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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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PENOBSCOT SHOE COMPANY
(NAME OF SUBJECT COMPANY)
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PENOBSCOT SHOE COMPANY
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, $1.00 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
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70934210
(CUSIP NUMBER OF CLASS OF SECURITIES)
IRVING KAGAN, CHIEF EXECUTIVE OFFICER
PENOBSCOT SHOE COMPANY
450 NORTH MAIN STREET
OLD TOWN, MAINE 04468
(207) 827-4431
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON
BEHALF OF THE PERSON FILING STATEMENT)
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COPIES TO:
GERALD E. RUDMAN, ESQ.
RUDMAN & WINCHELL, LLC
84 HARLOW STREET, 4TH FLOOR
BANGOR, MAINE 04402
(207) 947-4501
HARRY A. HANSON, III, ESQ., P.C.
CHOATE, HALL & STEWART
EXCHANGE PLACE, 53 STATE STREET
BOSTON, MA 02109
(617) 248-5000
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Penobscot Shoe Company, a Maine
corporation (the "Company"). The address of the principal executive offices of
the Company is 450 North Main Street, Old Town, Maine 04468. The title of the
class of equity securities to which this Statement relates is Common Stock,
$1.00 par value, of the Company (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER
This statement relates to a tender offer (the "Offer") disclosed in a
Schedule 14D-1, dated October 12, 1999 (the "Schedule 14D-1"), and filed with
the Securities and Exchange Commission (the "Commission") by Riedman
Corporation, a New York corporation ("Parent"), and PSC Acquisition Corp., a
Maine corporation ("Purchaser"), and an indirect wholly owned subsidiary of
Parent, to purchase all outstanding Shares at a price of $11.75 per Share, net
to the Seller in cash, without interest (as paid pursuant to the Offer) (the
"Offer Consideration"), on the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase, dated October 12, 1999, a copy of which is filed
as Exhibit (a)(1) hereto and is incorporated herein by reference (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together, as amended
and supplemented from time to time, constitute the "Offer Documents"). The Offer
to Purchase states that the address and principal executive offices of Parent
and Purchaser are at 45 East Avenue, Rochester, New York 14604.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 6, 1999 (the "Merger Agreement"), by and among the Company, Parent
and Purchaser. See Item 3(b) for a description of the Merger Agreement. A copy
of the Merger Agreement is filed as Exhibit (c)(1) hereto and is incorporated
herein by reference.
The Offer is conditioned upon, among other things, (1) there being validly
tendered by the Expiration Date (as defined in the Offer to Purchase), and not
withdrawn, a number of Shares of the Company representing at least eighty
percent (80%) of the Shares issued and outstanding and (2) the satisfaction or
waiver of certain conditions to the respective obligations of Purchaser, Parent
and the Company to consummate the transactions contemplated by the Merger
Agreement.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Statement, are set forth in Item 1 above.
(b) Except as set forth in this Item 3(b), to the knowledge of the Company,
there are no material contracts, agreements, arrangements or understandings and
no actual or potential conflicts of interest between the Company or its
affiliates and (i) the Company's executive officers, directors or affiliates or
(ii) Parent or Purchaser or their respective executive officers, directors or
affiliates.
THE MERGER AGREEMENT AND RELATED AGREEMENTS
Information with respect to the terms of the Merger Agreement and certain
related matters, including the Merger (as defined therein) and the Tender
Agreements each dated as of October 6, 1999, is set forth under the headings
"Introduction," "Terms of the Offer; Expiration Date," "Background of the Offer;
Contacts with the Company; The Merger Agreement; the Tender Agreements,"
"Purpose of the Offering; Plans for the Company After the Offer and the Merger,"
"Certain Conditions of the Offer," and "Certain Legal Matters and Regulatory
Approvals" in the Offer to Purchase. Copies of the Tender Agreements are filed
as exhibits to the Offer to Purchase and are identified as Exhibits (c)(2)
through (c)(10) hereto and are incorporated herein by reference. The information
with respect to the Company's obligation to appoint designees of Parent to the
Company's board described in the Offer to Purchase under "Background of the
Offer; Contacts with the Company; the Merger Agreement; the Tender
Agreements -- The Merger Agreement -- Board Representation; Directors" is
incorporated herein by reference. The Company's obligation to appoint designees
of Parent
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to the Company's Board of Directors is subject to Section 14(f) of the Exchange
Act and Rule 14f-1 thereunder.
DIRECTOR AND OFFICER COMPENSATION PLANS
The information under the headings "Compensation of, and Transactions with,
Directors, Officers and Others," "Contributory Retirement Plan," and "1991 Stock
Option Plan" in the Company's Proxy Statement dated as of March 2, 1999 for the
fiscal year ended November 27, 1998 (the "Proxy Statement"), portions of which
are identified as Exhibit (c)(11) hereto, is incorporated herein by reference.
DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE
The information in the Offer to Purchase under the heading "Background of
the Offer; Contracts with the Company; The Merger Agreement; The Tender
Agreements -- Directors' and Officers' Insurance and Indemnification" is
incorporated herein by reference.
CHANGE IN CONTROL AGREEMENTS
The Offer and/or Merger may be considered a "Change in Control" under the
Company's 1991 Stock Option Plan. Pursuant to the terms of such plans, all
outstanding options issued under the plan will become fully vested and
exercisable upon the occurrence of a "Change in Control." A copy of the 1991
Stock Option Plan is attached hereto as Exhibit (c)(16), and is incorporated
herein by reference.
The Offer and/or the Merger may be considered a "Change of Control" under
certain letter agreements with four executive officers, copies of which are
attached hereto as Exhibits (c)(12), (c)(13), (c)(14) and (c)(15) which provide
for payment of one year's salary and maintenance of health insurance in the
event the employment of the executive officer is terminated, either voluntarily
or involuntarily, within one year after the Change of Control.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Company Board
At a meeting on October 6, 1999, the Company's board of directors (the
"Board") unanimously (i) determined that the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, are fair
to and in the best interests of the Company's stockholders; (ii) adopted and
approved the Merger Agreement and authorized the execution thereof by the
Company; and (iii) recommended that the Company's stockholders accept the Offer
and tender their Shares thereunder.
(b) Background of and Reasons for the Board Recommendation
In September, 1998, the Company's Board authorized the Company's chairman
to interview and select an investment banking firm to advise the board of
directors with regard to a potential sale of the Company. In December, 1998, the
Company's Board interviewed representatives from four investment banking firms,
including Advest, Inc. ("Advest").
On January 4, 1999 the Company retained Advest, Inc. ("Advest") to act as
its exclusive financial advisor to pursue a potential sale of the Company.
In January, 1999, James R. Riedman, as Chairman and Chief Executive Officer
of Daniel Green Company ("Daniel Green"), a manufacturer and distributor of
shoes whose stock is listed on the NASDAQ Small Cap Market, telephoned a
representative of the Company to extend condolences on the recent death of the
Company's chief executive officer and to indicate an interest in discussing a
possible combination of the Company and Daniel Green. Parent owns 35.1% of the
outstanding shares of Daniel Green and Mr. Riedman is President and Chief
Executive Officer of Parent.
In January, 1999, during several conversations between representatives of
the Company and Advest, the parties discussed the viability of a sale of the
Company to a strategic or financial buyer, and the process
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involved. After its discussion with the representatives of Advest, and taking
into account the continuing challenges facing the Company in the marketplace,
the Company's board of directors determined that it was in the best interest of
the stockholders of the Company to consider a sale of the Company.
From February, 1999 to May, 1999, Advest contacted approximately 70
companies to explore whether they had any interest in acquiring the Company.
Only two of these calls resulted in expressions of interest.
In March, 1999, a representative of Advest contacted Daniel Green and
provided it with a Confidentiality Agreement, which was signed on March 18,
1999, and Advest forwarded a Confidential Memorandum to Daniel Green.
On March 24, 1999, a representative of Daniel Green telephoned a
representative of Advest to inquire about various aspects of the information
contained in the Confidential Memorandum.
On March 30, 1999, a representative of Daniel Green wrote to a
representative of Advest expressing Daniel Green's strong interest in entering
into a merger with the Company or acquiring all of the Company's outstanding
Shares in a cash acquisition. Daniel Green indicated that it would be in a
position to support a value at a substantial premium to the Company's
then-current listed trading price of $8.50 per share, contingent on financing,
due diligence, negotiation of definitive agreements and approval of the
Company's Board.
On April 16, 1999, a representative of Daniel Green wrote to a
representative of Advest expressing continued interest in acquiring the Company
and entering into discussions on specific terms, including paying a price of
$10.50 per share for a total consideration of $14,745,000.
On April 23, 1999, representatives of Daniel Green met with representatives
of the Company, including members of management, and Advest at Advest's offices
in Boston, Massachusetts to discuss the Confidential Memorandum and other
information concerning both Daniel Green and the Company.
On April 26, 1999, a representative of Daniel Green commenced due diligence
investigation of the Company with the materials assembled in the Advest data
room in Boston, Massachusetts.
On April 29, 1999, Daniel Green wrote to a representative of Advest
outlining terms of a proposed acquisition of the Company to be structured as a
cash merger. Daniel Green proposed paying $14,745,000, or approximately $10.50
per share, contingent on financing, due diligence, negotiation of definitive
agreements and approval by the Company's Board. Accompanying the letter was a
letter from Daniel Green's bank proposing to finance the acquisition on terms
set forth therein.
On April 30, 1999, Advest received a non-binding expression of interest
from another potential bidder indicating that it would be willing to pay a range
between $9.00 and $11.25 per share in an all-cash transaction.
On May 5, 1999, a representative of Daniel Green telephoned a
representative of Advest to inquire about Daniel Green's proposal. The Advest
representative indicated that the Company was unwilling to engage in formal
negotiations at the $10.50 per share valuation of the Company proposed by Daniel
Green.
Throughout May, 1999, the Company and Daniel Green continued to discuss a
possible merger.
On May 26, 1999, Advest received a letter of intent from the other
potential bidder containing a proposed purchase price of $8.50 per share. After
consultation with its financial advisors, the Company instructed Advest not to
proceed because the proposed purchase price was determined not to be adequate.
After a period of one to two days, the potential bidder telephoned Advest and
informally indicated a willingness to pay a purchase price of $9.50 per share.
After consultation with Advest, the Company again instructed Advest not to
proceed because the proposed purchase price was determined not to be adequate.
On June 7, 1999, a representative of Advest wrote to a representative of
Daniel Green setting out terms which would be acceptable to the Company, subject
to Board and stockholder approval, including aggregate consideration of
$15,798,250 in cash ($11.25 per share) plus 600,000 to 700,000 shares of Daniel
Green's common stock, registered and unrestricted.
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On June 8, 1999, a representative of Daniel Green telephoned a
representative of Advest and suggested a face-to-face meeting with the
principals of each company.
On June 14, 1999, principals of Daniel Green and the Company met in
Rochester, New York and discussed a revised proposal wherein the consideration
would be $11.50 per share in cash, with an earn-out of $.50 per share if the
Company met certain performance criteria for the fiscal year ending November 30,
1999. Among the other terms discussed was a termination fee of $1.5 million and
a commitment by the Company not to solicit other bidders.
On June 17, 1999, counsel for Daniel Green contacted counsel for the
Company and requested that the terms discussed at the June 14th meeting be
included in a binding letter of intent that required the Company to negotiate
exclusively with Daniel Green, provided for a financing contingency in favor of
Daniel Green and required a termination fee of $1.5 million payable to Daniel
Green in the event the parties did not reach a definitive agreement.
On June 18, 1999, principals of the Company and its financial and legal
advisors discussed the status of negotiations. Shortly thereafter, counsel for
the Company telephoned counsel for Daniel Green and indicated that the Company
was unwilling to proceed with negotiations unless both the financing contingency
and earn-out provisions were deleted. The Company's counsel further advised that
the Company would not consider signing a binding letter of intent with a
termination fee.
Throughout the remainder of June, 1999, counsel for Daniel Green and
counsel for the Company held discussions in an attempt to resolve outstanding
issues between the parties.
On July 7, 1999, in response to Daniel Green's request, counsel for the
Company prepared and sent a draft Merger Agreement to counsel for Daniel Green
containing alternative proposals for a transaction that the Company could
support, subject to stockholder and Board approval.
Throughout the remainder of July, 1999, the parties continued to try to
resolve the outstanding issues.
During the week of August 2, 1999, Daniel Green's chief executive officer
telephoned the Company's chairman of the board to discuss the financing
contingency and the Company's reluctance to accept it. He then suggested that
Parent, which owns 35.1% of the stock of Daniel Green and of which he is also
president and chief executive officer, would be willing to purchase the Shares
owned by the Company's chairman and his family, comprising 53.3% of the
Company's outstanding Shares.
The next day counsel for the Company telephoned counsel for Daniel Green
and indicated that the Parent's offer would have to be for all of the Company's
outstanding Shares in order for the Company to consider it.
Thereafter, Parent's chief executive officer telephoned the Company's
chairman to indicate that Parent would be willing to make a cash tender offer
for all of the outstanding Shares if Daniel Green could not satisfy the
Company's concerns with regard to financing.
On August 17, 1999, representatives of Daniel Green and Parent met in
Boston, Massachusetts with representatives of the Company and their respective
counsel to discuss how Daniel Green could finance a proposed tender offer and
merger with its bank commitment and support from Parent.
On August 24, 1999, Daniel Green submitted to the Company an expression of
interest to acquire all issued and outstanding Shares at $11.75 through a cash
tender offer by a Daniel Green subsidiary and a second stage merger. A copy of
the financing commitment from Daniel Green's bank was not yet available, but a
copy of a standby financing commitment from Parent was submitted along with a
copy of current financial statements of Parent.
On August 26, 1999, counsel for the Company advised Daniel Green's counsel
that certain aspects of Daniel Green's proposal were unacceptable. In the
meantime, president of Parent continued negotiations with Daniel Green's bank
concerning the support which the Bank would require from Parent in order for the
bank to provide its commitment to finance the Offer and the refinancing
thereafter.
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On August 31, 1999, Parent determined that it was unwilling to meet the
demands of Daniel Green's bank and would itself make a cash tender offer for all
of the Company's outstanding Shares.
On September 2, 1999, Parent informed the Company that Daniel Green would
no longer pursue the acquisition of the Company, and Parent sent to the Company
its expression of interest to make a cash tender offer for all outstanding
shares of the Company at $11.75 per share, without any financing contingency.
The Company's Board met on September 7, 1999 to consider Parent's
expression of interest and directed its officers to proceed to negotiate terms
of a definitive agreement.
From September 8, 1999 through October 6, 1999, the parties negotiated the
terms of a Merger Agreement.
The Company's Board met in person on October 1, 1999. All board members
attended; counsel for the Company and representatives from Advest participated
telephonically. The Board was apprised of the progress since the prior meeting
and given a detailed analysis of the status of negotiations regarding the Merger
Agreement and the proposed agreements with certain stockholders, including the
existence of "fiduciary out" provisions. The Board was apprised that (i) at
least 80% of the outstanding shares, which includes a majority of the Shares
held by stockholders other than the Company's chairman and his family, must
tender in order for the Purchaser to consummate the tender offer, and (ii) the
Purchaser had no financing contingency and was required to place all of the
Offer Consideration into escrow upon the execution of the Merger Agreement. The
Board was also apprised that Parent required that the Merger Agreement provide
for a breakup fee of up to $1.5 million (including transaction expenses) payable
to Parent in the event the Merger Agreement were terminated by Company, Parent
or Purchaser because of fiduciary duty issues. The Company's Board accepted this
provision after considering (i) that Parent provided the only viable offer after
an extensive search of potential purchasers, (ii) that Parent would not sign the
Merger Agreement without such a provision, (iii) the customary nature of breakup
fees in similar transactions, and (iv) the amount of the breakup fee in relation
to the size of the Offer. Advest then discussed the procedures and analysis it
undertakes in deriving its fairness opinion. At the conclusion of this
discussion, Advest apprised the Company's Board that it would be able to deliver
a favorable fairness opinion based upon the proposed tender offer consideration
of $11.75 per share. Next, the Board, legal counsel and Advest discussed a
number of strategic approaches to resolving open issues. In light of the fact
that there remained open issues with respect to the Merger Agreement, the Board
authorized counsel to ask Parent to increase its price above $12 per share. The
Board concluded that it would evaluate any open issues in light of Parent's
response to the requested price increase. Later that day, Company's counsel
notified Parent's counsel of the Board's request for a price increase above $12
per share.
On October 3, 1999, counsel for Parent telephoned Company's counsel and
advised that Parent was unwilling to raise its offer above $11.75 per share.
Counsel for both sides then continued to negotiate open issues with respect to
the Merger Agreement.
The Board reconvened telephonically on October 6, 1999. All Board members
participated in the call as well as counsel for the Company and representatives
of Advest. The Board was apprised of Parent's refusal to increase its offer
price. Counsel then updated the Board on the status of the Merger Agreement,
noting that all remaining issues had been satisfactorily resolved.
Following a lengthy discussion of strategic alternatives, Advest rendered
its opinion that the transaction is fair to the stockholders of the Company from
a financial point of view. It was the consensus of the Board that the benefit to
the Company's stockholders from consummating the proposed Merger transaction
outweighed the risk involved, compared with the alternatives of remaining
independent or soliciting other interested bidders. It was noted that the price
of the Merger transaction was toward the high end of the Company's 52-week range
of prices, which was from $6.75 to $12.75.
The Company's Board then unanimously (a) determined that the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, are fair, adequate and in the best interests of the Company's
stockholders, (b) adopted and approved the Merger Agreement and authorized the
execution thereof by the Company, and (c) recommended that the Company's
stockholders accept the Offer and tender their Shares thereunder.
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In reaching the conclusions described by Advest in clause (a) above, the
Company's Board considered a number of factors including, without limitation:
(i) The presentation to the Board, and the written opinion of Advest
that, based upon and subject to the assumptions and qualifications stated
therein, the consideration to be received by stockholders of the Company
pursuant to the Offer and Merger Agreement is fair from a financial point
of view. A copy of the written opinion is filed as Exhibit (c)(19) hereto
and is incorporated herein by reference. Stockholders are urged to read
such opinion carefully and in its entirety.
(ii) Current market conditions, the relationship between the
consideration to be received by stockholders in the Offer and the Merger on
the one hand and the historical and recent market prices of the Shares on
the other hand, and the fact that the market for the Shares is very
illiquid, thus restricting the ability to sell Shares at current market
prices.
(iii) The Company's business, the strategic direction of the Company's
business, the relationship of the Offer Consideration to historical and
projected earnings, acquisition transactions involving comparable companies
and the lack of other possible transactions that might provide greater
value to stockholders, and the risks associated with remaining an
independent company and engaging a qualified chief executive officer to
replace Mr. Kagan, who has been acting as chief executive officer of the
Company since its prior chief executive officer's untimely demise.
(iv) The terms and conditions of the transactions contemplated by the
Merger Agreement, as reviewed by and discussed with the Company's
management, legal counsel and financial advisors and the fact that the
terms of the Merger Agreement were determined through arm's-length
negotiations between the Company's Board and its legal and financial
advisors, on the one hand, and representatives of Parent and Purchaser, on
the other.
(v) The fact that the terms of the Merger Agreement allow the Board,
if required by fiduciary duties, to withdraw its recommendation of the
Merger and to accept an alternative acquisition proposal, upon payment of a
negotiated breakup fee and reimbursement of expenses.
(vi) The Company's right to exercise its fiduciary duties, subject to
certain conditions under the Merger Agreement, in order to respond to
requests for nonpublic information and to participate in substantive
discussions with any person making an Acquisition Proposal as defined in
the Merger Agreement.
(vii) The fact that Parent and Purchaser's obligations under the Offer
were not subject to any financing contingency, and the requirement of
Parent and Purchaser to place the entire Offer Consideration in cash into
escrow upon execution of the Merger Agreement.
(viii) The fact that, unless waived by the Company, Parent and
Purchaser cannot consummate the Offer unless the Minimum Condition is
satisfied, which requires that more than a majority of the Shares held by
stockholders other than the Company's chairman and his family be tendered
and not withdrawn in the Offer.
(ix) The fact that the Company's Board can waive the Minimum
Condition.
(x) The ability of stockholders to seek a "fair price" for their
Shares upon consummation of the Offer in accordance with Section 910 of the
Maine Business Corporation Act (the "MBCA") and the availability of
dissenters' rights in the Merger in accordance with Section 909 of the
MBCA.
(xi) The reasons for not undertaking a formal public "auction" or
other similar public process, including the potential disruption to the
Company's business, management and employees if an auction were pursued.
The Company's Board did not assign relative weights to the above factors or
determine that any factor was of particular importance. Rather, the Board views
its position and recommendations as being based on the totality of the
information presented to it and considered by it.
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OPINION OF FINANCIAL ADVISOR. The Company's Board retained Advest to act
as its financial advisor and to render an opinion to the Board as to the
fairness from a financial point of view of the consideration to be received by
stockholders of the Company in the Offer and the Merger. On October 6, 1999,
Advest delivered the fairness opinion to the Board, which was later confirmed in
writing, to the effect that, as of such date, the consideration to be received
by stockholders in the Offer and the Merger was fair, from a financial point of
view, to the stockholders of the Company. The fairness opinion contains certain
important qualifications and a description of assumptions made, matters
considered, areas of reliance on others on the review undertaken by Advest, and
is incorporated herein in its entirety. THE FAIRNESS OPINION, WHICH IS LIMITED
TO AN ASSESSMENT, AS OF ITS DATE, OF THE FAIRNESS OF THE PROPOSED CONSIDERATION
FROM A FINANCIAL POINT OF VIEW, IS ADDRESSED TO THE BOARD FOR ITS USE IN
CONNECTION WITH ITS REVIEW AND APPROVAL OF THE MERGER AGREEMENT, AND DOES NOT
CONSTITUTE A RECOMMENDATION AS TO HOW ANY HOLDER OF SHARES SHOULD VOTE WITH
RESPECT TO THE MERGER, OR WHETHER OR NOT ANY HOLDER OF SHARES SHOULD TENDER SUCH
SHARES IN THE OFFER.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company retained Advest, Inc. as its financial advisor in connection
with the transaction contemplated by the Merger Agreement, including delivery of
a written opinion as to the fairness to the Company's stockholders, from a
financial point of view, of the consideration to be received pursuant to the
Offer and Merger. Pursuant to the terms of Advest's engagement, the Company has
agreed to reimburse Advest for its out-of-pocket expenses up to $15,000 and has
agreed to pay Advest the following fees: an initial non-refundable retainer of
$15,000; a non-refundable monthly retainer of $7,500 until termination of the
Advest engagement; $50,000 upon delivery of Advest's written fairness opinion to
the Company's Board of Directors; and a Success Fee of approximately $430,000
(less the foregoing retainer and opinion fees paid to Advest), payable upon and
subject to consummation of the Merger. Payment of the Success Fee is subject to
consummation of the Merger, and the Board was aware of this fee structure and
took it into account in considering the Advest fairness opinion. The Company has
also agreed to indemnify Advest and certain related persons and entities against
certain liabilities, including liabilities under the federal securities laws,
relating to or arising out of its engagement by the Company. In the ordinary
course of its business, Advest and its affiliates may actively trade in the
shares of the Company for their own account and for the account of their
customers and, accordingly, may at any time hold a long or short position in
such securities.
ITEM 6. RECENT TRANSACTIONS WITH RESPECT TO SECURITIES
(a) During the past 60 days, no transactions in Shares have been effected
by the Company or, to the best of the Company's knowledge, by any of its
executive officers, directors, affiliates or subsidiaries.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director and affiliate of the Company presently intends to tender to the
Purchaser, pursuant to the Offer, all Shares held of record or beneficially
owned by him or it.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in this Schedule 14D-9, no negotiation is being
undertaken or is underway by the Company in response to the Offer that relates
to or would result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (ii) a
purchase, sale, or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as set forth in this Schedule 14D-9, there is no transaction,
board resolution, agreement in principle or signed contract in response to the
Offer that relates to or would result in one or more of the events referred to
in Item 7(a) above.
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ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
MAINE BUSINESS CORPORATION ACT
The Company is incorporated under the laws of the State of Maine. In
general, Section 611-A of the Maine Business Corporation Act (the "MBCA")
prevents an "interested stockholder" (generally, a person who owns or has the
right to acquire 25% or more of a corporation's outstanding voting stock, or an
affiliate or associate thereof) from engaging in a "business combination"
(defined to include mergers and certain other transactions) with a Maine
corporation for a period of five years following the date such person became an
interested stockholder unless prior to such date the board of directors of the
corporation approved the business combination. The Company's board of directors
has approved the business combination contemplated by the Merger Agreement.
Parent has informed the Company that neither it nor, to its knowledge, any of
its affiliates owns any Shares. Accordingly, the Company believes that Section
611-A is inapplicable to the Offer and the Merger.
Upon the purchase of at least 25% of the Shares, Purchaser will be deemed a
"controlling person" under Section 910 of the MBCA and a "control transaction"
shall have occurred. As a result, holders of Shares which have not been tendered
and purchased in the Offer, shall, upon consummation of the Offer, have the
right to demand that Purchaser pay "fair value" for those Shares in cash, as
determined in accordance with Section 910 of the MBCA. A copy of Section 910 is
attached to the Offer to Purchase as Schedule II and a general description of a
stockholder's rights is set forth under the heading "Certain Legal Matters and
Regulatory Approvals; Control Transaction Payment Rights" in the Offer to
Purchase. Schedule II to the Offer the Purchase and the disclosure set forth
under "Certain Legal Matters and Regulatory Approvals; Control Transaction
Payment Rights" are incorporated herein by reference.
DISCLAIMER
The information contained in this Schedule 14D-9 concerning Parent,
Purchaser, the Offer and the Merger was supplied by Purchaser. The Company takes
no responsibility for the completeness or accuracy of such information.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
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(a)(1) Offer to Purchase, dated October 12, 1999
(a)(2) Form of Summary Advertisement
(a)(3) Press Release of the Company, dated October 7, 1999
(incorporated by reference to Exhibit (a)(8) to Purchaser's
Tender Offer Statement on Schedule 14D-1, dated October 12,
1999.)
(b) None
(c)(1) Agreement and Plan of Merger, dated as of October 6, 1999,
by and among Parent, Purchaser and the Company
(c)(2) Tender Agreement, dated as of October 6, 1999, among Irving
Kagan, Purchaser and Parent
(c)(3) Tender Agreement, dated as of October 6, 1999, among Mildred
K. Striar, Purchaser and Parent
(c)(4) Tender Agreement, dated as of October 6, 1999, among Paula
G. Kagan, Purchaser and Parent
(c)(5) Tender Agreement, dated as of October 6, 1999, among Daniel
Gelb Kagan, Purchaser and Parent
(c)(6) Tender Agreement, dated as of October 6, 1999, among Leslie
J. Kagan, Purchaser and Parent
(c)(7) Tender Agreement, dated as of October 6, 1999, among Candace
K. Platz, Purchaser and Parent
(c)(8) Tender Agreement, dated as of October 6, 1999, among Nikki
Kagan, Purchaser and Parent
</TABLE>
8
<PAGE> 10
<TABLE>
<S> <C>
(c)(9) Tender Agreement, dated as of October 6, 1999, among Ronald R. Striar, M.D., Purchaser and Parent
(c)(10) Tender Agreement, dated as of October 6, 1999, among Mildred K. Striar, Trustee f/b/o Wendy Striar,
Purchaser and Parent
(c)(11) Portions of the Proxy Statement of the Company, dated as of March 2, 1999 for the fiscal year ended
November 27, 1998, are incorporated by reference, relating to 1999 Annual Meeting of Stockholders,
under the captions "Executive Compensation and Other Information" and "Compensation Committee Report on
Executive Compensation"
(c)(12) Letter Agreement between the Company and William Hoskins, dated January 12, 1999.
(c)(13) Letter Agreement between the Company and David L. Keane, dated January 8, 1999.
(c)(14) Letter Agreement between the Company and Jose Roberto Lenhard, dated January 6, 1999.
(c)(15) Letter Agreement between the Company and Wilhelm Pfander, dated January 6, 1999.
(c)(16) Indemnification Agreements dated September 1, 1995 between Penobscot Shoe Company and the following
directors of that company:
(i) Francis J. Guthrie
(ii) Irving Kagan
(iii) James L. Moody, Jr.
(iv) John J. Riddle
(v) Gerald E. Rudman
(c)(17) 1991 Stock Option Plan
(c)(18) Confidentiality Agreement, dated as of September 21, 1999, between Parent and the Company (incorporated
by reference to Exhibit (c)(3) to Purchaser's Tender Offer Statement on Schedule 14D-1, dated October
12, 1999)
(c)(19) Escrow Agreement, dated as of October 6, 1999 (incorporated by reference to Exhibit (c)(4) to
Purchaser's Tender Offer Statement on Schedule 14D-1, dated October 12, 1999)
(c)(20) Written opinion of Advest, Inc. dated October 6, 1999
(c)(21) Letter to the stockholders of the Company
</TABLE>
9
<PAGE> 11
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
PENOBSCOT SHOE COMPANY
By: /s/ IRVING KAGAN
------------------------------------
Name: Irving Kagan
Title: Chief Executive Officer
Dated: October 12, 1999
10
<PAGE> 12
ANNEX I
PENOBSCOT SHOE COMPANY
NORTH MAIN STREET
OLD TOWN, MAINE 04468
------------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about October 12, 1999, as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") to holders of the Shares. Capitalized terms used and not
otherwise defined herein shall have the meaning set forth in the Schedule 14D-9.
You are receiving this Information Statement in connection with the possible
election of persons (the "Parent Designees") designated by the Riedman
Corporation (the "Parent") to a majority of the seats on the Board of Directors
of the Company. Pursuant to the Merger Agreement, Parent and PSC Acquisition
Corp. are to commence the Offer effective October 12, 1999. The Offer is
scheduled to expire at 12:00 midnight, New York City time, on November 9, 1999,
unless otherwise extended.
The information contained in this Information Statement (including
information incorporated by reference) concerning Parent and PSC Acquisition
Corp. (an indirect wholly owned subsidiary of Parent) and the Parent Designees
has been furnished to the Company by Parent and PSC Acquisition Corp., and the
Company assumes no responsibility for the accuracy or completeness of such
information.
GENERAL INFORMATION REGARDING THE COMPANY
GENERAL
The common stock, $1.00 par value per share (the "Shares"), is the only
class of voting securities of the Company outstanding. Each Share has one (1)
vote. As of September 30, 1999, there were 1,388,290 Shares outstanding. As of
September 30, 1999, the Company held 144,752 Shares in treasury. The Board of
Directors of the Company currently consists of five (5) members and there are
currently no vacancies on the Board.
PARENT DESIGNEES
The Merger Agreement provides that effective upon satisfaction of the
Minimum Condition and the purchase and payment for shares by Purchaser in the
Offer, the Parent shall have the right to designate three directors to the Board
of Directors of the Company, and such designees shall become directors of the
Company. At such time, three of the current directors will resign.
A-1
<PAGE> 13
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS OF THE COMPANY
The names of the current directors, ages as of September 30, 1999, and
certain other information are set forth below. As indicated above, three of the
current directors will resign effective immediately following the purchase of
shares by Purchaser pursuant to the Offer.
<TABLE>
<CAPTION>
SHARES OWNED
FIRST BENEFICIALLY AND
EMPLOYMENT FOR BECAME OF RECORD ON
NAME AGE PAST FIVE YEARS DIRECTOR SEPTEMBER 30, 1999
- ---- --- --------------- -------- ------------------
<S> <C> <C> <C> <C>
Irving Kagan................... 70 Chairman of the Board of 1960 431,378
Directors and Chief Executive
Officer of the Company
Francis J. Guthrie............. 61 Executive Vice President, 1984 1,500
Marketing and Sales, Fortis
Benefits Insurance Company;
previously, Senior Vice
President of Corporate
Marketing and Communications,
Fortis, Inc., President and
Chief Executive Officer, The
Guthrie Group
(marketing/advertising)
James L. Moody, Jr. ........... 67 Retired, formerly Chairman of 1971 1,000
the Board, Hannaford Bros. Co.
(wholesale and retail
distributor of groceries);
currently a Director of
UNUM-Provident Corporation
(insurance), IDEXX
Laboratories, Inc. and
Staples, Inc., and a Trustee
of the Colonial Group of
Mutual Funds
John I. Riddle................. 61 Retail Real Estate and Shopping 1989 1,000
Center Consultant;
previously, President,
Sturbridge Yankee Workshop,
Inc. (retail firm)
Gerald E. Rudman............... 71 Clerk of the Company; Retired 1975 7,000
Senior Partner, Rudman &
Winchell, LLP
</TABLE>
There are no family relationships among any of the directors or executive
officers of the Company.
MEETINGS OF THE BOARD OF DIRECTORS AND OF ITS COMMITTEES
Since the fiscal year ended November 27, 1998, the Board of Directors held
a total of seven meetings. All of the directors attended at least 75% of the
aggregate of (i) the total number of meetings of the Board of Directors during
which they served as director and (ii) the total number of meetings held by
committees of the Board of Directors on which they served.
The chairman of the Board of Directors appoints an audit committee, a
compensation committee and a nominating committee after the annual meeting.
Messrs. Guthrie, Moody, Riddle and Rudman constituted the Board's audit
committee for the past fiscal year. This committee reviews with the Company's
independent certified public accountants the scope of their audit work, the
results of the audit and the examination of the Company's internal accounting
and control procedures. Since the year ended November 27, 1998, the audit
committee held one meeting.
Messrs. Kagan, Moody, Riddle, Guthrie and Rudman constituted the Board's
compensation committee for the past fiscal year. This committee reviews,
recommends and approves the Company's compensation policies and practices,
including the level of compensation of officers of the Company, and makes
recommen-
A-2
<PAGE> 14
dations concerning compensation of directors. Since the fiscal year ended
November 27, 1998, the compensation committee held three meetings.
Messrs. Kagan, Guthrie, Moody, Riddle and Rudman are members of the
nominating committee. This committee identifies, reviews and recommends
individuals to fill Board vacancies. One meeting was held since the fiscal year
ended November 27, 1998.
EXECUTIVE OFFICERS OF THE COMPANY
Information required by Item 7(b) of Schedule 14A with respect to executive
officers of the Company is set forth below. The executive officers of the
Company are elected annually by the Board of Directors and hold office until
their successors are elected and qualified, or until their earlier removal or
resignation.
<TABLE>
<CAPTION>
NAME AGE POSITION PRESENTLY HELD AND PERIOD OF SERVICE
- ---- --- ---------------------------------------------
<S> <C> <C>
Irving Kagan*............................. 70 Chief Executive Officer since December 1998,
Chairman of the Board since 1973, Chief Executive
Officer from 1973 to 1993, President from 1968 to
1988. Employed by the Company since 1948.
Wilhelm Pfander........................... 61 Vice President since 1977. Employed by the Company
since 1963.
David L. Keane............................ 47 Executive Vice President since April 1999, Vice
President from 1987 to 1989, Treasurer since 1994.
Employed by the Company since 1985.
William Hoskins........................... 57 Vice President since 1994. Employed by the Company
since 1993.
Gerald E. Rudman.......................... 71 Clerk since 1969, Director since 1975. Company
General Counsel.
</TABLE>
- ---------------
* On December 27, 1998, Paul Hansen passed away suddenly. The Chairman of the
Board, Irving Kagan, assumed the responsibilities as Chief Executive Officer
on December 30, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In January 1999 the Board of Directors of the Company entered into certain
letter agreements relating to "change of control" benefits with each of William
Hoskins, David L. Keane, Jose Roberto Lenhard and Wilhelm Pfander (the "Letter
Agreements"). The Letter Agreements provide that if the executive's employment
with the Company should terminate or be terminated (whether by the Company or by
the executive, for any reason whatsoever, with certain limited exceptions)
during the twelve (12) month period following a change of control (as defined
therein), the Company shall pay the executive's salary and shall, at its cost,
maintain the executive's health insurance for the remainder of that twelve (12)
month period. Copies of the Letter Agreements are filed as exhibits (c)(12)
through (c)(15) to the Schedule 14D-9 and are incorporated herein by reference.
The Company has retained the services of the law firm of Rudman & Winchell,
LLP during the year ended November 28, 1998. Gerald E. Rudman is a retired
senior partner of Rudman & Winchell, LLP.
A-3
<PAGE> 15
COMPENSATION OF, AND TRANSACTIONS WITH, DIRECTORS, OFFICERS AND OTHERS
The following table sets forth all direct compensation paid by the Company
during the year ended November 28, 1998, to the highest-paid officers and
directors, each of whose aggregate direct compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
BONUS
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OTHER(2)
- --------------------------- ---- -------- ------------ --------
<S> <C> <C> <C> <C>
Paul Hansen(1).................................... 1998 $169,412 $59,125 $8,643
President and Chief 1997 161,178 -- 6,643
Executive Officer 1996 158,102 25,737 6,643
William Hoskins................................... 1998 123,066 37,122 180
Vice President -- Sales 1997 116,699 -- 180
1996 113,103 15,442 180
David L. Keane.................................... 1998 92,678 25,013 70
Executive Vice President -- Finance 1997 90,565 -- 70
and Administration 1996 88,227 9,437 41
</TABLE>
- ---------------
(1) Mr. Hansen passed away on December 27, 1998.
(2) Represents excess life insurance valuations, except with respect to Paul
Hansen, which also included automobile allowance.
Bonuses are awarded pursuant to an incentive plan adopted by the Board of
Directors of the Company. The objective of the incentive plan in 1996, 1997 and
1998 was to reward the Company's employees when, in the discretion of the Board
of Directors, the Company outperformed certain standards set by the Board. These
standards, which included standards for net sales and operating profits, were
achieved in 1996 and 1998. These standards were not achieved in 1997, and
accordingly no bonus pool was funded. The Pool was allocated among employees
based on each individual's contribution to the Company's performance as
determined by the Board of Directors in its unilateral discretion.
Upon the death of any employee who has served the Company for at least 15
years and has been an officer and/or director of the Company and/or any
subsidiary for at least two years, the Company will pay the sum of $5,000 and
one year's salary to the employee's surviving spouse and minor children. Mr.
Wilhelm Pfander, Vice President of Manufacturing currently qualifies for these
benefits, and the Company is currently making payment to Mr. Hansen's widow
pursuant to this plan.
Mr. Kagan, Chairman of the Board of Directors, retired as Chief Executive
Officer of the Company on December 31, 1993. On November 26, 1993, the Board of
Directors voted to provide him a supplemental retirement benefit of $20,000 per
year. During 1998, Mr. Kagan received payments totaling $20,000 as a result of
this supplemental retirement benefit.
The compensation for each outside director in fiscal 1998 consisted of an
annual retainer of $7,500 and a payment of $500 for each meeting attended. In
addition, the Chairman of the Board receives an annual retainer of $20,000.
Director compensation for fiscal 1999 is expected to continue at this rate.
CONTRIBUTORY RETIREMENT PLAN
Since 1981, Penobscot Shoe Company has had a contributory retirement plan
covering substantially all employees. This is a defined benefit plan and the
amount of the Company's contribution with respect to specified persons cannot be
readily calculated by the actuaries of the plan. The annual retirement benefits
for each pension plan year of future service are determined as .85% of annual
earnings which are not in excess of $16,200, and 1.5% of any excess of annual
earnings over $16,200. Past service (prior to January 1, 1988) benefits are
determined for each year of credited past service as .65% of average earnings of
the three years ended January 1, 1988 up to $16,200 and 1.5% of the average over
$16,200.
A-4
<PAGE> 16
All employees who are enrolled as members of the pension plan have
contributed in each plan year 0.5% of their annual earnings up to $16,200, and
2.5% of their annual earnings in excess of $16,200. Effective January 1, 1999,
the Plan was amended to eliminate the requirement that employees contribute to
the Plan. The following table shows the annual pension benefit payable to
employees, including officers, retiring at age 65 using a constant salary. The
table includes past and future service as follows: for 15 years service, 10
years of past service and 5 years of future service; for 25 years service, 20
and 5 respectively; for 30 years service, 25 and 5 respectively; for 35 years
service, 30 and 5; for 45 years service, 40 and 5.
APPROXIMATE ANNUAL PENSION UPON RETIREMENT AT AGE 65
<TABLE>
<CAPTION>
15 YEARS 25 YEARS 30 YEARS 35 YEARS 45 YEARS
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 75,000 $15,198 $25,071 $30,008 $34,944 $ 44,817
100,000 20,823 34,446 41,258 48,069 61,692
125,000 26,448 43,821 52,508 61,194 78,567
150,000 32,073 53,196 63,758 74,319 95,442
160,000 34,323 56,946 68,258 79,569 102,192
</TABLE>
For the highest paid officers and directors, years of credited service for
pension plan purposes and the amount of compensation for the fiscal year on
which the pension benefit calculations were based are as follows:
<TABLE>
<CAPTION>
YEARS OF COMPENSATION
NAME CREDITED SERVICE COVERED
- ---- ---------------- ------------
<S> <C> <C>
Paul Hansen...................................... 32 $160,000
William Hoskins.................................. 6 160,000
David Keane...................................... 13 117,691
</TABLE>
1991 STOCK OPTION PLAN
The Company's 1991 Stock Option Plan (the "Plan") was adopted by the Board
of Directors on December 20, 1990 and approved by the Company's stockholders at
the 1991 annual meeting. The Plan provides that options for the purchase of up
to 75,000 shares of Common Stock may be granted, of which 33,000 shares remained
available at December 1, 1998. The Plan is intended to promote the growth and
profitability of the Company by providing key employees with additional
incentive to achieve the Company's objectives and to enable the Company to
attract and retain key employees of outstanding ability.
The Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"), which has the authority to designate the key
employees eligible to participate, to prescribe the number of shares and other
terms of awards, to interpret the Plan and to make rules and regulations and all
other determinations for administering the Plan. None of the Directors
constituting the Committee is eligible to receive any stock options pursuant to
the Plan.
The exercise price of all options granted by the Committee will not be less
than 100% of the fair market value of the Common Stock on the date the option is
granted. All options granted under the Plan must expire ten years after the date
they were granted unless provision is made for an earlier expiration. No option
may be granted later than ten years following the date the Plan was approved by
the Board of Directors. The full purchase price for shares acquired upon the
exercise of an option must be paid in cash, Common Stock, or the promissory note
of the participant containing such terms as the Committee shall specify, or a
combination thereof, as the Committee may determine.
If the optionee ceases to serve the Company for reasons other than death or
total and permanent disability, the optionee may exercise his or her option for
a period equal to the earlier to occur of the end of such exercise right as set
forth in the option, or three months following such termination, to the extent
the option was exercisable prior to termination. Except as so exercised, the
option expires at the end of such three month period. If the optionee, while in
the service of the Company, dies or becomes permanently and totally
A-5
<PAGE> 17
disabled at any time while he or she is entitled to exercise an option, the
optionee or his or her executor, administrator, heir or legatee may exercise the
option in full at any time up to one year following the date of such termination
or the end of the tenth year following the grant of the option, if earlier.
Options may be granted on terms different from those set forth in the Plan in
substitution for options held by employees of other companies who become
employees of the Company or a subsidiary as a result of a merger or other
acquisition transaction.
Options may not be transferred by an optionee otherwise than by will or by
the laws of descent and distribution and during the optionee's lifetime can be
exercised only by the optionee.
In the event that there is a change of control of the Company, as defined
in the Plan, each option held pursuant to the Plan will become fully
exercisable. In the event of a stock dividend, stock split, recapitalization or
other change in the Company's capital stock, the number and kind of shares of
stock or other securities subject to an option granted hereunder, and the
maximum number of shares or other securities available under the Plan, the
purchase price, and other relevant provisions, may be appropriately adjusted by
the Committee. The Committee may also make such adjustments in the event of a
material change in accounting principles or practices, a consolidation or merger
where the Company survives, a sale or acquisition of significant amounts of
stock or other property, or the occurrence of any other event, if determined by
the Committee to warrant such an adjustment to avoid distortion of the Plan.
Subject to the provision dealing with changes in control, if the Company is
involved in a merger or consolidation in which it is not the surviving
corporation, or the Company's shares are converted into, or exchanged for, the
shares of another corporation, or into or for other consideration, all options
granted under the Plan shall terminate upon such event. However, if such an
event occurs, the Committee shall cause replacement options to be granted or
make all outstanding options exercisable in full for a period of twenty days
prior to such event.
The Committee may amend the Plan and any option granted thereunder,
provided that, without the approval of the Stockholders of the Company, no
amendment may (except in the event of stock dividends, stock splits, certain
mergers, spin-offs, and similar events, as herein provided) increase the maximum
number of shares available under the Plan, the designation of those eligible to
participate in the Plan, reduce the minimum option price of future options, or
extend the time within which options may be granted. No amendment may adversely
affect the rights of any optionee without his or her consent.
All grants of options under the Plan or their exercise shall be in
accordance with applicable federal and state laws and regulations, and the
Company may impose such conditions and requirements as it deems necessary or
desirable to assure such compliance.
The Plan is not intended to qualify for incentive stock option tax
treatment under the Internal Revenue Code.
No options were granted during fiscal 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED OPTIONS
SHARES VALUE ON SEPTEMBER 30, 1999 ON SEPTEMBER 30, 1999
ACQUIRED ON REALIZED ----------------------------- ----------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wilhelm Pfander...... -- -- 6,000 0 51,750 0
William Hoskins...... -- -- 5,000 0 33,750 0
David L. Keane....... -- -- 5,000 0 43,125 0
</TABLE>
A-6
<PAGE> 18
SECURITY OWNERSHIP OF
PRINCIPAL STOCKHOLDERS, DIRECTORS, AND OFFICERS
The following information is furnished as of September 30, 1999, with
respect to the Shares beneficially owned, within the meaning of Rule 13d-3, by
any person who is known by the Company to be the beneficial owner of more than
five percent (5%) of any class of voting securities of the Company, by all
Directors of the Company, by all executive officers of the Company and by all
Directors and executive officers of the Company as a group. Unless otherwise
indicated, the named individuals hold sole voting and investment power over the
Shares listed below.
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY % OF TOTAL OUTSTANDING SHARES
NAME AND ADDRESS OWNED ON SEPTEMBER 30, 1999 OWNED ON SEPTEMBER 30, 1999
- ---------------- ----------------------------- -----------------------------
<S> <C> <C>
Irving Kagan, Chairman of the
Board............................ 431,378(a)(b) 31.1
Mildred K. Striar.................. 274,823(a)(c) 19.2
Joseph R. Nerges................... 131,450 9.5
Frances J. Guthrie, Director....... 1,500 *
James L. Moody, Jr, Director....... 1,000 *
John I. Riddle, Director........... 1,000 *
Gerald E. Rudman, Director and
Clerk............................ 7,000 *
David L. Keane, Executive Vice
President -- Finance and
Administration................... 5,500(d) *
William Hoskins, Vice President --
Sales............................ 5,000(e) *
Wilhelm Pfander, Vice President.... 6,155(f) *
All directors and officers as a
group (8 persons)................ 458,533(g) 33.0
TOTAL.................... 856,276 61.7
</TABLE>
- ---------------
* Less than 1% of outstanding shares
(a) Subject to: (i) an agreement between Mr. Kagan and Mrs. Striar granting each
a right of first refusal and certain rights of participation with respect to
the shares of the others.
(b) Included in this figure are 15,030 shares held by Paula G. Kagan, who is Mr.
Kagan's wife.
(c) Included in this figure are 6,187 shares held by Ronald R. Striar, M.D., who
is Mrs. Striar's husband, and 8,530 shares held in trust for Wendy Striar,
of which trust Mrs. Striar is the trustee.
(d) Included in this figure are 5,000 shares purchasable by Mr. Keane under
options presently exercisable.
(e) Included in this figure are 5,000 shares purchasable by Mr. Hoskins under
options presently exercisable.
(f) Included in this figure are 6,000 shares purchasable by Mr. Pfander under
options presently exercisable.
(g) Included in this figure are 16,000 shares purchasable by Messrs. Keane,
Hoskins and Pfander under options presently exercisable.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
Company's Common Stock to file with the Commission initial reports of ownership
and reports of changes in ownership of the Common Stock of the Company.
Directors, executive officers and holders of more than 10% of the Company's
Common Stock are
A-7
<PAGE> 19
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on copies of such forms furnished as
provided above, or written representations that no Forms 5 were required, the
Company believes that during the fiscal year ended November 27, 1998, its
officers, directors and holders of more than 10% of the Company's Common Stock
complied with all Section 16(a) filing requirements.
INFORMATION WITH RESPECT TO PARENT DESIGNEES
As of the date of this Information Statement, the Parent has determined who
will be Parent Designees. Set forth below are the name, business address,
principal occupation or employment and five (5) year employment history of the
persons who will be Parent Designees. Unless otherwise indicated, each such
person has held the occupation listed opposite his name for at least the past
five (5) years and each occupation refers to employment with the Parent. All
persons listed below are citizens of the United States.
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS EMPLOYMENT HELD DURING THE PAST FIVE YEARS
- ------------------------- ---------------------------------------------
<S> <C>
James R. Riedman.............. President and Chief Executive Officer,
Riedman Corporation Riedman Corporation (privately owned general
45 East Avenue insurance agency) 1992 to present; Chairman
Rochester, New York 14604 and Chief Executive Officer, Daniel Green
Company (manufacturer and distributor of
and shoes) 1996 to present; Director, Daniel
Green Company, 1993 to present.
Daniel Green Company
One Main Street
Dolgeville, New York 13329
John R. Riedman............... Chairman of the Board of Directors, Riedman
Riedman Corporation Corporation, 1992 - present; President and
45 East Avenue Chief Executive Officer, Riedman Corporation,
Rochester, New York 14604 1956 - 1992.
Kathy Griswald................ Pension Fund Manager, Southern New England
Telephone, until June 1999.
</TABLE>
John R. Riedman is the father of James R. Riedman and Kathy Griswald.
A-8
<PAGE> 1
Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PENOBSCOT SHOE COMPANY
AT
$11.75 NET PER SHARE
BY
PSC ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
RIEDMAN CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN STANDARD
TIME, ON NOVEMBER 9, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN, PRIOR TO THE EXPIRATION OF THE OFFER, AT
LEAST 80% OF THE TOTAL NUMBER OF SHARES OF OUTSTANDING COMMON STOCK OF PENOBSCOT
SHOE COMPANY (THE "COMPANY") AND (ii) THE SATISFACTION OR WAIVER OF CERTAIN
OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE INTRODUCTION
AND SECTION 1 -- "TERMS OF THE OFFER; EXPIRATION DATE" AND SECTION
13 -- "CERTAIN CONDITIONS OF THE OFFER" OF THIS OFFER TO PURCHASE.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF OCTOBER 6, 1999 BY AND AMONG THE COMPANY, PSC ACQUISITION CORP. AND
RIEDMAN CORPORATION. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND HAS DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN THE OFFER. THIS OFFER
TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION
WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, par value $1.00 per share (the "Shares" or "Company
Common Stock"), of the Company should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and (a) mail or deliver it together with the
certificate(s) evidencing tendered Shares, and any other required documents, to
the Depository (as defined herein) or (b) tender such Shares pursuant to the
procedures for book-entry transfer set forth in Section 3 -- "Procedures for
Accepting the Offer and Tendering Shares" or (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Any stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedures for book-entry transfer on a timely basis, may tender such Shares
by following the procedures for guaranteed delivery set forth in Section
3 -- "Procedures for Accepting the Offer and Tendering Shares".
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from the
Information Agent or from brokers, dealers, commercial banks or trust companies.
THE INFORMATION AGENT FOR THE OFFER IS:
[GEORGESON SHAREHOLDER COMMUNICATIONS LOGO]
October 12, 1999.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION
1. Terms of the Offer; Expiration Date.................. 5
2. Acceptance for Payment and Payment for Shares........ 7
3. Procedures for Accepting the Offer and Tendering
Shares............................................... 7
4. Withdrawal Rights.................................... 10
5. Certain Federal Income Tax Consequences.............. 11
6. Price Range of Shares; Dividends..................... 11
7. Certain Information Concerning the Company........... 12
8. Certain Information Concerning Purchaser and
Parent............................................... 14
9. Financing of the Offer and the Merger................ 15
10. Background of the Offer; Contacts with the Company;
The Merger Agreement; The Tender Agreements.......... 16
11. Purpose of the Offer; Plans for the Company After the
Offer and the Merger................................. 27
12. Effect of the Offer on the Market for the Shares,
Exchange Listing and Exchange Act Registration....... 28
13. Certain Conditions of the Offer...................... 29
14. Certain Legal Matters and Regulatory Approvals....... 30
15. Fees and Expenses.................................... 34
16. Miscellaneous........................................ 34
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND
PURCHASER.............................................. SCH-I
SCHEDULE 2
SECTION 910 OF THE MAINE BUSINESS CORPORATION ACT......... SCH-II
SCHEDULE 3
SECTION 909 OF THE MAINE BUSINESS CORPORATION ACT......... SCH-III
</TABLE>
2
<PAGE> 3
To the Holders of Common Stock of Penobscot Shoe Company:
INTRODUCTION
PSC Acquisition Corp., a corporation organized and existing under the laws
of the State of Maine ("Purchaser") and an indirect wholly-owned subsidiary of
Riedman Corporation, a corporation organized and existing under the laws of the
State of New York ("Parent"), hereby offers to purchase all of the outstanding
shares of common stock, par value $1.00 per share (the "Shares" or "Company
Common Stock"), of Penobscot Shoe Company, a corporation organized and existing
under the laws of the State of Maine (the "Company"), at a price of $11.75 per
Share (such amount, or any greater amount per Share paid pursuant to the Offer,
being hereinafter referred to as the "Offer Price"), net to the seller in cash
(subject to applicable withholding of taxes), without interest, upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
Tendering stockholders who have Shares registered in their own name and who
tender directly to the Depository will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 -- "Stock Transfer
Taxes" of the Letter of Transmittal, stock transfer or other similar taxes with
respect to the purchase of Shares by Purchaser pursuant to the Offer. Purchaser
will pay all charges and expenses of EquiServe, L.P., which is acting as the
Depository (in such capacity, the "Depository") and Georgeson Shareholder
Communications Inc. which is acting as the information agent (in such capacity,
the "Information Agent") incurred in connection with the Offer. See Section
15 -- "Fees and Expenses".
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN, PRIOR TO THE EXPIRATION OF THE OFFER, AT
LEAST 80% OF THE TOTAL ISSUED AND OUTSTANDING SHARES OF COMPANY COMMON STOCK
(THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND
CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 1 -- "TERMS OF THE
OFFER; EXPIRATION DATE" AND SECTION 13 -- "CERTAIN CONDITIONS OF THE OFFER",
WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER.
The purpose of the Offer, which is being made pursuant to an Agreement and
Plan of Merger, dated as of October 6, 1999 (the "Merger Agreement"), by and
among Purchaser, Parent and the Company is to acquire for cash as many
outstanding Shares as possible as a first step in acquiring the entire equity in
the Company. The Merger Agreement provides, among other things, that as promptly
as practicable following the completion of the Offer and the satisfaction or
waiver of certain conditions set forth in the Merger Agreement and in accordance
with the relevant provisions of the Maine Business Corporation Act ("Maine
Law"), the Company will be merged with and into the Purchaser (the "Merger").
Upon consummation of the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and will be an indirect wholly-owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each issued and outstanding Share (other than (i) Shares owned by
Parent, Purchaser or any direct or indirect wholly owned subsidiary of the
Company or Parent immediately prior to the effective time of the Merger
("Ineligible Shares") and (ii) Shares which are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders who
have (A) properly exercised appraisal rights with respect thereto ("Dissenting
Shares") in accordance with Section 909 of Maine Law or (B) properly exercised
the right to receive payment therefor following a control transaction in
accordance with Section 910 of Maine Law ("Demanding Shares")), will be
converted into and represent the right to receive the Offer Price, without
interest (the "Merger Price"). See Section 10 -- "Background of the Offer;
Contacts with the Company; The Merger Agreement; The Tender Agreements".
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND HAS DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS. THE BOARD UNANIMOUSLY RECOMMENDS THAT
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<PAGE> 4
THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN THE
OFFER.
Advest, Inc. ("Advest"), the financial advisor to the Company, has
delivered a written opinion to the Board to the effect that, as of the date of
such opinion and based upon and subject to certain matters described therein,
the $11.75 per Share cash consideration to be received by the holders of the
Shares in the Offer and the Merger is fair, from a financial point of view, to
such holders. A copy of such opinion is attached as an exhibit to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which has been filed by the Company with the Securities and Exchange Commission
(the "Commission" or the "SEC") in connection with the Offer and which is being
mailed to shareholders herewith, and should be read carefully in its entirety
for a description of the assumptions made, matters considered and limitations on
the review undertaken by Advest.
In connection with the execution of the Merger Agreement, Parent and
Purchaser entered into Tender Agreements (the "Tender Agreements"), dated as of
October 6, 1999, among Parent, Purchaser and Irving Kagan, his sister, Mildred
Striar, and certain other family members (collectively, the "Principal
Stockholders"), pursuant to which each of the Principal Stockholders has, among
other things, agreed to tender into the Offer all Shares owned by them and not
withdraw their tenders prior to the expiration of the Offer. As of September 30,
1999, the 740,321.5 Shares owned by the Principal Stockholders and subject to
the Tender Agreements constituted approximately 53.33% of the total issued and
outstanding Shares of the Company. Thus, the Principal Stockholders' tender of
their Shares pursuant to the Tender Agreements will not be sufficient to satisfy
the Minimum Condition. The Minimum Condition should be satisfied if at least
approximately 370,311 Shares are validly tendered and not withdrawn prior to the
expiration of the Offer, in addition to the 740,321.5 that will be tendered
pursuant to the Tender Agreements. See Section 10 -- "Background of the Offer;
Contacts with the Company; The Merger Agreement; The Tender Agreements".
