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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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AMERICAN SAFETY RAZOR COMPANY
(NAME OF SUBJECT COMPANY)
AMERICAN SAFETY RAZOR COMPANY
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, $.01 PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
029362100
(CUSIP NUMBER OF CLASS OF SECURITIES)
THOMAS H. QUINN
CHAIRMAN & CHIEF EXECUTIVE OFFICER
ONE RAZOR BLADE LANE
P.O. BOX 500
VERONA, VIRGINIA 24482-0500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF PERSON FILING STATEMENT)
WITH COPIES TO:
JAMES B. CARLSON, ESQ.
MAYER, BROWN & PLATT
1675 BROADWAY
NEW YORK, NEW YORK 10019-5820
(212) 506-2500
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject entity is American Safety Razor Company, a Delaware
corporation (the "Company"), which has its principal executive offices at One
Razor Blade Lane, P.O. Box 500, Virginia 24482-0500. The class of equity
securities to which this statement relates is the common stock, $.01 par value
per share, of the Company (the "Shares").
ITEM 2. TENDER OFFER OF BIDDER
This Solicitation/Recommendation Statement on Schedule 14D-9 (this "Statement")
relates to the cash tender offer (the "Offer") by RSA Acquisition Corp., a
Delaware corporation ("Purchaser"), a wholly-owned subsidiary of RSA Holdings
Corp. of Delaware ("Parent"), a Delaware corporation disclosed in a tender Offer
Statement on Schedule 14D-1, dated February 22, 1999 (the "Schedule 14D-1"),
whereby Purchaser has offered to purchase all of the outstanding Shares held by
the stockholders of the Company (the "Stockholders") at a price of $14.125 per
Share (such price, or any such higher price as may be paid in the Offer, being
referred to herein as the "Offer Price"), net to the Stockholders in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated February 22, 1999 (the "Offer") and in the
related Letter of Transmittal (which together with any amendments or supplements
thereto constitute the "Offer Documents"), each of which is incorporated by
reference herein. Parent is a wholly owned subsidiary of J.W. Childs Equity
Partners II, L.P. ("J.W. Childs").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED
AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES (THE "MINIMUM SHARES") OF COMMON STOCK WHICH CONSTITUTES MORE THAN 50% OF
THE VOTING POWER OF AMERICAN SAFETY RAZOR COMPANY (DETERMINED ON A FULLY DILUTED
BASIS) ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION"). THE OFFER IS ALSO
SUBJECT TO OTHER TERMS AND CONDITIONS. SEE "OFFER CONDITIONS" UNDER ITEM 3.
The Company has represented and warranted to Purchaser and Parent in the Merger
Agreement (as defined below) that, as of February 12, 1999, there were (i)
12,110,049 Shares issued and outstanding, and (ii) 750,000 Shares reserved
pursuant to the exercise of options (of which there are options to purchase
464,400 Shares outstanding). The Merger Agreement provides, among other things,
that prior to the Effective Time or Termination of the Merger Agreement the
Company will not, without the prior written consent of Parent, issue any
additional Shares (except upon the exercise of outstanding options and
warrants). Based on the foregoing, the Company believes that the Minimum
Condition will be satisfied if a majority of the outstanding Shares are validly
tendered and not withdrawn prior to the expiration of the Offer. Holders of
approximately 2,311,654 (approximately 19%) of the outstanding Shares and have
agreed to tender their Shares pursuant to the Offer. See "Shareholders
Agreement" under Item 3.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
February 12, 1999 (the "Merger Agreement"), by and among the Parent, the
Purchaser and the Company. Pursuant to the Merger Agreement and the Delaware
General Corporation Law ("DGCL"), as soon as practicable after the completion of
the Offer and satisfaction or waiver, if permissible, of all conditions to the
Merger, the Purchaser will be merged with and into the Company (the "Merger"),
and the Company will be the
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surviving corporation in the Merger and be a wholly-owned subsidiary of the
Parent (the "Surviving Corporation"). At the effective time of the Merger (the
"Effective Time"), each Share then outstanding (other than any Shares held by
(i) Parent, the Purchaser, any wholly-owned subsidiary of the Parent or the
Purchaser, in the treasury of the Company or by any wholly-owned subsidiary of
the Company, which Shares, by virtue of the Merger, shall be canceled, and shall
cease to exist with no payment being made with respect thereto, and (ii) Shares
held by the Stockholders of the Company who have properly perfected their
dissenters rights if any, under the DGCL), will be converted into the right to
receive the Offer Price, net to the seller in cash, without interest. The Merger
Agreement is incorporated by reference herein and is summarized in Item 3 of
this Schedule 14D-9.
Consummation of the Merger is conditioned upon, among other things, the approval
and adoption by the requisite vote of Stockholders of the Merger Agreement, if
required by applicable law. Under the DGCL, if a corporation owns at least 90%
of the outstanding shares of each class of stock of a corporation's stock, the
corporation holding such stock may merge such corporation into itself, or itself
into such corporation, without any action or vote on the part of the board of
directors or the shareholders of such other corporation (a "short-form merger").
In the event that Purchaser acquires in the aggregate at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, then, at the election of
Parent, a short-form merger could be effected without any further approval of
the Company's Board of Directors (the "Company's Board") or the Stockholders.
Pursuant to the Merger Agreement, following the purchase of Shares in the Offer,
the Parent has the right to designate directors on the Company's Board. See the
Company's Information Statement (the "Information Statement") pursuant to
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder, which is attached
as Annex A hereto and incorporated herein by reference.
According to the Schedule 14D-1, the principal office of the Parent and
Purchaser is located at c/o J.W. Childs Equity Partners II, L.P., One Federal
Street, 21st Floor, Boston, Massachusetts 02110.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Statement, is set forth in Item 1 above. All information contained in this
Statement or incorporated herein by reference concerning the Parent, the
Purchaser or their respective officers, directors, representatives or
affiliates, or actions or events with respect to any of them, was provided by
the Parent or the Purchaser, respectively, and the Company takes no
responsibility for such information.
(b) Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates and its executive officers, directors or affiliates
are described below in Item 6(a) to this Schedule 14D-9 and/or in the
Information Statement under the captions "Executive Compensation", "Certain
Transactions" or "Employment Agreements." In addition, certain members of the
Company's Board and management have interests in the Offer and the Merger that
are in addition to, and not necessarily alligned with, the interests of the
other Stockholders. These interests are described below in Item 6(a) to this
Schedule 14D-9 and/or in the Information Statement under the caption "Executive
Compensation", "Certain Transactions" or "Employment Agreements". Except as
described herein, there are no material contracts, agreements, arrangements or
understand-
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ings between the Company or its affiliates and the Parent, the Purchaser or any
of their respective executive officers, directors or affiliates.
THE MERGER AGREEMENT; THE SHAREHOLDERS AGREEMENT. The following is a summary of
the Merger Agreement and the Shareholders Agreement among the Parent, the
Purchaser and certain Stockholders (the "Principle Holders") dated as of
February 12, 1999 (the "Shareholders Agreement"), which summaries are qualified
in their entirety by reference to the Merger Agreement, the Shareholders
Agreement and such other agreements which are filed as exhibits to the Schedule
14D-9.
TERMS OF THE OFFER, EXPIRATION DATE. 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), the Purchaser will accept
for payment and pay for all Shares validly tendered on or prior to the
Expiration Date and not properly withdrawn. The term "Expiration Date" means
12:00 Midnight, New York City time, on Friday, March 19, 1999, unless and until
the Purchaser, in its 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 the Purchaser, shall expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE MINIMUM
CONDITION AND THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED BY
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1996, AS AMENDED, AND THE
REGULATIONS THEREUNDER (THE "HSR ACT"). THE PURCHASER RESERVES THE RIGHT (BUT
SHALL NOT BE OBLIGATED) TO WAIVE ANY OR ALL OF SUCH CONDITIONS, BUT SUBJECT TO
THE TERMS OF THE MERGER AGREEMENT. THE OFFER IS NOT CONDITIONED ON THE RECEIPT
OF FINANCING. SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT INCLUDING THE
PROVISIONS OF THE MERGER AGREEMENT SET FORTH IN THE NEXT PARAGRAPH AND THE
APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"), THE PURCHASER RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO
WAIVE ANY OR ALL CONDITIONS TO THE OFFER (OTHER THAN THE MINIMUM CONDITION) AND
TO MAKE ANY OTHER CHANGES IN THE TERMS AND CONDITIONS OF THE OFFER. SUBJECT TO
THE PROVISIONS OF THE MERGER AGREEMENT, INCLUDING THE PROVISIONS OF THE MERGER
AGREEMENT SET FORTH IN THE NEXT PARAGRAPH, AND THE APPLICABLE RULES AND
REGULATIONS OF THE COMMISSION, IF BY THE EXPIRATION DATE ANY OR ALL OF SUCH
CONDITIONS TO THE OFFER HAVE NOT BEEN SATISFIED, THE PURCHASER RESERVES THE
RIGHT (BUT SHALL NOT BE OBLIGATED) TO (I) TERMINATE THE OFFER AND RETURN ALL
TENDERED SHARES TO TENDERING STOCKHOLDERS, (II) WAIVE SUCH UNSATISFIED
CONDITIONS AND PURCHASE ALL SHARES VALIDLY TENDERED OR (III) EXTEND THE OFFER,
AND, SUBJECT TO THE TERMS OF THE OFFER (INCLUDING THE RIGHTS OF STOCKHOLDERS TO
WITHDRAW THEIR SHARES), RETAIN THE SHARES WHICH HAVE BEEN TENDERED, UNTIL THE
OFFER, AS SO EXTENDED BY THE PURCHASER, SHALL EXPIRE.
Subject to the applicable rules and regulations of the Commission and the terms
of the Merger Agreement, the Purchaser expressly reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or not
any of the events set forth in the Offer Conditions shall have occurred or shall
have been determined by the Purchaser to have occurred, to (i) extend the period
of time during which the Offer is open and thereby delay acceptance for payment
of, and the payment for, any Shares, by giving oral or written notice of such
extension to Continental Stock Transfer & Trust Co., which is acting as the
Depositary (in such capacity, the "Depositary") and (ii) amend the Offer in any
respect by giving oral or written notice of such amendment to the Depositary.
Under the terms of the Merger Agreement, however, without the prior written
consent of the Company, the Purchaser will not decrease the price per Share
payable in the Offer, change
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the form of consideration payable in the Offer, decrease the number of Shares
sought to be purchased in the Offer, change the Offer conditions, waive the
Minimum Condition, impose additional conditions to the Offer, except as
otherwise provided in the Merger Agreement, extend the initial Expiration Date
or amend any other terms of the Offer in any manner adverse to the holders of
any Shares. The Purchaser shall have no obligation to pay interest on the
purchase price of tendered Shares, including in the event the Purchaser
exercises its right to extend the period of time during which the Offer is open.
The rights reserved by the Purchaser in this paragraph are in addition to the
Purchaser's rights to terminate the Offer pursuant to the Offer Conditions set
forth below. The Merger Agreement provides that, subject to the terms and
conditions of the Offer and the Merger Agreement and the satisfaction or waiver
(to the extent permitted) of all the conditions to the Offer as of the
Expiration Date, the Purchaser will accept for payment and pay for all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the Expiration Date. If the Offer Conditions are not satisfied or waived
by the Purchaser as of the Expiration Date, Purchaser will extend the Offer from
time to time for the shortest time periods permitted by law and which it
reasonably believes are necessary until the consummation of the Offer; provided
that notwithstanding the satisfaction of the Offer Conditions, the Parent and
the Purchaser shall have the right, after consultation with the Company, to
extend the Offer until up to April 2, 1999, notwithstanding the prior
satisfaction of the conditions to the Offer.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, and such announcement in
the case of an extension will be made in accordance with Rule 14e-1(d) under the
Exchange Act, no later than 9:00 A.M., New York City time, on the next business
day after the previously scheduled Expiration Date. Without limiting the manner
in which the Purchaser may choose to make any public announcement, except as
provided by applicable law (including Rules 14d-4(c) and 14(d)-6(d) under the
Exchange Act, which require that material changes be promptly disseminated to
holders of Shares), the Purchaser shall have no obligation to publish, advertise
or otherwise communicate any such public announcement other than by issuing a
release to the Dow Jones News Service.
If the Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, the Purchaser will disseminate
additional tender offer material and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality, of the changes. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought, a minimum
ten business day period from the day of such change is generally required to
allow for adequate dissemination to stockholders. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday, or a federal holiday
and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York
City time.
The Company has provided the Purchaser with a list of Stockholders 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 and other
relevant materials will be mailed by the Purchaser to record holders of Shares
and furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the list of
Stockholders or, if applicable, who are listed as participants in a
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clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
THE OFFER. The Merger Agreement provides for the commencement of the Offer as
soon as practicable, and in any event within five business days from the date of
the execution of the Merger Agreement. The obligation of the Purchaser to accept
for payment or pay for any Shares tendered pursuant to the Offer is subject to
the satisfaction or waiver (to the extent permitted by the Merger Agreement) of
the conditions set forth in the Offer Conditions. The Parent or the Purchaser
may waive any such condition in whole or in part and make any other changes in
the terms and conditions of the Offer, subject to the terms of the Merger
Agreement.
Under the terms of the Merger Agreement, without the prior written consent of
the Company, the Purchaser will not decrease the price per Share payable in the
Offer, change the form of consideration payable in the Offer, decrease the
number of Shares sought to be purchased in the Offer, change the Offer
Conditions, waive the Minimum Condition, impose additional conditions to the
Offer, except as otherwise provided in the Merger Agreement, extend the initial
Expiration Date or amend any other terms of the Offer in any manner adverse to
the Stockholders. The Purchaser shall have no obligation to pay interest on the
purchase price of tendered Shares, including in the event the Purchaser
exercises its right to extend the period of time during which the Offer is open.
The rights reserved by the Purchaser in this paragraph are in addition to the
Purchaser's rights to terminate the Offer pursuant to the Offer Conditions. The
Merger Agreement provides that, subject to the terms and conditions of the Offer
and the Merger Agreement and the satisfaction or waiver (to the extent
permitted) of all the Offer Conditions as of the Expiration Date, the Purchaser
will accept for payment and pay for all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the Expiration
Date. If the Offer Conditions are not satisfied or waived by the Purchaser as of
the Expiration Date, the Purchaser will extend the Offer from time to time for
the shortest time periods permitted by law and which it reasonably believes are
necessary until the consummation of the Offer; provided that notwithstanding the
satisfaction of the Offer Conditions, the Parent and the Purchaser shall have
the right, after consultation with the Company, to extend the Offer until up to
April 2, 1999, notwithstanding the prior satisfaction of the Offer Conditions.
OFFER CONDITIONS. Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14-e-1(c) under the Exchange
Act (relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for any Shares
tendered pursuant to the Offer, and may postpone the acceptance for payment or,
subject to the restriction referred to above, payment for any Shares tendered
pursuant to the Offer, and may amend or terminate the Offer (whether or not any
shares have theretofore been purchased or paid for) to the extent permitted by
the Merger Agreement if (i) the Minimum Condition is not satisfied, or (ii) at
any time on or after the date of the Merger Agreement and prior to the
acceptance for payment of Shares, any of the following conditions occurs or has
occurred:
a. there shall have been instituted or pending any action or proceeding brought
by any governmental authority before any federal or state court, or any
order or preliminary or permanent injunction entered and continuing in any
action or proceeding before any federal or state court or governmental,
administrative or regulatory authority or agency, or any statute, rule,
regulation, legislation, interpretation, judgment or order enacted,
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entered, enforced, promulgated, amended, issued and continuing and
applicable to the Parent, the Purchaser, the Company or any subsidiary or
affiliate of the Purchaser or the Company or the Offer or the Merger, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency which would reasonably be expected to have
the effect of: (i) making illegal, or otherwise directly or indirectly
restraining or prohibiting or making materially more expensive the making of
the Offer, the acceptance for payment of, or payment for, the Shares by the
Parent or the Purchaser or the consummation of any of the transactions
contemplated by the Merger Agreement; (ii) prohibiting or materially
limiting the ownership or operation by the Company or any of its
subsidiaries or the Parent, the Purchaser or any of the Parent's affiliates
of all or any material portion of the business or assets of the Company or
any of its subsidiaries, taken as a whole, or any of its affiliates or
compelling Parent, Purchaser or any of the Parent's affiliates to dispose of
or hold separate all or any material portion of the business or assets of
the Company or any of its subsidiaries or Parent, or any of its affiliates,
as a result of the transactions contemplated by the Offer or the Merger
Agreement; or (iii) imposing or confirming material limitations on the
ability of the Parent, the Purchaser or any of the Parent's affiliates
effectively to acquire or hold or to exercise full rights of ownership of
Shares, including without limitation the right to vote any Shares acquired
or owned by the Parent or the Purchaser or any of its affiliates on all
matters properly presented to the Stockholders, including without limitation
the adoption and approval of the Merger Agreement and the Merger or the
right to vote any shares of capital stock of any subsidiary directly or
indirectly owned by the Company; or (iv) requiring material divestiture by
the Parent or the Purchaser of any Shares;
b. there shall have occurred and be continuing (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in the United States,
(ii) a material adverse change in or material disruption of conditions in
the market for syndicated bank credit facilities or the financial, banking,
or capital markets generally, (iii) a commencement and continuation of a war
or armed hostilities or other national or international calamity directly or
indirectly involving the United States which would have a Material Adverse
Effect (as defined below) on the Company or (iv) in the case of any of the
foregoing existing at the time of commencement of the Offer, a material
acceleration or worsening thereof;
c. (i) it shall have been publicly disclosed or the Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 25% of the outstanding Shares has been acquired by any
corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act), other than the Parent or its
affiliates, or the Principal Holders or any of their respective affiliates
(but only with respect to the Shares that they beneficially own on the date
of the Merger Agreement), or (ii)(A) the Company's Board or any committee
thereof shall have withdrawn or modified in a manner adverse to the Parent
or the Purchaser the approval or recommendation of the Offer, the Merger or
the Merger Agreement, or approved or recommended any Takeover Proposal or
any other acquisition of Shares other than the Offer and the Merger, (B) any
such corporation, partnership, person or other entity or group shall have
entered into a definitive agreement or an agreement in principle with the
Company with respect to an Acquisition Transaction, or (C) the
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Company's Board or any committee thereof shall have resolved to do any of the
foregoing;
d. any of the representations and warranties of the Company set forth in the
Merger Agreement that are qualified as to materiality or Material Adverse
Effect shall not be true and correct, or any such representations and
warranties that are not so qualified shall not be true and correct in any
material respect, in each case as if such representations and warranties
were made at the time of such determination;
e. the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
f. the Merger Agreement shall have been terminated in accordance with its terms
or the Offer shall have been terminated with the consent of the Company; or
g. any waiting periods under the HSR Act of applicable to the purchase of
Shares pursuant to the Offer shall not have expired or been terminated, or
any material approval, permit, authorization or consent of any domestic or
foreign governmental, administrative or regulatory agency (federal, state,
local, provincial or otherwise) shall not have been obtained on terms
satisfactory to the Parent in its reasonable discretion;
and, in addition, which, in the case of (a) through (g), in the reasonable, good
faith judgment of the Parent or the Purchaser, and regardless of the
circumstances (including any action or inaction by the Parent or the Purchaser
or any of their affiliates) giving rise to any such conditions, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment of
or payment for Shares or to proceed with the Merger.
WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless theretofore accepted
for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after April 22, 1999. If the Purchaser extends the Offer, is delayed in its
acceptance for payment of Shares or is unable to purchase Shares validly
tendered pursuant to the Offer for any reason, then without prejudice to the
Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf
of the 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. Any such delay in acceptance for payment will be
accompanied by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary. Any
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Share certificates to be withdrawn have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and the signatures on the notice of withdrawal must be guaranteed
by a bank, broker, dealer, credit union, savings association or other entity
which is a member in good standing of the Securities Transfer Agents Medallion
Program (each of the foregoing being referred to as an "Eligible Institution"),
unless such Shares have been tendered for the account of any Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at a book entry transfer of such Shares into the Depositary's
account at the
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Depositary Trust Company to be credited with the withdrawn Shares, in which case
a notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. The Purchaser
reserves the absolute right to reject any and all withdrawals determined by it
not to be in proper form. The Purchaser also reserves the absolute right to
waive any defect or irregularity in any withdrawal of Shares of any particular
Stockholder whether or not similar defects or irregularities are waived in the
case of the other Stockholders. No withdrawal of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of the Purchaser, the Parent, any of their affiliates or assigns,
Donaldson, Lufkin & Jenrette Securities Corporation and NationsBanc Montgomery
Securities LLC, each of which is acting as Dealer Manager, the Depositary,
MacKenzie Partners, Inc. or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Withdrawals of Shares may not be rescinded. 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 herein.
COMPOSITION OF THE BOARD OF DIRECTORS AFTER THE OFFER. The Merger Agreement
provides that, promptly upon the consummation of the Offer, and from time to
time thereafter, Parent shall be entitled to designate such number of directors
(the "Designees"), rounded up to the next whole number, on the Company's Board
as is equal to the product of the total number of directors on the Company's
Board (determined after giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent or its affiliates bears to the total number of
fully-diluted Shares then outstanding, and the Company shall, promptly take all
actions necessary to cause the Designees to be so elected, including, if
necessary, seeking the resignations of one or more existing directors or
increasing the size of the Company's Board; provided, however, that prior to the
Effective Time, the Company's Board shall always have at least three members who
are neither officer, directors, Stockholders or Designees of the Purchaser or
any of its affiliates.
THE MERGER. The Merger Agreement provides that, upon the terms and subject to
the satisfaction or waiver of the conditions thereof (and including those
described in Section 15) and in accordance with DGCL, at the Effective Time, the
Purchaser shall be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser shall cease and the Company shall
continue as the surviving corporation. At the Parent's election, any direct or
indirect subsidiary of the Parent other than the Purchaser may be merged with
and into the Company instead of the Purchaser.
CERTIFICATE OF INCORPORATION, BY-LAWS, DIRECTORS AND OFFICERS AFTER THE
MERGER. The Merger Agreement provides that the Amended and Restated Certificate
of Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended in accordance with its terms and applicable law. At the
Effective Time, the By-Laws of the Purchaser shall be the By-Laws of the
Surviving Corporation until thereafter amended in accordance with their terms
and applicable law. The Merger Agreement further provides that the directors of
the Purchaser immediately prior to the Effective Time shall be the
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initial directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, in
each case until their respective successors are duly elected and qualified, or
their earlier death, resignation or removal; provided that, promptly upon the
payment by the Purchaser for Shares pursuant to the Offer, any partners,
officers or affiliates of The Jordan Company ("TJC") who are also officers of
the Company immediately prior to the Effective Time shall resign as officers of
the Company.
CONVERSION OF SHARES. Pursuant to the Merger Agreement, at the Effective Time,
each Share issued and outstanding immediately prior to the Effective Time (other
than any Shares held by the Parent, the Purchaser, any wholly-owned subsidiary
of Parent or the Purchaser, in the treasury of the Company or by any wholly
owned subsidiary of the Company, which Shares, by virtue of the Merger, shall be
canceled and shall cease to exist with no payment being made with respect
thereto, and other than Dissenting Shares (as defined below)) shall be converted
into the right to receive in cash the Offer Price, payable to the holder
thereof, and without interest, upon surrender of the certificate formerly
representing such Share.
CONVERSION OF OPTIONS. The Merger Agreement provides that, immediately prior to
the Effective Time, each outstanding stock option granted under the Company's
stock option plan, whether or not then exercisable or vested, shall become fully
exercisable and vested and shall be canceled by the Company, and the holder
thereof shall be entitled to receive immediately following the Effective Time
from the Company in consideration for such cancellation an amount in cash equal
to the product of (a) the excess of the Offer Price over the exercise price per
Share thereof and (b) the number of Shares subject to such stock option (net of
taxes required by law to be withheld with respect thereto).
DISSENTING SHARES. The Merger Agreement provides that Shares outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of or consented to the Merger and who demands in writing appraisal of
such Shares in accordance with Section 262 of the DGCL if such Section 262
provides for appraisal rights for such Shares in the Merger ("Dissenting
Shares") shall not be converted into the right to receive the Offer Price, but
shall be entitled to receive the consideration as shall be determined pursuant
to Section 262 of the DGCL, unless and until such holder fails to perfect or
withdraws or otherwise loses his right to appraisal and payment under the DGCL.
If, after the Effective Time, any such holder fails to perfect or withdraws or
loses his right to appraisal, such Dissenting Shares shall thereupon be treated
as if they had been converted as of the Effective Time into the right to receive
the Offer Price, if any, to which such holder is entitled, without interest or
dividends thereon. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, withdrawals of such demands and
any other instruments served pursuant to the DGCL and received by the Company
and, prior to the Effective Time, Parent shall have the right to direct all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
STOCKHOLDERS MEETING. The Merger Agreement provides that if required, the
Company, acting through the Company's Board, shall, in accordance with
applicable law, (i) duly call, give notice of, convene and hold a special
meeting of its Stockholders (the "Special Meeting") as soon as practicable
following the consummation of the Offer for the purpose of considering and
taking action upon the Merger Agreement; (ii) prepare and file with,
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and use its reasonable best efforts to have cleared by, the Commission a
preliminary proxy statement relating to the Merger and the Merger Agreement and
use its reasonable efforts (x) to obtain and furnish the information required to
be included by the Commission in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, to respond promptly to any comments made by
the Commission with respect to the preliminary proxy statement and cause a
definitive proxy statement (the "Proxy Statement") to be mailed to the
Stockholders and (y) to obtain the necessary approvals of the Merger and the
Merger Agreement by the Stockholders; and (iii) subject to the fiduciary
obligations of the Company's Board under applicable law as determined in good
faith by a majority of the Company's Board based on the advice of independent
outside legal counsel, (A) include in the Proxy Statement the recommendation of
the Company's Board that the Stockholders vote in favor of the approval of the
Merger and the adoption of the Merger Agreement and the written opinion of the
Company's financial advisor that the consideration to be received by the
Stockholders of the Company pursuant to the Offer and the Merger is fair to such
Stockholders and (B) use its reasonable best efforts to obtain the necessary
adoption of the Merger Agreement. Pursuant to the Merger Agreement, Parent also
agrees that it will vote, or cause to be voted, all of the Shares then owned by
it, the Purchaser or any of its other subsidiaries in favor of the approval of
the Merger and the adoption of the Merger Agreement.
The Merger Agreement provides that, notwithstanding the foregoing, in the event
that Parent, the Purchaser or any other subsidiary of Parent shall acquire at
least 90% of the outstanding Shares pursuant to the Offer, the parties thereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the consummation of the Offer, without a
meeting of Stockholders, in accordance with Section 253 of the DGCL.
CONDUCT OF BUSINESS PENDING THE MERGER. The Company has agreed that, during the
period from the date of the Merger Agreement to the Effective Time, except
pursuant to the terms of the Merger Agreement or unless Parent shall otherwise
agree in writing, the Company will, and will cause each of its subsidiaries to
conduct its operations only in, and the Company and its subsidiaries shall not
take any action other than in, the ordinary course of business consistent with
past practice and in compliance with applicable laws. The Company has also
agreed that the Company and each of its subsidiaries shall use commercially
reasonable efforts to preserve intact their business organization, to keep
available the services of their present officers and key employees, and to
preserve their present relationships with customers, suppliers and other persons
with which they have significant business relations, except, in each case, as
would not have a Material Adverse Effect (as defined below) on the Company.
Without limiting the generality of the foregoing and except as otherwise
expressly contemplated by the Merger Agreement, the Company has agreed that the
Company and its subsidiaries shall refrain from taking various actions without
the Parent's prior written consent until the Effective Time. These prohibitions
cover, among other things, limitations on making changes to their organizational
documents, selling their capital stock, declaring or paying any dividend or
other distribution, making changes in their capital stock, increasing the
compensation payable to directors, officers and employees (except in the
ordinary course of business consistent with past practices), increasing or
granting any severance or termination pay (except to the extent required under
existing plans, policies or agreements), engaging in any material corporate
transaction, including acquisitions, incurring debt outside the ordinary course
of business consistent with past practices, entering into, renewing or amending
contracts and making capital expenditures beyond
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specified limits, selling, leasing, licensing or disposing any material assets
(outside the ordinary course of business), changing accounting or tax policies,
settling any material litigation or any litigation which relates to the
transactions contemplated by the Merger Agreement, changing the key management
structure of the Company or any of its subsidiaries, transferring or granting
any rights to intellectual property, taking any action reasonably likely to
expose the Company to any claim that the Company has violated applicable laws,
rules or regulations, adopting a plan of complete or partial dissolution or
liquidation, merger, restructuring, recapitalization or other reorganization of
the Company or any of its active subsidiaries, paying or discharging any claims,
liabilities or obligations outside the ordinary course of business consistent
with past practices, entering into any collective bargaining agreement and
taking any actions that would make any of the representations and warranties of
the Company contained in the Merger Agreement untrue and incorrect or result in
any of the Offer Conditions not being satisfied.
ACCESS TO INFORMATION. Pursuant to the Merger Agreement from the date thereof
to the Effective Time, the Company shall, and shall cause its subsidiaries, and
each of their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, provide the
Parent and the Purchaser and their respective officers, employees, counsel,
advisors and representatives and financing sources (collectively, the "Parent
Representatives") reasonable access, consistent with applicable law, at all
reasonable times to the offices and other facilities and to the books and
records of the Company and its subsidiaries, and will permit the Parent and the
Purchaser to make inspections of such as either of them may reasonably require,
and will cause the Company Representatives and the Company's subsidiaries to
furnish the Parent, the Purchaser and the Parent Representatives to the extent
available with such other information with respect to the business and
operations of the Company and its subsidiaries as the Parent and the Purchaser
may from time to time reasonably request.
EFFORTS. The Merger Agreement provides that, subject to the terms and
conditions thereof, each of the parties thereto shall use its reasonable best
efforts to ensure that the conditions set forth in the Merger Agreement are
satisfied and to consummate and make effective the transactions contemplated by
the Offer, the Merger and the Merger Agreement as promptly as practicable. The
Company shall also provide all reasonable cooperation in connection with any
financing of the Offer and the Merger.
PUBLIC ANNOUNCEMENTS. So long as the Merger Agreement is in effect, the Parent,
the Purchaser and the Company agree to consult with each other before issuing
any press release or otherwise making any public statement with respect to the
transactions contemplated by the Merger Agreement and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or any listing agreement with any securities
exchange.
EMPLOYMENT BENEFITS MATTERS. The Merger Agreement provides that from and after
the Effective Time, the Parent shall cause the Company to honor and continue to
maintain in full force and effect all employee benefit arrangements to which the
Company or any of its subsidiaries is presently a party, including but not
limited to the agreements existing on the date thereof between the Company and
certain executives of the Company, provided that nothing in the Merger Agreement
shall restrict or limit the Company's ability to amend or terminate any employee
benefit plan.
Pursuant to the Merger Agreement the Parent has agreed to cause the Company to
take such actions as are necessary so that, for a period of at least one year
from the Effective Time, employees of the Company and its subsidiaries
(excluding employees covered by
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collective bargaining agreements) will be provided cash compensation employee
benefits and incentive compensation and similar plans and programs which will
provide compensation and benefits which in the aggregate are substantially
comparable to those provided to such employees by specified employee benefit
plans; provided, however, that neither the Parent nor the Company shall have any
obligation to provide benefits substantially comparable to any plan providing
equity awards or awards based on equity awards.
