<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
THE INTERLAKE CORPORATION
(NAME OF SUBJECT COMPANY)
GKN NORTH AMERICA MANUFACTURING INC.
AND
GKN NORTH AMERICA INCORPORATED
AND
GKN PLC
(BIDDERS)
------------------------
COMMON STOCK, $1.00 PAR VALUE
AND
SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, $1.00 PAR VALUE
(TITLE OF CLASSES OF SECURITIES)
------------------------
458702107 (COMMON STOCK)
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
SEIFOLLAH GHASEMI
GKN NORTH AMERICA MANUFACTURING INC.
3300 UNIVERSITY DRIVE
AUBURN HILLS, MI 48326-2362
(248) 371-0802
------------------------
COPY TO:
BONNIE GREAVES, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 848-4000
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
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TRANSACTION VALUATION AMOUNT OF FILING FEE
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<S> <C>
$261,363,079.50* $52,272.62**
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</TABLE>
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: Not applicable
Form or Registration No.: Not applicable
Filing Party: Not applicable
Date Filed: Not applicable
</TABLE>
* The Transaction Value is calculated by multiplying $7.25, the tender offer
price per Common Share, by 25,121,142, the sum of the number of Common Shares
outstanding and the number of Common Shares subject to outstanding options,
and by multiplying $1,980.87, the tender offer price per Series A Share, by
40,000, the number of Series A Shares and then adding these two products.
** The filing fee is calculated by taking 1/50 of 1% of the Transaction Value.
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<PAGE> 2
CUSIP No. 458702107
<TABLE>
<S> <C> <C>
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1. Name of Reporting Persons S.S. or I.R.S. Identification No.
of Above Person GKN PLC
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2. Check the Appropriate Box if a Member of Group (a) [ ] (b) [
]
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3. SEC Use only
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4. Sources of Funds WC
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5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f) [ ]
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6. Citizenship or Place of Organization ENGLAND
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
NONE
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8. Check if the Aggregate Amount in Row (7) Excludes Certain
Shares [ ]
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9. Percent of Class Represented by Amount in Row (7) NONE
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10. Type of Reporting Person HC
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</TABLE>
<PAGE> 3
CUSIP NO. 458702107
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------
1. Name of Reporting Persons S.S. or I.R.S. Identification Nos.
of Above Person GKN NORTH AMERICA INCORPORATED
- ---------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(a) [ ] (b) [ ]
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3. SEC Use only
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4. Sources of Funds AF
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5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f) [ ]
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6. Citizenship or Place of Organization DELAWARE
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
NONE
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8. Check if the Aggregate Amount in Row (7) Excludes Certain
Shares [ ]
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9. Percent of Class Represented by Amount in Row (7) NONE
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10. Type of Reporting Person CO
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</TABLE>
<PAGE> 4
CUSIP No. 458702107
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------
1. Name of Reporting Persons S.S. or I.R.S. Identification Nos.
of Above Person GKN NORTH AMERICA MANUFACTURING INC.
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2. Check the Appropriate Box if a Member of Group (a) [ ] (b) [
]
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3. SEC Use only
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4. Sources of Funds AF
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5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f) [ ]
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6. Citizenship or Place of Organization DELAWARE
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
NONE
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8. Check if the Aggregate Amount in Row (7) Excludes Certain
Shares [ ]
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9. Percent of Class Represented by Amount in Row (7) NONE
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10. Type of Reporting Person CO
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</TABLE>
<PAGE> 5
This Tender Offer Statement on Schedule 14D-1 (the "Statement") relates to
the offer by GKN North America Manufacturing Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of GKN North America Incorporated, a
Delaware corporation ("Parent"), to purchase all outstanding shares of Common
Stock, par value $1.00 per share (the "Common Shares") (including the associated
Common Share purchase rights (the "Rights") issued pursuant to that certain
Rights Agreement dated as of January 20, 1989 between the Company and First
National Bank of Chicago, as Rights Agent, as amended (the "Rights Agreement")),
of The Interlake Corporation, a Delaware corporation, at a price of $7.25 per
Common Share, net to the seller in cash, and all outstanding shares of Series A
Convertible Exchangeable Preferred Stock, par value $1.00 per share, of the
Company (the "Series A Shares" and, together with the Common Shares, the
"Shares") at a price of $1,980.87 per Series A Share, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated December 10, 1998
(the "Offer to Purchase") and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"), copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is The Interlake Corporation, which has
its principal executive offices at 550 Warrenville Road, Lisle, Illinois
60532-4387.
(b) The information set forth in the Introduction and Section 1 "Terms of
the Offer; Expiration Date" of the Offer to Purchase is incorporated herein by
reference.
(c) The information concerning the principal market in which the Common
Shares are traded and certain high and low sales prices for the Common Shares in
such principal market set forth in Section 6 "Price Range of Common Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by GKN, Parent and the Purchaser.
The information concerning the name, state or other place of organization,
principal business and address of the principal office of each of GKN, Parent
and the Purchaser, and the information concerning the name, business address,
present principal occupation or employment and the name, principal business and
address of any corporation or other organization in which such employment or
occupation is conducted, material occupations, positions, offices or employments
during the last five years and citizenship of each of the executive officers and
directors of GKN, Parent and the Purchaser are set forth in the Introduction,
Section 8 "Certain Information Concerning GKN, Parent and the Purchaser" of the
Offer to Purchase and Schedule I thereto and are incorporated herein by
reference.
(e) and (f) During the last five years, none of GKN, Parent or the
Purchaser, and, to the best knowledge of GKN, Parent and the Purchaser, none of
the persons listed in Schedule I to the Offer to Purchase has been (i) convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and, as a result of such proceeding, was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 "Certain Information Concerning
GKN, Parent and the Purchaser" and Section 10 "Background of the Offer; Contacts
with the Company; the Merger Agreement" of the Offer to Purchase is incorporated
herein by reference.
(b) The information set forth in the Introduction, Section 7 "Certain
Information Concerning the Company", Section 8 "Certain Information Concerning
GKN, Parent and the Purchaser", Section 10 "Background of the Offer; Contacts
with the Company; the Merger Agreement" and Section 11 "Purpose of the Offer;
Plans for the Company" of the Offer to Purchase is incorporated herein by
reference.
1
<PAGE> 6
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 "Financing of the Offer and
the Merger" of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
"Background of the Offer; Contacts with the Company; the Merger Agreement" and
Section 11 "Purpose of the Offer; Plans for the Company" of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 13 "Effect of the Offer on
the Market for Common Shares, Exchange Listing and Exchange Act Registration" of
the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 8 "Certain Information
Concerning GKN, Parent and the Purchaser" and in Section 11 "Purpose of the
Offer; Plans for the Company" of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 "Certain
Information Concerning GKN, Parent and the Purchaser", Section 10 "Background of
the Offer; Contacts with the Company; the Merger Agreement" and Section 11
"Purpose of the Offer; Plans for the Company" of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 "Fees and
Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 "Certain Information Concerning GKN,
Parent and the Purchaser" of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) and (c) The information set forth in Section 15 "Certain Legal Matters
and Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 13 "Effect of the Offer on the
Market for Common Shares, Exchange Listing and Exchange Act Registration" is
incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase is incorporated
herein by reference.
2
<PAGE> 7
<TABLE>
<CAPTION>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<S> <C>
(a)(1) Offer to Purchase dated December 10, 1998.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter from Warburg Dillon Read LLC to Brokers,
Dealers, Commercial Banks, Trust Companies and Nominees.
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street
Journal on December 10, 1998.
(a)(8) Press Release issued by GKN on December 7, 1998.
(a)(9) Press Release issued by the Company on December 7, 1998.
(a)(10) Press Release issued by GKN Sinter Metals Inc. on December
7, 1998.
(a)(11) Press Release issued by GKN on December 10, 1998.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of December 5, 1998,
among Parent, the Purchaser and the Company.
(c)(2) Confidentiality Agreement dated August 26, 1998 between GKN
(United Kingdom) plc and the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
3
<PAGE> 8
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
December 10, 1998
GKN plc
By /s/ DAVID J. TURNER
------------------------------------
Name: David J. Turner
Title: Finance Director
4
<PAGE> 9
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
December 10, 1998
GKN NORTH AMERICA INCORPORATED
By /s/ GREY DENHAM
------------------------------------
Name: Grey Denham
Title: President
5
<PAGE> 10
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: December 10, 1998
GKN NORTH AMERICA MANUFACTURING INC.
By /s/ SEIFOLLAH GHASEMI
----------------------------------------
Name: Seifollah Ghasemi
Title: Vice President
6
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------
<S> <C> <C>
(a)(1) Offer to Purchase dated December 10, 1998.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter from Warburg Dillon Read LLC to Brokers,
Dealers, Commercial Banks, Trust Companies and Nominees.
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street
Journal on December 10, 1998.
(a)(8) Press Release issued by GKN on December 7, 1998.
(a)(9) Press Release issued by the Company on December 7, 1998.
(a)(10) Press Release issued by GKN Sinter Metals Inc. on December
7, 1998.
(a)(11) Press Release issued by GKN on December 10, 1998.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of December 5, 1998,
among Parent, the Purchaser and the Company.
(c)(2) Confidentiality Agreement dated August 26, 1998 between GKN
(United Kingdom) plc and the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
AND
SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
OF
THE INTERLAKE CORPORATION
AT
$7.25 NET PER SHARE OF COMMON STOCK
AND
$1,980.87 NET PER SHARE OF SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
BY
GKN NORTH AMERICA MANUFACTURING INC.
A WHOLLY OWNED SUBSIDIARY OF
GKN NORTH AMERICA INCORPORATED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON JANUARY 8, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF THE INTERLAKE CORPORATION
(THE "COMPANY") (INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS) (THE
"COMMON SHARES"), AND SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, PAR
VALUE $1.00 PER SHARE, (THE "SERIES A SHARES" AND, TOGETHER WITH THE COMMON
SHARES, THE "SHARES") OF THE COMPANY THAT (AFTER GIVING EFFECT TO THE CONVERSION
OF ALL SERIES A SHARES TO COMMON SHARES) REPRESENT AT LEAST TWO-THIRDS (66 2/3%)
OF THE OUTSTANDING COMMON SHARES ON A FULLY DILUTED BASIS ON THE DATE OF
PURCHASE (NOT TAKING INTO ACCOUNT THE COMMON STOCK PURCHASE RIGHTS) AND (2) THE
WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976
APPLICABLE TO THE PURCHASE OF THE SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR
BEEN TERMINATED.