The Merger Agreement provides that so long as it is in effect, the Company
shall not cause or permit the size of the Board to be expanded to more than five
directors. The Merger Agreement also provides that promptly upon satisfaction of
the Minimum Condition and the purchase of and payment for Shares in the Offer by
Parent or any of its subsidiaries, if requested by Parent, Parent will be
entitled to designate three directors for election to Company's five person
Board. The Company will, upon request of and as specified by Purchaser or
Parent, on the date of such request, secure the resignations of such number of
its incumbent directors as is necessary to enable Parent's designees to be so
elected to the Board, and will take all actions necessary to cause Parent's
designees to be so elected or appointed. At such times, the Company will use its
best efforts to cause individuals designated by Parent to constitute the same
percentage of each committee of the Board (other than any committee of the Board
established to take action under the Merger Agreement). Notwithstanding the
foregoing, until the Effective Time, the Company will retain as members of its
Board at least two directors who are directors of the Company on the date of the
Merger Agreement; provided, that upon satisfaction of the Minimum Condition and
subsequent to the purchase of and payment for Shares pursuant to the Offer,
Parent will always have its designees represent at least a majority of the
entire Board. See Section 10 -- "Background of the Offer; Contacts with the
Company; The Merger Agreement; The Tender Agreements".
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the stockholders of the Company, if required under
Maine Law. See Section 10 -- "Background of the Offer; Contacts with the
Company; The Merger Agreement; The Tender Agreements". If so required, a Proxy
Statement (as defined in Section 10 -- "Background of the Offer; Contacts with
the Company; The Merger Agreement; The Tender Agreements") containing detailed
information concerning the Merger will be furnished to stockholders of the
Company in connection with a special meeting of its stockholders to be called by
the Company to vote on the Merger. Purchaser will vote all Shares acquired
pursuant to the Offer in favor of the Merger. Maine law requires, among other
things, that the adoption of any plan of merger or consolidation of the Company
must be approved by the Board and by the holders of a majority of the
outstanding shares, unless a corporation's charter or by-laws provides for a
higher percentage. The Company's By-Laws require the approval of 55% of the
outstanding Shares to consummate a merger. Consequently, if the Offer is closed
after achieving the
4
<PAGE> 5
Minimum Condition (tender of 80% of the outstanding Shares), Purchaser will have
sufficient voting power to approve and adopt the Merger Agreement and the Merger
without the vote of any other stockholder. Notwithstanding the foregoing, if
Parent and Purchaser collectively own, following consummation of the Offer, at
least 90% of the outstanding Shares, Parent, Purchaser and the Company will
cause the Merger to become effective as soon as practicable, without a meeting
of the stockholders of the Company, in accordance with the "short-form" merger
provisions of Section 904 of Maine Law, if possible.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Merger Agreement and
the Offer (including if the Offer is extended or amended, the terms and
conditions of such extension or amendment), Purchaser will accept for payment
and pay for all Shares validly tendered prior to the Expiration Date (as defined
below) and not properly withdrawn as permitted by Section 4 -- "Withdrawal
Rights". The term "Expiration Date" means 12:00 Midnight, Eastern Standard Time,
on November 9, 1999; provided, however, that Purchaser may, without the consent
of the Company (but subject to the terms and conditions of the Merger Agreement,
as described below), extend the period during which the Offer is open, in which
event the term "Expiration Date" will mean the latest time and date at which the
Offer, as so extended by Purchaser, will expire.
Purchaser is entitled to extend the Offer (and defer the Expiration Date)
up to 90 days after the Offer commences, in one or more periods of not more than
10 business days each, if at the initial expiration date of the Offer, or any
extension thereof, any condition to the Offer is not satisfied or waived
("Extension A"). Purchaser also is entitled, but shall be under no obligation,
to extend the Offer (and to defer the Expiration Date) further for an additional
period ending no more than 150 days (in one or more periods of not more than 10
business days each) following an extension pursuant to Extension A, if at the
Expiration Date, as deferred pursuant to Extension A, the Litigation Condition
or the Trading Suspension Condition (as defined in Section 13 -- "Certain
Conditions to the Offer") have not been satisfied or waived. Purchaser is
further entitled to extend the Offer for any period required by rule,
regulation, interpretation or position of the Commission or the Staff thereof
which is applicable to the Offer. Furthermore, at the Expiration Date, if all
conditions to the Offer have been satisfied or waived, and for so long as less
than 90% of the outstanding shares of Company Common Stock have been validly
tendered and not properly withdrawn pursuant to the Offer, Purchaser may, in its
sole discretion and without the consent of the Company, extend the Offer (and
defer the Expiration Date) for up to an additional 10 business days in the
aggregate (in periods of no more than five business days each). In addition, the
Offer Price may be increased and the Offer may be extended to the extent
required by law in connection with such increase without the consent of the
Company. Any extension of the Offer in accordance therewith shall defer the
Expiration Date until the latest date to which the Offer is so extended but not
beyond those dates set forth above. Notwithstanding the foregoing, subject to
the other terms of the Merger Agreement (including Parent's and Purchaser's
right to terminate the Agreement) if any conditions other than the Minimum
Condition have not been satisfied or waived as of a scheduled Expiration Date,
and such conditions are reasonably capable of being satisfied by December 31,
1999, then Purchaser is required to continue to extend the Offer through such
date in intervals of no less than five business days each. During any such
extension, all Shares previously tendered and not withdrawn will remain tendered
pursuant to the Offer, subject to the rights of a tendering stockholder to
withdraw his, her or its Shares. See Section 4 -- "Withdrawal Rights".
Subject to the applicable regulations of the Commission, Purchaser also
expressly reserves the right, in its sole discretion (but subject to the terms
and conditions of the Merger Agreement), at any time and from time to time, (i)
to delay acceptance for payment of, or, regardless of whether such Shares were
theretofore accepted for payment, payment for, any Shares, or to terminate the
Offer and not accept for payment, or not pay for, any Shares if, at the
Expiration Date, any of the conditions specified in Section 13 -- "Certain
Conditions of the Offer" exists and (ii) to waive any of the conditions
specified in Section 13 -- "Certain
5
<PAGE> 6
Conditions of the Offer", in whole or in part. The Merger Agreement provides
that, without the consent of the Company, Purchaser will not (i) decrease the
Offer Price, (ii) change the form of consideration payable in the Offer, (iii)
reduce the number of Shares sought to be purchased in the Offer, (iv) amend the
conditions to the Offer set forth in Section 13 -- "Certain Conditions of the
Offer" or impose conditions to the Offer in addition to those set forth in
Section 13 -- "Certain Conditions of the Offer" or (v) amend or waive the
Minimum Condition to be less than 80% of the total issued and outstanding shares
of Company Common Stock. Purchaser is required under the Merger Agreement
promptly after expiration of the Offer to accept for payment, and pay for, all
Shares validly tendered and not withdrawn, subject to the terms and conditions
of the Offer and the Merger Agreement.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, such announcement in the
case of an extension to be made no later than 9:00 a.m., Eastern Standard 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 material changes be promptly disseminated to stockholders in
a manner reasonably designed to inform them of such changes) and without
limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a press
release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1(d) under the Exchange Act. These rules generally provide that
the minimum period during which a tender offer must remain open following a
material change in the terms of the offer or information concerning the offer,
other than a change in price or a change in percentage of securities sought,
will depend upon the facts and circumstances, including the relative materiality
of the changes in the terms or information. In the Commission's view, an offer
should remain open for a minimum of five business days from the date a material
change is first published, sent or given to securityholders. With respect to a
change in price or a change in percentage of securities sought, a minimum ten
business day period is generally required to allow for adequate dissemination to
shareholders and for investor responses.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to increase the consideration being offered in the
Offer or, subject to the Company's consent, to decrease the number of Shares
being sought or the consideration being offered in the Offer, such decrease in
the number of Shares being sought or such increase or decrease in the
consideration being offered will be applicable to all stockholders whose Shares
are accepted for payment pursuant to the Offer. If at the time notice of any
such decrease in the number of Shares being sought or such increase or decrease
in the consideration being offered is first published, sent or given to holders
of such Shares, the Offer is scheduled to expire at any time earlier than the
period ending on the tenth business day from and including the date that such
notice is first so published, sent or given, the Offer will be extended at least
until the expiration of such ten business day period. For purposes of the Offer,
a "business day" means any day, other than Saturday, Sunday or a federal
holiday, and consists of the time period from 12:01 a.m. through 12:00 Midnight,
Eastern Standard Time.
Under no circumstances will interest on the Offer Price for the Shares be
paid, regardless of any extension of the Offer or delay in making such payment.
During any extension of the Offer, all Shares previously tendered and not
withdrawn will remain tendered pursuant to the Offer, subject to the rights of a
tendering shareholder to withdraw his Shares. See Section 4 -- "Withdrawal
Rights".
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.
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<PAGE> 7
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment, and will pay for, all Shares
validly tendered prior to the Expiration Date and not properly withdrawn as soon
as it is legally permitted to do so under applicable law. The obligations of
Purchaser to consummate the Offer and to accept for payment and to pay for all
Shares validly tendered and not properly withdrawn will be subject only to the
satisfaction or waiver of the conditions to the Offer set forth in Section
13 -- "Certain Conditions of the Offer". Subject to applicable rules of the
Commission and to the terms of the Merger Agreement, Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares in
order to comply, in whole or in part, with any applicable law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depository of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depository's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3 -- "Procedures for Accepting the Offer and Tendering Shares", (ii) the Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message (as defined below)
in connection with a book-entry transfer, and (iii) any other documents required
by the Letter of Transmittal. Accordingly, payment may be made to tendering
stockholders at different times if delivery of the certificates and other
required documents occur at different times.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depository and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
Purchaser has deposited $16,312,419 in escrow with Manufacturers and
Traders Trust Company (the "Escrow Agent") which will upon the terms and
conditions set forth in the Escrow Agreement transmit the funds to the
Depository to pay the Offer Price for all of Company's issued and outstanding
Shares tendered, not withdrawn and accepted for payment by Purchaser pursuant to
the Offer upon satisfaction or waiver of all conditions to the Offer. Any
determination concerning the satisfaction of such terms and conditions shall be
within the sole discretion of Purchaser. For purposes of the Offer, Purchaser
will be deemed to have accepted for payment (and thereby purchased) Shares
validly tendered and not properly withdrawn as, if and when Purchaser gives oral
or written notice to the Depository of Purchaser's acceptance for payment of
such Shares pursuant to the Offer. The Depository will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for Shares be paid, regardless of any extension of the Offer or any delay in
making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depository's account at the Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3 -- "Procedures for Accepting the Offer and
Tendering Shares", such Shares will be credited to an account maintained at such
Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFERING AND TENDERING SHARES.
VALID TENDER. In order for a holder of Shares to validly tender Shares
pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depository at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date and either (i) the Share
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<PAGE> 8
Certificates evidencing tendered Shares must be received by the Depository at
such address or such Shares must be tendered pursuant to the procedures for
book-entry transfer described below and a Book-Entry Confirmation must be
received by the Depository, in each case prior to the Expiration Date, or (ii)
the tendering stockholder must comply with the guaranteed delivery procedures
described below.
If Certificates are forwarded to the Depository in multiple deliveries, a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) must accompany each delivery. No alternative, conditional or
contingent tenders will be accepted.
BOOK-ENTRY TRANSFER. The Depository will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depository's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other required documents,
must, in any case, be received by the Depository at its address set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedures
described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITORY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITORY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Security Transfer Agents Medallion
Program, or by any other "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing being
referred to as an "Eligible Institution"), except in cases where Shares are
tendered (i) by a registered holder of Shares who has not completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. If a Share Certificate is registered in the name of a
person other than the person who or that signs the Letter of Transmittal, or if
payment is to be made, or a Share Certificate not accepted for payment or not
tendered is to be returned, to a person other than the registered holder(s),
then the Share Certificate must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear on the Share Certificate, with the signature(s) on such Share Certificate
or stock powers guaranteed by an Eligible Institution. See Instruction
1 -- "Guarantee of Signatures" and Instruction 5 -- "Signatures on Letter of
Transmittal; Stock Powers and Endorsements" of the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depository prior to the
Expiration Date, or such stockholder cannot complete the procedures for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
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<PAGE> 9
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received by the Depository prior to the Expiration Date as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal, are received by the Depository
within three American Stock Exchange ("AMX") trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day
on which trading occurs on the American Stock Exchange.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depository and must
include a guarantee by an Eligible Institution in the form set forth in the form
of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depository of (i) the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and (iii) any other documents required by the Letter of Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination will be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition to the Offer or any defect or irregularity in the tender of any Shares
of any particular stockholder, whether or not similar defects or irregularities
are waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects and irregularities have been cured
or waived. None of Purchaser, Parent, the Depository, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
APPOINTMENT AS PROXY. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and with respect to any and all other Shares or other
securities issued or issuable in respect of such Shares on or after the date of
this Offer to Purchase). All such proxies will be considered coupled with an
interest in the tendered Shares. Such appointment will be effective when, and
only to the extent that, Purchaser accepts such Shares for payment. Upon such
acceptance for payment, all prior proxies given by such stockholder with respect
to such Shares (and such other Shares and securities) will be revoked without
further action, and no subsequent proxies may be given nor any subsequent
written consent executed by such stockholder (and, if given or executed, will
not be deemed to be effective) with respect thereto. The designees of Purchaser
will, with respect to the Shares (and such other Shares and securities) for
which the appointment is effective, be empowered to exercise all voting and
other rights of such stockholder as they in their sole discretion may deem
proper at any annual or special meeting of the Company's stockholders or any
adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon Purchaser's payment for
such Shares, Purchaser must be able to exercise full voting rights with respect
to such Shares (and such other Shares and securities).
9
<PAGE> 10
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
BACKUP WITHHOLDING. Under the federal income tax laws, the Depository will
be required to withhold 31% of the amount of any payments made to certain
stockholders pursuant to the Offer ("Backup Withholding") unless such
stockholder (a) is a corporation or comes within certain other exempt categories
and when required demonstrates that fact or (b) provides the Depository with
stockholder's correct taxpayer identification number and a certification that
such stockholder is not subject to backup withholding by completing the
substitute Form W-9 in the Letter of Transmittal, or otherwise complies with
applicable requirements of the Backup Withholding rules. See Instruction
9 -- "Substitute Form W-9" of the Letter of Transmittal. In addition, with
respect to any holder that is a foreign government or international
organization, the Depository will not deduct or withhold from the consideration
otherwise payable to any such holder of Shares pursuant to the Offer any amount
with respect to which such holder has timely delivered to the Depository a
properly executed Form 8709 in accordance with applicable law.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares made pursuant to the Offer are irrevocable. Shares
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after the Expiration
Date. If Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares or is unable to accept Shares for payment pursuant to the Offer for
any reason, then, without prejudice to Purchaser's rights under the Offer, the
Depository may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders comply with the procedures for withdrawal described in this Section
4. Any such delay will be by an extension of the Offer to the extent required by
law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depository at
one of its addresses set forth on the back cover page of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depository, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depository and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution,
unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry transfer as set forth in Section 3 -- "Procedures for Accepting the
Offer and Tendering Shares", any notice of withdrawal must also specify the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares, in which case a notice of withdrawal will be
effective if delivered to the Depository by any method described in the first
sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
Parent, the Depository, 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 any such notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3 -- "Procedures for Accepting the Offer and
Tendering Shares".
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<PAGE> 11
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or to the Merger will
be a taxable transaction to the stockholders of the Company for federal income
tax purposes and may also be a taxable transaction under applicable state, local
or foreign tax laws. This will be the case whether a stockholder sells Shares
pursuant to the Offer, the Merger or the control transaction payment right under
Section 910 of the Maine Law.
A tendering stockholder whose Shares are accepted for sale pursuant to the
Offer generally will recognize gain or loss on the date the Offer is consummated
in an amount equal to the difference between such stockholder's tax basis in the
Shares accepted for purchase and the amount of cash received in exchange
therefor. A stockholder who receives cash in exchange for Shares pursuant to the
Merger will recognize gain or loss at the Effective Time in an amount equal to
the difference between such stockholder's tax basis in such Shares and the
amount of cash received in exchange therefor.
Gain or loss will be capital gain or loss if the Shares were capital assets
in the hands of the stockholder, and will be long-term capital gain or loss if
the Shares were held by the stockholder for more than 12 months. Under present
U.S. federal law, long-term capital gains are generally taxable at a maximum
rate of 20% for individuals and 35% for corporations. Certain limitations apply
to the use of capital losses.
The foregoing discussion may not be applicable to certain types of
stockholders, including stockholders who acquired shares pursuant to the
exercise of employee stock options or otherwise as compensation, individuals who
are not citizens or residents of the United States and foreign corporations.
The federal income tax discussion set forth above is included for general
information only and is based upon Purchaser's understanding of present law. The
tax consequences to each stockholder will depend in part upon such stockholder's
particular situation. STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM,
INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND STATE,
LOCAL AND FOREIGN TAX LAWS AND CHANGES IN SUCH TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and traded principally on the AMX under the symbol
"PSO". The following table sets forth, for the quarters indicated, the high and
low sales prices per Share on the AMX as reported by the Dow Jones News Service.
The Company has paid dividends on the Shares during the indicated quarters as
set forth below.
<TABLE>
<CAPTION>
HIGH LOW DIVIDEND
---- --- --------
<S> <C> <C> <C>
1997:
First Quarter...................................... 7 1/8 5 5/8 $.05
Second Quarter..................................... 6 3/4 5 1/4 .05
Third Quarter...................................... 6 1/16 5 1/2 .05
Fourth Quarter..................................... 6 3/8 5 3/4 .05
1998:
First Quarter...................................... 5 7/8 5 1/8 $.05
Second Quarter..................................... 6 3/4 5 3/8 .05
Third Quarter...................................... 8 3/8 6 1/4 .05
Fourth Quarter..................................... 8 3/8 6 1/16 .05
1999:
First Quarter...................................... 11 3/8 6 7/8 $.05
Second Quarter..................................... 10 1/8 8 1/8 .05
Third Quarter...................................... 12 5/8 8 5/8 .05
</TABLE>
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<PAGE> 12
On October 6, 1999, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per Share as reported on the AMX was $11 9/16. On
October 8, 1999, the last full trading day prior to the printing of this Offer
to Purchase, the closing price per Share as reported on the AMX was $11 5/8.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
Under the terms of the Merger Agreement, the Company is not permitted to
declare or pay dividends with respect to the Shares without the prior written
consent of Parent except that the Company may pay a quarterly cash dividend not
to exceed $0.05 in the fiscal quarter ended November 30, 1999. On October 6,
1999, the Company's Board declared a quarterly dividend of $.05 payable to
holders of record of Shares on October 14, 1999. The dividend is scheduled to be
paid on October 25, 1999.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth herein, the information concerning the
Company contained in this Offer to Purchase, including financial information,
has been furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. None of Purchaser, Parent or the Information Agent assumes any
responsibility for the accuracy or completeness of the information concerning
the Company, furnished by the Company or 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 Purchaser, Parent or the Information Agent.
The Company is a corporation organized and existing under the laws of the
Sate of Maine with its principal executive offices located at 450 North Main
Street, Old Town, Maine 04468. The Company is engaged in the design, importing
and sale of branded footwear to retailers. Its principal products are women's
dress, tailored and casual footwear, including boots and sandals, selling in the
moderate price range. In 1998, all of the Company's sales were made under the
exclusive brand name, TROTTERS, to approximately 1600 locations nationwide.
SELECTED FINANCIAL INFORMATION. Set forth below is a summary of certain
financial information relating to the Company which has been excerpted or
derived from the financial statements contained in the Company's Annual Report
on Form 10-K for the fiscal year ended November 27, 1998 (the "Form 10-K") and
the unaudited financial statements contained in the Company's Quarterly Report
on Form 10-Q for the quarter ended August 27, 1999 (the "Form 10-Q"). More
comprehensive information is included in the Form 10-K, the Form 10-Q and other
reports and documents filed by the Company with the Commission. The financial
information that follows is qualified in its entirety by reference to such
reports and other documents, including the financial statements and related
notes contained therein. Such reports and other documents may be examined and
copies may be obtained from the offices of the Commission in the manner set
forth below under "Available Information".
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<PAGE> 13
PENOBSCOT SHOE COMPANY
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------------ ----------------------- -----------------------
NOVEMBER 27, NOVEMBER 27, NOVEMBER 29, AUGUST 27, AUGUST 28, AUGUST 27, AUGUST 28,
1998 1997 1996 1999 1998 1999 1998
------------ ------------ ------------ ---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Net sales.................. $19,607 $14,826 $15,429 $5,835 $5,637 $16,709 $14,826
Operating income........... 2,075 379 904 978 629 2,337 1,163
Net income................. $ 1,486 444 $ 857 673 $ 506 $ 1,609 $ 986
Basic earnings per common
share.................... $ 1.08 $ .32 $ .59 $ .49 $ .37 $ 1.16 $ .72
Diluted earnings per common
share outstanding........ $ 1.07 $ .32 $ .58 $ .48 $ .36 $ 1.16 $ .71
Weighted average common
shares outstanding....... 1,377 1,391 1,459 1,388 1,377 1,384 1,376
Weighted average common
shares outstanding,
assuming dilution........ 1,389 1,404 1,469 1,388 1,391 1,393 1,388
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
------------------------------------------ -----------------------
NOVEMBER 27, NOVEMBER 27, NOVEMBER 29, AUGUST 27, AUGUST 28,
1998 1997 1996 1999 1998
------------ ------------ ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets........................... $15,393 $12,571 $11,836 $16,002 $14,093
Total current liabilities.............. 3,365 1,778 1,243 2,607 2,819
Total liabilities...................... 3,533 1,887 1,342 2,775 2,928
Total stockholders' equity............. 11,860 10,684 10,494 13,227 11,165
</TABLE>
CERTAIN COMPANY PROJECTIONS. To the knowledge of Parent and Purchaser, the
Company does not as a matter of course make public forecasts as to its future
financial performance. However, during the discussions and negotiations
described in Section 10 -- "Background of the Offer; Contacts with the Company;
The Merger Agreement; The Tender Agreements", Advest furnished Parent with
certain financial projections of the Company which Parent and Purchaser believe
are not publicly available. The financial projections were for the Company as an
independent company (i.e. without regard to the impact to the Company of a
transaction with Parent and Purchaser). Neither Parent nor Purchaser verified
the accuracy of such financial projections. According to the projections, the
Company has estimated that it will have total revenues of approximately
$21,735,000, and net income of approximately $2,167,000 for the fiscal year
ending November 26, 1999.
IT IS THE UNDERSTANDING OF PARENT AND PURCHASER THAT THE PROJECTIONS WERE
NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH PUBLISHED
GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS OR FORECASTS AND
ARE INCLUDED HEREIN ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO PARENT AND
PURCHASER. THESE FORWARD-LOOKING STATEMENTS (AS THAT TERM IS DEFINED IN THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995) ARE SUBJECT TO CERTAIN RISKS
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
PROJECTIONS. THE COMPANY HAS ADVISED PARENT AND PURCHASER THAT ITS INTERNAL
FINANCIAL FORECASTS (UPON WHICH THE PROJECTIONS PROVIDED TO PARENT AND PURCHASER
WERE BASED IN PART) ARE, IN GENERAL, PREPARED SOLELY FOR INTERNAL USE AND
CAPITAL BUDGETING AND OTHER MANAGEMENT DECISIONS, AND ARE SUBJECTIVE IN MANY
RESPECTS
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<PAGE> 14
AND THUS SUSCEPTIBLE TO INTERPRETATIONS AND PERIODIC REVISION BASED ON ACTUAL
EXPERIENCE AND BUSINESS DEVELOPMENTS. THE PROJECTIONS ALSO REFLECT NUMEROUS
ASSUMPTIONS (NOT ALL OF WHICH WERE PROVIDED TO PARENT AND PURCHASER), ALL MADE
BY MANAGEMENT OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL
BUSINESS, ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, INCLUDING
EFFECTIVE TAX RATES CONSISTENT WITH HISTORICAL LEVELS FOR THE COMPANY, ALL OF
WHICH ARE DIFFICULT TO PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL
AND NONE OF WHICH WERE SUBJECT TO APPROVAL BY PARENT OR PURCHASER. ACCORDINGLY,
THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS
WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY GREATER OR LESS THAN
THOSE CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THE PROJECTIONS HEREIN
SHOULD NOT BE REGARDED AS AN INDICATION THAT ANY OF PARENT, PURCHASER, THE
COMPANY OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES CONSIDERED OR CONSIDER
THE PROJECTIONS TO BE A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE
PROJECTIONS SHOULD NOT BE RELIED UPON AS SUCH. NONE OF PARENT, PURCHASER, THE
COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES HAS MADE, OR
MAKES, ANY REPRESENTATION TO ANY PERSON REGARDING ULTIMATE PERFORMANCE OF THE
COMPANY COMPARED TO THE INFORMATION CONTAINED IN THE PROJECTIONS AND NONE OF
THEM INTENDS TO UPDATE OR OTHERWISE REVISE THE PROJECTIONS TO REFLECT
CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF
FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING
THE PROJECTIONS ARE SHOWN TO BE IN ERROR. IT IS EXPECTED THAT THERE WILL BE
DIFFERENCES BETWEEN ACTUAL AND PROJECTED RESULTS, AND ACTUAL RESULTS MAY BE
MATERIALLY HIGHER OR LOWER THAN THOSE PROJECTED.
AVAILABLE INFORMATION. The Shares are registered under the Exchange Act,
and the Company is therefore subject to the reporting requirements of the
Exchange Act. In accordance with the Exchange Act, the Company is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
regional offices of the Commission: New York Regional Office, Seven World Trade
Center, 3rd Floor, New York, New York 10048; and Chicago Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials may be obtained by mail, upon payment of the
Commission's customary fees, by writing to its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a Website
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the
Commission. In addition, reports, proxy statements and other information
concerning the Company can be inspected and copied at the AMX, 86 Trinity Place,
New York, New York 10006-1881, on which the Shares are listed. Except as
otherwise stated in this Offer to Purchase, all of the information with respect
to the Company set forth in this Offer to Purchase has been derived from
publicly available information.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
Purchaser is a newly incorporated corporation organized and existing under
the laws of the State of Maine. Purchaser was organized in connection with the
Offer and the Merger and has not carried on any activities other than in
connection with the Offer and the Merger. Until immediately prior to the time
that Purchaser will purchase Shares pursuant to the Offer, it is not anticipated
that Purchaser will have any
14
<PAGE> 15
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. The principal offices of Purchaser are located at
45 East Avenue, Rochester, New York 14604. Purchaser is an indirect wholly-owned
subsidiary of Parent.
Parent was formed as a New York corporation in 1956. Its principal business
is the retail sale of property, life and health insurance policies as agent for
the insurers. Its principal office is located at 45 East Avenue, Rochester, New
York 14604. It has 70 offices in 12 states with over 600 employees. Parent is
privately owned.
The name, citizenship, business address, principal occupation or
employment, and five-year employment history of each of the directors and
executive officers of Parent and Purchaser and certain other information are set
forth in Schedule I hereto.
Except as described in this Offer to Purchase and in the Tender Agreements,
(i) none of Purchaser, Parent or, to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I to this Offer to Purchase or any
affiliate or majority owned subsidiary of Purchaser, Parent or any of the
persons so listed beneficially owns or has any right to acquire, directly or
indirectly, any Shares and (ii) none of Purchaser, Parent or, to the best
knowledge of Purchaser and Parent, any of the persons or entities referred to
above, or any director, executive officer or subsidiary of any of the foregoing,
has effected any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement and in the Tender Agreements and
as otherwise described in this Offer to Purchase, none of Purchaser, Parent or,
to the best knowledge of Purchaser and Parent, any of the persons listed in
Schedule I to this Offer to Purchase has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, 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 this Offer to Purchase, since November 25, 1995,
neither Purchaser, Parent nor, to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I hereto, has had any business
relationship or transaction with the Company or any of its executive officers,
directors or affiliates that is required to be reported under the rules and
regulations of the Commission applicable to the Offer. Except as set forth in
this Offer to Purchase, since November 25, 1995, there have been no contacts,
negotiations or transactions between any of Purchaser, Parent or any of their
respective subsidiaries or, to the best knowledge of Purchaser and Parent, any
of the persons listed in Schedule I to this Offer to Purchase, on the one hand,
and the Company or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
9. FINANCING OF THE OFFER AND THE MERGER.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Purchaser to consummate the Offer and the Merger and
to pay related fees and expenses is estimated to be approximately $17 million.
Purchaser will obtain all of such funds from Parent in the form of capital
contributions and/or loans. Parent currently intends to provide all of such
funds by borrowing amounts under Parent's existing credit facility arranged for
Parent by Fleet National Bank. As of the date of this Offer to Purchase,
$16,312,419 has been drawn under this facility and placed into escrow with the
Escrow Agent and the aggregate commitment is available for drawdown until
December 31, 2000. The interest on borrowings is based on LIBOR plus an
applicable spread. Parent plans to repay a portion of such borrowings from the
combined operations of Parent and the Surviving Corporation. Upon request by
Purchaser, the Escrow Agent will transfer to the Depository sufficient funds
from the escrowed amount to pay stockholders for Shares that have been validly
tendered, not withdrawn and accepted for payment by Purchaser. Section
2 -- "Acceptance for Payment and Payment for Shares."
15
<PAGE> 16
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY;
THE MERGER AGREEMENT; THE TENDER AGREEMENTS.
BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In January, 1999,
James R. Riedman, as Chairman and CEO of Daniel Green Company, a manufacturer
and distributor of shoes whose stock is listed on the NASDAQ Small Cap Market,
telephoned a representative of Company to extend condolences on the recent
demise of Company's CEO and to indicate an interest in discussing a possible
combination of Company and Daniel Green Company. Parent owns 35.1% of the
outstanding shares of Daniel Green Company and Mr. Riedman is President and CEO
of Parent.
In March, 1999, a representative of Advest contacted representatives of
Daniel Green Company and advised that a Confidential Memorandum concerning the
Company would be made available to them if a Confidentiality Agreement were
signed. The Confidentiality Agreement was signed on March 18, 1999 and returned
to Advest. Advest then forwarded the Confidential Memorandum to Daniel Green
Company.
On March 24, 1999, a representative of Daniel Green Company telephoned a
representative of Advest to inquire concerning various aspects of the
information contained in the Confidential Memorandum.
On March 30, 1999, a representative of Daniel Green Company wrote to a
representative of Advest expressing Daniel Green's strong interest in entering
into a merger with the Company or in acquiring all of the Company's stock in a
cash acquisition. In connection with an acquisition, Daniel Green Company
indicated that it would be in a position to support a value at a substantial
premium to Company's then current trading price of $8.50 a share, contingent on
financing, due diligence, negotiation of definitive agreements and approval of
the Company's Board.
On April 16, 1999, a representative of Daniel Green Company wrote to a
representative of Advest expressing continued interest in acquiring Company and
entering into discussions on specific terms including paying a price of $10.50 a
share for a total consideration of $14,745,000.
On April 23, 1999, representatives of Daniel Green Company met with
representatives of the Company and Advest at Advest's offices in Boston,
Massachusetts to discuss the Confidential Memorandum and other information
concerning both Daniel Green Company and Company.
On April 26, 1999, a representative of Daniel Green Company commenced due
diligence investigation of the Company with the materials assembled at the
Advest data room in Boston, Massachusetts.
On April 29, 1999, Daniel Green Company wrote to a representative of Advest
outlining terms of a proposed acquisition of Company to be structured as a cash
merger. The consideration to be paid was $14,745,000 or $10.50 per share,
contingent on financing, due diligence, negotiation of definitive agreements and
approval by the Company's Board. Accompanying the letter was a letter from
Daniel Green Company's bank proposing to finance the acquisition on terms set
forth therein.
On May 5, 1999, a representative of Daniel Green Company telephoned a
representative of Advest to inquire concerning Daniel Green Company's proposal.
The Advest representative indicated that the Company was unwilling to engage in
formal negotiations at the $10.50 per share valuation of the Company proposed by
Daniel Green.
Throughout May 1999, the Company and Daniel Green continued to discuss a
possible merger.
On June 7, 1999, a representative of Advest wrote to a representative of
Daniel Green Company in response to Daniel Green Company's letter of April 29th.
The letter outlined terms which would be acceptable including aggregate
consideration of $15,798,250 in cash (or $11.25 per share) plus between 600,000
and 700,000 shares of Daniel Green Company's common stock, registered and
unrestricted.
On June 8, 1999, a representative of the Daniel Green Company telephoned a
representative of Advest and suggested a face-to-face meeting with principals of
each company.
On June 14, 1999, representatives of Daniel Green Company and the Company
met in Rochester, New York and discussed a revised proposal wherein the
consideration would be $11.50 per share in cash, with an
16
<PAGE> 17
earn-out of $.50 per share if the Company met certain performance criteria for
the fiscal year ending November 26, 1999. Among the other terms discussed was a
termination fee of $1.5 million dollars and a commitment on the part of the
Company not to solicit other bidders.
On June 17, 1999, counsel for Daniel Green Company contacted counsel for
the Company and requested that the terms discussed at the June 14th meeting be
included in a binding letter of intent that required the Company to negotiate
exclusively with Daniel Green Company, provided for a financing contingency in
favor of Daniel Green Company and required a termination fee of $1.5 million
payable to Daniel Green Company in the event the parties did not reach a
definitive agreement.
On June 18, 1999, counsel for the Company telephoned counsel for Daniel
Green Company and indicated that the Company was unwilling to proceed with
negotiations unless both the financing contingency and earn-out provisions were
deleted. The Company's counsel further advised that the Company would not
consider signing a binding letter of intent with a termination fee.
Throughout the remainder of June 1999, counsel for Daniel Green Company and
counsel for the Company held discussions in an attempt to resolve outstanding
issues between the parties.
On July 7, 1999, in response to Daniel Green Company's request, counsel for
the Company prepared and sent a draft Merger Agreement to counsel for Daniel
Green Company containing alternative proposals for a transaction that the
Company could support, subject to Board and stockholder approval.
Throughout the remainder of July 1999, the parties continued to try to
resolve the outstanding issues.
During the week of August 2, 1999, the chairman of Daniel Green Company
telephoned the Company's Chairman of the Board to discuss the financing
contingency and the Company's reluctance to accept it. The Chairman of Daniel
Green Company then suggested that Parent, which owns 35.1% of the stock of
Daniel Green Company and of which he is President and Chief Executive Officer,
would be willing to purchase the shares of Company stock owned by the Company's
Chairman, his sister and their children, comprising 53.33% of the Company's
stock.
The next day the attorney for Company telephoned the attorney for Daniel
Green Company and indicated that the Parent's offer would have to be for all of
Company's stock.
Thereafter, Parent's President telephoned Company's principal stockholder
to indicate that Parent would be willing to make a cash tender offer for all of
the outstanding stock of Company if Daniel Green Company could not satisfy the
Company's concerns with regard to financing.
On August 17, 1999, representatives of Daniel Green Company and Parent met
in Boston, Massachusetts with representatives of Company and their respective
counsel to discuss how Daniel Green Company would finance a proposed tender
offer and merger with its bank commitment and support from Parent.
On August 24, 1999 Daniel Green Company submitted to Company an expression
of interest to acquire all of the issued and outstanding shares of Company
common stock at $11.75 through a cash tender offer by a Daniel Green Company
subsidiary, and a second stage merger on terms specified. A copy of the
financing commitment from Daniel Green Company's bank, as requested by Company's
attorneys was not yet available, but a copy of a standby financing commitment
from Parent was submitted along with a copy of current financial statements of
Parent.
On August 26, 1999 the attorneys for the Company advised Daniel Green
Company's attorney that certain aspects of Daniel Green's proposal were
unacceptable. In the meantime, President of Parent continued negotiations with
Daniel Green Company's bank concerning the support which the Bank required from
Parent to give the Bank's commitment to finance the Offer and the refinancing
thereafter.
On August 31, 1999 Parent determined that it was unwilling to meet the
demands of Daniel Green Company's bank and would itself make a cash tender offer
for Company's shares.
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On September 1, 1999, the Chairman of the Daniel Green Company board of
directors, informed the board of Parent's decision. The board, with the Chairman
abstaining, made a determination that without the financial support of Parent it
would be unable to pursue the acquisition of the Company.
On September 2, 1999 Parent informed the Company that Daniel Green Company
would no longer pursue the acquisition of the Company, and Parent sent its
expression of interest to make a cash tender offer at $11.75 per share, without
any financing contingency.
The Board of Directors of the Company met on September 7, 1999 to consider
Parent's expression of interest and directed its officers to proceed to
negotiate terms and definitive agreements.
From September 8, 1999 through October 6, 1999 the parties negotiated the
terms of the Merger Agreement.
On October 1, 1999, Company's counsel notified Parent's counsel that
Company's Board met earlier that day and had authorized Company's counsel to
request that Parent increase its Offer price above $12 per Share.
On October 3, 1999, Parent's counsel telephoned Company's counsel and
advised that Parent was unwilling to raise its Offer price above $11.75 per
Share. Counsel for both sides then negotiated open issues with respect to the
Merger Agreement.
The Board of the Company approved the Offer and the Merger on October 6,
1999. The definitive agreements were signed by representatives of Parent and the
Company on October 6, 1999.
The proposed transaction was publicly announced by the Company on the
morning of October 7, 1999. A copy is filed as an exhibit to the Schedule 14D-1
and is incorporated herein by reference.
THE MERGER AGREEMENT. The following is a summary of certain provisions of
the Merger Agreement, a copy of which is filed as an exhibit to the Schedule
14D-1. The summary is not a complete description of the terms and conditions of
the Merger Agreement and the summary is qualified in its entirety by reference
to the Merger Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable (but in no event later than five business days after
the public announcement of the execution of the Merger Agreement). Purchaser has
commenced the Offer in accordance with the terms of the Merger Agreement.
Subject to the terms of the Merger Agreement and subject to the prior
satisfaction or waiver of the conditions of the Offer (including, without
limitation, the Minimum Condition), the Merger Agreement requires Purchaser to
accept for payment and pay for, all Shares validly tendered and not withdrawn.
The obligation of Purchaser to accept for payment and pay for Shares validly
tendered and not withdrawn prior to the expiration of the Offer is subject to
the satisfaction of the Minimum Condition and certain other conditions that are
described in Section 13 -- "Certain Conditions of the Offer" hereof. Purchaser
and Parent have agreed that Purchaser will not amend or waive the Minimum
Condition to be less than 80% of the total issued and outstanding shares (other
than treasury shares) of Company Common Stock and will not decrease the Offer
Price, change the form of consideration to be paid, decrease the number of
Shares sought, amend the conditions to the Offer or impose conditions to the
Offer in addition to those set forth in Section 13 -- "Certain Conditions of the
Offer" hereof without the prior written consent of the Company.
EXTENSION OF THE OFFER. Purchaser is entitled to extend the Offer (and
defer the Expiration Date) for a period of up to 90 days from commencement of
the Offer, in one or more periods of not more than 10 business days each, if at
the initial expiration date of the Offer, or any extension thereof, any
condition to the Offer is not satisfied or waived ("Extension A"). Parent also
agrees that, subject to the terms and conditions of the Merger Agreement, to
cause Purchaser to extend the Offer in intervals of not less than five business
days each until December 31, 1999, provided that all conditions to the Offer
continue to be capable of being satisfied as of or prior to that date. Purchaser
also is entitled, but shall be under no obligation, to extend the Offer (and to
defer the Expiration Date) further for an additional period ending no more than
150 days (in one or more periods of not more than 10 business days each)
following an extension pursuant to Extension A, if at the
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Expiration Date, as deferred pursuant to Extension A, the Litigation Condition
or the Trading Suspension Condition (as defined in Section 13 -- "Certain
Conditions to the Offer") have not been satisfied or waived. Further, Purchaser
is entitled to extend the Offer for any period required by any rule, regulation,
interpretation or provision of the Commission. Furthermore, at the Expiration
Date, if all conditions to the Offer have been satisfied or waived, and for so
long as less than 90% of the outstanding shares of Company Common Stock have
been validly tendered and not properly withdrawn pursuant to the Offer,
Purchaser may, in its sole discretion and without the consent of the Company,
extend the Offer (and defer the Expiration Date) for up to an additional 10
business days in the aggregate (in periods of no more than five business days
each). In addition, the Offer Price may be increased and the Offer may be
extended to the extent required by law in connection with such increase without
the consent of the Company. Any extension of the Offer in accordance therewith
shall defer the Expiration Date until the latest date to which the Offer is so
extended. During any such extension, all Shares previously tendered and not
withdrawn will remain tendered pursuant to the Offer, subject to the rights of a
tendering stockholder to withdraw his, her or its Shares. See Section 4 --
"Withdrawal Rights".
BOARD REPRESENTATION; DIRECTORS. The Merger Agreement provides that so
long as it is in effect, the Company will not cause or permit the size of the
Board to be expanded to more than five directors. The Merger Agreement also
provides that, promptly upon the purchase of and payment for Shares by Parent or
any of its subsidiaries if the Minimum Condition has been met, Parent will be
entitled to designate three directors for election to the Company's five member
Board. The Company will, upon request of and as specified by Purchaser or
Parent, secure the resignations of such number of its incumbent directors as is
necessary to enable Parent's designees to be so elected to the Board, and will
take all actions necessary to cause Parent's designees to be so elected or
appointed. At such times, the Company will use its reasonable best efforts to
cause individuals designated by Parent to constitute the same percentage as such
individuals represent on the Board, of each committee of the Board (other than
any committee of the Board established to take action under the Merger
Agreement). Notwithstanding the foregoing, until the Effective Time, the Company
will retain as members of its Board at least two directors who are directors of
the Company on the date of the Merger Agreement; provided, that after
satisfaction of Minimum Condition and subsequent to the purchase of and payment
for Shares pursuant to the Offer, Parent will always have its designees
represent at least a majority of the entire Board.
From and after the time, if any, that Parent's designees constitute a
majority of the Board, until the Effective Time the unanimous vote of the entire
Board is required for the Company to: (i) amend or terminate the Merger
Agreement, (ii) extend the time for performance of any of the obligations of
Parent or Purchaser thereunder, or (iii) waive any condition or any of the
Company's obligations, rights or remedies thereunder.
THE MERGER. Following consummation of the Offer, upon the terms and
subject to the conditions of the Merger Agreement and in accordance with Maine
Law, at the Effective Time, Purchaser will be merged with and into the Company.
As a result of the Merger, the separate corporate existence of Purchaser will
cease and the Company will continue as the successor or surviving corporation
(the "Surviving Corporation") and will be an indirect wholly-owned subsidiary of
Parent. Hereinafter, the date on which the Closing of the Merger will take place
is referred to as the "Closing Date". The Merger will become effective at such
time as duly prepared articles of merger are filed with the Secretary of State
of the State of Maine in accordance with Maine Law or such other time as is
agreed upon by the parties and specified in the articles of merger (the
"Effective Time").
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time (other than the Chief Executive Officer) will be the initial
officers of the Surviving Corporation. The Merger Agreement also provides that,
at the Effective Time, the Articles of Incorporation and the By-Laws of the
Purchaser will be the Articles of Incorporation and the By-Laws of the Surviving
Corporation.
CONVERSION OF SECURITIES. Pursuant to the Merger Agreement, at the
Effective Time, each share of common stock, par value $.001 per share, of
Purchaser issued and outstanding immediately prior to the
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Effective Time will be converted into and exchanged for one share of common
stock, par value $1.00 per share, of the Surviving Corporation. All Shares that
are owned by the Company as treasury stock will be canceled and retired and
cease to exist without payment of any consideration therefor. In addition, each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares of Demanding Common Stock (as defined below), and Dissenting Common Stock
(as defined below) and Shares held by Parent or any of its wholly owned
subsidiaries, including Purchaser)) will be converted into the right to receive
the Offer Price payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly representing such
Shares. All such Shares, when so converted, will no longer be outstanding and
will automatically be canceled and retired and will cease to exist, and each
certificate evidencing such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon its
surrender in accordance with this Offer to Purchase, without interest.
Notwithstanding the above, neither Demanding Shares nor Dissenting Shares
will be converted into the right to receive the Merger Consideration, but
instead, holders of Demanding Shares or Dissenting Shares will be entitled only
to the rights granted by the provisions of Sections 910 or 909, respectively, of
Maine Law, which entitles stockholders exercising their rights thereunder to
receive a judicial determination of the fair value of their shares and to
receive payment of such fair value in cash, together with a fair rate of
interest, if any. Such judicially determined fair value could be more or less
than the Merger Consideration. See Section 14 -- "Certain Legal Matters and
Regulatory Approvals".
STOCK OPTIONS. As of the Effective Time, each person who holds an
outstanding employee stock option to purchase Shares (an "Option") granted under
the Company's 1991 Stock Option Plan (the "Option Plan"), will be entitled to
receive the product of (A) the excess, if any, of the Offer Price over the
exercise price of each such Option and (B) the number of Shares subject thereto
(such payment, if any, to be net of applicable withholding taxes) (the "Option
Price"). Prior to the consummation of the Offer, the holders of such Options may
either (i) exercise their Options and tender the Shares issued in connection
therewith or (ii) transfer their Options to Purchaser in consideration for an
amount equal to the Option Price for their Options. Effective upon the Company's
execution of the Merger Agreement, the Company may not make any further grants
under the Option Plan. As of the Effective Time the Option Plan will terminate
and all rights and obligations of the Company and the holder of any Option under
any provision of the Option Plan, any agreement entered into thereunder or any
other plan, program or arrangement providing for the issuance of grant of any
other interest in respect of the capital stock of the Company shall be canceled.
The Company will take all action necessary to ensure that, after the time of the
consummation of the Merger, no person shall have any right under the Option Plan
or any other plan, program or arrangement with respect to equity securities of
the Company.
STOCKHOLDERS' APPROVAL. Pursuant to the Merger Agreement, if required by
applicable law to consummate the Merger, the Company will (i) duly call, give
notice of, convene and hold a special meeting of its stockholders (the "Special
Meeting") as soon as practicable following the acceptance for payment and
purchase of Shares by Purchaser pursuant to the Offer for the purposes of
considering and taking action upon the Merger Agreement; (ii) prepare and file
with the SEC a preliminary proxy or information statement relating to the Merger
and the Merger Agreement and use its reasonable best efforts to obtain and
furnish the information required to be included by the SEC in the Proxy
Statement (as hereinafter defined) and, after consultation with Parent, to
respond promptly to any comments made by the SEC with respect to the preliminary
proxy or information statement and cause a definitive proxy or information
statement (the "Proxy Statement") to be mailed to its stockholders; (iii) use
its reasonable best efforts to obtain the necessary stockholder approval of the
Merger and Merger Agreement; and (iv) subject to the fiduciary obligations of
the Board under applicable law as advised by independent counsel, include in the
Proxy Statement the recommendation of the Board that stockholders of the Company
vote in favor of the approval of the Merger and the adoption of the Merger
Agreement.
Parent shall vote, or cause to be voted, all the Shares then owned by it,
Purchaser or any of its other subsidiaries and affiliates in favor of the
approval of the Merger and the approval and adoption of the Merger Agreement.
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However, if Parent or Purchaser acquires at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, each of the parties will take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after such acquisition, without a meeting of stockholders of the
Company, in accordance with the "short-form" merger provisions of Section 904 of
Maine Law, if possible.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including
representations and warranties by the Company with respect to organization;
capitalization; authorization relative to the Merger Agreement; validity of the
Merger Agreement; consents, approvals and violations; SEC reports and financial
statements; no undisclosed liabilities; absence of certain changes; employee
benefit matters; litigation; no defaults under certain contracts and compliance
with applicable laws; taxes; property; environmental matters; intellectual
property; material contracts; labor matters; restrictions on business
activities; year 2000 compliance; vote required with regard to the Merger;
brokers; opinion of financial advisor and certain other matters.
CONDUCT OF BUSINESS PENDING THE MERGER. Under the Merger Agreement, the
Company has agreed that during the period from the date of the Merger Agreement
and continuing until such time as the Purchaser's designees constitute a
majority of the members of the Board, unless as contemplated by the Merger
Agreement or Parent otherwise agrees in writing, the business of the Company
will be conducted only in the ordinary and usual course of business consistent
with past practices subject to the following additional restrictions and
requirements:
(a) the Company will not, directly or indirectly, (i) sell, transfer
or pledge or agree to sell, transfer or pledge any Company Common Stock or
any capital stock or any other securities of the Company or capital stock
or any other securities owned by it, either directly or indirectly; (ii)
amend or cause to be amended its Articles of Incorporation or By-laws; or
(iii) split, combine or reclassify the outstanding Company Common Stock;
(b) the Company shall not: (i) declare, set aside or pay any dividend
or other distribution with respect to its capital stock except for a $0.05
dividend declared by the Company's Board on October 6, 1999 and payable to
holders of record of the Shares on October 14, 1999; (ii) issue, sell,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants or rights of any
kind to acquire, any shares of capital stock of the Company or any other
property or assets, (other than shares of Company Common Stock reserved for
issuances pursuant to the exercise of Options outstanding on the date of
the Merger Agreement); (iii) transfer, lease, license, sell, mortgage,
pledge, dispose of or encumber any right to any trademark, service mark or
trade name owned by it or over which it has any right whatsoever; (iv)
transfer, lease, license, sell, mortgage, pledge, dispose of or encumber
any (A) real property or (B) any personal property having an aggregate fair
market value of $100,000 in a single transaction or a series of related
transactions other than purchases of inventory and sales of its products in
the ordinary course of business and permitted capital expenditures; (v)
incur or modify any indebtedness or other liability except for borrowings
under the Company's existing line of credit solely for working capital
purposes, provided the aggregate borrowings outstanding under such line do
not at any time exceed $2.6 million; (vi) authorize or make any capital
expenditures in excess of $50,000 individually and $100,000 in the
aggregate; or (vii) redeem, purchase or otherwise acquire directly or
indirectly any of its capital stock;
(c) the Company will not modify, amend or terminate any of its
material contracts or benefit plans or waive, release or assign any rights
or claims thereunder or settle or compromise any material litigation;
(d) the Company will not permit any material insurance policy naming
it as a beneficiary or a loss payable payee to be canceled or terminated
without notice to Parent;
(e) the Company will not: (i) assume, guarantee or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person or entity; (ii) make any loans, advances or
capital contributions to, or investments in, or acquisitions of, any other
person or entity; or (iii) enter into any commitment or transaction with
respect to any of the foregoing (including, but not limited to, any
borrowing, capital expenditure or purchase, sale or lease of assets);
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(f) the Company will not change any of the accounting methods used by
it unless required by United States Generally Accepted Accounting
Principles ("GAAP") or law or take any action, other than reasonable and
usual actions in the ordinary course of business and consistent with past
practice, with respect to accounting policies or procedures (including,
without limitation, procedures with respect to the payment of accounts
payable and collection of accounts receivable);
(g) the Company will not adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, recapitalization or other
reorganization of the Company (other than the Merger);
(h) the Company will not make any election or settle or compromise any
material federal, state, local or foreign income tax liability;
(i) the Company will not pay, discharge or satisfy any claim,
liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction
of liabilities reflected or reserved against in the Company's balance sheet
dated November 27, 1998 as the same may become due and payable by its
terms, or subsequently incurred in the ordinary course of business;
(j) the Company will not take, or agree to commit to take, any action
that would make any representation or warranty of the Company contained in
the Merger Agreement inaccurate in any material respect at, or as of any
time prior to, the Effective Time (except for representations made as of a
specific date);
(k) except as described under "The Merger Agreement -- Stock Options"
above, the Company will not amend or change the period (or permit any
acceleration, amendment or change) of exercisability of Options granted
under any Option Plan or authorize cash payments in exchange for any
Options;
(l) the Company will not increase the compensation payable or to
become payable to its officers, directors or key employees, except in the
ordinary course of business or pursuant obligations under existing written
agreements;
(m) except as required by applicable law, the Company will not, except
in the ordinary course of business (i.e., pursuant to the severance policy
or practice of the Company existing on the date hereof), terminate any
officer or other key employee, grant any severance or termination pay to,
or enter into any employment or severance agreement with, any director or
officer of the Company or establish, adopt, enter into or terminate or
amend any employee benefit plan;
(n) the Company will use commercially reasonable efforts to preserve
intact the business organizations, goodwill, rights, licenses, permits and
franchises of the Company and maintain its existing relationships with
customers, suppliers and other persons or entities having business dealings
with it; and
(o) the Company shall not announce an intention, enter into any formal
or informal agreement or otherwise make a commitment to do any of the
foregoing.
CONFIDENTIALITY AGREEMENT. Unless otherwise required by law, Parent has
agreed to hold any information furnished to it by the Company which is
non-public in confidence in accordance with the provisions of the
Confidentiality Agreement between the Company and Parent dated as of September
21, 1999 (the "Confidentiality Agreement").
NO SOLICITATION. The Company has agreed that it will not, and will use its
best efforts to cause its respective officers, directors, employees and
investment bankers, attorneys or other agents retained by or acting on behalf of
the Company not to, (i) initiate, solicit or encourage (including by way of
furnishing non-public information), directly or indirectly, any inquiries or the
making of any proposal that constitutes or is reasonably likely to lead to any
Acquisition Proposal (as defined below), (ii) except as described below, engage
in negotiations or discussions with, or furnish any information or data to any
third party relating to an Acquisition Proposal or (iii) enter into any
agreement with respect to any Acquisition Proposal or approve any Acquisition
Proposal. The Company is also required to promptly request each person that has
executed a confidentiality agreement in connection with its consideration of an
Acquisition Proposal to return or destroy
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all non-public information furnished to such person by or on behalf of the
Company. The Company is further required to, and to cause its directors,
officers, employees and financial advisors and other agents or representatives
to, cease immediately and cause to be terminated all activities, discussions or
negotiations, if any, with persons or entities being conducted with respect to
any Acquisition Proposal.
The Company, the Board and the Company's officers, employees, accountants,
consultants, counsel, financing sources and other representatives (i) may
participate in discussions or negotiations (including, as a part thereof, making
any counterproposal) with or furnish information to any third party making an
unsolicited Acquisition Proposal (a "Potential Acquiror") if the Board
determines in good faith upon the advice of its independent legal counsel, that
the failure to participate in such discussions or negotiations or to furnish
such information would be inconsistent with its fiduciary duties under
applicable law, and (ii) will be permitted to take and disclose to the Company's
stockholders a position with respect to any tender or exchange offer by a third
party, or amend or withdraw such position, pursuant to Rules 14d-9 and 14e-2
under the Exchange Act, provided that the Board shall not recommend that the
stockholders of the Company tender their shares in connection with any such
tender or exchange offer unless the Board of the Directors of the Company
determines in good faith judgment, upon the advice of its independent legal
counsel, that failing to take such action would be inconsistent with the Board's
fiduciary duties under applicable law.
Any non-public information furnished to a Potential Acquiror shall be
furnished pursuant to a confidentiality agreement substantially similar to the
confidentiality provisions of the Confidentiality Agreement. In the event that
the Company determines to provide any information as described above, or
receives any Acquisition Proposal, it will promptly inform Parent in writing as
to the fact that information is to be provided and will furnish to Parent the
identity of the recipient of such information or the Potential Acquiror and the
terms of such Acquisition Proposal. The Company is required to promptly provide
to Parent any non-public information concerning the Company provided to any
other person which has not been previously provided to Parent.
The Board may not (i) withdraw or modify or propose to withdraw or modify,
in any manner adverse to Parent, its approval or recommendation of the Merger
Agreement, the Offer or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any agreement
with respect to any Acquisition Proposal; notwithstanding the foregoing, the
Board may withdraw or modify or propose to withdraw or modify its recommendation
of the Merger Agreement, the Offer or the Merger recommend or propose to
recommend an Acquisition Proposal or terminate this the Merger Agreement
pursuant to Section 7.1(e) of the Merger Agreement and thereafter enter into an
agreement in connection with such Acquisition Proposal if, in each case, the
Board determines in good faith, upon the advice of its independent legal
counsel, that it would be inconsistent not to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law. The Company
will provide at least five business days advance notice to Parent to the effect
that it is taking such action.
"Acquisition Proposal" means any bona fide offer or proposal, whether in
writing or otherwise, made by a third party to acquire beneficial ownership of
all or a material portion of the assets of, or any material equity interest in,
the Company pursuant to a merger, consolidation or other business combination,
recapitalization, sale of shares of capital stock, sale of assets, tender offer
or exchange offer or similar transaction involving the Company (other than the
transactions contemplated by the Merger Agreement).
DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION. Parent has agreed
for a period of five (5) years, from and after the consummation of the Offer, to
cause the Surviving Corporation to indemnify, defend and hold harmless (and to
cause the Surviving Corporation to advance expenses as incurred to the fullest
extent permitted under applicable law if an appropriate undertaking is given to
the Surviving Corporation by the indemnified party) any person who is now, or
has been at any time prior to the Effective Time, an officer or director (the
"Indemnified Party") of the Company against all losses, claims, damages,
liabilities, costs and expenses (including attorneys' fees and expenses),
judgments, fines, losses and amounts paid in settlement in connection with any
actual or threatened action, suit, claim, proceeding or investigation (each a
"Claim") to the extent that any such Claim is based on, or arises out of, (i)
the fact that such person is or was a director or officer of the Company or is
or was serving at the request of the Company as a director or officer of another
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corporation, partnership, joint venture, trust or other enterprise or (ii) the
Merger Agreement, or any of the transactions contemplated thereby, in each case
to the extent that any such Claim pertains to any matter or fact arising,
existing or occurring prior to or at the Effective Time, regardless of whether
such Claim is asserted or claimed prior to, at or after the Effective Time, to
the full extent provided in the Company's Articles of Incorporation or By-laws
in effect at the date of the Merger Agreement, subject to limitations imposed by
applicable law.
In addition, for a period of five years after the Effective Time, Parent
will cause the Surviving Corporation to maintain in effect a policy of
directors' and officers' liability insurance with reputable and financially
sound carriers covering those persons who, as of immediately prior to the
Effective Time, are covered by the Company's policy, containing terms and
conditions which are no less advantageous to the insured parties than currently
provided by Company. However, Parent shall not be obligated to cause the
Surviving Corporation to make annual premium payments for such insurance in
excess of 150% of the annual premiums paid as of the date of the Merger
Agreement by the Company for such insurance (such amount, the "Maximum
Premium"). If such insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum Premium, Parent will
cause the Surviving Corporation to maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal to the
Maximum Premium. In addition, if such insurance coverage cannot be obtained at
all, Parent shall purchase all available run-off insurance policies with respect
to pre-existing insurance in an amount that, together with all other insurance
purchased pursuant to this paragraph, does not exceed the Maximum Premium.