The Merger Agreement further provides that if any termination or layoff of (i)
any employee as of the Effective Time as a result of the transactions
contemplated by the Merger Agreement or (ii) any employee of the Company as of
the Effective Time after the Effective Time, the Parent will cause the Company
to comply fully, if applicable, with the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN") and all other applicable foreign, federal,
state and local laws, including those prohibiting discrimination and requiring
notice to employees. The Company shall not, and shall cause its subsidiaries not
to, at any time prior to 60 days after the Effective Time, effectuate a "plant
closing" or "mass layoff" as those terms are defined in WARN affecting in whole
or in part any facility, site of employment, operating unit or employee of the
Company or any subsidiary without complying fully with the requirements of WARN.
The Parent will bear the cost of compliance with (or failure to comply with) any
such laws.
INDEMNIFICATION. The Merger Agreement provides that the Amended and Restated
Certificate of Incorporation and By-laws of the Company after the Merger shall
contain provisions no less favorable with respect to indemnification than are
set forth in the Amended and Restated Certificate of Incorporation and By-laws
of the Company prior to the Merger, and these provisions are not to be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of individuals
who at the Effective Time were directors, officers or employees of the Company.
The Merger Agreement also provides that for six years from and after the
Effective Time, the Parent agrees that it will or will cause the Company to
indemnify and hold harmless each present and former director, officer and
employee of the Company, against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") (but only to the extent such Costs are not otherwise
covered by insurance and paid) incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time, including, in any event, in connection with the
Offer, the Merger and the Merger Agreement, whether asserted or claimed prior
to, at or after the Effective Time, to the fullest extent permitted under
applicable law (and the Parent shall, or shall cause the Company to, also
advance expenses as incurred to the fullest extent permitted under applicable
law, provided the person to whom expenses are advanced provides an undertaking
to repay such advances if it is ultimately determined that such person is not
entitled to indemnification).
The Merger Agreement also provides that from and after the Effective Time, the
Parent agrees that the Company shall use its reasonable best efforts to cause to
be maintained in effect for not less than six years from the Effective Time the
current policies of the directors' and officers' liability insurance maintained
by the Company with respect to matters occurring prior to the Effective Time;
provided, that the Company may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous and
provided that such substitution shall not result in any gaps or
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lapses in coverage with respect to matters occurring prior to the Effective
Time; and provided, further, that the Company shall not be required to pay an
annual premium in excess of 200% of the last annual premium paid by the Company
prior to the date thereof and, if the Company is unable to obtain the insurance
required by the Merger Agreement it shall obtain as much comparable insurance as
possible for an annual premium equal to such maximum amount.
NO SOLICITATION OF TRANSACTIONS. The Merger Agreement provides that prior to
the Effective Time, the Company shall not, and shall not authorize or permit any
of its or its subsidiaries' directors, officers, employees, agents, advisors or
representatives, directly or indirectly, to (a) solicit, initiate or encourage
or knowingly facilitate the submission of any inquiries or the making of any
proposal (a "Takeover Proposal") with respect to any acquisition or purchase of
a substantial amount of the assets of the Company and its subsidiaries, taken as
a whole, or of over 15% of any class of equity securities or convertible
securities of the Company or any tender offer (including a self tender offer) or
exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities or convertible securities
of the Company or any of its subsidiaries, or any merger, consolidation or
business combination, recapitalization, reclassification, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries other than the transactions contemplated by the Merger Agreement,
the Shareholders Agreement or any other transaction the consummation of which
would reasonably be expected to impede, interfere with, prevent or materially
delay the Offer or the Merger or which would reasonably be expected to
materially dilute the benefits to the Parent and the Purchaser of the Offer or
the Merger (each an "Acquisition Transaction"), (b) negotiate, explore or
otherwise participate in discussions with any person (other than Parent,
Purchaser or their respective directors, officers, employees, agents and
representatives), and including any parties with which the Company has
previously engaged in discussions or negotiations with respect to any
Acquisition Transaction, or furnish to any person (other than the Parent, the
Purchaser or their respective directors, officers, employees, agents and
representatives) any information with respect to its business, properties or
assets or any of the foregoing, or otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by any
other person (other than the Parent, the Purchaser or their respective
directors, officers, employees, agents and representatives) to do or seek any of
the foregoing or (c) enter into any agreement, arrangement or understanding with
respect to, or endorse, any Takeover Proposal; provided, however, that the
foregoing shall not prohibit the Company from (i) prior to the consummation of
the Offer (A) furnishing information pursuant to a confidentiality letter
(provided for informational proposes to the Parent), with terms no less
favorable than the Confidentiality Agreement (as defined in the Merger
Agreement), concerning the Company and its businesses, properties or assets to a
third party who has made an unsolicited bona fide written Takeover Proposal, or
(B) engaging in discussions or negotiations with such a third party who has made
an unsolicited bona fide written Takeover Proposal or (ii) following receipt of
an unsolicited bona fide written Takeover Proposal but prior to consummation of
the Offer, failing to make or withdrawing or modifying its recommendation of the
Merger Agreement, but in each case referred to in the foregoing clauses (i) and
(ii) only to the extent that the Board of Directors of the Company shall have
concluded in good faith, on the basis of advice from outside legal counsel and
the Company's financial advisors, that (A) such Takeover Proposal is more
favorable to the Stockholders of the Company than the transactions contemplated
by the Merger Agreement (taking into account all legal, financial, regulatory
and other aspects of the proposal and the person making the proposal) and (B)
such action is necessary in
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order for the Board of Directors to comply with its fiduciary duties to the
stockholders of the Company under applicable law; provided, further, that the
Board of Directors of the Company shall not take any of the foregoing actions
referred to in clauses (i) and (ii) until after notice to the Parent and the
Purchaser with respect to such action and the Board of Directors shall continue
to advise the Parent and the Purchaser after taking such action. Nothing in the
Merger Agreement shall prevent the Company's Board from taking, and disclosing
to the Stockholders, a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any tender offer. In addition,
if the Company's Board receives an unsolicited Transaction Proposal or any
inquiry with respect to or which could lead to any Takeover Proposal, then the
Company shall promptly inform the Parent and the Purchaser orally and in writing
of the terms and conditions of such proposal and the identity of the person
making it.
SPECIAL MEETING. The Company shall take no action unless compelled by legal
process to call a special meeting of Stockholders except in accordance with the
Merger Agreement unless and until the Merger Agreement has been terminated in
accordance with its terms.
DISPOSITION OF LITIGATION. The Merger Agreement provides that the Company will
not settle any litigation currently pending, or commenced after the date
thereof, against the Company or any of its directors by any Stockholder of the
Company relating to the Offer or the Merger Agreement, without the prior written
consent of the Parent. The Merger Agreement further provides that the Company
will not voluntarily cooperate with any third party which has sought or may
thereafter seek to restrain or prohibit or otherwise oppose the Offer or the
Merger and will cooperate with the Parent and the Purchaser to resist any such
effort to restrain or prohibit or otherwise oppose the Offer or the Merger.
STATE TAKEOVER LAWS. The Company shall, upon the request of the Purchaser, take
all reasonable steps to assist in any challenge by the Purchaser to the validity
or applicability to the transactions contemplated by the Merger Agreement,
including the Offer and the Merger and the Shareholders Agreement, of any state
or foreign takeover law.
RESTATEMENT OF FINANCIAL ADVISORY AGREEMENT. The Merger Agreement provides that
the Company has amended and restated the Financial Advisory Agreement, dated
July 12, 1995, between the Company and TJC Management Corporation (the
"Financial Advisory Agreement") in consideration of the payment of fees of not
more than $2.5 million to TJC Management Corporation (the "TJC Amount") in
accordance with a payment letter acceptable to Parent (the "TJC Letter"). The
parties acknowledge that the TJC Amount is paid in consideration of services in
connection with the Merger Agreement, as well as the transactions contemplated
thereby, and such amendment and restatement which constitute conditions of the
Purchaser's willingness to enter into the Merger Agreement.
THE DEBT OFFER. Pursuant to the Merger Agreement, the Company shall, as soon as
practicable after the date thereof, commence an offer to purchase (the "Debt
Offer") all of the Company's outstanding 9 7/8% Series B Senior Notes due 2005
(the "Senior Notes"). The Debt Offer is subject to a number of conditions,
including the consummation of the Offer. The Company shall waive any of the
conditions to the Debt Offer and make any other changes in the terms and
conditions of the Debt Offer as may be reasonably requested by the Parent, and
the Company shall not, without the Parent's prior consent, waive a condition to
the Debt Offer or make any changes to the terms and conditions of the Debt
Offer. Notwithstanding anything in the Merger Agreement, including the
immediately preceding sentence, to the contrary, the Company shall not be
required to accept for payment or pay for any Senior Notes prior to the
consummation of the Offer.
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Pursuant to the Merger Agreement, the Purchaser acknowledges that the Company is
making the Debt Offer at the request and as an accommodation to the Purchaser,
and that the Debt Offer, and its terms, conditions, failure or success, or any
claims or actions relating thereto, will not be grounds for failure of a
condition, termination or delay of the Offer or the Merger, including the
conditions thereof, nor otherwise affect them. The Purchaser will pay and
reimburse the Company upon request for all fees and expenses relating to the
Debt Offer, and will indemnify the Company and its directors and officers from
and against all claims, lawsuits, losses, expenses and liabilities incurred by
any of them in connection with the Debt Offer.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various customary
representations and warranties of the parties thereto including, but not limited
to, representations and warranties by the Company concerning the Company's
capitalization, required filings and consents, the Company's Board approval of
the Merger Agreement and the transactions contemplated thereby (including
approvals so as to render inapplicable thereto the limitation on business
combinations contained in Section 203 of the DGCL), Commission filings and
financial statements, absence of certain changes or events, business, compliance
with law, absence of litigation, employee benefit plans, environmental matters,
tax matters, intellectual property matters, insurance matters, labor matters,
real estate matters and brokers. Some of the representatives are qualified by a
Material Adverse Effect clause. "Material Adverse Effect" includes any change or
effect that would be materially adverse to the assets, liabilities, business,
operations, or financial condition of the Company and its subsidiaries, taken as
a whole, except for any such change or effect resulting from general economic,
financial or market conditions in the United States.
CONDITIONS OF THE MERGER. Under the Merger Agreement, the respective
obligations of the Parent, the Purchaser and the Company to consummate the
Merger are subject to the satisfaction, at or before the Effective Time, of each
of the following conditions: (i) if required by the DGCL, the Stockholders shall
have duly adopted the Merger Agreement and approved the transactions
contemplated by the Merger Agreement pursuant to the requirements of the
Company's Amended and Restated Certificate of Incorporation and applicable law
(which the Company has represented shall be solely the affirmative vote of a
majority of the outstanding Shares), (ii) the Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the terms
thereof; provided, that this condition shall be deemed to have been satisfied
with respect to the Parent and the Purchaser if the Purchaser fails to accept
for payment or pay for Shares pursuant to the Offer in violation of the terms of
the Offer, (iii) the consummation of the Merger shall not be restrained,
enjoined or prohibited by any order, judgment, decree, injunction or ruling of a
court of competent jurisdiction or any governmental entity and there shall not
have been any statute, rule or regulation enacted, promulgated or deemed
applicable to the Merger by any governmental entity which prevents the
consummation of the Merger; provided that the party invoking this condition
shall have used its reasonable best efforts to prevent the entry of such order,
judgment, decree, injunction or ruling and to appeal as promptly as practicable
any such order, judgment, decree, injunction or ruling, and (iv) any waiting
period applicable to the Merger under the HSR Act shall have terminated or
expired.
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TERMINATION EVENTS. The Merger Agreement can be terminated and the Offer and
the Merger contemplated thereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the Stockholders:
(a) by mutual written consent of the Parent and the Company;
(b) by the Parent or the Company if there shall be any statute, law, rule or
regulation that makes consummation of the Offer or the Merger illegal or
prohibited or if any court or other governmental entity of competent
jurisdiction or located or having jurisdiction within the United States or
any country or economic region in which either the Company or the Parent,
directly or indirectly, has material assets or operations shall have issued,
enacted, entered, promulgated or enforced any final order, judgment, decree,
injunction, or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Offer or the Merger and such order, judgment,
decree, injunction or ruling shall have become nonappealable;
(c) by the Parent or the Company if (i) the Offer is terminated or withdrawn
pursuant to its terms without any Shares being purchased thereunder or (ii)
if Purchaser shall have failed to pay for Shares pursuant to the Offer
within 55 days following the date of the Merger Agreement; provided,
however, that neither the Parent nor the Company, as the case may be, may
terminate the Merger Agreement as described in this paragraph, if the
Purchaser's termination or withdrawal of the Offer or failure to pay for
Shares pursuant to the Offer has been caused by or results from the failure
of such terminating party to perform in any material respect any of its
covenants or agreements contained in the Merger Agreement or a material
breach of such party's representations and warranties contained in the
Merger Agreement;
(d) by the Company if (i) the Offer shall not be commenced within five business
days following the date of execution of the Merger Agreement, provided, that
the failure to so commence has not been caused by and does not result from
the failure of the Company to perform in any material respect any of its
representations, warranties, covenants or agreements contained in the Merger
Agreement, (ii) there shall have been a breach of any representation,
warranty, covenant or agreement (without regard to any materiality or
Material Adverse Effect qualifier) on the part of the Parent or the
Purchaser contained in the Merger Agreement which materially adversely
affects the Parent's or Purchaser's ability to consummate (or materially
delays commencement or consummation of) the Offer, and, with respect to any
such breach that is reasonably capable of being cured, which shall not have
been cured prior to the earlier of (A) 10 business days following notice of
such breach and (B) two business days prior to the Expiration Date, (iii)
the Purchaser shall have terminated the Offer, (iv) any of the commitment
letters for the financing of the Offer and the Merger shall have been
withdrawn, terminated or modified in an adverse manner to the Company or (v)
prior to the purchase of Shares pursuant to the Offer, any person shall have
made a bona fide Takeover Proposal (A) that the Company's Board determines
in its good faith judgment in consultation with its financial advisor, is
more favorable to the Stockholders than the Offer and the Merger (taking
into account all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal) and (B) as a result of which a
majority of the Company's Board concludes in good faith on the advice of
independent outside legal counsel to the Company that termination of the
Merger Agreement is necessary in order for the Company's Board to comply
with its fiduciary obligations under applicable law; provided, that such
termination under this clause (v) shall not be effective until the
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Company has made payment of the Fee and Expenses (as defined below)
reimbursement required by the Merger Agreement; or
(e) by the Parent prior to the purchase of Shares pursuant to the Offer, if (i)
there shall have been a breach of any representation or warranty on the part
of the Company contained in the Merger Agreement (without regard to any
materiality or Material Adverse Effect qualifier) which would reasonably be
expected to have a Material Adverse Effect on the Company or which would
materially adversely affect (or materially delay) the commencement or
consummation of the Offer, (ii) there shall have been a breach of any
covenant or agreement on the part of the Company contained in the Merger
Agreement (without regard to any materiality or Material Adverse Effect
qualifier) which would reasonably be expected to have a Material Adverse
Effect on the Company or which would materially adversely effect (or
materially delay) the consummation of the Offer, which, in the case of
clause (i) or (ii), if such breach is reasonably capable of being cured,
such breach shall not have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two business days prior to the
Expiration Date, (iii) the Company shall effect, or enter into any agreement
with respect to, an Acquisition Transaction (as defined in the Merger
Agreement) with any person (other than the Parent or the Purchaser) or the
Company's Board has resolved to do so, (iv) the Company's Board shall have
withdrawn or modified in a manner adverse to the Purchaser its approval or
recommendation of the Offer or the Merger or shall have recommended another
offer or transaction, or shall have resolved to effect any of the foregoing
or (v) the Minimum Condition shall not have been satisfied by the Expiration
Date and, in addition, on or prior to such date (A) any person (other than
the Parent or the Purchaser) shall have made a public proposal, filing,
announcement or communication to the Company with respect to a Significant
Acquisition Transaction (as defined below) or (B) any person (including the
Company or any of its affiliates or subsidiaries) other than the Parent or
any of its affiliates shall have become the beneficial owner of 25% or more
of the Shares.
"SIGNIFICANT ACQUISITION TRANSACTION" has the same meaning as "Acquisition
Transaction" except that the references to 15% contained therein shall be deemed
to be (i) 35% with respect to any Significant Acquisition Transaction effected
through a primary sale of Shares (or a security convertible into Shares) by the
Company or a merger involving the Company or a tender or exchange offer or any
other transaction that the Company's Board has recommended acceptance of, and
(ii) 50% with respect to any Significant Acquisition Transaction effected
through a tender or exchange offer that the Company's Board has recommended
rejection of or other market or secondary acquisition of Shares (or a security
convertible into Shares).
TERMINATION FEES AND EXPENSES. The Merger Agreement provides that (i) if the
Merger Agreement is terminated by the Company as described under paragraph
(d)(v) under "Termination Events", or by the Parent as described under paragraph
(e)(iii) or (iv) under "Termination Events"; or (ii) (A) if the Merger Agreement
is terminated by the Parent as described under paragraph (e)(i), (e)(ii) or
(e)(v), under "Termination Events," and (B) following the date of the Merger
Agreement and at or prior to the time of the event giving rise to such
termination there shall have existed a Takeover Proposal for a Significant
Acquisition Transaction with respect to the Company and (C) within twelve months
thereafter, either (1) the Company enters into an agreement with respect to any
Significant Acquisition Transaction or (2) any Significant Acquisition
Transaction occurs, then the Company shall pay to Parent a cash fee of $5.5
million (the "Fee");
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<PAGE> 19
If the Merger Agreement is terminated as described under Section 8.01(d)(v) or
8.01(e) thereof under "Termination Events", then the Company shall pay to
Purchaser an amount equal to the reasonable and documented Expenses of the
Parent and the Purchaser of up to $1 million (the "Expenses Cap"); provided,
however, that the Expenses Cap shall not apply to the Collection Expenses. Such
Expenses shall be in addition to, and not in substitution for, the Fee paid by
the Company, if any.
"EXPENSES" means all out-of-pocket fees and expenses actually incurred by the
Parent or the Purchaser or on their behalf, whether before or after the
execution and delivery of the Merger Agreement, in connection with the
transactions contemplated by the Merger Agreement, including the Merger and the
Shareholders Agreement, including without limitation, fees and reasonable
expenses payable to all banks, investment banking firms and other financial
institutions, and their respective agents and counsel, all fees and reasonable
expenses of counsel, accountants, experts and consultants to the Parent or the
Purchaser, and, further, including without limitation fees and reasonable
expenses of, or incurred in connection with, any litigation or other proceedings
to collect the Fee or the Expenses (the "Collection Expenses").
SHAREHOLDERS AGREEMENT. Pursuant to the Shareholders Agreement, each Principal
Holder agrees to validly tender (or cause the record owner of such shares to
validly tender), pursuant to and in accordance with the terms of the Offer, as
soon as practicable after commencement of the Offer but in no event later than
15 business days after the date of commencement of the Offer, all of such
Principal Holder's Shares by physical delivery of the certificates therefor and
to not withdraw such Shares.
The Shareholders Agreement also provides that the Principal Holders will (i)
grant an irrevocable proxy to the Purchaser to vote their Shares during the term
of the Shareholders Agreement in favor of the Merger, the execution and delivery
by the Company of the Merger Agreement and against any action or agreement that
would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement or the
Shareholders Agreement, (ii) not directly or indirectly solicit, facilitate,
participate in or initiate any inquiries or the making of any proposal by any
person or entity (other than the Purchaser or any of its affiliates) which
constitutes or may reasonably be expected to lead to any sale of the Shares or
any Takeover Proposal or Acquisition Transaction, or (iii) not sell, transfer,
pledge, encumber, assign or otherwise dispose of their Shares or stock options
during the term of the Shareholders Agreement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Company Board.
On February 11, 1999, the Company's Board, (i) unanimously approved the Offer,
the Merger and the Merger Agreement, (ii) determined that the terms of the Offer
and the Merger are fair to, and in the best interests of, the shareholders of
the Company, and (iii) recommended that the Shareholders tender their shares
pursuant to the Offer.
(b) Reasons for the Company's Board Recommendation.
(1) BACKGROUND.
On October 24, 1997, the Company engaged PaineWebber Incorporated
("PaineWebber") as its financial advisor to evaluate strategic alternatives
available to the Company,
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<PAGE> 20
including a possible sale transaction. As part of this engagement, PaineWebber
solicited interest from a select group of potential purchasers approved by the
Company's Board.
In early December 1997, PaineWebber contacted J.W. Childs regarding a potential
interest in purchasing the Company. On December 4, 1997, J.W. Childs executed a
customary confidentiality and standstill agreement with respect to the exchange
of non-public information between the Company and J.W. Childs. Following the
execution of the confidentiality and standstill agreement, J.W. Childs conducted
a preliminary due diligence investigation and submitted an initial indication of
interest which was not viewed as satisfactory by the Company.
On May 13, 1998, after conducting an extensive sale process, the Board of
Directors determined that is was not in the best interest of the Stockholders to
continue to pursue a sale transaction at that time.
Following the announcement of the termination of the sale process, PaineWebber
continued to explore strategic alternatives available to the Company with
selected parties, including a possible majority recapitalization.
On or about November 17, 1998, representatives of J.W. Childs contacted a
representative of PaineWebber regarding its renewed interest in the Company and
submitted an initial non-binding indication of interest to acquire 100% of the
Company of $13.50 to $14.50 per share.
Following the receipt of J.W. Childs' initial indication of interest, the
Company advised PaineWebber of its renewed interest in pursuing a sale
transaction. Subsequently, PaineWebber contacted selected parties potentially
interested in purchasing the Company. On December 17, 1998, following an initial
due diligence investigation, J.W. Childs submitted to representatives of the
Company a revised offer of $14.00 per share to acquire 100% of the Company.
Subsequent to this revised Offer, the Company and its legal counsel prepared and
delivered to J.W. Childs an initial draft of the Merger Agreement and the
Shareholders Agreement.
From late December 1998 through early February 1999, representatives of J.W.
Childs conducted an extensive due diligence investigation of the Company,
including but not limited to the business, operations and financial conditions
as well as numerous discussions with members of the Company's senior management.
During this period of time, TJC, PaineWebber and the Company's legal advisors
continued to negotiate with J.W. Childs and its legal counsel regarding the
terms of the transaction.
On February 1, 1999, following additional discussions and negotiations between
the Company, TJC, PaineWebber and J.W. Childs, J.W. Childs raised its offer to
$14.125 per share.
On February 7, 1999, the Company's Board held a telephonic meeting to consider
the proposed transaction. At the meeting, the Board reviewed the terms of the
proposed transaction and the provisions contained in the draft Merger Agreement
and the Shareholders Agreement, and the other related agreements, including the
agreements pertaining to the financing arrangements for the Offer and the
Merger. The Company's Board also reviewed a summary of the sale process compiled
by PaineWebber. The Company's legal counsel reviewed with the Company's Board
the current terms contained in the draft agreements. In addition to discussing
these terms, the presentation by legal counsel included a discussion of the
fiduciary duties of the Company's Board. After discussion, the Company's Board
directed management of the Company and TJC to
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<PAGE> 21
continue discussions with representatives of J.W. Childs in respect of the
remaining issues in the draft agreements that were not yet resolved.
On February 11, 1999, the Company's Board held a final telephonic meeting to
consider the proposed merger transaction. Members of the Company's senior
management, the Company's legal counsel and TJC updated the Company's Board of
the results of the negotiations that had occurred since the February 7, 1999
meeting of the Company's Board. During the meeting, a representative of
PaineWebber presented in detail a financial analysis of the Company and the
proposed transaction, and presented orally, which was confirmed in writing on
February 12, 1999, that the consideration to be received by the Stockholders,
other than the Purchaser and the Parent, is fair from a financial point of view,
subject to the assumptions stated therein. After discussion and consideration,
the Company's Board voted unanimously to approve the Merger, the Merger
Agreement and all of the related transactions, subject to final agreement and
financing.
Also on February 11, 1999, the Company's disinterested directors discussed the
Merger Agreement and certain affiliate agreements including the Financial
Advisory Agreement between the Company and TJC Management Corporation. In
connection with the Financial Advisory Agreement the Company would have been
obligated to pay to TJC Management Corporation up to 2% of the aggregate
consideration paid in any transaction involving the Company. With the advice of
PaineWebber, considering the typical and appropriate fees currently paid to
financial advisors in similar transactions, the Company and TJC Management
Corporation entered into an Amended and Restated Financial Advisory Agreement
dated as of February 12, 1999 which provided for a lump sum payment of
$2,500,000. This lump sum payment, representing approximately 0.8% of the total
consideration payable in the Offer, is payable upon closing of the Offer. The
disinterested directors unanimously approved the form of this Amended and
Restated Financial Advisory Agreement.
The Merger Agreement, the Shareholders Agreement and other related transaction
documents were then executed and delivered by each of the Parent, the Purchaser
and the Company after the close of business on February 12, 1999, following the
satisfactory negotiation of certain terms of the financing and the completion of
due diligence by J.W. Childs. On February 15, 1999, the Merger was publicly
announced jointly by J.W. Childs and the Company.
(2) REASONS FOR RECOMMENDATIONS
In approving the Offer, the Merger, the Merger Agreement and the other
transactions contemplated thereby, and recommending that Stockholders accept the
Offer and vote for adoption of the Merger Agreement and approval of the
transactions contemplated thereby, the Company's Board discussed the proposed
transaction at several of the Company's Board meetings and consulted with the
Company's legal and financial advisors, as well as with the Company's
management. The following are material factors considered by the Company's Board
in reaching its decision.
- The Company with the assistance of PaineWebber has been exploring
strategic alternatives including the sale of the Company since October
24, 1997 and has conducted preliminary discussions and negotiations with
a number of interested parties.
- The $14.125 Offer price represents (i) a premium of approximately 24%
over the average closing sale price of $11.43 per Share for the 30
trading days immediately
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<PAGE> 22
preceding February 15, 1999 (the "Announcement Date"), the Company first
publicly announced it had executed the Merger Agreement and (ii) a 43%
premium over the closing sale price of $9 7/8 per Share on February 12,
1999, the last trading day prior to the Announcement Date, each as
reported on NASDAQ.
- The historical market prices and trading activity of the Shares and the
Company's historical financial results;
- The opinion of PaineWebber to the Company's Board dated February 12, 1999
to the effect that, as of such date and based upon and subject to the
assumptions made, matters considered and limitations on the review
undertaken set forth therein, the consideration to be received by holders
of the Shares pursuant to the Offer and the Merger was fair to such
holders from a financial point of view (the full text of the opinion of
PaineWebber is attached as Annex B hereto and is incorporated herein by
reference and should be read in its entirety);
- The fact that the Offer provides for a prompt cash tender offer for all
Shares, thereby enabling shareholders of the Company to receive cash in
exchange for their Shares at the earliest possible time;
- The likelihood that the Offer and the Merger would be consummated,
including the ability of Parent to cause the Purchaser to meet its
financial and other obligations of the Offer and the Merger Agreement, as
well as the effects on the Company's business, operations and financial
condition should it not be possible to consummate the Merger following
public announcement that the Merger Agreement has been entered into;
- The terms and conditions of the Offer and the Merger, the Merger
Agreement and the transactions contemplated thereby, which were the
product of arm's-length negotiations, including the parties'
representations, warranties and covenants, the conditions to their
respective obligations, and the limited ability of Parent and Purchaser
to terminate the Offer or the Merger Agreement;
- A review of the strategic alternatives available to the Company
(including continuing the Company's business in its present configuration
without significant changes and continuing to raise capital to fund the
Company's growth or a major leveraged recapitalization of the Company),
none of which the Company's Board believed to be as favorable to the
Stockholders as the Offer and the Merger;
- The provisions of the Merger Agreement relating to potential competing
transactions, including the ability of the Company to entertain
unsolicited competing bids (provided that the Company's Board determines,
on the basis of the advice of outside legal counsel that such action is
required by its fiduciary obligations to the Company and the
Stockholders), to provide information to such competing bidders, to
negotiate with such competing bidders, to withdraw its recommendation
with respect to the Offer and the Merger, and to terminate the Merger
Agreement in favor of a more favorable transaction with a competing
bidder upon payment of the Fee; and
- The Company's Board belief that the transactions contemplated by the
Merger Agreement would offer growth opportunities to the Company's
employees.
The foregoing discussion of the factors considered by the Company's Board is not
intended to be exhaustive. In view of the wide variety of factors considered in
connection with its evaluation of the Offer and the Merger, the Company's Board
did not find it practicable
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<PAGE> 23
to, and did not, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching its determinations. Rather, the
Company's Board made its determination based on the total mix of information
available to it, and the judgments of individual directors may have been
influenced to a greater or lesser degree by differing factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Pursuant to an engagement letter agreement between the Company and PaineWebber
dated February 4, 1999, the Company agreed to pay PaineWebber a fee of
$2,500,000 for financial advisory services and in rendering a fairness opinion.
Of the $2,500,000 fee to be paid to PaineWebber, $750,000 was in consideration
for the fairness opinion.
PaineWebber is a securities firm engaged in securities trading and brokerage
activities, as well as providing investment banking and financial advisory
services. In the ordinary course of its trading and brokerage activities,
PaineWebber or its affiliates may at any time actively trade or hold the
securities of the Company for their own account or for the account of customers
and, accordingly, may at any time hold a long or short position in such
securities. In addition, PaineWebber has acted as the Company's investment
banker on prior occasions and received fees for those services.
Except as described herein, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to the Stockholders on its behalf
concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTERESTS WITH RESPECT TO SECURITIES
(a) None.
(b) The information set forth in the Shareholders Agreement, which is Exhibit
(a)(2) of this Schedule 14D-9 is incorporated herein by reference.
ITEM 7. CERTAIN NEGOTIATIONS BY THE SUBJECT COMPANY.
(a) Except as described herein, no negotiation is being undertaken or is under
way by the Company in response to the Offer that relates to or would result
in: (1) an extraordinary transaction such as a merger or reorganization,
involving the subject company or any subsidiary of the subject company; (2)
a purchase, sale or transfer of a material amount of assets by the subject
company or any subsidiary of the company; or (3) any material change in the
present capitalization or dividend policy of the subject company. Currently,
negotiation is being undertaken or is under way by the Company and are in
the preliminary stages in response to the Offer that relates to or would
result in a tender offer for securities of the subject company.
(b) None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Not Applicable.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Merger Agreement, dated as of February 12, 1999 among the Company,
Purchaser and Parent.
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<PAGE> 24
(a)(2) Shareholder's Agreement, dated February 12, 1999 among the Parent,
Purchaser, and Principal Holders.
(a)(3) Confidentiality Agreement dated as of December 4, 1997 between
PaineWebber Incorporated and J.W. Childs Associates, L.P.
(a)(4) Confidentiality Agreement dated as of January 12, 1999 between
PaineWebber Incorporated and J.W. Childs Associates, L.P.
(a)(5) Press Release issued by the Company on February 15, 1999
(a)(6) Form of Recommendation Letter to Stockholders from William Weathersby
(a)(7) Letter of Transmittal*
(a)(8) Offer to Purchase dated February 22, 1999*
- -------------------------
*Incorporated by reference from the Tender Offer Statement on Schedule 14D-1
filed by J.W. Childs Equity Partners II, L.P. on February 22, 1999.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
AMERICAN SAFETY RAZOR COMPANY
By: /s/ WILLIAM C. WEATHERSBY
-----------------------------------
Name: William C. Weathersby
Title: President
Date: February 22, 1999
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<PAGE> 26
EXHIBIT A
AMERICAN SAFETY RAZOR COMPANY
ONE RAZOR BLADE LANE
P.O. BOX 500
VERONA, VIRGINIA 24482-0500
(540) 248-8000
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement ("Information Statement") is being mailed on or about
February 22, 1999, as part of the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") to the holders of shares of
common stock, $.01 par value per share, of the Company (the "Shares"). You are
receiving this Information Statement in connection with the possible election of
persons designated by Parent to a majority of the seats on the Company's Board.
