitute W-9 on reverse side)
[ ] Credit Shares delivered by book-entry transfer
and not purchased to the account set forth below:
Check appropriate box:
[ ] DTC [ ] PDTC
Account number: ..........................................
- ----------------------------------------------------------
- ----------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 5 and 7)
To be completed ONLY if the check for the
purchase price of Shares purchased or Share
Certificates evidencing Shares not purchased are to be
mailed to someone other than the undersigned, or to
the undersigned at an address other than that shown
under "Description of Shares Tendered".
Mail [ ] Check
[ ] Share Certificate(s) to:
Name....................................................
(Please Print)
Address.................................................
........................................................
(Zip Code)
........................................................
Taxpayer Identification or Social Security Number
(See Substitute W-9 on reverse side)
- ----------------------------------------------------------
--------------------------------------------------------
SIGN HERE
(Please complete Substitute Form W-9 on reverse)
========================================================
Signature(s) of Owner(s)
........................................................
Dated............................................., 199_
(Must be signed by registered holder(s) exactly as
name(s) appear(s) on Share Certificates or on a
security position listing by a person(s) authorized to
become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a
trustee, executor, administrator, guardian, attorney-
in-fact, officer of a corporation or other person
acting in a fiduciary or representative capacity,
please provide the following information and see
Instruction 5).
Name(s).................................................
(Please Print)
........................................................
Capacity (full title)...................................
Address.................................................
........................................................
(Include Zip Code)
Area Code and
Telephone Number........................................
(See Substitute W-9 on reverse side)
Guarantee of Signature(s)
(If required; see Instructions 1 and 5)
Name of Firm............................................
Authorized Signature....................................
Dated......................................... , 199 .
For use by financial institutions only.
Financial institutions: place medallion guarantee in
space below.
--------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Payer: The Bank of New York
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE Part I Taxpayer Identification No. -- For All Accounts Part II For Payees Exempt
FORM W-9 from Backup
Enter your taxpayer ------------------------- Withholding (see
Department of the identification number in the enclosed Guidelines)
Treasury appropriate box. For most
Internal Revenue Service individuals and sole
proprietors, this is your social Social Security number
Payer's Request for security number. For other -------------------------
Taxpayer Identification entities, it is your Employer
No. Identification Number. If you
do not have a number, see
How to Obtain a TIN in the
enclosed Guidelines.
Note: If the account is in -------------------------
more than one name, see the
chart on page 2 of the
enclosed Guidelines to Employer Identification
determine what number to Number
enter. -------------------------
- --------------------------------------------------------------------------------------------------------------------------
Certification. -- Under 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 either
(a) I have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office or (b) I intend to
mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within sixty (60)
days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number;
(2) I am not subject to backup withholding either because (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service ("IRS") that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject
to backup withholding; and
(3) Any other information provided on this form is true, correct and complete.
You must cross item (2) above if you have been notified by the IRS that you
are currently subject to backup withholding because of underreporting
interest or dividends on your tax return and you have not received a notice
from the IRS advising you that backup withholding has terminated.
- --------------------------------------------------------------------------------------------------------------------------
SIGNATURE.....................DATE . . . . . . . . . . . . . . . , 199 . . .
- --------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY
PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
</TABLE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. All signatures on this Letter of
Transmittal must be guaranteed by a firm which is a member of the Medallion
Signature Guarantee Program, or by any other "eligible guarantor institution",
as such term is defined in Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended (each of the foregoing being referred to as
an "Eligible Institution"), unless (i) this Letter of Transmittal is signed by
the registered holder(s) of the Shares (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares)
tendered hereby and such holder(s) has (have) completed neither the box
entitled "Special Payment Instructions" nor the box entitled "Special Delivery
Instructions" on the reverse hereof or (ii) such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates.
This Letter of Transmittal is to be used either if Share Certificates are to
be forwarded herewith or if Shares are to be delivered by book-entry transfer
pursuant to the procedure set forth under "The Tender Offer--Procedures for
Accepting the Offer and Tendering Shares" in the Offer to Purchase. Share
Certificates evidencing all physically tendered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility of all Shares delivered by book-entry transfer as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by this Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth herein prior to the
Expiration Date (as defined in "The Tender Offer--Terms of the Offer" in the
Offer to Purchase). If Share Certificates are forwarded to the Depositary in
multiple deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery. Stockholders whose Share
Certificates are not immediately available, who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by
book-entry transfer on a timely basis may tender their Shares pursuant to the
guaranteed delivery procedure described in under "The Tender Offer--Procedures
for Accepting the Offer and Tendering Shares" in the Offer to Purchase.
Pursuant to such procedure: (i) such 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) the
Share Certificates evidencing all physically delivered Shares in proper form
for transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer, in each case together with a Letter of Transmittal (or
a facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange, Inc. trading days after the date of execution of such Notice of
Guaranteed Delivery, all as described under "The Tender Offer--Procedures for
Accepting the Offer and Tendering Shares" in the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE
CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY
BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING
STOCKHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be
accepted and no fractional Shares will be purchased. By execution of this
Letter of Transmittal (or a facsimile hereof), all tendering stockholders
waive any right to receive any notice of the acceptance of their Shares for
payment.
3. Inadequate Space. If the space provided herein under
"Description of Shares Tendered" is inadequate, the Share Certificate numbers,
the number of Shares evidenced by such Share Certificates and the number of
Shares tendered should be listed on a separate schedule and attached hereto.
4. Partial Tenders (not applicable to stockholders who tender
by book-entry transfer). If fewer than all the Shares evidenced by any Share
Certificate delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered". In such cases, new Share Certificate(s)
evidencing the remainder of the Shares that were evidenced by the Share
Certificates delivered to the Depositary herewith will be sent to the
person(s) signing this Letter of Transmittal, unless otherwise provided in the
box entitled "Special Delivery Instructions" on the reverse hereof, as soon as
practicable after the expiration or termination of the Offer. All Shares
evidenced by Share Certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond with
the name(s) as written on the face of the Share Certificates evidencing such
Shares without alteration, enlargement or any other 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 the
names of different holders, it will be necessary to complete, sign and submit
as many separate Letters of Transmittal as there are different registrations
of such Shares.
If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, no endorsements of Share Certificates
or separate stock powers are required, unless payment is to be made to, or
Share Certificates evidencing Shares not tendered or not purchased are to be
issued in the name of, a person other than the registered holder(s), in which
case, the Share Certificate(s) evidencing the Shares tendered hereby must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on such Share
Certificate(s). Signatures on such Share Certificate(s) and stock powers 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 tendered hereby, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal or any Share Certificate or stock
power is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person should so indicate when
signing, and proper evidence satisfactory to Purchaser of such person's
authority so to act must be submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this
Instruction 6, Purchaser will pay all stock transfer taxes with respect to the
sale and transfer of any 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 Share Certificate(s) evidencing Shares not tendered or not purchased
are to be issued in the name of, a person other than the registered holder(s),
the amount of any stock 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 SHARE CERTIFICATES
EVIDENCING THE SHARES TENDERED HEREBY.
7. Special Payment and Delivery Instructions. If a check for
the purchase price of any Shares tendered hereby is to be issued, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be
issued, in the name of a person other than the person(s) signing this Letter
of Transmittal or if such check or any such Share Certificate is to be sent to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal but at an address other than that
shown in the box entitled "Description of Shares Tendered" on the reverse
hereof, the appropriate boxes on the reverse of this Letter of Transmittal
must be completed. Stockholders delivering Shares tendered hereby by
book-entry transfer may request that Shares not purchased be credited to such
account maintained at a Book-Entry Transfer Facility as such stockholder may
designate in the box entitled "Special Payment Instructions" on the reverse
hereof. If no such instructions are given, all such Shares not purchased will
be returned by crediting the account at the Book-Entry Transfer Facility
designated on the reverse hereof as the account from which such Shares were
delivered.
8. Questions and Requests for Assistance or Additional Copies.
Questions and requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses or telephone numbers set
forth below. Additional copies of the Offer to Purchase, this Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent or from brokers, dealers, commercial banks or trust
companies.
9. Substitute Form W-9. Each tendering stockholder is required
to provide the Depositary with a correct Taxpayer Identification Number
("TIN") on the Substitute Form W-9 which is provided above, and to certify,
under penalty of perjury, that such number is correct and that such
stockholder is not subject to backup withholding of federal income tax. If a
tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide
the information on the Substitute Form W-9 may subject the tendering
stockholder to 31% federal income tax withholding on the payment of the
purchase price of all Shares purchased from such stockholder. If the
tendering stockholder has not been issued a TIN and has applied for one or
intends to apply for one in the near future, such stockholder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute
Form W-9, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% on all payments of the purchase price
to such stockholder until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF)
PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE
GUARANTEES AND SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND
ALL OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE
OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered
Shares are accepted for payment is required by law to provide the Depositary
(as payer) with such stockholder's correct Taxpayer Identification Number
("TIN") on Substitute Form W-9 below. If such stockholder is an individual,
the TIN is such stockholder's social security number. If the Depositary is
not provided with the correct TIN, the stockholder may be subject to a $50
penalty imposed by the Internal Revenue Service, and payments that are made to
such stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding of 31%. If a stockholder makes a false
statement that results in no imposition of backup withholding, and there is no
reasonable basis for such statement, a $500 penalty may also be imposed by the
Internal Revenue Service.
Certain stockholders (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
and reporting requirements. In order for a foreign individual to qualify as
an exempt recipient, such individual must submit a statement, signed under
penalties of perjury, attesting to such individual's exempt status. Forms of
such statements can be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions. A stockholder should consult his or her
advisor as to such stockholder's qualification for exemption from backup
withholding and the procedure for obtaining such exemption.
If backup withholding applies, the Depositary is required to
withhold 31% of any payments made to the stockholder. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a
stockholder with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the form below certifying that the TIN provided on
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN),
and that (i) such 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 (ii) the Internal Revenue Service has
notified such stockholder that such stockholder 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 held in more than one name or are
not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the tendering stockholder
has not been issued a TIN and has applied for a number or intends to apply for
a number in the near future, the stockholder should write "Applied For" in the
space provided for the TIN in Part I, and sign and date the Substitute Form W-
9. If "Applied For" is written in Part I and the Depositary is not provided
with a TIN within 60 days, the Depositary will withhold 31% of all payments of
the purchase price to such stockholder until a TIN is provided to the
Depositary.
Stockholders should contact the Information Agent, the Dealer
Manager or their broker, dealer, commercial bank or trust company for
assistance concerning the Offer. Additional copies of the Offer to Purchase,
this Letter of Transmittal and other related materials may also be obtained
from the Information Agent or the Dealer Manager.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Toll Free: (800) 290-6424
Banks and Brokers Call Collect:
(212) 269-5550
The Dealer Manager for the Offer is:
Salomon Smith Barney
388 Greenwich Street
New York, New York 10013
(212) 816-7406
Salomon Smith Barney is a service mark of Smith Barney Inc.
Salomon Brothers Inc and Smith Barney Inc. are affiliated but
separately registered broker/dealers under common control of
Salomon Smith Barney Holdings Inc. Salomon Brothers Inc and
Salomon Smith Barney Holdings Inc. have been licensed to use the
Salomon Smith Barney service mark.
Exhibit (a)(3)
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
of
TriMas Corporation
Pursuant to the Offer to Purchase dated December 17, 1997
of
MascoTech Acquisition, Inc.
a wholly owned subsidiary of
MascoTech, Inc.
(Not to be used for signature guarantees)
This Notice of Guaranteed Delivery, or one substantially in the
form hereof, must be used to accept the Offer (as defined below) (i) if
certificates ("Share Certificates") evidencing shares (the "Shares") of common
stock, par value $.01 per share, of TriMas Corporation, a Delaware corporation
(the "Company"), are not immediately available, (ii) if Share Certificates and
all other required documents cannot be delivered to The Bank of New York, as
Depositary (the "Depositary"), prior to the Expiration Date (as defined under
"The Tender Offer--Terms of the Offer" in the Offer to Purchase (as defined
below)) or (iii) if the procedure for delivery by book-entry transfer cannot
be completed on a timely basis. This Notice of Guaranteed Delivery may be
delivered by hand or mail or transmitted by facsimile transmission to the
Depositary. See "The Tender Offer--Procedures for Accepting the Offer and
Tendering Shares" in the Offer to Purchase.
The Depositary for the Offer is:
The Bank of New York
<TABLE>
<S> <C> <C>
By Facsimile
By Mail: (For Eligible Institutions Only): By Overnight Courier:
Tender & Exchange Department (215) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm Facsimile by Telephone Receive and Deliver Window
New York, New York 10286-1248 1-800-507-9357 New York, New York 10286
By Hand:
Tender & Exchange Department
101 Barclay Street
Receive and Deliver Window
New York, New York 10286
------------------
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS
OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE
TRANSMISSION OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID
DELIVERY.
This form 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.
Ladies and Gentlemen:
The undersigned hereby tenders to MascoTech Acquisition, Inc.,
a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of
MascoTech, Inc., upon the terms and subject to the conditions set forth in the
Offer to Purchase dated December 17, 1997 and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of which is
hereby acknowledged, _______ shares of Common Stock, $0.01 par value per share
(the "Shares"), of TriMas Corporation, a Delaware corporation, pursuant to the
guaranteed delivery procedure set forth under "The Tender Offer--Procedures
for Accepting the Offer and Tendering Shares" of the Offer to Purchase.
<TABLE>
<S> <C>
Certificate Nos. (if available): SIGN HERE
- --------------------------------------------------- ---------------------------------------------------
(Signature(s) of Holder(s))
Dated:
- --------------------------------------------------- --------------------------------------------
Please check one box if Shares will be delivered by Name(s) of Holder(s):
book-entry transfer:
--------------------------------------------------
[ ] The Depositary Trust Company Please type or print
[ ] The Philadelphia Depositary Company
--------------------------------------------------
Account No. Address of Company
- ------------------------------------------------------
--------------------------------------------------
Zip Code
--------------------------------------------------
Area Code and Telephone Number
</TABLE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a member of a registered
national securities exchange or the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States, guarantees (a) that the above named
person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4
under the Securities Exchange Act of 1934, (b) that such tender of Shares
complies with Rule 14e-4 and (c) to deliver to the Depositary the Shares
tendered hereby, together with a properly completed and duly executed Letter(s)
of Transmittal (or facsimile(s) thereof) or an Agent's Message (as defined in
the Offer to Purchase) in the case of a book-entry delivery and any other
required documents, all within three New York Stock Exchange trading days of
the date hereof. A "trading day" is any day on which the New York Stock
Exchange is open for business.
<TABLE>
<S> <C>
- ------------------------------------- -------------------------------------
Name of Firm Authorized Signature
- ------------------------------------- -------------------------------------
Address Title
Name:
- ------------------------------------- --------------------------------
Zip Code Please type or print
Dated:
- ------------------------------------- -------------------------------
Area Code and Telephone Number
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
</TABLE>
Exhibit (a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
TriMas Corporation
at
$34.50 Net Per Share
by
MascoTech Acquisition, Inc.
a wholly owned subsidiary of
MascoTech, Inc.
- ----------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JANUARY 16, 1998, UNLESS THE OFFER IS EXTENDED.
- ----------------------------------------------------------------------------
December 17, 1997
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Smith Barney Inc. (now associated with Salomon Brothers Inc and
collectively with Salomon Brothers Inc doing business as Salomon Smith Barney)
has been appointed by MascoTech Acquisition, Inc., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of MascoTech, Inc. ("Parent"), to
act as the Dealer Manager in connection with Purchaser's offer to purchase all
issued and outstanding shares (the "Shares") of common stock, $.01 par value
per share, of TriMas Corporation, a Delaware corporation (the "Company"), at a
price of $34.50 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase, dated
December 17, 1997 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, together with the Offer to Purchase, constitute the
"Offer") enclosed herewith. Please furnish copies of the enclosed materials
to those of your clients for whose accounts you hold Shares registered 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 of the Offer such
number of the then issued and outstanding Shares (not including Shares
tendered by Parent, its subsidiaries or its Chief Executive Officer or by
Masco Corporation), which represents at least a majority of the then issued
and outstanding Shares (excluding for purposes of this calculation all Shares
owned by Parent, its subsidiaries, its Chief Executive Officer or by Masco
Corporation and all Shares that may not be tendered pursuant to the Offer
because they are subject to restrictions under certain Company stock plans).
Enclosed for your information and use are copies of the
following documents:
1. Offer to Purchase, dated December 17, 1997;
2. Letter of Transmittal to be used by holders of Shares in
accepting the Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer
if the Shares and all other required documents are not immediately available
or cannot be delivered to The Bank of New York (the "Depositary") by the
Expiration Date (as defined in the Offer to Purchase) or if the procedure for
book-entry transfer cannot be completed by the Expiration Date;
4. A printed form of letter which may be sent to your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer;
5. A letter to stockholders of the Company from Brian P.
Campbell, President of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to stockholders
of the Company, recommending that the Company's stockholders accept the Offer
and tender their Shares pursuant to the Offer;
6. Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9; and
7. Return envelope addressed to 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, JANUARY 16,
1998, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant
to 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) will be made only after timely receipt by the Depositary of
certificates evidencing such Shares (or a confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities (as defined in the Offer to Purchase)), a Letter of
Transmittal (or facsimile thereof) properly completed and duly executed and
any other required documents.
If holders of Shares wish to tender, but it is impracticable
for them to forward their certificates or other required documents prior to
the expiration of the Offer, a tender may be effected by following the
guaranteed delivery procedure described under "The Tender Offer--Procedures
for Accepting the Offer and Tendering Shares" in the Offer to Purchase.
None of Purchaser, Parent nor any officer, director,
stockholder, agent or other representative of Purchaser or Parent will pay any
fees or commissions to any broker, dealer or other person (other than the
Dealer Manager, the Depositary and the Information Agent as described in the
Offer) in connection with the solicitation of tenders of Shares pursuant to
the Offer. However, Purchaser will, 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
stock transfer taxes payable with respect to 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 Salomon Smith Barney or D.F. King & Co., Inc. (the "Information
Agent") at their respective addresses and telephone numbers set forth on the
back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from
the Information Agent, at the address and telephone numbers set forth on the
back cover page of the Offer to Purchase.
Very truly yours,
SALOMON SMITH BARNEY
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL
RENDER YOU, OR ANY OTHER PERSON, THE AGENT OF PARENT, PURCHASER, THE DEALER
MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY
OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR
TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER
OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
Exhibit (a)(5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
TriMas Corporation
at
$34.50 Net Per Share
by
MascoTech Acquisition, Inc.
a wholly owned subsidiary of
MascoTech, Inc.
- ----------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JANUARY 16, 1998, UNLESS THE OFFER IS EXTENDED.
- ----------------------------------------------------------------------------
December 17, 1997
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated
December 17, 1997 (the "Offer to Purchase"), and a related Letter of
Transmittal in connection with the offer by MascoTech Acquisition, Inc., a
Delaware corporation ("Purchaser") and wholly owned subsidiary of MascoTech,
Inc., a Delaware corporation ("Parent"), to purchase all issued and
outstanding shares (the "Shares") of common stock, $.01 par value per share,
of TriMas Corporation, a Delaware corporation (the "Company"), at a price of
$34.50 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with the Offer to Purchase, constitute the
"Offer"). We are the holder of record of Shares held by us for your account.
A tender of 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.
We request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us for your account,
upon the terms and subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $34.50 per Share, net to you in cash.
2. The Offer is being made for all issued and outstanding
Shares.
3. The Board of Directors of the Company (the "Company Board")
has unanimously determined that the Offer and the Merger (as defined in the
Offer to Purchase) are fair to, and in the best interests of, the holders of
Shares (other than Parent, its Chief Executive Officer and Masco Corporation)
and recommends that stockholders accept the Offer and tender their Shares
pursuant to the Offer. The unanimous vote of the Company Board is based
upon, among other things, the unanimous recommendation of the Offer by a
Special Committee of the Company Board, which is comprised entirely of
non-management independent directors.
4. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JANUARY 16, 1998, UNLESS THE OFFER IS
EXTENDED.
5. The Offer is conditioned upon, among other things, there
being validly tendered and not withdrawn prior to the expiration of the Offer
such number of the then issued and outstanding Shares (not including Shares
tendered by Parent, its subsidiaries or its Chief Executive Officer or by
Masco Corporation), which represents at least a majority of the then issued
and outstanding shares (excluding for purposes of this calculation all Shares
owned by Parent, its subsidiaries, its Chief Executive Officer or by Masco
Corporation and all Shares that may not be tendered pursuant to the Offer
because they are subject to restrictions under certain Company stock plans).
6. You will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please
so instruct us by completing, executing and returning to us the instruction
form contained in this letter. An envelope in which to return your
instructions to us is enclosed. If you authorize the tender of your Shares,
all such Shares will be tendered unless otherwise specified in your
instructions. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US AS SOON AS POSSIBLE
SO THAT WE WILL HAVE AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF
PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the
related Letter of Transmittal and is being made to all holders of Shares.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser
will make a good faith effort to comply with such state statute. If, after
such good faith effort, Purchaser cannot comply with such state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Purchaser by Smith
Barney Inc. (now associated with Salomon Brothers Inc and collectively with
Salomon Brothers Inc doing business as Salomon Smith Barney), the Dealer
Manager, or one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF TRIMAS CORPORATION
BY MASCOTECH ACQUISITION, INC.,
A WHOLLY OWNED SUBSIDIARY OF
MASCOTECH, INC.
The undersigned acknowledge(s) receipt of your letter and the
enclosed Offer to Purchase, dated December 17, 1997, and the related Letter of
Transmittal (which together constitute the "Offer") in connection with the
offer by MascoTech Acquisition, Inc., a Delaware corporation and wholly owned
subsidiary of MascoTech, Inc., to purchase all issued and outstanding shares
(the "Shares") of common stock, $.01 par value per share, of TriMas
Corporation, a Delaware corporation.
This will instruct you to tender the number of Shares indicated
below (or, if no number is indicated below, all Shares) that are held by you
for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Dated: , 199
---------------------------------
Number of Shares to be Tendered:*
Shares
SIGN HERE
- ---------------------------------------------------
Signature(s)
- ---------------------------------------------------
- ---------------------------------------------------
Please type or print name(s):
- ---------------------------------------------------
- ---------------------------------------------------
Please type or print address:
- ---------------------------------------------------
- ---------------------------------------------------
Area Code and Telephone Number
- ---------------------------------------------------
Taxpayer Identification or Social Security Number
- ------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
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 PAYOR.
- --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 payor.
- -------------------------------------------------------------
GIVE THE SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY
NUMBER OF --
- -------------------------------------------------------------
1. An individual's ac- The individual
count
2. Two or more individ- The actual owner of the
uals (joint account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint funds,
either person(1)
4. Custodian account of The minor(2)
a minor (Uniform Gift
to Minors Act)
5. Adult and minor The adult or, if the minor
(joint account) is the only contributor, the
minor(1)
6. Account in the name The ward, minor, or in-
of guardian or com- competent person(3)
mittee for a designat-
ed ward, minor, or
incompetent person
7. a. The usual The grantor-trustee(1)
revocable 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 not
or pension trust 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 organi-
zation 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 Agri-
culture in the name of
a public entity (such
as a State or local
government, school
district or prison)
that receives agricul-
tural program pay-
ments
- --------------------------------------------------------------
(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.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't 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:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an
individual retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
o An international organization or any agency, or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
o An entity registered at all times under the Investment Company Act of
1940.
o A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding including the following:
o Payments to nonresident aliens subject to withholding under section
1441.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one non-resident partner.
o Payments of patronage dividends where the amount received is not
paid in money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o 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.
o Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
o Payments described in section 6049(b)(5) to non-resident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o 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, 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 6019 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. 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 IDENTIFICATON 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 a reasonable
cause and not to willful neglect.
(2) 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.
(3) 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.
Exhibit (a)(7)
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 December 17, 1997, and the related Letter of Transmittal and any
supplements thereto, and is being made to all holders of Shares. The
Offer is not being made to (nor will tenders be accepted from or on behalf
of) holders of Shares in any jurisdiction in which the making of the Offer
or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. In those jurisdictions whose laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of Purchaser, if at all, only by the Dealer Manager or one or
more registered brokers or dealers licensed under the laws of such
jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
TriMas Corporation
at
$34.50 Net Per Share
by
MascoTech Acquisition, Inc.
a wholly owned subsidiary of
MascoTech, Inc.
MascoTech Acquisition, Inc. ("Purchaser"), a Delaware
corporation and a wholly owned subsidiary of MascoTech, Inc. ("Parent"), is
offering to purchase any and all outstanding shares (the "Shares") of common
stock, par value $.01 per share, of TriMas Corporation (the "Company"), a
Delaware corporation, at a price of $34.50 per Share, net to the seller in
cash (the "Offer Price"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated December 17, 1997 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer").
- -------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JANUARY 16, 1998, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------
The Offer is being made pursuant to the Agreement and Plan of
Merger dated December 10, 1997, as amended by Amendment No. 1 dated as of
December 15, 1997 (as so amended, the "Merger Agreement"), among Parent,
Purchaser and the Company. The Offer is not conditioned on obtaining
financing. The Merger Agreement provides, among other things, that as
promptly as practicable after the purchase of Shares pursuant to the Offer and
the satisfaction of the other conditions set forth in the Merger Agreement, in
accordance with the Delaware General Corporation Law, Purchaser will be merged
with and into the Company (the "Merger"), with the Company continuing as the
surviving corporation. At the effective time of the Merger (the "Effective
Time"), each Share outstanding immediately prior to the Effective Time (other
than Shares held in the treasury of the Company, Shares owned by Parent or its
subsidiaries or Shares as to which appraisal rights have been exercised) shall
be converted into the right to receive the per Share price paid in the Offer
in cash, without interest.
The Board of Directors of the Company has unanimously
determined that the Offer and the Merger are fair to, and in the best
interests of, the holders of Shares (other than Parent, its Chief Executive
Officer and Masco Corporation) and recommends that stockholders accept the
Offer and tender their Shares pursuant to the Offer. The unanimous vote of
the Board of Directors of the Company is based upon, among other things, the
unanimous recommendation of the Offer by a special Committee of the Board of
Directors, which is comprised entirely of non-management independent directors.
As of December 15, 1997, Parent beneficially owned 15,191,109
of the 41,325,118 outstanding Shares, representing approximately 36.76% of the
Shares then outstanding. In addition, as of that date Masco Corporation and
the Chief Executive Officer of Parent beneficially owned approximately 3.83%
and 4.36%, respectively, of the Shares then outstanding.
The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer such
number of the then issued and outstanding Shares (not including Shares
tendered by Parent, its subsidiaries or its Chief Executive Officer or by
Masco Corporation), which represents at least a majority of the then issued
and outstanding Shares (excluding for purposes of this calculation all Shares
owned by Parent, its subsidiaries or its Chief Executive Officer or by Masco
Corporation and all Shares that may not be tendered pursuant to the Offer
because they are subject to restrictions under certain Company stock plans).
