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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
(PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
ARDEN INDUSTRIAL PRODUCTS, INC.
(NAME OF SUBJECT COMPANY)
PARK-OHIO INDUSTRIES, INC.
P O ACQUISITION CORPORATION
(BIDDERS)
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COMMON SHARES, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
039780101
(CUSIP NUMBER)
-------------------------
RONALD J. COZEAN, ESQ.
PARK-OHIO INDUSTRIES, INC.
23000 EUCLID AVENUE
CLEVELAND, OHIO 44117
(216) 692-7200
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
-------------------------
COPY TO:
MARY ANN JORGENSON, ESQ.
SQUIRE, SANDERS & DEMPSEY L.L.P.
4900 KEY TOWER
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114-1304
(216) 479-8500
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$41,936,736 $8,387
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* For purposes of calculating amount of filing fee only. The amount
assumes the purchase of 6,989,456 Common Shares, par value $.01 per
share of Arden Industrial Products, Inc., at $6.00 net in cash per
share. The amount of the filing fee calculated in accordance with
Regulation 240.0-11 of the Securities Exchange Act of 1934 equals 1/50
of 1% of the value of the shares to be purchased.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
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CUSIP NO. 039780101 14D-1
1 NAME OF REPORTING PERSON:
P O Acquisition Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
3 SEC USE ONLY:
4 SOURCES OF FUNDS:
AF
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f). [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
Minnesota
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON:
320,200
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES: [ ]
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
Approximately 4.6 % of the Shares Outstanding as of June 10, 1997
10 TYPE OF REPORTING PERSON:
CO
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CUSIP NO. 039780101 14D-1
1 NAME OF REPORTING PERSON:
Park-Ohio Industries, Inc. (34-6520107)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
3 SEC USE ONLY:
4 SOURCES OF FUNDS:
BK
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f). [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION:
Ohio
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON:
320,200
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES: [ ]
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
Approximately 4.6 % of the Shares Outstanding as of June 10, 1997
10 TYPE OF REPORTING PERSON:
CO
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This Schedule 14D-1 Tender Offer Statement (the "Statement") relates to
a tender offer by P O Acquisition Corporation, a Minnesota corporation (the
"Purchaser") and a wholly owned subsidiary of Park-Ohio Industries, Inc., an
Ohio corporation ("Parent"), to purchase all outstanding Common Shares, par
value $.01 per share, of Arden Industrial Products, Inc., a Minnesota
corporation, at a price of $6.00 net in cash per share, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated June 25, 1997
(the "Offer to Purchase") and in the related Letter of Transmittal (which,
together with any amendments and supplements thereto, collectively constitute
the "Offer"), and is intended to satisfy the reporting requirements of Section
14(d) of the Securities Exchange Act of 1934, as amended. Copies of the Offer to
Purchase and the related Letter of Transmittal are filed as Exhibits (a)(1) and
(a)(2) hereto, respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Arden Industrial Products, Inc.,
a Minnesota corporation (the "Company"), which has its principal executive
offices at 560 Oak Grove Parkway, Vadnais Heights, Minnesota 55127.
(b) The title of the securities which are the subject of the Offer is
the Company's Common Shares, $.01 par value (the "Shares"), at a price of $6.00
net in cash per share. The offer is for all outstanding Shares. The information
concerning the number of outstanding Shares is set forth in "Introduction" of
the Offer to Purchase and is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d) This Schedule 14D-1 is being filed by the Purchaser and Parent.
Information concerning the principal business and principal offices of the
Purchaser and Parent is set forth in Section 9 ("Certain Information Concerning
the Purchaser and Parent") of the Offer to Purchase and is incorporated herein
by reference. The names, business addresses, present principal occupations or
employment, material occupation, positions, offices or employment during the
last five years and citizenship of each director and executive officer of
Purchaser and Parent are set forth in Schedule A to the Offer to Purchase and
are incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser nor
Parent, nor, to the best of Parent's knowledge, any of its executive officers or
directors has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) nor has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction as a result of
which such person 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.
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ITEM 3. PAST CONTACTS, TRANSACTION OR NEGOTIATIONS WITH THE SUBJECT
COMPANY
(a) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase is incorporated
herein by reference.
(b) The information set forth in Section 10 ("Background of the Offer;
Contacts with the Company") of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 12 ("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 Section 11 ("Purpose of the Offer;
Plans for the Company; The Merger; Dissenters' Rights") of the Offer to Purchase
is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the
Offer on Market for the Shares, NASDAQ Quotation, and Exchange Act
Registration") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 9 ("Certain
Information Concerning the Purchaser and Parent") and Schedule A to, 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 Section 9 ("Certain Information Concerning
the Purchaser and Parent"), Section 10 ("Background of the Offer; Contacts with
the Company") and Section 11 ("Purpose of the Offer; Plans for the Company; The
Merger; Dissenters' Rights") of the Offer to Purchase is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 15 ("Fees and Expenses") of the
Offer to Purchase is incorporated herein by reference.
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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. See Exhibit (g).
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 10 ("Background of the Offer;
Contacts with the Company") of the Offer to Purchase is incorporated herein by
reference.
(b) and (c) The information set forth in Section 14 ("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
Market for the Shares, NASDAQ Quotation, and Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the
Letter of Transmittal is incorporated herein by reference.
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, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Press Release
(b)(1) The Parent's Credit Agreement dated as of April 11, 1995 is
filed as Exhibit 4 to the Parent's Quarterly Report on Form
10-Q for the quarter ended March 31, 1995, and is incorporated
herein by reference.
(b)(2) Amendments One through Four to the Parent's Credit Agreement
are filed as Exhibits 4(d), 4(e), 4(f) and 4(g) to the
Parent's Annual Report on Form 10-K for the year ended
December 31, 1996, and are incorporated herein by reference.
(b)(3) Fifth Amendment to the Parent's Credit Agreement dated
June 23, 1997.
(c)(1) Merger Agreement, dated as of June 16, 1997, among the
Company, Parent and the Purchaser.
(d) None.
(e) Not applicable.
(f) None.
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(g) Audited Financial Statements for the two years ended December
31, 1996 of Parent. (Incorporated by reference to Parent's
Annual Report on Form 10-K for the year ended December 31,
1996.)
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 26, 1997 PARK-OHIO INDUSTRIES, INC.
By: /s/ James S. Walker
------------------------------
Name: James S. Walker
Title: Vice President
P O ACQUISITION CORPORATION
By: /s/ James S. Walker
------------------------------
Name: James S. Walker
Title: Vice President
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Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING COMMON SHARES
OF
ARDEN INDUSTRIAL PRODUCTS, INC.
AT
$6.00 NET PER SHARE
BY
P O ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
PARK-OHIO INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON FRIDAY, JULY 25, 1997, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT WITHDRAWN, A NUMBER OF
SHARES (AS DEFINED) WHICH WILL CONSTITUTE AT LEAST 50.1% OF THE COMBINED VOTING
POWER OF THE VOTING SECURITIES OF ARDEN INDUSTRIAL PRODUCTS, INC. ("COMPANY") ON
A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT
PURSUANT TO THE OFFER.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY'S SHAREHOLDERS, HAS APPROVED THE OFFER AND THE MERGER AND RECOMMENDS
THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER.
IMPORTANT
On June 16, 1997, Park-Ohio Industries, Inc., an Ohio corporation
("Parent"), P O Acquisition Corporation, a Minnesota corporation and a wholly
owned subsidiary of Parent ("Purchaser"), and Arden Industrial Products, Inc., a
Minnesota corporation ("Company"), entered into an Agreement and Plan of Merger
which provides, among other things, that as promptly as practicable following
consummation of the offer made hereby, the parties thereto shall, subject to the
terms and conditions provided therein, cause the Purchaser to be merged with and
into the Company.
Any shareholder desiring to tender all or any portion of his or her common
shares ("Shares"), par value $.01 per Share, of the Company should either (a)
complete and sign the Letter of Transmittal or a facsimile thereof in accordance
with the instructions in the Letter of Transmittal, have his or her signature
thereon guaranteed if required by Instruction 1 of the Letter of Transmittal and
mail or deliver the Letter of Transmittal or such facsimile with his or her
certificate(s) for the tendered Shares and any other required documents to the
Depositary, or follow the procedure for book-entry transfer of Shares set forth
in Section 3 of this Offer to Purchase, or (b) request his or her broker,
dealer, bank, trust company or other nominee to effect the transaction for such
shareholder. Shareholders having Shares registered in the name of a broker,
dealer, bank, trust company or other nominee are urged to contact such broker,
dealer, bank, trust company or other nominee if they desire to tender Shares so
registered.
A shareholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply with the procedure
for book-entry transfer on a timely basis, may tender such Shares by following
the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Requests for
additional copies of this Offer to Purchase, the Letter of Transmittal or the
Notice of Guaranteed Delivery may be directed to the Information Agent or to
brokers, dealers, banks or trust companies.
------------------------
The Dealer Manager for the Offer is:
VALUE INVESTING PARTNERS, INC.
June 26, 1997
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C> <C>
INTRODUCTION......................................................... 1
THE TENDER OFFER..................................................... 3
1. Terms of the Offer............................................... 3
2. Acceptance for Payment and Payment for Shares.................... 4
3. Procedure for Tendering Shares................................... 5
4. Rights of Withdrawal............................................. 7
5. Certain Federal Income Tax Consequences of the Offer............. 7
6. Price Range of Shares; Dividends................................. 8
7. Effect of the Offer on Market for the Shares, NASDAQ Quotation, 8
and Exchange Act Registration....................................
8. Certain Information Concerning the Company....................... 9
9. Certain Information Concerning the Purchaser and Parent.......... 10
10. Background of the Offer; Contacts with the Company............... 12
11. Purpose of the Offer; Plans for the Company; the Merger 12
Agreement; Dissenters' Rights....................................
12. Source and Amount of Funds....................................... 17
13. Certain Conditions of the Offer.................................. 18
14. Certain Legal Matters............................................ 19
15. Fees and Expenses................................................ 21
16. Miscellaneous.................................................... 21
SCHEDULE A........................................................... A-1
</TABLE>
i
<PAGE> 3
TO THE HOLDERS OF COMMON SHARES
OF ARDEN INDUSTRIAL PRODUCTS, INC.:
INTRODUCTION
P O Acquisition Corporation, a Minnesota corporation ("Purchaser") and a
wholly owned subsidiary of Park-Ohio Industries, Inc., an Ohio corporation
("Parent"), hereby offers to purchase all of the outstanding common shares
("Shares"), par value $.01 per Share, of Arden Industrial Products, Inc., a
Minnesota corporation ("Company"), at $6.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which together constitute the
"Offer"). Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares by the Purchaser pursuant to the Offer. The
Purchaser will pay the charges and expenses of Value Investing Partners, Inc.
("Dealer Manager"), National City Bank ("Depositary") and Corporate Investor
Communications, Inc. ("Information Agent") in connection with the Offer, as
described herein. See Section 15.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT WITHDRAWN, A NUMBER OF
SHARES WHICH WILL CONSTITUTE AT LEAST 50.1% OF THE COMBINED VOTING POWER OF THE
VOTING SECURITIES OF THE COMPANY ON A FULLY DILUTED BASIS AS OF THE DATE THE
SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER ("MINIMUM CONDITION"). SEE
SECTION 13.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY'S SHAREHOLDERS, HAS APPROVED THE OFFER AND THE MERGER AND RECOMMENDS
THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 16, 1997 ("Merger Agreement"), among the Company, Parent and the
Purchaser, pursuant to which, after the completion of the Offer, the Purchaser
will be merged with and into the Company and each outstanding Share (other than
Shares owned by shareholders exercising their dissenters' rights in accordance
with Section 302A.473 of the Minnesota Business Corporation Act ("MBCA")), will
be converted into and represent the right to receive $6.00 in cash ("Offer
Price") or any higher price paid for Shares pursuant to the Offer. The Merger
Agreement is more fully described in Section 11 below.
According to the Company, as of June 10, 1997 there were 6,989,456 Shares
outstanding and approximately 815,459 Shares subject to issuance pursuant to the
Company's stock option and incentive plans.
PURPOSE OF THE OFFER; THE MERGER
The purpose of the Offer is to acquire for cash as many outstanding Shares
as possible as a first step in acquiring the entire equity interest in the
Company. The Merger Agreement provides that as soon as practicable upon
consummation of the Offer, the parties thereto shall, subject to the terms and
conditions provided therein, effect the Merger between the Company and the
Purchaser, pursuant to which each then outstanding Share (other than Shares
owned by shareholders exercising their dissenters' rights in accordance with
Section 302A.473 of the MBCA) will be converted pursuant to the terms of the
Merger into the right to receive an amount in cash equal to the per Share price
paid pursuant to the Offer. See Section 11.
MINIMUM CONDITION
The Offer is conditioned on, among other things, there being validly
tendered prior to the expiration of the Offer and not withdrawn, a number of
Shares which will constitute at least 50.1% of the combined voting power of the
voting securities of the Company on a fully diluted basis as of the date the
Shares are accepted for payment pursuant to the Offer ("Minimum Condition"). The
Purchaser may, in its sole discretion, waive any one or more of the conditions
of the Offer, including the Minimum Condition. See Section 13. The
<PAGE> 4
Company has represented in Section 5.3 of the Merger Agreement that as of June
10, 1997, there were 6,989,456 Shares issued and outstanding and stock options
outstanding to purchase an aggregate of approximately 815,459 Shares.
Based on the foregoing, the Purchaser believes there are approximately
7,804,915 Shares outstanding on a fully diluted basis. Accordingly, the
Purchaser believes that the Minimum Condition would be satisfied if at least
3,910,263 Shares are validly tendered prior to the Expiration Date and not
withdrawn.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ IN ITS ENTIRETY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
2
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THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions set forth in the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the Purchaser will accept for payment, and pay
for, all Shares validly tendered on or prior to the Expiration Date (as herein
defined) and not withdrawn, as permitted by Section 4. The term "Expiration
Date" means 5:00 p.m., New York City time, on Friday, July 25, 1997, unless and
until the Purchaser shall have extended the period for which the Offer is open
pursuant to the terms of the Merger Agreement, in which event the term
"Expiration Date" shall mean the latest time and date on which the Offer, as so
extended, shall expire.
Without the written consent of the Company, Purchaser will not decrease the
Offer Price, change the number of Shares sought to an amount less than 50.1% of
the outstanding Shares, change the form of consideration to be paid pursuant to
the Offer or impose conditions to the Offer in addition to those set forth on
Annex A to the Merger Agreement, or amend any other term or condition of the
Offer in any manner (except as may be required pursuant to the applicable
regulations of the Securities and Exchange Commission ("Commission")) which is
adverse to the holders of the Shares; provided, however, that if on a scheduled
expiration date of the Offer, all conditions of the Offer shall not have been
satisfied or waived, the Offer may be extended from time to time without the
consent of the Company for such period of time as is reasonably expected to be
necessary to satisfy the unsatisfied conditions; and provided further, that if
as of a scheduled expiration date all of the conditions of the Offer shall have
been satisfied and in excess of 80% but less than 90% of the outstanding Shares
shall have been tendered, Purchaser may extend the Offer for up to an additional
ten business days.
Any extension will be made by giving oral or written notice of such
extension to the Depositary. Any such extension will also be publicly announced
by press release issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the right of a tendering shareholder to withdraw his or
her Shares. See Section 4. Subject to the applicable regulations of the
Commission and the qualifications set forth in the foregoing paragraph,
Purchaser expressly reserves the right, in its sole discretion, at any time or
from time to time, (i) to delay acceptance for payment of or, regardless of
whether such Shares were theretofore accepted for payment, payment for any
Shares or to terminate the Offer and not accept for payment or pay for any
Shares not theretofore accepted for payment, or paid for, upon the occurrence of
any condition to the Offer contained in Annex A to the Merger Agreement and (ii)
to waive any condition or otherwise amend the Offer, by giving oral or written
notice of such delay, termination or amendment to the Depositary and by making a
public announcement thereof. If the Purchaser accepts any Shares for payment
pursuant to the terms of the Offer, it will accept for payment all Shares
validly tendered prior to the Expiration Date and not withdrawn, and, subject to
(i) above, will promptly pay for all Shares so accepted for payment. The
Purchaser confirms that its reservation of the right to delay payment for Shares
which it has accepted for payment is limited by Rule 14e-1(c) under the
Securities Exchange Act of 1934 ("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.
Any extension, delay, termination or amendment of the Offer will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. 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 shareholders in connection with the
Offer be promptly disseminated to shareholders in a manner reasonably designed
to inform shareholders of such change) and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
3
<PAGE> 6
In the event that Purchaser shall make a material change in the terms of
the Offer or the information concerning the Offer, or shall waive a material
condition of the Offer, the Offer will be extended to the extent required by
Rules 14d-4(c) and 14d-6(d) under the Exchange Act.
If, prior to the Expiration Date, the Purchaser shall decrease the
percentage of Shares being sought or increase or decrease the consideration
offered to holders of Shares, such increase or decrease shall be applicable to
all holders whose Shares are accepted for payment pursuant to the Offer and, if
at the time notice of any increase or decrease is first published, sent or given
to holder of Shares, the Offer is scheduled to expire at any time earlier than
the tenth business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended until the expiration of
such ten business-day period. For purposes of the Offer, a "business day" means
any day other than a Saturday, Sunday or federal holiday and consists of the
time period from 12:01 a.m. through 12:00 Midnight, New York City time.
The Company has provided the Purchaser, the Depositary and the Information
Agent with the Company's shareholder list and security position listings for the
purpose of disseminating the Offer to holders of Shares. The Offer to Purchase
and the related Letter of Transmittal are being mailed to record holders of
Shares whose names appear on the Company's shareholder list and is being
furnished, for subsequent transmittal to beneficial owners of shares, to
brokers, dealers, banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the shareholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the 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, Shares
validly tendered and not withdrawn as promptly as practicable after the later of
(a) the expiration or termination of the waiting period applicable to the
acquisition of Shares pursuant to the Offer under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("H-S-R Act"), and (b) the
Expiration Date. Parent filed a Notification and Report Form under the H-S-R Act
on June 26, 1997, and, accordingly, unless earlier terminated or extended by a
request for additional information, the waiting period under the H-S-R Act is
scheduled to expire at 11:59 p.m., New York City time, on July 11, 1997. See
Section 14. In addition, subject to applicable rules of the Commission, the
Purchaser expressly reserves the right to delay acceptance for payment of or
payment for Shares in order to comply, in whole or in part, with any applicable
law. See Section 13. 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 certificates for such Shares (or a confirmation of a book-entry
transfer of such Shares into the Depositary's account at the Depository Trust
Company ("Depository Institution")), a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other required documents.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment Shares validly tendered and not withdrawn as, if and when the
Purchaser gives oral or written notice to the Depositary of its acceptance for
payment of such Shares pursuant to 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 the tendering
shareholders for purpose of receiving payments from the Purchaser and
transmitting such payments to the tendering shareholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for Shares be paid, regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased Shares will be
returned, without expense to the tendering shareholder (or, in the case of
Shares tendered by book-entry transfer of such shares into the Depositary's
account at the Depository Institution pursuant to the procedures set forth in
Section 3, such Shares will be credited to an account maintained with the
Depository Institution), as soon as practicable following expiration or
termination of the Offer.
4
<PAGE> 7
3. PROCEDURE FOR TENDERING SHARES.
Valid Tender of Shares
For a shareholder validly to tender Shares pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal or manually executed
facsimile thereof, together with any required signature guarantees and any other
required documents, must be transmitted to and received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase and
either (a) certificates for tendered Shares must be received by the Depositary
at such address, (b) such Shares must be tendered pursuant to the procedures for
book-entry transfer set forth below (and a confirmation of receipt of such
tender received), or (c) such shareholder must comply with the guaranteed
delivery procedure set forth below, in each case prior to the Expiration Date.
Book-Entry Transfer
The Depositary will establish accounts with respect to the Shares at the
Depository Institution for purposes of the Offer within two business days after
the date of this Offer to Purchase, and any financial institution that is a
participant in the Depository Institution's system may make book-entry delivery
of the Shares by causing the Depository Institution to transfer such Shares into
the Depositary's account in accordance with the Depository Institution's
procedure for such transfer. However, although delivery of Shares may be
effected through book-entry at the Depository Institution, the Letter of
Transmittal (or facsimile thereof), with any required signature guarantees and
any other required documents, must, in any case, be transmitted to and received
by the Depositary at one or more of its addresses set forth on the back cover of
this Offer to Purchase prior to the Expiration Date, or the guaranteed delivery
procedure described below must be complied with. Delivery of the Letter of
Transmittal or any other required documents to the Depository Institution shall
not constitute delivery to the Depositary.
Signature Guarantees
Signatures on all Letters of Transmittal must be guaranteed by a firm which
is a member of a recognized Medallion Program approved by the Securities
Transfer Association Inc. (an "Eligible Institution"), except in cases where
Shares are tendered (i) by a registered shareholder who has not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. See Instructions 1 and 5 in the Letter of Transmittal.
If the certificates are registered in the name of a person other than the signer
of the Letter of Transmittal, or if certificates for unpurchased securities are
to be issued to a person other than the registered owner(s), the certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered owner or owners appear on
the certificates, with the signature(s) on the certificates or stock powers
guaranteed as aforesaid.
THE METHOD OF DELIVERY OF ALL REQUIRED DOCUMENTS IS AT THE ELECTION AND
RISK OF EACH TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO THE
PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, A SHAREHOLDER MUST
PROVIDE THE DEPOSITARY WITH HIS OR HER CORRECT TAXPAYER IDENTIFICATION NUMBER
AND CERTIFY WHETHER HE OR SHE IS SUBJECT TO BACKUP WITHHOLDING OF FEDERAL INCOME
TAX BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL.
Guaranteed Delivery
If a shareholder desires to tender Shares pursuant to the Offer and such
shareholder's certificates are not immediately available or such shareholder
cannot deliver the certificates and all other required documents to the
Depositary prior to the Expiration Date or such shareholder cannot complete the
procedure for book-entry
5
<PAGE> 8
transfer on a timely basis, such Shares may nevertheless be tendered, provided
that all of the following conditions are satisfied:
a. such tenders are made by or through an Eligible Institution;
b. a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary as provided below on or prior to the Expiration
Date; and
c. the certificates for all tendered Shares (or a confirmation of a
book-entry transfer of such securities into the Depositary's account at the
Depository Institution as described above), in proper form for transfer,
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and all other documents required by the Letter of
Transmittal are received by the Depositary within three (3) NASDAQ Stock
Market trading days after the date of execution of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a signature guaranteed by an Eligible Institution in the form set forth
in such Notice.
Other Requirements
In all cases, notwithstanding any other provision hereof, payment for
Shares tendered and accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of certificates for Shares (or a
confirmation of a book-entry transfer of such securities into the Depositary's
account at the Depository Institution as described above), properly completed
and duly executed Letter(s) of Transmittal (or facsimile(s) thereof) and any
other required documents.
By executing a Letter of Transmittal as set forth above, the tendering
shareholder irrevocably appoints designees of the Purchaser as such
shareholder's attorneys-in-fact and proxies, each with full power of
substitution, to the full extent of such shareholder's rights with respect to
the Shares tendered by such shareholder and accepted for payment by the
Purchaser and with respect to any and all other Shares or other securities
issued or issuable in respect of such Shares on or after June 26, 1997. Such
appointment is effective when, and only to the extent that, the Purchaser
deposits the payment for such Shares with the Depositary. All such proxies shall
be considered coupled with an interest in the tendered Shares and therefore
shall not be revocable. Upon the effectiveness of such appointment, all prior
proxies given by such shareholder will be revoked, and no subsequent proxies may
be given (and, if given, will not be deemed effective). The Purchaser's
designees will, with respect to the Shares for which the appointment is
effective, be empowered to exercise all voting and other rights of such
shareholder as they, in their sole discretion, may deem proper at any annual,
special or adjourned meeting of the shareholders of the Company, by written
consent in lieu of any such meeting or otherwise. The Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's payment for such Shares, the Purchaser must be
able to exercise full voting rights with respect to such Shares.
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 and Parent, in their sole discretion, which determination shall
be final and binding. The Purchaser and Parent reserve the absolute right to
reject any and all tenders determined by them not to be in proper form or the
acceptance for payment of which may, in the opinion of their counsel, be
unlawful. The Purchaser and Parent also reserve the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in the tender of
any Shares. No tender of Shares will be deemed to have been validly made until
all defects and irregularities have been cured or waived. Neither the Purchaser,
Parent, the Depositary, the Information Agent, the Dealer Manager nor any other
person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure
6
<PAGE> 9
to give any such notification. The Purchaser's and Parent's interpretation of
the terms and conditions of the Offer (including the Letter of Transmittal and
instructions thereto) will be final and binding.
The tender of Shares pursuant to any of the procedures described above will
constitute an agreement between the tendering shareholder and the Purchaser upon
the terms and subject to the conditions of the Offer.
4. RIGHTS OF WITHDRAWAL.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time 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 25, 1997.
For a withdrawal of Shares tendered pursuant to the Offer to be effective,
a written, telegraphic, telex or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase. Any notice of withdrawal must specify
the name of the person having tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the names in which the certificate(s) evidencing the
Shares to be withdrawn are registered, if different from that of the person who
tendered such Shares. The signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution, unless such Shares have been tendered for
the account of any Eligible Institution. If Shares have been tendered pursuant
to the procedures for book-entry transfer as set forth in Section 3, any notice
of withdrawal must specify the name and number of the account at the Depository
Institution to be credited with the withdrawn Shares and otherwise comply with
the Depository Institution's procedures. If certificates have been delivered or
otherwise identified to the Depositary, the name of the registered holder and
the serial numbers of the particular certificates evidencing the Shares
withdrawn must also be furnished to the Depositary as aforesaid prior to the
physical release of such certificates. All questions as to the form and validity
(including time of receipt) of any notice of withdrawal will be determined by
the Purchaser and Parent, in their sole discretion, which determination shall be
final and binding. None of the Purchaser, Parent, the Dealer Manager, the
Depositary, the Information Agent, or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give such notification. Any Shares
properly withdrawn will be deemed not to have been validly tendered for purposes
of the Offer. However, withdrawn Shares may be re-tendered by following one of
the procedures described in Section 3 at any time prior to the Expiration Date.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares, or is unable to accept for payment Shares pursuant to the
Offer, for any reason, then, without prejudice to the Purchaser's rights under
this 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 shareholders are entitled to withdrawal rights as set forth in this
Section 4. Any such delay will be by an extension of the Offer to the extent
required by law.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER
Sales of Shares pursuant to the Offer and the exchange of Shares for cash
pursuant to the Merger will be taxable transactions for federal income tax
purposes and may also be taxable under applicable state, local and other tax
laws. In general, for federal income tax purposes, a shareholder whose Shares
are purchased pursuant to the Offer or who receives cash as a result of the
Merger will realize gain or loss equal to the difference between the adjusted
basis of the Shares sold or exchanged and the amount of cash received therefor.
Such gain or loss will be capital gain or loss if the Shares are held as capital
assets by the shareholder.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO SHAREHOLDERS IN SPECIAL SITUATIONS
SUCH AS SHAREHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF EMPLOYEE
STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND SHAREHOLDERS WHO ARE NOT UNITED
STATES CITIZENS OR RESIDENTS. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX
7
<PAGE> 10
CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND
EFFECT OF STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares is listed on the NASDAQ National Market System ("NASDAQ/NMS")
under the symbol "AFAS." The following table sets forth, for the fiscal quarters
indicated, the high and low sales prices for the Shares on the NASDAQ/NMS based
upon public sources. The Company has never paid cash dividends on the Shares.