FEES AND EXPENSES. All costs and expenses incurred in connection with the
Merger Agreement and the transactions contemplated thereby will be paid by the
party incurring such expenses.
EMPLOYEE MATTERS. Pursuant to the Merger Agreement, Purchaser will treat
service with the Company prior to the Effective Time by each employee of the
Company in the same manner as service with the Company is treated for
eligibility and vesting purposes (and excluding benefit accrual purposes,
including, without limitation, benefit service under any defined benefit pension
plan) under any benefit plan of Company in which any such employee is eligible
to participate following the Effective Time and which Purchaser elects in its
sole discretion to continue or as Purchaser otherwise deems appropriate for any
new benefits established by the Surviving Corporation for Company employees who
become employed by the Surviving Corporation. However, Purchaser shall not be
obligated to (i) make any particular benefit plan or benefit available to any
such employee, (ii) continue any particular benefit plan or benefit or (iii)
refrain from terminating or amending any particular benefit plan or benefit.
CONDITIONS TO THE MERGER. The respective obligation of each party to
effect the Merger are subject to the satisfaction on or prior to the Closing
Date of each of the following conditions:
(a) STOCKHOLDER APPROVAL. The Merger Agreement shall have been
approved and adopted by the requisite vote of the holders of Company Common
Stock, if required by applicable law and the Company's Articles of
Incorporation, in order to consummate the Merger;
(b) STATUTES. No statute, rule, order, decree or regulation shall
have been enacted or promulgated by any foreign or domestic governmental
entity or authority of competent jurisdiction which prohibits the
consummation of the Merger;
(c) CONSENTS. All foreign or domestic governmental consents, orders
and approvals required for the consummation of the Merger and the
transactions contemplated in the Merger Agreement will have been obtained
and will be in effect at the Effective Time, except for such consents the
failure of which to obtain would not have a material adverse effect on the
Company;
(d) INJUNCTIONS. There will be no order or injunction of a federal or
state court or other governmental entity of competent jurisdiction in
effect precluding, restraining, enjoining or prohibiting consummation of
the Merger;
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(e) PURCHASE OF SHARES IN OFFER. Parent, Purchaser or their
affiliates will have accepted for payment and paid for shares of Company
Common Stock pursuant to the Offer, except that Parent and Purchaser will
not be entitled to rely on this condition if Purchaser has failed to
purchase Shares pursuant to the Offer in breach of its obligations under
the Merger Agreement;
(f) PROXY STATEMENT. The Proxy Statement for the shareholders meeting
at which the Merger will be considered by stockholders, if one is
necessary, shall have been cleared by the Commission and shall not be the
subject of any stop order; and
(g) PERFORMANCE OF OBLIGATIONS. Parent and Purchaser on the one hand,
and Company on the other, shall have performed all obligations required of
them under the Merger Agreement, unless the non-performance was actually
known by the other at the time the Shares were accepted for payment.
TERMINATION. The Merger Agreement may be terminated and the Merger
contemplated therein may be abandoned at any time prior to the Effective Time,
whether before or after stockholder approval, by:
(a) The mutual consent of the Board of Directors of Parent, Purchaser
and the Company;
(b) Either of the Board of Directors of the Company, on the one hand,
or the Board of Directors of Parent, on the other, if any governmental
entity or court of competent jurisdiction issues an order, decree,
injunction or ruling or takes any other action (which order, decree,
injunction, ruling or other action the parties to the Merger Agreement have
used their respective reasonable best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated in the Merger Agreement and such order, decree,
injunction, ruling or other action shall have become final and non-
appealable; provided that the party seeking to terminate the Merger
Agreement has used all reasonable best efforts to challenge such order,
decree, injunction or ruling;
(c) The Company if (i) there shall have been a breach of any
representations or warranties on the part of Parent or Purchaser or if any
representation or warranty of Parent or Purchaser shall have become untrue
that is not curable, or, if curable, is nor cured within ten (10) days
after notice by Parent; (ii) Parent or Purchaser shall have failed to
commence the Offer on or prior to five (5) business days following the date
of the initial public announcement of the Offer; (iii) there shall have
been a breach by Parent or Purchaser of any of their respective covenants
or agreements having a Parent Material Adverse Effect which is not cured
within five (5) days after notice, provided that the Company is not in
breach of its obligations under the Merger Agreement in any material
respect;
(d) Parent and Purchaser if (i) there shall have been a breach of any
representations or warranties on the part of the Company of if any
representation or warranty of Parent or Purchaser shall become untrue that
is not curable or, if curable, is not cured within ten (10) days after
notice by the Company; (ii) there shall have been a breach by the Company
of one or more of its covenants or agreements having a Company Material
Adverse Effect or materially adversely delaying the ability of Purchaser to
consummate the Offer or of Parent, Purchaser or the Company to consummate
the Merger and the Company has not cured such breach within five (5)
business days after notice by Parent or Purchaser thereof, provided that
neither Parent nor Purchaser is not in breach of any of their respective
obligations under the Merger Agreement in any material respect.
(e) Parent and Purchaser or the Company if (i) the Company's Board of
Directors shall withdraw, modify or change its recommendation of the Offer
or the Merger in a manner adverse to Parent; (ii) Parent or Purchaser
requests in writing that the Company's Board of Directors reconfirm its
recommendation of this Agreement, the Offer and the Merger to the
stockholders of the Company and the Company's Board fails to do so within
five (5) days after its receipt of such request; (iii) the Company's Board
of Directors shall have recommended an Acquisition Proposal to the
Company's stockholders; or (iv) a tender or exchange offer for twenty
percent (20%) or more of the outstanding shares of Company Common Stock is
commenced (other than by Parent or an affiliate of Parent) and the
Company's Board of Directors recommends that the Company's stockholders
tender their shares in such tender or exchange offer;
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(f) The Company, if on any Expiration Date on which no further rights
to extend the Offer are available to, or have been exercised by, Purchaser,
the Minimum Condition has not been met or, Purchaser shall have failed to
pay for Shares pursuant to the Offer, provided the Company has not breached
in any material respect its obligations under the Merger Agreement that in
any manner shall have proximately contributed in any material respect to
such failure; or
(g) Parent and Purchaser, if on any Expiration Date on which no
further rights to extend the Offer are available to, or have been exercised
by, Purchaser all conditions to Purchaser's obligation to accept for
payment and pay for shares pursuant to the Offer shall have been satisfied
or waived other than the Minimum Condition and Purchaser terminates the
Offer without purchasing Shares pursuant to the Offer; provided, however,
that this right to terminate the Merger Agreement shall not be available to
Parent and Purchaser if either of them has breached in any material respect
its obligations under this Agreement in any manner that shall have
proximately contributed in any material respect to the termination of the
Offer.
In the event of the termination of the Merger Agreement as provided above,
the Merger Agreement will become null and void, and there will be no liability
on the part of Parent or the Company, except (i) under the provisions of the
Merger Agreement relating to the Confidentiality Agreement and the payment of
the Termination Fee (as defined below) and (ii) nothing in the Merger Agreement
will relieve any party of liability for fraud or willful breach of the Merger
Agreement.
Pursuant to the Merger Agreement, in the event that Company, Parent or
Purchaser terminates the Merger Agreement pursuant to paragraph (e) above, then
the Company will simultaneously with or prior to such termination, pay to Parent
by wire transfer of immediately available funds to an account designated by
Parent an amount equal to $1.5 million (the "Termination Fee"). If the Company
fails to promptly pay the Termination Fee, the Company will also pay Parent's
reasonable out-of-pocket costs and expenses incurred in connection with
litigation to obtain such payment. The Merger Agreement provides that payment of
the Termination Fee does not derogate from any rights or remedies which Parent
or Purchaser may possess under the Merger Agreement or applicable law, provided
that the Termination Fee will be liquidated damages and the sole and exclusive
remedy of Parent in the event that the Merger Agreement is terminated under
circumstances which entitle Parent to payment of such fee.
THE TENDER AGREEMENTS. The following is a summary of the Tender
Agreements, a copy of which is filed as an exhibit to the Schedule 14D-1. Such
summary is qualified in its entirety by reference to the Tender Agreements.
Pursuant to the Tender Agreements and in order to induce Parent and
Purchaser to enter into the Merger Agreement, the Principal Stockholders, who
collectively hold 740,321.5 shares of Company Common Stock, representing
approximately 53.33% of the total issued and outstanding shares of Company
Common Stock on the date of the Tender Agreements, have agreed to tender or
cause the record owner thereof to tender all their Shares pursuant to the Offer
and not to withdraw any Shares tendered in the Offer.
Parent and Purchaser agree (a) not to decrease the price to be paid to the
Company's stockholders in the Offer or the Merger below $11.75 per Share, and
that (b) on the date that the Shares are accepted for payment and purchased by
Purchaser pursuant to the Offer, Purchaser or Parent, as the case may be, shall
make, or cause to be made by the paying agent, to each Principal Stockholder the
purchase price for all its Shares that are tendered by it and accepted for
payment and purchased by Purchaser to such account as is designated by such
Principal Stockholder in a letter of transmittal which accompanies the tender of
the Shares.
Each Principal Stockholder has agreed not to enter into any agreement,
arrangement or understanding with any person the effect of which would be
inconsistent or violative of the provisions and agreements described in the
Principal Stockholders' respective Tender Agreements.
Except as provided above, until the termination of his Tender Agreement,
each Principal Stockholder has agreed not to, directly or indirectly, (i)
transfer to any entity any or all of its Shares held by it; or (ii) grant any
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proxies or powers of attorney, deposit any of its Shares into a voting trust or
enter into a voting agreement, understanding or arrangement with respect to such
Shares.
Each Principal Stockholder has also agreed, solely in its capacity as a
stockholder of the Company, that he or she will not, and will cause its agents
or representatives not to, directly or indirectly, (i) initiate, solicit or
encourage (including by way of furnishing non-public information) any inquiries
or the making of any proposal that constitutes or is reasonably likely to lead
to an Acquisition Proposal or (ii) engage in negotiations or discussions with,
or furnish any information or data to, any third party relating to an
Acquisition Proposal. In addition, the Principal Stockholders will promptly
inform Parent of the terms of any proposal, discussion, negotiation or inquiry
(and will disclose any written materials received by them in connection with
such proposal, discussion, negotiation or inquiry) and the identity of the party
making such proposal or inquiry, which the Principal Stockholders may receive in
respect of any Acquisition Proposal. Any action taken by the Company or any
member of the Board in his or its capacity as such in accordance with his
fiduciary duties under applicable law shall be deemed not to violate this
undertaking in the Tender Agreement.
The Tender Agreements, and all rights and obligations of the parties
thereunder, will terminate upon the date upon which the Merger Agreement is
terminated in accordance with its terms.
11. PURPOSE OF THE OFFERING; PLANS FOR THE COMPANY AFTER THE OFFER AND THE
MERGER.
PURPOSE OF THE OFFER. The purpose of the Offer and the Merger is for
Parent to acquire control of, and the entire equity interest in, the Company.
The purpose of the Merger is for Parent to acquire all Shares not purchased
pursuant to the Offer. Upon consummation of the Merger, the Company will be an
indirect wholly-owned subsidiary of Parent. The Offer is intended to increase
the likelihood that the Merger will be completed promptly.
VOTE REQUIRED TO APPROVE MERGER. Maine Law requires, among other things,
that the adoption of any plan of merger or consolidation of the Company must be
approved by the Board and by the holders of a majority of the outstanding
Shares, unless a corporation's charter or by-laws provides for a higher
percentage. The Company's By-Laws require the approval of 55% of the outstanding
Shares to consummate a merger. The Board has approved the Offer and the Merger;
in addition, under the Tender Agreements, the Principal Stockholders have agreed
to tender and sell all of their Shares pursuant to the Offer. Although the
Shares subject to the Tender Agreements constituted approximately 53.33% of all
issued and outstanding Shares as of the date of the Merger Agreement, they do
not constitute the 55% which Company By-Laws require for approval. Thus,
Purchaser will not have sufficient voting power to effect the Merger without the
vote of any other stockholder of the Company, which vote will be granted to
Purchaser by virtue of the tendered Shares which constitute the Minimum
Condition. Maine Law also provides that if a parent company owns at least 90% of
each class of stock of a subsidiary, the parent company can effect a "short
form" merger with that subsidiary without the action of the other stockholders
of the subsidiary. Accordingly, if, as a result of the Offer or otherwise, the
Offeror acquires or controls at least 90% of the outstanding Shares, Purchaser
may be able to effect the Merger without any action by, other stockholders of
the Company. Under this procedure, the Company is required by law to provide
notice of the Merger to stockholders.
PLANS FOR THE COMPANY. It is expected that, initially following the
Merger, the business and operations of the Company will, except as set forth in
this Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company after the consummation of the Offer and the Merger,
and will take such actions as it deems appropriate under the circumstances then
existing. Parent intends to seek additional information about the Company during
this period. Thereafter, Parent intends to review such information as part of a
comprehensive review of the Company's business, operations, capitalization and
management with a view to optimizing exploitation of the Company's potential.
Parent also intends to explore with Daniel Green Company whether and on
what terms a combination of that entity with the Company is feasible. As was
stated above, Parent owns approximately 35.1% of the outstanding common stock of
Daniel Green. In any such investigation and/or negotiation, James Riedman,
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President of Parent and Chairman and CEO of Daniel Green Company, would recuse
himself from deliberations of the Daniel Green Company Board.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, any
material change in the Company's capitalization or dividend policy or any other
material change in the Company's corporate structure or business.
12. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION.
The purchase of Shares by 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, if any, held by the public.
If the Offer and Merger are consummated, the Shares will no longer meet the
requirements of the AMX for continued listing and will be delisted from the AMX.
According to the AMX's published guidelines, the AMX considers delisting the
Shares if, among other things, the number of record holders falls below 300, the
number of publicly held Shares (exclusive of holdings of officers, directors and
their immediate families and other concentrated holdings of ten percent or more
("AMX Excluded Holdings")) falls below 200,000 or the aggregate market value of
publicly held Shares (exclusive of AMX Excluded Holdings) falls below
$1,000,000. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the AMX for continued
listing and the listing of the Shares is discontinued, the market for the Shares
could be adversely affected.
If the AMX delists the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchange or
through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other sources. The extent of the public market therefor and
the availability of such quotations would depend, however, upon such factors as
the number of stockholders and/or the aggregate market value of the Shares
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act as described below and other factors. Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
greater or less than the Offer Price.
The Shares are currently "margin securities", as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding the continued listing, public trading and
market quotations for the Shares, it is possible that, following the purchase of
the Shares pursuant to the Offer, the Shares will no longer constitute "margin
securities" for purposes of the margin regulations of the Federal Reserve Board,
in which event such Shares will no longer be used as collateral for loans made
by brokers.
Registration of the Shares under the Exchange Act may be terminated upon
application of the Company to the Commission if the Shares are neither listed on
a national securities exchange nor held by 300 or more holders of record. The
termination of the registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
holders of Shares 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), the requirement of furnishing a proxy statement in connection with
stockholders' meetings and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to the
Shares. In addition, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of their
Shares pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended. If registration of the Shares under the Exchange Act is terminated, the
Shares will no longer be "margin securities" or be eligible for stock exchange
listing or NASDAQ reporting. Purchaser currently intends to seek to cause the
Company to terminate the
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registration of the Shares under the Exchange Act as soon after consummation of
the Offer as the requirements for termination of registration are met. If
registration of the Shares under the Exchange Act is not terminated prior to the
Merger becoming effective, registration of the Shares under the Exchange Act
will be terminated following consummation of the Merger.
13. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer (subject to the provisions
of the Merger Agreement), Purchaser will not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer and not accept for payment any tendered shares if:
(a) there have not been validly tendered and not withdrawn prior to
the expiration of the Offer at least 80% of the total issued and
outstanding shares of Company Common Stock on the date of the Merger
Agreement,
(b) at any time on or after the date of the Merger Agreement, and
before the expiration of the Offer, any of the following events shall occur
and be continuing:
(i) there shall have been instituted or be pending any action or
proceeding before any court or Governmental Entity, (A) challenging or
seeking to make illegal, materially delay or otherwise directly or
indirectly restrain or prohibit or make more costly the making of the
Offer, the acceptance for payment of, or payment for, any Shares by the
Parent, the Purchaser or any other affiliate of the Parent, the purchase
of Shares pursuant to the Tender Agreements, or the consummation of any
other aspect of the Transactions, or seeking to obtain material damages
in connection with any aspect of the Transactions; (B) seeking to
prohibit or limit materially the ownership or operation by the Company,
the Parent or any of their Subsidiaries of all or any material portion
of the business or assets of the Company, the Parent or any of their
Subsidiaries, or to compel the Company, the Parent or any of their
Subsidiaries to dispose of or hold separate all or any material portion
of the business or assets of the Company, the Parent or any of their
Subsidiaries, as a result of the Transactions; (C) seeking to impose or
confirm limitations on the ability of the Parent, the Purchaser or any
other affiliate of the Parent to exercise effectively full rights of
ownership of any Shares, including, without limitation, the right to
vote any Shares acquired by the Purchaser pursuant to the Offer, the
Tender Agreements or otherwise on all matters properly presented to the
Company's shareholders, including, without limitation, the approval and
adoption of this Agreement and the transactions contemplated hereby; (D)
seeking to require divestiture by the Parent, the Purchaser or any other
affiliate of the Parent of any Shares; or (E) which otherwise would have
a Company Material Adverse Effect (the "Litigation Condition").
(ii) the representations and warranties of the Company set forth in
the Merger Agreement or of the Principal Stockholders in the Tender
Agreements shall not be true and correct in any respect, disregarding
for this purpose any standard of materiality contained in any such
representation or warranty, as of the date of consummation of the Offer
as though made on or as of such date, except (i) for changes
specifically permitted by the Agreement or (ii) (A) those
representations and warranties that address matters only as of a
particular date which are true and correct as of such date or (B) where
the failure of such representations and warranties to be true and
correct, do not, individually or in the aggregate, have a Company
Material Adverse Effect.
(iii) there shall have occurred, since June 30, 1999, any change,
condition, event or development that, individually or in the aggregate
with any other change, condition or development since such date, has, or
could be reasonably expected to have, a Company Material Adverse Effect
or any legal or regulatory changes that are or are reasonably expected
to be materially adverse to the business operations, properties,
condition (financial or otherwise), assets, liabilities (contingent or
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otherwise) or results of operation or prospects of the Company either
individually or in the aggregate; or
(iv) the Company shall have breached or failed in any material
respect to perform or comply with any material obligation, agreement or
covenant required by the Merger Agreement to be performed or complied
with by it (including, without limitation, if the Company shall have
entered into any definitive agreement or any agreement in principle with
any Person relating to an Acquisition Proposal (other than Parent,
Purchaser or any affiliate thereof));
(v) there shall have occurred (A) any general suspension of trading
in, or limitation on prices for, securities on the American Stock
Exchange, which suspension or limitation shall have continued for a
period in excess of 24 hours, (B) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States
or any limitation (whether or not mandatory) by Federal, state or
foreign authorities on the extension of credit by lending institutions,
which moratorium, suspension, or limitation in Parent's reasonable
judgment is reasonably likely to materially affect the ability of Parent
to pay for the Shares, (C) a commencement of a war or armed hostilities
or other national or international calamity directly or indirectly
involving the United States and reasonably likely to have a Company
Material Adverse Effect or materially and adversely affect the
consummation of the Offer, or (D) in the case of clauses (A), (B) and
(C) above existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof (the "Trading Suspension
Condition");
(vi) the Board of Directors of the Company (or a special committee
thereof) shall have withdrawn or amended, or modified in a manner
adverse to Parent and Purchaser its recommendation of the Offer or the
Merger, or shall have endorsed, approved or recommended any Acquisition
Proposal other than the Transactions or failed to reconfirm its
recommendation of this Agreement and the Transactions contemplated
hereunder within five business days after being requested to do so by
Parent and Purchaser;
(vii) any Person, other than Parent, Purchaser or their affiliates
or any group of which any of them is a member, acquires beneficial
ownership of 20% or more of the Shares of Common Stock or rights to
acquire 20% or more of the outstanding Shares of Common Stock;
(viii) the Merger Agreement shall have been terminated in
accordance with its terms; or
(ix) the Parent, Purchaser and the Company shall have agreed in
writing that the Purchaser shall terminate the Offer.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and, subject to the Merger Agreement, may be asserted by either of them or may
be waived by Parent or Purchaser, in whole or in part at any time and from time
to time in the sole discretion of Parent or Purchaser, provided that the Minimum
Condition may not be waived to be less than 80% of the total issued and
outstanding shares of Company Common Stock, without the Company's prior written
consent.
14. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS
GENERAL. Based upon its examination of publicly available information with
respect to the Company, the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company (see
Section 10), neither Purchaser nor Parent is aware of any license or other
regulatory permit that appears to be material to the business of the Company
which might be adversely affected by the acquisition of Shares by Purchaser
pursuant to the Offer or of any approval or other action by any domestic
(federal or state) or foreign governmental, administrative or regulatory
authority or agency which would be required prior to the acquisition of Shares
by Purchaser pursuant to the Offer. Should any such approval or other action be
required, it is Purchaser's present intention to seek such approval or action.
There can be no assurance that any such approval or other action, if needed,
would be obtained without substantial conditions or that adverse consequences
might not result to the business of the Company, Purchaser or Parent or that
certain parts of the
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businesses of the Company, Purchaser or Parent might not have to be disposed of
or held separate or other substantial conditions complied with in order to
obtain such approval or other action or in the event that such approval was not
obtained or such other action was not taken. Purchaser's obligation under the
Offer to accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section 14.
See Section 13 -- "Certain Conditions of the Offer".
SECTION 611-A OF THE MAINE LAW. The Company is incorporated under the laws
of the State of Maine. In general, Section 611-A of Maine Law ("Section 611-A")
prevents an "interested stockholder" (generally a person who owns or has the
right to acquire 25% or more of a corporation's outstanding voting stock or an
affiliate or associate thereof) from engaging in a "business combination"
(defined to include mergers and certain other transactions) with a Maine
corporation for a period of five years following the date such person became an
interested stockholder unless, among other things, prior to such date the board
of directors of the corporation approved either the business combination or
following the transaction in which the interested stockholder became an
interested stockholder, the business combination is approved by the board of
directors of the corporation and authorized at a meeting of shareholders by the
affirmative vote of the holders of a majority of the outstanding voting stock of
the corporation not owned by the interested shareholder. Neither Parent nor
Purchaser is an interested stockholder and the Company's Board of Directors has
approved both the Offer and the Merger. Accordingly, Section 611-A is
inapplicable to the Offer and the Merger.
SECTION 910 OF MAINE LAW. Except in the case of corporations whose
articles of incorporation specify otherwise, Section 910 of Maine Law ("Section
910") entitles shareholders to payment from a "Controlling Person" for his
shares upon the occurrence of a "Control Transaction", defined as the
acquisition by the controlling person of (i) voting power over voting shares
that carry with them the right to cast at least 25% of the votes that all
shareholders would be entitled to cast in an election of the directors of the
corporation or (ii) voting power over at least 25% of the shares in any class
entitled to elect all the directors of any specified number of them. A person
has voting power over a voting share if that person has or shares, directly or
indirectly, through any option, contract, arrangement, understanding, voting
trust, conversion right or relationship, or by acting jointly or in concert or
otherwise, the power to vote, or to direct the voting of, that voting share.
Within fifteen (15) days of the Control Transaction, the Controlling Person
must give notice that a Control Transaction has occurred to each shareholder of
record of the corporation holding voting shares. Any holder of voting shares
may, prior to or within thirty (30) days after such notice has been given,
demand in writing that the Controlling Person pay such shareholder in cash an
amount equal to the "fair value" (defined as an amount which takes into
consideration all relevant factors, including an increment representing a
proportion of any value payable for acquisition of control of the corporation)
of each voting share held by the demanding shareholder.
Within ten (10) days after the expiration of the period provided for making
such demand, the Controlling Person must make a written offer to each demanding
shareholder to pay for the shares at a specified price deemed by the Controlling
Person to be the fair value of those shares. The offer must be made at the same
price per share to each demanding shareholder of the same class.
If any demanding shareholder and the Controlling Person agree upon the fair
value of the shares within thirty (30) days of the expiration of the demand
period, then the Controlling Person must pay the demanding shareholders within
ninety (90) days after the date on which the Controlling Person's offer to
purchase was made. If, however, one or more demanding shareholders fail to agree
with the Controlling Person within this thirty (30) day period as to the fair
value of the shares, (i) the Controlling Person may bring an action in Superior
Court in the County where the corporation's registered office is located or the
demanding shareholder may bring such suit in the name of the Controlling Person
if the Controlling Shareholder fails to institute such an action. In either
case, all demanding shareholders, except those who have previously agreed with
the Controlling Person on the fair value of the shares, shall be made parties to
the proceedings. The shareholder shall bear the burden of proving he is entitled
to receive payment. The Court shall fix the fair value of the shares. The
shareholders who are parties to the proceeding (except those determined by the
Court not to be entitled to receive payment) shall be entitled to judgment
against the Controlling Person for the fair value of
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their shares, plus interest from the time of the Control Transaction and costs
and expenses (except, with respect to costs and expenses, in cases where the
Court finds that the shareholders' failure to accept the offer was in bad
faith).
Section 910 does not apply if (i) the corporation does not have a class of
voting shares (x) registered or traded on a national securities exchange or (y)
registered with the Commission pursuant to the Exchange Act; or (ii) the
Controlling Person acquires such status inadvertently and divests itself of a
sufficient amount of its voting shares so that it is no longer a Controlling
Person as a soon as practicable, but in no event more than 30 days after the
Controlling Person receives notice from the corporation that it has become a
Controlling Person.
Upon consummation of the Offer, Purchaser shall be deemed a "Controlling
Person" under Section 910 and a "control transaction" shall have occurred. As a
result, holders of Shares which are not tendered and purchased shall have the
right to demand that Purchaser pay the fair value of those Shares in cash.
If any holder of Shares who demands payment under Section 910 fails to
perfect, or effectively withdraws or loses his right of payment as provided in
Maine Law, the Shares of such stockholder will be converted into the right to
receive the Merger Consideration in accordance with the Merger Agreement.
A stockholder seeking to exercise rights under Section 910 may not tender
his Shares in the Offer. FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 910
(SEE SCHEDULE II ATTACHED HERETO) FOR PERFECTING PAYMENT RIGHTS MAY RESULT IN
LOSS OF SUCH RIGHTS.
STATE TAKEOVER LAWS. A number of other states have adopted laws and
regulations applicable to attempts to acquire securities of corporations that
are incorporated, or have substantial assets, stockholders, principal executive
offices or principal places of business, or whose business operations otherwise
have substantial economic effects, in such states. In Edgar v. Mite Corp., the
Supreme Court of the United States invalidated on constitutional grounds the
Illinois Business Takeover Statute, which, as a matter of state securities law,
made takeovers of corporations meeting certain requirements more difficult.
However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court
held that the State of Indiana may, as a matter of corporate law and, in
particular, with respect to those aspects of corporate law concerning corporate
governance, constitutionally disqualify a potential acquiror from voting on the
affairs of a target corporation without the prior approval of the remaining
stockholders, provided that such laws were applicable only under certain
conditions. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal
district court in Oklahoma ruled that the Oklahoma statutes were
unconstitutional insofar as they applied to corporations incorporated outside
Oklahoma, in that they would subject such corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a Federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held in Grand
Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated
Transactions Act and Florida Control Share Acquisition Act were unconstitutional
as applied to corporations incorporated outside of Florida.
Based on information supplied by the Company, Parent and Purchaser do not
believe that any state takeover statutes (other than Section 611-A and Section
910) apply to the Offer or the Merger. Parent and Purchaser have not attempted
to comply with any state takeover laws. Should any person seek to apply any
state takeover law or claim that Parent or Purchaser have not properly complied
with any such law, Parent and Purchaser reserve the right to challenge the
validity or applicability of any such law allegedly applicable to the Offer or
the claim that it has not properly complied with any such law, in appropriate
court proceedings or otherwise, and nothing contained in this Offer to Purchase
nor any action taken in connection herewith is intended as a waiver of that
right. In the event it is asserted that one or more state takeover laws applies
to the Offer or the Merger or that Parent and Purchaser has not properly
complied with any such law, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer or the Merger or that Parent
or Purchaser has not properly complied with it, as the case may be. Parent
and/or Purchaser might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined,
Purchaser might be unable to accept for payment any Shares tendered pursuant to
the
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<PAGE> 33
Offer or be delayed in continuing or consummating the Offer and the Merger. In
such case, Purchaser may not be obligated to accept for payment, or pay for, any
Shares tendered. See Section 13 -- "Certain Conditions of the Offer".
ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules that have been promulgated thereunder by the Federal
Trade Commission (the "FTC"), certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice and the FTC and certain waiting period
requirements have been satisfied. Based on information supplied by the Company,
Parent and Purchaser believe that the acquisition of Shares by Purchaser
pursuant to the Offer and the Merger are not subject to such requirements.
DISSENTERS' RIGHTS. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
who have neither voted in favor of the Merger nor consented thereto in writing
may have rights pursuant to the provisions of Section 909 to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their Shares
as of the date prior to the Effective Date. If the statutory procedures
specified in Section 909 are complied with, such rights could lead to a judicial
determination of the fair value required to be paid in cash to such dissenting
holders for their Dissenting Shares. Any such judicial determination of the fair
value of the Dissenting Shares could be based upon considerations other than, or
in addition to, the Offer Price, the market value of the Dissenting Shares,
including asset values, and the investment value of the Dissenting Shares. The
value so determined could be greater or lower than the Offer Price.
The procedure for exercising dissenter's rights is set forth in full in the
copy of Section 909 attached hereto as Schedule III.
If any holder of Shares who demands appraisal under Section 909 fails to
perfect, or effectively withdraws or loses his right to appraisal, as provided
in Maine Law, the Shares of such stockholder will be converted into the right to
receive the Merger Consideration in accordance with the Merger Agreement. A
stockholder may withdraw his demand for appraisal by delivery to Parent of a
written withdrawal of his demand for appraisal and acceptance of the terms of
the Merger.
A stockholder seeking to exercise dissenters' rights under Section 909 may
not tender his Shares in the Offer. FAILURE TO FOLLOW THE STEPS REQUIRED BY
SECTION 909 FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH
RIGHTS.
GOING PRIVATE TRANSACTIONS. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire any remaining Shares not held by it. However,
Rule 13e-3 will not be applicable to the Merger or any such other business
combination if (i) the Shares are deregistered under the Exchange Act prior to
the Merger or other business combination, or (ii) the Merger or other business
combination is consummated within one year after the purchase of the Shares
pursuant to the Offer and the value of the consideration paid per Share in the
Merger or other business combination (measured at the time of consummation of
the Merger) is at least equal to the amount paid per Share in the Offer. If
applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to consummation of the transaction.
MARGIN CREDIT REGULATIONS. Federal Reserve Board Regulations T, U and X
(the "Margin Credit Regulations") restrict the extension or maintenance of
credit for the purpose of buying or carrying margin stock, including the Shares,
if the credit is secured directly or indirectly thereby. Such secured credit may
not be extended or maintained in an amount that exceeds the maximum loan value
of the margin stock. Under the Margin Credit Regulations, the Shares are
presently margin stock and the maximum loan value thereof is generally 50% of
their current market value. The definition of "indirectly secured" contained in
the Margin
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<PAGE> 34
Credit Regulations provides that the term does not include an arrangement with a
customer if the lender in good faith has not relied upon margin stock as
collateral in extending or maintaining the particular credit.
15. FEES AND EXPENSES
Except as set forth below, Purchaser will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer.
Purchaser and Parent have retained Georgeson Shareholder Communications
Inc., as the Information Agent, and EquiServe, L.P. as the Depository, in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telecopy, telegraph and personal interview and may
request banks, brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners.
The Information Agent and the Depository will receive reasonable and
customary compensation for their services in connection with the Offer, plus
reimbursement for their reasonable out-of-pocket expenses, and will be
indemnified against certain liabilities in connection with the Offer, including
certain liabilities under the federal securities laws. Brokers, dealers,
commercial banks and trust companies will be reimbursed by Purchaser for
customary handling and mailing expenses incurred by them in forwarding material
to their customers.
16. MISCELLANEOUS
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will
make a good faith effort to comply with any such state statute. If, after such
good faith effort, Purchaser cannot comply with any such state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer will be deemed to be made on behalf of Purchaser by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY 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 HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 -- "Certain Information
Concerning the Company" (except that they will not be available at the regional
offices of the Commission).
PSC ACQUISITION CORP.
October 12, 1999
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<PAGE> 35
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. EXECUTIVE OFFICERS AND DIRECTORS OF PARENT
The following table sets forth the name, current business address,
citizenship and present principal occupation or employment, and material
occupations, positions, offices or employments during the last five years, of
each director and executive officer of Parent. Unless otherwise indicated, the
current business address of each person is 45 East Avenue, Rochester, New York
14604. Each such person is a citizen of the United States of America. Unless
otherwise indicated, each of the following persons has held his or her present
position as set forth below for the past five years. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to employment
with Parent.
Executive Officers
JAMES R. RIEDMAN. Mr. Riedman, age 40, is President and Chief Executive
Officer of Riedman Corporation, a privately owned general insurance agency with
principal office at 45 East Avenue, Rochester, New York 14604. Mr. Riedman is
also Chairman and Chief Executive Officer of Daniel Green Company, a
manufacturer and distributor of shoes with principal office at One Main Street,
Dolgeville, New York 13329. Riedman Corporation owns 35.1% of the stock of
Daniel Green Company, and James R. Riedman has been chairman and CEO of that
company since June, 1996.
JOHN R. RIEDMAN. Mr. Riedman, age 70, Founded Riedman Corporation in 1956
and is Chairman of the Board of Directors.
GEOFFREY M. WEAVER, JR. Mr. Weaver, age 53, is Vice President and Chief
Financial Officer of Riedman Corporation where he has been employed since 1989.
KATHY GRISWALD, age 43, is financial consultant. Until June 1999 and during
the past five years, she was Pension Fund Manager for Southern New England
Telephone. Ms. Griswald is a Certified Financial Analyst.
Directors
James R. Riedman, John R. Riedman and Kathy Griswald are the sole directors
of Riedman Corporation.
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, current business address,
citizenship and present principal occupation or employment, and material
occupations, positions, offices or employments during the last five years, of
each director and executive officer of Purchaser. Unless otherwise indicated,
the current business address of each person is 45 East Avenue, Rochester, New
York 14604. Unless otherwise indicated, each such person is a citizen of the
United States and all persons became officers or directors of Purchaser upon its
formation in October 1999.
Executive Officers and Directors
The directors and executive officers of Purchaser are the same as the
directors and executive officers of Parent.
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<PAGE> 36
SCHEDULE II
SECTION 910 OF THE
MAINE BUSINESS CORPORATION ACT
13A SEC. 910. RIGHT OF SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES FOLLOWING A
CONTROL TRANSACTION
1. SHAREHOLDERS ENTITLED TO RIGHTS; EXCEPTIONS. Any holder of the voting
shares of a corporation that becomes the subject of a control transaction
described in subsection 2 shall be entitled to the rights and remedies provided
in this section, unless:
A. The bylaws, by amendment adopted within 90 days of the effective
date of this Act and not subsequently rescinded by an amendment of the
articles of incorporation, provide that this section shall not be
applicable to the corporation; or [1985, c. 394, sec. 3 (new).]
B. The articles of incorporation provide that this section shall not
be applicable to the corporation. [1985, c. 394, sec. 3 (new).]
[1985, c. 394, sec. 3 (new).]
2. DEFINITIONS. As used in this section, unless the context indicates
otherwise, the following terms have the following meanings.
A. A "controlling person" means:
(1) A person who has, or a group of persons acting in concert that
has, voting power over voting shares of the corporation that would
entitle the holders of those shares to cast at least 25% of the votes
that all shareholders would be entitled to cast in an election of the
directors of the corporation; or
(2) A person who has, or a group of persons acting in concert that
has, voting power over at least 25% of the shares in any class of shares
entitled to elect all the directors, or any specified number of them.
A "person" includes any individual, firm, corporation or other entity.
[1985, c. 394, sec. 3 (new).]
B. Notwithstanding paragraph A, a person or group of persons which
would otherwise be a controlling person within the meaning of this section
shall not be deemed a controlling person unless, subsequent to the
effective date of this section, that person or group increases the
percentage of outstanding voting shares of the corporation over which it
has voting power to a percentage in excess of the percentage of outstanding
voting shares of the corporation over which that person or group had voting
power on the effective date of this section, and to at least the amount
specified in paragraph A. [1985, c. 394, sec. 3 (new).]
C. For the purposes of this section:
(1) A person is not a controlling person under paragraph A if that
person holds voting power, in good faith and not for the purpose of
circumventing this section, as an agent, bank, broker, nominee or
trustee for one or more beneficial owners who do not individually or, if
they are a group acting in concert, as a group have the voting power
specified in paragraph A or who are not considered a controlling person
under paragraph B;
(2) A person has voting power over a voting share if that person
has or shares, directly or indirectly, through any option, contract,
arrangement, understanding, voting trust, conversion right or
relationship, or by acting jointly or in concert or otherwise, the power
to vote, or to direct the voting of, that voting share; and
(3) A person engaged in business as an underwriter or group
consisting of persons engaged in business as underwriters is not a
controlling person under paragraph A if that person or group holds
voting power specified in paragraph A, in good faith and not for the
purpose of circumventing this
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<PAGE> 37
section, over shares of the corporation acquired through participation
in good faith in a firm commitment underwriting of an offering of shares
registered under the United States Securities Act of 1933. [1993, c.
302, sec. 1 (amd).]
D. A "control transaction" means the acquisition by a person or group
of the status of a controlling person. [1985, c. 394, sec. 3 (new).]
E. The "control transaction date" means the date on which a
controlling person becomes a controlling person. [1985, c. 394, sec. 3
(new).]
[1993, c. 302, sec. 1 (amd).]
3. NOTICE OF CONTROL TRANSACTION TO BE GIVEN TO SHAREHOLDERS. Within 15
days of the control transaction date, notice that a control transaction has
occurred shall be given by the controlling person to each shareholder of record
of the corporation holding voting shares. If the controlling person so requests,
the corporation shall, at the option of the corporation and at the expense of
the controlling person, either furnish a list of all such shareholders to the
person or group or mail the notice to all such shareholders. There shall be
included in, or enclosed with, the notice a copy of this section. Any list
provided by the corporation to a controlling person pursuant to this subsection
shall be used only for the purpose of giving the notice required by this
subsection.
[1985, c. 394, sec. 3 (new).]
4. SHAREHOLDER DEMAND FOR PAYMENT. After the control transaction date, any
holder of voting shares of the corporation may, prior to or within 30 days after
the notice required by subsection 3 is given, which time period shall be
specified in the notice, make written demand on the controlling person for
payment of the amount provided in subsection 5 with respect to the voting shares
of the corporation held by the shareholder, and the controlling person shall pay
that amount to the shareholder. The demand of the shareholder shall state the
number and class or series, if any, of the shares owned by him with respect to
which the demand is made.
[1985, c. 394, sec. 3 (new).]
5. SHAREHOLDER ENTITLED TO RECEIVE PAYMENT FOR SHARES. A shareholder
making written demand under subsection 4 shall be entitled to receive cash for
each of his shares in an amount equal to the fair value of each voting share as
of the day prior to the control transaction date, taking into account all
relevant factors, including an increment representing a proportion of any value
payable for acquisition of control of the corporation.
[1985, c. 394, sec. 3 (new).]
6. SUBMISSION OF CERTIFICATES; NOTATION. At the time of filing his demand
for payment for his shares pursuant to subsection 4, or within 20 days
thereafter, each shareholder demanding payment shall submit the certificate or
certificates representing his shares to the corporation or its transfer agent
for notation thereon that such demand has been made; such certificates shall
promptly be returned after entry thereon of such notation. A shareholder's
failure to do so shall, at the option of the controlling person, terminate his
rights under this section, unless a court of competent jurisdiction, for good
and sufficient cause shown, shall otherwise direct. If shares represented by a
certificate on which notation has been so made shall be transferred, each new
certificate issued for those shares shall bear a similar notation, together with
the name of the original holder of the shares who made the written demand, and a
transferee of the shares shall acquire by the transfer no rights in the
corporation other than those which the original demanding shareholder had after
making demand for payment of the fair value of the shares.
[1985, c. 394, sec. 3 (new).]
7. WRITTEN OFFER; BALANCE SHEET. Within 10 days after the expiration of
the period provided in subsection 4 for making demand, the controlling person
shall make a written offer to each demanding shareholder to pay for those shares
at a specified price deemed by the controlling person to be the fair value of
those shares. The offer shall be made at the same price per share to all
demanding shareholders of the same class. The notice and offer shall be
accompanied by a balance sheet of the corporation as of the latest available
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<PAGE> 38
date and not more than 12 months prior to the making of the offer, and a profit
and loss statement of the corporation for the 12 months' period ended on the
date of the balance sheet.
[1985, c. 394, sec. 3 (new).]
8. AGREEMENT ON FAIR VALUE; PAYMENT. If, within 30 days after the
expiration of the period provided in subsection 4 for making demand, the fair
value of the shares is agreed upon between any demanding shareholder and the
controlling person, payment for those shares shall be made within 90 days after
the date on which the written offer required by subsection 7 was made, upon
surrender of the certificate or certificates representing those shares. Upon
payment of the agreed value, the demanding shareholder shall cease to have any
interest in the shares.
[1985, c. 394, sec. 3 (new).]
9. FAILURE TO REACH AGREEMENT ON FAIR VALUE OF SHARES. If, within the
additional 30-day period prescribed by subsection 8, one or more demanding
shareholders and the controlling person have failed to agree as to the fair
value of shares:
A. The controlling person may, or shall, if it receives a demand as
provided in subparagraph (1), bring an action in the Superior Court in the
county in this State where the registered office of the corporation is
located praying that the fair value of those shares be found and
determined. This action:
(1) Shall be brought by the controlling person, if it receives a
written demand for suit from any demanding shareholder, which demand is
made within 60 days after the date on which the written offer required
by subsection 7 was made; and if it receives a demand for suit, the
controlling person shall bring the action within 30 days after receipt
of the written demand; or
(2) In the absence of a demand for suit, may at the election of the
controlling person be brought by the controlling person at any time from
the expiration of the additional 30-day period prescribed by subsection
8 until the expiration of 60 days after the date on which the written
offer required by subsection 7 was made; [1985, c. 394, sec. 3 (new).]
B. If the controlling person fails to institute the action within the
period specified in paragraph A, any demanding shareholder may thereafter
bring such an action in the name of the controlling person; [1985, c. 394,
sec. 3 (new).]
C. No such action may be brought, either by the controlling person or
by a demanding shareholder, more than 6 months after the date on which the
written offer required by subsection 7 was made; [1985, c. 394, sec. 3
(new).]
D. In any such action, whether initiated by the controlling person or
by a demanding shareholder, all demanding shareholders, wherever residing,
except those who have agreed with the controlling person upon the price to
pay for their shares, shall be made parties to the proceeding as an action
against their shares quasi in rem. A copy of the complaint shall be served
on each demanding shareholder who is a resident of this State as in other
civil actions, and shall be served by registered or certified mail, or by
personal service without the State, on each demanding shareholder who is a
nonresident. The jurisdiction of the court shall be plenary and exclusive;
[1985, c. 394, sec. 3 (new).]
E. The court shall determine whether each demanding shareholder, as to
whom the controlling person requests the court to make such determination,
has satisfied the requirements of this section and is entitled to receive
payment for his shares; as to any demanding shareholder with respect to
whom the controlling person makes such a request, the burden is on the
shareholder to prove that he is entitled to receive payment. The court
shall then proceed to fix the fair value of the shares. The court may, if
it so elects, appoint one or more persons as appraisers to receive evidence
and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as shall be specified in the order of
their appointment or an amendment to the order of appointment; [1985, c.
394, sec. 3 (new).]
F. All shareholders who are parties to the proceedings shall be
entitled to judgment against the controlling person for the amount of the
fair value of their shares, except for any shareholder whom the
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<PAGE> 39
court shall have determined not to be entitled to receive payment for his
shares. The judgment shall be payable only upon and concurrently with the
surrender to the controlling person of the certificate or certificates
representing those shares. Upon payment of the judgment, the demanding
shareholder shall cease to have any interest in those shares; [1985, c.
394, sec. 3 (new).]
G. The judgment shall include an allowance for interest at such rate
as the court may find to be fair and equitable in all the circumstances,
from the control transaction date to the date of payment. If the court
finds that the refusal of any shareholder to accept the controlling
person's offer of payment for his shares was arbitrary, vexatious or not in
good faith, it may in its discretion refuse to allow interest to him;
[1985, c. 394, sec. 3 (new).]
H. The costs and expenses of any such proceeding shall be determined
by the court and shall be assessed against the controlling person, but all
or any part of those costs and expenses may be apportioned and assessed as
the court may deem equitable against any or all of the demanding
shareholders who are parties to the proceeding to whom the controlling
person shall have made an offer to pay for the shares, if the court finds
that the action of those shareholders in failing to accept that offer was
arbitrary or vexatious or not in good faith. Those expenses shall include
reasonable compensation for and reasonable expenses of the appraisers, but
shall exclude the fees and expenses of counsel for any party and shall
exclude the fees and expenses of experts employed by any party, unless the
court otherwise orders for good cause. The court shall award each
shareholder who is a party to the proceeding reasonable compensation for
any expert or experts employed by the shareholder in the proceeding and the
shareholder's reasonable attorney's fees and expenses, if:
(1) No offer was made; or
(2) The fair value of the shares as determined materially exceeds
the amount which the controlling person offered to pay therefor; and
[1985, c. 728 (amd).]
I. At all times during the pendency of any such proceeding, the court
may make any and all orders which may be necessary to protect the
corporation, the controlling person or the demanding shareholders, or which
are otherwise just and equitable. Those orders may include, without
limitation, orders:
(1) Requiring the controlling person to pay into court, or post
security for, the amount of the judgment or its estimated amount, either
before final judgment or pending appeal;
(2) Requiring the deposit with the court of certificates
representing shares held by the demanding shareholders;
(3) Imposing a lien on the property of the controlling person to
secure the payment of the judgment, which lien may be given priority
over liens and encumbrances contracted by the controlling person after
the control transaction date; and
(4) Staying the action pending the determination of any similar
action pending in another court having jurisdiction. [1985, c. 394, sec.
3 (new).]
[1985, c. 728 (amd).]
10. HOLDING AND DISPOSAL OF SHARES ACQUIRED BY PAYMENT. Shares acquired by
a controlling person pursuant to payment of the agreed value therefor or to
payment of the judgment entered therefor, as provided in this section, may be
held and disposed of as authorized and issued shares.
[1985, c. 394, sec. 3 (new).]
11. MINORS. The demand required by subsection 4 may be made, in the case
of a shareholder who is a minor or otherwise legally incapacitated, either by
the shareholder, notwithstanding his legal incapacity, or by his guardian, or by
any person acting for him as next friend. The shareholder shall be bound by the
time limitations set forth in this section, notwithstanding his legal
incapacity.
[1985, c. 394, sec. 3 (new).]
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<PAGE> 40
12. APPEALS. Appeals shall lie from judgments in actions brought under
this section as in other civil actions in which equitable relief is sought.
[1985, c. 394, sec. 3 (new).]
13. COMPLIANCE; SHAREHOLDER RIGHTS. If a person or group of persons
proposing to engage in a control transaction complies with the requirements of
this section in connection with the control transaction, the effectiveness of
the rights afforded in this section to shareholders may be conditioned upon the
consummation of the control transaction.
The person or group of persons shall give prompt written notice of the
satisfaction of any such condition to each shareholder who has made demand
as provided in this section.
[1985, c. 394, sec. 3 (new).]
14. APPLICATION. This section does not apply to:
A. Any corporation that is the subject of a control transaction and
that does not have a class of voting shares:
(1) Registered or traded on a national securities exchange; or
(2) Registered with the Securities and Exchange Commission pursuant
to the Act of Congress known as the Securities Exchange Act of 1934, as
the same has been or may hereafter be amended, United States Code
Annotated, Title 15, Section 78a et seq.; [1985, c. 394, sec. 3 (new).]
B. Any person or group that inadvertently becomes a controlling person
if that controlling person divests itself of a sufficient amount of its
voting shares so that it is no longer a controlling person, as soon as
practicable, but in no event more than 30 days after that person or group
receives notice from the corporation that it has become a controlling
person, or to any corporation that is the subject of a control transaction
and that on the effective date of this section was a subsidiary of any
other corporation. For purposes of this paragraph, "subsidiary" shall mean
any corporation as to which any other corporation has acquired or has the
right to acquire, directly or indirectly, through the exercise of warrants,
options and rights and the conversion of all convertible securities,
whether issued or granted by the subsidiary or otherwise, voting power over
voting shares of the subsidiary that would entitle the holders thereof to
cast in excess of 50% of the votes that all shareholders would be entitled
to cast in the election of directors of that subsidiary; provided that a
subsidiary will not be deemed to cease being a subsidiary so long as such
corporation remains a controlling person within the meaning of subsection
2; or [1985, c. 394, sec. 3 (new).]
C. Any person or group that becomes a controlling person solely as a
result of the corporation's purchase or redemption of its own voting
shares. [1985, c. 394, sec. 3 (new).]
[1985, c. 394, sec. 3 (new).]
SECTION HISTORY:
1985, c. 394, sec. 3 (NEW).
1985, c. 728 (AMD).
1993, c. 302, sec. 1 (AMD).
II-5
<PAGE> 41
SCHEDULE III
SECTION 909 OF THE
MAINE BUSINESS CORPORATION ACT
13A SEC. 909. RIGHT OF DISSENTING SHAREHOLDERS TO PAYMENT FOR SHARES
1. A shareholder having a right under any provision of this Act to dissent
to proposed corporate action shall, by complying with the procedure in this
section, be paid the fair value of his shares, if the corporate action to which
he dissented is effected. The fair value of shares shall be determined as of the
day prior to the date on which the vote of the shareholders, or of the directors
in case a vote of the shareholders was not necessary, was taken approving the
proposed corporate action, excluding any appreciation or depreciation of shares
in anticipation of such corporate action. [1971, c. 439, sec. 1 (new).]
2. The shareholder, whether or not entitled to vote, shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to the proposed
corporate action. No such objection shall be required from any shareholder to
whom the corporation failed to send notice of such meeting in accordance with
this Act. [1971, c. 439, sec. 1 (new).]
3. If the proposed corporate action is approved by the required vote and
the dissenting shareholder did not vote in favor thereof, the dissenting
shareholder shall file a written demand for payment of the fair value of his
shares. Such demand
A. Shall be filed with the corporation or, in the case of a merger or
consolidation, with the surviving or new corporation; and [1971, c. 439,
sec. 1 (new).]
B. Shall be filed by personally delivering it, or by mailing it via
certified or registered mail, to such corporation at its registered office
within this State or to its principal place of business or to the address
given to the Secretary of State pursuant to section 906, subsection 4,
paragraph B; it shall be so delivered or mailed within 15 days after the
date on which the vote of shareholders was taken, or the date on which
notice of a plan of merger of a subsidiary into a parent corporation
without vote of shareholders was mailed to shareholders of the subsidiary;
and [1971, c. 439, sec. 1 (new).]
C. Shall specify the shareholder's current address; and [1971, c. 439,
sec. 1 (new).]
D. May not be withdrawn without the corporation's consent. [1971, c.
439, sec. 1 (new).] [1971, c. 439, sec. 1 (new).]
4. Any shareholder failing either to object as required by subsection 2 or
to make demand in the time and manner provided in subsection 3 shall be bound by
the terms of the proposed corporate action. Any shareholder making such
objection and demand shall thereafter be entitled only to payment as in this
section provided and shall not be entitled to vote or to exercise any other
rights of a shareholder. [1971, c. 439, sec. 1 (new).]
5. The right of a shareholder otherwise entitled to be paid for the fair
value of his shares shall cease, and his status as a shareholder shall be
restored, without prejudice to any corporate proceedings which may have been
taken during the interim,
A. If his demand shall be withdrawn upon consent, or [1971, c. 439,
sec. 1 (new).]
B. If the proposed corporate action shall be abandoned or rescinded,
or the shareholders shall revoke the authority to effect such action, or
[1971, c. 439, sec. 1 (new).]
C. If, in the case of a merger, on the date of the filing of the
articles of merger the surviving corporation is the owner of all the
outstanding shares of the other corporations, domestic and foreign, that
are parties to the merger, or [1971, c. 439, sec. 1 (new).]
D. If no action for the determination of fair value by a court shall
have been filed within the time provided in this section, or [1971, c. 439,
sec. 1 (new).]
III-1
<PAGE> 42
E. If a court of competent jurisdiction shall determine that such
shareholder is not entitled to the relief provided by this section. [1971,
c. 439, sec. 1 (new).] [1971, c. 439, sec. 1 (new).]
6. At the time of filing his demand for payment for his shares, or within
20 days thereafter, each shareholder demanding payment shall submit the
certificate or certificates representing his shares to the corporation or its
transfer agent for notation thereon that such demand has been made; such
certificates shall promptly be returned after entry thereon of such notation. A
shareholder's failure to do so shall, at the option of the corporation,
terminate his rights under this section, unless a court of competent
jurisdiction, for good and sufficient cause shown, shall otherwise direct. If
shares represented by a certificate on which notation has been so made shall be
transferred, each new certificate issued therefor shall bear a similar notation,
together with the name of the original dissenting holder of such shares, and a
transferee of such shares shall acquire by such transfer no rights in the
corporation other than those which the original dissenting shareholder had after
making demand for payment of the fair value thereof. [1971, c. 439, sec. 1
(new).]
7. Within the time prescribed by this subsection, the corporation, or, in
the case of a merger or consolidation, the surviving or new corporation,
domestic or foreign, shall give written notice to each dissenting shareholder
who has made objection and demand as herein provided that the corporate action
dissented to has been effected, and shall make a written offer to each such
dissenting shareholder to pay for such shares at a specified price deemed by
such corporation to be the fair value thereof. Such offer shall be made at the
same price per share to all dissenting shareholders of the same class. The
notice and offer shall be accompanied by a balance sheet of the corporation the
shares of which the dissenting shareholder holds, as of the latest available
date and not more than 12 months prior to the making of such offer, and a profit
and loss statement of such corporation for the 12 months' period ended on the
date of such balance sheet. The offer shall be made within the later of 10 days
after the expiration of the period provided in subsection 3, paragraph B, for
making demand, or 10 days after the corporate action is effected; corporate
action shall be deemed effected on a sale of assets when the sale is
consummated, and in a merger or consolidation when the articles of merger or
consolidation are filed or upon which later effective date as is specified in
the articles of merger or consolidation as permitted by this Act. [1971, c. 439,
sec. 1 (new).]
8. If within 20 days after the date by which the corporation is required,
by the terms of subsection 7, to make a written offer to each dissenting
shareholder to pay for his shares, the fair value of such shares is agreed upon
between any dissenting shareholder and the corporation, payment therefor shall
be made within 90 days after the date on which such corporate action was
effected, upon surrender of the certificate or certificates representing such
shares. Upon payment of the agreed value the dissenting shareholder shall cease
to have any interest in such shares. [1971, c. 439, sec. 1 (new).]
9. If within the additional 20-day period prescribed by subsection 8, one
or more dissenting shareholders and the corporation have failed to agree as to
the fair value of the shares:
A. Then the corporation may, or shall, if it receives a demand as
provided in subparagraph (1), bring an action in the Superior Court in the
county in this State where the registered office of the corporation is
located praying that the fair value of such shares be found and determined.
If, in the case of a merger or consolidation, the surviving or new
corporation is a foreign corporation without a registered office in this
State, such action shall be brought in the county where the registered
office of the participating domestic corporation was last located. Such
action:
(1) Shall be brought by the corporation, if it receives a written
demand for suit from any dissenting shareholder, which demand is made
within 60 days after the date on which the corporate action was
effected; and if it receives such demand for suit, the corporation shall
bring the action within 30 days after receipt of the written demand; or,
(2) In the absence of a demand for suit, may at the corporation's
election be brought by the corporation at any time from the expiration
of the additional 20-day period prescribed by subsection 8 until the
expiration of 60 days after the date on which the corporate action was
effected; [1971, c. 439, sec. 1 (new).]
III-2
<PAGE> 43
B. If the corporation fails to institute the action within the period
specified in paragraph A, any dissenting shareholder may thereafter bring
such an action in the name of the corporation; [1971, c. 439, sec. 1
(new).]
C. No such action may be brought, either by the corporation or by a
dissenting shareholder, more than 6 months after the date on which the
corporate action was effected; [1971, c. 439, sec. 1 (new).]
D. In any such action, whether initiated by the corporation or by a
dissenting shareholder, all dissenting shareholders, wherever residing,
except those who have agreed with the corporation upon the price to be paid
for their shares, shall be made parties to the proceeding as an action
against their shares quasi in rem. A copy of the complaint shall be served
on each dissenting shareholder who is a resident of this State as in other
civil actions, and shall be served by registered or certified mail, or by
personal service without the State, on each dissenting shareholder who is a
nonresident. The jurisdiction of the court shall be plenary and exclusive;
[1971, c. 439, sec. 1 (new).]
E. The court shall determine whether each dissenting shareholder, as
to whom the corporation requests the court to make such determination, has
satisfied the requirements of this section and is entitled to receive
payment for his shares; as to any dissenting shareholder with respect to
whom the corporation makes such a request, the burden is on the shareholder
to prove that he is entitled to receive payment. The court shall then
proceed to fix the fair value of the shares. The court may, if it so
elects, appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The appraisers shall
have such power and authority as shall be specified in the order of their
appointment or an amendment thereof; [1971, c. 439, sec. 1 (new).]