For purposes of the Offer, Purchaser will be deemed to have
accepted for payment (and thereby purchased) Shares validly tendered and not
properly withdrawn as, if and when Purchaser gives oral or written notice to
The Bank of New York (the "Depositary"), of Purchaser's acceptance for payment
of such Shares pursuant to the Offer. 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 payments from Purchaser and transmitting such payments to
tendering stockholders whose Shares have been accepted for payment. Under no
circumstances will interest on the purchase price for Shares be paid,
regardless of any delay in making such payment. In all cases, payment for
Shares tendered and accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of (A) the certificates evidencing
such Shares (the "Share Certificates") or timely confirmation (a "Book-Entry
Confirmation") of book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility (as defined in the Offer to
Purchase), (B) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or, in the
case of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase) and (C) any other documents required under the Letter of
Transmittal. Accordingly, payment may be made to tendering stockholders at
different times if delivery of the Shares and other required documents occurs
at different times.
Purchaser expressly reserves the right, in its sole discretion
(but subject to the terms and conditions of the Merger Agreement), at any time
and from time to time, to extend for any reason the period of time during
which the Offer is open, by giving oral or written notice of such extension to
the Depositary.
Tenders of Shares made pursuant to the Offer are irrevocable
except that such Shares may be withdrawn at any time prior to the Expiration
Date and, unless theretofore accepted for payment by Purchaser pursuant to the
Offer, may also be withdrawn at any time after February 15, 1998. 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 page of the 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 of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in the Offer to Purchase), unless such Shares have
been tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in the
Offer to Purchase, any notice of withdrawal must specify the name and number
of the account at the book-entry transfer facility to be credited with the
withdrawn Shares. However, withdrawn Shares may be retendered by again
following one of the procedures described in the Offer to Purchase at any time
prior to the Expiration Date. All questions as to the form and validity
(including time of receipt) of any notice of withdrawal will be determined by
Purchaser, in its sole discretion, whose determination will be final and
binding.
The information required to be disclosed by Rule
14d-6(e)(1)(vii) of the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
The Company has provided Purchaser with the Company's
stockholder list and security position listings for the purpose of
disseminating the Offer to holders of Shares. The Offer to Purchase and
Letter of Transmittal will be mailed to record holders of Shares whose names
appear on the Company's stockholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies, and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
Questions or requests for assistance may be directed to D.F.
King & Co., Inc., the Information Agent, or Salomon Smith Barney, the Dealer
Manager, at their respective addresses and telephone numbers set forth below.
Additional copies of this Offer to Purchase, the Letter of Transmittal and
other related materials may be obtained from the Information Agent or the
Dealer Manager. No fees or commissions will be paid to brokers, dealers or
other persons (other than the Dealer Manager and the Information Agent) for
soliciting tenders of the Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Toll Free: (800) 290-6424
Banks and Brokers Call Collect:
(212) 269-5550
The Dealer Manager for the Offer is:
Salomon Smith Barney
388 Greenwich Street
New York, New York 10013
(212) 816-7406
Salomon Smith Barney is a service mark of Smith Barney Inc.
Salomon Brothers Inc and Smith Barney Inc. are affiliated
but separately registered broker/dealers under common
control of Salomon Smith Barney Holdings Inc. Salomon
Brothers Inc and Salomon Smith Barney Holdings Inc. have
been licensed to use the Salomon Smith Barney service mark.
Exhibit (a)(8)
Draft 7--December 10, 1997, 1:30 p.m. Contact:
Kenneth J. Zak
For Release: December 11, 1997 313-792-6386
MASCOTECH REACHES AGREEMENT TO
------------------------------
PURCHASE ALL OUTSTANDING SHARES OF TRIMAS
-----------------------------------------
Taylor and Ann Arbor, Michigan (December 11, 1997) --MascoTech,
Inc. (NYSE: MSX) and TriMas Corporation (NYSE: TMS ) today jointly announced
that they have executed a definitive merger agreement pursuant to which
MascoTech will purchase for $34.50 per share in cash all outstanding shares of
TriMas not already owned by MascoTech, for an aggregate of approximately $900
million.
The merger agreement provides that MascoTech will commence a
tender offer within five business days. Pursuant to the merger agreement, any
shares not purchased in the offer (other than shares as to which dissenters'
rights have been perfected) will be acquired for the same price in cash, in a
second-step merger. TriMas currently has approximately 41 million shares
outstanding. MascoTech currently owns approximately 15.2 million shares or 37
percent of the outstanding shares of TriMas and certain MascoTech related
parties own approximately 3.4 million shares or 8 percent of the outstanding
shares of TriMas.
The tender offer will be subject to the condition that a
majority of the approximately 21.9 million outstanding shares that could be
tendered by shareholders, other than MascoTech and certain MascoTech related
parties, are validly tendered and not withdrawn, as well as other customary
conditions including clearance under the Hart-Scott-Rodino Antitrust
Improvements Act. Neither the offer nor the merger is subject to a financing
condition.
The merger agreement was approved by the Boards of Directors of
TriMas and MascoTech following, in each case, the unanimous recommendation of
the merger to the Board of each company by a Special Committee of independent
Directors of each respective company. BT Wolfensohn, a division of BT Alex.
Brown Incorporated, has served as financial advisor to the Special Committee
of TriMas. Salomon Smith Barney Inc. has acted as financial adviser to
MascoTech in connection with the transaction.
The merged organization will have a combined sales volume of
$1.6 billion and will retain the name MascoTech, Inc.
Richard A. Manoogian, who is currently Chairman and Chief
Executive Officer of MascoTech and Chairman of TriMas, will serve as Chairman
of the combined companies. Other members of the senior management team of the
merged organization will include Frank M. Hennessey, currently Executive Vice
President of Masco Corporation, who will become Vice Chairman and Chief
Executive Officer of the combined companies; MascoTech President Lee M.
Gardner and TriMas President Brian P. Campbell, who will continue as Co-Chief
Operating Officers; and MascoTech Vice President Timothy Wadhams, who will
become Senior Vice President and Chief Financial Officer of the combined
companies..
Manoogian commented, "This merger combines two outstanding
companies, both of which have leadership positions in the commercial and
industrial markets, including transportation-related markets. I am pleased
that the combined company will be led by an exceptional management team that I
believe will create value for our shareholders in the future."
Campbell added, "joining forces with MascoTech is a unique and
exciting opportunity for all TriMas businesses, customers and employees. The
strengths of both organizations in our respective markets will further
position the combined company as a leading provider of proprietary products
and technologies to our customers on a worldwide basis. MascoTech has
world-class metalforming and other technical capabilities that will be
utilized by many of TriMas' operations, allowing them to expand into and serve
markets and customers in ways not possible before."
MascoTech's transportation-related businesses include
metal-worked components primarily for vehicle engine and drivetrain
applications and automotive aftermarket products.
TriMas is a diversified proprietary products company with
leadership product positions in commercial, industrial and consumer niche
markets.
Visit MascoTech's website at http://www.mascotech.com.
MascoTech's press releases are also available through Company News On-Call by
fax, 800-758-5804, extension 535375, or http ://www. prnewswire. com.
####
Exhibit (a)(9)
Draft of December 16, 1997, 4:30 p.m. Contact:
Kenneth J. Zak
For Release: December 17, 1997 313-792-6386
MASCOTECH COMMENCES TENDER OFFER TO
-----------------------------------
PURCHASE ALL OUTSTANDING SHARES OF TRIMAS
-----------------------------------------
Taylor, Michigan (December 17, 1997) --MascoTech, Inc. (NYSE:
MSX) announced today that it has commenced a tender offer to acquire all
outstanding shares of TriMas Corporation (NYSE: TMS) not already owned by
MascoTech for $34.50 per share, net to the seller in cash. The offer is being
made in accordance with the terms of MascoTech's previously announced merger
agreement with TriMas. The offer and withdrawal rights will expire at 12:00
midnight, New York City time, on Friday, January 16, 1998, unless the offer is
extended.
The tender offer is subject to the condition that a majority of
the approximately 21.9 million outstanding shares that could be tendered by
shareholders, other than MascoTech and certain MascoTech related parties, are
validly tendered and not withdrawn, as well as other customary conditions
including clearance under the Hart-Scott-Rodino Antitrust Improvements Act.
Neither the offer nor the merger is subject to a financing condition.
Pursuant to the merger agreement, any shares not purchased in
the offer (other than shares as to which dissenters' rights have been
perfected) will be acquired for the same price in cash, in a second-step
merger. TriMas currently has approximately 41 million shares outstanding.
MascoTech currently owns approximately 15.2 million shares or approximately 37
percent of the outstanding shares of TriMas and certain MascoTech related
parties own approximately 3.4 million shares or 8 percent of the outstanding
shares of TriMas.
Salomon Smith Barney is acting as dealer manager in connection
with the offer.
MascoTech's transportation-related businesses include
metal-worked components primarily for vehicle engine and drivetrain
applications and automotive aftermarket products.
TriMas is a diversified proprietary products company with
leadership product positions in commercial, industrial and consumer niche
markets.
Visit MascoTech's website at http://www.mascotech.com.
MascoTech's press releases are also available through Company News On-Call by
fax, 800-758-5804, extension 535375, or http ://www. prnewswire. com.
####
Exhibit (b)(1)
December 10, 1997
MascoTech, Inc.
21001 Van Born Road
Taylor, MI 48180
Ladies and Gentlemen:
MascoTech, Inc. (the "Borrower"), has requested credit facilities (the
"Facilities") in the aggregate principal amount of $1,300,000,000 (the
"Aggregate Commitment").
The Borrower has indicated that it has formed or intends to form a
wholly-owned subsidiary ("Acquisition") incorporated in the State of Delaware
which will acquire Schooner (the "Target") in a two-step transaction which is
subject to approval of the Target's Board of Directors. The Borrower has
indicated that (i) the acquisition of the Target will be made by a tender
offer by Acquisition (the "Tender Offer") followed by a merger of Acquisition
with and into the Target (the "Merger") and (ii) prior to the consummation of
the Tender Offer, the directors of the Borrower, the directors of Acquisition
and the directors of the Target will approve, and Acquisition and the Target
will execute and deliver, an Agreement and Plan of Merger (the "Merger
Agreement").
The First National Bank of Chicago is pleased to provide you with a
financing commitment for $500,000,000 of the Facilities and to agree to act as
administrative agent and documentation agent (in such capacity, the
"Administrative Agent"), Bank of America NT&SA is pleased to provide you with
a financing commitment for $400,000,000 of the Facilities and to act as
Syndication Agent (in such capacity, the "Syndication Agent") and NationsBank,
N.A. is pleased to provide you with a financing commitment of $400,000,000 of
the Facilities and to act as Syndication Agent (in such capacity, the
"Syndication Agent", and collectively with the Administrative Agent and the
other Syndication Agent, the "Agents"), in each case on the terms and
conditions set forth in the term sheet attached hereto ("Term Sheet") and
subject to the conditions set forth in this letter (the "Commitment Letter"),
and First Chicago Capital Markets, Inc., BancAmerica Robertson Stephens, Inc.,
and NationsBanc Montgomery Securities, Inc. (the "Arrangers"), are pleased to
provide the Borrower and Acquisition with their undertaking to syndicate all
or a portion of the Facilities to a syndicate of lenders (collectively, the
"Lenders"). The financing commitments of the Agents hereunder are several and
not joint. While the Agents' agreement herein is to provide the entire amount
of the Facilities on a fully underwritten basis, the Agents reserve the right
to syndicate all or a portion of the Facilities to additional Lenders, with a
corresponding reduction in the Agents' commitments. In the event that
commitments in excess of the Aggregate Commitment are received, the Arrangers
reserve the right to reduce the Agents' initial commitments and to allocate
commitments among the Lenders.
The agents, officers and employees of each of the Agents and the
Arrangers will have the right to share information received from the Borrower
and the Target and their affiliates and their respective agents, officers, and
employees solely for the purpose of evaluating, structuring, negotiating and
consummating the acquisition and financing transactions contemplated in this
Commitment Letter and the Term Sheet.
The Borrower agrees to (i) reimburse the Agents and the Arrangers for all
out-of-pocket expenses (including the reasonable fees of outside counsel and
time charges for inside counsel) incurred in connection with this Commitment
Letter, the Term Sheet and the Fee Letter (as defined below), the transactions
contemplated hereby and thereby and the Agents' and the Arrangers' due
diligence in connection therewith, including without limitation reasonable
travel expenses and costs incurred in connection with the preparation,
negotiation, execution, administration, syndication, and enforcement of any
document relating to this transaction and its role hereunder, (ii) indemnify
and hold harmless the Agents, the Arrangers, Lenders and their respective
officers, employees, agents and directors (collectively, the "Indemnified
Persons") against any and all losses, claims, damages, or liabilities of every
kind whatsoever to which the Indemnified Persons may become subject as a
result of claims by parties other than the parties to this Commitment Letter
in connection in any way with the transactions which are the subject of this
Commitment Letter, including without limitation expenses incurred in
connection with investigating or defending against any liability or action
whether or not a party thereto, except to the extent any of the foregoing is
found in a final judgment by a court of competent jurisdiction to have arisen
solely from such Indemnified Person's gross negligence or willful misconduct;
and (iii) assert no claim against any Indemnified Persons seeking exemplary or
punitive damages on any theory of liability in connection in any way with the
transactions which are the subject of this Commitment Letter. The obligations
described in this paragraph are independent of all other obligations of the
Borrower hereunder, shall survive the expiration, revocation or termination of
this Commitment Letter, and shall be payable whether or not the financing
transactions contemplated by this Commitment Letter shall close, but the
foregoing shall be superseded by the corresponding provisions in the Credit
Agreement when executed. The Agents' and the Arrangers' respective
obligations under this Commitment Letter are enforceable solely by the party
signing this Commitment Letter and may not be relied upon by any other person.
IF THIS COMMITMENT LETTER, THE TERM SHEET, THE FEE LETTER, OR ANY ACT,
OMISSION OR EVENT DESCRIBED IN THIS PARAGRAPH BECOMES THE SUBJECT OF A
DISPUTE, THE PARTIES HERETO EACH HEREBY WAIVES TRIAL BY JURY. The Borrower
agrees not to settle any claim, litigation or proceeding relating to this
transaction (whether or not any Agent or Arranger is a party thereto) unless
such settlement releases all Indemnified Persons from any and all liability in
respect of such transaction or unless each Indemnified Person approves such
settlement.
The Agents' several commitments and the Arrangers' undertaking hereunder
is subject to and contingent upon (i) the execution of the Merger Agreement,
(ii) the preparation, execution, and delivery of a credit agreement ("Credit
Agreement") and other loan documents (collectively, the "Loan Documents")
incorporating substantially the terms and the conditions outlined herein and
in the Term Sheet; and (iii) the determination by at least two of the three
Agents and two of the three Arrangers that (a) there is an absence of a
"material adverse change" (as defined below) in the Borrower and its
consolidated subsidiaries (including the Target and its consolidated
subsidiaries to the extent owned directly or indirectly by the Borrower,
which, with respect to the funding to purchase the shares of the Target
acquired pursuant to the Tender Offer, would take into effect the shares to be
purchased) taken as a whole, from that reflected in their respective financial
statements as of and for the period ended September 30, 1997 previously
delivered to the Agents; (b) with respect to the initial funding to purchase
the shares of the Target pursuant to the Tender Offer, there is an absence of
any event, occurrence, development or state of circumstances or facts which
has had or has a reasonable probability of having, individually or in the
aggregate, a material adverse effect on the Target (a "Target material adverse
change"); and (c) the determination by two of the three Arrangers that there
has been no (i) general suspension of trading in, or limitation on prices for,
securities on the NYSE or in the over-the-counter market, (ii) declaration of
a banking moratorium by Federal or New York or Michigan authorities or any
general suspension of payments in respect of lenders that regularly
participate in the United States market in loans to large corporations, (iii)
material limitation by any Federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency in the United States that materially affects the extension
of credit generally by lenders that regularly participate in the United States
market in loans to large corporations, (iv) commencement of a war involving
the United States or any commencement of armed hostilities or other national
or international calamity involving the United States that has a material
adverse effect on bank syndication or financial markets in the United States,
or (v) in the case of any of the foregoing occurrences existing on or at the
time of the commencement of the Tender Offer, material acceleration or
worsening thereof. A "material adverse change" is any event, occurrence,
development or state of circumstances or facts which has had or has a
reasonable probability of having, individually or in the aggregate, a material
adverse effect on the Borrower and its consolidated subsidiaries (including
the Target and its consolidated subsidiaries, to the extent owned by the
Borrower, which, with respect to the funding to purchase the shares of the
Target acquired pursuant to the Tender Offer, would take into effect the
shares to be purchased) taken as a whole.
The Agents and the Arrangers have reviewed certain historical and pro
forma financial statements, including projections, of the Borrower and the
Target and other materials provided by you and are generally familiar with the
business, financial condition and operations of the Borrower and the Target.
If the Agents become aware of information not previously disclosed or
otherwise known to them which has a "materially negative impact" (as defined
below) on the Borrower's or the Target's financial condition, operations,
liabilities and assets, the Agents may, in their reasonable discretion,
suggest alternative financing amounts or structures that provide additional
protection for the Agents or may decline to participate in the proposed
financing. A "materially negative impact" results where any event, occurrence,
development or state of circumstances or facts has had or has a reasonable
probability of having, individually or in the aggregate, a material adverse
change or, with respect to the initial funding to purchase the shares of the
Target pursuant to the Tender Offer, a Target material adverse change.
The Arrangers will, in consultation with the Borrower, manage all
aspects of the syndication, including, without limitation, decisions as to the
selection of institutions to be approached and when they will be approached,
when their commitments will be accepted, which institutions will participate,
the allocations of the commitments among the Lenders and the amount and
distribution of the fees discussed herein among the Lenders. To assist the
Arrangers in their syndication efforts, the Borrower shall (a) provide and
cause its advisors to provide the Arrangers upon request with all information
deemed reasonably necessary by them to complete successfully the syndication,
including, without limitation, all information and projections prepared by the
Borrower or on the Borrower's behalf relating to the transactions contemplated
hereby; (b) cause its advisors and the management of the Borrower to actively
participate in both the preparation of an information package regarding the
operations and prospects of the Borrower and the Target and the presentation
of the information to prospective Lenders; and (c) not make any statement
publicly about the Commitment or the Facilities which might negatively affect
the Arrangers' ability to syndicate the Facilities. If, in the opinion of the
Arrangers, any portion of the syndication is unsuccessful, then upon the
request of the Arrangers, the Borrower will consider in good faith a
restructuring not materially less favorable to the Borrower.
After the Borrower has publicly announced the transaction, the Borrower
authorizes each of the Agents and the Arrangers to answer inquiries from the
media with respect to the existence, amount and tenor and, with the prior
approval of the Borrower, other aspects of the Facilities. The foregoing
authorization shall remain in effect unless the Borrower notifies each in
writing that such authorization is revoked.
Please indicate your acceptance of these commitments from the Agents and
the undertaking by the Arrangers in the space indicated below and return a
copy of this letter so executed to the Administrative Agent. The commitments
and undertakings will expire at 5 p.m., Chicago time, on December 11, 1997
unless on or prior to such time the Administrative Agent and the Arrangers
shall have received a copy of this letter executed by the Borrower, together
with the fee required under paragraph 1(a) of the fee letter of even date
herewith (the "Agents and Arrangers Fee Letter") among the Borrower, the
Agents and the Arrangers. Notwithstanding timely acceptance of the
commitments pursuant to the preceding sentence, the commitments will
automatically terminate unless definitive Loan Documents are executed on or
before February 28, 1997. By its acceptance hereof, the Borrower agrees to
pay the Agents and the Arrangers the fees described in the Agents and
Arrangers Fee Letter and to pay the Administrative Agent the fees described in
the fee letter of even date herewith between the Borrower and the
Administrative Agent in each case as and when due (the "Administrative Agent's
Fee Letter"; together with the Agents and Arrangers Fee Letter, the "Fee
Letters").
By its acceptance hereof, the Borrower hereby authorizes each of the
Agents and the Arrangers, at their respective sole expense and with the prior
approval by the Borrower, subsequent to the consummation of the Tender Offer
and Merger to publish such tombstones and give such other publicity to the
Facilities as each may from time to time determine in its sole discretion.
By accepting delivery of this Commitment Letter, the Fee Letters and the
Term Sheet, the Borrower hereby agrees that, prior to executing this
Commitment Letter, the Borrower will not disclose either expressly or
impliedly, without the Agents' and the Arrangers' consent, to any person any
of the terms of this Commitment Letter, the Fee Letters or Term Sheet, or the
fact that this Commitment Letter, the Fee Letters or Term Sheet or the
financing proposal represented thereby exists except that the Borrower may
disclose any of the foregoing to any employee, financial advisor (BUT NOT TO
ANY FINANCIAL ADVISOR WHICH MAY BE A PROVIDER OF SENIOR DEBT IN THIS
TRANSACTION) or attorney of the Borrower or the Target to whom, in each case,
it is necessary to disclose such information so long as any such employee,
advisor or attorney is directed to observe this confidentiality obligation.
Upon the Borrower's execution of this Commitment Letter, the Borrower may make
public disclosure of the existence and the amount of the commitment; and the
Borrower may file a copy of the Commitment Letter (but not either of the Fee
Letters), or make such other disclosures if such disclosure is, in the opinion
of the Borrower's counsel, required by law. If the Borrower does not accept
this commitment, the Borrower is to immediately return this Commitment Letter,
the Fee Letters and the Term Sheet (and all copies of the foregoing and all
prior versions thereof) to the Administrative Agent.
This Commitment Letter and Term Sheet supersede any and all prior
versions thereof. This Commitment Letter shall be governed by the internal
laws of the State of New York, and may only be amended by a writing signed by
both parties.
Sincerely,
THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Administrative Agent
By: ________________________________
FIRST CHICAGO CAPITAL MARKETS, INC.,
as Arranger
By: ________________________________
BANK OF AMERICA NT&SA,
individually and as Syndication Agent
By: ________________________________
BANCAMERICA ROBERTSON STEPHENS,
INC., as Arranger
By: ________________________________
NATIONSBANK, N.A.,
individually and as Syndication Agent
By: ________________________________
NATIONSBANC MONTGOMERY
SECURITIES, INC.,
as Arranger
By: ________________________________
Accepted and agreed:
_________________________
By: _______________________________
Title:_____________________________
Date:______________________________
TERM SHEET
December 10, 1997
This term sheet is intended as an outline and summarizes the principal
terms, conditions, representations, warranties and other provisions which
would be contained in definitive legal documentation for this transaction.
GENERAL TERMS
Borrowers: MascoTech, Inc. (the "Borrower"), a certain acquisition
subsidiary of the Borrower ("Acquisition") and certain other subsidiaries of
the Borrower (collectively, the "Borrowers").
Transaction: The Borrower plans to (i) refinance its existing
$575,000,000 bank credit facility (the "Existing Bank Facility") under which
NBD Bank is the agent, (ii) acquire the outstanding capital stock of a company
identified by the Borrower to the Agents and the Arrangers and which is
described by the code name "Schooner" (herein, the "Target"), pursuant to a
tender offer to be made by Acquisition (the "Tender Offer"), (iii) merge the
Target and Acquisition (the "Merger") pursuant to that certain Agreement and
Plan of Merger (the "Merger Agreement") entered into by the Target and
Acquisition and (iv) refinance the existing bank credit facility of the Target.
Aggregate Amount: Up to $1,300,000,000 (the "Aggregate Commitment")
comprised of loans under the facilities described below (the "Facilities").
Agents: The First National Bank of Chicago (the "Administrative Agent"),
Bank of America NT&SA (the "Syndication Agent"), and NationsBank, N.A. (the
"Syndication Agent", and collectively, the "Agents").
Arrangers: First Chicago Capital Markets, Inc., BancAmerica Robertson
Stephens, Inc., and NationsBanc Montgomery Securities, Inc. (the "Arrangers").
Lenders: The Agents and, if the Agents syndicate the transaction, a
group of lenders selected by the Arrangers, in consultation with the Borrowers
and the Agents (collectively, together with the Agents in their capacities as
lender, the "Lenders").
Syndication Management: The Arrangers, in consultation with the
Borrowers and the Agents, will manage all aspects of the syndication
including, without limitation, the timing of offers to potential Lenders, the
amounts offered to potential Lenders, the acceptance of commitments and the
amounts accepted, the compensation provided and the allocation of the
commitments.
Allocation: The Arrangers shall, in consultation with the Borrowers and
the Agents, allocate the commitments received from the Lenders.
THE FACILITIES
Revolving Credit Facility
Amount: $800,000,000 (the "Revolving Credit Commitment" and the
loans thereunder, the "Revolving Credit Loans"). The
Revolving Credit Commitment will include a $25,000,000
swingline facility within such revolving credit facility and
the multicurrency and letter of credit subfacilities
described below.
Purpose: To provide funds (i) to finance the purchase of capital
stock of the Target acquired pursuant to the Tender Offer,
(ii) to finance the Merger and (iii) for general corporate
purposes.
Maturity: November 15, 2003.
Multicurrency Subfacility: Up to U.S. $200,000,000 of the Revolving
Credit Facility shall be available for eurocurrency loans (the "Eurocurrency
Loans") to the Borrowers. The Eurocurrency Loans may be denominated in any
readily available and freely tradeable foreign currencies agreed upon by the
Borrowers and the Lenders ("Available Foreign Currencies") and will be
provided by certain designated Lenders to be agreed upon.
Letter of Credit Subfacility: Up to U.S. $150,000,000 of the Revolving
Credit Facility shall be available for the issuance of standby and commercial
letters of credit for the account of the Borrowers. Such letters of credit
shall be issued by the Administrative Agent. All letters of credit shall
mature not later than 5 days prior to Maturity.
Competitive Bid Facility: Competitive bid facility consistent with the
bid loan facility in the Existing Bank Facility to be available only when
Senior Debt to EBITDA ratio is less than 3.0 to 1.0.
Drawdowns: Minimum amounts of $10,000,000 with additional increments of
$5,000,000, except ABR Loans may be in minimum amounts of $5,000,000 with
additional increments of $5,000,000 and Eurocurrency Loans shall be in such
amounts as are mutually agreeable to the Borrowers and the Lenders. Drawdowns
are at the relevant Borrower's option with same-day notice for ABR Loans, one
business day notice for competitive bid absolute rate loans, three business
days for Eurodollar Loans, four business days for other Eurocurrency Loans and
five business days for competitive bid Eurodollar loans.
Term Loan Facility
Amount: $500,000,000 (the "Term Loan Commitment" and the loans
thereunder, the "Term Loans").
Purpose: To provide funds to finance (i) the purchase of capital
stock of the Target acquired pursuant to the Tender Offer
and (ii) the Merger.
Maturity: November 15, 2003.