<TABLE>
<CAPTION>
COMMON
STOCK PRICE
------------
FISCAL YEAR HIGH LOW
--------------------------------------------------------------- ---- ---
<S> <C> <C>
Year ended June 30, 1995:
First Quarter................................................ $13 1/8 $9 3/8
Second Quarter............................................... $10 1/4 $6 1/4
Third Quarter................................................ $ 8 1/4 $5 3/4
Fourth Quarter............................................... $ 9 $6
Year ended June 30, 1996:
First Quarter................................................ $ 9 1/2 $7
Second Quarter............................................... $ 8 1/4 $4 7/8
Third Quarter................................................ $ 5 1/4 $4
Fourth Quarter............................................... $ 5 3/4 $4 1/2
Year ended June 30, 1997:
First Quarter................................................ $ 5 1/2 $4
Second Quarter............................................... $ 5 3/8 $4 5/8
Third Quarter................................................ $ 5 1/8 $4
Fourth Quarter (through June 20)............................. $ 5 5/8 $3 1/2
</TABLE>
On June 20, 1997, the reported closing price for the Shares on the
NASDAQ/NMS was $5 5/8 per Share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON MARKET FOR THE SHARES, NASDAQ QUOTATION, AND EXCHANGE
ACT REGISTRATION
The purchase of Shares by the Purchaser pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and will reduce the
number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by the public.
The Shares are authorized for quotation on the NASDAQ/NMS. According to
NASDAQ's published guidelines, the Shares would no longer meet the inclusion
requirements of NASDAQ/NMS if, among other things, the number of publicly held
Shares (excluding Shares held directly or indirectly by officers and directors
of the Company and any person who is a beneficial owner of more than 10% of the
outstanding Shares) was less than 200,000, the aggregate market value of
publicly held Shares was less than $1.0 million, or there were fewer than 400
holders of the Shares or 300 holders of round lots. If these standards were not
met, quotations might continue to be published in the over-the-counter
"additional list" or one of the "local lists" unless, as set forth in NASDAQ's
published guidelines, among other things, the number of publicly held Shares was
less than 100,000, or there were fewer than 300 holders in total. According to
the Company, as of June 10, 1997 there were approximately 514 holders of record
of Shares and 6,989,456 Shares outstanding.
If the Shares cease to qualify for quotation on the NASDAQ Stock Market,
the market therefore could be adversely affected. It is possible that the Shares
would be traded on other securities exchanges or in the over-the-counter market,
and that price quotations would be reported by such exchanges or other sources.
The extent of the public market for the Shares and the availability of such
quotations would, however, depend upon the number of shareholders and/or the
aggregate market value of the Shares remaining at such time, the
8
<PAGE> 11
interest in maintaining a market in the Shares on the part of securities firms,
the possible termination of registration of the Shares under the Exchange Act
and other factors.
The Shares are presently "margin securities" under the regulations of the
Federal Reserve Board, which has the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares. Depending upon
factors similar to those described above regarding listing and market
quotations, the Shares might no longer constitute "margin securities" for the
purposes of the Federal Reserve Board's margin regulations, in which event the
Shares would be ineligible as collateral for margin loans made by brokers.
Exchange Act Registration
The Shares are currently registered under the Exchange Act. Such
registration may be terminated by the Company upon application to the Commission
if the outstanding Shares are not listed on a national securities exchange and
if there are fewer than 300 holders of record of Shares. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its shareholders and to
the Commission and would make certain provisions of the Exchange Act, such as
the short-swing profit recovery provisions of Section 16(b) and the requirement
of furnishing a proxy statement in connection with shareholders' meetings
pursuant to Section 14(a) and the related requirement of furnishing an annual
report to shareholders, no longer applicable with respect to the Shares.
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 under the Securities Act of 1933, as amended, may be impaired or
eliminated. If registration of the Shares under the Exchange Act were
terminated, the Shares would no longer be eligible for NASDAQ reporting or for
continued inclusion on the Federal Reserve Board's list of "margin securities."
THE PURCHASER INTENDS TO SEEK TO CAUSE THE COMPANY TO APPLY FOR TERMINATION OF
REGISTRATION OF THE SHARES AS SOON AS POSSIBLE AFTER CONSUMMATION OF THE OFFER
IF THE REQUIREMENTS FOR TERMINATION OF REGISTRATION ARE MET.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Minnesota corporation with its principal executive offices
located at 560 Oak Grove Parkway, Vadnais Heights, Minnesota 55127. The Company
was founded in 1972 and had its initial public offering in 1994.
The Company is an international distributor of specialty and standard
fasteners to the industrial market, offering its customers a broad line of
fastener products and a wide range of value-added services. These services
include innovative inventory management programs, engineering and design support
and continuous quality assurance programs, which enable the Company's customers
to lower their overall costs of purchasing, handling and designing fasteners,
and assembling their products. The Company distributes fasteners to
approximately 7,500 original equipment manufacturers and other industrial
manufacturers, assemblers and subassemblers that operate in a broad range of
industries, as well as to other distributors. The Company currently operates
seven distribution centers in the Midwest and Southeast and has approximately
380 employees.
Set forth below is certain summary consolidated financial information for
the Company's last three fiscal years as contained in the Company's 1996 Annual
Report to Shareholders and for the nine months ended March 31, 1997 and March
31, 1996 as contained in the Company's Quarterly Report on Form 10-Q for the
quarters ended March 31, 1997 and March 31, 1996. More comprehensive financial
information is included in such reports (including management's discussion and
analysis of financial condition and results of operation) 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 other documents and all of the
financial information and notes contained therein. Copies of such reports and
other documents may be examined at or obtained from the Commission.
9
<PAGE> 12
ARDEN INDUSTRIAL PRODUCTS, INC.
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, FISCAL YEAR ENDED JUNE 30,
----------------- ---------------------------
1997 1996 1996 1995 1994
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT INFORMATION:
Sales............................................ $65,335 $66,090 $87,510 $86,330 $69,526
Gross profit..................................... 17,647 19,145 25,185 26,980 22,917
Income (Loss) before income taxes................ (1,562) 342 662 5,838 6,099
Net income (Loss)................................ (953) 210 404 3,578 3,689
BALANCE SHEET INFORMATION:
Total assets..................................... 42,162 41,943 43,300 40,407 34,957
Shareholders' equity............................. 30,211 30,971 31,165 30,761 27,149
PER SHARE INFORMATION:
Net income (Loss) per common share............... (.14) .03 .06 .51 .62
Weighted average number of common and common
equivalent shares outstanding.................. 6,989 6,989 7,007 6,987 5,992
</TABLE>
The information concerning the Company contained in this Offer to Purchase
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources and is qualified in its
entirety by reference thereto. Although neither Parent nor Purchaser has any
knowledge that would indicate that any statements contained herein based on such
documents and records are untrue, neither Parent nor Purchaser takes any
responsibility for the accuracy or completeness of the information 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 Parent and Purchaser.
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is obligated to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Information concerning the Company's directors and officers,
their remuneration, stock options granted to them, the principal holders of the
Company's securities, any material interests of such persons in transactions
with the Company and other matters is required to be disclosed in proxy
statements distributed to the Company's shareholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference room at the Commission's office
at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and should
also be available for inspection and copying at the following regional offices
of the Commission: 1400 Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511; and 7 World Trade Center, 13th Floor,
New York, New York 10048. Copies may be obtained, by mail, upon payment of the
Commission's customary charges, by writing to its principal office at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.
The Purchaser is a Minnesota corporation incorporated on June 12, 1997 and
to date has engaged in no activities other than those incident to its formation
and the commencement of the Offer. The Purchaser is a wholly owned subsidiary of
Parent. Parent, a diversified logistics and manufacturing company, was
incorporated under the laws of the State of Ohio on November 20, 1984. The
principal executive offices of the Purchaser and Parent are located at 23000
Euclid Avenue, Cleveland, Ohio 44117.
Additional information concerning Parent is set forth in Parent's Annual
Report on Form 10-K for the year ended December 31, 1996, which information is
incorporated by reference herein, and subsequent
10
<PAGE> 13
Quarterly Reports on Form 10-Q, which reports may be obtained from the SEC in
the manner set forth with respect to information concerning the Company in
Section 8.
Set forth below is certain consolidated financial information of Parent:
PARK-OHIO INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
--------------------- ---------------------
1997 1996 1996 1995
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operations
Net Sales................................... $ 93,806 $ 90,854 $347,679 $289,501
Income from continuing operations........... 2,242 2,582 9,693 19,813
Income from discontinued operations......... 0 1,499 11,642 4,221
-------- -------- -------- --------
Net income.................................. $ 2,242 $ 4,081 $ 21,335 $ 24,034
======== ======== ======== ========
Net income per common share:
Continuing operations.................... $ .20 $ .24 $ .88 $ 1.93
Discontinued operations.................. 0 .14 1.06 .41
-------- -------- -------- --------
Net income............................... $ .20 $ .38 $ 1.94 $ 2.34
======== ======== ======== ========
Common shares used in the Computation......... 11,097 10,816 10,960 10,257
======== ======== ======== ========
Financial Position
Working capital............................. $105,299 $105,223 $ 99,723 $ 96,719
Total assets................................ 300,277 310,828 282,910 301,747
Long-term debt.............................. 72,977 103,932 60,754 96,503
Subordinated debentures..................... 22,235 22,235 22,235 22,235
Shareholders' equity........................ 119,950 100,080 115,698 95,954
</TABLE>
The name, citizenship, business address, present principal occupation, and
material positions held during the past five years of each of the directors and
executive officers of Parent and the Purchaser are set forth in Schedule A to
this Offer to Purchase.
Except as set forth in Schedule A, neither the Purchaser nor Parent, nor,
to the best of their knowledge, any of the persons listed in Schedule A hereto
nor any associate or majority-owned subsidiary of any of the foregoing,
beneficially owns or has a right to acquire any equity securities of the
Company. Neither the Purchaser nor Parent, nor, to the best of their knowledge,
any of the persons or entities referred to above, nor any director, executive
officer or subsidiary of any of the foregoing, has effected any transaction in
such equity securities during the past 60 days.
Except as set forth in Sections 10 and 11, neither the Purchaser nor
Parent, nor, to the best of their knowledge, any of the persons listed in
Schedule A hereto, has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
but not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any such securities, joint ventures,
loan or option arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies. Except as set forth in
Sections 10 and 11, there have been no contacts, negotiations or transactions
since 1994 between Parent or the Purchaser, or, to the best of their knowledge,
any of the persons listed in Schedule A hereto, on the one hand, and the Company
or its affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets. Except as
described in Sections 10 and 11, neither the Purchaser nor Parent, nor, to the
best of their knowledge, any of the persons listed in Schedule A hereto, has
since January 1, 1994 had any transaction with the Company or any of its
executive officers, directors or affiliates that would require disclosure under
the rules and regulations of the Commission applicable to the Offer.
11
<PAGE> 14
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
Representatives of Parent and the Company originally met on March 18, 1997
in Bloomington, Minnesota to discuss the possibility of combining the Parent's
logistics segment and the Company, with Parent receiving equity in the combined
public company. The Company signed a confidentiality agreement on March 19, 1997
in order to receive confidential information on Parent's logistics segment.
Subsequently, a meeting was held in Cleveland, Ohio on April 15, 1997 to further
discuss the combination and a confidentiality agreement was executed by Parent
in order to receive confidential information concerning the Company. The Company
sent a letter on April 22, 1997 to Parent responding to the April 15, 1997
discussions. The letter raised several issues including the ownership percentage
which parent would have in the combined company and the protections for the
minority shareholders in the combined company. Having determined that resolving
these issues would be difficult and time-consuming, Parent sent a letter to the
Company on April 29, 1997 outlining a transaction in which Parent would acquire
the Company in a merger transaction at a price equal to $6.00 per outstanding
Share. During May, 1997, executives of Parent and the Company held several
telephone conversations regarding Parent's offer. On June 2, 1997, executives of
Parent and the Company met in Vadnais Heights, Minnesota for further
discussions.
On June 4, 1997, attorneys for Parent and the Company began negotiating the
terms and conditions of the Merger Agreement. The Boards of Directors of Parent
and the Company approved the transactions contemplated by the Merger Agreement
(including the Offer) on June 12, 1997 and June 16, 1997, respectively. The
Merger Agreement was executed on June 16, 1997. Thereafter, Parent performed ten
days of additional due diligence which was completed on June 25, 1997. During
the due diligence period, Parent engaged in discussions with certain executive
officers of the Company (including the Chairman and Senior Vice President of
Marketing, the President and Chief Executive Officer and the Chief Financial
Officer) regarding the provision of services by such persons as consultants to
the surviving corporation ("Surviving Corporation") after the Effective Time. No
formal consulting agreements have been entered into; however, it is anticipated
that such agreements will provide for the payment of fees for services performed
and agreements not-to-compete with Parent or the Surviving Corporation.
A copy of the Merger Agreement has been filed as an Exhibit to the Schedule
14D-1 filed by Purchaser and Parent with the Commission and is available for
inspection and copying at the principal office of the Commission in the manner
set forth in Section 8.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER; DISSENTERS'
RIGHTS.
Purpose/Plans
The purpose of the Offer is to acquire for cash as many outstanding Shares
as possible as a first step in acquiring control of, and the entire equity
interest in, the Company.
The acquisition of 90% or more of the outstanding Shares pursuant to the
Offer will permit the Merger to be effected under Minnesota law immediately upon
consummation of the Offer, without the approval of the Company's shareholders.
Therefore, if at least approximately 6,290,510 Shares (or such greater number as
may be necessary if options are exercised) are acquired pursuant to the Offer,
the Purchaser will be able to, and pursuant to the terms of the Merger
Agreement, the parties to the Merger Agreement will be required to, effect the
Merger without a meeting of holders of Shares. If the Minimum Condition is met
(but less than 90% of the outstanding Shares are acquired), a special meeting
will be called to obtain shareholder approval of the Merger. In such case,
subject to the fiduciary duty of the Board of Directors of the Company and the
requirements of applicable law, the Company will be required pursuant to the
terms of the Merger Agreement, to (a) hold such meeting as promptly as
practicable following the termination of the Offer, (b) prepare and file (in
consultation with Parent and Parent's counsel) a proxy statement with the
Commission, (c) use reasonable efforts to have such proxy statement cleared by
the Commission as promptly as practicable, and (d) take all action necessary to
secure the approval of the Company's shareholders. Upon consummation of the
Offer, Purchaser will have a sufficient number of votes to approve the Merger at
such meeting.
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Following the Offer and the Merger, Parent anticipates that it will operate
the Company as a wholly owned subsidiary of Parent.
There can be no assurance that the Merger will take place because the
Merger is subject to conditions discussed below which are beyond the control of
Parent and the Company. In the event that, for any reason, the Merger does not
occur, depending on the results of the Offer, Parent may consider the
desirability of acquiring either additional Shares or the entire remaining
equity interest in the Company. If Parent determines to do either, any such
future transaction or transactions might be by means of a merger, reverse stock
split, open market or privately negotiated purchases, one or more additional
tender offers, exchange offers or otherwise. Such transactions might be on terms
and at prices more or less favorable than those of the Offer. Moreover, the
decision to enter into such future transactions and the forms they might take
will depend on the circumstances then existing, including the financial
resources of the Company and Parent and Parent's business, tax and accounting
objectives, performance of the Shares in the market, availability and
alternative uses of funds, money market and stock market conditions, general
economic conditions and other factors.
The Merger Agreement
Certain provisions of the Merger Agreement are summarized below. Such
description is qualified in its entirety by reference to the text of the Merger
Agreement, a copy of which has been filed by Parent as an exhibit to the
Schedule 14D-1 and may be obtained in the manner described in Section 8. The
Merger Agreement provides, in pertinent part, that:
Promptly after the purchase of Shares pursuant to the Offer and the receipt
of any required approval by the Company's shareholders of the Merger Agreement
and the satisfaction or waiver of certain other conditions, the Purchaser will
be merged with and into the Company. Upon consummation of the Merger ("Effective
Time"), each then outstanding Share (other than Shares owned by shareholders
exercising their dissenters' rights in accordance with Section 302A.473 of the
MBCA) will be converted into the right to receive an amount in cash ("Merger
Consideration") equal to the per Share price paid pursuant to the Offer.
Following consummation of the Merger, (a) the Company will be the Surviving
Corporation, (b) the Articles of Incorporation, By-laws and directors of the
Purchaser at the Effective Time will be the Articles of Incorporation, By-laws
and directors of the Surviving Corporation, and (c) the officers of the Company
at the Effective Time will be the officers of the Surviving Corporation until
they resign or are replaced.
The closing of the Merger shall take place on the later of the first
business day following the date on which the last of the conditions, set forth
in the Merger Agreement, is fulfilled or waived or July 25, 1997 ("Closing
Date").
The obligation of the Company, the Purchaser and Parent to effect the
Merger are subject to the satisfaction or waiver, on or before the Closing Date,
of certain conditions, including (a) the acceptance and purchase by the
Purchaser of Shares pursuant to the Offer, (b) the adoption of the Merger
Agreement by the shareholders of the Company or the acquisition by Purchaser of
90% or more of the outstanding Shares, (c) the expiration of any applicable
waiting period under the H-S-R Act, and (d) there being no statute, rule,
regulation, decree, injunction or other order of any nature of any court or
governmental authority which prevents or materially changes the transactions
contemplated by the Merger Agreement; provided; however, that in the case of a
decree, injunction or other order, the party invoking such condition shall have
used reasonable efforts to prevent the entry of any such injunction or other
order and to appeal as promptly as possible any decree, injunction or other
order.
The obligations of Purchaser and Parent to effect the Merger are subject to
the satisfaction or waiver of the following conditions on or before the Closing
Date: (a) the Company shall have performed in all material respects all
obligations and covenants required to be performed by it under the Merger
Agreement; (b) all necessary approvals of any governmental authority in
connection with the Merger shall have been obtained, except where the failure to
obtain such approval would not have a material adverse effect on the Company;
(c) there shall not have been entered any order by any governmental authority in
any suit, action or proceeding which requires the payment of material damages by
Purchaser, Parent or the Company in
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connection with the Offer or the Merger or prohibits or limits certain ownership
or operating rights of Parent and/or its subsidiaries; and (d) each of the
representations and warranties of the Company contained in the Merger Agreement
shall be true and correct on the Closing Date (unless they expressly relate to
an earlier date).
The Merger Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, whether prior to or after approval by the
shareholders of the Company, by the mutual written consent of the Board of
Directors of Parent and the Board of Directors of the Company. The Merger
Agreement may also be terminated as described below.
The Merger Agreement may be terminated by either of the Board of Directors
of Parent or the Board of Directors of the Company if (a) Purchaser or Parent
has not purchased Shares in accordance with the terms of the Offer on or prior
to September 23, 1997 (provided that the right to so terminate the Merger
Agreement shall not be available to any party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of, or results in, the
failure of any such condition) or (b) any governmental authority shall have
issued an order, decree or ruling or taken any other action prohibiting the
transactions contemplated by the Merger Agreement and such action shall have
become final and non-appealable.
The Merger Agreement may be terminated by the Board of Directors of the
Company if (a) prior to the purchase of Shares pursuant to the Offer, the Board
of Directors of the Company shall have taken a Permitted Action (as defined
below) and upon or prior to such termination, the Company shall have paid Parent
a termination fee of $1.5 million, (b) prior to the purchase of Shares pursuant
to the Offer, either of Purchaser or Parent shall have failed in any material
respect to perform or comply with any of its material covenants and agreements
contained in the Merger Agreement or shall have breached in any material respect
its representations and warranties contained in the Merger Agreement (provided
that such breach has not been cured prior to termination), (c) Purchaser or
Parent shall have terminated the Offer, or the Offer shall have expired, without
Purchaser purchasing any Shares pursuant thereto (provided the Company is not
then in material breach of the Merger Agreement), (d) 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 A to the Merger Agreement,
Purchaser or Parent 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
(provided that the Company is not then in material breach of the Merger
Agreement) or (e) the commitment from Parent's lenders to provide funds for
Purchaser's acquisition of Shares, as described in the Merger Agreement, shall
have ceased to be in force or replaced by a similar commitment in form and
substance satisfactory to the Company.
As used herein, the term "Permitted Action" means (a) a withdrawal or
modification by the Board of Directors of the Company of its approval or
recommendation of the Merger Agreement, the Offer or the Merger in a manner
adverse to Purchaser and Parent or (b) an approval or recommendation, or entry
into an agreement, regarding an acquisition proposal of a type which the Board
of Directors of the Company is permitted to entertain pursuant to the Merger
Agreement and with respect to which the Board of Directors of the Company is
required to act on in order to comply with its fiduciary duties to the
shareholders of the Company.
The Merger Agreement may be terminated by the Board of Directors of Parent
if (a) 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 A to the Merger Agreement, Purchaser or Parent 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 (provided that Acquiror is not then in
material breach of the Merger Agreement), (b) prior to the purchase of Shares
pursuant to the Offer, the Board of Directors of the Company shall have taken a
Permitted Action, (c) prior to the purchase of Shares pursuant to the Offer, it
shall have been publicly disclosed or Purchaser or Parent shall have learned
that any person, entity or group shall have acquired, or shall have been granted
any option, right or warrant to acquire, beneficial ownership of more than (i)
20% of any class of series of the capital stock of the Company or (ii) 10% of
any class of series of the capital stock of the Company and such person, entity
or group shall have manifested an intent to acquire additional Shares for any
reason other than passive investment, (d) Purchaser or Parent shall have
terminated the Offer or the Offer shall have
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<PAGE> 17
expired without Purchaser or Parent purchasing any Shares thereunder (provided
that neither Purchaser nor Parent is then in material breach of the Merger
Agreement) or (e) the Company shall have failed in any material respect to
perform or comply with any of its material covenants and agreements contained in
the Merger Agreement.
From and after the date of the Merger Agreement until the Effective Time,
the Company will not, nor will it authorize any of its officers, directors,
employees, agents or representatives to, (a) solicit, initiate or knowingly
encourage submission of any Acquisition Proposal (as defined below), (b) enter
into any agreement with respect to an Acquisition Proposal, or (c) participate
in any discussions or negotiations regarding, or furnish to any person any
non-public information with respect to, or take any other action to knowingly
facilitate any inquiries or the making of any proposal that constitutes or would
reasonably be expected to lead to, an Acquisition Proposal; provided, however,
that: (y) the Company may engage in discussions with, and provide information to
a third party who, without any solicitation from the Company or representatives
of the Company, seeks to engage in such discussions or requests such information
if (i) the Board of Directors of the Company determines that failing to do so
would violate its fiduciary duties to the Company's shareholders, (ii) the
Company first obtains an executed confidentiality agreement from such third
party, and (iii) the Acquisition Proposal would entitle the holders of Shares to
receive aggregate consideration in excess of $6.00 per Share; and (z) the Board
of Directors of the Company may take and disclose to the Company's shareholders
a position with regard to a tender offer or exchange offer and make such other
disclosure in connection therewith as may be required by law. The Company will
immediately notify Purchaser and Parent of any Acquisition Proposal, including
the material terms thereof and the identity of the offeror.
As used herein, the term "Acquisition Proposal" means any proposal or offer
from any person relating to (a) any acquisition or purchase of more than 10% of
either the capital stock of the Company or the assets of the Company, (b) any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 10% or more of the capital stock of the Company, or (c) any
merger, consolidation or business combination, involving the Company, other than
the transactions contemplated by the Merger Agreement.
Prior to the Effective Time, the Company will take such actions as may be
necessary such that, at the Effective Time, each then outstanding option to
purchase Shares, whether or not then vested or exercisable, shall be canceled
and the holders thereof shall become entitled, upon surrender to the Company, to
receive an amount of cash equal to the product of (a) the excess, if any, of the
purchase price paid pursuant to the Offer over the exercise price per Share
provided for in such option and (b) the number of Shares issuable pursuant to
the unexercised portion of such option, less any required withholding of taxes.
Parent has agreed to advance funds to the Company to the extent necessary to
effect the cancellation of such options.
The Company will file with the Commission contemporaneously with the
commencement of the Offer, and mail to its shareholders, a
Solicitation/Recommendation Statement on Schedule 14D-9 containing the
recommendation of the Board of Directors of the Company that the Company's
shareholders accept the Offer and approve and adopt the Merger Agreement.
Subject to compliance with applicable law, promptly following the purchase by
Purchaser of more than 50% of the Shares pursuant to the Offer, the Company
will, if requested by Parent, take all actions necessary to cause persons
designated by Parent to become directors of the Company so that the total number
of such persons equals the number of directors, rounded up to the next whole
number, which represents the product of (a) the total number of directors on the
Board of Directors multiplied by (b) the percentage that the number of Shares
accepted by Purchaser for payment bears to the number of Shares outstanding at
the time of such acceptance for payment; provided that, prior to the Effective
Time, the Company's Board of Directors shall always have at least three members
who are not officers, designees, shareholders or affiliates of Parent and
provided, further, that prior to the Effective Time, the affirmative vote of a
majority of the directors of the Company who are not officers, designees,
shareholders or affiliates of Parent shall be required to take any action by the
Company which, pursuant to the Merger Agreement, must be taken by the Board of
Directors of the Company.
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The Merger Agreement provides that following the Merger, the Articles of
Incorporation and By-laws of the Surviving Corporation shall contain provisions
no less favorable with respect to indemnification than are set forth in the
Articles of Incorporation and Bylaws of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers or employees
of the Company, unless such modification is required by law. Subject to, and
pursuant to, the provisions of the Merger Agreement, the Company must, and after
the Effective Time the Surviving Corporation must, to the fullest extent
permitted under applicable law and regardless of whether the Merger becomes
effective, indemnify and hold harmless each present and former director, officer
and employee of the Company against any costs or expenses, judgments, fines,
losses, claims and liabilities in connection with any claim, action, suit,
proceeding or investigation arising out of or pertaining to any action or
omission in such person's capacity as an officer, director or employee of the
Company for a period of six years after the Effective Time. In the event that
the Surviving Corporation lacks sufficient funds to indemnify any such party as
contemplated by the Merger Agreement, Parent shall be responsible for the
payment of, and shall pay, such deficiency. Subject to certain qualifications
set forth in the Merger Agreement, Parent shall use its best efforts to cause to
be maintained in effect for three years from the Effective Time the current
policies of directors' and officers' liability insurance maintained by the
Company.
The Merger Agreement also contains certain restrictions as to the conduct
of business by the Company pending the Merger, as well as representations and
warranties of each of the parties customary in transactions of this kind.
Subject to the requirements of applicable law, the Merger Agreement may be
amended at any time prior to the Effective Time by action taken by the Company,
Parent and the Purchaser.
Dissenters' Rights
No dissenters' rights are available in connection with the Offer. However,
if the Merger is consummated, dissenting shareholders who comply with the
procedural requirements summarized below may demand payment of fair value for
their Shares under Section 302A.473 of the MBCA. To be entitled to payment, the
dissenting shareholder must not accept the Offer and must file, prior to the
vote for the Merger, a written notice of intent to demand payment of the fair
value of the shares and must not vote in favor of the Merger. Any shareholder
contemplating the exercise of their dissenters' rights shall be directed to
review carefully the provisions of Section 302A.471 and 302A.473 of the MBCA,
particularly the procedural steps required to perfect such rights. SUCH RIGHTS
WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF SECTION 302A.473 ARE NOT FULLY
AND PRECISELY SATISFIED.
Shareholders of the Company who do not demand payment for their shares as
provided above and in Section 302A.473 of the MBCA shall be deemed to have
assented to the Merger. A vote against the Merger, however, is not necessary to
entitle dissenting shareholders to require the Company to purchase their shares.
Conversely, a vote against the Merger is not sufficient to protect the rights of
shareholder as a dissenter without the concurrent compliance with the procedural
requirements under state law.
If the Purchase acquires at least ninety percent of the Shares pursuant to
the Offering, no shareholder vote will be required to consummate the Merger. In
such event, no notice of intent to demand dissenter's rights is required.
If and when the Merger is approved by shareholders of the Company or
effected without a vote of shareholders and not abandoned by the Board of
Directors, the Company shall notify all shareholders who have dissented as
provided above of:
(a) the address to which demand for payment and certificates Shares
must be sent to obtain payment and the date by which they must be received;
(b) any restriction on transfer of uncertificated Shares that will
apply after the demand for payment is received;
(c) a form to be used to certify the date on which the shareholder, or
the beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and
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(d) a copy of Sections 302A.471 and 302A.473 of the MBCA and a brief
description of the procedures to be followed to dissent and obtain payment
of fair values for Shares.