Pursuant to the Merger Agreement, Parent commenced the Offer on February 22,
1999. The Offer is scheduled to expire at 12:00 midnight, New York City time, on
Friday, March 19, 1999, unless the Offer is extended. You are urged to read this
Information Statement carefully. You are not, however, required to take any
action. Capitalized terms used herein and not otherwise defined herein shall
have the meaning set forth in the Schedule 14D-9. The information contained in
this Information Statement or incorporated by reference herein concerning
Parent, Purchaser, or their respective officers, directors, representatives or
affiliates or actions or events with respect to any of them, was provided by
Parent or Purchaser, and the Company takes no responsibility for such
information.
GENERAL INFORMATION REGARDING THE COMPANY
GENERAL
The Shares are the only class of voting securities of the Company outstanding.
The holders of at least one-third of the outstanding Shares represented in
person or by proxy will constitute a quorum. Each Stockholder is entitled to one
vote per share assuming the presence of a quorum, the affirmative vote of a
majority in interest of the Stockholders present in person or by proxy and
entitled to vote thereon is required to elect the Directors. As of February 22,
1999, there were 12,110,049 shares outstanding and 750,000 Shares were reserved
pursuant to the exercise of options (of which there are options to purchase
464,400 Shares outstanding).
PARENT'S DESIGNEES
The Merger Agreement provides that, promptly upon the consummation of the Offer,
and from time to time thereafter, Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Company's Board
as is equal to the product of the total number of directors on the Company's
Board (determined after giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent or its affiliates bears to the total number of
fully-diluted Shares then outstanding, and the
A-1
<PAGE> 27
Company shall, promptly take all actions necessary to cause Parent's designees
(the "Designees") to be so elected, including, if necessary, seeking the
resignations of one or more existing directors or increasing the size of the
Company's Board; provided, however, that prior to the Effective Time, the
Company's Board shall always have at least three members who are neither
officer, directors, Stockholders or Designees of the Purchaser or any of its
affiliates.
Purchaser has informed the Company that it will choose the Designees from the
directors and executive officers of certain affiliates of Parent listed in
Schedule I attached hereto. Purchaser has informed the Company that each of the
directors and executive officers listed in Schedule I has consented to act as a
director if so designated. The business address of Parent and Purchaser is c/o
J.W. Childs Equity Partners II, L.P., One Federal Street, 21st Floor, Boston MA
02110.
It is expected that the Designees may assume office at any time following the
purchase by Purchaser pursuant to the Offer of such number of Shares
representing not less than a majority of the outstanding shares of Common Stock
on a fully-diluted basis and that upon assuming office Designees will thereafter
constitute at least a majority of the Company's Board.
A-2
<PAGE> 28
DIRECTORS AND EXECUTIVE OFFICERS
THE CURRENT MEMBERS OF THE BOARD
The Company's Board currently consists of nine members. The name of the current
Directors, their ages as of December 31, 1998 and certain other information
about them are set forth below. As indicated above, some of the current
Directors may resign effective immediately following the purchase of the Shares
by the Purchaser pursuant to the Offer.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER
NAME AGE INFORMATION
- ---- --- --------------------------------------------------------
<S> <C> <C>
William C. Weathersby................ 57 Mr. Weathersby joined the Company in January 1990, and
has served as President and a director since that time.
Prior to joining the Company, Mr. Weathersby held senior
executive positions with Revlon Health Care and Squibb
Corporation. From 1985 through 1989, Mr. Weathersby was
Group President, Squibb Corporation, and a member of its
Executive Committee.
William C. Ballard................... 58 Mr. Ballard became a member of the Board of Directors on
June 15, 1993 in connection with the Initial Public
Offering. Mr. Ballard has been of counsel to the law
firm of Greenebaum, Doll & McDonald in Louisville,
Kentucky since May 1992. From 1970 to April 1992, Mr.
Ballard held various positions with Humana Inc., an
investor-owned hospital company, including most recently
as its Executive Vice President and as a member of its
Board of Directors. Mr. Ballard is a director of Atria
Communities, Inc., Health Care REIT, Health Care
Recoveries, Inc., Jordan Telecommunication Products,
Inc., LG&E Energy Corp., Mid-America Bancorp, Vencor,
Inc. and United Healthcare Corp.
Jonathan F. Boucher.................. 42 Mr. Boucher became a member of the Board of Directors
and the Company's Vice President in April 1989 in
connection with the Acquisition (as defined below).
Since June 1983, Mr. Boucher has been a managing
director of The Jordan Company. Mr. Boucher is a
director and officer of Jordan Industries, Inc., Jackson
Products, Inc., Motors and Gears, Inc. and Jordan
Telecommunication Products, Inc
</TABLE>
A-3
<PAGE> 29
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER
NAME AGE INFORMATION
- ---- --- --------------------------------------------------------
<S> <C> <C>
Thomas H. Quinn...................... 51 Mr. Quinn became Chairman of the Board of Directors of
the Company in April 1989 in connection with the
acquisitions by the Company of its predecessor and
Ardell Industries, Inc. (collectively, the
"Acquisition"). Since 1988, Mr. Quinn has been
President, Chief Operating Officer and a director of
Jordan Industries, Inc. and Chairman of the Board and
Chief Executive Officer of Welcome Home, Inc. and a
director of AmeriKing, Inc., Motors and Gears, Inc. and
Jordan Telecommunication Products, Inc. On January 22,
1997, Welcome Home, Inc. filed a Chapter 11 petition in
the United States Bankruptcy Court for the Southern
District of New York.
John W. Jordan II.................... 50 Mr. Jordan became a member of the Board of Directors in
April 1989 in connection with the Acquisition. Mr.
Jordan is the managing director of The Jordan Company,
which he founded in February 1982. Mr. Jordan is also a
director of Jordan Industries, Inc., AmeriKing, Inc.,
Carmike Cinemas, Inc., Motors and Gears, Inc., Welcome
Home, Inc., Apparel Ventures, Inc., Jackson Products,
Inc., GFSI, Inc., GFSI Holdings, Inc., Jordan
Telecommunication Products, Inc. and Rockshox, Inc.
D. Patrick Curran.................... 50 Mr. Curran became a member of the Board of Directors on
June 15, 1993 in connection with the Company's initial
public offering of the Common Stock (the "Initial Public
Offering"). Mr. Curran is President and Chairman of
Curran Companies, a manufacturer and supplier of
specialty chemicals, which he has been associated with
since 1968. He has also served as Chairman of Cook
Composites and Polymers, Inc. since 1990. Mr. Curran
also serves on the Board of Directors of Applebee's
International, Inc., Sealright Co., Inc. and UNITOG
Company.
</TABLE>
A-4
<PAGE> 30
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER
NAME AGE INFORMATION
- ---- --- --------------------------------------------------------
<S> <C> <C>
David W. Zalaznick................... 45 Mr. Zalaznick became a member of the Board of Directors
in April 1989 in connection with the Acquisition. Since
1982, Mr. Zalaznick has been a managing director of The
Jordan Company. Mr. Zalaznick is also a director of
Jordan Industries, Inc., AmeriKing, Inc., Carmike
Cinemas, Inc., Marisa Christina, Inc., Motors and Gears,
Inc., Apparel Ventures, Inc., Jackson Products, Inc.,
GFSI, Inc., GFSI Holdings, Inc. and Jordan
Telecommunication Products, Inc.
John R. Lowden....................... 42 Mr. Lowden became a member of the Board of Directors in
April 1989 in connection with the Acquisitions. Mr.
Lowden has been a managing director of The Jordan
Company since March 1985 and is also an officer and a
director of Apparel Ventures, Inc.
Paul D. Rhines....................... 55 Mr. Rhines became a member of the Board of Directors in
April 1989 in connection with the Acquisitions. Since
1980, Mr. Rhines has been a founding general managing
director of R.W. Allsop & Associates L.P. and R.W.
Allsop & Associates II, Limited Partnership and is also
a founding general partner of the general partner of the
Allsop Venture Partners III, L.P., all of which are
engaged in financing growth-oriented private companies
and acquisitions.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
In 1998, there were three (3) meetings of the Company's Board (including
regularly scheduled and special meetings), none of which were conducted by
teleconference. In addition, the Company's Board took action by unanimous
written consent on four (4) occasions in 1998. Each of Messrs. John Lowden, Paul
Rhines, John Jordan II, and David Zalaznick attended fewer than 75% of the
aggregate of: (1) the total number of meetings of the Company's Board and (2)
the total number of meetings held by all committees of the Company's Board on
which he served in 1998.
The Company's Board has established three standing committees: the Audit
Committee, the Compensation Committee and the Executive Committee. The Company's
Board does not have a Nominating Committee. The responsibilities of the Audit
Committee, the Compensation Committee and the Executive committee are as
follows:
AUDIT COMMITTEE
The Audit Committee (i) recommends to the Company's Board the appointment of a
firm of independent public accountants to audit the Company's financial
statements, (ii) reviews and approves the scope, purpose and type of audit
services to be performed by the independent public accountants and (iii) meets
with the Company's internal auditor to review audit plans and other matters
related to the Company's internal control systems.
A-5
<PAGE> 31
The Audit Committee is composed of Messrs. Ballard, Boucher and Curran. The
Audit Committee held 2 meetings, one of which was conducted by teleconference,
in 1998.
COMPENSATION COMMITTEE
The duties of the Compensation Committee are to make recommendations to the
Company's Board concerning the salaries of the Company's officers and to advise
the Company's Board on other compensation and benefit matters. The Compensation
Committee is composed of Messrs. Boucher, Quinn and Rhines. The Compensation
Committee held 3 meetings, all of which were conducted by teleconference, in
1998.
EXECUTIVE COMMITTEE
Except as expressly limited by applicable law or the Company's Amended and
Restated Certificate of Incorporation, the Executive Committee exercises all the
powers and authorities of the Company's Board in the management of the business
and affairs of the Company between meetings of the full Company's Board. The
Executive Committee is composed of Messrs. Boucher, Quinn and Weathersby. The
Executive Committee held numerous meetings, all of which were conducted by
teleconference, in 1998.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $15,000 per year for
serving as a director. In addition, the Company reimburses directors for their
travel and other expenses incurred in connection with attending meetings of the
Company's Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Boucher, Quinn and Rhines are the members of the Compensation Committee
of the Company's Board. As such, during 1998, certain of the Company's executive
officers served and currently serve as directors and members of a compensation
committee of another entity, one of whose executive officers served and
currently serves as a director and member of the Compensation Committee of the
Company. See "Certain Transactions."
CERTAIN TRANSACTIONS
THE JORDAN COMPANY. On July 12, 1995, the Company and TJC Management
Corporation, an affiliate of The Jordan Company, entered into an advisory
agreement (the "Advisory Agreement"). The Advisory Agreement provides for the
payment by the Company to TJC Management Corporation of (a) up to 2% of the
aggregate consideration paid by the Company and/or its subsidiaries in
connection with acquisitions or paid to the Company in connection with a sale of
the Company and/or its subsidiaries and (b) up to 1% of the amount obtained
pursuant to any debt, equity or other refinancing. In accordance with Company
policy, the Advisory Agreement was (i) approved by a majority of the members of
the Company's Board and by a majority of the disinterested members of the
Company's Board and (ii) deemed by the Company's Board to be subject to terms
and conditions no less favorable to the Company than could be obtained from
unaffiliated third parties.
During the fiscal year 1998, the Company paid to The Jordan Company an aggregate
of $60,000 as compensation for Messrs. Jordan, Zalaznick, Boucher and Lowden
serving as members of the Company's Board. See "Director Compensation."
A-6
<PAGE> 32
On February 12, 1999, the Company and TJC Management Corporation amended and
restated the Advisory Agreement (the "Amended Advisory Agreement"). The
Company's Board unanimously approved the Amended Advisory Agreement. Pursuant to
the Amended Advisory Agreement, the Company and TJC Management Corporation
agreed upon a flat $2,500,000 fee for financial advisory services payable at
closing of the Offer which represents .8% of the Offer. The financial advisory
fee in the Amended Advisory Agreement represents a reduction from a fee of up to
2% to .8% in connection with the Offer. In accordance with Company policy, the
Amended Advisory Agreement was (i) approved by a majority of the members of the
Company's Board and by a majority of the disinterested members of the Company's
Board and (ii) deemed by the Company's Board to be subject to terms and
conditions no less favorable to the Company than could be obtained from
unaffiliated third parties.
INDEMNIFICATION AGREEMENTS. The Company is party to indemnification agreements
with each of the members of the Company's Board pursuant to which the Company
has agreed to indemnify and hold harmless each director from liabilities
incurred as a result of such director's status as a director of the Company,
subject to certain limitations.
INFORMATION ABOUT EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
The following individuals currently serve as executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
- ---- --- ----------------
<S> <C> <C>
Thomas H. Quinn...................... 51 Chairman of the Board, Chief Executive
Officer
William Weathersby................... 57 President, Chief Operating Officer
Thomas G. Kasvin..................... 51 Senior Vice President, Chief Financial
Officer
Michael J. Piron..................... 58 Vice President-Operations
Gary S. Wade......................... 54 Vice President -- Industrial/Specialty
</TABLE>
THOMAS H. QUINN. For biographical information with respect to Mr. Quinn, see
Current Members of the Board.
WILLIAM C. WEATHERSBY. Mr. Weathersby joined the Company in January 1990, an
has served as President and director since that time. Prior to joining the
Company, Mr. Weathersby held senior executive positions with Revlon Health Care
and Squibb Corporation. From 1985 through 1989, Mr. Weathersby was Group
President, Squibb Corporation, and a member of its Executive Committee.
THOMAS G. KASVIN. Mr. Kasvin joined the Company in August 1991, and has served
as Vice President -- Chief Financial Officer since that time until August 1996,
when he became Senior Vice President -- Chief Financial Officer. From May 1982
through July 1991, Mr. Kasvin was corporate controller from Marmon Group, a
privately held, diversified manufacturing company.
MICHAEL J. PIRON. Mr. Piron has been Vice President -- Technical and Logistics
Operations of the Company since January 1994. Prior to joining the Company, Mr.
Piron was Vice President of Operations for the Consumer Products Group at
Bristol Myers Squibb. From 1963 through 1987, Mr. Piron held various
manufacturing and logistics positions in consumer products with Johnson &
Johnson, Warner-Lamver and Hoechst Celanese.
A-7
<PAGE> 33
GARY S. WADE. Mr. Wade has been responsible for various sales management and
marketing functions in our Industrial Division since 1978. In 1990, Mr. Wade was
appointed Vice President-Industrial/Specialty. Prior to joining the Company, Mr.
Wade had held both sales management positions with the General Product Division
of Philip Morris USA.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth a summary of certain information regarding
compensation paid or accrued by the Company for services rendered to the Company
for the fiscal year ended December 31, 1998, and the two prior fiscal years,
paid or awarded to those persons who were, at December 31, 1998: (i)the
Company's chief executive officer, (ii) the Company's four most highly
compensated executive officers other than the chief executive officer whose
total annual salary and bonus exceeded $100,000 during such period
(collectively, the "Named Executive Officers") and (iii) an additional
individual for whom disclosure would have been provided but for the fact that
the individual was not serving as an executive officer of the Company as of
December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION ----------------------
---------------- OTHER ANNUAL SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) OPTIONS
--------------------------- ---- --------- -------- --------------- ----------------------
<S> <C> <C> <C> <C> <C>
Thomas H. Quinn......................... 1998 125,000 0 0 0
Chairman and Chief 1997 125,000 0 0 0
Executive Officer 1996 125,000 0 0 0
William C. Weathersby................... 1998 292,000 0 0 0
President, Chief Operating 1997 292,000 250,000 0 15,000
Officer and Director 1996 288,333 245,000 0 20,000
Thomas G. Kasvin........................ 1998 190,832 0 0 0
Senior Vice President -- 1997 174,667 117,447 0 15,000
Chief Financial Officer 1996 159,333 110,169 0 20,000
Michael J. Piron........................ 1998 161,152 0 0 0
Vice President -- Technical 1997 161,152 84,883 0 7,500
and Logistics Operations 1996 161,152 84,294 10,034(4) 15,000
James V. Heim........................... 1998 197,087 0 332,902(5) 0
1997 206,667 136,815 0 15,000
1996 113,750 117,000 19,358(6) 20,000
Gary S. Wade............................ 1998 134,678 64,300 0 0
Vice President -- Industrial/ 1997 124,785 45,010 0 7,500
Specialty 1996 119,822 39,771 0 10,000
</TABLE>
- -------------------------
(1) Includes amounts deferred under the Company's 401(k) plan.
(2) The Company provides bonus compensation based on an individual's achievement
of certain specified objectives, with additional rewards if certain
operating objectives, including, among others, earnings per share, are met.
Employees are eligible to receive from 10% to 100% of their annual
compensation as a bonus under this program. The bonus plan is administered
by the Company's Compensation Committee.
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<PAGE> 34
(3) Except as indicated, no executive named in the table received any other
annual compensation in an amount in excess of the lesser of either $50,000
or 10% of the total of annual salary and loans reported for him in the two
preceding columns for the periods covered by this table.
(4) Represents the amount paid by the Company to Mr. Piron for certain
relocation expenses incurred in connection with the commencement of his
employment with the Company.
(5) Payment pursuant to a Separation and Release Agreement dated as of November
9, 1998 between the Company and James V. Heim.
(6) Represents the amount paid by the Company to Mr. Heim for certain relocation
expenses incurred in connection with the commencement of his employment with
the Company.
The following table shows stock options exercised by each of the Named Executive
Officers during the fiscal year ended December 31, 1998, including the aggregate
value of gains on the date of exercise. In addition, this table includes the
number of shares covered by both exercisable and non-exercisable stock options
as of fiscal year-end, and the values for unexercised options based on the
year-end price of the Common Stock. Except as listed in the table, no other
Named Executive Officer exercised any Company stock options or beneficially
owned unexercised Company stock options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT DECEMBER 31, 1998 DECEMBER 31, 1998(1)
ACQUIRED VALUE ---------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William C.
Weathersby........... 0 0 28,000 32,000 $75,500 $28,875
Thomas G. Kasvin....... 0 0 35,000 30,000 99,125 22,125
Michael J. Piron....... 0 0 26,000 21,500 73,500 25,875
James V. Heim.......... 0 0 8,000 27,000 8,000 12,000
Gary S. Wade........... 0 0 22,000 15,500 64,750 12,750
</TABLE>
- -------------------------
(1) Based on the difference between the closing market price on December 31,
1998, for the Common Stock, which was $12.00 per share, and the option
exercise price.
EMPLOYMENT AGREEMENTS
On March 3, 1995, Sterile Products Holdings, Inc., a wholly-owned subsidiary of
the Company ("Holdings") and Sterile Products Corporation, d.b.a. Absorbent
Cotton Company, Inc., a wholly-owned subsidiary of Holdings ("ACCO"), entered
into an employment agreement with Mr. C.C. Van Noy (the "Van Noy Employment
Agreement"). Pursuant to the terms of the Van Noy Employment Agreement, Mr. Van
Noy served as the President of ACCO for two years and agreed not to compete with
Holdings or ACCO or disclose any confidential information during the period in
which the Annual Retirement Payments (as hereinafter defined) are being paid to
him. In exchange for his services and agreements not to compete or disclose
certain information, Mr. Van Noy, who has retired and no longer performs
services for the Company, is entitled to receive an
A-9
<PAGE> 35
annual payment of $75,000 (the "Annual Retirement Payments") for a ten year
period. The Van Noy Employment Agreement provides that the Annual Retirement
Payments shall be made to the beneficiary of Mr. Van Noy upon his death, subject
to certain adjustments.
On December 8, 1997, the Company entered into Employment Protection Agreements
(the "Protection Agreements") with each of Messrs. Weathersby and Kasvin (the
"Executive"). The Protection Agreement provides that, in the event of a Change
of Control (as defined therein), the Company will pay the Executive a lump sum
in cash (the "Change of Control Payment") equal to: (i) one year's base salary
(six months in the case of Mr. Weathersby) and (ii) an amount equal to 100% of
Executive's target bonus (50% in the case of Mr. Weathersby) for the fiscal year
in which the Change of Control occurs. If, after a Change of Control,
Executive's employment is terminated or is otherwise materially and adversely
affected, Executive will be entitled to an additional lump sum payment equal to
the Change of Control Payment. In addition, all stock options previously granted
to the Executive, whether or not vested, shall become immediately exercisable.
Executive shall have one year from such date to exercise the options.
On November 9, 1998, the Company entered into a Separation and Release Agreement
(the "Release Agreement") with Mr. James V. Heim, Senior Vice President of
Consumer and Personal Products. Pursuant to the terms of the Release Agreement,
Mr. Hein's employment with the Company ceased on November 30, 1998 . In
satisfaction of all Mr. Heim's claims for compensation, Mr. Heim received a lump
sum payment from the Company of $322,500. Mr. Heim may exercise his stock
options in the Company's stock until November 30, 1999. In furtherance of the
Employee Patent and Confidential Information Agreement executed by Mr. Heim on
June 3, 1996, Mr. Heim agrees that he will keep secret all confidential
financial and proprietary matters of the Company and will not take with him any
documents relating to the Company.
On February 5, 1999, the Company entered into a Letter Agreement with Thomas H.
Quinn. Pursuant to the Letter Agreement, Mr. Quinn's employment with the Company
will cease upon a change of control of the Company. In recognition of his
service and dedication to the Company, Mr. Quinn is entitled to receive a lump
sum payment, upon consummation of a change of control, from the Company of
$374,000.
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Compensation Committee is responsible for making recommendations to the
Company's Board concerning the salaries and the annual bonus and long-term
incentive plans that govern the compensation paid to all officers of the
Company. This report is provided by the Compensation Committee to assist
Stockholders in understanding the Compensation Committee's objectives and
procedures in establishing the compensation of the Company's Chief Executive
Officer and other senior executives. The Compensation Committee has devoted
considerable attention to developing the Company's compensation philosophy which
embodies four primary objectives:
1. to provide incentives based on value delivered to the Company's stockholders
and customers;
2. to clearly connect individual executive pay action with performance;
A-10
<PAGE> 36
3. to maintain a system of rewards that is competitive with industry standards;
and
4. to attract, motivate and retain executives of the highest quality.
The Company's compensation programs reflect the Compensation Committee's
commitment to the mission, values and performance of the Company. Continuous
review and refinement of the Company's compensation practices in response to the
changing business environment will serve to reinforce this commitment.
The most important performance yardstick in the Company's compensation program
is the Company's ability to deliver long-term value to Stockholders through
appreciation in share price, cash flow and earnings. On an ongoing basis, the
Compensation Committee will test and refine the compensation program to ensure a
high correlation between the level of compensation and these measures. Achieving
desirable stockholder returns over a sustained period of time requires
management's attention to a number of financial, operational and strategic
elements which enables the Company to focus on the on-going requirements of the
customer. The Company's compensation program, therefore, focuses executives on
actions that directly impact stockholder return in the long-term and serve the
needs of the Company's customers.
The Compensation Committee uses multiple sources of information to evaluate and
establish appropriate compensation practices. The Compensation Committee relies
on data from benchmark companies within industry to assess the Company's
relative performance and compensation levels. Benchmark companies are selected
by meeting multiple criteria including product lines, markets served, revenue
size, revenue source and comparable operations. Consistent with the Compensation
Committee's objectives, the Compensation Committee will position its executive
compensation targets competitively with the benchmark companies. Annual
executive compensation will be below, at or above the competitive target
depending on individual and Company performance.
The Company's executive compensation program has three components -- base
salary, annual incentives and long-term incentives. Base salary and annual
incentives are primarily designed to reward current performance. Long-term
incentives are primarily designed to provide strong incentives for long-term
future performance.
The Compensation Committee strongly believes that incentive compensation should
only be rewarded with commensurate performance. The Compensation Committee has
approved compensation plans which include high minimum levels of performance to
ensure that incentives are paid only when truly earned.
DESCRIPTION OF COMPENSATION PROGRAMS
The following briefly describes the role of each element of compensation:
BASE SALARY
Base salary are at levels sufficient to attract and retain qualified executives.
To accomplish these goals, the Compensation Committee has generally targeted
base salaries within a competitive range of average base salaries for similar
positions in benchmark companies within industry. Aggregate base salary
increases are intended to parallel increases in the pay levels of industry as a
whole. Individual executive salary increases will strongly reflect the
individual's level of performance and, to a lesser extent, trends within the
industry.
A-11
<PAGE> 37
ANNUAL INCENTIVE
The Company's executive annual incentive plan serves to recognize and reward
executives for taking actions that build the value of the Company, generate
competitive total returns to stockholders, and provide value-added services to
the Company's customers. The formula for annual incentive awards is based on an
individual's achievement of certain specified objectives, with additional
rewards if certain operating objectives, including, among others, earnings per
share, are met. Employees are eligible to receive from 10% to 100% of their
annual compensation as an incentive under this program. The annual incentive for
the President of the Company is based on the above factors and the discretion of
the Compensation Committee.
LONG-TERM INCENTIVES
The Company's current method of providing long-term incentive compensation
opportunities to its employees is through the use of stock options. The
Company's Stock Option Plan allows for the awarding of incentive stock options,
non-qualified stock options and SARs. The purposes of the Company's Stock Option
Plan are to encourage ownership of Common Stock by officers and other key
employees of the Company and its subsidiaries, to attract and retain highly
qualified personnel for positions of substantial responsibility and to provide
additional incentive to promote the success of the Company's business. The
incentive provided executives under the Stock Option Plan is directly related to
increases in the value of the Company to all stockholders, as measured by the
trading price of the Common Stock. During the fiscal year ended December 31,
1998, no stock options were granted to employees of the Company.
COMPENSATION ADMINISTRATION
The Compensation Committee follows an annual cycle to administer each of the
three components of executive compensation. The integrity of the Company's
compensation program relies on a rigorous annual performance evaluation process.
DISCUSSION OF CEO COMPENSATION
Mr. Quinn's annual compensation for 1998 remained unchanged from the prior year.
Mr. Quinn is the Chief Operating Officer of Jordan Industries, Inc., an
affiliate of the Company. The amount of compensation paid to Mr. Quinn during
1998 was based in part on his responsibilities for and contribution to the
Company's over-all performance. Mr. Quinn is in contact on a frequent basis with
Company personnel regarding, among other things, marketing strategy, results of
operations, acquisition strategy and financial matters.
COMPENSATION DEDUCTIBLE UNDER SECTION 162(M) OF THE INTERNAL REVENUE CODE
On August 10, 1993, the Revenue Reconciliation Act of 1993 was enacted which
amended the Internal Revenue Code of 1986, as amended (the "Code"), by adding
Section 162(m), which eliminates the deductibility of most cash and noncash
compensation over $1 million paid to certain "covered employees" (which
generally is defined as a corporation's chief executive officer and the four
other highest compensated employees). Contributions to qualified plans, items
excluded from the employee's gross income, compensation paid pursuant to a
binding agreement entered into on or before February 17, 1993, commission-based
compensation, and certain "performance-based" compensation are types of
remuneration that are not affected by the deduction limitation. Based on
Treasury
A-12
<PAGE> 38
regulations issued in December 1995, grants of stock options under the Stock
Option Plan are not considered as compensation subject to the Section 162(m)
limitation.
During the fiscal year ended December 31, 1998, none of the Named Executive
Officers received total compensation in excess of $1 million. However, it is
possible that in some future year some portion of the compensation paid to the
Company's chief executive officer and its four other highest compensated
employees will not be tax deductible under Section 162(m). When the compensation
of any of the Company's affected executives becomes closer to the $1 million
deduction limitation, the Compensation Committee plans to consider the
requirements of Section 162(m) and decide what actions, if any, will be taken
when setting the compensation levels for these executives.
SECURITY OWNERSHIP OF COMMON STOCK OF CERTAIN OWNERS AND MANAGEMENT
The following table sets forth as of December 31, 1998 (except as otherwise
noted) certain information with respect to the number of shares of Common Stock
beneficially owned by (i) each director of the Company who beneficially owned
Common Stock, (ii) each executive officer of the Company as of December 31, 1998
named in the table below under "Compensation of Executive Officers--Summary
Compensation Table" who beneficially owned Common Stock, (iii) all directors and
executive officers of the Company as a group and (iv) based on information
available to the Company and a review of statements filed with the Commission
pursuant to Section 13(d) and 13(g) of the Securities Act of 1934, as amended
(the "Exchange Act"), each person or entity that beneficially owned (directly or
together with affiliates) more than 5% of the Common Stock. The Company believes
that each individual or entity named has sole investment and voting power with
respect to shares of Common Stock indicated as beneficially owned by them,
except as otherwise noted.
<TABLE>
<CAPTION>
COMMON
STOCK
BENEFICIALLY PERCENTAGE
NAME OWNED(1) OWNERSHIP(1)
- ---- ------------ ------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Jonathan F. Boucher(2)................................ 360,639 2.9%
John W. Jordan II(3).................................. 332,140 2.7
David W. Zalaznick(4)................................. 303,140 2.5
William C. Weathersby(5).............................. 197,000 1.6
John R. Lowden(6)..................................... 184,860 1.5
Thomas H. Quinn(7).................................... 175,200 1.4
Thomas G. Kasvin(8)................................... 62,600 *
William C. Ballard(9)................................. 21,000 *
Michael Piron(10)..................................... 26,000 *
D. Patrick Curran(11)................................. 15,000 *
Gary S. Wade(12)...................................... 36,300 *
Paul D. Rhines........................................ 10,343 *
All directors and executive officers as a group (16
persons)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)........ 1,768,822 14.6%
</TABLE>
A-13
<PAGE> 39
<TABLE>
<CAPTION>
COMMON
STOCK
BENEFICIALLY PERCENTAGE
NAME OWNED(1) OWNERSHIP(1)
- ---- ------------ ------------
<S> <C> <C>
OTHER PRINCIPAL STOCKHOLDERS:
Sanford C. Bernstein & Co. Inc. (13).................. 1,222,650 10.1%
FMR Corp.(14)......................................... 1,065,400 8.8%
T. Rowe Price Associates, Inc.(15).................... 994,900 8.2%
1838 Investment Advisors, Inc. (16)................... 697,963 5.8%
</TABLE>
- -------------------------
* Indicates beneficial ownership of less than 1% of shares of Common Stock.
(1) Calculated pursuant to Rule 13d-3(d) of the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options, warrants,
rights or conversion privileges exercisable within 60 days are deemed
outstanding for the purpose of calculating the number and percentage owned
by such person, but not deemed outstanding for the purpose of calculating
the percentage owned by each other person listed.
(2) Includes 2,000 shares of Common Stock held by Thomas C. Boucher, 2,000
shares of Common Stock held by Peter C. Boucher, 2,000 shares of Common
Stock held by Hayden W. Boucher, each under the Uniform Gifts to Minors Act
and for each of which Mr. Boucher disclaims beneficial ownership, 6,500
shares of Common Stock held by the Jonathan F. Boucher Profit Sharing Plan,
of which Mr. Boucher is trustee, and 3000 Shares are owned by the Jonathan
F. Boucher Money Purchase Plan of which Mr. Boucher is a Trustee. Mr.
Boucher is a managing director of The Jordan Company, an entity with which
Messrs. Jordan, Zalaznick, Quinn and Lowden are also affiliated. Mr.