Amortization: Installments of principal as follows:
Quarter Principal Payment Due
- ------- ---------------------
March 31, 1998 6,250,000
June 30, 1998 6,250,000
September 30, 1998 6,250,000
December 31, 1998 6,250,000
March 31, 1999 10,000,000
June 30, 1999 10,000,000
September 30, 1999 10,000,000
December 31, 1999 10,000,000
March 31, 2000 15,000,000
June 30, 2000 15,000,000
September 30, 2000 15,000,000
December 31, 2000 15,000,000
March 31, 2001 18,750,000
June 30, 2001 18,750,000
September 30, 2001 18,750,000
December 31, 2001 18,750,000
January 31, 2002 100,000,000
March 31, 2002 22,500,000
June 30, 2002 22,500,000
September 30, 2002 22,500,000
December 31, 2002 22,500,000
March 31, 2003 25,000,000
June 30, 2003 25,000,000
September 30, 2003 25,000,000
November 15, 2003 35,000,000
PRICING SCHEDULE
At the relevant Borrower's option:
-ABR
-Eurodollar Rate (for U.S. Dollar Loans) plus the Applicable Margin
-Competitive Bid Rates
-Eurocurrency Rate plus the Applicable Margin
Pricing Schedule: The Facility Fee, the Applicable Margin and the Letter
of Credit Fee shall be determined by the Leverage Ratio (as defined in the
financial covenants) in accordance with the Pricing Grid below:
Pricing Grid
<TABLE>
<CAPTION>
=======================================================================================================
Applicable Margin
Leverage Ratio over Eurocurrency or Letter of Credit Fee Facility Fee
Eurodollar Rate
=======================================================================================================
<S> <C> <C> <C>
Greater than or equal 1.000% 1.000% 0.250%
to 4.50 to 1.0
Less than 4.50 to 1.0 0.875% 0.875% 0.250%
and greater than or
equal to 4.25 to 1.0
Less than 4.25 to 1.0 0.775% 0.775% 0.225%
and greater than or
equal to 3.75 to 1.0
Less than 3.75 to 1.0 0.675% 0.675% 0.200%
and greater than or
equal to 3.25 to 1.0
Less than 3.25 to 1.0 0.575% 0.575% 0.175%
and greater than or
equal to 2.5 to 1.0
Less than 2.5 to 1.0 and 0.350% 0.350% 0.150%
greater than or equal
to 2.0 to 1.0
Less than 2.0 to 1.0 0.225% 0.225% 0.150%
=======================================================================================================
</TABLE>
Initial Pricing will be at an All-In Cost (spread plus facility fee) of 1.125%
which will not be reduced to below 1.125% until at least three months after
closing or below 1.00% until at least six months after closing.
The Facility Fee, the Applicable Margin and the Letter of Credit Fee
shall be adjusted quarterly (upward or downward) in a manner consistent with
the Borrower's Existing Bank Facility. The swingline loans will be at such
rates as agreed upon between the Borrower and the Administrative Agent.
General Provisions Relating to Interest Rates: Eurodollar Rate and
Eurocurrency Rate interest periods shall be one, two, three or six months,
subject to interest period limitations during the general syndication period.
Interest on ABR loans shall be payable on the last day of each calendar
quarter, upon any prepayment (whether due to acceleration or otherwise) and at
final maturity. Interest on Eurodollar Rate and Eurocurrency Rate loans shall
be payable in arrears on the last day of each interest period and, in the case
of an interest period longer than three months, quarterly, upon any prepayment
(whether due to acceleration or otherwise) and at final maturity. Interest
on all Eurodollar Rate Loans, Eurocurrency Loans, Competitive Bid Rate Loans
and fees shall be calculated for actual days elapsed on the basis of a 360-day
year. Interest on ABR loans shall be calculated for actual days elapsed on
the basis of a 365, or when appropriate 366, day year.
The Credit Agreement will include customary provisions relating to yield
protection, availability, withholding taxes, illegality and capital adequacy
consistent with the Existing Bank Facility. After specified defaults, all
interest rates will, upon the vote of the Majority Lenders, be increased by
2.0% per annum while such default is continuing.
Definitions Relating to Interest Rates: The following terms shall have
the meanings set forth below:
"ABR" means a fluctuating rate of interest equal to the higher of (a) CBR and
(b) the Federal Funds Effective Rate most recently determined by the
Administrative Agent plus 1/2% per annum.
"CBR" means the corporate base rate of interest announced by the
Administrative Agent from time to time, changing when and as said corporate
base rate changes.
"Eurocurrency Rate" shall be based upon the cost of funding in the relevant
currency under procedures to be reasonably determined by the Administrative
Agent.
"Eurodollar Rate" means the arithmetic average of the rates at which the
Agents (in their capacities as Lenders) (the "Reference Lenders") offer to
place deposits in U.S. dollars with first-class banks in the London interbank
market at 11:00 a.m. (London time) two business days prior to the borrowing
date in the approximate amount of, and for a maturity corresponding to, each
such Reference Lender's portion of the loan, adjusted for Federal Reserve
Board reserve requirements.
"Federal Funds Effective Rate" means, for any period, a fluctuating rate of
interest equal for each day during such period to (a) the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day by
the Federal Reserve Bank of New York or (b) if such rate is not so published
for any day the average of the quotations for such day on such transactions
received by the Administrative Agent from three Federal Funds brokers of
recognized standing selected by it.
FEES
Letter of Credit Fees:
Issuance Fee: An issuance and fronting fee with
respect to each Letter of Credit issued shall be payable to the
Administrative Agent of such standby Letter of Credit in such amount
as agreed upon between the Borrower and the Administrative Agent.
Letter of Credit Fee: A letter of credit fee in the
amount shown in the applicable Pricing Schedule shown above on the
face amount of each Letter of Credit, payable quarterly in arrears
to the Lenders (including the Administrative Agent) ratably from the
date each such Letter of Credit is issued until its stated expiry
date.
Facility Fee: A facility fee in the amount shown in the applicable
Pricing Schedule shown above on the average daily amount, whether used or
unused, of the Revolving Credit Facility and the Term Loans, payable quarterly
in arrears for the ratable benefit of the Lenders from the closing date until
termination of the Revolving Credit Commitments and payment of the loans.
Agents' and Arrangers' Fees: Such additional fees payable to the Agents
and the Arrangers as are agreed to in the Agents and Arrangers Fee Letter and
the Administrative Agent Fee Letter, each of even date herewith.
Guaranties and Collateral
-------------------------
The Borrower will (and, if at the expiration of the Tender Offer, the
Borrower and Acquisition have not obtained sufficient shares of the Target to
effect a short-form merger, Sintered Components, Inc. and Tubular Products,
Inc. will within 5 business days of the initial funding to purchase shares of
the Target pursuant to the Tender Offer) guarantee the Facilities prior to the
Merger, and after the Merger the Borrower and only the present and future
domestic direct and indirect subsidiaries which are significant subsidiaries
(within the meaning of Regulation S-X) of the Borrowers, including the Target,
will guarantee the Facilities. The guaranty of any such subsidiary will be
automatically released upon the sale of such subsidiary if all cash proceeds
of the sale are applied to reduction of the Term Loans, or, if the Term Loans
have been paid in full, the Revolving Credit Loans. The loans made under the
Facilities shall be unsecured except that stock of the Target owned by the
Borrower and Acquisition will be pledged at the time of the initial funding to
finance the purchase of the stock of the Target acquired pursuant to the
Tender Offer if permissible under Regulation U, or, otherwise, at the time of
the Merger. The pledged stock will be released upon the Borrower's
achievement of an implied or actual senior unsecured debt rating of BB+ by
Standard & Poors Ratings Group or Ba1 by Moody's Investors Service or a ratio
of Senior Debt to EBITDA of less than 2.5 to 1.0, but not before the
consummation of the Merger. If the stock of the Target cannot be pledged in
compliance with Regulation U prior to the Merger, the loans made under the
Facilities shall be unsecured and there will be no restriction on liens on or
disposition of capital stock of the Target acquired pursuant to the Tender
Offer except that the Borrower that owns such capital stock will agree that if
such stock is disposed of, the disposition will be for fair market value and
the proceeds thereof will be held in cash equivalents.
Prepayments
Mandatory
Prepayment -
Sale of Assets: Upon the sale, transfer or other disposition of any assets
(other than the sale of inventory in the ordinary course of
business and the sale of equipment if the proceeds are used
to purchase replacement equipment of comparable value within
180 days) in excess of $25,000,000 per fiscal year, to the
extent permitted under the Loan Documents, the Borrowers
shall make a mandatory prepayment in an amount equal to 100%
of the cash proceeds (net of the amount of any debt secured
by such assets required to be repaid, income taxes and
expenses of sale) realized from any such sale, transfer or
other disposition in excess of $25,000,000, such mandatory
prepayment to be applied to the Term Loans until paid in
full, then to the Revolving Credit Facility (and, at the
option of the Borrower, the reduction of the Revolving
Credit Commitment). This prepayment shall be applicable as
long as, and to the extent that, the ratio of Senior Debt to
EBITDA ratio is more than 3.0 to 1.0 after giving pro forma
effect to the use of such proceeds.
Mandatory
Prepayment -
Debt/Equity Sale: Upon the sale of any common stock, preferred stock,
warrants or other equity or the placement of any debt, with
certain exceptions, the Borrowers shall make a mandatory
prepayment in an amount equal to 100% of the net cash
proceeds of such equity or debt, such mandatory prepayment
to be applied to the Term Loans until paid in full, then to
the Revolving Credit Facility (and, at the option of the
Borrower, the reduction of the Revolving Credit Commitment).
This prepayment shall be applicable as long as, and to the
extent that, the ratio of Senior Debt to EBITDA ratio is
more than 3.0 to 1.0 after giving pro forma effect to the
use of such proceeds.
Voluntary
Prepayments: The Loans may be prepaid in whole or in part without
premium; and the Revolving Credit Commitment may be
permanently reduced without premium on one day's notice,
provided such reductions will be in an amount of at least
$5,000,000 and multiples of $1,000,000 in excess thereof.
The Borrowers will pay breakage costs with respect to any
payments of Eurodollar or other Eurocurrency which are made
on a date other than the last day of the interest period
therefor.
Allocation of
Prepayments: All mandatory prepayments to be applied to the Term Loans
shall be applied to the principal installments thereof first
to the installment due on January 31, 2002 and thereafter to
the other installments in the inverse order of maturity.
All voluntary prepayments to be applied to the Term Loans
shall be applied, at the Borrower's option, either to the
installment due on January 31, 2002, or to the other
installments thereof, pro rata, or any combination of the
foregoing.
Conditions of Lending
---------------------
The Loan Documents shall be in form and substance acceptable to the
Lenders, and will, in general, follow the terms of the Existing Bank Facility
except where noted herein and as required for the Tender Offer and Merger and
related transactions. The Credit Agreement shall include, without limitation,
conditions precedent, representations and warranties, covenants, events of
default, indemnification (of Agents, Arrangers and Lenders) and other
provisions customary for such financings.
Conditions Precedent to Tender Offer Financing
----------------------------------------------
Usual conditions to each advance other than the Term Loan Facility and
the Revolving Credit Loans made to finance the purchase of shares of the
Target pursuant to the Tender Offer (consistent with Existing Bank Facility).
Conditions precedent to (i) the initial loans under the Revolving Credit
Facility and (ii) the initial loans under the Term Loan Facility to finance
the purchase of capital stock of the Target acquired by Acquisition pursuant
to the Tender Offer will include without limitation those set forth below.
Approval: Evidence satisfactory to the Agents that the Borrowers'
directors shall have approved the Tender Offer and Merger;
and the Target's directors shall have approved and
recommended acceptance of the Tender Offer and shall have
approved the Merger. The Borrower, Acquisition and the
Target shall have made all filings with and obtained all
approvals and authorizations from any governmental body,
agency, official or authority, and any applicable waiting
period related thereto shall have expired or been terminated,
which filings, approvals or authorizations (or the
expiration of such waiting periods) are legally required to
be obtained or made by them (or to have expired or
terminated) prior to the consummation of the Tender Offer
and which, if not obtained or made (or expired or
terminated) would, individually or in the aggregate, have a
reasonable probability of having a material adverse effect
on the Borrower or the Target.
Litigation: No law or regulation makes consummation of the Tender Offer
or the Merger illegal or otherwise prohibited and no
judgment, injunction, order or decree enjoins the Borrower,
Acquisition or the Target from consummating the Tender Offer
or the Merger.
Total
Consideration: The amounts and forms of the consideration to be paid in the
Tender Offer and the Merger shall be acceptable to the
Agents if higher than $34.50 per share, together with
evidence of such consideration to be paid satisfactory to
the Agents.
Tender Offer: All conditions precedent to the Borrower's consummation of
the Tender Offer shall have been satisfied or waived with
the approval of the Agents. The terms of the Tender Offer
shall not be amended without the consent of the Agents. The
number of the Target's shares of capital stock validly
tendered pursuant to the Tender Offer and not properly
withdrawn prior to expiration of the Tender Offer shall
represent not less than the minimum number of shares,
determined on a fully diluted basis necessary to effectuate
the Merger in accordance with the provisions of any
applicable corporate statute, anti-takeover statute or
provision in the Target's certificate of incorporation,
by-laws, etc. in order to consummate the Merger.
Merger
Agreement: The Target and Acquisition shall have entered into the
Merger Agreement and the Merger Agreement shall not have
been amended or modified or any of its provisions waived by
the Borrower in any respect material to the Lenders without
the approval of the Agents and there shall not have occurred
or exist any breach or default by the Borrower material to
the Lenders under the Merger Agreement. Except for such
inaccuracies or omissions the consequences of which do not
singly or in the aggregate constitute a material adverse
effect on the Target, the representations and warranties of
the Target contained in the Merger Agreement shall be true
in all respects at and as of the time shares are accepted
for payment pursuant to the Tender Offer as if made at and
as of such time (except as to those representations and
warranties which are made as of a specified date, which shall
be true and correct as of such date).
Fairness
Opinion: Receipt of a copy of any fairness opinion relating to the
Tender Offer.
Valuation: The Agents shall have received evidence confirming the
solvency and other appropriate factual information in form
and substance satisfactory to them from the chief financial
officer of the Borrower supporting the conclusion that after
giving effect to the Tender Offer and the Merger, the
Borrower and its consolidated subsidiaries, including the
Target, taken as a whole, is solvent and will be solvent
subsequent to incurring the indebtedness in connection with
the Tender Offer and the Merger, will be able to pay its
debts as they become due and will not be left with
unreasonably small capital.
Existing
Facilities: Refinancing and replacing, with the Facilities, all
obligations of the Borrowers under the Existing Bank
Facility.
Regulations: Compliance with all applicable requirements of Regulations
G, T, U and X of the Board of Governors of the Federal
Reserve System.
No Default;
No MAC: No default or event of default shall exist on the funding
date and no Material Adverse Change shall have occurred.
When used in connection with the Borrower or the Target, a
"Material Adverse Change" is any event, occurrence,
development or state of circumstances or facts which has had
or has a reasonable probability of having, individually or
in the aggregate, a material adverse effect on the Borrower
and its consolidated subsidiaries (including the Target and
its consolidated subsidiaries, to the extent the Target is
owned by the Borrower or Acquisition, which, with respect to
the funding to purchase the shares of the Target acquired
pursuant to the Tender Offer, would take into effect the
shares to be purchased) taken as a whole.
Target MAC: No event, occurrence, development or state of circumstances
or facts which has had or has a reasonable probability of
having, individually or in the aggregate, a material adverse
effect on the Target shall have occurred.
Interest
Rate Protection: Within 180 days of the initial loans, the Borrowers shall
enter into interest rate swap or hedging agreements or other
agreements (including (i) replacement financing at a fixed
rate of interest or (ii) equity) which effectively limit the
amount of interest that the Borrowers must pay on notional
amounts of at least $200,000,000 for at least 2 years.
Customary
Documents: Receipt of other customary closing documentation, including,
without limitation, customary legal opinions of the
Borrowers' counsel acceptable to the Agents.
Conditions Precedent to Merger Financing
----------------------------------------
Conditions precedent to the initial loans to finance the Merger will
include, without limitations, those set forth below:
Merger: The Merger shall have become effective in accordance with
all applicable laws and regulations and the Merger
Agreement, the provisions of which shall not have been
amended, waived or modified by the Borrower in any manner
material to the Lenders without the prior consent of the
Majority Lenders, and each of the conditions precedent to
the Borrower's obligation to consummate the Merger material
to the Lenders set forth in the Merger Agreement shall have
been satisfied to the satisfaction of the Majority Lenders.
Litigation: No law or regulation makes consummation of the Merger
illegal or otherwise prohibited and no judgment, injunction,
order or decree enjoins the Borrower, Acquisition or the
Target from consummating the Merger.
No Default;
No MAC: No default or event of default shall exist on the funding
date (taking into effect consummation of the Merger) and no
Material Adverse Change shall have occurred since the
funding of the Tender Offer.
Covenants
---------
Covenants: The Credit Agreement will contain affirmative and negative
covenants consistent with the Existing Bank Facility (except
where noted below and except for additional covenants listed
below), including without limitation restrictions on the
following:
-liens and encumbrances on not more than 10% of
current assets plus 5% of net worth
-sale of assets not to exceed 10% of total assets per
year
-subsidiary indebtedness outside of the Facilities
will not exceed $100,000,0000
-Restricted payments (defined as dividends on
preferred stock exceeding $3,750,000 in any fiscal
quarter, dividends on common stock and repurchases
of stock or subordinated debt, but excluding
issuances of or purchases of stock or dividends paid
in connection with employee stock option, employee
stock award or related benefit plans) shall be
limited to (i) $40,000,000 plus (ii) 75% of any
proceeds of equity and 60% of any proceeds of
subordinated debt issued by the Borrower after the
ratio of Senior Debt to EBITDA is less than 3.0 to
1.0, plus (iii) 50% of Excess Cash Flow or, after the
ratio of Senior Debt to EBITDA is less than 3.0 to
1.0,100% of Excess Cash Flow. Excess Cash Flow shall
be defined as net income minus scheduled payments of
principal (excluding the installment due January 31,
2002) minus dividends paid on preferred stock up to
an amount not to exceed $15,000,000 in any one fiscal
year. Excess Cash Flow shall be calculated on a
quarterly basis promptly following the receipt of the
Borrower's 10Qs and 10Ks, as applicable. This
covenant will not apply if, after giving effect to
any such restricted payment made, the ratio of Total
Debt to EBITDA is less than 3.0 to 1.0.
Financial
Covenants: The Credit Agreement will contain the following financial
covenants (for purposes of the following financial
covenants, the definitions of EBITDA (except that non-
recurring cash gains or losses and non-cash earnings from
equity investments will be included up to an amount not to
exceed $30,000,000 in the aggregate in any rolling four
fiscal quarter period), capital expenditures and
indebtedness will be substantially consistent with the
definitions in the Existing Bank Facility):
- Capitalization. The Borrowers will
maintain at all times consolidated net worth plus
subordinated debt plus, at all times prior to
March 31, 2002, the amount of subordinated debt
which the Borrower may require Masco Corporation
to purchase pursuant to the Amended and Restated
Securities Purchase Agreement dated as of November
23, 1993 between the Borrower and Masco
Corporation as in effect on the date hereof of not
less than the sum of $650,000,000 plus 60% of the
consolidated net income (after taxes) of the
Borrower and its Subsidiaries for each fiscal year
(in which net income is positive) which ends
subsequent to the initial closing. On March 31,
2002 and for all times thereafter, the minimum
capitalization level shall be reduced by
$200,000,000.
- Fixed Charge Coverage Ratio. The Borrowers
will maintain a fixed charge coverage ratio of (a)
EBITDA minus capital expenditures to (b) interest
plus scheduled debt payments (exclusive of the
installment due January 31, 2002) plus cash taxes
excluding cash taxes with respect to gains not
included in EBITDA, calculated on a rolling four
quarter basis, of at least (i) 1.10 to 1.00 for
each fiscal quarter for the period commencing with
the fiscal quarter ending March 31, 1998 and
through the fiscal quarter ending June 30, 2000;
and (ii) 1.15 to 1.00 for each fiscal quarter
thereafter.
- Leverage Ratio. The Borrowers will
maintain a ratio of (a) the consolidated
indebtedness and contingent liabilities consisting
of guaranties of indebtedness of others, synthetic
leases, and securitization transactions (to the
extent in excess of $50,000,000 for such
contingent liabilities) minus cash and cash
equivalents maintained in the United States in
excess of $10,000,000 of the Borrower and its
Subsidiaries at such time to (b) EBITDA, as
calculated for the four most recently ended fiscal
quarters as of such time, not be greater than the
following ratios for the corresponding periods
ending on the dates listed below:
Quarter Ending Ratio
-------------- -----
March 31, 1998 4.85 to 1.00
June 30, 1998 4.85 to 1.00
September 30, 1998 4.75 to 1.00
December 31, 1998 4.50 to 1.00
March 31, 1999 4.50 to 1.00
June 30, 1999 4.50 to 1.00
September 30, 1999 4.50 to 1.00
December 31, 1999 4.25 to 1.00
March 31, 2000 4.25 to 1.00
June 30, 2000 4.00 to 1.00
September 30, 2000 4.00 to 1.00
December 31, 2000 3.75 to 1.00
March 31, 2001 3.75 to 1.00
June 30, 2001 3.50 to 1.00
September 30, 2001 3.50 to 1.00
December 31, 2001 3.00 to 1.00
March 31, 2002 3.00 to 1.00
June 30, 2002 3.00 to 1.00
September 30, 2002 3.00 to 1.00
December 31, 2002 3.00 to 1.00
March 31, 2003 3.00 to 1.00
June 30, 2003 3.00 to 1.00
September 30, 2003 3.00 to 1.00
and each quarter thereafter
REPRESENTATIONS AND WARRANTIES
Representations and warranties to be made as of the closing date and in
connection with each advance consistent with those contained in the Existing
Bank Facility except as otherwise provided for herein.
DEFAULTS
Events of default consistent with those contained in the Existing Bank
Facility and failure to consummate the Merger within 180 days of the initial
funding of loans under the Facilities.
ASSIGNMENTS AND PARTICIPATIONS
Each Lender may, in its sole discretion, sell participations in the loans and
in its commitment in the minimum amount of $5,000,000 and multiples of
$5,000,000, provided that (a) participants shall have no right to withhold
their consent to the Lenders voting on any matters with respect to the Loan
Documents except with respect to amendments which (i) forgive principal of, or
interest on, any loan, (ii) postpone any date fixed for the payment of
principal of, or interest on, any loan, (iii) decrease the rates at which
interest or fees are payable, or (iv) release any material guarantor (in each
case, other than as expressly provided in the Loan Documents), (b) the Lender
shall remain solely responsible for the performance of its obligations under
the Loan Documents and the Borrowers shall continue to deal solely and
exclusively with such Lender and (c) such participants shall not have any
rights as Lenders under the Loan Documents. Additionally, each of the Lenders
will have the right, with the consent of the Borrowers (which consent shall
not be unreasonably withheld or delayed and shall not be required if payment
default exists) and of the Administrative Agent, to sell assignments (and the
Borrowers shall release the assigning Lender for the amount so assigned) in
the minimum amount of $5,000,000 and multiples of $5,000,000, and an
assignment fee of $3,500 shall be paid by the assignor or the assignee to the
Administrative Agent in connection with each assignment. Each Lender may
disclose information to prospective participants and assignees, subject to
appropriate confidentiality agreements.
MISCELLANEOUS
Governing Law: The Commitment Letter and this Term Sheet are governed by
the internal laws of the State of New York.
Voting: Majority Lenders shall mean those Lenders holding at least 51%
of the commitments, or if the commitments have been terminated, of the
outstanding loans.
Expenses and Indemnification: The reasonable expenses of the each Agent
and Arranger, whether incurred prior to or subsequent to closing but subject
to any limitations agreed upon in writing, in investigation, preparation,
negotiation, documentation, syndication, administration and collection will be
for the account of the Borrowers, including reasonable expenses of and fees
for attorneys for the each Agent and Arranger (who may or may not be employees
of such Agent or Arranger) and other advisors and professionals engaged by the
Agents and the Arrangers. The Credit Agreement will include provisions
governing indemnification of the Agents, the Arrangers and the Lenders and
their respective affiliates, directors, officers, employees and agents (each,
an "indemnified person") in respect of all losses, costs, expenses (including
reasonable fees, charges and disbursements of counsel) and liabilities
resulting from any litigation, investigation or other proceedings, related to
or arising out of the transactions contemplated by or related to the Credit
Agreement.
*** This Term Sheet is intended as an outline only and summarizes the
principal conditions, covenants, representations, warranties and other
provisions which would be contained in definitive legal documentation for the
financing contemplated hereby. The commitment of the Agents and the other
Lenders is subject to negotiation and execution of definitive Loan Documents
in form and substance satisfactory to the Lenders and their respective counsel.
Exhibit (c)(4)
President's Agreement
EMPLOYMENT AGREEMENT
This Agreement (the "Agreement") is made as of the day of
December, 1997, between TriMas Corporation, a Delaware corporation and Brian
P. Campbell (the "Employee").
RECITALS
The Employee has actively and significantly participated in the
management and development of the business, assets and value of the Company
and the Company considers the retaining of the Company's existing management
essential to protecting and enhancing the best interest of the Company and
enhancing shareholder value;
The Company believes that executing this Agreement is in the
best interest of the Company and its shareholders and the Employee believes
that the execution of this Agreement is in his best interests; and
The Company and the Employee desire to enter into this
Agreement;
NOW, THEREFORE, to induce the Employee to remain in the employ
of the Company, and for other good and valuable consideration, the Company and
the Employee agree as follows:
1. Definitions.
(a) "Benefit Period" shall mean the period commencing on the
date of this Agreement and continuing through the later of (i)
the end of the Contract Employment Period or (ii) the date which
is one (1) year after the Termination Date, but in no event to
end later than March 8, 2004.
(b) "Board" shall mean the Company's Board of Directors.
(c) "Business Activities" shall mean the design, development,
manufacture, distribution, sale and marketing of products or
services sold, distributed or provided by TriMas Corporation or
any of its subsidiaries prior to the Termination Date. Business
Activities shall not include the provision of services of a
professional nature (including but not limited to the provision
of financial, treasury, consulting or accounting services) by an
individual professionally licensed or trained to perform such
services ("Professional Services") in any capacity as an
employee, partner, owner or otherwise for any enterprise
generally engaged in the provision of such Professional Services
to the public.
(d) "Cause," when used in connection with the termination of
the Employee's employment by the Company, shall mean (i) the
willful and continued failure (after written notice from the
Company to the Employee) by the Employee to substantially perform
the Employee's primary duties and obligations (of a nature
consistent with this Agreement including without limitation
Section 3 hereof) to the Company (other than any failure
resulting from the Employee's Disability or actions taken by the
Company which prevent the Employee's performance), (ii) the
engaging by the Employee in willful misconduct which is
materially injurious to the Company, monetarily or otherwise, or
(iii) the commission of any act constituting a felony under the
laws of any state within the United States or of the United
States.
(e) "Company" shall mean TriMas Corporation and any
corporation or entity that is a successor (whether by purchase of
all or substantially all of the business and/or assets, merger,
consolidation or liquidation) of the Company.
(f) "Contract Employment Period" shall mean that period
commencing with the date of this Agreement and continuing to
March 8, 2001.
(g) "Disability" shall mean a physical or mental incapacity
of the Employee which entitles the Employee to benefits under the
long term disability plan applicable to the Employee and
maintained by the Company as in effect at the time of such
disability, provided however the TriMas Corporation Supplemental
Executive Retirement and Disability Plan shall not be deemed to
be such a long term disability plan. However, if the Company has
no such plan at that time, "Disability" shall mean any physical
or mental condition that renders the Employee unable to
substantially perform the Employee's duties with the Company for
a period of one hundred and eighty (180) days during any period
of twelve (12) consecutive months.
(h) "Employment Term" shall have the meaning set forth in
Section 2 of this Agreement.