To receive the fair value of the Shares, a dissenting shareholder must
demand payment and deposit share certificates within 30 days after the notice
was given, but the dissenter retains all other rights of a shareholder until the
proposed action takes effect. Under Minnesota law, notice by mail is given by
the Company when deposited in the United States mail. A shareholder who fails to
make demand for payment and to deposit certificates will lose the right to
receive the fair value of the shares notwithstanding the timely filing of the
first notice of intent to demand payment. After the effective date of the
resolutions, the Company shall remit to the dissenting shareholders who have
complied with the above-described procedures the amount the Company estimates to
be the fair value of such shareholder's shares, plus interest.
If a dissenter believes that the amount remitted by the Company is less
than the fair value of the shares, with interest, the shareholder may give
written notice to the Company of the dissenting shareholder's estimate of fair
value, with interest, within 30 days after the Company mails such remittance and
demand payment of the difference. UNLESS A SHAREHOLDER MAKES SUCH A DEMAND
WITHIN SUCH THIRTY-DAY PERIOD, THE SHAREHOLDER WILL BE ENTITLED ONLY TO THE
AMOUNT REMITTED BY THE COMPANY.
Within sixty days after the Company receives such a demand from a
shareholder, it will be required either to pay the shareholder the amount
demanded or agreed to after discussion between the shareholder and the Company
or to file in court a petition requesting that the court determine the fair
value of the shares, with interest. All shareholders who have demanded payments
for their shares, but have not reached agreement with the Company, will be made
parties to the proceeding. The court will then determine whether the
shareholders in question have fully complied with the provisions of Section
302A.473 and will determine the fair value of the shares, taking into account
any and all factors the court finds relevant (including the recommendation of
any appraisers that may have been appointed by the Court), computed by any
method that the court, in its discretion, sees fit to use, whether or not used
by the Company or a shareholder. The costs and expenses of the court proceeding
will be assessed against the Company, except that the court may assess part or
all of those costs and expenses against a shareholder whose action in demanding
payment is found to be arbitrary, vexatious, or not in good faith.
The fair value of the Company's Shares means the fair value of the shares
immediately before the effectiveness of the Merger. Under Section 302A.471, a
shareholder of the Company has no right at law or in equity to set aside the
consummation of the Merger, except if such consummation is fraudulent with
respect to such shareholder or the Company.
Any shareholder making a demand for payment for fair value may withdraw the
demand at any time prior to the determination of the fair value of the shares by
filing written notice of such withdrawal with the Company.
12. SOURCE AND AMOUNT OF FUNDS.
The Purchaser estimates that the total amount of funds required to purchase
all of the outstanding Shares pursuant to the Offer and the Merger and to pay
related fees and expenses will be approximately $44.5 million. Purchaser will
obtain such funds from Parent, which will borrow such funds on an unsecured
basis from a group of banks pursuant to a senior credit facility which consists
of a $35 million term loan and $140 million in revolving credit commitments
("Credit Facility"). Fundings under the Credit Facility will be available to
Parent at the lending agent's base rate or, at Parent's election, at LIBOR plus
a percentage which fluctuates based on specific financial ratios. Interest will
be payable, at Parent's election, monthly, bi-monthly, quarterly or
semiannually. The Credit Facility expires on April 11, 2001. No plans or
arrangements have been made to refinance or repay borrowings under the Credit
Facility.
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13. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer and provided that
Purchaser shall not be obligated to accept for payment any Shares until
expiration of all applicable waiting periods under the H-S-R Act, Purchaser
shall not be required to accept for payment or pay for, and may delay the
acceptance for payment of or payment for, any tendered Shares, and may, in its
sole discretion, terminate or amend the Offer as to any Shares not then paid for
if (i) the Minimum Condition shall have been satisfied or (ii) at any time on or
after June 23, 1997 (unless otherwise indicated below) and at or before the time
of payment for such Shares (whether or not Shares have been accepted for payment
or paid for pursuant to the Offer), any of the following events shall occur:
a. there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange or
in the over-the-counter market, (ii) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States,
(iii) a commencement or escalation of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation (whether or not mandatory) by any
governmental or regulatory authority on, or any other event which might
affect, the extension of credit by lending institutions, or (v) in the case
of any of the foregoing existing at the time of the commencement of the
Offer, in the reasonable judgment of the Purchaser, a material acceleration
or worsening thereof;
b. the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Merger Agreement or there shall have been a breach of any representation or
warranty on the part of the Company having a material adverse effect on the
Company or the Company's value to Acquiror or materially adversely
affecting (or materially delaying) the Offer or the Merger;
c. there shall have been instituted or pending any action, litigation,
proceeding, investigation or other application ("Action"), (including any
worsening of any existing Action) before any United States court or
governmental entity by any United States governmental entity (i)
challenging the acquisition by Parent or Purchaser of Shares, seeking to
restrain or restrain or prohibit the consummation of the Offer or the
Merger, or obtain any material damages in connection therewith, (ii)
seeking to prohibit, or impose any material limitations on, Parent's or
Purchaser's ownership or operation of all the Company's business or assets
or to compel Parent or Purchaser to dispose of or hold separate all or any
portion of the Company's business or assets as a result of the transactions
contemplated by the Offer or the Merger, which limitations would have a
material adverse effect with respect to the value of the Company to Parent,
(iii) seeking to make the acceptance for payment, purchase of, or payment
for, some or all of the Shares illegal or render Purchaser unable to, or
result in a material delay in, or materially restrict, the ability of
Purchaser to accept for payment, purchase or pay for some or all of the
Shares, (iv) seeking to impose material limitations on the ability of
Parent or Purchaser effectively to acquire or hold or to exercise full
rights of ownership of the Shares purchased by it on all matters properly
presented to the shareholders of the Company or (v) that is reasonably
likely to have a material adverse effect on the Company or the value of the
Shares to Parent or Purchaser as a result of the consummation of the
transactions contemplated by the Offer and the Merger;
d. any statute, rule, regulation, order or injunction shall have been
promulgated, enacted, entered, enforced or deemed applicable to the Offer
or the Merger, or any other action shall have been taken, proposed or
threatened, by any United States court or other governmental authority
other than the application to the Offer or the Merger of the waiting
periods under the H-S-R Act, that, directly or indirectly, can reasonably
be expected to result in any of the consequences referred to in clauses (i)
through (v) of subsection (c) above;
e. a tender or exchange offer for some portion or all the Shares shall
have been commenced or publicly proposed to be made by another person
(including the Company), or it shall have been publicly disclosed that any
person, entity or "group," as defined in Section 13(d)(3) of the Exchange
Act (other than Parent or the Purchaser) shall have (i) become the
beneficial owner of more than 20% of the Shares, (ii) become the beneficial
owner of more than 10% of the Shares for any reason other than
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<PAGE> 21
passive investment or (iii) entered into an agreement with respect to an
Acquisition Proposal with or involving the Company;
f. any change shall have occurred in the financial condition,
properties, businesses or results of operations of the Company that is or
is reasonably likely to have a material adverse effect on the Company;
g. the Board of Directors of the Company (or a special committee
thereof) shall have amended, modified or withdrawn its recommendation of
the Offer or the Merger, or shall have failed to publicly reconfirm such
recommendation upon request by Parent or Purchaser, or shall have endorsed,
approved or recommended any other Acquisition Proposal, or shall have
resolved to do any of the foregoing;
h. the Merger Agreement shall have been terminated in accordance with
its terms or Parent or Purchaser shall have reached an agreement or
understanding in writing with the Company providing for termination or
amendment of the Offer or delay in payment for Shares;
i. any Action is instituted or pending by a non-governmental person
(or there shall be a worsening of an existing action) which, in the
reasonable judgment of Parent, has a reasonable likelihood of success, and
if successful on the merits, is more likely than not to have a material
adverse effect on the Company or the value of the Shares to Parent as a
result of the consummation of the transactions contemplated by the Offer
and the Merger; or
j. there has been any (i) release of hazardous substances in, on,
under or affecting any properties currently or formerly owned, operated or
leased by the Company in violation of, or as would be reasonably
anticipated to result in liability under, applicable environmental laws or
(ii) disposal of hazardous substances or any other substance in a manner
that has led to, or could reasonably be expected to lead to, a violation of
applicable environmental laws except, in either case, as disclosed in the
disclosure schedules which have been incorporated into the Merger Agreement
and except, in either case, for those which, individually or in the
aggregate, are not reasonably likely to have a material adverse effect on
the Company;
which, in the sole judgment of Parent and Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
the Purchaser) giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with acceptance for payment of or payment for
Shares.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances (including any action or inaction by Parent or the Purchaser)
giving rise to such condition or may be waived by Parent or the Purchaser, by
express and specific action to that effect, in whole or in part at any time and
from time to time in its sole discretion.
14. CERTAIN LEGAL MATTERS.
General
Except as otherwise disclosed herein, based upon an examination of publicly
available filings with respect to the Company, Parent and the Purchaser are not
aware of any licenses or other regulatory permits which appear to be material to
the business of the Company and which might be adversely affected by the
acquisition of Shares by the Purchaser pursuant to the Offer or of any approval
or other action by any governmental, administrative or regulatory agency or
authority which would be required for the acquisition or ownership of Shares by
the Purchaser pursuant to the Offer. Should any such approval or other action be
required, it is currently contemplated that such approval or action would be
sought or taken. There can be no assurance that any such approval or action, if
needed, would be obtained or, if obtained, that it will be obtained without
substantial conditions or that adverse consequences might not result to the
Company's or Parent's business or that certain parts of the Company's or
Parent's business might not have to be disposed of in the event that such
approvals were not obtained or such other actions were not taken, any of which
could cause the Purchaser to elect to terminate the Offer without the purchase
of the Shares thereunder. The Purchaser's obligation under the Offer to accept
for payment and pay for Shares is subject to certain conditions. See Section 13.
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Antitrust Compliance
Under the H-S-R Act and the rules that have been promulgated thereunder by
the Federal Trade Commission ("FTC"), certain acquisition transactions may not
be consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice ("Antitrust Division") and the FTC and
certain waiting period requirements have been satisfied. The acquisition of
Shares by the Purchaser is subject to these requirements. See Section 2 of this
Offer to Purchase as to the effect of the H-S-R Act on the timing of the
Purchaser's obligation to accept Shares for payment.
Pursuant to the H-S-R Act, Parent filed a Notification and Report Form with
respect to the acquisition of Shares pursuant to the Offer with the Antitrust
Division and the FTC on June 26, 1997. Under the provisions of the H-S-R Act
applicable to the purchase of Shares pursuant to the Offer, such purchases may
not be made until the expiration of a 15-calendar day waiting period following
the filing by Parent. Accordingly, the waiting period under the H-S-R Act will
expire at 11:59 p.m., New York City time, on July 11, 1997, unless early
termination of the waiting period is granted or Parent receives a request for
additional information or documentary material prior thereto. Pursuant to the
H-S-R Act, Parent has requested early termination of the waiting period
applicable to the Offer. There can be no assurances given, however, that the
15-day H-S-R Act waiting period will be terminated early. If either the FTC or
the Antitrust Division were to request additional information or documentary
material from Parent, the waiting period would expire at 11:59 p.m., New York
City time, on the tenth calendar day after the date of substantial compliance by
Parent with such request. Thereafter, the waiting period could be extended only
by agreement or by court order. If the acquisition of Shares is delayed pursuant
to a request by the FTC or the Antitrust Division for additional information or
documentary material pursuant to the H-S-R Act, the purchase of and payment for
Shares will be deferred until 10 days after the request is substantially
complied with unless the waiting period is sooner terminated by the FTC or the
Antitrust Division. See Section 2. Only one extension of such waiting period
pursuant to a request for additional information is authorized by the rules
promulgated under the H-S-R Act, except by agreement or by Court order. Any such
extension of the waiting period will not give rise to any withdrawal rights not
otherwise provided for by applicable law. See Section 4.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the Purchaser's
purchase of Shares, the Antitrust Division or the FTC could take such action
under the antitrust laws as they deem necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares pursuant to the
Offer or seeking divestiture of Shares acquired by the Purchaser or the
divestiture of substantial assets of the Company, Parent or any of Parent's
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 a challenge is made, what
the result would be. See Section 13 of this Offer to Purchase for certain
conditions to the Offer that could become applicable in the event of such a
challenge.
State Takeover Laws
Section 302A.673 of the MBCA ("Section 302A.673") generally provides that a
Minnesota corporation which has at least 50 shareholders may not engage in any
Business Combination (defined to include a variety of transactions, including
mergers), or vote, consent or otherwise act to authorize any of its subsidiaries
to engage in a business combination, with any Interested Shareholder (defined to
include, among others, any person who beneficially owns or controls 10% or more
of a corporation's outstanding voting stock) for a period of four years
following the date such person became an Interested Shareholder, unless before
such person became an Interested Shareholder, a committee of disinterested
directors of the corporation formed pursuant to Section 302A.673 approved the
Business Combination or approved the transaction in which the Interested
Shareholder became an Interested Shareholder. Because a committee of the Board
of Directors of the Company formed pursuant to Section 302A.673 has unanimously
approved the Offer and the Merger, the requirements of Section 302A.673 have
been satisfied.
20
<PAGE> 23
Chapter 80B of the Minnesota Corporate Takeovers Act ("Chapter 80B")
generally provides that it is unlawful for any person to make a takeover offer
unless a registration statement on the form prescribed by the Commissioner of
Commerce shall have been filed with the Commissioner of Commerce and delivered
to the target company, and the material terms of and certain specified
information shall be delivered to all offerees as soon as practicable after the
date of the filing of such registration statement. The Purchaser has complied
with Chapter 80B in connection with the Offer.
The Purchaser does not believe that any state takeover laws, other than
Section 302A.673 and Chapter 80B, apply to the Offer and it has not complied
with any other state takeover laws. If the Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto, the Purchaser will make a good faith effort to comply with
such statute. If, after such good faith effort, the Purchaser cannot comply with
such state statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) the holders of Shares in such state. See Section 13.
15. FEES AND EXPENSES.
In connection with the offer, the Company has retained the services of
Value Investing Partners, Inc., as Dealer Manager, Corporate Investor
Communications, Inc., as Information Agent, and National City Bank, as
Depositary.
Parent has agreed to pay reasonable and customary compensation to the
Dealer Manager in connection with the Offer. In addition, Parent has agreed to
pay reasonable and customary compensation to the Information Agent and the
Depositary for their services in connection with the Offer, to reimburse them
for certain out-of-pocket expenses incurred in connection with the Offer, and to
indemnify and hold them harmless against certain liabilities in connection with
the Offer.
The Information Agent may contact holders of Shares by mail, telephone,
telex, telegraph and personal interviews and may request brokers, dealers and
other nominee shareholders to forward materials relating to the Offer to
beneficial owners of Shares. No commissions will be paid by the Purchaser or
Parent to brokers, dealers, banks and trust companies, but such persons will be
reimbursed by the Purchaser for customary mailing and handling expenses incurred
by them in forwarding material to their customers.
16. 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. However, the Purchaser may, in its sole discretion, take such
action as it may deem necessary to make the Offer comply with the laws of any
such jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
When the securities or blue sky laws of a jurisdiction require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed made on behalf
of the Purchaser by the Dealer Manager or one or more registered brokers or
dealers which are licensed under the laws of such jurisdiction.
Neither the Purchaser nor Parent is aware of any jurisdiction in which the
making of the Offer or the acceptance of Shares in connection therewith would
not be in compliance with the laws of such jurisdiction.
The Purchaser and Parent have filed with the Commission a Tender Offer
Statement on Schedule 14D-1 pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, which furnishes certain additional
information with respect to the Offer, and may file amendments thereto. The
Company has filed with the Commission a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer pursuant to Rule 14d-9 under the
Exchange Act. Such Schedules and any amendments thereto, including exhibits, may
be examined and copies may be obtained from the principal office of the
Commission in Washington, D.C. in the manner set forth in Section 8.
21
<PAGE> 24
No person has been authorized to give any information or make any
representation on behalf of Parent or the Purchaser not contained in this Offer
to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as being accurate or as
having been authorized.
PARK-OHIO INDUSTRIES, INC.
P O ACQUISITION CORPORATION
22
<PAGE> 25
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following sets forth
the name, business address, present principal occupation and the material
occupations, positions and employment within the past five years for each
director and executive officer of Parent. Each person listed below is of United
States citizenship and, unless otherwise specified, has his principal business
address at the offices of Parent located at 23000 Euclid Avenue, Cleveland, Ohio
44117.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL POSITIONS
NAME AND BUSINESS ADDRESS HELD DURING PAST FIVE YEARS
- ----------------------------------- ------------------------------------------------------
<S> <C>
Edward F. Crawford................. Chairman of the Board, Chief Executive Officer and
President of Parent since 1992; Chairman of the Board
and Chief Executive Officer of Crawford Group, Inc.
(manufacturing businesses) since 1964; Director of
Continental Global Group, Inc. (conveyor equipment
manufacturer) since 1997.
James W. Wert...................... Director of Parent since 1992; Director of Continental
32700 Meadowlark Way Global Group, Inc. (conveyor equipment manufacturer)
Pepper Pike, OH 44124 since 1997; Senior Executive Vice President and Chief
Investment Officer of KeyCorp (financial services
company) from 1995 to 1996; Chief Financial Officer of
KeyCorp from 1994 to 1995; Vice Chairman and Chief
Financial Officer of Society Corporation (financial
services company) from 1990 to 1994.
Lewis E Hatch, Jr.................. Director of Parent since 1992; Director of Teleflex,
1008 Sea Palms West Drive Incorporated (medical equipment manufacturer) since
St. Simons, Island, GA 31522 1976; Chairman of the Board and Chief Operating
Officer of Rusch International (medical device
company) from 1986 to 1992.
Thomas E. McGinty.................. Director of Parent since 1986; Chairman of the Board
2 Commerce Park Square and Chief Executive Officer of Parent from 1991 to
Beachwood, OH 44122 1992; President of Belvoir Consultants, Inc.
(management consultants) since 1983.
Lawrence O. Selhorst............... Director of Parent since 1995; Chairman of the Board
26300 Miles Road and Chief Executive Officer of American Spring Wire
Bedford Hts., OH 44146 Corporation (spring wire manufacturer) since 1968;
Chairman of the Board of RB&W Corp. (industrial
fastener subsidiary of Parent) from 1992 to 1995;
Director of Lincoln Electric Company (electric motor
manufacturer) since 1992.
Felix J. Tarorick.................. Vice President of Operations of Parent since 1996;
President of Kay Home Products, Inc. from 1992 to
1995; President of RB&W Manufacturing from 1995 to
1997.
James S. Walker.................... Vice President and Chief Financial Officer of Parent
since 1991.
Ronald J. Cozean................... Secretary and General Counsel of Parent since 1994;
Associate at Squire, Sanders & Dempsey L.L.P. (law
firm) from 1991 to 1994.
Matthew V. Crawford................ Assistant Secretary and Corporate Counsel of Parent
since 1995; President of Crawford Container Company
since 1991; Corporate Finance Analyst at McDonald &
Co. Securities, Inc. from 1994 to 1995.
Patrick W. Fogarty................. Chief Financial Officer of RB&W Corporation since
1995; Senior Manager at Ernst & Young, LLP from 1983
to 1995.
</TABLE>
A-1
<PAGE> 26
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. Set forth are the names
and positions held by each of the Purchaser's directors and executive officers.
The present principal occupation or employment, five-year employment history and
business address of each of the directors and executive officers of the
Purchaser is set forth in Item 1 above. All directors and executive officers
listed below are citizens of the United States.
<TABLE>
<CAPTION>
NAME POSITION WITH PURCHASER
- ----------------------------------- ------------------------------------------------------
<S> <C>
Edward F. Crawford................. Chairman of the Board of Directors and President of
Purchaser since inception.
James S. Walker.................... Director, Vice President and Treasurer of Purchaser
since inception.
Ronald J. Cozean................... Director and Secretary of Purchaser since inception.
</TABLE>
3. BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES. Parent beneficially
owns 320,200 Shares, or approximately 4.6% of the outstanding Shares. No
transactions in the Shares have been effected by Parent in the past 60 days.
A-2
<PAGE> 27
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal, certificates for the Shares and any other required documents
should be sent by each shareholder of the Company or his or her broker, dealer,
bank, trust company or other nominee to the Depositary as follows:
The Depositary is:
NATIONAL CITY BANK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission By Hand or Overnight Delivery:
(for Eligible Institutions
only):
National City Bank, Depositary Fax: (216)476-8367 National City Bank, Depositary
P. O. Box 94720 Corporate Trust Operations
Cleveland, Ohio 44101-4720 Third Floor -- North Annex
(800)622-6757 (Shareholder 4100 West 150th Street
Questions) Cleveland, Ohio 44135-1385
</TABLE>
Confirm Facsimile Transmission
by Telephone:
(216)476-8049
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and locations
listed below. You may also contact your broker, dealer, bank or trust company or
other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
CORPORATE INVESTOR
COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
For Information Call Toll Free:
(800)640-6242
The Dealer Manager for the Offer is:
VALUE INVESTING PARTNERS, INC.
1853 Post East Road
Westport, Connecticut 06880
For Information Call Toll Free:
(800) 489-2190
<PAGE> 1
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER COMMON SHARES
OF
ARDEN INDUSTRIAL PRODUCTS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED AS OF JUNE 26, 1997
OF
P O ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
PARK-OHIO INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON FRIDAY, JULY 25, 1997, UNLESS THE OFFER IS EXTENDED
The Depositary for the Offer is:
NATIONAL CITY BANK
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION BY HAND OR OVERNIGHT DELIVERY:
(FOR ELIGIBLE INSTITUTIONS ONLY):
National City Bank, Depositary Fax: (216) 476-8367 National City Bank, Depositary
P. O. Box 94720 Corporate Trust Operations
Cleveland, Ohio 44101-4720 Third Floor -- North Annex
(800) 622-6757 (SHAREHOLDER 4100 West 150th Street
QUESTIONS) Cleveland, Ohio 44135-1385
</TABLE>
CONFIRM FACSIMILE TRANSMISSION
BY TELEPHONE:
(216) 476-8049
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING
THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders if
certificates for Shares (as defined below) are to be forwarded herewith or if
tenders of Shares are to be made by book-entry transfer to the account
maintained by the Depositary at the Depository Trust Company ("Depository
Institution") pursuant to the procedures set forth in Section 3 of the Offer to
Purchase (as defined below). Shareholders who tender Shares by book-entry
transfer are referred to herein as "Book-Entry Shareholders" and other
shareholders are referred to herein as "Certificate Shareholders." Shareholders
whose certificates are not immediately available or who cannot deliver their
certificates and all other documents required hereby to the Depositary on or
prior to the Expiration Date (as defined in the Offer to Purchase), or who
cannot comply with the book-entry transfer procedures on a timely basis, may
nevertheless tender their Shares according to the guaranteed delivery procedure
set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF
DOCUMENTS TO THE DEPOSITORY INSTITUTION DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
<PAGE> 2
<TABLE>
<S> <C>
[ ] CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY
THE DEPOSITARY WITH THE DEPOSITORY INSTITUTION AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
-------------------------------------------------------------------------------------
Depository Trust Company Account Number
---------------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY
SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
---------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------------------------------------------
Name of Institution which Guaranteed Delivery
------------------------------------------------------------------
If Delivered by Book-Entry Transfer:
Name of Depository Institution
------------------------------------------------------------------------------------
Account Number
-----------------------------------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE EVIDENCED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
TOTAL SHARES
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
any certificate(s) delivered to the Depositary are being tendered. See
Instruction 4.
------------------------------------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
The undersigned hereby tenders to P O Acquisition Corporation, a Minnesota
corporation (the "Purchaser") and a wholly owned subsidiary of Park-Ohio
Industries, Inc., an Ohio corporation, the above-described common shares, par
value $.01 (the "Shares"), of Arden Industrial Products, Inc., a Minnesota
corporation (the "Company"), pursuant to the Purchaser's offer to purchase all
of the outstanding Shares at a price of $6.00 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 26, 1997 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, together with the
Offer to Purchase, constitute 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 the Shares
tendered herewith.
Upon the terms and conditions of the Offer, subject to, and effective upon,
acceptance for payment of and payment for the Shares tendered herewith in
accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Purchaser, all right, title and
interest in and to all of the Shares that are being tendered hereby and appoints
the Depositary the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) to,
(a) deliver such Share Certificates (as defined herein) or transfer ownership of
such Shares on the account books maintained by the Depository Institution,
together in either such case with all accompanying evidences of transfer and
authenticity, to or upon the order of the Purchaser, (b) present such Shares for
transfer on the books of the Company, and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares, all in accordance
with the terms and the conditions of the Offer.
The undersigned hereby irrevocably appoints the designees of the Purchaser,
and each of them, 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 (including pursuant to written consent) with respect to all of the
Shares tendered thereby which have been accepted for payment by the Purchaser
prior to the time of such vote or action, which the undersigned is entitled to
vote at any meeting of shareholders (whether annual or special and whether or
not an adjourned meeting) of the Company or otherwise. This proxy and power of
attorney is coupled with an interest in the Shares, 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 any other proxy granted by the undersigned
at any time with respect to such Shares and no subsequent proxies will be given
(or if given will not be deemed effective) with respect thereto by the
undersigned. The undersigned understands that in order for Shares to be deemed
validly tendered, the Purchaser or its designee must be able to exercise full
voting rights with respect to such Shares immediately upon the Purchaser's
acceptance of such Shares 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 that when the same are accepted for payment by the
Purchaser, the Purchaser will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and the same will not be subject to any adverse claim. The undersigned will,
upon request, 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 the Shares tendered hereby.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto and acceptance for payment of such Shares will constitute a
binding agreement between the undersigned and the Purchaser upon the terms and
subject to the conditions set forth in the Offer.
<PAGE> 4
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
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 for 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 Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or issue any certificates for Shares not so tendered or
accepted for payment in the name of, and deliver said check and/or return such
certificates to, the person or persons so indicated. The undersigned recognizes
that Purchaser has no obligation, pursuant to the Special Payment Instructions,
to transfer any Shares from the name of the registered holder thereof if the
Purchaser does not accept for payment any of the Shares so tendered.
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are
to be issued in the name of someone other than the undersigned.
Issue check and/or certificate(s) to:
Name:
------------------------------------------------------
Please Type or Print
Address:
----------------------------------------------------
---------------------------------------------------------------
(Include Zip Code)
---------------------------------------------------------------
(Tax Identification or Social Security No.)
(See Substitute Form W-9 on Inside Back Cover)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are
to be sent to someone other than the undersigned, or to the undersigned at
an address other than that shown above.
Mail check and/or certificate(s) to:
Name:
------------------------------------------------------
Please Type or Print
Address:
----------------------------------------------------
---------------------------------------------------------------
(Include Zip Code)
---------------------------------------------------------------
(Tax Identification or Social Security No.)
IMPORTANT
SIGN HERE
(Please Complete Substitute Form W-9 below)
-------------------------------------
-------------------------------------
(Signature(s) of Holder(s))
Dated: ____________, 1997 (Must be
signed by registered holder(s)
exactly as name(s) appear(s) on stock
certificate(s) or on a security
position listing or by person(s)
authorized to become registered
holder(s) by certificate and
documents transmitted herewith. If
signature is by trustees, executors,
administrators, guardians,
attorneys-in-fact, officers of
corporations or others acting in a
fiduciary or representative capacity,
please set forth full title and see
Instruction 5.)