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it, together with the certificate(s) evidencing
tendered Shares, and any other required documents, to IBJ Schroder Bank & Trust
Company (the "Depositary") (at the Depositary's address set forth on the back
cover of this Offer to Purchase) or tender such Shares pursuant to the procedure
for book-entry transfer set forth in Section 3 or (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. 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
procedure for book-entry transfer on a timely basis, may tender such Shares by
following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to MacKenzie Partners,
Inc. (the "Information Agent") or to Warburg Dillon Read LLC (the "Dealer
Manager") at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
also be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
------------------------
The Dealer Manager for the Offer is:
December 10, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION..................................................... 1
1. Terms of the Offer; Expiration Date......................... 3
2. Acceptance for Payment and Payment for Shares............... 5
3. Procedures for Accepting the Offer and Tendering Shares..... 6
4. Withdrawal Rights........................................... 9
5. Certain Federal Income Tax Consequences..................... 9
6. Price Range of Common Shares; Dividends..................... 10
7. Certain Information Concerning the Company.................. 10
8. Certain Information Concerning GKN, Parent and the
Purchaser................................................. 14
9. Financing of the Offer and the Merger....................... 17
10. Background of the Offer; Contacts with the Company; the
Merger Agreement.......................................... 17
11. Purpose of the Offer; Plans for the Company................. 27
12. Dividends and Distributions................................. 29
13. Effect of the Offer on the Market for Common Shares,
Exchange Listing and Exchange Act Registration............ 29
14. Conditions of the Offer..................................... 30
15. Certain Legal Matters and Regulatory Approvals.............. 32
16. Fees and Expenses........................................... 34
17. Miscellaneous............................................... 35
</TABLE>
Schedule I. Directors and Executive Officers of GKN, Parent and the Purchaser
<PAGE> 3
To the Holders of Common Stock and
Series A Convertible Exchangeable
Preferred Stock of The Interlake Corporation
INTRODUCTION
GKN North America Manufacturing Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of GKN North America Incorporated, a
Delaware corporation ("Parent"), hereby offers to purchase all outstanding
shares of Common Stock, par value $1.00 per share (the "Common Shares")
(including the associated Common Share purchase rights (the "Rights") issued
pursuant to that certain Rights Agreement dated as of January 26, 1989 between
the Company and The First National Bank of Chicago, as Rights Agent, as amended
(the "Rights Agreement")), of The Interlake Corporation, a Delaware corporation
(the "Company"), at a price per Common Share of $7.25 (such price, as it may
hereafter be increased, the "Common Share Offer Price"), net to the seller in
cash, and all outstanding shares of Series A Convertible Exchangeable Preferred
Stock, par value $1.00 per share, of the Company (the "Series A Shares" and,
together with the Common Shares, the "Shares"), at a price per Series A Share of
$1,980.87 (such price, as it may hereafter be increased, the "Series A Share
Offer Price" and, together with the Common Share Offer Price, the "Offer
Prices"), net to the seller in cash, in each case, upon the terms and subject to
the conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer").
The Purchaser is a corporation formed by Parent in connection with the
Offer and the transactions contemplated thereby. Parent is an indirect wholly
owned subsidiary of GKN plc, a company publicly traded in the United Kingdom and
incorporated in England in 1900 ("GKN"), and a holding company for certain of
GKN's North American subsidiaries. For information concerning GKN, Parent and
the Purchaser, see Section 8.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 7 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by the
Purchaser pursuant to the Offer. The Purchaser will pay all charges and expenses
of Warburg Dillon Read LLC, which is acting as Dealer Manager for the Offer (in
such capacity, the "Dealer Manager"), IBJ Schroder Bank & Trust Company, which
is acting as the Depositary (the "Depositary"), and MacKenzie Partners, Inc.,
which is acting as the Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT EACH OF THE OFFER AND THE MERGER (AS DEFINED BELOW) IS FAIR TO,
AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, AND RECOMMENDS
THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), the Company's
financial advisor, has delivered to the Board its written opinion that the
Common Share Offer Price and the Common Share Merger Price (as defined below)
are fair, from a financial point of view, to the holders of Common Shares. A
copy of the opinion of Morgan Stanley is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
COMMON SHARES AND SERIES A SHARES THAT (AFTER GIVING EFFECT TO THE CONVERSION OF
ALL SUCH SERIES A SHARES TO COMMON SHARES) REPRESENT AT LEAST TWO-THIRDS
(66 2/3%) OF THE OUTSTANDING COMMON SHARES ON A FULLY DILUTED BASIS ON THE DATE
OF PURCHASE (NOT TAKING INTO ACCOUNT THE RIGHTS) (THE "MINIMUM CONDITION") AND
(2) THE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF
1976 (THE "HSR ACT") APPLICABLE TO THE
1
<PAGE> 4
PURCHASE OF THE SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED.
SEE SECTION 14, WHICH SETS FORTH A DESCRIPTION OF THE CONDITIONS TO THE OFFER.
FIRST CHICAGO EQUITY CORPORATION ("FIRST CHICAGO"), THE HOLDER OF 31,500
SERIES A SHARES, CONVERTIBLE INTO COMMON SHARES REPRESENTING APPROXIMATELY 24%
OF THE OUTSTANDING COMMON SHARES ON A FULLY DILUTED BASIS (NOT TAKING INTO
ACCOUNT THE RIGHTS), HAS CONSENTED TO THE OFFER AND THE MERGER AND HAS ADVISED
GKN THAT IT INTENDS TO TENDER ALL OF ITS SERIES A SHARES IN THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 5, 1998 (the "Merger Agreement"), among Parent, the Purchaser and
the Company. The Merger Agreement provides, among other things, that, subject to
the satisfaction of the conditions to consummation of the Merger as set forth in
the Merger Agreement and in accordance with the applicable provisions of the
General Corporation Law of the State of Delaware ("Delaware Law"), the Purchaser
will be merged with and into the Company (the "Merger"). Following consummation
of the Merger, the Company will continue as the surviving corporation (the
"Surviving Corporation") and will become a wholly owned subsidiary of Parent and
an indirect wholly owned subsidiary of GKN. GKN has agreed, pursuant to the
Merger Agreement, to guarantee unconditionally the obligations of Parent and the
Purchaser thereunder.
At the effective time of the Merger (the "Effective Time"), (a) each Common
Share issued and outstanding immediately prior to the Effective Time (other than
any Common Shares held by Parent, the Purchaser, any wholly owned subsidiary of
Parent or the Purchaser, in the treasury of the Company or by any wholly owned
subsidiary of the Company and other than Common Shares held by stockholders who
shall have demanded and perfected appraisal rights under Delaware Law) will be
cancelled and converted automatically into the right to receive in cash the
Common Share Offer Price, payable to the holder thereof, without any interest
thereon, less any required withholding taxes (the "Common Share Merger Price"),
(b) each Series A Share issued and outstanding immediately prior to the
Effective Time (other than any Series A Shares held by Parent, the Purchaser,
any wholly owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly owned subsidiary of the Company and other than Series A
Shares held by stockholders who shall have demanded and perfected appraisal
rights under Delaware Law) will be cancelled and converted automatically into
the right to receive in cash the Series A Share Offer Price, payable to the
holder thereof, without any interest thereon, less any required withholding
taxes (the "Series A Merger Price") and (c) each share of Nonvoting Common
Stock, par value $1.00 per share, of the Company (the "Nonvoting Common Shares")
issued and outstanding immediately prior to the Effective Time (other than any
Nonvoting Common Shares held by Parent, the Purchaser, any wholly owned
subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly owned subsidiary of the Company and other than Nonvoting Common Shares
held by stockholders who shall have demanded and perfected appraisal rights
under Delaware Law) will be cancelled and converted automatically into the right
to receive in cash the Common Share Offer Price, payable to the holder thereof,
without any interest thereon, less any required withholding taxes (the
"Nonvoting Merger Price" and, together with the Common Share Merger Price and
the Series A Merger Price, the "Merger Consideration"). The Merger Agreement is
more fully described in Section 10.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required, the approval of the Merger by the
requisite vote of the stockholders of the Company. See Section 11. Under the
Company's Restated Certificate of Incorporation and Delaware Law, the
affirmative vote of the holders of at least two-thirds (66 2/3%) of the
outstanding Common Shares is required to approve the Merger. Consequently, if
the Purchaser acquires, pursuant to the Offer or otherwise, a number of Common
Shares and Series A Shares that (after giving effect to the conversion of all
such Series A Shares to Common Shares) represents at least two thirds (66 2/3%)
of the outstanding Common Shares, the Purchaser will have sufficient voting
power to approve the Merger without the vote of any other stockholder.
Furthermore, if the Purchaser acquires, pursuant to the Offer or otherwise, at
least 90% of the outstanding shares of each class of stock of the Company, the
Purchaser will be able to approve the Merger without a vote
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of the Company's stockholders. In such event, Parent, the Purchaser and the
Company have agreed to take, at the request of the Purchaser, all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders. If, however, the Purchaser does not acquire at least 90% of the
shares of each class of stock of the Company, and a vote of the Company's
stockholders is required under Delaware Law, a significantly longer period of
time will be required to effect the Merger. See Section 11.
Pursuant to the Rights Agreement, the Company has distributed one Right for
each outstanding Common Share. The Company has represented in the Merger
Agreement that the Board has taken all necessary action to irrevocably amend the
Rights Agreement so that neither the execution or delivery of the Merger
Agreement nor the making of the Offer or the acceptance for payment or payment
for Shares by the Purchaser pursuant to the Offer will cause the Rights to
become exercisable under the Rights Agreement, Parent or the Purchaser or any of
their affiliates to be deemed to be an Acquiring Person (as defined in the
Rights Agreement) or the Share Acquisition Date (as defined in the Rights
Agreement) to occur upon any such event.
