<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
BAILEY CORPORATION
------------------------
(NAME OF SUBJECT COMPANY)
VEMCO ACQUISITION CORP.
VENTURE HOLDINGS TRUST
------------------------
(BIDDERS)
COMMON STOCK, PAR VALUE $.10 PER SHARE
------------------------
(TITLE OF CLASS OF SECURITIES)
056 771306
------------------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
MICHAEL G. TORAKIS
33662 JAMES J. POMPO DRIVE, P.O. BOX 278
FRASER, MICHIGAN 48026-0278
(810) 296-8851
------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
Copy to:
PAUL R. RENTENBACH
DYKEMA GOSSETT PLLC
400 RENAISSANCE CENTER
DETROIT, MICHIGAN 48243-1668
(313) 568-6973
------------------------
JUNE 5, 1996
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
------------------------
CALCULATION OF FILING FEE
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<TABLE>
<S> <C>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$58,985,789 $11,797
</TABLE>
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* Estimated solely for purposes of calculating the amount of filing fee. The
amount assumes the purchase of 6,741,233 shares of Common Stock, par value
$.10 per share of the Subject Company (the "Shares"), at a price per Share of
$8.75 in cash. Such number of Shares represents all of the Shares outstanding
as of June 5, 1996, assuming the exercise of all currently exercisable
options and warrants to acquire Shares.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
</TABLE>
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<PAGE> 2
CUSIP No. 056 771306
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1 NAME OF REPORTING PERSONS: Vemco Acquisition Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)/ /
(b)/X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
AF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) or 2(f) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,750,115*
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8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES / /
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) APPROXIMATELY
28.9%*
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10 TYPE OF REPORTING PERSON
CO
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* See footnote on following page.
2
<PAGE> 3
CUSIP No. 056 771306
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1 NAME OF REPORTING PERSON: Venture Holdings Trust
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)/ /
(b)/X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
BK
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f). / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Michigan
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,750,115*
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8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES / /
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) APPROXIMATELY
28.9%*
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10 TYPE OF REPORTING PERSON
00
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*On June 5, 1996, Vemco Acquisition Corp. (the "Purchaser"), entered into a
Tender and Option Agreement (the "Tender and Option Agreement") with Roger R.
Phillips, William A. Taylor, Louis T. Enos, E Gordon Young, John G. Owens and
Allan B. Freedman (collectively, the "Stockholders") pursuant to which the
Stockholders have agreed, among other things, to validly tender (and not
withdraw, except in accordance with the terms of the Tender and Option
Agreement) pursuant to the Offer to Purchase, dated June 11, 1996 (the "Offer to
Purchase") all of the Shares beneficially owned by them (representing an
aggregate of 1,750,115 Shares, or approximately 28.9% of the Shares outstanding
as of June 5, 1996 but excluding 12,500 shares subject to the Tender and Option
Agreement which may be acquired upon exercise of an outstanding option that will
become exercisable only after a change in control of the Company occurs).
Pursuant to the Tender and Option Agreement, each of the Stockholders has also
agreed to vote, or grant a consent or approval in respect of the Shares subject
to the Tender and Option Agreement in favor of the Merger and the Merger
Agreement (each as defined in the Offer to Purchase). The Tender and Option
Agreement is described more fully in Section 12 of the Offer to Purchase.
3
<PAGE> 4
This Tender Offer Statement on Schedule 14D-1 relates to the offer by Vemco
Acquisition Corp., a Delaware corporation (the "Purchaser"), formed by Venture
Holdings Trust, a grantor trust ("Parent"), to purchase all of the outstanding
shares of common stock, par value $.10 per share (the "Common Stock"), of Bailey
Corporation, a Delaware corporation (the "Company") and the associated Common
Stock purchase rights issued pursuant to the Rights Agreement, dated as of
September 28, 1995, as amended, between the Company and State Street Bank and
Trust Company as Rights Agent (the "Rights" and together with the Common Stock,
the "Shares"), at a price of $8.75 per Share, net to the seller in cash,
followed by a merger of the Purchaser into the Company, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated June 11,
1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer"), which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively. This Tender Offer Statement on Schedule 14D-1 also
constitutes a Statement on Schedule 13D with respect to the acquisition by the
Purchaser and Parent of beneficial ownership of the Shares subject to the Tender
and Option Agreement. The item numbers and responses thereto below are in
accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Bailey Corporation, a Delaware
corporation, which has its principal executive offices at 700 Lafayette Road,
P.O. Box 307, Seabrook, New Hampshire 03874.
(b) The exact title of the class of equity securities being sought in the
Offer is the common stock, par value $.10 per share (the "Common Stock"), of the
Company and the associated Common Stock purchase rights issued pursuant to the
Rights Agreement, dated as of September 28, 1995, as amended, between the
Company and State Street Bank and Trust Company as Rights Agent (the "Rights"
and together with the Common Stock, the "Shares"). The information set forth in
"Introduction" in the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is being filed by the Purchaser and Parent.
The information set forth in "Introduction" and Section 9 ("Certain Information
Concerning the Purchaser and Parent") of, and Schedule I ("Information
Concerning Directors and Executive Officers of Parent and its Affiliates,
including the Purchaser") to, the Offer to Purchase is incorporated herein by
reference.
(e)-(f) Neither the Purchaser nor Parent nor, to their knowledge, any of
the persons listed in Schedule I ("Information Concerning Directors and
Executive Officers of Parent and its Affiliates, including the Purchaser") to
the Offer to Purchase, has during the last five years (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Background of
the Offer") and Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company; The Merger Agreement; Tender and Option Agreement; Other Agreements;
Other Matters") of the Offer to Purchase is incorporated herein by reference.
4
<PAGE> 5
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in "Introduction," Section 6 ("Price
Range of the Shares; Dividends"), Section 11 ("Background of the Offer"),
Section 12 ("Purpose of the Offer and the Merger; Plans for the Company; The
Merger Agreement; Tender and Option Agreement; Other Agreements; Other Matters")
and Section 13 ("Dividends and Distributions; Changes in Stock") of the Offer to
Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares, NNM Quotation, Exchange Act Registration and Margin
Securities") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent") and Section 12 ("Purpose of
the Offer and the Merger; Plans for the Company; The Merger Agreement; Tender
and Option Agreement; Other Agreements; Other Matters") of the Offer to Purchase
is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Background of
the Offer") and Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company; The Merger Agreement; Tender and Option Agreement; Other Agreements;
Other Matters") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction," Section 10 ("Source and Amount
of Funds") and Section 16 ("Fees and Expenses") of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer and the
Merger; Plans for the Company; The Merger Agreement; Tender and Option
Agreement; Other Agreements; Other Matters") of the Offer to Purchase is
incorporated herein by reference.
(b)-(c) The information set forth in Section 15 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares, NNM Quotation, Exchange Act Registration and Margin
Securities") of the Offer to Purchase is incorporated herein by reference.
(e) Not applicable
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
5
<PAGE> 6
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated June 11, 1996.
(a)(8) Text of Press Release, dated June 5, 1996, issued by the Company.
(b)(1) Commitment Letter, dated June 3, 1996, from NBD Bank.
(c)(1) Agreement and Plan of Merger, dated June 5, 1996, between the
Purchaser and the Company.
(c)(2) Tender and Option Agreement, dated June 5, 1996, among the
Purchaser, Roger R. Phillips, William A. Taylor, Louis T. Enos, E Gordon Young,
John G. Owens and Allan B. Freedman.
(c)(3) Confidentiality Agreement, dated April 4, 1996, between Venture
Industries, Inc. and the Company.
(c)(4) Indemnity Agreement, dated June 5, 1996, between the Company and
Roger R. Phillips.
(c)(5) Indemnity Agreement, dated June 5, 1996, between the Company and
William A. Taylor.
(c)(6) Indemnity Agreement, dated June 5, 1996, between the Company and
Louis T. Enos.
(c)(7) Indemnity Agreement, dated June 5, 1996, between the Company and E
Gordon Young.
(c)(8) Indemnity Agreement, dated June 5, 1996, between the Company and
John G. Owens.
(c)(9) Indemnity Agreement, dated June 5, 1996, between the Company and
Allan B. Freedman.
(c)(10) Indemnity Agreement, dated June 5, 1996, between the Company and
Leonard Heilman.
(c)(11) Guaranty, dated June 5, 1996, by Vemco, Inc., Venture Industries
Corporation, Vemco Leasing, Inc., Venture Leasing Company, Venture Mold &
Engineering Corporation, Venture Service Company, each a Michigan corporation,
and Venture Industries Canada, Ltd., an Ontario corporation (each a "Guarantor"
and collectively, the "Guarantors") to the Company and to Roger R. Phillips,
William A. Taylor, Louis T. Enos, E Gordon Young, John G. Owens, Allan B.
Freedman and Leonard Heilman (each a "Beneficiary" and collectively, the
"Beneficiaries") with respect to the obligations of the Purchaser.
(c)(12) Confidentiality Agreement, dated February 9, 1996, between Venture
Holdings Trust and the Company.
(d) None.
(e) Not applicable.
(f) None.
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: June 11, 1996 VEMCO ACQUISITION CORP.
By: /s/ MICHAEL G. TORAKIS
------------------------------------
Michael G. Torakis, President
VENTURE HOLDINGS TRUST
By: /s/ MICHAEL G. TORAKIS
------------------------------------
Michael G. Torakis, President
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- --------------------------------------------------------------------------------
<S> <C> <C>
(a)(1) -- Offer to Purchase.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(5) -- Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(6) -- Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(7) -- Form of Summary Advertisement dated June 11, 1996.
(a)(8) -- Text of Press Release, dated June 5, 1996, issued by the Company.
(b)(1) -- Commitment Letter, dated June 3, 1996, from NBD Bank.
(c)(1) -- Agreement and Plan of Merger, dated June 5, 1996, between the Purchaser and the
Company.
(c)(2) -- Tender and Option Agreement, dated June 5, 1996, among the Purchaser, Roger R.
Phillips, William A. Taylor, Louis T. Enos, E Gordon Young, John G. Owens and
Allan B. Freedman
(c)(3) -- Confidentiality Agreement, dated April 4, 1996, between Venture Industries, Inc.
and the Company.
(c)(4) -- Indemnity Agreement, dated June 5, 1996, between the Company and Roger R.
Phillips.
(c)(5) -- Indemnity Agreement, dated June 5, 1996, between the Company and William A.
Taylor.
(c)(6) -- Indemnity Agreement, dated June 5, 1996, between the Company and Louis T. Enos.
(c)(7) -- Indemnity Agreement, dated June 5, 1996, between the Company and E Gordon Young.
(c)(8) -- Indemnity Agreement, dated June 5, 1996, between the Company and John G. Owens.
(c)(9) -- Indemnity Agreement, dated June 5, 1996, between the Company and Allan B.
Freedman.
(c)(10) -- Indemnity Agreement, dated June 5, 1996, between the Company and Leonard
Heilman.
(c)(11) -- Guaranty, dated June 5, 1996, by Vemco, Inc., Venture Industries Corporation,
Vemco Leasing, Inc., Venture Leasing Company, Venture Mold & Engineering
Corporation, Venture Service Company, each a Michigan corporation, and Venture
Industries Canada, Ltd., an Ontario corporation (each a "Guarantor" and
collectively, the "Guarantors") to the Company and to Roger R. Phillips, William
A. Taylor, Louis T. Enos, E Gordon Young, John G. Owens, Allan B. Freedman and
Leonard Heilman (each a "Beneficiary" and collectively, the "Beneficiaries")
with respect to the obligations of the Purchaser.
(c)(12) -- Confidentiality Agreement, dated February 9, 1996, between Venture Holdings
Trust and the Company.
(d) -- None.
(e) -- Not applicable.
(f) -- None.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BAILEY CORPORATION
AT
$8.75, NET PER SHARE
BY
VEMCO ACQUISITION CORP.
A CORPORATION FORMED BY
VENTURE HOLDINGS TRUST
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JULY 12, 1996, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF BAILEY CORPORATION (THE "COMPANY") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS HEREINAFTER DEFINED)
THAT NUMBER OF SHARES OF COMMON STOCK (AND THE ASSOCIATED RIGHTS) (TOGETHER, THE
"SHARES") WHICH TOGETHER WITH THE SHARES THEN OWNED BY VEMCO ACQUISITION CORP.
(THE "PURCHASER") AND ITS AFFILIATES, REPRESENTS AT LEAST A MAJORITY OF THE
SHARES OUTSTANDING ON A FULLY-DILUTED BASIS (THE "MINIMUM CONDITION"), (2)
VENTURE HOLDINGS TRUST ("PARENT") HAVING RECEIVED THE FINANCING CONTEMPLATED BY
THE COMMITMENT LETTER, DATED JUNE 3, 1996, FROM NBD BANK PURSUANT TO WHICH,
SUBJECT TO THE TERMS AND CONDITIONS THEREOF, NBD BANK HAS COMMITTED TO PROVIDE
THE FINANCING NECESSARY TO PURCHASE ALL OUTSTANDING SHARES ON A FULLY-DILUTED
BASIS PURSUANT TO THE OFFER AND THE MERGER AND TO REFINANCE ALL OUTSTANDING
INDEBTEDNESS OF THE COMPANY REFLECTED ON THE COMPANY SEC REPORTS (THE "FINANCING
CONDITION"), (3) THE APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976 (THE "HSR ACT") HAVING EXPIRED OR BEEN
TERMINATED, AND (4) THE COMPANY HAVING GIVEN NOTICE OF REDEMPTION FOR ALL
CONVERTIBLE DEBENTURES WHICH ARE REDEEMABLE AT THE COMPANY'S OPTION IN
ACCORDANCE WITH THEIR TERMS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS. SEE SECTIONS 12 AND 14.
PURCHASER HAS ENTERED INTO A TENDER AND OPTION AGREEMENT WITH CERTAIN
STOCKHOLDERS OF THE COMPANY PURSUANT TO WHICH, AMONG OTHER THINGS, SUCH
STOCKHOLDERS HAVE GRANTED PURCHASER AN OPTION TO ACQUIRE AT $8.75 PER SHARE AND
AGREED TO TENDER AND, IN THE EVENT SUCH OPTION IS NOT THERETOFORE EXERCISED,
SELL IN THE OFFER 1,750,115 SHARES BENEFICIALLY OWNED BY THE STOCKHOLDERS (OR
APPROXIMATELY 26.0% OF THE OUTSTANDING SHARES ON A FULLY-DILUTED BASIS). SEE
SECTION 12.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver the certificate(s) representing tendered Shares,
and any other required documents, to the Depositary or tender such Shares
pursuant to the procedure for book-entry transfer set forth in Section 3 or (2)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. A stockholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if such stockholder desires to tender such
Shares.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis, may tender such Shares
by following the procedure for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at its addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent or from brokers, dealers, commercial
banks and trust companies.
------------------------
The Information Agent for the Offer is:
Mackenzie Partners, Inc.
June 11, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
Introduction......................................................................... 1
1. Terms of the Offer............................................................ 3
2. Acceptance for Payment and Payment for Shares................................. 5
3. Procedure for Tendering Shares................................................ 6
4. Withdrawal Rights............................................................. 9
5. Certain Federal Income Tax Consequences....................................... 9
6. Price Range of the Shares; Dividends.......................................... 10
7. Effect of the Offer on the Market for the Shares, NNM Quotation, Exchange
Act Registration and Margin Securities........................................ 10
8. Certain Information Concerning the Company.................................... 11
9. Certain Information Concerning the Purchaser and Parent....................... 14
10. Source and Amount of Funds.................................................... 16
11. Background of the Offer....................................................... 19
12. Purpose of the Offer and the Merger; Plans for the Company; The Merger
Agreement;
Tender and Option Agreement; Other Agreements; Other Matters.................. 21
13. Dividends and Distributions; Changes in Stock................................. 37
14. Certain Conditions of the Offer............................................... 38
15. Certain Legal Matters......................................................... 39
16. Fees and Expenses............................................................. 41
17. Miscellaneous................................................................. 41
Schedule I -- Information Concerning Directors and Executive Officers
of Parent and its Affiliates, Including The Purchaser.............................. S-1
</TABLE>
<PAGE> 3
To Holders of Common Stock
of BAILEY CORPORATION:
INTRODUCTION
Vemco Acquisition Corp., a Delaware corporation (the "Purchaser") formed by
Venture Holdings Trust, a grantor trust ("Parent"), hereby offers to purchase
all outstanding shares of common stock, par value $.10 per share (the "Common
Stock"), of Bailey Corporation, a Delaware corporation (the "Company"), and the
associated Common Stock purchase rights (the "Rights" and, together with the
Common Stock, the "Shares"), issued pursuant to the Rights Agreement, dated as
of September 28, 1995, as amended, between the Company and State Street Bank and
Trust Company, as Rights Agent (the "Rights Agreement"), at a purchase price of
$8.75 per Share, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). Until a Distribution Date (as defined in the Rights Agreement), the
Rights will be evidenced by and trade with the certificates evidencing the
Common Stock. See Section 12 for a brief description of the Rights Agreement and
its application to the Offer and the Merger (as defined herein).
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of State Street Bank and Trust Company,
which is acting as the Depositary (the "Depositary"), and MacKenzie Partners,
Inc., which is acting as Information Agent (the "Information Agent"), incurred
in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER (AS HEREINAFTER DEFINED) AND DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY AND RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER ALL OF THEIR SHARES.
The Company has advised the Purchaser that Smith Barney Inc., the Company's
financial advisor, has delivered to the Board of Directors of the Company its
written opinion, dated June 5, 1996, to the effect that, as of such date, and
based upon and subject to certain matters stated in such opinion, the $8.75 per
Share cash consideration to be received by the holders of the Shares (other than
Parent and its affiliates) in the Offer and the Merger was fair, from a
financial point of view, to such holders. Such opinion is set forth in full as
an exhibit to the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders of the
Company concurrently herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS HEREINAFTER DEFINED)
THAT NUMBER OF SHARES WHICH TOGETHER WITH THE SHARES THEN OWNED BY THE PURCHASER
AND ITS AFFILIATES, REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON
A FULLY-DILUTED BASIS (THE "MINIMUM CONDITION"), (2) PARENT HAVING RECEIVED THE
FINANCING CONTEMPLATED BY THE COMMITMENT LETTER, DATED JUNE 3, 1996, FROM NBD
BANK PURSUANT TO WHICH, SUBJECT TO THE TERMS AND CONDITIONS THEREOF, NBD BANK
HAS COMMITTED TO PROVIDE THE FINANCING NECESSARY TO PURCHASE ALL OUTSTANDING
SHARES ON A FULLY-DILUTED BASIS PURSUANT TO THE OFFER AND THE MERGER AND TO
REFINANCE ALL OUTSTANDING INDEBTEDNESS OF THE COMPANY REFLECTED ON THE COMPANY
SEC REPORTS (THE "FINANCING CONDITION"), (3) THE APPLICABLE WAITING PERIOD UNDER
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED AND THE
REGULATIONS THEREUNDER (THE "HSR ACT") HAVING EXPIRED OR TERMINATED, AND (4) THE
COMPANY HAVING GIVEN NOTICE OF REDEMPTION FOR ALL CONVERTIBLE DEBENTURES WHICH
ARE REDEEMABLE AT THE COMPANY'S OPTION IN ACCORDANCE WITH THEIR TERMS. SEE
SECTIONS 12 AND 14.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
June 5, 1996 (the "Merger Agreement"), between the Purchaser and the Company
pursuant to which, as promptly as practicable after the purchase of Shares
pursuant to the Offer and the satisfaction or waiver of certain
<PAGE> 4
conditions, the Purchaser will be merged with and into the Company (the
"Merger"). In the Merger, each outstanding Share (other than Shares held by the
Company as treasury stock or by any subsidiary of the Company, or owned by
Parent, the Purchaser or any other affiliate of either Parent or the Purchaser
and other than Shares held by stockholders, if any, who perfect their appraisal
rights under Delaware law) will be converted into the right to receive $8.75, or
any higher price per Share paid pursuant to the Offer, without interest thereon,
in cash (the "Merger Consideration"), and the Company will become wholly-owned
by Parent. See Section 12.
Concurrently with the execution of the Merger Agreement, the Purchaser
entered into a Tender and Option Agreement (the "Tender and Option Agreement"),
with certain stockholders of the Company (the "Stockholders") beneficially
owning, in the aggregate, 1,750,115, approximately 28.9% of the outstanding
shares or approximately 26.0% of the outstanding Shares on a fully-diluted basis
(as defined in the Merger Agreement). Pursuant to the Tender and Option
Agreement, the Stockholders have agreed, among other things, (i) to grant the
Purchaser an irrevocable option to buy all such Shares owned of record or
beneficially by them from and after the date of the Tender and Option Agreement
at $8.75 per share (the "Option") and (ii) to validly tender, and in the event
such Option is not theretofore exercised, sell all such Shares which are owned
of record or beneficially by them prior to the Expiration Date (as hereinafter
defined) and are subject to the Tender and Option Agreement in the Offer and to
vote such Shares in favor of the Merger, in each case upon the terms and subject
to the conditions set forth in the Tender and Option Agreement. In the event of
termination of the Option, or termination of the Merger Agreement under certain
circumstances, the Purchaser's Option shall continue for a period of 90 days
thereafter so long as (x) all applicable waiting periods under the HSR Act
required for the purchase of the Option Shares upon such exercise shall have
expired or been waived and (y) there shall not be in effect any preliminary or
final injunction or other order issued by any court or governmental,
administrative or regulatory agency or authority or legislative body or
commission prohibiting the exercise of the Option pursuant to this Agreement.
The Option will terminate, however, in the event the Merger Agreement is
terminated under certain circumstances as described under "Tender and Option
Agreement." See Section 12.
Based on the representations and warranties of the Company contained in the
Merger Agreement, there are 5,357,558 shares outstanding; accordingly, the
Minimum Condition will be satisfied if 3,370,617 Shares are validly tendered and
not withdrawn prior to the Expiration Date. Because the Stockholders
beneficially own an aggregate of 1,750,115 Shares(including only those shares
subject to exercisable options and warrants and excluding 12,500 options subject
to the Tender and Option Agreement which will become exercisable upon a change
in control of the Company) and are required to tender (and not withdraw) such
Shares pursuant to the Offer, the Minimum Condition will be satisfied by the
tender of at least 1,620,502 Shares held by persons other than the Stockholders.
The number of Shares required to be validly tendered and not withdrawn in order
to satisfy the Minimum Condition will increase to the extent additional Shares
are deemed to be outstanding on a fully-diluted basis under the Merger
Agreement. For purposes of the Merger Agreement, "on a fully-diluted basis"
means, as of any date, the number of Shares outstanding, plus all Shares the
Company is then required to issue pursuant to obligations outstanding at that
date under employee stock option or other benefit plans, outstanding warrants,
outstanding options of any kind, convertible securities, or otherwise (to the
extent such options, warrants, convertible securities or other rights are vested
or exercisable), other than Shares issuable upon conversion of the Company's 9%
Convertible Subordinated Notes due April 13, 2000 or its 8% Convertible
Debentures due July 31, 1999 (collectively, the "Convertible Debentures").
Parent has entered into a Commitment Letter, dated June 3, 1996, with NBD
Bank (the "Commitment Letter") pursuant to which, subject to the terms and
conditions thereof, NBD Bank has agreed to provide the financing necessary to
purchase all outstanding Shares on a fully-diluted basis pursuant to the Offer
and the Merger and to refinance all outstanding indebtedness of the Company
reflected on the reports (the "Company SEC Reports") required to be filed with
the Securities and Exchange Commission (the "Commission"). The Offer is
conditioned upon, among other things, Parent having received the financing
contemplated by the Commitment Letter. See Section 10 for a description of the
Commitment Letter and Parent's plans for financing the Offer and the Merger.
2
<PAGE> 5
The consummation of the Merger is subject to the satisfaction or waiver of
a number of conditions, including, if required, the approval of the Merger by
the requisite vote or consent of the stockholders of the Company. Under the
General Corporation Law of the State of Delaware ("Delaware Law"), the
stockholder vote necessary to approve the Merger will be the affirmative vote of
at least a majority of the outstanding Shares, including Shares held by the
Purchaser and its affiliates. Accordingly, if the Purchaser acquires a majority
of the outstanding Shares, the Purchaser will have the voting power required to
approve the Merger without the affirmative vote of any other stockholders of the
Company. Furthermore, if the Purchaser acquires at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, the Purchaser would be able to effect
the Merger pursuant to the "short-form" merger provisions of Section 253 of the
Delaware Law, without prior notice to, or any action by, any other stockholder
of the Company. In such event, the Purchaser intends to effect the Merger as
promptly as practicable following the purchase of Shares in the Offer. See
Section 12.
The Merger Agreement and the Tender and Option Agreement are more fully
described in Section 12.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not withdrawn in accordance with
Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time,
on Friday, July 12, 1996, unless and until the Purchaser (subject to the terms
of the Merger Agreement) shall have extended the period of time 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.
Subject to the terms of the Merger Agreement, the Tender and Option
Agreement and the applicable rules and regulations of the Commission, 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 Section 14 hereof shall have occurred or shall have been determined by the
Purchaser to have occurred, (i) to 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 the Depositary
and (ii) to amend the Offer in any other respect by giving oral or written
notice of such amendment to the Depositary.
If by 12:00 Midnight, New York City time, on Friday, July 12, 1996 (or any
other date or time then set as the Expiration Date), any or all conditions to
the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the terms and conditions contained in
the Merger Agreement, the Tender and Option Agreement and the applicable rules
and regulations of the Commission, to (i) terminate the Offer and not accept for
payment any Shares and return all tendered Shares to tendering stockholders,
(ii) waive all the unsatisfied conditions and, subject to complying with the
terms of the Merger Agreement, the Tender and Option Agreement and the
applicable rules and regulations of the Commission, accept for payment and pay
for all Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn, (iii) extend the Offer and, subject to the right of stockholders to
withdraw Shares until the Expiration Date, retain the Shares that have been
tendered during the period or periods for which the Offer is extended or (iv)
amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, waiver, amendment or termination will be
followed as promptly as practicable by public announcement. In the case of an
extension, Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires that the announcement be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in
3
<PAGE> 6
accordance with the public announcement requirements of Rule 14d-4(c) under the
Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that any material change in the
information published, sent or given to stockholders in connection with the
Offer be promptly disseminated to stockholders in a manner reasonably designed
to inform stockholders of such change). Without limiting the obligation of the
Purchaser under such Rules or the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service.
In the Merger Agreement, the Purchaser has agreed that subject to any
rights the Company may have under the Merger Agreement, including, without
limitation, the right to terminate the Merger Agreement if the Purchaser has
failed to waive the Financing Condition by the thirtieth (30th) business day
following commencement of the Offer and, except as otherwise required by law, it
will not, without the prior consent of the Company, extend the Offer, except
that, without the consent of the Company, (a) the Purchaser may extend the
Offer, in the event that any condition to the Offer is not satisfied or waived,
(b) the Purchaser may extend the Offer for an aggregate period of not more than
ten (10) business days if all conditions to the Offer have been satisfied but
fewer than 90% of the outstanding Shares have been validly tendered and not
withdrawn (not including Shares covered by guaranteed deliveries), and (c) for
any period required by any rule, regulation, interpretation or position of the
Commission or the staff applicable to the Offer.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 4.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the offer or information concerning
the offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to stockholders. As used in this Offer to Purchase, "business day"
has the meaning set forth in Rule 14d-1 under the Exchange Act.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition, the Financing Condition, the expiration or termination of all waiting
periods imposed by the HSR Act, the Company having given notice of redemption
for all convertible debentures which are redeemable at the Company's option in
accordance with their terms and the other conditions set forth in Section 14.
Subject to the terms and conditions contained in the Merger Agreement and the
Tender and Option Agreement, the Purchaser reserves the right (but shall not be
obligated) to waive any or all such conditions.
The Company has provided the Purchaser with its 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 will be furnished by the Purchaser to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
4
<PAGE> 7
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date, and not properly withdrawn in
accordance with Section 4, promptly after the later to occur of (i) the
Expiration Date or (ii) the satisfaction or waiver of the conditions set forth
in Section 14. The Purchaser expressly reserves the right, in its sole
discretion, to delay acceptance for payment of, or payment for, Shares in order
to comply in whole or in part with any applicable law, including, without
limitation, the HSR Act. Any such delays will be effected in compliance with
Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to
pay for or return tendered Shares promptly after the termination or withdrawal
of the Offer).
The Purchaser currently anticipates filing a Notification and Report Form
with respect to the Offer under the HSR Act on or about June 12, 1996. The
waiting period under the HSR Act with respect to the Offer will expire at 11:59
p.m., New York City time, on the 15th day after the date such form is filed
(anticipated to be on or about June 27, 1996, unless early termination of the
waiting period is granted). In addition, the Antitrust Division of the
Department of Justice (the "Antitrust Division") or the Federal Trade Commission
(the "FTC") may extend the waiting period by requesting additional information
or documentary material from Parent. If such a request is made, such waiting
period will expire at 11:59 p.m., New York City time, on the 10th day after
substantial compliance by Parent with such request. See Section 15 hereof for
additional information concerning the HSR Act and the applicability of the
antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (the "Share Certificates") or timely confirmation (a "Book-Entry
Confirmation") of the book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company or the Philadelphia Depository Trust
Company (each a "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3, (ii) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined below) in connection with a book-entry transfer,
and (iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares pursuant
to the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares; any such Shares may not be withdrawn except to the
5
<PAGE> 8
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, certificates for any such Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility), as promptly as practicable after the
expiration or termination of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid per Share pursuant to the Offer, the Purchaser will pay such
increased consideration for all such Shares purchased pursuant to the Offer,
whether or not such Shares were tendered prior to such increase in
consideration.
Stockholders of the Company will be required to tender one Right for each
Share tendered in order to effect a valid tender of such Share. If Right
Certificates have been distributed to holders of Shares prior to the
consummation of the Offer, Right Certificates representing a number of Rights
equal to the number of Shares being tendered must be delivered to the Depositary
in order for such Shares to be validly tendered. If Right Certificates have not
been distributed prior to the time Shares are accepted for payment by the
Purchaser, a tender of Shares will also constitute a tender of the associated
Rights.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment will
not relieve the Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
VALID TENDER. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, or an Agent's Message
in connection with a book-entry delivery of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date. In addition, either (i) certificates for tendered Shares
must be received by the Depositary along with the Letter of Transmittal at one
of such addresses or such Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below (and a Book-Entry Confirmation received by
the Depositary), in each case prior to the Expiration Date, or (ii) the
tendering stockholder must comply with the guaranteed delivery procedure set
forth below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at each Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in any of the Book-Entry Transfer Facilities'
systems may make book-entry delivery of Shares by causing a Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account at a Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other required documents, must, in any case,
6
<PAGE> 9
be transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEE. No signature guarantee is required on the Letter of
Transmittal if (i) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities Systems whose name appears on a
security position listing as the owner of the Shares) tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) such Shares are tendered for the account of a
bank, broker, dealer, credit union, savings association or other entity that is
a member in good standing of a recognized Medallion Program approved by The
Securities Transfer Association, Inc. (an "Eligible Institution"). In all other
cases, all signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made or
certificates for Shares not tendered or not accepted for payment are to be
issued to a person other than the registered holder of the certificates
surrendered, the tendered certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names of
the registered holders or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed as described above. See
Instruction 5 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(3) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees and any
other documents required by the Letter of Transmittal, are received by the
Depositary within three National Association of Securities Dealers
Automated Quotation National Market System (the "NNM") trading days after
the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a signature guarantee by an Eligible Institution in
the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for the Shares or a Book-Entry
Confirmation with respect to such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message in connection with a book-entry
transfer, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
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<PAGE> 10
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer,
including the tendering stockholder's representation and warranty that the
tender of such Shares complies with Rule 14e-4 under the Exchange Act.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must provide the Depositary with such stockholder's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalties of perjury that such TIN is correct and that such stockholder is
not subject to backup withholding. Certain stockholders (including, among
others, all corporations and certain foreign individuals and entities) are not
subject to backup withholding. If a stockholder does not provide its correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on such stockholder and payment of cash to
such stockholder pursuant to the Offer may be subject to backup withholding of
31%. All stockholders surrendering Shares pursuant to the Offer should complete
and sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to the Purchaser and the Depositary). Noncorporate
foreign stockholders should complete and sign the main signature form and a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
APPOINTMENT. By executing the Letter of Transmittal, the tendering
stockholder will irrevocably appoint designees of the Purchaser as such
stockholder's attorney-in-fact and proxies in the manner set forth in the Letter
of Transmittal, each with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by the Purchaser and with respect to any and all other
Shares or other securities or rights issued or issuable in respect of such
Shares on or after June 7, 1996. All such proxies shall be considered coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, the Purchaser accepts for payment Shares
tendered by such stockholder as provided herein. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney and proxies may be given
(and, if given, will not be deemed effective). The designees of the Purchaser
will thereby be empowered to exercise all voting and other rights with respect
to such Shares or other securities or rights in respect of any annual, special
or adjourned meeting of the Company's stockholders, or otherwise, as they in
their sole discretion deem proper. The Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such Shares, the Purchaser must be able to
exercise full voting and other rights with respect to such Shares and other
securities or rights, including voting at any meeting of stockholders then
scheduled.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser, in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form or
the acceptance for payment of or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right, in its sole discretion, subject to the terms and conditions of the Merger
Agreement and the Tender and Option Agreement, to waive any of the conditions of
the Offer or any defect or irregularity in any tender with respect to any
particular Shares, whether or not similar defects or irregularities are waived
in the case of other Shares. No tender of Shares will be deemed to have been
validly made until all defects or irregularities relating thereto have been
cured or waived. None of the Purchaser, the Depositary, the Information Agent,
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification. The Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
8
<PAGE> 11
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4 tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after August 9, 1996.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares or is unable to accept Shares for payment pursuant to the
Offer for any reason, then, without prejudice to 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 in this
Section 4. Any such delay will be by an extension of the Offer to the extent
required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares. Withdrawals of
tenders of Shares may not be rescinded, and any Shares properly withdrawn will
thereafter be deemed not validly tendered for any purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, the Depositary, the Information Agent, nor 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.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
federal income tax purposes a tendering stockholder will recognize gain or loss
in an amount equal to the difference between the cash received and the
stockholder's adjusted tax basis in the Shares tendered by the stockholder and
purchased pursuant to the Offer or the Merger, as the case may be. Gain or loss
will be calculated for each block of Shares tendered and purchased pursuant to
the Offer (or cancelled pursuant to the Merger). For federal income tax
purposes, such gain or loss will be a capital gain or loss if the Shares are a
capital asset in the hands of the stockholder, and a long-term capital gain or
loss if the stockholder's holding period is more than one year as of the date of
the sale of the Shares or the effective date of the Merger, as the case may be.
THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR
GENERAL INFORMATION ONLY AND IS BASED ON THE LAW AS CURRENTLY IN EFFECT. THE TAX
TREATMENT OF EACH STOCKHOLDER WILL DEPEND IN PART UPON SUCH STOCKHOLDER'S
PARTICULAR SITUATION. SPECIAL TAX CONSEQUENCES NOT DESCRIBED HEREIN MAY BE
APPLICABLE TO PARTICULAR CLASSES OF TAXPAYERS, SUCH AS FINANCIAL INSTITUTIONS,
BROKER-DEALERS, PERSONS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES
AND
9
<PAGE> 12
STOCKHOLDERS WHO ACQUIRED THEIR SHARES THROUGH THE EXERCISE OF ANY EMPLOYEE
STOCK OPTION OR OTHERWISE AS COMPENSATION. ALL STOCKHOLDERS SHOULD CONSULT WITH
THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND
THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS.
6. PRICE RANGE OF THE SHARES; DIVIDENDS
According to the Company's Annual Report on Form 10-K for the fiscal year
ended July 30, 1995 (the "Company Form 10-K"), the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended January 28, 1996 (the "Company Form
10-Q") and information supplied to the Purchaser by the Company, the Shares are
traded on the NNM under the trading symbol "BAIB". The following table sets
forth, for the periods indicated, the high and low closing bid prices per Share
on the NNM.
<TABLE>
<CAPTION>
HIGH LOW
------------ ------------
<S> <C> <C> <C> <C>
Fiscal Year Ended July 31, 1994:
First Quarter............................................................. $13 3/4 $10 1/2
Second Quarter............................................................ 16 1/2 11 1/2
Third Quarter............................................................. 15 7/8 9
Fourth Quarter............................................................ 11 5 1/4
Fiscal Year Ended July 30, 1995:
First Quarter............................................................. $ 7 3/4 $ 5 3/4
Second Quarter............................................................ 9 6 3/4
Third Quarter............................................................. 7 3/4 5 7/8
Fourth Quarter............................................................ 7 5/8 4 1/2
Fiscal Year Ending July 31, 1996:
First Quarter............................................................. $ 5 1/4 $ 4
Second Quarter............................................................ 6 3/8 4 3/8
Third Quarter............................................................. 7 7/8 5 1/8
Fourth Quarter (through June 10, 1996).................................... 8 3/4 7 3/4
</TABLE>
On June 4, 1996, the last full trading day before the public announcement
of the execution of the Merger Agreement and the Purchaser's intention to
acquire the Shares pursuant to the Offer, the reported closing sales price of
the Shares on the NNM was $8.30. On June 10, 1996, the last full trading day
prior to the date of this Offer to Purchase, the reported closing sale price of
the Shares on the NNM was $8.50 per Share. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
The Company has never paid or declared cash dividends on the Shares.
Certain agreements pertaining to the Company's long-term indebtedness contain
covenants which restrict the Company's ability to pay dividends.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NNM QUOTATION, EXCHANGE ACT
REGISTRATION AND MARGIN SECURITIES
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares, if any, held by the public.
The Shares are currently listed and traded on the NNM, which constitutes
the principal trading market for the Shares. Depending upon the number of Shares
purchased pursuant to the Offer, the Shares may no longer meet the standards for
continued inclusion in the NNM, which require that an issuer have at least
200,000 publicly held shares, held by at least 400 shareholders or 300
shareholders of round lots, with a market value of $1,000,000, and have net
tangible assets of at least either $2,000,000 or $4,000,000, depending on
profitability levels during the issuer's four most recent fiscal years. If these
10
<PAGE> 13
standards are not met, the Shares might nevertheless continue to be included in
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") with quotations published in the NASDAQ "additional list" or in one
of the "local lists," but if the number of holders of the Shares were to fall
below 300, or if the number of publicly held Shares were to fall below 100,000
or there were not at least two registered and active market makers for the
Shares, the rules of the National Association of Securities Dealers, Inc.
("NASD") provide that the Shares would no longer be "qualified" for NASDAQ
reporting and NASDAQ would cease to provide any quotations. Shares held directly
or indirectly by directors, officers or beneficial owners of more than 10% of
the Shares are not considered as being publicly held for this purpose. According
to information provided by the Company, as of June 5, 1996 there were
approximately 523 holders of record of Shares and 5,357,558 Shares were
outstanding. If, as a result of the purchase of Shares pursuant to the Offer,
the Shares no longer meet the requirements of the NASD for continued inclusion
in the NNM or NASDAQ, as the case may be, the market for Shares could be
adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for quotation through NASDAQ, it is possible that the Shares would continue to
trade in the over-the-counter market and that price quotations would be reported
by other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
holders of Shares remaining at such time, the interests in maintaining a market
in Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act, as described below, and other
factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its stockholders and to
the Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short-swing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), may be
impaired or eliminated. The Purchaser intends to cause the Company to apply for
termination of registration of the Shares under the Exchange Act as soon after
the completion of the Offer as the requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be reported on NASDAQ and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities" or be eligible for NASDAQ reporting.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The historical information concerning the Company contained in this Offer
to Purchase, including financial information, has been taken from or based upon
publicly available documents and records on file with the Commission and other
public sources. Neither the Purchaser nor the Information Agent assumes
11
<PAGE> 14
any responsibility for the accuracy or completeness of the information
concerning the Company contained in such documents and records or for any
failure by the Company to disclose events which may have occurred or may affect
the significance or accuracy of any such information but which are unknown to
the Purchaser.
The Company is a Delaware corporation with its principal executive offices
at 700 Lafayette Road, Seabrook, New Hampshire 03874. The telephone number of
the Company at such office is (603) 474-3011. According to the Company's 1995
Form 10-K, the Company is a manufacturer of molded and painted plastic exterior
components for North American original equipment manufacturers of cars, light
trucks, sport utility vehicles and mini-vans. The Company's manufacturing
operations are performed at seven plants located in Seabrook, New Hampshire;
Conneaut, Ohio; Hillsdale, Michigan; Madison, Indiana; Lancaster, Ohio; Hartford
City, Indiana; and Portland, Indiana.
Set forth below is certain selected historical consolidated financial
information with respect to the Company and its subsidiaries excerpted or
derived from the information contained in the Company Form 10-K and the Company
Form 10-Q which are incorporated by reference herein. More comprehensive
financial information is included in such reports and other documents filed by
the Company with the Commission, and the following summary is qualified in its
entirety by reference to such reports and such other documents and all the
financial information (including any related notes) contained therein. Such
reports and other documents should be available for inspection and copies
thereof should be obtainable in the manner set forth below under "Available
Information."
BAILEY CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------- FISCAL YEAR ENDED
JANUARY 28, JANUARY 29, ---------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
----------- ----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales................... $79,915 $86,234 $168,228 $108,313 $91,398 $56,127 $23,954
Cost of products sold....... 78,494 74,015 151,414 92,379 77,010 48,360 21,285
Selling, general and
administrative expenses... 7,235 7,087 15,300 9,313 7,366 4,515 4,324
Interest.................... 2,378 1,752 3,871 1,648 1,913 1,607 1,284
Provision for income taxes
(benefit)................. (2,021) 1,385 (778) 2,207 2,044 639 (975)
Net income (loss)........... (6,171) 1,995 (1,579) 2,766 3,065 1,006 (1,964)
PER SHARE DATA:
Net income (loss)........... (1.14) .35 (.29) .52 .73 .26 (.52)
Weighted average shares
outstanding............... 5,401,000 6,427,000 5,444,000 5,356,000 4,187,000 3,941,000 3,744,000
FINANCIAL POSITION -- AT END
OF PERIOD:
Working capital
(deficiency).............. (9,658) (6,588) (2,082) 7,566 (1,487) (5,004) (4,713)
Total assets................ 111,751 107,932 100,721 91,721 52,210 38,821 24,289
Short-term debt, including
current portion of
long-term debt and
bank overdraft............ 25,811 14,508 18,710 5,857 10,836 9,812 7,563
Long-term debt and capital
leases.................... 32,658 35,633 33,136 35,438 16,674 11,830 6,761
Common stockholders' equity
investment................ 12,709 22,353 18,880 20,600 6,988 2,020 839
</TABLE>
To the knowledge of the Purchaser, the Company does not as a matter of
course make public forecasts as to its future financial performance. However, in
connection with the preliminary discussions
12
<PAGE> 15
concerning the feasibility of the Offer and the Merger, the Company prepared and
furnished the Purchaser with projections of gross revenues (the "Projections").
The Projections have been prepared utilizing numerous assumptions, including
assumptions relating to unit volumes for the car, mini-van and light truck
models served by the Company and the achievement of certain sales growth based
on new business.
BAILEY CORPORATION
CERTAIN PROJECTIONS OF FUTURE REVENUES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1996 1997 1998 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues................................... $172.4 $206.4 $216.5 $224.6
</TABLE>
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO COMPLYING WITH PUBLISHED
GUIDELINES OF THE COMMISSION AND ARE INCLUDED HEREIN ONLY BECAUSE SUCH
INFORMATION WAS PROVIDED TO THE PURCHASER AND ITS PROSPECTIVE LENDER. THE
PROJECTIONS WERE NOT PREPARED WITH A VIEW TO COMPLIANCE WITH THE GUIDELINES
ESTABLISHED BY THE COMMISSION OR THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS. THE PROJECTIONS REFLECT
NUMEROUS ASSUMPTIONS, ALL MADE BY MANAGEMENT OF THE COMPANY, WITH RESPECT TO
INDUSTRY PERFORMANCE, GENERAL BUSINESS, ECONOMIC, MARKET AND FINANCIAL
CONDITIONS AND OTHER MATTERS, ALL OF WHICH ARE DIFFICULT TO PREDICT, MANY OF
WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF WHICH WERE SUBJECT TO
APPROVAL BY THE PURCHASER. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE
ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL
RESULTS MAY BE MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE
PROJECTIONS. THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS
AN INDICATION THAT ANY OF THE PURCHASER, THE COMPANY OR THEIR RESPECTIVE
FINANCIAL ADVISORS CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A RELIABLE
PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED UPON AS
SUCH. NEITHER THE PURCHASER, THE COMPANY NOR THEIR RESPECTIVE FINANCIAL ADVISORS
ASSUME ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR
COMPLETENESS OF THE PROJECTIONS. NEITHER THE PURCHASER, THE COMPANY NOR ANY OF
THEIR FINANCIAL ADVISORS HAS MADE, OR MAKES, ANY REPRESENTATION TO ANY PERSON
REGARDING THE INFORMATION CONTAINED IN THE PROJECTIONS AND NONE OF THEM INTENDS
TO UPDATE OR OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING
AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN
THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE
SHOWN TO BE IN ERROR.
AVAILABLE INFORMATION. The Company is subject to the reporting requirements
of the Exchange Act and, in accordance therewith, is required to file reports
and other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
proxy statements distributed to the Company's stockholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located in the Northwestern Atrium Center, 500 West
Madison Street (Suite 1400), Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies should be obtainable, by
mail, upon payment of the Commission's customary charges, by writing to the
Commission's principal office at 450 Fifth Street,
13
<PAGE> 16
N.W., Washington, D.C. 20549. Such information should also be available for
inspection at the offices of the NASD, Reports Section, 1735 K Street, N.W.,
Washington, D.C. 20006.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation was formed by Parent to acquire the
Company and has not conducted any unrelated activities since its organization.
The principal offices of the Purchaser are located at 33662 James J. Pompo,
Fraser, Michigan 48026-0278. All outstanding shares of capital stock of the
Purchaser are owned by Parent.
Parent is a grantor trust which owns the following other subsidiaries:
Vemco, Inc.; Venture Industries Corporation; Venture Mold & Engineering
Corporation; Venture Leasing Company; Vemco Leasing, Inc.; Venture Services
Company; Venture Holdings Corporation; and Venture Industries Canada, Ltd.
(Parent, the Purchaser and these other subsidiaries are collectively referred to
as the "Venture Group"). Larry J. Winget is the sole trustee of Parent. The
Venture Group's principal executive offices are located at 33662 James J. Pompo,
P.O. Box 278, Fraser, Michigan 48026-0278. The Venture Group designs and
manufactures injection molded thermoplastic parts and components for North
American original equipment manufacturers of cars, mini-vans and sport utility
vehicles. The Venture Group's products include exterior components such as front
and rear bumper facias, body side claddings and body side moldings, and interior
trim components such as instrument panel carriers, side wall trim, window
moldings and air bag covers. Molding operations are conducted at nine facilities
in Fraser, Clinton Township, Almont and Grand Blanc, Michigan.
14
<PAGE> 17
Set forth below is certain selected historical consolidated financial
information with respect to Parent and its subsidiaries for the fiscal year
ended December 31, 1995, and for the three months ended March 31, 1996, which is
furnished on a regular basis to the Trustee acting on behalf of the holders of
Parent's outstanding 9 3/4% Senior Subordinated Notes Due 2004 (the "Senior
Subordinated Notes").
VENTURE HOLDINGS TRUST AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
----------------- ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:(1)
Net sales........................ $51,243 $75,747 $251,142 $244,112 $205,567 $174,771 $175,672
Cost of products sold............ 41,852 61,368 211,262 199,716 163,521 146,157 146,658
Gross profit..................... 9,392 14,379 39,880 44,395 42,046 28,614 29,014
Selling, general and
administrative expense......... 4,319 5,587 20,129 19,200 15,523 13,180 11,375
Income from operations........... 4,773 8,542 19,174 21,790 25,346 15,434 17,639
Interest expense................. 3,730 3,789 15,032 14,345 11,158 10,390 10,496
Extraordinary loss on early
retirement of debt............. -- -- -- -- 4,066 -- --
Net income(2).................... 1,044 4,752 4,142 7,445 10,122 5,044 7,143
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital.................. 62,636 80,102 74,354 85,258 32,291 29,556 32,489
Property, plant and equipment.... 119,090 111,363 116,299 111,472 102,277 94,501 91,998
Total assets..................... 229,535 248,177 231,602 234,435 166,578 148,618 146,002
Long-term debt (including current
maturities).................... 142,282 152,972 152,463 153,118 94,957 94,064 94,565
Warrants......................... -- -- -- -- -- 2,673 2,357
Trust principal(3)............... 54,542 54,108 53,498 49,356 41,911 31,789 27,633
</TABLE>
- -------------------------
(1) The Trust operates as a holding company and has no independent operations of
its own.
(2) Certain of the subsidiaries elected "S" Corporation status under the Code
and consequently, such subsidiaries does not incur liability for federal and
certain state income taxes. Upon termination of the Parent's status as a
trust, the S elections may terminate and the corporation succeeding the
Parent would be subject to income tax.
(3) Parent has made distributions to the beneficiary of the Trust in amounts
generally equal to taxes incurred by the beneficiary as a result of the
activities of the subsidiaries of approximately $.6 million and $.9 million,
for the years ended December 31, 1991 and 1992, respectively. For the years
ended December 31, 1993, 1994 and 1995, Parent paid the beneficiary $1.2
million, $3.4 million, and $.6 million respectively, as compensation in lieu
of a distribution of Trust principal for such purposes.
Except as described in this Offer to Purchase, neither Parent nor, to the
best knowledge of Parent, any of the persons listed in Schedule I or any
associate or majority-owned subsidiary of Parent (including the Purchaser) or
any of the persons so listed, beneficially owns any equity security of the
Company, and neither Parent nor, to the best knowledge of Parent, any of the
other persons referred to above, or any of the respective directors, executive
officers or subsidiaries of any of the foregoing, has effected any transaction
in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (1) there have not been any
contacts, transactions or negotiations between Parent, any of its subsidiaries
(including the Purchaser) or, to the best knowledge of Parent, any of the
persons listed in Schedule I, on the one hand, and the Company or any of its
directors, officers or affiliates, on the other hand, that are required to be
disclosed pursuant to the rules and regulations of the Commission and (2)
neither Parent nor, to the best knowledge of Parent, any of
15
<PAGE> 18
the persons listed in Schedule I has any contract, arrangement, understanding or
relationship with any person with respect to any securities of the Company.
NO AVAILABLE INFORMATION. Neither Parent nor the Purchaser is subject to
the informational filing requirements of the Exchange Act and neither Parent nor
the Purchaser is obligated to file reports or other information with the
Commission.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to consummate the Offer
and the Merger (including the cash out of outstanding and vested stock options
and warrants) (the "Acquisition") and to pay related fees and expenses
(inclusive of expenses of the Company) is estimated to be approximately $58
million. The total amount of funds required to refinance (a) all of the existing
indebtedness of the Company under its existing credit agreement and its
long-term debt obligations, (b) the 9 3/4% Senior Secured Notes Due 2000
("Senior Notes") of Parent is estimated to be approximately $102 million. The
Purchaser will obtain all of such funds through a capital contribution which
will be made by Parent. Parent intends to obtain funds for such capital
contribution pursuant to a revolving credit facility and two term loans
(collectively, the "Facilities") contemplated by the Commitment Letter. The
Facility will also be used by Parent to provide working capital to its
affiliates, including the Purchaser.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE FINANCING CONDITION.
THE OBLIGATIONS OF NBD BANK TO FUND UNDER THE COMMITMENT LETTER ARE SUBJECT TO
CERTAIN CONDITIONS THAT ARE SUMMARIZED BELOW. IF ANY SUCH CONDITION IS NOT
SATISFIED OR WAIVED, AND AS A RESULT, THE FINANCING CONTEMPLATED BY THE
COMMITMENT LETTER IS NOT FUNDED, THEN THE FINANCING CONDITION WILL NOT BE
SATISFIED AND THE PURCHASER WILL NOT BE OBLIGATED TO ACCEPT FOR PAYMENT OR TO
PAY FOR SHARES TENDERED PURSUANT TO THE OFFER. THE MERGER AGREEMENT PROVIDES
THAT IF THE FINANCING CONDITION IS NOT WAIVED BY THE PURCHASER BY THE THIRTIETH
(30TH) BUSINESS DAY FOLLOWING COMMENCEMENT OF THE OFFER, THE COMPANY MAY
TERMINATE THE MERGER AGREEMENT.
The Facilities will consist of three loans totaling $200 million (the
"Commitment Amount"), in the form of a $100 million Revolving Credit Facility, a
$70 million Term Loan B Facility and a $30 million Term Loan C Facility. The
Facilities will be guaranteed by all direct and indirect domestic subsidiaries
of the Parent, whether now existing or hereafter acquired or created, including
the Purchaser. Consummation of the Facilities is subject to, among other things,
the negotiation and execution of final agreements (the "Definitive Financing
Agreements") on terms satisfactory to the parties thereto. There can be no
assurance that the terms set forth below will be contained in the such
agreements or that such agreements will not contain additional provisions.
REVOLVING CREDIT FACILITY. The Commitment Letter provides that borrowings
may be made by the Parent or its direct or indirect subsidiaries (including the
Purchaser) from time to time over six years on a revolving credit basis in an
amount up to $100 million. Borrowings will be subject to a borrowing base, which
will be a negotiated percentage of eligible inventory and eligible accounts
receivable, with eligibility criteria to be determined by NBD Bank. At the
option of Parent, borrowings under the Revolving Credit Facility will bear
interest on the aggregate unpaid principal amount thereof at a floating rate per
annum equal to either the Alternate Base Rate plus 1.25% or the Eurodollar Rate
plus 2.5%, with adjustments in either rate subject to a performance-based grid
acceptable to NBD Bank and First Chicago Capital Markets, Inc. (the "Arranger"),
beginning six months after the date on which the Definitive Financing Agreements
are signed (the "Closing Date"). All borrowings under the Revolving Credit
Facility must be repaid on or before the sixth anniversary of the Closing Date.
As used in the Commitment Letter, the "Alternate Base Rate" is the larger of the
rate of interest announced from time to time by NBD Bank as its "prime rate"
(changing when and as such prime rate changes) or the federal funds rate plus
1/2% per annum. The "Eurodollar Rate" is the rate offered by NBD Bank in the
London interbank market for deposits of, and for a maturity corresponding to,
NBD Bank's portion of the Facilities, as adjusted for maximum statutory
reserves. For all facilities, Eurodollar Rate interest periods shall be one,
two, three or
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six months, and interest will be payable in arrears on the last day of the
interest period and (in the case of an interest period longer than three months,
quarterly). The Eurodollar Rate does not have to be made available to Parent as
an option for the first 90 days following the initial funding of any Loans under
the Commitment (or earlier, at the option of NBD Bank). The Definitive Financing
Agreements will also contain customary provisions relating to yield protection,
availability and capital adequacy for all facilities. After any default, if
required by the lending banks, the interest rate for each facility will be equal
to the then-highest rate applicable to the particular facility plus 3% per
annum.
TERM LOAN B. The Commitment Letter provides that Parent may borrow on a
term loan basis ("Term Loan B") in an amount of up to $70 million. As is the
case for the Revolving Credit Facility, at the option of Parent, Borrowings
under Term Loan B will bear interest on the aggregate unpaid principal amount
thereof at a floating rate per annum equal to either the Alternate Base Rate
plus 1.25% or the Eurodollar Rate plus 2.5%, with adjustments in either rate
subject to a performance-based grid acceptable to NBD Bank and the Arranger,
beginning six months after the Closing Date. The Arranger may, at its
discretion, reallocate a portion of the Term Loan B commitment to Term Loan C,
or vice versa. Borrowings under Term Loan B will be paid in quarterly
installments of principal, in amounts to be negotiated and acceptable to NBD
Bank and the Arranger. All amounts borrowed under Term Loan B must be repaid by
the sixth anniversary of the Closing Date.
TERM LOAN C. The Commitment Letter also provides that Parent may borrow on
a term loan basis ("Term Loan C") in an amount of up to $30 million. At the
option of Parent, Borrowings under Term Loan C will bear interest on the
aggregate unpaid principal amount thereof at a floating rate per annum equal to
either the Alternate Base Rate plus 1.50% or the Eurodollar Rate plus 3.0%, with
adjustments in either rate subject to a performance-based grid acceptable to NBD
Bank and the Arranger, beginning six months after the Closing Date. As with Term
Loan B, borrowings under Term Loan C will be paid in quarterly installments of
principal, in amounts to be negotiated and acceptable to NBD Bank and the
Arranger. All amounts borrowed under Term Loan C must be repaid by the seventh
anniversary of the Closing Date.
SECURITY. The Facilities will be secured by a first perfected security
interest in all of the assets of Parent and, through secured guaranties from its
domestic subsidiaries, including the Company and its subsidiaries upon its
acquisition pursuant to the Offer and the Merger. The assets to be pledged by
Parent as collateral will include all stock or other evidence of ownership of
its direct and indirect domestic subsidiaries, and 65% of the stock or other
evidence of ownership of all of its direct and indirect foreign subsidiaries.
Such collateral will also secure any interest rate swaps or hedge obligations of
Parent owing to any lender. All intercompany funds flows will be evidenced by
notes which, in the case of notes payable to any borrower or guarantor, shall be
senior obligations of such obligor.