-------------------------------------
Name(s)
-------------------------------------
-------------------------------------
(Please Print)
Capacity (Full Title)
-------------------------------------------------------------------------------
Address
-------------------------------------
(Including Zip Code)
-----------------------------------------------------------------------
--------------------------------- (Area Code and Telephone Number)
(Tax Identification or Social Security Number)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
-------------------------------------------------------------------------------
Name:
-------------------------------------
Please Type or Print
Address:
-------------------------------------
(Include Zip Code)
Name of Firm:
-------------------------------------
Date:
-------------------------------------,
1997
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder (which term, for purposes of this document, shall include any
participant in a Depository Institution whose name appears on a security
position listing as the owner of Shares) of Shares tendered herewith, unless
such holder has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the reverse
hereof or (ii) if such Shares are tendered for the account of a firm which is a
member of a recognized Medallion Program approved by The Securities Transfer
Association Inc. (an "Eligible Institution"). In all other cases, all signatures
on this Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5 of this Letter of Transmittal.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY
CONFIRMATIONS. This Letter of Transmittal is to be used either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Certificates for all physically tendered Shares ("Share
Certificates"), or confirmation of any book-entry transfer into the Depositary's
account at the Depository Institution of Shares tendered by book-entry transfer,
as well as this Letter of Transmittal or facsimile thereof, properly completed
and duly executed with any required signature guarantees, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Offer to Purchase). Shareholders whose
certificates are not immediately available, who cannot deliver their
certificates and all other required documents to the Depositary on or prior to
the Expiration Date, or who cannot complete the procedures for book-entry
transfer on a timely basis may nevertheless tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure 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 provided by the Purchaser must be
received by the Depositary on or prior to the Expiration Date, and (iii) the
certificates for all physically tendered Shares, or confirmation of any
book-entry transfer into the Depositary's account at a Depository Institution of
Shares tendered by book-entry transfer, as well as a Letter of Transmittal,
properly completed and duly executed with any required signature guarantees (or
facsimile thereof, properly completed and duly executed with any required
signature guarantees), and all other documents required by this Letter of
Transmittal, must be received by the Depositary within three (3) NASDAQ Stock
Market trading days after the date of execution of such Notice of Guaranteed
Delivery.
IF MULTIPLE SHARE CERTIFICATES ARE FORWARDED SEPARATELY TO THE DEPOSITARY,
A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL MUST ACCOMPANY EACH
SUCH DELIVERY.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY DEPOSITORY INSTITUTION, IS AT THE
ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF SUCH DELIVERY IS BY MAIL, IT
IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE SENT BY REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
If a Shareholder desires to tender Shares pursuant to the Offer and any
certificate representing such Shares has been lost, stolen, mutilated or
destroyed, such Shareholder should write to or telephone the Company's transfer
agent, at the address listed below, concerning the procedures for obtaining
replacement certificates for such Shares:
Norwest Shareowner Relations
Attention: Lost Securities
P.O. Box 64854
St. Paul, Minnesota 55164
(800) 380-1372
<PAGE> 7
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE SHAREHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such cases, new certificate(s) for the remainder
of the Shares that were evidenced by your old certificate(s) will be sent to
you, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holders of the Shares
tendered hereby, the signature must correspond with the names as written on the
face of the certificates 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 stock powers are
signed by trustees, executors, administrators, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Purchaser of their 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 stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or purchased are to be issued in the name
of, a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holder or holders appear on the
certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of purchased 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 no
tendered or purchased are to be registered in the name of, any person other than
the registered holder, 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 stock transfer taxes (whether imposed on the registered holder or
such person) payable on account of the transfer to such person will be deducted
from the purchase price if satisfactory evidence of the payment of such taxes,
or exemption therefrom, is not submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such certificates are to be mailed 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.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to, or additional copies of the Offer to Purchase,
this Letter of Transmittal, the Notice of Guaranteed Delivery and other tender
offer materials may be obtained from, the Information Agent or the Dealer
Manager at their respective addresses set forth below or from your broker,
dealer, bank or trust company.
<PAGE> 8
9. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"), generally
the shareholder's social security or federal employer identification number, on
Substitute Form W-9 below. Failure to provide the information on the form may
subject the tendering shareholder to 31% federal income tax withholding on the
payment of the purchase price. The box in Part 2 of the form may be checked if
the tendering shareholder has not been issued a TIN and has applied for a number
or intends to apply for a number in the near future. If the box in Part 2 is
checked and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% of all payments of the purchase price thereafter
until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE COPY THEREOF (TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO
PURCHASE).
IMPORTANT TAX INFORMATION
Under federal income tax law, a shareholder whose tendered Shares are
accepted for purchase is required by law to provide the Depositary (as payer)
with his or her correct taxpayer identification number, on Substitute Form W-9
below. If such shareholder is an individual, the taxpayer identification number
is his or her social security number. If a shareholder fails to provide a
taxpayer identification number to the Depositary, such shareholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such shareholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain shareholders (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 shareholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. 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 shareholder. 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.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of his or her correct taxpayer identification
number by completing the form below certifying that the taxpayer identification
number provided on Substitute Form W-9 is correct (or that such shareholder is
awaiting a taxpayer identification number) and that such shareholder is not
subject to backup withholding because (1) such shareholder is exempt from backup
withholding, (2) such shareholder has not been notified by the Internal Revenue
Service that he or she is subject to withholding as a result of a failure to
report all interest or dividends, or (3) the Internal Revenue Service has
notified such shareholder that he or she is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
<PAGE> 9
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- Please provide your correct TIN and certify PART 2 -- Awaiting TIN
by signing and dating below (See above for further Please see Below. [ ]
FORM W-9 explanation).
--------------------------------------
-----------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: (1) THE
INTERNAL REVENUE SERVICE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE AND (2) I AM
NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE (A) I AM EXEMPT FROM BACKUP
PAYER'S REQUEST FOR WITHHOLDING, OR (B) I HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE
TAXPAYER IDENTIFICATION (THE IRS) THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE
NUMBER (TIN) TO REPORT ALL INTEREST OR DIVIDENDS, OR (C) THE IRS HAS NOTIFIED ME THAT I
AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. (YOU MUST CROSS OUT ITEM (2)
ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR
RETURN.
-----------------------------------------------------------------------------
Date:
-------------------
SIGNATURE:
------------------------------------------------
ADDRESS:
---------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
<TABLE>
<S> <C>
------------------------------------------------ ------------------------------------------------
Signature Date
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 10
This Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
11 Commerce Road
Carlstadt, New Jersey 07072-2586
CALL TOLL-FREE (800) 640-6242
The Dealer Manager for the Offer is:
VALUE INVESTING PARTNERS, INC.
1853 Post East Road
Westport, Connecticut 06880
FOR INFORMATION CALL TOLL-FREE:
(800) 489-2190
<PAGE> 1
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY FOR
TENDER OF COMMON SHARES
OF
ARDEN INDUSTRIAL PRODUCTS, INC.
This form or one substantially equivalent hereto must be used to accept the
Offer (as defined in the Offer to Purchase) if certificates for common shares,
par value $.01 per share, of Arden Industrial Products, Inc., a Minnesota
corporation (the "Company"), are not immediately available, if the certificates
and all other required documents cannot be delivered to the Depositary prior to
the Expiration Date (as defined in the Offer to Purchase), or if the procedures
for book-entry transfer cannot be completed on a timely basis. Such form may be
delivered by hand or transmitted by telegram, facsimile transmission or mail to
the Depositary, and must include a guarantee by an Eligible Institution. See
Section 3 of the Offer to Purchase.
The Depositary:
NATIONAL CITY BANK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission By Hand or Overnight Delivery:
(for Eligible Institutions
only):
National City Bank, Depositary Fax: (216) 476-8367 National City Bank, Depositary
P.O. Box 94720 Corporate Trust Operations
Cleveland, Ohio 44101-4720 Third Floor -- North Annex
(800) 622-6757 4100 West 150th Street
(SHAREHOLDER QUESTIONS) Cleveland, Ohio 44135-1385
</TABLE>
Confirm Facsimile Transmission
by Telephone:
(216) 476-8049
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
(AS DEFINED IN THE OFFER TO PURCHASE) UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc. or a bank or
trust company having an office or correspondent in the United States, guarantees
(a) that the above named person(s) has a "net long position" in the Shares
tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange
Act of 1934, as amended, and (b) delivery to the Depositary, at one of its
addresses set forth above, of certificates representing the Shares tendered
hereby, in proper form for transfer, or confirmation of book-entry transfer of
such Shares into the Depositary's account at the Depository Trust Company
("Depository Institution"), in each case with delivery of a properly completed
and duly executed Letter of Transmittal (or a facsimile copy thereof), and any
other documents required by the Letter of Transmittal, within three (3) NASDAQ
Stock Market trading days of the date hereof.
------------------------------------
Name of Firm
------------------------------------
(Authorized Signature)
------------------------------------
Address
------------------------------------
Title
------------------------------------
(Zip Code)
------------------------------------
Name (Please Type or Print)
------------------------------------
Area Code and Tel. No.
Dated ____________________________ , 1997
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 3
LADIES AND GENTLEMEN:
The undersigned hereby tenders to P O Acquisition Corporation, a Minnesota
corporation and a wholly owned subsidiary of Park-Ohio Industries, Inc., an Ohio
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated June 26, 1997 and the related Letter of Transmittal, receipt
of which are hereby acknowledged, the number of common shares of Arden
Industrial Products, Inc., par value $.01 per share (the "Shares"), shown in the
Box below pursuant to the guaranteed delivery procedures set forth in Section 3
of the Offer to Purchase.
Shares
<TABLE>
<S> <C>
Certificate Nos. for Shares Name(s) of Record Holder(s)
(if available)___________________________
____________________________________________
_________________________________________
_____________________________________________
(Please Type or Print)
If Shares will be tendered by book-entry Address(es)_________________________________
transfer:
____________________________________________
(Zip Code)
Depository Trust Company
Account Number____________________________ Area Code and Tel. No._______________________
_____________________________________________
Signature(s)________________________________
____________________________________________
Dated_________________________________, 1997
</TABLE>
THE GUARANTEE ON THE PREVIOUS PAGE MUST BE COMPLETED.
<PAGE> 1
Exhibit (a)(4)
VALUE INVESTING PARTNERS, INC.
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING OF COMMON SHARES
OF
ARDEN INDUSTRIAL PRODUCTS, INC.
AT
$6.00 NET PER SHARE
BY
P O ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
PARK-OHIO INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
FRIDAY, JULY 25, 1997, UNLESS THE OFFER IS EXTENDED
June 26, 1997
TO BROKERS, DEALERS, BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
We have been appointed by P O Acquisition Corporation, a Minnesota
corporation (the "Purchaser") and a wholly owned subsidiary of Park-Ohio
Industries, Inc., an Ohio corporation ("Parent"), to act as Dealer Manager in
connection with its offer to purchase all of the outstanding common shares, par
value $.01 per share (the "Shares"), of Arden Industrial Products, Inc., a
Minnesota corporation (the "Company"), at a price of $6.00 per share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated June 26, 1997 (the "Offer to Purchase") and
the related Letter of Transmittal (which together constitute the "Offer"),
copies of which are enclosed herewith.
Please furnish copies of the enclosed materials to your clients for whose
accounts you hold Shares registered in your name or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered prior to the expiration of the Offer and not withdrawn, a number of
Shares which will constitute at least 50.1% of the combined voting power of the
voting securities of the Company on a fully diluted basis as of the date the
Shares are accepted for payment pursuant to the Offer. See the Introduction and
Sections 13 and 14 of the Offer to Purchase.
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. Offer to Purchase dated June 26, 1997;
2. Letter of Transmittal to tender Shares (together with accompanying
Substitute Form W-9);
3. A printed form of letter which may be sent to your clients for
whose account you hold Shares in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to
the Offer;
4. The Notice of Guaranteed Delivery to be used to accept the Offer
if certificates for Shares are not immediately available, if time will not
permit all required documents to reach the Depositary prior to
<PAGE> 2
the Expiration Date (as defined in the Offer to Purchase) or if the
procedure for book-entry transfer cannot be completed on a timely basis;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9;
6. Return envelope addressed to the Depositary; and
7. A copy of the Company's Schedule 14D-9, including its letter
recommending that shareholders tender their Shares.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, JULY 25, 1997, UNLESS THE
OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at the Depositary Institution (as defined
in the Offer to Purchase)), a Letter of Transmittal (or facsimile thereof)
properly completed and duly executed and any other required documents.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedure described in Section 3 of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other persons (other than the fees of the Dealer Manager and Information
Agent) in connection with the solicitation of tenders of Shares pursuant to the
Offer. You will be reimbursed 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, and additional copies of the enclosed materials may be obtained by
contacting Corporate Investor Communications, Inc., the Information Agent, or
Value Investing Partners, Inc., the Dealer Manager, at their respective
addresses and telephone numbers set forth on the back of the Offer to Purchase.
Very truly yours,
VALUE INVESTING PARTNERS, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEALER MANAGER, THE
DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR
MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
OF
ARDEN INDUSTRIAL PRODUCTS, INC.
AT
$6.00 NET PER SHARE
BY
P O ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
PARK-OHIO INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
FRIDAY, JULY 25, 1997, UNLESS THE OFFER IS EXTENDED
TO OUR CLIENTS:
Enclosed for your consideration are the Offer to Purchase dated June 26,
1997 (the "Offer to Purchase") and the related Letter of Transmittal (which
together constitute the "Offer") relating to the Offer by P O Acquisition
Corporation, a Minnesota corporation (the "Purchaser") and a wholly owned
subsidiary of Park-Ohio Industries, Inc., an Ohio corporation ("Parent"), to
purchase all outstanding common shares, par value $.01 per share (the "Shares"),
of Arden Industrial Products, Inc., a Minnesota corporation (the "Company"), at
a price of $6.00 per Share net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer. This material is being forwarded to
you as the beneficial owner of Shares carried by us in your account but not
registered in your name.
WE ARE 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 tender any
or all of such Shares held by us for your account, upon the terms and subject to
the conditions set forth in the Offer.
Please note the following:
1. The tender price is $6.00 per Share net to you in cash.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 5:00 p.m., New York
City time, on Friday, July 25, 1997, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there being
validly tendered prior to the expiration of the Offer and not withdrawn, a
number of Shares which will constitute at least 50.1% of the combined
voting power of the voting securities of the Company on a fully diluted
basis as of the date the Shares are accepted for payment pursuant to the
Offer. See the Introduction and Sections 13 and 14 of the Offer to
Purchase.
5. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer.
<PAGE> 2
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
attached to this letter. An envelope in which to return your instructions to us
is enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise indicated in the instruction form. Please forward your
instructions 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 made solely by the Offer to Purchase dated June 26, 1997 and
the related Letter of Transmittal and any amendments or supplements thereto. 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 acceptance thereof would not be in compliance with the securities 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 will
be deemed to be made on behalf of the Purchaser by Value Investing Partners,
Inc. or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
<PAGE> 3
INSTRUCTION WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
OF
ARDEN INDUSTRIAL PRODUCTS, INC.
AT
$6.00 NET PER SHARE
BY
P O ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
PARK-OHIO INDUSTRIES, INC.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated June 26, 1997 (the "Offer to Purchase") and the related Letter
of Transmittal (collectively the "Offer") relating to the Offer by P O
Acquisition Corporation, a Minnesota corporation (the "Purchaser") and a wholly
owned subsidiary of Park-Ohio Industries, Inc., an Ohio corporation ("Parent"),
to purchase all of the outstanding common shares, par value $.01 per share (the
"Shares"), of Arden Industrial Products, Inc., a Minnesota corporation (the
"Company").
You are instructed to tender the number of Shares indicated below (or, if
no number is indicated below, all Shares) that are held by you for the account
of the undersigned, upon the terms and subject to the conditions set forth in
the Offer.
--------------------------------
Number of Shares to be Tendered*
--------------------------- Shares
--------------------------------
SIGN HERE
- ------------------------------------------------------
- ------------------------------------------------------
Signature(s)
- ------------------------------------------------------
- ------------------------------------------------------
(Please print name(s) and address(es) here)
- ------------------------------------------------------
- ------------------------------------------------------
Area Code and Telephone Number(s)
- ------------------------------------------------------
Tax Identification or Social Security Number(s)
Dated:______________________________, 1997
- ------------------------
* Unless otherwise indicated, it will be assumed that all of your Shares held by
us for your account are to be tendered.
<PAGE> 1
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give
the Payer. Social Security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employer Identification numbers have nine
digits separated by only one hyphen: i.e., 00-0000000. The table below
will help determine the number to give the Payer.
<TABLE>
<CAPTION>
- ---------------------------------------------
GIVE THE SOCIAL
SECURITY OR
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF NUMBER
ACCOUNT: OF --
- ---------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more The actual owner of
the account or, if
combined funds, any
one of the
individuals(1)
3. Custodian account The minor(2)
of a minor (Uniform
Gift to Minors Act)
4. a. The usual The grantor-
revocable trustee(1)
savings trust
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust
under state law
5. Sole proprietorship The owner(3)
6. A valid trust, The legal entity
estate, or pension (Do not furnish the
trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(4)
<CAPTION>
- ---------------------------------------------
GIVE THE SOCIAL
SECURITY OR
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF NUMBER
ACCOUNT: OF --
- ---------------------------------------------
<C> <S> <C>
7. Corporate The corporation
8. Association, club, The organization
religious,
charitable,
educational or
other tax-exempt
organization
9. Partnership The partnership
10. A broker or The broker or
registered nominee nominee
11. 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
agriculture 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) Show the name of the owner.
(4) 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
Section references are to the Internal Revenue Code.
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 (the "IRS") and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in (1)
through (13) and a person registered under the Investment Advisers Act of 1940
who regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects payments
for such services is not exempt from backup withholding or information
reporting. Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A State, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
- - Payments of interest on obligations issued by; individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details see sections 6041, 6041(A)(a), 6042, 6044, 6045,
6049, 6050A and 6050N, and the regulations under such sections.
PRIVACY ACT NOTICE
Section 6109 requires you to give your correct taxpayer identification number to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your taxpayer identification number whether or not you are qualified to file a
tax return. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(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)
[PARK-OHIO LOGO]
FOR IMMEDIATE RELEASE DRAFT
CONTACTS:
EDWARD F. CRAWFORD DOUG EWING
CHAIRMAN & CHIEF EXECUTIVE OFFICER SWENSON/FALKER ASSOCIATES INC.
PARK-OHIO INDUSTRIES, INC. (FOR ARDEN INDUSTRIAL PRODUCTS, INC.)
(216) 692-7200 (612)-371-0000
PARK-OHIO INDUSTRIES COMMENCES TENDER OFFER FOR ARDEN INDUSTRIAL PRODUCTS
CLEVELAND, OH and ST. PAUL, MN (June 26, 1997) -- Park-Ohio Industries,
Inc. (NASDAQ:PKOH) and Arden Industrial Products, Inc. (NASDAQ:AFAS) announced
that PO Acquisition Corporation (the "Purchaser"), a wholly-owned subsidiary of
Park-Ohio, today commenced its cash tender offer for all the outstanding
shares of common stock of Arden, pursuant to the previously announced Agreement
and Plan of Merger.
Under the tender offer, shareholders who tender their shares will be
entitled to receive $6.00 in cash per share. The offer and withdrawal rights
will expire at 5 p.m. New York City time on Friday, July 25, 1997, unless
extended. Following completion of the tender offer, the Purchaser will be merged
into Arden and all remaining common shares of Arden, other than shares owned by
Purchaser and its affiliates, and shares owned by dissenting shareholders, will
be converted into the right to receive $6.00 per share in cash.
The offer is conditioned upon, among other things, there being validly
tendered and not withdrawn at the expiration of the offer a majority of the
then outstanding shares of Arden on a fully-diluted basis.
Value Investing Partners, Inc. is the dealer manager for the offer.
Corporate Investor Communications, Inc. is the information agent for the offer.
National City Bank is the depositary for the offer.
Arden is a leading national distributor of specialty and standard
fasteners to the industrial market. The company combines the most extensive
product line in the fastener industry with specialized value-added services,
such as inventory management (JIT) programs, to minimize fastener-related costs
for its customers.
Park-Ohio, headquartered in Cleveland, Ohio, is a diversified
manufacturing and logistics company.
####
23000 EUCLID AVENUE - EUCLID, OHIO 44117 - 216-692-7200 / FAX 216-692-7174
<PAGE> 1
EXHIBIT (b)(3)
FIFTH AMENDMENT AGREEMENT
This Fifth Amendment Agreement is made as of the 23rd day of June,
1997, by and among PARK-OHIO INDUSTRIES, INC., an Ohio corporation ("Borrower"),
KEYBANK NATIONAL ASSOCIATION (successor by merger to Society National Bank), as
Agent ("Agent") and the banking institutions listed on Annex 1 attached hereto
and made a part hereof ("Banks"):
WHEREAS, Borrower, Agent and the Banks are parties to a certain Credit
Agreement dated as of April 11, 1995, as amended and as it may from time to time
be further amended, restated or otherwise modified, which provides, among other
things, for a revolving credit and a term loan aggregating One Hundred
Twenty-Five Million Dollars, all upon certain terms and conditions ("Credit
Agreement");
WHEREAS, Borrower, Agent and the Banks desire to amend the Credit
Agreement to increase the amount of the credit facility to One Hundred Seventy
Five Million Dollars ($175,000,000) and to modify certain other provisions
thereof;
WHEREAS, each term used herein shall be defined in accordance with the
Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein and for other valuable considerations, Borrower, Agent and the
Banks agree as follows:
1. Article I of the Credit Agreement is hereby amended to delete the
definitions of "Commitment Period" and "Total Funded Indebtedness" in their
entirety and to insert in place thereof the following:
"Commitment Period" shall mean the period from the Closing
Date to April 11, 2001.
"Total Funded Indebtedness" shall mean all Indebtedness of
Borrower and its Consolidated Subsidiaries, on a consolidated basis,
that is funded, including, but not limited to, current, long-term and
Subordinated Indebtedness, if any.
2. Article I of the Credit Agreement is hereby amended to delete the
definition of "Funded Indebtedness" in its entirety.
3. Article I of the Credit Agreement is hereby amended to add the
following new definition thereto:
"Indebtedness" shall mean, for any Company (a) all obligations
to repay borrowed money, direct or indirect, incurred, assumed, or
guaranteed, (b) all obligations for the deferred purchase price of
capital assets excluding trade payables, (c) all obligations under
conditional sales or other title retention agreements, and (d) all
lease obligations which have been or should be capitalized on the books
of such Company in accordance with
<PAGE> 2
generally accepted accounting principles not inconsistent with such
Company's present accounting procedures.
4. In the event that Borrower acquires a majority of the outstanding
shares of stock of Arden Industrial Products, Inc., a Minnesota corporation
("Arden"), on or before July 31, 1997, then, as of the date hereof, Section 5.7
of the Credit Agreement is hereby deleted in its entirety with the following
being inserted in place thereof:
SECTION 5.7. WORKING CAPITAL. Borrower will not suffer or
permit the Consolidated Net Current Assets of Borrower and its
Consolidated Subsidiaries at any time to fall below the current minimum
amount required, which current minimum amount required shall be (a) One
Hundred Million Dollars ($100,000,000) on June 30, 1997 through
December 31, 1997, and (b) One Hundred Twenty Million Dollars
($120,000,000) on January 1, 1998 and thereafter, based upon Borrower's
financial statements for the most recent calendar quarter. Borrower and
its Consolidated Subsidiaries will maintain, on a consolidated basis,
at all times a ratio of Current Assets to Current Liabilities of no
less than 2.00 to 1.00, based upon Borrower's financial statements for
the most recent calendar quarter.
5. Section 5.8 of the Credit Agreement is hereby deleted in its
entirety with the following being inserted in place thereof:
SECTION 5.8. CASH-FLOW COVERAGE. Borrower and its Consolidated
Subsidiaries will maintain at all times a ratio of Consolidated
Cash-In-Flow to Consolidated Cash-Out-Flow of no less than the current
minimum ratio required, which current minimum ratio required shall be
(a) .70 to 1.00 on June 30, 1997 through September 29, 1997, (b) .90 to
1.00 on September 30, 1997 through December 31, 1997, (c) 1.50 to 1.00
on January 1, 1998 through December 31, 1998, (d) 1.75 to 1.00 on
January 1, 1999 through December 31, 1999, and (e) 2.00 to 1.00 on
January 1, 2000 and thereafter, based upon Borrower's financial
statements for the most recent calendar quarter and the fiscal year to
date period ended at the end of such quarter.
6. In the event that Borrower acquires a majority of the outstanding
shares of stock of Arden on or before July 31, 1997, then, as of the date
hereof, Section 5.9 of the Credit Agreement is hereby deleted in its entirety
with the following being inserted in place thereof:
SECTION 5.9. NET WORTH. Borrower will not suffer or permit the
Consolidated Net Worth of Borrower and its Consolidated Subsidiaries at
any time to fall below the current minimum amount required, which
current minimum amount required shall be (a) Seventy Two Million
Dollars ($72,000,000) on December 31, 1996 through December 30, 1997,
(b) Eighty Five Million Dollars ($85,000,000) on December 31, 1997
through December 30, 1998, (c) One Hundred Million Dollars
($100,000,000) on December 31, 1998 through December 30, 1999, (d) One
Hundred Seventeen Million Dollars ($117,000,000) on December 31, 1999
through December 30, 2000, and (e) One
2
<PAGE> 3
Hundred Thirty Six Million Dollars ($136,000,000) on December 31, 2000
and thereafter, based upon Borrower's financial statements for the most
recent calendar quarter.
7. In the event that Borrower acquires a majority of the outstanding
shares of stock of Arden on or before July 31, 1997, then, as of the date
hereof, Section 5.10 of the Credit Agreement is hereby deleted in its entirety
with the following being inserted in place thereof:
SECTION 5.10. LEVERAGE. Borrower and its Consolidated
Subsidiaries will not suffer or permit at any time the ratio of (a)
Total Liabilities minus Subordinated Indebtedness to (b) Consolidated
Net Worth (hereinafter referred to as "Leverage Ratio"), to exceed (i)
3.00 to 1.00 on December 31, 1996 through December 30, 1997, (iv) 2.50
to 1.00 on December 31, 1997 through December 30, 1998, and (v) 2.00 to
1.00 on December 31, 1998 and thereafter, based upon Borrower's
financial statements for the most recent calendar quarter.
8. Section 5.11 of the Credit Agreement is hereby deleted in its
entirety with the following being inserted in place thereof:
SECTION 5.11. BORROWING. Borrower will not create, incur or
have outstanding or permit any Subsidiary to create, incur or have
outstanding any obligation for borrowed money or any Indebtedness of
any kind; provided, that this Section shall not apply to (a) the Loans;
(b) any loans granted to Borrower evidenced by promissory notes issued
pursuant to any other agreement hereafter in effect so long as the
aggregate principal amount of all such loans does not exceed Two
Hundred Fifty Thousand Dollars ($250,000) at any one time outstanding;
(c) the Indebtedness set forth in Annex 2 attached hereto and made a
part hereof; or (d) loans to Subsidiaries from Borrower.
9. Subpart (viii) of Section 5.14 of the Credit Agreement is hereby
deleted in its entirety with the following being inserted in place thereof:
(viii) any investment of a Subsidiary of up to Two Million Five Hundred
Thousand Dollars ($2,500,000) in the common stock of a corporation that
such Subsidiary is considering acquiring, so long as (A) such
Subsidiary is a Guarantor of Payment, (B) the investment of all
Companies for such purposes does not exceed the aggregate amount of
Five Million Dollars ($5,000,000) and (C) the stock acquired by all
Companies in any one corporation shall not exceed the amount of Two
Million Five Hundred Thousand Dollars ($2,500,000), unless acquired
pursuant to the terms of Section 5.16 hereof;
10. Subpart (f) of Section 5.16 of the Credit Agreement is hereby
deleted in its entirety with the following being inserted in place thereof:
(f) Borrower shall have provided the Agent, at least fourteen
(14) Cleveland Banking Days prior to the acquisition, with (i) notice
of the proposed acquisition, which notice shall include (A) the name of
the entity to be acquired, (B) the proposed date of the acquisition,
(B) the aggregate amount of the consideration to be paid, (ii)
certifications of
3
<PAGE> 4
compliance with all financial covenants and of no default under the
credit agreement, both prior to and subsequent to the acquisition
(after taking the acquisition into effect), (iii) copies of the
Purchase Agreement, (iv) pro forma financial projections for three (3)
years, and (v) such other financial information as the Banks may
request; provided, however, that if the aggregate consideration to be
paid in connection with such acquisition does note exceed the aggregate
amount of Two Million Dollars ($2,000,000), Borrower shall only provide
the items listed in (iii) and (iv) upon request of the Agent;
11. Section 5.21 of the Credit Agreement is hereby deleted in its
entirety with the following being inserted in place thereof:
SECTION 5.21. CAPITAL EXPENDITURES. Borrower and its
Consolidated Subsidiaries will not invest in Capital Expenditures more
than an aggregate amount equal to Sixteen Million Dollars ($16,000,000)
during each fiscal year of Borrower.