In the Merger Agreement, Parent and the Company agree to take all actions
necessary so that, at the Effective Time of the Merger, (i) the employment of
each of Messrs. W. Robert Reum, Stephen Gregory and Stephen R. Smith will be
deemed to be terminated following a change in control, and (ii) all obligations
of the Company to each of said Company officers upon a termination following a
change in control that are dischargeable in cash, as set forth in those certain
Severance Pay Agreements dated as of March 1, 1994 (the "Severance Pay
Agreements") between the Company and each of said officers, and in that certain
Trust Agreement dated as of February 17, 1988 between the Company and U.S. Trust
Company of California, N.A., as amended to date, will have been discharged.
The Company has advised the Purchaser that, as of December 5, 1998, there
were 23,175,142 Common Shares and 40,000 Series A Shares issued and outstanding,
all of which were validly issued, fully paid and nonassessable and free of
preemptive rights, and the Company had no other shares of capital stock issued
or outstanding other than 355,313 Common Shares held in the treasury of the
Company. The Company has also advised the Purchaser that, as of December 5,
1998, it had no shares of capital stock reserved for issuance, other than
3,213,920 Common Shares reserved for issuance pursuant to Company stock
incentive programs, 10,471,204 Common Shares reserved for issuance upon
conversion of the Series A Shares and 23,530,455 Common Shares reserved for
issuance pursuant to the Rights Agreement. According to the Company, as of
December 5, 1998, there were outstanding options for 1,946,000 Common Shares,
and the Series A Shares will, as of January 1, 1999, be convertible into
10,929,000 Common Shares. Based on this information, the Purchaser believes that
there will be, as of such date, 36,050,142 Common Shares outstanding on a fully
diluted basis (after giving effect to the conversion of all Series A Shares to
Common Shares). Accordingly, the Purchaser believes that the Minimum Condition
would be satisfied if Common Shares and Series A Shares representing at least
24,033,428 Common Shares were validly tendered and not withdrawn pursuant to the
Offer.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ 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 Offer (including,
without limitation, the Minimum Condition and, if the Offer is extended or
amended, the terms and conditions of such extension or amendment), the Purchaser
will accept for payment and pay for, as soon as practicable after the expiration
of the Offer, all Shares validly tendered prior to the Expiration Date (as
hereinafter defined) and not withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on January 8, 1999,
unless and until the Purchaser (subject to the terms and conditions of the
Merger Agreement) shall have extended the period during which the Offer is open,
in which event the term
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<PAGE> 6
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
The Purchaser expressly reserves the right (subject to the terms and
conditions of the Merger Agreement), from time to time, to extend the period of
time during which the Offer is open, by giving oral or written notice of such
extension to the Depositary, for the shortest time periods that Parent
reasonably believes are necessary until the consummation of the Offer. In
addition, pursuant to the Merger Agreement, the Purchaser is permitted to extend
the Offer on one or more occasions for an aggregate period of not more than ten
business days beyond the latest expiration date if, as of such date, all of the
conditions to the Offer have been satisfied or waived by Parent, but the number
of Common Shares and Series A Shares validly tendered and not withdrawn pursuant
to the Offer (after giving effect to the conversion of all such Series A Shares
to Common Shares) equals 80% or more but less than 90% of the then outstanding
Common Shares on a fully diluted basis (not taking into account the Rights). If
the conditions to the Offer described in clauses (a) and (b) of Section 14 are
not satisfied on any scheduled expiration date of the Offer, the Purchaser will
extend the Offer from time to time until such condition is satisfied or waived
but will not in any event be required to extend the Offer beyond May 10, 1999.
During any such extension, all Shares previously tendered and not withdrawn will
remain subject to the Offer, subject to the rights of a tendering stockholder to
withdraw its, his or her Shares. See Section 4.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), the Purchaser also expressly reserves the right
(subject to the terms and conditions of the Merger Agreement), at any time and
from time to time, (i) to postpone acceptance for payment of, or payment for,
any Shares tendered, pending receipt of any regulatory approval specified in
Section 15, (ii) to terminate the Offer upon the occurrence of any of the
conditions specified in Section 14 prior to the Expiration Date and (iii) to
waive any condition or otherwise amend the Offer in any respect, by giving oral
or written notice of such postponement, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. The Merger Agreement
provides that, without the prior written consent of the Company, the Purchaser
may not decrease the Common Share Offer Price or the Series A Share Offer Price
or change the form of consideration payable in the Offer, decrease the number of
Shares sought to be purchased in the Offer, change the conditions to the Offer
or waive the Minimum Condition. The Purchaser acknowledges that (i) Rule
14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Purchaser to pay the consideration offered or return the
Shares tendered promptly after the termination or withdrawal of the Offer and
(ii) the Purchaser may not delay acceptance for payment of, or payment for, any
Shares (except as provided in clause (i) of the first sentence of this
paragraph) upon the occurrence of any of the conditions specified in Section 14
without extending the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the 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 the Purchaser
may choose to make any public announcement, the Purchaser shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service.
If the 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, the Purchaser will extend the Offer to the extent required by Rules
l4d-4(c), l4d-6(d) and 14e-1 under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, the Purchaser should decide to decrease the number of Shares being sought
or to increase or decrease the consideration being offered in the Offer, such
decrease in the number of Shares being sought or such increase or decrease in
the consideration being offered will be applicable to all stockholders whose
Shares are accepted for payment pursuant to the Offer. 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
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<PAGE> 7
Shares, the Offer is scheduled to expire at any time earlier than the period
ending on the tenth business day from and including the date that such notice is
first so published, sent or given, the Offer will be extended at least until the
expiration of such ten business day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
The Company has provided the Purchaser with 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.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment, and will pay for, all
Shares validly tendered and not properly withdrawn prior to the Expiration Date
promptly after the Expiration Date. Subject to applicable rules of the
Commission, the Purchaser expressly reserves the right to delay acceptance for
payment of, or payment for, Shares pending receipt of any regulatory approvals
specified in Section 15 or in order to comply in whole or in part with any other
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 Depositary 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 Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedure set forth in Section
3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message (as defined below) in lieu of the Letter
of Transmittal and (iii) any other documents required under the Letter of
Transmittal. The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry Confirmation that states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares that are the subject of such
Book-Entry Confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that the Purchaser may
enforce such agreement against such participant.
On December 8, 1998, GKN filed with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") a Premerger Notification and Report Form under the HSR Act with
respect to the Offer. Accordingly, it is anticipated that the waiting period
under the HSR Act applicable to the Offer will expire at 11:59 p.m., New York
City time, on December 23, 1998. Prior to the expiration or termination of such
waiting period, the FTC or the Antitrust Division may extend such waiting period
by requesting additional information from GKN with respect to the Offer. If such
a request is made with respect to the purchase of Shares in the Offer, the
waiting period will expire at 11:59 p.m., New York City time, on the tenth
calendar day after substantial compliance by GKN with such a request.
Thereafter, the waiting period may only be extended by court order. The waiting
period under the HSR Act may be terminated prior to its expiration by the FTC
and the Antitrust Division. GKN has requested early termination of the waiting
period, although there can be no assurance that this request will be granted.
See Section 15 for additional information regarding the HSR Act.
The Purchaser and the Company expect, on or about the date hereof, to
jointly file with the Committee on Foreign Investment in the United States
("CFIUS") a voluntary notice pursuant to the Exon-Florio Amendment to the
Defense Production Act of 1950 and the regulations thereunder (the "Exon-Florio
Provision"). Under the Exon-Florio Provision, the President of the United States
has the authority to prevent or rescind a transaction if he finds, after an
investigation, that there is credible evidence that leads him to
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<PAGE> 8
believe that a foreign interest acquiring or merging with a U.S. company might
take action that threatens to impair the national security. CFIUS, which
comprises various agencies of the United States Government, is charged with
conducting investigations and making recommendations to the President under the
Exon-Florio Provision. CFIUS is required under the Exon-Florio Provision to
decide whether to initiate a formal investigation within thirty calendar days
after the date of filing. If CFIUS decides to initiate a formal investigation,
it must complete the investigation and make a recommendation to the President
within 45 calendar days after commencement thereof. Thereafter, the President
must reach his decision within 15 calendar days. If CFIUS declines to
investigate, it will send a letter to the parties stating that action under the
Exon-Florio Provision is concluded. See Section 15 for additional information
regarding the Exon-Florio Provision.
The International Traffic in Arms Regulations ("ITAR") require companies,
like the Company, that are registered with the Office of Defense Trade Controls
of the United States Department of State (the "ODTC") to manufacture defense
articles to notify the ODTC 60 days in advance of a transfer of ownership or
control to a foreign person. On December 7, 1998, the Company filed with the
ODTC a notification of the proposed change in the ownership and control of the
Company. As permitted by ITAR, the Company has requested a waiver of the 60-day
notice requirement, but there can be no assurance that this request will be
granted.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from the Purchaser
and transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for Shares be paid, regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedure set forth in Section 3, such Shares will be credited to an account
maintained at the Book-Entry Transfer Facility), as promptly as practicable
following the expiration or termination of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid pursuant to the Offer for the Common Shares or the Series A Shares,
the Depositary will pay such increased consideration for all such Common Shares
and Series A Shares purchased pursuant to the Offer, whether or not such Common
Shares or Series A Shares were tendered prior to such increase in consideration.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
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, in the
case of a book-entry transfer, an Agent's Message in lieu of the Letter of
Transmittal) and any other documents required by the Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase and either (i) the certificates for tendered
Shares must be received by the Depositary at such address or such Shares must be
tendered pursuant to the
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<PAGE> 9
procedure for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary (including an Agent's Message if the
tendering stockholder has not delivered a Letter of Transmittal), in each case
prior to the Expiration Date, or (ii) the tendering stockholder must comply with
the guaranteed delivery procedures described below.