Boucher's address is c/o The Jordan Company, 767 Fifth Avenue, 48th Floor,
New York, New York 10153
(3) Includes 332,140 shares of Common Stock held by John W. Jordan II Revocable
Trust, of which Mr. Jordan is trustee. Mr. Jordan is a managing director of
The Jordan Company, an entity with which Messrs. Boucher, Quinn, Zalaznick
and Lowden are also affiliated. Mr. Jordan's address is c/o The Jordan
Company, 767 Fifth Avenue, 48th Floor, New York, New York 10153 .
(4) Includes 7,000 shares of Common Stock held by Amy Y. Zalaznick 1995
Irrevocable Trust, 7,000 shares of Common Stock held by Jeffrey C. Zalaznick
1995 Irrevocable Trust and 7,000 shares of Common Stock held by Samantha M.
Zalaznick 1995 Irrevocable Trust, for each of which Mr. Zalaznick's wife is
trustee and for each of which Mr. Zalaznick disclaims beneficial ownership.
Mr. Zalaznick is a managing director of The Jordan Company, an entity with
which Messrs. Boucher, Jordan, Quinn and Lowden are also affiliated. Mr.
Zalaznick's address is c/o The Jordan Company, 767 Fifth Avenue, 48th Floor,
New York, New York 10153.
(5) Includes 7,632 shares of Common Stock held by the William C. Weathersby
Irrevocable Trust F/B/O Marcus D. Weathersby, 7,632 shares of Common Stock
held by the William C. Weathersby Irrevocable Trust F/B/O William C.
Weathersby, Jr., and immediately exercisable options to purchase 28,000
shares of Common Stock. Mr. Weathersby's address is c/o American Safety
Razor Company, P.O. Box 500, Staunton, Virginia 24402
A-14
<PAGE> 40
(6) Includes 2,500 shares of Common Stock held by the Trust F/B/O John R.
Lowden, of which Mr. Lowden is co-trustee. Mr. Lowden is a managing director
of The Jordan Company, an entity with which Messrs. Boucher, Jordan, Quinn
and Zalaznick are also affiliated. Mr. Lowden's address is c/o The Jordan
Company, 767 Fifth Avenue, 48th Floor, New York, New York 10153
(7) Mr. Quinn is President and Chief Operating Officer of Jordan Industries,
Inc., a company affiliated with The Jordan Company, an entity with which
Messrs. Boucher, Jordan, Zalaznick and Lowden are also affiliated. Mr.
Quinn's address is c/o Jordan Industries, Inc. 1751 Lake Cook Road, Suite
550, Deerfield, Illinois 60015.
(8) Includes 800 shares of Common Stock owned by Mr. Kasvin's wife, which shares
Mr. Kasvin is deemed to beneficially own, and immediately exercisable
options to purchase 35,000 shares of Common Stock. Mr. Kasvin's address is
c/o American Safety Razor Company, P.O. Box 500, Staunton, Virginia 24402.
(9) Includes 4,000 shares of Common Stock held by the Charitable Remainder Trust
F/B/O Julie W. Ballard, 2,000 shares of Common Stock held by the Charitable
Remainder Trust F/B/O of Elizabeth Ballard Lebhor and 2,000 shares of Common
Stock held by the Charitable Remainder Trust F/B/O William C. Ballard, III,
for each of which Mr. Ballard is trustee, and immediately exercisable
options to purchase 10,000 shares of Common Stock. Mr. Ballard's address is
3300 National City Tower, 101 So. 5th St., Louisville, KY 40202.
(10) Includes immediately exercisable options to purchase 26,000 shares of
Common Stock. Mr. Piron's address is c/o American Safety Razor Company,
P.O. Box 500, Staunton, Virginia 24402.
(11) Includes immediately exercisable options to purchase 10,000 shares of
Common Stock. Mr. Curran's address is P.O. Box 419389, Kansas City, MO
64141-6389.
(12) Includes immediately exercisable options to purchase 22,000 shares of
Common Stock. Mr. Wade's address is c/o American Safety Razor Company, P.O.
Box 500, Staunton, Virginia 24402.
(13) As of January 8, 1999, Sanford C. Bernstein & Co. Inc. Investment Research
and Management ("Bernstein"), an investment advisor registered under
Section 203 of the Investment Advisers Act of 1940, beneficially owned
1,222,650 shares of Common Stock. Bernstein has sole voting power with
respect to 1,008,000 shares of Common Stock and shared voting power with
respect of 25,295 shares of Common Stock. Voting power is shared with
Bernstein clients who have appointed an independent voting agent with
instructions to vote shares in the same manner as Bernstein. Berstein has
sole dispositive power with respect to 1,222,650 shares of Common Stock.
The address of Bernstein is One State Street Plaza, New York, New York
10004-1545.
(14) As of February 1, 1999, Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR Corp. ("FMR"), beneficially
owned 1,065,400 shares of Common Stock as a result of acting as investment
adviser to various investment companies registered under Section 8 of the
Investment Company Act of 1940. FMR, through its control of Fidelity, has
sole dispositive power with respect to 1,065,400 shares of Common Stock and
no voting power with respect to 1,065,400 shares of Common Stock. Such
voting power resides with the Boards of Trustees of the funds. FMR carries
out the voting of the shares under written guidelines
A-15
<PAGE> 41
established by the funds' Boards of Trustees. The 1,065,400 shares of Common
Stock are also beneficially owned by Fidelity Low-Priced Stock Fund ("Stock
Fund"). The address of Fidelity, FMR and Stock Fund is 82 Devonshire Street,
Boston, Massachusetts 02109.
(15) As of February 12, 1999, T. Rowe Price Associates, Inc. ("Price"), an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940, beneficially owned 994,900 shares of Common Stock. Included in
the 994,900 shares are 700,000 shares of Common Stock which are
beneficially owned by T. Rowe Price Small Cap Value Fund ("Small Cap"), an
investment company registered under Section 8 of the Investment Company Act
of 1940 as to which Price serves as advisor. As to the 994,900 shares of
Common Stock: (i) Price has sole voting power with respect to 274,200
shares of Common Stock and Small Cap has sole voting power with respect to
700,000 shares of Common Stock and (ii) Price has sole dispositive power
with respect to 994,900 shares of Common Stock. The shares of Common Stock
are owned by various individual and institutional investors, which Price
serves as investment adviser with the power to direct investments and/or
sole power to vote the securities. For purposes of the Exchange Act, Price
is deemed to be the beneficial owner of such securities, however Price
expressly disclaims beneficial ownership of such securities. The address of
Price and Small Cap is 100 E. Pratt Street, Baltimore, Maryland 21202.
(16) As of February 3, 1999, 1838 Investment Advisors, Inc. ("1838"), an
investment advisor registered under Section 203 of the Investment Advisers
Act of 1940, beneficially owned 697,963 Shares of Common Stock. As to the
697,963 Shares of Common Stock 1838 has: (i) sole voting power with respect
to 434,311 Shares of Common Stock and (ii) sole dispositive power with
respect to 697,963 Shares of Common Stock. The Shares of Common Stock are
owned by various individual and institutional investors, which 1838 serves
as investment advisor with the power to direct investment and/or sale power
to vote the securities. The address of 1838 is 5 Radnor Corp. Center, Suite
320, Radnor, PA 19087.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons beneficially owning more than 10% of the
outstanding Common Stock of the Company to file reports of ownership and changes
in ownership with the Commission. Officers, directors and greater than 10%
holders of Common Stock are required by the Commission regulation to furnish the
Company with copies of all Section 19(a) forms they file.
Based solely on copies of such forms furnished as provided above, or written
representations that no forms were require, the Company believes that for the
fiscal year ended December 31, 1998, all Section 16(a) filing requirements
applicable to its officers, directors and owners of greater than 10% of its
Common Stock were complied with.
A-16
<PAGE> 42
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF THE PURCHASER AND THE PARENT
1. Directors and Executive Officers of the Purchaser and Parent. The name,
present principal occupation or employment and five-year employment history of
each director and executive officer of the Parent and the Purchaser are set
forth below. All persons listed below are citizens of the United States. The
business address of each of the Parent and the Purchaser is c/o J.W. Childs
Equity Partners II, L.P., One Federal Street, 21st Floor, Boston, MA 02110.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
Adam L. Suttin......................... Sole Director and President of both the Parent
and the Purchaser. Managing Director of J.W.
Childs Associates, L.P. since December 1997. Vice
President of J.W. Childs Associates, L.P. from
July 1995 to December 1997. Mr. Suttin was an
executive at the Thomas H. Lee Company from
August, 1989 to 1995, most recently holding the
position of Associate.
B. Lane MacDonald...................... Vice President and Secretary of both the Parent
and the Purchaser. Associate at J.W. Childs
Associates, L.P. since 1998. Assistant Vice
President at BancBoston Capital from 1995 to
1998. Financial Analyst at Robertson, Stephens
and Co. from 1992 to 1993.
Allan A. Dowds......................... Vice President and Treasurer of both the Parent
and the Purchaser. Chief Financial Officer of
J.W. Childs Associates, L.P. since 1995. Manager
of Accounting and Reporting at Snapple Beverage
Corporation from 1993 to 1995.
</TABLE>
2. Directors and Executive Officers of J.W. Childs. The name, present principal
occupation or employment and five-year employment history of directors and
officers of J.W. Childs are set forth below. All persons listed below are
citizens of the United States. The business address of all persons set forth
below is c/o J.W. Childs Equity Partners II, L.P., One Federal Street, 21st
Floor, Boston, MA 02110.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
John W. Childs......................... Sole Director, President and Treasurer of J.W.
Childs since July 1995. Prior to that time, he
was an executive at the Thomas H. Lee Company
from May 1987, most recently holding the position
of Senior Managing Director.
Steven G. Segal........................ Senior Managing Director since December 1997.
Managing Director of J.W. Childs Associates,
L.P., from July 1995 to December 1997. Managing
Director at the Thomas H. Lee Company, 1994-1995.
Associate at the Thomas H. Lee Company from 1987
to 1994.
</TABLE>
I-1
<PAGE> 43
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
---- ---------------------------------------------
<S> <C>
Adam L. Suttin......................... Sole Director and President of both the Parent
and the Purchaser. Managing Director of J.W.
Childs Associates, L.P. since December 1993. Vice
President of J.W. Childs Associates, L.P. from
July 1995 to December 1997. Mr. Suttin was an
executive at the Thomas H. Lee Company from
August, 1989 to 1995, most recently holding the
position of associate.
Glenn A. Hopkins....................... Managing Director, J.W. Childs Associates, L.P.,
since December 1997. Vice President, J.W. Childs
Associates, L.P., from September, 1995 to
December, 1997. Financial Analyst and Associate
at the Thomas H. Lee Company from 1989 to 1995.
Edward Yun............................. Vice President, J.W. Childs Associates, L.P.,
since December 1997. Associate, J.W. Childs
Associates, L.P. from August 1996 to December
1997. Associate at DLJ Merchant Banking Partners
from 1994 to 1996.
Dana L. Schmaltz....................... Vice President, J.W. Childs Associates, L.P.
since December, 1997. Associate, J.W. Childs
Associates, L.P., from February 1997 through
December 1997. Associate at DLJ Merchant Banking
Partners, 1995 to 1997. Associate, NTC Group,
1991 to 1993.
</TABLE>
I-2
<PAGE> 44
EXHIBIT B
Investment Banking Division
Paine Webber Incorporated
1285 Avenue of the Americas
New York, NY 10019
212 713-2000
February 12, 1999
Board of Directors
American Safety Razor Company
One Razor Blade Lane
P.O. Box 979
Verona, VA 24482-0979
Ladies and Gentlemen:
RSA Acquisition Corp. (the "Purchaser"), a wholly-owned subsidiary of RSA
Holdings Corp. of Delaware (the "Acquiring Company"), proposes to enter into an
agreement (the "Agreement") pursuant to which the Purchaser will make a tender
offer (the "Offer") for any and all shares of the common stock, par value $0.01
per share (the "Shares"), of American Safety Razor Company (the "Company").
Pursuant to the Offer, each shareholder of the Company whose Shares are accepted
will be entitled to receive $14.125 in cash per Share. You have informed us that
the Offer is expected to commence in February 1999 and close in April 1999. The
Agreement also provides that, following consummation of the Offer, the Company
will be merged with the Purchaser in a transaction (the "Merger") in which each
Share will be converted into the right to receive $14.125 in cash.
You have asked us whether or not, in our opinion, the proposed cash
consideration to be received by the shareholders of the Company pursuant to the
Offer and the Merger is fair to the shareholders of the Company, other than the
Purchaser and the Acquiring Company, from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
Reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the three fiscal years ended December 31, 1997 and the
Company's Form 10-Q and the related unaudited financial information for the
nine months ended September 30, 1998;
Reviewed certain information, including financial forecasts, relating to
the business, earnings, cash flow, assets and prospects of the Company,
furnished to us by the Company;
Conducted discussions with members of senior management of the Company
concerning its businesses and prospects;
Reviewed the historical market prices and trading activity for the Shares
and compared them with that of certain publicly traded companies which we
deemed to be relevant;
Compared the results of operations of the Company with that of certain
companies which we deemed to be relevant;
B-1
<PAGE> 45
Compared the proposed financial terms of the Offer and the Merger with
those of certain other business combinations which we deemed to be
relevant;
Reviewed a draft of the Agreement dated February 12, 1999; and
Reviewed such other financial studies and analyses and performed such other
investigations and took into account such other matters as we deemed
necessary, including our assessment of general economic, market and
monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness of all
information that was publicly available, supplied or communicated to us by or on
behalf of the Company, and we have not assumed any responsibility to
independently verify such information. With respect to the financial forecasts
examined by us, we have assumed that they were reasonably prepared on bases
reflecting the best currently available estimates and good faith judgments of
the management of the Company as to the future performance of the Company. We
have also relied upon assurances of the management of the Company that they are
unaware of any facts that would make the information or financial forecasts
provided to us incomplete or misleading. We have not made any independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of the Company nor have we been furnished with any such evaluations or
appraisals. We have also assumed, with your consent, that any material
liabilities (contingent or otherwise, known or unknown) of the Company are as
set forth in the consolidated financial statements of the Company. Our opinion
is based on economic, monetary and market conditions existing on the date
hereof.
Our opinion is directed to the Board of Directors of the Company and does not
constitute a recommendation to any shareholder of the Company as to whether any
such shareholder should or should not tender his or her shares in the Offer or
as to how any shareholder should vote on the Merger. This opinion does not
address the relative merits of the Offer and the Merger and any other
transactions or business strategies discussed by the Board of Directors of the
Company as alternatives to the Offer and the Merger or the decision of the Board
of Directors of the Company to proceed with the Offer and the Merger.
In the ordinary course of business, PaineWebber Incorporated may trade in the
securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold long or short positions in such
securities.
PaineWebber Incorporated is currently acting as financial advisor to the Company
in connection with the Offer and the Merger and will be receiving a fee in
connection with the rendering of this opinion and upon consummation of the Offer
and the Merger.
On the basis of, and subject to the foregoing, we are of the opinion that the
proposed cash consideration to be received by the shareholders of the Company
pursuant to the Offer and the Merger is fair to the shareholders of the Company,
other than the Purchaser and the Acquiring Company, from a financial point of
view.
B-2
<PAGE> 46
This opinion has been prepared for the information of the Board of Directors of
the Company in connection with the Offer and the Merger and shall not be
reproduced, summarized, described or referred to, provided to any person or
otherwise made public or used for any other purpose without the prior written
consent of PaineWebber Incorporated; provided, however, that this opinion may be
reproduced in full in the Offer materials to be filed with the Securities and
Exchange Commission and distributed to the Company's shareholders in connection
with the Offer and the Merger. Notwithstanding the foregoing, the Company may
publicly announce that PaineWebber Incorporated represented the Company in
connection with the Offer and the Merger and delivered a fairness opinion in
connection therewith.
Very truly yours,
/s/ PAINEWEBBER INCORPORATED
PaineWebber Incorporated
B-3
<PAGE> 1
EXHIBIT (a)(1)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 12, 1999, by and
among RSA Holdings Corp. of Delaware, a Delaware corporation ("Parent"), RSA
Acquisition Corp., a Delaware corporation and a subsidiary of Parent (the
"Purchaser") and American Safety Razor Company, a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
the Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all of the shares of
Common Stock, par value $0.01 per share, of the Company (the "Shares") at a
price per share of $14.125 net to the selling stockholders in cash (such price
as it may hereafter be increased, the "Share Offer Price") upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, pursuant to the Merger (as defined) Purchaser shall pay and
cash out all options outstanding on the date hereof issued and exercisable under
the Option Plan (as hereinafter defined) at a price per option net to the
selling stockholder in cash equal to the difference between the Share Offer
Price and the exercise price of such options under the Option Plan (the "Option
Offer Price");
WHEREAS, the Board of Directors of the Company (the "Board") has
approved the Offer and the Merger as fair and advisable to the Company's
stockholders and is recommending that the Company's stockholders accept the
Offer;
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the merger of the Purchaser with and into the
Company, as set forth be low (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "GCL") and upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding Share not owned directly or indirectly by Parent or the Company will
be converted into the right to receive the Share Offer Price applicable thereto
in cash;
WHEREAS, concurrently with the execution and delivery of the Merger
Agreement, Parent, certain shareholders of the Company and certain executive
officers of the Company, including but not limited to the partners, principals,
officers, employees and affiliates of The Jordan Company ("TJC") (the "Principal
Holders"), have entered into a Shareholders Agreement dated as of the date
hereof in the form of Exhibit A hereto (the "Shareholders Agreement", and,
together with the Confidentiality Agreement (as hereinafter defined), the
"Related Agreements");
<PAGE> 2
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) So long as this agreement shall not have been terminated in
accordance with Section 8.01 and none of the events set forth in Annex I hereto
(as hereinafter provided) shall have occurred or exist, the Purchaser shall, and
Parent shall cause the Purchaser to, commence (within the meaning of Rule
14d-2(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) as promptly as practicable after the date hereof, but in any event not
later than the fifth business day following the date hereof, the Offer for all
outstanding Shares at the Share Offer Price applicable to such Shares, net to
the seller in cash in accordance with this Agreement. The initial expiration
date for the Offer shall be the twentieth business day from and after the date
the Offer is commenced, including the date of commencement as the first business
day in accordance with Rule 14d-2 under the Exchange Act (the "Initial
Expiration Date"). As promptly as reasonably practicable, on the commencement
date of the Offer, the Parent and the Purchaser shall file with the Securities
and Exchange Commission (the "SEC"), with respect to the Offer, the Purchaser's
Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") (together with
any supplements or amendments thereto, the "Offer Documents"), which shall
contain (as an exhibit thereto) the Purchaser's Offer to Purchase (the "Offer to
Purchase") which shall be mailed to the holders of Shares with respect to the
Offer. The Company and its counsel shall be given an opportunity to review and
comment upon the Offer Documents and any amendment or supplement thereto prior
to the filing thereof with the SEC, and Parent and Purchaser shall consider such
comments in good faith. Parent and Purchaser agree to provide to the Company and
its counsel any comments which Parent, Purchaser or their counsel may receive
from the Staff of the SEC with respect to the Offer Documents promptly after
receipt thereof. The obligation of Parent to accept for payment or pay for any
Shares tendered pursuant to the Offer will be subject to the satisfaction or
waiver (to the extent permitted by this Agreement) of the conditions set forth
in Annex I hereto (the "Offer Conditions"). Without the prior written consent of
the Company, the Purchaser shall not decrease the price per Share or change the
form of consideration payable in the Offer, decrease the number of Shares sought
to be purchased in the Offer, change the conditions set forth in Annex I, waive
the Minimum Condition (as defined in Annex I), impose additional conditions to
the Offer, except as otherwise provided herein, extend the Initial Expiration
Date or amend any other term of the Offer in any
2
<PAGE> 3
manner adverse to the holders of any Shares. Subject to the terms of the Offer
and this Agreement and the satisfaction or waiver (to the extent permitted by
this Agreement) of all the conditions of the Offer set forth in Annex I hereto
as of the Initial Expiration Date or any expiration date permitted by the
Agreement, Parent will accept for payment and pay for all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
such expiration date of the Offer. Subject to Section 8.01, if the conditions
set forth in Annex I hereto are not satisfied or, to the extent permitted by
this Agreement, waived by the Parent, as of the Initial Expiration Date (or any
subsequently scheduled expiration date), Parent will extend the Offer from time
to time for the shortest time periods permitted by law and which it reasonably
believes are necessary until the consummation of the Offer; provided that
notwithstanding the satisfaction of the Offer Conditions the Parent and the
Purchaser shall have the right, after consultation with the Company, to extend
the Offer for up to 10 business days after the Initial Expiration Date,
notwithstanding the prior satisfaction of the Offer Conditions. Each of Parent
and the Purchaser shall use its reasonable best efforts to avoid the occurrence
of any event specified in Annex I or to cure any such event that shall have
occurred.
(b) The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or the Purchaser with respect to information supplied by the Company in writing
for inclusion in the Offer Documents. Each of Parent and the Purchaser, on the
one hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and the
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
stockholders of the Company, in each case as and to the extent required by
applicable federal securities laws.
SECTION 1.02 Company Actions.
(a) The Company shall promptly file with the SEC and mail to the
holders of Shares a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (together with any amendments or supplements thereto, the
"Schedule 14D-9"). The Schedule 14D-9 will set forth, and the Company hereby
represents and warrants, that the Board, at a meeting duly called and held, has
(i) determined that the Offer and the Merger are fair and advisable to and in
the best interests of the Company and its stockholders, (ii) approved the Offer,
the Merger and the Shareholders Agreement in accordance with Section 203 of the
GCL, and (iii) resolved to recommend acceptance of the Offer and approval and
adoption of the Merger and this Agreement by the Company's stockholders (in
accordance with the requirements of the Company's certificate of incorporation
and of applicable law); provided, however, that prior to consummation of the
Offer such recommendation and approval may be withdrawn, modified or amended if
the Board by majority vote shall have determined in good faith, based upon the
3
<PAGE> 4
advice of outside legal counsel to the Company, that such determination to
withdraw, modify or amend would be necessary in order to comply with the Board's
fiduciary duty under applicable law. The Company hereby further represents and
warrants that PaineWebber, Incorporated (the "Financial Advisor") has delivered
to the Board its written opinion that the consideration to be received by the
holders of the Shares pursuant to each of the Offer and the Merger is fair to
such holders from a financial point of view. The Company has been authorized by
the Financial Advisor to permit, subject to prior review and consent by such
Financial Advisor (such consent not to be unreasonably withheld), the inclusion
of such fairness opinion (or a reference thereto) in the Offer Documents and in
the Schedule 14D-9 referred to below and the Proxy Statement. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Board described in this Section 1.02(a).
(b) The Schedule 14D-9 and all amendments thereto will comply in all
material respects with the Exchange Act and the rules and regulations
promulgated thereunder and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by the Parent or Purchaser for inclusion in the Schedule 14D-9. Each of
the Company, on the one hand, and Parent and the Purchaser, on the other hand,
agree promptly to correct any information provided by either of them for use in
the Schedule 14D-9 if and to the extent that it shall have become false or
misleading, and the Company further agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the stockholders of the Company, in each case as and to the
extent required by applicable federal securities law.
(c) Parent and its counsel shall be given an opportunity to review and
comment upon the Schedule 14D-9 and any amendment or supplement thereto prior to
the filing thereof with the SEC, and the Company shall consider any such
comments in good faith. The Company agrees to provide to Parent and their
counsel any comments which the Company or its counsel may receive from the Staff
of the SEC with respect to the Schedule 14D-9 promptly after receipt thereof. In
connection with the Offer, the Company will, if reasonably requested by
Purchaser, promptly furnish Purchaser with mailing labels, security position
listings, any non-objecting beneficial owner lists and any available listings or
computer files containing the names and addresses of the record holders of
Shares, each as of a recent date, and shall promptly furnish the Purchaser with
such additional information (including but not limited to updated lists of
stockholders, mailing labels, security position listing and non-objective
beneficial owner lists) and assistance as the Purchaser or its agents or
representatives may reasonably request in connection with communicating the
Offer to the record and beneficial holders of the Shares.
4
<PAGE> 5
SECTION 1.03 Directors.
(a) Subject to compliance with applicable law, promptly upon the
payment by the Purchaser for Shares pursuant to the Offer, and from time to time
thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board as is equal to the product of
the total number of directors on the Board (determined after giving effect to
the directors elected pursuant to this sentence) multiplied by the percentage
that the aggregate number of Common Shares beneficially owned by Parent or its
affiliates bears to the total number of fully diluted Common Shares then
outstanding, and the Company shall, promptly take all actions necessary to cause
Parent's designees to be so elected, including, if necessary, seeking the
resignations of one or more existing directors or increasing the size of the
Board; provided, however, that prior to the Effective Time (as defined in
Section 2.02), the Board shall always have at least three members who are
neither officers, directors, stockholders or designees of the Purchaser or any
of its affiliates ("Purchaser Insiders"). At such times, the Company will use
its reasonable best efforts to cause persons designated by Purchaser to
constitute the same percentage as is on the Board of (i) each committee of the
Board, (ii) each board of directors of each subsidiary of the Company and (iii)
each committee of each such board, in each case only to the extent permitted by
law. If the number of directors who are not Purchaser Insiders is reduced below
three for any reason prior to the Effective Time, the remaining directors who
are not Purchaser Insiders (or if there is only one director who is not a
Purchaser Insider, the remaining director who is not a Purchaser Insider) shall
be entitled to designate a person (or persons) to fill such vacancy (or
vacancies) who is not an officer, director, stockholder or designee of the
Purchaser or any of its affiliates and who shall be a director not deemed to be
a Purchaser Insider for all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees to the
Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 such information with respect to
the Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.03. Parent will
supply any information with respect to itself and its officers, directors and
affiliates required by such Section and Rule to the Company.
(c) From and after the election or appointment of Parent's designees
pursuant to this Section 1.03 and prior to the Effective Time, any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or the Purchaser or waiver of any of the Company's rights hereunder, or any
other action taken by the Board in connection with this Agreement, will require
the concurrence of a majority of the directors of the Company then in office who
are not Purchaser Insiders.
5
<PAGE> 6
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the satisfaction
or waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the GCL, at the Effective Time (as defined in
Section 2.02) the Purchaser shall be merged with and into the Company. Following
the Merger, the separate corporate existence of the Purchaser shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation"). At Parent's election, any direct or indirect subsidiary of Parent
other than Purchaser may he merged with and into the Company instead of the
Purchaser. In the event of such an election, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect such an election.
SECTION 2.02 Effective Time; Closing. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Sections 7.01(a) and (b),
but subject to Section 7.01(c), the Company shall execute in the manner required
by the GCL and deliver to the Secretary of State of the State of Delaware a duly
executed and verified certificate of merger, or, if permitted, a certificate of
ownership and merger, and the parties shall take such other and further actions
as may be required by law to make the Merger effective. The time the Merger
becomes effective in accordance with applicable law is referred to as the
"Effective Time."
SECTION 2.03 Effects of the Merger. The Merger shall have the effects
set forth in the GCL.
SECTION 2.04 Certificate of Incorporation and By-Laws of the Surviving
Corporation.
(a) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
(b) Subject to the provisions of Section 6.01 of this Agreement, the
by-laws of the Purchaser in effect at the Effective Time shall be the by-laws of
the Surviving Corporation, until thereafter amended in accordance with the
provisions thereof and hereof and applicable law.
SECTION 2.05 Directors. Subject to applicable law, the directors of the
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.06 Officers. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal; provided that,
promptly upon the payment by the Purchaser for Shares pursuant to
6
<PAGE> 7
the Offer, any partners, officers or affiliates of TJC who are also officers of
the Company immediately prior to the Effective Time shall resign as officers of
the Company.
SECTION 2.07 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof, each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares held by Parent, the Purchaser, any wholly-owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly-owned subsidiary
of the Company, which Shares, by virtue of the Merger and without any action on
the part of the holder thereof, shall be cancelled and retired and shall cease
to exist with no payment being made with respect thereto, and other than
Dissenting Shares (as defined in Section 3.01)) shall be converted into the
right to receive in cash the Share Offer Price applicable thereto (the "Merger
Price") payable to the holder thereof, and in the case of the Options, net of
taxes required by law to be withheld with respect thereto and without interest
thereon, upon surrender of the certificate formerly representing such Share.
SECTION 2.08 Conversion of Purchaser Common Stock. At the Effective
Time, each share of common stock, par value $0.01 per share, of the Purchaser
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation.
SECTION 2.09 Company Option Plan. Parent and the Company shall take all
actions necessary so that, immediately prior to the Effective Time, (A) each
outstanding option to purchase Common Shares (an "Option") granted under the
American Safety Razor Company Stock Option Plan (the "Option Plan"), whether or
not then exercisable or vested, shall become fully exercisable and vested, (B)
each Option which is then outstanding shall be cancelled and (C) in
consideration of such cancellation, and except to the extent that Parent or the
Purchaser and the holder of any such Option otherwise agree, immediately
following the Effective Time, the Company shall pay to such holders of Options
an amount in respect thereof equal to the product of (1) the excess of the
Merger Price over the exercise price thereof and (2) the number of Common Shares
subject thereto (such payment to be net of taxes required by law to be withheld
with respect thereto). The Company shall use its reasonable best efforts to take
all such action as is necessary prior to the Effective Time to terminate the
Option Plan so that on and after the Effective Time no current or former
employee or director shall have any Option to purchase shares of common stock or
any other equity interest in the Company under the Option Plan. The Company
shall use its reasonable best efforts to obtain any consents as may be necessary
to release the Company from any liability in respect of any Options.
SECTION 2.10 Stockholders' Meeting.
(a) If required by the Company's certificate of incorporation and/or
applicable law in order to consummate the Merger, the Company, acting through
the Board, shall, in accordance with applicable law:
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(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as soon as
practicable following the acceptance for payment of and payment for
Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon this Agreement;
(ii) prepare and file with and to use its reasonable best
efforts to have cleared by the SEC a preliminary proxy statement
relating to the Merger and this Agreement and use its reasonable best
efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy
statement and cause a definitive proxy statement (the "Proxy
Statement") to be mailed to its stockholders and (y) to obtain the
necessary approvals of the Merger and this Agreement by its
stockholders; and
(iii) subject to the fiduciary obligations of the Board under
applicable law as determined in good faith by a majority of the Board
based on the advice of independent outside legal counsel, (A) include
in the Proxy Statement the recommendation of the Board that
stockholders of the Company vote in favor of the approval of the Merger
and the adoption of this Agreement and the written opinion of the
Financial Advisor that the consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is
fair to such stockholders and (B) use its reasonable best efforts to
obtain the necessary adoption of this Agreement.
(b) Parent agrees that it will vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other subsidiaries in favor
of the approval of the Merger and the adoption of this Agreement.
SECTION 2.11 Merger Without Meeting of Stockholders. Notwithstanding
Section 2.10, in the event that Parent, the Purchaser or any other subsidiary of
Parent shall acquire at least 90% of the outstanding shares of each outstanding
class of capital stock of the Company pursuant to the Offer, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the acceptance for payment of and payment
for Shares by the Purchaser pursuant to the Offer without a meeting of
stockholders of the Company, in accordance with Section 253 of the GCL.