(i) "Good Reason," when used with reference to a oluntary
termination by the Employee of the Employee's employment with the
Company, shall mean:
(i) a substantial diminution in the Employee's
position such that the Employee's job is no longer of a
significant or responsible management or professional
nature;
(ii) at any time on or after March 31, 1999, the
demotion or a continuation of a prior demotion of the
Employee to a position where the Employee is no longer
discharging as the principal part of that position,
responsibilities of a general nature substantially
consistent with the type of responsibilities being
discharged by the Employee as of the date hereof;
(iii) a reduction in the Employee's base salary as
in effect on the date of this Agreement or as the same
may be increased from time to time; or the Company's
failure to pay to the Employee at least the Minimum
Bonus Compensation for the year ended December 31, 1997
or December 31, 1998; or a failure of the Company to
include the Employee as an eligible participant in the
Company's bonus plan, stock incentive plan and other
management incentive programs in which the Employee
currently participates other than as part of a broad-
based restructuring of benefits of the Company
affecting no less than substantially all comparably
compensated employees of the Company, provided that the
awarding of any such incentive compensation is in the
Board's discretion;
(iv) a change in the Employee's principal work
location to any location more than forty miles outside
of Ann Arbor, Michigan, except for required travel on
the Company's business to an extent substantially
consistent with the Employee's current business travel
obligations on the date of this Agreement; or
(v) the failure by the Company to comply with any
of its obligations under Section 13(a).
(j) "Minimum Bonus Compensation" shall apply to the years
ended December 31, 1997 and December 31, 1998 only and shall mean
the bonus amount of $__________.
(k) "Protected Vesting Period" shall have the meaning set
forth in Section 9(g) of this Agreement.
(l) "Termination Date" shall mean the effective date as
provided under this Agreement of the termination of the
Employee's employment.
(m) "Unvested Options" and "Unvested Stock Awards" shall
mean all (i) unvested restricted stock awards under the 1988
TriMas Corporation Restricted Stock Incentive Plan (Restated
December 5, 1995), (ii) unvested options under the 1988 TriMas
Corporation Stock Option Plan (Restated December 5, 1995), and
(iii) unvested restricted stock awards, options, or other awards
of any form under the TriMas Corporation 1995 Long Term Stock
Incentive Plan (Restated December 5, 1995) representing awards,
options or grants granted prior to February 28, 1998.
(n) "Without Cause" when used in connection with the
termination of the Employee's employment by the Company, shall
mean any termination of employment of the Employee by the Company
which is not a termination of employment for Cause or Disability.
2. Employment, Acceptance and Term. The Company hereby employs
the Employee in a senior management position with the Company and the Employee
hereby accepts such employment with the Company on the terms set forth in this
Agreement for the Contract Employment Period unless sooner terminated pursuant
to the provisions of Sections 7 or 8 of this Agreement or upon the Employee's
death (the "Employment Term").
3. Duties and Authority. During the Employment Term, the
Employee shall devote his full business time and energies to the business
and affairs of the Company and shall not, without the Company's written
consent, accept other employment or permit such personal business interests
as he may have to interfere with the performance of his duties under this
Agreement. The Employee agrees to use his best efforts, skill and
abilities to promote the interests of the Company, to work with other
employees of the Company in a competent and professional manner and
generally to promote the interests of the Company and to perform such other
duties of a management or professional nature as may be assigned to him by
the Chairman or Board of the Company.
4. Compensation. For all services to be performed by the
Employee during the Employment Term the Company shall pay the Employee an
annual base salary of not less than ___________________________________
($___________) Dollars per year, payable in accordance with the prevailing
payroll practices of the Company and less all applicable taxes required to
be withheld by federal, state or local laws. The Employee shall be
eligible for annual merit increases in base salary, consistent with the
annual merit increases granted to other comparably compensated employees of
the Company. In addition during the Employment Term, the Employee shall be
entitled to such bonus pursuant to the Company's bonus plan, in effect on
the date hereof or which may hereafter exist, to the extent the Employee
meets the eligibility requirements of such plan and such other
discretionary compensation as in each case may be awarded from time to time
in the discretion of the Board, provided that, during the Employment Term,
the Company shall pay to the Employee as a bonus (a) for 1997 and 1998 an
amount not less than the Minimum Bonus Compensation, and (b) for 1999 and
2000 an amount commensurate with other comparably compensated employees of
the Company but not less than ninety percent (90%) of the Employee's 1998
bonus.
5. Participation in Employee Benefit Plans. In addition to
the cash compensation payable hereunder, the Employee shall be entitled to
participate during the Employment Term in such employee benefit plans,
whether contributory or non-contributory, such as group insurance plans,
hospital, surgical, vision and dental benefit plans or other bonus
incentive, profit sharing, retirement or employee benefit plans of the
Company existing on the date hereof or as may be subsequently amended or
adopted by the Company for management employees in significant or
responsible management positions covered thereby to the extent that the
Employee meets the general eligibility requirements of any such plans.
These plans include, without limitation, the TriMas Corporation Pension
Plan, the TriMas Corporation Future Service Profit Sharing Plan, the TriMas
Corporation Salaried Savings Plan, the TriMas Corporation Retirement
Benefit Restoration Plan and the TriMas Corporation Supplemental Executive
Retirement and Disability Plan. The Employee shall be entitled during each
year of the Employment Term to paid vacation time consistent with past
practice and Company policy for comparable senior executives. Any
reference to a benefit plan under this Agreement, including without
limitation those referenced in this Section 5 and in Section 1(m), shall
include any successor plans (the "Plans").
6. Application of this Agreement: Term of Agreement. The
provisions of Sections 7 and 8 of this Agreement shall apply with respect
to any termination of employment of the Employee which occurs during the
period commencing on the date of this Agreement and ending on March 8,
2003. Such provisions shall not apply to any termination of employment of
the Employee which occurs following March 8, 2003 after which date the
Employee shall have no further rights under this Agreement except to the
extent they have heretofore accrued to the Employee, including without
limitation those which have accrued under Section 9. Continuation of
employment with a successor to TriMas Corporation, as described in Section
13(a), shall not alone constitute termination of the Employee's employment.
7. Termination of Employment of the Employee By the Company.
(a) The Company shall have the right to terminate the
Employee's employment hereunder at any time for Disability, for
Cause, or Without Cause in each circumstance; however if such
termination occurs during the Contract Employment Period, the
Company will be required to comply with the procedures
hereinafter specified.
(b) During the Contract Employment Period, termination of
the Employee's employment for Disability shall become effective
no sooner than thirty (30) days after a notice of intent to
terminate the Employee's employment, specifying Disability as the
basis for such termination, is given to the Employee by the
Board, by a committee of the Board or by the officer to whom the
Employee normally reports and any applicable requirements of the
Company's long term disability plan or, if the Company has no
such plan, its administrative practices then applicable to
disability have been met.
(c) During the Contract Employment Period, termination of
the Employee's employment for Cause shall be effective
immediately upon written notification from the Board, a committee
of the Board, or the officer to whom the Employee normally
reports, to the Employee stating in such notice that the Employee
is terminated for Cause and providing reasonable detail of the
facts and circumstances claimed by the Company to constitute
Cause. In the event the Employee believes that there was not
Cause for such termination, the Employee may notify the Company
in writing of such belief within fifteen (15) days after the
Company's delivery of written notice of termination for Cause to
the Employee. In the event the Employee gives notice to the
Company within such fifteen (15) day period, the Employee shall
(unless such an opportunity has been previously offered to the
Employee) within fifteen (15) days of the giving of such notice
be afforded an opportunity, together with the Employee's counsel,
to be heard before the superior to the officer to whom the
Employee normally reports. If, pursuant to such hearing, such
superior officer determines that there was no Cause for such
termination, then such termination shall be deemed to be Without
Cause. Any determination by such superior officer shall be in
addition to and shall not limit the right of the Employee to
arbitrate whether such termination was for Cause under Section 16
hereof.
(d) The Company shall have the absolute right to
terminate the Employee's employment Without Cause by notice from
the President of the Company or the Board; however, during the
Contract Employment Period, termination of the Employee's
employment Without Cause shall be effective on the date specified
in the notice but no sooner than five (5) business days after the
date of the Company's giving to the Employee a notice of
termination, specifying that such termination is Without Cause.
(e) Upon a termination of the Employee's employment for
Cause or (except as provided to the contrary in Section 14) for
Disability, the Employee shall have no right to receive any
compensation or benefits based on the provisions of this
Agreement provided, however, with respect to Disability nothing
in this sentence shall restrict any benefits that the Employee
would otherwise receive upon the occurrence of the Employee's
disability under any benefit plans of the Company covering the
Employee. Upon a termination of the Employee's employment
Without Cause, the Employee shall be entitled to receive the
benefits provided in Section 9 hereof.
8. Termination of Employment By the Employee. The Employee shall
be entitled at any time to terminate employment with the Company for any
reason and, if such termination is for Good Reason, to receive the benefits
provided in Section 9 hereof in the same manner as if such Employee had been
terminated Without Cause. The Employee shall give the Company notice of
voluntary termination of employment, which notice need specify only the
Employee's desire to terminate employment and, if such termination is for Good
Reason, also set forth in reasonable detail the facts and circumstances
claimed by the Employee to constitute Good Reason. Any notice by the Employee
pursuant to this Section shall be effective five (5) business days after the
date it is given by the Employee. If the Employee terminates his employment
with the Company other than for Good Reason, the Employee shall not be
entitled to receive benefits under this Agreement except those provided in
Section 9(a) and 9(b) hereof.
9. Benefits Upon Termination in Certain Circumstances. Upon the
termination of the Employee's employment by the Company Without Cause pursuant
to Section 7(d) hereof or by the Employee for Good Reason pursuant to Section
8 hereof during the period commencing on the date of this Agreement and ending
on March 8, 2003, the Employee shall execute a Separation Agreement and
Complete Release of Liability in the form attached as Exhibit A hereto (the
"Release") in favor of the Company and commencing eight (8) days thereafter,
provided the Employee did not revoke the Release pursuant to Section 8
thereof, the Employee shall be entitled to receive the following benefits:
(a) The Company shall pay to the Employee, not later than
thirty (30) days after the Termination Date, a lump sum cash
amount equal to the sum of (i) the full base salary earned by the
Employee through the Termination Date and unpaid at the
Termination Date, (ii) the amount of any base salary attributable
to vacation earned by the Employee but not taken before the
Termination Date, (iii) all other amounts earned by the Employee
and unpaid at the Termination Date (including any amount of a
bonus remaining unpaid from a prior performance year), and (iv)
all amounts owing by the Company on account of expenditures by
the Employee on behalf of the Company, including without
limitation all amounts due as reimbursement of travel and
entertainment expenses.
(b) The Company shall pay to the Employee, not later than
thirty (30) days after the Termination Date, the greater of (i) a
pro-rata amount of any bonus award earned by the Employee during
the year in which the Termination Date occurred; or (ii) a pro-
rata amount (x) in cases in which the Termination Date occurs
during 1997 and 1998, of the Minimum Bonus Compensation, and (y)
in cases in which the Termination Date occurs after December 31,
1998, of the Employee's cash bonus incentive compensation for the
immediately preceding full year prior to the Termination Date.
In each case, the proration shall be based on the number of days
in the year through the Termination Date compared with 365 days.
(c) The Company shall pay to the Employee a cash amount
equal to, the Employee's Base Annual Compensation multiplied by a
fraction,
(i) the numerator of which is (x) if the
Termination Date occurs before March 8, 2000, the number of
days remaining in the Contract Employment Period or, (y) if
the Termination Date occurs on or after March 8, 2000, the
number 365 and
(ii) the denominator of which is 365 (the
"Termination Payment"). "Base Annual Compensation" shall be
the sum of (a) the Employee's base annual salary at the
highest rate in effect during the year of the Termination
Date plus (b) the greater of (x) the Employee's cash
incentive bonus compensation for the full year immediately
preceding the Termination Date or (y) in cases in which the
Termination Date occurs during 1997 or 1998, the Minimum
Bonus Compensation, and (z) in cases in which the
Termination Date occurs during the period from January 1,
1999 through March 8, 2003, an amount equal to the
Employee's cash bonus incentive compensation pursuant to
Section 4 hereof for the immediately preceding full year
prior to the Termination Date. The Termination Payment
shall be paid at the option of the Employer either (a) in
equal monthly installments over the remaining months of the
Benefit Period, or (b) (x) in a lump sum equal to the
lesser of the Termination Payment or the Employee's Base
Annual Compensation, payable within thirty (30) days of the
Termination Date, and (y) the amount, if any, by which the
Termination Payment exceeds such lump sum payment made, in
equal monthly installments commencing one (1) year after the
Termination Date and ending in the last month of the Benefit
Period.
(d) The Company shall also pay to the Employee all legal
fees and expenses incurred by the Employee as a result of
successfully enforcing any right or benefit provided to the
Employee by this Agreement.
(e) The Company shall pay, when due, for outplacement
services as requested by the Employee to assist in locating new
employment, up to a maximum amount of $30,000.
(f) The Company shall maintain in full force and effect for
the Employee's continued benefit, and for the benefit of the
Employee's dependents, until the earlier of (i) the end of the
Benefit Period or (ii) the Employee's commencement of employment
with a new employer, any medical or dental insurance plans or
medical or dental insurance arrangements in which the Employee
was entitled to participate upon the Termination Date (subject to
the Company's right under Section 5 of this Agreement to amend or
replace such plans or arrangements after the Termination Date),
provided that the Employee's continued participation is possible
under the general terms and provisions of such plans or
arrangements. In the event that the Employee's participation in
any plans or arrangements of a new employer is barred, then until
the end of the Benefit Period, the Company shall arrange to
provide the Employee with benefits substantially similar to those
which the Employee is entitled to receive under such plans or
arrangements of the Company. Should the medical insurance plans
or arrangements provided by the Employee's new employer not
entitle the Employee or the Employee's dependents (i) to any
coverage during an initial qualification period or (ii) to
coverage for any condition which is considered a pre-existing
condition under the new employer's plan and which was covered
under the Company's medical insurance plans or arrangements at
the Termination Date, then notwithstanding the Employee's
employment, the Company shall, until the end of the Benefit
Period, continue to provide medical benefits as stated above in
this Section 9(f) during such qualification period (if clause (i)
of this sentence is applicable) and for such pre-existing
condition (if clause (ii) of this sentence is applicable).
(g) Any Unvested Options of the Employee under the Company's
Plans shall, to the extent such Unvested Options have not been
converted or adjusted in any transaction approved by the
Company's Board of Directors as contemplated by the applicable
Plan, immediately vest at the Termination Date. All Unvested
Stock Awards under the Company's Plans shall continue to vest in
accordance with the terms of the respective Plans during the
period which (x) if the Termination Date occurs before March 8,
2000, shall extend until June 30, 2001, or (y) if the Termination
Date occurs on or after March 8, 2000, shall extend until the
last day of the end of the fifteen (15th) month following the
Termination Date, (the applicable time period of this sentence is
referred to as the "Protected Vesting Period"). All Unvested
Stock Awards, as to which restrictions have not lapsed under the
Plan as provided in the preceding sentence, shall be forfeited to
the Company.
(h) The Employee's right to participate in the Company's
non-qualified Supplemental Executive Retirement and Disability
Plan ("SERP"), shall terminate on the Termination Date unless the
Employee hereafter becomes entitled to vested benefits thereunder
as a result of future amendments to SERP agreements generally
implemented for Company's management employees with significant
or responsible management positions covered thereby.
Any payments to be made under this Section 9 (except payments under
subsection (f)) shall be reduced by the amount of (i) any loans or other
monetary advances made by the Company to the Employee which remain outstanding
on the Termination Date are to be paid back to the Company according to the
terms of the current arrangement, (ii) any payments made to the Employee
pursuant to the SERP, and (iii) any other retirement benefits received by the
Employee from the Company.
Subject to the succeeding paragraph, in the event that any
payments, distributions or benefits to or for the benefit of the Employee from
the Company, whether paid or payable, distributed or distributable, as provided
for in Section 9 hereof, any other section of this Agreement, or otherwise
under any other plan or arrangement of the Company would constitute a
"parachute payment", as defined in Section 280G of the Internal Revenue Code
of 1986, as amended, or any successors thereto (the "Code"), such payments
under the Agreement shall be reduced to the largest amount that will eliminate
both the imposition of the excise tax imposed by Section 4999 of the Code and
the disallowance as deductions to the Company under Section 280G of the Code
of any such payments under this Agreement. The determination of any reduction
in the payments under this Agreement pursuant to this paragraph shall be made
by a major accounting firm selected by the Company (which shall not be the
Company's independent auditors) and approved by the Employee, which approval
shall not be unreasonably withheld.
Upon the termination of the Employee's employment by the Company
Without Cause or by the Employee for Good Reason, in each case prior to March
31, 1999, then in the event that any payments, distributions or benefits to or
for the benefit of the Employee from the Company, whether paid or payable,
distributed or distributable, as provided for in Section 9 hereof, any other
section of this Agreement, or otherwise from the Company would be subject to
an excise tax pursuant to Section 4999 of the Code, or subject to any interest
or penalties with respect to such excise tax, the Employee shall be entitled
to receive, not later than three (3) days prior to the date upon which the
Employee is required to make any payment based on such determination,
additional payments from the Company in an amount equal to all additional
income and excise taxes (including interest and penalties thereon) payable,
including income and excise taxes, interest and penalties, on any payment
received pursuant to this sentence, by the Employee by reason of the
imposition of such excise tax pursuant to Section 4999 of the Code. All taxes
deemed payable hereunder are to be calculated by a major accounting firm
selected by the Company (which shall not be the Company's independent
auditors) and approved by the Employee, which approval shall not be
unreasonably withheld, using maximum marginal rates applicable to the
Employee. If, after the payment of any amount pursuant to this paragraph, the
Company elects to contest such tax or taxes, the Employee shall cooperate with
the Company, in good faith at the Company's sole expense, to contest such tax
or taxes. If the Company is successful in contesting any proposed tax, the
Employee shall return to the Company, upon receipt by the Employee, any
refunds (including any interest paid or penalties remitted on any such
refunds) with respect to such contested tax or taxes and any other payments
made by the Company to the Employee pursuant to this paragraph with respect
to the amount refunded.
10. Other Employment; Mitigation. The Employee shall not be
required to mitigate the amount of any payment or benefit provided for in
Section 9 by seeking other employment. The amount of any payment or benefit
provided for in Section 9 shall not be reduced by any compensation earned by
the Employee as the result of other employment or consulting services
performed.
11. Life and Disability Insurance. During the Benefit Period, the
Company will continue to maintain in effect and pay the premiums on any
insurance policies insuring the life or disability of the Employee which are in
effect on the effective date hereof or may hereafter be taken out by Company,
or substitute policies for all significant management employees covered
thereby.
12. Non-Competition. In consideration of the payments to be
received by the Employee hereunder, in recognition of the highly competitive
nature of the industries in which the Company conducts its business and to
further protect the goodwill of the Company and to promote and preserve its
legitimate business interests, the Employee agrees that during the period
commencing the date hereof and ending on the last day of the Protected Vesting
Period, he will not:
(a) Engage in any Business Activities (other than on
behalf of the Company) whether such engagement is as an officer,
director, proprietor, employee, partner, investor (other than as
a holder of less than 1% of the outstanding capital stock of a
publicly traded corporation), consultant advisor, agent or
otherwise, in any geographic area in which the products or
services of the Company have been distributed or provided during
the period commencing two years prior to the date hereof and
ending on the Termination Date;
(b) Other than on behalf of the Company supply products or
provide services (but only to the extent such restricted
activities constitute Business Activities) to any customer with
whom the Company has done any business during the period
commencing two years prior to the date hereof and ending on the
Termination Date, whether as an officer, director, proprietor,
employee, partner, investor (other than as a holder of less than
1% of the outstanding capital stock of a publicly traded
corporation), consultant, advisor, agent or otherwise;
(c) Assist others in engaging in any of the Business
Activities in the manner prohibited to the Employee; and
(d) Induce or attempt to induce employees of the Company, or
its affiliates to engage in any activities hereby prohibited to
the Employee or to terminate their employment. It is expressly
understood and agreed that although the Employee and the Company
consider the restrictions contained in each of clauses (a)
through (d) above to be reasonable for the purpose of preserving
the Company's goodwill, proprietary rights, trade secrets,
valuable confidential business interests, relationships with
specific prospective and existing customers and going concern
value, and to protect the Company's business opportunities,
markets and trade areas, if a final judicial determination is
made by a court having jurisdiction that the time or territory or
scope of restricted activities or any other restriction contained
in this Agreement is an unenforceable restriction on the
activities of the Employee, the provisions of this Agreement
shall not be rendered void but shall be deemed amended to apply
as to such maximum time, restricted activities and territory and
to such other extent as such court may judicially determine or
indicate to be reasonable. Alternatively, if the court referred
to above finds that any restriction contained in this Section 12
is unenforceable, and such restriction cannot be amended so as to
make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained
therein. It is further expressly understood and agreed that the
providing of Professional Services shall not be restricted under
this Agreement.
13. Successors: Binding Agreement.
(a) The Company shall require any successor (whether by
purchase of all or substantially all of the business and/or
assets, merger, consolidation or liquidation) of the Company to
expressly assume, by written agreement, the obligation of the
Company to perform this Agreement upon or prior to such
succession taking place. A copy of such written agreement shall
be delivered to the Employee promptly after its execution by the
successor or such person or group.
(b) Failure of the Company to obtain such agreement upon
or prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Employee to
benefits as set forth above in Section 9. These amounts shall
not be discounted to any present value.
(c) This Agreement is personal to the Employee and the
Employee may not assign or transfer any part of the Employee's
rights or duties hereunder, or any compensation due to the
Employee hereunder, to any other person, except that this
Agreement shall inure to the benefit of and be enforceable by the
Employee's personal or legal representatives, executors,
administrators, heirs, distributees, devisees, legatees or
beneficiaries.
14. Death: Disability. If the Employee dies or experiences a
Disability on or prior to March 8, 2003 and before the date that the Employee
gives notice of termination for Good Reason pursuant to Section 8 hereof, or
before the Company gives notice of termination Without Cause pursuant to
Section 7(d) hereof, or for Cause pursuant to Section 7(c) hereof, the
Employee shall not be entitled to any benefits under this Agreement provided,
however, such restriction shall not otherwise restrict any benefits that the
Employee would otherwise receive upon the occurrence of the Employee's death
or disability under any benefit plans of the Company covering the Employee. If
the Employee dies or experiences a Disability on or prior to March 8, 2003 and
on or after the date that the Employee gives notice of termination for Good
Reason pursuant to Section 8 hereof, or on or after the Company gives notice
of termination Without Cause pursuant to Section 7(d) hereof, the Employee
shall be entitled to the benefits available to the Employee under this
Agreement and any such benefits shall not be reduced in any way because of
such death or Disability. If the Employee dies on the date the Employee is
terminated for Cause the Employee shall not be entitled to any benefits
hereunder unless it is subsequently determined pursuant to this Agreement that
such termination was not for Cause.
15. Modification: Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is agreed to in a writing signed by the Employee and by the Company, provided,
however, the Employee shall not be required to execute as a condition of
continued employment any additional agreement or any agreement which modifies
or replaces this Agreement during the Benefit Period. Waiver by any party of
any breach of or failure to comply with any provision of this Agreement by the
other party shall not be construed as, or constitute, a continuing waiver of
such provision, or a waiver of any other breach of, or failure to comply with,
any other provision of this Agreement.
16. Arbitration of Disputes.
(a) Except with respect to the enforcement of the
Company's rights under Section 12 hereof or the enforcement of
the Company's rights under the Release, any disagreement dispute,
controversy or claim arising out of or relating to this
Agreement, the interpretation or validity hereof, or the terms
and conditions of Employee's employment including the termination
thereof, shall be settled exclusively and finally by arbitration.
Except as provided in the preceding sentence, it is specifically
understood and agreed that any disagreement dispute or
controversy which cannot be resolved between the parties,
including without limitation any matter relating to the
interpretation of this Agreement, claims of discrimination under
state or federal law, shall be resolved solely by arbitration
irrespective of the magnitude thereof, the amount in controversy,
or the nature of the relief sought.
(b) The arbitration shall be conducted in accordance with
Employment Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA"), the terms of which
are incorporated herein.
(c) The arbitral tribunal shall consist of one arbitrator
skilled in arbitration of senior executive employment matters.
The parties to the arbitration shall jointly directly appoint
such arbitrator within thirty (30) days of initiation of the
arbitration. If the parties shall fail to appoint such
arbitrator as provided above, such arbitrator shall be appointed
by the AAA as provided in the Arbitration Rules and shall be a
person who has had substantial experience in senior executive
employment matters. The Company shall pay all of the fees, if
any, and expenses of such arbitrator and the arbitration.
(d) The arbitration shall be conducted in the
Southeastern Michigan area or in such other city in the United
States of America as the parties to the dispute may designate by
mutual written consent.
(e) At any oral hearing of evidence in connection with
the arbitration, each party thereto or its legal counsel shall
have the right to examine its witnesses and to cross-examine the
witnesses of any opposing party. No evidence of any witness
shall be presented in form unless the opposing party or parties
shall have the opportunity to cross-examine such witness, except
as the parties to the dispute otherwise agree in writing or
except under extraordinary circumstances where the interests of
justice require a different procedure.
(f) Any decision or award of the arbitral tribunal shall
be final and binding upon the parties to the arbitration
proceeding. The parties hereto agree that the arbitral award may
be enforced against the parties to the arbitration proceeding or
their assets wherever they may be found and that a judgment upon
the arbitral award may be entered in any court having
jurisdiction.
(g) Nothing herein contained shall be deemed to give the
arbitral tribunal any authority, power, or right to alter,
change, amend, modify, add to, or subtract from any of the
provisions of this Agreement.
17. Notice. All notices, requests, demands and other
communications required or permitted to be given by either party to the other
party by this Agreement (including, without limitation, any notice of
termination of employment and any notice under the Arbitration Rules of an
intention to arbitrate) shall be in writing and shall be deemed to have been
duly given when actually received, or three (3) business days after being
mailed by certified or registered mail, return receipt requested, postage
prepaid, or one (1) business day after being sent by a nationally recognized
overnight courier service, with charges prepaid by sender and receipted for by
or on behalf of the intended recipient, in each case to the address of the
other party, as follows:
If to the Company, to:
TriMas Corporation
315 East Eisenhower Parkway
Suite 300
Ann Arbor, Michigan 48108
Attention: President
With a copy to:
Corporate Counsel
21001 Van Born Road
Taylor, Michigan 48180
If to the Employee:
----------------------------
----------------------------
----------------------------
Either party hereto may change its address for purposes of this Section 16 by
giving ten (10) days' prior notice to the other party hereto.
18. Severability. If any term or provision of this Agreement or
the application hereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Agreement or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to
the fullest extent permitted by law.
19. Headings. The headings in this Agreement are inserted for
convenience of reference only and shall not be a part of or control or affect
the meaning of this Agreement.
20. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original.
21. Governing Law. This Agreement shall in all respects be
governed by, and construed and enforced in accordance with, the laws of the
State of Michigan, without regard to the conflicts of laws principles of such
state.
22. Payroll and Withholding Taxes. All payments to be made or
benefits to be provided hereunder by the Company shall be subject to reduction
for any then applicable payroll-related or withholding taxes, which the
Company shall timely pay or deposit as required by the Internal Revenue Code
of 1986, as amended and any successors thereto.
23. Entire Agreement. This Agreement supersedes any and all other
oral or written employment agreements heretofore made and constitutes the
entire agreement of the parties relating to the subject matter hereof.