FEES. Pursuant to the Commitment Letter, Parent will be obligated to pay to
NBD Bank, on behalf of all lenders, a one-time commitment fee equal to 1.75% of
the Commitment Amount, $250,000 of which was paid at the time of acceptance of
the Commitment Letter with the balance payable on the Closing Date, an initial
commitment fee of 0.50% per annum on the Commitment Amount, payable from the
date 30 days after Parent executes the Commitment Letter until the earlier of
the Closing Date or the date on which Parent terminates the Commitment Letter or
NBD Bank determines that the Definitive Financing Agreements will not be
executed. In addition, Parent is obligated to pay to NBD Bank a one-time
break-up fee of 0.25% of the Commitment Amount in the event that Definitive
Financing Agreements are not entered into and, within one year after the date of
the Commitment Letter Parent or any of its affiliates acquires the Company or
any substantial portion of its assets or business in a transaction in which the
Arranger or one of its affiliates does not act as arranger or otherwise receive
arrangement fees in at least the amount provided in the Commitment Letter,
payable upon consummation of any such acquisition. Parent will also be obligated
to pay to the lenders a commitment fee and an annual administration fee which
Parent believes to be customary for transactions of this type. All of the
reasonable and documented out-of-pocket expenses incurred by NBD Bank and the
Arranger in connection with the Commitment Letter will be reimbursed by Parent,
including its expenses in connection with any due
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diligence and the preparation, negotiation, execution, administration,
syndication and enforcement of the loans contemplated by the Commitment Letter.
PREPAYMENTS. The Definitive Financing Agreements will provide that upon the
sale, transfer or other disposition of any assets (other than the sale of
inventory in the ordinary course and the sale of equipment if the proceeds are
used to purchase replacement equipment of comparable value), to the extent
permitted under such agreements, Parent will make a mandatory prepayment in an
amount equal to 100% of the proceeds of the sale (net of income taxes and
expenses of sale) to be applied pro rata to the amounts outstanding under Term
Loan B and Term Loan C, until paid in full, and then to reduce commitments under
the Revolving Credit Facility. In addition, upon delivery of its audited
financial statements each year, commencing with the year ending December 31,
1997, Parent will be required to make an annual mandatory prepayment in an
amount equal to 75% of the Excess Cash Flow (to be defined), if positive, for
the most recently ended fiscal year, with such prepayment also to be applied pro
rata to the amounts outstanding under Term Loan B and Term Loan C, until paid in
full, and then to reduce commitments under the Revolving Credit Facility.
Finally, upon the sale of any common stock, preferred stock or other equity, or
the placement of any debt, Parent will be obligated to make a mandatory
prepayment in an amount equal to 100% of the proceeds of such equity or debt, to
be applied in the same manner as described above. Parent may prepay, in whole or
in part, amounts owing under Term Loan B or Term Loan C, or permanently reduce
the amount of the Revolving Credit Facility, on one day's notice, without
premium or penalty, provided that such payments or such reduction will be in
amounts of at least $5 million and multiples of $1 million in excess thereof.
Parent will be obligated to pay any breakage costs with respect to any payments
of Eurodollar Rate based loans that are made on a date other than the last day
of the interest period therefor. Any mandatory prepayments that are not accepted
by the lenders under Term Loan C will be applied to pay the principal owing on
Term Loan B until it is paid in full, and vice versa, and all prepayments will
be applied to the principal installments due under such facilities in inverse
order of their maturity.
TERMS AND CONDITIONS. The Commitment Letter provides that Parent will
observe certain financial and other covenants including, but not limited to,
covenants relating to minimum tangible net worth, interest coverage ratio, fixed
charge coverage ratio, total debt to EBITDAR ratio, and covenants providing
restrictions on (i) liens and encumbrances, (ii) dividends and restricted
payments, (iii) guarantees, (iv) sale and leaseback transactions, (v) sales of
assets, (vi) consolidations and mergers, (vii) investments and acquisitions,
(viii) capital expenditures, (ix) loans and advances, (x) indebtedness and
additional indebtedness, (x) compliance with pension, environmental and other
laws, (xi) operating leases and usage fees, (xii) transactions with affiliates,
(xiii) changes in lines of business, (xiv) hedging of interest rates and (xv)
prepayment of other debt, among others. The Definitive Financing Agreements will
provide for the usual and customary representations and warranties in connection
with each loan, including (but not limited to) those relating to the absence of
material litigation, absence of default or unmatured default, environmental
issues, priority of the lenders' liens, compliance with applicable laws and
regulations and compliance with outstanding contracts and agreements. The
Definitive Financing Agreements will also contain customary events of default,
including, without limitation, cross defaults to an occurrence of default
(whether or not resulting in acceleration) under any other agreement governing
indebtedness of Parent or any of its subsidiaries and any change in control of
Parent.
CONDITIONS TO LENDING. The Commitment Letter expressly conditions the
Facilities upon the initial funding having occurred no later than August 31,
1996, the receipt of all required approvals, governmental or otherwise, for the
completion of the Offer and the absence of any material adverse change in
primary and secondary loan syndication or capital markets generally. In
addition, the Financing is also conditioned on the following: (i) the absence of
any injunction or restraining order that would, in the judgment of NBD Bank or
the lenders, prohibit the making of loans to Parent or the consummation of the
Offer or the Merger, or which could reasonably be expected to result in a
material adverse effect on Parent and its subsidiaries or the Company and its
subsidiaries, (ii) results of a review of contingent liabilities (e.g.,
environmental, retiree medical benefits, ERISA, etc.), a review of contracts and
insurance,
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plant tours, a comprehensive field examination of all assets, and of appraisals
of all fixed assets and contractual obligations showing no material adverse
change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of Parent and its subsidiaries or the
Company and its subsidiaries from that reflected in their respective financial
statements as of and for their respective most recently-ended fiscal years and
interim periods or in other information previously provided to NBD Bank and the
Arranger in connection with the Offer and the Merger ("Material Adverse
Change"), (iii) no amendment to the terms of the Offer without the consent of
NBD Bank and the other lenders, (iv) continued truth and correctness of the
representations and warranties contained in the Merger Agreement and the receipt
of an opinion of counsel as to the enforceability of the Merger Agreement and
its compliance with applicable law, (v) the Senior Subordinated Notes remaining
outstanding on and as of the Closing Date and, after giving effect to the
initial borrowings under the Facilities, no default or event which with the
giving of notice or the passage of time could become a default will exist
thereunder and all indebtedness under the Facilities will be classified as
senior indebtedness, (vi) NBD Bank and the lenders having received (a) pro forma
opening financial statements giving effect to the Acquisition which must not be
materially less favorable, in NBD Bank's and the lenders' reasonable judgment,
than the projections previously provided to them and which must demonstrate,
together with all other information then available to them, that Parent and its
subsidiaries can repay their debts and satisfy their respective other
obligations as and when due, and can comply with financial covenants acceptable
to NBD Bank and the lenders, and (b) such information as NBD Bank and the
lenders may reasonably request to confirm the tax, legal and business
assumptions made in such pro forma financial statements, (vii) receipt of a copy
of a fairness opinion from the Company's investment banker addressed to the
Company's board of directors, relating to the Acquisition, (viii) NBD Bank and
the lenders having received evidence reconfirming the solvency and other
appropriate factual information and advice in form and substance satisfactory to
them from the chief financial officer of Parent supporting the conclusions that
after giving effect to the Acquisition, Parent and the Company and their
subsidiaries, on a consolidated basis, are solvent and will be solvent
subsequent to incurring the indebtedness in connection with the Acquisition,
will be able to pay their debts and liabilities as they become due and will not
be left with unreasonably small capital with which to engage in their
businesses, (ix) if requested by NBD Bank or the lenders, an environmental
review report to NBD Bank and the lenders, from an environmental review firm
acceptable to NBD Bank and the lenders, as to any environmental hazards or
liabilities involving Parent's or the Company's assets showing no Material
Adverse Change, (x) refinancing, amending and replacing of (a) all obligations
under existing loan facilities (other than the Facilities) in which NBD Bank is
a lender and (b) all outstanding Senior Secured Notes, (xi) all legal (including
tax implications) and regulatory matters will be satisfactory to NBD Bank and
the lenders, (xii) liens creating a first priority security interest in the
collateral will have been perfected, (xiii) compliance with all applicable
requirements of Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System, (xiv) no default or unmatured default existing on the
funding date and no Material Adverse Change shall have occurred, (xv) the
lenders may require Parent to enter into interest rate swap and hedge agreements
or other agreements which effectively limit the amount of interest that Parent
must pay on notional amounts of the lender financing to be agreed upon, and
(xvi) receipt of other customary closing documentation, including, without
limitation, customary legal opinions of Parent's counsel acceptable to NBD Bank,
including without limitation an unqualified legal opinion with respect to no
default under the Senior Subordinated Notes after giving effect to the
transactions contemplated by the Commitment Letter and the classification of all
indebtedness under the Facilities as senior indebtedness.
The foregoing is a summary of the material terms of the Commitment Letter.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference, a copy of which has been filed by Parent and
the Purchaser with the Commission as an exhibit to this Schedule 14D-1. The
Commitment Letter may be examined, and copies thereof may be obtained as set
forth in Section 8 above.
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11. BACKGROUND OF THE OFFER. During November 1995, the Parent and the
Company, through the initiative of a sales manager for one of the "Big 3"
automotive manufacturers, entered into an agreement providing for the joint
development of, and the joint provision of engineering services for, a select
group of products. As a result of this cooperative venture, there developed an
interest on the part of the Parent and the Company of furthering their
relationship.
On January 23, 1996, Lawrence Winget, Chairman of the Parent, Michael
Torakis, President and Chief Financial Officer of the Parent, and Al Young, Ford
Sales Manager of Parent, met with Philip Kusky, Executive Vice President and
Chief Operating Officer of the Company, to discuss the feasibility of the Parent
acquiring the Company, and plans were made to arrange an initial meeting between
management of the Company and management of the Parent. This meeting was held
between Messrs. Torakis and Young, representing Parent, and Roger Phillips,
President of the Company, and Mr. Kusky, representing the Company, on January
29, 1996, and as a result, Parent and the Company agreed to proceed to formulate
their requests for information.
On February 9, 1996, Parent and the Company signed a preliminary
confidentiality agreement and during February 1996, representatives of
management of Parent toured various manufacturing facilities of the Company in
Michigan, Indiana, Ohio and New Hampshire. At the conclusion of these tours,
Parent determined to embark on a more complete review of the Company in order to
formulate a proposal for a business combination involving the Company.
On April 4, 1996, a confidentiality agreement between the Company and one
of Parent's wholly-owned subsidiaries was executed. On April 5, 1996, management
of Parent along with its advisors determined the scope of the "due diligence"
process and submitted a request to the Company for information. On April 10,
1996, representatives of the Company and Parent met at the Company's offices in
Dearborn, Michigan, to obtain the data previously requested. At that time, the
Company's management made presentations to Parent and its legal and financial
advisors regarding the history of the Company, its structure, product lines,
plant capacities, information systems, labor relations, overall business
operations, competitive market conditions and financial reporting, both
historical and prospective. The Company also provided revenue and costing
information, both actual and projected.
A subsequent meeting was held on April 26, 1996, between Messrs. Winget and
Butler, on behalf of Parent, and Messrs. Phillips, Taylor and Kusky, on behalf
of the Company, to discuss the status of Parent's investigation. At that
meeting, representatives of the Company inquired as to the structure of any
offer and indicated that a cash offer would be preferable. These representatives
also reported that they had met with another potential bidder for the Company
who had also commenced a due diligence investigation. At that meeting, Parent
stated that although it contemplated a cash offer, it was premature to discuss
the terms of an offer, or whether one would in fact be made, as significant
issues were unresolved.
At a meeting on May 15, 1996, held at Parent's corporate offices in Fraser,
Michigan, representatives of Parent and the Company met together with their
respective financial and legal advisors. Although the due diligence
investigation was not yet complete, the parties broadly discussed the structure
of a business combination, including a potential agreement with the principal
stockholders of the Company. At this meeting, Mr. Torakis stated that Parent was
prepared to offer to acquire the Company for a price of approximately $8.75 per
Share, subject to the Parent completing its due diligence, the negotiation of
definitive agreements between the parties, the directors of the Company having
granted to Parent an option to acquire their Shares and the Parent obtaining a
satisfactory financing commitment from its lender. On May 24, 1996, Mr. Winget
reaffirmed to Mr. Phillips that Parent, through a newly-formed subsidiary, would
be prepared to make an all cash offer to acquire the Company at $8.75 per Share,
pending the resolution of certain open issues. Concurrently with the completion
of Parent's due diligence investigation, representatives of the Company and
Parent negotiated the terms of the Merger Agreement, the Tender and Option
Agreement and the related agreements.
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On June 4, 1996, the Board of Directors of the Company held a meeting to
review the terms and conditions of the Merger Agreement, the Offer, and the
related transactions contemplated thereby. At such meeting, the Company's Board
reviewed the proposed transaction with the Company's legal and financial
advisors and approved the Merger Agreement and the transactions contemplated
thereby, subject to resolution of certain issues to the satisfaction of the
Company's President and its legal and financial advisors, including issues
relating to the conditions to Parent's financing of the Offer.
During the day on June 5, 1996, the Purchaser and the Company resolved all
remaining issues relating to the Merger Agreement and the Parent's financing for
the Offer and the parties executed and delivered the Merger Agreement in the
evening of June 5, 1996. Thereafter on June 5, 1996, the Company issued a press
release announcing the execution of the Merger Agreement. The Purchaser
commenced the Offer on June 11, 1996.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; TENDER AND OPTION AGREEMENT; OTHER AGREEMENTS; OTHER MATTERS
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer and the Merger is to enable Parent, through the
Purchaser, to acquire the entire equity interest in the Company. The Offer is
intended to increase the likelihood that the Merger will be completed promptly.
Parent regards the acquisition of the Company as an attractive opportunity to
expand its current product lines in the automotive and light truck exterior
market and to create additional growth opportunities.
PLANS FOR THE COMPANY
If and to the extent that the Purchaser acquires control of the Company,
Parent and the Purchaser intend to conduct a detailed review of the Company and
its assets, corporate structure, capitalization, operations, properties,
policies, management and personnel and consider and determine what, if any,
changes would be desirable in light of the circumstances which then exist. Such
strategies could include, among other things and subject to the terms of the
Merger Agreement, changes in the Company's business, corporate structure,
certificate of incorporation, bylaws, capitalization or management.
Except as noted in this Offer to Purchase, the Purchaser and Parent have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, or sale or transfer
of a material amount of assets, involving the Company or any subsidiary of the
Company or any other material changes in the Company's capitalization, corporate
structure, business or composition of its management or Board of Directors.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference, and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Merger Agreement may be
examined, and copies thereof may be obtained, as set forth in Section 8 above.
THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer and that upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, including without limitation, the Minimum
Condition and Financing Condition (as defined below), the Purchaser will accept
for payment and pay for Shares tendered as soon as practicable after it is
legally permitted to do so under applicable law. The Merger Agreement further
provides that, without the written consent of the Company, the Purchaser shall
not decrease the Offer Price, decrease the number of Shares sought, change the
form of consideration to be paid in the Offer, increase the Minimum Condition or
amend any other condition of the Offer in any manner adverse to the holders of
the Shares (other than with respect to insignificant changes or amendments)
except that the Purchaser may, without the consent of the
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Company (subject to any rights the Company may have under the Merger Agreement,
including without limitation the right to terminate the Merger Agreement if the
Financing Condition has not been waived by the Purchaser by the thirtieth (30th)
business day following commencement of the Offer), extend the Offer (i) if at
the then scheduled expiration date of the Offer any of the conditions to the
Purchaser's obligation to accept for payment and pay for shares of Company
Common Stock shall not be satisfied or waived, until such time as such
conditions are satisfied or waived; (ii) for an aggregate period of not more
than ten (10) business days beyond the initial expiration date of the Offer if
all conditions have been satisfied but less than ninety percent (90%) of the
outstanding shares of Company Common Stock have been validly tendered and not
withdrawn (not including shares covered by notices of guaranteed delivery); and
(iii) for any period required by any rule, regulation, interpretation or
position of the Commission or the staff applicable to the Offer.
For purposes of the Merger Agreement, "Minimum Condition" means that there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer that number of shares which, together with any shares beneficially
owned by the Purchaser, represents at least a majority of the Shares
outstanding, on a fully-diluted basis on the date of purchase, and "on a
fully-diluted basis" means the number of Shares outstanding plus all Shares
which the Company is required to issue pursuant to obligations outstanding at
that time under employee stock option or other benefit plans, outstanding
warrants, outstanding options of any kind, convertible securities, or otherwise
(to the extent such options, warrants, convertible securities or other rights
are vested or exercisable) other than Shares issuable upon conversion of the
Company's outstanding Convertible Debentures. "Financing Condition" means that
Parent shall have received the financing contemplated by the commitment from NBD
Bank to provide all of the financing (the "Financing") necessary to purchase all
outstanding Shares on a fully-diluted basis pursuant to the Offer and the Merger
and to refinance all outstanding indebtedness of the Company reflected on the
Company SEC Reports, as defined in the Merger Agreement.
THE MERGER. The Merger Agreement provides that subject to the terms and
conditions thereof, at the effective time of the Merger (the "Effective Time")
the Purchaser shall be merged with and into the Company and the separate
corporate existence of the Purchaser shall thereupon cease. The Company shall be
the successor or surviving corporation in the Merger (the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Delaware. The separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger.
The respective obligations of the parties to effect the Merger are subject
to the satisfaction or waiver, on or prior to the Closing Date, of the following
conditions: (a) all authorizations, consents, orders or approvals of, or
declarations or filings with, or expiration of waiting periods imposed by, any
Federal, state, local or foreign governmental or regulatory authority necessary
for the consummation of the Merger and the transactions contemplated by the
Merger Agreement shall have been filed, occurred or been obtained and shall be
in effect at the Effective Time; (b) no temporary restraining order, preliminary
injunction or permanent injunction or other order precluding, restraining,
enjoining, preventing or prohibiting the consummation of the Merger shall have
been issued by any Federal, state or foreign court or other governmental or
regulatory authority and remain in effect; (c) no Federal, state, local or
foreign statute, rule or regulation shall have been enacted which prohibits the
consummation of the Merger or would make the consummation of the Merger illegal;
(d) the Merger Agreement shall have been approved and adopted by the affirmative
vote required of the stockholders of the Company, if required pursuant to the
Company's certificate of incorporation and applicable Delaware law, in order to
consummate the Merger; and (e) the Purchaser shall have purchased Shares
sufficient to meet the Minimum Condition pursuant to the Offer.
In addition, the obligations of the Purchaser to effect the Merger are also
subject to the satisfaction or waiver by the Purchaser on or prior to Closing
Date of the following conditions: (a) the Company shall have taken action to
terminate all incentive plans or programs pursuant to which options have been or
may be issued, by using its best efforts to (i) receive, prior to the Effective
Time, a cancellation agreement from each holder of an outstanding option or
warrant, in form and substance satisfactory to the Purchaser, acknowledging the
cancellation and termination of such options or warrants, as the case
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<PAGE> 25
may be or (ii) to arrange for the exercise of such outstanding options or
warrants. Such cancellation agreements, if any, shall provide that in
consideration for the cancellation of such options and/or warrants, the
Surviving Corporation shall pay to each holder, promptly after the Effective
Time, an amount (less any applicable withholding and employment taxes) equal to
the amount by which the Merger Consideration exceeds the exercise price per
share of the Company Common Stock underlying each outstanding option, or the
strike price per share of Company Common Stock underlying each outstanding
warrant, multiplied by the number of shares of Company Common Stock covered by
such option or warrant, as the case may be; and (b) each of John G. Owens and
Allan B. Freedman shall have amended or terminated their respective
Noncompetition Agreements with the Company, and each of Louis T. Enos, Phillip
Kusky and E Gordon Young shall have amended or terminated their respective
Employment Agreements with the Company, in each case to provide that no payments
to be made thereunder shall be accelerated by virtue of the Offer or the Merger.
The Merger Agreement provides that at the Effective Time, each issued and
outstanding share of Company Common Stock (other than shares that are owned by
the Company as treasury stock and any shares owned by the Purchaser or any
affiliate of the Purchaser) shall be converted into the right to receive the
Offer Price, without interest. Pursuant to the Merger Agreement, each issued and
outstanding share of the Purchaser common stock, par value $1.00 per share,
shall be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that
promptly upon the purchase of and payment for any Shares (including without
limitation all Shares subject to the Tender and Option Agreement) by the
Purchaser or any affiliate of the Purchaser pursuant to the Offer or the Tender
and Option Agreement which represents the Minimum Condition, the Purchaser shall
be entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as is equal to the product of
the total number of directors then serving on such Board (after giving effect to
the directors designated by the Purchaser) multiplied by the ratio of the
aggregate number of Shares beneficially owned by the Purchaser and any of its
affiliates to the total number of Shares then outstanding. The Company shall,
upon request of the Purchaser, take all action necessary to cause the
Purchaser's designees to be elected or appointed to the Company's Board,
including, without limitation, increasing the size of its Board or, at the
Company's election, securing the resignations of such number of its incumbent
directors as is necessary to enable the Purchaser's designees to be so elected
or appointed to the Company's Board, and shall cause the Purchaser's designees
to be so elected or appointed. At such time, the Company shall also cause
persons designated by the Purchaser to constitute the same percentage (rounded
up to the next whole number) as is on the Company's Board of (i) each committee
of the Company's Board of Directors, (ii) each board of directors (or similar
body) of each subsidiary of the Company and (iii) each Committee (or similar
body) of each such board. In the event that the Purchaser's designees are
elected to the Board of Directors of the Company, until the Effective Time, the
Board of Directors shall have at least two directors who are directors of the
Company on June 5, 1996 (the "Company Directors"). In the event that the
Purchaser's designees are elected to the Board, after the acceptance for payment
of shares of Common Stock pursuant to the Offer and prior to the Effective Time,
the affirmative vote of the Company Directors shall be required to (a) amend or
terminate the Merger Agreement by the Company, (b) exercise or waive any of the
Company's rights, benefits or remedies under the Merger Agreement, (c) extend
the time for performance of the Purchaser's obligations under the Merger
Agreement or (d) take any other action by the Board in connection with the
Merger Agreement. The Merger Agreement further provides that the Company shall
promptly take all actions required pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder, including mailing to Stockholders as part
of the Schedule 14D-9 the information required by such Section 14(f) and Rule
14f-1, as is necessary to enable the Purchaser's designees to be elected to the
Company's Board.
STOCKHOLDERS MEETING. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, as soon as
practicable following the acceptance for payment and purchase of Shares
sufficient to meet the Minimum Condition by the Purchaser pursuant to
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the Offer, (i) duly call, give notice of, convene and hold a special meeting of
its Stockholders (the "Special Meeting"), for the purpose of considering and
taking action upon the Merger Agreement; (ii) prepare and file with the
Commission a preliminary proxy or information 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 Company
Proxy Statement (as defined below) and, after consultation with the Purchaser,
to respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement (the "Company Proxy Statement") to be mailed to its
stockholders and (y) to obtain the necessary approvals of the Merger and the
Merger Agreement by its stockholders; and (iii) include in the Company Proxy
Statement the recommendation of the Board of Directors that stockholders of the
Company vote in favor of the approval of the Merger and the adoption of the
Merger Agreement. The Purchaser agrees that it shall, and shall cause any
permitted assignee to, vote all Shares then owned by it which are entitled to
vote in favor of the approval of the Merger and the adoption of the Merger
Agreement.
The Merger Agreement provides that in the event that the Purchaser or any
permitted assignee of the Purchaser acquires at least 90% of the outstanding
Shares, the parties will, subject to the conditions of the Merger Agreement,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without approval of the
Company's stockholders.
INTERIM OPERATIONS. In the Merger Agreement, the Company agrees that,
except as expressly contemplated therein, or as agreed in writing by the
Purchaser, after June 5, 1996, and prior to the time the directors of the
Purchaser have been elected to the Board of Directors of the Company:
(i) the Company and each of its subsidiaries will carry on their
respective businesses in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted, and will use their
reasonable efforts consistent with past practice and policies to preserve
intact their present business organizations, keep available the services of
their present officers and employees and preserve their existing
relationships with customers, suppliers, lessors, lessees, creditors and
others having business dealings with them and the Company will continue to
maintain a standard system of accounting established and administered in
accordance with United States generally accepted accounting principles
("GAAP");
(ii) the Company will not, and will not cause or permit any of its
subsidiaries to, (a) declare, set aside or pay any dividends on or make
other distributions in respect of any shares of its capital stock, (b)
split, combine or reclassify any shares of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any shares of its capital stock or (c) propose to do
any of the foregoing;
(iii) the Company will not, and will not cause or permit any of its
subsidiaries to, issue, pledge, deliver, sell or transfer or authorize or
propose the issuance, pledge, delivery, sale or transfer of, or repurchase,
redeem or otherwise acquire directly or indirectly, or propose the
repurchase, redemption or other acquisition of, any shares of capital stock
of any class of the Company or its subsidiaries, or any options, warrants
or other rights exercisable for or securities convertible into or
exchangeable for, any such shares (or enter into any agreements,
arrangements, plans or understandings with respect to any of the
foregoing), other than pursuant to the exercise of outstanding options,
warrants or convertible debentures pursuant to the terms thereof as of June
5, 1996;
(iv) the Company will not, and will not cause or permit any of its
subsidiaries to, propose or adopt any amendment to its or their certificate
of incorporation or bylaws (or similar charter documents) or take any
action to alter the size or composition of its Board, except as
specifically contemplated by the Merger Agreement;
(v) the Company will not, and will not cause or permit any of its
subsidiaries to, transfer, sell, lease, license, mortgage or otherwise
dispose of or encumber any material assets, or enter into any
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<PAGE> 27
commitment to do any of the foregoing, other than in the ordinary and usual
course of business, consistent with past practice;
(vi) the Company will not, and will not cause or permit any of its
subsidiaries to, incur, become subject to, or agree to incur any debt for
borrowed money except for borrowings under existing terms of credit in the
ordinary course of business or incur or become subject to any other
material obligation or liability (absolute or contingent), except current
liabilities incurred, and obligations under contracts entered into, in the
ordinary course of business consistent with prior practice, and the Company
shall not pay or be liable for prepayment or other penalties in connection
with the early retirement of any Company indebtedness for borrowed money
other than as a result of the transactions contemplated by the Merger
Agreement;
(vii) the Company will not, and will not cause or permit any of its
subsidiaries to, make any change in the compensation payable or to become
payable to any of its officers, directors, employees, agents or
consultants, enter into any new collective bargaining agreement, enter into
or amend any employment, severance, termination or other agreement or make
any loans to any of its officers, directors, employees, agents or
consultants or make any change in its existing borrowing or lending
arrangements for or on behalf of any of such persons, whether contingent on
consummation of the Offer, the Merger or otherwise;
(viii) the Company will not, and will not cause or permit any of its
subsidiaries to (a) pay, agree to pay or make any accrual or arrangement
for payment of any pension, retirement allowance or other employee benefit
pursuant to any existing plan, agreement or arrangement to any officer,
director or employee except in the ordinary course of business and
consistent with past practice or as permitted by the Merger Agreement; (b)
pay or agree to pay or make any accrual or arrangement for payment to any
employees of the Company or any of its subsidiaries of any amount relating
to unused vacation days other than pursuant to Company policies and plans
in effect on January 31, 1996, and in a manner consistent with past
practice; (c) commit itself or themselves to adopt or pay, grant, issue,
accelerate or accrue salary or other payments or benefits pursuant to any
pension, profit sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or any employment or consulting agreement with or
for the benefit of any director, officer, employee, agent or consultant,
whether past or present other than pursuant to Company policies and plans
in effect on January 31, 1996, and in a manner consistent with past
practice; or (d) amend in any material respect any such existing plan,
agreement or arrangement, except as contemplated by the Merger Agreement;
(ix) the Company and each of its subsidiaries will (i) properly
prepare and file all material reports or tax returns required by the
Company or any subsidiary to be filed with any governmental or regulatory
authorities with respect to its business, operations, or affairs, and (ii)
pay in full and when due all taxes indicated on such tax returns or
otherwise levied or assessed upon the Company, its subsidiaries or any of
their assets and properties unless such taxes are being contested in good
faith by appropriate proceedings and reasonable reserves therefor have been
established in accordance with GAAP;
(x) the Company and each of its Subsidiaries will (i) report on a
regular basis, at reasonable times, to a representative designated by the
Purchaser regarding material operational matters and financial matters
(including monthly unaudited financial information); (ii) promptly and
regularly notify the Purchaser of any change in the normal course or
operation of its business or its properties and of any material development
in the business or operations of the Company and its subsidiaries
(including without limitation any Company Material Adverse Effect) or any
governmental or third party claims, complaints, investigations or hearings,
or communications indicating that the same may be forthcoming or
contemplated); (iii) cooperate with the Purchaser and its affiliates and
representatives in arranging for an orderly transition in connection with
the transfer of control of the Company, including without limitation
arranging meetings among the Company, its vendors, suppliers and
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<PAGE> 28
customers and representatives of the Purchaser and its affiliates; and (iv)
deliver to the Purchaser concurrently with filing with the Commission true
and correct copies of any report, statement or schedule filed by the
Company with the Commission subsequent to the date of the Merger Agreement;
(xi) the Company will not, and will not cause or permit any of its
Subsidiaries to: (a) enter into, amend or terminate any agreements,
commitments or contracts which, individually or in the aggregate, have a
Company Material Adverse Effect or waive, release, assign or relinquish any
material rights or claims thereunder, except in the ordinary course of
business, consistent with past practice; or authorize any new capital
expenditure or expenditures which, individually is in excess of $450,000
or, in the aggregate, are in excess of $2,000,000; (b) discharge or satisfy
any lien or encumbrance or payment of any obligation or liability (absolute
or contingent) other than current liabilities in the ordinary course of
business; (c) cancel or agree to cancel any material debts or claims,
except in each case in the ordinary course of business; (d) waive any
rights of substantial value; (e) pay, discharge, satisfy or settle any
litigation or other claims, liabilities or obligations (absolute, accrued,
asserted, unasserted, contingent or otherwise) involving the payment by the
Company or any of its Subsidiaries of more than $100,000; (f) make any
equity investments in third parties; (g) adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
subsidiaries (other than the Merger) or otherwise make any material change
in the conduct of the business or operations of the Company and its
Subsidiaries taken as a whole; or (h) agree in writing or otherwise to take
any of the foregoing actions or any other action which would constitute a
Company Material Adverse Effect in any of the items and matters covered by
the representations and warranties of the Company set forth in the Merger
Agreement.
For purposes of the Merger Agreement, a "Company Material Adverse Effect"
means any event, circumstance, condition, development or occurrence causing,
resulting in or having, or which could reasonably be expected to cause, result
in or have, a material adverse effect on the financial condition, business or
results of operations of the Company and its subsidiaries taken as a whole.
NO SOLICITATION. In the Merger Agreement, the Company has agreed that the
Company and its subsidiaries and affiliates will not, and will use their
reasonable efforts to ensure that their respective officers, directors,
employees, investment bankers, attorneys, accountants and other representatives
and agents do not, directly or indirectly, initiate, solicit, encourage or
participate in, or provide any information to any Person (as defined below)
concerning, or take any action to facilitate the making of, any offer or
proposal which constitutes or is reasonably likely to lead to any Acquisition
Proposal (as defined below) of the Company or any subsidiary or affiliate or an
inquiry with respect thereto. The Company has agreed, and shall cause its
subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to,
immediately cease and cause to be terminated all existing activities,
discussions and negotiations, if any, with any parties conducted heretofore with
respect to any such matters. Nonetheless, the Company may, directly or
indirectly, provide access and furnish information concerning its business,
properties or assets to any corporation, partnership, person or other entity or
group pursuant to an appropriate confidentiality agreement, and may negotiate
and participate in discussions and negotiations with such entity or group
concerning an Acquisition Proposal (x) if such entity or group has submitted a
bona fide written proposal to the Board relating to any such transaction and (y)
if, in the opinion of the Board, after consultation with independent legal
counsel to the Company, the failure to provide such information or access or to
engage in such discussions or negotiations would be inconsistent with their
fiduciary duties under applicable law.
The Company is required to promptly notify the Purchaser of any such
offers, proposals or Acquisition Proposals (including without limitation the
terms and conditions thereof and the identity of the person making it). The
Company is further required to give the Purchaser written notice of any
Acquisition Proposal that the Company intends to accept at least two business
days prior to accepting such offer or otherwise entering into any agreement or
understanding with respect thereto. For purposes
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<PAGE> 29
of the Merger Agreement, any modification of an Acquisition Proposal constitutes
a new Acquisition Proposal.
As used in the Merger Agreement, "Acquisition Proposal" when used in
connection with any Person means any tender or exchange offer involving such
Person, any proposal for a merger, consolidation or other business combination
involving such Person or any subsidiary of such Person, any proposal or offer to
acquire in any manner a substantial equity interest in, or a substantial portion
of the business or assets of, such Person or any subsidiary of such Person, any
proposal or offer with respect to any recapitalization or restructuring with
respect to such Person or any subsidiary of such Person or any proposal or offer
with respect to any other transaction similar to any of the foregoing with
respect to such Person, or any subsidiary of such Person or any public
announcement of a proposal, plan or intent to do any of the foregoing; provided,
however, that, as used in the Merger Agreement, the term "Acquisition Proposal"
shall not apply to any transaction of the type described in the immediately
preceding sentence involving the Purchaser or its affiliates. As used in the
Merger Agreement, "Person" means any corporation, partnership, person or other
entity or group (including the Company and its affiliates and representatives,
but excluding the Purchaser or any of its affiliates or representatives).
DIRECTORS' AND OFFICERS' INDEMNIFICATION. For six years after the earlier
of (i) the date on which the designees of the Purchaser have been elected to the
Board pursuant to the Merger Agreement and constitute a majority of the members
thereof and (ii) the Effective Time, the Surviving Corporation will keep in
effect provisions in its Certificate of Incorporation and Bylaws providing for
exculpation of director and officer liability and indemnification of the
indemnified parties (the "Indemnified Parties") to the fullest extent permitted
under the Delaware Law, provided, that any determination required to be made
with respect to whether an Indemnified Party's conduct complies with the
standards set forth under Delaware Law, the Surviving Corporation's Certificate
of Incorporation or Bylaws, will be made by independent counsel mutually
acceptable to the Purchaser and the Indemnified Party.
The Surviving Corporation will maintain the Company's existing officers'
and directors' liability insurance policy for a period of three years after the
Effective Time; provided, that the Surviving Corporation may substitute therefor
policies of substantially similar coverage and amounts containing terms no less
advantageous to such former directors or officers; provided, further, that if
the Company's existing directors' liability insurance expires, is terminated or
canceled during such period, the Surviving Corporation will use its reasonable
efforts to obtain substantially similar insurance; provided, however, that in no
event shall the Surviving Corporation be required to pay aggregate annual
premiums for insurance under this clause in excess of 150% of the aggregate
annual premiums paid by the Company in 1995 (on an annualized basis for such
purpose) (the "1995 Premiums"). In the event that, but for the last proviso of
the immediately preceding sentence, the Surviving Corporation would be required
to expend more than 150% of the 1995 Premiums, the Surviving Corporation would
nonetheless be required to purchase the maximum amount of such insurance
obtainable by payment of annual premiums equal to 150% of the 1995 Premiums.
As of the date of the Merger Agreement, the Purchaser entered into an
Indemnity Agreement with each of the directors and the chief financial officer
of the Company. See "Indemnity Agreements."
BENEFIT PLANS AND CERTAIN CONTRACTS. From and after the Effective Time,
subject to applicable law, the Purchaser will honor in accordance with their
terms, all Company benefit plans; provided, however, that nothing in the Merger
Agreement shall preclude any change effected on a prospective basis in any
Company Benefit Plan. Those employees of the Company and its subsidiaries whose
employment is continued by the Surviving Corporation after the Merger will be
employed on terms consistent with the Company's current employment practices and
at comparable levels of compensation and positions. Subject to the obligations
of the Surviving Corporation under existing employment agreements, such
employment shall be at will and the Surviving Corporation shall be under no
obligation to continue to employ any individuals. For purposes of eligibility to
participate in and vesting in various benefits (but not for determination of
benefits) provided to employees, employees of the Company and its subsidiaries
will be credited with their years of service with the Company and its
subsidiaries. As contemplated by the
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<PAGE> 30
Merger Agreement, on June 5, 1996, the Company entered into an Amendment to
Employment and Noncompetition Agreement with Roger R. Phillips, the Company's
Chief Executive Officer, to extend to December 31, 1997, the terms of his
Employment Agreement with the Company, dated February 18, 1994.
RIGHTS AGREEMENT. The Company has adopted resolutions amending the Rights
Agreement, in order to prevent the Merger Agreement, the Tender and Option
Agreement or the consummation of any of the transactions contemplated thereby
from resulting in the distribution of separate right certificates or the
occurrence of a Distribution Date under the Rights Agreement and to provide that
the Purchaser shall not be an "Acquiring Person" (as defined in the Rights
Agreement) by reason of the transactions contemplated by the Merger Agreement or
the Tender and Option Agreement. Except for such amendments, the Merger
Agreement provides that the Company will not amend the Rights Agreement in any
manner unless and until the Merger Agreement is terminated under the provisions
of clause (c)(ii) or (c)(iii) as set forth below under "Termination; Fees." In
addition, the Company covenants and agrees that it will not redeem the Rights
unless such redemption is consented to in writing by the Purchaser prior to such
redemption.
TERMINATION; FEES. Anything in the Merger Agreement or elsewhere to the
contrary notwithstanding, the Merger Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after stockholder approval thereof:
(a) by mutual consent of the Board of Directors of the Purchaser and
the Board of Directors of the Company;
(b) by either the Board of Directors of the Purchaser or the Board of
Directors of the Company: (i) if shares of Company Common Stock have not
been purchased pursuant to the Offer on or prior to August 31, 1996;
provided, however, that the right to terminate the Merger Agreement under
this clause will not be available to any party whose failure to fulfill any
material obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of the Purchaser to purchase shares of Company
Common Stock pursuant to the Offer on or prior to such date; or (ii) if a
court of competent jurisdiction or other governmental or regulatory
authority will have issued an order, decree or ruling or taken any other
action (which order, decree, ruling or other action the party seeking
termination will use its reasonable efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement and such order, decree,
ruling or other action will have become final and non-appealable, provided
that the party seeking termination did not contribute to the cause of
action.
(c) By the Board of Directors of the Company: (i) if, prior to the
purchase of Shares sufficient to meet the Minimum Condition by the
Purchaser pursuant to the Offer, the Company shall have (x) withdrawn,
modified or changed in a manner adverse to the Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger in order to
execute a definitive agreement relating to an Acquisition Proposal by a
Person other than Parent, the Purchaser or any affiliate of either of them,
after consulting with independent legal counsel and determining that the
failure to take such action would be inconsistent with its fiduciary duties
to the Company's stockholders and (y) paid or caused to be paid to the
Purchaser $2.1 million; or (ii) if, prior to the purchase of Shares
sufficient to meet the Minimum Condition pursuant to the Offer, the
Purchaser breaches or fails in any material respect to perform or comply
with any of its material covenants and agreements contained in the Merger
Agreement or breaches its representations and warranties in any material
respect; or (iii) if (x) the Purchaser or any of its affiliates shall have
failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer (the "Offer
Deadline") other than due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex B to the Merger Agreement or (y) the
Purchaser shall have failed to waive the Financing Condition by the
thirtieth (30th) business day following commencement of the Offer;
provided, that the Company
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<PAGE> 31
may not terminate the Merger Agreement pursuant to this clause if the
Company is in material breach of the Merger Agreement.
(d) By the Board of Directors of the Purchaser: (i) if, due to an
occurrence that if occurring after the commencement of the Offer would
result in a failure to satisfy any of the conditions set forth in Annex B
to the Merger Agreement, the Purchaser shall have failed to commence the
Offer on or prior to the Offer Deadline; provided that the Purchaser may
not terminate the Merger Agreement pursuant to this clause if the Purchaser
(x) is in material breach of the Merger Agreement or (y) has not exercised
such right by the close of business on or before the fifth business day
following the Offer Deadline; or (ii) if the Purchaser is not in material
breach of the Merger Agreement and either (A) prior to the purchase of
shares of Company Common Stock pursuant to the Offer, the Board of
Directors of the Company shall have withdrawn, or modified or changed
(including by amendment of the Company's Schedule 14D-9) in a manner
adverse to the Purchaser its approval or recommendation of the Offer, the
Merger Agreement or the Merger or will have recommended, or the Company
shall have executed an agreement in principle (or similar agreement) or a
definitive agreement relating to, an Acquisition Proposal; or (B) prior to
the purchase of shares of Company Common Stock pursuant to the Offer, it
shall have been publicly disclosed, or the Purchaser shall have learned,
that any person, entity or "group" (as that term is defined in Section
13(d)(3) of the Exchange Act), other than the Purchaser or its affiliates
or any group of which any of them is a member, shall have acquired
beneficial ownership of more than 14.9% of any class or series of capital
stock of the Company (including the Shares) through the acquisition of
stock, the formation of a group or otherwise, or will have been granted an
option, right, or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 14.9% of any class or series of capital stock of the
Company (including the Shares), or (iii) if the Purchaser shall have
terminated the Offer, or the Offer will have expired without the Purchaser
purchasing any shares of Company Common Stock thereunder, provided that the
Purchaser may not terminate the Merger Agreement pursuant to this clause if
(x) the Purchaser has failed to purchase shares of Company Common Stock in
the Offer in violation of the material terms thereof or (y) the Purchaser
has not exercised such right by the close of business on or before the
fifth business day following the termination or expiration of the Offer in
accordance with its terms; or (iv) if, prior to the purchase of Company
Common Stock pursuant to the Offer, the Company (x) breaches or fails to
perform or comply with any of its covenants and agreements contained in the
Merger Agreement other than those contained in Sections 5.1 through 5.9,
inclusive, of the Merger Agreement (generally regarding interim
operations), in any material respect, or (y) breaches or fails to perform
or comply with any of its covenants and agreement contained in Section 5.1
through 5.9, inclusive, of the Merger Agreement, or breaches its
representations and warranties in any respect, which breach or failure
shall have a Company Material Adverse Effect.
If (i) the Board of Directors of the Company terminates the Merger
Agreement under the circumstances set forth in clause (c)(i) above or if (ii)
the Board of Directors of the Purchaser terminates the Merger Agreement under
the circumstances set forth in clause (d)(ii)(A) above, then the Company will
pay or cause to be paid to the Purchaser (concurrently with such termination) an
amount equal to $2.1 million. Further, if the Board of Directors of the
Purchaser terminates the Merger Agreement under the circumstances set forth in
clause d(ii)(B) or d(iv) above, and within nine months of any such termination a
Person shall acquire or beneficially own a majority of the then outstanding
shares of Company Common Stock or shall have obtained representation on the
Company's Board of Directors or will enter into a definitive agreement with the
Company with respect to an Acquisition Proposal or similar business combination,
then the Company shall pay or cause to be paid to the Purchaser (upon the
consummation of such Acquisition Proposal or similar business combination) an
amount equal to $2.1 million.
REPRESENTATIONS AND WARRANTIES. The Company has made customary
representations and warranties to the Purchaser with respect to, among other
things, its organization and qualification, subsidiaries, capitalization,
authority, consents and approvals, violations, the Company's SEC reports,
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<PAGE> 32
financial statements, undisclosed liabilities, certain changes, taxes,
litigation, employee benefit plans, environmental liability, compliance with
applicable laws, material contracts, patents, marks, trade names, copyrights and
registrations, labor matters, real property, information supplied, and the
Company's Proxy Statement.
TENDER AND OPTION AGREEMENT
The following is a summary of the material terms of the Tender and Option
Agreement. This summary is qualified in its entirety by reference to the full
text of the Tender and Option Agreement which is incorporated herein by
reference and a copy of which has been filed with the Commission as an exhibit
to the Schedule 14D-1. The Tender and Option Agreement may be examined and
copies may be obtained at the place and in the manner as set forth in Section 8
of this Offer to Purchase.
TENDER OF SHARES. Concurrently with the execution of the Merger Agreement,
the Purchaser and Roger R. Phillips, William A. Taylor, Louis T. Enos, E Gordon
Young, John G. Owens and Allan B. Freedman (the "Stockholders") entered into the
Tender and Option Agreement. Upon the terms and subject to the conditions of
such agreement, the Stockholders have severally agreed (i) to validly tender or
cause the record owner of any Shares to tender all Shares beneficially owned by
such Stockholder pursuant to the Offer, not later than the fifth business day
after commencement of the Offer or, with respect to any Shares acquired directly
or indirectly, or otherwise beneficially owned, by any of the Stockholders in
any capacity after June 5, 1996, and prior to the termination of the Tender and
Option Agreement, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
a purchase, dividend, distribution, gift, bequest, inheritance or as a
successor-in-interest in any capacity (including a fiduciary capacity) or
otherwise ("After-Acquired Shares") within one business day following the
acquisition thereof, (ii) not to withdraw any Shares so tendered without the
prior written consent of the Purchaser except upon receipt of notice from the
Purchaser that it is exercising the Option to acquire the Shares and (iii) to
withdraw all Shares tendered in the Offer immediately upon receipt of notice
from the Purchaser that it is exercising the Option in order that the Purchaser
may acquire such Shares. The Stockholders have agreed that the Purchaser's
obligation to accept for payment and pay for the Shares in the Offer is subject
to the terms and conditions of the Offer.
STOCK OPTION. In order to induce the Purchaser to enter into the Merger
Agreement, the Stockholders have granted to the Purchaser an irrevocable option,
exercisable in whole but not in part (the "Option") to purchase the 1,750,115
Shares beneficially owned by such Stockholders (the "Option Shares") at a
purchase price per Share equal to $8.75. Pursuant to the Tender and Option
Agreement, the Purchaser's Option will terminate in the event the Merger
Agreement is terminated under any circumstances other than (a) by the Company,
if, prior to the purchase of Shares sufficient to meet the Minimum Condition by
the Purchaser pursuant to the Offer, the Company shall have (x) withdrawn,
modified or changed in a manner adverse to the Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger in order to
execute a definitive agreement relating to an Acquisition Proposal (as defined
in the Merger Agreement) by a person other than Parent, the Purchaser or any
affiliate of either of them, after consulting with independent legal counsel and
determining that the failure to take such action would be inconsistent with the
fiduciary duty of the Board of Directors of the Company to the Company's
stockholders and (y) paid or cause to be paid to the Purchaser $2.1 million, (b)
by the Purchaser if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions to the Offer, the Purchaser shall have failed to commence the Offer
on or prior to the Offer Deadline (as defined in the Merger Agreement); (c) by
the Purchaser, if the Purchaser is not in material breach of the Agreement and
either (x) prior to the purchase of Shares, the Board of Directors of the
Company shall have withdrawn, or modified or changed (including by amendment of
the Company's Schedule 14D-9) in a manner adverse to the Purchaser its approval
or recommendation of the Offer, the Merger Agreement or the Merger or shall have
recommended, or the Company shall have executed an agreement in principle (or
similar agreement) or a definitive agreement relating to, an Acquisition
Proposal; or (y) prior to the purchase of shares of
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<PAGE> 33
Company Common Stock pursuant to the Offer, it shall have been publicly
disclosed, or the Purchaser shall have learned, that any person, entity or
"group" (as that term is defined in Section 13(d)(3) of the Exchange Act), other
than the Purchaser or its affiliates or any group of which any of them is a
member, will have acquired beneficial ownership (determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of more than 14.9% of any class or
series of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have been
granted an option, right, or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 14.9% of any class or series of capital stock
of the Company (including the Shares); or (d) if, prior to the purchase of
Shares pursuant to the Offer, the Company (x) breaches or fails to perform or
comply in any material respect with any of its covenants and agreements
contained in the Merger Agreement other than those regarding the conduct of
business of the Company pending the time the directors of the Purchaser have
been elected to the Board of Directors of the Company (contained in Section 5.1
through 5.9, inclusive), or (y) breaches or fails to perform or comply with any
of its covenants and agreements contained in Section 5.1 through 5.9, inclusive,
or breaches its representations and warranties in any respect, which breach or
failure shall have a Company Material Adverse Effect (as defined in the Merger
Agreement). In the event of termination of the Option, or termination of the
Merger Agreement under any circumstances other than those described in the
preceding sentence, the Purchaser's Option will continue for a period of 90 days
thereafter so long as (x) all applicable waiting periods under the HSR Act
required for the purchase of the Option Shares upon such exercise shall have
expired or been waived and (y) there shall not be in effect any preliminary or
final injunction or other order issued by any court or governmental,
administrative or regulatory agency or authority or legislative body or
commission prohibiting the exercise of the Option.
If, within twelve (12) months following the exercise of the Option by the
Purchaser, the Purchaser, directly or indirectly, sells, transfers or otherwise
disposes of any or all of the Shares acquired upon exercise of the Option or the
Offer to a third party (or realizes cash proceeds in respect of such Shares as a
result of a distribution to stockholders of the Company following the sale of
substantially all of the Company's assets) in connection with a transaction
whereby the third party is acquiring the entire equity interest in the Company
pursuant to a merger, tender offer, exchange offer, sale of assets, sale of
shares or a similar business transaction (a "Subsequent Sale") at a per Share
price in excess of $8.75 (the "Subsequent Sale Price"), then the Purchaser will
pay to each Stockholder, within five (5) days of receipt of payment by the
Purchaser, an amount equal to such Stockholder's pro rata share of fifty percent
(50%) of the excess of the Subsequent Sale Price over $8.75 multiplied by the
number of Shares sold in the Subsequent Sale.
ASSIGNMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. The Stockholders have
assigned to the Purchaser any and all dividends and other distributions that may
be declared, set aside or paid by the Company with respect to the Shares during
the term of the Tender and Option Agreement.
VOTING. Each Stockholder has agreed that (for so long as the Merger
Agreement is in effect), at any meeting of the holders of Company Common Stock,
however called, or in connection with any written consent of the holders of
Company Common Stock, he will vote (or cause to be voted) his Shares (a) 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 and the Tender and Option Agreement and any
actions required in furtherance thereof and hereof; (b) against any action or
agreement that would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or the Tender and Option Agreement; and (c) except as
otherwise agreed to in writing in advance by the Purchaser, against any of the
following actions or agreements (other than the Merger Agreement or the
transactions contemplated thereby): (i) any action or agreement that is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone or attempt to discourage or adversely affect the Merger, the Offer and
the transactions contemplated by the Tender and Option Agreement and the Merger
Agreement; (ii) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company and its
subsidiaries; (iii) a sale, lease
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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; (iv) any change in the management of the Board, except as
specifically contemplated by the Merger Agreement; (v) any change in the present
capitalization or dividend policy of the Company; (vi) any amendment of the
Company's certificate of incorporation or bylaws; or (vii) any other material
change in the Company's corporate structure or business. Notwithstanding
anything to the contrary contained in the Tender and Option Agreement, each
Stockholder will be free to act in his capacity as a member of the Board and to
discharge his fiduciary duty as such. Each Stockholder agrees, at the request of
the Purchaser, to execute and deliver to the Purchaser an irrevocable proxy.
OTHER COVENANTS, REPRESENTATIONS, WARRANTIES. In connection with the Tender
and Option Agreement, each Stockholder has made certain representations,
warranties and covenants, including without limitation with respect to ownership
of Shares, the Stockholder's power and authority to enter into and perform his
obligations under the Tender and Option Agreement, the receipt of requisite
governmental consents and approvals, absence of conflicts, absence of liens and
encumbrances on and in respect of the Stockholder's Shares, restrictions on the
transfer of the Stockholder's Shares, reliance by the Purchaser, finder's fees,
confidentiality, notice of additional shares and the solicitation of acquisition
proposals.
OTHER AGREEMENTS
RIGHTS AGREEMENT. The following is a summary of the material terms of the
Rights Agreement. This summary is qualified in its entirety by reference to the
Rights Agreement, a copy of which has been filed with the Commission as an
exhibit to the Company's Current Report on Form 8-K, dated September 28, 1995,
and is qualified in its entirety by reference to such Form 8-K. The Rights
Agreement may be examined and copies may be obtained at the place and in the
manner set forth in Section 8 of this Offer to Purchase.
On September 28, 1995, the Board of Directors of the Company distributed
one Right for each outstanding Share. The Rights were issued to the holders of
record of Common Stock outstanding on September 28, 1995, and will be issued
with respect to Common Stock issued thereafter until the Distribution Date (as
defined below) and, in certain circumstances, with respect to Common Stock
issued after the Distribution Date. Each Right, when it becomes exercisable as
described below, will entitle the registered holder to purchase from the Company
one share of Common Stock at a price of $28 (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of September 28, 1995 (the "Rights Agreement"), between the
Company and State Street Bank and Trust Company, as Rights Agent (the "Rights
Agent").
Until the earlier of (i) such time as the Company learns that a person or
group (including any affiliate or associate of such person or group) has
acquired, or has obtained the right to acquire, beneficial ownership of an
amount equal to or greater than such person's or group's Ownership Threshold (as
defined below) of the outstanding Capital Shares (as defined below) (such person
or group being an "Acquiring Person"), and (ii) such date, if any, as may be
designated by the Board of Directors of the Company following the commencement
of, or first public disclosure of an intent to commence, a tender or exchange
offer for outstanding Capital Shares which could result in such person or group
becoming the beneficial owner of an amount equal to or greater than such
person's or group's Ownership Threshold (as defined below) of the outstanding
Capital Shares (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced by the certificates for Capital Shares registered
in the names of the holders thereof (which certificates shall also be deemed to
be Right Certificates, as defined below) and not by separate Right Certificates.
Therefore, until the Distribution Date, the Rights will be transferred with and
only with the Capital Shares.
"Capital Shares", when used with reference to the Company prior to a
business combination, shall mean the shares of Common Stock or any other shares
of capital stock of the Company into which the Common Stock shall be
reclassified or changed.
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"Ownership Threshold" means, with respect to any person, the beneficial
ownership of the greater of (i) 15% of the Capital Shares at any time
outstanding or (ii) the percentage of the aggregate of the outstanding Capital
Shares beneficially owned by such person on the date the Rights Plan is
implemented, plus in the case of this clause (ii) 1% of the Capital Shares.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Capital Shares as of the close of business on the
Distribution Date (and to each initial record holder of certain Common Stock
originally issued after the Distribution Date), and such separate Right
Certificates alone will thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
on September 28, 2005 (the "Expiration Date") unless earlier redeemed by the
Company as described below.
The number of shares of Common Stock or other securities issuable upon
exercise of a Right, the Purchase Price, the Redemption Price (as defined below)
and the number of Rights associated with each outstanding Capital Share are all
subject to adjustment by the Board of Directors of the Company in the event of
any change in the Capital Shares.
At such time as there is an Acquiring Person, the Rights will entitle each
holder (other than such Acquiring Person (or any affiliate or associate of such
Acquiring Person)) of a Right to purchase, for the Purchase Price, that number
of shares of Common Stock which at the time of such event would have a market
value of twice the Purchase Price.
The Rights Agreement provides that, in the event the Company is acquired in
a merger or other business combination by an Acquiring Person or an associate or
affiliate of an Acquiring Person that is a publicly traded corporation or 50% or
more of the Company's assets or assets representing 50% or more of the Company's
revenues or cash flow are sold, leased, exchanged or otherwise transferred (in
one or more transactions) to an Acquiring Person or an associate or affiliate of
an Acquiring Person that is a publicly traded corporation, each Right will
entitle its holder (subject to the next paragraph) to purchase, for the Purchase
Price, that number of common shares of such corporation which at the time of the
transaction would have a market value of twice the Purchase Price. In the event
the Company is acquired in a merger or other business combination by an
Acquiring Person or an associate or affiliate of an Acquiring Person that is not
a publicly traded entity or 50% or more of the Company's assets or assets
representing 50% or more of the Company's revenues or cash flow are sold,
leased, exchanged or otherwise transferred (in one or more transactions) to an
Acquiring Person or an associate or affiliate of an Acquiring Person that is not
a publicly traded entity, each Right will entitle its holder (subject to the
next paragraph) to purchase, for the Purchase Price, at such holder's option,
(i) that number of shares of the surviving corporation in the transaction with
such entity (which surviving corporation could be the Company) which at the time
of the transaction would have a book value of twice the Purchase Price, (ii)
that number of shares of such entity which at the time of the transaction would
have a book value of twice the Purchase Price or (iii) if such entity has an
affiliate which has publicly traded common shares, that number of common shares
of such affiliate which at the time of the transaction would have a market value
of twice the Purchase Price.
Any Rights that are at any time beneficially owned by an Acquiring Person
(or any affiliate or associate of an Acquiring Person) will be null and void and
nontransferable and any holder will be unable to exercise or transfer any such
Right.
At any time after a person or a group becomes an Acquiring Person, the
Board of Directors of the Company may exchange all or part of the then
outstanding Rights (other than Rights that have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the securities that otherwise would have been issuable to the holder
of each Right upon exercise thereof. The Board of Directors of the Company may
also, in substitution for shares of Common Stock, (i) pay cash, (ii) issue other
equity securities or (iii) issue debt securities (or a combination thereof)
having an aggregate market value equal to the value of the shares of Common
Stock which otherwise would have been issuable, if, at such time, the Company
does not have a sufficient number of shares of Common Stock issued but not
outstanding or authorized but unissued.
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At any time prior to the earlier of (i) such time as a person becomes an
Acquiring Person and (ii) the Expiration Date, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price (in cash or
Common Stock or other securities of the Company deemed by the Board of Directors
to be at least equivalent in value) of $.01 per Right, subject to adjustment as
provided in the Rights Agreement (the "Redemption Price").
Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
At any time prior to the Distribution Date, the Company may, without the
approval of any holder of the Rights, supplement or amend any provision of the
Rights Agreement (including the date on which the Distribution Date shall occur
or the time during which the Rights may be redeemed), except that no supplement
or amendment shall be made which reduces the Redemption Price (other than
pursuant to certain adjustments thereof) or provides for an earlier Expiration
Date.
The Company has executed the Rights Amendment (i) to prevent the Merger
Agreement, the Tender and Option Agreement or the consummation of any of the
transactions contemplated thereby, including without limitation, the Offer and
the consummation of the Offer and the Merger, from resulting in the distribution
of separate Right Certificates or the occurrence of a Distribution Date (as
defined therein) and (ii) to provide that neither Parent nor the Purchaser will
be deemed to be an Acquiring Person (as defined therein) by reason of the
transactions expressly provided for in the Merger Agreement and the Tender and
Option Agreement. The Rights Amendment will render the Rights inoperative with
respect to any acquisition of Shares by Parent, the Purchaser or any of their
affiliates pursuant to the Merger Agreement and/or Tender and Option Agreement.