SECTION 2.12 Fractional Shares and Payments. In the event that the
aggregate consideration to be received by a holder of Shares pursuant to the
Offer or the Merger for such holders Shares equals, when aggregated, an amount
that includes one-half of one cent, then such amount will be rounded up to the
nearest whole cent.
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ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES AND WARRANTS
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who demands in writing appraisal for such Shares in
accordance with Section 262 of the GCL, if such Section 262 provides for
appraisal rights for such Shares in the Merger ("Dissenting Shares"), shall not
be converted into the right to receive the Merger Price as provided in Section
2.07 but shall be entitled to receive the consideration as shall be determined
pursuant to Section 262 of GCL, unless and until such holder fails to perfect or
withdraws or otherwise loses his right to appraisal and payment under the GCL.
If, after the Effective Time, any such holder fails to perfect or withdraws or
loses his right to appraisal, such Dissenting Shares shall thereupon be treated
as if they had been converted as of the Effective Time into the right to receive
the Merger Price, if any, to which such holder is entitled, without interest or
dividends thereon. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, withdrawals of such demands and
any other instruments served pursuant to the GCL and received by the Company
and, prior to the Effective Time, Parent shall have the right to direct all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 3.02 Payment for Shares.
(a) From and after the Effective Time, a bank or trust company
designated by Parent and reasonably acceptable to the Company shall act as
paying agent (the "Paying Agent") in effecting the payment of the Merger Price
in respect of certificates (the "Share Certificates") that, prior to the
Effective Time, represented Shares entitled to payment of the Merger Price
pursuant to Section 2.07. When and as needed, Parent or the Purchaser shall
deposit, or cause to be deposited, in trust with the Paying Agent the aggregate
Merger Price to which holder of Shares shall be entitled at the Effective Time
pursuant to Section 2.07.
(b) Promptly after the Effective Time, the Paying Agent shall mail to
each record holder of Certificates that immediately prior to the Effective Time
represented Shares (other than Share Certificates representing Dissenting Shares
and Certificates representing Shares held by Parent or the Purchaser, any
wholly-owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly-owned subsidiary of the Company) (i) a form of letter
of transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent and which shall be in such form and have such
other provisions as Parent and Purchaser may reasonably specify and (ii)
instructions for use in surrendering such Certificates and receiving the
aggregate Merger Price in respect thereof. Upon surrender of each such
Certificate together with such letter of transmittal duly completed and validly
executed in accordance with the instructions thereto, the
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Paying Agent shall pay the holder of such Certificate the Merger Price
multiplied by the number of Shares formerly represented by such Certificate in
consideration therefor, and such Certificate shall forthwith be cancelled. Until
so surrendered, each such Certificate (other than Share Certificates
representing Dissenting Shares and Certificates representing Shares held by
Parent or the Purchaser, any wholly-owned subsidiary of Parent or the Purchaser,
in the treasury of the Company or by any wholly-owned subsidiary of the Company)
shall represent solely the right to receive the aggregate Merger Price relating
thereto. No interest or dividends shall be paid or accrued on the Merger Price.
If the Merger Price (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate formerly representing Shares
surrendered therefor is registered, it shall be a condition to such right to
receive such Merger Price, that the Certificate so surrendered shall be properly
endorsed, with signature guaranteed, or otherwise be in proper form for transfer
and that the person surrendering such Certificates shall pay to the Paying Agent
any transfer or other taxes required by reason of the payment of the Merger
Price, to a person other than the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable.
(c) Promptly following the date which is 270 days after the Effective
Time, the Paying Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing a Share shall
thereafter look only to the Surviving Corporation (as a general creditor
thereof) for payment of its claim for the Merger Price (without any interest or
dividends thereon).
(d) No Liability. None of Parent, Purchaser, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates representing Shares shall not have been surrendered prior to
one year after the Effective Time (or immediately prior to such earlier date on
which any Merger Price would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.05(b)), any such Merger Price
shall, to the extent permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(e) Investment in Exchange Fund. The Paying Agent shall invest the
Merger Price as directed by the Surviving Corporation (within guidelines
approved by the Company prior to the Closing Date, which approval shall not be
unreasonably withheld). Any interest resulting from such investment shall be
paid to the Surviving Corporation.
(f) After the Effective Time, there shall be no registrations of
transfers on the stock transfer books of the Surviving Corporation of any Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates formerly representing Shares are presented to the
Surviving Corporation or the Paying Agent, they shall be surrendered and
cancelled in return for the payment of the aggregate Merger Price, relating
thereto, as provided in this Article III.
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(g) No Further Ownership Rights in Shares Exchanged For Cash. All cash
paid upon the surrender for exchange of Certificates representing Shares in
accordance with the terms of this Article III shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the Shares
exchanged for cash theretofore represented by such Certificates in accordance
with the GCL.
(h) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if reasonably
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable and customary amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to the
Certificate, the Paying Agent shall deliver in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Price with respect thereto.
(i) Withholding Rights. In the case of the Options, the Surviving
Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable to any holder of Shares pursuant to this Agreement such
amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or under any provision of state, local or foreign Tax law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser that
except as set forth in the Company's Form 10-K for the year ended December 31,
1997 and the Company's Form 10-Qs for each of the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998 (collectively, the "Recent SEC Reports")
filed with the SEC and except as set forth in the Company Disclosure Statement
delivered to Parent and Purchaser prior to the execution of this Agreement (the
"Company Disclosure Statement"):
SECTION 4.01 Organization and Qualification; Subsidiaries. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The Company and each of the
subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary; except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not reasonably
be expected to have a Material Adverse Effect on the Company. The term "Material
Adverse Effect on the Company" as used in this Agreement, means any change or
effect that would be materially adverse to the
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assets, liabilities, business, operations or financial condition of the Company
and its subsidiaries, taken as a whole, except for any such change or effect
resulting from general economic, financial or market conditions in the United
States.
SECTION 4.02 Certificate of Incorporation and By-Laws. The Company has
heretofore made available to Parent and the Purchaser a complete and correct
copy of the certificate of incorporation and the by-laws, each as amended to the
date hereof, of the Company and its subsidiaries. Such articles of incorporation
and by-laws are in full force and effect and no other organizational documents
are applicable to or binding upon the Company or any of its subsidiaries.
Neither the Company nor any of its subsidiaries is in violation in any material
respect of any of the provisions of its certificate of incorporation or by-laws.
SECTION 4.03 Capitalization. The authorized capital stock of the
Company consists of 25,000,000 Common Shares, 2,900,000 shares of Class B Common
Stock, par value $0.01 per share (the "Class B Common Stock") of the Company,
and 1,000,000 shares of Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), of the Company. As of the date of this Agreement, the
Company had 12,110,049 Common Shares outstanding and no shares of Class B Common
Stock and no shares of Preferred Stock issued or outstanding. The Company has no
shares of capital stock reserved for issuance, except that, as of the date of
this Agreement, there were 750,000 Common Shares reserved for issuance pursuant
to the Option Plan (of which Options to purchase 464,400 Common Shares are
outstanding). The Company Disclosure Statement sets forth the identity of each
holder of Options, and the number of shares of Common Stock and the exercise
price with respect thereto. All the outstanding Common Shares are, and all
Common Shares which may be issued pursuant to the exercise of outstanding
Options will be, when issued in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive (or similar) rights. There are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into securities having
such rights) ("Voting Debt") of the Company or any of its subsidiaries issued
and outstanding. Except as set forth above and except pursuant to the Option
Plan and except for the transactions contemplated by this Agreement, there are
no existing options, warrants, calls, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock of the Company or any of its subsidiaries, obligating the Company
or any of its subsidiaries to issue, transfer, or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any of its subsidiaries or securities
convertible into or exchangeable for such shares or equity interests or
obligations of the Company or any of its subsidiaries to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment. Except (i) as contemplated by this Agreement and (ii)
the Company's obligations under the Option Plan, there are no outstanding
contractual obligations of the Company or any of its subsidiaries to repurchase,
redeem, or otherwise acquire any Common Shares or the capital stock of the
Company or any of its subsidiaries or to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any such
subsidiary or any other entity. Each of the outstanding shares of capital stock
of each of the Company's subsidiaries is duly authorized, validly issued, fully
paid and nonassessable, and all such shares of the Company's
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subsidiaries are owned by the Company or by another wholly owned subsidiary of
the Company and owned in each case free and clear of any lien, claim, option,
charge, security interest, limitation, encumbrance and restriction of any kind
(any of the foregoing being a "Lien"), except such as would not reasonably be
expected to have a Material Adverse Effect on the Company. The Company has
delivered to Parent prior to the date hereof a list of all subsidiaries and
associated entities of the Company which evidences, among other things, the
amount of capital stock or other equity interests owned by the Company, directly
or indirectly, in such subsidiaries or associated entities. No entity in which
the Company owns, directly or indirectly, less than a 50% equity interest is,
individually or when taken together with all such other entities, material to
the business of the Company and its subsidiaries taken as a whole.
SECTION 4.04 Authority Relative to this Agreement; Minimum Condition.
(a) The Company has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby have been duly and
validly authorized and approved by the Board and no other corporate proceedings
on the part of the Company are necessary to authorize or approve this Agreement
or to consummate the transactions contemplated hereby (other than, with respect
to the Merger, the approval and adoption of the Merger and this Agreement by
holders of the Shares to the extent required by the Company's certificate of
incorporation and by applicable law and the filing of appropriate merger
documents as required by the GCL). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
(b) Pursuant to GCL and the Company's Certificate of Incorporation and
By-Laws, the Shares purchased in satisfaction of the Minimum Condition are
sufficient to provide the stockholder vote required to consummate the Merger in
accordance with the Company's Certificate of Incorporation and By-Laws and
Section 251 of the GCL.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) None of the execution, delivery of and performance of this
Agreement by the Company, the consummation by the Company of the transactions
contemplated hereby or compliance by the Company with any of the provisions
hereof will (i) conflict with or violate the certificate of incorporation or
by-laws of the Company or the comparable organizational documents of any of its
subsidiaries, (ii) conflict with or violate any law, regulation or order of any
governmental authority applicable to the Company or any of its subsidiaries, or
by which any of them or any of their respective properties or assets may be
bound or affected, or (iii) result in a violation or breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, (any of the foregoing referred to in clause (ii) or this
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clause (iii) being a "Violation") pursuant to, any loan and credit agreement,
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties may be bound or affected, except (x) in the
case of clause (iii), with regard to the Company's Credit Agreement (as
hereinafter defined) and other indebtedness of the Company set forth in the
Company Disclosure Statement, and (y) in the case of the foregoing clause (ii)
or (iii) for any such Violations which would not reasonably be expected to have
a Material Adverse Effect on the Company or materially adversely affect the
ability of the Company to perform its obligations and consummate the
transactions contemplated hereby.
(b) None of the execution, delivery and performance of this Agreement
by the Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with any of the provisions hereof will
require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing being a
"Consent"), any government or subdivision thereof, or any administrative,
governmental or regulatory authority, agency, court, commission, tribunal or
body, domestic, foreign or supranational (a "Governmental Entity"), except for
(i) compliance with any applicable requirements of the Exchange Act, (ii) the
filing of a certificate of merger, or, if permitted, a certificate of ownership
and merger, pursuant to the GCL, (iii) applicable state takeover and
environmental statutes listed on the Company Disclosure Statement, (iv)
compliance with the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as
amended (the "HSR Act") and any requirements of any foreign or supranational
Anti-Trust Laws (as hereinafter defined) and (v) Consents the failure of which
to obtain or make would not reasonably be expected to have a Material Adverse
Effect on the Company or materially adversely effect the ability of the Company
to consummate the transactions contemplated hereby.
SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements (the "SEC Reports")
required to be filed with the SEC since June 9, 1993. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Exchange Act or the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder applicable, as the case may be, to
such SEC Reports, and none of the SEC Reports (including but not limited to any
financial statements or schedules included or incorporated by reference therein)
contained when filed, or (except to the extent revised or superseded by a
subsequent filing with the SEC) contains any untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(b) The consolidated balance sheets as of December 31, 1997 and 1996
and the related consolidated statements of income, common shareholders' equity
and cash flows for each of the three years in the period ended December 31, 1997
(including the related notes and schedules
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thereto) of the Company contained in the Company's Form 10-K for the year ended
December 31, 1997 included in the SEC Reports present fairly, in all material
respects, the consolidated financial position and the consolidated results of
operations and cash flows of the Company and its consolidated subsidiaries as of
the dates or for the periods presented therein in conformity with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved except as otherwise noted therein, including the
related notes.
(c) The consolidated balance sheets and the related statements of
income and cash flows (including in each case the related notes thereto) of the
Company contained in the Forms 10-Q for the periods ended September 30, 1998,
June 30, 1998 and March 31, 1998 included in the SEC Reports (collectively, the
"Quarterly Financial Statements") have been prepared in accordance with the
requirements for interim financial statements contained in Regulation S-X. The
Quarterly Financial Statements present fairly, in all material respects, the
consolidated financial position and consolidated results of operations and cash
flows of the Company and its consolidated subsidiaries as of the dates and for
the periods presented therein in conformity with GAAP applied on a consistent
basis during the periods involved, except as otherwise noted therein, including
the related notes, provided, that the Quarterly Financial Statements do not
reflect full year end adjustments, accruals, reserves and footnotes.
(d) There are no liabilities of the Company or any of its subsidiaries
of any kind whatsoever, whether or not accrued and whether or not contingent or
absolute, that are material to the Company and its subsidiaries, taken as a
whole, other than (i) liabilities disclosed or provided for in the consolidated
balance sheet of the Company and its subsidiaries at December 31, 1997,
including the notes thereto, (ii) liabilities disclosed in the Recent SEC
Reports, (iii) liabilities incurred on behalf of the Company in connection with
this Agreement and the contemplated Merger, (iv) liabilities incurred in the
ordinary course of business consistent with past practice since September 30,
1998, and (v) other liabilities, none of which (without giving effect to the
materiality qualifier contained in this Section 4.06(d)) would reasonably be
expected to have a Material Adverse Effect.
(e) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Securities
Act and the rules and regulations promulgated thereunder or the Exchange Act and
the rules and regulations promulgated thereunder.
SECTION 4.07 Information. Neither the Schedule 14D-9, the Proxy
Statement, nor any of the information supplied by the Company in writing
specifically for inclusion or incorporation by reference in (i) the Offer
Documents, or (ii) any other document to be filed with the SEC or any other
Governmental Entity in connection with the transactions contemplated by this
agreement and any amendment or supplement to any of the above (the "Other
Filings") will, at the respective times filed with the SEC or other Governmental
Entity and, in addition, in the case of the Proxy Statement, at the date it or
any amendment or supplement is mailed to stockholders,
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at the time of the Special Meeting (as herein defined) and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Purchaser or any of their respective representatives which is contained in the
Schedule 14D-9 or the Proxy Statement. The Proxy Statement will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder, except that no representation is made by the
Company with respect to statements made therein based on information supplied by
Parent or the Purchaser in writing specifically for inclusion in the Proxy
Statement.
SECTION 4.08 Litigation. The Company Disclosure Statement sets forth
each instance in which any of the Company and its subsidiaries or any of their
respective properties (a) is subject to any judgment, order, decree,
stipulation, injunction, or charge or (b) is a party to or the subject of any
material charge, complaint, action, suit, proceeding, hearing, or investigation
of or in any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction, or to the Knowledge of the Company, is
threatened to be a party to or the subject of any such action, except, in each
case, where the judgment, order, decree, stipulation, injunction, charge,
complaint, action, suit, proceeding, hearing, or investigation would not
reasonably be expected to have a Material Adverse Effect on the Company or
unreasonably delay or prevent the consummation of the transactions contemplated
hereby.
SECTION 4.09 Compliance with Applicable Laws. Neither the Company nor
any of its subsidiaries is in conflict with or in default or violation of (i)
any laws, regulations, rules, orders, judgment or decree of any Governmental
Entity applicable to it, such subsidiaries or any of their respective properties
or (ii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except for any such conflicts, defaults or violations which would not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company and its subsidiaries have all permits, licenses, authorizations,
consents, approvals and franchises from governmental agencies required to
conduct their businesses as now being conducted, except for such permits,
licenses, authorizations, consents, approvals, and franchises the absence of
which would not reasonably be expected to have a Material Adverse Effect on the
Company. The business operations of the Company and its subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which, would not reasonably
be expected to have a Material Adverse Effect on the Company.
SECTION 4.10 Employee Benefit Plans.
(a) The Company Disclosure Statement includes a complete list of all
employee benefit plans (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of
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1974, as amended ("ERISA"), including, without limitation, multiemployer plans
within the meaning of ERISA Section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective bargaining,
bonus, incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), providing benefits to any employee or former employee of the Company
and its subsidiaries sponsored or maintained by the Company or any of its
subsidiaries or to which the Company or any of its subsidiaries contributes or
is obligated to contribute (collectively, the "Plans").
(b) With respect to each Plan, the Company has made available to Parent
a true, correct and complete copy of: (i) all material plan documents, benefit
schedules, trust agreements, and insurance contracts and other funding vehicles;
(ii) the three most recent Annual Reports (Form 5500 Series) and accompanying
schedules, if any; (iii) the current summary plan description, if any; (iv) the
three most recent annual financial reports, if any; (v) the three most recent
actuarial reports, if any; and (vi) the most recent determination letter from
the Internal Revenue Service (the "IRS"), if any.
(c) As to each single employer Plan, the Company and each of its
subsidiaries has complied, and is now in compliance, with all provisions of
ERISA, the Code and all laws and regulations applicable to each Plan, except
where the failure to comply would not reasonably be expected to have a Material
Adverse Effect. With respect to each Plan that is intended to be a "qualified
plan" within the meaning of Section 401(a) of the Code ("Qualified Plans"), the
Company has obtained (or has timely applied for), and the IRS has issued, a
favorable determination letter and each such Plan is qualified except where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect on the Company.
(d) All contributions required to be made to any Plan by applicable law
or regulation or by any Plan document or other contractual undertaking, and all
premiums due or payable with respect to insurance policies funding any Plan, for
any period through the date hereof have been timely made or paid in full or, to
the extent not required to be made or paid on or before the date hereof, have
been fully reflected in the financial statements of the Company included in the
SEC Reports to the extent required under generally accepted accounting
principles, except such as would not reasonably be expected to have a Material
Adverse Effect on the Company.
(e) No Plan is subject to Title IV or Section 302 of ERISA or Section
412 or 4971 of the Code. No event has occurred, nor do any circumstances exist
that could result in, any liability under (i) Title IV of ERISA, (ii) Section
302 of ERISA, (iii) Sections 412 and 4971 of the Code, or (iv) the continuation
coverage requirements of section 601 et seq. of ERISA and Section 4980B of the
Code except, in each case, as would not reasonably be expected to have a
Material Adverse Effect on the Company.
(f) With respect to any multiemployer plan (within the meaning of ERISA
Section 4001(a)(3)) to which the Company, its subsidiaries or any member of
their Controlled Group
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(defined as any organization which is a member of a controlled group of
organizations within the meaning of Code Section 414(b), (c), (m) or (o)) has
any liability or contributes (or has at any time within the six year period
prior to the date hereof, contributed or had an obligation to contribute): (i)
none of the Company, its subsidiaries or any member of their Controlled Group
has incurred any withdrawal liability under Title IV of ERISA; and, (ii) no such
multiemployer plan is in reorganization or insolvent (as those terms are defined
in ERISA Sections 4241 and 4245, respectively) except in each case as would not
reasonably be expected to have a Material Adverse Effect on the Company.
(g) With respect to any Plan, no actions, suits or claims (other than
routine claims for benefits in the ordinary course) are pending or, to the
Knowledge of the Company, threatened against the Company or any of its
subsidiaries, which, if adversely determined, would reasonably be expected to
have a Material Adverse Effect on the Company.
(h) No Plan (other than the Option Plan) exists that could result in
the payment to any present or former employee of the Company or its subsidiaries
of any money or other property or accelerate or provide any other rights or
benefits to any present or former employee of the Company or its subsidiaries as
a result of the transaction contemplated by this Agreement, whether or not such
payment would constitute a parachute payment within the meaning of Code Section
280G.
SECTION 4.11 Taxes.
(a) The Company has timely filed (or caused to be timely filed) all
Federal, state, local and foreign income and other tax returns regarding the
Company or its subsidiaries required by law to be filed prior to the date of
this Agreement, (b) such tax returns are correct and complete in all respects,
(c) the Company and its subsidiaries have paid all Federal, state, local or
foreign income and other taxes that are due and payable (including any interest,
penalties or additions to tax that are due with respect thereto) other than
taxes that are being contested in good faith and which have been reserved for in
accordance with GAAP, (d) no tax return of the Company or its subsidiaries is
currently under audit by any taxing authority and no deficiency in the payment
of any taxes by the Company or any subsidiary has been assessed, asserted or, to
the Knowledge of the Company, threatened against the Company or any subsidiary
that remains unsettled as of the date of this Agreement, (e) there are currently
no outstanding waivers of statutes of limitations with any taxing authority by
the Company or the subsidiaries, and (f) the Company has not at any time filed a
consolidated or combined Tax Return as a member of an affiliated group (within
the meaning of Section 1504 of the Code) other than as a group of which the
Company was the parent, except, in the case of clauses (a) through (f), where
any such failure or breach would not reasonably be expected to have a Material
Adverse Effect.
SECTION 4.12 Intellectual Property.
(a) The Company, directly or indirectly, owns, or is licensed or
otherwise possesses legally enforceable rights to use, all patents, trademarks,
trade names, service marks, copyrights,
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and any applications therefor, technology, know-how and tangible or intangible
proprietary information or material that are material to the business of the
Company and its subsidiaries as currently conducted by the Company or its
subsidiaries (the "Company Intellectual Property Rights").
(b) Either the Company or one of its subsidiaries is the sole and
exclusive owner of, or the exclusive or non-exclusive licensee of, with all
right, title and interest in and to (free and clear of any liens or
encumbrances), the Company Intellectual Property Rights, and, in the case of
Company Intellectual Property Rights owned by the Company or any of its
subsidiaries, has sole and exclusive rights (and is not contractually obligated
to pay any compensation to any third party in respect thereof) to the use
thereof or the material covered thereby in connection with the services or
products in respect of which the Company Intellectual Property Rights are being
used. No claims with respect to the Company Intellectual Property Rights have
been asserted or, to the Knowledge of the Company, are threatened by any person
that if adversely determined would reasonably be expected to have a Material
Adverse Effect on the Company (i) to the effect that the manufacture, sale,
licensing, or use of any of the products of the Company or any of its
subsidiaries as now manufactured, sold or licensed or used or proposed for
manufacture, use, sale or licensing by the Company or any of its subsidiaries
infringes on any copyright, patent, trade mark, service mark or trade secret,
(ii) against the use by the Company or any of its subsidiaries of any
trademarks, service marks, trade names, trade secrets, copyrights, patents,
technology or know-how and applications used in the business of the Company and
its subsidiaries are currently conducted, or (iii) challenging the ownership by
the Company or any of its subsidiaries or the validity of any of the Company
Intellectual Property Rights. All registered trademarks, service marks and
copyrights held by the Company are valid and subsisting, except to the extent
any failure does not constitute a Material Adverse Effect on the Company. To the
Knowledge of the Company, there is no unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property Rights by any third
party, including any employee or former employee of the Company or any of its
subsidiaries, which would have Material Adverse Effect on the Company. No
Company Intellectual Property Rights or product of the Company or any of its
subsidiaries is subject to any outstanding decree, order, judgment, or
stipulation restricting in any manner the licensing thereof by the Company or
any of its subsidiaries, except to the extent any such restriction would not
reasonably be expected to have a Material Adverse Effect on the Company. Neither
the Company nor any of its subsidiaries has entered into any agreement (other
than exclusive distribution agreements) under which the Company or its
subsidiaries is restricted from selling, licensing or otherwise distributing any
of its products to any class of customers, in any geographic area, during any
period of time or in any segment of the market, except to the extent any such
restriction would not reasonably be expected to have a Material Adverse Effect
on the Company.
SECTION 4.13 Environmental Matters. Except as would not reasonably be
expected to have a Material Adverse Effect on the Company, (i) the Company and
its subsidiaries are, and have been, in compliance with Environmental Law, (ii)
to the Knowledge of the Company, there has been no release of Hazardous
Substances at, about or under any real property currently or formerly owned or
operated by the Company or any current or former subsidiary thereof, (iii) no
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judicial or administrative proceeding is pending or to the Knowledge of the
Company threatened relating to violation of or liability under or relating to
any Environmental Law, including without limitation violations or liabilities
relating to any off-site disposal or contamination, (iv) the Company and its
subsidiaries have not received in writing any claims or notices alleging any
violation of or liability under or relating to any Environmental Law, and (v)
none of the Company and its subsidiaries has entered into, has agreed to, or is
subject to any settlement judgment, decree, order or other similar obligation
under or relating to any Environmental Law. "Environmental Law" means any and
all applicable foreign, Federal, state or local law (including, without
limitation, common law), statute, regulation, order, decree or judicial opinion
or other governmental requirement having the force and effect of law and
relating to the use, storage, handling or disposal of Hazardous Substances or
the protection of the environment. "Hazardous Substance" means any toxic or
hazardous material or substance that is regulated by or under authority of any
Environmental Law or that could result in liability under Environmental Law,
including without limitation, any petroleum products, asbestos and
polychlorinated biphenyls.
SECTION 4.14 Material Adverse Change. Since September 30, 1998, except
as contemplated by this Agreement, the Company and its subsidiaries, taken as a
whole, have conducted their businesses only in the ordinary course and in a
manner consistent with past practice and, since such date, there has not been:
(i) any change in the assets, liabilities, results of operation, financial
condition or business of the Company or any of its subsidiaries that would
reasonably be expected to have a Material Adverse Effect on the Company; (ii)
any condition, event or occurrence which would reasonably be expected to have a
Material Adverse Effect on the Company; or (iii) any other action which, if it
had been taken after the date hereof, would have required the consent of Parent
under Section 6.01.
SECTION 4.15 Certain Approvals; Take-Over Laws. The Board has taken
appropriate action such that, assuming the accuracy of Parent's representation
in Section 5.06 of this Agreement, the provisions of Section 203 of the GCL will
not apply to any of the transactions contemplated by this Agreement or the
Shareholders Agreement. Other than Section 203 of the GCL, no foreign or state
takeover law is applicable to the transactions contemplated by this Agreement,
including the Offer and the Merger.
SECTION 4.16 Opinion of Financial Advisor. The Company has received the
written opinion of PaineWebber, Incorporated ("PaineWebber") to the effect that
the Share Offer Price to be received by holders pursuant to each of the Offer
and the Merger is fair to the holders of the applicable Shares from a financial
point of view.
SECTION 4.17 Brokers. Except for the engagement of PaineWebber and TJC
Management Corp., none of the Company, any of its subsidiaries, or any of their
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement. True and
correct copies of the Company's agreements with
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PaineWebber and TJC Management Corp. have been provided to Parent prior to the
date of this Agreement.
SECTION 4.18 Insurance. The Company Disclosure Statement contains an
accurate and complete list as of the date of this Agreement of all material
policies of fire, liability, workmen's compensation and other forms of insurance
owned by the Company or its subsidiaries.
SECTION 4.19 Real Estate Matters. (a) The Company or its subsidiaries
has good, valid, and, in the case of Owned Properties (as defined below),
marketable fee title to: (i) all of the material real property and interests in
real property owned by the Company or its subsidiaries, except for properties
sold or otherwise disposed of in the ordinary course of business (the "Owned
Properties"), and (ii) all of the material leasehold estates in all real
properties leased by the Company or its subsidiaries, except leasehold interests
terminated in the ordinary course of business (the "Leased Properties"; the
Owned Properties and Leased Properties being sometimes referred to herein as the
"Real Properties"), in each case free and clear of all mortgages, liens,
security interests, easements, covenants, rights-of-way, subleases and other
similar restrictions and encumbrances ("Encumbrances"); except for (i) liens for
current property taxes and assessments or other governmental charges or levies
not yet due and payable or the validity of which is being contested in good
faith in appropriate proceedings; (ii) liens for mechanics, materialmen,
laborer, warehousemen, carriers and other similar common law or statutory liens
arising in the ordinary course of business which are not yet due and payable;
(iii) zoning, entitlement and other land use and environmental regulations by
governmental agencies provided that such regulations have not been violated;
(iv) Encumbrances which would not reasonably be expected to have a Material
Adverse Effect on the Company; and (v) Encumbrances under the Credit Agreement
(collectively the "Permitted Encumbrances").
(b) Except to the extent that the inaccuracy of any of the following
would not reasonably be expected to have a Material Adverse Effect: (i) each of
the agreements by which the Company has obtained a leasehold interest in each
Leased Property (individually, a "Lease" and collectively, the "Leases") is in
full force and effect in accordance with its respective terms and the Company or
its subsidiary is the holder of the lessee's or tenant's interest thereunder;
(ii) there exists no default by the Company or any of its subsidiaries and, to
the Knowledge of the Company, there exists no default by a landlord or third
party under any Lease and no circumstance exists which, with the giving of
notice, the passage of time or both, is reasonably likely to result in such a
default; (iii) there are no leases, subleases, licenses, concessions or any
other contracts or agreements granting to any person or entity other than the
Company or any of its subsidiaries any right to the possession, use, occupancy
or enjoyment of any Real Property or any portion thereof; and (iv) the current
operations and use of the Real Properties do not violate any statute, law,
regulation, rule, ordinance, permit, requirement, order or decree now in effect.
(c) Except as set forth in the Company Disclosure Statement, neither
the Company nor any of its subsidiaries is obligated under or bound by any
option, right of first refusal, purchase contract, or other contractual right to
sell or dispose of any Owned Property or any portions
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thereof or interests therein which property, portions and interests,
individually or in the aggregate, are material to the Company and its
subsidiaries.
SECTION 4.20 Labor Matters; Compliance. Neither the Company nor any of
its subsidiaries is a party to any agreement pursuant to which a labor
organization is certified under applicable labor law as a bargaining agent for
any of the Company's or any of its subsidiaries' employees, and no such
agreement is being negotiated. There are no representation or certification
proceedings, petitions seeking a representation proceeding, strikes or
organizing activities pending or, to the Knowledge of the Company, threatened to
be brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority (domestic or foreign); except for such
proceedings, petitions, activities or strikes that would not have a Material
Adverse Effect on the Company.
SECTION 4.21 Disclaimer of Other Representations and Warranties;
Disclosure.
(a) The Company does not make, and has not made, any representations or
warranties relating to the Company or any subsidiaries in connection with the
transactions contemplated hereby other than those expressly set forth in this
Article IV. It is understood that Purchaser has fully reviewed the SEC Reports,
Company Disclosure Statement, the materials referenced therein and in the "data
room" relating to the transactions contemplated by this Agreement. It is also
understood that any cost estimates, projections or other productions, any data,
any financial information or any memoranda or presentations are not and shall
not be deemed to be or to include representations or warranties of the Company,
except to the extent otherwise expressly covered by the representations and
warranties the Company hereunder. No person has been authorized by the Company
to make any representation or warranty relating to the Company or any
subsidiary, the businesses of the Company or any subsidiary or otherwise in
connection with the transactions contemplated hereby except as set forth in this
Article IV and, if made, such representation or warranty must not be relied upon
as having been authorized by the Company or any subsidiary of the Company.