Notwithstanding the forgoing, this Agreement is not intended to and does not
alter or amend any agreements between the Employee and the Company relating to
matters such as non-competition and non-disclosure of Company matters, and is
not intended to and does not limit the Employee's obligations under any
Company employee benefit or welfare plan or limit, restrict, or reduce any
employee benefit that the Employee is entitled to under any other agreement,
plan, or arrangement, including without limitation as applicable, those
providing for stock options, restricted stock, disability insurance or life
insurance.
24. Additional Benefits. During the Employment Term, the Company
shall provide the Employee with reasonable and suitable office space in Ann
Arbor, Michigan and a secretary located in Ann Arbor, Michigan at such office
for as long as the Employee is providing ongoing services hereunder to the
Company. The Employee shall be responsible for selecting his secretary and
the Company shall be responsible for the salary and other benefits of the
secretary, which shall approximate the current level of salary and benefits
payable to the Employee's secretary, subject to normal Company salary
increases.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
TriMas Corporation
By:
- ------------------------------- -------------------------------
(Employee Signature)
Its:
------------------------
- -------------------------------
(Employee Printed Name)
EXHIBIT A
SEPARATION AGREEMENT AND
COMPLETE RELEASE OF LIABILITY
This Separation Agreement and Complete Release of Liability
(this "Agreement') is made this ______ day of __________, ____ by and between
_________________ (the "Employee") and TriMas Corporation, a Delaware
corporation (the "Company").
The Company and Employee agree to the following terms:
1. Date of Separation. Employee's active full-time employment
with the Company will irrevocably and forever cease on ______________.
Employee will not seek employment with the Company thereafter.
2. Complete Release. In exchange for the compensation to be paid
to Employee pursuant to Section 9 of that certain Employment Agreement dated
November ____, 1997 between the Employee and the Company (the "Employment
Agreement"), which Employee acknowledges he would not otherwise be entitled to
receive without signing this Agreement, Employee forever discharges and
releases the Company, its affiliates, subsidiaries, and their respective
officers and directors, agents or representatives (the "Company Parties") from
and forever promises not to sue the Company Parties for any and all claims,
demands, damages, rights and causes of action, including, without limitation,
claims for compensatory and punitive damages and for injunctive and other
equitable or declaratory relief, Employee now has or may have against the
Company Parties up to the date of signing this Agreement, whether known or
unknown, including, but not limited to, claims, demands, rights and causes of
action arising out of Employee's employment and termination thereof, claims of
employment discrimination or bias, wrongful discharge, severance pay, unused
vacation and breach of contract and any violation of Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Employee Retirement
Income Security Act of 1974 (ERISA), the Americans with Disabilities Act of
1990 (ADA), the Age Discrimination and Employment Act of 1967 (ADEA), the Older
Workers Benefit Protection Act, the Fair Labor Standards Act, the Occupational
and Safety & Health Act, the Equal Pay Act and any and all other federal, state
and local laws and regulations and ordinances and or public policy and any and
all claims, demands, rights and causes of action the Employee now has or may
have against the Company Parties under common law or in equity including,
without limitation, contract or tort actions.
Employee acknowledges and fully understands and agrees that the
Company Parties may plead this release as a complete defense to any claim or
entitlement that may be asserted by Employee or other persons or agencies on
the Employee's behalf in any suit, grievance or claim against the Company
Parties for or on account of any matter whatsoever. This does not preclude,
however, the right of Employee to enforce the terms of this Agreement.
This release does not include a release of any pension benefits
for which Employee may be eligible under the terms of applicable Company
benefits plans.
3. Confidentiality and Non-Disparagement. Employee promises not
to disclose the contents of any Proprietary Information of the Company or any
of its affiliates or subsidiaries. Proprietary Information shall mean
information or material of the Company or any of its affiliates or
subsidiaries (1) which is not generally available to or used by others or (2)
the utility or value of which is not generally known or recognized as standard
practice, whether or not the underlying details are in the public domain and
includes, without limitation:
(a) Information or materials which relate to the Company's or
any of its affiliates' or subsidiaries' trade secrets,
manufacturing methods, machines, articles of manufacture,
compositions, inventions, engineering services, technological
developments, know-how, purchasing, accounting, merchandising or
licensing;
(b) Software in various stages of development (source code,
object code, documentation, diagrams, flow charts), designs,
drawings, specifications, models, data and customer information;
and
(c) Any information of the type described above which the
Company or any of its affiliates or subsidiaries obtained from
another party and which the Company or any of its affiliates or
subsidiaries treats as proprietary or designates as confidential,
whether or not owned or developed by the Company or any of its
affiliates or subsidiaries.
Employee agrees not to disparage the Company, its subsidiaries
or affiliates or their respective officers, directors or employees.
4. Non-Admission of Liability. This Agreement is made solely to
facilitate an arrangement reached by the Company with Employee. This
Agreement should not be construed as an admission by the Company of any
wrongdoing.
5. Consequences of Employee Violation of Promises. If Employee
(i) breaks the promises in Paragraph 2 of this Agreement and files a lawsuit or
makes a claim or charge based on legal claims that Employee has released, (ii)
breaks the promise made in Paragraph 3 of this Agreement and discloses
Proprietary Information to any non-authorized third party, and such disclosure
results in damage or injury to the Company or any of its affiliates or
subsidiaries, (iii) does not use his reasonable efforts to avoid disparaging
the Company, its subsidiaries and affiliates and their respective officers,
directors and employees, or (iv) without Company's prior written consent,
induces any Employee of the Company to leave the Company's employment,
Employee will reimburse the Company for all such damage or injury occasioned
by such action, including reasonable attorneys.
6. Period For Review and Consideration of Agreement - Employee
understands that Employee has been given a period of 21 days to review and
consider this Agreement before signing it. Employee further understands that
Employee may use as much of this 21 day period as Employee wishes prior to
signing and that Employee will have waived the full 21 day period by signing
this Agreement before the 21 day period expires.
7. Encouragement to Consult with Attorney - Employee is strongly
encouraged to consult with an attorney before signing this Agreement. Employee
understands that whether or not to do so is Employee's decision.
8. Employee's Right to Revoke Agreement - Employee may revoke this
Agreement within seven (7) days of Employee's signing it. Revocation can be
made only by delivering a written notice of revocation to
____________________________. For this revocation to be effective, written
notice must be received by _________________ no later than the close of
business on the seventh day after Employee signs this Agreement. If Employee
properly revokes this Agreement, it shall not be effective or enforceable, and
Employee will not receive the benefits described in Employee's Employment
Agreement.
9. Assistance in the Defense of Claims and Consultative Advice -
Employee agrees, upon reasonable notice from the Company, to assist the
Company in the defense of any legal or administrative proceeding now pending
or which later may be filed by or against the Company or by or against any
affiliated or related companies or any of their officers, directors or
employees. Company will reimburse and/or advance monies to Employee for lost
wages and out-of-pocket expenses incurred in connection with such assistance.
Employee agrees, in addition, to the extent requested from time to time by the
Company and provided such requests do not require more than a nominal amount
of Employee's time, to provide telephonic consultative advice with respect to
questions the Company may have regarding matters for which the Employee
previously had responsibility or otherwise possesses knowledge.
10. Company Property - Employee shall return to the Company upon
signing this Agreement any and all Company property which has been entrusted
to the Employee during the Employee's tenure with the Company.
11. Applicable Law; Severability - The parties agree that this
Agreement shall be governed by the laws of the State of Michigan. If any
provision of this Agreement is declared invalid, the remaining provisions
shall remain in effect.
12. Entire Agreement - The Company has used its best efforts to
compose this Agreement in a manner calculated to be readily understood by the
Employee. This Agreement is the complete, entire and final agreement between
Employee and the Company concerning the subject matter expressed herein. This
Agreement may not be modified or terminated except in writing signed by both
parties. The Company has made no promises to Employee other than those in
this Agreement and the Employment Agreement.
13. Successors/Assigns. This Agreement is personal to the Employee
and may not be assigned or transferred by the Employee. This Agreement shall
inure to the benefit of the Employee's personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees or
beneficiaries, and to the Company, and its successors and assigns.
EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT,
UNDERSTANDS IT AND IS VOLUNTARILY ENTERING INTO IT. PLEASE READ THIS
AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
EMPLOYEE WITNESS
- ------------------------------ ------------------------------
By:
---------------------------
Dated:
------------------------
TRIMAS CORPORATION WITNESS
------------------------------
By:
---------------------------
Its:
--------------------------
Dated:
------------------------
Exhibit (c)(5)
Executive Agreement
EMPLOYMENT AGREEMENT
This Agreement (the "Agreement") is made as of the ____ day of
December, 1997, between TriMas Corporation, a Delaware corporation and
_____________ (the "Employee").
RECITALS
The Employee has actively and significantly participated in the
management and development of the business, assets and value of the Company
and the Company considers the retaining of the Company's existing management
essential to protecting and enhancing the best interest of the Company and
enhancing shareholder value;
The Company believes that executing this Agreement is in the
best interest of the Company and its shareholders and the Employee believes
that the execution of this Agreement is in his best interests; and
The Company and the Employee desire to enter into this
Agreement;
NOW, THEREFORE, to induce the Employee to remain in the employ
of the Company, and for other good and valuable consideration, the Company and
the Employee agree as follows:
Section 1. Definitions.
(a) "Benefit Period" shall mean the period commencing on the
date of this Agreement and continuing through the later of (i) the end of
the Contract Employment Period or (ii) the date which is one (1) year after
the Termination Date, but in no event to end later than March 8, 2004.
(b) "Board" shall mean the Company's Board of Directors.
(c) "Business Activities" shall mean the design, development,
manufacture, distribution, sale and marketing of products or services sold,
distributed or provided by TriMas Corporation or any of its subsidiaries prior
to the Termination Date. Business Activities shall not include the provision
of services of a professional nature (including but not limited to the
provision of financial, treasury, consulting or accounting services) by an
individual professionally licensed or trained to perform such services
("Professional Services") in any capacity as an employee, partner, owner or
otherwise for any enterprise generally engaged in the provision of such
Professional Services to the public.
(d) "Cause," when used in connection with the termination of
the Employee's employment by the Company, shall mean (i) the willful and
continued failure (after written notice from the Company to the Employee)
by the Employee to substantially perform the Employee's primary duties and
obligations (of a nature consistent with this Agreement including without
limitation Section 3 hereof) to the Company (other than any failure
resulting from the Employee's Disability or actions taken by the Company
which prevent the Employee's performance), (ii) the engaging by the
Employee in willful misconduct which is materially injurious to the
Company, monetarily or otherwise, or (iii) the commission of any act
constituting a felony under the laws of any state within the United States
or of the United States.
(e) "Company" shall mean TriMas Corporation and any
corporation or entity that is a successor (whether by purchase of all or
substantially all of the business and/or assets, merger, consolidation or
liquidation) of the Company.
(f) "Contract Employment Period" shall mean that period
commencing with the date of this Agreement and continuing to March 8, 2001.
(g) "Disability" shall mean a physical or mental incapacity
of the Employee which entitles the Employee to benefits under the long term
disability plan applicable to the Employee and maintained by the Company as
in effect at the time of such disability, provided however the TriMas
Corporation Supplemental Executive Retirement and Disability Plan shall not
be deemed to be such a long term disability plan. However, if the Company
has no such plan at that time, "Disability" shall mean any physical or
mental condition that renders the Employee unable to substantially perform
the Employee's duties with the Company for a period of one hundred and
eighty (180) days during any period of twelve (12) consecutive months.
(h) "Employment Term" shall have the meaning set forth in
Section 2 of this Agreement.
(i) "Good Reason," when used with reference to a voluntary
termination by the Employee of the Employee's employment with the Company,
shall mean:
(i) a substantial diminution in the Employee's position such
that the Employee's job is no longer of a significant or responsible
management or professional nature;
(ii) at any time on or after March 31, 1999, the demotion or a
continuation of a prior demotion of the Employee to a position where
the Employee is no longer discharging as the principal part of that
position, responsibilities of a general nature substantially
consistent with the type of responsibilities being discharged by the
Employee as of the date hereof;
(iii) a reduction in the Employee's base salary as in effect on
the date of this Agreement or as the same may be increased from time
to time; or the Company's failure to pay to the Employee at least the
Minimum Bonus Compensation for the year ended December 31, 1997 or
December 31, 1998; or a failure of the Company to include the Employee
as an eligible participant in the Company's bonus plan, stock
incentive plan and other management incentive programs in which the
Employee currently participates other than as part of a broad-based
restructuring of benefits of the Company affecting no less than
substantially all comparably compensated employees of the Company,
provided that the awarding of any such incentive compensation is in
the Board's discretion;
(iv) a change in the Employee's principal work location to any
location more than forty miles outside of Ann Arbor, Michigan, except
for required travel on the Company's business to an extent
substantially consistent with the Employee's current business travel
obligations on the date of this Agreement; or
(v) the failure by the Company to comply with any of its
obligations under Section 13(a).
(j) "Minimum Bonus Compensation" shall apply to the years ended
December 31, 1997 and December 31, 1998 only and shall mean the bonus amount
of $__________.
(k) "Protected Vesting Period" shall have the meaning set
forth in Section 9(g) of this Agreement.
(l) "Termination Date" shall mean the effective date as
provided under this Agreement of the termination of the Employee's
employment.
(m) "Unvested Options" and "Unvested Stock Awards" shall
mean all (i) unvested restricted stock awards under the 1988 TriMas
Corporation Restricted Stock Incentive Plan (Restated December 5, 1995),
(ii) unvested options under the 1988 TriMas Corporation Stock Option Plan
(Restated December 5, 1995), and (iii) unvested restricted stock awards,
options, or other awards of any form under the TriMas Corporation 1995 Long
Term Stock Incentive Plan (Restated December 5, 1995) representing awards,
options or grants granted prior to February 28, 1998.
(n) "Without Cause" when used in connection with the
termination of the Employee's employment by the Company, shall mean any
termination of employment of the Employee by the Company which is not a
termination of employment for Cause or Disability.
Section 2. Employment, Acceptance and Term. The Company hereby
employs the Employee in a senior management position with the Company and the
Employee hereby accepts such employment with the Company on the terms set
forth in this Agreement for the Contract Employment Period unless sooner
terminated pursuant to the provisions of Sections 7 or 8 of this Agreement or
upon the Employee's death (the "Employment Term").
Section 3. Duties and Authority. During the Employment Term,
the Employee shall devote his full business time and energies to the business
and affairs of the Company and shall not, without the Company's written
consent, accept other employment or permit such personal business interests
as he may have to interfere with the performance of his duties under this
Agreement. The Employee agrees to use his best efforts, skill and abilities
to promote the interests of the Company, to work with other employees of the
Company in a competent and professional manner and generally to promote the
interests of the Company and to perform such other duties of a management or
professional nature as may be assigned to him by the President of the Company
or any other officers of the Company to whom the Employee normally reports.
Section 4. Compensation. For all services to be performed by
the Employee during the Employment Term the Company shall pay the Employee an
annual base salary of not less than ___________________________________
($___________) Dollars per year, payable in accordance with the prevailing
payroll practices of the Company and less all applicable taxes required to be
withheld by federal, state or local laws. The Employee shall be eligible for
annual merit increases in base salary, consistent with the annual merit
increases granted to other comparably compensated employees of the Company.
In addition during the Employment Term, the Employee shall be entitled to such
bonus pursuant to the Company's bonus plan, in effect on the date hereof or
which may hereafter exist, to the extent the Employee meets the eligibility
requirements of such plan and such other discretionary compensation as in each
case may be awarded from time to time in the discretion of the Board, provided
that, during the Employment Term, the Company shall pay to the Employee as a
bonus (a) for 1997 and 1998 an amount not less than the Minimum Bonus
Compensation, an (b) for 1999 and 2000 an amount commensurate with other
comparably compensated employees of the Company but not less than ninety
percent (90%) of the Employee's 1998 bonus.
Section 5. Participation in Employee Benefit Plans. In
addition to the cash compensation payable hereunder, the Employee shall be
entitled to participate during the Employment Term in such employee benefit
plans, whether contributory or non-contributory, such as group insurance plans,
hospital, surgical, vision and dental benefit plans or other bonus incentive,
profit sharing, retirement or employee benefit plans of the Company existing
on the date hereof or as may be subsequently amended or adopted by the Company
for management employees in significant or responsible management positions
covered thereby to the extent that the Employee meets the general eligibility
requirements of any such plans. These plans include, without limitation, the
TriMas Corporation Pension Plan, the TriMas Corporation Future Service Profit
Sharing Plan, the TriMas Corporation Salaried Savings Plan, the TriMas
Corporation Retirement Benefit Restoration Plan and the TriMas Corporation
Supplemental Executive Retirement and Disability Plan. The Employee shall be
entitled during each year of the Employment Term to paid vacation time
consistent with past practice and Company policy for comparable senior
executives. Any reference to a benefit plan under this Agreement, including
without limitation those referenced in this Section 5 and in Section 1(m),
shall include any successor plans (the "Plans").
Section 6. Application of this Agreement; Term of Agreement.
The provisions of Sections 7 and 8 of this Agreement shall apply with respect
to any termination of employment of the Employee which occurs during the
period commencing on the date of this Agreement and ending on March 8, 2003.
Such provisions shall not apply to any termination of employment of the
Employee which occurs following March 8, 2003 after which date the Employee
shall have no further rights under this Agreement except to the extent they
have heretofore accrued to the Employee, including without limitation those
which have accrued under Section 9. Continuation of employment with a
successor to TriMas Corporation, as described in Section 13(a), shall not
alone constitute termination of the Employee's employment.
Section 7. Termination of Employment of the Employee by the
Company.
(a) The Company shall have the right to terminate the
Employee's employment hereunder at any time for Disability, for Cause, or
Without Cause in each circumstance; however if such termination occurs
during the Contract Employment Period, the Company will be required to
comply with the procedures hereinafter specified.
(b) During the Contract Employment Period, termination of
the Employee's employment for Disability shall become effective no sooner
than thirty (30) days after a notice of intent to terminate the Employee's
employment, specifying Disability as the basis for such termination, is
given to the Employee by the Board, by a committee of the Board or by the
officer to whom the Employee normally reports and any applicable
requirements of the Company's long term disability plan or, if the Company
has no such plan, its administrative practices then applicable to
disability have been met.
(c) During the Contract Employment Period, termination of the
Employee's employment for Cause shall be effective immediately upon written
notification from the Board, a committee of the Board, or the officer to whom
the Employee normally reports, to the Employee stating in such notice that the
Employee is terminated for Cause and providing reasonable detail of the facts
and circumstances claimed by the Company to constitute Cause. In the event
the Employee believes that there was not Cause for such termination, the
Employee may notify the Company in writing of such belief within fifteen (15)
days after the Company's delivery of written notice of termination for Cause
to the Employee. In the event the Employee gives notice to the Company within
such fifteen (15) day period, the Employee shall (unless such an opportunity
has been previously offered to the Employee) within fifteen (15) days of the
giving of such notice be afforded an opportunity, together with the Employee's
counsel, to be heard before the superior to the officer to whom the Employee
normally reports. If, pursuant to such hearing, such superior officer
determines that there was no Cause for such termination, then such termination
shall be deemed to be Without Cause. Any determination by such superior
officer shall be in addition to and shall not limit the right of the Employee
to arbitrate whether such termination was for Cause under Section 16 hereof.
(d) The Company shall have the absolute right to terminate the
Employee's employment Without Cause by notice from the President of the
Company or the Board; however, during the Contract Employment Period,
termination of the Employee's employment Without Cause shall be effective on
the date specified in the notice but no sooner than five (5) business days
after the date of the Company's giving to the Employee a notice of termination,
specifying that such termination is Without Cause.
(e) Upon a termination of the Employee's employment for Cause or
(except as provided to the contrary in Section 14) for Disability, the Employee
shall have no right to receive any compensation or benefits based on the
provisions of this Agreement provided, however, with respect to Disability
nothing in this sentence shall restrict any benefits that the Employee would
otherwise receive upon the occurrence of the Employee's disability under any
benefit plans of the Company covering the Employee. Upon a termination of the
Employee's employment Without Cause, the Employee shall be entitled to receive
the benefits provided in Section 9 hereof.
Section 8. Termination of Employment by the Employee. The
Employee shall be entitled at any time to terminate employment with the
Company for any reason and, if such termination is for Good Reason, to receive
the benefits provided in Section 9 hereof in the same manner as if such
Employee had been terminated Without Cause. The Employee shall give the
Company notice of voluntary termination of employment, which notice need
specify only the Employee's desire to terminate employment and, if such
termination is for Good Reason, also set forth in reasonable detail the facts
and circumstances claimed by the Employee to constitute Good Reason. Any
notice by the Employee pursuant to this Section shall be effective five (5)
business days after the date it is given by the Employee. If the Employee
terminates his employment with the Company other than for Good Reason, the
Employee shall not be entitled to receive benefits under this Agreement except
those provided in Section 9(a) and 9(b) hereof.
Section 9. Benefits upon Termination in Certain Circumstances.
Upon the termination of the Employee's employment by the Company Without Cause
pursuant to Section 7(d) hereof or by the Employee for Good Reason pursuant to
Section 8 hereof during the period commencing on the date of this Agreement
and ending on March 8, 2003, the Employee shall execute a Separation Agreement
and Complete Release of Liability in the form attached as Exhibit A hereto
(the "Release") in favor of the Company and commencing eight (8) days
thereafter, provided the Employee did not revoke the Release pursuant to
Section 8 thereof, the Employee shall be entitled to receive the following
benefits:
(a) The Company shall pay to the Employee, not later than
thirty (30) days after the Termination Date, a lump sum cash amount
equal to the sum of (i) the full base salary earned by the Employee
through the Termination Date and unpaid at the Termination Date, (ii)
the amount of any base salary attributable to vacation earned by the
Employee but not taken before the Termination Date, (iii) all other
amounts earned by the Employee and unpaid at the Termination Date
(including any amount of a bonus remaining unpaid from a prior
performance year), and (iv) all amounts owing by the Company on
account of expenditures by the Employee on behalf of the Company,
including without limitation all amounts due as reimbursement of
travel and entertainment expenses.
(b) The Company shall pay to the Employee, not later than
thirty (30) days after the Termination Date, the greater of (i) a pro-
rata amount of any bonus award earned by the Employee during the year
in which the Termination Date occurred; or (ii) a pro-rata amount (x)
in cases in which the Termination Date occurs during 1997 and 1998, of
the Minimum Bonus Compensation, and (y) in cases in which the
Termination Date occurs after December 31, 1998, of the Employee's
cash bonus incentive compensation for the immediately preceding full
year prior to the Termination Date. In each case, the proration shall
be based on the number of days in the year through the Termination
Date compared with 365 days.
(c) The Company shall pay to the Employee a cash amount
equal to, the Employee's Base Annual Compensation multiplied by a
fraction,
(i) the numerator of which is (x) if the Termination Date
occurs before March 8, 2000, the number of days
remaining in the Contract Employment Period or, (y) if
the Termination Date occurs on or after March 8, 2000,
the number 365 and
(ii) the denominator of which is 365 (the "Termination
Payment").
"Base Annual Compensation" shall be the sum of (A) the Employee's base
annual salary at the highest rate in effect during the year of the
Termination Date plus (B) the greater of (x) the Employee's cash incentive
bonus compensation for the full year immediately preceding the Termination
Date or (y) in cases in which the Termination Date occurs during 1997 or
1998, the Minimum Bonus Compensation, and (z) in cases in which the
Termination Date occurs during the period from January 1, 1999 through
March 8, 2003, an amount equal to the Employee's cash bonus incentive
compensation pursuant to Section 4 hereof for the immediately preceding
full year prior to the Termination Date. The Termination Payment shall be
paid at the option of the Employer either (1) in equal monthly installments
over the remaining months of the Benefit Period, or (2) (x) in a lump sum
equal to the lesser of the Termination Payment or the Employee's Base
Annual Compensation, payable within thirty (30) days of the Termination
Date, and (y) the amount, if any, by which the Termination Payment exceeds
such lump sum payment made, in equal monthly installments commencing one
(1) year after the Termination Date and ending in the last month of the
Benefit Period.
(d) The Company shall also pay to the Employee all legal
fees and expenses incurred by the Employee as a result of successfully
enforcing any right or benefit provided to the Employee by this Agreement.
(e) The Company shall pay, when due, for outplacement
services as requested by the Employee to assist in locating new employment,
up to a maximum amount of $30,000.
(f) The Company shall maintain in full force and effect for
the Employee's continued benefit, and for the benefit of the Employee's
dependents, until the earlier of (i) the end of the Benefit Period or (ii)
the Employee's commencement of employment with a new employer, any medical
or dental insurance plans or medical or dental insurance arrangements in
which the Employee was entitled to participate upon the Termination Date
(subject to the Company's right under Section 5 of this Agreement to amend
or replace such plans or arrangements after the Termination Date), provided
that the Employee's continued participation is possible under the general
terms and provisions of such plans or arrangements. In the event that the
Employee's participation in any plans or arrangements of a new employer is
barred, then until the end of the Benefit Period, the Company shall arrange
to provide the Employee with benefits substantially similar to those which
the Employee is entitled to receive under such plans or arrangements of the
Company. Should the medical insurance plans or arrangements provided by
the Employee's new employer not entitle the Employee or the Employee's
dependents (i) to any coverage during an initial qualification period or
(ii) to coverage for any condition which is considered a pre-existing
condition under the new employer's plan and which was covered under the
Company's medical insurance plans or arrangements at the Termination Date,
then notwithstanding the Employee's employment, the Company shall, until
the end of the Benefit Period, continue to provide medical benefits as
stated above in this Section 9(f) during such qualification period (if
clause (i) of this sentence is applicable) and for such pre-existing
condition (if clause (ii) of this sentence is applicable).
(g) Any Unvested Options of the Employee under the
Company's Plans shall, to the extent such Unvested Options have not been
converted or adjusted in any transaction approved by the Company's Board of
Directors as contemplated by the applicable Plan, immediately vest at the
Termination Date. All Unvested Stock Awards under the Company's Plans
shall continue to vest in accordance with the terms of the respective Plans
during the period which (x) if the Termination Date occurs before March 8,
2000, shall extend until June 30, 2001, or (y) if the Termination Date
occurs on or after March 8, 2000, shall extend until the last day of the
end of the fifteen (15th) month following the Termination Date, (the
applicable time period of this sentence is referred to as the "Protected
Vesting Period"). All Unvested Stock Awards, as to which restrictions have
not lapsed under the Plan as provided in the preceding sentence, shall be
forfeited to the Company.
(h) The Employee's right to participate in the Company's
non-qualified Supplemental Executive Retirement and Disability Plan
("SERP"), shall terminate on the Termination Date unless the Employee
hereafter becomes entitled to vested benefits thereunder as a result of
future amendments to SERP agreements generally implemented for Company's
management employees with significant or responsible management positions
covered thereby.
Any payments to be made under this Section 9 (except payments
under subsection 9(f)) shall be reduced by the amount of (i) any loans or other
monetary advances made by the Company to the Employee which remain outstanding
on the Termination Date, (ii) any payments made to the Employee pursuant to
the SERP, and (iii) any other retirement benefits received by the Employee
from the Company.