F. All shareholders who are parties to the proceeding shall be
entitled to judgment against the corporation for the amount of the fair
value of their shares, except for any shareholder whom the court shall have
determined not to be entitled to receive payment for his shares. The
judgment shall be payable only upon and concurrently with the surrender to
the corporation of the certificate or certificates representing such
shares. Upon payment of the judgment, the dissenting shareholder shall
cease to have any interest in such shares; [1971, c. 439, sec. 1 (new).]
G. The judgment shall include an allowance for interest at such rate
as the court may find to be fair and equitable in all the circumstances,
from the date on which the vote was taken on the proposed corporate action
to the date of payment. If the court finds that the refusal of any
shareholder to accept the corporate offer of payment for his shares was
arbitrary, vexatious or not in good faith, it may in its discretion refuse
to allow interest to him; [1971, c. 439, sec. 1 (new).]
H. The costs and expenses of any such proceeding shall be determined
by the court and shall be assessed against the corporation, but all or any
part of such costs and expenses may be apportioned and assessed as the
court may deem equitable against any or all of the dissenting shareholders
who are parties to the proceeding to whom the corporation shall have made
an offer to pay for the shares, if the court shall find that the action of
such shareholders in failing to accept such offer was arbitrary or
vexatious or not in good faith. Such expenses shall include reasonable
compensation for and reasonable expenses of the appraisers, but shall
exclude the fees and expenses of counsel for any party and shall exclude
the fees and expenses of experts employed by any party, unless the court
otherwise orders for good cause. If the fair value of the shares as
determined materially exceeds the amount which the corporation offered to
pay therefor, or if no offer was made, the court in its discretion may
award to any shareholder who is a party to the proceeding such sum as the
court may determine to be reasonable compensation to any expert or experts
employed by the shareholder in the proceeding, and may, in its discretion,
award to any shareholder all or part of his attorney's fees and expenses;
[1971, c. 439, sec. 1 (new).]
I. At all times during the pendency of any such proceeding, the court
may make any and all orders which may be necessary to protect the
corporation or the dissenting shareholders, or which are otherwise just and
equitable. Such orders may include, without limitation, orders:
(1) Requiring the corporation to pay into court, or post security
for, the amount of the judgment or its estimated amount, either before
final judgment or pending appeal;
III-3
<PAGE> 44
(2) Requiring the deposit with the court of certificates
representing shares held by the dissenting shareholders;
(3) Imposing a lien on the property of the corporation to secure
the payment of the judgment, which lien may be given priority over liens
and encumbrances contracted after the vote authorizing the corporate
action from which the shareholders dissent;
(4) Staying the action pending the determination of any similar
action pending in another court having jurisdiction. [1971, c. 439, sec.
1 (new).] [1971, c. 439, sec. 1 (new).]
10. Shares acquired by a corporation pursuant to payment of the agreed
value therefor or to payment of the judgment entered therefor, as in this
section provided, may be held and disposed of by such corporation as in the case
of other treasury shares, except that, in the case of a merger or consolidation,
they may be held and disposed of as the plan of merger or consolidation may
otherwise provide. [1971, c. 439, sec. 1 (new).]
11. The objection required by subsection 2 and the demand required by
subsection 3 may, in the case of a shareholder who is a minor or otherwise
legally incapacitated, be made either by such shareholder, notwithstanding his
legal incapacity, or by his guardian, or by any person acting for him as next
friend. Such shareholder shall be bound by the time limitations set forth in
this section, notwithstanding his legal incapacity. [1971, c. 439, sec. 1
(new).]
12. Appeals shall lie from judgments in actions brought under this section
as in other civil actions in which equitable relief is sought. [1971, c. 439,
sec. 1 (new).]
13. No action by a shareholder in the right of the corporation shall abate
or be barred by the fact that the shareholder has filed a demand for payment of
the fair value of his shares pursuant to this section. [1971, c. 439, sec. 1
(new).]
SECTION HISTORY:
1971, c. 439, sec. 1,27 (NEW).
III-4
<PAGE> 45
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depository at its address
set forth below.
The Depository for the Offer is:
EQUISERVE, L.P.
<TABLE>
<S> <C>
By First Class Mail: By Overnight Courier:
EquiServe, L.P. EquiServe
Attn: Corporate Actions Attn: Corporate Actions
P.O. Box 8029 150 Royall Street
Canton, MA 02266-8029 Canton, MA 02021
By Hand: By Facsimile Transmission:
Securities Transfer Reporting Services, Inc. (For eligible institutions only)
c/o EquiServe (781) 575-2233
100 Williams Street
New York, NY 10038 Confirm Receipt of Facsimile By Telephone:
(781) 575-3120
</TABLE>
------------------------
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of the
Guaranteed Delivery may be obtained from the Information Agent. A stockholder
may also contact brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.
The Information Agent for the Offer is:
[GEORGESON SHAREHOLDER COMMUNICATIONS LOGO]
Georgeson Shareholder Communications Inc.
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
<PAGE> 1
Exhibit (a)(2)
(Summary Advertisement)
This announcement is neither an offer to purchase nor a solicitation of
an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
October 12, 1999 and the related Letter of Transmittal and any amendments or
supplements thereto, and is being made to all holders of Shares. The Offer is
not being made to, nor will tenders be accepted from or on behalf of, holders of
Shares in any jurisdiction in which the making of the Offer or acceptance
thereof would not be in compliance with the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Penobscot Shoe Company
at
$11.75 Net Per Share
by
PSC Acquisition Corp.
an indirect wholly-owned subsidiary of
Riedman Corporation
PSC Acquisition Corp., a Maine corporation (the "Purchaser") and an
indirect wholly-owned subsidiary of Riedman Corporation, a corporation organized
and existing under the laws of the State of New York ("Parent"), is offering to
purchase all the outstanding shares of common stock, par value $1.00 per share
(the "Shares"), of Penobscot Shoe Company, a Maine corporation (the "Company"),
at a purchase price of $11.75 per Share, net to the seller in cash (subject to
applicable withholding of tax), without interest, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated October 12, 1999 (the
"Offer to Purchase") and in the related Letter of Transmittal (which, as amended
or supplemented from time to time, together constitute the "Offer"). Tendering
stockholders who have Shares registered in their own name and who tender
directly to EquiServe, L.P. (the "Depository") 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 pursuant to the Offer. 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.
Following the consummation of the Offer, the Purchaser intends to effect the
merger described below.
================================================================================
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN
STANDARD TIME, ON NOVEMBER 9, 1999, UNLESS THE OFFER IS EXTENDED.
================================================================================
The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the Expiration Date (as defined
below) at least 80% of the Company's outstanding common stock (the "Minimum
Condition"). Certain stockholders of the Company owning 740,321.5 Shares
representing 53.33% outstanding have agreed to tender their Shares in the Offer
pursuant to Tender Agreements which are fully described in the Offer to
Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated October 6, 1999 (the "Merger Agreement"), by and among the Purchaser,
Parent and the Company. The Merger Agreement provides, among other things, that
the Purchaser will make the Offer and that as promptly as practicable following
the consummation of the Offer and the satisfaction or waiver of certain
conditions set forth in the Merger Agreement and in accordance with relevant
provisions of the Maine Business Corporation Act (the "Maine Law"), the
Purchaser will merge with and into the Company (the "Merger"). Upon the
consummation of the Merger, the Company will continue as the surviving
corporation and
<PAGE> 2
will be an indirect, wholly owned subsidiary of Parent. At the effective time of
the Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held by the Company as treasury
stock or by any subsidiary of the Company, Parent, the Purchaser or any other
subsidiary of Parent and other than Shares held by a holder who has not voted in
favor of the Merger or consented thereto in writing and who has demanded payment
of the fair value of such Shares pursuant to Section 910 of Maine Law or
demanded appraisal for such Shares in accordance with Section 909 of the Maine
Law) will be converted into the right to receive cash, without interest, in an
amount equal to the price per Share paid pursuant to the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY
AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND THE MERGER AND RECOMMENDS THAT
THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
The term "Expiration Date" means 12:00 Midnight, Eastern Standard Time,
on November 9, 1999, unless and until the Purchaser shall have extended the
period of time for which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
the Purchaser, shall expire. The Purchaser may, and may be required to, subject
to the terms of the Merger Agreement, extend the Offer. Any such extension will
be followed as promptly as practicable by public announcement thereof no later
than 9:00 a.m., Eastern Standard Time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares.
If any condition to the Offer is not satisfied, the Purchaser may,
subject to certain terms of the Merger Agreement, (a) terminate the Offer and
not accept for payment or pay for any Shares and return all tendered Shares to
tendering stockholders or (b) waive all the unsatisfied conditions (other than
the Minimum Condition which cannot without the Company's consent be waived or
reduced below 80% of the total issued and outstanding Shares) and accept for
payment and pay for all Shares validly tendered prior to the Expiration Date or
(c) extend the Offer and, subject to the right of stockholders to withdraw
Shares until the Expiration Date as set forth below, retain the Shares that
have been tendered during the period for which the Offer is extended.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment (and thereby purchased) validly tendered Shares, if, as and
when the Purchaser gives oral or written notice to the Depository of the
Purchaser's acceptance of such Shares for payment pursuant to the Offer. In all
cases, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depository, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Purchaser and transmitting payment to tendering stockholders. Under no
circumstances will interest on the purchase price of the Shares be paid by the
Purchaser by reason of any delay in making payment. Payment for Shares purchased
pursuant to the Offer will in all cases be made only after timely receipt by the
Depository of (i) certificates for such Shares (or timely confirmation of a
book-entry transfer of such Shares into the Depository's account at the
Book-Entry Transfer Facility (as defined in the Offer to Purchase)), and (ii)
the Letter of Transmittal (or a facsimile thereof) properly completed and duly
executed with all required signature guarantees or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer of
Shares, together with any other documents required by the Letter of Transmittal.
<PAGE> 3
Tenders of Shares made pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date. Thereafter, such tenders are irrevocable,
except that they also may be withdrawn at any time after December 9, 1999 unless
theretofore accepted for payment as provided in the Offer to Purchase. For a
withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depository at one of its addresses set
forth in the Offer to Purchase and must specify the name of the person who
tendered the Shares to be withdrawn and the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If certificates for the Shares to be withdrawn have been
delivered or otherwise identified to the Depository, a signed notice of
withdrawal with signatures guaranteed by an Eligible Institution (as defined in
the Offer to Purchase) must be submitted prior to the release of such Shares,
unless such Shares were tendered by an Eligible Institution. In addition, such
notice must specify, in the case of Shares tendered by delivery of certificates,
the serial numbers shown on the particular certificates evidencing the Shares to
be withdrawn or, in the case of Shares tendered by a book-entry transfer, the
name and number of the account at the Book-Entry Transfer Facility (as defined
in the Offer to Purchase) to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference.
The Company has provided the Purchaser with the Company's stockholder
lists 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 and other related materials will be mailed to record holders of
Shares whose names appear on the Company's stockholder lists, and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number set forth below. Additional copies of
the Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent, and copies will be
furnished promptly at the Purchaser's expense. The Purchaser will not pay any
fees or commissions to any broker or dealer or any other person (other than the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 STATE STREET, 10TH FLOOR
NEW YORK, NEW YORK 10004
BANKS AND BROKERS CALL (212) 440-9800
ALL OTHERS CALL TOLL FREE (800) 223-2064
<PAGE> 1
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
PENOBSCOT SHOE COMPANY,
PSC ACQUISITION CORP. AND
RIEDMAN CORPORATION
DATED AS OF OCTOBER 6, 1999
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
THE OFFER AND MERGER
<TABLE>
<CAPTION>
<S> <C>
Section 1.1 The Offer.................................................................................1
Section 1.2 Company Actions...........................................................................4
Section 1.3 Directors.................................................................................6
Section 1.4 The Merger................................................................................6
Section 1.5 Effective Time............................................................................7
Section 1.6 Closing...................................................................................7
Section 1.7 Directors and Officers of the Surviving Corporation.......................................7
Section 1.9 Stockholders' Meeting.....................................................................8
Section 1.8 Merger Without Meeting of Stockholders....................................................8
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock...............................................................9
Section 2.2 Exchange of Certificates..................................................................9
Section 2.3 Demanding Shares / Dissenting Shares.....................................................11
Section 2.4 Termination of Company Option Plans and Options..........................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization.............................................................................13
Section 3.2 Capitalization...........................................................................14
Section 3.3 Authorization; Validity of Agreement; Company Action.....................................15
Section 3.4 Consents and Approvals; No Violations....................................................15
Section 3.5 SEC Reports and Financial Statements.....................................................16
Section 3.6 No Undisclosed Liabilities...............................................................16
Section 3.7 Absence of Certain Changes...............................................................16
Section 3.8 Employee Benefit Plans; ERISA............................................................17
Section 3.9 Litigation...............................................................................19
Section 3.10 No Default; Compliance with Applicable Laws.............................................20
Section 3.11 Taxes...................................................................................21
Section 3.12 Property................................................................................22
Section 3.13 Environmental Matters...................................................................22
Section 3.14 Intellectual Property ..................................................................24
Section 3.15 Material Contracts......................................................................24
Section 3.16 Labor Matters...........................................................................25
Section 3.17 Restrictions on Business Activities.....................................................26
Section 3.18 Year 2000 Compliance....................................................................26
Section 3.19 Vote Required...........................................................................26
Section 3.20 Brokers.................................................................................27
Section 3.21 Opinion of Financial Advisor............................................................27
Section 3.22 Information in Proxy Statement; Schedule 14D-1..........................................27
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Section 3.23 Takeover Statutes.......................................................................27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER 27
Section 4.1 Organization.............................................................................28
Section 4.2 Authorization; Validity of Agreement; Necessary Action...................................28
Section 4.3 Consents and Approvals; No Violations....................................................28
Section 4.4Financing.................................................................................29
Section 4.5 Information in Offer Documents; Proxy Statement; Schedule 14D-9..........................29
Section 4.6 Purchaser's Operations...................................................................29
Section 4.7 Brokers or Finders.......................................................................30
Section 4.8Ownership of the Company..................................................................30
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company........................................................30
Section 5.2 Access to Information....................................................................33
Section 5.3 Consents and Approvals...................................................................33
Section 5.4 No Solicitation .........................................................................35
Section 5.5Publicity.................................................................................35
Section 5.6Notification of Certain Matters...........................................................36
Section 5.7 Directors' and Officers' Insurance and Indemnification ..................................36
Section 5.8 Further Assurances ......................................................................37
Section 5.9 Fees and Expenses .......................................................................37
Section 5.10 Employee Matters .......................................................................37
Section 5.11 Takeover Statute .......................................................................39
Section 5.12 Solvency After the Closing..............................................................39
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger...............................39
Section 6.2 Conditions to Obligation of Company to Effect Merger.....................................36
Section 6.3 Condition to Obligation of Parent and Purchaser to Effect Merger.........................36
ARTICLE VII
TERMINATION
Section 7.1 Termination..............................................................................42
Section 7.2 Effect of Termination....................................................................42
Section 7.3 Payment of Non-Recommendation Termination Fee............................................42
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification...............................................................43
Section 8.2 Non-Survival of Representations and Warranties...........................................43
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
Section 8.3 Notices..................................................................................44
Section 8.4 Counterparts.............................................................................45
Section 8.5 Entire Agreement; Third-Party Beneficiaries..............................................45
Section 8.6 Severability ............................................................................45
Section 8.7 Governing Law ...........................................................................45
Section 8.8 Jurisdiction ............................................................................45
Section 8.9 Assignment...............................................................................46
Section 8.10 Waiver..................................................................................47
Section 8.11 Headings ...............................................................................47
Section 8.12 Specific Performance ...................................................................47
Section 8.13 Obligations of Parent and the Company of Parent and the Company ........................47
Section 8.14 Limitations on Warranties ..............................................................47
Section 8.15 Schedules ..............................................................................48
Section 8.16 Interpretation .........................................................................48
Section 8.17 Execution ..............................................................................48
</TABLE>
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<PAGE> 5
GLOSSARY OF DEFINED TERMS
All capitalized terms used herein shall have the meanings given thereto
in this Agreement. The following capitalized terms are defined in the Section
set forth opposite such terms.
<TABLE>
<CAPTION>
SECTION OF
DEFINED TERM DEFINED TERM
- ------------ ------------
<S> <C>
Acquisition Proposal........................................................................Section 5.4(e)
Agreement.........................................................................................Preamble
Appointment Date........................................................................... Section 1.3(b)
Articles of Merger.............................................................................Section 1.5
Benefit Plans...............................................................................Section 3.8(a)
Certificates............................................................................... Section 2.2(a)
Claim.......................................................................................Section 5.79a)
Closing....................................................................................... Section 1.6
Closing Date.................................................................................. Section 1.6
Code....................................................................................... Section 2.2(d)
Company.......................................................................................... Preamble
Company Assets................................................................................Section 3.12
Company Common Stock............................................................................. Recitals
Company Material Adverse Effect................................................................Section 3.1
Company SEC Documents..........................................................................Section 3.5
Confidentiality Agreement...................................................................Section 5.2(b)
Continuing Directors........................................................................Section 1.3(a)
Demanding Common Stock........................................................................ Section 2.3
Disclosure Schedule............................................................................Article III
Dissenting Common Stock....................................................................... Section 2.3
ERISA.......................................................................................Section 3.8(a)
ERISA Affiliate.............................................................................Section 3.8(a)
Effective Time.................................................................................Section 1.5
Environmental Laws......................................................................Section 3.13(b)(i)
Environmental Liabilities.............................................................Section 3.13(b)(iii)
Environmental Permits..................................................................Section 3.13(b)(ii)
Exchange Act............................................................................... Section 1.1(a)
Expiration Date............................................................................ Section 1.1(a)
Fee.........................................................................................Section 7.3(a)
GAAP...........................................................................................Section 3.5
Governmental Entity............................................................................Section 3.4
Hazardous Substances...................................................................Section 3.13(b)(iv)
IRS.........................................................................................Section 3.8(b)
Indemnified Party...........................................................................Section 5.7(a)
Insured Parties.............................................................................Section 5.7(b)
Intellectual Property.........................................................................Section 3.14
Knowledge...................................................................................Section 3.8(e)
Liens.........................................................................................Section 3.12
MBCA....................................................................................... Section 1.2(a)
Maine Secretary............................................................................... Section 1.5
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
Majority Shareholders.............................................................................Recitals
Material Contracts............................................................................Section 3.15
Maine Secretary................................................................................ Section 1.5
Material Contracts............................................................................Section 3.15
Maximum Premium.............................................................................Section 5.7(b)
Merger........................................................................................ Section 1.4
Merger Consideration....................................................................... Section 2.1(c)
Minimum Condition.......................................................................... Section 1.1(a)
Most Recent Audited Balance Sheet.............................................................Section 3.12
Multiemployer Plan..........................................................................Section 3.8(d)
Offer...................................................................................... Section 1.1(a)
Offer Documents............................................................................ Section 1.1(d)
Offer Price................................................................................ Section 1.1(a)
Offer to Purchase...........................................................................Section 1.1(b)
Option Plan....................................................................................Section 2.4
Options........................................................................................Section 2.4
Ordinary Course of Business....................................................................Section 3.6
PBGC........................................................................................Section 3.8(c)
Parent........................................................................................... Preamble
Paying Agent............................................................................... Section 1.1(e)
Payment Fund............................................................................... Section 1.1(e)
Permitted Liens...............................................................................Section 3.12
Person......................................................................................Section 2.2(a)
Potential Acquirer..........................................................................Section 5.4(b)
Proxy Statement.........................................................................Section 1.9(a)(ii)
Purchaser........................................................................................ Preamble
Purchaser Common Stock........................................................................ Section 2.1
Purchaser Material Adverse Effect..............................................................Section 4.1
Real Property..........................................................................Section 3.13(a)(ii)
Representatives.............................................................................Section 5.2(a)
Schedule 14D-1............................................................................. Section 1.1(d)
Schedule 14D-9............................................................................. Section 1.2(b)
SEC........................................................................................ Section 1.1(d)
Shares........................................................................................... Recitals
Significant Contracts.........................................................................Section 3.10
Subsidiary..................................................................................Section 3.1(a)
Superior Proposal...........................................................................Section 5.4(f)
Surviving Corporation......................................................................... Section 1.4
Tax Return.................................................................................Section 3.11(h)
Taxes......................................................................................Section 3.11(h)
Tender Agreements................................................................................ Recitals
Transactions............................................................................... Section 1.2(a)
Voting Debt.................................................................................Section 3.2(a)
Year 2000 Compliant........................................................................Section 3.18(b)
1998 Financial Statements......................................................................Section 3.5
1998 Form 10-K.................................................................................Section 3.5
</TABLE>
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<PAGE> 7
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of October 6, 1999 (this
"Agreement"), by and among Riedman Corporation, a New York corporation
("Parent"), PSC Acquisition Corp., a Maine corporation and an indirect
wholly-owned subsidiary of Parent ("Purchaser"), and Penobscot Shoe Company,
a Maine corporation (the "Company").
R E C I T A L S :
WHEREAS, Parent and Purchaser have proposed acquiring all the
outstanding common stock, par value $1.00 per share, of the Company, (the
"Shares" or "Company Common Stock") at a price of $11.75 per Share in cash;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
WHEREAS, as a condition and inducement to Parent's and Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
several of the stockholders (the "Majority Stockholders") holding in the
aggregate approximately 53.33% of the outstanding shares of Company Common Stock
concurrently herewith entering into Tender Agreements (the "Tender Agreements"),
dated as of the date hereof, with Parent and Purchaser, pursuant to which, among
other things, they are agreeing to tender all of their Shares in the Offer, all
upon the terms and subject to the conditions set forth in the Tender Agreements;
and
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the acquisition of the Company by Parent
and Purchaser upon the terms and subject to the conditions set forth herein;
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE OFFER AND MERGER
SECTION 1.1 THE OFFER.
(a) Provided this Agreement shall not have been terminated in
accordance with Section 7.1, as promptly as practicable (but in no event later
than five (5) business days after the public announcement of the execution of
this Agreement), Purchaser shall, and Parent shall cause Purchaser to, commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), an offer (the "Offer") to purchase for cash any
and all shares of the issued and outstanding Company Common Stock at a price of
<PAGE> 8
$11.75 per Share, net to the seller in cash (such price, or such higher price
per Share as may be paid in the Offer being referred to herein as the "Offer
Price"), subject to the conditions set forth herein and in Annex A attached
hereto. The Company shall not tender Shares held by it or by any of its
Subsidiaries pursuant to the Offer and the Purchaser shall not be obligated to
purchase any such Shares. The obligations of Purchaser to consummate the Offer
and to accept for payment and to pay for any Shares validly tendered on or prior
to the expiration of the Offer and not withdrawn shall be subject only to there
being validly tendered and not withdrawn prior to the expiration of the Offer,
not less than eighty percent (80%) of the total issued and outstanding shares of
Company Common Stock on the date hereof (the "Minimum Condition") (which on this
date constitutes 1,110,633 Shares), and the other conditions set forth in Annex
A attached hereto. Except as expressly provided in Sections 1.1(b) and (c), the
Purchaser expressly reserves the right to waive any such condition, to increase
the price payable in the Offer and to make any other changes in the terms and
conditions of the Offer.
(b) The Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") containing the terms set forth in this Agreement, the
Minimum Condition and the other conditions set forth in Annex A attached hereto.
Unless previously approved by the Company in writing, no change may be made by
Purchaser that (i) decreases the Offer Price, (ii) changes the form of
consideration to be paid in the Offer, (iii) reduces the maximum number of
Shares to be purchased in the Offer, (iv) imposes conditions to the Offer in
addition to those set forth in Annex A, (v) amends the conditions set forth in
Annex A to broaden the scope of such conditions, (vi) extends the Offer except
as provided in Section 1.1(c), or (vii) amends or waives the Minimum Condition.
(c) Subject to the terms and conditions hereof, the initial
expiration date of the Offer shall be twenty (20) business days after the
commencement of the Offer (as extended in accordance herewith, the "Expiration
Date"), subject to extension as provided in this Section 1.1(c). Notwithstanding
anything herein to the contrary, Purchaser shall be entitled (i) to extend the
Offer (and defer the Expiration Date) for a period ending no later than ninety
(90) days after the commencement of the Offer in one or more periods of not more
than ten (10) business days each, if at any scheduled Expiration Date, any
condition to the Offer is not satisfied or waived by Purchaser; (ii) to extend
the Offer (and defer the Expiration Date) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer; and (iii) to extend
the Offer (and defer the Expiration Date) further for an additional period
ending no more than one hundred fifty (150) days (in one or more periods of not
more than ten (10) business days each) following an extension pursuant to clause
(i) of this sentence, if at the Expiration Date, as deferred pursuant to clause
(i) of this sentence, the condition to the Offer set forth in paragraph (b)(i)
of Annex A has not been satisfied or waived or the condition to the Offer set
forth in paragraph (b)(v) of Annex A has not been satisfied or waived; and (iv)
at the Expiration Date, if all conditions to the Offer have been satisfied or
waived by Purchaser, and for so long as less than ninety percent (90%) of the
outstanding shares of Company Common Stock have been validly tendered and not
properly withdrawn pursuant to the Offer, Purchaser may, in its sole discretion
and without the consent of the Company, extend the Offer (and defer the
Expiration Date) for up to an additional ten (10) business days in the aggregate
(in periods of no more than five (5) business days each). Subject to the terms
and conditions of this Agreement, if any one or more of the conditions to the
Offer set forth on Annex A (other than the Minimum Condition) are not satisfied
or waived by Parent and Purchaser at the time of any scheduled Expiration Date,
then, provided, that such conditions are and continue to be reasonably capable
of being satisfied by December 31, 1999, Purchaser shall extend the Offer in
such intervals of no less than five (5) business days each up until December 31,
1999. Any extension of the Offer in accordance herewith shall defer the
Expiration Date until the latest date to which the Offer is so extended. Subject
to the terms and conditions of the Offer and this Agreement, Purchaser shall
(and Parent shall cause
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<PAGE> 9
Purchaser to) accept for payment, and pay for, all Shares validly tendered and
not withdrawn pursuant to the Offer, as promptly as practicable after the
expiration of the Offer.
(d) As soon as practicable on the date the Offer is commenced,
Parent and Purchaser shall file with the SEC a Tender Offer Statement on
Schedule 14D-1 with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule 14D-1").
The Schedule 14D-1 shall include, as exhibits, the Offer to Purchase, a form of
related letter of transmittal and summary advertisement (collectively, together
with any amendments and supplements thereto, the "Offer Documents"). Parent and
Purchaser agree that they shall cause the Offer Documents to comply in all
material respects with the Exchange Act and the rules and regulations thereunder
and other applicable laws. Parent and Purchaser further agree that the Offer
Documents, on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation or warranty is made by
Parent or Purchaser with respect to information supplied by the Company or any
of its stockholders in writing specifically for inclusion or incorporation by
reference in the Offer Documents. The Company agrees that the information
provided by the Company in writing specifically for inclusion or incorporation
by reference in the Offer Documents shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of Parent and
Purchaser shall take all steps necessary to cause the Offer Documents to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws. Each of Parent
and Purchaser, on the one hand, and the Company, on the other hand, shall
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that it shall have become false or misleading in any
material respect and Purchaser further shall take all steps necessary to cause
the Schedule 14D-1 as so corrected to be filed with the SEC and the Offer
Documents to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given reasonable opportunity to review and comment on the Offer
Documents prior to the filing thereof with the SEC. Parent and Purchaser agree
to provide in writing to the Company and its counsel any comments Parent,
Purchaser or their counsel may receive from the SEC or its staff with respect to
the Offer Documents promptly after receipt of such comments.
(e) Simultaneously with the execution of this Agreement,
Parent shall designate a bank or trust company (the "Paying Agent") to make
payments of the funds which holders of shares of Company Common Stock shall be
entitled as payment for their Shares which are tendered and accepted by
Purchaser or to which they otherwise become entitled to in connection with the
Merger as provided herein. Such amount shall hereinafter be referred to as the
"Payment Fund." The expenses of the Paying Agent may be paid from the Payment
Fund only to the extent of any interest that accrues thereon and to the extent
that such interest is insufficient to pay those expenses, the Parent shall pay
such expenses. Simultaneously with the execution and delivery hereof, Parent
shall take all steps necessary to deposit or cause the Purchaser to deposit with
an escrow agent, in escrow for the benefit of the Company's stockholders,
immediately available funds equal to the aggregate Offer Price for all Shares
outstanding as of the date hereof, together with the aggregate amount payable to
the holders of Options pursuant to Section 2.4. The escrow shall be established
pursuant to an Escrow
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<PAGE> 10
Agreement in the form of Exhibit A annexed hereto which shall be entered into by
the escrow agent and the parties hereto at the time that the escrow is
established. The Payment Fund shall not be used for any purpose that is not
provided herein. The Paying Agent may invest, if so directed by Parent or
Purchaser, the Payment Fund in obligations of the United States government or
any agency or instrumentality thereof, or in obligations that are guaranteed or
insured by the United States government or an agency or instrumentality thereof.
Any net profit resulting from, or interest or income produced by, such
investments shall be payable to Parent or Purchaser on demand. In the event at
the end of any calendar month after the Payment Fund is deposited with the
Payment Agent, the Payment Fund shall realize a loss on any such investment,
Parent shall promptly thereafter deposit in such Payment Fund cash in an amount
necessary so that the Payment Fund will be sufficient to satisfy all of the
Purchaser's remaining obligations originally contemplated to be paid out of such
Payment Fund.
SECTION 1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer
and represents that (i) its Board of Directors, at a meeting duly called and
held on October 6, 1999, has, subject to the terms and conditions set forth
herein, (A) approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger (collectively, the "Transactions"),
determining that the Merger is advisable and that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company's stockholders and
such approval constitutes approval of the Offer, this Agreement and the Merger
for purposes of Section 611-A of the Maine Business Corporation Act (the
"MBCA"); and (B) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares thereunder to Purchaser and approve and
adopt this Agreement and the Merger, provided that such recommendation may be
withdrawn, modified or amended as provided in Section 5.4(d) hereof and (ii) the
restrictions on "business combinations" contained in Section 611-A of the MBCA
are inapplicable to the transactions contemplated by this Agreement and the
Tender Agreements. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of its Board of Directors described in clause
(i)(B) of the immediately preceding sentence, unless and until such
recommendation is withdrawn or modified, in a manner adverse to Parent, in
accordance with Section 5.4(d) hereof. The Company has been advised by each of
its directors and executive officers that they intend to tender or cause to be
tendered to the Purchaser pursuant to the Offer all Shares beneficially owned by
them and to vote such Shares in favor of the approval and adoption of this
Agreement and the Transactions.
(b) Concurrently with the filing of the Schedule 14D-1, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9") which shall contain the
recommendation referred to in clause (i)(B) of Section 1.2(a) hereof. The
Company shall take all steps necessary to cause the Schedule 14D-9 to be
disseminated to holders of Shares to the extent required by applicable federal
securities laws. The Company agrees that it shall cause the Schedule 14D-9 to
comply in all material respects with the Exchange Act and the rules and
regulations thereunder and other applicable laws. The Company further agrees
that the Schedule 14D-9, on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no
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<PAGE> 11
representation or warranty is made by the Company with respect to information
supplied by Parent or Purchaser in writing specifically for inclusion or
incorporation by reference in the Schedule 14D-9. Parent and Purchaser agree
that the information provided by them specifically in writing for inclusion or
incorporation by reference in the Schedule 14D-9 shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
Company, on the one hand, and Parent and Purchaser, on the other hand, shall
promptly correct any information provided by it for use in the Schedule 14D-9 if
and to the extent that it shall have become false or misleading in any material
respect and the Company further shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of the Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment on the Schedule 14D-9 prior to the
filing thereof with the SEC. The Company agrees to provide in writing to Parent
and its counsel any comments the Company or its counsel may receive from the SEC
or its staff with respect to the Schedule 14D-9 promptly after receipt of such
comments.
(c) In connection with the Offer, the Company shall promptly
furnish or cause to be furnished to Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
furnish Purchaser with such information and assistance as Purchaser or its
agents may reasonably request in communicating the Offer to the stockholders of
the Company. Except for such steps as are necessary to disseminate the Offer
Documents and to consummate the Merger, and subject to the requirements of
applicable law, each of Parent and Purchaser and their agents shall hold in
confidence until the Effective Time the information contained in any of such
labels and lists and the additional information referred to in the preceding
sentence, shall use such information only in connection with the Offer and
Merger and, if this Agreement shall be terminated, will deliver, and will use
their reasonable efforts to cause their agents to deliver, to the Company all
copies and any extracts or summaries from such information then in their
possession or control or to destroy the same.
SECTION 1.3 DIRECTORS.
(a) So long as this Agreement is in effect, the Company shall
not cause or permit the size of its Board of Directors to be expanded to more
than five (5) directors. Promptly upon the purchase of and payment for Shares by
Parent or Purchaser pursuant to the Offer, if the Minimum Condition has been
met, Parent shall, upon request, be entitled to designate three (3) directors to
the Company's Board of Directors. The Company shall, upon request of Purchaser
or Parent, secure the resignations of such number of its incumbent directors as
is necessary, consistent with the request of Purchaser or Parent, to enable
Parent's designees to be so elected to the Company's Board of Directors, and
shall take all actions necessary to cause Parent's designees to be so elected or
appointed. At such times, the Company will use its best efforts to cause
individuals designated by Parent to constitute the same percentage as such
individuals represent on the Company's Board of Directors on each committee of
the Board. Notwithstanding the foregoing, until the Effective Time, the Company
shall retain as members of its Board of Directors two (2) directors who are
directors of the Company on the date hereof (the "Continuing Directors");
provided, however, that upon and after satisfaction of the Minimum Condition and
subsequent to the purchase of and payment for Shares pursuant to the Offer,
Parent shall always have its designees represent at least a majority
-5-
<PAGE> 12
of the entire Board of Directors. If a Continuing Director resigns from the
Company's Board of Directors, Parent, Purchaser and the Company shall permit the
remaining Continuing Director to appoint the resigning Director's successor who
shall be deemed to be a Continuing Director. The Company's obligations under
this Section 1.3(a) shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. Parent or Purchaser shall supply to the
Company in writing and be solely responsible for any information with respect to
either of them and their nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1. Upon receipt of such information from Parent or
Purchaser, the Company shall include in the Schedule 14D-9 (as an annex or
otherwise) the information required by Section 14(f) and Rule 14f-1 as is
necessary to enable Parent's designees to be elected to the Company's Board of
Directors.
(b) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors (the "Appointment
Date"), the unanimous vote of the entire Board of Directors of the Company,
including the Continuing Directors, is required for the Company to: (i) amend or
terminate this Agreement, (ii) extend the time for performance of any of the
obligations or other acts of Parent or Purchaser hereunder except as otherwise
specifically permitted herein, or (iii) waive any condition of the Company's
obligations hereunder or any of the Company's rights or remedies hereunder.
SECTION 1.4 THE MERGER. Subject to the terms and conditions of this
Agreement and the provisions of the MBCA, at the Effective Time, the Company and
Purchaser shall consummate a merger (the "Merger") pursuant to which (a) the
Purchaser shall be merged with and into the Company and the separate corporate
existence of Purchaser shall thereupon cease, (b) the Company shall be the
successor or surviving corporation in the Merger (the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Maine, and (c) the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger.
Pursuant to the Merger, (x) the Articles of Incorporation of Purchaser, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Articles of Incorporation, and (y) the By-Laws of Purchaser, as
in effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by law, the Articles
of Incorporation and such By-Laws. The Merger shall have the effects set forth
in the MBCA. Without limiting the generality of the foregoing and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and the Purchaser shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of the Company and the Purchaser shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.5 EFFECTIVE TIME. Subject to the terms and conditions set
forth in this Agreement, Parent, Purchaser and the Company shall cause Articles
of Merger (the "Articles of Merger") be executed and filed on the date of the
Closing (or on such other date as Parent and the Company may agree) with the
Secretary of State of the State of Maine (the "Maine Secretary") as provided in
Section 903 of the MBCA (or, if permitted, Section 904 of the MBCA). The Merger
shall become effective on the date and at the time on which the Articles of
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<PAGE> 13
Merger have been duly filed with the Maine Secretary or on such other date and
at such other time as the parties hereto may agree and as may be set forth in
the Articles of Merger (such time being the "Effective Time").
SECTION 1.6 CLOSING. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m., Eastern Standard Time, on a date to be specified by
the parties, which shall be as soon as practicable, but in no event later than
the third (3rd) business day after satisfaction or waiver of all the conditions
set forth in Article VI hereof (the "Closing Date"), at the offices of Woods,
Oviatt, Gilman, Sturman & Clarke LLP, Rochester, New York, unless another date
or place is agreed to in writing by the parties hereto.
SECTION 1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors and Chief Executive Officer of Purchaser and the officers of the
Company (other than the Chief Executive Officer) immediately prior to the
Effective Time shall, from and after the Effective Time, be the directors, Chief
Executive Officer and other officers, respectively, of the Surviving Corporation
until their successors shall have been duly elected or appointed or qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
SECTION 1.8 STOCKHOLDERS' MEETING. Notwithstanding Section 1.9 hereof:
(a) Following consummation of the Offer, if required by
applicable law in order to consummate the Merger, the Company, acting through
its Board of Directors, shall, in accordance with applicable law and its
Articles of Incorporation and By-Laws:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders as soon as practicable following the
acceptance for payment and purchase of Shares by Purchaser pursuant to the Offer
for the purpose of considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this Agreement and use
its reasonable efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement and, after consultation with Parent,
to respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement (the "Proxy Statement") to be mailed to its stockholders
and (y) to obtain the necessary approvals of the Merger and this Agreement by
its stockholders; and
(iii) subject to Section 5.4(d), include in the Proxy
Statement the recommendation of the Board that stockholders of the Company vote
in favor of the approval of the Merger and the adoption of this Agreement.
(b) Parent shall provide the Company with the information
concerning Parent and Purchaser required to be included in the Proxy Statement.
Parent shall vote, or cause to be voted, all the Shares then owned by it,
Purchaser or any of its other subsidiaries and affiliates in favor of the
approval of the Merger and the approval and adoption of this Agreement.
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SECTION 1.9 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the
foregoing, in the event that Parent or Purchaser shall acquire at least ninety
percent (90%) of the outstanding shares of Company Common Stock pursuant to the
Offer, each of the parties hereto agree to cooperate and to take all reasonable
necessary actions so that the Merger can be approved without a meeting of
stockholders of the Company, in accordance with Section 904 of the MBCA, if
possible.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or common stock, par value $.001 per share, of
Purchaser (the "Purchaser Common Stock"):
(a) Each issued and outstanding share of the Purchaser Common
Stock issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $1.00 per share, of the Surviving Corporation.
(b) All shares of Company Common Stock that are owned by
Parent, Purchaser or by the Company as treasury stock immediately prior to the
Effective Time shall be cancelled and retired and shall cease to exist and no
consideration shall be delivered in connection therewith.
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than Shares to be cancelled in
accordance with Section 2.1(b) hereof, any shares of Demanding Common Stock and
any shares of Dissenting Common Stock) shall be converted into the right to
receive the Offer Price payable to the holder thereof, without interest (the
"Merger Consideration"), upon surrender of the certificate formerly representing
such share of Company Common Stock in the manner provided in Section 2.2 hereof.
All such shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.2 hereof, without interest, or (i) in the case of Demanding Common
Stock, the right, if any, to receive payment from Purchaser for the "fair value"
of such shares as determined in accordance with Section 910 of the MBCA or (ii)
in the case of Dissenting Common Stock, the right, if any, to receive payment
from the Surviving Corporation for the "fair value" of such shares as determined
in accordance with Section 909 of MBCA.
SECTION 2.2 EXCHANGE OF CERTIFICATES.
(a) Promptly after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates"),
whose shares were converted pursuant to Section 2.1(c) hereto into the
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right to receive the Merger Consideration, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent and the
Surviving Corporation may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration; provided, however, that such letter of transmittal shall
be substantially in the form and substance of a letter of transmittal and
instructions approved by the Company prior to the Effective Time, such approval
not to be unreasonably withheld. Upon surrender of a Certificate for
cancellation to the Paying Agent, together with such letter of transmittal, duly
completed and validly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration (subject to subsection
(e) below) for each share of Company Common Stock formerly represented by such
Certificate and the Certificate so surrendered shall forthwith be cancelled. If
payment of the Merger Consideration is to be made to a Person other than the
Person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall otherwise be in proper form for transfer and that the Person
requesting such payment shall have paid any transfer and other taxes required by
reason of the payment of the Merger Consideration to a Person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. For purposes of this Agreement, the term "Person" shall
mean an individual, corporation, partnership, limited liability company, joint
venture, association, trust, estate, unincorporated organization or other
entity. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive the Merger Consideration in cash as contemplated by this Section
2.2(c) or (A) in the case of Dissenting Common Stock, the right, if any, to
receive payment from the Surviving Corporation for the "fair value" of the
Shares in accordance with Section 909 of the MBCA and (B) in the case of
Demanding Common Stock, the right, if any, to receive payment from Purchaser for
the "fair value" of such Shares determined in accordance with Section 910 of the
MBCA.
(b) At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares, except as
otherwise provided for herein or by applicable law. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article II.
(c) At any time following one hundred eighty (180) days after
the Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any funds (including any interest received with
respect thereto) which had been made available to the Paying Agent and which
have not been disbursed to holders of Certificates, and thereafter such holders
shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) as general creditors thereof
with respect to the payment of any Merger Consideration that may be payable upon
surrender of any Certificates such stockholder holds, as determined pursuant to
this Agreement, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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<PAGE> 16
(d) In the event that any Certificate for Shares shall have
been lost, stolen or destroyed, the Paying Agent shall issue in exchange
therefor the Merger Consideration upon the making of an affidavit of that fact
by the holder thereof; provided, however, that Parent or the Paying Agent may,
in its discretion, require the delivery of a suitable bond or indemnity.
(e) Parent, Purchaser, the Surviving Corporation and the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable to a holder of Shares pursuant to the Offer or Merger such
amounts as Parent, Purchaser, the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law, it being acknowledged that Parent, Purchaser,
the Surviving Corporation or the Paying Agent shall not deduct or withhold from
the consideration otherwise payable to any such holder of Shares pursuant to the
Offer or the Merger any amount with respect to which such holder has timely
delivered to Parent, Purchaser, the Surviving Corporation or the Paying Agent,
as the case may be, a properly executed Form W-9 in accordance with applicable
law. Any amounts so withheld shall be delivered to the applicable taxing
authority for the account of such holder of shares of Company Common Stock from
whom the amount was withheld. To the extent amounts are so withheld by Parent,
Purchaser, the Surviving Corporation or the Paying Agent, the withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the deduction and withholding was made.
SECTION 2.3 DEMANDING SHARES / DISSENTING SHARES. Notwithstanding any
provision of this Agreement to the contrary, if and to the extent required by
the MBCA, shares of Company Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by holders of such
shares of Company Common Stock who have properly exercised demand payment rights
with respect thereto (the "Demanding Common Stock") in accordance with Section
910 of the MCBA or appraisal rights with respect thereto (the "Dissenting Common
Stock") in accordance with Section 909 of the MBCA, shall not be exchangeable
for the right to receive the Merger Consideration, and holders of such shares of
Demanding Common Stock or Dissenting Common Stock shall be entitled to receive
payment of the fair value of such shares of Demanding Common Stock or Dissenting
Common Stock in accordance with the provisions of Section 910 or Section 909,
respectively, of the MBCA unless and until such holders fail to perfect or
effectively withdraw or otherwise lose their rights to appraisal and payment
under the MBCA. If, after the Effective Time, any such holder fails to perfect
or effectively withdraws or loses such right, such shares of Demanding Common
Stock or Dissenting Common Stock shall thereupon be treated as if they had been
converted into and to have become exchangeable for, at the Effective Time, the
right to receive the Merger Consideration, without any interest thereon.
Notwithstanding anything to the contrary contained in this Section 2.3, if (i)
the Merger is rescinded or abandoned or (ii) the directors or stockholders of
the Company revoke the authority to effect the Merger, then the right of any
stockholder to be paid the fair value of such stockholder's Dissenting Common
Stock pursuant to Section 909 of the MBCA shall cease. The Company shall give
Parent prompt notice of any demands received by the Company for appraisals of
shares of Dissenting Common Stock (and shall also give Parent prompt notice of
any withdrawals of such demands) and Parent shall have the right to participate
in and direct all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to any demands for appraisals or offer to settle or settle
any such demands.
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SECTION 2.4 TERMINATION OF COMPANY OPTIONS AND OPTION PLAN
(a) The Company shall take all actions necessary to provide
that, effective as of the date hereof, no further options to purchase Shares
("Options") may be granted under the Company's 1991 Stock Option Plan (the
"Option Plan").
(b) The Company represents and warrants that, under the terms
of the outstanding Options, all such Options shall, as of the Effective Time, be
automatically cancelled and terminated and of no further force or effect,
provided the holders of such Options receive from the Company an amount equal to
the product of (i) the excess, if any, of the Offer Price over the exercise
price of each such cancelled and terminated Option and (ii) the number of Shares
subject thereto (such payment, if any, to be net of applicable withholding
taxes) (the "Option Price"). Prior to the Effective Time, holders of Options
outstanding on the date hereof (including those which are unvested and shall
accelerate and vest on the date of the closing of the Offer) may exercise their
Options and tender the Shares issued in connection therewith to Purchaser
pursuant to the Offer. Further, prior to the consummation of the Offer, holders
of Options outstanding on the date hereof may transfer their Options to
Purchaser and execute such documentation as Purchaser may require. In
consideration for the transfer of such Options, the Purchaser shall pay to the
holders of such transferred Options as of the consummation of the Offer an
amount equal to the Option Price for the transferred Options. The Company
represents and warrants and covenants to take such actions as may be necessary
so that as of the Effective Time, all rights and obligations of the Company and
the holder of any Option under any provision of the Option Plan (or any other
plan, program or arrangement with respect to equity securities of the Company),
any agreement entered into thereunder or 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 cancelled. The Company shall promptly
deliver to Parent prior to the closing of the Offer true and complete copies of
all documentation (all of which shall be reasonably satisfactory to Parent)
ensuring that the foregoing is effected.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser that the
statements contained in this Article III are correct and complete, except as set
forth in the disclosure schedule attached hereto (the "Disclosure Schedule" or
"Schedule"). The Disclosure Schedule is arranged in numbered and lettered
sections corresponding to the numbered and lettered sections contained in this
Article III. Notwithstanding anything to the contrary contained in this
Agreement, any information disclosed in one section of the Disclosure Schedule
shall, should the existence of the information be relevant to any other section
of the Disclosure Schedule, be deemed to be disclosed with respect to such
section of the Disclosure Schedule.
SECTION 3.1 ORGANIZATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maine and has all
requisite corporate or other power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be in good standing or to have such power or authority
would not have a Company Material Adverse Effect. The Company has no
Subsidiaries and does not hold any equity or other ownership interest, or any
interest convertible into or exercisable for any equity or similar interest in,
any corporation, partnership or joint venture or other business association or
entity. As used in this Agreement, the word "Subsidiary" means, with respect to
any Person any other Person of which (i) the first Person or any of its other
Subsidiaries is a general partner (excluding partnerships in which the first
Person or any of its other Subsidiaries do not have at least fifty percent (50%)
of the voting interest) or (ii) at least fifty percent (50%) of the securities
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<PAGE> 18
or other interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such other Person is directly or indirectly owned or controlled by
the first Person and/or by any one or more of its Subsidiaries. As used in this
Agreement, the term "Company Material Adverse Effect" means any event, change or
effect (i) that is, or is reasonably expected to be, materially adverse to the
business, operations, properties, condition (financial or otherwise), assets,
liabilities (contingent or otherwise) or results of operations of the Company,
either individually or in the aggregate with similar events, changes or effects
or (ii) which impairs the ability of the Company to consummate the transactions
contemplated hereby; provided, however, that there shall be excluded from
determination of any Company Material Adverse Effect under (i) any event, change
or effect to the extent that it results from or arises from or relates to (x)
changes in the industry in which the Company operates (including legal and
regulatory changes): (y) the execution of this Agreement and the announcement of
this Agreement and the transactions contemplated hereby, including, but not
limited to, (A) any stockholder litigation brought or threatened against the
Company or any member of the Board of Directors of the Company in respect of
this Agreement, the Offer or the Merger, or (B) any reduction or termination of
orders received by the Company employees, distributors or resellers or (C) the
cessation of employment by Company employees; and (z) any change in the market
price of the Company Common Stock.
(b) The Company is duly qualified or licensed to do business
and in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not in the aggregate have a
Company Material Adverse Effect.
(c) The Company has heretofore delivered to Parent a complete
and correct copy of each of its Articles of Incorporation and By-Laws, as
currently in effect. In all material respects, the minute books of the Company
contain accurate records of all meetings and accurately reflect all other
actions taken by the stockholders, the Boards of Directors and all committees of
the Boards of Directors of the Company. Except as set forth on Schedule 3.1(b)
attached hereto, complete and accurate copies of all such minute books and of
the stock register of the Company have been made available by the Company to the
Parent.
SECTION 3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
2,000,000 shares of Company Common Stock. As of the date hereof, (i) 1,388,291
shares of Company Common Stock are issued and outstanding, (ii) 75,000 shares of
Company Common Stock are reserved for issuance of Options awarded under the
Option Plan, of which 16,000 shares are reserved for outstanding options that
are exercisable or will become exercisable prior to the Effective Time and (iii)
144,751.5 shares of Company Common Stock are held in the Company's treasury. All
the outstanding shares of the Company Common Stock are, and all Shares which may
be issued pursuant to the exercise of outstanding Options when issued in
accordance with the respective terms thereof shall be, duly authorized, validly
issued, fully paid and non-assessable and free of preemptive rights. The Company
does not have authorized or outstanding any bonds, debentures, notes or other
indebtedness that have voting rights (or are convertible or exchangeable into or
exercisable for securities having such rights) ("Voting Debt") on any matter
pertaining to the Company.
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(b) Except (i) as set forth above, (ii) for the Transactions
contemplated by this Agreement, and (iii) as set forth in Schedule 3.2(a), (A)
there are no shares of capital stock of the Company authorized, issued or
outstanding, (B) there are no existing options, warrants, calls, preemptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of the
Company, obligating the Company to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock or Voting Debt of, or
other equity interest in, the Company or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment, and (C) there are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any Shares, or capital stock of the Company or any affiliate
of the Company or to provide funds to, or make any investment in (in the form of
a loan, capital contribution or otherwise), any other Person.
(c) Schedule 3.2(c) annexed hereto sets forth the following
information: (i) all outstanding Options, (ii) the holder of each of the
Options, (iii) the Option Plan, (iv) the number of Options held by each such
holder, (v) the exercise price of each such Option, (vi) the date of grant of
such Option, (vii) the expiration date of such Option, (viii) whether such
Option has vested as of the date hereof, and (ix) whether such Option is a
non-qualified stock option or an "incentive stock option" within the meaning of
Section 422(b) of the Code.
(d) There are no voting trusts or other agreements or
understandings to which the Company is a party with respect to the voting of the
capital stock or equity interests of or in the Company. The Company is not
required to redeem, repurchase or otherwise acquire shares of capital stock or
other equity interests of or in the Company, as a result of the transactions
contemplated by this Agreement.
SECTION 3.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION. The
Company has full corporate power and authority to execute and deliver this
Agreement and, to consummate the transactions contemplated hereby, subject to
obtaining the approval of holders of fifty-five percent (55%) of the outstanding
Shares prior to the consummation of the Merger. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval of its
stockholders as contemplated by Section 1.8 hereof in the case of the Merger.
This Agreement has been duly executed and delivered by the Company and, assuming
due and valid authorization, execution and delivery hereof by the other parties
hereto, is a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
SECTION 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
in Schedule 3.4 attached hereto, and except for such filings as may be required
under the Exchange Act and with the American Stock Exchange and the filing of
the Articles of Merger, neither the execution,
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delivery or performance of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof shall (i) conflict with or result in
any breach of any provision of the Articles of Incorporation or By-Laws of the
Company, (ii) require on the part of the Company any filing with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, domestic or foreign (a "Governmental Entity"), (iii) result
in a material violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
similar instrument or obligation to which the Company is a party or by which it
or any of its properties or assets may be bound, (iv) violate any order, writ,
injunction or decree currently in effect and binding upon or applicable to the
Company, or contravene any statute, rule or regulation of any state or of the
United States or political subdivision thereof or therein or any foreign
government applicable to the Company or any of its properties or assets, (v)
result in the creation or imposition of any lien, claim, security interest or
other encumbrance on any of the assets of the Company, or (vi) result in the
creation or imposition of any lien, claim, security interest or other
encumbrance on any Company Common Stock, excluding from the foregoing clauses
(ii), (iii), (iv) or (v) where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings, or the existence
of such violations, breaches or defaults, would not, individually or in the
aggregate, have a Company Material Adverse Effect.
SECTION 3.5 SEC REPORTS AND FINANCIAL STATEMENTS. The Company has filed
with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it under the Exchange Act since November 11, 1997
through the date hereof (as such documents have been amended since the time of
their filing, collectively, the "Company SEC Documents"). As of their respective
dates and, if amended, as of the date of the last such amendment, the Company
SEC Documents, including, without limitation, any financial statements or
schedules included therein, did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
(the "1998 Financial Statements") included in the Company's Annual Report on
Form 10-K for the fiscal year ended November 27, 1998 (including the related
notes thereto) (the "1998 Form 10-K") and in the quarterly report on Form 10-Q
for the fiscal quarters occurring since the 1998 Form 10-K, have been prepared
from, and are in accordance with, the books and records of the Company comply in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto and subject, in the case of
unaudited interim financial statements, to normal year-end adjustments and to
the absence of complete notes) and fairly present in all material respects the
financial position and the results of operations and cash flows of the Company
as at the dates thereof or for the periods presented therein. Except as
disclosed in the Company SEC Documents, the books and records of the Company
have been, and are being, maintained, in all material respects, in accordance
with GAAP and any other applicable legal and accounting requirements (subject to
normal year-end audit adjustments and the absence of notes).
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SECTION 3.6 NO UNDISCLOSED LIABILITIES. Except (a) as disclosed or
provided for in the Company SEC Documents filed prior to the date hereof or on
Schedule 3.6 annexed hereto, (b) for liabilities and obligations incurred in the
Ordinary Course of Business consistent with past practices since November 27,
1998, and (c) for liabilities and obligations incurred in connection with the
consummation of the transactions contemplated hereby, the Company has not
incurred any liabilities or obligations of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability or obligation. "Ordinary Course of
Business" means the ordinary and usual course of business of the Company
consistent with the Company's past custom and practice, including with respect
to quantity and frequency.
SECTION 3.7 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
Company SEC Documents filed to the prior date hereof or on Schedule 3.7 annexed
hereto, since November 27, 1998, the Company has conducted its business in the
Ordinary Course of Business and there has not been (a) any change in the
financial condition, business or results of operations of the Company or the
amount, character or ownership interests of the Company's assets that resulted
in or would be reasonably expected to result in a Company Material Adverse
Effect; (b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the
outstanding capital stock of the Company; (c) any material change by the Company
in accounting principles or methods, except insofar as may have been required by
GAAP; (d) any split, combination or reclassification of shares of the Company's
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution of any outstanding
capital stock or other equity interest of the Company; (e) any entry into any
written employment agreement with, or any increase in the rate or terms of
compensation payable or to become payable by the Company to any directors,
officers or key employees; (f) any increase in the rate or terms (including,
without limitation, any acceleration of the right to receive payment) of any
bonus, insurance, pension or other employee benefit plan, payment or arrangement
made to, for or with any such directors, officers or key employees, except for
increases occurring in the Ordinary Course of Business; (g) any amendment or
restatement to the Articles of Incorporation or By-Laws of the Company; (h) any
damage or destruction or loss of property (whether or not covered by insurance)
that individually or in the aggregate would result in Company Material Adverse
Effect; or (i) any sale, lease, transfer or assignment of any assets of the
Company other than in the Ordinary Course of Business, provided that no such
sale, lease, transfer of assignment has involved any assets (other than
inventory sold in the Ordinary Course of Business) which are material or which
in the aggregate are material.
SECTION 3.8 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Schedule 3.8(a) annexed hereto contains a true and
complete list of each deferred compensation, bonus, profit sharing, stock
option, pension, incentive compensation, and equity compensation plan, welfare
plan, fund or program (within the meaning of section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), "pension" plan,
fund or program (within the meaning of Section 3(2) of ERISA), each employment,
consulting, change in control, termination or severance agreement or policy, and
each fringe benefit, insurance, welfare, post-retirement, health, life, tuition
refund, scholarship, relocation, disability,
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<PAGE> 22
accident, sick, vacation, commission, payroll practices, retention,
non-competition or any other employee benefit plan, fund, program agreement or
arrangement (whether written or unwritten, insured or self-insured)), in each
case, that is or was sponsored, maintained or contributed to or required to be
contributed to by the Company or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the Company would be
deemed a "single employer" within the meaning of Section 4001(b) of ERISA or
Section 414(b), (c), (m) or (o) of the Code, or to which the Company or an ERISA
Affiliate is a party, for the benefit of any employee, director or stockholder
of the Company (whether current, former or retired) or their beneficiaries or to
which the Company or any ERISA Affiliate has or could reasonably be expected to
have any liability (the "Benefit Plans").
(b) With respect to each Benefit Plan, the Company has made
available to Purchaser and Parent true and complete copies of the Benefit Plan
documents, including amendments, and summary plan descriptions (or if the
Benefit Plan is not a written Benefit Plan, a description thereof), any related
trust, instruments, insurance vehicles or other instruments establishing a
funding vehicle, the three (3) most recent Form 5500 reports, financial
statements or summaries required under ERISA or the Code, the most recent
determination letter received from the Internal Revenue Service (the "IRS") with
respect to each Benefit Plan intended to qualify under Section 401 of the Code
and any communication received by or furnished to the Company or any ERISA
Affiliate from the IRS or any other governmental entity.
(c) No liability under Title IV or Section 302 of ERISA has
been incurred by the Company or any ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a risk to the Company or any
ERISA Affiliate of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation (the "PBGC") (which
premiums have been paid when due).