(b) Notwithstanding anything to the contrary contained in this
Agreement or in any of the Exhibits or the Company Disclosure Statement, any
information disclosed in one Exhibit or Company Disclosure Statement shall be
deemed to be disclosed for purposes of this Agreement. Certain information set
forth in the Company Disclosure Statement is included solely for informational
purposes and may not be required to be disclosed pursuant to this Agreement. The
disclosure of any information shall not be deemed to constitute an
acknowledgment that such information is required to be disclosed in connection
with the representations and warranties made by the Company in this Agreement or
that it is material, nor shall such information be deemed to establish a
standard of materiality or Material Adverse Effect (and the actual standard of
materiality may be higher or lower than the matters disclosed by such
information).
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware. The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Parent and the Purchaser
each has the requisite corporate power and authority to own, operate or lease
its properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not reasonably
be expected to have a Material Adverse Effect on Parent. The term "Material
Adverse Effect on Parent", as used in this Agreement, means any change in or
effect on the business, operations or financial condition of Parent or any of
its subsidiaries that would reasonably be expected to prevent or materially
delay consummation of the Offer or Merger.
SECTION 5.02 Authority Relative to this Agreement. Each of Parent and
the Purchaser has all necessary corporate power and authority to execute and
deliver this Agreement and each of the Related Agreements to which it is a party
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and each of the Related Agreements to which it is a
party by Parent and the Purchaser and the consummation by Parent and the
Purchaser of the transactions contemplated hereby have been duly and validly
authorized and approved by the Boards of Directors of Parent and the Purchaser
and by Parent as stockholder of the Purchaser and no other corporate proceedings
on the part of Parent or the Purchaser are necessary to authorize or approve
this Agreement or each of the Related Agreements to which it is a party or to
consummate the transactions contemplated hereby. This Agreement and each of the
Related Agreements to which it is a party has been duly executed and delivered
by each of Parent and the Purchaser and, assuming the due and valid
authorization, execution and delivery by the Company, constitutes a valid and
binding obligation of each of Parent and the Purchaser enforceable against each
of them in accordance with its terms, except that such enforceability (i) may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally and (ii) is subject
to general principles of equity.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement and each of
the Related Agreements to which it is a party by the Parent or the Purchaser,
the consummation by the Parent or the Purchaser of the transactions contemplated
hereby or compliance by the Parent or the
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Purchaser with any of the provisions contained in this Agreement and each of the
Related Agreements to which it is a party will (i) conflict with or violate the
organizational documents of the Parent or the Purchaser, (ii) conflict with or
violate any law, regulation or order applicable to Parent or the Purchaser or
any of their subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) result in a Violation
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the Parent
or the Purchaser, or any of their respective subsidiaries, is a party or by
which any of their respective properties may be bound or affected, except in the
case of the foregoing clause (ii) or (iii) for any such Violations which would
not have a Material Adverse Effect on the Parent.
(b) None of the execution and delivery of this Agreement or each of the
Related Agreements to which it is a party by Parent or the Purchaser, the
consummation by Parent or the Purchaser of the transactions contemplated hereby
or compliance by Parent or the Purchaser with any of the provisions hereof will
require any Consent of any Governmental Entity, except for (i) compliance with
any applicable requirements of the Exchange Act, (ii) the filing of a
certificate of merger, or, if permitted, a certificate of ownership and merger,
pursuant to the GCL, (iii) applicable state takeover and environmental statutes,
(iv) compliance with the HSR Act and any requirements of any foreign or
supranational Antitrust Laws and (v) Consents the failure of which to obtain or
make would not reasonably be expected to have a Material Adverse Effect on
Parent.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) the "Other Filings" will, at the respective times filed with the SEC or
other Governmental Entity and, in addition, in the case of the Proxy Statement,
at the date it or any amendment or supplement is mailed to stockholders, at the
time of the Special Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
SECTION 5.05 Financing. Purchaser has received and obtained firm
commitment letters from nationally recognized, financially capable financial
institutions addressed to Purchaser providing for equity, mezzanine and debt
capital and sufficient funds to consummate the Offer, the Merger and the
transactions contemplated hereby and related fees and expenses (the "Commitment
Letters"). The Purchaser is not aware of any reason, condition or circumstance
that would prevent or interfere with funding under the Commitment Letters as
contemplated by this Agreement. True, complete and correct copies of the
Commitment Letters, together with a summary of Purchaser's expected sources and
uses of cash, have been furnished to the Company. All fees and expenses
required, to be paid under the Commitment Letters have been paid by or on behalf
of Purchaser.
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SECTION 5.06 Ownership of Common Shares. Except for the transactions
contemplated by the Shareholders Agreement, as of the date of this Agreement,
neither Parent, Purchaser nor any of their respective subsidiaries or
stockholders beneficially owns any Common Shares.
SECTION 5.07 Brokers. None of Parent, Purchaser, or any of their
respective subsidiaries, officers, directors or employees, has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement for or with respect to which the Company is or might be liable.
SECTION 5.08 Line of Business. Section 5.08 of the Purchaser Disclosure
Statement contains a complete and accurate list of (i) all Persons which Parent,
Purchaser and each of its shareholders controls (as such term is defined in the
HSR Act) and whose principal line of business is in the consumer products
industry and (ii) the principal products produced or manufactured by each such
Person.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as expressly
contemplated by this Agreement, or with the prior written consent of Parent, or
as specified in the Company Disclosure Statement, during the period from the
date of this Agreement to the Effective Time, the Company will, and will cause
each of its subsidiaries to, conduct its operations only in and the Company and
its subsidiaries shall not take any action other than in the ordinary course of
business consistent with past practice and in compliance with applicable laws
(including but not limited to Environmental Laws) and will use commercially
reasonable efforts, and will cause each of its subsidiaries to use commercially
reasonable efforts, to preserve intact the business organization of the Company
and each of its subsidiaries, to keep available the services of its and their
present officers and key employees, and to preserve the present relationships of
the Company and its subsidiaries with customers, suppliers and other persons
with which the Company or any of its subsidiaries has significant business
relations. Without limiting the generality of the foregoing and except as
otherwise expressly contemplated by this Agreement or the Company Disclosure
Statement, the Company will not, and will not permit any of its subsidiaries to,
prior to the Effective Time, without the prior written consent of Parent (which
will not be unreasonably withheld or delayed):
(a) adopt any amendment to its charter or by-laws or
comparable organizational documents;
(b) except for issuances of capital stock of the Company's
subsidiaries to the Company or a wholly-owned subsidiary of the Company,
issue, reissue, sell, pledge, dispose of or encumber or authorize the
issuance, reissuance, sale, pledge, disposition or
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encumbrance of (i) additional shares of capital stock of any class, or
securities convertible into capital stock of any class, or any rights,
warrants or options or other rights of any kind to acquire any
convertible securities or capital stock or any other ownership interest
(including but not limited to stock appreciation rights or phantom
stock) of the Company or any of its subsidiaries other than the issuance
of Common Shares, in accordance with the terms of the instruments
governing such issuance on the date hereof or pursuant to the exercise
of Options outstanding on the date hereof or (ii) any other securities
in respect of, in lieu of, or in substitution for, Common Shares
outstanding on the date hereof;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in
respect of any class or series of its capital stock other than between
any of the Company and any of its wholly owned subsidiaries;
(d) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, or propose to redeem or purchase or otherwise
acquire, any shares of its capital stock, or any of its other
securities;
(e) except for (i) increases in salary, wages and benefits of
officers or employees of the Company or its subsidiaries in the ordinary
course of business and in accordance with past practice, (ii) increases
in salary, wages and benefits granted to officers and employees of the
Company or its subsidiaries in conjunction with new hires, promotions or
other changes in job status in the ordinary course of business for
officers and employees whose aggregate cash compensation is equal to or
less than $75,000 per annum or (iii) increases in salary, wages and
benefits to employees of the Company pursuant to collective bargaining
agreements entered into in the ordinary course of business consistent
with past practice, increase the compensation or fringe benefits payable
or to become payable to its directors, officers or key employees
(whether from the Company or any of its subsidiaries), or pay any
benefit not required by any existing plan or arrangement (including,
without limitation, the granting of stock options, stock appreciation
rights, shares of restricted stock or performance units) or grant any
severance or termination pay to (except pursuant to existing agreements,
plans or policies), or enter into any employment or severance agreement
with, any director, officer or other key employee of the Company or any
of its subsidiaries or establish, adopt, enter into, or amend any
collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, savings, welfare,
deferred compensation, employment, termination, severance or other
employee benefit plan, agreement, trust, fund, policy or arrangement for
the benefit or welfare of any directors, officers or current or former
employees (any of the foregoing being an "Employee Benefit
Arrangement"), except in each case to the extent as required by
applicable law or regulation, provided, however, that nothing herein
will be deemed to prohibit the payment of benefits as they become
payable;
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(f) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof or any material assets, (ii) except for
borrowings under existing lines of credit in the ordinary course of
business, incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans, advances or capital contributions to, or investments in,
any other person, except for bonuses, advances, capital contributions or
investments between any wholly owned subsidiary of the Company and the
Company or another wholly owned subsidiary of the Company, (iii) except
in the ordinary course of business consistent with past practice, make
or start any bid or proposal, or enter into, renew or amend any contract
or agreement that could result in a loss or would involve aggregate
consideration in excess of $0.5 million, (iv) authorize any single
capital expenditure which is in excess of $0.5 million or capital
expenditures which are, in the aggregate, in excess of $1.0 million for
the Company and its subsidiaries taken as a whole, (v) enter into any
transaction, contract or commitment with any affiliate of the Company,
except as contemplated by this Agreement, (vi) sell, lease, license to
others or dispose of any assets outside the ordinary course of business
consistent with past practice which individually or in the aggregate are
material to the Company or (vii) enter into or amend any contract,
agreement, commitment or arrangement with respect to any of the matters
set forth in this Section 6.01(f);
(g) except as may be required as a result of a change in law or
in generally accepted accounting principles, change in any material
respect any of the accounting practices or principles used by it;
(h) make or change any Tax election, make or change any method of
accounting with respect to Taxes, file any amended Tax Return or settle
or compromise any material Tax liability;
(i) settle or compromise any pending or threatened suit, action
or claim which is material or which relates to the transactions
contemplated hereby;
(j) make any change in the key management structure of the
Company or any of its subsidiaries, including, without limitation, the
hiring of additional officers or the termination of existing officers;
(k) transfer or grant any rights under, or enter into any
settlement regarding, the breach or infringement of, any Company
Intellectual Property Rights, or modify any existing rights with respect
thereto;
(l) take any action, including but not limited to introducing a
new product, reasonably likely to expose the Company to any claim that
the Company has violated applicable laws, rules or regulations or any
rights of any other person in any material respect;
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(m) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries not
constituting an inactive subsidiary (other than the Merger);
(n) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
the Company or incurred in the ordinary course of business and
consistent with past practice;
(o) enter into any collective bargaining agreement or any
successor collective bargaining agreement to any collective bargaining
agreement; or
(p) take, or offer or propose to take, or agree to take in
writing or otherwise, any of the actions described in Sections 6.01(a)
through 6.01(o) or any action which would make any of the
representations or warranties of the Company contained in this Agreement
untrue and incorrect as of the date when made in any material respect if
such action had then been taken, or would result in any of the
conditions set forth in Annex I not being satisfied.
SECTION 6.02 Access to Information. From the date hereof until the
Effective Time, the Company will, and will cause its subsidiaries, and each of
their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, provide Parent
and the Purchaser and their respective officers, employees, counsel, advisors
and representatives and financing sources (collectively, the "Parent
Representatives") reasonable access (subject, however, to existing
confidentiality and similar non-disclosure obligations and the preservation of
attorney-client and work product privileges), during normal business hours and
upon reasonable notice, to the offices and other facilities and to the books and
records of the Company and its subsidiaries, and will permit Parent and the
Purchaser to make inspections of such as either of them may reasonably require,
and will cause the Company Representatives and the Company's subsidiaries to
furnish Parent, the Purchaser and the Parent Representatives to the extent
available with such other information with respect to the business and
operations of the Company and its subsidiaries as Parent and the Purchaser may
from time to time reasonably request. Unless otherwise required by law, Parent
and the Purchaser will, and will cause the Parent Representatives to, hold any
such information in confidence until such time as such information otherwise
becomes publicly available through no wrongful act of Parent, the Purchaser or
the Parent Representatives. No investigation pursuant to this Section 6.02 shall
affect any representations or warranties of the parties herein or the conditions
to the obligations of the parties hereto. In the event of termination of this
Agreement for any reason, Parent and the Purchaser will, and will cause the
Parent Representatives to, return to the Company or destroy all copies of
written information furnished by the Company or any of the Company
Representatives to Parent or the Purchaser or the Parent Representatives and
destroy all memoranda, notes and other writings prepared by Parent, the
Purchaser or the Parent Representatives based upon or including the information
furnished by the Company or any of the Company Representatives to
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Parent or the Purchaser or the Parent Representatives (and Parent will certify
to the Company that such destruction has occurred). In addition, Parent will
comply with the terms of the Confidentiality Agreement (as hereinafter defined).
SECTION 6.03 Efforts. (a) Subject to the terms and conditions hereof,
each party hereto shall use their reasonable best efforts to ensure that the
conditions set forth in Article VII and Annex I are satisfied and to consummate
and make effective the transactions contemplated by the Offer, the Merger and
this Agreement as promptly as practicable in accordance with this Agreement.
(b) The Company agrees to provide, and will cause its subsidiaries and
its and their respective officers, employees and advisers to provide, all
reasonable cooperation in connection with the arrangement of any financing
contemplated by the Commitment Letters to be consummated contemporaneous with
the Closing in respect of the transactions contemplated by this Agreement,
including without limitation, participation in meetings, due diligence sessions,
road shows, the preparation of offering memoranda, private placement memoranda,
prospectuses and similar documents. The Company will also provide commercially
reasonable assistance to the Purchaser in connection with the execution and
delivery of any underwriting or placement agreements, pledge and security
documents, other definitive financing documents, or other requested certificates
or documents, as may be requested by Parent or Purchaser, except (i) as
specifically provided in Section 6.16 and (ii) the Company will not be
responsible for any indemnities or expense reimbursements in connection
therewith until the Offer closes.
(c) The Company and the Purchaser will as promptly as practicable file
with the Federal Trade Commission and the Department of Justice the notification
and report forms required for the transactions contemplated hereby and any
supplemental information that may be reasonably requested in connection
therewith pursuant to the HSR Act, which notification and report forms and
supplemental information will comply in all material respects with the
requirements of the HSR Act. Purchaser shall pay all filing fees required with
respect to the notification, report and other requirements of the HSR Act.
(d) If at any time prior to the Effective Time any event or circumstance
relating to either the Company or Parent or the Purchaser or any of their
respective subsidiaries, should be discovered by the Company or Parent, as the
case may be, and which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering parties will promptly inform the
other party of such event or circumstance. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
(e) Each of the parties agrees to cooperate with each other in taking,
or causing to be taken, all actions necessary to delist the Shares from the
NASDAQ National Market; provided, that such delisting shall not be effective
until after the Effective Time. The parties also
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acknowledge that it is Purchaser's intent that the Shares following the Merger
will not be listed on any national securities exchange or quoted on NASDAQ/NMS.
(f) The Purchaser agrees to use reasonable best efforts to promptly
satisfy any conditions in the Commitment Letters, and not to waive or amend, or
provide any waivers, in respect of the Commitment Letters in a manner which
would adversely affect the consummation of the Merger or the Offer in accordance
with this Agreement, including its timing thereof (an "Adverse Manner"). The
Purchaser agrees to fully enforce the Commitment Letters.
(g) Other than pursuant to Section 1.01(a), the Purchaser agrees not to
delay, extend or terminate the Offer or the Merger without the prior written
approval of the Company, unless Purchaser is entitled to terminate this
Agreement pursuant to Section 8.01.
SECTION 6.04 Consents.
(a) Each of the parties will as promptly as practicable (i) make the
required filings with, and take all reasonable steps to obtain the required
authorizations, approvals, consents and other actions of, any Governmental
Entity, (ii) take all reasonable steps (not including the expenditure of money
or the payment or delivery of other consideration) to obtain the required
consents of other persons with respect to the transactions contemplated hereby
and the Shareholders Agreement and (iii) use its reasonable best efforts to
obtain waivers of any Violations that may be caused by, the consummation of the
Offer, the Merger and other transactions contemplated by the Offer and this
Agreement.
(b) Any party hereto shall promptly inform the others of any material
communication from the United States Federal Trade Commission, the Department of
Justice or any other domestic or foreign government or governmental or
multinational authority regarding any of the transactions contemplated by this
Agreement. If any party or any affiliate thereof receives a request for
additional information or documentary material from any such government or
authority with respect to the transactions contemplated by this Agreement, then
such party will endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request. Parent will advise the
Company promptly in respect of any understandings, undertakings or agreements
(oral or written) which Parent proposes to make or enter into with the Federal
Trade Commission, the Department of Justice or any other domestic or foreign
government or governmental or multinational authority in connection with the
transactions contemplated by this Agreement. The parties will use their
respective commercially reasonable best efforts to satisfy the condition in
Section 7.01(d).
SECTION 6.05 Maintenance of Insurance. Each of the Company and its
subsidiaries will continue to carry its existing insurance through the Effective
Time, and shall not allow any breach, default or cancellation (other than
expiration and replacement of policies in the ordinary cause of business) of
such insurance policies or agreements to occur or exist that would reasonably be
expected to have a Material Adverse Effect on the Company.
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SECTION 6.06 Public Announcements. So long as this Agreement is in
effect, Parent, the Purchaser and the Company agree to consult with each other
before issuing any press release or otherwise making any public statement with
respect to the transactions contemplated by this Agreement and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with any
securities exchange.
SECTION 6.07 Employment Benefit Arrangements.
(a) Parent agrees that the Company will honor and, from and after the
Effective Time, Parent will cause the Surviving Corporation to honor and
continue to maintain in full force and effect, all Employee Benefit Arrangements
to which the Company or any of its subsidiaries is presently a party, including
but not limited to the agreements existing on the date hereof between the
Company and certain executives of the Company (the "Executive Protection
Agreements") listed on the Company Disclosure Statement, provided however that
nothing herein shall restrict or limit the surviving corporation's ability to
amend or terminate any Plan.
(b) Parent will cause the Surviving Corporation to take such actions as
are necessary so that, for a period of at least one year from the Effective
Time, employees of the Company and its subsidiaries (excluding employees covered
by collective bargaining agreements) will be provided cash compensation employee
benefit and incentive compensation and similar plans and programs as will
provide compensation and benefits which in the aggregate are substantially
comparable to those provided to such employees by the Plans listed in Section
4.10 of the Company Disclosure Statement; provided, however, that neither the
Parent nor the Surviving Corporation shall have any obligation to provide
benefits substantially, comparable to any Plan providing equity awards.
(c) In any termination or layoff of (i) any employee as of the Effective
Time as a result of the transactions contemplated by this Agreement or (ii) any
employee of the Surviving Corporation as of the Effective Time (a "Hired
Employee") after the Effective Time, Parent will cause the Surviving Corporation
to comply fully, if applicable, with the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN") and all other applicable foreign, Federal
state and local laws, including those prohibiting discrimination and requiring
notice to employees. The Surviving Corporation shall not, and shall cause its
subsidiaries not to, at any time prior to 60 days after the Effective Time,
effectuate a "plant closing" or "mass layoff" as those terms are defined in WARN
affecting in whole or in part any facility, site of employment, operating unit
or employee of the Company or any subsidiary without complying fully with the
requirements of WARN. Parent will bear the cost of compliance with (or failure
to comply with) any such laws.
SECTION 6.08 Indemnification.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in the Certificate of Incorporation and
By-laws of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
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manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers or employees of the Company.
(b) For six years from and after the Effective Time, Parent agrees that
it will or will cause the Surviving Corporation to indemnify and hold harmless
each present and former director, officer and employee of the Company
(collectively, the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") (but only to the extent such
Costs are not otherwise covered by insurance and paid) incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative (collectively, "Claims"), arising out
of or pertaining to matters existing or occurring at or prior to the Effective
Time, including, in any event, in connection with the Offer, the Merger and this
Agreement, whether asserted or claimed prior to, at or after the Effective Time,
to the fullest extent permitted under applicable law (and Parent shall, or shall
cause the Surviving Corporation to, also advance expenses as incurred to the
fullest extent permitted under applicable law provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification).
(c) Parent agrees that the Company and, from and after the Effective
Time, the Surviving Corporation shall use its reasonable best efforts to cause
to be maintained in effect for not less than six years from the Effective Time
the current policies of the directors' and officers' liability insurance
maintained by the Company with respect to matters occurring prior to the
Effective Time; provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that the Surviving Corporation shall not
be required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date hereof and if the Surviving
Corporation is unable to obtain the insurance required by this Section 6.08(c)
it shall obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount.
(d) Any Indemnified Party wishing to claim indemnification under this
Section 6.08, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Parent thereof, but the failure to so
notify shall not relieve Parent of any liability it may have to such Indemnified
Party if such failure does not materially prejudice the Parent. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Closing Date), (i) Parent or the Surviving Corporation shall
have the right to assume the defense thereof and Parent shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Parent or the Surviving Corporation elects
not to assume such defense or counsel for the indemnified parties advises that
there are issues which raise conflicts of interest between Parent or the
Surviving Corporation and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and Parent shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties promptly as statements
therefor are
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received; provided, however, that Parent or the Surviving Corporation shall be
obligated pursuant to this paragraph (d) to pay for only one firm of counsel for
all Indemnified Parties in any jurisdiction unless the use of one counsel for
such Indemnified Parties would present such counsel with a conflict of interest,
(ii) the Indemnified Parties will cooperate in the defense of any such matter
and (iii) Purchaser shall not be liable for any settlement effected without its
prior written consent, which will not be unreasonably withheld; and provided,
further, that Purchaser shall not have any obligation hereunder to any
Indemnified Party if and when a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(e) If the Parent or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and assigns of the
Parent shall assume all of the obligations set forth in this Section 6.08.
(f) The provisions of this Section 6.08 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
SECTION 6.09 No Solicitation. The Company agrees that, prior to the
Effective Time, it shall not, and shall not authorize or permit any of its or
its subsidiaries' directors, officers, employees, agents, advisors or
representatives, directly or indirectly, to (a) solicit, initiate or encourage
or knowingly facilitate the submission of any inquiries or the making of any
proposal (a "Takeover Proposal") with respect to any acquisition or purchase of
a substantial amount of the assets of the Company and its subsidiaries, taken as
a whole, or of over 15% of any class of equity securities or convertible
securities of the Company or any of its subsidiaries, or any tender offer
(including a self tender offer) or exchange offer that if consummated would
result in any person beneficially owning 15% or more of any class of equity
securities or convertible securities of the Company or any of its subsidiaries,
or any merger, consolidation or business combination recapitalization,
reclassification, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries other than the transactions contemplated by
this Agreement and the Shareholders Agreement or any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or Merger or which would reasonably be
expected to materially dilute the benefits to Parent and Purchaser of the
transactions contemplated hereby (each, an "Acquisition Transaction"), (b)
negotiate, explore or otherwise participate in discussions with any person
(other than Parent, Purchaser or their respective directors, officers,
employees, agents and representatives), and including any parties with which the
Company has previously engaged in discussions or negotiations with respect to
any Acquisition Transaction, or furnish to any person (other than Parent,
Purchaser or their respective directors, officers, employees, agents and
representatives) any information with respect to its business, properties or
assets or any of the foregoing, or otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by any
other
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person (other than Parent, Purchaser or their respective directors, officers,
employees, agents and representatives) to do or seek any of the foregoing or (c)
enter into any agreement, arrangement or understanding with respect to, or
endorse, any Takeover Proposal; provided, however, that the foregoing shall not
prohibit the Company from (i) prior to the consummation of the Offer (A)
furnishing information pursuant to a confidentiality letter (provided for
informational purposes to Parent), with terms no less favorable than the
Confidentiality Agreement, concerning the Company and its businesses, properties
or assets to a third party who has made an unsolicited bona fide written
Takeover Proposal, or (B) engaging in discussions or negotiations with such a
third party who has made an unsolicited bona fide written Takeover Proposal or
(ii) following receipt of an unsolicited bona fide written Takeover Proposal but
prior to consummation of the Offer, failing to make or withdrawing or modifying
its recommendation referred to in Section 1.02(a), but in each case referred to
in the foregoing clauses (i) and (ii) only to the extent that the Board of
Directors of the Company shall have concluded in good faith, on the basis of
advice from outside legal counsel and the Company's financial advisors, that (A)
such Takeover Proposal is more favorable to the stockholders of the Company than
the transactions contemplated by this Agreement (taking into account all legal,
financial, regulatory and other aspects of the proposal and the person making
the proposal) and (B) such action is necessary in order for the Board of
Directors to comply with its fiduciary duties to the shareholders of the Company
under applicable law; provided, further, that the Board of Directors of the
Company shall not take any of the foregoing actions referred to in clauses (i)
and (ii) until after notice to Parent and Purchaser with respect to such action
and the Board of Directors shall continue to advise Parent and Purchaser after
taking such action. Nothing herein shall prevent the Board from taking, and
disclosing to the Company's stockholders, a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Exchange Act with regard to any tender offer. In
addition, if the Board of Directors of the Company receives an unsolicited
Takeover Proposal or any inquiry with respect to or which could lead to any
Takeover Proposal, then the Company shall promptly inform Parent and Purchaser
orally and in writing of the terms and conditions of such proposal and the
identity of the person making it.
SECTION 6.10 Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (i) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time or (ii)
to cause any covenant, condition or agreement hereunder not to be complied with
or satisfied in all material respects and (b) any failure of the Company or
Parent, as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification shall affect the
representations or warranties of any party or the conditions to the obligations
of any party hereunder nor shall it limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 6.11 Special Meeting. The Company shall take no action unless
compelled by legal process to call a special meeting of stockholders of the
Company except in accordance
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with this Agreement unless and until this Agreement has been terminated in
accordance with its terms.
SECTION 6.12 Disposition of Litigation. (a) The Company agrees that it
will not settle any litigation currently pending, or commenced after the date
hereof, against the Company or any of its directors by any stockholder of the
Company relating to the Offer or this Agreement, without the prior written
consent of Parent.
(b) The Company will not voluntarily cooperate with any third party
which has sought or may hereafter seek to restrain or prohibit or otherwise
oppose the Offer or the Merger and will cooperate with Parent and Purchaser to
resist any such effort to restrain or prohibit or otherwise oppose the Offer or
the Merger.
SECTION 6.13 Restatement of Financial Advisory Agreement. The Company
has amended and restated the Financial Advisory Agreement, dated July 12, 1995,
between the Company and TJC Management Corp. (the "Financial Advisory
Agreement") in consideration of the payment of fees of not more than $2.5
million to TJC Management (the "TJC Amount") in accordance with a payment letter
acceptable to Parent (the "TJC Letter"). The parties acknowledge that the TJC
Amount is paid in consideration of services in connection with this Agreement,
as well as the transactions contemplated hereby, and such amendment and
restatement, which constitute conditions of Purchaser's willingness to enter
into this Agreement.
SECTION 6.14 Release. Except to the extent that the Released Parties are
shown in a final, unappealable determination by courts of competent jurisdiction
to have engaged in criminal, fraudulent or intentionally improper conduct,
Parent hereby irrevocably and unconditionally releases, acquits and forever
discharges on behalf of itself and any person acting by, through, or under or in
concert with Parent (including the Company) and all persons acting by, through,
under or in concert with any of them (collectively the "Releasees"), or any of
them, each of the directors and officers of the Company (collectively, the
"Released Parties") from any and all charges, complaints, claims, suits,
judgments, demands, actions, obligations or liabilities, damages, causes of
action, rights, costs, loans, debts and expenses (including attorneys' fees and
costs actually incurred) of any nature whatsoever known or unknown, emanating
from, arising out of, or in any way whatsoever arising prior to the Effective
Time or resulting from any action which the Company may have taken or failed to
take in connection with this Agreement and the transactions contemplated hereby,
including the Merger and the Offer, and Parent agrees that neither it, nor any
person acting by, through, or under, Parent shall institute or pursue any action
or actions, cause or causes of action (in law or in equity), suits, or claims in
state or federal court against or adverse to the Released Parties arising from
or attributable to the Releasees in connection with the foregoing.
SECTION 6.15 State Takeover Laws. The Company shall, upon the request of
the Purchaser, take all reasonable steps to assist in any challenge by the
Purchaser to the validity or applicability to the transactions contemplated by
this Agreement, including the Offer and the Merger and the Shareholder's
Agreement, of any state or foreign takeover law.
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SECTION 6.16 The Debt Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.01, and subject to Section
6.16(d), the Company shall, as soon as practicable after the date hereof,
commence an offer to purchase all of the Company's outstanding 9-7/8% Series B
Senior Notes due 2005 (the "Senior Notes") on the terms set forth in Section
6.16 of the Company Disclosure Statement and such other customary terms and
conditions as are reasonably acceptable to Parent (the "Debt Offer"); provided,
that closing of the Debt Offer will be subject to closing the Offer or Merger.
The Company shall waive any of the conditions to the Debt Offer and make any
other changes in the terms and conditions of the Debt Offer as may be reasonably
requested by Parent, and the Company shall not, without Parent's prior consent,
waive any condition to the Debt Offer, make any changes to the terms and
conditions of the Debt Offer set forth in Section 6.16 of the Disclosure
Statement or make any other changes to the terms and conditions of the Debt
Offer. Notwithstanding anything in this Agreement, including the immediately
preceding sentence, to the contrary, the Company shall not be required to accept
for payment or pay for any Senior Notes prior to the closing of the Offer.
(b) Promptly following the date of this Agreement, the Company shall
prepare, subject to reasonable advice and comments of Parent, an offer to
purchase the Senior Notes (or portions thereof) and forms of the related letter
of transmittal (the "Letter of Transmittal") (collectively, the "Debt Offer to
Purchase"), as well as all other information and exhibits required in connection
therewith (collectively, the "Debt Offer Documents"). All mailings to the
holders of Senior Notes in connection with the Debt Offer shall be subject to
the prior review, comment and approval (which will not be unreasonably withheld)
of Parent. The Company will use its reasonable best efforts to cause the Debt
Offer Documents to be mailed to the holders of the Senior Notes as promptly as
practicable following commencement of the Debt Offer in accordance with Section
6.16(a).
(c) The Company covenants and agrees that, subject to the terms and
conditions of this Agreement, including but not limited to the conditions to the
Debt Offer, on the closing of the Debt Offer, the Company will accept for
payment the Senior Notes.
(d)(i) Notwithstanding the foregoing, the Company will not be obligated
to take or refrain from taking any action which it reasonably believes is
inconsistent with applicable law or the terms and conditions of the Senior Notes
or which would impede, delay or interfere with the consummation of the Offer or
the Merger in accordance with this Agreement.
(ii) The Purchaser acknowledges that the Company is making the Debt
Offer at the request and as an accommodation to the Purchaser, and that the Debt
Offer, and its terms, conditions, failure or success, or any claims or actions
relating thereto, will not be grounds for failure of a condition, termination or
delay of the Offer or the Merger, including the conditions thereof, nor
otherwise affect them.
(iii) The Purchaser will pay and reimburse the Company upon request for
all fees and expenses relating to the Debt Offer, including but not limited to
legal fees and expenses,
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accounting fees and expenses, and printing, mailing and filing fees and
expenses, and fees and expenses of banks, financial institutions,
representatives and advisors, and will indemnify the Company and its directors
and officers from and against all claims, lawsuits, losses, expenses and
liabilities, including legal fees and expenses incurred by any of them in
connection with the Debt Offer and this Section 6.16.