THE 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 DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer 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 the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedure 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 lieu of the Letter of Transmittal, and any other required documents, must, in
any case, be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a member in good standing in the Security Transfer
Agent Medallion Signature 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 signer of the Letter of Transmittal, or
if payment is to be made, or a Share Certificate not accepted for payment or not
tendered is to be returned to a person other than the registered holder(s), then
the Share Certificate must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appears on the Share Certificate, with the signature(s) on such Share
Certificate or stock powers guaranteed by an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and 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 Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal, are
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<PAGE> 10
received by the Depositary within three New York Stock Exchange trading
days after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the form
of Notice of Guaranteed Delivery made available by the Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser in its sole discretion, which
determination shall be final and binding on all parties. The 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. The Purchaser also reserves the absolute right to waive
any condition of the Offer or any defect or irregularity, in the tender of any
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of the Purchaser, Parent, the Dealer Manager,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the 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 the Purchaser (and with respect to any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after the date of this Offer to Purchase). All such proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts 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 the Purchaser will, with respect to the Shares for which the
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they in their sole discretion may deem proper at any
annual or special meeting of the Company's stockholders or any adjournment or
postponement thereof, by written consent in lieu of any such meeting or
otherwise. The Purchaser reserves the right to require that, in order for Common
Shares to be deemed validly tendered, immediately upon the Purchaser's payment
for such Common Shares, the Purchaser must be able to exercise full voting
rights with respect to such Common Shares.
The acceptance for payment by the Purchaser of Shares pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO
CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE
OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH STOCKHOLDER'S
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH STOCKHOLDER IS NOT
SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE
FORM W-9 IN THE LETTER OF TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH
RESPECT TO A STOCKHOLDER, THE DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY
PAYMENTS MADE TO SUCH STOCKHOLDER. SEE INSTRUCTION 10 OF THE LETTER OF
TRANSMITTAL.
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4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by the Purchaser pursuant to the Offer,
may also be withdrawn at any time after February 7, 1999. If the Purchaser
extends the Offer, is delayed in its acceptance for payment of Shares or is
unable to accept Shares for payment pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent that tendering stockholders are
entitled to withdrawal rights as described in this Section 4. Any such delay
will be by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution,
unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give 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
retendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or in the Merger will
be a taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. In
general, a stockholder will recognize gain or loss for U.S. federal income tax
purposes equal to the difference between such stockholder's adjusted tax basis
in the surrendered Shares (which generally will be the cost of such Shares to
such stockholder) and the amount of cash received in exchange therefor. Assuming
the Shares constitute capital assets in the hands of the stockholder, such gain
or loss will be capital gain or loss and, in the case of an individual
stockholder, will be taxable at a maximum rate of 20%, provided that such Shares
were held for more than one year. Gain or loss will be calculated separately for
each block of Shares tendered pursuant to the Offer or converted pursuant to the
Merger. The deduction of capital losses is subject to certain limitations.
Stockholders should consult their own tax advisors in this regard.
In general, in order to prevent backup federal income tax withholding at a
rate of 31% on the cash consideration to be received in the Offer or pursuant to
the Merger, each stockholder (other than corporations and certain other "exempt
recipients") must provide such stockholder's correct taxpayer identification
number (and certain other information) by completing the Substitute Form W-9 in
the Letter of Transmittal.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, SUCH AS FINANCIAL INSTITUTIONS, BROKER-DEALERS, PERSONS WHO
RECEIVED PAYMENT IN RESPECT OF OPTIONS TO ACQUIRE SHARES, 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.
9
<PAGE> 12
THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW, WHICH IS SUBJECT TO
CHANGE, POSSIBLY WITH RETROACTIVE EFFECT. 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 INCOME AND OTHER TAX LAWS AND CHANGES
IN SUCH TAX LAWS.
6. PRICE RANGE OF COMMON SHARES; DIVIDENDS.
The Common Shares are listed and principally traded on the New York Stock
Exchange (the "NYSE") and quoted under the symbol "IK". The Series A Shares are
not registered or listed on a national exchange or, to the best knowledge of
GKN, Parent and the Purchaser, are they quoted on an interdealer quotation
system. The Series A Shares accrue dividends at the rate of 9% per annum.
Restrictive covenants in the Company's debt instruments prohibit it from paying
dividends on the Common Shares and the Series A Shares. The Company has not paid
dividends on the Common Shares since 1989 and has never paid dividends on the
Series A Shares. The following table sets forth, for the quarters indicated, the
high and low sales prices per Common Share on the NYSE as reported by the Dow
Jones News Service.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1996:
First Quarter............................................. $2 1/2 $1 3/4
Second Quarter............................................ 3 5/8 1 7/8
Third Quarter............................................. 4 1/2 2 3/4
Fourth Quarter............................................ 4 1/4 3
1997:
First Quarter............................................. $4 1/8 $2 7/8
Second Quarter............................................ 4 1/2 3 1/4
Third Quarter............................................. 6 15/16 4 5/16
Fourth Quarter............................................ 7 1/2 3 7/8
1998:
First Quarter............................................. $5 7/16 $4 1/4
Second Quarter............................................ 4 7/8 3 7/8
Third Quarter............................................. 4 1/4 2 7/16
Fourth Quarter (through December 9, 1998)................. 7 1/8 1 7/8
</TABLE>
On December 4, 1998, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of the Purchaser's intention to
commence the Offer, the closing price per Common Share as reported on the NYSE
was $3 1/2. On December 9, 1998, the last full trading day prior to the
commencement of the Offer, the closing price per Common Share as reported on the
NYSE was $6 7/8.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON
SHARES.
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 GKN, Parent or the Purchaser 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 that may have occurred or may affect the significance
or accuracy of any such information but which are unknown to the Purchaser or
Parent.
GENERAL. The Company is a Delaware corporation with its principal
executive offices located at 550 Warrenville Road, Lisle, Illinois 60532-4387.
The Company is engaged in the design, manufacture and sale or distribution of
value-added powder metal and related products for the automotive, materials
handling and aerospace industries.
10
<PAGE> 13
FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries that has been
excerpted or derived from the audited financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 28, 1997
(the "Form 10-K") and the unaudited financial statements contained in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 27, 1998
(the "Form 10-Q"). More comprehensive financial information is included in the
Form 10-K, the Form 10-Q and other 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.
THE INTERLAKE CORPORATION
SELECTED ANNUAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------------
DECEMBER 31, DECEMBER 29, DECEMBER 28,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales from continuing operations............... $ 689,913 $ 709,585 $ 725,591
--------- --------- ---------
Income from continuing operations before
extraordinary loss and accounting change......... $ 993 $ 7,525 $ 16,370(1)
--------- --------- ---------
Net Income......................................... $ 765(2) $ 55,244(2) $ 16,721(1)(2)
--------- --------- ---------
Income from continuing operations before
extraordinary loss and accounting change per
common share:
Basic............................................ $ .04 $ .33 $ .71(1)
Diluted.......................................... $ .03 $ .24 $ .50(1)
--------- --------- ---------
Net Income per common share:
Basic............................................ $ .03(2) $ 2.39(2) $ .72(1)(2)
Diluted.......................................... $ .03(2) $ 1.74(2) $ .51(1)(2)
--------- --------- ---------
Average number of shares outstanding:
Basic............................................ 22,691 23,093 23,198
Diluted.......................................... 30,520 31,670 32,848
--------- --------- ---------
CONSOLIDATED BALANCE SHEET DATA:
Working capital
Cash and cash equivalents........................ $ 41,562 $ 70,228 $ 84,508
Debt due within one year......................... (3,759) (3,759) (27,267)
Other working capital............................ 61,968 46,492 1,895
--------- --------- ---------
Total working capital............................ 99,771 112,961 59,136
--------- --------- ---------
Total assets....................................... $ 459,802 $ 457,723 $ 373,066
--------- --------- ---------
Long-term debt, including current maturities....... 443,615 398,819 323,632
--------- --------- ---------
Convertible Exchangeable Preferred Stock........... 39,155 39,155 39,155
--------- --------- ---------
Common stockholders' equity (deficit).............. (291,677) (228,134) (197,720)
--------- --------- ---------
</TABLE>
- ---------------
(1) Includes a non-operating charge for environmental matters of $10,500 in
1997.
(2) Includes extraordinary losses on early extinguishment of debt of $1,482 in
1997, $267 in 1996 and $3,448 in 1995 and cumulative effect of changes in
accounting principles of $1,876 in 1996.