(d) No Benefit Plan is a "multiemployer pension plan," as
defined in Section 3(37) or 4001(a)(3) of ERISA, or Section 414(f) of the Code
(a "Multiemployer Plan") nor is any Benefit Plan a plan described in Section
4063(a) of ERISA.
(e) Each Benefit Plan intended to be "qualified" within the
meaning of section 401(a) of the Code has received a determination letter from
the Internal Revenue Service to the effect that it is so qualified and, to the
Knowledge (as defined herein) of the Company, nothing has occurred or is
reasonably expected to occur through the Effective Time that caused or could
cause the loss of such qualification or exemption or the imposition of any
penalty or tax liability. "Knowledge" means actual knowledge after reasonable
inquiry provided that Knowledge of Persons that are not natural persons shall
mean only actual personal knowledge of such Persons' executive officers after
reasonable inquiry.
(f) No Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company for periods extending beyond their
retirement or other termination of service, other than (i) coverage mandated by
applicable law, or (ii) death benefits under any "pension plan".
(g) There are no pending or, to the Knowledge of the Company,
threatened or anticipated claims by or on behalf of any Benefit Plan, by any
employee or beneficiary covered
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under any such Benefit Plan, or otherwise involving any such Benefit Plan (other
than routine claims for benefits).
(h) With respect to each of the Benefit Plans on Schedule
3.8(a): (i) all payments required by any Benefit Plan, any collective bargaining
agreement or other agreement, or by-law (including, without limitation, all
contributions, insurance premiums, or inter-company charges) with respect to all
periods through the date of the Effective Time shall have been made prior to the
Effective Time or provided for by the Company as applicable, by full accruals
(as if all targets required by such Benefit Plan had been or will be met at
maximum levels) on its financial statements; (ii) no "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA and Section 412 of the
Code) has been or could be reasonably expected to be incurred, whether or not
waived, and no excise or other taxes have been or could be reasonably expected
to be incurred or are due and owing with respect to the Benefit Plan because of
any failure to comply with the minimum funding standards of ERISA and the Code;
(iii) the Benefit Plan complies and has been maintained and operated in all
material respects in accordance with its terms and applicable law, including,
without limitation, ERISA and the Code; (iv) no "prohibited transaction", within
the meaning of Section 4975 of the Code and Section 406 of ERISA that has
resulted or could reasonably be expected to result in liability to the Company,
has occurred or is reasonably expected to occur with respect to the Benefit
Plan; (v) no Benefit Plan is or is reasonably expected to be under audit or, to
the Knowledge of the Company, investigation by the IRS, U.S. Department of
Labor, or any other government authority and no such completed audit, if any,
has resulted in the imposition of any Tax or penalty that has not been paid;
(vi) with respect to each Benefit Plan that is funded mostly or partially
through an insurance policy, the Company has no liability in the nature of
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring on or
before the Effective Time; and (vii) there has not been an adverse change in the
financial condition of any such Benefit Plans covered under Title IV of ERISA
since the date of the latest actuarial report prepared for such plans (copies of
which have been provided to Parent and Purchaser) which would have caused a
material change in the funded status of such plans from the status as of such
date.
(i) Except as disclosed on Schedule 3.8(i) annexed hereto, the
consummation of the transactions contemplated by this Agreement will not give
rise to any liability for severance pay, unemployment compensation, termination
pay, or withdrawal liability, or accelerate the time of payment or vesting or
increase the amount of compensation or benefits due to any employee or director
of the Company (whether current, former, or retired) or their beneficiaries
solely by reason of such transactions or by reason of a termination of
employment following such transactions. Except as previously disclosed in
writing by the Company to Parent, no amounts payable under any Benefit Plan will
fail to be deductible for federal income tax purposes by virtue of Section 280G
or 162(m) of the Code. Neither the Company nor any officer or employee thereof,
has made any promise or commitment, whether legally binding or not, to create
any additional plan, agreement, or arrangement, or to modify or change any
existing Benefit Plan. No event, condition or circumstance exists that could
reasonably be expected to result in an increase of the benefits provided under
any Benefit Plan or the expense of maintaining any Benefit Plan from the level
of benefits or expense incurred for the most recent fiscal year ended before the
Effective Time. No event, condition, or circumstance exists that would prevent
the amendment or termination of any Benefit Plan in accordance with its terms
and applicable law. Neither the Company nor any ERISA Affiliate has any unfunded
liabilities
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pursuant to any Benefit Plan that is intended to be an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA and that is not intended to be
qualified under Section 401(a) of the Code.
SECTION 3.9 LITIGATION. Except as disclosed in the Company SEC
Documents filed with the SEC prior to the date hereof, there is no suit, action
or proceeding pending or, to the Knowledge of the Company, threatened against
the Company or any of its assets or its officers or directors in their
capacities as such, which individually or in the aggregate with all other such
suits, actions or proceedings is reasonably likely to have a Company Material
Adverse Effect.
SECTION 3.10 NO DEFAULT; COMPLIANCE WITH APPLICABLE LAWS.
(a) Except as disclosed in the Company SEC Documents filed
with the SEC prior to the date hereof, the Company has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with any Governmental Entity that are required in
order to permit it to carry on its business as it is presently conducted, other
than those the absence of which will not have a Company Material Adverse Effect;
all such permits, licenses, certificates of authority, orders and approvals are
now in full force and effect, and, to the Knowledge of Company, no suspension or
cancellation of any of them is threatened, in each case except as would not have
a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement, and the
consummation by the Company of the Transactions will not, constitute or result
in (i) a breach or violation of, or a default under, the Articles of
Incorporation or By-Laws of the Company, (ii) a breach or violation of, or a
default under, any Benefit Plan or any grant or award made under any of the
foregoing, (iii) a breach or violation of, or a default under, the acceleration
of or the creation of a lien, pledge, security interest or other encumbrance on
assets (with or without the giving of notice or the lapse of time) pursuant to
any provision of any agreement, lease, contract, note, mortgage, indenture,
arrangement or obligation of the Company or any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-governmental
permit or license to which the Company is subject or (iv) any change in the
rights or obligations of any party under any of the contracts described in
clause (ii) or (iv) above, except for such breaches, violations, defaults,
accelerations or changes that would not have a Company Material Adverse Effect.
SECTION 3.11 TAXES.
(a) The Company has (i) duly filed (or there has been filed on
their behalf) with the appropriate governmental authorities (x) all federal
income Tax Returns required to be filed by it on or prior to the date hereof and
(y) all other Tax Returns required to be filed by it on or prior to the date
hereof, other than such other Tax Returns the failure of which to file would not
have a Company Material Adverse Effect, and such Tax Returns are true, correct
and complete in all material respects, and (ii) duly paid in full or made
provision in accordance with GAAP (or there has been paid or provision has been
made on its behalf) for the payment of all Taxes shown to be due on such Tax
Returns.
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(b) No federal, state or local audits, actions, suits,
proceedings, investigations, claims or assessments are presently pending or
proposed in writing with regard to any Taxes or Tax Return of the Company.
(c) There are no outstanding written consents to extend the
statutory period of limitations applicable to the assessment of any federal
income Taxes or other material Taxes or deficiencies against the Company and no
power of attorney granted by the Company with respect to any Taxes is currently
in force.
(d) The Company (i) is not a party to any written or oral
agreement with any third party providing for the allocation or sharing of Taxes
or (ii) cannot have any liability or entitlement under any such agreement to
which it previously was a party.
(e) Complete copies of (i) Tax Returns for the Company and
(ii) state and local income Tax and other Tax Returns of the Company for each of
the years ended 1996, 1997 and 1998 have heretofore been made available to
Parent and Purchaser.
(f) (i) All amounts required to be collected or withheld by
the Company with respect to Taxes have been duly collected or withheld and any
such amounts that are required to be remitted to any taxing authority have been
duly remitted, (ii) there are no Tax rulings, requests for rulings, refund
claims, closing agreements or changes of accounting method relating to the
Company that could materially affect its liability for Taxes of the Company due
for any period after the Effective Time, (iii) the Company has not filed a
consent under Section 341(f) of the Code or any comparable provisions of state
revenue statues, and (iv) the Company will not be required to include in a
taxable period ending after the Effective Time taxable income attributable to a
prior taxable period that was not recognized in that taxable period as a result
of the installment method of accounting, the completed contract method of
accounting, the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of state or local
or foreign tax law;
(g) Since at least October 5, 1993, the Company has not been
treated as a member of a consolidated group for income Tax reporting purposes.
(h) "Taxes" shall mean any and all taxes, charges, fees,
levies, customs, duties, imposts or other assessments, including, without
limitation, income, gross receipts, excise, real or personal property, sales,
withholding, social security, occupation, use, service, service use, license,
net worth, payroll, franchise, transfer and recording taxes, fees and charges,
ad valorem, value added, asset, license, transaction, capital, estimated,
employment, workers compensation, utility, severance, production, unemployment
compensation, premium, windfall profits and gains taxes imposed by the United
States Internal Revenue Service or any taxing authority (domestic or foreign),
including, without limitation, any state, county, local or foreign government or
any subdivision or taxing agency thereof (including a United States
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, penalties or
additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. "Tax Return" shall mean
any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (domestic or
foreign) with respect to Taxes.
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SECTION 3.12 PROPERTY. The Company has good and marketable title to, or
a valid leasehold interest in, all properties, assets and rights of any kind
whatsoever (whether real, personal or mixed, and whether tangible or intangible)
(collectively, the "Company Assets") used by it, located on its premises or
shown in the balance sheet of the Company dated November 27, 1998 included in
the Company SEC Documents ("Most Recent Audited Balance Sheet"), in each case
free and clear of any mortgage, security interest, deed of trust, claim, charge,
title defect, lease, adverse interest or other lien, encumbrance or interest
(collectively, "Liens"), except as shown on the Most Recent Audited Balance
Sheet (the "Permitted Liens"). Except as otherwise disclosed by the Company to
Parent and Purchaser in writing on or prior to the date hereof, there are no
pending or, to the Knowledge of the Company, threatened condemnation proceedings
against or affecting any Company Assets and none of such Company Assets is
subject to any commitment or other arrangement for its sale to a third party
outside the Ordinary Course of Business.
SECTION 3.13 ENVIRONMENTAL MATTERS.
(a) To the Company's Knowledge, except as set forth in
Schedule 3.13(a) annexed hereto, the Company SEC Documents filed with the SEC
prior to the date hereof:
(i) the Company has not received any written
communication from any Person (including any Governmental Entity) stating or
alleging that the Company is a potentially responsible party or is otherwise
liable under any applicable Environmental Law with respect to any actual or
alleged environmental contamination which remains unresolved or outstanding,
other than any liabilities that, individually or in the aggregate, would not be
reasonably expected to have a Company Material Adverse Effect; and the Company
has not received any request for information from any Governmental Entity or any
other Person with respect to any actual or alleged environmental contamination
or non-compliance with Environmental Laws other than with respect to matters
that, individually or in the aggregate, would not be reasonably expected to have
a Company Material Adverse Effect;
(ii) all current and past operations of the Company,
including any operations at or from any property that is currently or was
formerly owned, leased or operated by the Company ("Real Property") comply with
and have at all times complied with all applicable Environmental Laws in effect
as of the date hereof, except where the failure to be in compliance would not
have a Company Material Adverse Effect;
(iii) excluding any nonfriable asbestos, the Real
Property contains no Hazardous Substances on, at or under it, nor have any
Hazardous Substances migrated from the Real Property upon or beneath other
properties in concentrations which would presently violate any applicable
Environmental Law in effect as of the date hereof or would be reasonably likely
to result in the imposition of Environmental Liabilities on the Company, or the
Real Property under any applicable Environmental Law in effect as of the date
hereof, including any liability or obligation for the investigation, corrective
action, remediation or monitoring of Hazardous Substances on, under, at or from
the Real Property, except with respect to violations or Environmental
Liabilities that would not have a Company Material Adverse Effect;
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(iv) the Company has been and is in full compliance
with the terms and conditions of all Environmental Laws (including compliance
with all Environmental Permits which are required under applicable Environmental
Laws), except where the failure to be in compliance would not, individually or
in the aggregate, have a Company Material Adverse Effect; and
(v) no Hazardous Substance has been disposed of,
transferred, released or transported by the Company or any of its Subsidiaries
from any of the Real Property during the time such Real Property was owned or
operated by the Company, other than as would not have a Company Material Adverse
Effect and allowed under applicable Environmental Law at the time the disposal,
transfer, release or transportation occurred and other than disposal at
commercial or municipal disposal sites that are not presently listed on the
CERCLA National Priorities List or any equivalent state list.
(b) (i) For purposes of this Section 3.13, "Environmental
Laws" means all applicable foreign, state, federal and local laws and the
applicable common law, regulations and rules, ordinances, codes, judgments,
decrees and orders relating to health, safety, or the pollution, preservation or
protection of the environment, including the release of Hazardous Substances
into the environment.
(ii) For the purposes of this Section 3.13,
"Environmental Permits" means the permits, licenses, authorizations and
approvals required or issued under any Environmental Law which are necessary for
the conduct of the Company's businesses and for the operations on, in or at, the
assets of the Company and the Real Property;
(iii) For the purposes of this Section 3.13,
"Environmental Liabilities" means any claims, judgments, damages (including
punitive damages), losses, penalties, fines, liabilities, encumbrances, Liens,
violations, costs and expenses (including attorneys' and consultants' fees) of
investigation, remediation, monitoring or defense of any matter, which (A) are
incurred as a result of (1) the existence of Hazardous Substances in, on, over,
under, at or emanating from any Real Property, (2) the offsite transportation,
treatment, storage or disposal of Hazardous Substances generated by the Company,
(3) the violation of or non-compliance with any Environmental Laws or (B) arise
under the Environmental Laws; and
(iv) For the purposes of this Section 3.13,
"Hazardous Substances" means any petroleum, petroleum products,
petroleum-derived substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead-based paint, radon, urea formaldehyde, asbestos
or any materials containing asbestos, pesticides, and any chemicals, materials
or substances regulated under any Environmental Law, or defined as or included
in the definition of "hazardous substances", "extremely hazardous substances",
"hazardous materials", "hazardous constituents", "toxic substances",
"pollutants", "contaminants", or any similar denomination intended to classify
or regulate such chemicals, materials or substances by reason of their toxicity,
carcinogenicity, ignitability, corrosivity or reactivity or other
characteristics under the Environmental Laws.
SECTION 3.14 INTELLECTUAL PROPERTY. The Company owns all rights in, or
possesses adequate licenses or other valid rights to use, all Intellectual
Property that is used in the conduct of its business in the manner in which it
is presently being conducted. The Company has not
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received any written notice that its rights in its Intellectual Property have
been declared unenforceable or otherwise invalid by any court or Governmental
Entity. To the Company's Knowledge, there is no existing infringement, misuse,
or misappropriation of any Intellectual Property by others that is material to
the business of the Company or which is reasonably likely to impose material
liability on the Company. The Company has not received any written notice
alleging that the operation of its business infringes in any material respect
upon the rights of others in any Intellectual Property. For purposes of this
Agreement, "Intellectual Property" shall mean: trademarks, service marks, brand
names, certification marks, trade dress, assumed names, trade names and goodwill
associated with the foregoing and registrations or applications for registration
relating thereto; patents, applications for patents (including, but not limited
to, divisions, continuations, continuations-in-part and renewal applications),
and any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any Person; writings and
other works, whether copyrightable or not, know-how; and all rights to the
foregoing.
SECTION 3.15 MATERIAL CONTRACTS. The Company has filed as an exhibit to
its Annual Report on Form 10-K or another Company SEC Document all contracts to
which the Company is a party or by which any of their respective properties or
assets may be bound that are or would be required to be filed in an exhibit to
an Annual Report on Form 10-K filed by it with the SEC as of the date of this
Agreement (collectively, the "Material Contracts"). Except for the Material
Contracts, the Company is not a party to any other contract, agreement or
written understanding that is material to the Company or its business,
operations, assets, financial performance, financial conditions or prospects.
Each of the Material Contracts is valid and enforceable against the Company
and/or the Company Assets, as applicable, in accordance with its terms, except
that such enforcement may be subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws of general
applicability, now or hereafter in effect, affecting creditors' rights, and the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. Neither the Company, nor,
to the Knowledge of the Company's executive officers, any other party, is in
breach of or in default under any Material Contract, and no event has occurred
that, with the lapse of time or the giving of notice or both, would constitute a
default thereunder by the Company or, to the Knowledge of the Company's
executive officers, any other Party, except for any such unenforceability,
default or event which, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect. No party to any Material
Contract has given notice to the Company of, or made a claim against the Company
with respect to, any breach or default thereunder, in any such case in which
such breach or default, individually or in the aggregate, is reasonably likely
to have a Company Material Adverse Effect.
SECTION 3.16 LABOR MATTERS. There are no controversies pending or, to
the Knowledge of the Company, threatened between the Company and any of its
employees, which controversies are reasonably likely to have a Company Material
Adverse Effect. The Company is not involved in or threatened with any material
labor dispute, grievance or litigation or investigation by a Governmental Entity
relating to wages, labor, safety or discrimination or other matters involving
any person employed by the Company, including, without limitation, charges of
unfair labor practices or discrimination complaints except for any such dispute,
grievance, litigation or investigation that would not be reasonably likely to
have a Company Material Adverse Effect.
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The Company has not engaged in any unfair labor practices within the meaning of
the National Labor Relations Act or similar such legislation of foreign
jurisdictions in a manner that would be reasonably likely to have a Company
Material Adverse Effect. The Company is not presently a party to, or bound by,
any collective bargaining agreement or union contract with respect to any
persons employed by the Company, and no collective bargaining agreement is being
negotiated by the Company. The Company does not have any Knowledge of any
current or pending strikes, slowdowns, work stoppages or lockouts, or threats
thereof, by or with respect to any employees of the Company, and there have been
no such strikes, slowdowns, work stoppages or lockouts within the past three (3)
years. The Company is and has operated its business in compliance in all
material respects with all laws, regulations and orders relating to employment
and employment practices, including, but not limited to, the Occupational Safety
and Health Act, the Immigration Reform and Control Act and the Worker Adjustment
and Retraining Notification Act and laws relating to wages, workers'
compensation, employment discrimination, equal employment opportunity,
affirmative action, employee privacy, wrongful or unlawful termination and
unemployment insurance or similar such legislation of foreign jurisdictions,
except where the failure to be in compliance would not have a Company Material
Adverse Effect.
SECTION 3.17 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon the Company which
materially prohibits or impairs any business or operations of the Company.
SECTION 3.18 YEAR 2000 COMPLIANCE.
(a) To the Knowledge of the Company and except as set forth in
the Company SEC Documents filed as of the date hereof, the computer systems of
the Company which are material to the conduct of the business of the Company
will not cause a Company Material Adverse Effect as a result of not being Year
2000 Compliant. The computer systems of the Company have the ability to
interface properly and will continue to interface properly with internal and
external applications and systems of third parties with which the Company
exchange data electronically whether or not they are Year 2000 Compliant. The
Company has provided Parent and Purchaser with access to true, complete and
accurate descriptions in reasonable detail of remedial or other work performed
to date in order to ensure Year 2000 Compliance by the Company and a description
in reasonable detail of the balance of the work to be performed to ensure Year
2000 Compliance by the Company. In addition, the Company has provided Parent and
Purchaser with access to true, complete and accurate copies of materials
provided to it by third party vendors with respect to the Year 2000 Compliance
of such parties with respect to the operations of the Company.
(b) The term "Year 2000 Compliant" as used herein means that
the computer systems (i) are capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date related data for
dates earlier and later than January 1, 2000, including calculating, comparing,
sorting, storing, tagging and sequencing, without resulting in or causing
logical or mathematical errors or inconsistencies in any user-interface
functionalities or otherwise, including data input and retrieval, data storage,
data fields, calculations, reports, processing or any other input or output;
(ii) have the ability to provide date recognition for any data element without
limitation (including date-related data represented without a century
designation, date-related data whose year is represented by only two digits and
date fields
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assigned special values); (iii) have the ability to function accurately into and
beyond the year 2000; (iv) have the ability to interpret data, dates and time
correctly into and beyond the year 2000; (v) have the ability to maintain
existing information without corrupting such data into and beyond the year 2000;
(vi) have the ability to process correctly after January 1, 2000 data containing
dates before that date; and (vii) have the ability to recognize all leap year
dates, including February 29, 2000.
SECTION 3.19 VOTE REQUIRED. The affirmative vote of the holders of
fifty five percent (55%) of all outstanding shares of Company Common Stock is
required to approve this Agreement and the Merger, and such vote is the only
vote of the holders of any series or class of common stock required to approve
and adopt the plan of merger in this Agreement and to approve the Merger.
SECTION 3.20 BROKERS. The Company shall not be obligated to pay any
brokerage or finder's fee to any agent, broker, finder, investment banker or
financial advisor or other firm or Person or any other commission or similar fee
in connection with the transactions contemplated by this Agreement, except to
Advest, Inc. in accordance with Schedule 3.20 annexed hereto and subject to
Section 5.9.
SECTION 3.21 OPINION OF FINANCIAL ADVISOR. The Company's Board of
Directors has obtained an opinion from Advest, Inc., financial advisor to the
Board, that as of the date of such opinion, the consideration to be received by
the holders of the Company Common Stock (other than Parent and its affiliates)
in the Offer and the Merger, taken together, is fair, from a financial point of
view, to such stockholders.
SECTION 3.22 INFORMATION IN PROXY STATEMENT; SCHEDULE 14D-1. None of
the information supplied by the Company for inclusion or incorporation by
reference in the Proxy Statement (if any) or the Schedule 14D-1 shall, at the
date mailed to stockholders and at the time of the meeting of stockholders (if
any) to be held in connection with the Merger, 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.
SECTION 3.23 TAKEOVER STATUTES. The Company's Board has taken all
appropriate and necessary action to approve the transactions contemplated by
this Agreement such that Section 611-A of the MBCA will not apply to the Offer,
the Merger, this Agreement, the Tender Agreements or any other transactions
contemplated hereby or thereby; to the Company's Knowledge, except for Section
910 of the MBCA, no other "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation under the laws
of the state of Maine is applicable to the Company, the Shares, the Offer, the
Merger, this Agreement, the Tender Agreements or the transactions contemplated
hereby or thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and warrant to the
Company as follows:
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SECTION 4.1 ORGANIZATION. Each of Parent and Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate or other power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power or authority would not have
a Purchaser Material Adverse Effect. As used in this Agreement, "Purchaser
Material Adverse Effect" means any event, change or effect that is or reasonably
expected to be materially adverse to the assets, liabilities (contingent or
otherwise) or condition (financial or otherwise) of Parent or Purchaser and
their respective Subsidiaries, taken as a whole, or which impairs the ability of
Parent or Purchaser to perform their respective obligations hereunder, except
that there shall be excluded from any determination of such definition any
event, change or effect any stockholder litigation brought or threatened against
Parent or Purchaser or any of their respective officers or directors as a result
of this Agreement and the transactions contemplated hereunder. Parent and
Purchaser are duly qualified or licensed to do business and in good standing in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, in the aggregate, have a Purchaser Material Adverse
Effect.
SECTION 4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION.
Each of Parent and Purchaser has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by Parent and Purchaser of this
Agreement, and the consummation by them of the transactions contemplated hereby,
have been duly authorized by the Boards of Directors of Parent and Purchaser and
no other corporate action on the part of Parent and Purchaser is necessary to
authorize the execution and delivery by Parent and Purchaser of this Agreement
and the consummation by them of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and Purchaser, as the
case may be, and, assuming due and valid authorization, execution and delivery
hereof by the Company, is a valid and binding obligation of each of Parent and
Purchaser, as the case may be, enforceable against them in accordance with its
respective terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings
as may be required under the Exchange Act or with the American Stock Exchange
and the filing of the Articles of Merger, neither the execution, delivery or
performance of this Agreement by Parent and Purchaser nor the consummation by
Parent and Purchaser of the transactions contemplated hereby nor compliance by
Parent and Purchaser with any of the provisions hereof shall (i) conflict with
or result in any breach of any provision of the respective Certificate of
Incorporation or By-Laws or similar organizational documents of Parent or
Purchaser, (ii) require on the part of Parent or Purchaser any filing with, or
permit, authorization, consent or approval of, any Governmental Entity, (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Parent or Purchaser is a party or by
which any of them or any of their properties or assets may be bound,
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except for such violations, breaches and defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents have
been obtained, or (iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Parent or Purchaser or any of their properties
or assets, excluding from the foregoing clauses (ii), (iii) or (iv) where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings, or the existence of such violations, breaches or defaults, would
not individually or in the aggregate, have a Purchaser Material Adverse Effect.
SECTION 4.4 FINANCING. Upon the execution hereof and at the expiration
of the Offer and at the Effective Time, Parent and Purchaser will have available
all the funds necessary for the acquisition of all Shares and to perform their
respective obligations under this Agreement, including the payment in full for
all Shares validly tendered in the Offer or outstanding as of the Effective Time
and will have deposited such funds under the Escrow Agreement.
SECTION 4.5 INFORMATION IN OFFER DOCUMENTS; PROXY STATEMENT; SCHEDULE
14D-9. None of the information supplied by Parent or Purchaser for inclusion or
incorporation by reference in the Offer Documents, Proxy Statement or the
Schedule 14D-9 shall, at the respective times that the Offer Documents, Proxy
Statement and Schedule 14D-9 are mailed to stockholders and at the time of the
meeting of stockholders (if any) to be held in connection with the Merger,
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.
SECTION 4.6 PURCHASER'S OPERATIONS. Purchaser was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
SECTION 4.7 BROKERS OR FINDERS. Parent represents, as to itself and
Purchaser, that no agent, broker, investment banker, financial advisor or other
firm or Person is or shall be entitled to any brokers' or finders' fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement.
SECTION 4.8 OWNERSHIP OF THE COMPANY. As of the date hereof, neither
Parent nor Purchaser, nor any Subsidiary of Parent, is the beneficial owner of
any shares of Company Common Stock.
ARTICLE V
COVENANTS
SECTION 5.1 INTERIM OPERATIONS OF THE COMPANY.
(a) The Company covenants and agrees that, except as
contemplated by this Agreement or as consented to in writing by Parent or
Purchaser, the business of the Company shall be conducted only in the Ordinary
Course of Business, subject to the following additional restrictions and
requirements:
(i) the Company shall not, directly or indirectly,
(A) sell, transfer or pledge or agree to sell, transfer or pledge any Company
Common Stock or any capital stock or
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other securities of the Company or capital stock or any other securities
beneficially owned by it, either directly or indirectly; (B) amend or cause to
be amended its Articles of Incorporation or By-Laws; or (C) split, combine or
reclassify the outstanding Company Common Stock;
(ii) the Company shall not: (A) declare, set aside or
pay any dividend or other distribution payable in cash, stock or property with
respect to its capital stock; (B) issue, sell, pledge, dispose of or encumber
any additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of the Company or any other property or
assets, other than shares of Company Common Stock reserved for issuances
pursuant to the exercise of Options outstanding on the date hereof; (C)
transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any
right to any trademark, service mark or trade name owned by it or over which it
has any right whatsoever; (D) transfer, lease, license, sell, mortgage, pledge,
dispose of, purchase, acquire or encumber any (1) real property or (2) any
personal property having an aggregate fair market value of $100,000 in a single
transaction or a series of related transactions, other than purchases of
inventory and sales of products in the Ordinary Course of Business and permitted
capital expenditures; (E) incur or modify any indebtedness or other liability,
provided, however, that the Company may make borrowings under the Company's
existing line of credit solely for working capital purposes, provided the
aggregate borrowings outstanding under such line do not at any time exceed
$2,600,000; (F) authorize or make any capital expenditures in excess of $50,000
individually and $100,000 in the aggregate; or (G) redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
(iii) the Company shall not modify, amend or
terminate any of its Material Contracts or Benefit Plans or waive, release or
assign any rights or claims under any Material Contract or settle or compromise
any material litigation;
(iv) the Company shall not permit any material
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent;
(v) the Company shall not: (A) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person; (B) make any
loans, advances or capital contributions to, or investments in, or acquisitions
of, any other Person; or (C) enter into any commitment with respect to any of
the foregoing (including, but not limited to, any borrowing, capital expenditure
or purchase, sale or lease of assets);
(vi) the Company shall not change any of the
accounting methods used by it unless required by a change in law or GAAP or take
any action, other than reasonable and usual actions in the Ordinary Course of
Business, with respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivable);
(vii) the Company shall not adopt a plan of complete
or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company (other than the Merger);
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(viii) make any election or settle or compromise any
material federal, state, local or foreign income tax liability;
(ix) pay, discharge or satisfy any claim, liability
or obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, of liabilities
reflected or reserved against in the Company's balance sheet dated November 27,
1998 as the same may become due and payable by its terms, or subsequently
incurred in the Ordinary Course of Business;
(x) the Company shall not take, or agree to commit to
take, any action that would make any representation or warranty of the Company
contained herein inaccurate in any material respect at, or as of any time prior
to, the Effective Time (except for representations made as of a specific date);
(xi) except as required under Section 2.4, the
Company shall not amend or change the period (or permit any acceleration,
amendment or change) of exercisability of Options granted under any Option Plan
or authorize cash payments in exchange for any Options;
(xii) the Company shall not increase the compensation
payable or to become payable to its officers, directors or key employees, except
in the Ordinary Course of Business or pursuant to obligations under written
agreements existing as of the date hereof;
(xiii) except as required by applicable law, the
Company shall not except in the Ordinary Course of Business (i.e. pursuant to
the Severance policy or practice of the Company existing on the date hereof as
disclosed in Schedule 5.1(a)(xiii) annexed hereto), grant any severance or
termination pay to, or enter into or amend any employment or severance agreement
with, any director or officer of the Company or establish, adopt, enter into, or
accelerate, terminate or amend any Benefit Plan;
(xiv) the Company shall use commercially reasonable
efforts to preserve intact the business organizations, goodwill, rights,
licenses, permits and franchises of the Company and maintain its existing
relationships with customers, suppliers and other Persons having business
dealings with it; and
(xv) the Company shall not announce an intention,
enter into any formal or informal agreement or otherwise make a commitment to do
any of the foregoing.
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SECTION 5.2 ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, upon
reasonable notice and during normal business hours, the Company shall afford to
the officers, employees, accountants, consultants, counsel, and other
representatives (collectively, "Representatives") of Parent, reasonable access
to all its properties, books, contracts, commitments and records (including tax
returns), and the Company shall furnish promptly to Parent, at the sole expense
of Parent (i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of federal securities laws and (ii) all other information concerning its
business, properties and personnel as Parent may reasonably request.
(b) Between the date hereof and the Effective Time, the
Company shall furnish to Parent (i) such financial statements as it regularly
and customarily provides to its Board of Directors on a monthly basis,
concurrent with the provision of such statements to the Board of Directors, (ii)
within ten (10) business days following preparation thereof (and in any event
within twenty (20) business days after the end of each fiscal quarter) an
unaudited balance sheet as of the end of such quarter and the related statements
of earnings, stockholders' equity and cash flows for the quarter then ended,
with condensed notes to such financial statements, and (iii) within ten (10)
business days following preparation thereof (and in any event within ninety (90)
calendar days after the end of each fiscal year) an audited balance sheet as of
the end of such year and the related statements of earnings, stockholders'
equity (deficit) and cash flows, all of such financial statements referred to in
clauses (i), (ii) and (iii) to be prepared in accordance with generally accepted
accounting principles in conformity with the practices consistently applied by
the Company with respect to such financial statements.
(c) Parent shall hold, and shall cause its Representative to
hold, any such documents or information which are nonpublic in confidence in
accordance with the provisions of the Confidentiality Agreement, dated September
21, 1999, between the Company and Parent (the "Confidentiality Agreement").
(d) No investigation by Parent, Purchaser or any of their
respective Representatives shall affect any representation or warranty of
Company in this Agreement or of any party to the Tender Agreements or any
condition to the obligations of Parent or Purchaser hereunder.
SECTION 5.3 CONSENTS AND APPROVALS. Each of the Company, Parent and
Purchaser shall use reasonable efforts to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement and the
transactions contemplated hereby and shall promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them in connection with this Agreement and the transactions contemplated
hereby. Each of the Company, Parent and Purchaser shall use reasonable efforts
to promptly obtain (and shall cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, Purchaser or the Company in connection with the
Merger or the taking of any action contemplated or by this Agreement. In
addition, no party hereto shall take any action after the date hereof that would
reasonably be expected to materially delay the obtaining of, or result in not
obtaining, any permission, approval or consent from any Governmental Entity or
other Person necessary to be obtained prior to Closing.
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SECTION 5.4 NO SOLICITATION.
(a) The Company shall not, and shall use its best efforts to
cause its officers, directors, employees and investment bankers, attorneys or
other agents retained by or acting on behalf of the Company not to, (i)
initiate, solicit or encourage (including by way of furnishing non-public
information), directly or indirectly, any inquiries or the making of any
proposal or offer that constitutes or is reasonably likely to lead to any
Acquisition Proposal, (ii) except as permitted by Section 5(b) below, engage in
negotiations or discussions with, or furnish any information or data to any
third party relating to an Acquisition Proposal, or (iii) enter into any
agreement with respect to any Acquisition Proposal or approve any Acquisition
Proposal. The Company will also promptly request each Person that has heretofore
executed a confidentiality agreement in connection with its consideration of an
Acquisition Proposal to return or destroy all non-public information furnished
to such Person by or on behalf of the Company. The Company shall, and shall
cause its directors, officers, employees, financial advisors and other agents or
representatives to, cease immediately and cause to be terminated all activities,
discussions or negotiations, if any, with any Persons conducted heretofore with
respect to any Acquisition Proposal.
(b) Notwithstanding Section 5.4(a), the Company and its Board
of Directors and its Representatives (i) may participate in discussions or
negotiations (including, as a part thereof, making any counterproposal) with or
furnish information to any third party (a "Potential Acquirer") making an
unsolicited Acquisition Proposal (which occurred without a breach of Section
5.4(a)) if the Board determines in good faith, upon the advice of its
independent legal counsel, that the failure to participate in such discussions
or negotiations or to furnish such information would be inconsistent with the
Board's fiduciary duties under applicable law, and (ii) shall be permitted to
take and disclose to the Company's stockholders a position with respect to any
tender or exchange offer by a Potential Acquirer, or amend or withdraw such
position, pursuant to Rules 14d-9 and 14e-2 of the Exchange Act, provided that
the Board shall not recommend that the stockholders of the Company tender their
Shares in connection with any such tender or exchange offer unless the Board of
Directors of the Company determines in its good faith judgment, upon the advice
of its independent outside legal counsel, that failing to take such action would
be inconsistent with the Board's fiduciary duties under applicable law.
(c) In the event that the Company shall receive any
Acquisition Proposal or the Company has received any request for nonpublic
information relating to the Company or for access to the properties, books or
records of the Company, by any Person that the Company has Knowledge is
considering making, or has made, an Acquisition Proposal, then it shall promptly
inform Parent in writing as to that fact and shall furnish to Parent the
identity of the Potential Acquirer and, if any Acquisition Proposal has been
made, the terms of such Acquisition Proposal (including a copy of any writing
containing such terms submitted by the Potential Acquirer). The Company agrees
not to release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party.
Notwithstanding the foregoing, the Company shall not engage in negotiations
with, or disclose any nonpublic information to, any such Person unless it
receives from such Person an executed confidentiality agreement with terms no
less favorable to the Company than the Confidentiality Agreement entered into
with Parent and Purchaser. The Company will promptly provide to Parent any
non-
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public information concerning the Company provided to any other person which was
not previously provided to Parent.
(d) The Board of Directors of the Company shall not (i) withdraw or
modify or propose to withdraw or modify, in any manner adverse to Parent or
Purchaser, the approval or recommendation of such Board of Directors of this
Agreement, the Offer or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any agreement
with respect to any Acquisition Proposal. Notwithstanding the foregoing, the
Company's Board of Directors may withdraw or modify or propose to withdraw or
modify its recommendation of this Agreement, the Offer or the Merger, recommend
or propose to recommend an Acquisition Proposal or terminate this Agreement
pursuant to Section 7.1(e) and thereafter enter into an agreement in connection
with such Acquisition Proposal if, in each case, the Board determines in good
faith, upon the advice of its independent legal counsel, that in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law it is necessary for the Board to withdraw or modify its approval or
recommendation of this Agreement, the Offer or the Merger, approve or recommend
such Acquisition Proposal or terminate this Agreement and enter into another
agreement as described above. The Company shall provide at least five (5)
business days advance notice to Parent to the effect that it is taking such
action.
(e) For purposes of this Agreement, "Acquisition Proposal"
shall mean any bona fide offer or proposal, whether in writing or otherwise,
made by a third party or group of third parties to acquire beneficial ownership
(as defined under Rule 13(d) of the Exchange Act) of all or a material portion
of the assets of, or any equity interest in, the Company pursuant to a merger,
consolidation or other business combination, recapitalization, sale of shares of
capital stock, sale of assets, tender offer or exchange offer or similar
transaction involving the Company (other than the transactions contemplated by
this Agreement).
SECTION 5.5 PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release reasonably acceptable
to Parent and the Company. Thereafter, until the earlier of the Appointment Date
or the date on which this Agreement is terminated in accordance with its terms,
neither the Company, Parent nor any of their respective affiliates shall issue
or cause the publication of any press release (or make any written public
statement or verbal statement on a conference call with analysts) with respect
to the Merger, this Agreement or the other transactions contemplated hereby
without notifying in advance the other party, except as may be required by law
or by any listing agreement with a national securities exchange.
SECTION 5.6 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence of which would cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Appointment Date, (ii) any material failure of the Company or
Parent, as the case may be, to comply with or satisfy any covenant or agreement
to be complied with or satisfied by it hereunder, and (iii) the occurrence or
failure to occur of an event or condition that would cause any condition to the
consummation of the Offer or the Merger not to be satisfied. The parties agree
and acknowledge that the delivery of any notice pursuant to this Section 5.6
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 5.7 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
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(a) From and for a period five (5) years after the Effective
Time, Parent shall cause the Surviving Corporation to indemnify, defend and hold
harmless (and shall also cause the Surviving Corporation to advance expenses as
incurred to the fullest extent permitted under applicable law, to the Company's
Articles of Incorporation and By-Laws and provided that the person to whom
expenses are advanced provides to the Surviving Corporation an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification) any person who is now, or has been at any time
prior to the Effective Time, an officer or director of the Company (the
"Indemnified Party") against all losses, claims, damages, liabilities, costs and
expenses (including attorneys' fees and expenses), judgments, fines, losses, and
amounts paid in settlement in connection with any actual or threatened action,
suit, claim, proceeding or investigation (each a "Claim") to the extent that any
such Claim is based on, or arises out of, (i) the fact that such person is or
was a director or officer of the Company or is or was serving at the request of
the Company as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or (ii) this Agreement, or any of the
transactions contemplated hereby or thereby, in each case to the extent that any
such Claim pertains to any matter or fact arising, existing, or occurring prior
to or at the Effective Time, regardless of whether such Claim is asserted or
claimed prior to, at or after the Effective Time, to the extent provided in the
Company's Articles of Incorporation or By-Laws in effect at the date hereof,
provided that such indemnification obligations shall be subject to all the
procedures and limitations imposed from time to time by applicable law.
(b) From and for a period of five (5) years after the
Effective Time, Parent will maintain or shall cause the Surviving Corporation to
maintain in effect policies of directors' and officers' liability insurance with
reputable and financially sound carriers covering those persons who, as of
immediately prior to the Effective Time, are covered by the Company's directors'
and officers' liability insurance policy (the "Insured Parties ") containing
terms and conditions which are no less advantageous to the Insured Parties than
those that are contained in the Company's directors' and officers' policy
currently in effect; provided, however, that neither Parent nor the Surviving
Corporation shall be required to expend on an annual basis in excess of one
hundred fifty percent (150%) of the annual premium currently paid by the Company
for such coverage (the "Maximum Premium"). If such insurance coverage cannot be
obtained at all, or can only be obtained at an annual premium in excess of the
Maximum Premium, Parent shall, or shall cause the Surviving Corporation to,
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium; provided further,
if such insurance coverage cannot be obtained at all, Parent shall purchase all
available run-off insurance policies with respect to pre-existing insurance in
an amount that, together with all other insurance purchased pursuant to this
Section 5.7(b), does not exceed the Maximum Premium.
SECTION 5.8 FURTHER ASSURANCES. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its respective
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, the parties hereto shall use their respective reasonable efforts to
take or cause to be taken all such necessary action, including, without
limitation, the execution and delivery of such further instruments and documents
as may be reasonably requested by the other party for such purposes or otherwise
to consummate and make effective the transactions contemplated hereby. Subject
to the terms and conditions of this Agreement, Parent and Purchaser agree to use
reasonable efforts to cause the Effective Time to occur as soon as practicable
following consummation of the Offer, subject to compliance with applicable law.
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SECTION 5.9 FEES AND EXPENSES. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses. The Company agrees that all
reasonable and documented legal, accounting, advisory, investment banking,
brokerage and agency fees and expenses that have been or will be incurred by it
in connection with this Agreement and the transaction contemplated hereby will
be paid in full upon or immediately prior to the consummation of the Offer and
Merger.
SECTION 5.10 EMPLOYEE MATTERS.
Purchaser shall cause the Surviving Corporation to treat
service with the Company prior to the Effective Time by each employee of the
Company in the same manner as service with the Company is treated for
eligibility and vesting purposes (and excluding benefit accrual purposes,
including, without limitation, benefit service under any defined benefit pension
plan) under any benefit plan of Company in which any such employee is eligible
to participate following the Effective Time and which Purchaser elects, in its
sole discretion, to continue or as Purchaser otherwise deems appropriate for any
new benefits established by the Surviving Corporation for the Company's
employees who become employed by the Surviving Corporation; provided, however
that nothing in this Section 5.10 shall obligate Purchaser or the Surviving
Corporation to (i) make any particular benefit plan or benefit available to any
such employee, (ii) continue any particular benefit plan or benefit or (iii)
refrain from terminating or amending any particular benefit plan or benefit.
SECTION 5.11 TAKEOVER STATUTE. If any "fair price", "moratorium",
"control share acquisition" or other form of anti-takeover statute or regulation
shall become applicable to the transactions contemplated hereby or by the Tender
Agreements, the Company and the members of the Board of Directors of the Company
shall grant such approvals and take such lawful actions as are reasonably
necessary so that the transactions contemplated hereby or thereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or regulation
on the transactions contemplated hereby and the Company, Parent and Purchaser
shall, without limiting the generality of any of the foregoing, satisfy the
respective obligations imposed on them by virtue of Section 910 of the MBCA.
SECTION 5.12 SECTION 338 ELECTION. No election shall be made (or deemed
made) under Section 338(g) or Section 338(h)(10) of the Code with respect to the
Merger.
ARTICLE VI
CONDITIONS
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction on or prior to the Closing Date of each of the following
conditions, any or all of which may be waived, in whole or in part, by any party
solely with respect to its own obligations hereunder to the extent permitted by
applicable law:
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(a) this Agreement shall have been approved and adopted by the
vote of the holders of fifty-five percent (55%) of the Company's Common Stock,
if required by applicable law and the Articles of Incorporation and By-Laws, in
order to consummate the Merger;
(b) no statute, rule, order, decree or regulation shall have
been enacted, promulgated or enforced by any foreign or domestic Governmental
Entity of competent jurisdiction which prohibits the consummation of the Merger;
(c) all foreign or domestic governmental consents, orders and
approvals required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained or complied with, as applicable,
and shall be in effect at the Effective Time, except for such consents the
failure of which to obtain would not have a Company Material Adverse Effect;
(d) there shall be no order or injunction of a foreign or
United States federal or state court or other Governmental Entity of competent
jurisdiction in effect precluding, restraining, enjoining or prohibiting
consummation of the Merger;
(e) Parent, Purchaser or their affiliates or respective
assigns shall have accepted for payment and paid for shares of Company Common
Stock pursuant to the Offer except that Parent and Purchaser shall not be
entitled to rely on this condition if Purchaser shall have failed to purchase
Shares pursuant to the Offer in breach of its obligations under this Agreement;
and
(f) the Proxy Statement, if required to be prepared and
disseminated to the Company's stockholders, shall have been cleared by the SEC
and shall not be the subject of any stop order.
SECTION 6.2 CONDITIONS TO OBLIGATION OF COMPANY TO EFFECT MERGER. The
obligation of the Company to consummate the Merger is subject to Parent and
Purchaser having performed and complied in all material respects with all
agreements and obligations required by this Agreement to be performed or
complied with by them on or prior to the Effective Time, unless the Company had
actual knowledge of such non-performance or non-compliance at the time of
acceptance of Shares for payment pursuant to the Offer.
SECTION 6.3 CONDITIONS TO OBLIGATION OF PARENT AND PURCHASER TO EFFECT
MERGER. The obligation of Parent and Purchaser to consummate the Merger is
subject to the Company having performed and complied in all material respects
with all agreements and obligations required by this Agreement to be performed
or complied with by it on or prior to the Effective Time, unless Parent or
Purchaser had actual knowledge of such non-performance or non-compliance at the
time of acceptance of Shares for payment pursuant to the Offer.
ARTICLE VII
TERMINATION
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SECTION 7.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof:
(a) by the mutual written consent of Parent, Purchaser and the
Company, by action of their respective Boards of Directors;
(b) by either of the Board of Directors of the Company, on the
one hand, or the Board of Directors of Parent, on the other, if any Governmental
Entity or court of competent jurisdiction shall have issued an order, decree,
injunction or ruling or taken any other action (which order, decree, injunction,
ruling or other action the parties hereto shall use their respective reasonable
efforts to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, injunction, ruling or other action shall have become final and
non-appealable; provided, however, that the party seeking to terminate this
Agreement shall have used all reasonable best efforts to challenge such order,
decree, injunction or ruling;
(c) by the Company if (i) there shall have been a breach of
any representations or warranties on the part of Parent or Purchaser set forth
in this Agreement or if any representations or warranties of Parent or Purchaser
shall have become untrue that is not curable, or, if curable, is not cured
within ten (10) calendar days after written notice of such breach is given by
the Company to Parent and Purchaser, provided that the Company has not breached
any of its obligations hereunder in any material respect; (ii) Parent, Purchaser
or any of their affiliates shall have failed to commence the Offer on or prior
to five (5) business days following the date of the initial public announcement
of the Offer; (iii) there shall have been a breach by Parent or Purchaser of any
of their respective covenants or agreements hereunder having a Parent Material
Adverse Effect, which has not cured such breach within five (5) business days
after notice by the Company thereof; provided, however, that the Company shall
not be in breach of any of its obligations hereunder in any material respect;
(d) by Parent and Purchaser if (i) there shall have been a
breach of any representations or warranties on the part of the Company set forth
in this Agreement or if any representations or warranties of the Company shall
have become untrue that is not curable or, if curable, is not cured within ten
(10) days after written notice of such breach is given by Parent to the Company;
or (ii) there shall have been a breach by the Company of one or more of its
covenants or agreements hereunder having a Company Material Adverse Effect or
materially adversely delaying the ability of Purchaser to consummate the Offer
or of Parent, Purchaser or the Company to consummate the Merger, and the Company
has not cured such breach within five (5) business days after notice by Parent
or Purchaser thereof; provided that neither Parent nor Purchaser shall be in
breach of any of their respective obligations hereunder in any material respect;
(e) by Parent and Purchaser or the Company if (i) the
Company's Board of Directors shall withdraw, modify or change its recommendation
of the Offer or the Merger in a manner adverse to Parent or Purchaser or shall
have resolved to do any of the foregoing; (ii) Parent or Purchaser requests in
writing that the Company's Board of Directors reconfirm its recommendation of
this Agreement, the Offer and the Merger to the stockholders of the Company and
the Company's Board fails to do so within five (5) business days after its
receipt of Parent's
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requests; (iii) the Company's Board of Directors shall have recommended an
Acquisition Proposal to the Company's stockholders; or (iv) a tender or exchange
offer for twenty percent (20%) or more of the outstanding shares of Company
Common Stock is commenced (other than by Parent or an affiliate of Parent) and
the Company's Board of Directors recommends that the Company's stockholders
tender their shares in such tender or exchange offer;
(f) by the Company, if on any Expiration Date on which no
further rights to extend the Offer are available to, or have been exercised by
Purchaser, the Minimum Condition has not been met, or Purchaser shall have
failed to pay for Shares pursuant to the Offer to the extent required by Section
1.1(a); provided, however, that the right to terminate this Agreement pursuant
to this subsection (f) shall not be available to the Company if it has breached
in any material respect its obligations under this Agreement that in any manner
shall have proximately contributed in any material respect to the failure
referenced in this subsection (f); or
(g) by Parent or Purchaser, if on any Expiration Date on which
no further rights to extend the Offer are available to, or have been exercised
by Purchaser, all conditions to Purchaser's obligation to accept for payment and
pay for shares pursuant to the Offer shall have been satisfied or waived other
than the Minimum Condition and Purchaser terminates the Offer in accordance with
the provisions of Annex A attached hereto without purchasing Shares pursuant to
the Offer; provided, however, that the right to terminate this Agreement
pursuant to this subsection (g) shall not be available to Parent and Purchaser
if either of them has breached in any material respect its obligations under
this Agreement in any manner that shall have proximately contributed in any
material respect to the termination of the Offer.
SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement (other than this
Section 7.2 and Sections 5.2(c) and 7.3) shall forthwith become null and void,
and there shall be no liability on the part of the Parent or the Company or any
of their respective Representatives, except nothing in this Section 7.2 shall
relieve any party of liability for fraud or for willful breach of this
Agreement.
SECTION 7.3 PAYMENT OF TERMINATION FEE. In the event this Agreement is
terminated by the Company, Parent or Purchaser pursuant to Section 7.1(e), the
Company shall simultaneously with or prior to such termination, pay Parent a
termination fee in the amount of $1,500,000 (the "Fee") by wire transfer of
immediately available funds to an account designated by Parent. The Company
acknowledges that the agreements contained in this Section 7.3 are an integral
part of the transactions contemplated by this Agreement, and that, without this
agreement, Parent and Purchaser would not enter into this Agreement;
accordingly, if the Company fails to promptly pay any amount due pursuant to and
in accordance with this Section 7.3, and, in order to obtain such payment, the
other party commences a suit which results in a judgment against the Company for
the Fee set forth in this Section 7.3, the Company shall also pay to Parent its
reasonable and documented out-of-pocket costs, fees and expenses (including
reasonable and documented attorneys' fees) incurred in connection with such
litigation. The provisions of this Section 7.3 shall not derogate from any
rights or remedies which Parent or Purchaser may possess under this Agreement or
under applicable law, as the case may be, provided that the Fee shall be
liquidated damages and the sole and exclusive remedy of Parent in the event that
this Agreement is terminated under circumstances which entitle Parent to payment
of such Fee.
ARTICLE VIII
MISCELLANEOUS
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SECTION 8.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of the Company contemplated
hereby, by written agreement of the parties hereto (which in the case of the
Company shall require approval of its Board of Directors and include approvals
as contemplated in Section 1.3(b)), at any time prior to the Closing Date with
respect to any of the terms contained herein; provided, however, that after the
approval of this Agreement by the stockholders of the Company, no such
amendment, modification or supplement shall reduce or change the Merger
Consideration.
SECTION 8.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time, termination of this Agreement, or, in the case of the Company,
shall survive the acceptance for payment of, and payment for, the shares of
Company Common Stock pursuant to the Offer. This Section 8.2 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time or the purchase of shares of Company Common Stock by
Purchaser pursuant to the Offer.
SECTION 8.3 NOTICES. All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, (ii) upon receipt if sent by reputable overnight courier
service or (iii) when successfully transmitted by telecopier without
interruption (with a confirming copy of such transmission sent within one
business day by reputable overnight courier service) to the party for whom
intended, provided that any notice received by telecopy or otherwise at the
addressee's location on any business day after 5:00 p.m. (addressee's local
time) shall be deemed to have been received at 9:00 a.m. (addressee's local
time) on the next business day. Any party to this Agreement may notify any other
party of any changes to the address or any of the other details specified in
this paragraph, provided that such notification shall only be effective on the
date specified in such notice or five (5) business days after the notice is
given, whichever is later. All notices required to be given under this Agreement
shall be sent to the party using the addresses or telecopy numbers specified
below:
(a) if to Parent or Purchaser, to:
Riedman Corporation
PSC Aquisition Corp.
45 East Avenue
Rochester, New York 14604
Attention: James R. Riedman, President
Telephone No: (716) 232-4424
Facsimile No: (716) 232-7802
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke LLP
700 Crossroads Building
Two State Street
Rochester, New York 14614
Attention: Harry P. Messina, Jr., Esq.
Telephone No.: (716) 987-2800
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Facsimile No.: (716) 454-3968
(b) if to the Company, to:
Penobscot Shoe Company
450 North Main Street
Old Town, Maine 04468
Attention: Irving Kagan,
Chairman of the Board of Directors
Telephone No: (207) 827-4431
Facsimile No: (207) 827-4834
with copies to:
Choate, Hall & Stewart
One Exchange Place
Boston, Massachusetts 02109-2891
Attention: Harry A. Hanson, III, Esq. P.C.
Telephone No.: (617) 248-5000
Facsimile No.: (617) 248-4000
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<PAGE> 45
and
Rudman & Winchell, LLC
84 Harlow Street, 4th Floor
Bangor, Maine 04402
Attention: Gerald E. Rudman, Esq.
Telephone No.: (207) 947-4501
Facsimile No.: (207) 941-9715
SECTION 8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 8.5 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This
Agreement, the Disclosure Schedule, the Tender Agreements and the
Confidentiality Agreement (including the documents and the instruments referred
to herein and therein): (a) constitutes the entire agreement and supersedes all
prior agreements; understandings, representations and warranties, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 1.3, 2.1, 2.2, 2.3, 2.4, 5.7 and 5.9, are not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder. References herein to this Agreement shall for all purposes
be deemed to include references to the Disclosure Schedule.
SECTION 8.6 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
authority to be invalid, void, unenforceable or against its regulatory policy,
the application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction, and the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated,
provided that the commercial objective of this Agreement is not frustrated
thereby.
SECTION 8.7 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the MBCA, where applicable, and otherwise with the
laws of the State of New York without giving effect to the principles of
conflicts of law thereof or of any other jurisdiction.
SECTION 8.8 JURISDICTION.
(a) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any action for enforcement of any judgment in respect thereof
shall be brought in the courts of the State of New York or of the United States
of America for the Western District of New York, to the extent the proceeding
involves an interpretation or enforcement of the MBCA, the state or federal
courts located in the State of Maine and, by execution and delivery of this
Agreement, the Company, Parent and Purchaser each hereby accepts for itself and
in respect of its property,
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generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts and appellate courts thereof. The Company, Parent and Purchaser
irrevocably consent to service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, or by recognized international
express carrier or delivery service, to the Company, Parent or Purchaser at
their respective addresses referred to in Section 8.3 hereof.
(b) The Company hereby designates CT Corporation as its agent
for service of process in the State of New York solely with respect to any
dispute or controversy arising out of this Agreement only, and service upon the
Company for such purposes shall be deemed to be effective upon service of CT
Corporation as aforesaid. The Company further covenants and agrees to execute,
upon Parent's request, such documents and agreements as are reasonably necessary
to confirm such designation.
(c) Parent and the Purchaser hereby designate CT Corporation
as their respective agent for service of process in the State of Maine solely
with respect to any dispute or controversy arising out of this Agreement and
relating to an interpretation of or involving enforcement of the MBCA, and
service upon Parent or the Purchaser for such purposes shall be deemed to be
effective upon service of CT Corporation as aforesaid.
(d) The Company, Parent and Purchaser each hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or otherwise brought in the courts referred to above and
hereby further irrevocably waives and agrees, to the extent permitted by
applicable law, not to plead or claim in any such court, by way of motion, as a
defense, counterclaim or otherwise, in any action or proceeding with respect to
this Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment before judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
(c) that the proceeding in any such court is brought in an inconvenient forum,
(d) that the venue of such proceeding is improper or (e) that this Agreement, or
the subject matter hereof, may not be enforced in or by such court. Nothing
herein shall affect the right of any party hereto to serve process in any other
manner permitted by law.
SECTION 8.9 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all its rights, interests and obligations hereunder to Parent
or to any direct or indirect wholly owned Subsidiary of Parent; provided that,
in the case of any such assignment by Purchaser, Purchaser shall remain liable
for all of its obligations under this Agreement. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and permitted
assigns.
SECTION 8.10 WAIVER. Any waiver of compliance with any obligation,
covenant, agreement, provision or condition of this Agreement or consent
pursuant to this Agreement shall not be effective unless evidenced by an
instrument in writing executed by the party to be
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charged. Any waiver of compliance with any such obligation, covenant, agreement,
provision or condition of this Agreement shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other non-compliance.
SECTION 8.11 HEADINGS. The table of contents and the descriptive
headings used herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement. "Include," "includes," and "including" shall be deemed to be followed
by "without limitation" whether or not they are in fact followed by such words
or words of like import.
SECTION 8.12 SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges and agrees that in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. Accordingly,
it is agreed that the parties hereto (a) shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to compel specific
performance of this Agreement in any proceeding instituted in any court of
competent jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity, and (b) will waive, in any proceeding for
specific performance, the defense of adequacy of a remedy at law. Each of the
parties further agrees to waive any requirement for the securing or posting of
any bond or other security in connection with any proceeding for specific
performance.
SECTION 8.13 OBLIGATIONS OF PARENT AND THE COMPANY OF PARENT AND THE
COMPANY. Whenever this Agreement requires a Subsidiary of Parent to take any
action, such requirement shall be deemed to include an undertaking on the part
of Parent to cause such Subsidiary to take such action. Whenever this Agreement
requires the Company to take or refrain from taking any action, such requirement
shall be deemed to include an undertaking on the part of the Company to cause
such Subsidiary to take or refrain from taking, as applicable, such action.
SECTION 8.14 LIMITATIONS ON WARRANTIES.
(a) Except for the representations and warranties contained in
Article III of this Agreement, the Company makes no other express or implied
representation or warranty to Parent or Purchaser. Parent and Purchaser
acknowledge that, in entering into this Agreement, it has not relied on any
representations or warranties of the Company other than the representations and
warranties of the Company set forth in Article III of this Agreement.