Pursuant to the Amendment, upon consummation of the Merger, all Rights will
expire and be of no further force or effect.
GUARANTY. The following is a summary of the material terms of the Guaranty.
This summary is qualified in its entirety by reference to the Guaranty which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an Exhibit to the Schedule 14D-1. The Guaranty may be examined and
a copy may be obtained at the place and in the manner as set forth in Section 8
of this Offer to Purchase.
Vemco, Inc., Venture Industries Corporation, Vemco Leasing, Inc., Venture
Leasing Company, Venture Mold & Engineering Corporation, Venture Service
Company, each a Michigan corporation, and Venture Industries Canada, LTD., an
Ontario corporation (each a "Guarantor" and collectively, the "Guarantors")
executed a Guaranty, dated June 5, 1996, for the benefit of the Company and each
of Roger R. Phillips, William A. Taylor, Louis T. Enos, E Gordon Young, John G.
Owens, Allen B. Freedman and Leonard Heilman (each a "Beneficiary" and
collectively, the 'Beneficiaries") with respect to the obligations of the
Purchaser (the Guaranty"). Pursuant to the Guaranty, the Guarantors jointly and
severally guaranteed to the Company and the Beneficiaries the performance of all
liabilities, agreements and other obligations of the Purchaser under the Merger
Agreement and the Indemnity Agreements (as hereinafter described), and of the
Company's obligations under the Noncompetition Agreements between the Company
and the Beneficiaries, the Amendment to the Employment and Noncompetition
Agreement between the Company and Roger R. Phillips, and the Amendment to the
Employment and Noncompetition Agreement between the Company and William A.
Taylor, together with all costs of collection, compromise or enforcement,
including, without limitation, reasonable attorneys' fees incurred with respect
to the Guaranty, or with respect to a proceeding under the federal bankruptcy
laws or any insolvency, receivership, arrangement or reorganization law or an
assignment for the benefit of creditors concerning the Purchaser or any
Guarantor, together with interest on all such costs of collection, compromise or
enforcement from the date arising (all the foregoing, collectively, the
"Obligations"). The Guaranty is an absolute, unconditional and continuing
guaranty of the full and punctual payment and performance of the Obligations and
not of their collectibility only and is in no way conditioned upon any
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requirement that the Company or any Beneficiary first attempt to collect any of
the Obligations from the Purchaser or resort to any security or other means of
obtaining their payment.
INDEMNITY AGREEMENTS. The following is a summary of the material terms of
the Indemnity Agreements. This summary is qualified in its entirety by reference
to the Indemnity Agreements which are incorporated herein by reference and
copies of which have been filed with the Commission as exhibits to the Schedule
14D-1. The Indemnity Agreements may be examined and copies may be obtained at
the place and in the manner as set forth in Section 8 of this Offer to Purchase.
The Purchaser entered into Indemnity Agreements, effective June 5, 1996,
with each of the directors of the Company and the chief financial officer (each
such officer and director, individually, an "Indemnitee"), which provide that,
subject to certain provisions of the Indemnity Agreements, in the event an
Indemnitee is, or becomes a party to, or witness or other participant in, or is
threatened to be made a party to, or witness or other participant in, any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, investigative or other (a "Proceeding") by reason of
(or arising in part out of) an Indemnifiable Event, the Purchaser will indemnify
such Indemnitee from and against any and all Expenses (as hereinafter defined)
actually and reasonably incurred or suffered by the Indemnitee to the fullest
extent permitted by law, as the same exists or may thereafter be amended or
interpreted (but in the case of any such amendment or interpretation, only to
the extent that such amendment or interpretation permits the Purchaser to
provide broader indemnification rights than were permitted prior thereto). The
rights to receive indemnification and the advancement of Expenses under the
Indemnity Agreements are not exclusive of any other rights which any Indemnitee
may be entitled or subsequently entitled under any statute, the certificate of
incorporation or bylaws of the Company or the Purchaser, by vote of the
stockholders of the Company or the Purchaser or the Board, or otherwise. To the
extent that a change in applicable law (whether by statute or judicial decision)
or the bylaws of the Company or the Purchaser permits greater indemnification
than is currently provided for an Indemnifiable Event, the Indemnity Agreements
provide that each Indemnitee will be entitled to such greater indemnification
under the Indemnity Agreements.
For purposes of the Indemnity Agreements, "Expenses" means any expense,
liability, or loss, including reasonable attorneys' fees, judgments, fines,
ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any
interest, assessments, or other charges imposed thereon, and any federal, state,
local, or foreign taxes imposed as a result of the actual or deemed receipt of
any payments under the Indemnity Agreements, paid or incurred in connection with
investigating, defending, being a witness in, or participating in (including on
appeal), or preparing for any of the foregoing in, any Proceeding relating to
any Indemnifiable Event. "Indemnifiable Event," as used in the Indemnity
Agreements, means any event or occurrence that takes place either prior to or
after the execution of the Indemnity Agreements that is (a) related to the fact
that an Indemnitee is, or has agreed to serve as, a director or officer of the
Company or while a director or officer of the Company serves at the request of
the Company as a director, officer, employee, trustee, agent, or fiduciary of
another foreign or domestic corporation, partnership, joint venture, employee
benefit plan, trust, or other enterprise, and (b) related to anything done or
not done by an Indemnitee in any such capacity, whether or not the basis of the
Proceeding is alleged action in an official capacity while serving in any
capacity described above.
The Indemnity Agreements provide that expenses incurred by an Indemnitee in
any Proceeding for which indemnification may be sought under the Indemnity
Agreement shall be advanced by the Purchaser to such Indemnitee within twenty
(20) days after receipt by the Purchaser of a statement or statements from such
Indemnitee requesting such advance and reasonably evidencing the Expenses
reasonably incurred by such Indemnitee (an "Expense Advance"). If it is
ultimately determined by a final judicial decision (from which there is no right
of appeal) that an Indemnitee is not entitled to be indemnified by the
Purchaser, the Indemnitee shall immediately repay any amounts advanced by the
Purchaser. Each Indemnitee further agrees to execute any further agreements
regarding the repayment of Expenses as the Purchaser may reasonably request
prior to receiving any such advance, including, without limitation, an
affirmation of the Indemnitee's good faith belief that any applicable standards
of conduct have been met by such Indemnitee.
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The Indemnity Agreements provide that no Indemnification or Expense Advance
pursuant to the Indemnity Agreements will be paid by the Purchaser: (i) in
connection with any Proceeding initiated by an Indemnitee against the Purchaser,
the Company or any director or officer of the Purchaser or the Company unless
the Purchaser or the Company has joined in, or the Board of Directors of the
Purchaser or the Company, has consented to, the initiation of such Proceeding,
or the Proceeding is one to enforce indemnification rights as provided in the
Indemnity Agreements; (ii) to the extent an Indemnitee settles or otherwise
disposes of a Proceeding or causes the settlement or disposal of a Proceeding
without the Purchaser's express prior written consent (which shall not be
unreasonably withheld or delayed) unless the Indemnitee receives court approval
for such settlement or other disposition where the Purchaser had the opportunity
to oppose the Indemnitee's request for such court approval; (iii) with regard to
any judicial award if the Purchaser was not given a reasonable and timely
opportunity, at its expense, to participate in the defense of such action unless
the Purchaser's participation in such Proceeding was barred by the Indemnity
Agreements or the court in such Proceeding; (iv) for any acts, omissions,
transactions or circumstances for which indemnification under the Indemnity
Agreements is prohibited by applicable state or federal law or until any
preconditions imposed upon, or agreed to by, the Purchaser by or with any court
or governmental agency are satisfied; (v) for remuneration paid to a director if
it shall be determined by a final decision of a court of competent jurisdiction
that such remuneration was in violation of law; (vi) for any accounting of
profits made from the purchase or sale by an Indemnitee of securities of the
Company in violation of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereof; (vii) for acts actually performed by the Indemnitee or of
which the Indemnitee had actual knowledge if the Indemnitee gained any personal
profit to which he was not entitled in the event that a final decision of a
court of competent jurisdiction establishes that the Indemnitee was not entitled
to such personal profit; or (viii) for proceedings based upon the same facts as
underlie a breach of a representation and warranty in the Merger Agreement.
Each Indemnitee and the Purchaser acknowledge in the Indemnity Agreements
that, in certain circumstances, federal law or public policy may override
applicable state law and prohibit the Purchaser from indemnifying Indemnitee
under the Indemnity Agreements or otherwise. The Purchaser and each Indemnitee
acknowledge that the SEC has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, each Indemnitee understands and agrees that the Purchaser may be
required in the future to undertake with the SEC to submit the question of
indemnification to a court in certain circumstances for a determination of the
Purchaser's right under public policy to indemnify Indemnitee.
The indemnification provided under the Indemnity Agreements will continue
as to each Indemnitee for any action taken or not taken while serving in an
indemnified capacity pertaining to an Indemnifiable Event even though such
Indemnitee may have ceased to serve in such capacity at the time of any
Proceeding. The Indemnity Agreements will continue until and terminate upon the
later of (i) six years after the date that such Indemnitee has ceased to serve
as a director or officer of the Company of (ii) the final termination of all
pending proceedings in respect of which Indemnitee is granted rights of
indemnification or expense advance under the Indemnity Agreements.
CONFIDENTIALITY AGREEMENT. The following is a summary of the material terms
of the Confidentiality Agreement. This summary is qualified in its entirety by
reference to the full text of the Confidentiality Agreement which is
incorporated herein by reference and copies of which have been filed with the
Commission as an exhibit to the Schedule 14D-1. The Confidentiality Agreement
may be examined and copies may be obtained at the place and in the manner as set
forth in Section 8 of this Offer to Purchase.
An affiliate of the Purchaser entered into a Confidentiality Agreement,
dated April 4 1996, with the Company (the "Confidentiality Agreement") pursuant
to which such affiliate, on behalf of the Parent, the Purchaser and all other
affiliates of the Parent, agreed, among other things, to keep confidential
certain non-public information or proprietary information of the Company
furnished to Parent by or on behalf of the Company. The Confidentiality
Agreement provides that, for a period of one year from the date of such
agreement, unless specifically invited in writing by the Board of Directors of
the Company, Parent and its
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affiliates (including the Purchaser) will not in any manner, directly or
indirectly, (a) effect or seek, offer or propose (whether publicly or otherwise)
to effect, or cause or participate in or in any way assist any other person to
effect or seek, offer or propose (whether publicly or otherwise) to effect or
participate in, (i) any acquisition of any securities (or beneficial ownership
thereof) or assets of the Company; (ii) any tender or exchange offer or merger
or other business combination involving the Company; (iii) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary transaction with
respect to the Company; or (iv) any "solicitation" of "proxies" (as such terms
are used in the proxy rules of the Securities and Exchange Commission) or
consents to vote any voting securities of the Company, (b) form, join or in any
way participate in a "group" (as defined under the Exchange Act), (c) otherwise
act, alone or in concert with others, to seek to control or influence the
management, Board of Directors or policies of the Company, or (d) enter into any
discussions or arrangements with any third party with respect to any of the
foregoing. Notwithstanding the foregoing, Parent and its affiliates are not
prohibited from (x) proposing to the Company's Board of Directors a cash
transaction relating to the acquisition of all of the outstanding common stock
of the Company at a price representing a premium to the average of the last sale
price of such common stock on the NNM for the ten trading days immediately
preceding the making of such proposal; or (y) proposing a transaction of the
type described in clause (a) above if (i) the Company publicly announces that it
has entered into an agreement with a party other than Parent or any of its
affiliates related to a tender or exchange offer, merger or other business
combination; or (ii) a party other than Parent or any of its affiliates publicly
announces the commencement of a tender or exchange offer for all of the
outstanding shares of the Company's capital stock.
In the event that (1) the Company attempts to enforce the provisions
applicable for one year described above, and (2) after the date of the
Confidentiality Agreement, the Company entered into an agreement with any other
party relating to the provision of confidential information for the purpose of
evaluating a possible transaction between the Company and such party of the type
described above and the terms of such agreement are more favorable to the other
party than are the terms applicable to Parent and its affiliates, then for the
purposes of enforcement proceedings, the terms of the Confidentiality Agreement
will be deemed amended such that the terms of the Confidentiality Agreement are
no less favorable to Parent and its affiliates than the terms of any such other
agreements.
OTHER MATTERS
APPRAISAL RIGHTS. No appraisal rights are available to holders of Shares in
connection with the Offer. However, if the Merger is consummated, holders of
Shares will have certain rights under Section 262 of the Delaware Law to dissent
and demand appraisal of, and payment in cash for the fair value of, their
Shares. Such rights, if the statutory procedures are complied with, could lead
to a judicial determination of the fair value (excluding any element of value
arising from accomplishment or expectation of the Merger) required to be paid in
cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than in addition to the Offer Price and the market value of the Shares,
including asset values and the investment value of the Shares. The value so
determined could be more or less than the Offer Price or the Merger
Consideration.
If any holder of Shares who demands appraisal under Section 262 of the
Delaware Law fails to perfect, or effectively withdraws or loses his right to
appraisal, as provided in the Delaware Law, the shares of such holder will be
converted into the Merger Consideration in accordance with the Merger Agreement.
A stockholder may withdraw his demand for appraisal by delivery to Parent of a
written withdrawal of his demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Section 262 of the Delaware Law for
perfecting appraisal rights may result in the loss of such rights.
GOING PRIVATE TRANSACTIONS. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. The Purchaser does not believe that
Rule 13e-3 will be applicable to the Merger unless, among other things, the
Merger is completed more than one year after termination of the Offer. If
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applicable, Rule 13e-3 would require, among other things, that certain financial
information regarding the Company and certain information regarding the fairness
of the Merger and the consideration offered to minority stockholders be filed
with the Commission and disclosed to minority stockholders prior to consummation
of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS; CHANGES IN STOCK
As described above, the Merger Agreement provides that prior to the time
the directors of the Purchaser have been elected to the Board of Directors of
the Company, the Company will not (i) declare, set aside or pay any dividends on
or make other distributions in respect of any shares of its capital stock, (ii)
split, combine or reclassify any shares of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for any shares of its capital stock or (iii) propose to do any of
the foregoing. Further, the Company will not, and will not cause or permit any
of its subsidiaries to, issue, pledge, deliver, sell or transfer or authorize or
propose the issuance, pledge, delivery, sale or transfer of, or repurchase,
redeem or otherwise acquire directly or indirectly, or propose the repurchase,
redemption or other acquisition of, any shares of capital stock of any class of
the Company or its subsidiaries, or any options, warrants or other rights
exercisable for or securities convertible into or exchangeable for, any such
shares (or enter into any agreements, arrangements, plans or understandings with
respect to any of the foregoing), other than pursuant to the exercise of
outstanding options, warrants or Convertible Debentures pursuant to the terms
thereof as of June 5, 1996.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser will not be required to accept for payment or, subject
to any applicable rules and regulations of the Commission, including Rule
14e-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, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer as to any Shares not then paid for, if (i) the applicable
waiting period under the HSR Act has not expired or terminated, (ii) the Minimum
Condition has not been satisfied or waived, (iii) the Financing Condition has
not been satisfied, (iv) the Company shall not have given notice of redemption
for all Convertible Debentures which are redeemable at the Company's option in
accordance with their terms or (v) at any time on or after June 5, 1996, and
before the time for payment for Shares, any of the following events shall exist:
(a) any domestic or foreign Federal, state or local governmental,
regulatory or administrative agency or authority or legislative body or
commission shall have instituted any action, proceeding, application, claim
or suit, or shall have promulgated, entered, enforced, enacted, proposed,
issued or made applicable to the Offer or the Merger any statute, rule,
regulation, judgment, order or injunction which directly or indirectly (1)
challenges, seeks to make illegal, prohibits or makes illegal, or imposes
any material limitations on, the Purchaser's ownership or operation (or
that of any of its respective subsidiaries or affiliates) of all or a
material portion of the businesses or assets of it or of the Company or its
subsidiaries, or compels the Purchaser or its affiliates to dispose of or
hold separate any material portion of the business or assets of the Company
or its subsidiaries, taken as a whole, (2) challenges, seeks to make
illegal, prohibits or makes illegal the acceptance for payment, payment for
or purchase of Shares or the consummation of the Offer or the Merger, (3)
restricts the ability of the Purchaser, or renders the Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares, (4)
imposes material limitations on the ability of the Purchaser to exercise
full rights of ownership of the Shares, including, without limitation, the
right to vote the Shares purchased by it on all matters presented to the
Company's stockholders, (5) seeks to obtain or obtains material damages as
a result of the transactions contemplated by the Offer or the Merger, or
38
<PAGE> 41
(6) seeks to require divestiture by the Purchaser or any of its
subsidiaries or affiliates of any Shares, and in the case of (5) or (6)
above, is likely to have a Company Material Adverse Effect, provided that
the Purchaser shall have used reasonable efforts to cause any such
judgment, order or injunction to be vacated or lifted;
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
Inc. or any other securities market for a period in excess of three hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions), (2)
a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (4) any
limitation (whether or not mandatory) by any foreign or United States
governmental authority on the extension of credit by banks or other
financial institutions, (5) any decline in either the Dow Jones Industrial
Average or the Standard & Poor's Index of 500 Industrial Companies by an
amount in excess of 20% measured from the close of business on June 5,
1996, or (6) in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or worsening
thereof;
(c) the Company shall have breached or failed to perform or comply
with any of its covenants and agreements contained in the Merger Agreement
other than those contained in Sections 5.1 through 5.9, inclusive
(regarding the conduct of business of the Company pending the time the
directors of the Purchaser have been elected to the Board of Directors of
the Company), in any material respect, or the Company shall have breached
or failed to perform or comply with any of its covenants and agreements
contained in Sections 5.1 through 5.9, inclusive, which breach or failure
shall have a Company Material Adverse Effect, or the Company shall have
breached its representations and warranties in any respect, which breach
shall have a Company Material Adverse Effect;
(d) since June 5, 1996, there shall have occurred any change in the
financial condition, business, or results of operations of the Company and
its subsidiaries that, or any event, condition, occurrence or development
of a state of circumstances or facts which individually or in the
aggregate, constitutes a Company Material Adverse Effect;
(e) the Merger Agreement shall have been terminated in accordance with
its terms;
(f) (i) it shall have been publicly disclosed or the Purchaser shall
have otherwise learned that any person, entity or "group" (as defined in
Section 13(d)(3) of the Exchange Act), other than the Purchaser or its
affiliates or any group of which any of them is a member, shall have
acquired beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 14.9% of any class or
series of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted an option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 14.9% of any class or series of
capital stock of the Company (including the Shares); or (ii) any person or
group shall have entered into a definitive agreement or agreement in
principle with the Company with respect to an Acquisition Proposal or other
business combination with the Company;
(g) the Company's Board of Directors shall have withdrawn, or modified
or changed (including by amendment of the Schedule 14D-9) in a manner
adverse to the Purchaser its approval or recommendation of the Offer, the
Merger Agreement or the Merger or shall have recommended an Acquisition
Proposal, which in the judgment of the Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by the
Purchaser giving rise to such condition) makes it inadvisable to proceed
with the Offer or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of the Purchaser and may
be waived by the Purchaser, in whole or in part at any time and from time to
time in the discretion of the Purchaser. The failure by the Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
39
<PAGE> 42
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, as well as certain representations
made to the Purchaser in the Merger Agreement by the Company, the Purchaser is
not aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the Purchaser's acquisition of Shares as contemplated
herein or of any approval or other action by any Governmental Entity that would
be required for the acquisition or ownership of Shares by the Purchaser as
contemplated herein. Should any such approval or other action be required, the
Purchaser and Parent currently contemplate that such approval or other action
will be sought. While the Purchaser does not presently intend to delay the
acceptance for payment of or payment for Shares tendered pursuant to the Offer
pending the outcome of any such matter, there can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that failure to obtain any such approval or
other action might not result in consequences adverse to the Company's business
or that certain parts of the Company's business might not have to be disposed of
if such approvals were not obtained or such other actions were not taken or in
order to obtain any such approval or other action. If certain types of adverse
action are taken with respect to the matters discussed below, the Purchaser
could decline to accept for payment or pay for any Shares tendered. See Section
14 for certain conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
The Company is incorporated under the laws of Delaware. Section 203 of the
Delaware Law prevents an "Interested Stockholder" (defined generally as a person
with 15% or more of the corporation's outstanding voting stock) from engaging in
a "Business Combination" (defined to include a variety of transactions,
including mergers) with a Delaware corporation for three years following the
date such person becomes an Interested Stockholder, unless (i) before such
person became an Interested Stockholder, the board of directors of the
corporation approved the transaction in which the Interested Stockholder became
an Interested Stockholder or approved the Business Combination, (ii) upon
consummation of the transaction which resulted in the Interested Stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by directors who are also officers
of the corporation and by certain employee stock ownership plans), (iii)
following the transaction in which such person became an Interested Stockholder,
the Business Combination is approved by the board of directors of the
corporation and authorized at a meeting of stockholders by the affirmative vote
of the holders of two-thirds of the outstanding voting stock of the corporation
not owned by the Interested Stockholder. The Board of Directors of the Company
has unanimously approved the Merger Agreement and the transactions contemplated
thereby, including the Offer and the execution and delivery of the Tender and
Option Agreement, for purposes of Section 203 of the Delaware Law, and the
restrictions of such Section 203 are, accordingly, not applicable to Parent, the
Purchaser or affiliates or associates of the Purchaser as a result of the
execution and delivery of the Tender and Option Agreement or the consummation of
the transactions contemplated by this Offer to Purchase.
40
<PAGE> 43
Neither the Purchaser nor Parent has currently complied with any state
takeover statute or regulation. The Purchaser reserves the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and an appropriate court does not determine that it is inapplicable
or invalid as applied to the Offer or the Merger, the Purchaser might be
required to file certain information with, or to receive approvals from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer or the Merger.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar day waiting period following the filing by the Purchaser of a
Notification and Report Form with respect to the Offer, unless the Purchaser
receives a request for additional information or documentary material from the
Antitrust Division or the FTC or unless early termination of the waiting period
is granted. The Purchaser currently anticipates making such filing on or about
June 14, 1996. If, within the initial 15-day waiting period, either the
Antitrust Division or the FTC requests additional information or material from
the Purchaser concerning the Offer, the waiting period will be extended and
would expire at 11:59 p.m., New York City time, on the tenth calendar day after
the date of substantial compliance by the Purchaser with such request. Only one
extension of the waiting period pursuant to a request for additional information
is authorized by the HSR Act. Thereafter, such waiting period may be extended
only by court order or with the consent of the Purchaser. In practice, complying
with a request for additional information or material can take a significant
amount of time. In addition, if the Antitrust Division or the FTC raises
substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Purchaser, or of the Company or its subsidiaries. Private parties may also bring
legal action under the antitrust laws under certain circumstances. There can be
no assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, of the results thereof.
16. FEES AND EXPENSES
The Purchaser has retained MacKenzie Partners, Inc., to act as the
Information Agent and State Street Bank and Trust Company to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person in connection with the solicitation of tenders
of Shares pursuant to the Offer. Brokers, dealers, banks and trust companies
will be reimbursed by the Purchaser upon request for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
41
<PAGE> 44
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. The Purchaser is not aware of any jurisdiction in which the making
of the Offer or the tender of Shares in connection therewith would not be in
compliance with the laws of such jurisdiction. If the Purchaser becomes aware of
any state law prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto in such state, the Purchaser will make a good faith effort to
comply with any such state statute or seek to have such state statute declared
inapplicable to the Offer. If, after such good faith effort, the Purchaser
cannot comply with any such state statute, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the holders of Shares in such
state. In any jurisdiction the securities, blue sky or other laws of which
require the Offer to be made by a licensed broker or dealer, the Offer is being
made on behalf of the Purchaser by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THE
DELIVERY OF THE OFFER TO PURCHASE NOR ANY PURCHASE PURSUANT TO THE OFFER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF PARENT, THE PURCHASER OR THE COMPANY SINCE THE DATE AS OF WHICH
INFORMATION IS FURNISHED OR THE DATE OF THIS OFFER TO PURCHASE.
The Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer. In addition, the Company has filed with
the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act,
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that they will not be available at the regional offices of the
Commission).
VEMCO ACQUISITION CORP.
June 11, 1996
42
<PAGE> 45
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND ITS AFFILIATES, INCLUDING THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND ITS AFFILIATES (OTHER
THAN THE PURCHASER). The following table sets forth the name, business address
and present principal occupation or employment, and material occupations,
positions, offices or employments for the past five years, of each of the
Executive Managers of the Venture Group. Because of its trust structure, the
Parent does not have executive officers or directors, although the Special
Advisor to the Trust, acting through the Trustee, has the authority to designate
individuals from time-to-time to act as officers as to particular matters. Each
individual named below holds the same position with each Subsidiary (other than
the Purchaser), except as otherwise indicated. Messrs. Winget, Schutz and
Torakis serve as the directors of each Subsidiary (other than the Purchaser),
with the exception of Venture Canada where Messrs. Winget and Cheifetz serve as
the directors. Each person is a citizen of the United States of America, except
Mr. Cheifetz, who is a Canadian citizen. Unless otherwise noted, each such
person's business address is Venture Industries, 33226 James J. Pompo, P.O. Box
278, Fraser, Michigan 48026-0278.
<TABLE>
<CAPTION>
POSITIONS WITH VENTURE GROUP (OTHER THAN THE
PURCHASER), MATERIAL OCCUPATIONS, OFFICES OR
NAME AND AGE EMPLOYMENTS HELD DURING PAST FIVE YEARS
- --------------------------------------------- ---------------------------------------------
<S> <C>
Lawrence J. Winget
Age 53..................................... Chairman of the Board and Chief Executive
Officer. In 1981 acquired 60% ownership of
Venture Industries. The remaining 40% was
acquired in 1987 and he is currently the sole
beneficiary of Parent.
Michael G. Torakis
Age 39..................................... President since April 1995,
Executive Vice President and Chief Financial
Officer since 1985.
A. James Schutz
Age 50..................................... Executive Vice President for over five years.
James E. Butler, Jr.
Age 42..................................... Vice President -- Finance since 1995.
Joined the Venture Group in 1994.
Certified Public Accountant, Coopers &
Lybrand LLP, 1981 to 1994.
Robert Wedge
Age 58..................................... President of Operations: Venture Mold &
Engineering since April 1995.
Vice President and General Manager: Venture
Mold & Engineering from 1993 to 1995.
Plant Manager from 1984 to 1993.
Nelson Gonzales
Age 59..................................... President of Operations: Venture Industries
and Vemco, Inc., since April 1995.
Senior level advisor from 1993 to 1995.
Plant Manager: Vemco, Inc. from 1990 to 1993.
</TABLE>
S-1
<PAGE> 46
<TABLE>
<CAPTION>
POSITIONS WITH VENTURE GROUP (OTHER THAN THE
PURCHASER), MATERIAL OCCUPATIONS, OFFICES OR
NAME AND AGE EMPLOYMENTS HELD DURING PAST FIVE YEARS
- --------------------------------------------- ---------------------------------------------
<S> <C>
Lawrence J. Winget, Jr.
Age 35..................................... Executive Vice President Engineering: Venture
Industries and Vemco, Inc. since April 1995.
Vice President and General Manager: Vemco,
Inc. from 1993 to 1995.
Assistant Manager: Vemco, Inc. from 1990 to
1993.
Joseph R. Tignanelli
Age 34..................................... Executive Vice President Operations: Venture
Industries and Vemco, Inc. since October
1995.
Vice President: Venture Industries, 1993 to
1995.
Assistant Manager: Venture Industries
Corporation, 1990 to 1993.
Theodore Lowe
Age 48..................................... Vice President -- Quality Improvement and
Corporate Planning since 1987.
Managing Director: Venture Asia Pacific Pty.
Ltd. and its subsidiaries since 1995.
Larry R. Marshall
Age 48..................................... Vice President -- Engineering: Venture
Industries and Vemco, Inc. since 1995.
General Manager -- Sales and Estimating from
1985 to 1995.
Stephen M. Cheifetz
Age 38..................................... Director: Venture Canada.
Partner in the firm of Wilson, Walker,
Hochberg, Slopen (attorneys), Windsor,
Ontario, Canada, for over five years.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name and position of each executive officer of the Purchaser. All
executive officers of the Purchaser are also directors of the Purchaser. For
further information regarding such persons, see paragraph 1 above.
<TABLE>
<CAPTION>
NAME POSITION WITH PURCHASER
- ------------------------------------------------------------------- ------------------------
<S> <C>
Lawrence J. Winget................................................. Chairman
Michael G. Torakis................................................. President
A. James Schutz.................................................... Executive Vice President
James E. Butler, Jr. .............................................. Treasurer and Secretary
</TABLE>
S-2
<PAGE> 47
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
STATE STREET BANK AND TRUST COMPANY
By Overnight Courier:
State Street Bank and Trust Company
c/o Boston Financial Data Services, Inc.
Two Heritage Drive MB2
North Quincy, MA 02171
By First Class Mail:
State Street Bank and Trust Company
Corporation Reorganization
P.O. Box 9061
Boston, MA 02205-8686
By Hand:
State Street Bank and Trust Company
225 Franklin Street--Concourse Level
Boston, MA 02110
or
State Street Bank and Trust Company
61 Broadway--Concourse Level
New York, NY 10006
For Information on your Account:
(800) 426-5523
(Toll-Free)
Questions and requests for assistance or for additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Information Agent at its telephone number and location listed
below. You may also contact your broker, dealer, bank, trust company or other
nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
Mackenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
(800) 322-2885
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BAILEY CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 11, 1996
BY
VEMCO ACQUISITION CORP.
A CORPORATION FORMED BY
VENTURE HOLDINGS TRUST
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JULY 12, 1996, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
STATE STREET BANK AND TRUST COMPANY
By Hand:
Bank of Boston
c/o Boston Equiserve
Corporate Reorganization
55 Broadway, 3rd Floor
New York, NY 10006
By Mail:
State Street Bank & Trust Co.
Corporate Reorganization
P.O. Box 9061
Boston, MA 02205-8686
By Overnight Courier:
State Street Bank & Trust Co.
Corporate Reorganization
2 Heritage Drive
North Quincy, MA 02171
By Facsimile Transmission:
(617) 774-4519
(For Eligible Institutions Only)
Confirm by Telephone to:
(617) 774-4511
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED BELOW AND
COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Bailey Corporation (the "Tendering Stockholders") if
certificates evidencing Shares ("Certificates") are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase) is used, if
delivery of Shares is to be made by book-entry transfer to an account maintained
by State Street Bank and Trust Company (the "Depositary") at The Depositary
Trust Company ("DTC") or the Philadelphia Depositary Trust Company ("PDTC")
(each a "Book-Entry Transfer Facility" and collectively, the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase (as defined below). Delivery of documents to a Book-Entry
Transfer Facility does not constitute delivery to the Depositary.
Tendering Stockholders whose Certificates are not immediately available or
who cannot deliver either their Certificates for, or a Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to, their Shares
and all other required documents to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) may tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2.
<PAGE> 2
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution:
- ---------------------------------------------------------------------
Check Box of Book-Entry Transfer Facility:
/ / DTC
/ / PDTC
Account Number:
- ---------------------------------------- Transaction Code
Number:
- ----------------------------------------
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
- --------------------------------------------------------------------------------
Window Ticket Number (if any):
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
- ------------------------------------------------------------------
Name of Institution which Guaranteed Delivery:
- -----------------------------------------------------------------------
If delivered by book-entry transfer, check box of Applicable Book-Entry Transfer
Facility:
/ / DTC
/ / PDTC
Account Number:
- ---------------------------------------- Transaction Code
Number:
- ----------------------------------------
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR ON SHARE CERTIFICATE(S) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE EVIDENCED BY NUMBER OF
CERTIFICATE SHARES SHARES
NUMBER(S)(1) CERTIFICATES(1) TENDERED(2)
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
TOTAL SHARES
- ----------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by holders of Shares delivering Shares by Book-Entry Transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to the
Depositary are being tendered. See Instruction 4.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Vemco Acquisition Corp., a Delaware
corporation (the "Purchaser") formed by Venture Holdings Trust, a grantor trust,
the above-described shares of common stock, $.10 par value per share (the
"Common Stock"), of Bailey Corporation, a Delaware corporation (the "Company"),
and the associated common stock purchase rights issued pursuant to the Rights
Agreement, dated as of September 28, 1995, as amended, between the Company and
State Street Bank and Trust Company, as Rights Agent (the "Rights," together
with the Common Stock, the "Shares"), at a price of $8.75 per share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated June 11, 1996 (the "Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended from time to time, together constitutes the
"Offer"). The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
tendering holders of the Shares ("Tendering Stockholders") to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms or
conditions of any such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser all right, title
and interest in and to all of the Shares that are being tendered hereby and all
dividends, distributions (including, without limitation, distributions of
additional Shares) and rights declared, paid or distributed in respect of such
Shares (collectively, "Distributions") and irrevocably constitutes and appoints
the Depositary the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares (and any Distributions), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver Certificates evidencing such Shares
(and any Distributions), or transfer ownership of such Shares (and any
Distributions) on the account books maintained by a Book-Entry Transfer Facility
together, in any such case, with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Purchaser, upon receipt by the
Depositary as the undersigned's agent, of the purchase price with respect to
such Shares, (ii) present such Shares (and any Distributions) for transfer on
the books of the Company and (iii) receive all benefits and otherwise exercise
all rights of beneficial ownership of such Shares (and any Distributions), all
in accordance with the terms and subject to the conditions of the Offer.
The undersigned hereby irrevocably appoints Michael G. Torakis and James E.
Butler, and each of them, as the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his substitute shall, in his sole discretion,
deem proper and otherwise act (by written consent or otherwise) with respect to
all Shares tendered hereby which have been accepted for payment by the Purchaser
prior to the time of such vote or other action and all Shares and other
securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed meeting)
or consent in lieu of any such meeting or otherwise. This proxy and power of
attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by the Purchaser in accordance with the
terms of the Offer. Such acceptance for payment shall revoke all other proxies
and powers of attorney granted by the undersigned at any time with respect to
such Shares (and all Shares and other securities issued in Distributions in
respect of such Shares), and no subsequent proxy or power of attorney shall be
given or written consent executed (and if given or executed, shall not be
effective) by the undersigned with respect thereto. The undersigned understands
that, in order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance of such Shares for payment, the Purchaser must be able to
exercise full voting and other rights with respect to such Shares, including,
without limitation, voting at any meeting of the Company's stockholders then
scheduled.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustee in bankruptcy, personal and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except
<PAGE> 4
as stated in the Offer to Purchase, this tender is irrevocable, provided that
the Shares tendered pursuant to the Offer may be withdrawn prior to their
acceptance for payment.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions) and that, when the same are accepted for
payment and paid for by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances, and that the Shares tendered hereby (and
any Distributions) will not be subject to any adverse claim. The undersigned,
upon request, will execute and deliver any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of Shares tendered hereby (and any Distributions). In
addition, the undersigned shall promptly remit and transfer to the Depositary
for the account of the Purchaser any and all Distributions issued to the
undersigned in respect of the Shares tendered hereby, accompanied by appropriate
documentation of transfer, and, pending such remittance and transfer or
appropriate assurance thereof, the Purchaser shall be entitled to all rights and
privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount of value thereof, as
determined by the Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser with respect to such Shares upon the terms and subject to the
conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may not be required to accept for payment
any of the Shares tendered hereby or may accept for payment fewer than all of
the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered." In the event that both the
"Special Payment Instructions" and the "Special Delivery Instructions" are
completed, please issue the check for the purchase price and/or return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return such certificates (and accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
under "Special Payment Instructions," in the case of a book-entry delivery of
Shares, please credit the account maintained at the Book-Entry Transfer Facility
indicated above with respect to any Shares not accepted for payment. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
"Special Payment Instructions" to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares tendered hereby.
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be issued in the name of someone other than the undersigned,
or if Shares delivered by book-entry transfer that are not accepted for payment
are to be returned by credit to an account maintained at a Book-Entry Transfer
Facility, other than to the account indicated above.
Issue (check appropriate box(es)):
/ / Check to / / Certificate(s) to:
Name:
- ----------------------------------------------------
(PLEASE PRINT)
Address:
- -------------------------------------------------
- ------------------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
/ / Credit unpurchased Shares delivered by book-entry transfer to the Book-Entry
Transfer Facility account set forth below:
/ / DTC / / PDTC (check one)
Account Number:
- -------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check of the purchase price of Shares accepted
for payment are to be sent to someone other than the undersigned or to the
undersigned at an address other than that shown above, under "Description of
Shares Tendered."
Mail (check appropriate box(es)):
/ / Check to / / Certificate(s) to:
Name:
- ----------------------------------------------------
(PLEASE PRINT)
Address:
- -------------------------------------------------
(INCLUDE ZIP CODE)
<PAGE> 6
IMPORTANT
TENDERING SHAREHOLDER:
SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE
(Signature(s) of Tendering Stockholder(s))
Dated:
- ----------------------------, 1996
(MUST BE SIGNED BY THE REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON
THE CERTIFICATES OR ON A SECURITY POSITION LISTING OR BY PERSON(S) AUTHORIZED TO
BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED HEREWITH.
IF SIGNATURE IS BY TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS,
ATTORNEYS-IN-FACT, AGENTS, OFFICERS OF CORPORATIONS OR OTHERS ACTING IN A
FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE PROVIDE THE FOLLOWING INFORMATION.
SEE INSTRUCTION 5.)
Name(s):
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title):
- --------------------------------------------------------------------------------
(See Instruction 5)
Address:
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Codes and Telephone Nos.:
- --------------------------------------------------------------------------------
(Home)
- --------------------------------------------------------------------------------
(Business)
Taxpayer Identification or Social Security No.:
- ---------------------------------------------------------------------------
(Complete Substitute Form W-9 on Reverse)
GUARANTEE OF SIGNATURE(S)
(If Required; see Instructions 1 and 5)
Authorized Signature(s):
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.:
- --------------------------------------------------------------------------------
Dated:
- ----------------------------, 1996
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a member firm of
a registered national securities exchange (registered under Section 6 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), by a member
firm of the National Association of Securities Dealers, Inc., by a commercial
bank or trust company having an office or correspondent in the United States or
by any other "Eligible Guarantor Institution" (bank, broker, dealer, credit
union, savings association or other entity that is a member in good standing of
a recognized Medallion Program approved by the Securities Transfer Association,
Inc. (each of the foregoing constituting an "Eligible Institution"), unless the
Shares tendered hereby are tendered (i) by the registered holder (which term,
for purposes of this document, shall include any participant in a Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of Shares) of such Shares who has completed neither the box entitled "Special
Payment Instructions" nor the box entitled "Special Delivery Instructions"
herein or (ii) for the account of an Eligible Institution. See Instruction 5. If
the Certificates are registered in the name of a person other than the signer of
this Letter of Transmittal, or if payment is to be made or delivered to, or
Certificates evidencing unpurchased Shares are to be issued or returned to, a
person other than the registered owner, then the tendered Certificates must be
endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
Certificates, with the signatures on the Certificates or stock powers guaranteed
by an Eligible Institution as provided herein. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed by
Tendering Stockholders if Certificates evidencing Shares are to be forwarded
herewith or if delivery of Shares is to be made pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase. For a
Tendering Stockholder to validly tender Shares pursuant to the Offer, either (a)
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), with any required signature guarantees or an Agent's
Message (as defined in the Offer to Purchase) in the case of a book-entry
delivery of Shares, and any other required documents, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date and either (a) Certificates for tendered Shares must be received
by the Depositary at one of such addresses on or prior to the Expiration Date or
(b) Shares must be delivered pursuant to the procedures for book-entry transfer
set forth in Section 3 of the Offer to Purchase and a Book-Entry Confirmation
must be received by the Depositary on or prior to the Expiration Date or (c) the
Tendering Stockholder must comply with the guaranteed delivery procedures set
forth below and in Section 3 of the Offer to Purchase.
Tendering Stockholders whose Certificates are not immediately available or
who cannot deliver their Certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer on or prior to the
Expiration Date may tender their Shares by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Purchaser, must be received by
the Depositary prior to the Expiration Date, and (iii) the Certificates
representing all tendered Shares in proper form for transfer, or a Book-Entry
Confirmation with respect to all tendered Shares, together with a Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or in the case of a
book-entry transfer, an Agent's Message) and any other documents required by
this Letter of Transmittal, must be received by the Depositary within three
Nasdaq National Market trading days after the date of such Notice of Guaranteed
Delivery. If Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
<PAGE> 8
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All Tendering Stockholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
information required under "Description of Shares Tendered" should be listed on
a separate signed schedule attached hereto.
4. Partial Tenders. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such case, a new Certificate for the remainder
of the Shares that were evidenced by your old certificate(s) will be sent,
without expense, to the person(s) signing this Letter of Transmittal, unless
otherwise provided in the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal, as soon
as practicable after the Expiration Date. All Shares represented by
Certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. Signatures on Letter of Transmittal, Instruments of Transfer and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or instruments of
transfer are signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of such person's authority to so
act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on such Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures on
such Certificate(s) or instruments of transfer must be guaranteed by an Eligible
Institution.
6. Transfer Taxes. Except as set forth in this Instruction 6, the Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other than the registered holder(s), or if tendered
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder(s) of such persons) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted. Except as provided in this Instruction 6, it will not be necessary
for transfer tax stamps to be affixed to the Certificate(s) listed in this
Letter of Transmittal.
7. Special Payment and Delivery Instructions. If a check and/or
Certificates for unpurchased Shares are to be issued in the name of a person
other than the signer of this Letter of Transmittal or if a check is to be sent
and/or such Certificates are to be returned to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. If any
tendered Shares are not purchased for any reason and such Shares are delivered
by Book Entry Transfer Facility, such Shares will be credited to an account
maintained at the appropriate Book Entry Transfer Facility.
<PAGE> 9
8. Requests for Assistance or Additional Copies. Questions and requests for
assistance may be directed to the Information Agent its address or telephone
numbers set forth below and requests for additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or brokers, dealers, commercial banks and
trust companies and such materials will be furnished at the Purchaser's expense.
9. Waiver of Conditions. The conditions of the Offer may be waived by the
Purchaser, in whole or in part, at any time or from time to time, in the
Purchaser's sole discretion.
10. Backup of Withholding Tax. Each Tendering Stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below
and to certify that the stockholder is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
Tendering Stockholder to 31% federal income tax backup withholding on the
payment of the purchase price for the Shares. The Tendering Stockholder should
indicate in the box in Part III of the Substitute Form W-9 if the Tendering
Stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the Tendering Stockholder has indicated
in the box in Part III that a TIN has been applied for and the Depositary is not
provided with a TIN by the time of payment, the Depositary will withhold 31% of
all payments of the purchase price, if any, made thereafter pursuant to the
Offer until a TIN is provided to the Depositary.
11. Lost or Destroyed Certificates. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Company's transfer agent, State Street Bank and Trust Company. The holders will
then be instructed as to the procedure to be followed in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
THEREOF, PROPERLY COMPLETED AND DULY EXECUTED, (TOGETHER WITH CERTIFICATES OR A
BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS) MUST BE
RECEIVED BY THE DEPOSITARY, OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
<PAGE> 10
IMPORTANT TAX INFORMATION
Under federal income tax law, a Tendering Stockholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payor) with
such Tendering Stockholder's correct TIN on Substitute Form W-9 below. If such
Tendering Stockholder is an individual, the TIN is his social security number.
If the Tendering Stockholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, such Tendering
Stockholder should so indicate on the Substitute Form W-9. See Instruction 10.
If the Depositary is not provided with the correct TIN, the Tendering
Stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such Tendering Stockholders with
respect to Shares purchased pursuant to the Offer may be subject to backup
federal income tax withholding.
Certain Tendering Stockholders (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that Tendering Stockholder must submit a statement, signed
under penalties of perjury, attesting to that individual's exempt status. Forms
for such statements can be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the Tendering Stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Tendering
Stockholder must provide the Depositary with his correct TIN by completing the
Substitute Form W-9 below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such Tendering Stockholder is awaiting a TIN) and that
(1) such Tendering Stockholder has not been notified by the Internal Revenue
Service that he is subject to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal Revenue Service has
notified the Tendering Stockholder that he is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Tendering Stockholder is required to give the Depositary the social
security number or employer identification number of the record holder of the
Shares tendered hereby. If the Shares are registered in more than one name or
are not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the Tendering Stockholder has
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, he or she should write "Applied For" in the space
provided for in the TIN in Part III, and sign and date the Substitute Form W-9.
If "Applied For" is written in Part III and the Depositary is not provided with
a TIN within 60 days, the Depositary will withhold 31% on all payments of the
purchase price made thereafter until a TIN is provided to the Depositary.
<PAGE> 11
PAYER'S NAME: STATE STREET BANK AND TRUST COMPANY
<TABLE>
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN PART II--For Payees Exempt From
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Backup Withholding, see the enclosed
PAYER'S REQUEST FOR SIGNING AND DATING BELOW. Guidelines for Certification of
TAXPAYER IDENTIFICATION Taxpayer Identification Number on
NUMBER (TIN) Substitute Form W-9 and complete as
DEPARTMENT OF THE TREASURY instructed therein.
INTERNAL REVENUE SERVICE
----------------------------------------------------------------------------
PART III
----------------------------------------------------------------------------
Social Security Number or Employer Identification Number
(If Awaiting TIN write "Applied For")
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my current taxpayer identification number
(or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or dividends,
or the IRS has notified me that I am no longer subject to backup
withholding.
NAME
(PLEASE PRINT)
SIGNATURE DATE
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you were no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
- --------------------------------------------------------------------------------
<PAGE> 12
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING A TIN.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all payments of the Offer Price made to me thereafter
will be withheld until I provide a number.
SIGNATURE DATE
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
Collect Tel.: (212) 929-5500
or
Toll Free: (800) 322-2885
June 11, 1996
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BAILEY CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JULY 12, 1996 UNLESS THE OFFER IS EXTENDED.
June 11, 1996
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
the common stock, $.10 par value per share (the "Common Stock"), of Bailey
Corporation, a Delaware corporation (the "Company") and the associated common
stock purchase rights issued pursuant to the Rights Agreement, dated as of
September 28, 1995, as amended, between the Company and State Street Bank and
Trust Company as Rights Agent (the "Rights" and together with the Common Stock,
the "Shares"), are not immediately available or the procedures for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach State Street Bank and Trust Company (the
"Depositary") prior to the Expiration Date (as defined in the Offer to
Purchase). This Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile transmission or mail to the Depositary. See Section 3
of the Offer to Purchase.
The Depositary for the Offer is:
STATE STREET BANK AND TRUST COMPANY
By Mail:
State Street Bank And Trust Company
Corporate Reorganization
P.O. Box 9061
Boston, MA 02205-8686
By Facsimile Transmission:
(617) 774-4519
(For Eligible Institutions Only)
Confirm by Telephone to:
(617) 774-4511
By Hand:
Bank of Boston
c/o Boston Equiserve
Corporate Reorganization
55 Broadway, 3rd Floor
New York, NY 10006
By Overnight Courier:
State Street Bank and Trust Company
Corporate Reorganization
2 Heritage Drive
North Quincy, MA 02171
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Vemco Acquisition Corp., a Delaware
corporation (the "Purchaser"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated June 11, 1996 (the "Offer to Purchase"),
and in the related Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares indicated below pursuant to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S><C>
Number of Shares: .................................. Name(s) of Record Holder(s):
Certificate Nos. (if available): ....................................................
(Please Print)
....................................................
Address(es): .......................................
....................................................
....................................................
Check ONE box if Shares will be tendered by (Zip Code)
book-entry transfer:
Area Code and Tel. No.:..............................
/ / DTC
Signature(s):
/ / PDTC
....................................................
....................................................
Account Number: ....................................
Dated: ....................................... , 1996
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible Institution (as such term is defined in
Section 3 of the Offer to Purchase), hereby (a) represents that the tender of
shares effected hereby complies with Rule 14e-4 under the Securities Exchange
Act of 1934, as amended, and (b) guarantees to deliver to the Depositary the
certificates representing the Shares tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation (as defined in Section 3 of the Offer to
Purchase) with respect to transfer of such Shares into the Depositary's account
at The Depositary Trust Company or the Philadelphia Depositary Trust Company, in
each case, together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required signature
guarantees or an Agent's Message (as defined in the Offer to Purchase) in the
case of a book-entry delivery of Shares, and any other documents required by the
Letter of Transmittal, all within three Nasdaq National Market trading days
after the date hereof.
Name of Firm:
- -------------------------------------------------------
Address:
- -------------------------------------------------------
- -------------------------------------------------------
(Zip Code)
Area Code and Tel. No.:
- -------------------------------------------------------
Date:
- -------------------------------------------------------
- -------------------------------------------------------
(Authorized Signature)
Name:
- -------------------------------------------------------
Title:
- -------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH YOUR
LETTER OF TRANSMITTAL.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BAILEY CORPORATION
AT
$8.75 NET PER SHARE
BY
VEMCO ACQUISITION CORP.
A CORPORATION FORMED BY
VENTURE HOLDINGS TRUST
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JULY 12, 1996, UNLESS THE OFFER IS EXTENDED.
June 11, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Vemco Acquisition Corp., a Delaware corporation
(the "Purchaser") formed by Venture Holdings Trust, a grantor trust, to act as
Information Agent in connection with the Purchaser's offer to purchase for cash
all of the outstanding shares of common stock, $.10 par value per share (the
"Common Stock"), of Bailey Corporation, a Delaware corporation (the "Company"),
and the associated common stock purchase rights issued pursuant to the Rights
Agreement, dated as of September 28, 1995, as amended, between the Company and
State Street Bank and Trust Company as Rights Agent (the "Rights" and together
with the Common Stock, the "Shares"), for $8.75 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated June 11, 1996 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which together with the Offer to Purchase (and any
amendments or supplements hereto or thereto, collectively) constitute the
"Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase dated June 11, 1996.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. A letter to stockholders of the Company from Roger R. Phillips,
President of the Company, together with a Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Securities and Exchange
Commission by the Company and mailed to stockholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if neither of the two procedures for tendering Shares set forth
in the Offer to Purchase can be completed by the Expiration Date (as
defined in the Offer to Purchase).
<PAGE> 2
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to State Street Bank and Trust Company,
the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 12, 1996, UNLESS THE OFFER
IS EXTENDED.
Please note the following:
1. The tender price is $8.75 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not
properly withdrawn prior to the expiration of the offer a majority of the
outstanding shares on a fully-diluted basis (as defined in the Merger
Agreement) and certain other conditions.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. However, federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is
provided or unless the required taxpayer identification information is
provided. See Instruction 10 of the Letter of Transmittal.
5. The Board of Directors of the Company (the "Board") has unanimously
determined that each of the Offer and the Merger (as defined in the Offer
to Purchase) is fair to, and is in the best interests of, the Company's
stockholders, has approved the Merger Agreement (as defined in the Offer to
Purchase) and the transactions contemplated thereby, including the Offer
and the Merger, and recommends that the Company's stockholders accept the
Offer and tender all of their Shares pursuant to the Offer.
6. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) Certificates pursuant to
the procedures set forth in Section 3 of the Offer to Purchase or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect
to such Shares, (b) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry delivery of Shares, and (c) any
other documents required by the Letter of Transmittal. Accordingly, payment
may not be made to all tendering stockholders at the same time depending
upon when Certificates are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO
BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and any
required signature guarantees or an Agent's Message in connection with a
book-entry transfer and other required documents should be sent to the
Depositary and (ii) Certificates representing the tendered Shares or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) should be
delivered to the Depositary in accordance with the instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date,
2
<PAGE> 3
a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer. The
Purchaser will, however, upon request, reimburse you for customary mailing and
handling expenses incurred by you in forwarding any of the enclosed materials to
your clients. The Purchaser will pay or cause to be paid any transfer taxes
payable on the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
MacKenzie Partners, Inc., the Information Agent for the Offer, at 156 Fifth
Avenue, New York, New York 10010, telephone number (212) 929-5500 or (toll free)
800-322-2885.
Requests for copies of the enclosed materials may be directed to the
Information Agent at its address and telephone numbers set forth on the back
cover of the enclosed Offer to Purchase.
Very truly yours,
MACKENZIE PARTNERS, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, THE
DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF
ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND
THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BAILEY CORPORATION
AT
$8.75 NET PER SHARE
BY
VEMCO ACQUISITION CORP.
A CORPORATION FORMED BY
VENTURE HOLDINGS TRUST
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JULY 12, 1996 UNLESS THE OFFER IS EXTENDED.
June 11, 1996
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated June 11,
1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") relating to the
offer by Vemco Acquisition Corp., a Delaware corporation (the "Purchaser")
formed by Venture Holdings Trust, a grantor trust, to purchase all the
outstanding shares of common stock, $.10 par value per share (the "Common
Stock"), of Bailey Corporation, a Delaware corporation (the "Company"), and the
associated common stock purchase rights issued pursuant to the Rights Agreement,
dated as of September 28, 1995, as amended, between the Company and State Street
Bank and Trust Company as Rights Agent (the "Rights" and together with the
Common Stock, the "Shares"), at a purchase price of $8.75 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer. Holders of Shares whose certificates for such Shares (the "Certificates")
are not immediately available or who cannot deliver their Certificates and all
other required documents to the depositary (the "Depositary") or complete the
procedures for book-entry transfer prior to the Expiration Date (as defined in
the Offer to Purchase) must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $8.75 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not properly
withdrawn prior to the expiration of the Offer a majority of the outstanding
Shares on a fully-diluted basis and certain other conditions.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by the
<PAGE> 2
Purchaser pursuant to the Offer. However, federal income tax backup withholding
at a rate of 31% may be required, unless an exemption is provided or unless the
required taxpayer identification information is provided. See Instruction 10 of
the Letter of Transmittal.
5. The Board of Directors of the Company (the "Board") has unanimously
determined that each of the Offer and the Merger (as defined in the Offer to
Purchase) is fair to, and is in the best interests of, the Company's
stockholders, has approved the Merger Agreement (as defined in the Offer to
Purchase) and the transactions contemplated thereby, including the Offer and the
Merger, and recommends that the Company's stockholders accept the Offer and
tender all of their Shares pursuant to the Offer.
6. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (a) Certificates pursuant to the procedures
set forth in Section 3 of the Offer to Purchase or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to such Shares,
(b) the Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and (c) any other documents required by the
Letter of Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when Certificates are actually
received by the Depositary.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JULY 12, 1996, UNLESS THE OFFER IS EXTENDED.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified below. An
envelope to return your instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD
BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF
PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
2
<PAGE> 3
Instructions with Respect to
the Offer to Purchase for Cash
all Outstanding Shares of Common Stock
(Including the Associated Rights)
of
BAILEY CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated June 11, 1996, and the related Letter of Transmittal in
connection with the offer by Vemco Acquisition Corp., a Delaware corporation
(the "Purchaser"), to purchase all outstanding shares of Common Stock, par value
$.10 per share (the "Common Stock"), of Bailey Corporation, a Delaware
corporation (the "Company") and the associated common stock purchase rights
(together with the Common Stock, the "Shares").
THIS WILL INSTRUCT YOU TO TENDER TO THE PURCHASER THE NUMBER OF SHARES
INDICATED BELOW (OR IF NO NUMBER IS INDICATED BELOW, ALL SHARES) WHICH ARE HELD
BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED, UPON THE TERMS AND SUBJECT TO THE
CONDITIONS SET FORTH IN THE OFFER.
1
<PAGE> 4
Number of Shares to be Tendered:*
- ------------------------------------------ Date:
- ------------------------
- --------------------------------------------------------------------------------
SIGN HERE
----------------------------------------------------------------------
----------------------------------------------------------------------
Signature(s)
----------------------------------------------------------------------
----------------------------------------------------------------------
(Print Name(s))
----------------------------------------------------------------------
----------------------------------------------------------------------
(Print Address(es))
----------------------------------------------------------------------
(Area Code and Telephone Number(s))
----------------------------------------------------------------------
(Taxpayer Identification or
----------------------------------------------------------------------
Social Security Number(s))
* Unless otherwise indicated, it will be assumed that all Shares held
by us for your account are to be tendered.
- --------------------------------------------------------------------------------
2
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------------
GIVE THE NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor The adult or, if the minor
(joint account) is the only contributor,
the minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person(3)
for a designated ward,
minor or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under state law
8. Sole proprietorship The owner(4)
account
<CAPTION>
- -------------------------------------------------------
GIVE THE NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------------
<S> <C>
9. A valid trust, estate, The legal entity (Do not
pension trust furnish the identification
number of the personal
representative or trustee
unless the legal entity
itself is so designated in
the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ------------------------------------------------------------
------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a) of the Code.
- - An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- - Payments described in section 6049(b)(5) of the Code to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE
FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
EXHIBIT(a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is being made solely by the Offer to Purchase
dated June 11, 1996 and the related Letter of Transmittal and is being made to
all holders of Shares. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares in any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Vemco Acquisition
Corp. by one or more registered brokers or dealers that are licensed under the
laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BAILEY CORPORATION
AT
$8.75 NET PER SHARE
BY
VEMCO ACQUISITION CORP.