Subject to the succeeding paragraph, in the event that any
payments, distributions or benefits to or for the benefit of the Employee from
the Company, whether paid or payable, distributed or distributable, as provided
for in Section 9 hereof, any other section of this Agreement, or otherwise
under any other plan or arrangement of the Company would constitute a
"parachute payment", as defined in Section 280G of the Internal Revenue Code
of 1986, as amended, or any successors thereto (the "Code"), such payments
under the Agreement shall be reduced to the largest amount that will eliminate
both the imposition of the excise tax imposed by Section 4999 of the Code and
the disallowance as deductions to the Company under Section 280G of the Code
of any such payments under this Agreement. The determination of any reduction
in the payments under this Agreement pursuant to this paragraph shall be made
by a major accounting firm selected by the Company (which shall not be the
Company's independent auditors) and approved by the Employee, which approval
shall not be unreasonably withheld.
Upon the termination of the Employee's employment by the Company
Without Cause or by the Employee for Good Reason, in each case prior to March
31, 1999, then in the event that any payments, distributions or benefits to or
for the benefit of the Employee from the Company, whether paid or payable,
distributed or distributable, as provided for in Section 9 hereof, any other
section of this Agreement, or otherwise from the Company would be subject to
an excise tax pursuant to Section 4999 of the Code, or subject to any interest
or penalties with respect to such excise tax, the Employee shall be entitled
to receive, not later than three (3) days prior to the date upon which the
Employee is required to make any payment based on such determination,
additional payments from the Company in an amount equal to all additional
income and excise taxes (including interest and penalties thereon) payable,
including income and excise taxes, interest and penalties, on any payment
received pursuant to this sentence, by the Employee by reason of the
imposition of such excise tax pursuant to Section 4999 of the Code. All taxes
deemed payable hereunder are to be calculated by a major accounting firm
selected by the Company (which shall not be the Company's independent
auditors) and approved by the Employee, which approval shall not be
unreasonably withheld, using maximum marginal rates applicable to the
Employee. If, after the payment of any amount pursuant to this paragraph, the
Company elects to contest such tax or taxes, the Employee shall cooperate with
the Company, in good faith at the Company's sole expense, to contest such tax
or taxes. If the Company is successful in contesting any proposed tax, the
Employee shall return to the Company, upon receipt by the Employee, any
refunds (including any interest paid or penalties remitted on any such
refunds) with respect to such contested tax or taxes and any other payments
made by the Company to the Employee pursuant to this paragraph with respect
to the amount refunded.
Section 10. Other Employment; Mitigation. The Employee shall
not be required to mitigate the amount of any payment or benefit provided for
in Section 9 by seeking other employment. If the amount to be paid to the
Employee under Section 9(c) hereof exceeds the Employee's Base Annual
Compensation, then any amount of such excess that would have been paid to the
Employee under Section 9(c) shall be reduced by any salary and bonus earned by
the Employee as the result of other employment or consulting services
performed during the period beginning one year after the Termination Date and
ending on the last day of the Benefit Period. Except for the reduction
required by the immediately preceding sentence, the amount of any payment
provided for in Section 9 shall not be reduced by any salary and bonus earned
by the Employee as the result of other employment or consulting services
performed.
Section 11. Life and Disability Insurance. During the Benefit
Period, the Company will continue to maintain in effect and pay the premiums
on any insurance policies insuring the life or disability of the Employee
which are in effect on the effective date hereof or may hereafter be taken out
by Company, or substitute policies for all significant management employees
covered thereby.
Section 12. Non-competition. In consideration of the payments
to be received by the Employee hereunder, in recognition of the highly
competitive nature of the industries in which the Company conducts its
business and to further protect the goodwill of the Company and to promote and
preserve its legitimate business interests, the Employee agrees that during
the period commencing the date hereof and ending on the last day of the
Protected Vesting Period, he will not:
(a) Engage in any Business Activities (other than on behalf
of the Company) whether such engagement is as an officer, director,
proprietor, employee, partner, investor (other than as a holder of
less than 1% of the outstanding capital stock of a publicly traded
corporation), consultant advisor, agent or otherwise, in any
geographic area in which the products or services of the Company have
been distributed or provided during the period commencing two years
prior to the date hereof and ending on the Termination Date;
(b) Other than on behalf of the Company supply products or
provide services (but only to the extent such restricted activities
constitute Business Activities) to any customer with whom the Company
has done any business during the period commencing two years prior to
the date hereof and ending on the Termination Date, whether as an
officer, director, proprietor, employee, partner, investor (other than
as a holder of less than 1% of the outstanding capital stock of a
publicly traded corporation), consultant, advisor, agent or otherwise;
(c) Assist others in engaging in any of the Business
Activities in the manner prohibited to the Employee; and
(d) Induce or attempt to induce employees of the Company, or
its affiliates to engage in any activities hereby prohibited to the
Employee or to terminate their employment.
It is expressly understood and agreed that although the Employee and the
Company consider the restrictions contained in each of clauses (a) through
(d) above to be reasonable for the purpose of preserving the Company's
goodwill, proprietary rights, trade secrets, valuable confidential business
interests, relationships with specific prospective and existing customers
and going concern value, and to protect the Company's business
opportunities, markets and trade areas, if a final judicial determination
is made by a court having jurisdiction that the time or territory or scope
of restricted activities or any other restriction contained in this
Agreement is an unenforceable restriction on the activities of the
Employee, the provisions of this Agreement shall not be rendered void but
shall be deemed amended to apply as to such maximum time, restricted
activities and territory and to such other extent as such court may
judicially determine or indicate to be reasonable. Alternatively, if the
court referred to above finds that any restriction contained in this
Section 12 is unenforceable, and such restriction cannot be amended so as
to make it enforceable, such finding shall not affect the enforceability of
any of the other restrictions contained therein. It is further expressly
understood and agreed that the providing of Professional Services shall not
be restricted under this Agreement.
Section 13. Successors; Binding Agreement.
(a) The Company shall require any successor (whether by
purchase of all or substantially all of the business and/or assets, merger,
consolidation or liquidation) of the Company to expressly assume, by
written agreement, the obligation of the Company to perform this Agreement
upon or prior to such succession taking place. A copy of such written
agreement shall be delivered to the Employee promptly after its execution
by the successor or such person or group.
(b) Failure of the Company to obtain such agreement upon or
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Employee to benefits as set forth above in
Section 9. These amounts shall not be discounted to any present value.
(c) This Agreement is personal to the Employee and the
Employee may not assign or transfer any part of the Employee's rights or
duties hereunder, or any compensation due to the Employee hereunder, to any
other person, except that this Agreement shall inure to the benefit of and
be enforceable by the Employee's personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees or
beneficiaries.
Section 14. Death; Disability. If the Employee dies or
experiences a Disability on or prior to March 8, 2003 and before the date that
the Employee gives notice of termination for Good Reason pursuant to Section 8
hereof, or before the Company gives notice of termination Without Cause
pursuant to Section 7(d) hereof, or for Cause pursuant to Section 7(c) hereof,
the Employee shall not be entitled to any benefits under this Agreement
provided, however, such restriction shall not otherwise restrict any benefits
that the Employee would otherwise receive upon the occurrence of the Employee's
death or disability under any benefit plans of the Company covering the
Employee. If the Employee dies or experiences a Disability on or prior to
March 8, 2003 and on or after the date that the Employee gives notice of
termination for Good Reason pursuant to Section 8 hereof, or on or after the
Company gives notice of termination Without Cause pursuant to Section 7(d)
hereof, the Employee shall be entitled to the benefits available to the
Employee under this Agreement and any such benefits shall not be reduced in
any way because of such death or Disability. If the Employee dies on the date
the Employee is terminated for Cause the Employee shall not be entitled to any
benefits hereunder unless it is subsequently determined pursuant to this
Agreement that such termination was not for Cause.
Section 15. Modification; Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in a writing signed by the Employee and
by the Company, provided, however, the Employee shall not be required to
execute as a condition of continued employment any additional agreement or any
agreement which modifies or replaces this Agreement during the Benefit Period.
Waiver by any party of any breach of or failure to comply with any provision
of this Agreement by the other party shall not be construed as, or constitute,
a continuing waiver of such provision, or a waiver of any other breach of, or
failure to comply with, any other provision of this Agreement.
Section 16. Arbitration of Disputes.
(a) Except with respect to the enforcement of the Company's
rights under Section 12 hereof or the enforcement of the Company's rights
under the Release, any disagreement dispute, controversy or claim arising
out of or relating to this Agreement, the interpretation or validity
hereof, or the terms and conditions of Employee's employment including the
termination thereof, shall be settled exclusively and finally by
arbitration. Except as provided in the preceding sentence, it is
specifically understood and agreed that any disagreement dispute or
controversy which cannot be resolved between the parties, including without
limitation any matter relating to the interpretation of this Agreement,
claims of discrimination under state or federal law, shall be resolved
solely by arbitration irrespective of the magnitude thereof, the amount in
controversy, or the nature of the relief sought.
(b) The arbitration shall be conducted in accordance with
Employment Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA"), the terms of which are incorporated
herein.
(c) The arbitral tribunal shall consist of one arbitrator
skilled in arbitration of senior executive employment matters. The parties
to the arbitration shall jointly directly appoint such arbitrator within
thirty (30) days of initiation of the arbitration. If the parties shall
fail to appoint such arbitrator as provided above, such arbitrator shall be
appointed by the AAA as provided in the Arbitration Rules and shall be a
person who has had substantial experience in senior executive employment
matters. The Company shall pay all of the fees, if any, and expenses of
such arbitrator and the arbitration.
(d) The arbitration shall be conducted in the Southeastern
Michigan area or in such other city in the United States of America as the
parties to the dispute may designate by mutual written consent.
(e) At any oral hearing of evidence in connection with the
arbitration, each party thereto or its legal counsel shall have the right
to examine its witnesses and to cross-examine the witnesses of any opposing
party. No evidence of any witness shall be presented in form unless the
opposing party or parties shall have the opportunity to cross-examine such
witness, except as the parties to the dispute otherwise agree in writing or
except under extraordinary circumstances where the interests of justice
require a different procedure.
(f) Any decision or award of the arbitral tribunal shall be
final and binding upon the parties to the arbitration proceeding. The
parties hereto agree that the arbitral award may be enforced against the
parties to the arbitration proceeding or their assets wherever they may be
found and that a judgment upon the arbitral award may be entered in any
court having jurisdiction.
(g) Nothing herein contained shall be deemed to give the
arbitral tribunal any authority, power, or right to alter, change, amend,
modify, add to, or subtract from any of the provisions of this Agreement.
Section 17. Notice. All notices, requests, demands and other
communications required or permitted to be given by either party to the other
party by this Agreement (including, without limitation, any notice of
termination of employment and any notice under the Arbitration Rules of an
intention to arbitrate) shall be in writing and shall be deemed to have been
duly given when actually received, or three (3) business days after being
mailed by certified or registered mail, return receipt requested, postage
prepaid, or one (1) business day after being sent by a nationally recognized
overnight courier service, with charges prepaid by sender and receipted for by
or on behalf of the intended recipient, in each case to the address of the
other party, as follows:
If to the Company, to:
TriMas Corporation
315 East Eisenhower Parkway
Suite 300
Ann Arbor, Michigan 48108
Attention: President
With a copy to:
Corporate Counsel
21001 Van Born Road
Taylor, Michigan 48180
If to the Employee:
_______________________
_______________________
_______________________
_______________________
Either party hereto may change its address for purposes of this Section 16
by giving ten (10) days' prior notice to the other party hereto.
Section 18. Severability. If any term or provision of this
Agreement or the application hereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Agreement or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
Section 19. Headings. The headings in this Agreement are
inserted for convenience of reference only and shall not be a part of or
control or affect the meaning of this Agreement.
Section 20. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original.
Section 21. Governing Law. This Agreement shall in all
respects be governed by, and construed and enforced in accordance with, the
laws of the State of Michigan, without regard to the conflicts of laws
principles of such state.
Section 22. Payroll and Withholding Taxes. All payments to be
made or benefits to be provided hereunder by the Company shall be subject to
reduction for any then applicable payroll-related or withholding taxes, which
the Company shall timely pay or deposit as required by the Internal Revenue
Code of 1986, as amended and any successors thereto.
Section 23. Entire Agreement. This Agreement supersedes any
and all other oral or written employment agreements heretofore made and
constitutes the entire agreement of the parties relating to the subject matter
hereof. Notwithstanding the forgoing, this Agreement is not intended to and
does not alter or amend any agreements between the Employee and the Company
relating to matters such as non-competition and non-disclosure of Company
matters, and is not intended to and does not limit the Employee's obligations
under any Company employee benefit or welfare plan or limit, restrict, or
reduce any employee benefit that the Employee is entitled to under any other
agreement, plan, or arrangement, including without limitation as applicable,
those providing for stock options, restricted stock, disability insurance or
life insurance.
[Note: The Employment Agreements for Messrs. Crawford and Roosa do not
contain any references to the Company's non-qualified Supplemental
Executive Retirement and Disability Plan or provide for any benefits
thereunder. Mr. Roosa's Employment Agreement provides that any outstanding
relocation advance owing to the Company as of his termination date shall
not reduce any amount payable under his Employment Agreement but shall be
repaid to the Company under separate arrangements.]
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
TriMas Corporation
By:
- ---------------------------- ----------------------------
(Employee Signature)
Its:
-----------------------
- ----------------------------
(Employee Printed Name)
EXHIBIT A
SEPARATION AGREEMENT AND
COMPLETE RELEASE OF LIABILITY
This Separation Agreement and Complete Release of Liability
(this "Agreement') is made this ______ day of __________, ____ by and between
_________________ (the "Employee") and TriMas Corporation, a Delaware
corporation (the "Company").
The Company and Employee agree to the following terms:
1. Date of Separation. Employee's active full-time employment
with the Company will irrevocably and forever cease on ______________.
Employee will not seek employment with the Company thereafter.
2. Complete Release. In exchange for the compensation to be paid
to Employee pursuant to Section 9 of that certain Employment Agreement dated
November ____, 1997 between the Employee and the Company (the "Employment
Agreement"), which Employee acknowledges he would not otherwise be entitled to
receive without signing this Agreement, Employee forever discharges and
releases the Company, its affiliates, subsidiaries, and their respective
officers and directors, agents or representatives (the "Company Parties") from
and forever promises not to sue the Company Parties for any and all claims,
demands, damages, rights and causes of action, including, without limitation,
claims for compensatory and punitive damages and for injunctive and other
equitable or declaratory relief, Employee now has or may have against the
Company Parties up to the date of signing this Agreement, whether known or
unknown, including, but not limited to, claims, demands, rights and causes of
action arising out of Employee's employment and termination thereof, claims of
employment discrimination or bias, wrongful discharge, severance pay, unused
vacation and breach of contract and any violation of Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Employee Retirement
Income Security Act of 1974 (ERISA), the Americans with Disabilities Act of
1990 (ADA), the Age Discrimination and Employment Act of 1967 (ADEA), the Older
Workers Benefit Protection Act, the Fair Labor Standards Act, the Occupational
and Safety & Health Act, the Equal Pay Act and any and all other federal, state
and local laws and regulations and ordinances and or public policy and any and
all claims, demands, rights and causes of action the Employee now has or may
have against the Company Parties under common law or in equity including,
without limitation, contract or tort actions.
Employee acknowledges and fully understands and agrees that the
Company Parties may plead this release as a complete defense to any claim or
entitlement that may be asserted by Employee or other persons or agencies on
the Employee's behalf in any suit, grievance or claim against the Company
Parties for or on account of any matter whatsoever. This does not preclude,
however, the right of Employee to enforce the terms of this Agreement.
This release does not include a release of any pension benefits
for which Employee may be eligible under the terms of applicable Company
benefits plans.
3. Confidentiality and Non-Disparagement. Employee promises not
to disclose the contents of any Proprietary Information of the Company or any
of its affiliates or subsidiaries. Proprietary Information shall mean
information or material of the Company or any of its affiliates or
subsidiaries (1) which is not generally available to or used by others or (2)
the utility or value of which is not generally known or recognized as standard
practice, whether or not the underlying details are in the public domain and
includes, without limitation:
(a) Information or materials which relate to the Company's or
any of its affiliates' or subsidiaries' trade secrets,
manufacturing methods, machines, articles of manufacture,
compositions, inventions, engineering services, technological
developments, know-how, purchasing, accounting, merchandising or
licensing;
(b) Software in various stages of development (source code,
object code, documentation, diagrams, flow charts), designs,
drawings, specifications, models, data and customer information;
and
(c) Any information of the type described above which the
Company or any of its affiliates or subsidiaries obtained from
another party and which the Company or any of its affiliates or
subsidiaries treats as proprietary or designates as confidential,
whether or not owned or developed by the Company or any of its
affiliates or subsidiaries.
Employee agrees not to disparage the Company, its subsidiaries
or affiliates or their respective officers, directors or employees.
4. Non-Admission of Liability. This Agreement is made solely to
facilitate an arrangement reached by the Company with Employee. This
Agreement should not be construed as an admission by the Company of any
wrongdoing.
5. Consequences of Employee Violation of Promises. If Employee
(i) breaks the promises in Paragraph 2 of this Agreement and files a lawsuit or
makes a claim or charge based on legal claims that Employee has released, (ii)
breaks the promise made in Paragraph 3 of this Agreement and discloses
Proprietary Information to any non-authorized third party, and such disclosure
results in damage or injury to the Company or any of its affiliates or
subsidiaries, (iii) does not use his reasonable efforts to avoid disparaging
the Company, its subsidiaries and affiliates and their respective officers,
directors and employees, or (iv) without Company's prior written consent,
induces any Employee of the Company to leave the Company's employment,
Employee will reimburse the Company for all such damage or injury occasioned
by such action, including reasonable attorneys.
6. Period For Review and Consideration of Agreement - Employee
understands that Employee has been given a period of 21 days to review and
consider this Agreement before signing it. Employee further understands that
Employee may use as much of this 21 day period as Employee wishes prior to
signing and that Employee will have waived the full 21 day period by signing
this Agreement before the 21 day period expires.
7. Encouragement to Consult with Attorney - Employee is strongly
encouraged to consult with an attorney before signing this Agreement. Employee
understands that whether or not to do so is Employee's decision.
8. Employee's Right to Revoke Agreement - Employee may revoke this
Agreement within seven (7) days of Employee's signing it. Revocation can be
made only by delivering a written notice of revocation to
____________________________. For this revocation to be effective, written
notice must be received by _________________ no later than the close of
business on the seventh day after Employee signs this Agreement. If Employee
properly revokes this Agreement, it shall not be effective or enforceable, and
Employee will not receive the benefits described in Employee's Employment
Agreement.
9. Assistance in the Defense of Claims and Consultative Advice -
Employee agrees, upon reasonable notice from the Company, to assist the
Company in the defense of any legal or administrative proceeding now pending
or which later may be filed by or against the Company or by or against any
affiliated or related companies or any of their officers, directors or
employees. Company will reimburse and/or advance monies to Employee for lost
wages and out-of-pocket expenses incurred in connection with such assistance.
Employee agrees, in addition, to the extent requested from time to time by the
Company and provided such requests do not require more than a nominal amount
of Employee's time, to provide telephonic consultative advice with respect to
questions the Company may have regarding matters for which the Employee
previously had responsibility or otherwise possesses knowledge.
10. Company Property - Employee shall return to the Company upon
signing this Agreement any and all Company property which has been entrusted
to the Employee during the Employee's tenure with the Company.
11. Applicable Law; Severability - The parties agree that this
Agreement shall be governed by the laws of the State of Michigan. If any
provision of this Agreement is declared invalid, the remaining provisions
shall remain in effect.
12. Entire Agreement - The Company has used its best efforts to
compose this Agreement in a manner calculated to be readily understood by the
Employee. This Agreement is the complete, entire and final agreement between
Employee and the Company concerning the subject matter expressed herein. This
Agreement may not be modified or terminated except in writing signed by both
parties. The Company has made no promises to Employee other than those in
this Agreement and the Employment Agreement.
13. Successors/Assigns. This Agreement is personal to the Employee
and may not be assigned or transferred by the Employee. This Agreement shall
inure to the benefit of the Employee's personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees or
beneficiaries, and to the Company, and its successors and assigns.
EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT,
UNDERSTANDS IT AND IS VOLUNTARILY ENTERING INTO IT. PLEASE READ THIS
AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
EMPLOYEE WITNESS
- ------------------------------ ------------------------------
By:
---------------------------
Dated:
------------------------
TRIMAS CORPORATION WITNESS
------------------------------
By:
---------------------------
Its:
--------------------------
Dated:
------------------------
Exhibit (c)(6)
Management Agreement
EMPLOYMENT AGREEMENT
This Agreement (the "Agreement") is made as of the day of
December, 1997, between TriMas Corporation, a Delaware corporation and
___________________________ (the "Employee").
RECITALS
The Employee has actively and significantly participated in the
management of the business and assets of the Company and the Company considers
the retaining of the Company's existing management essential to protecting and
enhancing the best interest of the Company and its shareholders;
The Company believes that executing this Agreement is in the
best interest of the Company and its shareholders and the Employee believes
that the execution of this Agreement is in the Employee's best interests; and
The Company and the Employee desire to enter into this
Agreement;
NOW, THEREFORE, to induce the Employee to remain in the employ
of the Company, and for other good and valuable consideration, the Company and
the Employee agree as follows:
1. Definitions.
(a) "Benefit Period" shall mean the period commencing on the date
of this Agreement and continuing through the later of (i) the end of the
Contract Employment Period or (ii) the date which is one (1) year after the
Termination Date, but in no event to end later than March 8, 2004.
(b) "Board" shall mean the Company's Board of Directors.
(c) "Business Activities" shall mean the design, development,
manufacture, distribution, sale and marketing of products or services sold,
distributed or provided by TriMas Corporation or any of its subsidiaries prior
to the Termination Date. Business Activities shall not include the provision
of financial services of a professional nature (including but not limited to
the provision of financial, treasury, consulting or accounting services) by an
individual professionally licensed or trained to perform such services
("Professional Services") in any capacity as an employee, partner, owner or
otherwise for any enterprise generally engaged in the provision of such
Professional Services to the public.
(d) "Cause," when used in connection with the termination of the
Employee's employment by the Company, shall mean (i) the willful and continued
failure (after written notice from the Company to the Employee) by the
Employee to substantially perform the Employee's primary duties and
obligations (of a nature consistent with this Agreement including without
limitation Section 3 hereof) to the Company (other than any failure resulting
from the Employee's Disability or actions taken by the Company which prevent
the Employee's performance), (ii) the engaging by the Employee in willful
misconduct which is materially injurious to the Company, monetarily or
otherwise, or (iii) the commission of any act constituting a felony under the
laws of any state within the United States or of the United States.
(e) "Company" shall mean TriMas Corporation and any corporation
or entity that is a successor (whether by purchase of all or substantially all
of the business and/or assets, merger, consolidation or liquidation) of the
Company.
(f) "Contract Employment Period" shall mean that period commencing
with the date of this Agreement and continuing to March 8, 2000.
(g) "Disability" shall mean a physical or mental incapacity of the
Employee which entitles the Employee to benefits under the long term
disability plan applicable to the Employee and maintained by the Company as
in effect at the time of such disability. However, if the Company has no such
plan at that time, "Disability" shall mean any physical or mental condition
that renders the Employee unable to substantially perform the Employee's duties
with the Company for a period of one hundred and eighty (180) days during any
period of twelve (12) consecutive months.
(h) "Employment Term" shall have the meaning set forth in Section
2 of this Agreement.
(i) "Good Reason," when used with reference to a voluntary
termination by the Employee of the Employee's employment with the Company,
shall mean:
(i) a substantial diminution in the Employee's position such
that the Employee's job is no longer of a significant or
responsible management or professional nature;
(ii) a reduction in the Employee's base salary as in effect on
the date of this Agreement or as the same may be increased from
time to time; or a failure of the Company to include the Employee
as an eligible participant in the Company's bonus plan, stock
incentive plan and other management incentive programs in which
the Employee currently participates other than as part of a
broad-based restructuring of benefits of the Company affecting no
less than substantially all comparably compensated employees of
the Company, provided that the awarding of any such incentive
compensation is in the Board's discretion;
(iii) a change in the Employee's principal work location to any
location more than forty miles outside of Ann Arbor, Michigan,
except for required travel on the Company's business to an extent
substantially consistent with the Employee's current business
travel obligations on the date of this Agreement; or
(iv) the failure by the Company to comply with any of its
obligations under Section 13(i).
(j) "Protected Vesting Period" shall have the meaning set forth in
Section 9(vii) of this Agreement.
(k) "Termination Date" shall mean the effective date as provided
under this Agreement of the termination of the Employee's employment.
(l) "Unvested Options" and "Unvested Stock Awards" shall mean all
(i) unvested restricted stock awards under the 1988 TriMas Corporation
Restricted Stock Incentive Plan (Restated December 5, 1995), (ii) unvested
options under the 1988 TriMas Corporation Stock Option Plan (Restated December
5, 1995), and (iii) unvested restricted stock awards, options, or other awards
of any form under the TriMas Corporation 1995 Long Term Stock Incentive Plan
(Restated December 5, 1995) representing awards, options or grants granted
prior to February 28, 1998.
(m) "Without Cause" when used in connection with the termination
of the Employee's employment by the Company, shall mean any termination of
employment of the Employee by the Company which is not a termination of
employment for Cause or Disability.
2. Employment, Acceptance and Term. The Company hereby employs
the Employee in a management position with the Company and the Employee hereby
accepts such employment with the Company on the terms set forth in this
Agreement for the Contract Employment Period unless sooner terminated pursuant
to the provisions of Sections 7 or 8 of this Agreement or upon the Employee's
death (the "Employment Term").
3. Duties and Authority. During the Employment Term, the Employee
shall devote his full business time and energies to the business and affairs
of the Company and shall not, without the Company's written consent, accept
other employment or permit such personal business interests as he may have to
interfere with the performance of his duties under this Agreement. The
Employee agrees to use his best efforts, skill and abilities to promote the
interests of the Company, to work with other employees of the Company in a
competent and professional manner and generally to promote the interests of
the Company and to perform such other duties of a management or professional
nature as may be assigned to him by the President of the Company or any other
officers of the Company to whom the Employee normally reports.
4. Compensation. For all services to be performed by the Employee
during the Employment Term the Company shall pay the Employee an annual base
salary of not less than ___________________________________ ($___________)
Dollars per year, payable in accordance with the prevailing payroll practices
of the Company and less all applicable taxes required to be withheld by
federal, state or local laws. The Employee shall be eligible for annual merit
increases in base salary, consistent with the annual merit increases granted
to other comparably compensated employees of the Company. In addition, during
the Employment Term, the Employee shall be entitled to such bonus pursuant to
the Company's bonus plan, in effect on the date hereof or which may hereafter
exist, to the extent the Employee meets the eligibility requirements of such
plan and such other discretionary compensation as in each case may be awarded
from time to time in the discretion of the Board.