11
<PAGE> 14
THE INTERLAKE CORPORATION
SELECTED INTERIM CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
------------------------------ ------------------------------
(UNAUDITED) (UNAUDITED)
SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27,
1997 1998 1997 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.............................. $195,490 $127,706 $551,509 $396,203
Income from continuing operations
before extraordinary loss............ 491 1,186 1,240 6,662
Net Income............................. $ 840 $ 941 $ 1,591 $ 6,197
-------- -------- -------- --------
Income (loss) from continuing
operations before extraordinary loss
per common share:
Basic................................ $ .02 $ .05 $ .05 $ .29
Diluted.............................. $ .02 $ .04 $ .04 $ .20
-------- -------- -------- --------
Net Income (loss) per common share:
Basic................................ $ .04 $ .04 $ .07 $ .27
Diluted.............................. $ .03 $ .03 $ .05 $ .18
-------- -------- -------- --------
Average number of shares outstanding:
Basic................................ 23,208 23,175 23,167 23,185
Diluted.............................. 33,349 33,641 32,706 33,577
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 27, SEPTEMBER 27,
1997 1998
(UNAUDITED) (UNAUDITED)
------------ -------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital
Cash and cash equivalents................................. $ 84,508 $ 4,988
Debt due within one year.................................. (27,267) (2,120)
Other working capital 1,895 21,774
Total working capital..................................... 59,136 24,642
------------ ---------
Total assets................................................ $ 373,066 $ 334,466
------------ ---------
Long-term debt, including current maturities................ 323,632 285,622
------------ ---------
Convertible Exchangeable Preferred Stock.................... 39,155 39,155
------------ ---------
Common stockholders' equity (deficit)....................... (197,720) (192,244)
------------ ---------
</TABLE>
CERTAIN FUTURE FINANCIAL INFORMATION. In connection with Parent's review
of the Company and in the course of the negotiations between the Company and
Parent described in Section 10, the Company provided Parent and its advisors
with certain business and financial information concerning the future financial
performance of the Company on a stand-alone basis that Parent and the Purchaser
believe is not publicly available. The Company does not as a matter of course
publicly disclose internal projections as to future revenues, earnings or
financial condition. The information provided to Parent includes certain
financial projections for the fiscal years from 1998 through 2001 which were
included in the confidential descriptive memorandum provided by the Company to
Parent in August 1998 (the "Company Projections"). In addition, the Company in
October 1998 provided Parent with the strategic plan numbers for the fiscal
years 1998 through 2001 which the Company represented as having been developed
by the Company's businesses in the course of their normal strategic planning
processes (the "Company Strategy Numbers"). The Company
12
<PAGE> 15
Projections indicate, for the fiscal years from 1998 through 2001 on a
consolidated basis, an increase in sales from $533.8 million to $643.5 million,
an increase in earnings before interest and taxes ("EBIT") from $62.7 million to
$89.0 million, and an increase in earnings before interest, taxes, depreciation
and amortization ("EBITDA") from $80.2 million to $111.5 million. The Company
Strategy Numbers indicate, for the fiscal years from 1998 through 2001 on a
consolidated basis, an increase in sales from $534.9 million to $710.3 million,
an increase in EBIT from $61.7 million to $102.4 million, and an increase in
earnings per share from $0.30 in 1998 to in excess of $1.00 by 2001. Both the
Company Projections and the Company Strategy Numbers were represented as based
on the assumption that there would be no economic recession during the period to
which they pertain. The Company Projections and the Company Strategy Numbers do
not necessarily reflect the view of GKN, Parent or the Purchaser with respect to
the performance of the Company as a unit of Parent.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
CERTAIN MATTERS DISCUSSED HEREIN ARE FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. FORWARD-LOOKING STATEMENTS INCLUDE THE
INFORMATION SET FORTH ABOVE CONCERNING THE FINANCIAL PERFORMANCE OF THE COMPANY
AND ITS THREE BUSINESS SEGMENTS AND EARNINGS PER SHARE FORECASTS. SUCH
INFORMATION HAS BEEN INCLUDED IN THIS OFFER TO PURCHASE FOR THE LIMITED PURPOSE
OF GIVING THE COMPANY'S STOCKHOLDERS ACCESS TO FINANCIAL PROJECTIONS PREPARED BY
THE COMPANY'S MANAGEMENT FOR INTERNAL USE AND NOT WITH A VIEW TO PUBLICATION.
THE COMPANY PROJECTIONS AND THE COMPANY STRATEGY NUMBERS WERE BASED ON
ASSUMPTIONS CONCERNING THE COMPANY'S PRODUCTS AND BUSINESS PROSPECTS FOR THE
PERIOD FROM 1998 THROUGH 2001, INCLUDING THE ASSUMPTION THAT THE COMPANY WOULD
CONTINUE TO OPERATE UNDER THE SAME OWNERSHIP STRUCTURE AS THEN EXISTED. THE
COMPANY PROJECTIONS AND THE COMPANY STRATEGY NUMBERS WERE ALSO BASED ON CERTAIN
REVENUE AND OPERATING ASSUMPTIONS. PROJECTED INFORMATION OF THIS TYPE IS BASED
ON ESTIMATES AND ASSUMPTIONS THAT
13
<PAGE> 16
ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND
CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE
BEYOND THE COMPANY'S CONTROL. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE
PROJECTED RESULTS WOULD BE REALIZED OR THAT ACTUAL RESULTS WOULD NOT BE
SIGNIFICANTLY MORE OR LESS FAVORABLE THAN THOSE SET FORTH ABOVE. IN ADDITION,
NEITHER THE COMPANY PROJECTIONS NOR THE COMPANY STRATEGY NUMBERS GIVE EFFECT TO
THE OFFER OR THE MERGER OR COMPLY WITH THE PUBLISHED GUIDELINES OF THE
COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS. THE COMPANY PROJECTIONS
AND THE COMPANY STRATEGY NUMBERS ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY
BECAUSE THEY WERE MADE AVAILABLE TO PARENT AND ITS ADVISORS BY THE COMPANY.
NEITHER THE COMPANY PROJECTIONS NOR THE COMPANY STRATEGY NUMBERS WILL BE UPDATED
OR OTHERWISE REVISED TO REFLECT EVENTS OR CIRCUMSTANCES EXISTING OR ARISING
AFTER THE DATE OF THIS OFFER TO PURCHASE OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS, EXCEPT AS REQUIRED BY APPLICABLE LAW. NONE OF GKN, PARENT,
THE PURCHASER, THE COMPANY OR ANY OTHER PARTY ASSUMES ANY RESPONSIBILITY FOR THE
ACCURACY OR VALIDITY OF THE COMPANY PROJECTIONS OR THE COMPANY STRATEGY NUMBERS.
NEITHER THE COMPANY PROJECTIONS NOR THE COMPANY STRATEGY NUMBERS NECESSARILY
REFLECT PARENT'S OR THE PURCHASER'S VIEW WITH RESPECT TO THE PERFORMANCE OF THE
COMPANY AS A UNIT OF PARENT.
AVAILABLE INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
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
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's regional offices located at Seven World Trade Center, Suite 1300,
New York, New York 10048 and the Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. The Company's filings are also available to the
public on the SEC Internet site (http://www.sec.gov). Copies of such materials
may also be obtained by mail from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Certain
reports and other information concerning the Company may also be inspected at
the offices of the NYSE, 20 Broad Street, New York, New York 10005.
8. CERTAIN INFORMATION CONCERNING GKN, PARENT AND THE PURCHASER.
GKN is a company publicly traded in the United Kingdom and incorporated in
England in 1900. GKN's ordinary shares are listed on the London Stock Exchange
and are held by approximately 41,000 persons. As of December 5, 1998, in excess
of 711 million ordinary shares of 50 pence each were issued and outstanding. At
the end of 1997, GKN and its subsidiaries employed approximately 35,000 persons,
of whom approximately 14,800 were in the United Kingdom, 14,900 in continental
Europe and 4,500 in the United States. The principal businesses of GKN and its
subsidiaries and joint ventures are the design, development and manufacture of
automotive and agricultural machinery components and products, and aerospace and
defense products, and the provision of industrial services. GKN and its
subsidiaries and joint ventures have operations in approximately 40 countries,
with their principal operations in the United Kingdom, continental Europe and
the United States. GKN's registered office is located at P.O. Box 55, Ipsley
House, Ipsley Church Lane, Redditch, Worcestershire B98 OTL, United Kingdom. GKN
has guaranteed unconditionally the obligations of the Purchaser and Parent under
the Merger Agreement.
Parent is an indirect wholly owned subsidiary of GKN and a holding company
for certain of GKN's North American subsidiaries. The offices of Parent are
located at 3300 University Drive, Auburn Hills, Michigan.
The Purchaser is a newly incorporated Delaware corporation 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. The principal offices of
the Purchaser are located at 3300 University Drive, Auburn Hills, Michigan. The
Purchaser is a wholly owned subsidiary of Parent. Until immediately prior to the
purchase by the Purchaser of
14
<PAGE> 17
Shares pursuant to the Offer, it is not anticipated that the Purchaser will have
any significant assets or liabilities or engage in activities other than those
incidental to its formation and capitalization and matters relating to the Offer
and the Merger. Because the Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding the Purchaser is
available.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of GKN, Parent and the Purchaser are set forth on Schedule I hereto.
Except as set forth in this Offer to Purchase: (i) none of GKN, Parent or
the Purchaser nor, to the best knowledge of any of the foregoing, any of the
persons listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of any of the foregoing, beneficially owns or has a
right to acquire any Shares or any other equity securities of the Company; (ii)
none of GKN, Parent or the Purchaser nor, to the best knowledge of any of the
foregoing, any of the persons or entities referred to in clause (i) above or any
of their executive officers, directors or subsidiaries has effected any
transaction in the Shares or any other equity securities of the Company during
the past 60 days; (iii) none of GKN, Parent or the Purchaser nor, to the best
knowledge of any of the foregoing, 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, contracts, arrangements, understandings
or relationships concerning the transfer or voting thereof, joint ventures, loan
or option arrangements, puts or calls, guaranties of loans, guaranties against
loss or the giving or withholding of proxies, consents or authorizations; (iv)
since December 26, 1994, there have been no transactions or business
relationships that would be required to be disclosed under the rules and
regulations of the Commission between any of GKN, Parent or the Purchaser or any
of their respective subsidiaries or, to the best knowledge of any of GKN, Parent
or the Purchaser, any of the persons listed in Schedule I of this Offer to
Purchase, on the one hand, and the Company or any of its executive officers,
directors or affiliates, on the other hand; and (v) since December 26, 1994,
there have been no contacts, negotiations or transactions between any of GKN,
Parent or the Purchaser or any of their respective subsidiaries or, to the best
knowledge of any of GKN, Parent or the Purchaser, any of the persons listed in
Schedule I of this Offer to Purchase, on the one hand, and the Company or its
subsidiaries or 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 of the Company or any of its subsidiaries.
Except as described in the following sentence, none of GKN, Parent or the
Purchaser had any relationship with the Company prior to the commencement of the
discussions that led to the execution of the Merger Agreement. See Section 10.
GKN Sinter Metals, Inc., a Delaware corporation and an indirect wholly owned
subsidiary of Parent ("Sinter Metals"), is the largest customer of Hoeganaes
Corporation, a Delaware corporation and an 80% subsidiary of the Company
("Hoeganaes"). During the most recent fiscal year, Hoeganaes' sales to Sinter
Metals were approximately $25,300,000.
GKN's selected consolidated financial data included herein have been
prepared in accordance with generally accepted accounting principles in the
United Kingdom ("U.K. GAAP"). U.K. GAAP differs in certain significant respects
from United States generally accepted accounting principles ("U.S. GAAP"). GKN
has not determined its financial position or results of operations for any
period under U.S. GAAP. A summary of the significant differences between U.K.
GAAP and U.S. GAAP is set forth below. The Purchaser, however, believes that the
differences between the U.K. GAAP and U.S. GAAP are not material to a decision
by a holder of Shares whether to sell, tender or hold any Shares. The selected
consolidated financial data are stated in pounds sterling. On December 9, 1998,
at 21:20, Bloomberg on-line service indicated one pound sterling equaled $1.6560
U.S. dollars.