A CORPORATION FORMED BY
VENTURE HOLDINGS TRUST
Vemco Acquisition Corp.(the "Purchaser"), a Delaware corporation formed by
Venture Holdings Trust, a grantor trust ("Parent"), hereby offers to purchase
all of the outstanding shares of common stock, par $.10 per share (the "Common
Stock"), of Bailey Corporation, a Delaware corporation (the "Company"),
together with the associated common stock purchase rights issued pursuant to
the Rights Agreement, dated September 28, 1995, as amended, between the Company
and State Street Bank and Trust Company, as Rights Agent (the "Rights", and
together with the Common Stock, the "Shares"), at a purchase price of $8.75 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated June 11,
1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which
together with any amendments or supplements thereto, collectively constitute
the "Offer"). Following the Offer, Purchaser intends to effect the Merger
described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME ON FRIDAY, JULY 12, 1996, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT WITHDRAWN THAT NUMBER OF
SHARES WHICH, TOGETHER WITH THE SHARES THEN OWNED BY THE PURCHASER OR PARENT,
REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY-DILUTED
BASIS (2) PARENT HAVING
<PAGE> 2
RECEIVED THE FINANCING CONTEMPLATED BY THE COMMITMENT LETTER, DATED JUNE 3,
1996, FROM NBD BANK PURSUANT TO WHICH, SUBJECT TO THE TERMS AND CONDITIONS
THEREOF, NBD BANK HAS COMMITTED TO PROVIDE ALL OF THE FINANCING NECESSARY TO
PURCHASE ALL OUTSTANDING SHARES ON A FULL-DILUTED BASIS PURSUANT TO THE OFFER
AND THE MERGER AND TO REFINANCE ALL OUTSTANDING INDEBTEDNESS OF THE COMPANY
REFLECTED ON THE COMPANY SEC REPORTS (THE "FINANCING CONDITION"), (3) THE
APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS
ACT HAVING EXPIRED OR TERMINATED, AND (4) THE COMPANY HAVING GIVEN NOTICE OF
REDEMPTION FOR ALL CONVERTIBLE DEBENTURES WHICH ARE REDEEMABLE AT THE COMPANY'S
OPTION IN ACCORDANCE WITH THEIR TERMS.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated as
of June 5, 1996 (the "Merger Agreement"),between the Purchaser and the Company
pursuant to which, as promptly as practicable following the later of the
Expiration Date and the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the Company (the "Merger"). At the
Effective Time of the Merger (the "Effective Time"), each Share then issued
and outstanding (other than Shares held by the Company as treasury stock or by
any subsidiary of the Company, or owned by the Purchaser or any other affiliate
of the Purchaser and other than Shares held by stockholders, if any, who
perfect their appraisal rights under Delaware law) will be converted into the
right to receive $8.75, or any higher price per Share paid pursuant to the
Offer, without interest thereon, in cash (the "Merger Consideration") and the
Company will become a wholly-owned subsidiary of Parent.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND
THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND
TENDER ALL OF THEIR SHARES PURSUANT THERETO.
Concurrently with the execution of the Merger Agreement, the Purchaser entered
into the Tender and Option Agreement with certain stockholders of the Company
(the "Stockholders") beneficially owning, in the aggregate, 1,762,615 (or
approximately 26.1%) of the outstanding Shares on a fully-diluted basis (as
defined in the Merger Agreement). Pursuant to the Tender and Option Agreement,
the Stockholders have, among other things, granted Purchaser an irrevocable
option to acquire at $8.75 per Share, and have agreed to tender and, in the
event such irrevocable option is not theretofore exercised, sell in the Offer,
in each case upon the terms and subject to the conditions thereof, all Shares
beneficially owned by the Stockholders.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased), Shares validly tendered to the Purchaser and
not properly withdrawn as, if and when the Purchaser gives oral or written
notice to State Street Bank and Trust Company (the "Depositary")
2
<PAGE> 3
of the Purchaser's acceptance for payment of such Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, payment for Shares
so accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting such payment to tendering stockholders. Under no
circumstances will interest on the purchase price for Shares be paid by the
Purchaser, regardless of any extension of the Offer or delay in making such
payment. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (1) certificates representing Shares ("Share Certificates"), or timely
confirmation of a book-entry transfer of such Shares, into the Depositary's
account at The Depositary Trust Company, the Midwest Securities Trust Company
or the Philadelphia Depositary Trust Company (each a "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 3 of the Offer to
Purchase, (2) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined in Section 2 of the Offer to Purchase) in
connection with a book-entry transfer, and (3) any other documents required by
the Letter of Transmittal.
Subject to the terms of the Merger Agreement and the Tender and Option
Agreement and the applicable rules of the Securities and Exchange Commission,
the Purchaser expressly reserves the right (but shall not be obligated), 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 Section 14 of the Offer to Purchase shall
have occurred, (i) to extend the period during which the Offer is open, and
thereby delay acceptance for payment of, or payment for, any Shares, by giving
oral or written notice of such extension to the Depositary and (ii) to amend
the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. The Purchaser shall not have any obligation to pay
interest on the purchase price for tendered Shares whether or not the Purchaser
exercises such rights. Any such extension will be followed as promptly as
practicable by public announcement thereof, such announcement to be made no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date.
The term "Expiration Date" means 12:00 Midnight, New York City Time, on Friday,
July 12, 1996 unless and until the Purchaser, in its sole discretion and
subject to the terms of the Merger Agreement and the Tender and Option
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.
Except as otherwise provided in Section 4 of the Offer to Purchase, 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 August 9, 1996
(or such later date as may apply in case the Offer is extended). In order for
a withdrawal to be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the
3
<PAGE> 4
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. 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 signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution (as defined
in Section 3 of the Offer to Purchase) 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 as set forth in Section 3 of
the Offer to Purchase, any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares and must otherwise comply with the procedures of such
Book-Entry Transfer Facility, in which case a notice of withdrawal will be
effective if delivered to the Depositary by any method of delivery described in
the second 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 information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6
under the Securities Exchange Act of 1934, as amended, is contained in the
Offer to Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal and, if required,
other relevant materials will be mailed to record holders of Shares whose names
appear on the Company's stockholder list provided by the Company, and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list, or who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO
THE OFFER.
Questions and requests for assistance may be directed to the Information Agent
as set forth below. Requests for copies of the Offer to Purchase and the
related Letter of Transmittal and all other tender offer materials may be
directed to the Information Agent, and copies will be furnished promptly at the
Purchaser's expense. Stockholders may also contact their broker, dealer,
commercial bank or trust company for assistance concerning the Offer. The
Purchaser will not pay any fees or commissions to any broker or dealer or any
other person for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
4
<PAGE> 5
156 Fifth Avenue
New York, New York 10010
Collect: (212) 929-5500
or
Toll Free: (800) 322-2885
June 11, 1996
5
<PAGE> 1
EXHIBIT (a)(8)
[BAILEY CORPORATION LETTERHEAD]
FOR IMMEDIATE RELEASE
- ---------------------
June 5, 1996
SEABROOK, NH - Bailey Corporation, a manufacturer of molded plastic components
for the automobile industry, announced today it has entered into a merger
agreement with Vemco Acquisition Corp., a subsidiary of Venture Holdings Trust
of Fraser, Michigan. The agreement calls for Vemco to commence a cash tender
offer for all outstanding shares of Bailey's common stock for $8.75 per share.
Venture Holdings Trust, through its wholly owned subsidiaries and
certain affiliates, is engaged in the design, development and manufacture of
molded plastic components as well as a wide range of systems integration and
other services for the automobile industry in the United States, Canada and the
Far East.
Consummation of the acquisition is contingent upon, among other things,
the tender of at least a majority of Bailey Corporation's total outstanding
shares of common stock.
Under the agreement and plan of merger, upon completion of the tender
offer, Vemco Acquisition Corp. will be merged with and into Bailey Corporation
and thereupon Bailey Corporation will become a subsidiary of Venture Holdings
Trust.
Bailey Corporation, by unanimous vote of its Board of Directors, has
determined that the tender offer and plan of merger are fair and in the best
interests of the Company's stockholders, have approved the contemplated
transaction, and have agreed to recommend to the Company's stockholders that
the tender offer be accepted.
- MORE -
PAGE 1 OF 2
<PAGE> 2
Bailey Release - June 5, 1996 Page 2 of 2
Roger Phillips, Chairman and CEO of Bailey Corporation, stated, "The
combination of Bailey with Venture presents an excellent opportunity for the
Company to continue to improve its current operations and makes long term
strategic sense as the consolidation of the automotive supplier industry
continues. We believe the transaction provides the best opportunity for our
stockholders to receive a fair return for their investment in Bailey.
"Bailey Corporation's common stock is quoted in the National Association of
Securities-Dealers Quotation System - National Market System ("NASDAQ-NMS")
under the Symbol "BAIB".
####
For further information contact: Bailey Corporation
Corporate Offices
Ph: (603) 474-3011
Fax: (603) 474-5831
<PAGE> 1
EXHIBIT (b)(1)
June 3, 1996
Venture Holdings Trust
c/o Venture Industries
33662 James J. Pompo Drive
P.O. Box 278
Fraser, Michigan 48026-0278
Attention: Michael G. Torakis
President and Chief Financial Officer
Dear Mike:
Venture Holdings Trust (the "Borrower") has requested credit facilities
(the "Facilities") in the aggregate principal amount of $200,000,000 (the
"Aggregate Commitment").
The Borrower has indicated that it intends to acquire a company which you
have identified to us and which you and we have described by the code name
"Coffee" (herein, the "Company") pursuant to a two-step acquisition. The first
step will consist of an all cash tender offer by means of an offer to purchase
(as amended from time to time, the "Tender Offer") to be made by a newly formed
subsidiary (the "Acquisition Sub") of the Borrower for all of the outstanding
common stock of Company (the "Stock"). Prior to the making of the Tender
Offer, Acquisition Sub and the Company shall have entered into a definitive
plan and agreement of merger (the "Merger Agreement") to merge Acquisition Sub
and the Company, subject to shareholder approval by Company (the "Merger") (the
Tender Offer and the Merger, collectively the "Acquisition"). The second step
of the Acquisition will consist of the Merger. The Agent's commitment is
contingent upon the consummation of the Tender Offer and Merger upon
substantially the same terms and conditions set forth in the Merger Agreement
draft dated June 3, 1996, the Agent's satisfactory review of the schedules to
the Merger Agreement and the total consideration for the Acquisition not being
greater than the specific amount described in a letter from the Borrower to the
Agent and the Arranger dated the date hereof and delivered prior to the
execution of this letter.
NBD Bank is pleased to provide you with a financing commitment for, and to
agree to act as administrative agent bank (the "Agent")
<PAGE> 2
in connection with, the entire amount of the Facilities on the terms and
conditions set forth in the term sheet attached hereto ("Term Sheet") and
subject to the conditions set forth in this letter. First Chicago Capital
Markets, Inc. (the "Arranger"), an affiliate of the Agent, is pleased to provide
you with its undertaking to syndicate all or a portion of the Facilities to a
syndicate of lenders (collectively, including NBD Bank, the "Lenders"). While
the Agent's agreement herein is to provide the entire amount of the Facilities
on a fully underwritten basis, the Arranger reserves the right to syndicate all
or a portion of the Facilities to additional Lenders.
Each of the Agent and the Arranger has reviewed (i) financial statements
of the Borrower, as of and for the three-month period ended March 31, 1996,
(ii) financial statements of the Company as of and for fiscal the year ended
July 31, 1995 and as of and for the six-month period ended January 31, 1996,
which statements were prepared by the Borrower and the Company, respectively,
and (iii) forecasts prepared by the Borrower dated May 20, 1996. Agents,
officers and employees of each of NBD Bank and First Chicago Capital Markets,
Inc. will have the right to share information received from the Borrower and
the Company and their affiliates, and their respective agents, officers, and
employees.
The Borrower agrees to (i) reimburse the Agent and the Arranger for all
reasonable and documented out-of-pocket expenses (including the fees of outside
counsel and time charges for inside counsel) incurred in connection with this
Commitment Letter, the transactions contemplated hereby and the Agent's and the
Arranger's on-going due diligence in connection therewith, including without
limitation travel expenses and costs incurred in connection with the
preparation, negotiation, execution, administration, syndication, and
enforcement of any document relating to this transaction and its role
hereunder; (ii) indemnify and hold harmless the Agent, the Arranger, the
Lenders and their respective officers, employees, agents and directors
(collectively, the "Indemnified Persons") against any and all losses, claims,
damages, or liabilities of every kind whatsoever to which the Indemnified
Persons may become subject in connection in any way with the transaction which
is the subject of this Commitment Letter, including without limitation expenses
incurred in connection with investigating or defending against any liability or
action whether or not a party thereto, except to the extent any of the
foregoing is found in a final judgment by a court of competent jurisdiction to
have arisen solely from such Indemnified Person's gross
<PAGE> 3
negligence or willful misconduct (including an intentional breach by
the Agent and Arranger of their express obligations hereunder); and (iii)
assert no claim against any Indemnified Persons seeking consequential damages
on any theory of liability in connection in any way with the transaction which
is the subject of this Commitment Letter. The obligations described in this
paragraph are independent of all other obligations of the Borrower hereunder
and under the Loan Documents, shall survive the expiration, revocation or
termination of this Commitment Letter, and shall be payable whether or not the
financing transactions contemplated by this Commitment Letter shall close. The
Agent's and the Arranger's respective obligations under this Commitment Letter
are enforceable solely by the party signing this Commitment Letter and may not
be relied upon by any other person. For purposes of enforcing this indemnity,
the Borrower irrevocably submits to the non-exclusive jurisdiction of any court
in which a claim arising out of or relating to the services provided under this
Commitment Letter is properly brought against the Agent, the Arranger, or the
Lenders and irrevocably waives any objection as to venue or inconvenient forum.
IF THIS COMMITMENT LETTER, THE TERM SHEET, THE FEE LETTER (DEFINED BELOW), OR
ANY ACT, OMISSION OR EVENT DESCRIBED IN THIS PARAGRAPH BECOMES THE SUBJECT OF A
DISPUTE, THE PARTIES HERETO ALL HEREBY WAIVE TRIAL BY JURY. The Borrower
agrees not to settle any claim, litigation or proceeding relating to this
transaction (whether or not the Agent or the Arranger is a party thereto)
unless such settlement releases all Indemnified Persons from any and all
liability in respect of such transaction.
The Agent's commitment and the Arranger's undertaking are subject to (i)
the preparation, execution, and delivery of a mutually acceptable credit
agreement ("Credit Agreement") and other loan documents (collectively, the
"Loan Documents") incorporating, without limitation, substantially the terms
and the conditions outlined herein and in the Term Sheet; (ii) the Agent's and
the Arranger's respective determination that (a) there is an absence of a
material adverse change (a "Material Adverse Change") in the business,
condition (financial or otherwise), operations, performance, properties, or
prospects of the Borrower or the Company or any of their respective material
subsidiaries from that reflected in their respective financial statements
described in the first sentence of the fourth paragraph of this letter or in
other information previously provided the Agent and the Arranger in connection
with the Acquisition; and (b) there is an absence of any material adverse
change prior to closing in primary and secondary loan syndication markets or
capital markets generally.
<PAGE> 4
The Arranger and the Agent will, in consultation with the Borrower,
manage all aspects of the syndication, including, without limitation, decisions
as to the selection of institutions to be approached and when they will be
approached, when their commitments will be accepted, which institutions will
participate, the allocations of the commitments among the Lenders and the
amount and distribution of the fees discussed herein among the Lenders. To
assist the Arranger in its syndication efforts, the Borrower shall (a) provide
and cause its advisors and management of the Company to provide the Arranger
upon request with all information deemed reasonably necessary by it to complete
successfully the syndication, including, without limitation, all information
and projections prepared by the Borrower or on the Borrower's behalf relating
to the transactions contemplated hereby; and (b) cause its advisors and the
management of the Company to actively participate in both the preparation of an
information package regarding the operations and prospects of the Borrower and
the Company and the presentation of the information to prospective Lenders.
After the Borrower has publicly announced the transaction, the Borrower
authorizes each of the Agent and the Arranger to answer inquiries from
financial media with respect to the Facilities. By its acceptance hereof, the
Borrower hereby authorizes each of the Agent and the Arranger, at their
respective sole expense but without any prior approval by the Borrower, to
publish such tombstones and give such other publicity to the Facilities as each
may from time to time determine in its sole discretion. The foregoing
authorization shall remain in effect unless the Borrower notifies each in
writing that such authorization is revoked.
Please indicate your acceptance of this commitment by the Agent and
undertaking by the Arranger in the space indicated below and return a copy of
this letter so executed to the Agent. This commitment and undertaking will
expire at 5 p.m. (Detroit time) June 4, 1996 unless on or prior to such time
the Agent shall have received a copy of this letter executed by the Borrower
together with the fee required under paragraph 1(a) of the Agent's Fee Letter
of even date herewith (the "Fee Letter"). Notwithstanding timely acceptance of
the commitment pursuant to the preceding sentence, the commitment will
automatically terminate unless definitive Loan Documents are executed on or
before August 31, 1996. By its acceptance hereof, the Borrower agrees to pay
the Agent and the Arranger the fees described in the Fee Letter.
<PAGE> 5
By accepting delivery of this Commitment Letter, the Fee Letter and the
Term Sheet, the Borrower hereby agrees that, prior to executing this Commitment
Letter, the Borrower will not disclose either expressly or impliedly, without
the Agent's and the Arranger's consent, to any person any of the terms of this
Commitment Letter, the Fee Letter or Term Sheet, or the fact that this
Commitment Letter, the Fee Letter or Term Sheet or the financing proposal
represented thereby exists except that the Borrower may disclose any of the
foregoing to the Company, to any employee, financial advisor (but not to a
financial advisor which might be a provider of senior debt in this transaction)
or attorney of the Borrower or the Company to whom, in each case, it is
necessary to disclose such information so long as the Company and any such
employee, advisor or attorney is directed to observe this confidentiality
obligation. Upon the Borrower's execution of this Commitment Letter, the
Borrower may make public disclosure of the existence and the amount of the
commitment; and the Borrower may file a copy of the Commitment Letter, or make
such other disclosures if such disclosure is, in the opinion of the Borrower's
counsel, required by law. If the Borrower does not accept this commitment, the
Borrower is to immediately return this Commitment Letter, the Fee Letter and
the Term Sheet (and all copies of the foregoing) to the Agent.
This Commitment Letter and Term Sheet supersede any and all prior versions
thereof. This Commitment Letter shall be governed by the internal laws of the
State of Michigan, and may only be amended by a writing signed by all parties
hereto.
Very truly yours,
NBD BANK,
individually and as Agent
By:
Title:
FIRST CHICAGO CAPITAL MARKETS, INC.,
as Arranger
<PAGE> 6
By:
Title:
Accepted and agreed:
VENTURE HOLDINGS TRUST
By:
Title:
Date:
<PAGE> 7
6/3/96
Term Sheet
Venture Holdings Trust
June 3, 1996
This Term Sheet is delivered with a commitment letter of even date
herewith (the "Commitment Letter") from NBD Bank and First Chicago Capital
Markets, Inc. to the Borrower. Capitalized terms used herein shall have the
meanings set forth in the Commitment Letter.
The Facilities
<TABLE>
<S> <C>
Borrower: Venture Holdings Trust, a grantor trust organized under the
laws of the State of Michigan (the "Borrower") and, with
respect to Facility A only, certain subsidiaries of the
Borrower (collectively, the "Subsidiary Borrowers").
Guarantors: All direct and indirect domestic subsidiaries of the Borrower,
whether now existing or hereafter acquired or created.
Amount: $200,000,000 (the "Aggregate Commitment") comprised of loans
and letters of credit under the facilities described below.
Arranger: First Chicago Capital Markets, Inc.
Administrative
Agent: NBD Bank (the "Agent")
Lenders: A group of lenders to be determined (collectively, together
with the Agent in its capacity as lender, the "Lenders").
Documentation: The Facilities will be evidenced by a Credit Agreement, notes,
guaranties, security agreements and other Loan Documents
mutually satisfactory to the Borrower and the Lenders.
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
Syndication
Management: The Arranger and the Agent will, in consultation with the
Borrower, manage all aspects of the syndication including,
without limitation, the timing of offers to potential Lenders,
the amounts offered to potential Lenders, the acceptance of
commitments, the final allocation of commitments among Lenders
and the compensation provided, all as set forth in the
Commitment Letter.
Facility A: Revolving Credit
Amount: $100,000,000 (the "Facility A Commitment"). The Facility A
Commitment shall be comprised of a separate $25,000,000 revolving
credit facility which refinances, amends and replaces the existing
revolving credit facility of NBD Bank and one or more other
separate revolving credit facilities, which may include a swingline
facility within such revolving credit facilities, as determined by
the Agent and the Arranger.
Purpose: To provide funds for the purchase of a corporation previously
identified to the Arranger and Agent and code-named "Coffee"
(the "Company") pursuant to the Acquisition, for payment
of expenses incurred in connection with the Acquisition and for
general corporate purposes of the Borrower and its subsidiaries,
with a $10,000,000 sublimit for commercial and standby letters of
credit.
Maturity: The sixth anniversary of the date upon which the Credit Agreement
is signed (the "Closing Date").
Borrowing
Base: The aggregate outstanding amount of loans and letters of credit
under Facility A shall not at any time exceed the Borrowing
Base. Borrowing Base means a to-be-determined percentage of
eligible inventory and eligible accounts receivable. Eligibility
criteria are to be determined by the Agent.
</TABLE>
<PAGE> 9
<TABLE>
<S> <C>
Letters of
Credit: One or more Lenders selected by the Borrower or any Subsidiary
Borrower will (with the consent of each such Lender) issue standby
and commercial letters of credit for the account of the Borrower or
any Subsidiary Borrower in an aggregate face amount not to exceed
$10,000,000. Lenders will hold pro rata risk participations in
each letter of credit.
Facility B: Term Loan
Amount: $70,000,000 (the "Facility B Commitment"). The Arranger, in its
discretion, may reallocate a portion of the Facility B
Commitment to Facility C, or vice versa.
Purpose: To provide funds for the purchase of the Company pursuant to the
Acquisition and for payment of expenses incurred in connection
with the Acquisition.
Maturity: The sixth anniversary of the Closing Date.
Amortization: Quarterly installments of principal acceptable to the Agent and
the Arranger.
Facility C: Term Loan
Amount: $30,000,000 (the "Facility C Commitment"). The Arranger, in its
discretion, may reallocate a portion of the Facility C
Commitment to Facility B, or vice versa.
Purpose: To provide funds for the purchase of the Company pursuant to the
Acquisition and for payment of expenses incurred in connection
with the Acquisition.
Maturity: The seventh anniversary of the Closing Date.
</TABLE>
9
<PAGE> 10
<TABLE>
<S> <C>
Amortization: Quarterly installments of principal acceptable to the Agent
and the Arranger.
FEES
The Borrower will pay the following fees:
Commitment Fee: A commitment fee of 0.5%, (with adjustments subject to a
performance based grid acceptable to the Agent and the
Arranger, provided that adjustments will not occur until six
months after the effective date of the Credit Agreement) on
the average daily unused portion of the Facility A Commitment
payable quarterly in arrears to the Lenders (including the
Agent) ratably from the Closing Date until termination of
Facility A Commitment.
Agent and
Other Fees: Such fees payable to the Arranger and Agent as are specified
in the fee letter among the Arranger, the Agent and the
Borrower (the "Agent's Fee Letter").
L/C Fees: In connection with each letter of credit issued under
Facility A, a letter of credit fee at the per annum rate set
forth on the pricing grid for such type of letter of credit on
the undrawn face amount of such letter of credit, payable
quarterly in arrears to the Agent for the account of the
Lenders. In addition, a letter of credit fronting fee
payable to the issuing Lender in its capacity as issuer in an
amount to be agreed upon between the letter of credit
applicant and the issuing Lender and, in connection with the
issuance of or any draw under any letter of credit, customary
processing and other fees charged by such issuing Lender.
</TABLE>
10
<PAGE> 11
INTEREST RATES
At the Borrower's option:
Facilities A and B:
ABR plus 1.25%, with adjustments subject to a
performance based grid acceptable to the Agent and the
Arranger, provided that adjustments will not occur
until six months after the effective date of the Credit
Agreement.
Eurodollar Rate plus 2.5%, with adjustments subject to
a performance based grid acceptable to the Agent and
the Arranger, provided that adjustments will not occur
until six months after the effective date of the Credit
Agreement.
Facility C:
ABR plus 1.50% per annum
Eurodollar Rate plus 3.00% per annum
"ABR" means the Alternate Base Rate and is the larger
of the Prime Rate or the federal funds rate plus 1/2%
per annum.
"Prime Rate" means the rate of interest announced by
the Agent from time to time as its "prime rate" (it
being acknowledged that such announced rate may not
necessarily be the lowest rate charged by the Agent to
any of its customers), changing when and as said prime
rate changes.
"Eurodollar Rate" means the rate offered by the Agent
in the London interbank market for deposits in the
amount of, and for a maturity corresponding to, the
Agent's portion of the loan, as adjusted for maximum
statutory reserves.
11
<PAGE> 12
Eurodollar Rate interest periods shall be one, two,
three or six months. Interest shall be payable in
arrears on the last day of each interest period and, in
the case of an interest period longer than three
months, quarterly, and upon any prepayment. Interest
and fees will be computed for actual days elapsed on a
360-day year basis.
The Credit Agreement will include customary provisions
relating to yield protection, availability and capital
adequacy. After default (if required by the Required
Lenders), the interest rate will be equal to the
then-highest rate applicable under the Facilities plus
3% per annum.
The Eurodollar Rate will not be made available, at the
Agent's sole option, for the first 90 days following
the initial funding of the loans or earlier at the
Agent's option.
COLLATERAL, GUARANTIES OR OTHER CREDIT SUPPORT
Each of the Facilities will be secured by a first perfected security
interest in all of the Borrower's assets and, through secured guaranties from
all domestic subsidiaries (including, without limitation, the Company and its
domestic subsidiaries), in all of such domestic subsidiaries' assets. The
assets of the Borrower to be pledged as collateral will include all of the
stock or other evidence of ownership of its direct and indirect domestic
subsidiaries. In addition to the foregoing, the Borrower will pledge as
collateral 65% of the stock or other evidence of ownership of all of its direct
and indirect foreign subsidiaries. The collateral will also secure interest
rate swaps or hedge obligations owing to any Lender. All intercompany funds
flows will be evidenced by notes which, in the case of notes payable to any
borrower or guarantor, shall be senior obligations of such obligor.
12
<PAGE> 13
PREPAYMENTS
<TABLE>
<S> <C>
Mandatory
Prepayment -
Sale of Assets: Upon the sale, transfer or other disposition of any assets (other than the sale of
inventory in the ordinary course of business and the sale of equipment if the proceeds
are used to purchase replacement equipment of comparable value), to the extent
permitted under the Loan Documents, the Borrower shall make a mandatory prepayment in
an amount equal to 100% of the proceeds (net of income taxes and expenses of sale)
realized from any such sale, transfer or other disposition, such mandatory prepayment
to be applied pro rata to Facilities B and C until paid in full, then to reduce
commitments under Facility A to $0.
Mandatory
Prepayment -
Excess Cash Flow: Upon delivery of its audited financial statements in each year commencing with the
fiscal year ending December 31, 1997, the Borrower shall make a mandatory prepayment
in an amount equal to 75% of the Excess Cash Flow (definition to be determined), if
positive, for the most recently ended fiscal year, such mandatory prepayment to be
applied pro rata to Facilities B and C until paid in full, then to reduce commitments
under Facility A to $0.
Mandatory
Prepayment -
Debt/Equity Sale: Upon the sale of any common stock, preferred stock, warrant or other equity or the
placement of any debt, the Borrower shall make a mandatory prepayment in an amount
equal to 100% of the proceeds of such equity or debt, such mandatory prepayment to be
applied pro rata to Facilities B and C until
</TABLE>
13
<PAGE> 14
<TABLE>
<S> <C>
paid in full, then to reduce commitments under Facility A to $0.
Voluntary
Prepayments: Facility B and Facility C may be prepaid in whole or in part without premium on one
day's notice, provided that such payments will be in amounts of at least $5,000,000
and multiples of $1,000,000 in excess thereof; and the Facility A Commitment may be
permanently reduced without premium on one day's notice, provided such reductions will
be in an amount of at least $5,000,000 and multiples of $1,000,000 in excess thereof.
The Borrower will pay breakage costs with respect to any payments of Eurodollar-rate
based loans which are made on a date other than the last day of the interest period
therefor.
Allocation of
Prepayments: Any mandatory prepayments which are not accepted by the Lenders under Facility C shall
be paid to the Lenders under Facility B until Facility B is paid in full. Any
mandatory prepayments which are not accepted by the Lenders under Facility B shall be
paid to the Lenders under Facility C until Facility C is paid in full. All
prepayments to be applied to either of Facilities B or C shall be applied to the
principal installments thereof in the inverse order of maturity.
</TABLE>
CONDITIONS OF LENDING
The Loan Documents shall be in form and substance acceptable to the
Lenders. The Credit Agreement shall include, without limitation, conditions
precedent, representations and warranties, covenants, events of default,
indemnification (of Agent, Arranger and Lenders) and other provisions customary
for such financings.
14
<PAGE> 15
CONDITIONS PRECEDENT
Usual conditions to each loan (including absence of default or unmatured
default, lack of material adverse change from the Borrower's or the Company's
financial condition and operations as reflected in (i) the Borrower's
consolidated financial statements as of March 31, 1996 previously delivered to
the Agent and (ii) the Company's consolidated financial statements as of
January 31, 1996 previously delivered to the Agent). Additional conditions
precedent to initial loan will include without limitation those set forth
below.
<TABLE>
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Initial
Funding: Initial funding shall occur no later than August 31, 1996.
Approval: Evidence satisfactory to the Agent and the Required Lenders (to be defined in the Credit
Agreement) that the Company's directors and shareholders and the Borrower's directors (and, if
required by law or by the Borrower's constitutive documents, the Borrower's shareholders) shall
have approved the Acquisition; and all regulatory and legal approvals for the Acquisition shall
have been obtained, including, without limitation, any filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Litigation: Absence of injunction or temporary restraining order which, in the judgment of the Agent or
the Required Lenders would prohibit the making of the loans or the consummation of the
Acquisition, and absence of litigation which would reasonably be expected to result in a material
adverse effect on the Borrower and its subsidiaries or the Company and its subsidiaries.
Due Diligence: Results of a review of contingent liabilities (e.g., environmental, retiree medical benefits,
ERI SA, etc.), a review of contracts and insurance, plant tours, a comprehensive field
examination of
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C>
all assets, and a review of appraisals of all fixed assets and contractual
obligations, showing no Material Adverse Change. All financial, accounting, legal and tax
aspects of the Acquisition and the financing must be acceptable.
Total
Consideration: The amounts and forms of the consideration paid in the Acquisition shall be acceptable to the
Agent and the Required Lenders.
Tender Offer: The terms of the tender offer shall not be amended without the consent of the Agent and the
Required Lenders. Without limiting the foregoing, the Lenders' obligation to fund shall be
conditioned upon the tendering of the minimum number of shares required to consummate a merger by
any applicable corporate statute, anti-takeover statute or provision in the Company's articles of
incorporation, by laws, etc.
Acquisition
Agreement: The representations and warranties in the Acquisition Agreement shall be true and correct
in all material respects as of the date of the Acquisition closing and the conditions therein
shall have been satisfied and the Lenders must have received an opinion of counsel satisfactory to
the Agent and the Required Lenders as to the enforceability of the Acquisition Agreement and its
compliance with all applicable law.
Subordinated
Debt: The 9-3/4% Senior Subordinated Notes of the Borrower due 2004 (the "Subordinated Notes")
shall remain outstanding on and as of the Closing Date and, after giving effect to the closing of
the Facilities and the initial borrowings thereunder, no default or event which with the giving
of notice or the passage of time could become a default shall exist thereunder and all
indebtedness under
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
the Facilities shall be classified as senior indebtedness and designated senior indebtedness
thereunder.
Financial Statements: The Agent and the Required Lenders shall have received (i) pro forma opening financial statements
giving effect to the Acquisition which must not be materially less favorable, in the Agent's and
Required Lenders' reasonable judgment, than the projections previously provided to them and which
must demonstrate, in their reasonable judgment, together with all other information then
available to the Agent and Required Lenders, that the Borrower and its subsidiaries can repay
their debts and satisfy their respective other obligations as and when due, and can comply with
financial covenants acceptable to the Agent and Required Lenders, and (ii) such information as
the Agent and the Required Lenders may reasonably request to confirm the tax, legal and business
assumptions made in such pro forma financial statements.
Fairness
Opinion: Receipt of a copy of a fairness opinion from the Company's investment banker addressed to the
Company's board of directors, relating to the Acquisition.
Valuation: The Agent and the Required Lenders shall have received evidence reconfirming the solvency and
other appropriate factual information and advice in form and substance satisfactory to them
and from the chief financial officer of the Borrower supporting the conclusions that after
giving effect to the Acquisition, the Borrower and the Company and their subsidiaries, on a
consolidated basis, are solvent and will be solvent subsequent to incurring the indebtedness in
connection with
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C>
the Acquisition, will be able to pay their debts and liabilities as
they become due and will not be left with unreasonably small capital
with which to engage in their businesses. Such evidence of value
shall include, without limitation, (i) with respect to non real-estate
fixed assets, orderly liquidation appraisals thereof and (ii) with
respect to real estate, fair market value appraisals as set forth in the
following paragraph.
Environmental: If requested by the Agent or the Required Lenders, an environmental review
report, satisfactory in form and substance, showing no Material Adverse Change,
to the Agent and the Required Lenders, from an environmental review firm
acceptable to the Agent and the Required Lenders, as to any environmental
hazards or liabilities involving the Borrower's or the Company's assets.
Existing Facilities: Refinancing, amending and replacing, with the Facilities, of (i) all
obligations under existing loan facilities (other than those under the
Facilities) in which Agent is a Lender and (ii) all outstanding notes issued
under the First Amended and Restated Trust Indenture dated as of February 1,
1994 from the Borrower and certain of its subsidiaries to NBD Bank, as Trustee.
Legal: All legal (including tax implications) and regulatory matters shall be
satisfactory to the Agent and the Required Lenders.
Collateral: Liens creating a first priority security interest in the Collateral shall have
been perfected.
Regulations: Compliance with all applicable requirements of Regulations U, G, T and X of the
Board of Governors of the Federal Reserve System.
</TABLE>
18
<PAGE> 19
<TABLE>
<S> <C>
No Default;
No MAC: No default or unmatured default shall exist on the
funding date and no Material Adverse Change shall have
occurred.
Interest
Rate Protection: The Required Lenders may require the Borrower to enter
into interest rate swap and hedge agreements or other
agreements which effectively limit the amount of interest
that the Borrower must pay on notional amounts of the
lender financing to be agreed upon.
Customary
Documents: Receipt of other customary closing documentation,
including, without limitation, customary legal opinions
of the Borrower's counsel acceptable to the Agent,
including without limitation an unqualified legal opinion
with respect to no default under the Subordinated Notes
after giving effect to the transactions contemplated
hereby and the classification of all indebtedness under
the Facilities as senior indebtedness, in all respects
acceptable to the Agent.
COVENANTS
Covenants: The Credit Agreement will contain customary covenants, including,
without limitation, restrictions (subject to exceptions, as
appropriate, to be negotiated) on the following:
-liens and encumbrances
-dividends/restricted payments
-guarantees
-sale and leaseback transactions
-sale of assets
-consolidations and mergers
-investments and acquisitions
-capital expenditures
-loans and advances
-indebtedness and additional indebtedness
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C>
-compliance with pension, environmental and
other laws
-operating leases and usage fees
-transactions with affiliates
-changes in line of business
-hedging of interest rates
(e.g., with swaps, caps)
-prepayment of other debt
-permit inspection of records and assets
Financial
Covenants: The Credit Agreement will contain financial covenants containing
limitations to be negotiated, including, without limitation,
covenants pertaining to:
-tangible net worth
-interest coverage ratio
-fixed-charge coverage ratio
-total debt to EBITDAR ratio
</TABLE>
REPRESENTATIONS
AND WARRANTIES
Usual representations and warranties in connection with each loan shall be
included in the Credit Agreement, including but not limited to absence of
material adverse change, absence of material litigation, absence of default or
unmatured default, representations regarding environmental issues, priority of
the Lenders' liens, compliance with all material requirements of law and
contracts, and compliance with Regulations G, U, T and X.
DEFAULTS
Customary events of default, including, without limitation, cross default
to occurrence of a default (whether or not resulting in acceleration) under any
other agreement governing indebtedness of the Borrower or any of its
subsidiaries and change of control.
20
<PAGE> 21
ASSIGNMENTS AND PARTICIPATIONS
Each Lender may, in its sole discretion, sell participations and may, with
the consent of the Borrower (which shall not be unreasonably withheld) and the
Agent, sell assignments in the loans and participations in letters of credit
and in its commitment and disclose information to prospective participants and
assignees, and share, at its option, any fees with such participants and
assignees.
The assignor shall pay an assignment fee (each an "Assignment Fee") of
$3,500 to Agent upon any assignment by a Lender of its rights and obligations
under the Credit Facilities (including, but not limited to, an assignment by a
Lender to another Lender).
OTHER
This commitment is, and the Loan Documents will be, governed by the law of
the State of Michigan. This term sheet is intended as an outline only and does
not purport to summarize all the conditions, covenants, representations,
warranties and other provisions which would be contained in definitive legal
documentation for the financing contemplated hereby. The commitment of the
Agent and the other Lenders is subject to negotiation and execution of
definitive Loan Documents in form and substance satisfactory to the Agent and
the other Lenders and their respective counsel.
21
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
by and between
VEMCO ACQUISITION CORP.,
a Delaware corporation
and
BAILEY CORPORATION,
a Delaware corporation
June 5, 1996
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
THE OFFER AND MERGER
Page
Section 1.1 The Offer................................................... 2
Section 1.2 Company Actions............................................. 4
Section 1.3 Directors................................................... 5
Section 1.4 The Merger.................................................. 6
Section 1.5 Effective Time.............................................. 7
Section 1.6 Closing..................................................... 7
Section 1.7 Directors and Officers of the Surviving Corporation......... 7
Section 1.8 Stockholders' Meeting....................................... 7
Section 1.9 Merger Without Approval of Company Stockholders............. 8
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of Capital Stock................................. 8
Section 2.2 Exchange of Certificates.................................... 9
Section 2.3 Stock Options; Warrants..................................... 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization and Qualification: Subsidiaries............... 11
Section 3.2 Capitalization............................................. 12
Section 3.3 Authority.................................................. 13
Section 3.4 Consents and Approvals; No Violation....................... 14
Section 3.5 Company SEC Reports........................................ 15
Section 3.6 Financial Statements....................................... 15
Section 3.7 Absence of Undisclosed Liabilities......................... 16
Section 3.8 Absence of Certain Changes................................. 16
Section 3.9 Taxes...................................................... 17
Section 3.10 Litigation................................................. 18
Section 3.11 Employee Benefit Plans, ERISA.............................. 18
Section 3.12 Environmental Liability.................................... 20
Section 3.13 Compliance with Applicable Laws............................ 21
Section 3.14 Material Contracts......................................... 21
Section 3.15 Patents, Marks, Trade Names, Copyrights and Registrations.. 22
Section 3.16 Labor Matters.............................................. 22
Section 3.17 Real Property.............................................. 23
i
<PAGE> 3
Section 3.18 Disclosure Documents.......................................... 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1 Organization................................................... 24
Section 4.2 Authority Relative to this Agreement........................... 24
Section 4.3 Consent and Approvals; No Violation............................ 25
Section 4.4 Information Supplied........................................... 25
Section 4.5 Financing...................................................... 25
Section 4.6 Purchaser's Operations......................................... 26
Section 4.7 No Shares Owned by Purchaser or Affiliates..................... 26
Section 4.8 Disclosure Documents........................................... 26
ARTICLE V
CONDUCT OF BUSINESS BY THE COMPANY
Section 5.1 Ordinary Course ........................................ 26
Section 5.2 Dividends, Changes in Stock.................................... 26
Section 5.3 Issuance or Repurchase of Securities........................... 27
Section 5.4 Governing Documents; Board of Directors........................ 27
Section 5.5 No Dispositions................................................ 27
Section 5.6 Indebtedness................................................... 27
Section 5.7 Employees...................................................... 27
Section 5.8 Benefit Plans.................................................. 28
Section 5.9 Taxes.......................................................... 28
Section 5.10 Consultation and Cooperation................................... 28
Section 5.11 Additional Matters............................................. 29
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1 No Solicitation................................................ 29
Section 6.2 Access to Information.......................................... 30
Section 6.3 HSR Act........................................................ 31
Section 6.4 Consents and Approvals......................................... 31
Section 6.5 Notification of Certain Events................................. 31
Section 6.6 Brokers or Finders............................................. 32
Section 6.7 Additional Actions............................................. 32
Section 6.8 Benefit Plans and Certain Contracts............................ 33
Section 6.9 Directors' and Officers' Indemnification....................... 33
Section 6.10 Publicity...................................................... 34
Section 6.11 Stockholders' Meeting; Proxy Materials......................... 34
ii
<PAGE> 4
Section 6.12 Rights Agreement............................................. 34
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations to Effect the Merger... 35
Section 7.2 Conditions to Purchaser's Obligation to Effect the Merger..... 35
ARTICLE VIII
TERMINATION
Section 8.1 Termination................................................... 36
Section 8.2 Effect of Termination......................................... 38
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Fees and Expenses ..................................... 38
Section 9.2 Amendment and Modification.................................... 39
Section 9.3 Nonsurvival of Representations and Warranties................. 39
Section 9.4 Notices....................................................... 39
Section 9.5 Definitions; Interpretation................................... 40
Section 9.6 Counterparts.................................................. 40
Section 9.7 Entire Agreement; No Third Party Beneficiaries................ 40
Section 9.8 Severability.................................................. 40
Section 9.9 Governing Law................................................. 41
Section 9.10 Assignment.................................................... 41
Section 9.11 Knowledge..................................................... 41
Signatures................................................................. 41
ANNEX A -- Guaranty
ANNEX B -- Conditions to the Tender Offer
ANNEX C -- Indemnity Agreement
INDEX OF DEFINED TERMS:
Acceptable Offer.................................................. 6.1(d)
Acquisition Proposal.............................................. 6.1(c)
Agreement........................................................Preamble
Audit............................................................. 3.9(f)
Certificate of Merger................................................ 1.5
Certificates...................................................... 2.2(b)
Closing.............................................................. 1.6
Closing Date......................................................... 1.6
Code............................................................. 3.11(b)
Company......................................................... Preamble
iii
<PAGE> 5
Company Common Stock....................................... Preamble
Company Directors............................................ 1.3(a)
Company Disclosure Documents................................ 3.18(a)
Company Material Adverse Effect.............................. 3.1(c)
Company Proxy Statement.................................. 1.8(a)(ii)
Company Stockholders Meeting................................... 6.11
Contracts...................................................... 3.14
Convertible Debentures....................................... 3.2(a)
DGCL...................................................... Preamble
Dissenting Stockholder.................................... Preamble
Effective Time.................................................. 1.5
Environmental Law........................................... 3.12(a)
ERISA....................................................... 3.11(a)
ERISA Affiliate............................................. 3.11(a)
ERISA Plans................................................. 3.11(a)
Exchange Act................................................. 1.1(a)
Financial Statements............................................ 3.6
Financing Commitment Letter.................................. 1.1(a)
Financing Condition.......................................... 1.1(a)
GAAP............................................................ 3.6
Governmental Entity.......................................... 3.4(b)
Hazardous Substances........................................ 3.12(a)
HSR Act...................................................... 3.4(b)
Indemnified Parties.......................................... 6.9(a)
Intellectual Property....................................... 3.15(b)
Intent Notice................................................ 6.1(b)
Liens.......................................................... 3.17
Material Contracts............................................. 3.14
Merger..................................................... Preamble
Merger Consideration......................................... 2.1(c)
Minimum Condition............................................ 1.1(a)
Offer...................................................... Preamble
Offer Deadline.......................................... 8.1(c)(iii)
Offer Documents.............................................. 1.1(b)
Offer Price.................................................. 1.1(a)
Offer to Purchase............................................ 1.1(a)
Option.......................................................... 2.3
Option Plans.................................................... 2.3
Options......................................................... 2.3
Other Transactions........................................... 1.2(a)
Parent....................................................... 1.1(a)
Paying Agent................................................. 2.2(a)
Permitted Liens................................................ 3.17
iv
<PAGE> 6
Person...................................................... 6.1(c)
Plans...................................................... 3.11(a)
Purchaser................................................. Preamble
Purchaser Common Stock......................................... 2.1
Purchaser Disclosure Documents................................. 4.8
Rights...................................................... 1.1(a)
Rights Agreement.......................................... Preamble
Rights Amendment............................................ 1.2(a)
Schedule 14D-1.............................................. 1.1(b)
Schedule 14D-9.............................................. 1.2(b)
SEC......................................................... 1.1(b)
Securities Act................................................ 3.5
Selling Stockholders...................................... Preamble
Shares.................................................... Preamble
Smith Barney................................................ 3.3(d)
SPD........................................................ 3.11(b)
Special Meeting.......................................... 1.8(a)(i)
Subsidiary.............................................. 3.1(c)(ii)
Surviving Corporation....................................... 1.4(a)
Tax Authority.................................................. 3.9
Taxes.......................................................... 3.9
Tax Returns.................................................... 3.9
Tender and Option Agreement............................... Preamble
Voting Debt................................................. 3.2(a)
Warrants....................................................... 2.3
1995 Premiums............................................... 6.9(b)
SCHEDULES:
Schedule 3.2 -- Outstanding Options and Warrants
Schedule 3.4 -- Conflicts
Schedule 3.8 -- Changes since January 31, 1996
Schedule 3.10 -- Litigation
Schedule 3.11 -- Employee Benefit and ERISA Matters
Schedule 3.12 -- Environmental Matters
Schedule 3.14 -- Certain Material Contracts
Schedule 3.16 -- Labor Matters
v
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into on
June 5, 1996 by and between VEMCO ACQUISITION CORP., a Delaware corporation
("Purchaser"), and BAILEY CORPORATION, a Delaware corporation (the "Company").
RECITALS:
WHEREAS, the Board of Directors of Purchaser has determined that it is
advisable and in the best interests of Purchaser to engage in a transaction
whereby Purchaser will acquire the Company on the terms and subject to the
conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has determined that it is
advisable and in the best interests of the Company and its stockholders to
engage in a transaction whereby Purchaser will acquire the Company on the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS, as an inducement to Purchaser to acquire the Company, and as a
condition to Purchaser's willingness to enter into this Agreement, concurrently
with the execution and delivery of this Agreement, Purchaser and certain
stockholders are entering into a tender and option agreement (the "Tender and
Option Agreement") pursuant to which such stockholders (the "Selling
Stockholders") have agreed to (i) grant Purchaser an irrevocable option to buy
their Shares (as defined below), and (ii) tender and, in the event such
irrevocable option is not theretofore exercised, sell their Shares in the Offer
(as defined below) and (iii) vote their Shares in favor of the Merger (as
defined below) in each case upon the terms and subject to the conditions set
forth therein; and
WHEREAS, in order to induce the Purchaser to enter into this Agreement,
the Board of Directors of the Company has approved the execution and delivery
of the Tender and Option Agreement so that (i) the restrictions on "business
combinations" set forth in Section 203 of the Delaware General Corporation Law
("DGCL") do not and will not apply to Purchaser or affiliates or associates of
Purchaser as a result of the execution and delivery of the Tender and Option
Agreement or the consummation of the transactions contemplated thereby or by
this Agreement, and (ii) the Rights Agreement between the Company and State
Street Bank and Trust Company, as Rights Agent, dated as of September 28, 1995
(the "Rights Agreement") shall be amended to prevent this Agreement or the
Tender and Option Agreement from resulting in the distribution of right
certificates or the Purchaser or its affiliates from being an Acquiring Person
(as defined in the Rights Agreement); and
WHEREAS, as an inducement to the Company to enter into this Agreement,
affiliates of Purchaser have executed and delivered of a guaranty agreement
(the "Guaranty") in the form of Annex A hereto; and
WHEREAS, in furtherance of its acquisition of the Company, Purchaser
proposes 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 issued and
outstanding shares of common stock, $.10 par value per
<PAGE> 8
share, of the Company (hereinafter referred to as either the "Shares" or the
"Company Common Stock") at a price per share of Company Common Stock of $8.75,
net to the seller in cash, upon the terms and subject to the conditions set
forth in this Agreement, and the Board of Directors of the Company has adopted
resolutions approving, among other things, the Offer and the Merger and
recommending that the Company's stockholders accept the Offer; and
WHEREAS, the respective Boards of Directors of Purchaser and the Company
have approved the merger (the "Merger") of Purchaser into the Company, upon the
terms and subject to the conditions set forth in this Agreement, whereby each
issued and outstanding share of Company Common Stock not owned directly or
indirectly by Purchaser or the Company, except shares of Company Common Stock
held by persons who object to the Merger and comply with all the provisions of
the DGCL concerning the right of holders of Company Common Stock to dissent
from the Merger and require appraisal of their shares of Company Common Stock
("Dissenting Stockholders"), will be converted into the right to receive the
per share consideration paid pursuant to the Offer; and
WHEREAS, the Company and Purchaser wish 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 premises and the representations,
warranties and agreements contained herein, the parties hereto agree as
follows:
ARTICLE I
THE OFFER AND MERGER
1.1 The Offer.
(a) As promptly as practicable, but in no event later than five business
days after the public announcement of the execution hereof, Purchaser shall
commence (within the meaning of Rule l4d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) the Offer to purchase for cash all of
the issued and outstanding shares of Company Common Stock, and the associated
Rights (the "Rights") issued pursuant to the Rights Agreement, at a price of
$8.75 per Share, net to the seller in cash, without interest (such price, or
such higher price per Share as may be paid in the Offer, being referred to
herein as the "Offer Price"), subject (i) to there being validly tendered and
not withdrawn prior to the expiration of the Offer that number of Shares which,
together with any Shares beneficially owned by Purchaser, represents at least a
majority of the Shares outstanding on a fully-diluted basis on the date of
purchase ("on a fully-diluted basis" meaning, as of any date, the number of
Shares outstanding plus all Shares the Company is then required to issue
pursuant to obligations outstanding at that date under employee stock option or
other benefit plans, outstanding warrants, outstanding options of any kind,
convertible securities, or otherwise (to the extent such options, warrants,
convertible securities or other rights are vested or exercisable), other than
Shares issuable upon conversion of the Company's 9% Convertible Subordinated
Notes due April 13, 2000,
2
<PAGE> 9
or its 8% Convertible Debentures due July 31, 1999 (collectively, the
"Convertible Debentures") (the "Minimum Condition"), (ii) the condition that
Venture Holdings Trust, the parent of Purchaser ("Parent") shall have received
the Financing (as defined below) contemplated by the commitment letter dated
June 3, 1996, from NBD Bank (the "Financing Commitment Letter") pursuant to
which, subject to the terms and conditions thereof, NBD Bank has committed to
provide all of the financing ("Financing") necessary to purchase all outstanding
Shares on a fully-diluted basis pursuant to the Offer and the Merger and to
refinance all outstanding indebtedness of the Company reflected on the Company
SEC Reports (the "Financing Condition") and (iii) the other conditions set forth
in Annex B hereto. Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, including without
limitation the Minimum Condition and the Financing Condition accept for payment
and pay for Shares tendered as soon as practicable after it is legally permitted
to do so under applicable law. The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") containing the terms set forth in this
Agreement, the Minimum Condition, the Financing Condition and the other
conditions set forth in Annex B hereto. Without the written consent of the
Company, Purchaser shall not decrease the Offer Price, decrease the number of
Shares sought, change the form of consideration to be paid in the Offer,
increase the Minimum Condition or amend any other condition of the Offer in any
manner adverse to the holders of the Shares (other than with respect to
insignificant changes or amendments). Notwithstanding the foregoing, but subject
to any rights the Company may have under this Agreement (including, without
limitation, pursuant to Section 8.1(c)(iii)(y)), Purchaser may, without the
consent of the Company, extend the Offer (i) if at the then scheduled expiration
date of the Offer any of the conditions to Purchaser's obligation to accept for
payment and pay for shares of Company Common Stock shall not be satisfied or
waived, until such time as such conditions are satisfied or waived; (ii) for an
aggregate period of not more than ten (10) business days beyond the initial
expiration date of the Offer if all conditions have been satisfied but less than
ninety percent (90%) of the outstanding shares of Company Common Stock have been
validly tendered and not withdrawn (not including shares covered by notices of
guaranteed delivery); and (iii) for any period required by any rule, regulation,
interpretation or position of the SEC or the staff of the SEC applicable to the
Offer. Purchaser shall terminate the Offer upon termination of this Agreement
pursuant to its terms.
(b) As soon as practicable on the date the Offer is commenced, Purchaser
shall file with the United States Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer
(together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement (collectively, together with any amendments and supplements
thereto, the "Offer Documents") with respect to the Offer. 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 therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by Purchaser with respect to information
supplied by the Company in writing specifically for inclusion in the Offer
Documents. Purchaser further
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agrees to take all steps necessary to cause the Offer Documents to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable Federal securities laws. Each of Purchaser, on
the one hand, and the Company, on the other hand, agrees promptly to correct any
information provided by such party for use in the Offer Documents if and to the
extent that it shall have become false and misleading in any material respect
and Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
Federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment upon the Schedule 14D-1 before it
is filed with the SEC. In addition, Purchaser agrees to provide the Company and
its counsel in writing with any comments Purchaser or its counsel may receive
from time to time from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments.
1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors, at a meeting duly called and held on
the date or dates on which the parties entered into this Agreement and the
Tender and Option Agreement, has unanimously (i) determined that each of the
Offer and the Merger are fair to and in the best interests of the Company's
stockholders (other than Purchaser and its affiliates); (ii) approved this
Agreement and the transactions contemplated hereby (including without
limitation (x) the acquisition of the Company by Purchaser or any of its
affiliates, and any purchase of Shares in connection therewith, by means of
this Agreement, the Offer, the Merger and the Tender and Option Agreement, and
any other transactions conducted to effectuate the acquisition of the Company
by Purchaser or its affiliates in accordance with this Agreement ("Other
Transactions")) and (y) any other transactions contemplated hereby and by the
foregoing clause (x)); (iii) resolved to recommend that the stockholders of the
Company accept the Offer, tender their Shares thereunder to Purchaser and
approve and adopt this Agreement and the Merger; (iv) adopted resolutions
approving all of the actions and transactions referenced herein, with the
consequences that the requirements for "business combinations" set forth in
Section 203 of the DGCL will not be applicable to the Merger; and (v) adopted
resolutions approving an amendment to the Rights Agreement, as necessary (the
"Rights Amendment"), (A) to prevent this Agreement, the Tender and Option
Agreement or the consummation of any of the transactions contemplated hereby or
thereby, including without limitation, the publication or other announcement of
the Offer and the consummation of the Offer and the Merger, from resulting in
the distribution of separate right certificates or the occurrence of a
Distribution Date (as defined therein) and (B) to provide that the Purchaser
shall not be deemed to be an Acquiring Person (as defined therein) by reason of
the transactions expressly provided for in this Agreement and the Tender and
Option Agreement. The Company shall not amend, revoke, withdraw or modify the
approval of the Purchaser's acquisition of the Company Common Stock by reason
of the Offer, the Merger or the Tender and Option Agreement so as to render the
restrictions of Section 203 of the DGCL applicable thereto; provided, however,
that the Company may take any such action if this Agreement has been terminated
pursuant to Section 8.1(c)(i) hereof and Purchaser has been paid the fees
contemplated by Section 9.1 hereof.
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(b) Concurrently with the commencement of the Offer, the Company shall
file with the SEC a Solicitation/ Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto, and including the
exhibits thereto, the "Schedule 14D-9") which shall contain the statements to
the same effect as those referred to in Section 1.2(a) hereof. The Schedule
14D-9 will comply in all material respects with the provisions of applicable
Federal securities laws and, on the date filed with the SEC and on the date
first published, sent or given to the Company's 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
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 Purchaser in writing specifically for inclusion in
the Schedule 14D-9. The Company further agrees to take all steps necessary to
cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
Federal securities laws. Each of the Company, on the one hand, and Purchaser,
on the other hand, agrees promptly to correct any information provided by it
for use in the Schedule 14D-9 if and to the extent that it shall have become
false and misleading in any material respect and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and to be disseminated to holders of the Shares, in each
case as and to the extent required by applicable Federal securities laws.
Purchaser and its counsel shall be given a reasonable opportunity to review
and comment upon the Schedule 14D-9 before it is filed with the SEC. In
addition, the Company agrees to provide Purchaser and its counsel in writing
any comments the Company or its counsel may receive from time to time from the
SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt
of such comments. The Company and its counsel will advise Purchaser and its
counsel of the substance of all communications received by the Company from the
SEC and its staff relating to the Schedule 14D-9, the Merger, this Agreement or
the transactions contemplated hereby.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to Purchaser mailing labels, security position listings
and any available listing or computer file containing the names and addresses
of the record holders of the Shares as of a recent date and those of persons
becoming record holders after such date, together with copies of all other
information in the Company's control regarding the beneficial owners of shares
of Company Common Stock that Purchaser may reasonably request, and shall
furnish Purchaser with such other information and assistance as Purchaser or
its agents may reasonably request in communicating the Offer to the
Stockholders of the Company.
1.3 Directors.
(a) Promptly upon the purchase of and payment for any Shares (including
without limitation all Shares subject to the Tender and Option Agreement) by
Purchaser or any affiliate of Purchaser pursuant to the Offer or the Tender and
Option Agreement which represents the Minimum Condition, Purchaser shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as is equal to the product of
the total number of directors then serving on such Board (after giving effect
to the directors designated by
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Purchaser pursuant to this Section) multiplied by the ratio of the aggregate
number of Shares beneficially owned by Purchaser and any of its affiliates to
the total number of Shares then outstanding. The Company shall, upon request of
Purchaser, take all action necessary to cause Purchaser's designees to be
elected or appointed to the Company's Board of Directors, including, without
limitation, increasing the size of its Board of Directors or, at the Company's
election, securing the resignations of such number of its incumbent directors as
is necessary to enable Purchaser's designees to be so elected or appointed to
the Company's Board, and shall cause Purchaser's designees to be so elected or
appointed. At such time, the Company shall also cause persons designated by
Purchaser to constitute the same percentage (rounded up to the next whole
number) as is on the Company's Board of Directors of (i) each committee of the
Company's Board of Directors, (ii) each board of directors (or similar body) of
each Subsidiary (as defined below) of the Company and (iii) each committee (or
similar body) of each such board. In the event that Purchaser's designees are
elected to the Board of Directors of the Company, until the Effective Time, the
Board of Directors shall have at least two directors who are directors on the
date hereof (the "Company Directors"). In such event, if either of the Company
Directors is unable to serve for any reason whatsoever, the other directors
shall designate a person to fill such vacancy who shall not be a designee,
stockholder or affiliate of Purchaser to be a Company Director for purposes of
this Agreement. Notwithstanding anything in this Agreement to the contrary, in
the event that Purchaser's designees are elected to the Board of Directors of
the Company, after the acceptance for payment of shares of Common Stock pursuant
to the Offer and prior to the Effective Time, the affirmative vote of the
Company Directors shall be required to (a) amend or terminate this Agreement by
the Company, (b) exercise or waive any of the Company's rights, benefits or
remedies hereunder,(c) extend the time for performance of Purchaser's respective
obligations hereunder or (d) take any other action by the Board of Directors of
the Company in connection with this Agreement.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
order to fulfill its obligations under Section 1.3(a), including mailing to
stockholders as part of the Schedule 14D-9 the information required by such
Section 14(f) and Rule 14f-1, as is necessary to enable Purchaser's designees
to be elected to the Company's Board of Directors. Purchaser shall supply the
Company with any information with respect to either of them and their nominees,
officers, directors and affiliates required by such Section 14(f) and Rule
14f-1. The provisions of Section 1.3(a) are in addition to and shall not limit
any rights which Purchaser or any of its affiliates may have as a holder or
beneficial owner of Shares as a matter of law with respect to the election of
directors or otherwise.