(iv) The Purchaser agrees to comply with applicable law and the terms
and conditions of the Senior Notes in connection with the Debt Offer and this
Section 6.16.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Stockholder Approval. If required by the GCL, the
stockholders of the Company shall have duly adopted this Agreement and
approved the transactions contemplated by this Agreement, pursuant to
the requirements of the Company's certificate of incorporation and
applicable law (which the Company has represented shall be solely the
affirmative vote of a majority of the outstanding Shares).
(b) Purchase of Shares. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the
terms hereof; provided, that this condition shall be deemed to have been
satisfied with respect to Parent and the Purchaser if the Purchaser
fails to accept for payment or pay for Shares pursuant to the Offer in
violation of the terms of the Offer.
(c) Injunctions; Illegality. The consummation of the Merger shall
not be restrained, enjoined or prohibited by any order, judgment,
decree, injunction or ruling of a court of competent jurisdiction or any
Governmental Entity and there shall not have been any statute, rule or
regulation enacted, promulgated or deemed applicable to the Merger by
any Governmental Entity which prevents the consummation of the Merger;
provided that the party invoking this condition shall have used their
reasonable best efforts to prevent the entry of such order, judgment,
decree, injunction or ruling and to appeal as promptly as practicable
any such order, judgment, decree, injunction or ruling.
(d) Expiration of HSR Waiting Period. Any waiting period
applicable to the Merger under the HSR Act shall have terminated or
expired.
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ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Offer
and Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
(a) by the mutual written consent of Parent and the Company;
(b) by Parent or the Company if there shall be any statute, law,
rule or regulation that makes consummation of the Offer or the Merger
illegal or prohibited or if any court or other Governmental Entity of
competent jurisdiction or located or having jurisdiction within the
United States or any country or economic region in which either the
Company or the Parent, directly or indirectly, has material assets or
operations shall have issued, enacted, entered, promulgated or enforced
any final order, judgment, decree, injunction, or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Offer
or the Merger and such order, judgment, decree, injunction or ruling
shall have become nonappealable;
(c) by Parent or the Company if (i) the Offer is terminated or
withdrawn pursuant to its terms without any Shares being purchased
thereunder; or (ii) if Purchaser shall have failed to pay for Common
Shares pursuant to the Offer within 55 days following the date hereof;
provided, however, that neither Parent nor the Company, as the case may
be, may terminate the Agreement pursuant to this Section 8.01(c) if
Purchaser's termination or withdrawal of the Offer or failure to pay for
Common Shares pursuant to the Offer has been caused by or results from
the failure of such party seeking to terminate the Agreement to perform
in any material respects any of its covenants or agreements contained in
this Agreement or a material breach of such party's representations and
warranties contained in this Agreement;
(d) by the Company if (i) the Offer shall not be commenced upon
the day specified in Section 1.01, provided, that the failure to so
commence has not been caused by and does not result from the failure of
the Company to perform in any material respect any of its
representations, warranties, covenants or agreements contained in this
Agreement, (ii) there shall have been a breach of any representation,
warranty, covenant or agreement (without regard to any materiality or
Material Adverse Effect qualifier) on the part of Parent or the
Purchaser contained in this Agreement which materially adversely affects
Parent's or Purchaser's ability to consummate (or materially delays
commencement or consummation of) the Offer, and, with respect to any
such breach that is reasonably capable of being cured, which shall not
have been cured prior to the earlier of (A) 10 business days following
notice of such breach and (B) two business days prior to the date on
which the Offer expires, (iii) Purchaser shall have terminated the
Offer, (iv) any of the Commitment Letters shall have been withdrawn,
terminated or modified in an
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Adverse Manner (unless such withdrawn, terminated or modified
Commitment Letters (which shall not include the Commitment Letter of
J.W. Childs Equity Partners II, L.P.) are promptly replaced, with
commitment letters from nationally recognized, capable financial
institutions, having substantially similar commitment, terms and
conditions, including but not limited to the funding and closing
conditions set forth therein, all of which shall be in form and
substance reasonably acceptable to the Company), or (unless with the
Company's prior written approval in accordance with this Agreement) or
(v) prior to the purchase of Shares pursuant to the Offer, any person
shall have made a bona fide Takeover Proposal (A) that the Board of
Directors of the Company determines in its good faith judgment in
consultation with its financial advisor, is more favorable to the
Company's stockholders than the Offer and the Merger (taking into
account all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal) and (B) as a result of
which a majority of the Board of Directors concludes in good faith on
the advice of independent outside legal counsel to the Company that
termination of this Agreement is necessary in order for the Board to
comply with its fiduciary obligations under applicable law; provided,
that such termination under this clause (v) shall not be effective
until the Company has made payment of the full fee and expense
reimbursement required by Section 8.03(b) hereof; or
(e) By Parent prior to the purchase of Shares pursuant to the
Offer, if (i) there shall have been a breach of any representation or
warranty on the part of the Company contained in this Agreement (without
regard to any materiality or Material Adverse Effect qualifier) which
would reasonably be expected to have a Material Adverse Effect on the
Company or which would materially adversely affect (or materially delay)
the commencement or consummation of the Offer, (ii) there shall have
been a breach of any covenant or agreement on the part of the Company
contained in this Agreement (without regard to any materiality or
material Adverse Effect qualifier) which would reasonably be expected to
have a Material Adverse Effect on the Company or which would materially
adversely affect (or materially delay) the consummation of the Offer,
which, in the clause (i) or (ii), if such breach is reasonably capable
of being cured, such breach shall not have been cured prior to the
earlier of (A) 10 days following notice of such breach and (B) two
business days prior to the date on which the Offer expires, (iii) the
Company shall effect, or enter into any agreement with respect to, an
Acquisition Transaction with any person (other than Parent or Purchaser)
or the Board has resolved to do so, (iv) the Board shall have withdrawn
or modified (including by amendment of the Schedule 14D- 9) in a manner
adverse to Purchaser its approval or recommendation of the Offer, this
Agreement or the Merger or shall have recommended another offer or
transaction, or shall have resolved to effect any of the foregoing or
(v) the Minimum Condition (as defined in Annex I hereto) shall not have
been satisfied by the expiration date of the Offer and, in addition, on
or prior to such date, either (A) any person (other than Parent or
Purchaser) shall have made a public proposal, filing, announcement or
communication to the Company with respect to a Significant Acquisition
Transaction (as defined in Section 9.15 hereof) or (B) any person
(including the Company or any of its affiliates or
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subsidiaries), other than Parent or any of its affiliates shall have
become the beneficial owners of 25% or more of the Common Shares.
SECTION 8.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of this Section
8.02, Section 8.03 and the last two sentences of Section 6.02, which shall
survive any such termination. Nothing contained in this Section 8.02 shall
relieve any party from liability for any breach of this Agreement or the
Confidentiality Agreement.
SECTION 8.03 Fees and Expenses. (a) Subject to Sections 8.03(b) and (c)
below, all Expenses (as hereinafter defined) incurred by the parties hereto
shall be borne solely and entirely by the party which has incurred such
Expenses; provided, that all Expenses related to the printing, filing and
mailing of the Offer Documents, the Debt Offer Documents and all Commission and
other regulatory filing fees incurred in connection with the Offer Documents and
Debt Offer Documents allocable to the Company and to Parent or Purchaser,
including legal fees and expenses, as the case may be, shall be paid by
Purchaser.
(b) (i) If this Agreement is terminated by the Company pursuant to
Section 8.01(d)(v) or by the Purchaser pursuant to Section 8.01(e) (iii) or
(iv); or
(ii) (A) If this Agreement is terminated by Parent pursuant to Section
8.01(e)(i), (ii) or (v), and, in addition, (B) following the date of this
Agreement and at or prior to the time of the event giving rise to such
termination there shall have existed a Significant Takeover Proposal with
respect to the Company and (C) within 12 months thereafter, either (1) the
Company enters into an agreement with respect to any Significant Acquisition
Transaction or (2) any Significant Acquisition Transaction occurs;
the Company shall pay to Parent, within one business day following the execution
and delivery of such agreement or such occurrence, as the case may be, or no
later than concurrently with any termination contemplated by Section
8.01(e)(iii) or (iv) or Section 8.01(d)(v), a fee, in cash and in immediately
available funds, of $5.5 million (the "Fee").
(c) If this Agreement is terminated pursuant to Section 8.01(d)(v) or
Section 8.01(e), then the Company shall pay to Purchaser, within one business
day after its receipt of written statements therefor, an amount equal to the
reasonable and documented Expenses set forth in such statement; provided, that
in no event will the amount of the Expenses reimbursed exceed $1 million (the
"Expenses Cap"); provided, however, that the Expenses Cap shall not apply to the
Collection Expenses. Such Expenses shall be in addition to, and not in
substitution for, the Fee paid by the Company, if any, pursuant to Section
8.03(b).
"Expenses" means all out-of-pocket fees and expenses actually incurred
by Parent or Purchaser or on their behalf, whether before or after the execution
and delivery of this Agreement, in connection with the transactions contemplated
by this Agreement, including the
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Merger and the Shareholders Agreement, including without limitation, fees and
reasonable expenses payable to all banks, investment banking firms and other
financial institutions, and their respective agents and counsel, all fees and
reasonable expenses of counsel, accountants, experts and consultants to Parent
or Purchaser, and, further, including without limitation fees and reasonable
expenses of, or incurred in connection with, any litigation or other proceedings
to collect the Fee or the Expenses (the "Collection Expenses").
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement may
be amended by the Company, Parent and the Purchaser at any time before or after
any approval of this Agreement by the stockholders of the Company but, after any
such approval, no amendment shall be made which decreases the Merger Price or
which adversely affects the rights of the Company's stockholders hereunder
without the approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of all the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any time
prior to the Effective Time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other party or in any document, certificate or writing delivered
pursuant hereto by any other party or (iii) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Section 3.02, Section 6.07, Section 6.08, Section 6.13, Section 6.14 and 6.16(d)
shall survive the Effective Time indefinitely (except to the extent a shorter
period of time is explicitly specified therein) and those agreements set forth
in the last two sentences of Section 6.02, Section 8.03 and Article IX shall
survive termination of this Agreement.
SECTION 9.02 Limitation on Warranties. The Company makes no
representations or warranties with respect to any projections, forecasts or
forward-looking information provided to Parent or Purchaser. There is no
assurance that any projected or forecasted results will be achieved. EXCEPT AS
TO THOSE MATTERS COVERED BY THE REPRESENTATIONS AND WARRANTIES IN ARTICLE IV,
THE COMPANY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR
IMPLIED, AS TO ANY OTHER INFORMATION OR MATTERS. Each of Parent and Purchaser
acknowledges that neither the Company, any subsidiary nor any other Person has
made any representation or
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warranty, express or implied, as to the accuracy or completeness of any
information which is not included in this Agreement or the Company Disclosure
Statement, and neither the Company, any subsidiary, nor any other Person will
have or be subject to any liability to Parent or Purchaser, any affiliate
thereof or any other Person resulting from the distribution of any such
information to, or use of any such information by, Parent or Purchaser, any
affiliate thereof or any of their agents, consultants, accountants, counsel or
other representatives. Without limitation of the foregoing, to the extent that
any memoranda or summaries prepared by the Company, any subsidiary or by any of
their respective advisors or representatives regarding the Company, the
subsidiaries, or their respective businesses are or have been provided to Parent
or Purchaser, Parent and Purchaser acknowledge and agree that no representation
or warranty is made to Purchaser or any affiliate thereof or any other Person as
to the completeness or accuracy of such memoranda or summaries.
SECTION 9.03 Company Disclosure Statement. Any fact or item in any
portion of the Company Disclosure Statement shall be deemed to be disclosed with
respect to any other relevant portion, whether or not an explicit
cross-reference appears. No representation or warranty hereunder shall be deemed
to be inaccurate if the actual situation is explicitly disclosed in the
specifically referenced section or cross-section of the Company Disclosure
Statement. Neither the specification of any dollar amount in any representation,
warranty or covenant contained in this Agreement nor the inclusion of any
specific item in the Company Disclosure Statement hereto is intended to imply
that such amount, or higher or lower amounts, or the item so included or other
items, are or are not material, and no party shall use the fact of the setting
forth of any such amount or the inclusion of any such item in any dispute or
controversy between the parties as to whether any obligation, item or matter not
described herein or included in the Company Disclosure Statement is or is not
material for purposes of this Agreement.
SECTION 9.04 Entire Agreement; Assignment.
(a) The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof. This Agreement, the
Related Agreements (including the documents and the instruments referred to
herein and the letter agreements, by and between Purchaser and the Company,
dated December 4, 1997 and January 12, 1999 (collectively, the "Confidentiality
Agreement")), constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
(b) Neither this Agreement and the Related Agreements nor any of the
rights, interests or obligations hereunder or thereunder will be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party except that Parent and Purchaser may
assign all or any of their rights to affiliates with the permission of the
Company, which will not be unreasonably withheld; provided, that no such
assignment shall relieve the assigning party of its obligations hereunder.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
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SECTION 9.05 Binding Agreement. This Agreement and the Related
Agreements shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided, that, except as provided
in Section 9.04(b), no party may assign its rights and obligations under this
Agreement without the prior written consent of the other parties.
SECTION 9.06 Further Assurances. Upon the reasonable request of Parent,
Purchaser or the Company, each party will on and after the Effective Time
execute and deliver to the other parties such other documents, assignments and
other instruments as may be required to effectuate completely the transfer and
assignment to Purchaser of, and to vest fully in Purchaser title to, the Shares,
and to effect and evidence the provisions of this Agreement and the Related
Agreements and the transactions contemplated hereby.
SECTION 9.07 Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity of enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other situation or in any other jurisdiction. If
the final judgement of a court of competent jurisdiction declares that any term
or provision hereof is invalid or unenforceable, the Parties agree that the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
SECTION 9.08 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser:
c/o J.W. Childs Associates, L.P.
One Federal Street - 21st Floor
Boston, MA 02110
Attention: Adam Suttin
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Mario A. Ponce, Esq.
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If to the Company:
American Safety Razor Company
One Razor Blade Lane
Verona, Virginia 24482
Attention: Tom Kasvin
with a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
Attention: James B. Carlson, Esq.
with a copy to:
The Jordan Company
767 Fifth Avenue
New York, New York 10153
Attention: Jonathan F. Boucher
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.09 Governing Law; Jurisdiction. (a) This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
(b) In addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of any federal court located in the State of
New York or any New York state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (iii) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in court other than a federal or state sitting in the State
of New York.
(c) In the event of any dispute in respect of this Agreement or the
Related Agreements, then the enforcement costs (including legal fees and
expenses) of the prevailing party will be paid and reimbursed by the losing
party.
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SECTION 9.10 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.12 Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party. Any
reference to any federal, state or local law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the context requires
otherwise.
SECTION 9.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.14 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and, except with respect
to Sections 1.03(c), 6.08, 6.13 and 6.14, 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.
SECTION 9.15 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person, shall mean
any other person directly or indirectly controlling, controlled by, or
under common control with, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as
applied to any person, means the possession, directly or indirectly, of
the power to direct
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<PAGE> 46
or cause the direction of the management and policies of that person,
whether through the ownership of voting securities, by contract or
otherwise;
(b) the term "Knowledge" means the actual knowledge, after
reasonable inquiry, of the executive officers of the Company;
(c) the term "Significant Acquisition Transaction" shall have the
same meaning as "Acquisition Transaction" except that the references to
15% contained therein shall be deemed to be (i) 35% with respect to any
Significant Acquisition Transaction effected through a primary sale of
Common Stock (or a security convertible into Common Stock) by the
Company or a merger involving the Company or a tender or exchange offer
or any other transaction that the Board has recommended acceptance of,
and (ii) 50% with respect to any Significant Acquisition Transaction
effected through a tender or exchange offer that the Board has
recommended rejection of or other market or secondary acquisition of the
Common Stock (or a security convertible into Common Stock);
(d) the term "Significant Takeover Proposal" means a Takeover
Proposal relating to a Significant Acquisition Transaction;
(e) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall
include a "group" as such term is defined in Section 13(d)(3) of the
Exchange Act); and
(f) the term "subsidiary" or "subsidiaries" means, with respect
to Parent, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the
Company or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or
indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
SECTION 9.16 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
SECTION 9.17 Parent Guarantee. Parent hereby guarantees the due
performance of any and all obligations and liabilities of the Purchaser under or
arising out of this Agreement and the transactions contemplated hereby.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
RSA HOLDINGS CORP. OF DELAWARE
By: /s/ Adam L. Suttin
------------------------------------
Name: Adam L. Suttin
Title:
RSA ACQUISITION CORP.
By: /s/ Adam L. Suttin
------------------------------------
Name: Adam L. Suttin
Title:
AMERICAN SAFETY RAZOR COMPANY
By: /s/ Jonathan F. Boucher
------------------------------------
Name: Jonathan F. Boucher
Title:
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ANNEX I
Offer Conditions
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-l(c) under the Exchange 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
tendered pursuant to the Offer, and may postpone the acceptance for payment or,
subject to the restriction referred to above, payment for any Shares tendered
pursuant to the Offer, and may amend or terminate the Offer (whether or not any
Shares have theretofore been purchased or paid for) to the extent permitted by
the Merger Agreement if, (i) at the expiration of the Offer, a number of shares
of Company Common Stock which constitutes more than 50% of the voting power
(determined on a fully-diluted basis), on the date of purchase, of all the
securities of the Company entitled to vote generally in the election of
directors or in a merger shall not have been validly tendered and not properly
withdrawn prior to the expiration of the Offer (the "Minimum Condition"), or
(ii) at any time on or after the date of this Agreement and prior to the
acceptance for payment of Shares, any of the following conditions occurs or has
occurred:
(a) there shall have been instituted or pending any action or
proceeding brought by any governmental authority before any federal or
state court, or any order or preliminary or permanent injunction entered
and continuing in any action or proceeding before any federal or state
court or governmental, administrative or regulatory authority or agency,
or any statute, rule, regulation, legislation, interpretation, judgment
or order enacted, entered, enforced, promulgated, amended, issued and
continuing and applicable to Parent, Purchaser, the Company or any
subsidiary or affiliate of Purchaser or the Company or the Offer or the
Merger, by any legislative body, court, government or governmental,
administrative or regulatory authority or agency which would reasonably
be expected to have the effect of: (i) making illegal, or otherwise
directly or indirectly restraining or prohibiting or making materially
more expensive the making of the Offer, the acceptance for payment of,
or payment for the Shares by Parent or the Purchaser or the consummation
of any of the transactions contemplated by the Merger Agreement; (ii)
prohibiting or materially limiting the ownership or operation by the
Company or any of its subsidiaries or Parent, Purchaser or any of
Parent's affiliates of all or any material portion of the business or
assets of the Company or any of its subsidiaries, taken as a whole, or
any of its affiliates or compelling Parent, Purchaser or any of Parent's
affiliates to dispose of or hold separate all or any material portion of
the business or assets of the Company or any of its subsidiaries or
Parent, or any of its affiliates, as a result of the transactions
contemplated by the Offer or the Merger Agreement; (iii) imposing or
confirming limitations on the ability of Parent, Purchaser or any of
Parent's affiliates effectively to acquire or hold or to exercise full
rights of ownership of Shares, including without limitation the right to
vote any Shares acquired or owned by Parent or Purchaser or any of its
affiliates on all matters properly presented to the stockholders of the
Company, including without limitation the adoption and approval of the
Agreement and
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the Merger or the right to vote any shares of capital stock of any
subsidiary directly or indirectly owned by the Company; or (iv)
requiring divestiture by Parent or Purchaser of any Shares;
(b) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) a material adverse change in or material disruption
of conditions in the market for syndicated bank credit facilities or the
financial, banking or capital markets generally, (iii) a commencement
and continuation of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United
States which would have a Material Adverse Effect on the Company or (iv)
in the case of any of the foregoing existing at the time of commencement
of the Offer, a material acceleration or worsening thereof;
(c) (i) it shall have been publicly disclosed or Purchaser shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under
the Exchange Act) of more than 25% of the outstanding Shares has been
acquired by any corporation (including the Company or any of its
subsidiaries or affiliates), partnership, person or other entity or
group (as defined in Section 13(d)(3) of the Exchange Act), other than
Parent or its affiliates, or the Principal Holders or any of their
respective affiliates (but only with respect to the Common Shares that
they beneficially own on the date hereof), or (ii) (A) the Board of
Directors of the Company or any committee thereof shall have withdrawn
or modified in a manner adverse to Parent or Purchaser the approval or
recommendation of the Offer, the Merger or the Merger Agreement, or
approved or recommended any Takeover Proposal or any other acquisition
of Shares other than the Offer and the Merger, (B) any such corporation,
partnership, person or other entity or group shall have entered into a
definitive agreement or an agreement in principle with the Company with
respect to an Acquisition Transaction, or (C) the Board of Directors of
the Company or any committee thereof shall have resolved to do any of
the foregoing;
(d) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality or
Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be
true and correct in any material respect, in each case as if such
representations and warranties were made at the time of such
determination;
(e) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by
it under the Merger Agreement;
(f) the Merger Agreement shall have been terminated in accordance
with its terms or the Offer shall have been terminated with the consent
of the Company; or
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(g) any waiting periods under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall not have expired or been
terminated, or any material approval, permit, authorization or consent
of any domestic or foreign governmental, administrative or regulatory
agency (federal, state, local, provincial or otherwise) shall not have
been obtained on terms satisfactory to the Parent in its reasonable
discretion;
and, in addition, which, in the case of (a) through (g), in the reasonable, good
faith judgement of Parent or the Purchaser, and regardless of the circumstances
(including any action or inaction by Parent or Purchaser or any of its
affiliates) giving rise to any such conditions, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for Shares
or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such conditions and may be waived by Parent or
the Purchaser in whole or in part at any time and from time to time in their
reasonable discretion, in each case, subject to the terms of the Merger
Agreement. The failure by Parent or the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
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EXHIBIT (a)(2)
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of February 12,
1999, by and among RSA Holdings Corp. of Delaware, a Delaware corporation
("Parent"), RSA Acquisition Corp., a Delware corporation ("Purchaser"), and the
other parties signatory hereto (each, a "Stockholder").
RECITALS
Concurrently herewith, Parent, Purchaser and American Safety Razor
Company, a Delaware corporation (the "Company"), are entering into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement";
capitalized terms used but not defined herein shall have the meanings set forth
in the Merger Agreement), pursuant to which Purchaser agrees to make an offer
(the "Offer") for all outstanding shares of Common Stock, par value $0.01 per
share (the "Common Stock"), of the Company, at a price of $14.125 per share, net
to the Stockholder in cash, to be followed by a merger (the "Merger") of
Purchaser with and into the Company.
As a condition to its willingness to enter into the Merger Agreement
and make the Offer, Parent and Purchaser have required that each Stockholder
agree, and each Stockholder has agreed, among other things, to tender into the
Offer and to grant an irrevocable proxy with respect to the number of shares of
Common Stock of such Stockholder set forth on Annex A hereto, together with any
additional shares when and if they are acquired, including, without limitation,
pursuant to Section 5.5 hereof (such shares, and any additional shares when and
if they are acquired, being referred to herein as the "Shares"), on the terms
and conditions provided for herein.
In consideration of this Agreement, Purchaser has entered into the
Merger Agreement and agreed to have the Company pay the TJC Amount, as a
condition to the Merger Agreement.
The Board of Directors of the Company has approved this Agreement, the
Merger Agreement and the transactions contemplated hereby and thereby so as to
render inapplicable Section 203 of the Delaware General Corporation Law ("DGCL")
to the transactions contemplated hereby and thereby.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Agreement to Tender. Each Stockholder hereby agrees to validly
tender (or cause the record owner of such shares to validly tender), pursuant to
and in accordance with the terms of the Offer, as soon as practicable after
commencement of the Offer but in no event later than 15 business days after the
date of commencement of the Offer, all of such Stockholder's Shares by physical
delivery of the certificates therefor (or by book entry or appropriate
instructions to brokers or custodians thereof, as the case may be) and to not
withdraw such Shares, except following termination of this Agreement pursuant to
Section 7 hereof. Each Stockholder hereby
<PAGE> 2
acknowledges and agrees that Parent's and the Purchaser's obligation to accept
for payment and pay for the Shares is subject to the terms and conditions of the
Offer. Stockholder hereby permits Parent and the Purchaser to publish and
disclose in the Offer Documents and, if approval of the Company's stockholders
is required under applicable law, the Proxy Statement (including all documents
and schedules filed with the Securities and Exchange Commission) his identity
and ownership of the Shares and the nature of his commitments, arrangements and
understandings under this Agreement.
2. Irrevocable Proxy. Each Stockholder hereby irrevocably appoints
Purchaser or any designee of Purchaser the lawful agent, attorney and proxy of
such Stockholder, during the term of this Agreement at any meeting of the
Stockholders of the Company, however called, or in connection with any written
consent of the Stockholders of the Company, to vote (or cause to be voted) the
Shares held of record or beneficially by such Stockholder (i) in favor of the
Merger, the execution and delivery by the Company of the Merger Agreement and
the approval of the terms thereof and each of the other actions contemplated by
the Merger Agreement, this Agreement and any actions required in furtherance
hereof and thereof; (ii) against any action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or this Agreement; and (iii)
except as specifically requested in writing by Purchaser in advance, against the
following actions (other than the Offer, Merger and the transactions
contemplated by the Merger Agreement): (1) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or its subsidiaries; (2) a sale, lease or transfer of a
material amount of assets of the Company or its subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (3) (a) any change in the majority of the Board of Directors
of the Company; (b) any material change in the present capitalization of the
Company or any amendment of the Company's certificate of incorporation; (c) any
other material change in the Company's corporate structure or business; or (d)
any other action which, is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, discourage or materially adversely affect the
Offer, Merger or the transactions contemplated by the Merger Agreement or this
Agreement or the contemplated economic benefits of any of the foregoing. Each
Stockholder intends this proxy to be irrevocable and coupled with an interest
and will take such further action or execute such other instruments as may be
necessary to effectuate the intent of this proxy and hereby revokes any proxy
previously granted by it with respect to the Shares. Each Stockholder shall not
hereafter, unless and until this Agreement terminates pursuant to Section 7.6
hereof, purport to vote (or execute a consent with respect to) such Shares
(other than through this irrevocable proxy) or grant any other proxy or power of
attorney with respect to any Shares, deposit any Shares into a voting trust or
enter into any agreement (other than this Agreement), arrangement or
understanding with any person, directly or indirectly, to vote, grant any proxy
or give instructions with respect to the voting of such Shares.
-2-
<PAGE> 3
3. Representations and Warranties.
3.1. Representations and Warranties of Purchaser. Each of Parent and
Purchaser hereby represents and warrants to each Stockholder as follows:
(a) Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of
Purchaser and Parent, as the case may be, and no other corporate
proceedings on the part of Parent or Purchaser, as the case may be, are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed
and delivered by Parent and Purchaser, as the case may be, and
constitutes a valid and binding agreement of Parent and Purchaser, as
the case may be, enforceable against each in accordance with its terms,
except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) is subject to
general principles of equity.
(b) No Conflicts. Except for (i) filings under the HSR Act, if
applicable, (ii) the applicable requirements of the Exchange Act, and
the Securities Act of 1933, as amended (the "Securities Act"), (iii)
the applicable requirements of state securities, takeover or Blue Sky
laws and (iv) such notifications, filings, authorizing actions, orders
and approvals as may be required under other laws, (A) no filing with,
and no permit, authorization, consent or approval of, any state,
federal or foreign public body or authority is necessary for the
execution of this Agreement by Purchaser or Parent, as the case may be,
and the consummation by each of the transactions contemplated hereby
and (B) neither the execution and delivery of this Agreement by
Purchaser or Parent, as the case may be, nor the consummation by it of
the transactions contemplated hereby nor compliance by it with any of
the provisions hereof shall (1) conflict with or result in any breach
of any provision of its certificate of incorporation or by-laws (or
similar documents), (2) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
(or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
license, contract, agreement or other instrument or obligation to which
it is a party or by which it or any of its properties or assets may be
bound or (3) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to it or any of its properties or assets,
except in the case of (2) or (3) for violations, breaches or defaults
which would not in the aggregate materially impair the ability of
Purchaser or Parent, as the case may be, to perform its obligations
hereunder.
(c) Good Standing. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under
the laws of Delaware and has all requisite corporate power and
authority to execute and deliver this Agreement.
-3-
<PAGE> 4
3.2. Representations and Warranties of Stockholder. Each Stockholder
hereby severally represents and warrants to Parent and Purchaser as follows:
(a) Ownership of Shares and Options. Subject to Section 4.3,
Stockholder (or accounts or trusts controlled or beneficially owned by
Stockholder) is the owner of the Shares and options to acquire Shares
("Stock Options") set forth on Annex A hereto and has the power to vote
and dispose of such Shares. To Stockholder's knowledge, such Shares
are, or upon issuance will be, validly issued, fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof. Stockholder has, or upon issuance will have, good title to the
Shares, free and clear of any agreements, liens, adverse claims or
encumbrances whatsoever with respect to the ownership of or the right
to vote such Shares.
(b) Power; Binding Agreement. Stockholder has the legal
capacity, power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and
performance of this Agreement by Stockholder will not violate any other
agreement to which Stockholder is a party including, without
limitation, any voting agreement, stockholders agreement or voting
trust. This Agreement has been duly and validly authorized, executed
and delivered by Stockholder and constitutes a valid and binding
agreement of Stockholder, enforceable against Stockholder in accordance
with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) is
subject to general principles of equity.
(c) No Conflicts. Except for (i) filings under the HSR Act, if
applicable, (ii) the applicable requirements of the Exchange Act and
the Securities Act, (iii) the applicable requirements of state
securities, takeover or Blue Sky laws, (iv) such notifications,
filings, authorizing actions, orders and approvals as may be required
under other laws, (A) no filing with, and no permit, authorization,
consent or approval of, any state, federal or foreign public body or
authority is necessary for the execution of this Agreement by
Stockholder and the consummation by Stockholder of the transactions
contemplated hereby and (B) neither the execution and delivery of this
Agreement by Stockholder nor the consummation by Stockholder of the
transactions contemplated hereby nor compliance by Stockholder with any
of the provisions hereof shall (1) conflict with or result in any
breach of any provision of the certificate of incorporation, by-laws,
trust or charitable instruments (or similar documents) of Stockholder,
(2) result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which Stockholder is a party or by which he
or it or any of his or its properties or assets may be bound or (3)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Stockholder or any of his or its properties or
assets, except in the case of (2)
-4-
<PAGE> 5
or (3) for violations, breaches or defaults which would not in the
aggregate materially impair the ability of Stockholder to perform his
or its obligations hereunder.
4. Certain Covenants of Stockholder. Each Stockholder hereby severally
covenants and agrees as follows:
4.1. No Solicitation. Neither Stockholder nor any officer, director,
employee, representative or agent of Stockholder shall, directly or indirectly,
solicit, facilitate, participate in or initiate any inquiries or the making of
any proposal by any person or entity (other than Purchaser or any affiliate of
Purchaser) which constitutes, or may reasonably be expected to lead to, (a) any
sale of the Shares or (b) any Takeover Proposal or Acquisition Transaction. If
Stockholder, or any officer, director, employee, representative or agent of
Stockholder, receives an inquiry or proposal with respect to the sale of Shares,
then Stockholder shall promptly inform Purchaser of the terms and conditions, if
any, of such inquiry or proposal and the identity of the person making it.
Stockholder shall, and shall cause its officers, directors, employees,
representatives and agents to, immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. This Section 4.1 will not bind
or apply to any person in their capacity as director of the Company.