12. In the event that Borrower acquires a majority of the outstanding
shares of stock of Arden on or before July 31, 1997, then, as of the date
hereof, Section 5.25 of the Credit Agreement is hereby deleted in its entirety
with the following being inserted in place thereof:
SECTION 5.25. TOTAL DEBT TO CAPITALIZATION. Borrower and its
Consolidated Subsidiaries will not suffer or permit at any time, on a
consolidated basis, the ratio of (a) Total Funded Indebtedness to (b)
Total Funded Indebtedness plus Equity, to exceed (i) .60 to 1.00 on
June 30, 1997 through December 31, 1997, (ii) .55 to 1.00 on January 1,
1998 through December 31, 1998, and (iii) .50 to 1.00 on January 1,
1999 and thereafter, based upon Borrower's financial statements for the
most recent calendar quarter.
13. The Credit Agreement is hereby amended by deleting Annex 1 and
Annex 2 thereof in its entirety and by inserting in place thereof a new Annex 1
and Annex 2, respectively, in the form of Annex 1 and Annex 2, respectively,
attached hereto.
14. The Credit Agreement is hereby amended by deleting Exhibit A in its
entirety and by substituting in place thereof a new Exhibit A in the form of
Exhibit A attached hereto.
15. Concurrently with the execution of this Fifth Amendment Agreement,
Borrower shall:
(a) execute and deliver to each Bank a new Revolving Credit Note dated
as of April 11, 1995, and such new Revolving Credit Note shall be in the form
and substance of Exhibit A attached hereto. After a Bank receives a new
Revolving Credit Note, such Bank will mark its Revolving Credit Note being
replaced thereby "Replaced" and return the same to Borrower;
4
<PAGE> 5
(b) pay to Agent, for the benefit of the Banks, an amendment fee in the
amount of twenty five (25) basis points times the amount of the increase in the
Revolving Credit Commitment; and
(c) pay all legal fees and expenses of Agent in connection with this
Fifth Amendment Agreement.
16. Borrower hereby represents and warrants to Agent and the Banks that
(a) Borrower has the legal power and authority to execute and deliver this Fifth
Amendment Agreement; (b) officials executing this Fifth Amendment Agreement have
been duly authorized to execute and deliver the same and bind Borrower with
respect to the provisions hereof; (c) the execution and delivery hereof by
Borrower and the performance and observance by Borrower of the provisions hereof
do not violate or conflict with the organizational agreements of Borrower or any
law applicable to Borrower or result in a breach of any provision of or
constitute a default under any other agreement, instrument or document binding
upon or enforceable against Borrower; (d) no Possible Default or Event of
Default exists under the Credit Agreement, nor will any occur immediately after
the execution and delivery of the Fifth Amendment Agreement or by the
performance or observance of any provision hereof; (e) neither Borrower nor any
Subsidiary has any claim or offset against, or defense or counterclaim to, any
of Borrower's or any Subsidiary's obligations or liabilities under the Credit
Agreement or any Related Writing, and Borrower and each Subsidiary hereby waives
and releases Agent and each of the Banks from any and all such claims, offsets,
defenses and counterclaims of which Borrower and any Subsidiary is aware, such
waiver and release being with full knowledge and understanding of the
circumstances and effect thereof and after having consulted legal counsel with
respect thereto, and (f) this Fifth Amendment Agreement constitutes a valid and
binding obligation of Borrower in every respect, enforceable in accordance with
its terms.
17. Each reference that is made in the Credit Agreement or any other
writing to the Credit Agreement shall hereafter be construed as a reference to
the Credit Agreement as amended hereby. Except as herein otherwise specifically
provided, all provisions of the Credit Agreement shall remain in full force and
effect and be unaffected hereby.
18. This Fifth Amendment Agreement may be executed in any number of
counterparts, by different parties hereto in separate counterparts and by
facsimile signature, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
19. The rights and obligations of all parties hereto shall be governed
by the laws of the State of Ohio.
Address: 23000 Euclid Avenue PARK-OHIO INDUSTRIES, INC.
5
<PAGE> 6
Euclid, Ohio 44117
<TABLE>
<CAPTION>
<S> <C> <C>
By: /s/ James S. Walker
--------------------------------------
James S. Walker, Vice President
and /s/ Ronald J. Cozean
--------------------------------------
Ronald J. Cozean, Secretary
Address: Key Center KEYBANK NATIONAL ASSOCIATION,
127 Public Square as a Bank and as Agent
Cleveland, OH 44114-1206
Attn: Commercial Loans- By: /s/ Kenneth M. Merhar
Cleveland District --------------------------------------
Kenneth M. Merhar, Vice President
Address: Huntington Building THE HUNTINGTON NATIONAL BANK
917 Euclid Avenue
Cleveland, OH 44115 By: /s/ James J. Jaworski
Attn: Corporate Banking Div. -------------------------------------
James J. Jaworski, Assistant
Vice President
Address: 611 Woodward Avenue NBD BANK
Detroit, MI 48226
Attn: Midwest Banking By: /s/ William J. McCaffrey
--------------------------------------
William J. McCaffrey, Vice President
Address: 200 Public Square MELLON BANK, N.A.
29th Floor
Cleveland, OH 44114-2301 By: /s/ Henry W. Centa
Attn: Corporate Banking Div. ----------------------------------------
Henry W. Centa, Vice President
Address: 1900 East Ninth Street NATIONAL CITY BANK
Cleveland, OH 44114-0756
Attn: Metro/Ohio Division By: /s/ Anthony J. DiMare
Loc.# 2104 ----------------------------------------
Anthony J. DiMare, Senior
Vice President
</TABLE>
The undersigned consent to the terms hereof.
6
<PAGE> 7
CASTLE RUBBER COMPANY
KAY HOME PRODUCTS, INC.
GENERAL ALUMINUM MFG. COMPANY
BLUE FALCON INVESTMENTS, INC.
RB&W CORPORATION
BLUE FALCON FORGE, INC.
TOCCO, INC.
THE AJAX MANUFACTURING COMPANY
CICERO FLEXIBLE PRODUCTS, INC.
SUMMERSPACE, INC.
By: /s/ James S. Walker
----------------------------------
James S. Walker, Treasurer of each
of the Companies listed above
and /s/ Ronald J. Cozean
----------------------------------
Ronald J. Cozean, Secretary of each
of the Companies listed above
7
<PAGE> 8
ANNEX 1
<TABLE>
<CAPTION>
REVOLVING CREDIT TERM LOAN
COMMITMENT COMMITMENT MAXIMUM
BANKING INSTITUTIONS PERCENTAGE AMOUNT AMOUNT AMOUNT
<S> <C> <C> <C> <C>
KeyBank National Association,
f.k.a. Society National Bank 35% $ 49,000,000 $12,250,000 $ 61,250,000
NBD Bank 25% $ 35,000,000 $ 8,750,000 $ 43,750,000
The Huntington National Bank 25% $ 35,000,000 $ 8,750,000 $ 43,750,000
National City Bank 10% $ 14,000,000 $ 3,500,000 $ 17,500,000
Mellon Bank, N.A. 5% $ 7,000,000 $ 1,750,000 $ 8,750,000
TOTAL 100% $140,000,000 $35,000,000
TOTAL COMMITMENT
AMOUNT $175,000,000
</TABLE>
8
<PAGE> 9
EXHIBIT A
REVOLVING CREDIT NOTE
$_______________ Cleveland, Ohio
As of April 11, 1995
FOR VALUE RECEIVED, the undersigned PARK-OHIO INDUSTRIES, INC. (the
"Borrower") promises to pay on April 11, 2001, to the order of _________ (the
"Bank") at the Main Office of KeyBank National Association (successor by merger
to Society National Bank), as Agent, 127 Public Square, Cleveland, Ohio
44114-1306 the principal sum of
DOLLARS
- ----------------------------------------------------------------
or the aggregate unpaid principal amount of all Revolving Loans made by Bank to
Borrower pursuant to Section 2.1 of the Credit Agreement, as hereinafter
defined, whichever is less, in lawful money of the United States of America. As
used herein, "Credit Agreement" means the Credit Agreement dated as of April 11,
1995, among Borrower, the banks named therein and KeyBank National Association,
as Agent, as such agreement may be from time to time amended, restated or
otherwise modified. Capitalized terms used herein shall have the meanings
ascribed to them in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each Revolving Loan from time to time outstanding, from the date of such
Revolving Loan until the payment in full thereof, at the rates per annum which
shall be determined in accordance with the provisions of Section 2.1A of the
Credit Agreement. Such interest shall be payable on each date provided for in
such Section 2.1A; provided, however, that interest on any principal portion
which is not paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Prime Rate Loans and LIBOR Loans, and payments of principal of any thereof,
shall be shown on the records of Bank by such method as Bank may generally
employ; provided, however, that failure to make any such entry shall in no way
detract from Borrower's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be two per cent (2%) in excess of the Adjusted Prime Rate from
time to time in effect. All payments of principal of and interest on this Note
shall be made in immediately available funds. In an Event of Default in the
payment of interest or balance of principal, when the same becomes due, Bank may
collect and Borrower agrees to pay a late charge of an amount equal to the
greater of (a) ten per cent (10%) of the amount of such late payment, or (b)
Twenty Five Dollars ($25).
9
<PAGE> 10
This Note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to the Credit Agreement for a description of
the right of the undersigned to anticipate payments hereof, the right of the
holder hereof to declare this Note due prior to its stated maturity, and other
terms and conditions upon which this Note is issued.
The undersigned authorizes any attorney at law at any time or times
after the maturity hereof (whether maturity occurs by lapse of time or by
acceleration) to appear in any state or federal court of record in the United
States of America, to waive the issuance and service of process, to admit the
maturity of this Note and the nonpayment thereof when due, to confess judgment
against the undersigned in favor of the holder of this Note for the amount then
appearing due, together with interest and costs of suit, and thereupon to
release all errors and to waive all rights of appeal and stay of execution. The
foregoing warrant of attorney shall survive any judgment, and if any judgment be
vacated for any reason, the holder hereof nevertheless may thereafter use the
foregoing warrant of attorney to obtain an additional judgment or judgments
against the undersigned. The undersigned agrees that the Agent or the Banks'
attorney may confess judgment pursuant to the foregoing warrant of attorney. The
undersigned further agrees that the attorney confessing judgment pursuant to the
foregoing warrant of attorney may receive a legal fee or other compensation from
the Agent or the Banks.
PARK-OHIO INDUSTRIES, INC.
By:
---------------------------------
James S. Walker, Vice President
and
--------------------------------
Ronald J. Cozean, Secretary
================================================================================
"WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE."
================================================================================
10
<PAGE> 1
EXHIBIT (C)(1)
AGREEMENT AND PLAN OF MERGER
Dated as of June 16, 1997
among
PARK-OHIO INDUSTRIES, INC.;
P O ACQUISITION CORPORATION
and
ARDEN INDUSTRIAL PRODUCTS, INC.
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................ 1
1.1 Definitions................................................ 1
1.2 Other Terms................................................ 6
1.3 Other Definitional Provisions.............................. 6
ARTICLE II THE TENDER OFFER........................................... 7
2.1 Tender Offer............................................... 7
ARTICLE III THE MERGER................................................. 10
3.1 Merger..................................................... 10
3.2 Closing.................................................... 10
3.3 Effective Time............................................. 10
3.4 Effects of the Merger...................................... 10
3.5 Articles of Incorporation and Bylaws....................... 10
3.6 Directors.................................................. 11
3.7 Officers................................................... 11
3.8 Board of Directors; Committees............................. 11
ARTICLE IV EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES......... 12
4.1 Effect on Capital Stock.................................... 12
4.2 Exchange of Certificates................................... 12
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............. 15
5.1 Organization, Standing and Corporate Power................. 15
5.2 Subsidiaries............................................... 15
5.3 Capitalization............................................. 15
5.4 Authority; Enforceability; No Conflicts; and Consents...... 16
5.5 Vote Required.............................................. 17
5.6 Compliance with Applicable Laws............................ 17
5.7 Company SEC Documents; Undisclosed Liabilities............. 18
5.8 Absence of Changes or Events............................... 19
5.9 Litigation................................................. 20
5.10 Taxes...................................................... 20
5.11 Employee Benefits.......................................... 22
5.12 Title to Properties........................................ 25
5.13 Insurance.................................................. 25
5.14 Labor Matters.............................................. 25
i
<PAGE> 3
5.15 Intellectual Property...................................... 25
5.16 No Restrictions on the Offer or the Merger................. 27
5.17 Dispositions............................................... 27
5.18 Brokers and Intermediaries................................. 27
5.19 Opinion of Financial Advisor............................... 27
5.20 Transactions With Affiliates............................... 27
5.21 Business Relations......................................... 28
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND
MERGER SUB................................................. 28
6.1 Organization, Standing and Corporate Power................. 28
6.2 Authority; Enforceability; No Conflicts and Consents....... 28
6.3 Brokers.................................................... 30
6.4 Ownership of Shares........................................ 30
6.5 Financing.................................................. 30
ARTICLE VII COVENANTS RELATING TO CONDUCT OF BUSINESS.................. 30
7.1 Conduct of Business of the Company......................... 30
7.2 Access to Information...................................... 33
ARTICLE VIII ADDITIONAL AGREEMENTS...................................... 34
8.1 Preparation of Proxy Statement; Shareholders' Meeting...... 34
8.2 Efforts; Notification...................................... 36
8.3 Supplemental Disclosure.................................... 37
8.4 Announcements.............................................. 37
8.5 No Solicitation............................................ 37
8.6 Stock Options.............................................. 39
8.7 Transfer Taxes............................................. 39
8.8 Directors and Officers' Indemnification and Insurance...... 40
ARTICLE IX CONDITIONS PRECEDENT....................................... 41
9.1 Conditions to Each Party's Obligation to Effect the Merger. 41
9.2 Conditions of Obligations of Acquiror...................... 42
ARTICLE X TERMINATION................................................ 43
10.1 Termination................................................ 43
10.2 Effect of Termination...................................... 46
10.3 Termination Fee............................................ 46
ARTICLE XI GENERAL PROVISIONS......................................... 46
11.1 Effectiveness of Representations, Warranties and Agreements 46
ii
<PAGE> 4
11.2 Expenses................................................... 46
11.3 Governing Law.............................................. 47
11.4 Notices.................................................... 47
11.5 Entire Agreement........................................... 48
11.6 Disclosure Schedule........................................ 48
11.7 Headings; References....................................... 48
11.8 Counterparts............................................... 49
11.9 Parties in Interest; Assignment............................ 49
11.10 Severability; Enforcement.................................. 49
11.11 Acquiror Guarantee......................................... 49
ANNEX A ................................................................... 51
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 16, 1997, among
Park-Ohio Industries, Inc. an Ohio corporation ("Acquiror"), P O Acquisition
Corporation, a Minnesota corporation and wholly-owned subsidiary of Acquiror
("Merger Sub"), and Arden Industrial Products, Inc., a Minnesota corporation
(the "Company")
W I T N E S S E T H:
WHEREAS, the boards of directors of Acquiror and the Company have
approved, and deem it advisable and in the best interests of their respective
shareholders to consummate the acquisition of the Company by Acquiror upon the
terms and subject to the conditions set forth herein;
WHEREAS, it is intended that the acquisition be accomplished by a
merger of Merger Sub with and into the Company ("Merger"), with the Company
continuing as the surviving corporation (the "Surviving Corporation"); and
WHEREAS, Acquiror, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
"Acquisition Proposal" shall have the meaning set forth in Section
8.5(c).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such other Person.
"Applicable Laws" shall mean, with respect to any Person, all statutes,
laws, ordinances, rules, orders, judgments, decrees, arbitration awards and
regulations of any Governmental Authority applicable to such Person and its
business, properties and assets.
"Articles of Merger" shall have the meaning set forth in Section 3.3.
<PAGE> 6
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close.
"Certificates" shall have the meaning set forth in Section 4.2 (b).
"Closing" shall have the meaning set forth in Section 3.2.
"Closing Date" shall have the meaning set forth in Section 3.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended, the
regulations promulgated thereunder, and the judicial and administrative
interpretations thereof.
"Company Common Stock" shall have the meaning set forth in Section
4.1(b).
"Company Disclosure Schedule" shall have the meaning set forth in
Section 11.6.
"Company Representatives" shall have the meaning set forth in Section
8.5.
"Company SEC Documents" shall have the meaning set forth in Section
5.7.
"Company Shareholder Approval" shall have the meaning set forth in
Section 5.4(a).
"Company Shareholders' Meeting" shall have the meaning set forth in
Section 8.1(d).
"Confidentiality Agreement" shall have the meaning set forth in Section
7.2.
"Dissenting Shares" shall have the meaning set forth in Section 4.2(d).
"DOJ" shall mean the Department of Justice.
"Effective Time" shall have the meaning set forth in Section 3.3.
"Employee Benefit Plans" shall have the meaning set forth in Section
5.11(a).
"Encumbrances" shall mean any and all mortgages, security interests,
liens, claims, pledges, restrictions, leases, title exceptions, rights of
others, charges or other encumbrances.
"Environmental Laws" shall mean all applicable United States, foreign,
state, provincial, and local laws, regulations, ordinances or orders relating to
the protection of the environment, including but not limited to the Clean Air
Act, 42 U.S.C. Section 7401 et. seq., the Clean Water Act ("CWA"), 33 U.S.C.
Section 1251 et. seq., the Resource Conservation Recovery Act ("RCRA"), 42
U.S.C. Section 6901 et. seq., the Toxic Substances Control Act ("TSCA"), 15
U.S.C. Section 2601 et. seq., the Comprehensive
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Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et. seq., the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801 et. seq., any administrative or judicial judgment, order or decree;
and any other state, federal or local law, regulation, rule, ordinance or order,
currently in existence which govern:
(a) the existence, cleanup and/or remedy of contamination on
property;
(b) the emission or discharge of Hazardous Substances into the
environment;
(c) the control of hazardous waste;
(d) the use, generation, transport, treatment, storage,
disposal, removal or recovery of Hazardous Substances,
including building materials; or
(e) the protection of health and safety.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the applicable regulations promulgated thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is part of the same controlled group, or under common control
with, or part of an affiliated service group that includes, the Company within
the meaning of Code Sections 414(b), (c), (m) or (o) and the regulations
promulgated thereunder and/or ERISA Section 4001(a)(14).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Agent" shall have the meaning set forth in Section 4.2(a).
"Exchange Fund" shall have the meaning set forth in Section 4.2(a).
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles in effect in
the United States of America as of the date of the applicable determination.
"General Disclosure Schedule" shall have the meaning set forth in
Article V.
"Governmental Authority" shall mean any foreign, Federal, state,
municipal or other governmental authority, department, commission, board,
bureau, agency or instrumentality.
"Hazardous Substances" shall mean
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<PAGE> 8
(a) any oil, flammable substances, explosives, radioactive
materials, hazardous wastes or substances, toxic wastes or
substances or any other wastes, materials, conditions or
pollutants which (1) pose a hazard to the environment or to
persons on or about the Real Property or (2) cause the Real
Property to be in violation of any Environmental Law;
(b) asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other
equipment which contain dielectric fluid containing levels
of polychlorinated biphenyls, or radon gas;
(c) any chemical, material or substance defined as, or included
in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," or "toxic substances" or words
of similar import under any applicable local, state or
federal law or under the regulations adopted pursuant
thereto, including but not limited to Environmental Laws;
(d) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by a governmental
authority.
"HSR Act" shall have the meaning set forth in Section 5.4(c).
"Improvements" shall mean, with respect to any Real Property, all
buildings, fixtures, improvements and facilities located on or attached to such
Real Property or owned or leased by the Company and used in, on or at such Real
Property, together with any and all loading docks, parking lots, garages, and
other facilities serving any such buildings; and landscaping and site
improvements.
"IRS" shall mean the United States Internal Revenue Service.
"Legal Proceedings" shall mean any civil or criminal judicial,
administrative or arbitral actions, suits, proceedings, hearings (public or
private) or governmental proceedings.
"Material Adverse Effect" shall mean, with respect to any Person, any
change, occurrence or effect that is or is reasonably likely to be materially
adverse to the assets, business, results of operations or condition (financial
or otherwise) of such Person and its Subsidiaries taken as a whole.
"MBCA" shall mean the Minnesota Business Corporation Act.
"Merger" shall have the meaning set forth in the second recital to this
Agreement. "Merger Consideration" shall have the meaning set forth in Section
4.1(b).
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<PAGE> 9
"Offer" shall have the meaning set forth in Section 2.1(a).
"Options" shall have the meaning set forth in Section 8.6.
"Permits" shall have the meaning set forth in Section 5.6(a).
"Permitted Encumbrances" shall mean only the following title
exceptions:
(a) taxes either not delinquent or being diligently contested;
(b) mechanics', materialmen's or similar statutory liens being
diligently contested;
(c) other exceptions that do not and would not, individually or
in the aggregate, have a Material Adverse Effect with
respect to the Company;
(d) encumbrances related to indebtedness disclosed in the
Company SEC Documents filed and publicly available prior to
the date of this Agreement, and
(e) encumbrances related to indebtedness other than described in
the preceding clause (d) described in the General Disclosure
Schedule.
"Person" shall mean an individual, corporation, partnership, trust or
unincorporated organization or a government or any agency or political
subdivision thereof.
"Proxy Statement" shall mean the proxy or information statement
relating to the Company Shareholder Approval in connection with the consummation
of the transactions contemplated by this Agreement, as such proxy statement may
be amended or supplemented from time to time.
"Real Property" shall have the meaning set forth in Section 5.12.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, placing, discharging, injecting, escaping, leaching, dumping, or
disposing into the environment, whether intentional or unintentional.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"SEC" shall mean the Securities and Exchange Commission.
"Short Form Merger" shall have the meaning set forth in Section 8.1(e).
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<PAGE> 10
"Subsidiary" shall mean, with respect to any Person, (i) each
corporation, partnership, joint venture, limited liability company or other
legal entity of which such Person owns, either directly or indirectly, 50% or
more of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or similar governing
body of such corporation, partnership, joint venture or other legal entity and
(ii) each partnership or limited liability company in which such Person or
another Subsidiary of such Person is the general partner, managing partner or
otherwise controls.
"Surviving Corporation" shall have the meaning set forth in the second
recital of this Agreement.
"Tax" or "Taxes" shall mean all taxes, charges, fees, imposts, levies,
assessments, including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to
tax or additional amounts imposed by any taxing authority (domestic or foreign)
and shall include any transferee liability in respect of Taxes, any liability in
respect of Taxes imposed by contract, tax sharing agreement, tax indemnity
agreement or any similar agreement.
"Tax Return" shall mean any report, return, document, declaration or
any other information or filing required to be supplied to any taxing authority
or jurisdiction (foreign or domestic) with respect to Taxes, including without
limitation, information returns, any document with respect to or accompanying
payments or estimated Taxes, or with respect to or accompanying requests for the
extension of time in which to file any such report, return document, declaration
or other information.
"Third Party" shall mean a party or parties unaffiliated with either
the Company or Acquiror.
1.2 OTHER TERMS. Other terms may be defined elsewhere in the text of
this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
1.3 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to
this Agreement as a whole and not to any particular
provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
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<PAGE> 11
(c) The terms "dollars" and "$" shall mean United States
dollars.
ARTICLE II
THE TENDER OFFER
----------------
2.1 TENDER OFFER.
(a) Provided that this Agreement shall not have been terminated
in accordance with Article X hereof and none of the events
set forth in Annex A hereto shall have occurred or be
existing (or, if any of such events has occurred or is
existing, shall not have been waived in writing by Merger
Sub), within fifteen business days of the date hereof,
Merger Sub will commence a tender offer (the "Offer") for
all of the outstanding shares of Company Common Stock at a
price of $6.00 per share in cash, net to the seller ("Offer
Price"), subject only to the conditions set forth in Annex A
hereto. Subject to the terms and conditions of the Offer,
which conditions may be waived by Merger Sub in its sole
discretion, Merger Sub will accept for payment and promptly
pay for all shares of Company Common Stock duly tendered and
not withdrawn pursuant to the Offer at the earliest time
following expiration of the Offer that all conditions to the
Offer shall have been satisfied or waived by Merger Sub. The
obligation of Merger Sub to commence the Offer shall be
subject only to the conditions set forth in Annex A hereto
and the obligation of Merger Sub to accept for payment,
purchase and pay for Company Common Stock tendered pursuant
to the Offer shall be subject only to such conditions, and
to the further condition that a number of Company Common
Stock representing not less than 50.1% of the combined
voting power of the voting securities of the Company on a
fully diluted basis shall have been validly tendered and not
withdrawn prior to the expiration date of the Offer. The
Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") containing the terms set forth in this
Agreement and the conditions set forth in Annex A hereto.
Without the written consent of the Company, Merger Sub shall
not decrease the Offer Price, change the number of shares of
Company Common Stock sought to an amount less than 50.1% of
the outstanding shares of Company Common Stock, change the
form of consideration to be paid pursuant to the Offer or
impose conditions to the Offer in addition to those set
forth in Annex A hereto, or amend any other term or
condition of the Offer in any manner, except as may be
required pursuant to the SEC's rules with respect to the
extension of time periods, which is adverse to the holders
of shares of Company Common Stock; provided, however, that
if on a scheduled expiration date of the Offer (as it may be
extended in accordance with the terms hereof), all
conditions to the
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<PAGE> 12
Offer shall not have been satisfied or waived, the Offer may
be extended from time to time without the consent of the
Company for such period of time as is reasonably expected to
be necessary to satisfy the unsatisfied conditions and
provided further that if as of a scheduled expiration date
all of the conditions to the Offer have been satisfied and
in excess of 80% but less than 90% of the outstanding shares
of Company Common Stock have been tendered, Merger Sub may
extend the Offer up to an additional ten business days.
(b) Acquiror and Merger Sub shall file with the SEC on the date
the Offer is commenced 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") which will include,
as exhibits, the Offer to Purchase and a form of letter of
transmittal and summary advertisement. The Company's Board
of Directors shall recommend acceptance of the Offer to its
shareholders in a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") to be filed with the
SEC on the date the Offer is commenced; provided, however,
that if the Company's Board of Directors determines to amend
or withdraw its recommendation in accordance with Section
8.5 hereof, such amendment or withdrawal shall not
constitute a breach of this Agreement. Acquiror and Merger
Sub represent that the Schedule 14D-1, and the Company
represents that the Schedule 14D-9, will comply in all
material respects with the provisions of applicable federal
and Minnesota securities laws and, on the date filed with
the SEC and on the date first published, sent or given to
the Company's shareholders, will 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 statement therein, in light of the circumstances
under which they were made, not misleading, except that no
representation is made by Acquiror or Merger Sub with
respect to information supplied by the Company in writing
for inclusion in the Schedule 14D-1. The information
supplied by the Company for inclusion in the Schedule 14D-1
will not, on the date filed with the SEC and on the date
first published, sent or given to the Company's
shareholders, 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, the information supplied by Acquiror
and Merger Sub for inclusion in the Schedule 14D-9 will not,
on the date filed with the SEC and on the date first
published, sent or given to the Company's shareholders,
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
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<PAGE> 13
that no representation is made by the Company with respect
to information supplied by Acquiror or Merger Sub in writing
for inclusion in the Schedule 14D-9. Each of Acquiror and
Merger Sub further agrees to take all steps necessary to
cause the Schedule 14D-1, and the Company 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 of
Company Common Stock, in each case as and to the extent
required by applicable federal securities laws. Each of
Acquiror and Merger Sub, on the one hand, and the Company,
on the other hand, agrees promptly to correct any
information in the Schedule 14D-1 or Schedule 14D-9, as
applicable, if and to the extent that it shall have become
false or misleading in any material respect, and Acquiror,
Merger Sub and the Company further agree to take all steps
necessary to cause the Schedule 14D-1 or Schedule 14D-9, as
applicable, as so corrected to be filed with the SEC and to
be disseminated to holders of shares of Company Common
Stock, in each case as and to the extent required by
applicable federal securities laws. The Company and its
counsel and investment advisers shall be given the
opportunity to review the Schedule 14D-1 before it is filed
with the SEC and Acquiror and its counsel shall be given the
opportunity to review the Schedule 14D-9 before it is filed
with the SEC. In addition, Acquiror and the Company agree to
provide each other and its counsel in writing with any
comments it or its counsel may receive from time to time
from the SEC or its staff with respect to the Schedule 14D-1
or Schedule 14D-9, as applicable, promptly after the receipt
of such comments.