1.4 The Merger.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time the Company and Purchaser shall consummate the Merger pursuant
to which (i) Purchaser shall be merged with and into the Company and the
separate corporate existence of Purchaser shall thereupon cease, (ii) the
Company shall be the successor or surviving corporation in the Merger (the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware, and (iii) the
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separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger.
(b) Pursuant to the Merger, (i) 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 as provided by applicable law and such certificate of incorporation,
and (ii) the Bylaws of Purchaser, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the certificate of incorporation and
such bylaws. The Merger shall have the effects set forth in the DGCL.
1.5 Effective Time. On the date of Closing (as defined in Section 1.6)
as soon as practicable following the satisfaction or waiver of the conditions
set forth in Article VII (or on such a other date as Purchaser and the Company
may agree) the parties shall cause a certificate of merger or other appropriate
document (in any such case, the "Certificate of Merger") to be executed and
filed with the Secretary of State of the State of Delaware as provided in the
DGCL. The Merger shall become effective at the time and on the date on which
the Certificate of Merger has been duly filed with the Secretary of State of
the State of Delaware or such later time as is agreed upon by the parties and
specified in the Certificate of Merger, and such time is hereinafter referred
to as the "Effective Time."
1.6 Closing. The Closing of the Merger (the "Closing") will take place
at 10:00 a.m., Detroit time, on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Article VII hereof (the "Closing Date"), at
the offices of Dykema Gossett PLLC, 400 Renaissance Center, Detroit, Michigan
48243, unless another date or place is agreed to in writing by the parties
hereto.
1.7 Directors and Officers of the Surviving Corporation. The directors
and officers of Purchaser at the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, of the Surviving
Corporation until their successors shall have been duly elected or appointed or
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's certificate of incorporation and bylaws.
1.8 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law, as soon as practicable following the acceptance for payment and
purchase of Shares sufficient to meet the Minimum Condition by Purchaser
pursuant to the Offer:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting"), for the purpose of considering
and taking action upon this Agreement;
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(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and use its reasonable
efforts (x) to obtain and furnish the information required to be included
by the SEC in the Company Proxy Statement (as defined below) and, after
consultation with Purchaser, to respond promptly to any comments made by
the SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement (the "Company 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) include in the Company Proxy Statement the recommendation of the
Board of Directors that stockholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement.
(b) Purchaser agrees that it shall, and shall cause any permitted
assignee to, vote all Shares then owned by it which are entitled to vote in
favor of the approval of the Merger and the adoption of this Agreement.
1.9 Merger Without Approval of Company Stockholders. Notwithstanding
Section 1.8 hereof, in the event that Purchaser or any permitted assignee of
Purchaser shall acquire at least 90% of the outstanding Shares, pursuant to the
Offer, the Tender and Option Agreement or otherwise, the parties hereto agree,
subject to Article VII hereof, to take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after such
acquisition, without approval of the Company's Stockholders, in accordance with
Section 253 of the DGCL. If the Board of Directors of the Company so approves a
merger pursuant to Section 253, Purchaser shall, and shall cause any permitted
assignee to, continue to hold not less than 90% of the issued and outstanding
shares of Company Common Stock until the consummation or abandonment of such
merger.
ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any shares of
Company Common Stock or common stock, par value $1.00 per share, of Purchaser
(the "Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share of
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Purchaser-Owned Stock. All shares
of Company Common Stock that are owned by the Company as treasury stock and any
shares of Company Common Stock owned by Purchaser or any affiliate of Purchaser
shall be canceled and retired and shall cease to exist and no consideration
shall be delivered in exchange therefor.
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(c) Conversion of Shares. Each issued and outstanding share of Company
Common Stock (other than shares to be cancelled in accordance with Section
2.1(b)) shall be converted into the right to receive the Offer Price, payable to
the holder thereof, without interest (the "Merger Consideration"), upon
surrender of the certificate formerly representing such share of Company Common
Stock in the manner provided in Section 2.2. All such shares of Company Common
Stock, when so converted, shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration therefor
upon the surrender of such certificate in accordance with Section 2.2, without
interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding shares of Company Common
Stock held by a Dissenting Stockholder shall not be converted as described in
Section 2.1(c) but shall become the right to receive such consideration as may
be determined to be due to such Dissenting Stockholder pursuant to Section 262
of the DGCL; provided, however, that the shares of Company Common Stock
outstanding immediately prior to the Effective Time and held by a Dissenting
Stockholder who shall, after the Effective Time, withdraw his or her demand for
appraisal or lose his or her right of appraisal, in either case pursuant to the
DGCL, shall be deemed to be converted as of the Effective Time into the right to
receive the Merger Consideration. The Company shall give Purchaser (i) prompt
notice of any written demands for appraisal of shares of Company Common Stock
received by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to any such demands. The Company shall not, without
the prior written consent of Purchaser, voluntarily make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such demands.
2.2 Exchange of Certificates.
(a) Paying Agent. Purchaser shall designate a bank or trust company to
act as agent for the holders of shares of Company Common Stock in connection
with the Merger (the "Paying Agent") to receive the monies to which holders of
shares of Company Common Stock shall become entitled pursuant to Section 2.1(c).
Such monies shall be invested by the Paying Agent as directed by Purchaser or
the Surviving Corporation. All costs and fees of the Paying Agent shall be paid
by the Parent or the Purchaser.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates"),
whose Shares were converted pursuant to Section 2.1 into the right to receive
the Merger Consideration (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Purchaser and the Company may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate
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for cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Purchaser, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each share of Company Common Stock formerly
represented by such Certificate and the Certificate so surrendered shall
forthwith be cancelled. If payment of the Merger Consideration is to be made to
a person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in Company Common Stock.
At the Effective Time, the stock transfer books of the Company shall be closed
and thereafter there shall be no further registration of transfers of shares of
Company Common Stock on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of shares of
Company Common Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
(d) Termination of Fund, No Liability. At any time following six (6)
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any monies (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
2.3 Stock Options; Warrants. Immediately prior to the Effective Time,
all options (individually, an "Option" and collectively, the "Options") then
outstanding under the Company's 1986 Incentive Stock Option Plan or any other
incentive compensation or stock option plan, agreement or arrangement of the
Company or otherwise (the "Option Plans") and all warrants to purchase shares of
Common Stock (the "Warrants"), shall be canceled and each holder of a vested
Option or Warrant will be entitled to receive from the Company, for each share
of Common Stock subject to a vested Option or Warrant, an amount in cash equal
to the excess, if any, of the Merger Consideration over the per share exercise
price of such Option or Warrant. The Company will use
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its best efforts to obtain any necessary consents from holders of Options or
Warrants to the cancellation and payment provided for in this Section 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser as follows:
3.1 Organization and Qualification, Subsidiaries.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the character of the Company's properties or the nature of its business
makes such qualification necessary, except in jurisdictions, if any, where the
failure to be so qualified would not result in a Company Material Adverse Effect
(as defined below). The Company has all requisite corporate or other power and
authority to own, use or lease its properties and to carry on its business as it
is now being conducted and as it is now proposed to be conducted. The Company
has made available to Purchaser a complete and correct copy of its certificate
of incorporation and bylaws. each as amended to date, and the Company's
certificate of incorporation and bylaws, as so delivered are in full force and
effect. The Company is not in default in any respect in the performance,
observation or fulfillment of any provision of its certificate of incorporation
or bylaws.
(b) Exhibit 22 to the Company's Report on Form 10-K for the fiscal year
ended July 31, 1995, sets forth a complete list of the Company's active
Subsidiaries. Each Subsidiary of the Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business as a foreign corporation and is
in good standing in the jurisdictions in which the character of Subsidiary's
properties or the nature of its business makes such qualification necessary,
except in jurisdictions, if any, where the failure to be so qualified would not
result in a Company Material Adverse Effect. Each of the Company's Subsidiaries
has the requisite corporate or other power and authority to own, use or lease
its properties and to carry on its business as it is now being conducted and as
it is now proposed to be conducted. Except as disclosed in the Company SEC
Reports, each of such Subsidiaries is operating in accordance with all
applicable laws and regulations of its jurisdiction of incorporation, except
where the failure so to operate would not result in a Company Material Adverse
Effect. The Company has made available to Purchaser a complete and correct copy
of the certificate of incorporation and bylaws (or similar charter documents) of
each of the Company's Subsidiaries, each as amended to date, and the certificate
of incorporation and bylaws (or similar charter documents) as so delivered are
in full force and effect. No Subsidiary of the Company is in default in any
respect in the performance, observation or fulfillment of any provision of its
certificate of incorporation or bylaws (or similar charter documents).
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(c) For purposes of this Agreement, (i) a "Company Material Adverse
Effect" shall mean any event, circumstance, condition, development or
occurrence causing, resulting in or having, or which could reasonably be
expected to cause, result in or have, a material adverse effect on the financial
condition, business or results of operations of the Company and its Subsidiaries
taken as a whole; and (ii) "Subsidiary" shall mean, with respect to any party,
any corporation or other organization, whether incorporated or unincorporated,
of which (x) at least a majority of the securities or other interests having by
their terms voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its subsidiaries, or by such party and one or more of its
subsidiaries, or (y) such party or any other subsidiary of such party is a
general partner (excluding such partnerships where such party or any Subsidiary
of such party do not have a majority of the voting interest in such
partnership).
3.2 Capitalization.
(a) The authorized capital stock of the Company consists solely of
40,000,000 shares of the Company Common Stock. As of the date hereof, (i)
5,353,558 shares of Company Common Stock are issued and outstanding; and (ii)
40,000 shares of Company Common Stock are issued and held in the treasury of the
Company. Schedule 3.2 sets forth a complete list of outstanding Options and
Warrants in each case indicating which are currently exercisable, and a list of
all shares of Common Stock issuable upon conversion of the Convertible
Debentures. No agreement or other document grants or imposes on any shares of
the Company Common Stock any right, preference, privilege or restriction with
respect to the transaction contemplated hereby (including, without limitation,
any rights of first refusal), other than the right to dissent from the Merger as
provided in Section 2.1(d) above. All of the issued and outstanding shares of
the Company Common Stock are, and all Shares which may be issued pursuant to the
exercise of outstanding Options and Warrants will be, when issued in accordance
with the terms thereof, duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Except for the Convertible
Debentures, 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 for the transactions
contemplated by this Agreement, as of the date hereof, (i) there are no shares
of capital stock of the Company authorized, issued or outstanding and (ii) there
are no existing options, warrants, calls, preemptive rights, subscriptions or
other rights, agreements, arrangements or commitments of any character
(including without limitation "earn-out" arrangements) 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. There are no outstanding contractual obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Shares or the capital stock of the Company or any Subsidiary or
affiliate of the Company or to provide funds to
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make any investment (in the form of a loan, capital contribution or otherwise)
in any Subsidiary or any other entity.
(b) There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries. None of
the Company or its Subsidiaries is required to redeem, repurchase or otherwise
acquire shares of capital stock of the Company or any of its Subsidiaries,
respectively, as a result of the transactions contemplated by this Agreement.
(c) Except for the Subsidiaries, neither the Company nor any Subsidiary
owns directly or indirectly any interest or investment (whether equity or debt)
in any corporation, partnership, joint venture, business, trust or entity.
3.3 Authority.
(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Company's Board of Directors and no other
corporate proceedings on the part of the Company are necessary, as a matter of
law to authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
the Company and is a valid and binding agreement of the Company, enforceable
against it in accordance with its terms, except (a) as such enforcement may be
subject to bankruptcy, insolvency or similar laws now or hereafter in effect
relating to creditors rights, and (b) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Board of Directors of the Company has duly and validly approved
and taken all corporate action required to be taken by the Board of Directors
for the consummation by the Company of the transactions contemplated by this
Agreement, including the Offer, the Merger and the acquisition of Shares
pursuant to the Offer, the Merger, the Tender and Option Agreement, and any
Other Transactions, including without limitation all matters contemplated by
Section 1.2(a)(ii) hereof. In reliance upon the representation and warranty of
Purchaser in Section 4.7 hereof, and assuming that the Minimum Condition is
satisfied, or that no Shares are purchased under the Offer or otherwise (other
than pursuant to the Tender and Option Agreement), the Company represents to
Purchaser that the actions set forth in Section 1.2(a) are all the actions
required, and are sufficient, to render the relevant antitakeover provisions of
Section 203 of the DGCL inapplicable to the Offer, the Merger, the Tender and
Option Agreement and any Other Transactions so long as this Agreement has not
been terminated in accordance with its terms.
(c) The Rights Amendment will be sufficient to render the Rights
inoperative with respect to any acquisition of Shares by the Purchaser or any of
its affiliates pursuant to this Agreement
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and/or the Tender and Option Agreement. As a result of the Rights Amendment,
the Rights shall not be exercisable as a result of the acceptance for payment
of Shares pursuant to the Offer and/or the purchase of Shares by Purchaser
pursuant to the Tender and Option Agreement.
(d) Smith Barney Inc. ("Smith Barney"), the financial advisor to the
Company, has delivered to the Board of Directors of the Company its opinion to
the effect that as of the date of this Agreement, the $8.75 per Share
consideration to be received by the holders of Company Common Stock (other than
Purchaser and its affiliates) pursuant to the Offer and the Merger is
fair to such holders from a financial point of view, and the Company has
delivered a copy of such opinion to the Purchaser.
(e) The Company hereby consents to the inclusion in the Offer Documents
of the recommendation of the Board of Directors of the Company described in this
Section 1.2(a) and Smith Barney has consented to inclusion of its opinion in
the Schedule 14D-9 so long as such inclusion is in form and substance
satisfactory to Smith Barney.
3.4 Consents and Approvals, No Violation. The execution and delivery of
this Agreement, the consummation of the transactions contemplated hereby and the
performance by the Company of its obligations hereunder will not:
(a) subject to the obtaining of any requisite approvals of the Company's
stockholders as contemplated by Sections 1.8 and 1.9 hereof, conflict with
any provision of the Company's certificate of incorporation or bylaws or
the certificate of incorporation or bylaws (or other similar charter
documents) of any of its Subsidiaries;
(b) require any consent, approval, order, authorization or permit of, or
registration, filing with or notification to, any governmental or
regulatory authority or agency (a "Governmental Entity"), except for (i)
the filing of a premerger notification and report form by the Company under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing with the SEC of (x) the Schedule 14D-9, (y) the
Company Proxy Statement relating to the approval by the Company's
Stockholders of this Agreement, if such approval is required by law, and
(z) such reports under Section 13(a) of the Exchange Act as may be required
in connection with this Agreement, the Tender and Option Agreement and the
transactions contemplated hereby and thereby, and (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware;
(c) except as disclosed on Schedule 3.4, result in any violation of or
the breach of or constitute a default (with notice or lapse of time or
both) under, or give rise to any right of termination, cancellation or
acceleration or guaranteed payments under or to a loss of a material
benefit under, any of the terms, conditions or provisions of any note,
lease, mortgage, license, agreement 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 or
assets may be bound, except for such violations, breaches,
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<PAGE> 21
defaults, or rights of termination, cancellation or acceleration, or losses
as to which requisite waivers or consents have been obtained or will be
obtained prior to the Effective Time or which, individually or in the
aggregate, would not (i) result in a Company Material Adverse Effect, (ii)
materially impair the ability of the Company to perform its obligations
under this Agreement or (iii) prevent the consummation of any of the
transactions contemplated by this Agreement;
(d) violate the provisions of any order, writ, injunction, judgment,
decree, statute, rule or regulation applicable to the Company or any
Subsidiary, in such a manner as to (i) result in a Company Material Adverse
Effect, (ii) materially impair the ability of the Company to perform its
obligations under this Agreement or (iii) prevent the consummation of any
of the transactions contemplated by this Agreement; or
(e) except as disclosed in Schedule 3.4, result in the creation of any
lien, charge or encumbrance upon any shares of capital stock, properties or
assets of the Company or its Subsidiaries under any agreement or instrument
to which the Company or its Subsidiaries is a party or by which the Company
or its Subsidiaries is bound.
3.5 Company SEC Reports. The Company has filed with the SEC, and has
heretofore delivered to Purchaser true and complete copies of each form,
registration statement, report, schedule, proxy or information statement and
other document (including exhibits and amendments thereto), including without
limitation its Annual Reports to Stockholders incorporated by reference in
certain of such reports, required to be filed with the SEC since July 26, 1992,
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act (the "Company SEC Reports"). As of the respective dates such
Company SEC Reports were filed or, if any such Company SEC Reports were amended,
as of the date such amendment was filed, each of the Company SEC Reports,
including without limitation any financial statements or schedules included
therein, (a) complied in all material respects with all applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and the
applicable rules and regulations promulgated thereunder, and (b) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the Subsidiaries is required to file any forms, reports or
other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act.
3.6 Financial Statements. Each of the audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company (including any related notes and schedules) included (or incorporated by
reference) in the Company SEC Reports and the Company's unaudited consolidated
balance sheet as of April 26, 1996 (collectively, the "Financial Statements"),
have been prepared from, and are in accordance with, the books and records of
the Company and its consolidated Subsidiaries, comply in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis (except as may be indicated in the notes thereto and subject,
in the case of quarterly
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<PAGE> 22
financial statements, to normal and recurring year-end adjustments which would
not be material in amount or effect) and fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its Subsidiaries as of
the date thereof and the consolidated results of operations and cash flows (and
changes in financial position, if any) of the Company and its Subsidiaries for
the periods presented therein (subject to normal year-end adjustments which
would not be material in amount or effect and the absence of financial footnotes
in the case of any unaudited interim financial statements).
3.7 Absence of Undisclosed Liabilities. Except (a) as specifically
disclosed in the Company SEC Reports and (b) for liabilities and obligations
incurred in the ordinary course of business since January 31, 1996, and
consistent with past practice, neither the Company nor any of its Subsidiaries
has incurred any material liabilities or obligations of any nature (contingent
or otherwise). As of the date hereof, the total amounts of principal and unpaid
interest outstanding under the Company's credit agreement with BayBank do not
exceed $31 million in the aggregate, and the long-term principal portions
thereof (including such amounts as are required to be classified as current debt
under GAAP) do not exceed $10 million.
3.8 Absence of Certain Changes. Except as disclosed in the Company SEC
Reports, since January 31, 1996, the Company and its Subsidiaries have conducted
their respective businesses only in, have not engaged in any transaction other
than according to, the ordinary and usual course, and there has not been (a) any
event, circumstance, condition, development or occurrence which has or is
reasonably likely to have a Company Material Adverse Effect; (b) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the capital stock of the
Company or any of its Subsidiaries; (c) any change by the Company in accounting
principles, practices or methods; (d) any labor dispute or difficulty which is
reasonably likely to result in any Company Material Adverse Effect, and to the
Company's knowledge no such dispute or difficulty is now threatened; (e) any
material asset sold, disposed of (except inventory sold in the ordinary course
of business) mortgaged, pledged or subjected to any lien, charge or other
encumbrance; (f) except as set forth on Schedule 3.8, any increase in the
compensation payable or which could become payable by the Company or any of its
Subsidiaries to their directors, officers, employees, distributors, dealers or
sales representatives; (g) any amendment of any employee benefit plan, except as
disclosed in Schedule 3.8; (h) any issuance, transfer, sale or pledge by the
Company or its Subsidiaries of any shares of stock or other securities or of any
commitments, options, rights or privileges under which the Company or its
Subsidiaries is or may become obligated to issue any shares of stock or other
securities, other than pursuant to Options and Warrants outstanding on the date
hereof; (i) except as set forth on Schedule 3.8, any indebtedness incurred by
the Company or its Subsidiaries, except such as may have been incurred in the
ordinary course of business and consistent with past practice; (j) any loan made
or agreed to be made by the Company or its Subsidiaries, nor has the Company or
its Subsidiaries become liable or agreed to become liable as a guarantor with
respect to any loan; (k) any waiver by the Company or its Subsidiaries of any
right or rights of material value or any payment, direct or indirect, of any
material debt, liability or other obligation; (l) any change in or amendment to
the certificate of incorporation or bylaws (or similar charter documents) of the
Company or its Subsidiaries; (m) any change in the Company's or any of
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<PAGE> 23
its Subsidiaries' relations with, or any loss or threat of loss of, any of the
Company's important suppliers or customers, which would result in a Company
Material Adverse Effect; (n) any termination, cancellation or waiver of any
contract or other right which would result in a Company Material Adverse Effect;
(o) any material damage, destruction or loss, whether or not covered by
insurance, adversely affecting the properties or business of the Company and its
Subsidiaries taken as a whole, or any deterioration in the operating condition
of the assets of the Company and its Subsidiaries which would have a Company
Material Adverse Effect; or (p) any payment made to affiliates of the Company
other than in accordance with the terms of existing employment agreements or
documents evidencing indebtedness owing to such affiliates.
3.9 Taxes.
(a) The Company and each of its Subsidiaries have timely filed (or have
had timely filed on their behalf) or will file or cause to be timely filed, all
material Tax Returns (as defined below) required by applicable law to be filed
by any of them prior to or as of the Closing Date. All such Tax Returns and
amendments thereto are or will be true, complete and correct in all material
respects.
(b) The Company and each of its Subsidiaries have paid (or have had paid
on their behalf), or where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of all material Taxes (as defined below) due with
respect to any period ending prior to or as of the Closing Date.
(c) No Audit (as defined below) by a Tax Authority (as defined below) is
pending or threatened with respect to any Tax Returns filed by, or Taxes due
from, the Company or any Subsidiary. No issue has been raised by any Tax
Authority in any Audit of the Company or any of its Subsidiaries that if raised
with respect to any other period not so audited could be expected to result in a
material proposed deficiency for any period not so audited. No material
deficiency or adjustment for any Taxes has been threatened, proposed, asserted
or assessed against the Company or any of its Subsidiaries. There are no liens
for Taxes upon the assets of the Company or any of its Subsidiaries, except
liens for current Taxes not yet due.
(d) Neither the Company nor any of its Subsidiaries has given or been
requested to give any waiver of statutes of limitations relating to the payment
of Taxes or have executed powers of attorney with respect to Tax matters, which
will be outstanding as of the Closing Date.
(e) Neither the Company nor its Subsidiaries are a party to, is bound by,
or has any obligation or liability for Taxes pursuant to any Tax sharing, Tax
indemnity, or similar agreements.
As used in this Agreement, (i) "Audit" shall mean any audit, assessment of
Taxes, other examination by any Tax Authority, proceeding or appeal of such
proceeding relating to Taxes; (ii) "Taxes" shall
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mean all Federal, state, local and foreign taxes, and other assessments of a
similar nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto; (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign governmental authority responsible for the administration of any Taxes;
and (iv) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
3.10 Litigation. Except as disclosed in the Company SEC Reports or on
Schedule 3.10 hereto, and except for claims of the type described on Schedule
3.16 hereto, there is no suit, claim, action, proceeding or investigation
pending or, to the Company's knowledge, threatened against or affecting the
Company, any Subsidiaries of the Company or any of the directors or officers of
the Company or any of its Subsidiaries in their capacity as such that,
individually or in the aggregate, allege damages of $100,000 or more. Neither
the Company nor any of its Subsidiaries, nor any officer, director or employee
of the Company or any of its Subsidiaries, has been permanently or temporarily
enjoined by any order, judgment or decree of any court or any other governmental
or regulatory authority from engaging in or continuing any conduct or practice
in connection with the business, assets or properties of the Company or such
Subsidiary nor, to the knowledge of the Company, is the Company, any Subsidiary
or any officer, director or employee of the Company or its Subsidiaries under
investigation by any Governmental Entity related to the conduct of the Company's
business. There is not in existence any order, judgment or decree of any court
or other tribunal or other agency enjoining or requiring the Company or any of
its Subsidiaries to take any action of any kind with respect to its business,
assets or properties.
3.11 Employee Benefit Plans, ERISA.
(a) Schedule 3.11 contains a true and complete list of each employment,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance or termination pay, hospitalization or other medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement, and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to or required to be contributed to by the Company or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"), that together
with the Company would be deemed a "single employer" within the meaning of
Section 4001(b)(1) of the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder ("ERISA"), for the
benefit of any employee or former employee of the Company or any ERISA Affiliate
whether formal or informal and whether legally binding or not (the "Plans").
Schedule 3.11 identifies each of the Plans that is an "employee welfare benefit
plan" or "employee pension benefit plan" as such terms are defined in Sections
3(l) and 3(2) of ERISA (such plans being hereinafter referred to collectively as
the "ERISA Plans"). Neither the Company nor any ERISA Affiliate has any formal
plan or commitment, whether legally binding or not, to create any additional
Plan or modify or change any existing Plan that would affect any employee or
terminated employee of the Company or any ERISA Affiliate.
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(b) With respect to each of the Plans, the Company has heretofore
delivered to Purchaser true and complete copies of each of the following
documents: (i) a copy of each Plan (including all amendments thereto); (ii) a
copy of the annual report, if required under ERISA, with respect to each Plan
for the last three years; (iii) a copy of the actuarial report, if required
under ERISA, with respect to each Plan for the last three years; (iv) a copy of
the most recent Summary Plan Description ("SPD"), together with all Summaries of
Material Modification issued with respect to such SPD, if required under ERISA
with respect to each Plan, and all other material employee communications
relating to each Plan; (v) if the Plan is funded through a trust or any other
funding vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof; (vi) all
contracts relating to the Plans with respect to which the Company or any ERISA
Affiliate may have any liability, including without limitation insurance
contracts, investment management agreements, subscription and participation
agreements and record keeping agreements; and (vii) the most recent
determination letter received from the Internal Revenue Service with respect to
each Plan that is intended to be qualified under Section 401 of the Internal
Revenue Code of 1986, as from time to time amended (the "Code").
(c) No liability under Title IV of ERISA has been incurred by the Company
or any ERISA Affiliate since the effective date of ERISA that has not been
satisfied in full.
(d) Neither the Company, any ERISA Affiliate, any of the ERISA Plans, any
trust created thereunder nor any trustee or administrator thereof has engaged in
a transaction or has taken or failed to take any action in connection with which
the Company, any ERISA Affiliate, any of the ERISA Plans, any such trust, any
trustee or administrator thereof, or any party dealing with the ERISA Plans or
any such trust could be subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975, 4976
or 4980B of the Code.
(e) Each of the Plans has been operated and administered in all material
respects in accordance with applicable laws, including but not limited to ERISA
and the Code.
(f) Each of the ERISA Plans that is intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified.
(g) Neither the Company nor any ERISA Affiliate currently maintains or
previously has maintained an ERISA Plan subject to Section 501(c)(9) of the
Code.
(h) Except as set forth on Schedule 3.11, no amounts payable under the
Plans or any other agreement or arrangement to which the Company or any ERISA
Affiliate is a party will fail to be deductible for Federal income tax purposes
by virtue of Section 280G of the Code.
(i) No "leased employee," as that term is defined in Section 414(n) of
the Code, performs services for the Company or any ERISA Affiliate.
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(j) Except for those Plans and other arrangements listed on Schedule
3.11, no Plan provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former employees
after retirement or other termination of service (other than coverage mandated
by applicable law, death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, deferred
compensation benefits accrued as liabilities on the books of the Company or the
ERISA Affiliates, or benefits, the full cost of which is borne by the current
or former employee (or his beneficiary)).
(k) With respect to each Plan that is funded wholly or partially through
an insurance policy, there will be no liability of the Company or an ERISA
Affiliate, as of the Closing Date, under any such insurance policy or ancillary
agreement with respect to such insurance policy in the nature of a retroactive
rate adjustment, loss sharing arrangement or other actual or contingent
liability arising wholly or partially out of events occurring prior to the
Closing Date.
3.12 Environmental Liability.
(a) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Hazardous Substances" means (A) all substances, wastes,
pollutants, contaminants and materials regulated, or defined or designated as
hazardous, extremely hazardous, or toxic under the following federal statutes
and their state counterparts, as well as these statutes' implementing
regulations: the Comprehensive Environmental Response, Compensation and
Liability Act, the Federal Insecticide, Fungicide and Rodenticide Act, the
Atomic Energy Act, the Resource Conservation and Recovery Act, the Clean Air Act
and the Hazardous Materials Transportation Act; (B) any asbestos or
asbestos-containing material, petroleum and petroleum products, including crude
oil and any fractions thereof, natural gas, natural gas liquids, synthetic gas
or polychlorinated biphenyls; or (C) any substance with respect to which a
federal, state or local agency requires environmental investigation, monitoring,
reporting or remediation; and (ii) "Environmental Law" means any applicable
statute, code, enactment, ordinance, rule, regulation, permit, consent,
authorization, judgment, order, or other requirement having the force and effect
of law whether local, state or national, to the extent enacted and in effect on
or prior to the Closing Date, relating to: (A) emissions, discharges, spills,
releases or threatened releases of Hazardous Substances or materials containing
Hazardous Substances into ambient air, surface water, ground water, water
courses, publicly or privately owned treatment works, drains, sewer systems,
wetlands, septic systems or onto land; (B) the manufacture, handling, transport,
use, treatment, storage or disposal of Hazardous Substances or materials
containing Hazardous Substances: (C) the regulation of storage tanks; or (D)
otherwise relating to pollution or protection of the environment or the
protection of human health from environmental hazards.
(b) Except as disclosed in the Company SEC Reports or in Schedule 3.12
hereto, (i) neither the Company nor any Subsidiary is in violation of any
Environmental Law except for any violation that would not individually or in the
aggregate result in liability to the Company in excess of $100,000; (ii) the
Company and each Subsidiary have all permits, licenses and other authorizations
required under any Environmental Law; (iii) no Hazardous Substances have been
used, stored,
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manufactured or processed by the Company or any Subsidiary, except as
reasonably necessary to conduct the business of the Company and the
Subsidiaries, and in compliance with all laws, ordinances and regulations
applicable to the use, storage or manufacture thereof, nor to the knowledge of
the Company has any third party used, stored, manufactured or processed any
Hazardous Substances on the property owned or leased by the Company except in
compliance with Environmental Law; (iv) there has been no disposal, release or
threatened release of Hazardous Substances by the Company or any Subsidiary, nor
to the knowledge of the Company has there been any disposal, release or
threatened release of Hazardous Substances from or to the property owned or
leased by the Company; (v) to the knowledge of the Company, none of the
properties owned or leased by the Company or any Subsidiary (including, without
limitation, soils and surface and ground waters) are contaminated with any
Hazardous Substance nor has the Company contaminated (including, without
limitation, soils and surface and groundwaters) with Hazardous Substances, the
properties owned or leased by it or any Subsidiary; (vi) to the knowledge of
the Company, neither the Company nor any Subsidiary is or is threatened to be
named as a potentially responsible party with respect to any off-site
contamination; and (vii) neither the Company nor any Subsidiary has received any
written notice of violation of or liability under any Environmental Law and the
Company is not aware of any circumstances that could reasonably be expected to
give rise to such notice.
(c) Without in any way limiting the generality of the foregoing, except
as disclosed in the Company SEC Reports or in Schedule 3.12 hereto, (i) the
Company does not store, dispose of or arrange for the disposal of Hazardous
Substances at on-site or off-site locations except in compliance with
Environmental Law, (ii) the Company does not own any underground storage tanks,
(iii) there is no asbestos contained in or forming part of any building,
building component. structure or office space owned or leased by the Company,
and (iv) there are no polychlorinated biphenyls (PCBs) or PCB-containing items
are used or stored at any property owned or leased by the Company, except in the
case of subsections (iii) and (iv) for such conditions as would not involve or
require the expenditure of more than $100,000 in the aggregate to remediate.
3.13 Compliance with Applicable Laws. Except as disclosed in the Company
SEC Reports or in a Schedule to this Agreement or as would not result in a
Company Material Adverse Effect, neither the Company nor any Subsidiary is in
conflict with, or in default or violation of, (a) any law, rule, regulation,
order, judgment or decree applicable to the Company or any Subsidiary or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (b) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any property or asset of the Company or any Subsidiary is bound or affected.
3.14 Material Contracts. Schedule 3.14 hereto sets forth a true and
correct list of any and all agreements, contracts, purchase or installment
agreements, indentures, leases, mortgages, licenses, plans, arrangements,
commitments (whether written or oral) and instruments (collectively,
"contracts") that are material to the Company and its Subsidiaries (the
"Material Contracts"); provided, however, that Schedule 3.14 need not list such
Material Contracts that are specifically
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filed as exhibits to the Company SEC Reports. True and complete copies of each
written Material Contract, or form thereof and true and complete written
summaries of each oral Material Contract have been made available to Purchaser
by the Company prior to the date hereof. Except as disclosed in the Company SEC
Reports, any Schedule to this Agreement or as set forth on Schedule 3.14, (i)
Each Material Contract is a valid, binding and enforceable agreement of the
Company or its Subsidiaries and, to the knowledge of the Company, the other
parties thereto and will, subject to the satisfaction of the conditions in
Article VII, continue to be valid, binding and enforceable immediately after the
Closing, except as such enforcement may be subject to bankruptcy, insolvency or
similar laws now or hereafter in effect relating to creditors' rights, and as
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought; (ii) as of the date hereof,
the Company has no reason to believe that the Company or the relevant Subsidiary
will not be able to fulfill in all material respects all of its obligations
under the Material Contracts which remain to be performed after the date hereof
and (iii) to the knowledge of the Company, there has not occurred any material
default (or event which upon provision of notice or lapse of time or both would
become such a default) under any of the Material Contracts on the part of the
Company or the relevant Subsidiary party thereto.
3.15 Patents, Marks, Trade Names, Copyrights and Registrations.
(a) The Company has all right, title and interest in all Intellectual
Property (as defined below) used in or necessary for the business of the Company
and its Subsidiaries as now conducted and the consummation of the transactions
contemplated hereby will not alter or impair in an adverse manner such
Intellectual Property rights.
(b) "Intellectual Property" includes United States and foreign
inventions, invention disclosures, patents, inventors' certificates, utility
models, trademarks, service marks, trade names, copyrights, mask work
registrations, trade secrets (including processes and software programs),
registrations and applications therefor, and past, present and future causes of
action and remedies therefor.
(c) To the knowledge of the Company, the Company and its Subsidiaries are
not in default under any material agreement pursuant to which it is licensing
Intellectual Property of a third party or granting licenses to its own
Intellectual Property. The Company has not notified any other party of an
alleged default of any such agreement. The Company has not received any
communications alleging that the Company has violated in any material respect
any other person's Intellectual Property rights or has engaged in unfair
competition against such person.
(d) To the knowledge of the Company, the Company and its Subsidiaries do
not now infringe or misappropriate any third party's Intellectual Property
rights and do not have any material liability for any past infringement or
misappropriation. No material dispute or disagreement involving the Company or
any of its Subsidiaries exists or is, to the knowledge of the Company,
threatened with regard to any third party Intellectual Property right, including
any allegation of
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Intellectual Property infringement or misappropriation or of any breach or
default of an Intellectual Property license or similar agreement.
3.16 Labor Matters. Schedule 3.16 sets forth each collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization to which the Company or any Subsidiary is a party or by which
the Company or any Subsidiary is bound. There are no controversies pending or,
to the best knowledge of the Company, threatened between the Company or any
Subsidiary and any of their respective employees. To the best knowledge of the
Company, there are no activities or proceedings of any labor union to organize
any non-unionized employees. Neither the Company nor any Subsidiary has breached
or otherwise failed to comply with any provision of any such agreement or
contract and, except as listed on Schedule 3.16, there are no grievances
outstanding against the Company or any Subsidiary under any such agreement or
contract nor any unfair labor practice complaints pending or, to the knowledge
of the Company, threatened against the Company or any Subsidiary before the
National Labor Relations Board or any current union representation questions
involving any alleged claims in excess of $25,000. There is no strike,
slowdown, work stoppage or lockout, or, to the best knowledge of the Company,
threat thereof, by or with respect to any employees of the Company or any
Subsidiary.
3.17 Real Property. The Company and the Subsidiaries have good and
marketable title to the real property they own and valid leasehold interests in
the real properties leased. Except as disclosed in the Company SEC Reports,
each parcel of real property owned or leased by the Company or any Subsidiary is
owned or leased free and clear of all mortgages, liens, security interests, or
other claims of third parties of any kind (collectively, "Liens"), other than
(A) Liens for current taxes and assessments not yet past due, (B) inchoate
mechanics and materialmen's Liens for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company or such Subsidiary consistent with past practice, and
as to none of which is the Company delinquent with respect to the underlying
obligation and (D) all matters of record, Liens and other imperfections of title
and encumbrances which, individually or in the aggregate, would not have a
Company Material Adverse Effect (collectively, "Permitted Liens").
3.18 Disclosure Documents.
(a) Each document filed or required to be filed by the Company with the
SEC in connection with the Offer, the Merger or the transactions contemplated
hereby (the "Company Disclosure Documents"), including, without limitation, the
Schedule 14D-9, the Company Proxy Statement and any amendments or supplements to
any thereof will comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(b) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to any stockholder of the Company, at the
time such stockholders vote on adoption of this Agreement and at the Effective
Time, the Company Proxy Statement as supplemented or amended, if applicable,
will not contain any untrue statement of a material fact or omit to state any
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material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. At the
time of the filing with the SEC or any other governmental authority of any
Company Disclosure Documents (other than the Company Proxy Statement), at the
time of any distribution thereof and throughout the remaining pendency of the
Offer, each such Company Disclosure Document will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading. The representations and warranties
contained in this subsection (b) will not apply to statements or omissions in
the Company Disclosure Documents based upon information furnished in writing to
the Company by Purchaser specifically for use therein.
(c) The information with respect to the Company or any Company Subsidiary
furnished by the Company or its affiliates to Purchaser in writing specifically
for use in the Offer and the Offer Documents shall not contain, as of the date
the Offer Documents are filed, any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made not misleading. If any
such information provided by the Company or its affiliates shall, after the
filing of the Offer Documents, become false or misleading in any material
respect, the Company shall promptly notify Purchaser and update such information
in writing.
(d) Any information disclosed on a particular Schedule hereto shall be
deemed to have been disclosed in connection with all other Schedules hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company as follows:
4.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate or other power to carry on its business as it is now
being conducted and as it is now proposed to be conducted. Purchaser is not in
default in any respect in the performance, observation or fulfillment of any
provision of its certificate of incorporation or bylaws. Purchaser has made
available to the Company a complete and correct copy of its certificate of
incorporation and bylaws and, as so delivered, such documents are in full force
and effect.
4.2 Authority Relative to this Agreement. Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby on
the part of Purchaser have been duly and validly authorized by the Board of
Directors of Purchaser and by Parent as the sole stockholder of Purchaser and no
other corporate proceedings on the part of Parent and Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly
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executed and delivered by Purchaser and is a valid and binding agreement of
Purchaser, enforceable against it in accordance with its terms, except (a) as
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, and (b) as the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
4.3 Consent and Approvals, No Violation. Neither the execution and
delivery of this Agreement by Purchaser, nor the consummation of the
transactions contemplated hereby, will:
(a) conflict with any provision of the certificate of incorporation or
bylaws of Purchaser;
(b) require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, except (i)
the filing of a premerger notification and report form under the HSR Act, (ii)
the filing with the SEC of the Schedule 14D-1, the Company Proxy Statement
relating to the approval by the Company's stockholders of the Agreement as
contemplated by Section 1.8 of the Agreement, if such approval is required by
law, and such reports under Section 13(a) of the Exchange Act as may be
required in connection with this Agreement, the Tender and Option Agreement and
the transactions contemplated hereby and thereby, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, and
(iv) where the failure to obtain such consents, approvals, authorizations or
permits or the failure to make such filings or notifications would not have a
material adverse effect on the financial condition, business or results of
operations of Purchaser;
(c) except as disclosed to the Company in writing by Purchaser, conflict
with, result in the breach of or constitute a default (or give rise to any right
of termination, cancellation or acceleration) under any of the terms, conditions
or provisions of any material note, lease, mortgage, license, agreement or other
instrument or obligation to which Purchaser is a party or by which Purchaser or
any of its assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained or which, in the aggregate, would not have a
material adverse effect on the financial condition, business, properties or
results of operations of Purchaser; or
(d) conflict with or violate the provisions of any order, writ,
injunction, judgment, decree, statute, rule or regulation applicable to
Purchaser in such a manner as to result in a material adverse effect on the
financial condition, business, properties or results of operations of Purchaser.
4.4 Information Supplied. None of the information supplied or to be
supplied by Purchaser expressly for inclusion in the Company Proxy Statement or
the Schedule 14D-9 will, at the date mailed to the Company's stockholders and at
the time of the Special Meeting, contain any untrue statement of a material fact
or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
in which they are made, not misleading.
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4.5 Financing. Parent has entered into, and furnished to the Company a
copy of, the Financing Commitment Letter with NBD Bank. Subject to the terms
and conditions specified therein, the Financing Commitment Letter will provide
Purchaser funds sufficient in amount to consummate the Offer and Merger pursuant
to this Agreement. The Financing Commitment Letter is in full force and effect
as of the date of the Agreement.
4.6 Purchaser's Operations. The Purchaser was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
4.7 No Shares Owned by Purchaser or Affiliates. As of the date hereof,
neither Purchaser nor any of its affiliates owns any Shares.
4.8 Disclosure Documents. Each document filed or required to be filed
with the SEC in connection with the Offer, the Merger and the transactions
contemplated hereby (the "Purchaser Disclosure Documents"), and any amendments
or supplements to any thereof, will comply as to form in all material respects
with the applicable requirements of the Exchange Act. At the time of filing
with the SEC or any other governmental authority of any Purchaser Disclosure
Documents, at the time of distribution thereof and throughout the remaining
pendency of the Offer, each such Purchaser Disclosure Document will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this Section 4.8 will not apply to statements or
omissions in the Purchaser Disclosure Documents based upon information furnished
in writing to the Purchaser by the Company specifically for use therein.
ARTICLE V
CONDUCT OF BUSINESS BY THE COMPANY
The Company agrees that, after the date hereof, and prior to the time the
directors of the Purchaser have been elected to the Board of Directors of the
Company pursuant to Section 1.3, except as expressly contemplated by this
Agreement, or as agreed in writing by Purchaser:
5.1 Ordinary Course. The Company and each of its Subsidiaries shall
carry on their respective businesses in the usual, regular and ordinary course,
in substantially the same manner as heretofore conducted, and use their
reasonable efforts consistent with past practice and policies to preserve intact
their present business organizations, keep available the services of their
present officers and employees and preserve their existing relationships with
customers, suppliers, lessors, lessees, creditors and others having business
dealings with them. The Company will continue to maintain a standard system of
accounting established and administered in accordance with GAAP.
5.2 Dividends, Changes in Stock. The Company shall not, and shall not
cause or permit any of its Subsidiaries to, (a) declare, set aside or pay any
dividends on or make other distributions in respect of any shares of its capital
stock, (b) split, combine or reclassify any shares of its capital
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stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for any shares of its capital stock or (c) propose
to do any of the foregoing.
5.3 Issuance or Repurchase of Securities. The Company shall not, and
shall not cause or permit any of its Subsidiaries to, issue, pledge, deliver,
sell or transfer or authorize or propose the issuance, pledge, delivery, sale or
transfer of, or repurchase, redeem or otherwise acquire directly or indirectly,
or propose the repurchase, redemption or other acquisition of, any shares of
capital stock of any class of the Company or its Subsidiaries, or any options,
warrants or other rights exercisable for or securities convertible into or
exchangeable for, any such shares (or enter into any agreements, arrangements,
plans or understandings with respect to any of the foregoing), other than
pursuant to the exercise of outstanding Options, Warrants or Convertible
Debentures pursuant to the terms thereof as of the date hereof.
5.4 Governing Documents, Board of Directors. The Company shall not, and
shall not cause or permit any of its Subsidiaries to, propose or adopt any
amendment to its or their certificate of incorporation or bylaws (or similar
charter documents) or take any action to alter the size or composition of its
Board of Directors, except as specifically contemplated by Section 1.3(a)
hereof.
5.5 No Dispositions. The Company shall not, and shall not cause or
permit any of its Subsidiaries to, transfer, sell, lease, license, mortgage or
otherwise dispose of or encumber any material assets, or enter into any
commitment to do any of the foregoing, other than in the ordinary and usual
course of business, consistent with past practice.
5.6 Indebtedness.
(a) The Company shall not, and shall not cause or permit any of its
Subsidiaries to, incur, become subject to, or agree to incur any debt for
borrowed money except for borrowings under existing terms of credit in the
ordinary course of business or incur or become subject to any other material
obligation or liability (absolute or contingent), except current liabilities
incurred, and obligations under contracts entered into, in the ordinary course
of business consistent with prior practice.
(b) The Company shall not pay or be liable for prepayment or other
penalties in connection with the early retirement of any Company indebtedness
for borrowed money, other than as a result of the transactions contemplated
hereby.
5.7 Employees. The Company shall not, and shall not cause or permit any
of its Subsidiaries to, make any change in the compensation payable or to become
payable to any of its officers, directors, employees, agents or consultants,
enter into any new collective bargaining agreement, enter into or amend any
employment, severance, termination or other agreement or make any loans to any
of its officers, directors, employees, agents or consultants or make any change
in its existing borrowing or lending arrangements for or on behalf of any of
such persons, whether contingent on consummation of the Offer, the Merger or
otherwise.
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5.8 Benefit Plans. The Company shall not, and shall not cause or permit
any of its Subsidiaries to (a) pay, agree to pay or make any accrual or
arrangement for payment of any pension, retirement allowance or other employee
benefit pursuant to any existing plan, agreement or arrangement to any officer,
director or employee except in the ordinary course of business and consistent
with past practice or as permitted by this Agreement; (b) pay or agree to pay or
make any accrual or arrangement for payment to any employees of the Company or
any of its Subsidiaries of any amount relating to unused vacation days other
than pursuant to Company policies and plans in effect on January 31, 1996, and
in a manner consistent with past practice; (c) commit itself or themselves to
adopt or pay, grant, issue, accelerate or accrue salary or other payments or
benefits pursuant to any pension, profit sharing, bonus, extra compensation,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other employee
benefit plan, agreement or arrangement, or any employment or consulting
agreement with or for the benefit of any director, officer, employee, agent or
consultant, whether past or present other than pursuant to Company policies and
plans in effect on January 31, 1996, and in a manner consistent with past
practice; or (d) amend in any material respect any such existing plan, agreement
or arrangement, except as contemplated by Section 7.2.
5.9 Taxes. The Company and each of its Subsidiaries shall (i) properly
prepare and file all material reports or Tax Returns required by the Company or
any Subsidiary to be filed with any governmental or regulatory authorities with
respect to its business, operations, or affairs, and (ii) pay in full and when
due all Taxes indicated on such Tax Returns or otherwise levied or assessed upon
the Company, its Subsidiaries or any of their assets and properties unless such
Taxes are being contested in good faith by appropriate proceedings and
reasonable reserves therefor have been established in accordance with GAAP.
5.10 Consultation and Cooperation. The Company and each of its
Subsidiaries shall (i) report on a regular basis, at reasonable times, to a
representative designated by Purchaser regarding material operational matters
and financial matters (including monthly unaudited financial information); (ii)
promptly and regularly notify Purchaser of any change in the normal course or
operation of its business or its properties and of any material development in
the business or operations of the Company and its Subsidiaries (including
without limitation any Company Material Adverse Effect or any governmental or
third party claims, complaints, investigations or hearings, or communications
indicating that the same may be forthcoming or contemplated); (iii) cooperate
with Purchaser and its affiliates and representatives in arranging for an
orderly transition in connection with the transfer of control of the Company,
including without limitation arranging meetings among the Company, its vendors,
suppliers and customers and representatives of Purchaser and its affiliates; and
(iv) deliver to Purchaser concurrently with filing with the SEC true and correct
copies of any report, statement or schedule filed by the Company with the SEC
subsequent to the date of this Agreement.
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5.11 Additional Matters. The Company shall not, and shall not cause or
permit any of its Subsidiaries to:
(a) enter into, amend or terminate any agreements, commitments or
contracts which, individually or in the aggregate, have a Company Material
Adverse Effect, or waive, release, assign or relinquish any material rights or
claims thereunder, except in the ordinary course of business, consistent with
past practice; or authorize any new capital expenditure or expenditures which,
individually is in excess of $450,000 or, in the aggregate, are in excess of
$2,000,000;
(b) discharge or satisfy any lien or encumbrance or payment of any
obligation or liability (absolute or contingent) other than current liabilities
in the ordinary course of business;
(c) cancel or agree to cancel any material debts or claims, except in
each case in the ordinary course of business;
(d) waive any rights of substantial value;
(e) pay, discharge, satisfy or settle any litigation or other claims,
liabilities or obligations (absolute, accrued, asserted, unasserted, contingent
or otherwise) involving the payment by the Company or any of its Subsidiaries of
more than $100,000;
(f) make any equity investments in third parties;
(g) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger) or otherwise make any
material change in the conduct of the business or operations of the Company and
its Subsidiaries taken as a whole; or
(h) agree in writing or otherwise to take any of the foregoing actions or
any other action which would constitute a Company Material Adverse Effect in any
of the items and matters covered by the representations and warranties of the
Company set forth in Article III.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 No Solicitation.
(a) The Company and its Subsidiaries and affiliates will not, and the
Company and its Subsidiaries and affiliates will use their reasonable efforts to
ensure that their respective officers, directors, employees, investment bankers,
attorneys, accountants and other representatives and agents do not, directly or
indirectly, initiate, solicit, encourage or participate in, or provide any
information to any Person (as defined below) concerning, or take any action to
facilitate the making
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of, any offer or proposal which constitutes or is reasonably likely to lead to
any Acquisition Proposal (as defined below) of the Company or any Subsidiary or
affiliate or an inquiry with respect thereto. The Company shall, and shall
cause its Subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to,
immediately cease and cause to be terminated all existing activities,
discussions and negotiations, if any, with any parties conducted heretofore with
respect to any of the foregoing. Notwithstanding the foregoing, the Company may,
directly or indirectly, provide access and furnish information concerning its
business, properties or assets to any corporation, partnership, person or other
entity or group pursuant to an appropriate confidentiality agreement, and may
negotiate and participate in discussions and negotiations with such entity or
group concerning an Acquisition Proposal (x) if such entity or group has
submitted a bona fide written proposal to the Board of Directors of the Company
relating to any such transaction and (y) if, in the opinion of the Board of
Directors of the Company, after consultation with independent legal counsel to
the Company, the failure to provide such information or access or to engage in
such discussions or negotiations would be inconsistent with their fiduciary
duties under applicable law.
(b) The Company shall promptly notify Purchaser of any such offers,
proposals or Acquisition Proposals (including without limitation the terms and
conditions thereof and the identity of the Person making it). The Company shall
give Purchaser written notice (an "Intent Notice") of any Acquisition Proposal
that the Company intends to accept at least two business days prior to accepting
such offer or otherwise entering into any agreement or understanding with
respect thereto. For purposes hereof, any modification of an Acquisition
Proposal shall constitute a new Acquisition Proposal.
(c) As used in this Agreement, "Acquisition Proposal" when used in
connection with any Person shall mean any tender or exchange offer involving
such Person, any proposal for a merger, consolidation or other business
combination involving such Person or any subsidiary of such Person, any proposal
or offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the business or assets of, such Person or any subsidiary
of such Person, any proposal or offer with respect to any recapitalization or
restructuring with respect to such Person or any subsidiary of such Person or
any proposal or offer with respect to any other transaction similar to any of
the foregoing with respect to such Person, or any subsidiary of such Person or
any public announcement of a proposal, plan or intent to do any of the
foregoing; provided, however, that, as used in this Agreement, the term
"Acquisition Proposal" shall not apply to any transaction of the type described
in this subsection (c) involving Purchaser or its affiliates. As used in this
Agreement, "Person" shall mean any corporation, partnership, person or other
entity or group (including the Company and its affiliates and representatives,
but excluding Purchaser or any of its affiliates or representatives).
6.2 Access to Information. Between the date of this Agreement and the
Effective Time, upon reasonable notice and at reasonable times, the Company
shall (and shall cause each of its Subsidiaries to) (i) provide Purchaser and
its officers, employees, accountants, counsel, financing sources and other
agents and representatives reasonable access to all plants, offices, warehouses
and other facilities and to all contracts, internal reports, data processing
files and records, Federal, state,
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local and foreign tax returns and records, commitments, books, records and
affairs of the Company and its Subsidiaries, whether located on the premises of
the Company or one of its Subsidiaries or at another location; (ii) furnish
promptly to Purchaser a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of Federal securities laws or regulations; (iii) permit Purchaser
to make such inspections as it may require; (iv) cause its officers and the
officers of its Subsidiaries to furnish Purchaser such financial, operating,
technical and product data and other information with respect to the business
and properties of the Company and its Subsidiaries as Purchaser from time to
time may request, including without limitation financial statements and
schedules; (v) allow Purchaser the opportunity to interview such employees,
vendors, customers, sales representatives, distributors and other personnel of
the Company with the Company's prior written consent, which consent shall not be
unreasonably withheld; and (vi) assist and cooperate with Purchaser in the
development of integration plans for implementation by the Surviving Corporation
following the Effective Time; provided, however, that no investigation pursuant
to this Section 6.2 shall affect or be deemed to modify any representation or
warranty made by the Company herein. Until the Effective Time, materials
furnished to Purchaser pursuant to this Section 6.2 may be used by Purchaser for
strategic and integration planning purposes relating to accomplishing the
transactions contemplated hereby.
6.3 HSR Act. The Company and Purchaser shall take all reasonable actions
necessary to file as soon as practicable notifications under the HSR Act and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any state attorney
general or other Governmental Entity in connection with antitrust matters.
6.4 Consents and Approvals. Each of the Company and Purchaser will take
all reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on it with respect to this Agreement, and the transactions
contemplated hereby (which actions shall include, without limitation, furnishing
all information required under the HSR Act and in connection with approvals of
or filings with any other Governmental Entity) and will promptly cooperate with
and furnish information to each other in connection with any such requirements
imposed upon any of them or any of their respective subsidiaries in connection
with this Agreement, and the transactions contemplated hereby. Each of the
Company and Purchaser will, and will cause their respective subsidiaries to,
take all reasonable actions necessary to obtain (and will cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or private third party
required to be obtained or made by Purchaser, the Company or any of their
respective subsidiaries in connection with the Merger or the taking of any
action contemplated thereby or by this Agreement.
6.5 Notification of Certain Events. The Company shall promptly notify
Purchaser of:
(a) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the transactions
contemplated by this Agreement;
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(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement;
(c) any action, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge threatened against, relating to or involving or
otherwise affecting the Company or any Subsidiary on the date of this Agreement
which could interfere with the consummation of the transactions contemplated by
this Agreement or could result in a Company Material Adverse Effect; and
(d) the occurrence, or non-occurrence, of any event which, to the
knowledge of the Company, would cause either (i) any representation or warranty
of the Company contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time, (ii)
any condition set forth in Annex B to be unsatisfied at any time from the date
hereof to the date Purchaser purchases Shares pursuant to the Offer, (iii) any
condition set forth in Article VII hereof to be unsatisfied at any time from the
date hereof to the Effective Time or (iv) any material failure by the Company to
comply with or satisfy any covenant, condition or agreement to be complied with
hereunder; provided that the delivery of any notice pursuant to this Section 6.5
shall not limit or otherwise affect the remedies available hereunder to
Purchaser.
6.6 Brokers or Finders. Each of Purchaser and the Company represents, as
to itself, its subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any brokers' or finders' fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
Smith Barney, whose fees and expenses will be paid by the Company, in accordance
with the agreements with such firm (copies of which have been delivered by the
Company), and each of Purchaser and Company agrees to indemnify and hold the
other harmless from and against any and all claims, liabilities or obligations
with respect to any other fees, commissions or expenses asserted by any person
on the basis of any act or statement alleged to have been made by such party or
its affiliates.
6.7 Additional Actions. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, to consummate and make
effective the Merger, and the other transactions contemplated by this Agreement,
subject, however, to the appropriate vote of stockholders of the Company
required so to vote as described in Section 6.11 hereof. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and
franchises of either of Purchaser or the Company, the proper officers and
directors of each corporation which is a party to this Agreement shall take all
such necessary action.
6.8 Benefit Plans and Certain Contracts.
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(a) From and after the Effective Time, subject to applicable law,
Purchaser will honor in accordance with their terms, all Company Benefit Plans;
provided, however, that nothing herein shall preclude any change effected on a
prospective basis in any Company Benefit Plan.
(b) Those employees of the Company and its Subsidiaries whose employment
is continued by the Surviving Corporation after the Closing Date shall be
employed on terms consistent with the Company's current employment practices and
at comparable levels of compensation and positions. Subject to the obligations
of the Surviving Corporation under existing employment agreements, all such
employment shall be at will and the Surviving Corporation shall be under no
obligation to continue to employ any individuals. For purposes of eligibility
to participate in and vesting in various benefits (but not for determination of
benefits) provided to employees, employees of the Company and its Subsidiaries
will be credited with their years of service with the Company and its
Subsidiaries.