(b) Except for the representations and warranties contained in
Article IV of this Agreement, Parent and Purchaser make no other express or
implied representation or warranty to the Company. The Company acknowledges
that, in entering into this Agreement, it has not relied on any representations
or warranties of Parent and Purchaser other than the representations and
warranties of Parent and Purchaser set forth in Article IV of this Agreement.
SECTION 8.15 SCHEDULES. The Disclosure Schedule shall be construed with
and as an integral part of this Agreement to the same extent as if the same had
been set forth verbatim herein. Any matter disclosed pursuant to the Disclosure
Schedule shall not be deemed to be an admission or representation as to the
materiality of the item so disclosed.
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SECTION 8.16 INTERPRETATION. The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the gender and neuter genders of such term. Any agreement, instrument
or statute defined or referred to herein or in any agreement or instrument that
is referred to herein means such agreement, instrument or statute as from time
to time amended, modified or supplemented, including (in the case of agreements
and instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
SECTION 8.17 INTERPRETATION. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 8.18 DRAFTING AND NEGOTIATION. The parties have jointly
participated in the drafting and negotiation of this Agreement. In the event of
any ambiguity, this Agreement shall be construed as if drafted jointly and no
presumption shall arise favoring any party by virtue of authorship of any
provision of this Agreement. In any action involving this Agreement, the parties
shall be deemed to have jointly drafted this Agreement.
SECTION 8.19 EXECUTION. This Agreement may be executed by facsimile
signatures and such signature shall be deemed binding for all purposes hereof,
without delivery of an original signature being thereafter required.
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement and Plan of Merger to be signed by their respective officers thereunto
duly authorized as of the date first written above.
Penobscot Shoe Company
By: /s/ Irving Kagan
---- -------------------------------
Name: Irving Kagan
Title: Chairman of the Board of Directors
PSC Acquisition Corp.
By: /s/ James R. Riedman
----------------------------------
Name: James R. Riedman
Title President
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Riedman Corporation
By: /s/ James R. Riedman
----------------------------------
Name: James R. Reidman
Title: President
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List of Attachments
Exhibit A -- Escrow Agreement
Annex A -- Conditions to the Offer
Company's Disclosure Statement
<PAGE> 51
Exhibit A
ESCROW AGREEMENT
This ESCROW AGREEMENT made as of the 6th day of October, 1999 by and
among RIEDMAN CORPORATION, a New York corporation, with principal offices at 45
East Avenue, Rochester, New York 14604 ("Parent"), PSC ACQUISITION CORP., a
Delaware corporation and wholly-owned subsidiary of Parent, with principal
offices at 45 East Avenue, Rochester, New York 14604 ("Purchaser"), PENOBSCOT
SHOE COMPANY, a Maine corporation, with principal offices at 450 North Maine
Street, Old Town, Maine 04468 ("Company"), and MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York corporation, with offices at 255 East Avenue, Rochester, New
York 14604 ("Escrow Agent").
R E C I T A L S :
A. Parent, Purchaser and Company have entered into an Agreement and
Plan of Merger dated this date (the "Merger Agreement") whereby Purchaser has
agreed to commence an offer (the "Offer") to purchase for cash any and all
shares of the issued and outstanding Company common stock, par value $1.00 per
share (the "Shares"), at a price of $11.75 per Share, net to the seller in cash
(such price, or such higher price per Share as Purchaser may indicate in the
Offer being referred to herein as the "Offer Price"), subject to the conditions
set forth in the Merger Agreement.
B. Parent and Purchaser have agreed to deposit with the Escrow Agent,
in escrow, an amount equal to the product of the Offer Price ($11.75) and the
number of Shares outstanding (1,388,291) or $16,312,419 which, together with
such sums as Parent and Purchaser may subsequently deposit to reflect any
increase in the Offer Price, shall be referred to as the "Escrow Fund".
C. The Escrow Agent is willing to accept the Escrow Fund on the terms
hereinafter set forth.
<PAGE> 52
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. ESCROW FUND. Parent and Purchaser hereby deposit the Escrow Fund
with Escrow Agent, in escrow, and Escrow Agent hereby accepts the Escrow Fund,
acknowledges receipt of $16,312,419.00 and agrees to hold and disburse the same
in accordance with the terms of this Escrow Agreement.
2. INITIAL RELEASE OF ESCROW FUND.
(a) Parent, Purchaser and Company agree that when the Minimum
Condition of the Offer and the other conditions to the Offer set forth in Annex
A of the Merger Agreement have been fulfilled and/or waived by Purchaser, they
shall jointly execute and deliver to the Escrow Agent a written authorization
and direction ("Instruction") that the Escrow Agent transfer from the Escrow
Fund to the Account hereinafter designated the amount indicated by them, being
the product of the Offer Price and the number of Shares which have been validly
tendered, not withdrawn and accepted by Parent and Purchaser as provided in the
Offer.
(b) Escrow Agent agrees, upon receipt of such Instruction,
promptly to transmit by wire transfer from the Escrow Fund to the Account the
sum set forth in the Instruction.
(c) The Account to which funds shall be transferred by the
Escrow Agent under this Section 2 is as follows:
BankBoston, N.A.
100 Federal Street
Boston, MA 02105
ABA#: 011-000-390
AC#: 56100123
Boston EquiServe Reorg Operating Account
Attention: Lisa Marchese, Ext. 3757
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Company, Purchaser and Parent understand and agree that under
Uniform Commercial Code Article 4A, all banks executing the above wire
instructions are entitled to rely on the account number and bank routing/transit
number provided by Company, Purchaser and Parent, and have no duty to discover
errors or discrepancies between names and such account numbers. Company,
Purchaser and Parent represent and warrant that they have used extraordinary
care to verify that the numbers set forth above are correct. The Escrow Agent's
acceptance of such wire transfer instructions shall be binding on all parties
and the Escrow Agent will not be liable for any cost, expense or loss arising
out of such transactions.
3. FURTHER RELEASE OF ESCROW FUND.
(a) Company agrees that, upon request of Parent and Purchaser,
whenever Purchaser accepts additional Shares tendered pursuant to the Offer
beyond those required to meet the Minimum Condition under the Merger Agreement,
Company will join with Parent and Purchaser in providing joint Instruction to
the Escrow Agent to transfer additional amounts from the Escrow Fund to the
Account, such amounts to be equal to the product of the Offer Price and the
number of additional tendered Shares accepted by Purchaser.
(b) The Escrow Agent agrees, upon receipt of such Instruction,
promptly to transmit by wire transfer from the Escrow Fund to the Account the
additional amounts set forth in the Instruction.
4. RELEASE OF ESCROW FUNDS UPON MERGER. Company, Parent and Purchaser
agree that upon merger of Company and Purchaser, with Purchaser or Company as
survivor, and whether a short-form merger under Section 904 of the Maine
Business Corporation Act ("MBCA") or a merger approved at a meeting of
stockholders of the Company, Company and Purchaser shall promptly present to
Escrow Agent their joint Instruction (or the surviving corporation under the
merger shall give its Instruction) to transmit by wire transfer from the
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Escrow Fund to the Account a specified amount. Company and Purchaser agree the
amount shall be equal to the product of the Offer Price and the remaining issued
and outstanding Shares of the Company which were not previously accepted by
Purchaser, less any Demanding Shares or Dissenting Shares (as defined in the
Merger Agreement). The Escrow Agent agrees, upon receipt of such Instruction,
promptly to transmit by wire transfer from the Escrow Fund to the Account the
amount set forth in such Instruction. It is agreed by the Parent, Purchaser and
Company that any amounts to be paid to holders of Demanding Common Stock or
Dissenting Common Stock shall be paid from the Escrow Fund, including such
additional funds as shall be required to be deposited by Parent and Purchaser to
satisfy the applicable provisions of Sections 910 and 909 of the MCBA. However,
Instruction to the Escrow Agent for disbursement of any such amounts shall be
signed only by Parent and shall certify that the amount is for payment of
Demanding Common Stock or Dissenting Common Stock. Parent shall send a copy of
the Instruction to the Company at the same time it sends the Instruction to the
Escrow Agent. The Escrow Agent agrees, upon receipt of such Instruction from
Parent, promptly to transmit by wire transfer from the Escrow Fund to the
Account the amount set forth in such Instruction.
5. RELEASE OF ESCROW FUNDS UPON TERMINATION OF TENDER OFFER OR MERGER
AGREEMENT. In the event that (1) Parent or Purchaser terminates the Offer or (2)
Company terminates the Merger Agreement, Parent shall give written notice to the
Escrow Agent to pay over to Purchaser all funds, together with earnings thereon,
then remaining in the Escrow Account ("Release Notice"). Upon receipt of the
Release Notice, Escrow Agent shall pay over such amounts according to the
instructions set forth in the Release Notice. Parent shall send to the Company a
copy of any Release Notice at the same time it is given to the Escrow Agent.
6. INVESTMENT OF ESCROW FUND. Escrow Agent may invest the Escrow Funds
if so directed by Parent in obligations of the United States government or any
agency or
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instrumentality thereof, or in obligations that are guaranteed or insured by the
United States government or any agency or instrumentality thereof. Any net
profit resulting from, or interest or income produced by such investments shall
be payable to Parent or Purchaser on written Instruction given by Parent.
Escrow Agent shall send to Parent a monthly statement showing the
investments in which the Escrow Fund is invested ("Escrow Fund Investments"),
the purchase price of investments purchased during the statement period and the
market value of Escrow Fund Investments as of the end of the statement period.
Parent shall review such statements and determine whether the market value of
Escrow Fund Investments is sufficient to enable the Escrow Fund to satisfy all
remaining obligations originally contemplated to be paid out of the Escrow Fund.
In the event that the Escrow Fund shall not be sufficient to satisfy all
remaining obligations originally contemplated to be paid out of the Escrow Fund,
Parent shall promptly thereafter deposit in such Escrow Fund cash in an amount
sufficient to enable such Escrow Fund to satisfy all remaining obligations
originally contemplated to be paid out of such Escrow Fund.
7. FEE OF ESCROW AGENT. For its services hereunder, Escrow Agent shall
receive the fees set forth on the fee schedule attached hereto as Exhibit A.
Parent and Purchaser shall be solely responsible for payment of Escrow Agent's
fee hereunder and Escrow Agent shall have no claim whatsoever on the Escrow
Fund. Parent may, in its sole discretion, authorize Escrow Agent's fees to be
paid from any interest or other earnings on the Escrow Fund, but not from any
amounts deposited by Parent or Purchaser to the Escrow Fund.
8. LIABILITY OF ESCROW AGENT.
(a) Escrow Agent may act in reliance upon any writing or
instrument or signature which it, in good faith, believes to be genuine, may
assume the validity and accuracy of any statements or assertion contained in
such writing or instrument, and may assume that any
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person purporting to give any writing, notice, advice or instruction in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent shall not be liable in any manner for the sufficiency or correctness as to
form, manner of execution, or validity of any written instructions delivered to
it; nor as to the identity, authority, or rights of any person executing the
same and shall otherwise not be liable for any mistakes of fact or error of
judgment, or for any acts or omissions of any kind unless caused by its willful
misconduct or gross negligence. The Escrow Agent shall be fully protected in
acting without inquiry in accordance with such written instruction, including by
way of example, and not as a limitation, without inquiry as to purposes for
which amounts disbursed from the Escrow Fund are expended, or whether the party
giving the written instruction has given a copy or other notice of such
instruction to any other party. The Escrow Agent shall not be liable for any
loss or diminution in value of the Escrow Fund as a result of the investment of
the Escrow Fund, nor shall it be responsible if the Escrow Fund is not
sufficient to make intended payments. The Escrow Agent shall have no duty to
calculate or verify any amounts required to be transferred to the Account or
otherwise disbursed from the Escrow Fund.
(b) It is agreed that the duties of Escrow Agent are purely
ministerial in nature and shall be expressly limited to the safekeeping of the
Escrow Fund and for the disposition of same in accordance with this Escrow
Agreement and any costs, expenses or fees incurred by the Escrow Agent in the
performance of these duties (except as described in the next sentence or in
Section 9) shall be borne by Parent and Purchaser. Each of Company, Parent and
Purchaser hereby agrees to indemnify, defend and hold Escrow Agent harmless from
and against any and all claims, liabilities, damages, costs, penalties, losses,
actions, suits or proceedings at law or in equity, or any other expenses, fees
or charges of any character or nature (including, without limitation, attorneys'
fees, paralegals' fees and costs incurred in all trial and appellate
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<PAGE> 57
proceedings or otherwise if no litigation is instituted) which it may incur or
with which it may be threatened directly or indirectly arising from or in any
way connected with this Escrow Agreement, whether or not such claims,
liabilities, damages, costs, penalties, losses, actions, suits or proceedings
arise from or are in any way connected with any negligence of Escrow Agent.
Notwithstanding anything in this subparagraph (b) to the contrary, in no event
shall Escrow Agent be absolved from any liability arising from Escrow Agent's
gross negligence or willful misconduct.
9. DISPUTES.
(a) In the event Escrow Agent is joined as a party to a
lawsuit relating to the Escrow Fund or this Agreement, Escrow Agent shall, at
its option, either: (i) tender the Escrow Fund to the appropriate court; or (ii)
disburse the Escrow Fund in accordance with the court's ultimate disposition of
the case, and Company, Parent and Purchaser hereby, jointly and severally, agree
to indemnify, defend and hold Escrow Agent harmless from and against all costs,
expenses, damages or losses in connection therewith, including, but not limited
to, attorneys' and paralegals' fees and court costs at all trial and appellate
levels.
(b) In the event Escrow Agent, pursuant to Section 9(a) or
10(d), tenders the Escrow Fund to the appropriate court and files an action of
interpleader or other appropriate action naming the other parties hereto and any
affected third parties of whom Escrow Agent has received actual notice, Escrow
Agent shall be released and relieved from any and all further obligation and
liability hereunder or in connection herewith and Company, Parent and Purchaser
hereby, jointly and severally, agree to indemnify, defend and hold Escrow Agent
harmless from and against all costs, expenses, damages or losses arising in
connection therewith, including, but not limited to, all costs and expenses
incurred by Escrow Agent in connection with the filing of
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<PAGE> 58
such action, including, but not limited to, attorneys' and paralegals' fees and
court costs at all trial and appellate levels.
10. REMOVAL AND RESIGNATION OF ESCROW AGENT.
(a) Company, Parent and Purchaser may, upon written notice to
Escrow Agent, remove the Escrow Agent, in which event removal shall take effect
no earlier than twenty (20) days after notice to Escrow Agent of such removal,
during which period, Company, Parent and Purchaser shall agree on a successor
escrow agent to assume the duties of the Escrow Agent hereunder.
(b) Escrow Agent may resign as Escrow Agent at any time upon
giving notice to the other parties of its desire to so resign; provided,
however, that resignation of Escrow Agent shall take effect no earlier than ten
(10) days after the giving of notice of resignation, during which period,
Company, Parent and Purchaser shall agree on a successor escrow agent to assume
the duties of the Escrow Agent hereunder.
(c) Upon termination of the duties of Escrow Agent as set
forth above, Escrow Agent shall deliver the Escrow Fund to the newly appointed
escrow agent designated by the other parties, and, except for rights of Escrow
Agent specified in this Escrow Agreement, Escrow Agent shall not otherwise have
the right to withhold the Escrow Funds from said newly appointed escrow agent.
(d) In the event the other parties fail to agree to a
successor escrow agent within the period described hereinabove, Escrow Agent
shall have the right to deposit the Escrow Fund into the appropriate court and
request judicial determination of the rights among the other parties by
interpleader or other appropriate action and, the other parties hereby, jointly
and severally, agree to indemnify, defend and hold Escrow Agent harmless from
and against any
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<PAGE> 59
costs, expenses, damages or losses in connection therewith, including, but not
limited to, reasonable attorneys' and paralegals' fees and court costs at all
trial and appellate levels.
(e) Escrow Agent shall not be bound by any modification,
cancellation or rescission of this Escrow Agreement unless in writing and signed
by all other parties and Escrow Agent. In no event shall any modification of
this Escrow Agreement, which shall affect the rights or duties of Escrow Agent,
be binding on Escrow Agent unless it shall have given its prior written consent.
11. NOTICE. Parent, Purchaser and Company agree to send to each other
any communications sent to Escrow Agent. Whenever any notice is required or
permitted under this Agreement, the notice will be in writing and will be deemed
effective and given when received on personal delivery or on receipt of the
United States mail, registered or certified mail, return receipt requested,
postage prepaid, to the addresses set out below or at other addresses as are
specified by written notice delivered in accordance with this Agreement:
If to Parent or Purchaser: Riedman Corporation
45 East Avenue
Rochester, New York 14604
Attn: John R. Riedman, President
and with a copy to: Woods, Oviatt, Gilman, Sturman & Clarke LLP
700 Crossroads Building
Rochester, New York 14614
Attn: Harry P. Messina, Jr., Esq.
If to Company: Penobscot Shoe Company
450 North Maine Street
Old Town, Maine 04468
Attn: Chairman
and with copies to: Choate, Hall & Stewart LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attn: Harry A. Hanson III, P.C.
and
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Rudman & Winchell, LLC
84 Harlow Street, 4th Floor
Bangor, Maine
Attn: Gerald E. Rudman, Esq.
If to Escrow Agent: Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203
Attn: Douglas P. Marmion
12. CHOICE OF LAW AND VENUE. This Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of New York. In the event
any action, suit or proceeding is instituted as a result of any matter or thing
affecting this Escrow Agreement, the parties hereto hereby designate Monroe
County, New York as the proper jurisdiction and the venue in which same is to be
instituted.
13. CUMULATIVE RIGHTS. No right, power or remedy conferred upon Escrow
Agent by this Escrow Agreement is exclusive of any other right, power or remedy.
All such rights, powers and/or remedies shall be cumulative and concurrent and
shall be in addition to any other right, power or remedy Escrow Agent may have
under the Escrow Agreement or now or hereafter existing at law, in equity or by
statute, and the exercise of one right, power or remedy by Escrow Agent shall
not be construed or considered as a waiver of any other right, power or remedy.
14. BINDING AGREEMENT. This Escrow Agreement shall be binding upon the
Escrow Agent, the other parties and their respective successors and assigns.
This Escrow Agreement may be executed in counterparts, all of which counterparts
shall be deemed to be a single document. Signature pages received by facsimile
transmission shall be deemed to be an original document.
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<PAGE> 61
15. SURVIVAL. The provisions of this Agreement regarding
indemnification of the Escrow Agent by the Parent, Purchaser and/or Company
shall survive the termination of this Agreement.
16. ENTIRE AGREEMENT. The Escrow Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes any and all other written or oral agreements, documents,
memoranda, understandings or otherwise between the parties relating to the
subject matter hereof.
IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
executed by their duly authorized officers the day and year first above set
forth.
RIEDMAN CORPORATION
By: /s/ James R. Riedman
----------------------------
Name: James R. Riedman
Title: President
PSC ACQUISITION CORP.
By: /s/ James R. Riedman
----------------------------
Name: James R. Riedman
Title: President
PENOBSCOT SHOE COMPANY
By: /s/ Irving Kagan
----------------------------
Name: Irving Kagan
Title: Chairman of the Board
MANUFACTURERS AND TRADERS
TRUST COMPANY
By: /s/ Doug Marmion
----------------------------
Name: Doug Marmion
Title: Trust Officer
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<PAGE> 62
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer (subject to the
provisions of the Agreement), Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate the Offer and not accept for payment any tendered
shares if:
(a) there shall not have been validly tendered and not withdrawn
prior to the expiration of the Offer not less than eighty
percent (80%) of the total issued and outstanding shares of
Company Common Stock on the date hereof (the "Minimum
Condition") (which constitutes 1,110,633 Shares as of the date
hereof);
(b) at any time on or after the date of the Agreement and prior to
the acceptance for payment of Shares, any of the following
events shall occur and be continuing:
(i) there shall have been instituted or be pending any
action or proceeding before any court or Governmental
Entity, (A) challenging or seeking to make illegal,
materially delay or otherwise directly or indirectly
restrain or prohibit or make more costly the making
of the Offer, the acceptance for payment of, or
payment for, any Shares by the Parent, the Purchaser
or any other affiliate of the Parent, or the
consummation of any other aspect of the Transactions,
or seeking to obtain damages in connection with any
aspect of the Transactions; (B) seeking to prohibit
or limit materially the ownership or operation by the
Company, the Parent or any of their Subsidiaries of
all or any material portion of the business or assets
of the Company, the Parent or any of their
Subsidiaries, or to compel the Company, the Parent or
any of their Subsidiaries to dispose of or hold
separate all or any material portion of the business
or assets of the Company, the Parent or any of their
Subsidiaries, as a result of the Transactions; (C)
seeking to impose or confirm limitations on the
ability of the Parent, the Purchaser or any other
affiliate of the Parent to exercise effectively full
rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by
the Purchaser pursuant to the Offer on all matters
properly presented to the Company's stockholders,
including, without limitation, the approval and
adoption of this Agreement and the transactions
contemplated hereby; (D) seeking to require
divestiture by the Parent, the Purchaser or any other
affiliate of the Parent of any Shares; or (E) which
otherwise would constitute a Company Material
Adverse Effect;
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<PAGE> 63
(ii) the representations and warranties of the Company set
forth in the Agreement or in the Tender Agreements
shall not be true and correct in any respect, as of
the date of consummation of the Offer as though made
on or as of such date, except (i) for changes
specifically permitted by the Agreement or (ii) (A)
those representations and warranties that address
matters only as of a particular date which are true
and correct as of such date or (B) where the failure
of such representations and warranties to be true and
correct, do not, individually or in the aggregate,
have a Company Material Adverse Effect;
(iii) there shall have occurred, since June 30, 1999, any
change, condition, event or development that,
individually or in the aggregate with any other
change, condition or development since such date,
has, or could be reasonably expected to have, a
Company Material Adverse Effect or any legal or
regulatory changes that is or is reasonably expected
to be materially adverse to the business operations,
properties, condition (financial or otherwise),
assets, liabilities (contingent or otherwise) or
results of operation or prospects of the Company
either individually or in the aggregate;
(iv) the Company shall have breached or failed in any
material respect to perform or comply with any
material obligation, agreement or covenant required
by the Agreement to be performed or complied with by
it (including, without limitation, if any Person
shall have entered into any definitive agreement or
any agreement in principle with the Company relating
to an Acquisition Proposal (other than Parent,
Purchaser or any affiliate thereof);
(v) there shall have occurred (A) any general suspension
of trading in, or limitation on prices for,
securities on the American Stock Exchange, which
suspension or limitation shall have continued for a
period in excess of twenty-four (24) hours, (B) a
declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States
or any limitation (whether or not mandatory) by
Federal, state or foreign authorities on the
extension of credit by lending institutions, which
moratorium, suspension, or limitation in Parent's
reasonable judgment is reasonably likely to
materially affect the ability of Parent to pay for
the Shares, (C) a commencement of a war or armed
hostilities or other national or international
calamity directly or indirectly involving the United
States and reasonably likely to have a Company
Material Adverse Effect or materially and adversely
affect the consummation of the Offer, or (D) in the
case of clauses (A), (B) and (C) above existing at
the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(vii) the Board of Directors of the Company (or a special
committee thereof) shall have withdrawn or amended,
or modified in a manner adverse to Parent and
Purchaser its recommendation of the Offer or the
Merger, or shall have endorsed, approved or
recommended any Acquisition Proposal
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<PAGE> 64
other than the Transactions or failed to reconfirm
its recommendation of this Agreement and the
Transactions contemplated hereunder within five (5)
days after being requested to do so by Parent and
Purchaser;
(viii) any Person, other than Parent, Purchaser or their
affiliates or any group of which any of them is a
member, acquires beneficial ownership of twenty
percent (20%)or more of the shares of Common Stock or
rights to acquire twenty percent (20%) or more of the
outstanding shares of Common Stock;
(ix) the Agreement shall have been terminated in
accordance with its terms; or
(x) the Parent, Purchaser and the Company shall have agreed in writing that the
Purchaser shall terminate the Offer .
The foregoing conditions are for the sole benefit of Purchaser and
Parent and, subject to the Agreement, may be asserted by either of them or may
be waived by Parent or Purchaser, in whole or in part at any time and from time
to time in the sole discretion of Parent or Purchaser. The failure by the Parent
or the Purchaser at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right; the waiver of any such right with respect
to particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
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<PAGE> 1
Exhibit (c)(2)
TENDER AGREEMENT
This TENDER AGREEMENT dated as of October 6, 1999 (this "Agreement") is
by and among RIEDMAN CORPORATION, a corporation organized under the laws of New
York ("Parent"), PSC ACQUISITION CORP., a Maine corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and the undersigned individual (the
"Stockholder").
R E C I T A L S :
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Penobscot Corporation, a Maine corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as amended from time to time, the
"Merger Agreement"), pursuant to which Parent has agreed, among other things, to
cause Purchaser to commence a cash tender offer (as such tender offer may
hereafter be amended from time to time, the "Offer") to purchase any and all
shares of common stock, par value $1.00 per share, of the Company (the "Company
Common Stock"); and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that the Stockholder enter into this
Agreement.
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to the Stockholder,
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
<PAGE> 2
"Owned Shares" means, with respect to the Stockholder, the
shares of Company Common Stock described in Section 2(c), together with any
other shares of Company Common Stock acquired by the Stockholder after the date
hereof.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, estate,
unincorporated organization or other entity.
"Representative" means, with respect to any Person, such
Person's agents and representatives (including any investment banker, financial
advisor, agent, representative or expert retained by or acting on behalf of such
Person).
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the beneficial ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. REPRESENTATIONS AND WARRANTIES OF THE TENDERING STOCKHOLDERS. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes his or her valid and binding
agreement, enforceable against him in accordance with its terms except (i) to
the extent limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Stockholder is the record or beneficial owner, has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement, in each case with respect to his or her
Owned Shares, subject to applicable securities laws and the terms of this
Agreement.
(c) Upon the consummation of the Offer, Purchaser will acquire
good and marketable title to the Stockholder's Owned Shares, free and clear of
all Encumbrances, except for any Encumbrance arising under the Securities Act of
1933, as amended, or any applicable state securities laws. As of the date
hereof, the Stockholder owns the number of shares of Company Common Stock set
forth under the Stockholder's signature at the end of this Agreement. Effective
with the execution of this Agreement, the Stockholder hereby waive any rights
which he may have with respect to any other stockholder's Owned Shares under the
Stockholders' Agreement dated November 18, 1987.
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<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represent and warrant, jointly and severally, to the
Stockholders as follows:
(a) Each of Parent and Purchaser is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, and each of them is in good standing under the laws of its
jurisdiction of incorporation. Parent and Purchaser have the corporate power and
authority to execute and deliver this Agreement and perform their respective
obligations hereunder. The execution and delivery by Parent and Purchaser of
this Agreement and the performance by Parent and Purchaser of their respective
obligations hereunder have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize the execution,
delivery or performance of this Agreement by Parent and Purchaser or the
consummation of the transactions contemplated hereby by Parent and Purchaser.
(b) This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and constitutes a valid and binding agreement
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms except (i) to the extent limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) None of the execution and delivery of this Agreement by
Parent or Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof shall (i) conflict with or result in any breach of the
Certificate of Incorporation or By-Laws of Parent or Purchaser, or (ii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, (iii) require on the part of Parent or the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, or
(iv) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Parent or Purchaser or any of their respective
properties or assets.
4. TENDER OF SHARES. The Stockholder shall tender or cause the record
owner thereof to tender into, pursuant to and in accordance with the terms of
the Offer, any and all of its Owned Shares. The parties agree that each
Stockholder will, for all Owned Shares tendered by it in the Offer and accepted
for payment and purchase by Purchaser, receive a price for each of its Owned
Shares equal to $11.75, or such higher per share consideration paid to other
stockholders who have tendered shares of Company Common
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<PAGE> 4
Stock into the Offer which have been accepted for payment and purchased by
Purchaser in the Offer (the "Offer Price"), but not any additional amounts paid
or payable to holders of Company Common Stock that do not participate in the
Offer by reason of rights of appraisal, rights of dissent or otherwise. The
Stockholder agrees not to withdraw any of its Owned Shares unless the Offer is
terminated or has expired without Purchaser having accepted for payment all of
the Shares tendered in the Offer.
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<PAGE> 5
5. RESTRICTIONS ON TRANSFER, OTHER PROXIES; NO SOLICITATION.
(a) Except as provided in Section 4 hereof, the Stockholder
shall not, until the termination of this Agreement, pursuant to Section 9,
directly or indirectly: (i) Transfer to any Person any or all of his or her
Owned Shares; or (ii) grant any proxies or powers of attorney, deposit any of
his Owned Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to such Owned Shares.
(b) Each Stockholder hereby agrees, solely in his capacity as
a stockholder of the Company, that from and after the date hereof until the
earlier of the termination of the Merger Agreement and the Effective Time, he
shall not, and such Stockholder shall cause his respective Affiliates not to,
directly or indirectly, (i) initiate, solicit or encourage (including by way of
furnishing non-public information) any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to an Acquisition Proposal or
(ii) engage in any negotiations or discussions with, or furnish any information
or data, to, any third party relating to an Acquisition Proposal. The
Stockholder will promptly inform Parent of the terms of any proposal,
discussion, negotiation or inquiry which the Stockholder may receive in respect
of any Acquisition Proposal. Any action taken by the Company or any member of
the Board of Directors of the Company in his or its capacity as such to the
extent permitted and in accordance with the terms of Section 5.4(b) of the
Merger Agreement shall be deemed not to violate this Section 5(b).
6. STOP TRANSFER AND LEGEND. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of its Owned Shares, unless such
transfer is made in compliance with this Agreement.
7. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
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<PAGE> 6
8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that her or she may
have.
9. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate only upon the termination of the Merger
Agreement in accordance with its terms. All representations and warranties
herein shall survive any termination of this Agreement.
10. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements; understandings, representations and warranties, both written and
oral, between the parties with respect to the subject matter hereof, including,
without limitation, a certain non-binding letter dated August 31, 1999 of Parent
to Company proposing terms for the transactions contemplated by the Merger
Agreement and this Agreement.
(b) The Stockholder agrees that this Agreement and the
respective rights and obligations of the Stockholder hereunder shall attach to
all Owned Shares.
(c) Except as provided below, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses. In the event any legal proceeding
is commenced by any party to this Agreement to enforce or recover damages for
any breach of the provisions hereof, the prevailing party in such legal
proceeding will be entitled to recover in such legal proceeding from the losing
party such prevailing party's costs and expenses incurred in connection with
such legal proceeding, including reasonable attorneys' fees. The provisions of
this Section 10(c) will survive the Closing hereunder.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Purchaser may assign
their rights and obligations hereunder to any assignee of Purchaser's rights and
obligations under the Merger Agreement. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(e) This Agreement may not be amended, changed, supplemented,
or otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise
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<PAGE> 7
required to be complied with by such other party hereunder, but any such waiver
shall be effective only if in writing executed by the waiving party.
(f) All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, or (ii) upon receipt if sent by reputable overnight
courier service. Any party to this Agreement may notify any other party of any
changes to the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date specified in
such notice or three (3) business days after the notice is given, whichever is
later. All notices required to be given under this Agreement shall be sent to
the party using the addresses specified below:
If to Parent or Purchaser:
Riedman Corporation
45 East Avenue
Rochester, New York 14604
Attention: James R. Riedman, President
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke, LLP
700 Crossroads Building
Two State Street
Rochester, New York 14614
Attention: Harry P. Messina, Jr., Esq.
If to the Stockholder:
To the address indicated at the foot of this Agreement
with a copy to:
Choate, Hall & Stewart
One Exchange Place
Boston, Massachusetts 02109-2891
Attention: Harry A. Hanson, III, Esq.
and
Rudman & Winchell, LLC
84 Harlow Street
Bangor, Maine 04401
Attention: Gerald E. Rudman, Esq.
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<PAGE> 8
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without affecting the
validity or enforceability of the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. If any provision
of this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable, provided the commercial
objective of this Agreement is not frustrated.
(h) Each of the parties hereto acknowledges and agrees that in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. Accordingly, it is agreed that the parties
hereto (i) shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to compel specific performance of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity, and (ii) will waive, in any proceeding for specific performance, the
defense of adequacy of a remedy at law. Each of the parties further agrees to
waive any requirement for the securing or posting of any bond or other security
in connection with any proceeding for specific performance.
(i) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) This Agreement shall be governed and construed in
accordance with the Maine Business Corporations Act (the "MBCA"), where
applicable, and otherwise with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
(k) This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter required.
(l) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any
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<PAGE> 9
action for enforcement of any judgment in respect thereof shall be brought
exclusively in the courts of the State of New York or of the United States of
America for the Western District of New York or the state or federal courts
located in the State of Maine, to the extent the proceeding involves an
interpretation or enforcement of the MBCA, and, by execution and delivery of
this Agreement, each of the Tendering Stockholder, Parent and Purchaser each
hereby accept for themselves and in respect of their respective property,
generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts and appellate courts thereof. Each of the Stockholder, Parent and
Purchaser irrevocably consents to service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, or by recognized
international express carrier or delivery service, to any Stockholder at the
address referred to in Section 11(f).
(m) Each of the Stockholder, Parent and Purchaser each hereby
irrevocably waives any objection which he or she may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or otherwise brought in the courts
referred to above and hereby further irrevocably waives and agrees, to the
extent permitted by applicable law, not to plead or claim in any such court, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (i) any claim that he or she is not
personally subject to the jurisdiction of the above-named courts, (ii) that he
or she or his or her property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), (iii) that the proceeding in any
such court is brought in an inconvenient forum, (iv) that the venue of such
proceeding is improper or (v) that this Agreement, or the subject matter hereof,
may not be enforced in or by such court. Nothing herein shall affect the right
of any party hereto to serve process in any other manner permitted by law.
11. DIRECTORS MATTERS EXCLUDED. Parent and Purchaser acknowledge and
agree that no provision of this Agreement shall limit or otherwise restrict the
Stockholder with respect to any act or omission that the Stockholder may
undertake or authorize in his capacity as director of the Company, including,
without limitation, any vote that the Stockholder may make as a director of the
Company with respect to any matter presented to the Company's Board of
Directors.
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed as of the day and year first above written.
PARENT: RIEDMAN CORPORATION
By:
Name: James R. Riedman
Title: President
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<PAGE> 10
PURCHASER: PSC ACQUISITION CORP.
By: -------------------------------
Name: James R. Riedman
Title: President
STOCKHOLDER:
/s/ Irving Kagan
-----------------------------------
Irving Kagan
-----------------------------------
Printed Name
2001 Kagan Court; Redington North
-----------------------------------
Street Address
Cavrabassett Valley, ME 04947
-----------------------------------
City, State and Zip Code
416,348.5
-----------------------------------
Number of Shares Owned
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<PAGE> 1
Exhibit (c)(3)
TENDER AGREEMENT
This TENDER AGREEMENT dated as of October 6, 1999 (this "Agreement") is
by and among RIEDMAN CORPORATION, a corporation organized under the laws of New
York ("Parent"), PSC ACQUISITION CORP., a Maine corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and the undersigned individual (the
"Stockholder").
R E C I T A L S :
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Penobscot Corporation, a Maine corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as amended from time to time, the
"Merger Agreement"), pursuant to which Parent has agreed, among other things, to
cause Purchaser to commence a cash tender offer (as such tender offer may
hereafter be amended from time to time, the "Offer") to purchase any and all
shares of common stock, par value $1.00 per share, of the Company (the "Company
Common Stock"); and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that the Stockholder enter into this
Agreement.
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to the Stockholder,
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
<PAGE> 2
"Owned Shares" means, with respect to the Stockholder, the
shares of Company Common Stock described in Section 2(c), together with any
other shares of Company Common Stock acquired by the Stockholder after the date
hereof.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, estate,
unincorporated organization or other entity.
"Representative" means, with respect to any Person, such
Person's agents and representatives (including any investment banker, financial
advisor, agent, representative or expert retained by or acting on behalf of such
Person).
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the beneficial ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. REPRESENTATIONS AND WARRANTIES OF THE TENDERING STOCKHOLDERS. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes his or her valid and binding
agreement, enforceable against him in accordance with its terms except (i) to
the extent limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Stockholder is the record or beneficial owner, has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement, in each case with respect to his or her
Owned Shares, subject to applicable securities laws and the terms of this
Agreement.
(c) Upon the consummation of the Offer, Purchaser will acquire
good and marketable title to the Stockholder's Owned Shares, free and clear of
all Encumbrances, except for any Encumbrance arising under the Securities Act of
1933, as amended, or any applicable state securities laws. As of the date
hereof, the Stockholder owns the number of shares of Company Common Stock set
forth under the Stockholder's signature at the end of this Agreement. Effective
with the execution of this Agreement, the Stockholder hereby waive any rights
which he may have with respect to any other stockholder's Owned Shares under the
Stockholders' Agreement dated November 18, 1987.
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<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represent and warrant, jointly and severally, to the
Stockholders as follows:
(a) Each of Parent and Purchaser is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, and each of them is in good standing under the laws of its
jurisdiction of incorporation. Parent and Purchaser have the corporate power and
authority to execute and deliver this Agreement and perform their respective
obligations hereunder. The execution and delivery by Parent and Purchaser of
this Agreement and the performance by Parent and Purchaser of their respective
obligations hereunder have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize the execution,
delivery or performance of this Agreement by Parent and Purchaser or the
consummation of the transactions contemplated hereby by Parent and Purchaser.
(b) This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and constitutes a valid and binding agreement
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms except (i) to the extent limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) None of the execution and delivery of this Agreement by
Parent or Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof shall (i) conflict with or result in any breach of the
Certificate of Incorporation or By-Laws of Parent or Purchaser, or (ii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, (iii) require on the part of Parent or the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, or
(iv) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Parent or Purchaser or any of their respective
properties or assets.
4. TENDER OF SHARES. The Stockholder shall tender or cause the record
owner thereof to tender into, pursuant to and in accordance with the terms of
the Offer, any and all of its Owned Shares. The parties agree that each
Stockholder will, for all Owned Shares tendered by it in the Offer and accepted
for payment and purchase by Purchaser, receive a price for each of its Owned
Shares equal to $11.75, or such higher per share consideration paid to other
stockholders who have tendered shares of Company Common
-3-
<PAGE> 4
Stock into the Offer which have been accepted for payment and purchased by
Purchaser in the Offer (the "Offer Price"), but not any additional amounts paid
or payable to holders of Company Common Stock that do not participate in the
Offer by reason of rights of appraisal, rights of dissent or otherwise. The
Stockholder agrees not to withdraw any of its Owned Shares unless the Offer is
terminated or has expired without Purchaser having accepted for payment all of
the Shares tendered in the Offer.
-4-
<PAGE> 5
5. RESTRICTIONS ON TRANSFER, OTHER PROXIES; NO SOLICITATION.
(a) Except as provided in Section 4 hereof, the Stockholder
shall not, until the termination of this Agreement, pursuant to Section 9,
directly or indirectly: (i) Transfer to any Person any or all of his or her
Owned Shares; or (ii) grant any proxies or powers of attorney, deposit any of
his Owned Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to such Owned Shares.
(b) Each Stockholder hereby agrees, solely in his capacity as
a stockholder of the Company, that from and after the date hereof until the
earlier of the termination of the Merger Agreement and the Effective Time, he
shall not, and such Stockholder shall cause his respective Affiliates not to,
directly or indirectly, (i) initiate, solicit or encourage (including by way of
furnishing non-public information) any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to an Acquisition Proposal or
(ii) engage in any negotiations or discussions with, or furnish any information
or data, to, any third party relating to an Acquisition Proposal. The
Stockholder will promptly inform Parent of the terms of any proposal,
discussion, negotiation or inquiry which the Stockholder may receive in respect
of any Acquisition Proposal. Any action taken by the Company or any member of
the Board of Directors of the Company in his or its capacity as such to the
extent permitted and in accordance with the terms of Section 5.4(b) of the
Merger Agreement shall be deemed not to violate this Section 5(b).
6. STOP TRANSFER AND LEGEND. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of its Owned Shares, unless such
transfer is made in compliance with this Agreement.
7. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that her or she may
have.
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<PAGE> 6
9. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate only upon the termination of the Merger
Agreement in accordance with its terms. All representations and warranties
herein shall survive any termination of this Agreement.
10. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements; understandings, representations and warranties, both written and
oral, between the parties with respect to the subject matter hereof, including,
without limitation, a certain non-binding letter dated August 31, 1999 of Parent
to Company proposing terms for the transactions contemplated by the Merger
Agreement and this Agreement.
(b) The Stockholder agrees that this Agreement and the
respective rights and obligations of the Stockholder hereunder shall attach to
all Owned Shares.
(c) Except as provided below, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses. In the event any legal proceeding
is commenced by any party to this Agreement to enforce or recover damages for
any breach of the provisions hereof, the prevailing party in such legal
proceeding will be entitled to recover in such legal proceeding from the losing
party such prevailing party's costs and expenses incurred in connection with
such legal proceeding, including reasonable attorneys' fees. The provisions of
this Section 10(c) will survive the Closing hereunder.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Purchaser may assign
their rights and obligations hereunder to any assignee of Purchaser's rights and
obligations under the Merger Agreement. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(e) This Agreement may not be amended, changed, supplemented,
or otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
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<PAGE> 7
(f) All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, or (ii) upon receipt if sent by reputable overnight
courier service. Any party to this Agreement may notify any other party of any
changes to the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date specified in
such notice or three (3) business days after the notice is given, whichever is
later. All notices required to be given under this Agreement shall be sent to
the party using the addresses specified below:
If to Parent or Purchaser:
Riedman Corporation
45 East Avenue
Rochester, New York 14604
Attention: James R. Riedman, President
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke, LLP
700 Crossroads Building
Two State Street
Rochester, New York 14614
Attention: Harry P. Messina, Jr., Esq.
If to the Stockholder:
To the address indicated at the foot of this Agreement
with a copy to:
Choate, Hall & Stewart
One Exchange Place
Boston, Massachusetts 02109-2891
Attention: Harry A. Hanson, III, Esq.
and
Rudman & Winchell, LLC
84 Harlow Street
Bangor, Maine 04401
Attention: Gerald E. Rudman, Esq.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent
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<PAGE> 8
of such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable, provided the commercial objective of this
Agreement is not frustrated.
(h) Each of the parties hereto acknowledges and agrees that in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. Accordingly, it is agreed that the parties
hereto (i) shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to compel specific performance of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity, and (ii) will waive, in any proceeding for specific performance, the
defense of adequacy of a remedy at law. Each of the parties further agrees to
waive any requirement for the securing or posting of any bond or other security
in connection with any proceeding for specific performance.
(i) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) This Agreement shall be governed and construed in
accordance with the Maine Business Corporations Act (the "MBCA"), where
applicable, and otherwise with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
(k) This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter required.
(l) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any action for enforcement of any judgment in respect thereof
shall be brought exclusively in the courts of the State of New York or of the
United States of America for the Western District of New York or the state or
federal courts located in the State of Maine, to the
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<PAGE> 9
extent the proceeding involves an interpretation or enforcement of the MBCA,
and, by execution and delivery of this Agreement, each of the Tendering
Stockholder, Parent and Purchaser each hereby accept for themselves and in
respect of their respective property, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts and appellate courts thereof.
Each of the Stockholder, Parent and Purchaser irrevocably consents to service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, or by recognized international express carrier or delivery service, to
any Stockholder at the address referred to in Section 11(f).
(m) Each of the Stockholder, Parent and Purchaser each hereby
irrevocably waives any objection which he or she may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or otherwise brought in the courts
referred to above and hereby further irrevocably waives and agrees, to the
extent permitted by applicable law, not to plead or claim in any such court, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (i) any claim that he or she is not
personally subject to the jurisdiction of the above-named courts, (ii) that he
or she or his or her property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), (iii) that the proceeding in any
such court is brought in an inconvenient forum, (iv) that the venue of such
proceeding is improper or (v) that this Agreement, or the subject matter hereof,
may not be enforced in or by such court. Nothing herein shall affect the right
of any party hereto to serve process in any other manner permitted by law.
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed as of the day and year first above written.
PARENT: RIEDMAN CORPORATION
By:
Name: James R. Riedman
Title: President
PURCHASER: PSC ACQUISITION CORP.
By:
Name: James R. Riedman
Title: President
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<PAGE> 10
STOCKHOLDER:
Mildred K. Striar
-----------------------------------
Mildred K. Striar
-----------------------------------
Printed Name
3390 S. Ocean Blvd. #203
-----------------------------------
Street Address
Palm Beach, FL 33480
-----------------------------------
City, State and Zip Code
260,106
-----------------------------------
Number of Shares Owned
-10-
<PAGE> 1
Exhibit (c)(4)
TENDER AGREEMENT
This TENDER AGREEMENT dated as of October 6, 1999 (this "Agreement") is
by and among RIEDMAN CORPORATION, a corporation organized under the laws of New
York ("Parent"), PSC ACQUISITION CORP., a Maine corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and the undersigned individual (the
"Stockholder").
R E C I T A L S :
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Penobscot Corporation, a Maine corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as amended from time to time, the
"Merger Agreement"), pursuant to which Parent has agreed, among other things, to
cause Purchaser to commence a cash tender offer (as such tender offer may
hereafter be amended from time to time, the "Offer") to purchase any and all
shares of common stock, par value $1.00 per share, of the Company (the "Company
Common Stock"); and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that the Stockholder enter into this
Agreement.
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to the Stockholder,
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
<PAGE> 2
"Owned Shares" means, with respect to the Stockholder, the
shares of Company Common Stock described in Section 2(c), together with any
other shares of Company Common Stock acquired by the Stockholder after the date
hereof.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, estate,
unincorporated organization or other entity.
"Representative" means, with respect to any Person, such
Person's agents and representatives (including any investment banker, financial
advisor, agent, representative or expert retained by or acting on behalf of such
Person).
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the beneficial ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. REPRESENTATIONS AND WARRANTIES OF THE TENDERING STOCKHOLDERS. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes his or her valid and binding
agreement, enforceable against him in accordance with its terms except (i) to
the extent limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Stockholder is the record or beneficial owner, has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement, in each case with respect to his or her
Owned Shares, subject to applicable securities laws and the terms of this
Agreement.
(c) Upon the consummation of the Offer, Purchaser will acquire
good and marketable title to the Stockholder's Owned Shares, free and clear of
all Encumbrances, except for any Encumbrance arising under the Securities Act of
1933, as amended, or any applicable state securities laws. As of the date
hereof, the Stockholder owns the number of shares of Company Common Stock set
forth under the Stockholder's signature at the end of this Agreement. Effective
with the execution of this Agreement, the Stockholder hereby waive any rights
which he may have with respect to any other stockholder's Owned Shares under the
Stockholders' Agreement dated November 18, 1987.
-2-
<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represent and warrant, jointly and severally, to the
Stockholders as follows:
(a) Each of Parent and Purchaser is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, and each of them is in good standing under the laws of its
jurisdiction of incorporation. Parent and Purchaser have the corporate power and
authority to execute and deliver this Agreement and perform their respective
obligations hereunder. The execution and delivery by Parent and Purchaser of
this Agreement and the performance by Parent and Purchaser of their respective
obligations hereunder have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize the execution,
delivery or performance of this Agreement by Parent and Purchaser or the
consummation of the transactions contemplated hereby by Parent and Purchaser.
(b) This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and constitutes a valid and binding agreement
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms except (i) to the extent limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) None of the execution and delivery of this Agreement by
Parent or Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof shall (i) conflict with or result in any breach of the
Certificate of Incorporation or By-Laws of Parent or Purchaser, or (ii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, (iii) require on the part of Parent or the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, or
(iv) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Parent or Purchaser or any of their respective
properties or assets.
4. TENDER OF SHARES. The Stockholder shall tender or cause the record
owner thereof to tender into, pursuant to and in accordance with the terms of
the Offer, any and all of its Owned Shares. The parties agree that each
Stockholder will, for all Owned Shares tendered by it in the Offer and accepted
for payment and purchase by Purchaser, receive a price for each of its Owned
Shares equal to $11.75, or such higher per share consideration paid to other
stockholders who have tendered shares of Company Common
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<PAGE> 4
Stock into the Offer which have been accepted for payment and purchased by
Purchaser in the Offer (the "Offer Price"), but not any additional amounts paid
or payable to holders of Company Common Stock that do not participate in the
Offer by reason of rights of appraisal, rights of dissent or otherwise. The
Stockholder agrees not to withdraw any of its Owned Shares unless the Offer is
terminated or has expired without Purchaser having accepted for payment all of
the Shares tendered in the Offer.
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<PAGE> 5
5. RESTRICTIONS ON TRANSFER, OTHER PROXIES; NO SOLICITATION.
(a) Except as provided in Section 4 hereof, the Stockholder
shall not, until the termination of this Agreement, pursuant to Section 9,
directly or indirectly: (i) Transfer to any Person any or all of his or her
Owned Shares; or (ii) grant any proxies or powers of attorney, deposit any of
his Owned Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to such Owned Shares.
(b) Each Stockholder hereby agrees, solely in his capacity as
a stockholder of the Company, that from and after the date hereof until the
earlier of the termination of the Merger Agreement and the Effective Time, he
shall not, and such Stockholder shall cause his respective Affiliates not to,
directly or indirectly, (i) initiate, solicit or encourage (including by way of
furnishing non-public information) any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to an Acquisition Proposal or
(ii) engage in any negotiations or discussions with, or furnish any information
or data, to, any third party relating to an Acquisition Proposal. The
Stockholder will promptly inform Parent of the terms of any proposal,
discussion, negotiation or inquiry which the Stockholder may receive in respect
of any Acquisition Proposal. Any action taken by the Company or any member of
the Board of Directors of the Company in his or its capacity as such to the
extent permitted and in accordance with the terms of Section 5.4(b) of the
Merger Agreement shall be deemed not to violate this Section 5(b).
6. STOP TRANSFER AND LEGEND. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of its Owned Shares, unless such
transfer is made in compliance with this Agreement.
7. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that her or she may
have.
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<PAGE> 6
9. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate only upon the termination of the Merger
Agreement in accordance with its terms. All representations and warranties
herein shall survive any termination of this Agreement.
10. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements; understandings, representations and warranties, both written and
oral, between the parties with respect to the subject matter hereof, including,
without limitation, a certain non-binding letter dated August 31, 1999 of Parent
to Company proposing terms for the transactions contemplated by the Merger
Agreement and this Agreement.
(b) The Stockholder agrees that this Agreement and the
respective rights and obligations of the Stockholder hereunder shall attach to
all Owned Shares.
(c) Except as provided below, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses. In the event any legal proceeding
is commenced by any party to this Agreement to enforce or recover damages for
any breach of the provisions hereof, the prevailing party in such legal
proceeding will be entitled to recover in such legal proceeding from the losing
party such prevailing party's costs and expenses incurred in connection with
such legal proceeding, including reasonable attorneys' fees. The provisions of
this Section 10(c) will survive the Closing hereunder.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Purchaser may assign
their rights and obligations hereunder to any assignee of Purchaser's rights and
obligations under the Merger Agreement. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(e) This Agreement may not be amended, changed, supplemented,
or otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
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<PAGE> 7
(f) All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, or (ii) upon receipt if sent by reputable overnight
courier service. Any party to this Agreement may notify any other party of any
changes to the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date specified in
such notice or three (3) business days after the notice is given, whichever is
later. All notices required to be given under this Agreement shall be sent to
the party using the addresses specified below:
If to Parent or Purchaser:
Riedman Corporation
45 East Avenue
Rochester, New York 14604
Attention: James R. Riedman, President
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke, LLP
700 Crossroads Building
Two State Street
Rochester, New York 14614
Attention: Harry P. Messina, Jr., Esq.
If to the Stockholder:
To the address indicated at the foot of this Agreement
with a copy to:
Choate, Hall & Stewart
One Exchange Place
Boston, Massachusetts 02109-2891
Attention: Harry A. Hanson, III, Esq.
and
Rudman & Winchell, LLC
84 Harlow Street
Bangor, Maine 04401
Attention: Gerald E. Rudman, Esq.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent
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<PAGE> 8
of such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable, provided the commercial objective of this
Agreement is not frustrated.
(h) Each of the parties hereto acknowledges and agrees that in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. Accordingly, it is agreed that the parties
hereto (i) shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to compel specific performance of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity, and (ii) will waive, in any proceeding for specific performance, the
defense of adequacy of a remedy at law. Each of the parties further agrees to
waive any requirement for the securing or posting of any bond or other security
in connection with any proceeding for specific performance.
(i) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) This Agreement shall be governed and construed in
accordance with the Maine Business Corporations Act (the "MBCA"), where
applicable, and otherwise with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
(k) This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter required.
(l) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any action for enforcement of any judgment in respect thereof
shall be brought exclusively in the courts of the State of New York or of the
United States of America for the Western District of New York or the state or
federal courts located in the State of Maine, to the
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<PAGE> 9
extent the proceeding involves an interpretation or enforcement of the MBCA,
and, by execution and delivery of this Agreement, each of the Tendering
Stockholder, Parent and Purchaser each hereby accept for themselves and in
respect of their respective property, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts and appellate courts thereof.
Each of the Stockholder, Parent and Purchaser irrevocably consents to service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, or by recognized international express carrier or delivery service, to
any Stockholder at the address referred to in Section 11(f).
(m) Each of the Stockholder, Parent and Purchaser each hereby
irrevocably waives any objection which he or she may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or otherwise brought in the courts
referred to above and hereby further irrevocably waives and agrees, to the
extent permitted by applicable law, not to plead or claim in any such court, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (i) any claim that he or she is not
personally subject to the jurisdiction of the above-named courts, (ii) that he
or she or his or her property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), (iii) that the proceeding in any
such court is brought in an inconvenient forum, (iv) that the venue of such
proceeding is improper or (v) that this Agreement, or the subject matter hereof,
may not be enforced in or by such court. Nothing herein shall affect the right
of any party hereto to serve process in any other manner permitted by law.
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed as of the day and year first above written.
PARENT: RIEDMAN CORPORATION
By:
Name: James R. Riedman
Title: President
PURCHASER: PSC ACQUISITION CORP.
By:
Name: James R. Riedman
Title: President
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<PAGE> 10
STOCKHOLDER:
Paula G. Kagan
-----------------------------------
Paula G. Kagan
-----------------------------------
Printed Name
2001 Kagan Court; Redington North
-----------------------------------
Street Address
Carrabassett Valley, ME 04947
-----------------------------------
City, State and Zip Code
15,030
-----------------------------------
Number of Shares Owned
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<PAGE> 1
Exhibit (c)(5)
TENDER AGREEMENT
This TENDER AGREEMENT dated as of October 6, 1999 (this "Agreement") is
by and among RIEDMAN CORPORATION, a corporation organized under the laws of New
York ("Parent"), PSC ACQUISITION CORP., a Maine corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and the undersigned individual (the
"Stockholder").
R E C I T A L S :
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Penobscot Corporation, a Maine corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as amended from time to time, the
"Merger Agreement"), pursuant to which Parent has agreed, among other things, to
cause Purchaser to commence a cash tender offer (as such tender offer may
hereafter be amended from time to time, the "Offer") to purchase any and all
shares of common stock, par value $1.00 per share, of the Company (the "Company
Common Stock"); and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that the Stockholder enter into this
Agreement.
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to the Stockholder,
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
<PAGE> 2
"Owned Shares" means, with respect to the Stockholder, the
shares of Company Common Stock described in Section 2(c), together with any
other shares of Company Common Stock acquired by the Stockholder after the date
hereof.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, estate,
unincorporated organization or other entity.
"Representative" means, with respect to any Person, such
Person's agents and representatives (including any investment banker, financial
advisor, agent, representative or expert retained by or acting on behalf of such
Person).
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the beneficial ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. REPRESENTATIONS AND WARRANTIES OF THE TENDERING STOCKHOLDERS. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes his or her valid and binding
agreement, enforceable against him in accordance with its terms except (i) to
the extent limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Stockholder is the record or beneficial owner, has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement, in each case with respect to his or her
Owned Shares, subject to applicable securities laws and the terms of this
Agreement.
(c) Upon the consummation of the Offer, Purchaser will acquire
good and marketable title to the Stockholder's Owned Shares, free and clear of
all Encumbrances, except for any Encumbrance arising under the Securities Act of
1933, as amended, or any applicable state securities laws. As of the date
hereof, the Stockholder owns the number of shares of Company Common Stock set
forth under the Stockholder's signature at the end of this Agreement. Effective
with the execution of this Agreement, the Stockholder hereby waive any rights
which he may have with respect to any other stockholder's Owned Shares under the
Stockholders' Agreement dated November 18, 1987.
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<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represent and warrant, jointly and severally, to the
Stockholders as follows:
(a) Each of Parent and Purchaser is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, and each of them is in good standing under the laws of its
jurisdiction of incorporation. Parent and Purchaser have the corporate power and
authority to execute and deliver this Agreement and perform their respective
obligations hereunder. The execution and delivery by Parent and Purchaser of
this Agreement and the performance by Parent and Purchaser of their respective
obligations hereunder have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize the execution,
delivery or performance of this Agreement by Parent and Purchaser or the
consummation of the transactions contemplated hereby by Parent and Purchaser.
(b) This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and constitutes a valid and binding agreement
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms except (i) to the extent limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) None of the execution and delivery of this Agreement by
Parent or Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof shall (i) conflict with or result in any breach of the
Certificate of Incorporation or By-Laws of Parent or Purchaser, or (ii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, (iii) require on the part of Parent or the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, or
(iv) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Parent or Purchaser or any of their respective
properties or assets.