(c) The Schedule 14D-9 shall set forth, and Company hereby
represents, that (a) the Board of Directors of Company has
at a meeting duly called and held and at which a quorum was
present and acting throughout, by the requisite vote of all
directors present, (i) determined that the Offer and the
Merger are in the best interests of Company and its
shareholders, (ii) approved the Offer, this Agreement and
the Merger, and (iii) subject to the fiduciary duties of the
Board of Directors, recommended acceptance of the Offer and
approval and adoption of this Agreement and the Merger by
the holders of shares of Company Common Stock.
(d) In connection with the Offer, the Company will cause its
Transfer Agent to furnish promptly to Merger Sub a list, as
of the most recent available date, of the record holders of
shares of Company Common Stock and their addresses, as well
as mailing labels containing the names and addresses of all
record holders of shares of Company Common Stock and lists
of security positions of shares of Company Common Stock held
in stock depositories. The Company will furnish Merger Sub
with such additional information (including, but not limited
to, updated lists of holders of shares of Company
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<PAGE> 14
Common Stock and their addresses, mailing labels and lists
of security positions) and such other assistance as Acquiror
or Merger Sub or their agents may reasonably request in
communicating the Offer to the record and beneficial holders
of shares of Company Common Stock.
ARTICLE III
THE MERGER
----------
3.1 MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the MBCA, Merger Sub shall be merged with
and into Company at the Effective Time. Following the Merger, the separate
corporate existence of Merger Sub shall cease and the Company shall continue as
the Surviving Corporation and shall continue to be governed by the laws of the
State of Minnesota in accordance with the MBCA and the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger.
3.2 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
10.1, the closing of the Merger (the "Closing") will take place at 9:00 a.m.,
Cleveland time, on the later of the first Business Day following the date on
which the last of the conditions set forth in Article IX is fulfilled or waived
or July 25, 1997 (the "Closing Date"), at the offices of Squire, Sanders &
Dempsey L.L.P., 4900 Key Tower, 127 Public Square, Cleveland, Ohio 44114-1304,
unless another date, time or place is agreed to by the parties hereto.
3.3 EFFECTIVE TIME. On the Closing Date, or as soon as practicable
thereafter, the parties hereto shall cause the Merger to be consummated by
filing Articles of Merger (the "Articles of Merger") executed in accordance with
the relevant provisions of the MBCA with the Secretary of State of the State of
Minnesota. The Merger shall become effective at such time as the Articles of
Merger is so duly filed or at such time thereafter as is provided in the
Articles of Merger (the "Effective Time").
3.4 EFFECTS OF THE MERGER. The Merger shall have the effects as set
forth in Section 302A.641 of the MBCA.
3.5 ARTICLES OF INCORPORATION AND BYLAWS.
(a) The Articles of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation after
the Effective Time, until duly amended in accordance with
its terms and the MBCA.
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<PAGE> 15
(b) The Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving
Corporation after the Effective Time until duly amended as
provided therein, by the MBCA or the Articles of
Incorporation of the Surviving Corporation.
3.6 DIRECTORS. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignations or removal or until their respective successors
are duly elected and qualified, as the case may be.
3.7 OFFICERS. The officers of the Company immediately prior to the
Effective Time shall remain the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
3.8 BOARD OF DIRECTORS; COMMITTEES. If requested by Acquiror, the
Company will, subject to compliance with applicable law and promptly following
the purchase by Merger Sub of more than 50 percent of the outstanding Company
Common Stock pursuant to the Offer, take all actions necessary to cause persons
designated by Acquiror to become directors of the Company so that the total
number of such persons equals that number of directors, rounded up to the next
whole number, which represents the product of (x) the total number of directors
on the Board of Directors multiplied by (y) the percentage that the number of
shares of Company Common stock so accepted for payment bears to the number of
shares of Company Common Stock outstanding at the time of such acceptance for
payment. In furtherance thereof, the Company will increase the size of the
Board, or use its reasonable efforts to secure the resignation of directors, or
both, as is necessary to permit Acquiror's designees to be elected to the
Company's Board of Directors; provided, however, that prior to the Effective
Time, the Company's Board of Directors shall always have at least three members
who are neither officers of Acquiror nor designees, shareholders or affiliates
of Acquiror. At such time, the Company, if so requested, will use its reasonable
efforts to also cause persons designated by Acquiror to constitute the same
percentage of each committee of the Board of Directors. The Company's
obligations to appoint designees to the Board of Directors shall be subject to
Section 14(f) of the Securities Exchange Act of 1934 (the "Exchange Act") and
Rule 14f-1 thereunder. The Company shall promptly take all actions required
pursuant to such Section and Rule in order to fulfill its obligations under this
Section 3.8 and shall provide for inclusion in Acquiror's Schedule 14D-1 being
mailed to shareholders contemporaneously with the commencement of the Offer such
information with respect to the Company and its officers and directors as is
required under such Section and Rule in order to fulfill its obligations under
this Section 3.8. Acquiror will supply the Company and be solely responsible for
any information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1. Notwithstanding anything in
this Agreement to the contrary, prior to the Effective Time, the affirmative
vote of a majority of the directors of the Company which are not officers of
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<PAGE> 16
Acquiror or designees, shareholders of affiliates of Acquiror shall be required
to (i) amend or terminate this Agreement on behalf the Company, (ii) exercise or
waive any of the Company's rights or remedies hereunder, (iii) extend the time
for performance of Merger Sub's obligations hereunder or (iv) take any other
action by the Company in connection with this Agreement required to be taken by
the Board of Directors.
ARTICLE IV
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
--------------------------------------------
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
------------------------------------------------------
4.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Company
Common Stock or the holder of any shares of the capital stock of Merger Sub, the
Merger shall have the following effects on such shares of capital stock:
(a) Capital Stock of Merger Sub. Each share of the capital stock
of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of
Company Common Stock.
(b) Conversion of Company Common Stock. Each share of Common
Stock, par value $0.01 per share ("Company Common Stock"),
of the Company, issued and outstanding immediately prior to
the Effective Time (excluding Dissenting Shares, if any),
shall be converted into the right to receive $6.00 net to
seller in cash without interest (the "Merger
Consideration"). All such shares, by virtue of the Merger,
shall no longer be outstanding and shall be canceled and
retired and shall cease to exist.
(c) No Rights as Shareholders After Effective Time. On and after
the Effective Time, holders of certificates which
immediately prior to the Effective Time represented
outstanding shares of Company Common Stock shall cease to
have any rights as shareholders of the Company except the
right to receive the consideration set forth in this Article
IV for each such share held by them or, if applicable,
payments due to holders of Dissenting Shares, if any, in
accordance with Section 4.2(d).
4.2 EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Prior to the Effective Time, Acquiror shall
designate a bank or trust company to act as exchange agent
in the Merger which shall be reasonably satisfactory to the
Company (the "Exchange Agent"), and Acquiror shall make
available to the Exchange Agent for the benefit of the
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<PAGE> 17
holders of shares of Company Common Stock for exchange in
accordance with this Article IV, through the Exchange Agent,
the Merger Consideration deliverable pursuant to Section
4.1(b) in exchange for outstanding shares of Company Common
Stock (the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the Merger
Consideration deliverable pursuant to Section 4.1(b) out of
the Exchange Fund upon the holder's satisfaction of the
exchange procedures set forth in subsection (b) below.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, Acquiror shall instruct the Exchange
Agent to mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time
evidenced outstanding shares of Company Common Stock (the
"Certificates"), (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 proper
delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Acquiror
reasonably may 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 for cancellation to the Exchange Agent, together
with such letter of transmittal, duly executed and completed
in accordance with the instructions thereto, and such other
customary documents as may be required by the Exchange
Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor payment evidencing the Merger
Consideration, less any required tax withholdings, and the
Certificates so surrendered shall forthwith be canceled. No
interest will be paid or will accrue on the amount payable
upon the surrender of any such Certificate. If payment is to
be made to a person other than the registered holder of the
Certificate surrendered, it shall be a condition of such
payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to
a person other than the registered holder of the Certificate
surrendered or establish to the satisfaction of the
Surviving Corporation or the Exchange Agent that such tax
has been paid or is not applicable. One hundred and eighty
days following the Effective Time, the Surviving Corporation
shall be entitled to cause the Exchange Agent to deliver to
it any funds (including any interest received with respect
thereto) made available to the Exchange Agent which have not
been disbursed to holders of Certificates formerly
representing Company Common Stock outstanding on the
Effective Time or Options outstanding, and thereafter such
holders shall be entitled to look to the Surviving
Corporation only as general creditors thereof with respect
to the cash payable upon due surrender of their
Certificates. The Surviving
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<PAGE> 18
Corporation shall pay all charges and expenses, including
those of the Exchange Agent, in connection with the exchange
of cash for Company Common Stock.
(c) Transfer Books. After the Effective Time, there shall be no
transfers on the stock transfer books of the Surviving
Corporation of any shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If,
after the Effective Time, certificates for such shares of
Company Common Stock are presented to the Surviving
Corporation, they shall be canceled and exchanged as
provided in this Section 4.2 subject to the satisfaction of
the exchange procedures set forth above and the MBCA in the
case of Dissenting Shares.
(d) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock
which immediately prior to the Effective Time are held by
shareholders who have properly exercised and perfected
appraisal rights under Section 302A.473 of the MBCA (the
"Dissenting Shares"), shall not be converted into the right
to receive the Merger Consideration, but the holders of
Dissenting Shares shall be entitled to receive such
consideration as shall be determined pursuant to Section
302A.473 of the MBCA; provided, however, that if any such
holder shall have failed to perfect or shall withdraw or
lose his right to appraisal and payment under the MBCA, such
holder's shares of Company Common Stock shall thereupon be
deemed to have been converted as of the Effective Time into
the right to receive the Merger Consideration, without any
interest thereon, and such shares of Company Common Stock
shall no longer be Dissenting Shares. The Company shall give
Acquiror notice of any Dissenting Shares and Acquiror shall
have the right to participate in all negotiations and
proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the
prior written consent of Acquiror, voluntarily make any
payment with respect to, or settle or offer to settle, any
such demand for payment.
(e) No Liability. None of Company, Acquiror or Merger Sub shall
be liable to any holder of shares of Company Common Stock
for such cash that has been delivered to a public official
pursuant to any applicable abandoned property, escheat or
similar laws.
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<PAGE> 19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to Acquiror and Merger Sub
that except as set forth in the schedules referred to herein or in a separate
general schedule (the "General Disclosure Schedule"):
5.1 ORGANIZATION, STANDING AND CORPORATE POWER. The Company is a
corporation duly organized and validly existing and is in good standing under
the laws of the jurisdiction in which it is organized and has the requisite
corporate power and authority to carry on its business as now being conducted.
The Company is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualifications or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed (individually or in the aggregate) would not have a Material Adverse
Effect on the Company. The Company has delivered to Acquiror complete and
correct copies of the Articles of Incorporation and bylaws, or similar
organizational documents, of the Company, in each case as amended to the date of
this Agreement, all of which are in full force and effect.
5.2 SUBSIDIARIES. The Company has no Subsidiaries.
5.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 25,000,000 shares of Company Common Stock and no shares of preferred
stock. As of June 10, 1997, (i) 6,989,456 of Company Common Stock were issued
and outstanding, and (ii) 815,459 shares of Company Common Stock were reserved
for issuance upon exercise of outstanding Options. Except as set forth above, no
shares of common stock or other voting or equity securities of the Company are
reserved for issuance. Except as set forth in Schedule 5.3, there are no
outstanding stock appreciation rights and there are no other outstanding
contractual rights the value of which is derived from the financial performance
of the Company or the value of shares of Company Common Stock. All outstanding
shares of Company Common Stock are duly authorized, validly issued, fully paid
and nonassessable and are not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which shareholders of the Company may vote. Except as set
forth above there are no outstanding securities, options, warrants, calls,
rights, commitments, subscriptions, agreements, voting trusts, arrangements or
undertakings of any kind to which the Company is a party or by which the Company
is bound, obligating the Company to issue, deliver or sell or cause to be
issued, delivered or sold, additional shares of capital stock or other voting or
equity securities of the Company or obligating the Company to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking or to vote any such security.
Except as set forth on Schedule 5.3, there are no outstanding contractual
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<PAGE> 20
obligations of the Company to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company.
5.4 AUTHORITY; ENFORCEABILITY; NO CONFLICTS; AND CONSENTS.
(a) The Company has the requisite corporate power and authority
to enter into this Agreement and, subject to obtaining the
Company Shareholder Approval, to consummate the transactions
contemplated by this Agreement. The execution and delivery
of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action
on the part of the Company, subject, in the case of the
consummation of the Merger, to adoption of this Agreement by
the holders of a majority of the outstanding shares of
Company Common Stock (the "Company Shareholder Approval"),
at a special meeting of the holders of Company Common Stock.
This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes the valid
and binding obligations of Acquiror and Merger Sub,
constitutes the valid and binding obligations of the
Company, enforceable against the Company in accordance with
its terms.
(b) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any breach
or violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation
or cause loss of a material benefit under, or result in the
creation or maturation of any Encumbrance or purchase right
upon any of the properties or assets of the Company under,
(i) the Articles of Incorporation or Bylaws of the Company,
(ii) other than severance agreements, severance plans and
employment agreements disclosed in the Company SEC
Documents, the Options or as set forth in Schedule 5.4 and
subject to the governmental filings and other matters
referred to in Section 5.4(c), any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
arrangement, obligation, instrument, concession, franchise,
permit or license applicable to the Company or its
properties or assets or (iii) subject to the governmental
filings and other matters referred to in Section 5.4(c), any
judgment, order, award, decree, statute, law, ordinance,
rule or regulation applicable to the Company or its
properties or assets, other than, in the case of clauses
(ii) or (iii), any such conflicts, violations, defaults,
rights or liens that individually or in the aggregate would
not (X) have a Material Adverse Effect on the Company, (Y)
impair, in any material respect, the ability of the Company
to perform its obligations under
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<PAGE> 21
this Agreement or (Z) prevent or significantly delay the
consummation of any of the transactions contemplated by this
Agreement.
(c) No consent, approval, order, permit or authorization of, or
registration, declaration or filing with, any Governmental
Authority is required by the Company in connection with the
execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions
contemplated by this Agreement, 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 (the "HSR Act"), (ii) as required by the Exchange Act
and Chapter 80B of the Minnesota Statutes, (iii) the filing
of the Articles of Merger with the Secretary of State of the
State of Minnesota and appropriate documents with the
relevant authorities of other states in which the Company is
qualified to do business, and (iv) such other consents,
approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained
or made would not, individually or in the aggregate, (X)
have a Material Adverse Effect on the Company, (Y) impair,
in any material respect, the ability of the Company to
perform its obligations under this Agreement or (Z) prevent
or significantly delay the consummation of the transactions
contemplated by this Agreement.
5.5 VOTE REQUIRED. The Company Shareholder Approval is the only vote of
the holders of the Company's capital stock necessary to approve this Agreement
and the transactions contemplated hereby.
5.6 COMPLIANCE WITH APPLICABLE LAWS.
(a) The Company has in effect all Federal, state, local and
foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices,
permits and rights, including all authorizations under
Environmental Laws ("Permits"), necessary for it to own,
lease or operate its properties and assets and to carry on
its business as now conducted other than such Permits the
absence of which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company,
and there has occurred no default under any such Permit
other than such defaults which, individually or in the
aggregate, would not have a Material Adverse Effect on the
Company. Except as disclosed in the Company SEC Documents
filed and publicly available prior to the date of this
Agreement and the General Disclosure Schedule, the Company
is in compliance with all Applicable Laws, except for such
noncompliance which, individually or in the aggregate, would
not have a Material Adverse Effect on the Company. No
investigation or review by any Governmental Authority
concerning any such possible noncompliance
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<PAGE> 22
by the Company is pending or, to the knowledge of the
Company, threatened.
(b) The Company is, and has been, in compliance with all
applicable Environmental Laws, except as set forth on
Schedule 5.6 and except for such noncompliance which,
individually or in the aggregate, would not have a Material
Adverse Effect on the Company.
(c) There have been no Releases of Hazardous Substances in, on,
under or affecting any properties currently or formerly
owned, operated, or leased by the Company in violation of,
or as would reasonably be anticipated to result in liability
under, applicable Environmental Laws, and the Company has
not disposed of any Hazardous Substances or any other
substance in a manner that has led to, or could reasonably
be anticipated to lead to, a Release in violation of
applicable Environmental Laws except, in each case, as
disclosed on Schedule 5.6.
5.7 COMPANY SEC DOCUMENTS; UNDISCLOSED LIABILITIES.
(a) The Company has delivered to Acquiror each registration
statement, schedule, report, proxy statement or information
statement prepared by it since it became obligated to file
with the SEC, including, without limitation, (i) the
Company's Annual Reports on Form 10-K (ii) the Company's
Quarterly Reports on Form 10-Q and periodic Reports on Form
8-K and (iii) the Company's Proxy Statements, each in the
form (including exhibits and any amendments thereto) filed
with the SEC (collectively together with any similar
documents or documents filed by the Company with the SEC
pursuant to the terms hereof, the "Company SEC Documents")
which documents are all filings required to be made by the
Company during such period. As of their respective dates,
(i) the Company SEC Documents (including any financial
statements filed as a part thereof or incorporated by
reference therein) complied, and any Company SEC Documents
filed with the SEC subsequent to the date hereof will
comply, in all material respects with the requirements of
the Securities Act or the Exchange Act, as applicable, to
such Company SEC Documents, and (ii) none of the Company SEC
Documents contained or will contain at the time of filing
any untrue statement of a material fact or omitted or will
omit at the time of filing to state a material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are
made, not misleading. Each of the balance sheets included in
or incorporated by reference into the Company SEC Documents
(including the related notes and schedules) fairly presents
the financial position of the Company as of its date and
each of the statements of income, of
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<PAGE> 23
shareholders' equity and of cash flows included in or
incorporated by reference into the Company SEC Documents
(including the related notes and schedules) fairly presents
the results of operations, retained earnings and cash flows,
as the case may be, of the Company for the periods set forth
therein (subject to, in the case of unaudited statements,
normal year-end audit adjustments which will not be material
in amount or effect), in each case in accordance with GAAP
consistently applied during the periods involved, except as
may be noted therein. Other than the Company SEC Documents,
the Company has not filed any other definitive reports or
statements with the SEC between June 30, 1996 and the date
hereof.
(b) Except as disclosed in the Company SEC Documents filed and
publicly available prior to the date of this Agreement or in
the Company Disclosure Schedule, the Company does not have
any material indebtedness, obligations or liabilities of any
kind (whether accrued, absolute, contingent or otherwise)
(i) required by GAAP to be reflected on a balance sheet of
the Company or in the notes, exhibits or schedules thereto
(except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice
since March 31, 1997) or (ii) which reasonably could be
expected to have a Material Adverse Effect on the Company.
5.8 ABSENCE OF CHANGES OR EVENTS. Except as disclosed in the Company
SEC Documents filed and publicly available prior to the date of this Agreement
or as set forth in the Company Disclosure Schedule or permitted by Section 7.1
of this Agreement, since March 31, 1997, the Company has conducted its business
only in the ordinary course, and there has not been (i) any change or occurrence
(other than those which relate to the industries the Company operates in
generally or the economy in general) which resulted in or is reasonably likely
to have a Material Adverse Effect on the Company, (ii) any declaration, setting
aside or payment of any dividend or other distribution with respect to the
Company Common Stock, (iii) any issuance of any shares of Company Common Stock
or other capital stock of the Company or any securities convertible into or
exchangeable or exercisable for capital stock of the Company, (iv) any split,
combination or reclassification of any of the capital stock of the Company or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock of the
Company, (v) (X) any granting by the Company to any director or officer of the
Company of any increase in compensation, except as required under employment
agreements, (Y) any granting by the Company to any such person of any increase
in severance or termination pay, except as disclosed in Schedule 5.8 or, (Z) any
entry by the Company into any employment, severance or termination agreement
with any such person, (vi) other than those listed on Schedule 5.8, any
acquisition of or commitment to purchase or build any property or project
involving an expenditure in excess of $1 million in the aggregate, (vii) any
damage, destruction or loss not covered by insurance, that has or reasonably
could be expected to have a Material Adverse Effect on the Company or (viii) any
change in accounting methods,
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<PAGE> 24
principles or practices by the Company affecting its assets, liabilities or
business, except insofar as may have been required by a change in GAAP.
5.9 LITIGATION. Except as disclosed in Schedule 5.9 or in the Company
SEC Documents filed and publicly available prior to the date of this Agreement,
there are no Legal Proceedings pending against the Company or, to the knowledge
of the Company, threatened that, individually or in the aggregate, could
reasonably be expected to (i) have a Material Adverse Effect on the Company, or
(ii) prevent, or significantly delay, the consummation of the transactions
contemplated by this Agreement. Except as disclosed in Schedule 5.9 or as set
forth in the Company SEC Documents filed and publicly available prior to the
date of this Agreement, there is no judgment, order, injunction or decree of any
Governmental Authority outstanding against the Company.
5.10 TAXES. Except as disclosed in Schedule 5.10:
(a) The Company, and each affiliated group (as defined in
Section 1504(a) of the Code without regard to the
limitations of Section 1504(b) of the Code) of which the
Company is or has ever been a member, has timely filed all
Federal income Tax Returns and all other material Tax
Returns and reports required to be filed by it, and such Tax
Returns and reports are complete and accurate in all
material respects. The Company is entitled to file and be
included in a federal income tax return in accordance with
the requirements therefor prescribed in the Code. The
Company has paid all taxes shown due on such Tax Returns.
The most recent financial statements contained in the
Company SEC Documents reflect an adequate reserve for all
Taxes payable by the Company for all taxable periods and
portions thereof through the date of such financial
statements.
(b) No material deficiencies for any Taxes and no deficiencies
for any federal or state income taxes have been proposed,
asserted or assessed against the Company that have not been
fully paid or adequately provided for in the appropriate
financial statements of the Company, no requests for waivers
or extensions of the time to assess any Taxes are pending,
and no such waivers or extensions have been agreed to by the
Company. No material issues relating to Taxes have been
raised in writing by the relevant taxing authority during
any presently pending audit or examination, and no
representative of the Company has any knowledge or
information that any relevant taxing authority is
contemplating raising any such material issue relating to
Taxes.
(c) No liens for Taxes exist with respect to any assets or
properties of the Company, except for statutory liens for
Taxes not yet due.
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<PAGE> 25
(d) The Company is not a party to or obligated under any tax
sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes
(including any advance pricing agreement, closing agreement
or other agreement relating to Taxes with any taxing
authority).
(e) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without
limitation, as a result of any termination of employment
prior to or following the Effective Time) none of Acquiror,
Merger Sub, the Company or the Surviving Corporation, or any
of their respective Subsidiaries will be obligated to make a
payment to an individual employed by the Company who is a
"disqualified individual", that would be characterized as an
"excess parachute payment" (as such terms are defined in
Section 280G of the Code) without regard to whether such
payment is reasonable compensation for personal services
performed or to be performed in the future; and the Company
otherwise has not made or has or will not become obligated
to make any such payment.
(f) The Company has complied in all material respects with all
applicable laws, rules and regulations relating to the
payment and withholding of Taxes. No tax is required to be
withheld pursuant to Section 1445 of the Code as a result of
the transactions contemplated by this Agreement.
(g) No Federal, state, local or foreign audits or other
administrative proceedings or court proceedings are
presently pending with regard to any Federal income or
material state, local or foreign Taxes or Tax Returns of the
Company and the Company has not received a written notice of
any material pending audit or proceeding, nor does the
Company or any representative of the Company have any
knowledge or information that any such audit or proceeding
is contemplated by any relevant taxing authority.
(h) The Company has not agreed or is required to make any
adjustment under Section 481(a) of the Code.
(i) The Company has not, with regard to any assets or property
held or acquired by it, filed a consent to the application
of Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by the Company.
(j) No property owned by the Company (i) is property required to
be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code
of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986; (ii)
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<PAGE> 26
constitutes "tax exempt use property" within the meaning of
Section 168(h)(1) of the Code; or (iii) is "tax exempt bond
financed property" within the meaning of Section 168(g) of
the Code.
(k) The Company has never been a member of an affiliated group
of corporations within the meaning of section 1504 of the
Code.
(l) The Company is not and has not been a party to any joint
venture, partnership, limited liability company, or any
other arrangement or contract that could be treated as a
partnership for purposes of any Tax.
(m) All material elections with respect to Taxes affecting the
Company are set forth in Schedule 5.10.
(n) The Company does not have and has not had a "permanent
establishment" in any foreign country, as such term is
defined in any applicable Tax treaty or convention between
the United States and such foreign country.
5.11 EMPLOYEE BENEFITS.
(a) Schedule 5.11(a) contains a complete and accurate list of
all pension, retirement, savings, disability, medical,
dental, health, life (including without limitation any
individual life insurance policy under which any employee,
former employee, officer or director of Company is the named
insured and as to which Company makes premium payments,
whether or not Company is the owner, beneficiary or both of
such policy), death benefit, group insurance,
profit-sharing, deferred compensation, stock option, stock
purchase, bonus, incentive, vacation pay, holiday pay,
severance pay, personal leave, employee discounts,
perquisites, educational benefit or similar programs, or
other employee benefit plan, trust, arrangement, contract,
agreement, policy or commitment (including, without
limitation, any pension plan as defined in Section 3(2) of
ERISA ("Pension Plan"), any multiemployer plan within the
meaning of Sections 4001 and 3(37) of ERISA ("Multiemployer
Plan") and any welfare plan as defined in Section 3(1) of
ERISA ("Welfare Plan")), whether or not any of the foregoing
is funded or insured and whether written or oral now or
heretofore maintained, or contributed to, by the Company or
any ERISA Affiliate for the benefit of any current or former
employee, director or officer of the Company (the
"Employees") or other Persons (all of the foregoing being
herein called the "Employee Benefit Plans"). Except as set
forth in Schedule 5.11(a), neither the Company nor any of
its ERISA Affiliates has any formal plan to create any
additional material Employee Benefit Plan or to modify or
change any existing Employee Benefit Plan in a material
respect.
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<PAGE> 27
(b) Except as set forth in Schedule 5.11(b), each Employee
Benefit Plan has been operated and administered in all
respects in accordance with its terms and with applicable
law, including, but not limited to, ERISA, and the Code, and
all filings, disclosures and notices required by ERISA or
the Code (including notices under Section 4980B of the Code)
have been timely made. Each Pension Plan which is intended
to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal
Revenue Service with respect to the plan and trust documents
and all amendments thereto prior to the expiration of the
applicable remedial amendment period for such Employee
Benefit Plan, and the Company is not aware of any
circumstances likely to result in revocation of any such
favorable determination letter. Except as set forth in
Schedule 5.11(b), there is no pending or, to the best
knowledge of the Company, threatened legal action, suit or
claim relating to the Employee Benefit Plans. The Company
has not engaged in a transaction with respect to any
Employee Benefit Plan that, assuming the taxable period of
such transaction expired as of the date hereof, would
reasonably be expected to subject the Company to a tax or
penalty imposed by either Section 4975 of the Code or
Section 502(i) of ERISA.