(c) Prior to the Effective Time of the Merger, the Company shall enter
into an employment contract with Roger R. Phillips providing for the employment
of Mr. Phillips until December 31, 1997, at a compensation not less than he is
receiving at the date of this Agreement.
6.9 Directors' and Officers' Indemnification.
(a) For six years after the earlier of (i) the date on which the
designees of Purchaser have been elected to the Board of Directors of the
Company pursuant to Section 1.3 hereof and constitute a majority of the members
thereof and (ii) the Effective Time, the Surviving Corporation shall keep in
effect provisions in its Certificate of Incorporation and Bylaws providing for
exculpation of director and officer liability and indemnification of the
indemnified parties (the "Indemnified Parties") to the fullest extent permitted
under the DGCL, provided, that any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the standards
set forth under the DGCL, the Surviving Corporation's Certificate of
Incorporation or Bylaws, shall be made by independent counsel mutually
acceptable to Purchaser and the Indemnified Party.
(b) The Surviving Corporation shall maintain the Company's existing
officers' and directors' liability insurance policy for a period of three years
after the Effective Time; provided, that the Surviving Corporation may
substitute therefor policies of substantially similar coverage and amounts
containing terms no less advantageous to such former directors or officers;
provided, further, that if the existing director's liability insurance expires,
is terminated or cancelled during such period, the Surviving Corporation will
use its best efforts to obtain substantially similar insurance; provided,
however, that in no event shall the Company be required to pay aggregate annual
premiums for insurance under this Section 6.9 in excess of 150% of the aggregate
annual premiums paid by the Company in 1995 (the "1995 Premiums"). In the event
that, but for the last proviso of the immediately preceding sentence, the
Surviving Corporation would be required to expend more than 150% of the 1995
Premiums, the Surviving Corporation shall nonetheless purchase the maximum
amount of such insurance obtainable by payment of annual premiums equal to 150%
of the 1995 Premiums.
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<PAGE> 40
(c) Purchaser shall have entered into an Indemnity Agreement with the
directors and certain officers of the Company as of the date of this Agreement
in the form of Annex C hereto.
6.10 Publicity. The initial announcements of the execution of this
Agreement, the Offer, the Merger and the transactions contemplated hereby shall
be subject to the prior review and approval of both Purchaser and the Company.
Thereafter, so long as this Agreement is in effect and subject to Section 6.1
hereof, neither the Company, Purchaser nor any of their respective affiliates
shall issue or cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other transactions
contemplated hereby without the prior consultation of the other party, except as
may be required by law or by any listing agreement with a national securities
exchange.
6.11 Stockholders' Meeting; Proxy Material. Unless Purchaser acquires at
least 90% of the outstanding Shares, in which case Purchaser shall cause the
merger to take place without a vote of the Company's stockholders as permitted
under the DGCL, if required by applicable law, the Company shall cause a special
meeting of its stockholders (the "Company Stockholders Meeting") to be duly
called and held as soon as reasonably practicable after the purchase of Shares
pursuant to the Offer for the purpose of acting upon proposals to approve this
Agreement and all actions contemplated hereby that require the approval of the
Company's stockholders. The Board shall recommend approval and adoption of this
Agreement by the Company's stockholders, unless otherwise required by the
fiduciary duties of the Board under applicable law as advised by independent
legal counsel (who may be the Company's regularly engaged legal counsel). In
connection with the Company Stockholders Meeting, the Company shall in
accordance with applicable law and after consultation with the Buyer, prepare
and file with the SEC a preliminary Company Proxy Statement relating to the
matters to be considered at the Company Stockholders Meeting, respond promptly
to any comments made by the SEC with respect to the preliminary Company Proxy
Statement and cause a definitive Company Proxy Statement to be mailed to its
stockholders.
6.12 Rights Agreement. Except for the amendments contemplated by Section
1.2(a) hereof or amendments approved in writing by the Purchaser, the Company
will not, following the date hereof, amend the Rights Agreement in any manner
unless and until this Agreement has been terminated pursuant to Section
8.1(c)(ii) or (iii). In addition the Company covenants and agrees that it will
not redeem the Rights unless such redemption is consented to in writing by
Purchaser prior to such redemption.
ARTICLE VII
CONDITIONS
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7.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
(a) Governmental Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expiration of waiting periods
imposed by, any Federal, state, local or foreign governmental or regulatory
authority necessary for the consummation of the Merger and the transactions
contemplated by this Agreement shall have been filed, occurred or been obtained
and shall be in effect at the Effective Time.
(b) Legal Action. No temporary restraining order, preliminary injunction
or permanent injunction or other order precluding, restraining, enjoining,
preventing or prohibiting the consummation of the Merger shall have been issued
by any Federal, state or foreign court or other governmental or regulatory
authority and remain in effect.
(c) Statutes. No Federal, state, local or foreign statute, rule or
regulation shall have been enacted which prohibits the consummation of the
Merger or would make the consummation of the Merger illegal.
(d) Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote required of the stockholders of the Company, if
required pursuant to the Company's certificate of incorporation and applicable
Delaware law, in order to consummate the Merger.
(e) Purchase of Shares in Offer. Purchaser shall have purchased Shares
of Company Common Stock sufficient to meet the Minimum Condition pursuant to the
Offer.
7.2 Conditions to Purchaser's Obligation to Effect the Merger. The
obligations of the Purchaser to effect the Merger shall also be subject to the
satisfaction or waiver by Purchaser on or prior to Closing Date of the following
conditions:
(a) Options and Warrants. The Company shall have taken action to
terminate all incentive plans or programs pursuant to which Options have been or
may be issued. The Company shall use its best efforts to (i) receive, prior to
the Effective Time, a cancellation agreement from each holder of an outstanding
Option or Warrant, in form and substance satisfactory to Purchaser,
acknowledging the cancellation and termination of such Options or Warrants, as
the case may be or (ii) arrange for the exercise of such outstanding Options or
Warrants. Such cancellation agreements, if any, shall provide that in
consideration for the cancellations of the Options and/or Warrants, the
Surviving Corporation shall pay to each holder thereof, promptly after the
Effective Time, an amount (less any applicable withholding and employment taxes)
equal to the amount by which the Merger Consideration exceeds the exercise price
per share of Company Common Stock underlying each outstanding Option, or the
strike price per share of Company Common Stock underlying each outstanding
Warrant, multiplied by the number of shares of Company Common Stock covered by
such vested Options or Warrants, as the case may be.
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<PAGE> 42
(c) Non-Competition Payments. Each of John G. Owens and Allan B.
Freedman shall have amended or terminated their existing respective
Noncompetition Agreements with the Company, and each of Louis T. Enos, Phillip
Kusky and E. Gordon Young shall have amended or terminated their respective
Employment Agreements with the Company, in each case to provide that no
payments to be made thereunder shall be accelerated by virtue of the Offer or
the Merger.
ARTICLE VIII
TERMINATION
8.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof:
(a) By Mutual Consent. By mutual consent of the Board of Directors of
Purchaser and the Board of Directors of the Company.
(b) By Purchaser or the Company. By either the Board of Directors of
Purchaser or the Board of Directors of the Company:
(i) if shares of Company Common Stock shall not have been purchased
pursuant to the Offer on or prior to August 31, 1996; provided, however,
that the right to terminate this Agreement under this Section 8.1(b)(i)
shall not be available to any party whose failure to fulfill any material
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Purchaser to purchase shares of Company Common Stock
pursuant to the Offer on or prior to such date; or
(ii) if a court of competent jurisdiction or other governmental or
regulatory authority shall have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the party
seeking termination shall use its reasonable efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable, provided that
the party seeking termination did not contribute to the cause of action.
(c) By the Company. By the Board of Directors of the Company:
(i) if, prior to the purchase of Shares sufficient to meet the
Minimum Condition by Purchaser pursuant to the Offer, the Company shall
have (x) withdrawn, modified or changed in a manner adverse to Purchaser
its approval or recommendation of the Offer, this Agreement or the Merger
in order to execute a definitive agreement relating to an Acquisition
Proposal by a Person other than Parent, Purchaser or any affiliate of
either of them, after consulting with independent legal counsel and
determining that the failure to take
36
<PAGE> 43
such action would be inconsistent with its fiduciary duties to the
Company's stockholders and (y) paid or caused to be paid the fees provided
for in Section 9.1 (b) hereof; or
(ii) if, prior to the purchase of Shares sufficient to meet the
Minimum Condition pursuant to the Offer, Purchaser breaches or fails in any
material respect to perform or comply with any of its material covenants
and agreements contained herein or breaches its representations and
warranties in any material respect; or
(iii) if (x) Purchaser or any of its affiliates shall have failed to
commence the Offer on or prior to five business days following the date of
the initial public announcement of the Offer (the "Offer Deadline") other
than due to an occurrence that if occurring after the commencement of the
Offer would result in a failure to satisfy any of the conditions set forth
in Annex B hereto, or (y) Purchaser shall have failed to waive the
Financing Condition by the thirtieth (30th) business day following the
commencement of the Offer; provided, that the Company may not terminate
this Agreement pursuant to this Section 8.1(c)(iii) if the Company is in
material breach of this Agreement.
(d) By Purchaser. By the Board of Directors of Purchaser:
(i) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex B hereto, Purchaser shall have failed to
commence the Offer on or prior to the Offer Deadline; provided that
Purchaser may not terminate this Agreement pursuant to this Section
8.1(d)(i) if Purchaser (x) is in material breach of this Agreement or (y)
has not exercised such right by the close of business on or before the
fifth business day following the Offer Deadline; or
(ii) if Purchaser is not in material breach of the Agreement and
either (A) prior to the purchase of shares of Company Common Stock pursuant
to the Offer, the Board of Directors of the Company shall have withdrawn,
or modified or changed (including by amendment of the Company's 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, or the
Company shall have executed an agreement in principle (or similar
agreement) or a definitive agreement relating to, an Acquisition Proposal
as provided in Section 8.1(c); or (B) prior to the purchase of shares of
Company Common Stock pursuant to the Offer, it shall have been publicly
disclosed, or Purchaser shall have learned, that any person, entity or
"group" (as that term is defined in Section 13(d)(3) of the Exchange Act),
other than Purchaser or its affiliates or any group of which any of them is
a member, shall have acquired beneficial ownership (determined pursuant to
Rule 13d-3 promulgated under the Exchange Act) of more than 14.9% of any
class or series of capital stock of the Company (including the Shares),
through the acquisition of stock, the formation of a group or otherwise, or
shall have been granted an option, right, or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 14.9% of any class
or series of capital stock of the Company (including the Shares); or
37
<PAGE> 44
(iii) if Purchaser shall have terminated the Offer, or the Offer
shall have expired without Purchaser purchasing any shares of Company
Common Stock thereunder, provided that Purchaser may not terminate this
Agreement pursuant to this Section 8.1(d)(iii) if (x) Purchaser has failed
to purchase shares of Company Common Stock in the Offer in violation of the
material terms thereof or (y) Purchaser has not exercised such right by the
close of business on or before the fifth business day following the
termination or expiration of the Offer in accordance with its terms; or
(iv) if, prior to the purchase of Company Common Stock pursuant to
the Offer, the Company (x) breaches or fails to perform or comply with any
of its covenants and agreements contained herein other than those contained
in Sections 5.1 through 5.9, inclusive, in any material respect, or (y)
breaches or fails to perform or comply with any of its covenants and
agreements contained in Sections 5.1 through 5.9, inclusive, or breaches
its representations and warranties in any respect, which breach or failure
shall have a Company Material Adverse Effect.
8.2 Effect of Termination. In the event of termination of this Agreement
as provided in Section 8.1 above, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void and there shall be no liability or obligation on the part of Purchaser
or the Company, or their respective officers, directors or employees, except (a)
for fraud or for material breach of this Agreement, (b) as set forth in this
Section 8.2, or Sections 6.10 and 9.1 hereof, (c) to the extent that, and for so
long as, Purchaser's designees to the Company's Board of Directors pursuant to
Section 1.3 hereof constitute at least a majority of the members of such Board
of Directors, Section 6.9(a) hereof and (d) to the extent that, and for so long
as, Purchaser may exercise the Option under the Tender and Option Agreement, the
Company shall not take action so as to make the Rights Agreement or the
restrictions of Section 203 of the DGCL applicable thereto.
ARTICLE IX
GENERAL PROVISIONS
9.1 Fees and Expenses.
(a) Except as contemplated by this Agreement, including Section 9.1(b)
hereof, all costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party incurring such expenses.
(b) If (i) the Board of Directors of the Company shall terminate this
Agreement pursuant to Section 8.1(c)(i) hereof, or if (ii) the Board of
Directors of Purchaser shall terminate this Agreement pursuant to Section
8.1(d)(ii)(A) hereof, or if (iii) the Board of Directors of Purchaser shall
terminate this Agreement pursuant to Section 8.1(d)(ii)(B) or Section 8.1(d)(iv)
and within nine months of any such termination a Person shall acquire or
beneficially own a majority of the then outstanding shares of Company Common
Stock or shall have obtained representation on the Company's Board of
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<PAGE> 45
Directors or shall enter into a definitive agreement with the Company with
respect to an Acquisition Proposal or similar business combination, then, in any
such case as described in clause (i), (ii) or (iii), the Company shall pay or
cause to be paid to Purchaser (concurrently with the termination of this
Agreement in the case of a termination referred to in Section 9.1(b)(i) or
Section 9.1(b)(ii) hereof, upon the consummation of the Acquisition Proposal or
similar business combination in the case of a termination referred to in Section
9.1(b)(iii) hereof), an amount equal to $2.1 million.
9.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the Stockholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective Boards of Directors (which in the case of the Company shall include
approvals as contemplated in Section 1.3(c) hereof), at any time prior to the
Closing Date with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the Stockholders of the
Company, no such amendment, modification or supplement shall reduce or change
the Merger Consideration.
9.3 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Effective
Time.
9.4 Notices. All notices and other communications hereunder and shall be
in writing and shall be deemed given upon personal delivery, facsimile
transmission (which delivery by an overnight express courier service (delivery,
postage or freight charges prepaid), or on the fourth day following deposit in
the United States mail (if sent by registered or certified mail, return receipt
requested, delivery, postage or freight charges prepaid), addressed to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Purchaser, to:
Vemco Acquisition Corp.
33662 James J. Pompo Drive, P.O. Box 278
Fraser, Michigan 48026-0278
Telecopy: (810) 294-1960
Attention: Michael G. Torakis, President
with a copy to:
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
Telecopy No. (313) 568-6915
Attention: Paul R. Rentenbach
(b) if to the Company, to:
Bailey Corporation
700 Lafayette Road, P.O. Box 307
39
<PAGE> 46
Seabrook, NH 03874
Telecopy: (603) 474-5831
Attention: Roger R. Phillips, President
with a copy to:
Foley Hoag & Eliot
1 Post Office Square
Boston, MA 02109-2170
Telecopy: (617) 832-7000
Attention: David A. Broadwin
9.5 Definitions, Interpretation. As used in this Agreement, the term
"affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the Exchange
Act. When a reference is made in this Agreement to an Article, Section, Exhibit
or Schedule, such reference shall be to an Article, Section, Exhibit or Schedule
to this Agreement unless otherwise indicated. The words "include," "includes"
and "including" when used herein shall be deemed in each case to be followed by
the words "without limitation." The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
9.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
9.7 Entire Agreement, No Third Party Beneficiaries. This Agreement
(including the documents and the instruments referred to herein and therein) and
the Confidentiality Agreement dated April 4, 1996 (the "Confidentiality
Agreement"), between Venture Industries, Inc., and the Company (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 6.9 hereof is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
9.8 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated and this Agreement shall be reformed to provide the parties with
substantially equivalent benefits to those conferred by the deleted provisions
hereof.
9.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware (without giving effect to the
principles of conflicts of law thereof).
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<PAGE> 47
9.10 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that Purchaser may assign, in its sole discretion, any or all of
its rights, interests and obligations hereunder to Parent or to any direct or
indirect wholly owned subsidiary of Parent. 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.
9.11 Knowledge. Wherever the word "knowledge" (or variations thereof,
including, without limitation, "know" and "knows") appears in Article III of
this Agreement, the parties intend that such word be construed to mean the
actual knowledge of the Executive Officers of the Company (as such term is
defined in the Company Proxy Statement).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
VEMCO ACQUISITION CORP.
By:
-----------------------------
Michael G. Torakis, President
BAILEY CORPORATION
By:
-----------------------------
Roger R. Phillips, President
41
<PAGE> 48
ANNEX A
GUARANTY
This Guaranty is made as of the June 5, 1996, by VEMCO, INC., VENTURE
INDUSTRIES CORPORATION, VEMCO LEASING, INC., VENTURE LEASING COMPANY, VENTURE
MOLD & ENGINEERING CORPORATION, VENTURE SERVICE COMPANY, each a Michigan
corporation, and VENTURE INDUSTRIES CANADA, LTD., an Ontario corporation (each
a "Guarantor" and collectively, the "Guarantors") to Bailey Corporation, a
Delaware corporation (the "Company") and to Roger R. Phillips, William A.
Taylor, Louis T. Enos, E. Gordon Young, John G. Owens, Allen B. Freedman and
Leonard Heilman (each a "Beneficiary" and collectively, the "Beneficiaries")
with respect to the obligations of VEMCO ACQUISITION CORP., a Delaware
corporation (the "Purchaser").
RECITALS
A. The Company is willing, on or about the date of this Guaranty, to enter
into an Agreement and Plan of Merger with the Purchaser (the "Merger
Agreement"), provided that the Guarantors guarantee the obligations of the
Purchaser thereunder and with respect to certain related matters; and
B. Guarantors desire to induce the Company to enter into the Merger
Agreement.
In consideration of the foregoing matters and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Guarantors covenant and agree as follows:
1. GUARANTY OF PAYMENT AND PERFORMANCE. The Guarantors hereby jointly
and severally guarantee to the Company and the Beneficiaries the performance of
all liabilities, agreements and other obligations of the Purchaser under the
Merger Agreement, the Indemnity Agreements between the Purchaser and the
Beneficiaries contemplated by Section 6.9(c) of the Merger Agreement, and the
Company's obligations under the Noncompetition Agreements between the Company
and the Beneficiaries in the forms attached hereto, the Amendment to the
Employment and Noncompetition Agreement between the Company and Roger R.
Phillips, and the Amendment to the Employment and Noncompetition Agreement
between the Company and William A. Taylor, together with all costs of
collection, compromise or enforcement, including, without limitation,
reasonable attorneys' fees incurred with respect to this Guaranty, or with
respect to a proceeding under the federal bankruptcy laws or any insolvency,
receivership, arrangement or reorganization law or an assignment for the
benefit of creditors concerning Purchaser or any Guarantor, together with
interest on all such costs of collection, compromise or enforcement from the
date arising (all the foregoing, collectively, the "Obligations"). This
Guaranty is an absolute, unconditional and continuing guaranty of the full and
punctual payment and performance of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Company or any Beneficiary first attempt to collect any of the Obligations from
the Purchaser or resort to any security or other means of obtaining their
payment.
<PAGE> 49
2. UNLIMITED GUARANTY. The liability of the Guarantors hereunder shall
be unlimited.
3. WAIVERS BY GUARANTORS; PURCHASER'S FREEDOM TO ACT. The Guarantors
waive presentment, demand, protest, notice of acceptance, notice of obligations
incurred and all other notices of any kind, all defenses that may be available
by virtue of any valuation, stay, moratorium law or other similar law now or
hereafter in effect, any right to require the marshalling of assets of the
Purchaser, and all suretyship defenses generally. Without limiting the
generality of the foregoing, the Guarantors agree to the provisions of any
instrument evidencing, securing or otherwise executed in connection with any
Obligation and agree that the obligations of the Guarantors hereunder shall not
be released or discharged, in whole or in part, or otherwise affected by: (i)
the failure of the Company or any Beneficiary to assert any claim or demand or
to enforce any right or remedy against the Purchaser; (ii) any extensions or
renewals of, or alterations of the terms of, any Obligations or any portion
thereof (iii) any rescissions, waivers, amendments or modifications of any of
the terms or provisions of any agreement evidencing, securing or otherwise
executed in connection with any Obligation; (iv) the substitution or release of
any entity primarily or secondarily liable for any Obligation; (v) the adequacy
of any rights the Company or any Beneficiary may have against any other means
of obtaining repayment of the Obligations; (vi) failure to obtain or maintain a
right of contribution for the benefit of the Guarantors; or (vii) any other act
or omission that might in any manner or to any extent vary the risk of the
Guarantors or otherwise operate as a release or discharge of the Guarantors,
all of which may be done without notice to the Guarantors.
4. SUBROGATION. Until the payment and performance in full of all
Obligations and any and all obligations of the Purchaser to the Company and the
Beneficiaries, the Guarantors shall not exercise any rights against the
Purchaser arising as a result of payment by the Guarantors hereunder, by way of
subrogation or otherwise, and will not prove any claim in competition with the
Company or any Beneficiary in respect of any payment hereunder in bankruptcy or
insolvency proceedings of any nature; the Guarantors will not claim any set-off
or counterclaim against the Purchaser in respect of any liability of the
Guarantors to the Purchaser; and the Guarantors waive any benefit of and any
right to participate in any collateral that may be held by the Company or any
Beneficiary.
5. TERMINATION. This Guaranty is irrevocable and shall continue without
limit of time.
6. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon the
Guarantors, their successors and assigns, and shall inure to the benefit of and
be enforceable by the Company, the Beneficiaries and their successors,
transferees and assigns.
7. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Guaranty nor any consent to any departure by the Guarantors therefrom
shall be effective unless the same shall be in writing and signed by the
Company and the Beneficiaries. No failure on the part of the Company or any
Beneficiary to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof of the exercise
of any other right.
A-2
<PAGE> 50
8. NOTICES. All notices and other communications called for hereunder
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or
mailed first class mail postage prepaid or, in the case of telegraphic or
telexed notice, when transmitted, answerback received, addressed as set forth
below following the signatures hereto, or to such other address as either
party may designate in writing.
9. GOVERNING LAW; CONSENT TO JURISDICTION. This Guaranty is intended to
take effect as a sealed instrument and shall be governed by, and construed in
accordance with, the laws of The Commonwealth of Massachusetts. The Guarantors
agree that any suit for the enforcement of this Guaranty may be brought in the
courts of The Commonwealth of Massachusetts or the State of Michigan or any
Federal Court sitting therein, and consent to the non-exclusive jurisdiction of
such court and to service of process in any such suit being made upon the
Guarantors by mail at the address set forth at the head of this Guaranty. The
Guarantors hereby waive any objection that they may now or hereafter have to
the venue of such suit or any such court or that such suit was brought in an
inconvenient court.
10. MISCELLANEOUS. This Guaranty constitutes the entire agreement of the
Guarantors with respect to the matters set forth herein. This writing is
intended by the parties as a final, complete and exclusive expression of their
guaranty agreement. No course of dealing, course of performance or trade
usage, and no parol evidence of any nature, shall be used to supplement or
modify any terms. There are no conditions to the full effectiveness of this
Guaranty. The rights and remedies herein provided are cumulative and not
exclusive of any remedies provided by law or any other agreement, and this
Guaranty shall be in addition to any other guaranty of the Obligations. The
invalidity or unenforceability of any one or more sections of the Guaranty
shall not affect the validity or enforceability of its remaining provisions.
Captions are for the ease of reference only and shall not affect the meaning of
the relevant provisions. The meanings of all defined terms used in this
Guaranty shall be equally applicable to the singular and plural forms of the
terms defined.
IN WITNESS WHEREOF, the Guarantors have cause this Guaranty to be executed
and delivered as a sealed instrument as of the date appearing on page one.
VEMCO, INC.
By:
----------------------------------
Michael G. Torakis, President
VENTURE INDUSTRIES CORPORATION
By:
----------------------------------
Michael G. Torakis, President
A-3
<PAGE> 51
VEMCO LEASING, INC.
By:
----------------------------------
Michael G. Torakis, President
VENTURE SERVICE COMPANY
By:
----------------------------------
Michael G. Torakis, President
VENTURE LEASING COMPANY
By:
----------------------------------
Michael G. Torakis, President
VENTURE MOLD & ENGINEERING CORPORATION
By:
----------------------------------
Michael G. Torakis, President
VENTURE INDUSTRIES CANADA, LTD.
By:
----------------------------------
Michael G. Torakis, President
Address for Guarantors:
33662 James J. Pompo
P.O. Box 278
Fraser, MI 48026-0278
Address for Beneficiaries:
700 Lafayette Road
P.O. Box 307
Seabrook, NH 03874
A-4
<PAGE> 52
ANNEX B
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provisions of the Offer, and in addition to (and not
in limitation of) Purchaser's rights to extend and amend the Offer at any time
in its sole discretion (subject to the provisions of the Merger Agreement),
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, 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, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any tendered Shares, and may terminate the Offer as to
any Shares not then paid for, if (i) the applicable waiting period under the
HSR Act has not expired or terminated, (ii) the Minimum Condition has not been
satisfied or waived, (iii) the Financing Condition has not been satisfied or
(iv) the Company shall not have given notice of redemption for all Convertible
Debentures which are redeemable at the Company's option in accordance with
their terms or (v) at any time on or after June 5, 1996, and before the time
for payment for Shares, any of the following events shall exist :
(a) any domestic or foreign Federal, state or local governmental,
regulatory or administrative agency or authority or legislative body or
commission shall have instituted any action, proceeding, application, claim
or suit, or shall have promulgated, entered, enforced, enacted, proposed,
issued or made applicable to the Offer or the Merger any statute, rule,
regulation, judgment, order or injunction which directly or indirectly (1)
challenges, seeks to make illegal, prohibits or makes illegal, or imposes any
material limitations on, Purchaser's ownership or operation (or that of any of
their respective subsidiaries or affiliates) of all or a material portion of the
businesses or assets of it or of the Company or its Subsidiaries, or compels
Purchaser or its affiliates to dispose of or hold separate any material portion
of the business or assets of the Company or its subsidiaries, taken as a whole,
(2) challenges, seeks to make illegal, prohibits or makes illegal the acceptance
for payment, payment for or purchase of Shares or the consummation of the Offer
or the Merger, (3) restricts the ability of Purchaser, or renders Purchaser
unable, to accept for payment, pay for or purchase some or all of the Shares,
(4) imposes material limitations on the ability of Purchaser to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters presented to the Company's
Stockholders, (5) seeks to obtain or obtains material damages as a result of
the transactions contemplated by the Offer or the Merger, or (6) seeks to
require divestiture by Purchaser or any of its subsidiaries or affiliates of any
Shares, and in the case of (5) or (6) above, is likely to have a Company
Material Adverse Effect, provided that Purchaser shall have used reasonable
efforts to cause any such judgment, order or injunction to be vacated or lifted;
(b) there shall have occurred (1) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange, Inc. or
any other securities market for a period in excess of three hours (excluding
suspensions or limitations resulting solely from physical
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damage or interference with such exchanges not related to market conditions),
(2) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (4) any limitation
(whether or not mandatory) by any foreign or United States governmental
authority on the extension of credit by banks or other financial institutions,
(5) any decline in either the Dow Jones Industrial Average or the Standard &
Poor's Index of 500 Industrial Companies by an amount in excess of 20% measured
from the close of business on June 5, 1996, or (6) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(c) the Company shall have breached or failed to perform or comply with
any of its covenants and agreements contained in the Merger Agreement other than
those contained in Sections 5.1 through 5.9, inclusive, in any material respect,
or the Company shall have breached or failed to perform or comply with any of
its covenants and agreements contained in Sections 5.1 through 5.9, inclusive,
which breach or failure shall have a Company Material Adverse Effect, or the
Company shall have breached its representations and warranties in any respect,
which breach shall have a Company Material Adverse Effect;
(d) since the date of the Merger Agreement, there shall have occurred any
change in the financial condition, business, or results of operations of the
Company and its Subsidiaries that, or any event, condition, occurrence or
development of a state of circumstances or facts which individually or in the
aggregate, constitutes a Company Material Adverse Effect;
(e) the Merger Agreement shall have been terminated in accordance with
its terms;
(f) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that any person, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Purchaser or its affiliates or any
group of which any of them is a member, shall have acquired beneficial ownership
(determined pursuant to Rule l3d-3 promulgated under the Exchange Act) of more
than 14.9% of any class or series of capital stock of the Company (including the
Shares), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted an option, right or warrant, conditional
or otherwise, to acquire beneficial ownership of more than 14.9% of any class or
series of capital stock of the Company (including the Shares); or (ii) any
person or group shall have entered into a definitive agreement or agreement in
principle with the Company with respect to an Acquisition Proposal or other
business combination with the Company;
(g) the Company's Board of Directors shall have withdrawn, or modified or
changed (including by amendment of the Schedule 14D-9) in a manner adverse to
Purchaser its approval or recommendation of the Offer, the Merger Agreement or
the Merger or shall have recommended an Acquisition Proposal,
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which in the judgment of Purchaser, in any such case, and regardless of the
circumstances (including any action or inaction by Purchaser giving rise to
such condition) makes it inadvisable to proceed with the Offer or with such
acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Purchaser and may be
waived by Purchaser, in whole or in part at any time and from time to time in
the discretion of Purchaser. The failure by Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
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<PAGE> 55
ANNEX C
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), effective as of June 5, 1996,
between VEMCO ACQUISITION CORP., a Delaware corporation (the "Purchaser"), and
________________ ("Indemnitee"),
WITNESSETH THAT:
WHEREAS, Purchaser is acquiring or has acquired control of Bailey
Corporation (the "Company"); and
WHEREAS, the Company and certain of its officers and directors, including
Indemnitee, may be subject to certain legal liabilities, including but not
limited to liabilities arising from the matter styled as Vicki Match Suna and
Lori Rosen v. Bailey Corporation (the "Suna Litigation"); and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability, the Purchaser desires to provide for the
indemnification of, and the advancing of expenses to, Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the capitalized terms
listed below shall have the meanings ascribed to them as follows:
"Board" means the Board of Directors of the Purchaser.
"Expenses" means any expense, liability, or loss, including reasonable
attorneys' fees, judgments, fines, ERISA excise taxes and penalties,
amounts paid or to be paid in settlement, any interest, assessments, or
other charges imposed thereon, and any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any payments
under this Agreement, paid or incurred in connection with investigating,
defending, being a witness in, or participating in (including on appeal),
or preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event.
"Indemnifiable Event" means any event or occurrence that takes place
either prior to or after the execution of this Agreement that is (a)
related to the fact that Indemnitee is, or has agreed to serve as, a
director or officer of the Company or while a director or officer of the
Company serves at the request of the Company as a director, officer,
employee, trustee, agent, or fiduciary of another foreign or domestic
corporation, partnership, joint venture, employee benefit plan, trust, or
other enterprise, and (b) related to anything done or not done by
Indemnitee in any such capacity, whether or not the basis of the
Proceeding is alleged
<PAGE> 56
action in an official capacity while serving in any capacity described
above.
"Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, investigative or
other.
2. Agreement to Indemnify.
(a) Subject to the provisions of Section 2(c), in the event Indemnitee
is, or becomes a party to, or witness or other participant in, or is threatened
to be made a party to, or witness or other participant in, a Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, including, but
not limited to, the Suna Litigation, the Purchaser shall indemnify Indemnitee
from and against any and all Expenses actually and reasonably incurred or
suffered by the Indemnitee to the fullest extent permitted by law, as the same
exists or may hereafter be amended or interpreted (but in the case of any such
amendment or interpretation, only to the extent that such amendment or
interpretation permits the Purchaser to provide broader indemnification rights
than were permitted prior thereto). The rights to receive indemnification and
the advancement of Expenses under this Agreement are not exclusive of any other
rights which Indemnitee may be entitled or subsequently entitled under any
statute, the Certificate of Incorporation or Bylaws of the Company or the
Purchaser, by vote of the stockholders of the Company or the Purchaser or the
Board, or otherwise. To the extent that a change in applicable law (whether by
statute or judicial decision) or the Bylaws of the Company or the Purchaser
permits greater indemnification than is currently provided for an Indemnifiable
Event, Indemnitee shall be entitled to such greater indemnification under this
Agreement.
(b) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Purchaser for a portion of Expenses, but not, however,
for the total amount thereof, the Purchaser shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
(c) No Indemnification nor Expense Advance (as defined in Section 3
below) pursuant to this Agreement shall be paid by the Purchaser:
(i) In connection with any Proceeding initiated by Indemnitee
against the Purchaser, the Company or any director or officer of the
Purchaser or the Company unless the Purchaser or the Company has joined
in, or the Board of Directors of the Purchaser or the Company, has
consented to, the initiation of such Proceeding, or the Proceeding is one
to enforce indemnification rights under Section 5 below;
(ii) To the extent Indemnitee settles or otherwise disposes of a
Proceeding or causes the settlement or disposal of a Proceeding without
the Purchaser's express prior written consent (which shall not be
unreasonably withheld or delayed) unless Indemnitee receives court
approval for such settlement or other disposition where the Purchaser had
the opportunity to oppose Indemnitee's request for such court approval;
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(iii) With regard to any judicial award if the Purchaser was not
given a reasonable and timely opportunity, at its expense, to participate
in the defense of such action unless the Purchaser's participation in
such Proceeding was barred by this Agreement or the court in such
Proceeding;
(iv) For any acts, omissions, transactions or circumstances for
which indemnification under this Agreement is prohibited by applicable
state or federal law or until any preconditions imposed upon, or agreed
to by, the Purchaser by or with any court or governmental agency are
satisfied;
(v) For remuneration paid to the director if it shall be determined
by a final decision of a court of competent jurisdiction that such
remuneration was in violation of law;
(vi) For any accounting of profits made from the purchase or sale
by the Indemnitee of securities of the Company in violation of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereof;
(vii) For acts actually performed by the Indemnitee or of which the
Indemnitee had actual knowledge if the Indemnitee gained any personal
profit to which he was not entitled in the event that a final decision of
a court of competent jurisdiction establishes that the Indemnitee was not
entitled to such personal profit; or
(viii) For proceedings based upon the same facts as underlie a
breach of a representation and warranty in the Agreement and Plan of
Merger, of even date herewith, between Purchaser and the Company.
3. Expenses Advances. Expenses incurred by Indemnitee in any Proceeding for
which indemnification may be sought under this Agreement shall be advanced by
the Purchaser to Indemnitee within 20 days after receipt by the Purchaser of a
statement or statements from Indemnitee requesting such advance and reasonably
evidencing the Expenses reasonably incurred by Indemnitee (an "Expense
Advance"). If it is ultimately determined by a final judicial decision (from
which there is no right of appeal) that Indemnitee is not entitled to be
indemnified by the Purchaser, Indemnitee hereby agrees to immediately repay any
amounts advanced by the Purchaser under this Section 3. Indemnitee agrees to
execute any further agreements regarding the repayment of Expenses as the
Purchaser may reasonably request prior to receiving any such advance,
including, without limitation, an affirmation of Indemnitee's good faith belief
that any applicable standards of conduct have been met by Indemnitee.
4. Notification and Defense of Proceeding.
(a) Indemnitee shall give written notice (including a description of the
claim and an estimate of Expenses) to the Purchaser promptly after Indemnitee
has actual knowledge of any Proceeding as to which indemnification may be
sought under this Agreement in addition to the Suna Litigation,
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<PAGE> 58
of which Purchaser acknowledges it has been notified. The failure of
Indemnitee to give notice, as provided in this Section 4(a) shall not relieve
the Purchaser of its obligations to provide indemnification under this
Agreement; however, the amounts to which Indemnitee may be indemnified shall be
reduced to the extent that the Purchaser has been prejudiced by such failure.
(b) With respect to any Proceeding, the Purchaser will be entitled to
participate in the Proceeding at its own expense and, except as otherwise
provided below, to the extent the Purchaser so desires, the Purchaser may
assume the defense thereof directly or through the Company with counsel
reasonably satisfactory to Indemnitee. However, the Purchaser shall not be
entitled to assume the defense of any Proceeding brought by the Purchaser or
the Company.
(c) If the Purchaser assumes the defense, Indemnitee shall furnish such
information regarding Indemnitee or the Proceeding in question, as the
Purchaser may reasonably request and as may be required in connection with the
defense or settlement of such Proceeding and shall fully cooperate with the
Purchaser in every other respect. Except as provided in Section 4(f) below, if
the Purchaser assumes the defense of the Proceeding, the Purchaser shall take
all necessary steps in good faith to defend, settle or otherwise dispose of the
Proceeding.
(d) After notice from the Purchaser to Indemnitee of its election to
assume the defense of any Proceeding, the Purchaser will not be liable to
Indemnitee under this Agreement or otherwise for any Expenses subsequently
incurred by Indemnitee in connection with the defense of such Proceeding other
than reasonable costs of investigation or as otherwise provided in clauses (i)
through (iii) below. Indemnitee shall have the right to employ Indemnitee's
own counsel in such Proceeding, but all Expenses related thereto incurred after
notice from the Purchaser of its assumption of the defense shall be at
Indemnitee's expense, unless (i) the employment of counsel by Indemnitee has
been authorized by the Purchaser; (ii) Purchaser or a court of competent
jurisdiction has reasonably determined that there may be a conflict of interest
between Indemnitee and the Purchaser in the defense of the Proceeding; or (iii)
the Purchaser does not, in fact, assume and conduct the defense of such
Proceeding.
(e) Any Expenses incurred by the Purchaser in defense of the Proceeding
under this Section 4 (except in a situation described in clause (i), (ii) or
(iii) of Section 4(d)) shall be considered Expenses advanced by the Purchaser
to Indemnitee under Section 3 above.
(f) The Purchaser may consent to a settlement or other disposition of all
or any part of any Proceeding which the Purchaser is defending under Section
4(b) above without first obtaining the written consent of Indemnitee; provided
that such settlement or other disposition would not cause Indemnitee to lose
any right to indemnification under this Agreement.
5. Enforcement; Consent to Serve.
(a) The Purchaser acknowledges that Indemnitee is relying upon this
Agreement. Indemnitee shall have the right to enforce his indemnification
rights under this Agreement by
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commencing litigation in any court having subject matter jurisdiction thereof
and in which venue is proper. Likewise, the Purchaser may seek judicial
determination of its obligations under this Agreement. The Purchaser and
Indemnitee each hereby consent to service of process and to appear in any such
proceeding.
(b) It shall be a defense to any action brought by Indemnitee or the
Purchaser concerning enforceability of this Agreement that it is not
permissible under applicable law or prohibited by Section 2(c) of this
Agreement for the Purchaser to indemnify Indemnitee for the amount claimed. In
connection with any such action or any determination as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Purchaser.
(c) Neither the failure of the Purchaser (including its Board or
stockholders) to have made a determination prior to the commencement of such
action that indemnification is proper under the circumstances because
Indemnitee has met the standard of conduct set forth in applicable law, nor an
actual determination by the Purchaser (including its Board or stockholders)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval), or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief of that a court has determined that indemnification is not
permitted by applicable law.
(d) The Purchaser agrees that the Purchaser's failure to make
indemnification payments or Expense Advances to Indemnitee shall cause
irreparable damage to Indemnitee, the exact amount of which is impossible to
ascertain, and for this reason agrees that Indemnitee shall be entitled to seek
such injunctive or other equitable relief as shall be necessary to adequately
provide for payment or reasonably anticipated payments.
(e) The Purchaser shall indemnify Indemnitee against any and all Expenses
actually and reasonably incurred by Indemnitee in connection with any claim or
action asserted against or brought by Indemnitee for indemnification of
Expenses or payment of Expense Advances by the Purchaser under this Agreement
or any other agreement or under applicable law or the Purchaser's Certificate
of Incorporation or Bylaws now or hereafter in effect relating to
indemnification for Indemnifiable Events, if Indemnitee is successful in such
action. Any Expenses so paid shall be considered Expense Advances under
Section 3 above.
(f) Indemnitee and Purchaser acknowledge that, in certain circumstances,
federal law or public policy may override applicable state law and prohibit
Purchaser from indemnifying Indemnitee under this Agreement or otherwise.
Purchaser and Indemnitee acknowledge that the Securities and Exchange
Commission (the "SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and agrees that
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Purchaser may be required in the future to undertake with the SEC to submit the
question of indemnification to a court in certain circumstances for a
determination of the Purchaser's right under public policy to indemnify
Indemnitee.
6. Insurance; Subrogation. The Purchaser shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable
hereunder. In the event of payment under this Agreement, the Purchaser shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything, that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Purchaser effectively to bring suit to
enforce such rights.
7. General Provisions
(a) No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both parties hereto. No waiver of any of
the provisions of this Agreement shall operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver. Except as specifically provided herein, no failure to
exercise or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.
(b) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns,
spouses, heirs, and personal and legal representatives. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity pertaining to an
Indemnifiable Event even though Indemnitee may have ceased to serve in such
capacity at the time of any Proceeding.
(c) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof.
(d) The rights and remedies provided in this Agreement and by law shall
be cumulative and the exercise of any particular right or remedy shall not
preclude the exercise of any other right or remedy in addition to, or as an
alternative to, such right or remedy.
(e) Any notice required or permitted by this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery or, if
mailed, upon deposit with the United States Post Office by certified mail,
return receipt requested, postage prepaid, to the address for the recipient set
forth on the signature page thereto or to such other address as the recipient
shall hereafter have noticed the sending party in the manner set forth above.
(f) Descriptive headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement.
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(g) Any reference in this Agreement to the indemnity provisions of the
Purchaser's or the Company's Certificate of Incorporation or Bylaws or to any
applicable law shall refer to such provisions as they shall be amended from
time to time or to any successor provision, except that any change in the
Purchaser's or the Company's Certificate of Incorporation or Bylaws shall only
apply to the extent that such amendment permits the Purchaser or the Company to
provide broader indemnification rights to Indemnitee than currently provided.
(h) Purchaser's inability, pursuant to Court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. Any provision of this Agreement, which is unenforceable in any
jurisdiction, shall be ineffective in such jurisdiction to the extent of such
unenforceability without invalidating the remaining provisions of this
Agreement, and any unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(j) The rights and obligations under this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts between Delaware residents made and to be performed entirely
within such State.
(k) This Agreement shall continue until and terminate upon the later of
(i) six years after the date that Indemnitee shall have ceased to serve as a
director or officer of the Company or (ii) the final termination of all pending
proceedings in respect of which Indemnitee is granted rights of indemnification
or expense advance hereunder.
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the date first written above.
VEMCO ACQUISITION CORP.
By:
--------------------------------
Michael G. Torakis, President
INDEMNITEE:
------------------------------------
Signature
Name:
----------------------------
Address:
-------------------------
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EXHIBIT (C)(2)
TENDER AND OPTION AGREEMENT
This TENDER AND OPTION AGREEMENT (the "Agreement") is entered into on June
5, 1996 by and between Vemco Acquisition Corp., a Delaware corporation
("Purchaser"), and each of the individuals a signatory to this Agreement (the
"Stockholders").
RECITALS
WHEREAS, concurrently herewith, Purchaser is entering into an Agreement
and Plan of Merger (the "Merger Agreement") with Bailey Corporation, a Delaware
corporation (the "Company"), pursuant to which Purchaser will acquire the
Company, on the terms and subject to the conditions set forth in the Merger
Agreement, by means of a tender offer by Purchaser (the "Offer") for all
outstanding shares of common stock, par value $.10 per share, of the Company
(the "Company Common Stock"), at $8.75 per share, net to the seller in cash,
followed by a merger (the "Merger") of Purchaser into the Company (capitalized
terms used herein and not otherwise defined are used as defined in the Merger
Agreement); and
WHEREAS, as of the date hereof, the Stockholders together beneficially own
directly or indirectly 996,136 shares of Company Common Stock, together with
the associated Rights issued under that certain Rights Agreement dated
September 28, 1995, between the Company and State Street Bank and Trust
Company, as Rights Agent (which stock and associated rights are referred to as
the "Existing Shares" and, together with any After-Acquired Shares (as defined
below), (the "Shares"), which Existing Shares constitute approximately 18.6% of
the issued and outstanding shares of Company Common Stock; and
WHEREAS, as an inducement to Purchaser to acquire the Company, and as a
condition to Purchaser's willingness to enter into the Merger Agreement and
consummate the transactions contemplated thereby, Purchaser has required that
the Stockholders agree, and the Stockholders have agreed (i) to grant Purchaser
an irrevocable option to buy the Shares at $8.75 per share (the "Option"); and
(ii) to tender and, in the event such option is not theretofore exercised, sell
the Shares in the Offer and vote their Shares in favor of the Merger, in each
case upon the terms and subject to the conditions set forth herein; and
NOW THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, and such other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Agreement to Tender; Option.
1.1 Tender of Shares. Each Stockholder hereby agrees (a) to validly
tender (or cause the record owner of any Shares to tender) all Shares
beneficially owned by such Stockholder pursuant to the Offer, not later than
the fifth business day after commencement of the Offer or, with respect to
After-Acquired Shares, within one business day following the acquisition
thereof, (b) not to withdraw any Shares so tendered without the prior written
consent of Purchaser except as otherwise provided in Section 1.1(c) and (c) to
withdraw all Shares tendered in the Offer immediately upon
<PAGE> 2
receipt of notice from Purchaser that it is exercising the Option in order
that it may acquire such Shares in accordance with Section 1.2(a) hereof.
Each Stockholder hereby acknowledges and agrees that Purchaser's obligation to
accept for payment and pay for the Shares in the Offer is subject to the terms
and conditions of the Offer.
1.2 Option.
(a) In order to induce Purchaser to enter into the Merger Agreement, and
subject to the terms and conditions of this Agreement, each of the Stockholders
hereby irrevocably grants to Purchaser the Option, exercisable in whole but not
in part from and after the date hereof, to purchase Shares at a purchase price
of $8.75 per Share. If (i) the Offer if terminated, abandoned or withdrawn by
Purchaser (whether due to the failure of any of the conditions thereto or
otherwise) or (ii) the Merger Agreement is terminated pursuant to Section
8.1(c)(i), 8.1(d)(i), 8.1(d)(ii) or 8.1(d)(iv), the Option shall continue to be
exercisable, in whole but not in part for a period of 90 days after the date of
the occurrence of such event, so long as (x) all applicable waiting periods
under the HSR Act required for the purchase of the Option Shares upon such
exercise shall have expired or been waived and (y) there shall not be in effect
any preliminary or final injunction or other order issued by any court or
governmental, administrative or regulatory agency or authority or legislative
body or commission prohibiting the exercise of the Option pursuant to this
Agreement. In the event the Merger Agreement is terminated other than pursuant
to Section 8.1(c)(i), 8.1(d)(i), 8.1(d)(ii) or 8.1(d)(iv), the Option shall
terminate upon such termination of the Merger Agreement..
(b) In the event Purchaser wishes to exercise the Option, Purchaser shall
deliver written notice thereof to each of the Stockholders, specifying the
date, time and place for the closing of such purchase. A closing of the
purchase of Shares pursuant to the Option (a "Closing") shall take place on the
date, at the time and at the place specified in such notice; provided, that if
at such date any of the conditions specified in Section 1.2(a)(x) or (y) hereof
shall not have been satisfied or waived, Purchaser may postpone such Closing
until a date within two business days after such conditions are satisfied or
waived. At the Closing, each of the Stockholders will deliver to Purchaser (in
accordance with Purchaser's instructions) the certificates representing the
Shares being purchased pursuant to Section 1.2, duly endorsed or accompanied by
stock powers duly executed in blank. At such Closing, Purchaser shall either
(i) wire transfer to the account designated by each Stockholder or (ii) deliver
to each Stockholder a certified or bank cashier's check payable to or upon the
order of such Stockholder, in each case in an amount equal to the number of
Shares being purchased from such Stockholder at such Closing multiplied by
$8.75, in immediately available funds.
1.3 Assignment of Dividends and Other Distributions. Each Stockholder
hereby assigns to Purchaser any and all dividends and other distributions that
may be declared, set aside or paid by the Company with respect to such
Stockholder's Shares during the term of this Agreement.
1.4 Title. Each Stockholder agrees that, in connection with the transfer
of Shares to Purchaser in the Offer or to Purchaser pursuant to the Option, he
shall transfer to and unconditionally vest in the Purchaser good and valid
title to such Shares, free and clear of all claims, liens,
2
<PAGE> 3
restrictions, security interests, pledges, limitations and encumbrances
whatsoever, except those arising hereunder.
1.5 No Purchase. Purchaser may allow the Offer to expire without
accepting for payment or paying for any Shares, as set forth in the Offer to
purchase, and Purchaser may allow the Option to terminate without purchasing
all or any Shares pursuant to the exercise thereof. If any Shares are not
accepted for payment in accordance with the terms of the Offer or purchased
pursuant to the Option, they shall be returned to the respective Stockholder,
whereupon they shall continue to be held by such Stockholder subject to the
terms and conditions of this Agreement.
1.6 Certain Price Protection. If, within 12 months following the
exercise of the Option by Purchaser, Purchaser, directly or indirectly, sells,
transfers or otherwise disposes of any or all of the Shares acquired upon
exercise of the Option or the Offer to a third party (or realizes cash proceeds
in respect of such Shares as a result of a distribution to stockholders of the
Company following the sale of substantially all of the Company's assets) in
connection with a transaction whereby the third party is acquiring the entire
equity interest in the Company pursuant to a merger, tender offer, exchange
offer, sale of assets, sale of shares or a similar business transaction (a
"Subsequent Sale") at a per Share price in excess of $8.75 (the "Subsequent
Sale Price"), then Purchaser will pay to each Stockholder, within five (5)
days of receipt of payment by Purchaser, an amount equal to such Stockholder's
pro rata share of 50% of the excess of the Subsequent Sale Price over $8.75
multiplied by the number of Shares sold in the Subsequent Sale.
2. Voting. Each Stockholder hereby agrees that (for so long as the
Merger Agreement is in effect), at any meeting of the holders of Company Common
Stock, however called, or in connection with any written consent of the holders
of Company Common Stock, it shall vote (or cause to be voted) the Shares (a) 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 and this Agreement and any actions
required in furtherance thereof and hereof; (b) against any action or agreement
that would result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or this Agreement; and (c) except as otherwise agreed to in writing
in advance by Purchaser, against any of the following actions or agreements
(other than the Merger Agreement or the transactions contemplated thereby): (i)
any action or agreement that is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone or attempt to discourage or adversely
affect the Merger, the Offer and the transactions contemplated by this
Agreement and the Merger Agreement; (ii) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company and its Subsidiaries; (iii) 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; (iv) any change in the management or Board of Directors of
the Company, except as contemplated by the Merger Agreement; (v) any change in
the present capitalization or dividend policy of the Company; (vi) any
amendment of the Company's certificate of incorporation or bylaws; or (vii) any
other material change in the Company's corporate structure or business.
Notwithstanding anything to the contrary
3
<PAGE> 4
contained in this Agreement, each Stockholder shall be free to act in his
capacity as a member of the Board of Directors of the Company and to discharge
his fiduciary duty as such. At the request of Purchaser, each Stockholder, in
furtherance of the transactions contemplated hereby and by the Merger
Agreement, shall promptly execute and deliver to Purchaser an irrevocable proxy
and irrevocably appoint Purchaser or its designees, its attorney and proxy to
vote all Shares of such Stockholder, for all purposes whatsoever, with full
power of substitution. Each such Stockholder acknowledges that this proxy (a)
shall be coupled with an interest, (b) constitutes, among other things, an
inducement for Purchaser to enter into the Merger Agreement, and (c) shall be
irrevocable and shall not be terminated by operation of law upon the occurrence
of any event. Any such proxy shall terminate upon the termination of the
Option.
3. Representation and Warranties. Each Stockholder hereby severally and
not jointly represents and warrants to Purchaser as follows:
3.1 Ownership of Shares; Purchase Rights. (a) On the date hereof, (i)
such Stockholder is the record owner of the Existing Shares as set forth
opposite such Stockholder's name on the signature page hereto and (ii) such
Existing Shares constitute all of the shares of Company Common Stock owned of
record and beneficially by each such Stockholder. Such Stockholder has sole
voting power, sole power of disposition and sole power to agree to all of the
matters set forth in this Agreement with respect to all of the Existing Shares,
with no limitations, qualifications or restrictions on such rights, and the
Existing Shares are the only shares of Company Common Stock over which such
Stockholder has such powers or otherwise are owned of record or beneficially by
such Stockholder as of the date hereof.
(b) On the date hereof, (i) each Stockholder is the beneficial owner of
the options and warrants as set forth opposite such Stockholder's name on the
signature page hereto and (ii) such Stockholder does not have any option or
other right to acquire Shares ("Purchase Right") except as indicated thereon.
3.2 Power, Binding Agreement. Such 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 such
Stockholder will not violate any other agreement to which he is a party,
including without limitation any voting agreement, stockholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by such Stockholder and constitutes a valid and binding agreement of him,
enforceable against him in accordance with its terms, except that such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights.
3.3 No Conflicts. Except for filings under the HSR Act and the Exchange
Act, (a) no filing with, and no permit, authorization, consent or approval of,
any Federal, state or foreign public body or authority is necessary for the
execution of this Agreement by such Stockholder and the consummation by such
Stockholder of the transactions contemplated hereby and (b) neither the
execution and delivery of this Agreement by such Stockholder nor the
consummation by such
4
<PAGE> 5
Stockholder of the transactions contemplated hereby nor compliance by such
Stockholder with any of the provisions hereof shall (i) conflict with or result
in a violation orbreach 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, commitment, arrangement, understanding, agreement or other instrument
or obligation to which such Stockholder is a party or by which such Stockholder
or any of his properties or assets may be bound or (ii) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to such
Stockholder or any of his properties or assets.
3.4 Encumbrances. The Shares and the certificates representing such
Shares are now, and at all times during the term hereof will be, held by such
Stockholder, or by a nominee or custodian for the benefit of such Stockholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
3.5 Finder's Fees. Except for the fee to be paid to Smith Barney Inc., no
investment banker, broker, financial advisor, finder or other person is
entitled to a commission or fee from Purchaser or the Company in respect of
this Agreement or the transactions contemplated hereby based upon any
arrangement or agreement made by or on behalf of such Stockholder, except as
otherwise specifically provided in the Merger Agreement or arrangements or
agreements made by or on behalf of Purchaser by its authorized representatives.
3.6 Reliance by Purchaser. Such Stockholder understands and acknowledges
that Purchaser is entering into, and causing Purchaser to enter into, the
Merger Agreement in reliance upon such Stockholder's execution and delivery of
this Agreement and the representations, warranties and covenants of such
Stockholder set forth herein.
4. Other Covenants of the Stockholders. Each Stockholder hereby severally
and not jointly covenants and agrees as follows:
4.1 No Solicitation. Each Stockholder agrees that he shall comply with
the provisions of Section 6.1 of the Merger Agreement.
4.2 Restriction on Transfer, Proxies and Non-Interference; Stop Transfer
Order.
(a) Each Stockholder hereby agrees, while this Agreement is in effect, and
except as specifically contemplated hereby, not to (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or
other disposition of, any of the Shares or any interest therein, (ii) grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares or (iii) take any action
that would make any representation or warranty of any
5
<PAGE> 6
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling any Stockholder from performing its obligations under
this Agreement.
(b) In furtherance of the provisions of Section 4.2(a) hereof,
concurrently herewith the Stockholders shall and hereby do authorize the
Company to notify the Company's transfer agent that there is a stop transfer
order with respect to all of the Existing Shares and any additional Shares of
Common Stock acquired by any Stockholder after the date hereof (and that this
Agreement places limits on the voting and transfer of such shares).
4.3 Confidentiality. Each Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be
dependent upon confidentiality with respect to the matters referred to herein.
In this connection, pending public disclosure thereof, each Stockholder hereby
agrees not to disclose or discuss such matters with anyone not a party to this
Agreement (other than counsel and advisors, if any) without the prior written
consent of Purchaser, except for filings required pursuant to the Exchange Act
and the rules and regulations thereunder or disclosures such Stockholder's
counsel advises are necessary in order to fulfill its obligations imposed by
laws, in which event such Stockholder shall give notice of such disclosure to
Purchaser as promptly as practicable so as to enable Purchaser to seek a
protective order from a court of competent jurisdiction with respect thereto.
4.4 Additional Shares. (a) Each Stockholder agrees, subject to the
following provisions of this Section 4.4(a), at the request of Purchaser, to
exercise, exchange or convert his Purchase Rights into Shares of Company Common
Stock, so as to constitute After-Acquired Shares under this Agreement. In
order to facilitate the exercise at the request of Purchaser of any such
Purchase Right, Purchaser shall loan to any requesting Stockholder funds
sufficient to allow such Stockholder to exercise the Purchase Right. Such loan
shall not be interest bearing and, at Purchaser's option, shall be secured by a
pledge of the shares of Company Common Stock acquired upon exercise of such
Purchase Right.
(b) Each Stockholder hereby agrees to promptly notify Purchaser in writing
of the number of After-Acquired Shares that may be acquired by such
Stockholder, if any, after the date hereof.
4.5 Public Disclosure. Each Stockholder hereby agrees that Purchaser may
publish and disclose in the Offer Documents and, if approval of the Company's
Stockholders is required under applicable law, the Company Proxy Statement
(including all documents and schedules filed with the SEC) his identity and
ownership of Company Common Stock and the nature of his commitments,
arrangements and understandings under this Agreement.
4.6 No Inconsistent Agreements. No Stockholder shall enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions of this Agreement.
6
<PAGE> 7
4.7 Further Assurances. From time to time, at the other party's request
and without further consideration, each of the Purchaser on the one hand and a
Stockholder on the other shall execute and deliver such additional documents
and take all such further action as may be necessary or desirable to consummate
and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement.
5. Miscellaneous.
5.1 Fees and Expenses. All costs and expenses incurred in connection with
this Agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such expenses.
5.2 Survival of Representations and Warranties. Except for the
representations and warranties in Section 3.2 of this Agreement, the
representations and warranties contained in this Agreement shall not survive
the delivery of and payment for the Shares or termination of the Option in
accordance with this Agreement.
5.3 Effect of Representations, Warranties and Covenants of Holders. The
representations, warranties and covenants of the Stockholders shall be several
and not joint. The liability of each individual Stockholder shall extend only
to the representations, warranties and covenants of such Stockholder and not to
any representation, warranty or covenant of any other Stockholder. No
Stockholder shall have any liability for incidental or consequential damages or
any amount in excess of the aggregate purchase price for his Shares.