15
<PAGE> 18
Set forth below is a summary of certain selected financial information with
respect to GKN for the years ended December 31, 1996 and 1997 and the six month
periods ended June 28, 1997 and June 27, 1998.
GKN PLC
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, -------------------
------------- JUNE 28, JUNE 27,
1996 1997 1997 1998
----- ----- -------- --------
L L L L
<S> <C> <C> <C> <C>
Income Statement Data
Sales (including share of joint ventures)................. 3,337 3,383 1,687 1,800
Net Earnings (before exceptional items)................... 229 276 137 158
Earnings Per Share (before exceptional items)*............ 32.6 39.2 19.5 22.4
Balance Sheet Data
Total Assets.............................................. 2,501 2,460 2,668 2,363
Total Liabilities......................................... 1,736 1,873 2,072 1,672
Stockholders' Equity...................................... 725 554 550 679
Minority Interests -- Equity.............................. 40 33 46 12
</TABLE>
- ---------------
* Earnings per share for the first six months and full year of 1997 and for the
full year of 1996 have been adjusted to take account of the two-for-one share
split effective on May 18, 1998.
SUMMARY OF CERTAIN SIGNIFICANT DIFFERENCES BETWEEN U.K. GAAP AND U.S. GAAP
The consolidated accounts of GKN are prepared in accordance with U.K. GAAP,
which differs in certain respects from U.S. GAAP. The following is a summary of
the significant differences:
GOODWILL. Until December 31, 1997, the excess of the cost of shares in
subsidiaries and joint ventures over the fair value of underlying separable net
assets at the date of acquisition and other purchased goodwill was deducted from
GKN's consolidated stockholders' equity in the year of acquisition. Goodwill
arising in connection with acquisitions after January 1, 1998 is capitalized and
amortized on a straight-line basis over its estimated useful life up to a
maximum of 20 years. Under U.S. GAAP, goodwill is capitalized and amortized over
its estimated useful life, but not more than 40 years.
PROPERTY. Freehold and long leasehold property may be revalued and the
surplus or deficit arising on such revaluation is included in GKN's consolidated
reserves which form part of ordinary stockholders' equity. Revaluation of
freehold and long leasehold property is not permitted under U.S. GAAP.
STOCKS. Stocks are valued at the lower of cost or realizable value. In the
United Kingdom, cost of stocks, other than long-term work-in-progress, is
calculated using FIFO (first in, first out) or average. U.S. GAAP allows LIFO
(last in first out) to be used in addition to the two former methods.
DISPOSAL OF BUSINESSES. Profits and losses on disposal of a subsidiary or
associate under U.K. GAAP are calculated as the net of the surplus over (i)
carrying value plus (ii) amounts with respect to goodwill previously charged to
stockholders' equity. U.S. GAAP reflects the unamortized element of goodwill in
the calculation.
DIVIDENDS. Ordinary share dividends are provided in the financial year in
respect of which they are declared by the board of directors. Under U.S. GAAP,
such dividends are not provided for until the date declared.
16
<PAGE> 19
DEFERRED TAXATION. Deferred taxation is provided only where it is probable
that a taxation liability will crystallize. Under U.S. GAAP, as provided by
Statement of Financial Accounting Standards, full provision must generally be
made for all potential taxation liabilities.
PENSIONS. Pension costs, based on actuarial assumptions and methods, are
charged in the accounts so as to allocate the cost of providing benefits over
the service lives of employees in a consistent manner approved by the actuary.
U.S. GAAP prescribes the method of actuarial valuation and also requires assets
to be assessed at fair value and the assessment of liabilities to be based on
current interest rates.
9. FINANCING OF THE OFFER AND THE MERGER.
The total amount of funds required by Parent and the Purchaser to
consummate the Offer and the Merger, refinance the Company's outstanding
indebtedness, and to pay related fees and expenses is estimated to be
approximately $558 million. GKN has agreed to guarantee unconditionally the
obligations of Parent and the Purchaser under the Merger Agreement. GKN has
sufficient working capital to finance the Offer and the Merger and sufficient
funds from working capital and existing committed credit facilities to refinance
the Company's indebtedness and to pay transaction fees and expenses. No decision
has been made concerning which of the foregoing sources GKN will utilize. Such
decision will be made based on GKN's review from time to time of the
advisability of particular actions, as well as on prevailing interest rates and
financial and other economic conditions and such other factors as GKN may deem
appropriate.
Parent anticipates that any indebtedness incurred through borrowings under
credit facilities will be repaid from a variety of sources, which may include,
but not be limited to, funds generated internally by GKN and its subsidiaries
(including, following the Merger, funds generated by the Company) or bank
refinancing of the outstanding indebtedness. No decision has been made
concerning the method to be employed to repay such indebtedness.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER AGREEMENT
BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In light of Sinter Metals' status as Hoeganaes' largest customer,
representatives of Sinter Metals meet periodically with representatives of the
Company in the ordinary course of their business.
On July 24, 1998, Mr. Seifi Ghasemi, President and Chief Executive Officer
of Sinter Metals, met with a representative of First Chicago to discuss GKN's
interest in acquiring the Series A Shares held by First Chicago. At that
meeting, the representative of First Chicago advised Mr. Ghasemi that First
Chicago was not interested in selling its Series A Shares.
Later that day, Mr. Ghasemi met with Mr. Robert Reum, Chairman of the
Board, President and Chief Executive Officer of the Company, to discuss certain
matters arising out of the customer relationship between Sinter Metals and
Hoeganaes. At that meeting, Mr. Ghasemi discussed the growth plans of the GKN
group of companies and its possible interest in acquiring a producer of powdered
metal.
Thereafter, Mr. Reum called Mr. Ghasemi to advise him that the Company had
retained Morgan Stanley in connection with, among other things, the possible
sale of the Company. The Company and GKN (United Kingdom) plc entered into a
confidentiality agreement dated August 26, 1998. Thereafter, GKN received and
reviewed a confidential descriptive memorandum relating to the Company.
By letter dated September 22, 1998, GKN submitted a preliminary and
non-binding indication of interest in acquiring 100% of the equity of the
Company. In the letter, GKN proposed to enter into exclusive arrangements for a
defined period during which it would complete its diligence and confirm its
offer. The Company declined to enter into any such arrangement.
On October 14, 1998, representatives of the management of the Company and
Morgan Stanley made a presentation regarding the Company to representatives of
GKN. Thereafter, the parties had further discussions about the terms of a
possible transaction.
17
<PAGE> 20
By letter dated October 30, 1998, Morgan Stanley advised GKN that final
bids for the acquisition of the Company would be due on November 30, 1998. The
Company's proposed form of merger agreement was made available to GKN the week
of November 2, 1998.
On November 3, 1998, representatives of GKN and its advisors commenced
formal due diligence in a data room in Lisle, Illinois and, pursuant to
instructions given to GKN by Morgan Stanley, counsel for GKN and the Company
began the negotiation of a definitive merger agreement. During the week of
November 16, 1998, representatives of GKN advised the Company that GKN had
substantially completed its due diligence and requested that the bid date be
accelerated. In response, representatives of the Company said that the date
could not be changed in order to maintain the fairness of the process. On
November 20, 1998, the Board of Directors of GKN approved the proposed
acquisition of the Company.
On November 30, 1998, GKN submitted a final bid to acquire the Company at
$7.25 per Common Share, together with its proposed form of merger agreement.
During the week of November 30, 1998, representatives of GKN and the Company and
their respective counsel continued to negotiate the terms of the agreement. In
addition, on November 30, 1998, representatives of GKN and its counsel met with
representatives of First Chicago and Madison Dearborn Partners VIII, another
significant holder of Series A Shares. At that meeting, representatives of GKN
asked First Chicago to consider whether and how it might support the Offer and
the Merger if approved by the Board of Directors of the Company.
On December 4, 1998 and December 5, 1998, representatives of GKN, Parent,
the Purchaser and the Company finalized the terms of the Merger Agreement. On
December 4, 1998, First Chicago informed GKN that it had consented to the Offer
and the Merger and, further, that it intended to tender all of its Series A
Shares in the Offer. On December 5, 1998, the Merger Agreement was executed and
delivered by the parties.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is
filed as an Exhibit to the Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1"), filed by the Purchaser and Parent with the Commission in
connection with the Offer. Such summary is qualified in its entirety by
reference to the Merger Agreement.
THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer as promptly as reasonably practicable after the date thereof, but in
no event later than five business days after the initial public announcement of
the Purchaser's intention to commence the Offer. The obligation of the Purchaser
to accept for payment and pay for Shares tendered pursuant to the Offer will be
subject to the Minimum Condition and certain other conditions described in
Section 14 hereof. The Purchaser expressly reserves the right to waive any
condition to the Offer, to increase the price per Share payable in the Offer and
to make any other changes in the terms and conditions of the Offer; provided,
however, that, without the prior written consent of the Company, the Purchaser
may not reduce the price per Share or change the form of consideration payable
in the Offer, reduce the number of Shares sought to be purchased in the Offer,
change the conditions in the Offer or waive the Minimum Condition. The Offer
Prices will, subject to applicable withholding taxes, be net to the seller in
cash upon the terms and subject to the conditions of the Offer (including,
without limitation, the Minimum Condition). The Purchaser will pay, as promptly
as practicable after expiration of the Offer, for all Shares validly tendered
and not withdrawn. The initial expiration date for the Offer will be the
twentieth business day from and after the date the Offer is commenced, including
the date of commencement as the first business day in accordance with Rule 14d-2
under the Exchange Act. The Purchaser will be permitted to extend the Offer on
one or more occasions for an aggregate period of not more than ten business days
beyond the latest expiration date if, as of such date, all the conditions set
forth in Section 14 hereof are satisfied or waived by Parent, but the number of
Common Shares and Series A Shares validly tendered and not withdrawn pursuant to
the Offer (after giving effect to the conversion of all such Series A Shares to
Common Shares) equals 80% or more but less than 90% of the then outstanding
Common Shares on a fully diluted basis (not taking into account the Rights). If
the conditions to the Offer described in clauses (a) and (b) of Section 14 are
not satisfied on any scheduled expiration date of the Offer, the Purchaser will
extend the Offer from time to time until such condition is satisfied or waived
but will not in any
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event be required to extend the Offer beyond May 10, 1999. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the rights of a tendering stockholder to withdraw its,
his or her Shares. See Section 4.