(c) No liability to the Pension Benefit Guaranty Corporation
(the "PBGC") or otherwise with respect to the termination of
a plan under Title IV of ERISA has been or is expected to be
incurred by the Company or any ERISA Affiliate with respect
to any Pension Plan that is an ongoing, frozen or terminated
"single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, other than liability for payment of
PBGC premiums. The Company and its ERISA Affiliates do not
have any liability for and do not expect to incur any
withdrawal liability with respect to any Multiemployer Plan
under Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate) or any liability in
connection with the reorganization or termination of any
Multiemployer Plan. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been waived, has been
required to be filed for any Employee Benefit Plan or by any
ERISA Affiliate Plan within the 12-month period ending on
the date hereof. The PBGC has not instituted proceedings to
terminate any Pension Plan and, to the Company's knowledge,
no condition exists that presents a material risk that such
proceedings will be instituted.
(d) To the best knowledge of the Company, (i) all contributions
required to be made under the terms of any Employee Benefit
Plan or any collective bargaining agreement have been timely
made or properly reflected on the books of the Company. To
the best knowledge of the Company, (i) no
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<PAGE> 28
Pension Plan has or reasonably expects to have an
"accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302
of ERISA; and (ii) all required payments to the PBGC with
respect to each Pension Plan have been made on or before
their due dates. Neither the Company nor any ERISA Affiliate
has provided, or is required to provide, security to any
Pension Plan pursuant to Section 401(a)(29) of the Code.
(e) As of the last day of the most recent prior plan year, the
market value of assets of each Pension Plan which is a
single employer plan covered under Title IV of ERISA (a
Title IV Plan) equaled or exceeded (and will, as of the
Closing Date, equal or exceed) the present value of "benefit
liabilities" (within the meaning of ERISA Section
4001(a)(16)) thereunder determined in accordance with both
(1) the Title IV Plan's actuarial valuation assumptions in
effect for such prior plan year, and (2) the provisions of
Title IV of ERISA on a Title IV Plan termination basis
(assuming such Title IV Plan terminated on each of such
dates).
(f) Except as set forth on Schedule 5.11(f), the Company has no
obligations to provide retiree health and life benefits
under any Employee Benefit Plan, other than benefits
mandated by Section 4980B of the Code.
(g) Except as set forth on Schedule 5.11(g), the Company does
not maintain any Employee Benefit Plans covering foreign
Employees, and all such Employee Benefit Plans are in
compliance with applicable local law and, are funded in
accordance with applicable law.
(h) With respect to each Employee Benefit Plan, the Company has
provided or will make available to Acquiror upon request, if
applicable, true and complete copies of existing: (a) plan
documents and amendments thereto; (b) trust instruments and
insurance contracts; (c) Forms 5500 filed with the IRS
during the preceding five (5) years; (d) most recent
actuarial valuation report and financial statement; (e) the
most recent summary plan description; (f) forms filed with
the PBGC during the preceding five (5) years; (g) post-1988
determination letters issued by the IRS; (h) any Form 5310
or Form 5330 filed with the IRS; and (i) nondiscrimination
tests performed under ERISA and the Code (including 401(k)
and 401(m) tests) during the preceding five (5) years.
(i) Except as set forth on Schedule 5.11(i), the consummation of
the transactions contemplated by this Agreement would not
reasonably be expected to, directly or indirectly, (A)
entitle, any Employee to severance pay, unemployment
compensation or any other severance payment, (B) result in
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any payment becoming due or increase the amount of
compensation due to any Employee, (C) increase the benefits
payable under any Employee Benefit Plan or (D) result in the
acceleration of the time of payment or the vesting of any
benefits under any Employee Benefit Plan.
5.12 TITLE TO PROPERTIES. Schedule 5.12 sets forth a complete list of
all material real property owned in fee by the Company and sets forth all
material real property leased by the Company as lessee as of the date hereof
(such owned and leased material real property, including all Improvements,
referred to collectively as the "Real Property"). Except as set forth in
Schedule 5.12, each of the Company has good and valid title to, or a valid
leasehold interest in, the Real Property held by it. Except as set forth in
Schedule 5.12, the Real Property is free of Encumbrances, except for Permitted
Encumbrances, and the consummation of the transactions contemplated by this
Agreement will not create any Encumbrance on any of the Real Property which,
individually or in the aggregate, would have a Material Adverse Effect on the
Company. The Company enjoys peaceful and undisturbed possession under all leases
of Real Property, except for such breaches of the right to peaceful and
undisturbed possession that do not materially interfere with the ability of the
Company to conduct its business.
5.13 INSURANCE. All insurance policies identified in Schedule 5.13 and
relating to the business of the Company are in full force and effect, and the
Company is not in default under any of them.
5.14 LABOR MATTERS. Except as set forth in Schedule 5.14, the Company
is not the subject of any material proceeding asserting that the Company has
committed an unfair labor practice or is seeking to compel it to bargain with
any labor union or labor organization nor is there pending or, to the knowledge
of the management of the Company, threatened, nor has there been for the past
five years, any material labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Company. Except as set forth in Schedule
5.14, the Company is not a party to or otherwise bound by any labor or
collective bargaining agreements.
5.15 INTELLECTUAL PROPERTY.
(a) The Company owns, or is licensed or otherwise possesses
legally enforceable rights to use all patents, trademarks,
trade names, service marks, copyrights, and any applications
therefor, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary
information or materials that are used in the business of
the Company as currently conducted, except for any such
failures to own, be licensed or possess that, individually
or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on the Company.
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<PAGE> 30
Except as disclosed in Schedule 5.15 or the Company SEC Documents or as is not
reasonably likely to have a Material Adverse Effect on the Company:
(i) The Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the
performance of its obligations hereunder, in
violation of any licenses, sublicenses and other
agreements as to which the Company is a party and
pursuant to which the Company is authorized to use
any third-party patents, trademarks, service marks,
and copyrights ("Third-Party Intellectual Property
Rights");
(ii) No claims with respect to the patents, registered and
material unregistered trademarks and service marks,
registered copyrights, trade names, and any
applications therefor owned by the Company (the
"Company Intellectual Property Rights"), any trade
secret material to the Company, or Third Party
Intellectual Property Rights to the extent arising
out of any use, reproduction, or distribution of such
Third Party Intellectual Property Rights by or
through the Company, are currently pending or, to the
knowledge of the management of the Company, are
overtly threatened by any person;
(iii) the Company does not know of any valid grounds for
any material bona fide claims (A) to the effect that
the manufacture, sale, licensing or use of any
product as now used, sold or licensed or proposed for
use, sale or license by the Company, infringes on any
copyright, patent, trademark, service mark, or trade
secret; (B) against the use by the Company of any
trademarks, trade names, trade secrets, copyrights,
patents, technology, know-how, or computer software
programs and applications used in the business of the
Company as currently conducted or as proposed to be
conducted; (C) challenging the ownership, validity,
or effectiveness of any of the Company Intellectual
Property Rights or other trade secret material to the
Company; or (D) challenging the license or legally
enforceable right to use of the Third Party
Intellectual Property Rights by the Company;
(iv) to the knowledge of the management of the Company,
all material patents, registered trademarks and
service marks, and copyrights held by the Company are
valid, enforceable and subsisting; and
(v) to the knowledge of the management of the Company,
there is no material unauthorized use, infringement
or misappropriation of any of the Company
Intellectual Property Rights by any third party,
including any employee or former employee of the
Company.
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<PAGE> 31
5.16 NO RESTRICTIONS ON THE OFFER OR THE MERGER. No state takeover
statute or similar statute or regulation, including without limitation Sections
302A.671 to 302A.675 of the MBCA, and no provision of the articles of
incorporation, by-laws or other governing instruments (including, without
limitation any shareholder control agreement contemplated by Section 302A.457 of
the MBCA) of the Company (i) imposes restrictions materially adversely affecting
(or materially delaying) the consummation of the Offer or the Merger or (ii)
would, as a result of the Offer, the Merger, the transactions contemplated
hereby or the acquisition of securities of the Company or the Surviving
Corporation by Acquiror or Merger Sub, (A) restrict or impair the ability of
Acquiror to vote or otherwise to exercise the rights of a stockholder with
respect to securities of the Company or the Surviving Corporation that may be
acquired or controlled by Acquiror or (B) entitle any person, entity or group to
acquire securities of the Company or the Surviving Corporation on a basis not
available to Acquiror. A committee of the Board of Directors of the Company has
approved the Offer and Merger in satisfaction of Sections 302A.011, subdivision
38, paragraph (h), and 302A.673, subdivision 1, paragraph (a), of the MBCA.
5.17 DISPOSITIONS. Except as set forth in Schedule 5.17, as of the date
hereof the Company has not received any claims for indemnification,
contribution, breach or otherwise that are unresolved with respect to any
businesses, corporations, properties or assets (other than inventory sold in the
ordinary course) sold by it.
5.18 BROKERS AND INTERMEDIARIES. No broker, investment banker,
financial advisor or other person, other than Dain Bosworth Incorporated and
Sampson Associates, Inc.(whose fee arrangements have been disclosed to Acquiror
in writing and will not be modified subsequent to the date of this Agreement
except as to Dain Bosworth Incorporated to the extent requested by the Board of
Directors of the Company as necessary or desirable to assist the Board of
Directors in the exercise of its fiduciary duties to the Company's shareholders
under Applicable Law in connection with an expansion of Dain Bosworth
Incorporated's engagement), the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
5.19 OPINION OF FINANCIAL ADVISOR. The Board of Directors of the
Company has received the opinion of Dain Bosworth Incorporated to the effect
that, as of the date of this Agreement, the cash consideration to be received in
the Offer and the Merger by the holders of Company Common Stock (other than
Acquiror and its affiliates) is fair to such holders from a financial point of
view.
5.20 TRANSACTIONS WITH AFFILIATES. Other than the transactions
contemplated by this Agreement and except to the extent disclosed in the Company
SEC Documents or as set forth in Schedule 5.20, from January 1, 1995 through the
date of this Agreement, there have been no transactions, agreements,
arrangements or understandings between the Company, on
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<PAGE> 32
the one hand, and the Company's affiliates or other Persons, on the other hand,
that would be required to be disclosed under Item 404 of Regulation S-K under
the Securities Act.
5.21 BUSINESS RELATIONS. Except as set forth in Schedule 5.21, since
June 30, 1996, none of the suppliers or vendors for which Company distributes
any material amount of products has advised the Company that it has or intends
to cease to use Company as a supplier of such products, no significant business
relationships which Company has with such principal suppliers or vendors has
been terminated or materially adversely affected, and Company has not been
advised that any such business relationship may be terminated or materially
adversely affected by any such principal supplier or vendor. Except as set forth
in Schedule 5.21, since June 30, 1996, none of the customers of Company which in
the Company's 1996 Fiscal Year purchased $500,000 or more of the Company's
products has advised the Company that it has or intends to cease to use Company
as a supplier of products or has or intends to modify any significant business
relationships with the Company in a materially adverse manner, and Company has
not been advised that any such business relationship may be terminated or may be
materially adversely affected by any such principal customer.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB
---------------------------------------------------------
Acquiror and Merger Sub each hereby represents and warrants to the
Company as follows:
6.1 ORGANIZATION, STANDING AND CORPORATE POWER. Each of Acquiror and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has the
requisite corporate power and authority to carry on its business as now being
conducted. Each of Acquiror and Merger Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualifications
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) would not have a
Material Adverse Effect on Acquiror. Acquiror and Merger Sub each has delivered
to the Company complete and correct copies of its Articles of Incorporation and
by-laws (or comparable charter documents) in each case as amended to the date of
this Agreement.
6.2 AUTHORITY; ENFORCEABILITY; NO CONFLICTS AND CONSENTS.
(a) Each of Acquiror and Merger Sub has the requisite corporate
power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement.
The execution and delivery of this
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<PAGE> 33
Agreement by Acquiror and Merger Sub and the consummation by
Acquiror and Merger Sub of the transactions contemplated by
this Agreement have been duly authorized by all necessary
corporate action on the part of Acquiror and Merger Sub.
This Agreement has been duly executed and delivered by
Acquiror and Merger Sub and, assuming this Agreement
constitutes the valid and binding obligations of the
Company, constitutes valid and binding obligations of each
of Acquiror and Merger Sub, enforceable against Acquiror and
Merger Sub in accordance with its terms.
(b) The execution and delivery of this Agreement do not, and the
consummation of the transaction contemplated by this
Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of
termination, cancellation, or acceleration of any obligation
or cause loss of a material benefit under, or result in the
creation or maturation of any Encumbrance or purchase right
upon any of the properties or assets of Acquiror or Merger
Sub under, (i) the Articles of Incorporation or by-laws (or
comparable charter documents) of Acquiror or Merger Sub,
(ii) subject to the governmental filings and other matters
referred to in Section 6.2(c), any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to Acquiror or Merger Sub or (iii) subject to the
governmental filings and other matters referred to in
Section 6.2(c), any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Acquiror or
Merger Sub or their respective properties or assets, other
than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights or liens that
individually or in the aggregate would not (Y) impair, in
any material respect, the ability of Acquiror or Merger Sub
to perform its obligations under this Agreement or (Z)
prevent or significantly delay the consummation of any of
the transactions contemplated by this Agreement.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental
Authority is required by Acquiror or Merger Sub in
connection with the execution and delivery of this Agreement
or the consummation by Acquiror of any of the transactions
contemplated by this Agreement, except for (i) the filing of
a premerger notification and report form by Acquiror under
the HSR Act, (ii) such reports and filings under the
Exchange Act and Chapter 80B of the Minnesota Statutes as
may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the
filing of the Articles of Merger with the Minnesota
Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is
qualified to do
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<PAGE> 34
business, (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not,
individually or in the aggregate, (Y) impair, in any
material respect, the ability of Acquiror or Merger Sub to
perform its obligations under this Agreement or (Z) prevent
or significantly delay the consummation of the transactions
contemplated by this Agreement.
6.3 BROKERS. No broker, investment banker, financial advisor or other
person, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Acquiror.
6.4 OWNERSHIP OF SHARES. As of the date of this Agreement Acquiror and
its Affiliates own 320,200 shares of Company Common Stock.
6.5 FINANCING. Either Acquiror or Merger Sub has or will have
sufficient funds available to purchase all of the Company Common Stock
outstanding on a fully diluted basis and to pay all related fees and expenses.
Acquiror has furnished the Company with a commitment from financial
institution(s) to provide such funds and will either maintain such commitment
letter in force until the earlier of completion of purchase of all of the
Company Common Stock or creation of the Exchange Fund or replace such commitment
with a similar commitment in form and substance satisfactory to the Company.
ARTICLE VII
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
7.1 CONDUCT OF BUSINESS OF THE COMPANY. The Company shall carry on its
business in the ordinary course and use its best efforts to preserve intact its
current business organizations, keep available the services of its current
officers and key employees and preserve its relationships consistent with past
practice with customers, suppliers and others having business dealings with it
to the end that its goodwill and ongoing business shall be unimpaired in all
material respects at the Effective Time. Without limiting the generality of the
foregoing, prior to the Effective Time, except as otherwise provided by the
terms of this Agreement, the Company shall not, without the written consent of
Acquiror, which consent may not be unreasonably withheld:
(i) (A) declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of
its capital stock, (B) split, combine or reclassify
any of its capital stock or, except pursuant to the
exercise of Options existing on the date hereof,
issue or authorize the issuance of any other
securities in respect of, in lieu of or in
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<PAGE> 35
substitution for shares of its capital stock or
other equity interests or (C) purchase, redeem or
otherwise acquire or amend any shares of capital
stock or other equity interests of the Company or
any other securities thereof or any rights,
warrants or options to acquire any such shares,
interests or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber
or amend any shares of its capital stock, any other
voting securities or any securities convertible
into, or any rights, warrants or options to
acquire, any such shares, interests, voting
securities or convertible securities (other than
the issuance of Company Common Stock upon the
exercise of Options outstanding on the date of this
Agreement in accordance with their present terms);
(iii) amend its Articles of Incorporation, Bylaws or
other comparable charter or organizational
documents;
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing all or
substantially all of the assets of, or by any other
manner, any business or any corporation,
partnership, joint venture, association or other
business organization or division thereof or (B)
any assets except (x) purchases of inventory,
furnishings and equipment in the ordinary course of
business consistent in nature and amount with past
practice, (y) expenditures listed on Schedule 7.1
or (z) other expenditures in an amount not to
exceed $2,000 in any single instance or $25,000 in
the aggregate;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any lien or otherwise
dispose of any of its properties or assets, except
sales in the ordinary course of business consistent
with past practice;
(vi) (A) other than (1) ordinary course working capital
borrowings, of which not more than $3 million may
be outstanding at any one time plus amounts
necessary to make payments to holders of options
upon cancellation as is provided for in Section 8.6
of this Agreement, (2) borrowings required to
finance specific projects listed on Schedule 7.1,
incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person,
issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the
Company, guarantee any debt securities of another
person, enter into any "keep well" or other
agreement to maintain any financial statement
condition of another person or enter into any
arrangement having the economic effect of any of
the foregoing or (B) make any
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<PAGE> 36
loans, advances or capital contributions to, or
investments in, any other person other than
advances to employees, suppliers or customers in
the ordinary course of business consistent with
past practice;
(vii) pay, discharge, settle or satisfy any material
claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge,
settlement or satisfaction, (A) in the ordinary
course of business consistent with past practice or
(B) in accordance with their terms of liabilities
reflected or reserved against in the most recent
financial statements (or the notes thereto) of the
Company included in the Company SEC Documents filed
and publicly available prior to the date of this
Agreement or incurred in the ordinary course of
business consistent with past practice since the
date of such financial statements or waive the
benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to
which the Company is a party;
(viii) except as required to comply with Applicable Law,
(A) adopt, enter into, terminate or amend any
Employee Benefit Plan or other arrangement for the
benefit or welfare of any director, officer or
current or former employee including any collective
bargaining agreements or arrangements, (B) increase
in any manner the compensation or fringe benefits
of, or pay any bonus to, any director, officer or
employee (except for normal increases or bonuses as
contractually required pursuant to agreements
disclosed in the Company SEC Documents filed and
publicly available prior to the date of this
Agreement or in Schedule 5.8), grant any severance
or termination pay to, or enter into any employment
or severance agreement with any director, officer
or other employee of the Company or, (C) pay any
benefit subject to the requirements of ERISA that
is not provided for under any Employee Benefit
Plan, (D) except for payments or awards in cash
permitted by clause (B), grant any awards under any
bonus, incentive, performance or other compensation
plan or arrangement or Employee Benefit Plan
(including the grant of stock options, stock
appreciation rights, stock based or stock related
awards, performance units or restricted stock, or
the removal of existing restrictions in any
Employee Benefit Plans or agreements or awards made
thereunder) (E) take any action to fund or in any
other way secure the payment of compensation or
benefits under any employee plan, agreement,
contract or arrangement or Employee Benefit Plan
other than in the ordinary
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<PAGE> 37
course of business consistent with past practice,
(F) unless requested to do so by Acquiror, which
the Company agrees to do following the acquisition
of Company Common Stock in the Offer if so
requested by Acquiror, take any action to
accelerate the payment or vesting of compensation
or benefits under any employee plan, agreement,
contract or arrangement or Employee Benefit Plan,
or (G) establish, adopt, enter into, or make any
new grants or awards under or amend, any collective
bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock,
pension, retirement, employee stock ownership,
deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any
directors, officers or employees, including without
limitation, the Employees;
(ix) except in the ordinary course of business, modify,
amend or terminate any contract or agreement set
forth in the Company SEC Documents to which the
Company is a party or waive, release or assign any
material rights or claims;
(x) conduct its business in a manner or take, or cause
to be taken, any other action that would prevent or
materially delay the Company or Acquiror from
consummating the transactions contemplated hereby
in accordance with the terms of this Agreement
(regardless of whether such action would otherwise
be permitted or not prohibited hereunder),
including, without limitation, any action which may
materially limit the ability of the Company or
Acquiror to consummate the transactions
contemplated hereby as a result of antitrust or
other regulatory concerns; or
(xi) permit any insurance policy naming it as a
beneficiary or a loss payable payee to be canceled
or terminated without notice to Acquiror, except in
the ordinary and usual course of business;
(xii) make or amend any federal, state, or local Tax
election, agree to waive or extend any statute of
limitations, or resolve or agree to resolve any
audit or proceeding relating to Taxes that is
referenced in section 5.10 of this Agreement; or
(xiii) authorize any of, or commit or agree to take any
of, the foregoing actions.
7.2 ACCESS TO INFORMATION. The Company shall afford to Acquiror and
Merger Sub and to the officers, employees, accountants, counsel, financial
advisors and other
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<PAGE> 38
representatives of Acquiror and Merger Sub, reasonable access during normal
business hours (during the period prior to the Effective Time) to all its
properties, books, environmental reports, contracts, commitments, personnel,
consultants, customers, suppliers, accountants, attorneys, and records
(including the work papers of the Company's independent accountants) and, during
such period, the Company shall furnish promptly to the other party (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or state securities
laws and (b) all other information concerning its business, properties and
personnel as such other party may reasonably request provided, however, that (i)
no contact shall be made with any customers and suppliers of the Company other
than through a representative of the Company and (ii) the Company shall be
permitted to have a representative of the Company participate in any meetings or
discussions with any of the Company's customers and suppliers. Except as
required by Applicable Law, Acquiror and Merger Sub will hold, and will cause
its respective officers, employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic information in
confidence to the extent required by, and in accordance with, the provisions of
the letter, dated April 15, 1997, between the Company and Acquiror (the
"Confidentiality Agreement").
ARTICLE VIII
ADDITIONAL AGREEMENTS
---------------------
8.1 PREPARATION OF PROXY STATEMENT; SHAREHOLDERS' MEETING.
(a) If required following termination of the Offer, the Company
shall prepare and file with the SEC the Proxy Statement. The
Company shall use reasonable efforts to have the Proxy
Statement cleared by the SEC, as promptly as practicable
thereafter. The Proxy Statement shall not be filed, and no
amendment or supplement thereto will be made by the Company,
without consultation with Acquiror and its counsel.
(b) Each of the Company, Acquiror and Merger Sub covenants that
none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in the Proxy
Statement will, at the date it is first mailed to the
shareholders of the Company, or at the time of the Company
Shareholders' Meeting, 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 are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the
requirements of the Exchange Act. Notwithstanding the
foregoing, (i) no representation or covenant is made by the
Company with respect to statements made therein based on
information supplied in writing
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<PAGE> 39
by Acquiror or Merger Sub specifically for inclusion. If at
any time prior to the Effective Time there shall occur (i)
any event with respect to the Company, or with respect to
other information supplied by the Company for inclusion in
the Proxy Statement or (ii) any event with respect to
Acquiror or Merger Sub, or with respect to information
supplied by Acquiror or Merger Sub for inclusion in the
Proxy Statement, in either case which event is required to
be described in an amendment of, or a supplement to, the
Proxy Statement, such event shall be so described, and such
amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the shareholders of
the Company.
(c) The Company shall promptly notify Acquiror and Merger Sub of
the receipt of any comments from the SEC or its staff or any
other appropriate government official and of any requests by
the SEC or its staff or any other appropriate government
official for amendments or supplements to any of the filings
with the SEC in connection with the Merger and other
transactions contemplated hereby or for additional
information and shall supply Acquiror and Merger Sub with
copies of all correspondence between the Company or any of
its representatives, and the SEC or its staff or any other
appropriate government official, with respect thereto. The
Company shall use reasonable efforts to respond to any
comments of the SEC with respect to the Proxy Statement,
shall provide promptly to Acquiror and Merger Sub any
information such party may obtain that could necessitate
amending any such document and shall consult with counsel to
Acquiror with respect to such comments.
(d) If required following the termination of the Offer, the
Company shall take all action necessary in accordance with
Applicable Law and its Articles of Incorporation and Bylaws
to convene and hold a meeting of its shareholders (the
"Company Shareholders' Meeting") as promptly as practicable
for the purpose of obtaining the Company Shareholder
Approval. The Company shall, through its Board of Directors,
recommend to its shareholders the adoption of this Agreement
and the transactions contemplated hereby and shall use
reasonable efforts to solicit from its shareholders proxies
in favor of adoption of this Agreement and to take all other
lawful action necessary to secure the Company Shareholder
Approval. Notwithstanding the foregoing, the Company's
obligation to convene and hold the Company Shareholders'
Meeting and to recommend the adoption of this Agreement and
to solicit proxies from its shareholders shall be subject to
any action (including any withdrawal or change of its
recommendation) taken by, or upon authority of, the Board of
Directors of the Company which the Board of Directors
determines, based on the advice of outside legal counsel to
the Company, is
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<PAGE> 40
required in the exercise of its fiduciary duties to the
Company's shareholders under Applicable Law.
(e) If at any time after the satisfaction or waiver of the
conditions set forth in Article IX, Acquiror and Merger Sub
own ninety percent (90%) or more of the Company Common Stock
then outstanding, then the previous provisions of this
Section 8.1 shall not apply and, as soon as practicable
after the satisfaction or waiver of the conditions set forth
in Article IX, the parties hereto will cause the Merger to
be consummated by filing the Articles of Merger with the
Secretary of State of the State of Minnesota in accordance
with Sections 302A.621 and 302A.641 of the MBCA, and make
all other filings or recordings required by the MBCA in
connection with the Merger, including, without limitation,
the notice to shareholders required by Subdivision 2 of
Section 302A.621 of the MBCA. Such Merger in accordance with
Sections 302A.621 and 302A.641 of the MBCA is referred to
herein as the "Short Form Merger."
8.2 EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this
Agreement, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from
Governmental Authorities and the making of all necessary
registrations and filings (including filings with
Governmental Authorities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any
Governmental Authority (including in respect of any
Applicable Law), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this
Agreement or the consummation of any of the transactions
contemplated by this Agreement, including seeking to have
any stay or temporary restraining order entered by any court
or other Governmental Authority vacated or reversed and (iv)
the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement.
(b) The Company shall give prompt notice to Acquiror and Merger
Sub, and Acquiror and Merger Sub shall give prompt notice to
the Company, of (i)
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<PAGE> 41
any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate in any material
respect (including in the case of representations or
warranties by the Company or Acquiror and Merger Sub, as
applicable, such party's receiving knowledge of any fact,
event or circumstance which may cause any representation
qualified as to the knowledge of such party to be or become
untrue or inaccurate in any material respect) or (ii) the
failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the
representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties
under this Agreement.
8.3 SUPPLEMENTAL DISCLOSURE. The Company shall confer on a regular
basis with Acquiror or Merger Sub, report on operational matters and promptly
notify Acquiror or Merger Sub of, and furnish Acquiror or Merger Sub with, any
information it may reasonably request with respect to, any event or condition or
the existence of any fact that would cause any of the conditions to Acquiror's
or Merger Sub's obligation to consummate the Offer or the Merger not to be
completed, and Acquiror and Merger Sub shall promptly notify the Company of, and
furnish the Company any information it may reasonably request with respect to,
any event or condition or the existence of any fact that would cause any of the
conditions to the Company's obligation to consummate the Merger not to be
completed.
8.4 ANNOUNCEMENTS. Prior to the Closing, the Company will not issue any
press release or otherwise make any public statement with respect to this
Agreement and the transactions contemplated hereby without the prior consent of
Acquiror (which consent shall not be unreasonably withheld), except as may be
required by Applicable Law or applicable stock exchange regulations, in which
event Company shall, if possible, allow Acquiror reasonable time to comment on
such release or announcement in advance of such issuance. The parties agree that
the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form heretofore agreed to by the
parties.