5.4 Amendment and Modification. This Agreement may be amended, modified
and supplemented in any and all respects by written agreement of all parties
hereto.
5.5 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written consent of
the other parties, except that any or all of its respective rights, interests
and obligations hereunder to any other direct or indirect wholly owned
subsidiary of Venture Holdings Trust. 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 heirs, executors, legal representative or
successors and assigns or other transferees and any other successor in
interest.
5.6 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
<PAGE> 8
5.7 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon personal delivery, facsimile
transmission (which is confirmed), telex or delivery by an overnight express
courier service (delivery, postage or freight charges prepaid), or on the
fourth day following deposit in the United States mail (if sent by registered
or certified mail, return receipt requested, delivery, postage or freight
charges prepaid), addressed to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to a Stockholder: c/o Bailey Corporation
700 Lafayette Rd.
P. O. Box 307
Seabrook, NH 03874
Telecopy: (603) 474-5831
Attention: Roger R. Phillips
with a copy to: Foley Hoag & Eliot
One Post Office Square
Boston, MA 02109-2170
Telecopy: (617) 832-7000
Attention: David A. Broadwin, Esq.
If to Purchaser, to: Vemco Acquisition Corp.
33662 James J. Pompo Dr.
Fraser, MI 48026-0278
Telecopy: (810) 294-1960
Attention: Michael G. Torakis
with a copy to: Dykema Gossett PLLC
400 Renaissance Center
Detroit, MI 48243
Telecopy: (313) 568-6915
Attention: Paul R. Rentenbach, Esq.
5.8 Definitions; Interpretation.
(a) As used in this Agreement, (i) the term "After-Acquired Shares" shall
mean any shares of Company Common Stock acquired directly or indirectly, or
otherwise beneficially owned, by any of the Stockholders in any capacity after
the date hereof and prior to the termination hereof, whether upon the exercise
of options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of a purchase, dividend, distribution,
gift, bequest, inheritance or as a successor in interest in any capacity
(including a fiduciary capacity) or otherwise; (ii) the term "affiliate(s)"
shall have the meaning set forth in Rule 12b-2 of the Exchange Act and (ii) the
phrases "beneficially own" or "beneficial ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under
8
<PAGE> 9
the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing (without duplicative counting of the
same securities by the same holder, securities beneficially owned by a person
shall include securities beneficially owned by all other persons with whom such
Person would constitute a "group" within the meaning of Rule 13d-5 of the
Exchange Act).
(b) When a reference is made in this Agreement to a Section, such
reference shall be to a Section in this Agreement unless otherwise indicated.
The words "include," "includes" and "including" when used herein shall be
deemed in each case to be followed by the words "without limitation." The
descriptive headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
5.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
5.10 Entire Agreement, No Third Party Beneficiaries, Rights of Ownership.
This Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
5.11 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
5.12 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
5.13 Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
IN WITNESS WHEREOF, Purchaser and each of the Stockholders have caused
this Agreement to be duly executed as of the day and year first above written.
VEMCO ACQUISITION CORP.
By: _______________________________
Michael G. Torakis, President
9
<PAGE> 10
STOCKHOLDERS:
Purchase Rights
-----------------
Shares Options Warrants
- ------ ------- --------
322,041 200,000 0
-----------------
Roger R. Phillips
352,648 150,000 0
-----------------
William A. Taylor
108,682 100,000 0
-----------------
Louis T. Enos
92,083 100,000 0
-----------------
E. Gordon Young
80,682 100,000 0
-----------------
John G. Owens
40,000 100,000 12,500
- ------- ------- ------ -----------------
996,136 750,000 12,500 Allan B. Freedman
======= ======= ======
10
<PAGE> 1
EXHIBIT (c)(3)
BAILEY CORPORATION
700 Lafayette Road
Seabrook, NY 03847
April 4, 1996
Venture Industries, Inc.
33662 James J. Pompo
Fraser, MI 48026
Gentlemen:
You have requested information from Bailey Corporation, a Delaware
corporation (together with its subsidiaries and affiliates, "Bailey"), in
connection with our mutual consideration of the possibility of a transaction
between Venture Industries, Inc., a Michigan corporation (together with its
parent, subsidiaries and affiliates, "Venture"), and Bailey. As a condition to
our furnishing such information to you, we are requiring that you agree, as set
forth in this letter agreement, to treat confidentially such information,
whether furnished before or after the date of this letter agreement, and all
notes, analyses, compilation, studies or other documents, including any copies
or extracts thereof, whether prepared by you or others, which contain or
otherwise reflect such information (collectively the "Evaluation Material").
You agree that the Evaluation Material will be kept confidential by
Venture and its agents for a period of three years; provided, however, that (1)
any of such information may be disclosed to directors, officers, affiliates,
employees and representatives of Venture (it being understood that such
directors, officers, affiliates, employees and representatives--including,
without limitation, independent auditors, investment bankers or other
consultants to Venture--shall be informed by Venture of the confidential nature
of such information) who need to know such information for the sole purpose of
evaluating a possible transaction between Venture and Bailey, (2) any
disclosure of such information may be made to which Bailey consents in writing,
and (3) any disclosure of such information may be made if Venture has been
advised by counsel that such disclosure must be made in order that Venture not
commit a violation of law and Venture complies with the provisions of the
seventh paragraph of this letter, if applicable.
You agree that, for a period of one year from the date of this agreement,
unless specifically invited in writing by the Board of Bailey, Venture will not
in any manner, directly or indirectly, (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in or
<PAGE> 2
in any way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in, (i) any acquisition of any
securities (or beneficial ownership thereof) or assets of Bailey; (ii) any
tender or exchange offer or merger or other business combination involving
Bailey; (iii) any recapitalization, restructuring, liquidation, dissolution or
other extraordinary transaction with respect to Bailey; or (iv) any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) or consents to vote any voting securities of
Bailey, (b) form, join or in any way participate in a "group" (as defined under
the Exchange Act), (c) otherwise act, alone or in concert with others, to seek
to control or influence the management, Board of Directors or policies of
Bailey, or (d) enter into any discussions or arrangements with any third party
with respect to any of the foregoing. Notwithstanding the foregoing, Venture
shall not be prohibited from (x) proposing to Bailey's Board of Directors a cash
transaction relating to the acquisition of all of the outstanding common stock
of Bailey at a price representing a premium to the average of the last sale
price of such common stock on the Nasdaq National Market for the ten trading
days immediately preceding the making of such proposal; or (y) proposing a
transaction of the type described in clause (a) above if (i) Bailey publicly
announces that it has entered into an agreement with a party other than Venture
related to a tender or exchange offer, merger or other business combination; or
(ii) a party other than Venture publicly announces the commencement of a tender
or exchange offer for all of the outstanding shares of Bailey's capital stock.
Venture will not, and will cause its directors, officers, affiliates,
employees and representatives not to, use any of the Evaluation Material for any
reason or purpose other than to evaluate a possible transaction between Venture
and Bailey.
Venture will make all reasonable efforts to safeguard the Evaluation
Material from disclosure to anyone other than Venture and its agents. In
furtherance of such efforts Venture will not distribute the Evaluation Material
to anyone other than Venture and its agents without prior written authorization
from Bailey.
Without the prior written consent of Bailey, except as provided in the
second paragraph of this letter, Venture will not, and will cause its directors,
officers, affiliates, employees and representatives not to, disclose to any
person by means of public announcement, press release, private oral or written
communication or otherwise (1) the fact that Evaluation Material has been made
available to Venture or that Venture has inspected any portion of the Evaluation
Material, (2) the fact that discussion or negotiations are taking place
concerning a possible transaction between Venture and Bailey, or (3) any of the
terms, conditions or other facts with respect to any such possible transaction,
including the status thereof. The term "person" as used in this letter
agreement shall be broadly
<PAGE> 3
interpreted to include, without limitation, any corporation, company,
partnership, firm, joint venture, association, individual or other entity.
In the event that Venture or any of its directors, officers, affiliates,
employees or representatives should be required (by oral questions,
interrogatories, requests for information or documents, subpoena, Civil
Investigative Demand, or similar process) to disclose any Evaluation Material,
it is agreed that Venture will provide Bailey with prompt notice of such
requirement(s) so that Bailey may seek an appropriate protective order and/or
waive Venture's compliance with the provisions of this letter agreement. It is
further agreed that if, in the absence of a protective order or the receipt of a
waiver hereunder Venture is nonetheless, in the written opinion of its counsel,
compelled to disclose such information concerning Bailey to any tribunal or else
stand liable for contempt or suffer other censure of penalty, Venture may
disclose such information to such tribunal without liability hereunder;
provided, however, that Venture shall give Bailey written notice of the
information to be disclosed as far in advance of its disclosure as reasonably
practicable and, upon Bailey's request use reasonable efforts to obtain
assurances that confidential treatment shall be accorded such information.
Venture will promptly, upon the request of Bailey, deliver to Bailey all
documents furnished by Bailey to Venture constituting Evaluation Material,
without retaining any copy or extract thereof. In the event of such request,
all other documents constituting Evaluation Material will be held by Venture and
kept subject to the terms of this letter agreement or destroyed.
The term "Evaluation Material" does not include information which (i) is or
becomes generally available to the public other than as a result of disclosure
by Venture or its representatives; or (ii) is or was available to Venture on a
non-confidential basis prior to its disclosure to Venture by Bailey or its
representatives; or (iii) is or was independently developed by Venture.
Although you understand that we have endeavored and will endeavor to
include in the Evaluation Material information known to us which we believe to
be relevant for the purpose of your investigation, you further understand that
Bailey does not make any representation or warranty, express or implied, as to
the accuracy or completeness of the Evaluation Material. You agree that neither
Bailey nor its representatives shall have any liability to you or any of your
representatives resulting from the use of the Evaluation Material by you or such
representatives.
It is understood and agreed that no failure or delay by Bailey in
exercising any right, power or privilege hereunder
<PAGE> 4
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
right, power or privilege hereunder.
You agree that unless and until a definitive agreement between Bailey and
Venture with respect to a transaction has been executed and delivered, neither
Bailey nor Venture will be under any legal obligation of any kind whatsoever
with respect to a transaction.
It is further understood and agreed that money damages may not be a
sufficient remedy for any breach of this agreement by Venture or any of its
directors, officers, affiliates, employees or representatives and that Bailey
shall be entitled to seek specific performance as a remedy for any such breach.
Such remedy shall not be deemed to be the exclusive remedy for any breach of
this agreement but shall be in addition to all other remedies available at law
or equity to Bailey.
In the event that (1) Bailey shall attempt to enforce the provisions of the
third paragraph of this letter against Venture and (2) after the date hereof,
Bailey enters into an agreement with any other party relating to the provision
of confidential information for the purpose of evaluating a possible transaction
between Bailey and such party of the type described in clause (a) of the third
paragraph of this letter and the terms of such agreement are more favorable to
the other party than the terms of the third paragraph of this letter are to
Venture, then for the purposes of such enforcement proceedings the terms of this
letter shall be deemed amended such that the terms of this letter are no less
favorable to Venture than the terms of any such other agreements.
All modifications of, waivers of and amendments to this agreement must be
in writing signed on behalf of Bailey and Venture.
This agreement shall be governed and construed in accordance with the laws
of the State of Delaware (without giving affect to the principles of conflicts
of laws thereof). This agreement constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
between Venture and Bailey with respect to the subject matter hereof.
<PAGE> 5
If you are in agreement with the foregoing, please sign and return one copy
of this agreement which will constitute our agreement with respect to the
subject matter hereof.
Very truly yours,
BAILEY CORPORATION
By:
-----------------------------
Name: Roger Phillips
Title: President
Acknowledged and Agreed to:
VENTURE INDUSTRIES, INC.
By:
------------------------------------------
Name: James E. Butler
Title: Vice President-Finance
<PAGE> 1
EXHIBIT (c)(4)
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), effective as of June 5, 1996,
between VEMCO ACQUISITION CORP., a Delaware corporation (the "Purchaser"), and
ROGER R. PHILLIPS ("Indemnitee"),
WITNESSETH THAT:
WHEREAS, Purchaser is acquiring or has acquired control of Bailey
Corporation (the "Company"); and
WHEREAS, the Company and certain of its officers and directors, including
Indemnitee, may be subject to certain legal liabilities, including but not
limited to liabilities arising from the matter styled as Vicki Match Suna and
Lori Rosen v. Bailey Corporation (the "Suna Litigation"); and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability, the Purchaser desires to provide for the
indemnification of, and the advancing of expenses to, Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the capitalized terms
listed below shall have the meanings ascribed to them as follows:
"Board" means the Board of Directors of the Purchaser.
"Expenses" means any expense, liability, or loss, including reasonable
attorneys' fees, judgments, fines, ERISA excise taxes and penalties,
amounts paid or to be paid in settlement, any interest, assessments, or
other charges imposed thereon, and any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any payments
under this Agreement, paid or incurred in connection with investigating,
defending, being a witness in, or participating in (including on appeal),
or preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event.
"Indemnifiable Event" means any event or occurrence that takes place
either prior to or after the execution of this Agreement that is (a)
related to the fact that Indemnitee is, or has agreed to serve as, a
director or officer of the Company or while a director or officer of the
Company serves at the request of the Company as a director, officer,
employee, trustee, agent, or fiduciary of another foreign or domestic
corporation, partnership, joint venture, employee benefit plan, trust, or
other enterprise, and (b) related to anything done or not done by
Indemnitee in any such capacity, whether or not the basis of the
Proceeding is alleged action in an official capacity while serving in any
capacity described above.
<PAGE> 2
"Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, investigative or
other.
2. Agreement to Indemnify.
(a) Subject to the provisions of Section 2(c), in the event Indemnitee
is, or becomes a party to, or witness or other participant in, or is threatened
to be made a party to, or witness or other participant in, a Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, including, but
not limited to, the Suna Litigation, the Purchaser shall indemnify Indemnitee
from and against any and all Expenses actually and reasonably incurred or
suffered by the Indemnitee to the fullest extent permitted by law, as the same
exists or may hereafter be amended or interpreted (but in the case of any such
amendment or interpretation, only to the extent that such amendment or
interpretation permits the Purchaser to provide broader indemnification rights
than were permitted prior thereto). The rights to receive indemnification and
the advancement of Expenses under this Agreement are not exclusive of any other
rights which Indemnitee may be entitled or subsequently entitled under any
statute, the Certificate of Incorporation or Bylaws of the Company or the
Purchaser, by vote of the stockholders of the Company or the Purchaser or the
Board, or otherwise. To the extent that a change in applicable law (whether by
statute or judicial decision) or the Bylaws of the Company or the Purchaser
permits greater indemnification than is currently provided for an Indemnifiable
Event, Indemnitee shall be entitled to such greater indemnification under this
Agreement.
(b) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Purchaser for a portion of Expenses, but not, however,
for the total amount thereof, the Purchaser shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
(c) No Indemnification nor Expense Advance (as defined in Section 3
below) pursuant to this Agreement shall be paid by the Purchaser:
(i) In connection with any Proceeding initiated by Indemnitee
against the Purchaser, the Company or any director or officer of the
Purchaser or the Company unless the Purchaser or the Company has joined
in, or the Board of Directors of the Purchaser or the Company, has
consented to, the initiation of such Proceeding, or the Proceeding is one
to enforce indemnification rights under Section 5 below;
(ii) To the extent Indemnitee settles or otherwise disposes of a
Proceeding or causes the settlement or disposal of a Proceeding without
the Purchaser's express prior written consent (which shall not be
unreasonably withheld or delayed) unless Indemnitee receives court
approval for such settlement or other disposition where the Purchaser had
the opportunity to oppose Indemnitee's request for such court approval;
(iii) With regard to any judicial award if the Purchaser was not
given a reasonable
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<PAGE> 3
and timely opportunity, at its expense, to participate in the defense of
such action unless the Purchaser's participation in such Proceeding was
barred by this Agreement or the court in such Proceeding;
(iv) For any acts, omissions, transactions or circumstances for
which indemnification under this Agreement is prohibited by applicable
state or federal law or until any preconditions imposed upon, or agreed
to by, the Purchaser by or with any court or governmental agency are
satisfied;
(v) For remuneration paid to the director if it shall be determined
by a final decision of a court of competent jurisdiction that such
remuneration was in violation of law;
(vi) For any accounting of profits made from the purchase or sale
by the Indemnitee of securities of the Company in violation of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereof;
(vii) For acts actually performed by the Indemnitee or of which the
Indemnitee had actual knowledge if the Indemnitee gained any personal
profit to which he was not entitled in the event that a final decision of
a court of competent jurisdiction establishes that the Indemnitee was not
entitled to such personal profit; or
(viii) For proceedings based upon the same facts as underlie a
breach of a representation and warranty in the Agreement and Plan of
Merger, of even date herewith, between Purchaser and the Company.
3. Expenses Advances. Expenses incurred by Indemnitee in any Proceeding for
which indemnification may be sought under this Agreement shall be advanced by
the Purchaser to Indemnitee within 20 days after receipt by the Purchaser of a
statement or statements from Indemnitee requesting such advance and reasonably
evidencing the Expenses reasonably incurred by Indemnitee (an "Expense
Advance"). If it is ultimately determined by a final judicial decision (from
which there is no right of appeal) that Indemnitee is not entitled to be
indemnified by the Purchaser, Indemnitee hereby agrees to immediately repay any
amounts advanced by the Purchaser under this Section 3. Indemnitee agrees to
execute any further agreements regarding the repayment of Expenses as the
Purchaser may reasonably request prior to receiving any such advance,
including, without limitation, an affirmation of Indemnitee's good faith belief
that any applicable standards of conduct have been met by Indemnitee.
4. Notification and Defense of Proceeding.
(a) Indemnitee shall give written notice (including a description of the
claim and an estimate of Expenses) to the Purchaser promptly after Indemnitee
has actual knowledge of any Proceeding as to which indemnification may be
sought under this Agreement in addition to the Suna Litigation, of which
Purchaser acknowledges it has been notified. The failure of Indemnitee to give
notice, as
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<PAGE> 4
provided in this Section 4(a) shall not relieve the Purchaser of its
obligations to provide indemnification under this Agreement; however, the
amounts to which Indemnitee may be indemnified shall be reduced to the extent
that the Purchaser has been prejudiced by such failure.
(b) With respect to any Proceeding, the Purchaser will be entitled to
participate in the Proceeding at its own expense and, except as otherwise
provided below, to the extent the Purchaser so desires, the Purchaser may
assume the defense thereof directly or through the Company with counsel
reasonably satisfactory to Indemnitee. However, the Purchaser shall not be
entitled to assume the defense of any Proceeding brought by the Purchaser or
the Company.
(c) If the Purchaser assumes the defense, Indemnitee shall furnish such
information regarding Indemnitee or the Proceeding in question, as the
Purchaser may reasonably request and as may be required in connection with the
defense or settlement of such Proceeding and shall fully cooperate with the
Purchaser in every other respect. Except as provided in Section 4(f) below, if
the Purchaser assumes the defense of the Proceeding, the Purchaser shall take
all necessary steps in good faith to defend, settle or otherwise dispose of the
Proceeding.
(d) After notice from the Purchaser to Indemnitee of its election to
assume the defense of any Proceeding, the Purchaser will not be liable to
Indemnitee under this Agreement or otherwise for any Expenses subsequently
incurred by Indemnitee in connection with the defense of such Proceeding other
than reasonable costs of investigation or as otherwise provided in clauses (i)
through (iii) below. Indemnitee shall have the right to employ Indemnitee's
own counsel in such Proceeding, but all Expenses related thereto incurred after
notice from the Purchaser of its assumption of the defense shall be at
Indemnitee's expense, unless (i) the employment of counsel by Indemnitee has
been authorized by the Purchaser; (ii) Purchaser or a court of competent
jurisdiction has reasonably determined that there may be a conflict of interest
between Indemnitee and the Purchaser in the defense of the Proceeding; or (iii)
the Purchaser does not, in fact, assume and conduct the defense of such
Proceeding.
(e) Any Expenses incurred by the Purchaser in defense of the Proceeding
under this Section 4 (except in a situation described in clause (i), (ii) or
(iii) of Section 4(d)) shall be considered Expenses advanced by the Purchaser
to Indemnitee under Section 3 above.
(f) The Purchaser may consent to a settlement or other disposition of all
or any part of any Proceeding which the Purchaser is defending under Section
4(b) above without first obtaining the written consent of Indemnitee; provided
that such settlement or other disposition would not cause Indemnitee to lose
any right to indemnification under this Agreement.
5. Enforcement; Consent to Serve.
(a) The Purchaser acknowledges that Indemnitee is relying upon this
Agreement. Indemnitee shall have the right to enforce his indemnification
rights under this Agreement by commencing litigation in any court having
subject matter jurisdiction thereof and in which venue
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<PAGE> 5
is proper. Likewise, the Purchaser may seek judicial determination of its
obligations under this Agreement. The Purchaser and Indemnitee each hereby
consent to service of process and to appear in any such proceeding.
(b) It shall be a defense to any action brought by Indemnitee or the
Purchaser concerning enforceability of this Agreement that it is not
permissible under applicable law or prohibited by Section 2(c) of this
Agreement for the Purchaser to indemnify Indemnitee for the amount claimed. In
connection with any such action or any determination as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Purchaser.
(c) Neither the failure of the Purchaser (including its Board or
stockholders) to have made a determination prior to the commencement of such
action that indemnification is proper under the circumstances because
Indemnitee has met the standard of conduct set forth in applicable law, nor an
actual determination by the Purchaser (including its Board or stockholders)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval), or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief of that a court has determined that indemnification is not
permitted by applicable law.
(d) The Purchaser agrees that the Purchaser's failure to make
indemnification payments or Expense Advances to Indemnitee shall cause
irreparable damage to Indemnitee, the exact amount of which is impossible to
ascertain, and for this reason agrees that Indemnitee shall be entitled to seek
such injunctive or other equitable relief as shall be necessary to adequately
provide for payment or reasonably anticipated payments.
(e) The Purchaser shall indemnify Indemnitee against any and all Expenses
actually and reasonably incurred by Indemnitee in connection with any claim or
action asserted against or brought by Indemnitee for indemnification of
Expenses or payment of Expense Advances by the Purchaser under this Agreement
or any other agreement or under applicable law or the Purchaser's Certificate
of Incorporation or Bylaws now or hereafter in effect relating to
indemnification for Indemnifiable Events, if Indemnitee is successful in such
action. Any Expenses so paid shall be considered Expense Advances under
Section 3 above.
(f) Indemnitee and Purchaser acknowledge that, in certain circumstances,
federal law or public policy may override applicable state law and prohibit
Purchaser from indemnifying Indemnitee under this Agreement or otherwise.
Purchaser and Indemnitee acknowledge that the Securities and Exchange
Commission (the "SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and agrees that Purchaser may be required
in the future to undertake with the SEC to submit the question of
5
<PAGE> 6
indemnification to a court in certain circumstances for a determination of the
Purchaser's right under public policy to indemnify Indemnitee.
6. Insurance; Subrogation. The Purchaser shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable
hereunder. In the event of payment under this Agreement, the Purchaser shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything, that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Purchaser effectively to bring suit to
enforce such rights.
7. General Provisions
(a) No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both parties hereto. No waiver of any of
the provisions of this Agreement shall operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver. Except as specifically provided herein, no failure to
exercise or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.
(b) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns,
spouses, heirs, and personal and legal representatives. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity pertaining to an
Indemnifiable Event even though Indemnitee may have ceased to serve in such
capacity at the time of any Proceeding.
(c) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof.
(d) The rights and remedies provided in this Agreement and by law shall
be cumulative and the exercise of any particular right or remedy shall not
preclude the exercise of any other right or remedy in addition to, or as an
alternative to, such right or remedy.
(e) Any notice required or permitted by this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery or, if
mailed, upon deposit with the United States Post Office by certified mail,
return receipt requested, postage prepaid, to the address for the recipient set
forth on the signature page thereto or to such other address as the recipient
shall hereafter have noticed the sending party in the manner set forth above.
(f) Descriptive headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement.
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<PAGE> 7
(g) Any reference in this Agreement to the indemnity provisions of the
Purchaser's or the Company's Certificate of Incorporation or Bylaws or to any
applicable law shall refer to such provisions as they shall be amended from
time to time or to any successor provision, except that any change in the
Purchaser's or the Company's Certificate of Incorporation or Bylaws shall only
apply to the extent that such amendment permits the Purchaser or the Company to
provide broader indemnification rights to Indemnitee than currently provided.
(h) Purchaser's inability, pursuant to Court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. Any provision of this Agreement, which is unenforceable in any
jurisdiction, shall be ineffective in such jurisdiction to the extent of such
unenforceability without invalidating the remaining provisions of this
Agreement, and any unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(j) The rights and obligations under this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts between Delaware residents made and to be performed entirely
within such State.
(k) This Agreement shall continue until and terminate upon the later of
(i) six years after the date that Indemnitee shall have ceased to serve as a
director or officer of the Company or (ii) the final termination of all pending
proceedings in respect of which Indemnitee is granted rights of indemnification
or expense advance hereunder.
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the date first written above.
VEMCO ACQUISITION CORP.
By: _________________________________
Michael G. Torakis, President
INDEMNITEE:
____________________________________
Signature
Name: ___________________________
Address: _________________________
7
<PAGE> 1
EXHIBIT(c)(5)
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), effective as of June 5, 1996,
between VEMCO ACQUISITION CORP., a Delaware corporation (the "Purchaser"), and
WILLIAM A. TAYLOR ("Indemnitee"),
WITNESSETH THAT:
WHEREAS, Purchaser is acquiring or has acquired control of Bailey
Corporation (the "Company"); and
WHEREAS, the Company and certain of its officers and directors, including
Indemnitee, may be subject to certain legal liabilities, including but not
limited to liabilities arising from the matter styled as Vicki Match Suna and
Lori Rosen v. Bailey Corporation (the "Suna Litigation"); and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability, the Purchaser desires to provide for the
indemnification of, and the advancing of expenses to, Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the capitalized terms
listed below shall have the meanings ascribed to them as follows:
"Board" means the Board of Directors of the Purchaser.
"Expenses" means any expense, liability, or loss, including reasonable
attorneys' fees, judgments, fines, ERISA excise taxes and penalties,
amounts paid or to be paid in settlement, any interest, assessments, or
other charges imposed thereon, and any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any payments
under this Agreement, paid or incurred in connection with investigating,
defending, being a witness in, or participating in (including on appeal),
or preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event.
"Indemnifiable Event" means any event or occurrence that takes place
either prior to or after the execution of this Agreement that is (a)
related to the fact that Indemnitee is, or has agreed to serve as, a
director or officer of the Company or while a director or officer of the
Company serves at the request of the Company as a director, officer,
employee, trustee, agent, or fiduciary of another foreign or domestic
corporation, partnership, joint venture, employee benefit plan, trust, or
other enterprise, and (b) related to anything done or not done by
Indemnitee in any such capacity, whether or not the basis of the
Proceeding is alleged action in an official capacity while serving in any
capacity described above.
<PAGE> 2
"Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, investigative or
other.
2. Agreement to Indemnify.
(a) Subject to the provisions of Section 2(c), in the event Indemnitee
is, or becomes a party to, or witness or other participant in, or is threatened
to be made a party to, or witness or other participant in, a Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, including, but
not limited to, the Suna Litigation, the Purchaser shall indemnify Indemnitee
from and against any and all Expenses actually and reasonably incurred or
suffered by the Indemnitee to the fullest extent permitted by law, as the same
exists or may hereafter be amended or interpreted (but in the case of any such
amendment or interpretation, only to the extent that such amendment or
interpretation permits the Purchaser to provide broader indemnification rights
than were permitted prior thereto). The rights to receive indemnification and
the advancement of Expenses under this Agreement are not exclusive of any other
rights which Indemnitee may be entitled or subsequently entitled under any
statute, the Certificate of Incorporation or Bylaws of the Company or the
Purchaser, by vote of the stockholders of the Company or the Purchaser or the
Board, or otherwise. To the extent that a change in applicable law (whether by
statute or judicial decision) or the Bylaws of the Company or the Purchaser
permits greater indemnification than is currently provided for an Indemnifiable
Event, Indemnitee shall be entitled to such greater indemnification under this
Agreement.
(b) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Purchaser for a portion of Expenses, but not, however,
for the total amount thereof, the Purchaser shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
(c) No Indemnification nor Expense Advance (as defined in Section 3
below) pursuant to this Agreement shall be paid by the Purchaser:
(i) In connection with any Proceeding initiated by Indemnitee
against the Purchaser, the Company or any director or officer of the
Purchaser or the Company unless the Purchaser or the Company has joined
in, or the Board of Directors of the Purchaser or the Company, has
consented to, the initiation of such Proceeding, or the Proceeding is one
to enforce indemnification rights under Section 5 below;
(ii) To the extent Indemnitee settles or otherwise disposes of a
Proceeding or causes the settlement or disposal of a Proceeding without
the Purchaser's express prior written consent (which shall not be
unreasonably withheld or delayed) unless Indemnitee receives court
approval for such settlement or other disposition where the Purchaser had
the opportunity to oppose Indemnitee's request for such court approval;
(iii) With regard to any judicial award if the Purchaser was not
given a reasonable
2
<PAGE> 3
and timely opportunity, at its expense, to participate in the defense
of such action unless the Purchaser's participation in such Proceeding was
barred by this Agreement or the court in such Proceeding;
(iv) For any acts, omissions, transactions or circumstances for
which indemnification under this Agreement is prohibited by applicable
state or federal law or until any preconditions imposed upon, or agreed
to by, the Purchaser by or with any court or governmental agency are
satisfied;
(v) For remuneration paid to the director if it shall be
determined by a final decision of a court of competent jurisdiction that
such remuneration was in violation of law;
(vi) For any accounting of profits made from the purchase or sale
by the Indemnitee of securities of the Company in violation of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereof;
(vii) For acts actually performed by the Indemnitee or of which the
Indemnitee had actual knowledge if the Indemnitee gained any personal
profit to which he was not entitled in the event that a final decision of
a court of competent jurisdiction establishes that the Indemnitee was not
entitled to such personal profit; or
(viii) For proceedings based upon the same facts as underlie a
breach of a representation and warranty in the Agreement and Plan of
Merger, of even date herewith, between Purchaser and the Company.
3. Expenses Advances. Expenses incurred by Indemnitee in any Proceeding for
which indemnification may be sought under this Agreement shall be advanced by
the Purchaser to Indemnitee within 20 days after receipt by the Purchaser of a
statement or statements from Indemnitee requesting such advance and reasonably
evidencing the Expenses reasonably incurred by Indemnitee (an "Expense
Advance"). If it is ultimately determined by a final judicial decision (from
which there is no right of appeal) that Indemnitee is not entitled to be
indemnified by the Purchaser, Indemnitee hereby agrees to immediately repay any
amounts advanced by the Purchaser under this Section 3. Indemnitee agrees to
execute any further agreements regarding the repayment of Expenses as the
Purchaser may reasonably request prior to receiving any such advance,
including, without limitation, an affirmation of Indemnitee's good faith belief
that any applicable standards of conduct have been met by Indemnitee.
4. Notification and Defense of Proceeding.
(a) Indemnitee shall give written notice (including a description of the
claim and an estimate of Expenses) to the Purchaser promptly after Indemnitee
has actual knowledge of any Proceeding as to which indemnification may be
sought under this Agreement in addition to the Suna Litigation, of which
Purchaser acknowledges it has been notified. The failure of Indemnitee to give
notice, as
3
<PAGE> 4
provided in this Section 4(a) shall not relieve the Purchaser of its
obligations to provide indemnification under this Agreement; however, the
amounts to which Indemnitee may be indemnified shall be reduced to the extent
that the Purchaser has been prejudiced by such failure.
(b) With respect to any Proceeding, the Purchaser will be entitled to
participate in the Proceeding at its own expense and, except as otherwise
provided below, to the extent the Purchaser so desires, the Purchaser may
assume the defense thereof directly or through the Company with counsel
reasonably satisfactory to Indemnitee. However, the Purchaser shall not be
entitled to assume the defense of any Proceeding brought by the Purchaser or
the Company.
(c) If the Purchaser assumes the defense, Indemnitee shall furnish such
information regarding Indemnitee or the Proceeding in question, as the
Purchaser may reasonably request and as may be required in connection with the
defense or settlement of such Proceeding and shall fully cooperate with the
Purchaser in every other respect. Except as provided in Section 4(f) below, if
the Purchaser assumes the defense of the Proceeding, the Purchaser shall take
all necessary steps in good faith to defend, settle or otherwise dispose of the
Proceeding.
(d) After notice from the Purchaser to Indemnitee of its election to
assume the defense of any Proceeding, the Purchaser will not be liable to
Indemnitee under this Agreement or otherwise for any Expenses subsequently
incurred by Indemnitee in connection with the defense of such Proceeding other
than reasonable costs of investigation or as otherwise provided in clauses (i)
through (iii) below. Indemnitee shall have the right to employ Indemnitee's
own counsel in such Proceeding, but all Expenses related thereto incurred after
notice from the Purchaser of its assumption of the defense shall be at
Indemnitee's expense, unless (i) the employment of counsel by Indemnitee has
been authorized by the Purchaser; (ii) Purchaser or a court of competent
jurisdiction has reasonably determined that there may be a conflict of interest
between Indemnitee and the Purchaser in the defense of the Proceeding; or (iii)
the Purchaser does not, in fact, assume and conduct the defense of such
Proceeding.
(e) Any Expenses incurred by the Purchaser in defense of the Proceeding
under this Section 4 (except in a situation described in clause (i), (ii) or
(iii) of Section 4(d)) shall be considered Expenses advanced by the Purchaser
to Indemnitee under Section 3 above.
(f) The Purchaser may consent to a settlement or other disposition of all
or any part of any Proceeding which the Purchaser is defending under Section
4(b) above without first obtaining the written consent of Indemnitee; provided
that such settlement or other disposition would not cause Indemnitee to lose
any right to indemnification under this Agreement.
5. Enforcement; Consent to Serve.
(a) The Purchaser acknowledges that Indemnitee is relying upon this
Agreement. Indemnitee shall have the right to enforce his indemnification
rights under this Agreement by commencing litigation in any court having
subject matter jurisdiction thereof and in which venue
4
<PAGE> 5
is proper. Likewise, the Purchaser may seek judicial determination of its
obligations under this Agreement. The Purchaser and Indemnitee each hereby
consent to service of process and to appear in any such proceeding.
(b) It shall be a defense to any action brought by Indemnitee or the
Purchaser concerning enforceability of this Agreement that it is not
permissible under applicable law or prohibited by Section 2(c) of this
Agreement for the Purchaser to indemnify Indemnitee for the amount claimed. In
connection with any such action or any determination as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Purchaser.
(c) Neither the failure of the Purchaser (including its Board or
stockholders) to have made a determination prior to the commencement of such
action that indemnification is proper under the circumstances because
Indemnitee has met the standard of conduct set forth in applicable law, nor an
actual determination by the Purchaser (including its Board or stockholders)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval), or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief of that a court has determined that indemnification is not
permitted by applicable law.
(d) The Purchaser agrees that the Purchaser's failure to make
indemnification payments or Expense Advances to Indemnitee shall cause
irreparable damage to Indemnitee, the exact amount of which is impossible to
ascertain, and for this reason agrees that Indemnitee shall be entitled to seek
such injunctive or other equitable relief as shall be necessary to adequately
provide for payment or reasonably anticipated payments.
(e) The Purchaser shall indemnify Indemnitee against any and all Expenses
actually and reasonably incurred by Indemnitee in connection with any claim or
action asserted against or brought by Indemnitee for indemnification of
Expenses or payment of Expense Advances by the Purchaser under this Agreement
or any other agreement or under applicable law or the Purchaser's Certificate
of Incorporation or Bylaws now or hereafter in effect relating to
indemnification for Indemnifiable Events, if Indemnitee is successful in such
action. Any Expenses so paid shall be considered Expense Advances under
Section 3 above.
(f) Indemnitee and Purchaser acknowledge that, in certain circumstances,
federal law or public policy may override applicable state law and prohibit
Purchaser from indemnifying Indemnitee under this Agreement or otherwise.
Purchaser and Indemnitee acknowledge that the Securities and Exchange
Commission (the "SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and agrees that Purchaser may be required
in the future to undertake with the SEC to submit the question of
5
<PAGE> 6
indemnification to a court in certain circumstances for a determination of the
Purchaser's right under public policy to indemnify Indemnitee.
6. Insurance; Subrogation. The Purchaser shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable
hereunder. In the event of payment under this Agreement, the Purchaser shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything, that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Purchaser effectively to bring suit to
enforce such rights.
7. General Provisions
(a) No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both parties hereto. No waiver of any of
the provisions of this Agreement shall operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver. Except as specifically provided herein, no failure to
exercise or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.
(b) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns,
spouses, heirs, and personal and legal representatives. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity pertaining to an
Indemnifiable Event even though Indemnitee may have ceased to serve in such
capacity at the time of any Proceeding.
(c) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof.
(d) The rights and remedies provided in this Agreement and by law shall
be cumulative and the exercise of any particular right or remedy shall not
preclude the exercise of any other right or remedy in addition to, or as an
alternative to, such right or remedy.
(e) Any notice required or permitted by this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery or, if
mailed, upon deposit with the United States Post Office by certified mail,
return receipt requested, postage prepaid, to the address for the recipient set
forth on the signature page thereto or to such other address as the recipient
shall hereafter have noticed the sending party in the manner set forth above.
(f) Descriptive headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement.
6
<PAGE> 7
(g) Any reference in this Agreement to the indemnity provisions of the
Purchaser's or the Company's Certificate of Incorporation or Bylaws or to any
applicable law shall refer to such provisions as they shall be amended from
time to time or to any successor provision, except that any change in the
Purchaser's or the Company's Certificate of Incorporation or Bylaws shall only
apply to the extent that such amendment permits the Purchaser or the Company to
provide broader indemnification rights to Indemnitee than currently provided.
(h) Purchaser's inability, pursuant to Court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. Any provision of this Agreement, which is unenforceable in any
jurisdiction, shall be ineffective in such jurisdiction to the extent of such
unenforceability without invalidating the remaining provisions of this
Agreement, and any unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(j) The rights and obligations under this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts between Delaware residents made and to be performed entirely
within such State.
(k) This Agreement shall continue until and terminate upon the later of
(i) six years after the date that Indemnitee shall have ceased to serve as a
director or officer of the Company or (ii) the final termination of all pending
proceedings in respect of which Indemnitee is granted rights of indemnification
or expense advance hereunder.
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the date first written above.
VEMCO ACQUISITION CORP.
By: _________________________________
Michael G. Torakis, President
INDEMNITEE:
____________________________________
Signature
Name: ____________________________
Address: _________________________
7
<PAGE> 1
EXHIBIT (c)(6)
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), effective as of June 5, 1996,
between VEMCO ACQUISITION CORP., a Delaware corporation (the "Purchaser"), and
LOUIS T. ENOS ("Indemnitee"),
WITNESSETH THAT:
WHEREAS, Purchaser is acquiring or has acquired control of Bailey
Corporation (the "Company"); and
WHEREAS, the Company and certain of its officers and directors, including
Indemnitee, may be subject to certain legal liabilities, including but not
limited to liabilities arising from the matter styled as Vicki Match Suna and
Lori Rosen v. Bailey Corporation (the "Suna Litigation"); and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability, the Purchaser desires to provide for the
indemnification of, and the advancing of expenses to, Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the capitalized terms
listed below shall have the meanings ascribed to them as follows:
"Board" means the Board of Directors of the Purchaser.
"Expenses" means any expense, liability, or loss, including reasonable
attorneys' fees, judgments, fines, ERISA excise taxes and penalties,
amounts paid or to be paid in settlement, any interest, assessments, or
other charges imposed thereon, and any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any payments
under this Agreement, paid or incurred in connection with investigating,
defending, being a witness in, or participating in (including on appeal),
or preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event.
"Indemnifiable Event" means any event or occurrence that takes place
either prior to or after the execution of this Agreement that is (a)
related to the fact that Indemnitee is, or has agreed to serve as, a
director or officer of the Company or while a director or officer of the
Company serves at the request of the Company as a director, officer,
employee, trustee, agent, or fiduciary of another foreign or domestic
corporation, partnership, joint venture, employee benefit plan, trust, or
other enterprise, and (b) related to anything done or not done by
Indemnitee in any such capacity, whether or not the basis of the
Proceeding is alleged action in an official capacity while serving in any
capacity described above.
<PAGE> 2
"Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, investigative or
other.
2. Agreement to Indemnify.
(a) Subject to the provisions of Section 2(c), in the event Indemnitee
is, or becomes a party to, or witness or other participant in, or is threatened
to be made a party to, or witness or other participant in, a Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, including, but
not limited to, the Suna Litigation, the Purchaser shall indemnify Indemnitee
from and against any and all Expenses actually and reasonably incurred or
suffered by the Indemnitee to the fullest extent permitted by law, as the same
exists or may hereafter be amended or interpreted (but in the case of any such
amendment or interpretation, only to the extent that such amendment or
interpretation permits the Purchaser to provide broader indemnification rights
than were permitted prior thereto). The rights to receive indemnification and
the advancement of Expenses under this Agreement are not exclusive of any other
rights which Indemnitee may be entitled or subsequently entitled under any
statute, the Certificate of Incorporation or Bylaws of the Company or the
Purchaser, by vote of the stockholders of the Company or the Purchaser or the
Board, or otherwise. To the extent that a change in applicable law (whether by
statute or judicial decision) or the Bylaws of the Company or the Purchaser
permits greater indemnification than is currently provided for an Indemnifiable
Event, Indemnitee shall be entitled to such greater indemnification under this
Agreement.
(b) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Purchaser for a portion of Expenses, but not, however,
for the total amount thereof, the Purchaser shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
(c) No Indemnification nor Expense Advance (as defined in Section 3
below) pursuant to this Agreement shall be paid by the Purchaser:
(i) In connection with any Proceeding initiated by Indemnitee
against the Purchaser, the Company or any director or officer of the
Purchaser or the Company unless the Purchaser or the Company has joined
in, or the Board of Directors of the Purchaser or the Company, has
consented to, the initiation of such Proceeding, or the Proceeding is one
to enforce indemnification rights under Section 5 below;
(ii) To the extent Indemnitee settles or otherwise disposes of a
Proceeding or causes the settlement or disposal of a Proceeding without
the Purchaser's express prior written consent (which shall not be
unreasonably withheld or delayed) unless Indemnitee receives court
approval for such settlement or other disposition where the Purchaser had
the opportunity to oppose Indemnitee's request for such court approval;
(iii) With regard to any judicial award if the Purchaser was not
given a reasonable
2
<PAGE> 3
and timely opportunity, at its expense, to participate in the defense
of such action unless the Purchaser's participation in such Proceeding
was barred by this Agreement or the court in such Proceeding;
(iv) For any acts, omissions, transactions or circumstances for
which indemnification under this Agreement is prohibited by applicable
state or federal law or until any preconditions imposed upon, or agreed
to by, the Purchaser by or with any court or governmental agency are
satisfied;
(v) For remuneration paid to the director if it shall be determined
by a final decision of a court of competent jurisdiction that such
remuneration was in violation of law;
(vi) For any accounting of profits made from the purchase or sale
by the Indemnitee of securities of the Company in violation of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereof;
(vii) For acts actually performed by the Indemnitee or of which the
Indemnitee had actual knowledge if the Indemnitee gained any personal
profit to which he was not entitled in the event that a final decision of
a court of competent jurisdiction establishes that the Indemnitee was not
entitled to such personal profit; or
(viii) For proceedings based upon the same facts as underlie a
breach of a representation and warranty in the Agreement and Plan of
Merger, of even date herewith, between Purchaser and the Company.
3. Expenses Advances. Expenses incurred by Indemnitee in any Proceeding for
which indemnification may be sought under this Agreement shall be advanced by
the Purchaser to Indemnitee within 20 days after receipt by the Purchaser of a
statement or statements from Indemnitee requesting such advance and reasonably
evidencing the Expenses reasonably incurred by Indemnitee (an "Expense
Advance"). If it is ultimately determined by a final judicial decision (from
which there is no right of appeal) that Indemnitee is not entitled to be
indemnified by the Purchaser, Indemnitee hereby agrees to immediately repay any
amounts advanced by the Purchaser under this Section 3. Indemnitee agrees to
execute any further agreements regarding the repayment of Expenses as the
Purchaser may reasonably request prior to receiving any such advance,
including, without limitation, an affirmation of Indemnitee's good faith belief
that any applicable standards of conduct have been met by Indemnitee.
4. Notification and Defense of Proceeding.
(a) Indemnitee shall give written notice (including a description of the
claim and an estimate of Expenses) to the Purchaser promptly after Indemnitee
has actual knowledge of any Proceeding as to which indemnification may be
sought under this Agreement in addition to the Suna Litigation, of which
Purchaser acknowledges it has been notified. The failure of Indemnitee to
give notice, as
3
<PAGE> 4
provided in this Section 4(a) shall not relieve the Purchaser of its
obligations to provide indemnification under this Agreement; however, the
amounts to which Indemnitee may be indemnified shall be reduced to the extent
that the Purchaser has been prejudiced by such failure.
(b) With respect to any Proceeding, the Purchaser will be entitled to
participate in the Proceeding at its own expense and, except as otherwise
provided below, to the extent the Purchaser so desires, the Purchaser may
assume the defense thereof directly or through the Company with counsel
reasonably satisfactory to Indemnitee. However, the Purchaser shall not be
entitled to assume the defense of any Proceeding brought by the Purchaser or
the Company.
(c) If the Purchaser assumes the defense, Indemnitee shall furnish such
information regarding Indemnitee or the Proceeding in question, as the
Purchaser may reasonably request and as may be required in connection with the
defense or settlement of such Proceeding and shall fully cooperate with the
Purchaser in every other respect. Except as provided in Section 4(f) below, if
the Purchaser assumes the defense of the Proceeding, the Purchaser shall take
all necessary steps in good faith to defend, settle or otherwise dispose of the
Proceeding.
(d) After notice from the Purchaser to Indemnitee of its election to
assume the defense of any Proceeding, the Purchaser will not be liable to
Indemnitee under this Agreement or otherwise for any Expenses subsequently
incurred by Indemnitee in connection with the defense of such Proceeding other
than reasonable costs of investigation or as otherwise provided in clauses (i)
through (iii) below. Indemnitee shall have the right to employ Indemnitee's
own counsel in such Proceeding, but all Expenses related thereto incurred after
notice from the Purchaser of its assumption of the defense shall be at
Indemnitee's expense, unless (i) the employment of counsel by Indemnitee has
been authorized by the Purchaser; (ii) Purchaser or a court of competent
jurisdiction has reasonably determined that there may be a conflict of interest
between Indemnitee and the Purchaser in the defense of the Proceeding; or (iii)
the Purchaser does not, in fact, assume and conduct the defense of such
Proceeding.
(e) Any Expenses incurred by the Purchaser in defense of the Proceeding
under this Section 4 (except in a situation described in clause (i), (ii) or
(iii) of Section 4(d)) shall be considered Expenses advanced by the Purchaser
to Indemnitee under Section 3 above.
(f) The Purchaser may consent to a settlement or other disposition of all
or any part of any Proceeding which the Purchaser is defending under Section
4(b) above without first obtaining the written consent of Indemnitee; provided
that such settlement or other disposition would not cause Indemnitee to lose
any right to indemnification under this Agreement.
5. Enforcement; Consent to Serve.
(a) The Purchaser acknowledges that Indemnitee is relying upon this
Agreement. Indemnitee shall have the right to enforce his indemnification
rights under this Agreement by commencing litigation in any court having
subject matter jurisdiction thereof and in which venue
4
<PAGE> 5
is proper. Likewise, the Purchaser may seek judicial determination of
its obligations under this Agreement. The Purchaser and Indemnitee each hereby
consent to service of process and to appear in any such proceeding.
(b) It shall be a defense to any action brought by Indemnitee or the
Purchaser concerning enforceability of this Agreement that it is not
permissible under applicable law or prohibited by Section 2(c) of this
Agreement for the Purchaser to indemnify Indemnitee for the amount claimed. In
connection with any such action or any determination as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Purchaser.
(c) Neither the failure of the Purchaser (including its Board or
stockholders) to have made a determination prior to the commencement of such
action that indemnification is proper under the circumstances because
Indemnitee has met the standard of conduct set forth in applicable law, nor an
actual determination by the Purchaser (including its Board or stockholders)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval), or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief of that a court has determined that indemnification is not
permitted by applicable law.
(d) The Purchaser agrees that the Purchaser's failure to make
indemnification payments or Expense Advances to Indemnitee shall cause
irreparable damage to Indemnitee, the exact amount of which is impossible to
ascertain, and for this reason agrees that Indemnitee shall be entitled to seek
such injunctive or other equitable relief as shall be necessary to adequately
provide for payment or reasonably anticipated payments.
(e) The Purchaser shall indemnify Indemnitee against any and all Expenses
actually and reasonably incurred by Indemnitee in connection with any claim or
action asserted against or brought by Indemnitee for indemnification of
Expenses or payment of Expense Advances by the Purchaser under this Agreement
or any other agreement or under applicable law or the Purchaser's Certificate
of Incorporation or Bylaws now or hereafter in effect relating to
indemnification for Indemnifiable Events, if Indemnitee is successful in such
action. Any Expenses so paid shall be considered Expense Advances under
Section 3 above.
(f) Indemnitee and Purchaser acknowledge that, in certain circumstances,
federal law or public policy may override applicable state law and prohibit
Purchaser from indemnifying Indemnitee under this Agreement or otherwise.
Purchaser and Indemnitee acknowledge that the Securities and Exchange
Commission (the "SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and agrees that Purchaser may be required
in the future to undertake with the SEC to submit the question of
5
<PAGE> 6
indemnification to a court in certain circumstances for a determination of the
Purchaser's right under public policy to indemnify Indemnitee.
6. Insurance; Subrogation. The Purchaser shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable
hereunder. In the event of payment under this Agreement, the Purchaser shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything, that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Purchaser effectively to bring suit to
enforce such rights.
7. General Provisions
(a) No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both parties hereto. No waiver of any of
the provisions of this Agreement shall operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver. Except as specifically provided herein, no failure to
exercise or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.
(b) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns,
spouses, heirs, and personal and legal representatives. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity pertaining to an
Indemnifiable Event even though Indemnitee may have ceased to serve in such
capacity at the time of any Proceeding.
(c) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof.
(d) The rights and remedies provided in this Agreement and by law shall
be cumulative and the exercise of any particular right or remedy shall not
preclude the exercise of any other right or remedy in addition to, or as an
alternative to, such right or remedy.
(e) Any notice required or permitted by this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery or, if
mailed, upon deposit with the United States Post Office by certified mail,
return receipt requested, postage prepaid, to the address for the recipient set
forth on the signature page thereto or to such other address as the recipient
shall hereafter have noticed the sending party in the manner set forth above.
(f) Descriptive headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement.
6
<PAGE> 7
(g) Any reference in this Agreement to the indemnity provisions of the
Purchaser's or the Company's Certificate of Incorporation or Bylaws or to any
applicable law shall refer to such provisions as they shall be amended from
time to time or to any successor provision, except that any change in the
Purchaser's or the Company's Certificate of Incorporation or Bylaws shall only
apply to the extent that such amendment permits the Purchaser or the Company to
provide broader indemnification rights to Indemnitee than currently provided.
(h) Purchaser's inability, pursuant to Court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. Any provision of this Agreement, which is unenforceable in any
jurisdiction, shall be ineffective in such jurisdiction to the extent of such
unenforceability without invalidating the remaining provisions of this
Agreement, and any unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(j) The rights and obligations under this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts between Delaware residents made and to be performed entirely
within such State.
(k) This Agreement shall continue until and terminate upon the later of
(i) six years after the date that Indemnitee shall have ceased to serve as a
director or officer of the Company or (ii) the final termination of all pending
proceedings in respect of which Indemnitee is granted rights of indemnification
or expense advance hereunder.
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the date first written above.
VEMCO ACQUISITION CORP.
By: _________________________________
Michael G. Torakis, President
INDEMNITEE:
____________________________________
Signature
Name: ___________________________
Address: _________________________
7
<PAGE> 1
INDEMNITY AGREEMENT EXIHIBT (c)(7)
THIS INDEMNITY AGREEMENT (this "Agreement"), effective as of June 5, 1996,
between VEMCO ACQUISITION CORP., a Delaware corporation (the "Purchaser"), and
E. GORDON YOUNG ("Indemnitee"),
WITNESSETH THAT:
WHEREAS, Purchaser is acquiring or has acquired control of Bailey
Corporation (the "Company"); and
WHEREAS, the Company and certain of its officers and directors, including
Indemnitee, may be subject to certain legal liabilities, including but not
limited to liabilities arising from the matter styled as Vicki Match Suna and
Lori Rosen v. Bailey Corporation (the "Suna Litigation"); and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability, the Purchaser desires to provide for the
indemnification of, and the advancing of expenses to, Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the capitalized terms
listed below shall have the meanings ascribed to them as follows:
"Board" means the Board of Directors of the Purchaser.
"Expenses" means any expense, liability, or loss, including reasonable
attorneys' fees, judgments, fines, ERISA excise taxes and penalties,
amounts paid or to be paid in settlement, any interest, assessments, or
other charges imposed thereon, and any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any payments
under this Agreement, paid or incurred in connection with investigating,
defending, being a witness in, or participating in (including on appeal),
or preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event.
"Indemnifiable Event" means any event or occurrence that takes place
either prior to or after the execution of this Agreement that is (a)
related to the fact that Indemnitee is, or has agreed to serve as, a
director or officer of the Company or while a director or officer of the
Company serves at the request of the Company as a director, officer,
employee, trustee, agent, or fiduciary of another foreign or domestic
corporation, partnership, joint venture, employee benefit plan, trust, or
other enterprise, and (b) related to anything done or not done by
Indemnitee in any such capacity, whether or not the basis of the
Proceeding is alleged action in an official capacity while serving in any
capacity described above.
<PAGE> 2
"Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, investigative or other.
2. Agreement to Indemnify.
(a) Subject to the provisions of Section 2(c), in the event Indemnitee
is, or becomes a party to, or witness or other participant in, or is threatened
to be made a party to, or witness or other participant in, a Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, including, but
not limited to, the Suna Litigation, the Purchaser shall indemnify Indemnitee
from and against any and all Expenses actually and reasonably incurred or
suffered by the Indemnitee to the fullest extent permitted by law, as the same
exists or may hereafter be amended or interpreted (but in the case of any such
amendment or interpretation, only to the extent that such amendment or
interpretation permits the Purchaser to provide broader indemnification rights
than were permitted prior thereto). The rights to receive indemnification and
the advancement of Expenses under this Agreement are not exclusive of any other
rights which Indemnitee may be entitled or subsequently entitled under any
statute, the Certificate of Incorporation or Bylaws of the Company or the
Purchaser, by vote of the stockholders of the Company or the Purchaser or the
Board, or otherwise. To the extent that a change in applicable law (whether by
statute or judicial decision) or the Bylaws of the Company or the Purchaser
permits greater indemnification than is currently provided for an Indemnifiable
Event, Indemnitee shall be entitled to such greater indemnification under this
Agreement.
(b) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Purchaser for a portion of Expenses, but not, however,
for the total amount thereof, the Purchaser shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
(c) No Indemnification nor Expense Advance (as defined in Section 3
below) pursuant to this Agreement shall be paid by the Purchaser:
(i) In connection with any Proceeding initiated by Indemnitee
against the Purchaser, the Company or any director or officer of the
Purchaser or the Company unless the Purchaser or the Company has joined
in, or the Board of Directors of the Purchaser or the Company, has
consented to, the initiation of such Proceeding, or the Proceeding is one
to enforce indemnification rights under Section 5 below;
(ii) To the extent Indemnitee settles or otherwise disposes of a
Proceeding or causes the settlement or disposal of a Proceeding without
the Purchaser's express prior written consent (which shall not be
unreasonably withheld or delayed) unless Indemnitee receives court
approval for such settlement or other disposition where the Purchaser had
the opportunity to oppose Indemnitee's request for such court approval;
(iii) With regard to any judicial award if the Purchaser was not
given a reasonable
2
<PAGE> 3
and timely opportunity, at its expense, to participate in the defense of
such action unless the Purchaser's participation in such Proceeding was
barred by this Agreement or the court in such Proceeding;
(iv) For any acts, omissions, transactions or circumstances for
which indemnification under this Agreement is prohibited by applicable
state or federal law or until any preconditions imposed upon, or agreed
to by, the Purchaser by or with any court or governmental agency are
satisfied;
(v) For remuneration paid to the director if it shall be determined
by a final decision of a court of competent jurisdiction that such
remuneration was in violation of law;
(vi) For any accounting of profits made from the purchase or sale
by the Indemnitee of securities of the Company in violation of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereof;
(vii) For acts actually performed by the Indemnitee or of which the
Indemnitee had actual knowledge if the Indemnitee gained any personal
profit to which he was not entitled in the event that a final decision of
a court of competent jurisdiction establishes that the Indemnitee was not
entitled to such personal profit; or
(viii) For proceedings based upon the same facts as underlie a
breach of a representation and warranty in the Agreement and Plan of
Merger, of even date herewith, between Purchaser and the Company.
3. Expenses Advances. Expenses incurred by Indemnitee in any Proceeding for
which indemnification may be sought under this Agreement shall be advanced by
the Purchaser to Indemnitee within 20 days after receipt by the Purchaser of a
statement or statements from Indemnitee requesting such advance and reasonably
evidencing the Expenses reasonably incurred by Indemnitee (an "Expense
Advance"). If it is ultimately determined by a final judicial decision (from
which there is no right of appeal) that Indemnitee is not entitled to be
indemnified by the Purchaser, Indemnitee hereby agrees to immediately repay any
amounts advanced by the Purchaser under this Section 3. Indemnitee agrees to
execute any further agreements regarding the repayment of Expenses as the
Purchaser may reasonably request prior to receiving any such advance,
including, without limitation, an affirmation of Indemnitee's good faith belief
that any applicable standards of conduct have been met by Indemnitee.