5. Participation in Employee Benefit Plans. In addition to the
cash compensation payable hereunder, the Employee shall be entitled to
participate during the Employment Term in such employee benefit plans, whether
contributory or non-contributory, such as group insurance plans, hospital,
surgical, vision and dental benefit plans or other bonus incentive, profit
sharing, retirement or employee benefit plans of the Company existing on the
date hereof or as may be subsequently amended or adopted by the Company for
management employees in significant or responsible positions covered thereby
to the extent that the Employee meets the general eligibility requirements of
any such plans. These plans include, without limitation, the TriMas
Corporation Pension Plan, the TriMas Corporation Future Service Profit Sharing
Plan, the TriMas Corporation Salaried Savings Plan, and the TriMas Corporation
Retirement Benefit Restoration Plan. The Employee shall be entitled during
each year of the Employment Term to paid vacation time consistent with past
practice and Company policy for comparably compensated employees. Any
reference to a benefit plan under this Agreement, including without limitation
those referenced in this Section 5 and in Section 1(xii), shall include any
successor plans (the "Plans").
6. Application of this Agreement: Term of Agreement. The
provisions of Sections 7 and 8 of this Agreement shall apply with respect to
any termination of employment of the Employee which occurs during the period
commencing on the date of this Agreement and ending on March 8, 2003. Such
provisions shall not apply to any termination of employment of the Employee
which occurs following March 8, 2003 after which date the Employee shall have
no further rights under this Agreement except to the extent they have
heretofore accrued to the Employee, including without limitation those which
have accrued under Section 9. Continuation of employment with a successor to
TriMas Corporation, as described in Section 13(a), shall not alone constitute
termination of the Employee's employment.
7. Termination of Employment of the Employee By the Company
(a) The Company shall have the right to terminate the Employee's
employment hereunder at any time for Disability, for Cause, or Without Cause
in each circumstance; however if such termination occurs during the Contract
Employment Period the Company will be required to comply with the procedures
hereinafter specified.
(b) During the Contract Employment Period, termination of the
Employee's employment for Disability shall become effective no sooner than
thirty (30) days after a notice of intent to terminate the Employee's
employment, specifying Disability as the basis for such termination, is given
to the Employee by the Board, by a committee of the Board or by the officer to
whom the Employee normally reports and any applicable requirements of the
Company's long term disability plan or, if the Company has no such plan, its
administrative practices then applicable to disability have been met.
(c) During the Contract Employment Period, termination of the
Employee's employment for Cause shall be effective immediately upon written
notification from the Board, a committee of the Board, or the officer to whom
the Employee normally reports, to the Employee stating in such notice that the
Employee is terminated for Cause and providing reasonable detail of the facts
and circumstances claimed by the Company to constitute Cause. Any
determination by the Board, such committee or such officer shall not limit the
right of the Employee to arbitrate whether such termination was for Cause
under Section 16 hereof.
(d) The Company shall have the absolute right to terminate the
Employee's employment Without Cause by notice from the President of the
Company or the Board; however, during the Contract Employment Period,
termination of the Employee's employment Without Cause shall be effective on
the date specified in the notice but no sooner than five (5) business days
after the date of the Company's giving to the Employee a notice of termination,
specifying that such termination is Without Cause.
(e) Upon a termination of the Employee's employment for Cause or
(except as provided to the contrary in Section 14) for Disability, the Employee
shall have no right to receive any compensation or benefits based on the
provisions of this Agreement; provided, however, with respect to Disability
nothing in this sentence shall restrict any benefits that the Employee would
otherwise receive upon the occurrence of the Employee's disability under any
benefit plans of the Company covering the Employee. Upon a termination of the
Employee's employment Without Cause, the Employee shall be entitled to receive
the benefits provided in Section 9 hereof.
8. Termination of Employment By the Employee. The Employee shall
be entitled at any time to terminate employment with the Company for any
reason and, if such termination is for Good Reason, to receive the benefits
provided in Section 9 hereof in the same manner as if such Employee had been
terminated Without Cause. The Employee shall give the Company notice of
voluntary termination of employment, which notice need specify only the
Employee's desire to terminate employment and, if such termination is for Good
Reason, also set forth in reasonable detail the facts and circumstances
claimed by the Employee to constitute Good Reason. Any notice by the Employee
pursuant to this Section shall be effective five (5) business days after the
date it is given by the Employee. If the Employee terminates his employment
with the Company other than for Good Reason, the Employee shall not be
entitled to receive benefits under this Agreement except those provided in
Section 9(a) and 9(b) hereof.
9. Benefits Upon Termination in Certain Circumstances.
Upon the termination of the Employee's employment by the Company
Without Cause pursuant to Section 7(d) hereof or by the Employee for Good
Reason pursuant to Section 8 hereof during the period commencing on the date
of this Agreement and ending on March 8, 2003, the Employee shall execute a
Separation Agreement and Complete Release of Liability in the form attached
as Exhibit A hereto (the "Release") in favor of the Company and commencing
eight (8) days thereafter, provided the Employee did not revoke the Release
pursuant to Section 8 thereof, the Employee shall be entitled to receive the
following benefits:
(a) The Company shall pay to the Employee, not later than thirty
(30) days after the Termination Date, a lump sum cash amount equal to the sum
of (i) the full base salary earned by the Employee through the Termination Date
and unpaid at the Termination Date, (ii) the amount of any base salary
attributable to vacation earned by the Employee but not taken before the
Termination Date, (iii) all other amounts earned by the Employee and unpaid
at the Termination Date (including any amount of a bonus remaining unpaid from
a prior performance year), and (iv) all amounts owing by the Company on
account of expenditures by the Employee on behalf of the Company, including
without limitation all amounts due as reimbursement of travel and
entertainment expenses.
(b) The Company shall pay to the Employee, not later than thirty
(30) days after the Termination Date, the greater of (i) a pro-rata amount of
any bonus award earned by the Employee during the year in which the Termination
Date occurred; or (ii) a pro-rata amount of the Employee's cash bonus
incentive compensation for the immediately preceding full year prior to the
Termination Date. In each case, the proration shall be based on the number of
days in the year through the Termination Date compared with 365 days.
(c) The Company shall pay to the Employee a cash amount equal to,
the Employee's Base Annual Compensation multiplied by a fraction,
(A) the numerator of which is (x) if the Termination Date
occurs before March 8, 1999, the number of days
remaining in the Contract Employment Period or, (y) if
the Termination Date occurs on or after March 8, 1999,
the number 365, and
(B) the denominator of which is 365 (the "Termination Payment").
Base Annual Compensation shall be the sum of (i) the Employee's base annual
salary at the highest rate in effect during the year of the Termination Date
plus (ii) an amount equal to the Employee's cash bonus incentive compensation
for the full year immediately preceding the Termination Date. The Termination
Payment shall be paid at the option of the Employer either (a) in equal
monthly installments over the remaining months of the Benefit Period, or (b)
(x) in a lump sum equal to the lesser of the Termination Payment or the
Employee's Base Annual Compensation, payable within thirty (30) days of the
Termination Date and (y) the amount, if any, by which the Termination Payment
exceeds such lump sum payment made, in equal monthly installments commencing
one (1) year after the Termination Date and ending in the last month of the
Benefit Period.
(d) The Company shall also pay to the Employee all legal fees and
expenses incurred by the Employee as a result of successfully enforcing any
right or benefit provided to the Employee by this Agreement.
(e) The Company shall pay, when due, for outplacement services as
requested by the Employee to assist in locating new employment, up to a
maximum amount of $30,000.
(f) The Company shall maintain in full force and effect for the
Employee's continued benefit, and for the benefit of the Employee's
dependents, until the earlier of (i) the end of the Benefit Period or (ii) the
Employee's commencement of employment with a new employer, any medical or
dental insurance plans or medical or dental insurance arrangements in which
the Employee was entitled to participate upon the Termination Date (subject to
the Company's right under Section 5 of this Agreement to amend or replace such
plans or arrangements after the Termination Date), provided that the
Employee's continued participation is possible under the general terms and
provisions of such plans or arrangements. In the event that the Employee's
participation in any plans or arrangements of a new employer is barred, then
until the end of the Benefit Period, the Company shall arrange to provide the
Employee with benefits substantially similar to those which the Employee is
entitled to receive under such plans or arrangements of the Company. Should
the medical insurance plans or arrangements provided by the Employee's new
employer not entitle the Employee or the Employee's dependents (a) to any
coverage during an initial qualification period or (b) to coverage for any
condition which is considered a pre-existing condition under the new
employer's plan and which was covered under the Company's medical insurance
plans or arrangements at the Termination Date, then notwithstanding the
Employee's employment, the Company shall, until the end of the Benefit Period,
continue to provide medical benefits as stated above in this Section 9(vi)
during such qualification period (if clause (a) of this sentence is
applicable) and for such pre-existing condition (if clause (b) of this
sentence is applicable).
(g) Any Unvested Options of the Employee under the Company's Plans
shall, to the extent such Unvested Options have not been converted or adjusted
in any transaction approved by the Company's Board of Directors as
contemplated by the applicable Plan, immediately vest at the Termination Date.
All Unvested Stock Awards under the Company's Plans shall continue to vest in
accordance with the terms of the respective Plans during the period which (x)
if the Termination Date occurs before March 8, 1999, shall extend until June
30, 2000, or (y) if the Termination Date occurs on or after March 8, 1999,
shall extend until the last day of the end of the fifteen (15th) month
following the Termination Date, (the applicable time period of this sentence is
referred to as the "Protected Vesting Period"). All Unvested Stock Awards,
as to which restrictions have not lapsed under the Plan as provided in the
preceding sentence, shall be forfeited to the Company.
Any payments to be made under this Section 9 (except payments
under subsection (vi)) shall be reduced by the amount of (i) any loans or other
monetary advances made by the Company to the Employee which remain outstanding
on the Termination Date other than any advances for relocation expenses which
are to be paid back to the Company under other repayment arrangements and (ii)
any retirement benefits received by the Employee from the Company.
Subject to the succeeding paragraph, in the event that any
payments, distributions or benefits to or for the benefit of the Employee from
the Company, whether paid or payable, distributed or distributable, as provided
for in Section 9 hereof, any other section of this Agreement, or otherwise
under any other plan or arrangement of the Company would constitute a
"parachute payment", as defined in Section 280G of the Internal Revenue Code
of 1986, as amended, or any successors thereto (the "Code"), such payments
under the Agreement shall be reduced to the largest amount that will eliminate
both the imposition of the excise tax imposed by Section 4999 of the Code and
the disallowance as deductions to the Company under Section 280G of the Code
of any such payments under this Agreement. The determination of any reduction
in the payments under this Agreement pursuant to this paragraph shall be made
by a major accounting firm selected by the Company (which shall not be the
Company's independent auditors) and approved by the Employee, which approval
shall not be unreasonably withheld.
Upon the termination of the Employee's employment by the Company
Without Cause or by the Employee for Good Reason, in each case prior to March
31, 1999, then in the event that any payments, distributions or benefits to or
for the benefit of the Employee from the Company, whether paid or payable,
distributed or distributable, as provided for in Section 9 hereof, any other
section of this Agreement, or otherwise from the Company would be subject to
an excise tax pursuant to Section 4999 of the Code, or subject to any interest
or penalties with respect to such excise tax, the Employee shall be entitled
to receive, not later than three (3) days prior to the date upon which the
Employee is required to make any payment based on such determination,
additional payments from the Company in an amount equal to all additional
income and excise taxes (including interest and penalties thereon) payable,
including income and excise taxes, interest and penalties, on any payment
received pursuant to this sentence, by the Employee by reason of the
imposition of such excise tax pursuant to Section 4999 of the Code. All taxes
deemed payable hereunder are to be calculated by a major accounting firm
selected by the Company (which shall not be the Company's independent
auditors) and approved by the Employee, which approval shall not be
unreasonably withheld, using maximum marginal rates applicable to the
Employee. If, after the payment of any amount pursuant to this paragraph, the
Company elects to contest such tax or taxes, the Employee shall cooperate with
the Company, in good faith at the Company's sole expense, to contest such tax
or taxes. If the Company is successful in contesting any proposed tax, the
Employee shall return to the Company, upon receipt by the Employee, any
refunds (including any interest paid or penalties remitted on any such
refunds) with respect to such contested tax or taxes and any other payments
made by the Company to the Employee pursuant to this paragraph with respect
to the amount refunded.
10. Other Employment; Mitigation. The Employee shall not be
required to mitigate the amount of any payment or benefit provided for in
Section 9 by seeking other employment. If the amount to be paid to the
Employee under Section 9(iii) hereof exceeds the Employee's Base Annual
Compensation, then any amount of such excess that would have been paid to the
Employee under Section 9(iii) shall be reduced by any salary and bonus earned
by the Employee as the result of other employment or consulting services
performed during the period beginning one year after the Termination Date and
ending on the last day of the Benefit Period. Except for the reduction
required by the immediately preceding sentence, the amount of any payment
provided for in Section 9 shall not be reduced by any salary and bonus earned
by the Employee as the result of other employment or consulting services
performed.
11. Life and Disability Insurance. During the Benefit Period, the
Company will continue to maintain in effect and pay the premiums on any
insurance policies insuring the life or disability of the Employee which are in
effect on the effective date hereof or may hereafter be taken out by Company,
or substitute policies for all significant management employees covered
thereby.
12. Non-Competition. In consideration of the payments to be
received by the Employee hereunder, in recognition of the highly competitive
nature of the industries in which the Company conducts its business and to
further protect the goodwill of the Company and to promote and preserve its
legitimate business interests, the Employee agrees that during the period
commencing the date hereof and ending on the last day of the Protected Vesting
Period, the Employee will not:
(a) Engage in any Business Activities (other than on behalf of the
Company) whether such engagement is as an officer, director, proprietor,
employee, partner, investor (other than as a holder of less than 1% of the
outstanding capital stock of a publicly traded corporation), consultant
advisor, agent or otherwise, in any geographic area in which the products or
services of the Company have been distributed or provided during the period
commencing two years prior to the date hereof and ending on the Termination
Date;
(b) Other than on behalf of the Company supply products or provide
services (but only to the extent such restricted activities constitute Business
Activities) to any customer with whom the Company has done any business during
the period commencing two years prior to the date hereof and ending on the
Termination Date, whether as an officer, director, proprietor, employee,
partner, investor (other than as a holder of less than 1% of the outstanding
capital stock of a publicly traded corporation), consultant, advisor, agent or
otherwise;
(c) Assist others in engaging in any of the Business Activities in
the manner prohibited to the Employee; and
(d) Induce or attempt to induce employees of the Company, or its
affiliates to engage in any activities hereby prohibited to the Employee or to
terminate their employment.
It is expressly understood and agreed that although the
Employee and the Company consider the restrictions contained in each of
clauses (a) through (d) above to be reasonable for the purpose of preserving
the Company's goodwill, proprietary rights, trade secrets, valuable
confidential business interests, relationships with specific prospective and
existing customers and going concern value, and to protect the Company's
business opportunities, markets and trade areas, if a final judicial
determination is made by a court having jurisdiction that the time or
territory or scope of restricted activities or any other restriction contained
in this Agreement is an unenforceable restriction on the activities of the
Employee, the provisions of this Agreement shall not be rendered void but
shall be deemed amended to apply as to such maximum time, restricted
activities and territory and to such other extent as such court may judicially
determine or indicate to be reasonable. Alternatively, if the court referred
to above finds that any restriction contained in this Section 12 is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained therein. It is further expressly understood and
agreed that the providing of Professional Services shall not be restricted
under this Agreement.
13. Successors: Binding Agreement.
(a) The Company shall require any successor (whether by purchase of
all or substantially all of the business and/or assets, merger, consolidation
or liquidation) of the Company to expressly assume, by written agreement, the
obligation of the Company to perform this Agreement upon or prior to such
succession taking place. A copy of such written agreement shall be delivered
to the Employee promptly after its execution by the successor or such person
or group.
(b) Failure of the Company to obtain such agreement upon or prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle the Employee to benefits as set forth above in Section 9.
These amounts shall not be discounted to any present value.
(c) This Agreement is personal to the Employee and the Employee
may not assign or transfer any part of the Employee's rights or duties
hereunder, or any compensation due to the Employee hereunder, to any other
person, except that this Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, heirs, distributees, devisees, legatees or beneficiaries.
14. Death: Disability. If the Employee dies or experiences a
Disability on or prior to March 8, 2003 and before the date that the Employee
gives notice of termination for Good Reason pursuant to Section 8 hereof, or
before the Company gives notice of termination Without Cause pursuant to
Section 7(d) hereof, or for Cause pursuant to Section 7(c) hereof, the
Employee shall not be entitled to any benefits under this Agreement provided,
however, such restriction shall not otherwise restrict any benefits that the
Employee would otherwise receive upon the occurrence of the Employee's death
or disability under any benefit plans of the Company covering the Employee. If
the Employee dies or experiences a Disability on or prior to March 8, 2003 and
on or after the date that the Employee gives notice of termination for Good
Reason pursuant to Section 8 hereof, or on or after the Company gives notice
of termination Without Cause pursuant to Section 7(d) hereof, the Employee
shall be entitled to the benefits available to the Employee under this
Agreement and any such benefits shall not be reduced in any way because of
such death or Disability. If the Employee dies on the date the Employee is
terminated for Cause the Employee shall not be entitled to any benefits
hereunder unless it is subsequently determined pursuant to this Agreement that
such termination was not for Cause.
15. Modification: Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is agreed to in a writing signed by the Employee and by the Company, provided,
however, the Employee shall not be required to execute as a condition of
continued employment any additional agreement or any agreement which modifies
or replaces this Agreement during the Benefit Period. Waiver by any party of
any breach of or failure to comply with any provision of this Agreement by the
other party shall not be construed as, or constitute, a continuing waiver of
such provision, or a waiver of any other breach of, or failure to comply with,
any other provision of this Agreement.
16. Arbitration of Disputes.
(a) Except with respect to the enforcement of the Company's rights
under Section 12 hereof or the enforcement of the Company's rights under the
Release, any disagreement dispute, controversy or claim arising out of or
relating to this Agreement, the interpretation or validity hereof, or the terms
and conditions of Employee's employment including the termination thereof,
shall be settled exclusively and finally by arbitration. Except as provided in
the preceding sentence, it is specifically understood and agreed that any
disagreement dispute or controversy which cannot be resolved between the
parties, including without limitation any matter relating to the
interpretation of this Agreement, claims of discrimination under state or
federal law, shall be resolved solely by arbitration irrespective of the
magnitude thereof, the amount in controversy, or the nature of the relief
sought.
(b) The arbitration shall be conducted in accordance with
Employment Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA"), the terms of which are incorporated
herein.
(c) The arbitral tribunal shall consist of one arbitrator skilled
in arbitration of senior executive employment matters. The parties to the
arbitration shall jointly directly appoint such arbitrator within thirty (30)
days of initiation of the arbitration. If the parties shall fail to appoint
such arbitrator as provided above, such arbitrator shall be appointed by the
AAA as provided in the Arbitration Rules and shall be a person who has had
substantial experience in employment matters. The Company shall pay all of
the fees, if any, and expenses of such arbitrator and the arbitration.
(d) The arbitration shall be conducted in the Southeastern Michigan
area or in such other city in the United States of America as the parties to
the dispute may designate by mutual written consent.
(e) At any oral hearing of evidence in connection with the
arbitration, each party thereto or its legal counsel shall have the right to
examine its witnesses and to cross-examine the witnesses of any opposing
party. No evidence of any witness shall be presented in form unless the
opposing party or parties shall have the opportunity to cross-examine such
witness, except as the parties to the dispute otherwise agree in writing or
except under extraordinary circumstances where the interests of justice
require a different procedure.
(f) Any decision or award of the arbitral tribunal shall be final
and binding upon the parties to the arbitration proceeding. The parties hereto
agree that the arbitral award may be enforced against the parties to the
arbitration proceeding or their assets wherever they may be found and that a
judgment upon the arbitral award may be entered in any court having
jurisdiction.
(g) Nothing herein contained shall be deemed to give the arbitral
tribunal any authority, power, or right to alter, change, amend, modify, add
to, or subtract from any of the provisions of this Agreement.
17. Notice. All notices, requests, demands and other
communications required or permitted to be given by either party to the other
party by this Agreement (including, without limitation, any notice of
termination of employment and any notice under the Arbitration Rules of an
intention to arbitrate) shall be in writing and shall be deemed to have been
duly given when actually received, or three (3) business days after being
mailed by certified or registered mail, return receipt requested, postage
prepaid, or one (1) business day after being sent by a nationally recognized
overnight courier service, with charges prepaid by sender and receipted for by
or on behalf of the intended recipient, in each case to the address of the
other party, as follows:
If to the Company, to:
TriMas Corporation
315 East Eisenhower Parkway
Suite 300
Ann Arbor, Michigan 48108
Attention: President
With a copy to:
Corporate Counsel
21001 Van Born Road
Taylor, Michigan 48180
If to the Employee:
_________________________
_________________________
_________________________
_________________________
Either party hereto may change its address for purposes of this Section 16 by
giving ten (10) days' prior notice to the other party hereto.
18. Severability. If any term or provision of this Agreement or
the application hereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Agreement or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to
the fullest extent permitted by law.
19. Headings. The headings in this Agreement are inserted for
convenience of reference only and shall not be a part of or control or affect
the meaning of this Agreement.
20. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original.
21. Governing Law. This Agreement shall in all respects be
governed by, and construed and enforced in accordance with, the laws of the
State of Michigan, without regard to the conflicts of laws principles of such
state.
22. Payroll and Withholding Taxes. All payments to be made or
benefits to be provided hereunder by the Company shall be subject to reduction
for any then applicable payroll-related or withholding taxes, which the
Company shall timely pay or deposit as required by the Internal Revenue Code
of 1986, as amended and any successors thereto.
23. Entire Agreement. This Agreement supersedes any and all other
oral or written employment agreements heretofore made and constitutes the
entire agreement of the parties relating to the subject matter hereof.
Notwithstanding the forgoing, this Agreement is not intended to and does not
alter or amend any agreements between the Employee and the Company relating to
matters such as non-competition and non-disclosure of Company matters, and is
not intended to and does not limit the Employee's obligations under any
Company employee benefit or welfare plan or limit, restrict, or reduce any
employee benefit that the Employee is entitled to under any other agreement,
plan, or arrangement, including without limitation as applicable, those
providing for stock options, restricted stock, disability insurance or life
insurance.
24. Confidentiality. The Employee promises not to disclose the
contents of this Agreement to anyone other than his immediate family and to
attorneys or other counselors retained by the Employee for the purposes of
assisting or counseling the Employee with respect to this Agreement except by
an order of a court.
[Note: To the extent the Employee does not have a relocation advance
outstanding to the Company, the reference to such advance in Paragraph 9
has been deleted in such Employee's agreement.]
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
TriMas Corporation
By:
- ---------------------------- ----------------------------
(Employee Signature
Its:
- ---------------------------- ---------------------------
(Employee Printed Name)
EXHIBIT A
SEPARATION AGREEMENT AND
COMPLETE RELEASE OF LIABILITY
This Separation Agreement and Complete Release of Liability
(this "Agreement') is made this ______ day of __________, ____ by and between
_________________ (the "Employee") and TriMas Corporation, a Delaware
corporation (the "Company").
The Company and Employee agree to the following terms:
1. Date of Separation. Employee's active full-time employment
with the Company will irrevocably and forever cease on ______________.
Employee will not seek employment with the Company thereafter.
2. Complete Release. In exchange for the compensation to be paid
to Employee pursuant to Section 9 of that certain Employment Agreement dated
November ____, 1997 between the Employee and the Company (the "Employment
Agreement"), which Employee acknowledges he would not otherwise be entitled to
receive without signing this Agreement, Employee forever discharges and
releases the Company, its affiliates, subsidiaries, and their respective
officers and directors, agents or representatives (the "Company Parties") from
and forever promises not to sue the Company Parties for any and all claims,
demands, damages, rights and causes of action, including, without limitation,
claims for compensatory and punitive damages and for injunctive and other
equitable or declaratory relief, Employee now has or may have against the
Company Parties up to the date of signing this Agreement, whether known or
unknown, including, but not limited to, claims, demands, rights and causes of
action arising out of Employee's employment and termination thereof, claims of
employment discrimination or bias, wrongful discharge, severance pay, unused
vacation and breach of contract and any violation of Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Employee Retirement
Income Security Act of 1974 (ERISA), the Americans with Disabilities Act of
1990 (ADA), the Age Discrimination and Employment Act of 1967 (ADEA), the Older
Workers Benefit Protection Act, the Fair Labor Standards Act, the Occupational
and Safety & Health Act, the Equal Pay Act and any and all other federal, state
and local laws and regulations and ordinances and or public policy and any and
all claims, demands, rights and causes of action the Employee now has or may
have against the Company Parties under common law or in equity including,
without limitation, contract or tort actions.
Employee acknowledges and fully understands and agrees that the
Company Parties may plead this release as a complete defense to any claim or
entitlement that may be asserted by Employee or other persons or agencies on
the Employee's behalf in any suit, grievance or claim against the Company
Parties for or on account of any matter whatsoever. This does not preclude,
however, the right of Employee to enforce the terms of this Agreement.
This release does not include a release of any pension benefits
for which Employee may be eligible under the terms of applicable Company
benefits plans.
3. Confidentiality and Non-Disparagement. Employee promises not
to disclose the contents of any Proprietary Information of the Company or any
of its affiliates or subsidiaries. Proprietary Information shall mean
information or material of the Company or any of its affiliates or
subsidiaries (1) which is not generally available to or used by others or (2)
the utility or value of which is not generally known or recognized as standard
practice, whether or not the underlying details are in the public domain and
includes, without limitation:
(a) Information or materials which relate to the Company's or
any of its affiliates' or subsidiaries' trade secrets,
manufacturing methods, machines, articles of manufacture,
compositions, inventions, engineering services, technological
developments, know-how, purchasing, accounting, merchandising or
licensing;
(b) Software in various stages of development (source code,
object code, documentation, diagrams, flow charts), designs,
drawings, specifications, models, data and customer information;
and
(c) Any information of the type described above which the
Company or any of its affiliates or subsidiaries obtained from
another party and which the Company or any of its affiliates or
subsidiaries treats as proprietary or designates as confidential,
whether or not owned or developed by the Company or any of its
affiliates or subsidiaries.
Employee agrees not to disparage the Company, its subsidiaries
or affiliates or their respective officers, directors or employees.
4. Non-Admission of Liability. This Agreement is made solely to
facilitate an arrangement reached by the Company with Employee. This
Agreement should not be construed as an admission by the Company of any
wrongdoing.
5. Consequences of Employee Violation of Promises. If Employee
(i) breaks the promises in Paragraph 2 of this Agreement and files a lawsuit or
makes a claim or charge based on legal claims that Employee has released, (ii)
breaks the promise made in Paragraph 3 of this Agreement and discloses
Proprietary Information to any non-authorized third party, and such disclosure
results in damage or injury to the Company or any of its affiliates or
subsidiaries, (iii) does not use his reasonable efforts to avoid disparaging
the Company, its subsidiaries and affiliates and their respective officers,
directors and employees, or (iv) without Company's prior written consent,
induces any Employee of the Company to leave the Company's employment,
Employee will reimburse the Company for all such damage or injury occasioned
by such action, including reasonable attorneys.
6. Period For Review and Consideration of Agreement - Employee
understands that Employee has been given a period of 21 days to review and
consider this Agreement before signing it. Employee further understands that
Employee may use as much of this 21 day period as Employee wishes prior to
signing and that Employee will have waived the full 21 day period by signing
this Agreement before the 21 day period expires.
7. Encouragement to Consult with Attorney - Employee is strongly
encouraged to consult with an attorney before signing this Agreement. Employee
understands that whether or not to do so is Employee's decision.