4. TENDER OF SHARES. The Stockholder shall tender or cause the record
owner thereof to tender into, pursuant to and in accordance with the terms of
the Offer, any and all of its Owned Shares. The parties agree that each
Stockholder will, for all Owned Shares tendered by it in the Offer and accepted
for payment and purchase by Purchaser, receive a price for each of its Owned
Shares equal to $11.75, or such higher per share consideration paid to other
stockholders who have tendered shares of Company Common
-3-
<PAGE> 4
Stock into the Offer which have been accepted for payment and purchased by
Purchaser in the Offer (the "Offer Price"), but not any additional amounts paid
or payable to holders of Company Common Stock that do not participate in the
Offer by reason of rights of appraisal, rights of dissent or otherwise. The
Stockholder agrees not to withdraw any of its Owned Shares unless the Offer is
terminated or has expired without Purchaser having accepted for payment all of
the Shares tendered in the Offer.
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<PAGE> 5
5. RESTRICTIONS ON TRANSFER, OTHER PROXIES; NO SOLICITATION.
(a) Except as provided in Section 4 hereof, the Stockholder
shall not, until the termination of this Agreement, pursuant to Section 9,
directly or indirectly: (i) Transfer to any Person any or all of his or her
Owned Shares; or (ii) grant any proxies or powers of attorney, deposit any of
his Owned Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to such Owned Shares.
(b) Each Stockholder hereby agrees, solely in his capacity as
a stockholder of the Company, that from and after the date hereof until the
earlier of the termination of the Merger Agreement and the Effective Time, he
shall not, and such Stockholder shall cause his respective Affiliates not to,
directly or indirectly, (i) initiate, solicit or encourage (including by way of
furnishing non-public information) any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to an Acquisition Proposal or
(ii) engage in any negotiations or discussions with, or furnish any information
or data, to, any third party relating to an Acquisition Proposal. The
Stockholder will promptly inform Parent of the terms of any proposal,
discussion, negotiation or inquiry which the Stockholder may receive in respect
of any Acquisition Proposal. Any action taken by the Company or any member of
the Board of Directors of the Company in his or its capacity as such to the
extent permitted and in accordance with the terms of Section 5.4(b) of the
Merger Agreement shall be deemed not to violate this Section 5(b).
6. STOP TRANSFER AND LEGEND. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of its Owned Shares, unless such
transfer is made in compliance with this Agreement.
7. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that her or she may
have.
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<PAGE> 6
9. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate only upon the termination of the Merger
Agreement in accordance with its terms. All representations and warranties
herein shall survive any termination of this Agreement.
10. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements; understandings, representations and warranties, both written and
oral, between the parties with respect to the subject matter hereof, including,
without limitation, a certain non-binding letter dated August 31, 1999 of Parent
to Company proposing terms for the transactions contemplated by the Merger
Agreement and this Agreement.
(b) The Stockholder agrees that this Agreement and the
respective rights and obligations of the Stockholder hereunder shall attach to
all Owned Shares.
(c) Except as provided below, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses. In the event any legal proceeding
is commenced by any party to this Agreement to enforce or recover damages for
any breach of the provisions hereof, the prevailing party in such legal
proceeding will be entitled to recover in such legal proceeding from the losing
party such prevailing party's costs and expenses incurred in connection with
such legal proceeding, including reasonable attorneys' fees. The provisions of
this Section 10(c) will survive the Closing hereunder.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Purchaser may assign
their rights and obligations hereunder to any assignee of Purchaser's rights and
obligations under the Merger Agreement. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(e) This Agreement may not be amended, changed, supplemented,
or otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
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<PAGE> 7
(f) All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, or (ii) upon receipt if sent by reputable overnight
courier service. Any party to this Agreement may notify any other party of any
changes to the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date specified in
such notice or three (3) business days after the notice is given, whichever is
later. All notices required to be given under this Agreement shall be sent to
the party using the addresses specified below:
If to Parent or Purchaser:
Riedman Corporation
45 East Avenue
Rochester, New York 14604
Attention: James R. Riedman, President
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke, LLP
700 Crossroads Building
Two State Street
Rochester, New York 14614
Attention: Harry P. Messina, Jr., Esq.
If to the Stockholder:
To the address indicated at the foot of this Agreement
with a copy to:
Choate, Hall & Stewart
One Exchange Place
Boston, Massachusetts 02109-2891
Attention: Harry A. Hanson, III, Esq.
and
Rudman & Winchell, LLC
84 Harlow Street
Bangor, Maine 04401
Attention: Gerald E. Rudman, Esq.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent
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<PAGE> 8
of such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable, provided the commercial objective of this
Agreement is not frustrated.
(h) Each of the parties hereto acknowledges and agrees that in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. Accordingly, it is agreed that the parties
hereto (i) shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to compel specific performance of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity, and (ii) will waive, in any proceeding for specific performance, the
defense of adequacy of a remedy at law. Each of the parties further agrees to
waive any requirement for the securing or posting of any bond or other security
in connection with any proceeding for specific performance.
(i) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) This Agreement shall be governed and construed in
accordance with the Maine Business Corporations Act (the "MBCA"), where
applicable, and otherwise with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
(k) This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter required.
(l) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any action for enforcement of any judgment in respect thereof
shall be brought exclusively in the courts of the State of New York or of the
United States of America for the Western District of New York or the state or
federal courts located in the State of Maine, to the
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<PAGE> 9
extent the proceeding involves an interpretation or enforcement of the MBCA,
and, by execution and delivery of this Agreement, each of the Tendering
Stockholder, Parent and Purchaser each hereby accept for themselves and in
respect of their respective property, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts and appellate courts thereof.
Each of the Stockholder, Parent and Purchaser irrevocably consents to service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, or by recognized international express carrier or delivery service, to
any Stockholder at the address referred to in Section 11(f).
(m) Each of the Stockholder, Parent and Purchaser each hereby
irrevocably waives any objection which he or she may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or otherwise brought in the courts
referred to above and hereby further irrevocably waives and agrees, to the
extent permitted by applicable law, not to plead or claim in any such court, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (i) any claim that he or she is not
personally subject to the jurisdiction of the above-named courts, (ii) that he
or she or his or her property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), (iii) that the proceeding in any
such court is brought in an inconvenient forum, (iv) that the venue of such
proceeding is improper or (v) that this Agreement, or the subject matter hereof,
may not be enforced in or by such court. Nothing herein shall affect the right
of any party hereto to serve process in any other manner permitted by law.
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed as of the day and year first above written.
PARENT: RIEDMAN CORPORATION
By:
Name: James R. Riedman
Title: President
PURCHASER: PSC ACQUISITION CORP.
By:
Name: James R. Riedman
Title: President
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<PAGE> 10
STOCKHOLDER:
Daniel G. Kagan
-----------------------------------
Daniel G. Kagan
-----------------------------------
Printed Name
36 Todd Brook Rd.
-----------------------------------
Street Address
Freemont, ME 04032
-----------------------------------
City, State and Zip Code
8,530
-----------------------------------
Number of Shares Owned
-10-
<PAGE> 1
Exhibit (c)(6)
TENDER AGREEMENT
This TENDER AGREEMENT dated as of October 6, 1999 (this "Agreement") is
by and among RIEDMAN CORPORATION, a corporation organized under the laws of New
York ("Parent"), PSC ACQUISITION CORP., a Maine corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and the undersigned individual (the
"Stockholder").
R E C I T A L S :
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Penobscot Corporation, a Maine corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as amended from time to time, the
"Merger Agreement"), pursuant to which Parent has agreed, among other things, to
cause Purchaser to commence a cash tender offer (as such tender offer may
hereafter be amended from time to time, the "Offer") to purchase any and all
shares of common stock, par value $1.00 per share, of the Company (the "Company
Common Stock"); and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that the Stockholder enter into this
Agreement.
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to the Stockholder,
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
<PAGE> 2
"Owned Shares" means, with respect to the Stockholder, the
shares of Company Common Stock described in Section 2(c), together with any
other shares of Company Common Stock acquired by the Stockholder after the date
hereof.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, estate,
unincorporated organization or other entity.
"Representative" means, with respect to any Person, such
Person's agents and representatives (including any investment banker, financial
advisor, agent, representative or expert retained by or acting on behalf of such
Person).
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the beneficial ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. REPRESENTATIONS AND WARRANTIES OF THE TENDERING STOCKHOLDERS. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes his or her valid and binding
agreement, enforceable against him in accordance with its terms except (i) to
the extent limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Stockholder is the record or beneficial owner, has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement, in each case with respect to his or her
Owned Shares, subject to applicable securities laws and the terms of this
Agreement.
(c) Upon the consummation of the Offer, Purchaser will acquire
good and marketable title to the Stockholder's Owned Shares, free and clear of
all Encumbrances, except for any Encumbrance arising under the Securities Act of
1933, as amended, or any applicable state securities laws. As of the date
hereof, the Stockholder owns the number of shares of Company Common Stock set
forth under the Stockholder's signature at the end of this Agreement. Effective
with the execution of this Agreement, the Stockholder hereby waive any rights
which he may have with respect to any other stockholder's Owned Shares under the
Stockholders' Agreement dated November 18, 1987.
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<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represent and warrant, jointly and severally, to the
Stockholders as follows:
(a) Each of Parent and Purchaser is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, and each of them is in good standing under the laws of its
jurisdiction of incorporation. Parent and Purchaser have the corporate power and
authority to execute and deliver this Agreement and perform their respective
obligations hereunder. The execution and delivery by Parent and Purchaser of
this Agreement and the performance by Parent and Purchaser of their respective
obligations hereunder have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize the execution,
delivery or performance of this Agreement by Parent and Purchaser or the
consummation of the transactions contemplated hereby by Parent and Purchaser.
(b) This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and constitutes a valid and binding agreement
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms except (i) to the extent limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) None of the execution and delivery of this Agreement by
Parent or Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof shall (i) conflict with or result in any breach of the
Certificate of Incorporation or By-Laws of Parent or Purchaser, or (ii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, (iii) require on the part of Parent or the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, or
(iv) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Parent or Purchaser or any of their respective
properties or assets.
4. TENDER OF SHARES. The Stockholder shall tender or cause the record
owner thereof to tender into, pursuant to and in accordance with the terms of
the Offer, any and all of its Owned Shares. The parties agree that each
Stockholder will, for all Owned Shares tendered by it in the Offer and accepted
for payment and purchase by Purchaser, receive a price for each of its Owned
Shares equal to $11.75, or such higher per share consideration paid to other
stockholders who have tendered shares of Company Common
-3-
<PAGE> 4
Stock into the Offer which have been accepted for payment and purchased by
Purchaser in the Offer (the "Offer Price"), but not any additional amounts paid
or payable to holders of Company Common Stock that do not participate in the
Offer by reason of rights of appraisal, rights of dissent or otherwise. The
Stockholder agrees not to withdraw any of its Owned Shares unless the Offer is
terminated or has expired without Purchaser having accepted for payment all of
the Shares tendered in the Offer.
-4-
<PAGE> 5
5. RESTRICTIONS ON TRANSFER, OTHER PROXIES; NO SOLICITATION.
(a) Except as provided in Section 4 hereof, the Stockholder
shall not, until the termination of this Agreement, pursuant to Section 9,
directly or indirectly: (i) Transfer to any Person any or all of his or her
Owned Shares; or (ii) grant any proxies or powers of attorney, deposit any of
his Owned Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to such Owned Shares.
(b) Each Stockholder hereby agrees, solely in his capacity as
a stockholder of the Company, that from and after the date hereof until the
earlier of the termination of the Merger Agreement and the Effective Time, he
shall not, and such Stockholder shall cause his respective Affiliates not to,
directly or indirectly, (i) initiate, solicit or encourage (including by way of
furnishing non-public information) any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to an Acquisition Proposal or
(ii) engage in any negotiations or discussions with, or furnish any information
or data, to, any third party relating to an Acquisition Proposal. The
Stockholder will promptly inform Parent of the terms of any proposal,
discussion, negotiation or inquiry which the Stockholder may receive in respect
of any Acquisition Proposal. Any action taken by the Company or any member of
the Board of Directors of the Company in his or its capacity as such to the
extent permitted and in accordance with the terms of Section 5.4(b) of the
Merger Agreement shall be deemed not to violate this Section 5(b).
6. STOP TRANSFER AND LEGEND. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of its Owned Shares, unless such
transfer is made in compliance with this Agreement.
7. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that her or she may
have.
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<PAGE> 6
9. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate only upon the termination of the Merger
Agreement in accordance with its terms. All representations and warranties
herein shall survive any termination of this Agreement.
10. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements; understandings, representations and warranties, both written and
oral, between the parties with respect to the subject matter hereof, including,
without limitation, a certain non-binding letter dated August 31, 1999 of Parent
to Company proposing terms for the transactions contemplated by the Merger
Agreement and this Agreement.
(b) The Stockholder agrees that this Agreement and the
respective rights and obligations of the Stockholder hereunder shall attach to
all Owned Shares.
(c) Except as provided below, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses. In the event any legal proceeding
is commenced by any party to this Agreement to enforce or recover damages for
any breach of the provisions hereof, the prevailing party in such legal
proceeding will be entitled to recover in such legal proceeding from the losing
party such prevailing party's costs and expenses incurred in connection with
such legal proceeding, including reasonable attorneys' fees. The provisions of
this Section 10(c) will survive the Closing hereunder.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Purchaser may assign
their rights and obligations hereunder to any assignee of Purchaser's rights and
obligations under the Merger Agreement. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(e) This Agreement may not be amended, changed, supplemented,
or otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
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<PAGE> 7
(f) All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, or (ii) upon receipt if sent by reputable overnight
courier service. Any party to this Agreement may notify any other party of any
changes to the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date specified in
such notice or three (3) business days after the notice is given, whichever is
later. All notices required to be given under this Agreement shall be sent to
the party using the addresses specified below:
If to Parent or Purchaser:
Riedman Corporation
45 East Avenue
Rochester, New York 14604
Attention: James R. Riedman, President
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke, LLP
700 Crossroads Building
Two State Street
Rochester, New York 14614
Attention: Harry P. Messina, Jr., Esq.
If to the Stockholder:
To the address indicated at the foot of this Agreement
with a copy to:
Choate, Hall & Stewart
One Exchange Place
Boston, Massachusetts 02109-2891
Attention: Harry A. Hanson, III, Esq.
and
Rudman & Winchell, LLC
84 Harlow Street
Bangor, Maine 04401
Attention: Gerald E. Rudman, Esq.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent
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<PAGE> 8
of such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable, provided the commercial objective of this
Agreement is not frustrated.
(h) Each of the parties hereto acknowledges and agrees that in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. Accordingly, it is agreed that the parties
hereto (i) shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to compel specific performance of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity, and (ii) will waive, in any proceeding for specific performance, the
defense of adequacy of a remedy at law. Each of the parties further agrees to
waive any requirement for the securing or posting of any bond or other security
in connection with any proceeding for specific performance.
(i) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) This Agreement shall be governed and construed in
accordance with the Maine Business Corporations Act (the "MBCA"), where
applicable, and otherwise with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
(k) This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter required.
(l) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any action for enforcement of any judgment in respect thereof
shall be brought exclusively in the courts of the State of New York or of the
United States of America for the Western District of New York or the state or
federal courts located in the State of Maine, to the
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<PAGE> 9
extent the proceeding involves an interpretation or enforcement of the MBCA,
and, by execution and delivery of this Agreement, each of the Tendering
Stockholder, Parent and Purchaser each hereby accept for themselves and in
respect of their respective property, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts and appellate courts thereof.
Each of the Stockholder, Parent and Purchaser irrevocably consents to service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, or by recognized international express carrier or delivery service, to
any Stockholder at the address referred to in Section 11(f).
(m) Each of the Stockholder, Parent and Purchaser each hereby
irrevocably waives any objection which he or she may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or otherwise brought in the courts
referred to above and hereby further irrevocably waives and agrees, to the
extent permitted by applicable law, not to plead or claim in any such court, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (i) any claim that he or she is not
personally subject to the jurisdiction of the above-named courts, (ii) that he
or she or his or her property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), (iii) that the proceeding in any
such court is brought in an inconvenient forum, (iv) that the venue of such
proceeding is improper or (v) that this Agreement, or the subject matter hereof,
may not be enforced in or by such court. Nothing herein shall affect the right
of any party hereto to serve process in any other manner permitted by law.
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed as of the day and year first above written.
PARENT: RIEDMAN CORPORATION
By:
Name: James R. Riedman
Title: President
PURCHASER: PSC ACQUISITION CORP.
By:
Name: James R. Riedman
Title: President
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<PAGE> 10
STOCKHOLDER:
Leslie J. Kagan
-----------------------------------
Leslie J. Kagan
-----------------------------------
Printed Name
124 Highland Street
-----------------------------------
Street Address
W. Newton, MA 02465
-----------------------------------
City, State and Zip Code
8,530
-----------------------------------
Number of Shares Owned
-10-
<PAGE> 1
Exhibit (c)(7)
TENDER AGREEMENT
This TENDER AGREEMENT dated as of October 6, 1999 (this "Agreement") is
by and among RIEDMAN CORPORATION, a corporation organized under the laws of New
York ("Parent"), PSC ACQUISITION CORP., a Maine corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and the undersigned individual (the
"Stockholder").
R E C I T A L S :
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Penobscot Corporation, a Maine corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as amended from time to time, the
"Merger Agreement"), pursuant to which Parent has agreed, among other things, to
cause Purchaser to commence a cash tender offer (as such tender offer may
hereafter be amended from time to time, the "Offer") to purchase any and all
shares of common stock, par value $1.00 per share, of the Company (the "Company
Common Stock"); and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that the Stockholder enter into this
Agreement.
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to the Stockholder,
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
<PAGE> 2
"Owned Shares" means, with respect to the Stockholder, the
shares of Company Common Stock described in Section 2(c), together with any
other shares of Company Common Stock acquired by the Stockholder after the date
hereof.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, estate,
unincorporated organization or other entity.
"Representative" means, with respect to any Person, such
Person's agents and representatives (including any investment banker, financial
advisor, agent, representative or expert retained by or acting on behalf of such
Person).
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the beneficial ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. REPRESENTATIONS AND WARRANTIES OF THE TENDERING STOCKHOLDERS. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes his or her valid and binding
agreement, enforceable against him in accordance with its terms except (i) to
the extent limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Stockholder is the record or beneficial owner, has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement, in each case with respect to his or her
Owned Shares, subject to applicable securities laws and the terms of this
Agreement.
(c) Upon the consummation of the Offer, Purchaser will acquire
good and marketable title to the Stockholder's Owned Shares, free and clear of
all Encumbrances, except for any Encumbrance arising under the Securities Act of
1933, as amended, or any applicable state securities laws. As of the date
hereof, the Stockholder owns the number of shares of Company Common Stock set
forth under the Stockholder's signature at the end of this Agreement. Effective
with the execution of this Agreement, the Stockholder hereby waive any rights
which he may have with respect to any other stockholder's Owned Shares under the
Stockholders' Agreement dated November 18, 1987.
-2-
<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represent and warrant, jointly and severally, to the
Stockholders as follows:
(a) Each of Parent and Purchaser is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, and each of them is in good standing under the laws of its
jurisdiction of incorporation. Parent and Purchaser have the corporate power and
authority to execute and deliver this Agreement and perform their respective
obligations hereunder. The execution and delivery by Parent and Purchaser of
this Agreement and the performance by Parent and Purchaser of their respective
obligations hereunder have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize the execution,
delivery or performance of this Agreement by Parent and Purchaser or the
consummation of the transactions contemplated hereby by Parent and Purchaser.
(b) This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and constitutes a valid and binding agreement
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms except (i) to the extent limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) None of the execution and delivery of this Agreement by
Parent or Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof shall (i) conflict with or result in any breach of the
Certificate of Incorporation or By-Laws of Parent or Purchaser, or (ii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, (iii) require on the part of Parent or the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, or
(iv) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Parent or Purchaser or any of their respective
properties or assets.
4. TENDER OF SHARES. The Stockholder shall tender or cause the record
owner thereof to tender into, pursuant to and in accordance with the terms of
the Offer, any and all of its Owned Shares. The parties agree that each
Stockholder will, for all Owned Shares tendered by it in the Offer and accepted
for payment and purchase by Purchaser, receive a price for each of its Owned
Shares equal to $11.75, or such higher per share consideration paid to other
stockholders who have tendered shares of Company Common
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<PAGE> 4
Stock into the Offer which have been accepted for payment and purchased by
Purchaser in the Offer (the "Offer Price"), but not any additional amounts paid
or payable to holders of Company Common Stock that do not participate in the
Offer by reason of rights of appraisal, rights of dissent or otherwise. The
Stockholder agrees not to withdraw any of its Owned Shares unless the Offer is
terminated or has expired without Purchaser having accepted for payment all of
the Shares tendered in the Offer.
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<PAGE> 5
5. RESTRICTIONS ON TRANSFER, OTHER PROXIES; NO SOLICITATION.
(a) Except as provided in Section 4 hereof, the Stockholder
shall not, until the termination of this Agreement, pursuant to Section 9,
directly or indirectly: (i) Transfer to any Person any or all of his or her
Owned Shares; or (ii) grant any proxies or powers of attorney, deposit any of
his Owned Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to such Owned Shares.
(b) Each Stockholder hereby agrees, solely in his capacity as
a stockholder of the Company, that from and after the date hereof until the
earlier of the termination of the Merger Agreement and the Effective Time, he
shall not, and such Stockholder shall cause his respective Affiliates not to,
directly or indirectly, (i) initiate, solicit or encourage (including by way of
furnishing non-public information) any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to an Acquisition Proposal or
(ii) engage in any negotiations or discussions with, or furnish any information
or data, to, any third party relating to an Acquisition Proposal. The
Stockholder will promptly inform Parent of the terms of any proposal,
discussion, negotiation or inquiry which the Stockholder may receive in respect
of any Acquisition Proposal. Any action taken by the Company or any member of
the Board of Directors of the Company in his or its capacity as such to the
extent permitted and in accordance with the terms of Section 5.4(b) of the
Merger Agreement shall be deemed not to violate this Section 5(b).
6. STOP TRANSFER AND LEGEND. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of its Owned Shares, unless such
transfer is made in compliance with this Agreement.
7. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that her or she may
have.
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<PAGE> 6
9. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate only upon the termination of the Merger
Agreement in accordance with its terms. All representations and warranties
herein shall survive any termination of this Agreement.
10. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements; understandings, representations and warranties, both written and
oral, between the parties with respect to the subject matter hereof, including,
without limitation, a certain non-binding letter dated August 31, 1999 of Parent
to Company proposing terms for the transactions contemplated by the Merger
Agreement and this Agreement.
(b) The Stockholder agrees that this Agreement and the
respective rights and obligations of the Stockholder hereunder shall attach to
all Owned Shares.
(c) Except as provided below, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses. In the event any legal proceeding
is commenced by any party to this Agreement to enforce or recover damages for
any breach of the provisions hereof, the prevailing party in such legal
proceeding will be entitled to recover in such legal proceeding from the losing
party such prevailing party's costs and expenses incurred in connection with
such legal proceeding, including reasonable attorneys' fees. The provisions of
this Section 10(c) will survive the Closing hereunder.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Purchaser may assign
their rights and obligations hereunder to any assignee of Purchaser's rights and
obligations under the Merger Agreement. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(e) This Agreement may not be amended, changed, supplemented,
or otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
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<PAGE> 7
(f) All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, or (ii) upon receipt if sent by reputable overnight
courier service. Any party to this Agreement may notify any other party of any
changes to the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date specified in
such notice or three (3) business days after the notice is given, whichever is
later. All notices required to be given under this Agreement shall be sent to
the party using the addresses specified below:
If to Parent or Purchaser:
Riedman Corporation
45 East Avenue
Rochester, New York 14604
Attention: James R. Riedman, President
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke, LLP
700 Crossroads Building
Two State Street
Rochester, New York 14614
Attention: Harry P. Messina, Jr., Esq.
If to the Stockholder:
To the address indicated at the foot of this Agreement
with a copy to:
Choate, Hall & Stewart
One Exchange Place
Boston, Massachusetts 02109-2891
Attention: Harry A. Hanson, III, Esq.
and
Rudman & Winchell, LLC
84 Harlow Street
Bangor, Maine 04401
Attention: Gerald E. Rudman, Esq.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent
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<PAGE> 8
of such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable, provided the commercial objective of this
Agreement is not frustrated.
(h) Each of the parties hereto acknowledges and agrees that in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. Accordingly, it is agreed that the parties
hereto (i) shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to compel specific performance of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity, and (ii) will waive, in any proceeding for specific performance, the
defense of adequacy of a remedy at law. Each of the parties further agrees to
waive any requirement for the securing or posting of any bond or other security
in connection with any proceeding for specific performance.
(i) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) This Agreement shall be governed and construed in
accordance with the Maine Business Corporations Act (the "MBCA"), where
applicable, and otherwise with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
(k) This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter required.
(l) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any action for enforcement of any judgment in respect thereof
shall be brought exclusively in the courts of the State of New York or of the
United States of America for the Western District of New York or the state or
federal courts located in the State of Maine, to the
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<PAGE> 9
extent the proceeding involves an interpretation or enforcement of the MBCA,
and, by execution and delivery of this Agreement, each of the Tendering
Stockholder, Parent and Purchaser each hereby accept for themselves and in
respect of their respective property, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts and appellate courts thereof.
Each of the Stockholder, Parent and Purchaser irrevocably consents to service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, or by recognized international express carrier or delivery service, to
any Stockholder at the address referred to in Section 11(f).
(m) Each of the Stockholder, Parent and Purchaser each hereby
irrevocably waives any objection which he or she may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or otherwise brought in the courts
referred to above and hereby further irrevocably waives and agrees, to the
extent permitted by applicable law, not to plead or claim in any such court, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (i) any claim that he or she is not
personally subject to the jurisdiction of the above-named courts, (ii) that he
or she or his or her property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), (iii) that the proceeding in any
such court is brought in an inconvenient forum, (iv) that the venue of such
proceeding is improper or (v) that this Agreement, or the subject matter hereof,
may not be enforced in or by such court. Nothing herein shall affect the right
of any party hereto to serve process in any other manner permitted by law.
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed as of the day and year first above written.
PARENT: RIEDMAN CORPORATION
By:
Name: James R. Riedman
Title: President
PURCHASER: PSC ACQUISITION CORP.
By:
Name: James R. Riedman
Title: President
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<PAGE> 10
STOCKHOLDER:
Candance K. Platz
-----------------------------------
Candance K. Platz
-----------------------------------
Printed Name
163 Torrey Rd.
-----------------------------------
Street Address
Poland, ME 04274
-----------------------------------
City, State and Zip Code
8,530
-----------------------------------
Number of Shares Owned
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<PAGE> 1
Exhibit (c)(8)
TENDER AGREEMENT
This TENDER AGREEMENT dated as of October 6, 1999 (this "Agreement") is
by and among RIEDMAN CORPORATION, a corporation organized under the laws of New
York ("Parent"), PSC ACQUISITION CORP., a Maine corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and the undersigned individual (the
"Stockholder").
R E C I T A L S :
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Penobscot Corporation, a Maine corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as amended from time to time, the
"Merger Agreement"), pursuant to which Parent has agreed, among other things, to
cause Purchaser to commence a cash tender offer (as such tender offer may
hereafter be amended from time to time, the "Offer") to purchase any and all
shares of common stock, par value $1.00 per share, of the Company (the "Company
Common Stock"); and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that the Stockholder enter into this
Agreement.
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to the Stockholder,
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
<PAGE> 2
"Owned Shares" means, with respect to the Stockholder, the
shares of Company Common Stock described in Section 2(c), together with any
other shares of Company Common Stock acquired by the Stockholder after the date
hereof.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, estate,
unincorporated organization or other entity.
"Representative" means, with respect to any Person, such
Person's agents and representatives (including any investment banker, financial
advisor, agent, representative or expert retained by or acting on behalf of such
Person).
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the beneficial ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. REPRESENTATIONS AND WARRANTIES OF THE TENDERING STOCKHOLDERS. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes his or her valid and binding
agreement, enforceable against him in accordance with its terms except (i) to
the extent limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Stockholder is the record or beneficial owner, has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement, in each case with respect to his or her
Owned Shares, subject to applicable securities laws and the terms of this
Agreement.
(c) Upon the consummation of the Offer, Purchaser will acquire
good and marketable title to the Stockholder's Owned Shares, free and clear of
all Encumbrances, except for any Encumbrance arising under the Securities Act of
1933, as amended, or any applicable state securities laws. As of the date
hereof, the Stockholder owns the number of shares of Company Common Stock set
forth under the Stockholder's signature at the end of this Agreement. Effective
with the execution of this Agreement, the Stockholder hereby waive any rights
which he may have with respect to any other stockholder's Owned Shares under the
Stockholders' Agreement dated November 18, 1987.
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<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represent and warrant, jointly and severally, to the
Stockholders as follows:
(a) Each of Parent and Purchaser is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, and each of them is in good standing under the laws of its
jurisdiction of incorporation. Parent and Purchaser have the corporate power and
authority to execute and deliver this Agreement and perform their respective
obligations hereunder. The execution and delivery by Parent and Purchaser of
this Agreement and the performance by Parent and Purchaser of their respective
obligations hereunder have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize the execution,
delivery or performance of this Agreement by Parent and Purchaser or the
consummation of the transactions contemplated hereby by Parent and Purchaser.
(b) This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and constitutes a valid and binding agreement
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms except (i) to the extent limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) None of the execution and delivery of this Agreement by
Parent or Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof shall (i) conflict with or result in any breach of the
Certificate of Incorporation or By-Laws of Parent or Purchaser, or (ii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, (iii) require on the part of Parent or the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, or
(iv) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Parent or Purchaser or any of their respective
properties or assets.
4. TENDER OF SHARES. The Stockholder shall tender or cause the record
owner thereof to tender into, pursuant to and in accordance with the terms of
the Offer, any and all of its Owned Shares. The parties agree that each
Stockholder will, for all Owned Shares tendered by it in the Offer and accepted
for payment and purchase by Purchaser, receive a price for each of its Owned
Shares equal to $11.75, or such higher per share consideration paid to other
stockholders who have tendered shares of Company Common
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<PAGE> 4
Stock into the Offer which have been accepted for payment and purchased by
Purchaser in the Offer (the "Offer Price"), but not any additional amounts paid
or payable to holders of Company Common Stock that do not participate in the
Offer by reason of rights of appraisal, rights of dissent or otherwise. The
Stockholder agrees not to withdraw any of its Owned Shares unless the Offer is
terminated or has expired without Purchaser having accepted for payment all of
the Shares tendered in the Offer.
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<PAGE> 5
5. RESTRICTIONS ON TRANSFER, OTHER PROXIES; NO SOLICITATION.
(a) Except as provided in Section 4 hereof, the Stockholder
shall not, until the termination of this Agreement, pursuant to Section 9,
directly or indirectly: (i) Transfer to any Person any or all of his or her
Owned Shares; or (ii) grant any proxies or powers of attorney, deposit any of
his Owned Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to such Owned Shares.
(b) Each Stockholder hereby agrees, solely in his capacity as
a stockholder of the Company, that from and after the date hereof until the
earlier of the termination of the Merger Agreement and the Effective Time, he
shall not, and such Stockholder shall cause his respective Affiliates not to,
directly or indirectly, (i) initiate, solicit or encourage (including by way of
furnishing non-public information) any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to an Acquisition Proposal or
(ii) engage in any negotiations or discussions with, or furnish any information
or data, to, any third party relating to an Acquisition Proposal. The
Stockholder will promptly inform Parent of the terms of any proposal,
discussion, negotiation or inquiry which the Stockholder may receive in respect
of any Acquisition Proposal. Any action taken by the Company or any member of
the Board of Directors of the Company in his or its capacity as such to the
extent permitted and in accordance with the terms of Section 5.4(b) of the
Merger Agreement shall be deemed not to violate this Section 5(b).
6. STOP TRANSFER AND LEGEND. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of its Owned Shares, unless such
transfer is made in compliance with this Agreement.
7. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that her or she may
have.
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<PAGE> 6
9. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate only upon the termination of the Merger
Agreement in accordance with its terms. All representations and warranties
herein shall survive any termination of this Agreement.
10. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements; understandings, representations and warranties, both written and
oral, between the parties with respect to the subject matter hereof, including,
without limitation, a certain non-binding letter dated August 31, 1999 of Parent
to Company proposing terms for the transactions contemplated by the Merger
Agreement and this Agreement.
(b) The Stockholder agrees that this Agreement and the
respective rights and obligations of the Stockholder hereunder shall attach to
all Owned Shares.
(c) Except as provided below, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses. In the event any legal proceeding
is commenced by any party to this Agreement to enforce or recover damages for
any breach of the provisions hereof, the prevailing party in such legal
proceeding will be entitled to recover in such legal proceeding from the losing
party such prevailing party's costs and expenses incurred in connection with
such legal proceeding, including reasonable attorneys' fees. The provisions of
this Section 10(c) will survive the Closing hereunder.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Purchaser may assign
their rights and obligations hereunder to any assignee of Purchaser's rights and
obligations under the Merger Agreement. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(e) This Agreement may not be amended, changed, supplemented,
or otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
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<PAGE> 7
(f) All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, or (ii) upon receipt if sent by reputable overnight
courier service. Any party to this Agreement may notify any other party of any
changes to the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date specified in
such notice or three (3) business days after the notice is given, whichever is
later. All notices required to be given under this Agreement shall be sent to
the party using the addresses specified below:
If to Parent or Purchaser:
Riedman Corporation
45 East Avenue
Rochester, New York 14604
Attention: James R. Riedman, President
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke, LLP
700 Crossroads Building
Two State Street
Rochester, New York 14614
Attention: Harry P. Messina, Jr., Esq.
If to the Stockholder:
To the address indicated at the foot of this Agreement
with a copy to:
Choate, Hall & Stewart
One Exchange Place
Boston, Massachusetts 02109-2891
Attention: Harry A. Hanson, III, Esq.
and
Rudman & Winchell, LLC
84 Harlow Street
Bangor, Maine 04401
Attention: Gerald E. Rudman, Esq.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent
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<PAGE> 8
of such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable, provided the commercial objective of this
Agreement is not frustrated.
(h) Each of the parties hereto acknowledges and agrees that in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. Accordingly, it is agreed that the parties
hereto (i) shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to compel specific performance of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity, and (ii) will waive, in any proceeding for specific performance, the
defense of adequacy of a remedy at law. Each of the parties further agrees to
waive any requirement for the securing or posting of any bond or other security
in connection with any proceeding for specific performance.
(i) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) This Agreement shall be governed and construed in
accordance with the Maine Business Corporations Act (the "MBCA"), where
applicable, and otherwise with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
(k) This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter required.
(l) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any action for enforcement of any judgment in respect thereof
shall be brought exclusively in the courts of the State of New York or of the
United States of America for the Western District of New York or the state or
federal courts located in the State of Maine, to the
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<PAGE> 9
extent the proceeding involves an interpretation or enforcement of the MBCA,
and, by execution and delivery of this Agreement, each of the Tendering
Stockholder, Parent and Purchaser each hereby accept for themselves and in
respect of their respective property, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts and appellate courts thereof.
Each of the Stockholder, Parent and Purchaser irrevocably consents to service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, or by recognized international express carrier or delivery service, to
any Stockholder at the address referred to in Section 11(f).
(m) Each of the Stockholder, Parent and Purchaser each hereby
irrevocably waives any objection which he or she may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or otherwise brought in the courts
referred to above and hereby further irrevocably waives and agrees, to the
extent permitted by applicable law, not to plead or claim in any such court, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (i) any claim that he or she is not
personally subject to the jurisdiction of the above-named courts, (ii) that he
or she or his or her property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), (iii) that the proceeding in any
such court is brought in an inconvenient forum, (iv) that the venue of such
proceeding is improper or (v) that this Agreement, or the subject matter hereof,
may not be enforced in or by such court. Nothing herein shall affect the right
of any party hereto to serve process in any other manner permitted by law.
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed as of the day and year first above written.
PARENT: RIEDMAN CORPORATION
By:
Name: James R. Riedman
Title: President
PURCHASER: PSC ACQUISITION CORP.
By:
Name: James R. Riedman
Title: President
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<PAGE> 10
STOCKHOLDER:
Nikki L. Kagan
-----------------------------------
Nikki L. Kagan
-----------------------------------
Printed Name
Zeitlin #17/8
-----------------------------------
Street Address
Tel Aviv 64855 Israel
-----------------------------------
City, State and Zip Code
8,530
-----------------------------------
Number of Shares Owned
-10-
<PAGE> 1
Exhibit (c)(9)
TENDER AGREEMENT
This TENDER AGREEMENT dated as of October 6, 1999 (this "Agreement") is
by and among RIEDMAN CORPORATION, a corporation organized under the laws of New
York ("Parent"), PSC ACQUISITION CORP., a Maine corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and the undersigned individual (the
"Stockholder").
R E C I T A L S :
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Penobscot Corporation, a Maine corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as amended from time to time, the
"Merger Agreement"), pursuant to which Parent has agreed, among other things, to
cause Purchaser to commence a cash tender offer (as such tender offer may
hereafter be amended from time to time, the "Offer") to purchase any and all
shares of common stock, par value $1.00 per share, of the Company (the "Company
Common Stock"); and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that the Stockholder enter into this
Agreement.
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to the Stockholder,
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
<PAGE> 2
"Owned Shares" means, with respect to the Stockholder, the
shares of Company Common Stock described in Section 2(c), together with any
other shares of Company Common Stock acquired by the Stockholder after the date
hereof.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, estate,
unincorporated organization or other entity.
"Representative" means, with respect to any Person, such
Person's agents and representatives (including any investment banker, financial
advisor, agent, representative or expert retained by or acting on behalf of such
Person).
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the beneficial ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. REPRESENTATIONS AND WARRANTIES OF THE TENDERING STOCKHOLDERS. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes his or her valid and binding
agreement, enforceable against him in accordance with its terms except (i) to
the extent limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Stockholder is the record or beneficial owner, has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement, in each case with respect to his or her
Owned Shares, subject to applicable securities laws and the terms of this
Agreement.
(c) Upon the consummation of the Offer, Purchaser will acquire
good and marketable title to the Stockholder's Owned Shares, free and clear of
all Encumbrances, except for any Encumbrance arising under the Securities Act of
1933, as amended, or any applicable state securities laws. As of the date
hereof, the Stockholder owns the number of shares of Company Common Stock set
forth under the Stockholder's signature at the end of this Agreement. Effective
with the execution of this Agreement, the Stockholder hereby waive any rights
which he may have with respect to any other stockholder's Owned Shares under the
Stockholders' Agreement dated November 18, 1987.
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<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represent and warrant, jointly and severally, to the
Stockholders as follows:
(a) Each of Parent and Purchaser is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, and each of them is in good standing under the laws of its
jurisdiction of incorporation. Parent and Purchaser have the corporate power and
authority to execute and deliver this Agreement and perform their respective
obligations hereunder. The execution and delivery by Parent and Purchaser of
this Agreement and the performance by Parent and Purchaser of their respective
obligations hereunder have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize the execution,
delivery or performance of this Agreement by Parent and Purchaser or the
consummation of the transactions contemplated hereby by Parent and Purchaser.
(b) This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and constitutes a valid and binding agreement
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms except (i) to the extent limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) None of the execution and delivery of this Agreement by
Parent or Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof shall (i) conflict with or result in any breach of the
Certificate of Incorporation or By-Laws of Parent or Purchaser, or (ii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, (iii) require on the part of Parent or the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, or
(iv) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Parent or Purchaser or any of their respective
properties or assets.
4. TENDER OF SHARES. The Stockholder shall tender or cause the record
owner thereof to tender into, pursuant to and in accordance with the terms of
the Offer, any and all of its Owned Shares. The parties agree that each
Stockholder will, for all Owned Shares tendered by it in the Offer and accepted
for payment and purchase by Purchaser, receive a price for each of its Owned
Shares equal to $11.75, or such higher per share consideration paid to other
stockholders who have tendered shares of Company Common
-3-
<PAGE> 4
Stock into the Offer which have been accepted for payment and purchased by
Purchaser in the Offer (the "Offer Price"), but not any additional amounts paid
or payable to holders of Company Common Stock that do not participate in the
Offer by reason of rights of appraisal, rights of dissent or otherwise. The
Stockholder agrees not to withdraw any of its Owned Shares unless the Offer is
terminated or has expired without Purchaser having accepted for payment all of
the Shares tendered in the Offer.
-4-
<PAGE> 5
5. RESTRICTIONS ON TRANSFER, OTHER PROXIES; NO SOLICITATION.
(a) Except as provided in Section 4 hereof, the Stockholder
shall not, until the termination of this Agreement, pursuant to Section 9,
directly or indirectly: (i) Transfer to any Person any or all of his or her
Owned Shares; or (ii) grant any proxies or powers of attorney, deposit any of
his Owned Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to such Owned Shares.
(b) Each Stockholder hereby agrees, solely in his capacity as
a stockholder of the Company, that from and after the date hereof until the
earlier of the termination of the Merger Agreement and the Effective Time, he
shall not, and such Stockholder shall cause his respective Affiliates not to,
directly or indirectly, (i) initiate, solicit or encourage (including by way of
furnishing non-public information) any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to an Acquisition Proposal or
(ii) engage in any negotiations or discussions with, or furnish any information
or data, to, any third party relating to an Acquisition Proposal. The
Stockholder will promptly inform Parent of the terms of any proposal,
discussion, negotiation or inquiry which the Stockholder may receive in respect
of any Acquisition Proposal. Any action taken by the Company or any member of
the Board of Directors of the Company in his or its capacity as such to the
extent permitted and in accordance with the terms of Section 5.4(b) of the
Merger Agreement shall be deemed not to violate this Section 5(b).
6. STOP TRANSFER AND LEGEND. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of its Owned Shares, unless such
transfer is made in compliance with this Agreement.
7. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that her or she may
have.
-5-
<PAGE> 6
9. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate only upon the termination of the Merger
Agreement in accordance with its terms. All representations and warranties
herein shall survive any termination of this Agreement.
10. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements; understandings, representations and warranties, both written and
oral, between the parties with respect to the subject matter hereof, including,
without limitation, a certain non-binding letter dated August 31, 1999 of Parent
to Company proposing terms for the transactions contemplated by the Merger
Agreement and this Agreement.
(b) The Stockholder agrees that this Agreement and the
respective rights and obligations of the Stockholder hereunder shall attach to
all Owned Shares.
(c) Except as provided below, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses. In the event any legal proceeding
is commenced by any party to this Agreement to enforce or recover damages for
any breach of the provisions hereof, the prevailing party in such legal
proceeding will be entitled to recover in such legal proceeding from the losing
party such prevailing party's costs and expenses incurred in connection with
such legal proceeding, including reasonable attorneys' fees. The provisions of
this Section 10(c) will survive the Closing hereunder.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Purchaser may assign
their rights and obligations hereunder to any assignee of Purchaser's rights and
obligations under the Merger Agreement. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(e) This Agreement may not be amended, changed, supplemented,
or otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
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<PAGE> 7
(f) All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, or (ii) upon receipt if sent by reputable overnight
courier service. Any party to this Agreement may notify any other party of any
changes to the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date specified in
such notice or three (3) business days after the notice is given, whichever is
later. All notices required to be given under this Agreement shall be sent to
the party using the addresses specified below:
If to Parent or Purchaser:
Riedman Corporation
45 East Avenue
Rochester, New York 14604
Attention: James R. Riedman, President
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke, LLP
700 Crossroads Building
Two State Street
Rochester, New York 14614
Attention: Harry P. Messina, Jr., Esq.
If to the Stockholder:
To the address indicated at the foot of this Agreement
with a copy to:
Choate, Hall & Stewart
One Exchange Place
Boston, Massachusetts 02109-2891
Attention: Harry A. Hanson, III, Esq.
and
Rudman & Winchell, LLC
84 Harlow Street
Bangor, Maine 04401
Attention: Gerald E. Rudman, Esq.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent
-7-
<PAGE> 8
of such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable, provided the commercial objective of this
Agreement is not frustrated.
(h) Each of the parties hereto acknowledges and agrees that in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. Accordingly, it is agreed that the parties
hereto (i) shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to compel specific performance of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity, and (ii) will waive, in any proceeding for specific performance, the
defense of adequacy of a remedy at law. Each of the parties further agrees to
waive any requirement for the securing or posting of any bond or other security
in connection with any proceeding for specific performance.
(i) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) This Agreement shall be governed and construed in
accordance with the Maine Business Corporations Act (the "MBCA"), where
applicable, and otherwise with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
(k) This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter required.
(l) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any action for enforcement of any judgment in respect thereof
shall be brought exclusively in the courts of the State of New York or of the
United States of America for the Western District of New York or the state or
federal courts located in the State of Maine, to the
-8-
<PAGE> 9
extent the proceeding involves an interpretation or enforcement of the MBCA,
and, by execution and delivery of this Agreement, each of the Tendering
Stockholder, Parent and Purchaser each hereby accept for themselves and in
respect of their respective property, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts and appellate courts thereof.
Each of the Stockholder, Parent and Purchaser irrevocably consents to service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, or by recognized international express carrier or delivery service, to
any Stockholder at the address referred to in Section 11(f).
(m) Each of the Stockholder, Parent and Purchaser each hereby
irrevocably waives any objection which he or she may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or otherwise brought in the courts
referred to above and hereby further irrevocably waives and agrees, to the
extent permitted by applicable law, not to plead or claim in any such court, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (i) any claim that he or she is not
personally subject to the jurisdiction of the above-named courts, (ii) that he
or she or his or her property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), (iii) that the proceeding in any
such court is brought in an inconvenient forum, (iv) that the venue of such
proceeding is improper or (v) that this Agreement, or the subject matter hereof,
may not be enforced in or by such court. Nothing herein shall affect the right
of any party hereto to serve process in any other manner permitted by law.
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed as of the day and year first above written.
PARENT: RIEDMAN CORPORATION
By:
Name: James R. Riedman
Title: President
PURCHASER: PSC ACQUISITION CORP.
By:
Name: James R. Riedman
Title: President
-9-
<PAGE> 10
STOCKHOLDER:
Ronald R. Striar, M.D.
-----------------------------------
Ronald R. Striar, M.D.
-----------------------------------
Printed Name
3390 S. Ocean Blvd. Apt. 204
-----------------------------------
Street Address
Palm Beach, FL 33480
-----------------------------------
City, State and Zip Code
6,187
-----------------------------------
Number of Shares Owned
-10-
<PAGE> 1
Exhibit (c)(10)
TENDER AGREEMENT
This TENDER AGREEMENT dated as of October 6, 1999 (this "Agreement") is
by and among RIEDMAN CORPORATION, a corporation organized under the laws of New
York ("Parent"), PSC ACQUISITION CORP., a Maine corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and the undersigned individual (the
"Stockholder").
R E C I T A L S :
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Penobscot Corporation, a Maine corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as amended from time to time, the
"Merger Agreement"), pursuant to which Parent has agreed, among other things, to
cause Purchaser to commence a cash tender offer (as such tender offer may
hereafter be amended from time to time, the "Offer") to purchase any and all
shares of common stock, par value $1.00 per share, of the Company (the "Company
Common Stock"); and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that the Stockholder enter into this
Agreement.
P R O V I S I O N S :
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to the Stockholder,
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
<PAGE> 2
"Owned Shares" means, with respect to the Stockholder, the
shares of Company Common Stock described in Section 2(c), together with any
other shares of Company Common Stock acquired by the Stockholder after the date
hereof.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, estate,
unincorporated organization or other entity.
"Representative" means, with respect to any Person, such
Person's agents and representatives (including any investment banker, financial
advisor, agent, representative or expert retained by or acting on behalf of such
Person).
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the beneficial ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. REPRESENTATIONS AND WARRANTIES OF THE TENDERING STOCKHOLDERS. The
Stockholder hereby represents and warrants to Parent and Purchaser as follows:
(a) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes his or her valid and binding
agreement, enforceable against him in accordance with its terms except (i) to
the extent limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Stockholder is the record or beneficial owner, has
sole voting power, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement, in each case with respect to his or her
Owned Shares, subject to applicable securities laws and the terms of this
Agreement.
(c) Upon the consummation of the Offer, Purchaser will acquire
good and marketable title to the Stockholder's Owned Shares, free and clear of
all Encumbrances, except for any Encumbrance arising under the Securities Act of
1933, as amended, or any applicable state securities laws. As of the date
hereof, the Stockholder owns the number of shares of Company Common Stock set
forth under the Stockholder's signature at the end of this Agreement. Effective
with the execution of this Agreement, the Stockholder hereby waive any rights
which he may have with respect to any other stockholder's Owned Shares under the
Stockholders' Agreement dated November 18, 1987.
-2-
<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. Parent and
Purchaser hereby represent and warrant, jointly and severally, to the
Stockholders as follows:
(a) Each of Parent and Purchaser is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, and each of them is in good standing under the laws of its
jurisdiction of incorporation. Parent and Purchaser have the corporate power and
authority to execute and deliver this Agreement and perform their respective
obligations hereunder. The execution and delivery by Parent and Purchaser of
this Agreement and the performance by Parent and Purchaser of their respective
obligations hereunder have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize the execution,
delivery or performance of this Agreement by Parent and Purchaser or the
consummation of the transactions contemplated hereby by Parent and Purchaser.
(b) This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and constitutes a valid and binding agreement
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms except (i) to the extent limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) None of the execution and delivery of this Agreement by
Parent or Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof shall (i) conflict with or result in any breach of the
Certificate of Incorporation or By-Laws of Parent or Purchaser, or (ii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, (iii) require on the part of Parent or the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, or
(iv) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Parent or Purchaser or any of their respective
properties or assets.
4. TENDER OF SHARES. The Stockholder shall tender or cause the record
owner thereof to tender into, pursuant to and in accordance with the terms of
the Offer, any and all of its Owned Shares. The parties agree that each
Stockholder will, for all Owned Shares tendered by it in the Offer and accepted
for payment and purchase by Purchaser, receive a price for each of its Owned
Shares equal to $11.75, or such higher per share consideration paid to other
stockholders who have tendered shares of Company Common
-3-
<PAGE> 4
Stock into the Offer which have been accepted for payment and purchased by
Purchaser in the Offer (the "Offer Price"), but not any additional amounts paid
or payable to holders of Company Common Stock that do not participate in the
Offer by reason of rights of appraisal, rights of dissent or otherwise. The
Stockholder agrees not to withdraw any of its Owned Shares unless the Offer is
terminated or has expired without Purchaser having accepted for payment all of
the Shares tendered in the Offer.
-4-
<PAGE> 5
5. RESTRICTIONS ON TRANSFER, OTHER PROXIES; NO SOLICITATION.
(a) Except as provided in Section 4 hereof, the Stockholder
shall not, until the termination of this Agreement, pursuant to Section 9,
directly or indirectly: (i) Transfer to any Person any or all of his or her
Owned Shares; or (ii) grant any proxies or powers of attorney, deposit any of
his Owned Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to such Owned Shares.
(b) Each Stockholder hereby agrees, solely in his capacity as
a stockholder of the Company, that from and after the date hereof until the
earlier of the termination of the Merger Agreement and the Effective Time, he
shall not, and such Stockholder shall cause his respective Affiliates not to,
directly or indirectly, (i) initiate, solicit or encourage (including by way of
furnishing non-public information) any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to an Acquisition Proposal or
(ii) engage in any negotiations or discussions with, or furnish any information
or data, to, any third party relating to an Acquisition Proposal. The
Stockholder will promptly inform Parent of the terms of any proposal,
discussion, negotiation or inquiry which the Stockholder may receive in respect
of any Acquisition Proposal. Any action taken by the Company or any member of
the Board of Directors of the Company in his or its capacity as such to the
extent permitted and in accordance with the terms of Section 5.4(b) of the
Merger Agreement shall be deemed not to violate this Section 5(b).
6. STOP TRANSFER AND LEGEND. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of its Owned Shares, unless such
transfer is made in compliance with this Agreement.
7. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that her or she may
have.
-5-
<PAGE> 6
9. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate only upon the termination of the Merger
Agreement in accordance with its terms. All representations and warranties
herein shall survive any termination of this Agreement.
10. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements; understandings, representations and warranties, both written and
oral, between the parties with respect to the subject matter hereof, including,
without limitation, a certain non-binding letter dated August 31, 1999 of Parent
to Company proposing terms for the transactions contemplated by the Merger
Agreement and this Agreement.
(b) The Stockholder agrees that this Agreement and the
respective rights and obligations of the Stockholder hereunder shall attach to
all Owned Shares.
(c) Except as provided below, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses. In the event any legal proceeding
is commenced by any party to this Agreement to enforce or recover damages for
any breach of the provisions hereof, the prevailing party in such legal
proceeding will be entitled to recover in such legal proceeding from the losing
party such prevailing party's costs and expenses incurred in connection with
such legal proceeding, including reasonable attorneys' fees. The provisions of
this Section 10(c) will survive the Closing hereunder.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Purchaser may assign
their rights and obligations hereunder to any assignee of Purchaser's rights and
obligations under the Merger Agreement. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
(e) This Agreement may not be amended, changed, supplemented,
or otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
-6-
<PAGE> 7
(f) All notices (which term shall include any other
communications) required or permitted to be given under this Agreement or in
connection with the matters contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given to the intended party (i) when
personally delivered, or (ii) upon receipt if sent by reputable overnight
courier service. Any party to this Agreement may notify any other party of any
changes to the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date specified in
such notice or three (3) business days after the notice is given, whichever is
later. All notices required to be given under this Agreement shall be sent to
the party using the addresses specified below:
If to Parent or Purchaser:
Riedman Corporation
45 East Avenue
Rochester, New York 14604
Attention: James R. Riedman, President
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke, LLP
700 Crossroads Building
Two State Street
Rochester, New York 14614
Attention: Harry P. Messina, Jr., Esq.
If to the Stockholder:
To the address indicated at the foot of this Agreement
with a copy to:
Choate, Hall & Stewart
One Exchange Place
Boston, Massachusetts 02109-2891
Attention: Harry A. Hanson, III, Esq.
and
Rudman & Winchell, LLC
84 Harlow Street
Bangor, Maine 04401
Attention: Gerald E. Rudman, Esq.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent
-7-
<PAGE> 8
of such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable, provided the commercial objective of this
Agreement is not frustrated.
(h) Each of the parties hereto acknowledges and agrees that in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. Accordingly, it is agreed that the parties
hereto (i) shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to compel specific performance of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity, and (ii) will waive, in any proceeding for specific performance, the
defense of adequacy of a remedy at law. Each of the parties further agrees to
waive any requirement for the securing or posting of any bond or other security
in connection with any proceeding for specific performance.
(i) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) This Agreement shall be governed and construed in
accordance with the Maine Business Corporations Act (the "MBCA"), where
applicable, and otherwise with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
(k) This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter required.
(l) Any legal action or proceeding with respect to this
Agreement or any matters arising out of or in connection with this Agreement or
otherwise, and any action for enforcement of any judgment in respect thereof
shall be brought exclusively in the courts of the State of New York or of the
United States of America for the Western District of New York or the state or
federal courts located in the State of Maine, to the
-8-
<PAGE> 9
extent the proceeding involves an interpretation or enforcement of the MBCA,
and, by execution and delivery of this Agreement, each of the Tendering
Stockholder, Parent and Purchaser each hereby accept for themselves and in
respect of their respective property, generally and unconditionally, the
exclusive jurisdiction of the aforesaid courts and appellate courts thereof.
Each of the Stockholder, Parent and Purchaser irrevocably consents to service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, or by recognized international express carrier or delivery service, to
any Stockholder at the address referred to in Section 11(f).
(m) Each of the Stockholder, Parent and Purchaser each hereby
irrevocably waives any objection which he or she may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or otherwise brought in the courts
referred to above and hereby further irrevocably waives and agrees, to the
extent permitted by applicable law, not to plead or claim in any such court, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (i) any claim that he or she is not
personally subject to the jurisdiction of the above-named courts, (ii) that he
or she or his or her property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), (iii) that the proceeding in any
such court is brought in an inconvenient forum, (iv) that the venue of such
proceeding is improper or (v) that this Agreement, or the subject matter hereof,
may not be enforced in or by such court. Nothing herein shall affect the right
of any party hereto to serve process in any other manner permitted by law.
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed as of the day and year first above written.
PARENT: RIEDMAN CORPORATION
By:
Name: James R. Riedman
Title: President
PURCHASER: PSC ACQUISITION CORP.
By:
Name: James R. Riedman
Title: President
-9-
<PAGE> 10
STOCKHOLDER:
Mildred K. Striar, Trustee
-----------------------------------
Mildred K. Striar, Trustee
f/b/o Wendy Striar
-----------------------------------
Printed Name
3390 S. Ocean Blvd. Apt. 203
-----------------------------------
Street Address
Palm Beach, FL 33480
-----------------------------------
City, State and Zip Code
8,530
-----------------------------------
Number of Shares Owned
-10-
<PAGE> 1
Exhibit (c)(12)
January 12, 1999
William Hoskins
Vice President - Sales
Penobscot Shoe Company
P.O. Box 545
Old Town, ME 04468
Dear Bill:
Upon the recommendation of the Compensation Committee of the Board of
Directors of Penobscot Shoe Company (the "Company"), the Board has recognized
that its senior executives are apt to be subjected to unusual diversions and
apprehensions in the present corporate environment and deems it in the best
interests of the Company and its Shareholders to provide selected senior
executives with additional job security.
The Board views your continued allegiance and dedication to your
responsibilities as most essential to the Company's success in normal operating
periods, as well as in periods of unsolicited tender offers for our shares,
other takeover bids or any transaction which would result in a change of
control. In particular, the Board believes it important, should the Company
receive proposals from third parties with respect to its future, or should the
Board move toward acquisitions or mergers on its own initiative, that you
should, without being influenced by perceived uncertainties of your position, be
able to assess and advise the Board as to whether such contemplated action will
be in the best interests of the Company and its Shareholders.
For the purpose of this Agreement, change of control of the Company
shall be deemed to have taken place if, as a result of: a tender offer or
exchange offer for the stock of the Company; merger or consolidation of the
Company; sale or other disposition by the Company of substantially all of the
assets not in the normal course of business; issuance of stock or other
securities of the Company; adoption of any plan or proposal for liquidation or
dissolution of the Company; reclassification of securities, recapitalization,
merger; or contested election of any combination of the foregoing transactions,
any person (including an individual or group of individuals or any corporation,
partnership or other entity) controls or has the power to vote (directly or
indirectly or in combination with one or more affiliates or associates as those
terms
<PAGE> 2
are defined in Rule 12b-2 of the Securities Exchange Commission as it now
exists) more than 50% of the voting securities of the Company or succeeds the
business of the Company.