4. Notification and Defense of Proceeding.
(a) Indemnitee shall give written notice (including a description of the
claim and an estimate of Expenses) to the Purchaser promptly after Indemnitee
has actual knowledge of any Proceeding as to which indemnification may be
sought under this Agreement in addition to the Suna Litigation, of which
Purchaser acknowledges it has been notified. The failure of Indemnitee to give
notice, as
3
<PAGE> 4
provided in this Section 4(a) shall not relieve the Purchaser of its
obligations to provide indemnification under this Agreement; however, the
amounts to which Indemnitee may be indemnified shall be reduced to the extent
that the Purchaser has been prejudiced by such failure.
(b) With respect to any Proceeding, the Purchaser will be entitled to
participate in the Proceeding at its own expense and, except as otherwise
provided below, to the extent the Purchaser so desires, the Purchaser may
assume the defense thereof directly or through the Company with counsel
reasonably satisfactory to Indemnitee. However, the Purchaser shall not be
entitled to assume the defense of any Proceeding brought by the Purchaser or
the Company.
(c) If the Purchaser assumes the defense, Indemnitee shall furnish such
information regarding Indemnitee or the Proceeding in question, as the
Purchaser may reasonably request and as may be required in connection with the
defense or settlement of such Proceeding and shall fully cooperate with the
Purchaser in every other respect. Except as provided in Section 4(f) below, if
the Purchaser assumes the defense of the Proceeding, the Purchaser shall take
all necessary steps in good faith to defend, settle or otherwise dispose of the
Proceeding.
(d) After notice from the Purchaser to Indemnitee of its election to
assume the defense of any Proceeding, the Purchaser will not be liable to
Indemnitee under this Agreement or otherwise for any Expenses subsequently
incurred by Indemnitee in connection with the defense of such Proceeding other
than reasonable costs of investigation or as otherwise provided in clauses (i)
through (iii) below. Indemnitee shall have the right to employ Indemnitee's
own counsel in such Proceeding, but all Expenses related thereto incurred after
notice from the Purchaser of its assumption of the defense shall be at
Indemnitee's expense, unless (i) the employment of counsel by Indemnitee has
been authorized by the Purchaser; (ii) Purchaser or a court of competent
jurisdiction has reasonably determined that there may be a conflict of interest
between Indemnitee and the Purchaser in the defense of the Proceeding; or (iii)
the Purchaser does not, in fact, assume and conduct the defense of such
Proceeding.
(e) Any Expenses incurred by the Purchaser in defense of the Proceeding
under this Section 4 (except in a situation described in clause (i), (ii) or
(iii) of Section 4(d)) shall be considered Expenses advanced by the Purchaser
to Indemnitee under Section 3 above.
(f) The Purchaser may consent to a settlement or other disposition of all
or any part of any Proceeding which the Purchaser is defending under Section
4(b) above without first obtaining the written consent of Indemnitee; provided
that such settlement or other disposition would not cause Indemnitee to lose
any right to indemnification under this Agreement.
5. Enforcement; Consent to Serve.
(a) The Purchaser acknowledges that Indemnitee is relying upon this
Agreement. Indemnitee shall have the right to enforce his indemnification
rights under this Agreement by commencing litigation in any court having
subject matter jurisdiction thereof and in which venue
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<PAGE> 5
is proper. Likewise, the Purchaser may seek judicial determination of its
obligations under this Agreement. The Purchaser and Indemnitee each hereby
consent to service of process and to appear in any such proceeding.
(b) It shall be a defense to any action brought by Indemnitee or the
Purchaser concerning enforceability of this Agreement that it is not
permissible under applicable law or prohibited by Section 2(c) of this
Agreement for the Purchaser to indemnify Indemnitee for the amount claimed. In
connection with any such action or any determination as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Purchaser.
(c) Neither the failure of the Purchaser (including its Board or
stockholders) to have made a determination prior to the commencement of such
action that indemnification is proper under the circumstances because
Indemnitee has met the standard of conduct set forth in applicable law, nor an
actual determination by the Purchaser (including its Board or stockholders)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval), or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief of that a court has determined that indemnification is not
permitted by applicable law.
(d) The Purchaser agrees that the Purchaser's failure to make
indemnification payments or Expense Advances to Indemnitee shall cause
irreparable damage to Indemnitee, the exact amount of which is impossible to
ascertain, and for this reason agrees that Indemnitee shall be entitled to seek
such injunctive or other equitable relief as shall be necessary to adequately
provide for payment or reasonably anticipated payments.
(e) The Purchaser shall indemnify Indemnitee against any and all Expenses
actually and reasonably incurred by Indemnitee in connection with any claim or
action asserted against or brought by Indemnitee for indemnification of
Expenses or payment of Expense Advances by the Purchaser under this Agreement
or any other agreement or under applicable law or the Purchaser's Certificate
of Incorporation or Bylaws now or hereafter in effect relating to
indemnification for Indemnifiable Events, if Indemnitee is successful in such
action. Any Expenses so paid shall be considered Expense Advances under
Section 3 above.
(f) Indemnitee and Purchaser acknowledge that, in certain circumstances,
federal law or public policy may override applicable state law and prohibit
Purchaser from indemnifying Indemnitee under this Agreement or otherwise.
Purchaser and Indemnitee acknowledge that the Securities and Exchange
Commission (the "SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and agrees that Purchaser may be required
in the future to undertake with the SEC to submit the question of
5
<PAGE> 6
indemnification to a court in certain circumstances for a determination of the
Purchaser's right under public policy to indemnify Indemnitee.
6. Insurance; Subrogation. The Purchaser shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable
hereunder. In the event of payment under this Agreement, the Purchaser shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything, that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Purchaser effectively to bring suit to
enforce such rights.
7. General Provisions
(a) No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both parties hereto. No waiver of any of
the provisions of this Agreement shall operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver. Except as specifically provided herein, no failure to
exercise or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.
(b) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns,
spouses, heirs, and personal and legal representatives. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity pertaining to an
Indemnifiable Event even though Indemnitee may have ceased to serve in such
capacity at the time of any Proceeding.
(c) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof.
(d) The rights and remedies provided in this Agreement and by law shall
be cumulative and the exercise of any particular right or remedy shall not
preclude the exercise of any other right or remedy in addition to, or as an
alternative to, such right or remedy.
(e) Any notice required or permitted by this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery or, if
mailed, upon deposit with the United States Post Office by certified mail,
return receipt requested, postage prepaid, to the address for the recipient set
forth on the signature page thereto or to such other address as the recipient
shall hereafter have noticed the sending party in the manner set forth above.
(f) Descriptive headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement.
6
<PAGE> 7
(g) Any reference in this Agreement to the indemnity provisions of the
Purchaser's or the Company's Certificate of Incorporation or Bylaws or to any
applicable law shall refer to such provisions as they shall be amended from
time to time or to any successor provision, except that any change in the
Purchaser's or the Company's Certificate of Incorporation or Bylaws shall only
apply to the extent that such amendment permits the Purchaser or the Company to
provide broader indemnification rights to Indemnitee than currently provided.
(h) Purchaser's inability, pursuant to Court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. Any provision of this Agreement, which is unenforceable in any
jurisdiction, shall be ineffective in such jurisdiction to the extent of such
unenforceability without invalidating the remaining provisions of this
Agreement, and any unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(j) The rights and obligations under this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts between Delaware residents made and to be performed entirely
within such State.
(k) This Agreement shall continue until and terminate upon the later of
(i) six years after the date that Indemnitee shall have ceased to serve as a
director or officer of the Company or (ii) the final termination of all pending
proceedings in respect of which Indemnitee is granted rights of indemnification
or expense advance hereunder.
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the date first written above.
VEMCO ACQUISITION CORP.
By
-----------------------------------
Michael G. Torakis, President
INDEMNITEE:
-------------------------------------
Signature
Name:
--------------------------------
Address:
-----------------------------
7
<PAGE> 1
EXHIBIT (c)(8)
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), effective as of June 5, 1996,
between VEMCO ACQUISITION CORP., a Delaware corporation (the "Purchaser"), and
JOHN G. OWENS ("Indemnitee"),
WITNESSETH THAT:
WHEREAS, Purchaser is acquiring or has acquired control of Bailey
Corporation (the "Company"); and
WHEREAS, the Company and certain of its officers and directors, including
Indemnitee, may be subject to certain legal liabilities, including but not
limited to liabilities arising from the matter styled as Vicki Match Suna and
Lori Rosen v. Bailey Corporation (the "Suna Litigation"); and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability, the Purchaser desires to provide for the
indemnification of, and the advancing of expenses to, Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the capitalized terms
listed below shall have the meanings ascribed to them as follows:
"Board" means the Board of Directors of the Purchaser.
"Expenses" means any expense, liability, or loss, including reasonable
attorneys' fees, judgments, fines, ERISA excise taxes and penalties,
amounts paid or to be paid in settlement, any interest, assessments, or
other charges imposed thereon, and any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any payments
under this Agreement, paid or incurred in connection with investigating,
defending, being a witness in, or participating in (including on appeal),
or preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event.
"Indemnifiable Event" means any event or occurrence that takes place
either prior to or after the execution of this Agreement that is (a)
related to the fact that Indemnitee is, or has agreed to serve as, a
director or officer of the Company or while a director or officer of the
Company serves at the request of the Company as a director, officer,
employee, trustee, agent, or fiduciary of another foreign or domestic
corporation, partnership, joint venture, employee benefit plan, trust, or
other enterprise, and (b) related to anything done or not done by
Indemnitee in any such capacity, whether or not the basis of the
Proceeding is alleged action in an official capacity while serving in any
capacity described above.
<PAGE> 2
"Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, investigative or
other.
2. Agreement to Indemnify.
(a) Subject to the provisions of Section 2(c), in the event Indemnitee
is, or becomes a party to, or witness or other participant in, or is threatened
to be made a party to, or witness or other participant in, a Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, including, but
not limited to, the Suna Litigation, the Purchaser shall indemnify Indemnitee
from and against any and all Expenses actually and reasonably incurred or
suffered by the Indemnitee to the fullest extent permitted by law, as the same
exists or may hereafter be amended or interpreted (but in the case of any such
amendment or interpretation, only to the extent that such amendment or
interpretation permits the Purchaser to provide broader indemnification rights
than were permitted prior thereto). The rights to receive indemnification and
the advancement of Expenses under this Agreement are not exclusive of any other
rights which Indemnitee may be entitled or subsequently entitled under any
statute, the Certificate of Incorporation or Bylaws of the Company or the
Purchaser, by vote of the stockholders of the Company or the Purchaser or the
Board, or otherwise. To the extent that a change in applicable law (whether by
statute or judicial decision) or the Bylaws of the Company or the Purchaser
permits greater indemnification than is currently provided for an Indemnifiable
Event, Indemnitee shall be entitled to such greater indemnification under this
Agreement.
(b) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Purchaser for a portion of Expenses, but not, however,
for the total amount thereof, the Purchaser shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
(c) No Indemnification nor Expense Advance (as defined in Section 3
below) pursuant to this Agreement shall be paid by the Purchaser:
(i) In connection with any Proceeding initiated by Indemnitee
against the Purchaser, the Company or any director or officer of the
Purchaser or the Company unless the Purchaser or the Company has joined
in, or the Board of Directors of the Purchaser or the Company, has
consented to, the initiation of such Proceeding, or the Proceeding is one
to enforce indemnification rights under Section 5 below;
(ii) To the extent Indemnitee settles or otherwise disposes of a
Proceeding or causes the settlement or disposal of a Proceeding without
the Purchaser's express prior written consent (which shall not be
unreasonably withheld or delayed) unless Indemnitee receives court
approval for such settlement or other disposition where the Purchaser had
the opportunity to oppose Indemnitee's request for such court approval;
(iii) With regard to any judicial award if the Purchaser was not
given a reasonable
2
<PAGE> 3
and timely opportunity, at its expense, to participate in the defense of
such action unless the Purchaser's participation in such Proceeding was
barred by this Agreement or the court in such Proceeding;
(iv) For any acts, omissions, transactions or circumstances for
which indemnification under this Agreement is prohibited by applicable
state or federal law or until any preconditions imposed upon, or agreed
to by, the Purchaser by or with any court or governmental agency are
satisfied;
(v) For remuneration paid to the director if it shall be determined
by a final decision of a court of competent jurisdiction that such
remuneration was in violation of law;
(vi) For any accounting of profits made from the purchase or sale
by the Indemnitee of securities of the Company in violation of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereof;
(vii) For acts actually performed by the Indemnitee or of which the
Indemnitee had actual knowledge if the Indemnitee gained any personal
profit to which he was not entitled in the event that a final decision of
a court of competent jurisdiction establishes that the Indemnitee was not
entitled to such personal profit; or
(viii) For proceedings based upon the same facts as underlie a
breach of a representation and warranty in the Agreement and Plan of
Merger, of even date herewith, between Purchaser and the Company.
3. Expenses Advances. Expenses incurred by Indemnitee in any Proceeding for
which indemnification may be sought under this Agreement shall be advanced by
the Purchaser to Indemnitee within 20 days after receipt by the Purchaser of a
statement or statements from Indemnitee requesting such advance and reasonably
evidencing the Expenses reasonably incurred by Indemnitee (an "Expense
Advance"). If it is ultimately determined by a final judicial decision (from
which there is no right of appeal) that Indemnitee is not entitled to be
indemnified by the Purchaser, Indemnitee hereby agrees to immediately repay any
amounts advanced by the Purchaser under this Section 3. Indemnitee agrees to
execute any further agreements regarding the repayment of Expenses as the
Purchaser may reasonably request prior to receiving any such advance,
including, without limitation, an affirmation of Indemnitee's good faith belief
that any applicable standards of conduct have been met by Indemnitee.
4. Notification and Defense of Proceeding.
(a) Indemnitee shall give written notice (including a description of the
claim and an estimate of Expenses) to the Purchaser promptly after Indemnitee
has actual knowledge of any Proceeding as to which indemnification may be
sought under this Agreement in addition to the Suna Litigation, of which
Purchaser acknowledges it has been notified. The failure of
Indemnitee to give notice, as
3
<PAGE> 4
provided in this Section 4(a) shall not relieve the Purchaser of its obligations
to provide indemnification under this Agreement; however, the amounts to which
Indemnitee may be indemnified shall be reduced to the extent that the Purchaser
has been prejudiced by such failure.
(b) With respect to any Proceeding, the Purchaser will be entitled to
participate in the Proceeding at its own expense and, except as otherwise
provided below, to the extent the Purchaser so desires, the Purchaser may
assume the defense thereof directly or through the Company with counsel
reasonably satisfactory to Indemnitee. However, the Purchaser shall not be
entitled to assume the defense of any Proceeding brought by the Purchaser or
the Company.
(c) If the Purchaser assumes the defense, Indemnitee shall furnish such
information regarding Indemnitee or the Proceeding in question, as the
Purchaser may reasonably request and as may be required in connection with the
defense or settlement of such Proceeding and shall fully cooperate with the
Purchaser in every other respect. Except as provided in Section 4(f) below, if
the Purchaser assumes the defense of the Proceeding, the Purchaser shall take
all necessary steps in good faith to defend, settle or otherwise dispose of the
Proceeding.
(d) After notice from the Purchaser to Indemnitee of its election to
assume the defense of any Proceeding, the Purchaser will not be liable to
Indemnitee under this Agreement or otherwise for any Expenses subsequently
incurred by Indemnitee in connection with the defense of such Proceeding other
than reasonable costs of investigation or as otherwise provided in clauses (i)
through (iii) below. Indemnitee shall have the right to employ Indemnitee's
own counsel in such Proceeding, but all Expenses related thereto incurred after
notice from the Purchaser of its assumption of the defense shall be at
Indemnitee's expense, unless (i) the employment of counsel by Indemnitee has
been authorized by the Purchaser; (ii) Purchaser or a court of competent
jurisdiction has reasonably determined that there may be a conflict of interest
between Indemnitee and the Purchaser in the defense of the Proceeding; or (iii)
the Purchaser does not, in fact, assume and conduct the defense of such
Proceeding.
(e) Any Expenses incurred by the Purchaser in defense of the Proceeding
under this Section 4 (except in a situation described in clause (i), (ii) or
(iii) of Section 4(d)) shall be considered Expenses advanced by the Purchaser
to Indemnitee under Section 3 above.
(f) The Purchaser may consent to a settlement or other disposition of all
or any part of any Proceeding which the Purchaser is defending under Section
4(b) above without first obtaining the written consent of Indemnitee; provided
that such settlement or other disposition would not cause Indemnitee to lose
any right to indemnification under this Agreement.
5. Enforcement; Consent to Serve.
(a) The Purchaser acknowledges that Indemnitee is relying upon this
Agreement. Indemnitee shall have the right to enforce his indemnification
rights under this Agreement by commencing litigation in any court having
subject matter jurisdiction thereof and in which venue
4
<PAGE> 5
is proper. Likewise, the Purchaser may seek judicial determination of its
obligations under this Agreement. The Purchaser and Indemnitee each hereby
consent to service of process and to appear in any such proceeding.
(b) It shall be a defense to any action brought by Indemnitee or the
Purchaser concerning enforceability of this Agreement that it is not
permissible under applicable law or prohibited by Section 2(c) of this
Agreement for the Purchaser to indemnify Indemnitee for the amount claimed. In
connection with any such action or any determination as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Purchaser.
(c) Neither the failure of the Purchaser (including its Board or
stockholders) to have made a determination prior to the commencement of such
action that indemnification is proper under the circumstances because
Indemnitee has met the standard of conduct set forth in applicable law, nor an
actual determination by the Purchaser (including its Board or stockholders)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval), or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief of that a court has determined that indemnification is not
permitted by applicable law.
(d) The Purchaser agrees that the Purchaser's failure to make
indemnification payments or Expense Advances to Indemnitee shall cause
irreparable damage to Indemnitee, the exact amount of which is impossible to
ascertain, and for this reason agrees that Indemnitee shall be entitled to seek
such injunctive or other equitable relief as shall be necessary to adequately
provide for payment or reasonably anticipated payments.
(e) The Purchaser shall indemnify Indemnitee against any and all Expenses
actually and reasonably incurred by Indemnitee in connection with any claim or
action asserted against or brought by Indemnitee for indemnification of
Expenses or payment of Expense Advances by the Purchaser under this Agreement
or any other agreement or under applicable law or the Purchaser's Certificate
of Incorporation or Bylaws now or hereafter in effect relating to
indemnification for Indemnifiable Events, if Indemnitee is successful in such
action. Any Expenses so paid shall be considered Expense Advances under
Section 3 above.
(f) Indemnitee and Purchaser acknowledge that, in certain circumstances,
federal law or public policy may override applicable state law and prohibit
Purchaser from indemnifying Indemnitee under this Agreement or otherwise.
Purchaser and Indemnitee acknowledge that the Securities and Exchange
Commission (the "SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and agrees that Purchaser may be required
in the future to undertake with the SEC to submit the question of
5
<PAGE> 6
indemnification to a court in certain circumstances for a determination of the
Purchaser's right under public policy to indemnify Indemnitee.
6. Insurance; Subrogation. The Purchaser shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable
hereunder. In the event of payment under this Agreement, the Purchaser shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything, that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Purchaser effectively to bring suit to
enforce such rights.
7. General Provisions
(a) No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both parties hereto. No waiver of any of
the provisions of this Agreement shall operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver. Except as specifically provided herein, no failure to
exercise or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.
(b) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns,
spouses, heirs, and personal and legal representatives. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity pertaining to an
Indemnifiable Event even though Indemnitee may have ceased to serve in such
capacity at the time of any Proceeding.
(c) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof.
(d) The rights and remedies provided in this Agreement and by law shall
be cumulative and the exercise of any particular right or remedy shall not
preclude the exercise of any other right or remedy in addition to, or as an
alternative to, such right or remedy.
(e) Any notice required or permitted by this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery or, if
mailed, upon deposit with the United States Post Office by certified mail,
return receipt requested, postage prepaid, to the address for the recipient set
forth on the signature page thereto or to such other address as the recipient
shall hereafter have noticed the sending party in the manner set forth above.
(f) Descriptive headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement.
6
<PAGE> 7
(g) Any reference in this Agreement to the indemnity provisions of the
Purchaser's or the Company's Certificate of Incorporation or Bylaws or to any
applicable law shall refer to such provisions as they shall be amended from
time to time or to any successor provision, except that any change in the
Purchaser's or the Company's Certificate of Incorporation or Bylaws shall only
apply to the extent that such amendment permits the Purchaser or the Company to
provide broader indemnification rights to Indemnitee than currently provided.
(h) Purchaser's inability, pursuant to Court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. Any provision of this Agreement, which is unenforceable in any
jurisdiction, shall be ineffective in such jurisdiction to the extent of such
unenforceability without invalidating the remaining provisions of this
Agreement, and any unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(j) The rights and obligations under this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts between Delaware residents made and to be performed entirely
within such State.
(k) This Agreement shall continue until and terminate upon the later of
(i) six years after the date that Indemnitee shall have ceased to serve as a
director or officer of the Company or (ii) the final termination of all pending
proceedings in respect of which Indemnitee is granted rights of indemnification
or expense advance hereunder.
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the date first written above.
VEMCO ACQUISITION CORP.
By: _________________________________
Michael G. Torakis, President
INDEMNITEE:
____________________________________
Signature
Name: ___________________________
Address: _________________________
<PAGE> 1
EXHIBIT (c)(9)
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), effective as of June 5, 1996,
between VEMCO ACQUISITION CORP., a Delaware corporation (the "Purchaser"), and
ALLAN B. FREEDMAN ("Indemnitee"),
WITNESSETH THAT:
WHEREAS, Purchaser is acquiring or has acquired control of Bailey
Corporation (the "Company"); and
WHEREAS, the Company and certain of its officers and directors, including
Indemnitee, may be subject to certain legal liabilities, including but not
limited to liabilities arising from the matter styled as Vicki Match Suna and
Lori Rosen v. Bailey Corporation (the "Suna Litigation"); and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability, the Purchaser desires to provide for the
indemnification of, and the advancing of expenses to, Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the capitalized terms
listed below shall have the meanings ascribed to them as follows:
"Board" means the Board of Directors of the Purchaser.
"Expenses" means any expense, liability, or loss, including reasonable
attorneys' fees, judgments, fines, ERISA excise taxes and penalties,
amounts paid or to be paid in settlement, any interest, assessments, or
other charges imposed thereon, and any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any payments
under this Agreement, paid or incurred in connection with investigating,
defending, being a witness in, or participating in (including on appeal),
or preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event.
"Indemnifiable Event" means any event or occurrence that takes place
either prior to or after the execution of this Agreement that is (a)
related to the fact that Indemnitee is, or has agreed to serve as, a
director or officer of the Company or while a director or officer of the
Company serves at the request of the Company as a director, officer,
employee, trustee, agent, or fiduciary of another foreign or domestic
corporation, partnership, joint venture, employee benefit plan, trust, or
other enterprise, and (b) related to anything done or not done by
Indemnitee in any such capacity, whether or not the basis of the
Proceeding is alleged action in an official capacity while serving in any
capacity described above.
<PAGE> 2
"Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, investigative or
other.
2. Agreement to Indemnify.
(a) Subject to the provisions of Section 2(c), in the event Indemnitee
is, or becomes a party to, or witness or other participant in, or is threatened
to be made a party to, or witness or other participant in, a Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, including, but
not limited to, the Suna Litigation, the Purchaser shall indemnify Indemnitee
from and against any and all Expenses actually and reasonably incurred or
suffered by the Indemnitee to the fullest extent permitted by law, as the same
exists or may hereafter be amended or interpreted (but in the case of any such
amendment or interpretation, only to the extent that such amendment or
interpretation permits the Purchaser to provide broader indemnification rights
than were permitted prior thereto). The rights to receive indemnification and
the advancement of Expenses under this Agreement are not exclusive of any other
rights which Indemnitee may be entitled or subsequently entitled under any
statute, the Certificate of Incorporation or Bylaws of the Company or the
Purchaser, by vote of the stockholders of the Company or the Purchaser or the
Board, or otherwise. To the extent that a change in applicable law (whether by
statute or judicial decision) or the Bylaws of the Company or the Purchaser
permits greater indemnification than is currently provided for an Indemnifiable
Event, Indemnitee shall be entitled to such greater indemnification under this
Agreement.
(b) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Purchaser for a portion of Expenses, but not, however,
for the total amount thereof, the Purchaser shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
(c) No Indemnification nor Expense Advance (as defined in Section 3
below) pursuant to this Agreement shall be paid by the Purchaser:
(i) In connection with any Proceeding initiated by Indemnitee
against the Purchaser, the Company or any director or officer of the
Purchaser or the Company unless the Purchaser or the Company has joined
in, or the Board of Directors of the Purchaser or the Company, has
consented to, the initiation of such Proceeding, or the Proceeding is one
to enforce indemnification rights under Section 5 below;
(ii) To the extent Indemnitee settles or otherwise disposes of a
Proceeding or causes the settlement or disposal of a Proceeding without
the Purchaser's express prior written consent (which shall not be
unreasonably withheld or delayed) unless Indemnitee receives court
approval for such settlement or other disposition where the Purchaser had
the opportunity to oppose Indemnitee's request for such court approval;
(iii) With regard to any judicial award if the Purchaser was not
given a reasonable
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<PAGE> 3
and timely opportunity, at its expense, to participate in the defense
of such action unless the Purchaser's participation in such Proceeding was
barred by this Agreement or the court in such Proceeding;
(iv) For any acts, omissions, transactions or circumstances for
which indemnification under this Agreement is prohibited by applicable
state or federal law or until any preconditions imposed upon, or agreed
to by, the Purchaser by or with any court or governmental agency are
satisfied;
(v) For remuneration paid to the director if it shall be determined
by a final decision of a court of competent jurisdiction that such
remuneration was in violation of law;
(vi) For any accounting of profits made from the purchase or sale
by the Indemnitee of securities of the Company in violation of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereof;
(vii) For acts actually performed by the Indemnitee or of which the
Indemnitee had actual knowledge if the Indemnitee gained any personal
profit to which he was not entitled in the event that a final decision of
a court of competent jurisdiction establishes that the Indemnitee was not
entitled to such personal profit; or
(viii) For proceedings based upon the same facts as underlie a
breach of a representation and warranty in the Agreement and Plan of
Merger, of even date herewith, between Purchaser and the Company.
3. Expenses Advances. Expenses incurred by Indemnitee in any Proceeding for
which indemnification may be sought under this Agreement shall be advanced by
the Purchaser to Indemnitee within 20 days after receipt by the Purchaser of a
statement or statements from Indemnitee requesting such advance and reasonably
evidencing the Expenses reasonably incurred by Indemnitee (an "Expense
Advance"). If it is ultimately determined by a final judicial decision (from
which there is no right of appeal) that Indemnitee is not entitled to be
indemnified by the Purchaser, Indemnitee hereby agrees to immediately repay any
amounts advanced by the Purchaser under this Section 3. Indemnitee agrees to
execute any further agreements regarding the repayment of Expenses as the
Purchaser may reasonably request prior to receiving any such advance,
including, without limitation, an affirmation of Indemnitee's good faith belief
that any applicable standards of conduct have been met by Indemnitee.
4. Notification and Defense of Proceeding.
(a) Indemnitee shall give written notice (including a description of the
claim and an estimate of Expenses) to the Purchaser promptly after Indemnitee
has actual knowledge of any Proceeding as to which indemnification may be
sought under this Agreement in addition to the Suna Litigation, of which
Purchaser acknowledges it has been notified. The failure of Indemnitee to give
notice, as
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<PAGE> 4
provided in this Section 4(a) shall not relieve the Purchaser of its
obligations to provide indemnification under this Agreement; however, the
amounts to which Indemnitee may be indemnified shall be reduced to the extent
that the Purchaser has been prejudiced by such failure.
(b) With respect to any Proceeding, the Purchaser will be entitled to
participate in the Proceeding at its own expense and, except as otherwise
provided below, to the extent the Purchaser so desires, the Purchaser may
assume the defense thereof directly or through the Company with counsel
reasonably satisfactory to Indemnitee. However, the Purchaser shall not be
entitled to assume the defense of any Proceeding brought by the Purchaser or
the Company.
(c) If the Purchaser assumes the defense, Indemnitee shall furnish such
information regarding Indemnitee or the Proceeding in question, as the
Purchaser may reasonably request and as may be required in connection with the
defense or settlement of such Proceeding and shall fully cooperate with the
Purchaser in every other respect. Except as provided in Section 4(f) below, if
the Purchaser assumes the defense of the Proceeding, the Purchaser shall take
all necessary steps in good faith to defend, settle or otherwise dispose of the
Proceeding.
(d) After notice from the Purchaser to Indemnitee of its election to
assume the defense of any Proceeding, the Purchaser will not be liable to
Indemnitee under this Agreement or otherwise for any Expenses subsequently
incurred by Indemnitee in connection with the defense of such Proceeding other
than reasonable costs of investigation or as otherwise provided in clauses (i)
through (iii) below. Indemnitee shall have the right to employ Indemnitee's
own counsel in such Proceeding, but all Expenses related thereto incurred after
notice from the Purchaser of its assumption of the defense shall be at
Indemnitee's expense, unless (i) the employment of counsel by Indemnitee has
been authorized by the Purchaser; (ii) Purchaser or a court of competent
jurisdiction has reasonably determined that there may be a conflict of interest
between Indemnitee and the Purchaser in the defense of the Proceeding; or (iii)
the Purchaser does not, in fact, assume and conduct the defense of such
Proceeding.
(e) Any Expenses incurred by the Purchaser in defense of the Proceeding
under this Section 4 (except in a situation described in clause (i), (ii) or
(iii) of Section 4(d)) shall be considered Expenses advanced by the Purchaser
to Indemnitee under Section 3 above.
(f) The Purchaser may consent to a settlement or other disposition of all
or any part of any Proceeding which the Purchaser is defending under Section
4(b) above without first obtaining the written consent of Indemnitee; provided
that such settlement or other disposition would not cause Indemnitee to lose
any right to indemnification under this Agreement.
5. Enforcement; Consent to Serve.
(a) The Purchaser acknowledges that Indemnitee is relying upon this
Agreement. Indemnitee shall have the right to enforce his indemnification
rights under this Agreement by commencing litigation in any court having
subject matter jurisdiction thereof and in which venue
4
<PAGE> 5
is proper. Likewise, the Purchaser may seek judicial determination of its
obligations under this Agreement. The Purchaser and Indemnitee each hereby
consent to service of process and to appear in any such proceeding.
(b) It shall be a defense to any action brought by Indemnitee or the
Purchaser concerning enforceability of this Agreement that it is not
permissible under applicable law or prohibited by Section 2(c) of this
Agreement for the Purchaser to indemnify Indemnitee for the amount claimed. In
connection with any such action or any determination as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Purchaser.
(c) Neither the failure of the Purchaser (including its Board or
stockholders) to have made a determination prior to the commencement of such
action that indemnification is proper under the circumstances because
Indemnitee has met the standard of conduct set forth in applicable law, nor an
actual determination by the Purchaser (including its Board or stockholders)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval), or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief of that a court has determined that indemnification is not
permitted by applicable law.
(d) The Purchaser agrees that the Purchaser's failure to make
indemnification payments or Expense Advances to Indemnitee shall cause
irreparable damage to Indemnitee, the exact amount of which is impossible to
ascertain, and for this reason agrees that Indemnitee shall be entitled to seek
such injunctive or other equitable relief as shall be necessary to adequately
provide for payment or reasonably anticipated payments.
(e) The Purchaser shall indemnify Indemnitee against any and all Expenses
actually and reasonably incurred by Indemnitee in connection with any claim or
action asserted against or brought by Indemnitee for indemnification of
Expenses or payment of Expense Advances by the Purchaser under this Agreement
or any other agreement or under applicable law or the Purchaser's Certificate
of Incorporation or Bylaws now or hereafter in effect relating to
indemnification for Indemnifiable Events, if Indemnitee is successful in such
action. Any Expenses so paid shall be considered Expense Advances under
Section 3 above.
(f) Indemnitee and Purchaser acknowledge that, in certain circumstances,
federal law or public policy may override applicable state law and prohibit
Purchaser from indemnifying Indemnitee under this Agreement or otherwise.
Purchaser and Indemnitee acknowledge that the Securities and Exchange
Commission (the "SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and agrees that Purchaser may be required
in the future to undertake with the SEC to submit the question of
5
<PAGE> 6
indemnification to a court in certain circumstances for a determination of the
Purchaser's right under public policy to indemnify Indemnitee.
6. Insurance; Subrogation. The Purchaser shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable
hereunder. In the event of payment under this Agreement, the Purchaser shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything, that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Purchaser effectively to bring suit to
enforce such rights.
7. General Provisions
(a) No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both parties hereto. No waiver of any of
the provisions of this Agreement shall operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver. Except as specifically provided herein, no failure to
exercise or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.
(b) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns,
spouses, heirs, and personal and legal representatives. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity pertaining to an
Indemnifiable Event even though Indemnitee may have ceased to serve in such
capacity at the time of any Proceeding.
(c) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof.
(d) The rights and remedies provided in this Agreement and by law shall
be cumulative and the exercise of any particular right or remedy shall not
preclude the exercise of any other right or remedy in addition to, or as an
alternative to, such right or remedy.
(e) Any notice required or permitted by this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery or, if
mailed, upon deposit with the United States Post Office by certified mail,
return receipt requested, postage prepaid, to the address for the recipient set
forth on the signature page thereto or to such other address as the recipient
shall hereafter have noticed the sending party in the manner set forth above.
(f) Descriptive headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement.
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<PAGE> 7
(g) Any reference in this Agreement to the indemnity provisions of the
Purchaser's or the Company's Certificate of Incorporation or Bylaws or to any
applicable law shall refer to such provisions as they shall be amended from
time to time or to any successor provision, except that any change in the
Purchaser's or the Company's Certificate of Incorporation or Bylaws shall only
apply to the extent that such amendment permits the Purchaser or the Company to
provide broader indemnification rights to Indemnitee than currently provided.
(h) Purchaser's inability, pursuant to Court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. Any provision of this Agreement, which is unenforceable in any
jurisdiction, shall be ineffective in such jurisdiction to the extent of such
unenforceability without invalidating the remaining provisions of this
Agreement, and any unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(j) The rights and obligations under this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts between Delaware residents made and to be performed entirely
within such State.
(k) This Agreement shall continue until and terminate upon the later of
(i) six years after the date that Indemnitee shall have ceased to serve as a
director or officer of the Company or (ii) the final termination of all pending
proceedings in respect of which Indemnitee is granted rights of indemnification
or expense advance hereunder.
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the date first written above.
VEMCO ACQUISITION CORP.
By: _________________________________
Michael G. Torakis, President
INDEMNITEE:
____________________________________
Signature
Name: ____________________________
Address: _________________________
7
<PAGE> 1
EXHIBIT (c)(10)
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), effective as of June 5, 1996,
between VEMCO ACQUISITION CORP., a Delaware corporation (the "Purchaser"), and
LEONARD HEILMAN ("Indemnitee"),
WITNESSETH THAT:
WHEREAS, Purchaser is acquiring or has acquired control of Bailey
Corporation (the "Company"); and
WHEREAS, the Company and certain of its officers and directors, including
Indemnitee, may be subject to certain legal liabilities, including but not
limited to liabilities arising from the matter styled as Vicki Match Suna and
Lori Rosen v. Bailey Corporation (the "Suna Litigation"); and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability, the Purchaser desires to provide for the
indemnification of, and the advancing of expenses to, Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the capitalized terms
listed below shall have the meanings ascribed to them as follows:
"Board" means the Board of Directors of the Purchaser.
"Expenses" means any expense, liability, or loss, including reasonable
attorneys' fees, judgments, fines, ERISA excise taxes and penalties,
amounts paid or to be paid in settlement, any interest, assessments, or
other charges imposed thereon, and any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any payments
under this Agreement, paid or incurred in connection with investigating,
defending, being a witness in, or participating in (including on appeal),
or preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event.
"Indemnifiable Event" means any event or occurrence that takes place
either prior to or after the execution of this Agreement that is (a)
related to the fact that Indemnitee is, or has agreed to serve as, a
director or officer of the Company or while a director or officer of the
Company serves at the request of the Company as a director, officer,
employee, trustee, agent, or fiduciary of another foreign or domestic
corporation, partnership, joint venture, employee benefit plan, trust, or
other enterprise, and (b) related to anything done or not done by
Indemnitee in any such capacity, whether or not the basis of the
Proceeding is alleged action in an official capacity while serving in any
capacity described above.
<PAGE> 2
"Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, investigative or
other.
2. Agreement to Indemnify.
(a) Subject to the provisions of Section 2(c), in the event Indemnitee
is, or becomes a party to, or witness or other participant in, or is threatened
to be made a party to, or witness or other participant in, a Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, including, but
not limited to, the Suna Litigation, the Purchaser shall indemnify Indemnitee
from and against any and all Expenses actually and reasonably incurred or
suffered by the Indemnitee to the fullest extent permitted by law, as the same
exists or may hereafter be amended or interpreted (but in the case of any such
amendment or interpretation, only to the extent that such amendment or
interpretation permits the Purchaser to provide broader indemnification rights
than were permitted prior thereto). The rights to receive indemnification and
the advancement of Expenses under this Agreement are not exclusive of any other
rights which Indemnitee may be entitled or subsequently entitled under any
statute, the Certificate of Incorporation or Bylaws of the Company or the
Purchaser, by vote of the stockholders of the Company or the Purchaser or the
Board, or otherwise. To the extent that a change in applicable law (whether by
statute or judicial decision) or the Bylaws of the Company or the Purchaser
permits greater indemnification than is currently provided for an Indemnifiable
Event, Indemnitee shall be entitled to such greater indemnification under this
Agreement.
(b) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Purchaser for a portion of Expenses, but not, however,
for the total amount thereof, the Purchaser shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
(c) No Indemnification nor Expense Advance (as defined in Section 3
below) pursuant to this Agreement shall be paid by the Purchaser:
(i) In connection with any Proceeding initiated by Indemnitee
against the Purchaser, the Company or any director or officer of the
Purchaser or the Company unless the Purchaser or the Company has joined
in, or the Board of Directors of the Purchaser or the Company, has
consented to, the initiation of such Proceeding, or the Proceeding is one
to enforce indemnification rights under Section 5 below;
(ii) To the extent Indemnitee settles or otherwise disposes of a
Proceeding or causes the settlement or disposal of a Proceeding without
the Purchaser's express prior written consent (which shall not be
unreasonably withheld or delayed) unless Indemnitee receives court
approval for such settlement or other disposition where the Purchaser had
the opportunity to oppose Indemnitee's request for such court approval;
(iii) With regard to any judicial award if the Purchaser was not
given a reasonable
2
<PAGE> 3
and timely opportunity, at its expense, to participate in the defense of
such action unless the Purchaser's participation in such Proceeding
was barred by this Agreement or the court in such Proceeding;
(iv) For any acts, omissions, transactions or circumstances for
which indemnification under this Agreement is prohibited by applicable
state or federal law or until any preconditions imposed upon, or agreed
to by, the Purchaser by or with any court or governmental agency are
satisfied;
(v) For remuneration paid to the director if it shall be determined
by a final decision of a court of competent jurisdiction that such
remuneration was in violation of law;
(vi) For any accounting of profits made from the purchase or sale
by the Indemnitee of securities of the Company in violation of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereof;
(vii) For acts actually performed by the Indemnitee or of which the
Indemnitee had actual knowledge if the Indemnitee gained any personal
profit to which he was not entitled in the event that a final decision of
a court of competent jurisdiction establishes that the Indemnitee was not
entitled to such personal profit; or
(viii) For proceedings based upon the same facts as underlie a
breach of a representation and warranty in the Agreement and Plan of
Merger, of even date herewith, between Purchaser and the Company.
3. Expenses Advances. Expenses incurred by Indemnitee in any Proceeding for
which indemnification may be sought under this Agreement shall be advanced by
the Purchaser to Indemnitee within 20 days after receipt by the Purchaser of a
statement or statements from Indemnitee requesting such advance and reasonably
evidencing the Expenses reasonably incurred by Indemnitee (an "Expense
Advance"). If it is ultimately determined by a final judicial decision (from
which there is no right of appeal) that Indemnitee is not entitled to be
indemnified by the Purchaser, Indemnitee hereby agrees to immediately repay any
amounts advanced by the Purchaser under this Section 3. Indemnitee agrees to
execute any further agreements regarding the repayment of Expenses as the
Purchaser may reasonably request prior to receiving any such advance,
including, without limitation, an affirmation of Indemnitee's good faith belief
that any applicable standards of conduct have been met by Indemnitee.
4. Notification and Defense of Proceeding.
(a) Indemnitee shall give written notice (including a description of the
claim and an estimate of Expenses) to the Purchaser promptly after Indemnitee
has actual knowledge of any Proceeding as to which indemnification may be
sought under this Agreement in addition to the Suna Litigation, of which
Purchaser acknowledges it has been notified. The failure of Indemnitee to
give notice, as
3
<PAGE> 4
provided in this Section 4(a) shall not relieve the Purchaser of its
obligations to provide indemnification under this Agreement; however, the
amounts to which Indemnitee may be indemnified shall be reduced to the extent
that the Purchaser has been prejudiced by such failure.
(b) With respect to any Proceeding, the Purchaser will be entitled to
participate in the Proceeding at its own expense and, except as otherwise
provided below, to the extent the Purchaser so desires, the Purchaser may
assume the defense thereof directly or through the Company with counsel
reasonably satisfactory to Indemnitee. However, the Purchaser shall not be
entitled to assume the defense of any Proceeding brought by the Purchaser or
the Company.
(c) If the Purchaser assumes the defense, Indemnitee shall furnish such
information regarding Indemnitee or the Proceeding in question, as the
Purchaser may reasonably request and as may be required in connection with the
defense or settlement of such Proceeding and shall fully cooperate with the
Purchaser in every other respect. Except as provided in Section 4(f) below, if
the Purchaser assumes the defense of the Proceeding, the Purchaser shall take
all necessary steps in good faith to defend, settle or otherwise dispose of the
Proceeding.
(d) After notice from the Purchaser to Indemnitee of its election to
assume the defense of any Proceeding, the Purchaser will not be liable to
Indemnitee under this Agreement or otherwise for any Expenses subsequently
incurred by Indemnitee in connection with the defense of such Proceeding other
than reasonable costs of investigation or as otherwise provided in clauses (i)
through (iii) below. Indemnitee shall have the right to employ Indemnitee's
own counsel in such Proceeding, but all Expenses related thereto incurred after
notice from the Purchaser of its assumption of the defense shall be at
Indemnitee's expense, unless (i) the employment of counsel by Indemnitee has
been authorized by the Purchaser; (ii) Purchaser or a court of competent
jurisdiction has reasonably determined that there may be a conflict of interest
between Indemnitee and the Purchaser in the defense of the Proceeding; or (iii)
the Purchaser does not, in fact, assume and conduct the defense of such
Proceeding.
(e) Any Expenses incurred by the Purchaser in defense of the Proceeding
under this Section 4 (except in a situation described in clause (i), (ii) or
(iii) of Section 4(d)) shall be considered Expenses advanced by the Purchaser
to Indemnitee under Section 3 above.
(f) The Purchaser may consent to a settlement or other disposition of all
or any part of any Proceeding which the Purchaser is defending under Section
4(b) above without first obtaining the written consent of Indemnitee; provided
that such settlement or other disposition would not cause Indemnitee to lose
any right to indemnification under this Agreement.
5. Enforcement; Consent to Serve.
(a) The Purchaser acknowledges that Indemnitee is relying upon this
Agreement. Indemnitee shall have the right to enforce his indemnification
rights under this Agreement by commencing litigation in any court having
subject matter jurisdiction thereof and in which venue
4
<PAGE> 5
is proper. Likewise, the Purchaser may seek judicial determination of its
obligations under this Agreement. The Purchaser and Indemnitee each hereby
consent to service of process and to appear in any such proceeding.
(b) It shall be a defense to any action brought by Indemnitee or the
Purchaser concerning enforceability of this Agreement that it is not
permissible under applicable law or prohibited by Section 2(c) of this
Agreement for the Purchaser to indemnify Indemnitee for the amount claimed. In
connection with any such action or any determination as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Purchaser.
(c) Neither the failure of the Purchaser (including its Board or
stockholders) to have made a determination prior to the commencement of such
action that indemnification is proper under the circumstances because
Indemnitee has met the standard of conduct set forth in applicable law, nor an
actual determination by the Purchaser (including its Board or stockholders)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval), or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief of that a court has determined that indemnification is not
permitted by applicable law.
(d) The Purchaser agrees that the Purchaser's failure to make
indemnification payments or Expense Advances to Indemnitee shall cause
irreparable damage to Indemnitee, the exact amount of which is impossible to
ascertain, and for this reason agrees that Indemnitee shall be entitled to seek
such injunctive or other equitable relief as shall be necessary to adequately
provide for payment or reasonably anticipated payments.
(e) The Purchaser shall indemnify Indemnitee against any and all Expenses
actually and reasonably incurred by Indemnitee in connection with any claim or
action asserted against or brought by Indemnitee for indemnification of
Expenses or payment of Expense Advances by the Purchaser under this Agreement
or any other agreement or under applicable law or the Purchaser's Certificate
of Incorporation or Bylaws now or hereafter in effect relating to
indemnification for Indemnifiable Events, if Indemnitee is successful in such
action. Any Expenses so paid shall be considered Expense Advances under
Section 3 above.
(f) Indemnitee and Purchaser acknowledge that, in certain circumstances,
federal law or public policy may override applicable state law and prohibit
Purchaser from indemnifying Indemnitee under this Agreement or otherwise.
Purchaser and Indemnitee acknowledge that the Securities and Exchange
Commission (the "SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and agrees that Purchaser may be required
in the future to undertake with the SEC to submit the question of
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indemnification to a court in certain circumstances for a determination of the
Purchaser's right under public policy to indemnify Indemnitee.
6. Insurance; Subrogation. The Purchaser shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable
hereunder. In the event of payment under this Agreement, the Purchaser shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything, that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Purchaser effectively to bring suit to
enforce such rights.
7. General Provisions
(a) No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both parties hereto. No waiver of any of
the provisions of this Agreement shall operate as a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver. Except as specifically provided herein, no failure to
exercise or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.
(b) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns,
spouses, heirs, and personal and legal representatives. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity pertaining to an
Indemnifiable Event even though Indemnitee may have ceased to serve in such
capacity at the time of any Proceeding.
(c) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof.
(d) The rights and remedies provided in this Agreement and by law shall
be cumulative and the exercise of any particular right or remedy shall not
preclude the exercise of any other right or remedy in addition to, or as an
alternative to, such right or remedy.
(e) Any notice required or permitted by this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery or, if
mailed, upon deposit with the United States Post Office by certified mail,
return receipt requested, postage prepaid, to the address for the recipient set
forth on the signature page thereto or to such other address as the recipient
shall hereafter have noticed the sending party in the manner set forth above.
(f) Descriptive headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement.
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(g) Any reference in this Agreement to the indemnity provisions of the
Purchaser's or the Company's Certificate of Incorporation or Bylaws or to any
applicable law shall refer to such provisions as they shall be amended from
time to time or to any successor provision, except that any change in the
Purchaser's or the Company's Certificate of Incorporation or Bylaws shall only
apply to the extent that such amendment permits the Purchaser or the Company to
provide broader indemnification rights to Indemnitee than currently provided.
(h) Purchaser's inability, pursuant to Court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. Any provision of this Agreement, which is unenforceable in any
jurisdiction, shall be ineffective in such jurisdiction to the extent of such
unenforceability without invalidating the remaining provisions of this
Agreement, and any unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(j) The rights and obligations under this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts between Delaware residents made and to be performed entirely
within such State.
(k) This Agreement shall continue until and terminate upon the later of
(i) six years after the date that Indemnitee shall have ceased to serve as a
director or officer of the Company or (ii) the final termination of all pending
proceedings in respect of which Indemnitee is granted rights of indemnification
or expense advance hereunder.
IN WITNESS WHEREOF, this Agreement has been entered into effective as of
the date first written above.
VEMCO ACQUISITION CORP.
By: _________________________________
Michael G. Torakis, President
INDEMNITEE:
____________________________________
Signature
Name: ___________________________
Address: _________________________
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EXHIBIT (c)(11)
GUARANTY
This Guaranty is made as of the June 5, 1996, by VEMCO, INC., VENTURE
INDUSTRIES CORPORATION, VEMCO LEASING, INC., VENTURE LEASING COMPANY, VENTURE
MOLD & ENGINEERING CORPORATION, VENTURE SERVICE COMPANY, each a Michigan
corporation, and VENTURE INDUSTRIES CANADA, LTD., an Ontario corporation (each
a "Guarantor" and collectively, the "Guarantors") to Bailey Corporation, a
Delaware corporation (the "Company") and to Roger R. Phillips, William A.
Taylor, Louis T. Enos, E. Gordon Young, John G. Owens, Allen B. Freedman and
Leonard Heilman (each a "Beneficiary" and collectively, the "Beneficiaries")
with respect to the obligations of VEMCO ACQUISITION CORP., a Delaware
corporation (the "Purchaser").
RECITALS
A. The Company is willing, on or about the date of this Guaranty, to enter
into an Agreement and Plan of Merger with the Purchaser (the "Merger
Agreement"), provided that the Guarantors guarantee the obligations of the
Purchaser thereunder and with respect to certain related matters; and
B. Guarantors desire to induce the Company to enter into the Merger
Agreement.
In consideration of the foregoing matters and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Guarantors covenant and agree as follows:
1. GUARANTY OF PAYMENT AND PERFORMANCE. The Guarantors hereby jointly and
severally guarantee to the Company and the Beneficiaries the performance of all
liabilities, agreements and other obligations of the Purchaser under the Merger
Agreement, the Indemnity Agreements between the Purchaser and the Beneficiaries
contemplated by Section 6.9(c) of the Merger Agreement, and the Company's
obligations under the Noncompetition Agreements between the Company and the
Beneficiaries in the forms attached hereto, the Amendment to the Employment and
Noncompetition Agreement between the Company and Roger R. Phillips, and the
Amendment to the Employment and Noncompetition Agreement between the Company and
William A. Taylor, together with all costs of collection, compromise or
enforcement, including, without limitation, reasonable attorneys' fees incurred
with respect to this Guaranty, or with respect to a proceeding under the federal
bankruptcy laws or any insolvency, receivership, arrangement or reorganization
law or an assignment for the benefit of creditors concerning Purchaser or any
Guarantor, together with interest on all such costs of collection, compromise or
enforcement from the date arising (all the foregoing, collectively, the
"Obligations"). This Guaranty is an absolute, unconditional and continuing
guaranty of the full and punctual payment and performance of the Obligations and
not of their collectibility only and is in no way conditioned upon any
requirement that the Company or any Beneficiary first attempt to collect any of
the Obligations from the Purchaser or resort to any security or other means of
obtaining their payment.
2. UNLIMITED GUARANTY. The liability of the Guarantors hereunder shall
be unlimited.
<PAGE> 2
3. WAIVERS BY GUARANTORS; PURCHASER'S FREEDOM TO ACT. The Guarantors
waive presentment, demand, protest, notice of acceptance, notice of obligations
incurred and all other notices of any kind, all defenses that may be available
by virtue of any valuation, stay, moratorium law or other similar law now or
hereafter in effect, any right to require the marshalling of assets of the
Purchaser, and all suretyship defenses generally. Without limiting the
generality of the foregoing, the Guarantors agree to the provisions of any
instrument evidencing, securing or otherwise executed in connection with any
Obligation and agree that the obligations of the Guarantors hereunder shall not
be released or discharged, in whole or in part, or otherwise affected by: (i)
the failure of the Company or any Beneficiary to assert any claim or demand or
to enforce any right or remedy against the Purchaser; (ii) any extensions or
renewals of, or alterations of the terms of, any Obligations or any portion
thereof (iii) any rescissions, waivers, amendments or modifications of any of
the terms or provisions of any agreement evidencing, securing or otherwise
executed in connection with any Obligation; (iv) the substitution or release of
any entity primarily or secondarily liable for any Obligation; (v) the adequacy
of any rights the Company or any Beneficiary may have against any other means
of obtaining repayment of the Obligations; (vi) failure to obtain or maintain a
right of contribution for the benefit of the Guarantors; or (vii) any other act
or omission that might in any manner or to any extent vary the risk of the
Guarantors or otherwise operate as a release or discharge of the Guarantors,
all of which may be done without notice to the Guarantors.
4. SUBROGATION. Until the payment and performance in full of all
Obligations and any and all obligations of the Purchaser to the Company and the
Beneficiaries, the Guarantors shall not exercise any rights against the
Purchaser arising as a result of payment by the Guarantors hereunder, by way of
subrogation or otherwise, and will not prove any claim in competition with the
Company or any Beneficiary in respect of any payment hereunder in bankruptcy or
insolvency proceedings of any nature; the Guarantors will not claim any set-off
or counterclaim against the Purchaser in respect of any liability of the
Guarantors to the Purchaser; and the Guarantors waive any benefit of and any
right to participate in any collateral that may be held by the Company or any
Beneficiary.
5. TERMINATION. This Guaranty is irrevocable and shall continue without
limit of time.
6. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon the
Guarantors, their successors and assigns, and shall inure to the benefit of and
be enforceable by the Company, the Beneficiaries and their successors,
transferees and assigns.
7. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Guaranty nor any consent to any departure by the Guarantors therefrom
shall be effective unless the same shall be in writing and signed by the
Company and the Beneficiaries. No failure on the part of the Company or
any Beneficiary to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof of the
exercise of any other right.
8. NOTICES. All notices and other communications called for hereunder
shall be made in
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writing and, unless otherwise specifically provided herein, shall be deemed
to have been duly made or given when delivered by hand or mailed first class
mail postage prepaid or, in the case of telegraphic or telexed notice, when
transmitted, answerback received, addressed as set forth below following the
signatures hereto, or to such other address as either party may designate in
writing.
9. GOVERNING LAW; CONSENT TO JURISDICTION. This Guaranty is intended to
take effect as a sealed instrument and shall be governed by, and construed in
accordance with, the laws of The Commonwealth of Massachusetts. The Guarantors
agree that any suit for the enforcement of this Guaranty may be brought in the
courts of The Commonwealth of Massachusetts or the State of Michigan or any
Federal Court sitting therein, and consent to the non-exclusive jurisdiction of
such court and to service of process in any such suit being made upon the
Guarantors by mail at the address set forth at the head of this Guaranty. The
Guarantors hereby waive any objection that they may now or hereafter have to
the venue of such suit or any such court or that such suit was brought in an
inconvenient court.
10. MISCELLANEOUS. This Guaranty constitutes the entire agreement of the
Guarantors with respect to the matters set forth herein. This writing is
intended by the parties as a final, complete and exclusive expression of their
guaranty agreement. No course of dealing, course of performance or trade
usage, and no parol evidence of any nature, shall be used to supplement or
modify any terms. There are no conditions to the full effectiveness of this
Guaranty. The rights and remedies herein provided are cumulative and not
exclusive of any remedies provided by law or any other agreement, and this
Guaranty shall be in addition to any other guaranty of the Obligations. The
invalidity or unenforceability of any one or more sections of the Guaranty
shall not affect the validity or enforceability of its remaining provisions.
Captions are for the ease of reference only and shall not affect the meaning of
the relevant provisions. The meanings of all defined terms used in this
Guaranty shall be equally applicable to the singular and plural forms of the
terms defined.
IN WITNESS WHEREOF, the Guarantors have cause this Guaranty to be executed
and delivered as a sealed instrument as of the date appearing on page one.
VEMCO, INC.
By: __________________________________
Michael G. Torakis, President
VENTURE INDUSTRIES CORPORATION
By: __________________________________
Michael G. Torakis, President
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VEMCO LEASING, INC.
By: __________________________________
Michael G. Torakis, President
VENTURE SERVICE COMPANY
By: __________________________________
Michael G. Torakis, President
VENTURE LEASING COMPANY
By: __________________________________
Michael G. Torakis, President
VENTURE MOLD & ENGINEERING CORPORATION
By: __________________________________
Michael G. Torakis, President
VENTURE INDUSTRIES CANADA, LTD.
By: __________________________________
Michael G. Torakis, President
Address for Guarantors:
33662 James J. Pompo
P.O. Box 278
Fraser, MI 48026-0278
Address for Beneficiaries:
700 Lafayette Road
P.O. Box 307
Seabrook, NH 03874
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EXHIBIT (c)(12)
AGREEMENT
This Agreement, made this 9th day of February, 1996, is between BAILEY
CORPORATION ("Bailey") and VENTURE HOLDINGS ("Venture").
Venture desires to receive information from Bailey for the purpose of
considering an investment in or business consolidation with Bailey.
Bailey is willing to furnish the requested information to Venture under the
terms and conditions set forth below.
1. For purposes of this Agreement, "Information" shall mean all information
pertaining to Bailey which is furnished by Bailey to Venture, and all
analyses, compilations, data, studies or other documents prepared by Venture
containing or based upon, in whole or in part, any such information. The
term "Information" shall not include any portion of the information which:
a) is or becomes generally available to the public other than as a result of
a breach of this Agreement by Venture;
b) becomes available to Venture on a con-confidential basis from a source
other than Bailey, provided that such source is entitled to disclose the
Information; or
c) was known to Venture on a non-confidential basis prior to the disclosure
thereof by Bailey.
2. Except as required by law, the Information shall be treated as confidential,
and shall not, without the prior written consent of Bailey, be used by
Venture for any purpose other than as described above. Venture may provide
access to the Information only to its employees and affiliates who have a
need to review the Information for the described purpose, and who agree to
be bound by the terms of this Agreement as a condition of said access.
3. Venture and Bailey shall treat as confidential and not disclose to any third
party without the other's prior written consent the fact that Venture is
considering the matters described above or has received the Information
described above.
VENTURE HOLDINGS BAILEY CORPORATION
By: /S/ MICHAEL G. TORAKIS By: /S/ ROGER R. PHILLIPS