THE MERGER. Pursuant to the Merger Agreement, the Company will, if
required by the Company's Restated Certificate of Incorporation and/or
applicable law in order to consummate the Merger, (1) duly call, give notice of,
convene and hold a special meeting of its stockholders as soon as practicable
following consummation of the Offer for the purpose of considering and taking
action on the Merger Agreement and the transactions contemplated thereby, (2)
prepare and file, in cooperation with Parent and the Purchaser, with the
Commission a preliminary proxy statement relating to the Merger and use its
reasonable best efforts (a) to obtain and furnish the information required to be
included by the Commission in the Proxy Statement (as hereinafter defined) and,
after consultation with Parent, to respond promptly to any comments made by the
Commission with respect to the preliminary proxy statement and cause a
definitive proxy statement (the "Proxy Statement") to be mailed to its
stockholders and (b) to obtain the necessary approvals of the Merger and the
Merger Agreement by its stockholders, and (3) subject to the fiduciary
obligations of the Board under applicable law as advised by outside 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 and the transactions contemplated thereby. Parent agrees
that it will vote, or cause to be voted, all of the Common Shares owned by it,
the Purchaser or any of its other subsidiaries in favor of the approval of the
Merger and the adoption of the Merger Agreement. If Parent, the Purchaser or any
other subsidiary of Parent acquires, pursuant to the Offer or otherwise, at
least 90% of the then outstanding Common Shares and at least 90% of the then
outstanding Series A Shares, if any Series A Shares are then outstanding, the
Purchaser will be able to approve the Merger without a vote of the Company's
stockholders. In such event, Parent, the Purchaser and the Company have agreed
to take, at the request of the Purchaser, all necessary and appropriate action
to cause the Merger to become effective as soon as reasonably practicable after
such acquisition, without a meeting of the Company's stockholders.
The Merger Agreement provides that, upon the terms and subject to the
conditions thereof, and in accordance with Delaware Law, at the Effective Time,
the Purchaser shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of the Purchaser will cease and the
Surviving Corporation will become a wholly owned subsidiary of Parent. Upon
consummation of the Merger, (a) each Common Share issued and outstanding
immediately prior to the Effective Time (other than any Common Shares held by
Parent, the Purchaser, any wholly owned subsidiary of Parent or the Purchaser,
in the treasury of the Company or by any wholly owned subsidiary of the Company
and other than Common Shares held by stockholders who shall have demanded and
perfected appraisal rights under Delaware Law) will be canceled and converted
automatically into the right to receive in cash the Common Share Merger Price,
payable to the holder thereof, without interest thereon, less any required
withholding taxes, (b) each Series A Share issued and outstanding immediately
prior to the Effective Time (other than any Series A Shares held by Parent, the
Purchaser, any wholly owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly owned subsidiary of the Company and
other than Series A Shares held by stockholders who shall have demanded and
perfected appraisal rights under Delaware Law) will be canceled and converted
automatically into the right to receive in cash the Series A Merger Price and
(c) each Nonvoting Common Share issued and outstanding immediately prior to the
Effective Time (other than any Nonvoting Common Shares held by Parent, the
Purchaser, any wholly owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly owned subsidiary of the Company and
other than Nonvoting Common Shares held by stockholders who will have demanded
and perfected appraisal rights under Delaware Law) will be canceled and
converted automatically into the right to receive the Nonvoting Merger Price. In
addition, at the Effective Time, each share of common stock, par value $.01 per
share, of the Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one share of common
stock, par value $.01 per share, of the Surviving Corporation.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the
obligations of Parent, the Purchaser and the Company to effect the Merger are
subject to satisfaction of customary conditions including the following: (i)
stockholder approval if required under the Company's Restated Certificate of
Incorporation
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<PAGE> 22
or applicable law, (ii) the purchase by the Purchaser of all Shares validly
tendered and not withdrawn pursuant to the Offer in accordance with the terms
thereof, and (iii) no government or subdivision thereof, administrative,
governmental or regulatory authority, agency, legislative body, court,
commission, tribunal or body, domestic, foreign or supranational (a
"Governmental Entity"), or court of competent jurisdiction having enacted any
law, rule, regulation, executive order, decree, injunction or other order having
the effect of making the acquisition of Shares by Parent or the Purchaser or any
affiliate of either of them illegal or otherwise restricting, preventing or
prohibiting consummation of the Offer or the Merger.
CHARTER DOCUMENTS; INITIAL DIRECTORS AND OFFICERS. The Merger Agreement
provides that, at the Effective Time, the Restated Certificate of Incorporation
of the Company, as in effect immediately prior to the Effective Time, will be
the certificate of incorporation of the Surviving Corporation; provided,
however, that at the Effective Time, the Restated Certificate of Incorporation
of the Company will be amended in its entirety to be substantially identical to
the Certificate of Incorporation of the Purchaser. The Merger Agreement also
provides that the by-laws of the Purchaser, as in effect immediately prior to
the Effective Time, will be the by-laws of the Surviving Corporation. Pursuant
to the Merger Agreement, the directors of the Purchaser immediately prior to the
Effective Time will be the initial directors of the Surviving Corporation. In
addition, pursuant to the Merger Agreement, the officers of the Company
immediately prior to the Effective Time will be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
COMPANY BOARD REPRESENTATION. The Merger Agreement provides that, subject
to compliance with applicable law, promptly upon the payment by the Purchaser
for Shares pursuant to the Offer and fulfillment of the Minimum Condition, and
from time to time thereafter, the Purchaser will be entitled to designate such
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as is equal to the product of the total number of
directors on the Board (determined after giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Common Shares and Series A Shares (after giving effect to the
conversion of all such Series A Shares to Common Shares) beneficially owned by
the Purchaser or its affiliates following such purchase bears to the total
number of fully diluted Common Shares (not taking into account the Rights) then
outstanding (the "Proportionate Percentage"), and the Company will, upon request
of Parent, promptly take all actions necessary to cause the Purchaser's
designees to be so elected, including increasing the size of the Board or
securing the resignations of incumbent directors or both. The Merger Agreement
also provides that at such time, the Company will use its reasonable best
efforts to cause persons designated by the Purchaser to constitute the
Proportionate Percentage of (i) each committee of the Board, (ii) each board of
directors of each domestic Subsidiary (other than Hoeganaes), (iii) each
committee of each such board, in each case to the extent permitted by applicable
law, and (iv) the directors that the Company is entitled to nominate to the
board of directors of Hoeganaes pursuant to the Amended and Restated
Stockholders Agreement, dated as of September 28, 1994, among The Interlake
Companies, Inc., a Delaware corporation, Hoganas AB, a Swedish corporation
("HB"), and Hoeganaes. The Merger Agreement also provides that, until the
earlier of (i) the time the Purchaser acquires that number of Common Shares and
Series A Shares that (after giving effect to the conversion of all such Series A
Shares to Common Shares) represents at least two-thirds (66 2/3%) of the
outstanding Common Shares on a fully diluted basis (not taking into account the
Rights) and (ii) the Effective Time, the Company will use its reasonable best
efforts to ensure that all the members of the Board and each committee of the
Board and such boards and committees of the domestic subsidiaries of the Company
as of the date of the Merger Agreement who are not employees of the Company will
remain members of the Board and of such boards and committees. The Merger
Agreement provides that, from and after the election or appointment of the
Purchaser's designees and prior to the Effective Time, any amendment or
termination of the Merger Agreement by the Company, any extension by the Company
of the time for the performance of any of the obligations or other acts of
Parent or the Purchaser or waiver of any of the Company's rights thereunder, or
any other action taken by the Board in connection with the Merger Agreement,
will require the concurrence of a majority of the directors of the Company then
in office who neither were designated by the Purchaser nor are employees of the
Company.
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COMPANY OPTION PLANS; DISCHARGE OF CERTAIN SEVERANCE OBLIGATIONS. The
Merger Agreement provides that Parent and the Company will take all actions
necessary so that, immediately prior to the acceptance for payment and purchase
of Shares by the Purchaser pursuant to the Offer, (i) each outstanding option to
purchase Common Shares (an "Option") granted under the Company's 1986, 1989,
1997 and 1998 Stock Incentive Programs (collectively, the "Option Plans"),
whether or not then exercisable or vested, shall become fully exercisable and
vested, (ii) each Option that is then outstanding will be canceled and (iii) in
consideration of such cancellation, and except to the extent that Parent or the
Purchaser and the holder of any such Option otherwise agree, immediately
following consummation of the Offer, the Company will pay to such holders of
Options an amount in respect thereof equal to the product of (a) the excess of
the Common Share Offer Price over the exercise price thereof and (b) the number
of Common Shares subject thereto (such payment to be net of taxes required by
law to be withheld with respect thereto); provided that the foregoing will be
subject to obtaining any necessary consents of holders of Options, which the
Company and Parent will use their reasonable best efforts to obtain.