In recognition of the premise, and of further consideration of your
continued employment with the Company, in the event that within one year after
the effective date of the change of control of the Company, your employment with
the Company terminates, either voluntarily or involuntarily, other than by
reason of death, disability, willful misconduct or retirement under the
Company's Pension Plan, the Company will promptly pay to you, upon your request
and at your option, either (i) a lump sum payment in an amount equal to your
highest annualized base salary (whenever earned) if within 12 months, reduced by
the months elapsed since the effective date of the change of control (the
Contract Period) or (ii) monthly payments prorated, equal in the aggregate to
such lump sum payment. Either payment shall be subject to applicable deductions
for federal and states taxes.
Whichever method you choose, you shall, as a condition of payment,
covenant to retain in confidence any confidential information known to you
concerning the Company and its business so long as such information is not
publicly disclosed for the period of two years following your date of
termination.
Annualized base salary shall mean your annual salary only, excluding
all fringe benefits, contributions to Pension Plan, and bonuses.
During the Contract Period, the Company will maintain your present
health insurance.
Except as may be provided in your Plan and Stock Option Plan, the
arrangements provided by this Agreement constitute the entire obligation of the
Company to you, and payment by the Company shall constitute a full settlement
and satisfaction of any claim you might otherwise assert against the Company on
account of such termination.
This Agreement shall be binding upon and inure to the benefit of you,
your personal representative and the Company and any successor to the Company.
Neither this Agreement nor any rights arising hereunder may be assigned or
pledged by you. If you wish to accept this Agreement, please so indicate by
signing and returning this duplicate original of this letter whereupon this
letter shall constitute a binding agreement between you and the Company.
<PAGE> 3
Very truly yours,
PENOBSCOT SHOE COMPANY
/s/ Gerald E. Rudman
By:__________________________________
Gerald E. Rudman
Chairman of the Compensation Committee
AGREED TO:
/s/ William Hoskins
_____________________________________
William Hoskins
Dated:________________________________
<PAGE> 1
Exhibit (c)(13)
January 8, 1999
David L. Keane
Vice President - Finance and Administration
Penobscot Shoe Company
P.O. Box 545
Old Town, ME 04468
Dear David:
Upon the recommendation of the Compensation Committee of the Board of
Directors of Penobscot Shoe Company (the "Company"), the Board has recognized
that its senior executives are apt to be subjected to unusual diversions and
apprehensions in the present corporate environment and deems it in the best
interests of the Company and its Shareholders to provide selected senior
executives with additional job security.
The Board views your continued allegiance and dedication to your
responsibilities as most essential to the Company's success in normal operating
periods, as well as in periods of unsolicited tender offers for our shares,
other takeover bids or any transaction which would result in a change of
control. In particular, the Board believes it important, should the Company
receive proposals from third parties with respect to its future, or should the
Board move toward acquisitions or mergers on its own initiative, that you
should, without being influenced by perceived uncertainties of your position, be
able to assess and advise the Board as to whether such contemplated action will
be in the best interests of the Company and its Shareholders.
For the purpose of this Agreement, change of control of the Company
shall be deemed to have taken place if, as a result of: a tender offer or
exchange offer for the stock of the Company; merger or consolidation of the
Company; sale or other disposition by the Company of substantially all of the
assets not in the normal course of business; issuance of stock or other
securities of the Company; adoption of any plan or proposal for liquidation or
dissolution of the Company; reclassification of securities, recapitalization,
merger; or contested election of any combination of the foregoing transactions,
any person (including an individual or group of individuals or any corporation,
partnership or other entity) controls or has the power to vote (directly or
indirectly or in combination with one or more affiliates or associates as those
terms
<PAGE> 2
are defined in Rule 12b-2 of the Securities Exchange Commission as it now
exists) more than 50% of the voting securities of the Company or succeeds the
business of the Company.
In recognition of the premise, and of further consideration of your
continued employment with the Company, in the event that within one year after
the effective date of the change of control of the Company, your employment with
the Company terminates, either voluntarily or involuntarily, other than by
reason of death, disability, willful misconduct or retirement under the
Company's Pension Plan, the Company will promptly pay to you, upon your request
and at your option, either (i) a lump sum payment in an amount equal to your
highest annualized base salary (whenever earned) if within 12 months, reduced by
the months elapsed since the effective date of the change of control (the
Contract Period) or (ii) monthly payments prorated, equal in the aggregate to
such lump sum payment. Either payment shall be subject to applicable deductions
for federal and states taxes.
Whichever method you choose, you shall, as a condition of payment,
covenant to retain in confidence any confidential information known to you
concerning the Company and its business so long as such information is not
publicly disclosed for the period of two years following your date of
termination.
Annualized base salary shall mean your annual salary only, excluding
all fringe benefits, contributions to Pension Plan, and bonuses.
During the Contract Period, the Company will maintain your present
health insurance.
Except as may be provided in your Plan and Stock Option Plan, the
arrangements provided by this Agreement constitute the entire obligation of the
Company to you, and payment by the Company shall constitute a full settlement
and satisfaction of any claim you might otherwise assert against the Company on
account of such termination.
This Agreement shall be binding upon and inure to the benefit of you,
your personal representative and the Company and any successor to the Company.
Neither this Agreement nor any rights arising hereunder may be assigned or
pledged by you. If you wish to accept this Agreement, please so indicate by
signing and returning this duplicate original of this letter whereupon this
letter shall constitute a binding agreement between you and the Company.
<PAGE> 3
Very truly yours,
PENOBSCOT SHOE COMPANY
/s/ Gerald E. Rudman
By:__________________________________
Gerald E. Rudman
Chairman of the Compensation Committee
AGREED TO:
/s/ David L. Keane
_____________________________________
David L. Keane
Dated:________________________________
<PAGE> 1
Exhibit (c)(14)
January 6, 1999
Mr. Jose Roberto Lenhard
Rua Cristovao Colombo, 603
Apto 702
Novo Hamburgo-RS-Brasil 93.510.320
Dear Jose:
Penobscot Shoe Company is deeply grateful to you for your willingness to remain
as our Independent Commercial Agent in Brazil, particularly in light of Paul
Hansen's unexpected death.
The Company views your continued allegiance and dedication to your
responsibilities as most essential to the Company's success in normal operating
periods, as well as in periods of unsolicited tender offers for our shares,
other takeover bids or any transaction which will result in a change of control
in the Company.
For purposes of this letter, change of control of the Company shall be deemed to
have taken place if, as a result of: a tender offer or exchange offer for the
stock of the Company; merger or consolidation of the Company; sale or other
disposition of the Company of substantially all of the assets not in the normal
course of business; issuance of stock or other securities of the Company;
adoption of any plan or proposal for liquidation or dissolution of the Company;
reclassification of securities, recapitalization, merger; or contested election
or any combination of the foregoing transactions, any person (including an
individual or group of individuals or any corporation, partnership or other
entity) controls or has the power to vote (directly or indirectly or in
combination of one or more affiliates or associates as those terms are defined
in Rule 12B-2 of the Securities Exchange Commission as it now exists) more than
50% of the voting securities of the Company or succeeds to the business of the
Company.
In recognition of the foregoing and of further consideration for your continuing
as our Independent Commercial Agent in Brazil, in the event that within one year
after the effective date of the change of control of the Company, your
relationship with the Company terminates, either voluntarily or involuntarily,
other than by reason of death, disability, willful misconduct or
<PAGE> 2
retirement, the Company will pay to you upon your request at your option either
(i) a lump sum payment in an amount equal to your compensation within the prior
12 months, reduced by the months elapsed since the effective date of the change
of control (the Contract Period), or (ii) monthly payments prorated, equal in
the aggregate to such lump sum payment.
Whichever method you choose, you shall, as a condition of payment, covenant to
retain in confidence any confidential information known to you concerning the
Company and its business so long as such information is not publicly disclosed,
for a period of two years following the date of your termination.
This agreement shall be binding upon and inure to the benefit of you, your
personal representative and the Company and any successor to the Company.
Neither this agreement nor any rights arising hereunder may be assigned or
pledged by you. If you wish to accept this agreement, please so indicate by
signing and returning the duplicate original of this letter whereupon this
letter shall constitute a binding agreement between you and the Company.
Very truly yours,
PENOBSCOT SHOE COMPANY
/s/ Irving Kagan
By: _______________________________
Irving Kagan
Chairman of the Board
AGREED TO:
/s/ Jose Roberto Lenhard
___________________________________
Jose Roberto Lenhard
<PAGE> 1
Exhibit (c)(15)
January 6, 1999
Wilhelm Pfander
Vice President - Manufacturing
Penobscot Shoe Company
P.O. Box 545
Old Town, ME 04468
Dear Willie:
Upon the recommendation of the Compensation Committee of the Board of
Directors of Penobscot Shoe Company (the "Company"), the Board has recognized
that its senior executives are apt to be subjected to unusual diversions and
apprehensions in the present corporate environment and deems it in the best
interests of the Company and its Shareholders to provide selected senior
executives with additional job security.
The Board views your continued allegiance and dedication to your
responsibilities as most essential to the Company's success in normal operating
periods, as well as in periods of unsolicited tender offers for our shares,
other takeover bids or any transaction which would result in a change of
control. In particular, the Board believes it important, should the Company
receive proposals from third parties with respect to its future, or should the
Board move toward acquisitions or mergers on its own initiative, that you
should, without being influenced by perceived uncertainties of your position, be
able to assess and advise the Board as to whether such contemplated action will
be in the best interests of the Company and its Shareholders.
For the purpose of this Agreement, change of control of the Company
shall be deemed to have taken place if, as a result of: a tender offer or
exchange offer for the stock of the Company; merger or consolidation of the
Company; sale or other disposition by the Company of substantially all of the
assets not in the normal course of business; issuance of stock or other
securities of the Company; adoption of any plan or proposal for liquidation or
dissolution of the Company; reclassification of securities, recapitalization,
merger; or contested election of any combination of the foregoing transactions,
any person (including an individual or group of individuals or any corporation,
partnership or other entity) controls or has the power to vote (directly or
indirectly or in combination with one or more affiliates or associates as those
terms
<PAGE> 2
are defined in Rule 12b-2 of the Securities Exchange Commission as it now
exists) more than 50% of the voting securities of the Company or succeeds the
business of the Company.
In recognition of the premise, and of further consideration of your
continued employment with the Company, in the event that within one year after
the effective date of the change of control of the Company, your employment with
the Company terminates, either voluntarily or involuntarily, other than by
reason of death, disability, willful misconduct or retirement under the
Company's Pension Plan, the Company will promptly pay to you, upon your request
and at your option, either (i) a lump sum payment in an amount equal to your
highest annualized base salary (whenever earned) if within 12 months, reduced by
the months elapsed since the effective date of the change of control (the
Contract Period) or (ii) monthly payments prorated, equal in the aggregate to
such lump sum payment. Either payment shall be subject to applicable deductions
for federal and states taxes.
Whichever method you choose, you shall, as a condition of payment,
covenant to retain in confidence any confidential information known to you
concerning the Company and its business so long as such information is not
publicly disclosed for the period of two years following your date of
termination.
Annualized base salary shall mean your annual salary only, excluding
all fringe benefits, contributions to Pension Plan, and bonuses.
During the Contract Period, the Company will maintain your present
health insurance.
Except as may be provided in your Plan and Stock Option Plan, the
arrangements provided by this Agreement constitute the entire obligation of the
Company to you, and payment by the Company shall constitute a full settlement
and satisfaction of any claim you might otherwise assert against the Company on
account of such termination.
This Agreement shall be binding upon and inure to the benefit of you,
your personal representative and the Company and any successor to the Company.
Neither this Agreement nor any rights arising hereunder may be assigned or
pledged by you. If you wish to accept this Agreement, please so indicate by
signing and returning this duplicate original of this letter whereupon this
letter shall constitute a binding agreement between you and the Company.
<PAGE> 3
Very truly yours,
PENOBSCOT SHOE COMPANY
/s/ Gerald E. Rudman
By:__________________________________
Gerald E. Rudman
Chairman of the Compensation Committee
AGREED TO:
/s/ Wilhelm Pfander
______________________________________
Wilhelm Pfander
Dated:________________________________
<PAGE> 1
Exhibit(c)(16)(i)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement made as of the first day of September,
1995, by and between PENOBSCOT SHOE COMPANY, a Maine corporation located at Old
Town, Maine (the "Company"); and FRANCIS J. GUTHRIE of Cape Elizabeth,
Maine (the "Director").
WHEREAS, the Director has served as an outside director of the Company
for a number of years; and
WHEREAS, the ability of the Company to attract and retain the services
of highly qualified directors is essential to the continued success of the
Company; and to encourage the Director to continue to serve in this capacity,
the Company seeks to assure the Director of the most complete indemnification
permitted by law for expenses or liabilities which he may incur as a Director;
and
WHEREAS, Article XVIII-A of the By-Laws of the Company requires
indemnification of directors and officers to the fullest extent permitted by
Maine law, but this provision could be amended as a result of a change in the
composition of the Company's shareholders or directors, and presently the
Company does not maintain directors and officers liability insurance; and
WHEREAS, Maine law provides that the indemnification granted by law or
any By-law is not exclusive of other rights to indemnification which directors
may receive; and since the Company believes that retaining the Director's
services is very important, the Company has determined it to be fair and in the
best interests of the Company and its shareholders to enter into this Agreement.
NOW THEREFORE, in consideration of the Director's continued service as
a director of the Company and for other good and valuable consideration, the
Company and the Director agree as follows:
1. The Company shall fully and completely indemnify the Director if, by
reason of, or arising in whole or in part out of, the fact that he is or has
been a director, employee or agent of the Company, or at the request of the
Company, express or implied, is or was serving as a director, officer, trustee,
partner, fiduciary, employee or agent of any other corporation, partnership,
joint venture, trust, pension or other employee benefit plan or other entity or
enterprise, any of the following shall occur:
(a) the Director is made or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, including any
arbitration proceeding and including any action or claim by or in the
right of the Company (provided that he is not finally adjudicated to be
liable to the Company, unless and to the extent that the Court in which
such action was brought determines that he is nonetheless
<PAGE> 2
entitled to such indemnification); unless the Director is a party
plaintiff suing on his own behalf or on behalf of one or more of the
shareholders of the Company, except as provided in paragraph 5 below;
(b) he is made subject to any inquiry or investigation; or
(c) he is obligated to attend any proceeding as a witness in
any matter, whether voluntarily or involuntarily.
Such indemnification shall cover expenses (specifically
including attorney's fees, costs of investigation and expert witness fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding to the fullest extent
permitted by law, and shall be paid as soon as practicable but, in any case, no
later than thirty (30) days after demand.
2. Expenses incurred by the Director or on his behalf in connection
with any such action or proceeding shall be paid by the Company in advance of
the final disposition of such action or proceeding, as soon as practicable,
after furnishing the undertakings required by Subsections 4A and 4B of Section
719 of the Maine Business Corporation Act, but, in any case, no later than
thirty (30) days after demand.
3. The indemnification provided by this Agreement shall not be
exclusive of any right to which the Director may be entitled by law or pursuant
to the Company's Articles of Incorporation, By-Laws, any policy of insurance,
any other contract or otherwise. These rights to indemnification shall be
cumulative, and no failure or delay in exercising any such right shall operate
as a waiver of it, nor shall any single or partial exercise of it preclude its
additional or further exercise or the exercise of any other right.
4. While the Director's rights are independent of, and not affected by,
any By-Law, provision of the Articles, or any policies of insurance maintained
by the Company, indemnification payments pursuant to this Agreement shall be
reduced by amounts actually received by him with respect to the same item by
virtue of such insurance or other indemnification by the Company.
5. In the event that the Director institutes, in good faith, any legal
action to obtain or enforce, or is required to defend the validity or
enforceability of, any right to a benefit provided by this contract, the Company
will, regardless of the outcome of such action, pay for all actual attorneys'
fees and expenses reasonably incurred by him, as soon as practicable, but, in
any case, no later than thirty (30) days after demand.
6. In any matter covered by this Agreement, a presumption shall exist
that the Director is entitled to indemnification, and the burden of proof shall
be upon the party seeking to deny indemnification.
7. For so long as the Director serves in any capacity described in this
Agreement, none of the provisions hereof may be terminated or amended by the
<PAGE> 3
Company without his written consent. The provisions hereof shall be binding on
any successor to the Company, whether by consolidation, merger, acquisition of
all or substantially all of the Company's assets, or otherwise. In any case,
insofar as legally permissible, neither the ceasing to act in any such capacity,
nor the termination of this Agreement, nor a subsequent change in the law, shall
affect any rights the Director may have under this Agreement with respect to
such service, while this Agreement was in effect.
8. In all matters covered by this Agreement, the estate of the
Director, his heirs and assigns, and any of them, shall stand in his stead and
be entitled to indemnification in the same manner and to the same extent as he
would be, where they or any of them may be liable on account of his activities
contemplated by this Agreement.
9. This Agreement shall be governed by the law of the State of Maine.
If at any time a court or other body having jurisdiction over any of the
provisions of this Agreement shall determine that any provision is unenforceable
in any respect, it shall have no effect on any other provision, and any such
unenforceable provision shall be reduced in its operation, and not terminated,
as such court or body determines may be reasonable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PENOBSCOT SHOE COMPANY
By /s/ Paul Hansen
- ---------------------------- ---------------------------
Its President
Company
/s/ Francis J. Guthrie
- ---------------------------- ---------------------------
Francis J. Guthrie
Director
<PAGE> 4
Exhibit (c)(16)(ii)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement made as of the first day of September,
1995, by and between PENOBSCOT SHOE COMPANY, a Maine corporation located at Old
Town, Maine (the "Company"); and IRVING KAGAN of Bangor, Maine (the
"Director").
WHEREAS, the Director has served as an outside director of the Company
for a number of years; and
WHEREAS, the ability of the Company to attract and retain the services
of highly qualified directors is essential to the continued success of the
Company; and to encourage the Director to continue to serve in this capacity,
the Company seeks to assure the Director of the most complete indemnification
permitted by law for expenses or liabilities which he may incur as a Director;
and
WHEREAS, Article XVIII-A of the By-Laws of the Company requires
indemnification of directors and officers to the fullest extent permitted by
Maine law, but this provision could be amended as a result of a change in the
composition of the Company's shareholders or directors, and presently the
Company does not maintain directors and officers liability insurance; and
WHEREAS, Maine law provides that the indemnification granted by law or
any By-law is not exclusive of other rights to indemnification which directors
may receive; and since the Company believes that retaining the Director's
services is very important, the Company has determined it to be fair and in the
best interests of the Company and its shareholders to enter into this Agreement.
NOW THEREFORE, in consideration of the Director's continued service as
a director of the Company and for other good and valuable consideration, the
Company and the Director agree as follows:
1. The Company shall fully and completely indemnify the Director if, by
reason of, or arising in whole or in part out of, the fact that he is or has
been a director, employee or agent of the Company, or at the request of the
Company, express or implied, is or was serving as a director, officer, trustee,
partner, fiduciary, employee or agent of any other corporation, partnership,
joint venture, trust, pension or other employee benefit plan or other entity or
enterprise, any of the following shall occur:
(a) the Director is made or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, including any arbitration
proceeding and including any action or claim by or in the right of the
Company (provided that he is not finally adjudicated to be liable to the
Company, unless and to the extent that the Court in which such action was
brought determines that he is nonetheless
<PAGE> 5
entitled to such indemnification); unless the Director is a party
plaintiff suing on his own behalf or on behalf of one or more of the
shareholders of the Company, except as provided in paragraph 5 below;
(b) he is made subject to any inquiry or investigation; or
(c) he is obligated to attend any proceeding as a witness in
any matter, whether voluntarily or involuntarily.
Such indemnification shall cover expenses (specifically
including attorney's fees, costs of investigation and expert witness fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding to the fullest extent
permitted by law, and shall be paid as soon as practicable but, in any case, no
later than thirty (30) days after demand.
2. Expenses incurred by the Director or on his behalf in connection
with any such action or proceeding shall be paid by the Company in advance of
the final disposition of such action or proceeding, as soon as practicable,
after furnishing the undertakings required by Subsections 4A and 4B of Section
719 of the Maine Business Corporation Act, but, in any case, no later than
thirty (30) days after demand.
3. The indemnification provided by this Agreement shall not be
exclusive of any right to which the Director may be entitled by law or pursuant
to the Company's Articles of Incorporation, By-Laws, any policy of insurance,
any other contract or otherwise. These rights to indemnification shall be
cumulative, and no failure or delay in exercising any such right shall operate
as a waiver of it, nor shall any single or partial exercise of it preclude its
additional or further exercise or the exercise of any other right.
4. While the Director's rights are independent of, and not affected by,
any By-Law, provision of the Articles, or any policies of insurance maintained
by the Company, indemnification payments pursuant to this Agreement shall be
reduced by amounts actually received by him with respect to the same item by
virtue of such insurance or other indemnification by the Company.
5. In the event that the Director institutes, in good faith, any legal
action to obtain or enforce, or is required to defend the validity or
enforceability of, any right to a benefit provided by this contract, the Company
will, regardless of the outcome of such action, pay for all actual attorneys'
fees and expenses reasonably incurred by him, as soon as practicable, but, in
any case, no later than thirty (30) days after demand.
6. In any matter covered by this Agreement, a presumption shall exist
that the Director is entitled to indemnification, and the burden of proof shall
be upon the party seeking to deny indemnification.
7. For so long as the Director serves in any capacity described in this
Agreement, none of the provisions hereof may be terminated or amended by the
<PAGE> 6
Company without his written consent. The provisions hereof shall be binding on
any successor to the Company, whether by consolidation, merger, acquisition of
all or substantially all of the Company's assets, or otherwise. In any case,
insofar as legally permissible, neither the ceasing to act in any such capacity,
nor the termination of this Agreement, nor a subsequent change in the law, shall
affect any rights the Director may have under this Agreement with respect to
such service, while this Agreement was in effect.
8. In all matters covered by this Agreement, the estate of the
Director, his heirs and assigns, and any of them, shall stand in his stead and
be entitled to indemnification in the same manner and to the same extent as he
would be, where they or any of them may be liable on account of his activities
contemplated by this Agreement.
9. This Agreement shall be governed by the law of the State of Maine.
If at any time a court or other body having jurisdiction over any of the
provisions of this Agreement shall determine that any provision is unenforceable
in any respect, it shall have no effect on any other provision, and any such
unenforceable provision shall be reduced in its operation, and not terminated,
as such court or body determines may be reasonable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PENOBSCOT SHOE COMPANY
By /s/ Paul Hansen
- ---------------------------- ---------------------------
Its President
Company
/s/ Irving Kagan
- ---------------------------- ---------------------------
Irving Kagan
Director
<PAGE> 7
Exhibit (c)(16)(iii)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement made as of the first day of September,
1995, by and between PENOBSCOT SHOE COMPANY, a Maine corporation located at Old
Town, Maine (the "Company"); and JAMES L. MOODY, JR. of Brewer, Maine (the
"Director").
WHEREAS, the Director has served as an outside director of the Company
for a number of years; and
WHEREAS, the ability of the Company to attract and retain the services
of highly qualified directors is essential to the continued success of the
Company; and to encourage the Director to continue to serve in this capacity,
the Company seeks to assure the Director of the most complete indemnification
permitted by law for expenses or liabilities which he may incur as a Director;
and
WHEREAS, Article XVIII-A of the By-Laws of the Company requires
indemnification of directors and officers to the fullest extent permitted by
Maine law, but this provision could be amended as a result of a change in the
composition of the Company's shareholders or directors, and presently the
Company does not maintain directors and officers liability insurance; and
WHEREAS, Maine law provides that the indemnification granted by law or
any By-law is not exclusive of other rights to indemnification which directors
may receive; and since the Company believes that retaining the Director's
services is very important, the Company has determined it to be fair and in the
best interests of the Company and its shareholders to enter into this Agreement.
NOW THEREFORE, in consideration of the Director's continued service as
a director of the Company and for other good and valuable consideration, the
Company and the Director agree as follows:
1. The Company shall fully and completely indemnify the Director if, by
reason of, or arising in whole or in part out of, the fact that he is or has
been a director, employee or agent of the Company, or at the request of the
Company, express or implied, is or was serving as a director, officer, trustee,
partner, fiduciary, employee or agent of any other corporation, partnership,
joint venture, trust, pension or other employee benefit plan or other entity or
enterprise, any of the following shall occur:
(a) the Director is made or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, including any
arbitration proceeding and including any action or claim by or in the
right of the Company (provided that he is not finally adjudicated to be
liable to the Company, unless and to the extent that the Court in which
such action was brought determines that he is nonetheless
<PAGE> 8
entitled to such indemnification); unless the Director is a party
plaintiff suing on his own behalf or on behalf of one or more of the
shareholders of the Company, except as provided in paragraph 5 below;
(b) he is made subject to any inquiry or investigation; or
(c) he is obligated to attend any proceeding as a witness in
any matter, whether voluntarily or involuntarily.
Such indemnification shall cover expenses (specifically
including attorney's fees, costs of investigation and expert witness fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding to the fullest extent
permitted by law, and shall be paid as soon as practicable but, in any case, no
later than thirty (30) days after demand.
2. Expenses incurred by the Director or on his behalf in connection
with any such action or proceeding shall be paid by the Company in advance of
the final disposition of such action or proceeding, as soon as practicable,
after furnishing the undertakings required by Subsections 4A and 4B of Section
719 of the Maine Business Corporation Act, but, in any case, no later than
thirty (30) days after demand.
3. The indemnification provided by this Agreement shall not be
exclusive of any right to which the Director may be entitled by law or pursuant
to the Company's Articles of Incorporation, By-Laws, any policy of insurance,
any other contract or otherwise. These rights to indemnification shall be
cumulative, and no failure or delay in exercising any such right shall operate
as a waiver of it, nor shall any single or partial exercise of it preclude its
additional or further exercise or the exercise of any other right.
4. While the Director's rights are independent of, and not affected by,
any By-Law, provision of the Articles, or any policies of insurance maintained
by the Company, indemnification payments pursuant to this Agreement shall be
reduced by amounts actually received by him with respect to the same item by
virtue of such insurance or other indemnification by the Company.
5. In the event that the Director institutes, in good faith, any legal
action to obtain or enforce, or is required to defend the validity or
enforceability of, any right to a benefit provided by this contract, the Company
will, regardless of the outcome of such action, pay for all actual attorneys'
fees and expenses reasonably incurred by him, as soon as practicable, but, in
any case, no later than thirty (30) days after demand.
6. In any matter covered by this Agreement, a presumption shall exist
that the Director is entitled to indemnification, and the burden of proof shall
be upon the party seeking to deny indemnification.
7. For so long as the Director serves in any capacity described in this
Agreement, none of the provisions hereof may be terminated or amended by the
<PAGE> 9
Company without his written consent. The provisions hereof shall be binding on
any successor to the Company, whether by consolidation, merger, acquisition of
all or substantially all of the Company's assets, or otherwise. In any case,
insofar as legally permissible, neither the ceasing to act in any such capacity,
nor the termination of this Agreement, nor a subsequent change in the law, shall
affect any rights the Director may have under this Agreement with respect to
such service, while this Agreement was in effect.
8. In all matters covered by this Agreement, the estate of the
Director, his heirs and assigns, and any of them, shall stand in his stead and
be entitled to indemnification in the same manner and to the same extent as he
would be, where they or any of them may be liable on account of his activities
contemplated by this Agreement.
9. This Agreement shall be governed by the law of the State of Maine.
If at any time a court or other body having jurisdiction over any of the
provisions of this Agreement shall determine that any provision is unenforceable
in any respect, it shall have no effect on any other provision, and any such
unenforceable provision shall be reduced in its operation, and not terminated,
as such court or body determines may be reasonable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PENOBSCOT SHOE COMPANY
By /s/ Paul Hansen
- ---------------------------- ---------------------------
Its President
Company
/s/ James L. Moody, Jr.
- ---------------------------- ---------------------------
James L. Moody, Jr.
Director
<PAGE> 10
Exhibit (c)(16)(iv)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement made as of the first day of September,
1995, by and between PENOBSCOT SHOE COMPANY, a Maine corporation located at Old
Town, Maine (the "Company"); and JOHN I. RIDDLE of Cape Elizabeth, Maine (the
"Director").
WHEREAS, the Director has served as an outside director of the Company
for a number of years; and
WHEREAS, the ability of the Company to attract and retain the services
of highly qualified directors is essential to the continued success of the
Company; and to encourage the Director to continue to serve in this capacity,
the Company seeks to assure the Director of the most complete indemnification
permitted by law for expenses or liabilities which he may incur as a Director;
and
WHEREAS, Article XVIII-A of the By-Laws of the Company requires
indemnification of directors and officers to the fullest extent permitted by
Maine law, but this provision could be amended as a result of a change in the
composition of the Company's shareholders or directors, and presently the
Company does not maintain directors and officers liability insurance; and
WHEREAS, Maine law provides that the indemnification granted by law or
any By-law is not exclusive of other rights to indemnification which directors
may receive; and since the Company believes that retaining the Director's
services is very important, the Company has determined it to be fair and in the
best interests of the Company and its shareholders to enter into this Agreement.
NOW THEREFORE, in consideration of the Director's continued service as
a director of the Company and for other good and valuable consideration, the
Company and the Director agree as follows:
1. The Company shall fully and completely indemnify the Director if, by
reason of, or arising in whole or in part out of, the fact that he is or has
been a director, employee or agent of the Company, or at the request of the
Company, express or implied, is or was serving as a director, officer, trustee,
partner, fiduciary, employee or agent of any other corporation, partnership,
joint venture, trust, pension or other employee benefit plan or other entity or
enterprise, any of the following shall occur:
(a) the Director is made or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, including any arbitration
proceeding and including any action or claim by or in the right of the
Company (provided that he is not finally adjudicated to be liable to the
Company, unless and to the extent that the Court in which such action was
brought determines that he is nonetheless
<PAGE> 11
entitled to such indemnification); unless the Director is a party
plaintiff suing on his own behalf or on behalf of one or more of the
shareholders of the Company, except as provided in paragraph 5 below;
(b) he is made subject to any inquiry or investigation; or
(c) he is obligated to attend any proceeding as a witness in
any matter, whether voluntarily or involuntarily.
Such indemnification shall cover expenses (specifically
including attorney's fees, costs of investigation and expert witness fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding to the fullest extent
permitted by law, and shall be paid as soon as practicable but, in any case, no
later than thirty (30) days after demand.
2. Expenses incurred by the Director or on his behalf in connection
with any such action or proceeding shall be paid by the Company in advance of
the final disposition of such action or proceeding, as soon as practicable,
after furnishing the undertakings required by Subsections 4A and 4B of Section
719 of the Maine Business Corporation Act, but, in any case, no later than
thirty (30) days after demand.
3. The indemnification provided by this Agreement shall not be
exclusive of any right to which the Director may be entitled by law or pursuant
to the Company's Articles of Incorporation, By-Laws, any policy of insurance,
any other contract or otherwise. These rights to indemnification shall be
cumulative, and no failure or delay in exercising any such right shall operate
as a waiver of it, nor shall any single or partial exercise of it preclude its
additional or further exercise or the exercise of any other right.
4. While the Director's rights are independent of, and not affected by,
any By-Law, provision of the Articles, or any policies of insurance maintained
by the Company, indemnification payments pursuant to this Agreement shall be
reduced by amounts actually received by him with respect to the same item by
virtue of such insurance or other indemnification by the Company.
5. In the event that the Director institutes, in good faith, any legal
action to obtain or enforce, or is required to defend the validity or
enforceability of, any right to a benefit provided by this contract, the Company
will, regardless of the outcome of such action, pay for all actual attorneys'
fees and expenses reasonably incurred by him, as soon as practicable, but, in
any case, no later than thirty (30) days after demand.
6. In any matter covered by this Agreement, a presumption shall exist
that the Director is entitled to indemnification, and the burden of proof shall
be upon the party seeking to deny indemnification.
7. For so long as the Director serves in any capacity described in this
Agreement, none of the provisions hereof may be terminated or amended by the
<PAGE> 12
Company without his written consent. The provisions hereof shall be binding on
any successor to the Company, whether by consolidation, merger, acquisition of
all or substantially all of the Company's assets, or otherwise. In any case,
insofar as legally permissible, neither the ceasing to act in any such capacity,
nor the termination of this Agreement, nor a subsequent change in the law, shall
affect any rights the Director may have under this Agreement with respect to
such service, while this Agreement was in effect.
8. In all matters covered by this Agreement, the estate of the
Director, his heirs and assigns, and any of them, shall stand in his stead and
be entitled to indemnification in the same manner and to the same extent as he
would be, where they or any of them may be liable on account of his activities
contemplated by this Agreement.
9. This Agreement shall be governed by the law of the State of Maine.
If at any time a court or other body having jurisdiction over any of the
provisions of this Agreement shall determine that any provision is unenforceable
in any respect, it shall have no effect on any other provision, and any such
unenforceable provision shall be reduced in its operation, and not terminated,
as such court or body determines may be reasonable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PENOBSCOT SHOE COMPANY
By /s/ Paul Hansen
- ---------------------------- ---------------------------
Its President
Company
/s/ John I. Riddle
- ---------------------------- ---------------------------
John I. Riddle
Director
<PAGE> 13
Exhibit (c)(16)(v)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement made as of the first day of September,
1995, by and between PENOBSCOT SHOE COMPANY, a Maine corporation located at Old
Town, Maine (the "Company"); and GERALD E. RUDMAN of Bangor, Maine (the
"Director").
WHEREAS, the Director has served as an outside director of the Company
for a number of years; and
WHEREAS, the ability of the Company to attract and retain the services
of highly qualified directors is essential to the continued success of the
Company; and to encourage the Director to continue to serve in this capacity,
the Company seeks to assure the Director of the most complete indemnification
permitted by law for expenses or liabilities which he may incur as a Director;
and
WHEREAS, Article XVIII-A of the By-Laws of the Company requires
indemnification of directors and officers to the fullest extent permitted by
Maine law, but this provision could be amended as a result of a change in the
composition of the Company's shareholders or directors, and presently the
Company does not maintain directors and officers liability insurance; and
WHEREAS, Maine law provides that the indemnification granted by law or
any By-law is not exclusive of other rights to indemnification which directors
may receive; and since the Company believes that retaining the Director's
services is very important, the Company has determined it to be fair and in the
best interests of the Company and its shareholders to enter into this Agreement.
NOW THEREFORE, in consideration of the Director's continued service as
a director of the Company and for other good and valuable consideration, the
Company and the Director agree as follows:
1. The Company shall fully and completely indemnify the Director if, by
reason of, or arising in whole or in part out of, the fact that he is or has
been a director, employee or agent of the Company, or at the request of the
Company, express or implied, is or was serving as a director, officer, trustee,
partner, fiduciary, employee or agent of any other corporation, partnership,
joint venture, trust, pension or other employee benefit plan or other entity or
enterprise, any of the following shall occur:
(a) the Director is made or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, including any arbitration
proceeding and including any action or claim by or in the right of the
Company (provided that he is not finally adjudicated to be liable to the
Company, unless and to the extent that the Court in which such action was
brought determines that he is nonetheless
<PAGE> 14
entitled to such indemnification); unless the Director is a party
plaintiff suing on his own behalf or on behalf of one or more of the
shareholders of the Company, except as provided in paragraph 5 below;
(b) he is made subject to any inquiry or investigation; or
(c) he is obligated to attend any proceeding as a witness in
any matter, whether voluntarily or involuntarily.
Such indemnification shall cover expenses (specifically
including attorney's fees, costs of investigation and expert witness fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding to the fullest extent
permitted by law, and shall be paid as soon as practicable but, in any case, no
later than thirty (30) days after demand.
2. Expenses incurred by the Director or on his behalf in connection
with any such action or proceeding shall be paid by the Company in advance of
the final disposition of such action or proceeding, as soon as practicable,
after furnishing the undertakings required by Subsections 4A and 4B of Section
719 of the Maine Business Corporation Act, but, in any case, no later than
thirty (30) days after demand.
3. The indemnification provided by this Agreement shall not be
exclusive of any right to which the Director may be entitled by law or pursuant
to the Company's Articles of Incorporation, By-Laws, any policy of insurance,
any other contract or otherwise. These rights to indemnification shall be
cumulative, and no failure or delay in exercising any such right shall operate
as a waiver of it, nor shall any single or partial exercise of it preclude its
additional or further exercise or the exercise of any other right.
4. While the Director's rights are independent of, and not affected by,
any By-Law, provision of the Articles, or any policies of insurance maintained
by the Company, indemnification payments pursuant to this Agreement shall be
reduced by amounts actually received by him with respect to the same item by
virtue of such insurance or other indemnification by the Company.
5. In the event that the Director institutes, in good faith, any legal
action to obtain or enforce, or is required to defend the validity or
enforceability of, any right to a benefit provided by this contract, the Company
will, regardless of the outcome of such action, pay for all actual attorneys'
fees and expenses reasonably incurred by him, as soon as practicable, but, in
any case, no later than thirty (30) days after demand.
6. In any matter covered by this Agreement, a presumption shall exist
that the Director is entitled to indemnification, and the burden of proof shall
be upon the party seeking to deny indemnification.
7. For so long as the Director serves in any capacity described in this
Agreement, none of the provisions hereof may be terminated or amended by the
<PAGE> 15
Company without his written consent. The provisions hereof shall be binding on
any successor to the Company, whether by consolidation, merger, acquisition of
all or substantially all of the Company's assets, or otherwise. In any case,
insofar as legally permissible, neither the ceasing to act in any such capacity,
nor the termination of this Agreement, nor a subsequent change in the law, shall
affect any rights the Director may have under this Agreement with respect to
such service, while this Agreement was in effect.
8. In all matters covered by this Agreement, the estate of the
Director, his heirs and assigns, and any of them, shall stand in his stead and
be entitled to indemnification in the same manner and to the same extent as he
would be, where they or any of them may be liable on account of his activities
contemplated by this Agreement.
9. This Agreement shall be governed by the law of the State of Maine.
If at any time a court or other body having jurisdiction over any of the
provisions of this Agreement shall determine that any provision is unenforceable
in any respect, it shall have no effect on any other provision, and any such
unenforceable provision shall be reduced in its operation, and not terminated,
as such court or body determines may be reasonable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PENOBSCOT SHOE COMPANY
By /s/ Paul Hansen
- ---------------------------- ---------------------------
Its President
Company
/s/ Gerald E. Rudman
- ---------------------------- ---------------------------
Gerald E. Rudman
Director
<PAGE> 1
Exhibit (c)(17)
PENOBSCOT SHOE COMPANY
1991 STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1991 Stock Option Plan (the "Plan") is to advance
the interests of Penobscot Shoe Company (the "Company") by enhancing the ability
of the Company (a) to attract and retain employees who are in a position to make
significant contributions to the success of the Company; (b) to reward employees
for such contributions; and (c) to encourage these employees to take into
account the long-term interests of the Company through ownership of shares of
the Company's common stock par value $1.00 ("Common Stock").
The Plan is intended to accomplish these goals by enabling the Company
to grant awards ("Awards") to eligible employees. Awards will be in the form of
Stock Options.
2. ADMINISTRATION
The Plan will be administered by the Compensation Committee of the
Board of Directors of the Company (the "Committee"). The Committee will have
authority, not inconsistent with the express provisions of the Plan, (a) to
grant Awards to such eligible employees as the Committee may select
("Participants"); (b) to determine the times of grants; (c) to determine the
number of shares of Common Stock to be covered by any Award; (d) to determine
the terms and conditions of any Award, which terms and conditions may differ
among individual Awards and Participants; (e) to prescribe the form or forms of
instruments evidencing Awards and any other instruments required under the Plan
and to change such forms from time to time; (f) to adopt, amend and rescind
rules and regulations for the administration of the Plan; (g) to interpret the
Plan and to decide any questions and settle all controversies and disputes that
may arise in connection with the Plan; and (h) to waive compliance by a
Participant with any obligation to be performed by him under an Award.
A majority of the members of the Committee will constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made without
notice or meeting of the Committee by a writing signed by a majority of the
Committee members. All members of the Committee shall be disinterested persons
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective on the date on which it is approved by
the stockholders of the Company. Grants of Awards under the Plan may be made
prior to the date (but after adoption of the Plan by the Board of Directors),
subject to approval of the Plan by stockholders.
<PAGE> 2
No Award may be granted under the Plan after the completion of ten
years from the date on which the Plan was adopted by the Board of Directors, but
Awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
(a) Number of Shares. Subject to adjustment as provided in Section 8,
the aggregate number of shares of Common Stock that may be delivered under the
Plan is 75,000. For purposes of this limitation, shares of Common Stock which
are forfeited will not be counted.
(b) Shares to be Delivered. Shares delivered under the Plan will be
authorized but unissued shares of Common Stock or, if the Committee so decides
in its sole discretion, previously issued Common Stock acquired by the Company
and held in treasury. No fractional shares of Common Stock will be delivered
under the Plan.
5. ELIGIBILITY
Employees eligible to become Participants shall be those key employees
of the Company and its subsidiaries who, in the opinion of the Committee, are in
a position to make a significant contribution to the success of the Company or
its subsidiaries. A subsidiary for purposes of the Plan is a corporation in
which the Company owns, directly or indirectly, stock possessing 50% or more of
the total combined voting power of all classes of stock. Members of the
Committee will not be eligible to become Participants.
6. STOCK OPTIONS
Stock Options granted under the Plan ("Options") will be non-qualified
stock options.
Options granted under the Plan will be subject to the following terms
and conditions and will contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee deems desirable:
(a) Exercise Price. The exercise price of each Option will be
determined by the Committee but may not be less than 100% of the fair market
value per share of Common Stock at the time the Option is granted.
(b) Duration of Options. An Option will be exercisable during such
period or periods as the Committee may specify. The latest date on which an
Option may be exercised will be the date which is ten years from the date the
option was granted or such earlier date as may be specified by the Committee at
the time the Option is granted.
(c) Exercise of Options.
(1) Options will be exercisable at such future time or
times, whether or not in installments, as determined
by the Committee at or after the grant date.
<PAGE> 3
The Committee may at any time accelerate the
exercisability of all or any portion of any Option.
(2) Any exercise of an Option must be by written notice
to the Company, accompanied by (i) the document
evidencing the Option (the "Option Certificate") and
any other documents required by the Committee and
(ii) payment in accordance with Section 6(d) below
for the number of shares of Common Stock for which
the Option is exercised.
(d) Payment for and Delivery of Common Stock. Common Stock purchased on
exercise of an Option shall be paid for as follows: (1) in cash or by certified
check, bank draft or money order payable to the order of the Company or (2) if
so permitted by the Option Certificate, (i) through the delivery of shares of
Common Stock having a fair market value on the last business day preceding the
date of exercise equal to the purchase price or (ii) by a combination of cash
and Common Stock as provided in clauses (1) and (2)(i) above or (iii) by
delivery of a promissory note of the Participant to the Company, payable on such
terms as are specified in the Option Certificate (except that the Option
Certificate may provide that the rate of interest on the note will be the lowest
rate which is sufficient, at the time the note is given, to avoid imputation of
interest under the applicable provisions of the Code), or by a combination of
cash (or cash and Common Stock) and the Participant's's promissory note;
provided, that if the Common Stock delivered upon exercise of the Option is an
original issue of authorized Common Stock, at least so much of the exercise
price as represents the par value of such Common Stock must be paid in cash if
the Committee determines that cash payment is required by law.
(e) Nontransferability of Options. No Option may be transferred other
than by will or by the laws of descent and distribution, and during a
Participant's lifetime an Option may be exercised only by him.
(f) Death or Disability. If a Participant's employment with the Company
and its subsidiaries terminates by reason of death or total and permanent
disability, each Option held by the Participant will become fully exercisable
and will remain exercisable after the date of such termination for a period of
one year (subject, however, to the limitations of Section 6(b) regarding the
ten-year exercise period for such Option). In the case of a deceased
Participant, such Option may be exercised within such time limits by his
executor or administrator, or by the person or persons to whom the Option is
transferred by will or the applicable laws of descent and distribution.
(g) Other Termination of Employment. If a Participant's employment with
the Company and its subsidiaries terminates for any reason other than death or
total and permanent disability, all Options held by the Participant that are not
then exercisable shall terminate. Options that are exercisable on the date of
termination will continue to be exercisable for a period of three months (or, if
less, the remaining exercise period set by the Option Certificate) unless the
employee has confessed to, or been convicted of, any act of fraud, theft or
dishonesty arising in the course of, or in connection with, his employment with
the Company. After completion of that three-month period (or such lesser period
as provided herein) such Options shall terminate to the extent not previously
exercised, expired or terminated.
<PAGE> 4
7. CHANGE OF CONTROL
Notwithstanding any other provision of this Plan, in the event of a
Change of Control of the Company each Option held by each Participant will
automatically become fully exercisable.
As used herein, a Change of Control of the Company will be deemed to
take place if (1) any individual, corporation, partnership, company or other
entity, including a "group" as defined in section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the beneficial owner of shares of stock of the
Company having 25% or more of the total number of votes that may be cast for the
election of directors of the Company, or (2) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Company cease for any reason to constitute a
majority thereof; provided, however, that any director who is not in office at
the beginning of such twenty-four month period but whose election by the Board
or whose nomination for election by the Company's stockholders was to fill a
vacancy caused by death and was approved by a vote of a least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved shall be deemed to have been in office at the beginning of such period
for purposes of this definition.
8. CHANGES IN COMPANY; SUBSTITUTE AWARDS
(a) Changes in Stock. In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the Company's capital
stock, the number and kind of shares of stock or securities of the Company
subject to Awards then outstanding or subsequently granted under the Plan, the
maximum number of shares of stock or securities that may be delivered under the
Plan, the purchase price, and other relevant provisions will be appropriately
adjusted by the Committee, whose determination shall be binding on all persons.
The Committee may also adjust the number of shares subject to
outstanding Awards, the exercise price of outstanding Options and the terms of
outstanding Awards, to take into consideration material changes in accounting
practices or principles, consolidations or mergers (except those described in
Section 8(b) below), acquisitions or dispositions of stock or property or any
other event if it is determined by the Committee that such adjustment is
appropriate to avoid distortion in the operation of the Plan.
(b) Merger, Etc. Subject to Section 7, in the event of a dissolution or
liquidation of the Company or a merger or consolidation in which the Company is
not the surviving corporation or its outstanding shares are converted into
securities of another corporation or exchanged for other consideration, all
Options granted hereunder will terminate, but at least 20 days prior to the
effective date of any such dissolution or liquidation (or 20 days prior to any
earlier related sale of substantially all the assets of the Company) or of any
such merger or consolidation, the Committee shall either make all Options
outstanding hereunder immediately exercisable or arrange that the successor or
corporation, if any, grant replacement Options.
<PAGE> 5
9. GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal Requirements, Etc. The
Committee may require each person acquiring Common Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the Common Stock without a view to distribution hereof.
The Company will not be obligated to deliver any shares of Common Stock
pursuant to an Award (1) until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, and
(2) if the outstanding Common Stock is at the time listed on any stock exchange,
until the shares to be delivered have been listed or authorized to be listed on
such exchange upon official notice of issuance, and (3) until all other legal
matters in connection with the issuance and delivery of such shares have been
approved by the Company's counsel. If the sale of Common Stock has not been
registered under the Securities Act of 1933, as amended, the Company may require
such representations or agreements as counsel for the Company may consider
appropriate to avoid violation of such Act and may require that the certificates
evidencing such Common Stock bear an appropriate legend restricting transfer.
Notwithstanding any provision of the Plan, the Company will be under no
obligation to deliver shares of Common Stock to an estate of a deceased
Participant, or to the person or persons to whom the Award has been transferred
by the Participant's will or the applicable laws of descent and distribution,
until the Company is satisfied as to the authority of such person or persons.
(b) Tax Withholding, Etc. Each Participant will, no later than the date
as of which any Common Stock received hereunder first becomes includable in
gross income for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of, all federal,
state and local taxes required by law to be withheld with respect to such
income. The Company and its subsidiaries will, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Participant.
The Committee may provide, in respect of any transfer of Common Stock
under an Award, that if and to the extent withholding of any federal, state or
local tax is required, the Participant may elect in such manner as the Committee
prescribes, to have the Company hold back from the transfer Common Stock having
a value calculated to satisfy withholding obligation.
Notwithstanding the foregoing, in the case of a Participant subject to
the restrictions of Section 16(b) of the Securities Exchange Act of 1934 no such
election shall be effective unless made in compliance with any applicable
requirements of Rule 16b-3(e) or any successor rule under such Act.
(c) Continuance of Employment. For purposes of the Plan, employment of
a Participant will not be considered terminated (1) in the case of sick leave or
other bona fide leave of absence approved for purposes of the Plan by the
Committee, so long as the Participant's right
<PAGE> 6
to reemployment is guaranteed either by statute or by contract, or (2) in the
case of a transfer to the employment of a corporation (or a parent or subsidiary
corporation of such corporation) issuing or assuming an option in a transaction
to which section 425(a) of the Code would apply.
(d) Fair Market Value. For purposes of the Plan, in general, "fair
market value" of a share of Common Stock on any date means the closing price on
such date as reflected in the American Exchange Composite Index. If, however,
the Committee determines that a different meaning is in any circumstance
necessary in order to comply with applicable law, such different meaning will
apply in that circumstance.
(e) Employment Rights. Neither the adoption of the Plan nor the grant
of Awards will confer upon any employee any right to continued employment with
the Company or any subsidiary or affect in any way the right of the Company or
subsidiary to terminate the employment of an employee at any time. Except as
specifically provided by the Committee in any particular case, the loss of
existing or potential profit in Awards granted under this Plan shall not
constitute an element of damages in the event termination is in violation of an
obligation of the Company to the employee by contract or otherwise.
10. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND
TERMINATION
Neither adoption of the Plan nor the grant of Awards to a Participant
shall affect the Company's right to grant to such Participant awards that are
not subject to the Plan, to issue to such Participant Common Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Common Stock may
be issued to employees.
The Committee may at any time discontinue granting Awards under the
Plan. With the consent of the Participant, the Committee may at any time cancel
an existing Award in whole or in part and grant the Participant another Award
for such number of shares of Common Stock as in the Committee specifies. The
Committee may at any time or times amend the Plan or any outstanding Award for
the purpose of satisfying the requirements of any changes in applicable laws or
regulations or for any other purpose which may at the time be permitted by law,
provided that (except to the extent expressly required or permitted herein
above) no such amendment shall, without the approval of the stockholders of the
Company, (a) increase the maximum number of shares available for delivery under
the Plan, (b) change the group of employees eligible to receive Awards under the
Plan, (c) reduce the price at which options may be granted, (d) extend the time
within which Awards may be granted, or (e) amend the provision of this Section
10, and no such amendment shall adversely affect the rights of any Participant
(without his consent) under any Award previously granted.
As adopted by the Board of Directors: December 20, 1990
As approved by the Stockholders:
<PAGE> 1
EXHIBIT (C)(20)
[ADVEST, INC. LOGO]
October 6, 1999
Board of Directors
Penobscot Shoe Company
450 North Main Street
Old Town, Maine 04468
Members of the Board:
Penobscot Shoe Company ("Penobscot" or the "Company") and Riedman
Corporation ("Riedman") are expected to enter into an Agreement and Plan of
Merger (the "Agreement"), whereby a newly created indirect wholly-owned
subsidiary of Riedman ("Merger Subsidiary") will offer to purchase all of the
issued and outstanding shares of Penobscot common stock for $11.75 per share
(the "Tender Offer"). Subsequent to the completion of the Tender Offer, Merger
Subsidiary will be merged with and into the Company (the "Merger"), and each
outstanding share of Penobscot common stock that was not acquired in the Tender
Offer will be converted into the right to receive $11.75 in cash. The Merger and
the Tender Offer together comprise the "Transaction". At the completion of the
Transaction, Penobscot will be an indirect wholly-owned subsidiary of Riedman.
You have asked us whether, in our opinion, the cash consideration to be
received by Penobscot shareholders is fair, from a financial point of view, to
such shareholders of the outstanding shares of common stock of the Company.
In arriving at our opinion set forth below, we have, among other things:
(i) Reviewed the Agreement and Plan of Merger dated October 6, 1999 and
the Tender Agreements dated October 6, 1999;
(ii) Reviewed the drafts of Schedule 14D-9 and Schedule 14D-1 to be
submitted to the Securities and Exchange Commission;
(iii) Reviewed the publicly available consolidated financial statements
of Penobscot for recent years and interim periods to date as well
as other filings with the Securities and Exchange Commission for
such periods;
(iv) Reviewed the reported prices of common stock, trading activity, as
well as publicly available financial and operating data for
companies deemed similar to Penobscot;
1
<PAGE> 2
Board of Directors
Penobscot Shoe Company
October 6, 1999
Page 2 of 3
(v) Reviewed the pricing and financial terms of recent corporate
transactions involving acquired companies deemed similar to
Penobscot;
(vi) Reviewed internal financial and operating information, including
certain projections prepared by the senior management of
Penobscot;
(vii) Discussed the business, financial condition, and prospects of
Penobscot with certain members of senior management; and
(viii) Performed such other financial studies and analyses and
investigations as we deemed necessary.
In addition to the foregoing, we have, among other things, performed the
following analyses and investigations: (i) compared the proposed purchase price
per share to the historical trading range of Penobscot's common stock; (ii)
compared the proposed purchase price and its implied ratios ("multiples") to
sales, earnings, book value and cash flow to the same multiples calculated from
current public market valuations of publicly traded companies deemed similar to
the Company; (iii) compared the proposed purchase price and its implied
multiples of sales and cash flow to the same multiples as calculated from
valuations established in recent transactions of companies deemed similar to the
Company; (iv) analyzed and compared the proposed purchase price to the value of
estimated future free cash flows discounted to their current value; and (v)
analyzed Penobscot's historical trading activity, including volume and price
relationships. In addition, we performed such other investigations and took into
account such other matters and information as we deemed necessary.
Advest has provided certain investment banking services to Penobscot in the
past and has received fees for rendering these services, including a fee for
advising the Company on this Transaction. As part of our engagement, the Company
has agreed to pay Advest a fee for delivery of this opinion letter.
In preparing this opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Company,
and we have not independently verified such information, nor have we undertaken
an independent appraisal of the assets or liabilities of the Company. This
opinion is necessarily based upon circumstances and conditions as they exist and
can be evaluated by us as of the date of this letter. Our opinion is directed to
the Board of Directors of Penobscot and does not constitute a recommendation of
any kind to any shareholder of Penobscot as to whether such shareholder should
tender his or her stock in the Tender Offer or how such shareholder should vote
at the shareholders' meeting to be held in connection with the Merger. We have
assumed for purposes of this opinion that there have been no material changes in
the financial condition of the Company from the conditions disclosed in the
Company's financial reports.
2
<PAGE> 3
Board of Directors
Penobscot Shoe Company
October 6, 1999
Page 3 of 3
Advest hereby consents to a description and inclusion of this opinion in
any public filings issued with regard to this transaction and to references to
Advest in such documents. Except as otherwise provided above, this opinion is
solely for the use and benefit of the Company and shall not be disclosed
publicly or made available to third parties without the prior written approval
of Advest.
In reliance upon and subject to the foregoing, it is our opinion that, as
of the date hereof, the cash consideration to be received by the Company's
shareholders in the Transaction is fair, from a financial point of view, to the
Company's shareholders.
Very truly yours,
ADVEST, INC.
/s/ Rex H. Green
Rex H. Green
Managing Director
3
<PAGE> 1
PENOBSCOT SHOE COMPANY
450 NORTH MAIN STREET
OLD TOWN, MAINE 04468
October 12, 1999
To Our Stockholders:
We are pleased to inform you that on October 6, 1999, Penobscot Shoe
Company (the "Company") entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Riedman Corporation ("Parent") and PSC Acquisition
Corp. ("Purchaser"), an indirect wholly owned subsidiary of Parent. Pursuant to
the Merger Agreement, Purchaser has commenced a cash tender offer (the "Offer")
to acquire all of the issued and outstanding shares of the Company's common
stock, $1.00 par value per share (the "Shares"), for $11.75 per share, net to
the seller in cash. Under the terms of the Merger Agreement, as soon as
practicable after the consummation of the Offer and subject to the terms and
conditions set forth in the Merger Agreement, the Company will merge with and
into the Purchaser (the "Merger"), and each remaining share which is then issued
and outstanding will be converted into the right to receive $11.75 net to the
seller in cash (or any higher price that may be paid in the Offer), without
interest.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY (A) DETERMINED THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS, (B) ADOPTED AND APPROVED THE MERGER AGREEMENT AND AUTHORIZED THE
EXECUTION THEREOF BY THE COMPANY AND (C) RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY ACCEPT THE OFFER.
To arrive at its recommendation, the Board of Directors carefully evaluated
a number of factors as described in the attached Offer to Purchase of the
Purchaser, dated October 12, 1999, and the Schedule 14D-9 that is being filed
today with the Securities and Exchange Commission. These factors include, among
other things, the opinion of Advest, Inc., the Company's financial advisor, that
the $11.75 per Share that stockholders of the Company will receive pursuant to
the Merger Agreement is fair from a financial point of view to these
stockholders. The full text of the written opinion of Advest, Inc., which sets
forth assumptions made, matters considered and limitations on the review
undertaken in connection with the opinion, is attached as an Exhibit to the
attached Schedule 14D-9 that is being filed today with the Securities and
Exchange Commission. Stockholders are urged to read this opinion in its
entirety.
In addition to the attached Schedule 14D-9 relating to the Offer and the
Offer to Purchase are related tender offer materials, including a Letter of
Transmittal to be used for tendering your Shares. These documents set forth the
terms and conditions of the Offer and Merger and provide instructions as to how
to tender your Shares. We urge you to read the enclosed material carefully.
Sincerely,
/S/ Irving Kagan
Irving Kagan
Chairman of the Board of Directors