8.5 NO SOLICITATION.
(a) From and after the date hereof until the Effective Time, the
Company shall not, nor shall it authorize any of its
officers, directors, employees, agents, investment bankers,
attorneys, financial advisors or other representatives
(collectively, "Company Representatives") to (i) solicit,
initiate or knowingly encourage the submission of, any
Acquisition Proposal, (ii) enter into any agreement with
respect to any Acquisition Proposal, or (iii) participate in
any discussions or negotiations regarding, or furnish to any
Person any non-public information with respect to, or take
any other action to knowingly facilitate any inquiries or
the making of any proposal that constitutes or
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would reasonably be expected to lead to, an Acquisition
Proposal; provided, however, that, notwithstanding anything
to the contrary in this Agreement, (i) the Company may
participate in discussions or negotiations with, and may
furnish information concerning the Company and its business,
properties and assets to, a third party who, without any
solicitation by the Company or any Company Representatives
after the date of this Agreement, seeks to engage in such
discussions or negotiations or requests such information, if
(1) the Board of Directors of the Company determines, based
on the advice of the Company's outside legal counsel, that
failing to engage in such discussion or negotiations or
provide such information would violate the fiduciary duties
of the Board of Directors of the Company to its
shareholders, (2) prior to engaging in discussions or
negotiations with, or furnishing information to, such Third
Party, the Company shall receive from such Third Party an
executed confidentiality agreement in reasonably customary
form on terms not more favorable to such Person or entity
than the terms contained in the Confidentiality Agreement,
and (3) the Acquisition Proposal would result in the holders
of Company Common Stock being entitled to receive
consideration which, in the aggregate, would be greater than
$6.00 per share (collectively, a "Permitted Acquisition
Proposal"), and (ii) the Board of Directors of the Company
may take and disclose to the Company's shareholders a
position with regard to a tender offer or exchange offer
contemplated by Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act and may make such disclosure to the
shareholders of the Company as may be required under
Applicable Law; provided, that the Board of Directors of the
Company shall not recommend that the shareholders of the
Company tender their shares of Company Common Stock unless
such recommendation is permitted by Section 8.5(d).
(b) The Company shall immediately notify Acquiror and Merger Sub
of any Acquisition Proposal, including the identity of the
Third Party making any such Acquisition Proposal and the
material terms and conditions of any Acquisition Proposal.
(c) As used in this Agreement, "Acquisition Proposal" shall mean
any proposal or offer from any person relating to (i) any
direct or indirect acquisition or purchase of more than 10%
of either the capital stock of the Company or the assets of
the Company, (ii) any tender offer or exchange offer that if
consummated would result in any person beneficially owning
10% or more of the capital stock of the Company or (iii) any
merger, consolidation or business combination, involving the
Company other than the transactions contemplated by this
Agreement.
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<PAGE> 43
(d) Notwithstanding anything to the contrary in this Agreement,
the Board of Directors of the Company shall be permitted
from time to time to take the following actions in the
circumstances described below: (i) to withdraw or modify its
approval or recommendation of this Agreement, the Offer or
the Merger in a manner adverse to Acquiror and Merger Sub;
or (ii) to approve or recommend or enter into an agreement
with respect to a Permitted Acquisition Proposal; if, in
each such case, (A) a Permitted Acquisition Proposal is
publicly proposed, publicly disclosed or communicated to the
Company and (B) the Board of Directors of the Company
determines, based on the advice of the Company's outside
legal counsel, that such action is required in order to
comply with its fiduciary duties to the shareholders of the
Company. No action by the Board of Directors of the Company
permitted by the preceding sentence (each, a "Permitted
Action") shall constitute a breach of this Agreement by the
Company.
8.6 STOCK OPTIONS. Prior to the Effective Time, the Company shall take
such actions as may be necessary such that at the Effective Time, each then
outstanding option to purchase shares of Company Common Stock whether or not
then vested or exercisable in accordance with its terms (collectively, the
"Options"), shall be canceled and entitle the holder thereof, upon surrender to
the Company, to receive an amount of cash equal to the product of (x) the amount
by which the Merger Consideration exceeds the exercise price per share of
Company Common Stock subject to such Option (whether vested or unvested) and (y)
the number of shares of Company Common Stock issuable pursuant to the
unexercised portion of such Option (whether vested or unvested), less any
required withholding of taxes (such amount being hereinafter referred to as, the
"Option Consideration"). The surrender of an Option to the Company in exchange
for the Option Consideration shall be deemed a release of any and all rights the
holder had or may have had in respect of such Option. The Company's 1993 Stock
Option Plan and all other Options to acquire Company Common Stock shall
terminate as of the Effective Time and the provisions in any other plan, program
or arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company shall be canceled as of the
Effective Time, and the Company shall take all permitted action necessary,
including receiving applicable consents from optionees, to ensure that following
the Effective Time no participant in any Company's 1993 Stock Option Plan or
other plans, programs or arrangements shall have any right thereunder to acquire
equity securities of the Company or the Surviving Corporation and to terminate
all such plans. Acquiror agrees to advance funds to the Company to the extent
such funds are required by the Company in order to carry out its obligations
under the terms of this Section 8.6.
8.7 TRANSFER TAXES. The Company, Acquiror and Merger Sub shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer and stamp taxes, any transfer,
recording, registration and other fees and any similar taxes that become payable
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<PAGE> 44
in connection with the transactions contemplated by this Agreement ("Transfer
Taxes"). The Company shall pay or cause to be paid any such Transfer Taxes.
8.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. The
Articles of Incorporation and By-Laws of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in Article V of the Articles of Incorporation of the Company and in the
Company's By-Laws, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at the Effective
Time were directors, officers or employees of the Company, unless such
modification is required by law. The Company shall, to the fullest extent
permitted under applicable law and regardless of whether the Merger becomes
effective, indemnify and hold harmless, and after the Effective Time, the
Surviving Corporation shall, to the fullest extent permitted under applicable
law, indemnify and hold harmless, each present and former director, officer and
employee of the Company or any of its subsidiaries (collectively, the
"Indemnified Parties") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their capacity as an officer, director or employee
whether occurring before or after the Effective Time for a period of six years
after the Effective Time In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) the Company or the Surviving Corporation, as the case may be, shall
pay the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to the Company or the
Surviving Corporation, promptly after statements therefor are received, and (ii)
the Company and the Surviving Corporation will cooperate in the defense of any
such matter, provided further, that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); and provided
further, that neither the Company nor the Surviving Corporation shall be
obligated pursuant to this Section 8.8 to pay for the fees and disbursements of
more than one counsel for all Indemnified Parties in any single action except to
the extent that two or more of such Indemnified Parties have conflicting
interests in the outcome of such action; and provided further that, in the event
that any proceeding or proceedings for indemnification are asserted or made
within such six-year period, all right to indemnification in respect of any such
proceeding or proceedings shall continue until the disposition of any and all
such proceedings. In the event that the Surviving Corporation lacks sufficient
funds to indemnify any Indemnified Party in full as contemplated by this Section
8.8, Acquiror shall be responsible for the payment of, and shall pay, any such
deficiency. Acquiror shall use its best efforts to cause to be maintained in
effect for three years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company (provided
that Acquiror may substitute therefor policies of at least the same coverage
containing terms and conditions which are not
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<PAGE> 45
materially less advantageous) with respect to matters occurring prior to the
Effective Time to the extent available; provided that in no event shall Acquiror
or the Company be required to expend more than an amount per year equal to 175%
of current annual premiums paid by the Company (the "Premium Amount") to
maintain or procure insurance coverage pursuant hereto; and further provided
that if Acquiror or the Company are not able to obtain the insurance called for
by this Section, Acquiror or the Company will obtain as much comparable
insurance as is available for the Premium Amount per year. In the event the
Surviving Corporation or Acquiror or any of their successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in each such case, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation or Acquiror shall assume the
obligations set forth in this Section 8.8.
ARTICLE IX
CONDITIONS PRECEDENT
--------------------
9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction or waiver on or prior to the Closing Date of each of the following
conditions:
(a) Shareholder Approval. The Company shall have obtained the
Company Shareholder Approval or Merger Sub shall have
acquired sufficient shares of Company Common Stock in the
Offer to effect a Short Form Merger.
(b) HSR Act. The applicable waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall
have expired or been earlier terminated.
(c) No Injunctions or Restraints. Subject to fulfillment by each
party of its obligations under Section 8.2(a) of this
Agreement no statute, rule, regulation, decree, preliminary
or permanent injunction, temporary restraining order or
other order of any nature of any court or Governmental
Authority shall be in effect that restrains, prevents or
materially changes the transactions contemplated hereby;
provided, however, that in the case of a decree, injunction
or other order, the party invoking this condition shall have
used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as
possible any decree, injunction or other order.
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<PAGE> 46
(d) Merger Sub (or another Subsidiary of Acquiror) shall have
acquired shares of Company Common Stock pursuant to the
Offer.
9.2 CONDITIONS OF OBLIGATIONS OF ACQUIROR. The obligations of Acquiror
and Merger Sub to effect the Merger are further subject to the satisfaction of
each of the following conditions, any or all of which may be waived on or prior
to the Closing Date in whole or in part by Acquiror and Merger Sub:
(a) Agreements. The Company shall have performed in all material
respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date and
shall have complied or be in compliance in all material
respects with any agreement or covenant of the Company to be
performed by it under this Agreement at or prior to the
Closing Date.
(b) Consents. All necessary approvals or authorizations of any
Governmental Authority in connection with the Merger shall
have been obtained except where the failure to have obtained
or made any such approval or authorization would not have a
Material Adverse Effect on the Company.
(c) Litigation. Subject to fulfillment by each party of its
obligations under Section 8.2(a) there shall not have been
entered any order by any Governmental Authority in any suit,
action or proceeding, which (i) requires the payment of
damages by Acquiror, Merger Sub or the Company in connection
with the Offer or the Merger which damages are material to
the value of the Company, (ii) prohibits or limits the
ownership or operation by Acquiror and its Subsidiaries of,
or compels Acquiror or any of its Subsidiaries to dispose of
or hold separate, any business or assets which are material
to Acquiror and its Subsidiaries taken as a whole, in each
case as a result of the Offer or the Merger or any of the
other transactions contemplated by this Agreement, or (iii)
imposes limitations on the ability of Acquiror to acquire or
hold, or exercise full rights of ownership of, shares of
capital stock of the Company, which limitations would have a
Material Adverse Effect with respect to the value of the
Company to the Acquiror.
(d) Representations and Warranties. There shall not have been a
breach of any representation or warranty on the part of the
Company having a Material Adverse Effect on the Company or
the Company's value to Acquiror or materially adversely
affecting (or materially delaying) the consummation of the
Offer or the Merger.
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<PAGE> 47
ARTICLE X
TERMINATION
-----------
10.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after shareholder approval hereof;
(a) By the mutual consent of the Board of Directors of Acquiror
and the Board of Directors of the Company.
(b) By either of the Board of Directors of the Company or the
Board of Directors of Acquiror:
(i) if Acquiror or Merger Sub has not purchased shares
of Company Common Stock in accordance with the
terms of the Offer on or prior to September 23,
1997; provided, however, that the right to
terminate this Agreement under this Section
10.1(b)(i) shall not be available to any party
whose failure to fulfill any obligations under this
Agreement has been the cause of, or resulted in,
the failure to satisfy the conditions to the Offer;
or
(ii) if any Governmental Authority shall have issued an
order, decree or ruling or taken any other action
(which order, decree, ruling or other action the
parties hereto shall use their best 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.
(c) By the Board of Directors of the Company:
(i) if, prior to the purchase of shares of Company
Common Stock pursuant to the Offer, the Board of
Directors of the Company shall have taken a
Permitted Action; provided that the fee provided
for in Section 10.3 must be paid at or prior to
such termination;
(ii) if prior to the purchase of shares of Company
Common Stock pursuant to the Offer, Acquiror or
Merger Sub (y) breaches or fails in any material
respect to perform or comply with any of its
material covenants and agreements contained herein
or (z) breaches its representations and warranties
in any material respect; provided, however, that if
any such breach is cured prior to termination, the
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<PAGE> 48
Company may not terminate this Agreement pursuant
to this Section 10.1(c)(ii);
(iii) if Acquiror or Merger Sub shall have terminated the
Offer, or the Offer shall have expired, without
Merger Sub purchasing any shares of Company Common
Stock pursuant thereto; provided that the Company
may not terminate this Agreement pursuant to this
Section 10.1(c)(iii) if the Company is in material
breach of this Agreement;
(iv) 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 A hereto, Acquiror or Merger Sub 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; provided,
that the Company may not terminate this Agreement
pursuant to this Section 10.1(c)(iv) if the Company
is in material breach of this Agreement; or
(v) The commitment from financial institution(s) to
provide funds for acquisition of the Company Common
Stock described in section 6.6 shall cease to be in
force or replaced by a similar commitment in form
and substance satisfactory to the Company.
(d) By the Board of Directors of Acquiror:
(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 A hereto, Acquiror or Merger Sub 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; provided
that Acquiror may not terminate this Agreement
pursuant to this Section 10.1(d)(i) if Acquiror or
Merger Sub is in material breach of this Agreement;
(ii) if (A) prior to the purchase of shares of Company
Common Stock pursuant to the Offer, the Board of
Directors of the Company takes a Permitted Action,
or (B) prior to the purchase of shares of Company
Common Stock pursuant to the Offer, it shall have
been publicly disclosed or Acquiror or Merger Sub
shall have learned that any person, entity or
"group" (as that term is defined in Section
13(d)(3) of the Exchange Act) (an "Acquiring
Person"), shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of more than 20% of any
class or series of
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<PAGE> 49
capital stock of the Company (including shares of
Company Common Stock), through the acquisition of
stock, the formation of a group or otherwise, or
shall have been granted any option, right or
warrant, conditional or otherwise, to acquire
beneficial ownership of more than 20% of any class
or series of capital stock of the Company
(including shares of Company Common Stock); or (C)
prior to the purchase of shares of Company Common
Stock pursuant to the Offer, it shall have been
publicly disclosed or Acquiror or Merger Sub shall
have learned that any Acquiring Person, shall have
acquired beneficial ownership (determined pursuant
to Rule 13d-3 promulgated under the Exchange Act)
of more than 10% of any class or series of capital
stock of the Company (including shares of Company
Common Stock), through the acquisition of stock,
the formation of a group or otherwise, or shall
have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial
ownership of more than 10% of any class or series
of capital stock of the Company (including shares
of Company Common Stock) and such Acquiring Person
shall have manifested an intent to acquire any
additional shares of Company Common Stock for any
reason other than passive investment;
(iii) if Acquiror or Merger Sub, as the case may be,
shall have terminated the Offer following the
occurrence of any of the events described in Annex
A, or the Offer shall have expired without Acquiror
or Merger Sub, as the case may be, purchasing any
shares of Company Common Stock thereunder, provided
that Acquiror or Merger Sub may not terminate this
Agreement pursuant to this Section 10.1(d)(iii) if
Acquiror or Merger Sub is in material breach of
this Agreement;
(iv) if the Company breaches or fails in any material
respect to perform or comply with any of its
material covenants and agreements contained herein;
or
(v) if, within ten days of the date hereof, Acquiror
notifies Company that its due diligence has
revealed information not previously disclosed to or
known to Acquiror which materially and adversely
affects the value of the Company Common Stock to
Acquiror. Any notice of termination of the
Agreement pursuant to this clause shall be
accompanied by a notice from Acquiror of the nature
of the information so revealed and the basis for
Acquiror's assertion that such information has such
a material adverse effect.
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<PAGE> 50
10.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 10.1, written notice thereof shall forthwith be
given to the other party 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 on the part of Acquiror, Merger Sub or the
Company except (A) for fraud or for material breach of this Agreement and (B) as
set forth in Sections 7.2, 10.3 and 11.2 hereof. Notwithstanding the foregoing,
the liability of the Company or Acquiror and Merger Sub together under the terms
of this Section 10.2 shall be limited to a maximum of One Million Dollars
($1,000,000.00); provided, that these limitations shall not apply to the breach
attributable to willful misconduct or gross negligence of the breaching party
and shall not affect the Company's obligation to pay the termination fee
pursuant to Section 10.3. Any payment made by the Company pursuant to Section
10.3 will preclude any liability for payments under this Section 10.2.
10.3 TERMINATION FEE. If (y) the Board of Directors of the Company
shall terminate this Agreement pursuant to Section 10.1(c)(i) hereof or (z) the
Board of Directors of Acquiror shall terminate this Agreement pursuant to
Section 10.1(d)(ii)(A) hereof, the Company shall pay to Acquiror (not later than
the date of termination of this Agreement) an amount equal to $1.5 million. The
Company acknowledges that the agreements contained in this Section 10.3 are an
integral part of the transactions contemplated in this Agreement, and that,
without these agreements, Acquiror and Merger Sub would not enter into this
Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 10.3, and, in order to obtain such payment, Acquiror or
Merger Sub commences a suit which results in a judgment against the Company for
the amount set forth in this Section, the Company shall pay to Acquiror or
Merger Sub its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the annual rate of
interest charged to Acquiror under its credit facility.
ARTICLE XI
GENERAL PROVISIONS
------------------
11.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Article
X, except that the agreements set forth in Articles III and IV shall survive the
Effective Time and those set forth in Sections 10.2, 10.3 and Article 11 hereof
shall survive termination.
11.2 EXPENSES. Each of the parties hereto shall pay the fees and
expenses of its respective counsel, accountants and other experts and shall pay
all other costs and expenses incurred by it in connection with the negotiation,
preparation and execution of this Agreement and the consummation of the
transactions contemplated hereby.
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<PAGE> 51
11.3 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Minnesota without reference to
choice of law principles, including all matters of construction, validity and
performance.
11.4 NOTICES. Notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective persons giving them (in the case of any
corporation the signature shall be by an officer thereof) and delivered by hand,
deposited in the United States mail (registered or certified, return receipt
requested), properly addressed and postage prepaid, or delivered by telecopy:
If to the Company, to:
Arden Industrial Products
560 Oak Grove Parkway
Vadnais Heights Minnesota 55127
Attention: Michael Lindseth
Fax: (612) 483-2734
with copies to:
Doherty Rumble & Butler
Professional Association
Suite 3500, Fifth Street Towers
150 South Fifth Street
Minneapolis, Minnesota 55402
Attention: C. Robert Beattie, Esq.
Fax: (612) 340-5584
and
Fredrikson & Byron
1100 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Thomas R. King, Esq.
Fax: (612) 347-7077
If to Acquiror, to:
Park-Ohio Industries, Inc.
23000 Euclid Avenue
Cleveland, Ohio 44117
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<PAGE> 52
Attention: Mr. Edward F. Crawford
Fax: (216) 692-6877
with copies to:
Park-Ohio Industries, Inc.
23000 Euclid Avenue
Cleveland, Ohio 44117
Attention: Mr. Ronald J. Cozean
Fax: (216) 692-6877
and
Squire, Sanders & Dempsey L.L.P.
127 Public Square
4900 Key Tower
Cleveland, Ohio 44114-1304
Attention: Mary Ann Jorgenson, Esq.
Fax: (216) 479-8776
Such names and addresses may be changed by notice given in accordance with this
Section 11.4.
11.5 ENTIRE AGREEMENT. This Agreement (including the Company Disclosure
Schedule, and the Exhibits attached hereto, all of which are a part hereof) and
the Confidentiality Agreement contain the entire understanding of the parties
hereto with respect to the subject matter contained herein and therein,
supersede and cancel all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, respecting such
subject matter. There are no restrictions, promises, representations,
warranties, agreements or undertakings of any party hereto with respect to the
transactions contemplated by this Agreement other than those set forth herein or
made hereunder.
11.6 DISCLOSURE SCHEDULE. The disclosure schedules, including the
General Disclosure Schedule, dated the date hereof, delivered by the Company to
Acquiror (the "Company Disclosure Schedule") are incorporated into this
Agreement by reference and made a part hereof.
11.7 HEADINGS; REFERENCES. The article, section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. All references
herein to "Articles," "Sections" or "Exhibits" shall be deemed to be references
to Articles or Sections hereof or Exhibits hereto unless otherwise indicated.
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<PAGE> 53
11.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original, but all of
which shall constitute one and the same original.
11.9 PARTIES IN INTEREST; ASSIGNMENT. Neither this Agreement nor any of
the rights, interest or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties. Subject
to the preceding sentence this Agreement shall inure to the benefit of and be
binding upon the Company, Acquiror and Merger Sub and shall inure to the sole
benefit of the Company, Acquiror and Merger Sub and their respective successors
and permitted assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies under or by
reason of this Agreement.
11.10 SEVERABILITY; ENFORCEMENT. Except to the extent that the
application of this Section 11.10 would have any adverse effect with respect to
Acquiror or the Company, the invalidity of any portion hereof shall not affect
the validity, force or effect of the remaining portions hereof. If it is ever
held that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, each party agrees that a court of competent
jurisdiction may enforce such restriction to the maximum extent permitted by
law, and each party hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such restriction.
11.11 ACQUIROR GUARANTEE. Acquiror hereby irrevocably and
unconditionally guarantees to the Company the prompt and complete performance by
Merger Sub of each and every obligation Merger Sub may have under this
Agreement. At the Company's discretion, Acquiror may be joined in any action,
suit or proceeding brought by the Company against Merger Sub in connection with
this Agreement and Acquiror shall conclusively be bound by the judgment in any
action, suit or proceeding brought by the Company against Merger Sub as if
Acquiror were a party thereto.
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<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
Acquiror:
PARK-OHIO INDUSTRIES, INC.
By:
--------------------------------
Name:
Title:
Merger Sub:
P O ACQUISITION CORPORATION
By:
--------------------------------
Name:
Title:
Company:
ARDEN INDUSTRIAL PRODUCTS, INC.
By:
--------------------------------
Name:
Title:
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<PAGE> 55
ANNEX A
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer and provided that Merger Sub shall not be obligated to accept for
payment any shares of Company Common Stock until expiration of all applicable
waiting periods under the HSR Act, Merger Sub shall not be required to accept
for payment or pay for, or may delay the acceptance for payment of or payment
for, any tendered shares of Company Common Stock, or may, in its sole
discretion, terminate or amend the Offer as to any shares of Company Common
Stock not then paid for if 3,910,263 shares of Company Common Stock shall not
have been properly and validly tendered pursuant to the Offer and not withdrawn
prior to the expiration of the Offer, or, if on or after June 23, 1997, (or as
to clause (j) below at anytime) and at or before the time of payment for any of
such shares of Company Common Stock (whether or not any shares of Company Common
Stock have theretofore been accepted for payment), any of the following events
shall occur:
(a) there shall have occurred (i) any general suspension of
trading in securities on the NYSE or in the over-the-counter
market, (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United
States, (iii) a commencement or escalation of a war, armed
hostilities or other international or national calamity
directly or indirectly involving the United States, (iv) any
limitation (whether or not mandatory) by any governmental or
regulatory authority, agency, commission or other entity,
domestic or foreign ("Governmental Entity"), on, or any
other event which might affect, the extension of credit by
banks or other lending institutions, or (v) or in the case
of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or
worsening thereof;
(b) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or
agreements under the Merger Agreement or there shall have
been a breach of any representation or warranty on the part
of the Company having a Material Adverse Effect on the
Company or the Company's value to Acquiror or materially
adversely affecting (or materially delaying) the
consummation of the Offer or the Merger;
(c) there shall be instituted or pending any action, litigation,
proceeding, investigation or other application (hereinafter,
an "Action"), (including a worsening of any existing Action)
before any United States court or other Governmental Entity
by any United States Governmental Entity: (i) challenging
the acquisition by Acquiror or Merger Sub of shares of
Company Common Stock, seeking to restrain or prohibit the
consummation of the transactions contemplated by the Offer
or the Merger, or seeking to obtain any damages which
damages are material to the Company; (ii) seeking to
prohibit, or impose any material limitations on, Acquiror's
or Merger Sub's ownership
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<PAGE> 56
or operation of all the Company's business or assets or to
compel Acquiror or Merger Sub to dispose of or hold separate
all or any portion of the Company's business or assets as a
result of the transactions contemplated by the Offer of the
Merger which limitations would have a material adverse
effect with respect to the value of the Company to Acquiror;
(iii) seeking to make the acceptance for payment, purchase
of, or payment for, some or all of the shares of Company
Common Stock illegal or render Merger Sub unable to, or
result in a material delay in, or materially restrict, the
ability of Merger Sub to accept for payment, purchase or pay
for some or all of the shares of Company Common Stock; (iv)
seeking to impose material limitations on the ability of
Acquiror or Merger Sub effectively to acquire or hold or to
exercise full rights of ownership of the shares of Company
Common Stock including, without limitation, the right to
vote the shares of Company Common Stock purchased by them on
an equal basis with all other shares of Company Common Stock
on all matters properly presented to the shareholders; or
(v) that in any event is reasonably likely to have a
Material Adverse Effect on the Company or the value of the
shares of Company Common Stock to Acquiror or Merger Sub as
a result of consummation of the transactions contemplated by
the Offer and the Merger;
(d) any statute, rule, regulation, order or injunction shall be
enacted, promulgated, entered, enforced or deemed or become
applicable to the Offer or the Merger, or any other action
shall have been taken, proposed or threatened, by any United
States court or other Governmental Authority other than the
application to the Offer or the Merger of waiting periods
under the HSR Act, that, directly or indirectly, can
reasonably be expected to result in any of the effects of,
or have any of the consequences sought to be obtained or
achieved in, any Action referred to in clauses (i) through
(v) of paragraph (c) above;
(e) a tender or exchange offer for some portion or all of the
shares of Company Common Stock shall have been commenced or
publicly proposed to be made by another person (including
the Company), or it shall have been publicly disclosed that
(i) any person (including the Company), entity or "group"
(as defined in Section 13(d) of the Exchange Act and the
rules promulgated thereunder), shall have become the
beneficial owner (as defined in Section 13(d) of the
Exchange Act and the rules promulgated thereunder) of more
than 20% of the shares of Company Common Stock; (ii) any
person (including the Company), entity or "group" (as
defined in Section 13(d) of the Exchange Act and the rules
promulgated thereunder), shall have become the beneficial
owner (as defined in Section 13(d) of the Exchange Act and
the rules promulgated thereunder) of more than 10% of the
shares of Company Common Stock for any reason other than
passive investment or (iii) any Person, entity or group
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<PAGE> 57
shall have entered into a definitive agreement or an
agreement in principle with respect to an acquisition
proposal with or involving the Company;
(f) any change shall have occurred in the financial condition,
properties, businesses or results of operations of the
Company that is or is reasonably likely to have a Material
Adverse Effect on the Company;
(g) the Board of Directors of the Company (or a special
committee thereof) shall have amended, modified or withdrawn
its recommendation of the Offer or the Merger, or shall have
failed to publicly reconfirm such recommendation upon
request by Acquiror or Merger Sub, or shall have endorsed,
approved or recommended any other Acquisition Proposal, or
shall have resolved to do any of the foregoing;
(h) the Merger Agreement shall have been terminated by the
Company or Acquiror or Merger Sub in accordance with its
terms or Acquiror or Merger Sub shall have reached an
agreement or understanding in writing with the Company
providing for termination or amendment of the Offer or delay
in payment for the shares of Company Common Stock;
(i) any Action is instituted or pending by a non-governmental
Person (or there shall be a worsening of an existing Action)
which, in the reasonable judgment of Acquiror, has a
reasonable likelihood of success, and if successful on the
merits, is more likely than not to have a Material Adverse
Effect on the Company or the value of the shares of Company
Common Stock to Acquiror as a result of the consummation of
the transactions contemplated by the Offer and the Merger;
or
(j) if there has been any (y) Release of Hazardous Substances
in, on, under or affecting any properties currently or
formerly owned, operated or leased by the Company in
violation of, or as would reasonably be anticipated to
result in liability under, applicable Environmental Laws or
(z) disposal of Hazardous Substances or any other substance
in a manner that has led to, or could reasonably be
anticipated to lead to, a Release in violation of applicable
Environmental Laws except, in either case, as disclosed on
Schedule 5.6 of the Company Disclosure Schedule and except
in either case for those which, individually or in the
aggregate, are not reasonably likely to have a Material
Adverse Effect on the Company,
which, in the sole judgment of Acquiror and Merger Sub, in any such case, and
regardless of the circumstances (including any action or inaction by Acquiror or
Merger Sub giving rise to any such conditions, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for shares
of Company Common Stock.
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<PAGE> 58
The foregoing conditions are for the sole benefit of Acquiror and
Merger Sub and may be asserted by Acquiror or Merger Sub regardless of the
circumstances (including any action or inaction by Acquiror or Merger Sub)
giving rise to such condition or may be waived by Acquiror or Merger Sub, by
express and specific action to that effect, in whole or in part at any time and
from time to time in its sole discretion.
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