8. Employee's Right to Revoke Agreement - Employee may revoke this
Agreement within seven (7) days of Employee's signing it. Revocation can be
made only by delivering a written notice of revocation to
____________________________. For this revocation to be effective, written
notice must be received by _________________ no later than the close of
business on the seventh day after Employee signs this Agreement. If Employee
properly revokes this Agreement, it shall not be effective or enforceable, and
Employee will not receive the benefits described in Employee's Employment
Agreement.
9. Assistance in the Defense of Claims and Consultative Advice -
Employee agrees, upon reasonable notice from the Company, to assist the
Company in the defense of any legal or administrative proceeding now pending
or which later may be filed by or against the Company or by or against any
affiliated or related companies or any of their officers, directors or
employees. Company will reimburse and/or advance monies to Employee for lost
wages and out-of-pocket expenses incurred in connection with such assistance.
Employee agrees, in addition, to the extent requested from time to time by the
Company and provided such requests do not require more than a nominal amount
of Employee's time, to provide telephonic consultative advice with respect to
questions the Company may have regarding matters for which the Employee
previously had responsibility or otherwise possesses knowledge.
10. Company Property - Employee shall return to the Company upon
signing this Agreement any and all Company property which has been entrusted
to the Employee during the Employee's tenure with the Company.
11. Applicable Law; Severability - The parties agree that this
Agreement shall be governed by the laws of the State of Michigan. If any
provision of this Agreement is declared invalid, the remaining provisions
shall remain in effect.
12. Entire Agreement - The Company has used its best efforts to
compose this Agreement in a manner calculated to be readily understood by the
Employee. This Agreement is the complete, entire and final agreement between
Employee and the Company concerning the subject matter expressed herein. This
Agreement may not be modified or terminated except in writing signed by both
parties. The Company has made no promises to Employee other than those in
this Agreement and the Employment Agreement.
13. Successors/Assigns. This Agreement is personal to the Employee
and may not be assigned or transferred by the Employee. This Agreement shall
inure to the benefit of the Employee's personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees or
beneficiaries, and to the Company, and its successors and assigns.
EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT,
UNDERSTANDS IT AND IS VOLUNTARILY ENTERING INTO IT. PLEASE READ THIS
AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
EMPLOYEE WITNESS
- ------------------------------ ------------------------------
By:
---------------------------
Dated:
------------------------
TRIMAS CORPORATION WITNESS
------------------------------
By:
---------------------------
Its:
--------------------------
Dated:
------------------------
Exhibit (c)(10)
December 2, 1997
Gentlemen:
In connection with the consideration of a possible negotiated
transaction (the "Transaction") between our companies, the company named below
(the "Company") may furnish to the counterparty named below ("Shareholder")
information pertinent to the review and evaluation of the business of the
Company. Each party agrees with the other as follows:
1. Nondisclosure of Information. Shareholder agrees that
the Evaluation Material (as defined in the following paragraph) is
confidential and proprietary, and that, subject to section 2 of this letter
agreement, such information will be kept strictly confidential by the
Shareholder and its Representatives (as defined in the following
paragraph). Subject to section 2 of this letter agreement, Shareholder
also agrees to disclose the Evaluation Material only to its Representatives
who need to know such information for the purpose of evaluating the
Transaction, who are informed by the shareholder of the confidential nature
of such information and who shall agree to treat such information
confidentially in accordance with the terms and conditions of this
Agreement. Shareholder will be responsible for any breach of this
Agreement by its Representatives.
"Representatives" of a party shall mean the party's directors,
officers, employees, affiliates, representatives (including, without
limitation, attorneys, accountants and financial and other advisers) or
agents, and shall also include in the case of the Shareholder prospective
lenders and their officers, employees and advisers. "Evaluation Material"
shall mean all information of the Company (whether written or oral and whether
prepared by such party, its advisers or otherwise) which is or has been
furnished to the Shareholder or any of its Representatives at any time
(whether before, after or on the date of this Agreement) by or on behalf of
the Company or its Representatives and all analyses, compilations, forecasts,
studies or other documents prepared by the receiving party or its
Representatives in connection with such receiving party's or its
Representatives review of, or such receiving party's interest in, the
Transaction, to the extent that they contain or reflect such information;
provided, however, that the term "Evaluation Material" does not, however,
include information which (i) is or becomes generally available to the public
other than as a result of a disclosure by Shareholder or its Representatives
contrary to this letter agreement or (ii) is or becomes available to the
Shareholder on a non-confidential basis from a source other than the Company
or its Representatives, which source, to the best knowledge of the receiving
party after due inquiry, is not prohibited from disclosing such information to
the receiving party by a legal, contractual or fiduciary obligation to the
Company.
Subject to section 2 of this letter agreement, without the
prior written consent of the providing party, except as required to comply
with applicable law or stock exchange rules, the Shareholder will not, and
will cause its Representatives not to, disclose to any person other than its
Representatives the fact that the Evaluation Material exists or has been
provided to such party, that the Shareholder is considering the Transaction or
any other possible transaction involving the other party or that discussions
or negotiations are taking place concerning a possible transaction involving
the Shareholder or any of the terms, conditions or other facts with respect to
any such possible transaction, including, without limitation, the status
thereof.
Each party hereby acknowledges that it is aware, and that it
will advise its Representatives who are informed as to the matters which are
the subject of this Agreement, that the United States securities laws prohibit
any person who has received from an issuer any material, non-public
information from purchasing or selling securities of such issuer or from
communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.
2. Required Disclosure. The Company acknowledges that
Shareholder may disclose Evaluation Material to the extent that such
disclosure is required in connection with the Transaction or any other
transaction under applicable securities laws and is consistent with
applicable fiduciary duties under state law; provided, that in any such
case the Shareholder gives the Company written notice of the information to
be disclosed as far in advance of its disclosure as is reasonably
practicable. In addition, if the Shareholder or any of its Representatives
is requested in any proceeding to disclose any Evaluation Material, the
Shareholder will give the Company prompt written notice of such request so
that the providing party may seek an appropriate protective order. If in
the absence of a protective order the Shareholder or any of its
Representatives, in the opinion of counsel, is compelled in a proceeding to
disclose Evaluation Material, the Shareholder or such Representative may
disclose such portion of the Evaluation Material which counsel advises in
writing that the Shareholder or such Representatives is compelled to
disclose, without liability under this Agreement, provided, however, that
the Shareholder gives the Company written notice of the information to be
disclosed as far in advance of its disclosure as is reasonably practicable
and uses all reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information.
3. No Representation or Warranty. Although the Company
will endeavor to include in the Evaluation Material information which it
believes to be relevant for the purpose of the Shareholder's investigation,
the Shareholder understands that neither the Company nor any of its
Representatives have made or make any representation or warranty as to the
accuracy or completeness of the Evaluation Material. Each party agrees
that neither the Company nor its Representatives shall have any liability
to the receiving party or any of its Representatives resulting from the use
of the Evaluation Material. The Shareholder further agrees that it is not
entitled to rely on the accuracy or completeness of the Evaluation Material
and that it will be entitled to rely solely on such representations and
warranties as may be included in any definitive agreement with respect to a
Transaction, subject to such limitations and restrictions as may be
contained therein.
4. Termination of Discussions and Negotiations. The
Shareholder acknowledges and agrees that the Company reserves the right, in
its sole discretion, to reject any and all proposals made by the
Shareholder or its Representatives with regard to the Transaction, and
(subject to the provisions of any definitive agreement with respect to the
Transaction, if such an agreement is executed) to terminate discussions and
negotiations at any time and for any or no reason.
If either party determines not to proceed with the Transaction,
it will promptly inform the other party of that decision.
5. Specific Enforcement. The Shareholder agrees that money
damages would not be a sufficient remedy for any breach of this Agreement
by it or its Representatives, and that in addition to all other remedies
available under applicable law, the Company shall be entitled to specific
performance and to injunctive or other equitable relief as a remedy for any
such breach without proof of actual damages. The Shareholder agrees not to
oppose the granting of such relief, and to waive any requirement for the
securing or posting of any bond in connection with such remedy. If a court
of competent jurisdiction determines in a final, nonappealable order that
this letter agreement has been breached by the Shareholder or its
Representatives, then such Shareholder will reimburse the Company for the
Company's costs and expenses (including, without limitation, legal fees and
expenses) incurred in connection with all such litigation.
6. General Provisions. This Agreement contains the entire
agreement between the parties concerning the subject matter hereof. No
amendment, modification or discharge of this letter agreement, and no
waiver hereunder, shall be valid or binding unless set forth in writing and
signed by each party. Any such waiver shall constitute a waiver only with
respect to the specific matter described in such writing and shall in no
way impair a party's rights in any other respect or at any other time.
Each party also agrees that no failure or delay by a party in exercising
any right, power or privilege under this Agreement will operate as a waiver
thereof, nor will any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any right, power or
privilege under this Agreement. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original copy of this
Agreement, and all of which, taken together, shall be deemed to constitute
one and the same agreement.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to its conflict
of laws principles or rules.
Please confirm your agreement with the foregoing by signing and
returning to the undersigned the duplicate copy of this letter enclosed
herewith.
Very truly yours,
TriMas Corporation
By /s/ Peter C. DeChants
--------------------------
Name: Peter C. DeChants
Title: Vice President
and Treasurer
Confirmed and agreed to as
of the date of this letter:
MascoTech, Inc.
By /s/ David B. Liner
--------------------------
Name: David B. Liner
Title: Vice President
and Corporate Counsel
Exhibit (g)(1)
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
__________________________________________x
:
GERALD SAPSOWITZ, :
:
Plaintiff, :
:
v. :
:
RICHARD A. MANOOGIAN, BRIAN A. : C.A. No. 16084
CAMPBELL, JOHN A. MORGAN, HERBERT S. :
AMSTER, EUGENE A. GARGARO, HELMUT F. :
STERN, TRIMAS CORPORATION and :
MASCOTECH, INC. :
:
Defendants. :
__________________________________________x
CLASS ACTION COMPLAINT
----------------------
Plaintiff alleges upon information and belief, except for
paragraph 1 hereof, which is alleged upon knowledge, as follows:
1. Plaintiff has been the owner of the common stock of TriMas
Corporation ("TriMas" or "TMS" or the "Company") since prior to the transaction
herein complained of and continuously to date.
2. TriMas is a corporation duly organized and existing under
the laws of the State of Delaware. The Company manufactuers industrial
container closures, pressurized gas cylinders, towing systems products,
specialty fasteners, specialty products for fiberglass insulation, specialty
tapes and precision cutting tools.
3. MascoTech Inc. ("MascoTech") is a Delaware corporation
based in Taylor, Michigan and manufactures engine and drive train products,
including semi-finished transmission shafts, drive gears, connecting rods,
wheel spindles and front wheel drive components, windshields and
aftermarket parts, such as fuel and emission system, components, windshield
wiper blades, constant velocity joints, brake hardware repair kits, and
other automotive accessories, and holds various equity investments in
industrial building, engineering and automotive parts manufacturing
companies.
4. Defendants Richard A. Manoogian ("Manoogian"), Brian A.
Campbell, John A. Morgan, Herbert S. Amster, Eugene A. Gargaro and Helmut F.
Stern are Directors of TMS. Defendant Manoogian is both Chairman and Chief
Executive Officer of MascoTech, as well as Chairman of TriMas.
5. MascoTech and MascoTech-related entities currently own
approximately 45% of the outstanding shares of TMS.
6. The Individual Defendants are in a fiduciary relationship
with Plaintiff and the other public stockholders of TriMas and owe them the
highest obligations of good faith and fair dealing.
CLASS ACTION ALLEGATIONS
------------------------
7. Plaintiff brings this action on its own behalf and as a
class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on
behalf of all common stockholders of the Company (except defendants herein and
any person, firm, trust, corporation, or other entity related to or affiliated
with any of the defendants) and their successors in interest, who are or will
be threatened with injury arising from defendants' actions as more fully
described herein.
8. This action is properly maintainable as a class action
because:
(a) The class is so numerous that joinder of all members
is impracticable. As of July 31, 1997, there were approximately 41,348,611
shares of TriMas common stock outstanding owned by hundreds, if not
thousands, of record and beneficial holders. (Approximately 55% of these
shares are publicly held; MascoTech and related entities own the remaining
45%);
(b) There are questions of law and fact which are common
to the class including, inter alia, the following: (i) whether defendants have
breached their fiduciary and other common law duties owed by them to plaintiff
and the members of the class; and (ii) whether the class is entitled to
injunctive relief or damages as a result of the wrongful conduct committed by
defendants.
(c) Plaintiff is committed to prosecuting this action and
has retained competent counsel experienced in litigation of this nature. The
claims of the plaintiff are typical of the claims of other members of the
class and plaintiff has the same interests as the other members of the class.
Plaintiff will fairly and adequately represent the class.
(d) Defendants have acted in a manner which affects
plaintiff and all members of the class alike, thereby making appropriate
injunctive relief and/or corresponding declaratory relief with respect to the
class as a whole.
(e) The prosecution of separate actions by individual
members of the Class would create a risk of inconsistent or varying
adjudications with respect to individual members of the Class, which would
establish incompatible standards of conduct for defendants, or adjudications
with respect to individual members of the Class which would, as a practical
matter, be dispositive of the interests of other members or substantially
impair or impede their ability to protect their interests.
SUBSTANTIVE ALLEGATIONS
-----------------------
9. On December 11, 1997, TriMas and MascoTech announced that
they had entered into a definitive agreement whereby MascoTech will acquire
the 55% of the outstanding TMS shares which it did not already own, in a
transaction valued at approximately $900 million. Under the terms of the
transaction as presently proposed, MascoTech will commence a cash tender offer
for all of TMS shares for $34.50 per share.
10. By entering into the agreement with MascoTech, the TriMas
Board has initiated a process to sell the Company which imposes heightened
fiduciary responsibilities and requires enhanced scrutiny by the Court.
However, the terms of the proposed transaction were not the result of an
auction process or active market check; they were arrived at without a full
and thorough investigation by the Individual Defendants; and they are
intrinsically unfair and inadequate from the standpoint of the TriMas
shareholders.
11. The Individual Defendants failed to make an informed
decision, as no market check of the Company's value was obtained. In agreeing
to the merger, the Individual Defendants failed to properly inform themselves
of TMS's highest transactional value.
12. The Individual Defendants have violated the fiduciary duties
owed to the public shareholders of TMS. The Individual Defendants' agreement
to the terms of the transaction, its timing, and the failure to auction the
Company and invite other bidders, and defendants' failure to provide a market
check demonstrate a clear absence of the exercise of due care and of loyalty
to TMS's public shareholders.
13. The Individual Defendants' fiduciary obligations under these
circumstances require them to:
(a) undertake an appropriate evaluation of TMS's net worth
as a merger/acquisition candidate; and
(b) actively evaluate the proposed transaction and engage
in a meaningful auction with third parties in an attempt to obtain the best
value for TriMas's public shareholders.
14. The Individual Defendants have breached their fiduciary
duties by reason of the acts and transactions complained of herein, including
their decision to merge with MascoTech without making the requisite effort to
obtain the best offer possible.
15. Plaintiff and other members of the Class have been and will
be damaged in that they have not and will not receive their fair proportion of
the value of TMS's assets and business, and will be prevented from obtaining
fair and adequate consideration for their shares of TMS common stock.
16. The consideration to be paid to class members in the proposed
merger is unfair and inadequate because, among other things:
(a) The intrinsic value of TriMas's common stock is
materially in excess of the amount offered for those securities in the merger
giving due consideration to the anticipated operating results, net asset
value, cash flow, and profitability of the Company;
(b) The merger price is not the result of an appropriate
consideration of the value of TriMas because the TriMas Board approved the
proposed merger without undertaking steps to accurately ascertain TriMas's
value through open bidding or at least a "market check mechanism"; and
(c) By entering into the agreement with MascoTech, the
Individual Defendants have allowed the price of TriMas stock to be capped,
thereby depriving plaintiff and the Class of the opportunity to realize any
increase in the value of TriMas stock.
17. By reason of the foregoing, each member of the Class will
suffer irreparable injury and damages absent injunctive relief by this Court.
18. Plaintiff and other members of the Class have no adequate
remedy at law.
WHEREFORE, plaintiff and members of the Class demand judgment
against defendants as follows:
a. Declaring that this action is properly maintainable as a
class action and certifying plaintiff as the representative
of the Class;
b. Preliminarily and permanently enjoining defendants and their
counsel, agents, employees and all persons acting under, in
concert with, or for them, from proceeding with,
consummating, or closing the proposed transaction;
c. In the event that the proposed transaction is consummated,
rescinding it and setting it aside, or awarding rescissory
damages to the Class;
d. Awarding compensatory damages against defendants,
individually and severally, in an amount to be determined at
trial, together with pre-judgment and post-judgment interest
at the maximum rate allowable by law, arising from the
proposed transaction;
e. Awarding plaintiff its costs and disbursements and reasonable
allowances for fees of plaintiff's counsel and experts and
reimbursement of expenses; and
f. Granting plaintiff and the Class such other and further
relief as the Court may deem just and proper.
Dated: December 11, 1997
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: /s/ Norman M. Monhait
-------------------------------
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LIEBHARD & LIFSHITZ
274 Madison Avenue
New York, NY 10016
(212) 779-1414
Exhibit (g)(2)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- - - - - - - - - - - - - - - - - - - - - -X
:
CHARLENE BLUE, : C.A. No. 16083NC
:
Plaintiff, :
:
-against- :
: CLASS ACTION COMPLAINT
: ----------------------
TRIMAS CORPORATION, RICHARD A. :
MANOOGIAN, HERBERT S. AMSTER :
EUGENE A. GARGARO, JR., JOHN A. :
MORGAN, BRIAN P. CAMPBELL, :
HELMUT F. STERN AND MASCOTECH, :
Inc., :
:
Defendants. :
:
- - - - - - - - - - - - - - - - - - - - - - X
Plaintiff, by her attorneys, alleges upon information and belief,
except as to paragraph 1 which plaintiff alleges upon knowledge, as follows:
1. Plaintiff Charlene Blue is a stockholder of defendant TriMas
Corporation ("TriMas" or the "Company").
2. Defendant TriMas is a corporation duly organized and existing
under the laws of the state of Delaware, with its principal offices located at
315 East Eisenhower Parkway, Ann Arbor, Michigan 48108. TriMas is a
diversified manufacturer of industrial container closures, specialty
dispensing and packaging products, pressurized gas cylinders, specialty
industrial gaskets, towing systems products, specialty fasteners and other
products, sold in commercial, industrial and consumer niche markets. As of
October 31, 1997, there were over 41 million shares of TriMas common stock
outstanding.
3. Defendant MascoTech, Inc., ("MascoTech") is a corporation
duly organized and existing under the laws of the State of Delaware with its
principal offices located at 21001 Van Born Road, Taylor, Michigan 48180.
MascoTech manufacturers custom engineered industrial products for the
transportation, architectural, energy and defense industries, including engine
components, modular office panels, cartridge cases and security grills.
MascoTech owns approximately 15.2 million shares of TriMas stock, representing
approximately 37 percent of the Company's total shares outstanding. In
addition, certain MascoTech affiliates own approximately 3.4 million shares of
TriMas stock, representing approximately 8 percent of the Company's total
shares outstanding.
4. Defendant Richard A. Manoogian is the Chairman of the
Company's Board of Directors. Manoogian is also the Chairman and Chief
Executive Officer of MascoTech.
5. Defendant Herbert S. Amster is a Director of TriMas.
6. Defendant Eugene A. Gargaro, Jr. is a Directors of TriMas
and the Secretary of MascoTech.
7. Defendant John A. Morgan is a Director of TriMas and a
Director of MascoTech.
8. Defendant Brian P. Campbell is a Director of TriMas and the
Company's President.
9. Defendant Helmut F. Stern is a Director of TriMas.
10. The defendants named in paragraphs 4 through 9 are sometimes
collectively referred to herein as the "Individual Defendants."
11. The Individual Defendants as officers and/or directors of
TriMas have a fiduciary relationship and responsibility to plaintiff and the
other common public stockholders of TriMas and owe to plaintiff and the other
class members the highest obligations of good faith, loyalty, fair dealing,
due care and candor.
CLASS ACTION ALLEGATIONS
------------------------
12. Plaintiff brings this action on her own behalf and as a
class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on
behalf of all common stockholders of TriMas, or their successors in interest,
who are being and will be harmed by defendants' actions described below (the
"Class"). Excluded from the Class are defendants herein and any person, firm,
trust, corporation, or other entity related to or affiliated with any of
defendants.
13. This action is properly maintainable as a class action
because:
a. The Class is so numerous that joinder of all members is
impracticable. There are hundreds of TriMas stockholders of record who are
located throughout the United States;
b. There are questions of law and fact which are common to
the Class and which predominate over questions affecting any individual Class
members, including, whether defendants have engaged or are continuing to act
in a manner calculated to benefit themselves at the expense of the TriMas
public stockholders; and whether plaintiff and the other Class members would be
irreparably damaged if the defendants are not enjoined in the manner described
below:
c. Plaintiff is committed to prosecuting this action and
has retained competent counsel experienced in litigation of this nature. The
claims of plaintiff are typical of the claims of the other members of the
Class and plaintiff has the same interests as the other members of the Class.
Accordingly, plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class; and
d. Plaintiff anticipates that there will be no difficulty
in the management of this litigation.
14. For the reasons stated herein, a class action is superior to
over available methods for the fair and efficient adjudication of this
controversy and the requirements of Rule 23 of the Chancery Court Rules are
satisfied.
CLAIM FOR RELIEF
----------------
15. TriMas is a Delaware corporation that manufactures industrial
container closures, specialty dispensing and packaging products, pressurized
gas cylinders, specialty industrial gaskets, towing systems products, specialty
fasteners and other products, sold in commercial, industrial and consumer niche
markets. As of October 31, 1997, there were over 41 million shares of TriMas
common stock outstanding.
16. MascoTech currently owns approximately 37 percent of the
outstanding common stock of TriMas, and MascoTech affiliates currently own an
additional 8 percent of the Company's outstanding common stock.
17. On December 11, 1997, it was reported that the respective
boards of TriMas and MascoTech agreed to MascoTech's acquisition of the
remaining shares of TriMas common Stock it does not already own for $34.50 per
share in cash.
18. As set forth above, TriMas has 6 board members whose
loyalties are, at best, divided in the instant transaction and cannot be
expected to act in the best interest of TriMas's stockholders.
19. The purpose of the proposed acquisition is to enable
MascoTech to acquire the shares of TriMas it does not already own, as well as
TriMas's valuable assets for MascoTech's own benefit at the expense of
TriMas's public stockholders.
20. The proposed acquisition comes at a time when TriMas has
performed well and MascoTech expects it will continue to perform well because
it is already well-positioned to do so.
21. MascoTech has timed this transaction to capture TriMas's
future potential and use it to their own ends without paying an adequate or
fair price for the Company's remaining shares.
22. Amidst this backdrop of positive and improving financial
position and increased prospects for growth, MascoTech made an offer at $34.50
for each share of TriMas common stock. The offer made by MascoTech - - and
already accepted by the Trimas's Board of Directors - - represents a woefully
inadequate premium over the current price of TriMas common stock.
23. The Individual Defendants and MascoTech are in a position of
control and power over the TriMas's stockholders and have access to internal
financial information about TriMas, its true value, expected increase in true
value and the benefits to MascoTech of 100 percent ownership of TriMas to which
plaintiff and the Class members are not privy. Defendants are using their
positions of power and control to benefit MascoTech in this transaction, to the
detriment of the TriMas common stockholders.
24. In proposing the merger, MascoTech and the Individual
Defendants have committed or threatened to commit the following acts to the
detriment and disadvantage of TriMas public stockholders:
a. They are undervalued the TriMas common stock by
ignoring the full value of its assets and future prospects. The proposed
merger consideration does not reflect the value of TriMas's valuable assets;
and
b. They timed the announcement of the proposed buyout to
place an artificial lid on the market price of TriMas's common stock to
justify an exchange ration which is unfair to TriMas's public stockholders.
25. The Individual Defendants have clear and material conflicts
of interest and are acting to better the interests of MascoTech and themselves
at the expense of TriMas's public stockholders.
26. In light of the foregoing, the Individual Defendants must,
as their fiduciary obligations require:
o undertake an appropriate evaluation of TriMas's worth
as an acquisition candidate;
o act independently so that the interests of TriMas's
public stockholders will be protected, including but
not limited to the retention of independent advisors
and the appointment of a Special Committee of some or
all of the members of the TriMas's board to consider
the MascoTech offer and negotiate with MascoTech on
behalf of TriMas's minority stockholders;
o adequately ensure that no conflicts of interest exist
between defendants' own interests and their fiduciary
obligation to maximize stockholder value or, if such
conflicts exist, to ensure that all conflicts be
resolved in the best interests of TriMas's public
stockholders; and
o if a merger transaction is a to go forward, require
that it be approved by a majority of the TriMas's
stockholders.
27. As a result of defendants' failure to take such steps to
date, plaintiff and the other members of the Class have been and will be
damaged in that they have not and will not receive their proportionate share
of the value of the Company's assets and business, and have been and will be
prevented from obtaining a fair price for their common stock.
28. Defendants, in failing to disclose the material non-public
information in their possession as to the value of TriMas's assets, the full
extent of the future earnings potential of TriMas and its expected increase in
profitability, are engaging in self-dealing, are not acting in good faith
toward plaintiff and the other members of the Class, and have breached and are
breaching their fiduciary duties to the members of the Class.
29. As a result of the defendants' unlawful actions, plaintiff
and the other members of the Class will be irreparably harmed in that they
will not receive their fair portion of the value of TriMas's assets and
business and will be prevented from obtaining the real value of their equity
ownership of the Company. Unless the proposed merger is enjoined by the
Court, defendants will continue to breach their fiduciary duties owned to
plaintiff and the members of the Class, will no engage in arm's length
negotiations on the merger terms, and will not supply to TriMas's public
stockholders sufficient information to enable them to cast informed votes on
the proposed merger and may consummate the proposed merger, all to the
irreparable harm of the the members of the Class.
30. Plaintiff and the other members of the Class have no adequate
remedy at law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
A. Ordering that this action may be maintained as a class
action and certifying plaintiff as the Class representative;
B. Declaring that defendants have breached their fiduciary and
other duties to plaintiff and the other members of the Class;
C. Entering an order requiring defendants to take the steps set
forth hereinabove;
D. Preliminarily and permanently enjoining the defendants and
their counsel, agents, employees and all persons acting under, in concert
with, or for them, from proceeding with, consummating or closing the proposed
merger transaction;
E. In the event the proposed merger is consummated, rescinding
it and setting it aside;
F. Awarding compensatory damages against defendants individually
and severally in an amount to be determined at trial, together with prejudgment
interest at the maximum rate allowable by law;
G. Awarding costs and disbursements, including plaintiff's
counsel's fees and experts' fees; and
H. Granting such other and further relief as to the Court may
seem just and proper.
Dated: December 11, 1997
ROSENTHAL, MONHAIT, GROSS &
GODDESS, P.A.
By: /s/ Norman M. Monhait
-----------------------------
919 North Market Street
Suite 1401
Mellon Bank Center
Wilmington, Delaware 19801
(302) 656-4433
OF COUNSEL:
ABBEY, GARDY, & SQUITIERI, LLP
212 East 39th Street
New York, New York 10016
(212) 889-3700