4.2. Restriction on Transfer, Proxies and NonInterference. Stockholder
hereby agrees, while this Agreement is in effect, and except as contemplated
hereby, not to (a) sell, transfer, pledge, encumber, assign or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to the sale, transfer, pledge, encumbrance, assignment or other
disposition of, any of the Shares or Stock Options or (b) grant any proxies,
deposit any Shares into a voting trust or enter into a voting agreement with
respect to any Shares or (c) take any action that would make any representation
or warranty of such Stockholder contained herein untrue or incorrect or have the
effect of preventing or disabling such Stockholder from performing his
obligations under this Agreement.
4.3. Legending of Certificates; Nominees Shares. If requested by
Purchaser, Stockholder agrees to submit to Purchaser contemporaneously with or
promptly following execution of this Agreement all certificates representing the
Shares so that Purchaser may note thereon a legend referring to the proxy and
other rights granted to it by this Agreement. If any of the Shares beneficially
owned by Stockholder are held of record by a brokerage firm in "street name"or
in the name of any other nominee (a "Nominee", and, as to such Shares, "Nominee
Shares"), Stockholder agrees that, upon written notice by Purchaser requesting
it, Stockholder will within five days of the giving of such notice execute and
deliver to Purchaser a limited power of attorney in such form as shall be
reasonably satisfactory to Purchaser enabling Purchaser to require the Nominee
to (i) grant to Purchaser an irrevocable proxy to the same effect as Section 1
and 2 hereof with respect to the Nominee Shares held by such Nominee, (ii)
tender such Nominee Shares in the Offer pursuant to Section 1 hereof, and (iii)
submit to Purchaser the certificates representing such Nominee Shares for
notation of the above-referenced legend thereon.
-5-
<PAGE> 6
4.4. Stop Transfer Order. In furtherance of this Agreement,
concurrently herewith, Stockholder shall and hereby does authorize the Company's
counsel to notify the Company's transfer agent that there is a stop transfer
order with respect to all of the Shares (and that this Agreement places limits
on the voting and transfer of such shares).
4.5. Stock Options. Each Stockholder that owns any Stock Options hereby
agrees not to take any action that would affect the full vesting or free
exercisability of such Stock Options. Each Stockholder that owns any Stock
Options hereby agrees with Purchaser that, if requested by Purchaser at any time
during the period from and including the Exercise Date to the Expiration Date
when Purchaser desires to exercise the Option with respect to any Shares
underlying any Stock Options, the Stockholder will exercise such number of fully
vested and freely exercisable Stock Options (including any such Stock Options
that may become fully vested and freely exercisable at any subsequent time
between the Exercise Date and the Expiration Date) as may be necessary to enable
Purchaser to acquire such Shares.
5. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate the transactions contemplated by this Agreement,
including, without limitation, to vest in Purchaser good title to any Shares
purchased hereunder.
6. Adjustments to Prevent Dilution, Etc. In the event of a stock
dividend or distribution, or any change in the Company's Common Stock by reason
of any stock dividend, split-up, reclassification, recapitalization, combination
or the exchange of shares, the term "Shares" shall be deemed to refer to and
include the Shares as well as all such stock dividends and distributions and any
shares into which or for which any or all of the Shares may be changed or
exchanged. In such event, the amount to be paid per share by Purchaser shall be
proportionately adjusted.
7. Miscellaneous.
7.1. Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) shall not
be assigned by operation of law or otherwise, provided that Purchaser may assign
its rights and obligations hereunder to any direct or indirect wholly owned
parent company or subsidiary of Purchaser, but no such assignment shall relieve
Purchaser of its obligations hereunder if such assignee does not perform such
obligations.
7.2. Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
7.3. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received
-6-
<PAGE> 7
if so given) by hand delivery, telegram, telex or telecopy, or by mail
(registered or certified mail, postage prepaid, return receipt requested) or by
any courier service, such as Federal Express, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to Stockholder: At such Stockholder's address set forth
on Annex A hereto
If to Parent or Purchaser: RSA Holdings Corp. of Delaware
c/o J.W. Childs Associates, L.P.
One Federal Street, 21st Floor
Boston, MA 02110
Facsimile No.: (617) 753-1101
Attention: Adam Suttin
copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 455-2502
Attention: Mario Ponce, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
7.4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
7.5. Cooperation as to Regulatory Matters. If so requested by
Purchaser, promptly after the date hereof, Stockholder will use its reasonable
best efforts to cause it and the Company (if required) to make all filings which
are required under the HSR Act and applicable requirements and to seek all
regulatory approvals required in connection with the transactions contemplated
hereby. The parties shall furnish to each other such necessary information and
reasonable assistance as may be requested in connection with the preparation of
filings and submissions to any governmental agency, including, without
limitation, filings under the provisions of the HSR Act. Stockholder shall also
use its reasonable best efforts to cause the Company to supply Purchaser with
copies of all correspondence, filings or communications (or memoranda setting
forth the substance thereof) between the Company and its representatives and the
Federal Trade Commission, the Department of Justice and any other governmental
agency or authority and members of their respective staffs with respect to this
Agreement and the transactions contemplated hereby.
7.6. Termination. This Agreement shall terminate on the earlier of (i)
the Effective Time or (ii) the termination of the Merger Agreement in accordance
with its terms, provided, that such termination will not terminate or affect
Section 3 thereof.
-7-
<PAGE> 8
7.7. Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore, each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
7.8. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but both of which shall
constitute one and the same Agreement.
7.9. Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
7.10. Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
-8-
<PAGE> 9
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
each of the parties hereto, all as of the date first above written.
RSA HOLDINGS CORP. OF DELAWARE
By: /s/ Adam L. Suttin
--------------------------------------
Name: Adam L. Suttin
Title:
RSA ACQUISITION CORP.
By: /s/ Adam L. Suttin
--------------------------------------
Name: Adam L. Suttin
Title:
<PAGE> 10
JOHN W. JORDAN
By: /s/ John W. Jordan
--------------------------------------
DAVID W. ZALAZNICK
By: /s/ David W. Zalaznick
--------------------------------------
JONATHAN F. BOUCHER
By: /s/ Jonathan F. Boucher
--------------------------------------
JOHN R. LOWDEN
By: /s/ John R. Lowden
--------------------------------------
THOMAS H. QUINN
By: /s/ Thomas H. Quinn
--------------------------------------
ADAM MAX
By: /s/ Adam Max
--------------------------------------
<PAGE> 11
LEUCADIA NATIONAL CORP.
By: /s/ Joseph A. Orlando
-------------------------------------
Name: Joseph A. Orlando
Title: Vice President and CEO
JZ Equity Partners PLC
By: /s/ James E. Jordon
-------------------------------------
Name:
Title:
WILLIAM C. WEATHERSBY
By: /s/ William C. Weathersby
-------------------------------------
THOMAS G. KASVIN
By: /s/ Thomas G. Kasvin
-------------------------------------
<PAGE> 12
ANNEX A
<TABLE>
<CAPTION>
Number of Shares of
Number of Shares Common Stock Underlying
Stockholder Name of Common Stock Stock Options
- ---------------- --------------- -------------
<S> <C> <C>
John W. Jordan II 332,140 0
c/o The Jordan Company
767 Fifth Avenue
New York, NY 10153
David W. Zalaznick 303,140 0
c/o The Jordan Company
767 Fifth Avenue
New York, NY 10153
Jonathan F. Boucher 360,639 0
c/o The Jordan Company
767 Fifth Avenue
New York, NY 10153
John R. Lowden 184,860 0
c/o The Jordan Company
767 Fifth Avenue
New York, NY 10153
Thomas H. Quinn 175,200 0
c/o The Jordan Company
767 Fifth Avenue
New York, NY 10153
Adam Max 94,346 0
c/o The Jordan Company
767 Fifth Avenue
New York, NY 10153
Leucadia National Corp. 419,233 0
c/o The Jordan Company
767 Fifth Avenue
New York, NY 10153
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
Number of Shares of
Number of Shares Common Stock Underlying
Stockholder Name of Common Stock Stock Options
- ---------------- --------------- -------------
<S> <C> <C>
MCIT PLC 245,496 0
c/o The Jordan Company
767 Fifth Avenue
New York, NY 10153
William C. Weathersby 169,000 60,000
c/o American Safety Razor Company
One Razor Blade Lane
Verona, VA 24482
Thomas G. Kasvin 27,600 65,000
c/o American Safety Razor Company
One Razor Blade Lane
Verona, VA 244820
</TABLE>
<PAGE> 1
Exhibit (a)(3)
CONFIDENTIAL
December 4, 1997
J.W. Childs & Associates
1 Federal Street, 21st Floor
Boston, MA 02110
Attention: Mr. Adam L. Suttin
Vice President
Dear Sir:
To enable J.W. Childs Associates (hereinafter referred to as "you") to
evaluate a possible business combination between you and/or your Affiliates (as
defined below) and American Safety Razor Company (together with its
subsidiaries, the "Company") by way of any recapitalization, acquisition, merger
or other transaction involving the Company, whereby any securities or assets of
the Company is exchanged ("Transaction"), you have requested that the Company
furnish you or your directors, partners, trustees, officers and employees and
representatives of your legal, accounting and financial advisors (the persons to
whom such disclosure is permissible being collectively referred to herein as
your "Representatives") certain oral and written information concerning the
Company. All such information, in whatever format or storage medium, and whether
furnished before, on or after the date hereof, together with all analyses,
compilations, studies, data, notes, interpretations or other documents prepared
by you or your Representatives, which contains, is based upon or otherwise
reflects, in whole or in part, such furnished information and your review of,
interest in or receipt of, the Company, the Transaction or the foregoing
information is hereinafter referred to as the Confidential Information.) In
consideration of the Company furnishing the Confidential Information to you, you
agree as follows:
I. Except as and to the extent expressly provided otherwise below,
the Confidential Information will be kept confidential and shall not, without
the Company's prior written consent, be disclosed or used by you or your
Representatives, in any manner whatsoever, other than in connection with the
evaluation and/or consummation of a proposed Transaction. You agree to disclose
the Confidential Information only to your Representatives who are actively and
directly participating in the evaluation of the Transaction and who, prior to
receiving the Confidential Information, agree to maintain its confidentiality on
the same terms and conditions as set forth herein. You shall be responsible for
any breach of this agreement by your Representatives (it being understood that
such responsibility shall be in addition to and not by way of limitation of any
right or remedy the Company may have against such Representatives with respect
to such breach). You shall keep a record of each location of the Confidential
Information.
-1-
<PAGE> 2
II. In consideration of our furnishing you with Confidential
Information, you also agree that for a period of two years from the date of this
letter agreement, neither you nor any of your Representatives will, without the
prior written consent of the Company or its Board of Directors:
a. acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or
direct or indirect rights to acquire any voting securities of
the Company or any subsidiary thereof, or of any successor to
or person in control of the Company, or any assets of the
Company or any subsidiary or division thereof or of any such
successor or controlling person;
b. make, or in any way participate, directly or indirectly, in
any "solicitation" or "proxies" to vote (as such terms are
used in the rules of the Securities and Exchange Commission),
or seek to advise or influence any person or entity with
respect to the voting of any voting securities of the Company;
c. make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions) any
extraordinary transaction involving the Company or its
securities or assets;
d. seek or propose to influence or control the Company's
management or policies (or request permission to do so);
e. form, join or in any way participate in a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in connection with any of the
foregoing.
You will promptly advise the Company of any inquiry or proposal made to you with
respect to the foregoing.
III. The Confidential Information, and all copies thereof, except for
that portion of the Confidential Information which consists solely of analyses,
compilations, studies, data, notes, interpretations or other documents prepared
by you or your Representatives, will, upon the Company's request, be returned by
you without you retaining any copies thereof (in any format or storage medium,
including computer disk or memory.) To the extent that you utilize any portion
of the Confidential Information to prepare your own analyses, compilations,
studies, data, notes, interpretations or other documents, you will hold and keep
such Confidential Information confidential and subject to the terms of this
agreement, or destroy or purge such Confidential Information from any computer
system, as the case may be (with destruction or purging confirmed in writing),
and any oral Confidential Information will continue to be subject to this
Agreement.
IV. In the event that you or anyone to whom you disclose the
Confidential Information pursuant to this agreement become legally compelled in
the opinion of your outside counsel to disclose any of the Confidential
Information, you will provide the Company with "prompt notice" (hereinafter
defined) thereof so that we may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this agreement. You and
your Representatives will not oppose (and will, if and to the extent requested
by the Company, cooperate with, assist and join with the Company, at the
Company's expense) any action by the Company to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information. The term
"prompt notice" means written notice given by you to the Company as soon as
possible
-2-
<PAGE> 3
after you receive notice of your legal duty to disclose such Confidential
Information. In the event that such protective order or other remedy is not
obtained, or that the Company waives compliance with this agreement, you and
your Representatives will furnish only that portion of the Confidential
Information which you are advised by outside counsel must be disclosed. With
respect to any such release, you will advise such third party in writing that
such information is subject to this Confidential Agreement.
V. You acknowledge that you are familiar with the insider trading
laws and your responsibility under the Federal Securities Laws, and will refrain
from trading on the basis of or disclose the Confidential Information in
violation thereof.
VI. Although the Company has included, or will include, in the
Confidential Information certain data that it believes to be relevant for the
purpose of your investigation, you acknowledge that neither the Company nor its
Representatives are making any representation or warranty as to its accuracy or
completeness. You further agree that the Company's only obligation to you shall
be with respect to those representations and warranties set forth in a
definitive agreement which may be executed by the Company and you. You agree
that neither the Company nor any its officers, directors, employees, agents or
other representatives shall have any liability to you or any of your
Representatives resulting from the use of the Confidential Information by you or
your Representatives. You further agree that no delay or failure by the Company
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
thereunder.
VII. You understand that by receiving the Confidential Information,
neither the Company nor its representatives undertake any obligation to provide
you with any access to any additional information.
VIII. The term "Confidential Information" does not include information
that (a) is or becomes generally available to the public other than as a result
of a disclosure by you or anyone to whom you transmit the Confidential
Information, (b) becomes available to you on a non-confidential basis from a
source other than the Company who, to your knowledge, is not bound by an
obligation of confidentiality to the Company or is not otherwise prohibited from
disclosing such information, or (c) is otherwise demonstrably known to you on
the date hereof.
IX. You agree that you will not, directly or indirectly, without the
prior written consent of the Company solicit to hire (i) any executive employed
by the Company or (ii) any other employee of the Company with whom you have had
contact or who (or whose performance) became known to you in connection with the
Transaction; provided, however, that the foregoing shall not prevent you from
hiring any such person who contacts you on his or her own initiative without any
direct or indirect solicitation by or encouragement from you and who has not
been employed by the Company during the preceding six months.
X. For purposes of this Agreement, "Affiliate" shall have the
meaning ascribed to such term in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended.
XI. You agree that any breach of your obligations hereunder could
cause the Company irreparable injury and that monetary damages may not be an
adequate remedy for any such
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<PAGE> 4
breach. In the event of a breach or threatened breach by any of you and your
Representatives of the provisions of this agreement, you agree that the Company
may be entitled to equitable relief in any court of competent jurisdiction,
including an injunction restraining any of you and your Representatives from
breaching the terms hereof, in addition to all other remedies available to the
Company at law or in equity. You and your Representatives shall waive any
requirement for the securing or posting of any bond in connection with seeking
any such remedy. You agree to indemnify the Company against any costs
(including, with limitation, reasonable attorneys' fees), demands or liabilities
arising directly or indirectly out of a breach of your or your Representatives'
obligations hereunder. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies available to the Company at law or in
equity for any such breach, including specific performance or recovery of
monetary damages.
XII. If any provision of this agreement, or the application of any
provision to any person or circumstance, shall be held to be inconsistent with
any present or future law, ruling, rule, policy or regulation of any court or
governmental or regulatory authority having jurisdiction over the subject matter
hereof, such provision shall be deemed to be rescinded or modified in accordance
with such law, ruling, rule or regulation of the remainder of this agreement, or
the application of such provision to persons or circumstances other than those
as to which it shall be held inconsistent, shall not be affected thereby.
XIII. The parties hereby irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the courts of the State of Delaware and
of the United States of America located in the State of Delaware for any
actions, suits or proceedings arising out of or related to this agreement and
the transactions contemplated hereby (and the parties agree not to commence any
action, suit or proceeding relating thereto except in such courts), and further
agree that service of any process, summons, notice or document by U.S.
registered mail to the respective addresses set forth above shall be effective
service of process for any action, suit or proceeding brought against the
parties in any such court. The parties hereby irrevocably and unconditionally
waive any objection to the laying of venue of any Transaction in any of the
aforementioned courts and hereby further irrevocably and unconditionally waive
and agree not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
XIV. You understand and agree that no contract or agreement providing
for a Transaction shall be deemed to exist unless and until a definitive
agreement in respect of a Transaction has been executed and delivered, and you
hereby waive, in advance, any claims (including breach of contract) in
connection with a Transaction unless and until you shall have entered into such
a definitive agreement. You also agree that unless and until a definitive
agreement between the Company and you with respect to a Transaction has been
executed and delivered, neither the Company nor any of its representatives has
any legal obligation of any kind whatsoever with respect to such Transaction by
virtue of this agreement or any other written or oral expression with respect to
such Transaction except, in the case of this agreement, for the matters
specifically agreed to herein. You understand that (i) the Company and its
representatives shall be free to conduct any process for any Transaction as they
in their sole discretion shall determine (including negotiating with any of the
prospective parties to such Transaction and entering into a definitive agreement
without prior notice to you or any other person) and (ii) any procedures
relating to such Transaction may be changed at any time without prior notice to
you or any other person. You hereby confirm that you are not acting as a broker
for or Representative of any person and are
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<PAGE> 5
considering the Transaction only for your own account. Neither this paragraph
nor any other provision in this agreement can be waived, amended or assigned
except by written consent of the Company, which consent shall specifically refer
to this paragraph (or such other provision) and explicitly make such waiver or
amendment.
XV. This agreement shall be governed by and construed in accordance
with the law of the State of Delaware without regard to any requirements thereof
that might cause the application of the law of any other jurisdiction.
XVI. The Company is a third party beneficiary of this Agreement and
shall have the right to enforce its terms.
XVII. This agreement will terminate three years from the date hereof.
If you agree to the foregoing, please sign both enclosed counterparts
of this letter where indicated below and promptly return one to us.
Very truly yours,
PAINEWEBBER INCORPORATED
on behalf of
AMERICAN SAFETY RAZOR COMPANY
By: /s/ Fuad A. Sawaya
----------------------------------
Name: Fuad A. Sawaya
Title: Managing Director
ACCEPTED AND AGREED
as of the date hereof:
J.W. CHILDS & ASSOCIATES
By: /s/ Adam L. Suttin
-------------------------
Name: Adam L. Suttin
Title: Vice President
- -5-
<PAGE> 1
Exhibit (a)(4)
PAINE WEBBER INCORPORATED
11285 Avenue of the Americas - 13th Floor
New York, New York 10019
January 12, 1999
CONFIDENTIAL
J.W. Childs Associates
One Federal Street - 21st Floor
Boston, MA 02110
Attention: Adam Suttin
Dear Sir:
To enable J.W. Childs Associates and its Affiliates (hereinafter
referred to as "you") to evaluate a possible business combination between you
and/or your Affiliates (as defined below) and American Safety Razor Company
(together with its subsidiaries, the "Company") by way of any recapitalization,
acquisition, merger or other transaction involving the Company, whereby any
securities or assets of the Company is exchanged ("Transaction"), you previously
entered into a confidentiality letter agreement, dated December 4, 1997, between
you and the Company (the "Existing Letter"). Without limiting or modifying the
Existing Letter, you have requested that the Company furnish you or your
employees (the persons to whom such disclosure is permissible being collectively
referred to herein as your "Representatives") certain oral and written
information concerning the Company's new Tri-Flexxx razor blades, including
samples thereof. All such information and samples, in whatever format or storage
medium, and whether furnished before, on or after the date hereof, together with
all analyses, test results, compilations, studies, data, notes, interpretations
or other documents prepared by you or your Representatives, which contains, is
based upon or otherwise reflects, in whole or in part, such furnished
information and your review of, interest in or receipt of, the Company
Confidential Information or the foregoing information is hereinafter referred to
as the "Confidential Information."
You have requested the Tri-Flexxx razor blades to conduct limited
internal testing thereof (and not by any external consultants, laboratories or
other services or persons) in connection with a possible Transaction, and the
Company is providing them to you for this limited purpose. You acknowledge and
agree to use the blades for this purpose only, and that the Tri-Flexxx razor
blades and their technology are important trade secrets of the Company, and that
any distribution of the Tri-Flexxx razor blades to third parties, or any
disclosure of your limited internal testing or other Confidential Information,
could be very adverse to the Company and its business and
<PAGE> 2
prospects, including relating to the Tri-Flexxx razor blades. You further agree
that only the individuals listed in Exhibit A will be given the blades and
access thereto. In consideration of the Company furnishing the Confidential
Information to you, you agree as follows:
I. Except as and to the extent expressly provided otherwise below, the
Confidential Information will be kept confidential and shall not, without the
Company's prior written consent, be disclosed or used by you or your
Representatives, in any manner whatsoever, other than in connection with the
evaluation and/or consummation of a proposed Transaction. You agree to disclose
the Confidential Information only to your Representatives who are actively and
directly participating in the evaluation of the Transaction and who, prior to
receiving the Confidential Information, agree to maintain its confidentiality on
the same terms and conditions as set forth herein. You shall be responsible for
any breach of this agreement by your Representatives (it being understood that
such responsibility shall be in addition to and not by way of limitation of any
right or remedy the Company may have against such Representatives with respect
to such breach). You shall keep a record of each location of the Confidential
Information.
II. The Confidential Information and all copies thereof will, upon the
Company's request, be returned by you without you retaining any copies thereof
(in any format or storage medium, including computer disk or memory). To the
extent that you utilize any portion of the Confidential Information to prepare
your own analyses, compilation, studies, data, notes, interpretations or other
documents, you will hold and keep such Confidential Information confidential and
subject to the terms of this agreement, or destroy or purge such Confidential
Information from any computer system, as the case may be (with destruction or
purging confirmed in writing), and any oral Confidential Information will
continue to be subject to this Agreement.
III. In the event that you or anyone to whom you disclose the
Confidential Information pursuant to this letter agreement become legally
compelled in the opinion of your outside counsel to disclose any of the
Confidential Information, you will provide the Company with "prompt notice"
(hereinafter defined) thereof so that the Company may seek a protective order or
other appropriate remedy and/or waive compliance with the provisions of this
agreement. You and your Representatives will not oppose (and will, if and to the
extent requested by the Company, cooperate with, assist and join with the
Company, at the Company's expense) any action by the Company to obtain reliable
assurance that confidential treatment will be accorded the Confidential
Information. The term "prompt notice" means written notice given by you to the
Company as soon as possible after you receive notice of your legal duty to
disclose such Confidential Information. In the event that such protective order
or other remedy is not obtained, or that the Company waives compliance with this
agreement, you and your Representatives will furnish only that portion of the
Confidential Information which you are advised by outside counsel must be
disclosed. With respect to any such release, you will advise such third party in
writing that such information is subject to this Confidential Agreement.
IV. Although the Company has included, or will include, in the
Confidential Information certain data that it believes to be relevant for the
purpose of your investigation, you
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<PAGE> 3
acknowledge that neither the Company nor its Representatives are making any
representation or warranty as to its accuracy or completeness. You further agree
that the Company's only obligation to you shall be with respect to those
representations and warranties set forth in a definitive agreement which may be
executed by the Company and you. You agree that neither the Company nor any of
its officers, directors, employees, agents or other representatives shall have
any liability to you or any of your Representatives resulting from the use of
the Confidential Information by you or your Representatives. You further agree
that no delay or failure by the Company in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege thereunder.
V. You understand that by receiving the Confidential Information,
neither the Company nor its representatives undertake any obligation to provide
you with any access to any additional information.
VI. The term "Confidential Information" does not include information
that (a) is or becomes generally available to the public other than as a result
of a disclosure by you or anyone to whom you transmit the Confidential
Information, (b) becomes available to you on a non- confidential basis from a
source other than the Company who, to your knowledge, is not bound by an
obligation of confidentiality to the Company or is not otherwise prohibited from
disclosing such information, or (c) is otherwise demonstrably known to you on
the date hereof.
VII. You agree that any breach of your obligations hereunder could
cause the Company irreparable injury and that monetary damages may not be an
adequate remedy for any such breach. In the event of a breach or threatened
breach by any of you and your Representatives of the provisions of this
agreement, you agree that the Company may be entitled to equitable relief in any
court of competent jurisdiction, including an injunction restraining any of you
and your Representatives from breaching the terms hereof, in addition to all
other remedies available to the Company at law or in equity. You and your
Representatives shall waive any requirement for the securing or posting of any
bond in connection with seeking any such remedy. You agree to indemnify the
Company against any costs (including, with limitation, reasonable attorneys'
fees), demands or liabilities arising directly or indirectly out of a breach of
your or your Representatives' obligations hereunder. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to the Company at law or in equity for any such breach, including specific
performance or recovery of monetary damages.
VIII. If any provision of this letter agreement, or the application of
any provision to any person or circumstance, shall be held to be inconsistent
with any present or future law, ruling, rule, policy or regulation of any court
or governmental or regulatory authority having jurisdiction over the subject
matter hereof, such provision shall be deemed to be rescinded or modified in
accordance with such law, ruling, rule or regulation of the remainder of this
agreement, or the application of such provision to persons or circumstances
other than those as to which it shall be held inconsistent, shall not be
affected thereby.
-3-
<PAGE> 4
IX. The parties hereby irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the courts of the State of Delaware and
of the United States of America located in the State of Delaware for any
actions, suits or proceedings arising out of or related to this agreement and
the transactions contemplated hereby (and the parties agree not to commence any
action, suit or proceeding relating thereto except in such courts), and further
agree that service of any process, summons, notice or document by U.S.
registered mail to the respective addresses set forth above shall be effective
service of process for any action, suit or proceeding brought against the
parties in any such court. The parties hereby irrevocably and unconditionally
waive any objection to he laying of venue of any Transaction in any of the
aforementioned courts and hereby further irrevocably and unconditionally waive
and agree not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
X. This letter agreement shall be governed by and construed in
accordance with the law of the State of Delaware without regard to any
requirements thereof that might cause the application of the law of any other
jurisdiction.
XI. The Company is an intended third party beneficiary of this
Agreement and shall have the right to enforce its terms.
If you agree to the foregoing, please sign this letter where indicated
below and promptly return a copy of the executed signature page to us.
Very truly yours,
PAINEWEBBER INCORPORATED
on behalf of
AMERICAN SAFETY RAZOR COMPANY
By: /s/ Fuad A. Sawaya
---------------------------------------
Name: Fuad A. Sawaya
Title: Managing Director
ACCEPTED AND AGREED
as of the date hereof:
J.W. CHILDS ASSOCIATES
By: /s/ Adam L. Suttin
------------------------
Name: Adam L. Suttin
Title: Vice President
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<PAGE> 5
Exhibit A
Names of Blades Recipients
<PAGE> 1
EXHIBIT (a)(5)
Company Press Release
J. W. CHILDS TO ACQUIRE AMERICAN SAFETY
RAZOR COMPANY
STAUNTON, VA--(BUSINESS WIRE)--Feb. 15, 1999--J. W. Childs Equity Partners II,
L.P. and American Safety Razor Company (Nasdaq:RAZR - news) today announced that
they have entered into a definitive merger agreement under which J. W. Childs
will acquire American Safety Razor for $14 1/8 per share or approximately $173
million in cash.
Pursuant to the Merger Agreement, a cash tender offer will be commenced by a
wholly-owned subsidiary of J. W. Childs no later than February 22, 1999 to
acquire all of the outstanding shares of common stock of American Safety Razor.
On Friday, February 12, 1999, the last reported sales price of common stock of
American Safety Razor was $9 7/8. The Board of Directors of American Safety
Razor has unanimously approved the merger agreement. PaineWebber Incorporated
has rendered a fairness opinion to the Board of Directors in connection with the
transaction.
The tender offer will be subject to the valid tender of shares representing a
majority of the voting power (determined on a fully diluted basis) of American
Safety Razor, the expiration of the waiting period under applicable antitrust
and competition laws, and other customary conditions.
The Jordan Company, certain of its affiliates, partners and officers, and
members of American Safety Razor's senior management, collectively the holders
of approximately 19% of the stock of American Safety Razor, have contractually
agreed to support the transaction and tender the shares of American Safety Razor
held by them in response to the tender offer.
Funding for the tender offer and merger and the transactions contemplated
thereby will be provided with approximately $245 million of debt commitments
made by J. W. Childs, NationsBank, N.A. and Donaldson, Lufkin & Jenrette. J. W.
Childs has also made an equity investment commitment of $90 million.
American Safety Razor Company is the leading manufacturer of private-brand and
value-priced shaving blades and razors in the United States. The Company's
shaving blade and razor products are sold under retailers' private-brand names
as well as American Safety Razor's own brands: Personna(R), Gem(R), Flicker(R),
LegMate(R), Bump Fighter(R), Treet(R), GEM Blue Star(R), Pal(R), MBC(TM) and
Burma Shave(TM). The Company also manufactures cotton swabs, cotton balls and
puffs, and foot care items which are sold under retailers' private-brand names
as well as its own value-priced brands, Megas(R), ACCO(R), and Crystal(R). The
Company is also a leading manufacturer of premium and value-priced blades and
bladed hand tools, sold primarily under the Personna(R), American Line(TM), and
Ardell(TM) brand names, as well as bar soaps for the cosmetic/skin care,
pharmaceutical, and department store markets. In addition to its consumer
<PAGE> 2
products, American Safety Razor manufactures and markets industrial and
specialty and medical blades. J. W. Childs is a private investment firm based in
Boston.
Contact:
American Safety Razor Company, Staunton
Thomas G. Kasvin, 540/248-9725
<PAGE> 1
Exhbiit (a)(6)
[ASR Letterhead]
February 19, 1999
Dear Shareholders:
We are pleased to inform you that our Company has entered into an
Agreement and Plan of Merger, dated as of February 12, 1999 (the "Merger
Agreement"), with RSA Holdings Corp. of Delaware ("Parent") and RSA Acquisition
Corp., a wholly-owned subsidiary of Parent ("Purchaser"). Pursuant to the Merger
Agreement, Purchaser has today commenced a cash tender offer (the "Offer") to
purchase all of the outstanding common shares, $.01 without par value per share
(the "Shares"), of the Company at a purchase price of $14.125 per share, net to
the shareholder in cash.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND THE OFFER AND DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY. YOUR BOARD OF DIRECTORS
RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the attached Schedule 14D-9 that is
being filed today with the Securities and Exchange Commission, including, among
other things, the opinion of PaineWebber Incorporated, the Company's financial
advisor, and that the consideration to be offered to the shareholders in the
Offer pursuant to the Merger Agreement is fair to such shareholders from a
financial point of view.
In addition to the attached Schedule 14D-9, enclosed is the Offer to
Purchase together with related materials, including a Letter of Transmittal, to
be used for tendering your Shares pursuant to the Offer. These documents state
the terms and conditions of the Offer, provide detailed information about the
transactions and include instructions as to how to tender your Shares. We urge
you to read these documents carefully in making your decision with respect to
tendering your Shares pursuant to the Offer.
Very truly yours,
- -----------------------------
William C. Weathersby
President and Chief Operating Officer