In the Merger Agreement, Parent and the Company agree to take all actions
necessary so that, at the Effective Time of the Merger, (i) the employment of
each of Messrs. W. Robert Reum, Stephen Gregory and Stephen R. Smith will be
deemed to be terminated following a change in control, and (ii) all obligations
of the Company to each of said Company officers upon a termination following a
change in control that are dischargeable in cash, as set forth in the Severance
Pay Agreements, and in that certain Trust Agreement dated as of February 17,
1988 between the Company and U.S. Trust Company of California, N.A., as amended
to date, will have been discharged.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains customary
representations and warranties of the Company, including representations by the
Company as to (i) organization, qualification and similar corporate status of
the Company and its subsidiaries, (ii) the capitalization of the Company and its
subsidiaries, (iii) the authorization, execution, delivery, performance and
enforceability of the Merger Agreement, (iv) the noncontravention of the Merger
Agreement and the transactions contemplated thereby with the Company's Restated
Certificate of Incorporation or by-laws, material contracts, and orders, and the
laws or regulations to which the Company or any of its subsidiaries is a party
or by which it is bound, (v) the filing of required Commission reports and the
absence of untrue statements of material facts, or omissions of material facts
in such reports, (vi) the absence of changes or events that have had a material
adverse effect on the Company, (vii) the absence of any untrue statement of a
material fact or omission of any material fact required to be stated in any
recommendations statement of the Company's Board of Directors or document
related to the Offer, (viii) material transactions outside the ordinary course
of the Company's business consistent with past practice, (ix) real property
ownership and the possession and enforceability of real property leases, (x)
claims and litigation, (xi) the filing of tax returns and the payment of taxes,
(xii) compliance with laws, rules, statutes, orders, ordinances or regulations,
and material notes, bonds, mortgages, indentures, contracts, agreements, leases,
licenses, permits, franchise or other instruments or obligations of the Company
and the Subsidiaries, (xiii) the absence of environmental claims and compliance
with all environmental and safety laws and regulations, (xiv) possession of
necessary rights and licenses in intellectual property, (xv) employee benefit
matters, (xvi) required consents and approvals of governmental or regulatory
authorities and (xvii) labor matters.
The Merger Agreement also contains customary representations and warranties
of Parent and the Purchaser, including representations by Parent and the
Purchaser as to (i) organization, qualification and similar corporate matters of
Parent and the Purchaser, (ii) the authorization, execution, delivery,
performance and enforceability of the Merger Agreement, (iii) the
noncontravention of the Merger Agreement and the transactions contemplated
thereby with any provision of the Restated Certificate of Incorporation or
by-laws of Parent or the Purchaser, material contract, order, law or regulation
to which Parent or the Purchaser is a party or by which it is bound, (iv)
required consents and approvals of governmental or regulatory authorities, (v)
the absence of untrue statements of material facts or omissions of material
facts in any documents related to the Offer and in information provided to the
Company in connection with the Schedule 14D-1 and proxy statement, (vi) Parent's
and the Purchaser's ability to provide the funds necessary to satisfy the
Purchaser's
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<PAGE> 24
obligations under the Merger Agreement, and (vii) the beneficial ownership of
Shares by Parent or the Purchaser immediately prior to execution of the Merger
Agreement.
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the Merger Agreement,
the Company has agreed that, between the date of the Merger Agreement and the
Effective Time, unless Parent will otherwise agrees in writing, the businesses
of the Company and the Subsidiaries will be conducted only in the ordinary
course of business and in a manner consistent with past practice; and the
Company will use its reasonable best efforts to preserve intact the business
organization of the Company and the Subsidiaries, to keep available the services
of the current officers, employees and consultants of the Company and the
Subsidiaries and to preserve the current relationships of the Company and the
Subsidiaries with customers, suppliers and other persons with which the Company
or any Subsidiary has significant business relations. The Merger Agreement
provides that by way of amplification and not limitation, and except as
contemplated therein, neither the Company nor any Subsidiary shall, between the
date of the Merger Agreement and the Effective Time, directly or indirectly do,
or propose to do, any of the following, without the prior written consent of
Parent:
(a) adopt any amendment to its certificate of incorporation or by-laws
or equivalent organizational documents or the Rights Agreement;
(b) issue, reissue, sell, pledge, dispose of, grant or encumber or
authorize the issuance, reissuance, or any sale, pledge, disposition, grant
or encumbrance of (i) any shares of capital stock of any class of the
Company or any Subsidiary, or any warrants, options, convertible securities
or other rights of any kind to acquire any shares of such capital stock, or
any other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for the issuance of (x)
Common Shares and Nonvoting Common Shares upon conversion of any Series A
Shares and (y) a maximum of 2,000,000 Common Shares issuable pursuant to
employee stock options outstanding on the date of the Merger Agreement) or
(ii) any assets of the Company or any Subsidiary, except for sales in the
ordinary course of business and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other distribution
payable in cash, securities, property or otherwise, with respect to any of
its capital stock, except for the declaration and payment in the ordinary
course of business and consistent with past practice of any dividend;
provided, however, in no event shall Hoeganaes pay any dividend that has
previously been deferred;
(d) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock except
for (y) any special redemption of the Series A Shares at the Dividend
Reference Value to which the holders thereof may be entitled upon the
occurrence of a Change of Control (as such terms are defined in the
Company's Restated Certificate of Incorporation) and (z) the redemption of
the Rights;
(e) except for (i) increases in salary, wages and benefits of and,
after consultation with Parent, the establishing of annual incentive plans
for officers or employees of the Company or its Subsidiaries in the
ordinary course of business and consistent with past practice (which
incentive plans, in the case of Messrs. Reum, Gregory and Smith may be
adopted at any time after December 1, 1998), (ii) increases in salary,
wages and benefits granted to officers and employees of the Company or the
Subsidiaries in the ordinary course of business and consistent with past
practice in conjunction with new hires, promotions or other changes in job
status, (iii) increases in salary, wages and benefits to employees of the
Company pursuant to collective bargaining agreements entered into in the
ordinary course of business, (iv) the payment in calendar year 1998, with
respect solely to Messrs. Reum, Gregory and Smith of (x) annual bonuses
payable in respect of the fiscal year ending December 27, 1998 and (y)
bonuses payable for the three-year period from 1996 through 1998 pursuant
to the Long-Term Plan under the 1996 Senior Executive Incentive
Compensation Plan, it being understood that the bonuses to be paid in
calendar year 1998 will not exceed the bonuses that would have otherwise
been payable, (v) with respect solely to Messrs. Reum, Gregory and Smith,
the acceleration of vesting into calendar year 1998 of any outstanding
Options which vest by their terms upon a change in control, (vi) to the
extent set forth in the Company Disclosure Statement attached as a schedule
to the Merger Agreement, the funding or amendment of "rabbi trusts" with
respect to the Directors Post-Retirement Income Plan, the deferred
compensation
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agreements of Grant L. Johnson and Frederick C. Langenberg, and/or certain
Key Executive Severance Agreements, (vii) to the extent set forth in the
Company Disclosure Statement, the settlement of any outstanding
non-qualified pension obligations, and (viii) to the extent set forth in
the Company Disclosure Statement, the payment or transfer from The
Interlake Corporation Retirement Savings Plan and/or Employee Stock
Ownership Plan of the account balances of Messrs. Reum, Gregory and Smith,
increase the compensation or fringe benefits payable or to become payable
to its directors, officers or key employees (whether from the Company or
any of the Subsidiaries), or pay any benefit not required by any existing
plan or arrangement (including, without limitation, the granting of stock
options, stock appreciation rights, shares of restricted stock or
performance units) or grant any severance or termination pay to (except
pursuant to existing agreements, plans or policies), or enter into any
employment or severance agreement with, any director, officer or other key
employee of the Company or any of the Subsidiaries or establish, adopt,
enter into, or amend any collective bargaining, bonus, profit-sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
savings, welfare, deferred compensation, employment, termination, severance
or other employee benefit plan, agreement, trust, fund, policy or
arrangement for the benefit or welfare of any directors, officers or
current or former employees (any of the foregoing being an "Employee
Benefit Arrangement"), except in each case to the extent required by
applicable law or regulation; provided, however, that nothing herein will
be deemed to prohibit the payment of benefits as they become payable in
accordance with the terms of an Employee Benefit Arrangement;
(f) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or any
material amount of assets; (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any person,
or make any loans or advances, except in the ordinary course of business
and consistent with past practice; (iii) enter into any supply or purchase
agreements that will take in excess of 12 months to perform, or enter into
any other contract or agreement other than in the ordinary course of
business, consistent with past practice; (iv) authorize or commit to any
capital expenditure, which is in excess of amounts allocated for any and
all periods and/or any and all projects specified in the Company's 1999
Strategic Plan heretofore furnished to Parent or, with respect to the HC
2000 Project, the amount that is expressly contemplated by the Phase II
Budget for any and all periods and/or any and all projects specified in the
HC 2000 Project; (v) enter into or amend any contract, agreement commitment
or arrangement with respect to any matter set forth in this paragraph (f),
pursuant to certain budgets provided to Parent; or (vi) enter into or amend
any contract, agreement, commitment or arrangement with respect to any
matter described in this paragraph (f);
(g) 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);
(h) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or
reserved against in the consolidated balance sheet of the Company and its
subsidiaries as at September 27, 1998, or subsequently incurred in the
ordinary course of business and consistent with past practice; or
(j) agree in writing or otherwise to take any of the foregoing
actions.
EMPLOYEE BENEFIT ARRANGEMENTS. Pursuant to the Merger Agreement, Parent
agrees that the Company will honor and, from and after the Effective Time,
Parent will cause the Surviving Corporation to honor, all Employee Benefit
Arrangements to which the Company or any of its Subsidiaries is currently a
party,
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provided, however that the Merger Agreement, the Company or the Purchaser may
amend or terminate an Employee Benefit Arrangement to the extent permitted under
the terms thereof.
ACCESS TO INFORMATION; CONFIDENTIALITY. The Merger Agreement provides
that, from the date thereof until the Effective Time, the Company will, and will
cause the Subsidiaries, and each of their respective officers, directors,
employees, auditors, counsel, advisors and representatives to, provide Parent
and the Purchaser and their respective officers, directors, employees, auditors,
counsel, advisors and representatives reasonable access to the officers,
employees, agents, properties, offices, plants and other facilities and to the
books and records of the Company and the Subsidiaries, and will furnish such
persons with all financial, operating and other data and information with
respect to the business and operations of the Company and the Subsidiaries as
Parent and the Purchaser may from time to time reasonably request. The Company
will not, however, be required to make available to Parent or the Purchaser any
facilities of, or information or materials with respect to, Hoeganaes to the
extent the Company and its advisors determine that to do so would be contrary to
its obligations to the minority stockholder of Hoeganaes. Pursuant to the Merger
Agreement, unless otherwise required by law, Parent and the Purchaser will, and
will cause their representatives to, hold any such information in confidence
until such time as such information otherwise becomes publicly available through
no wrongful act of Parent, the Purchaser or the Parent Representatives. In
addition, pursuant to the Merger Agreement, Parent agrees to comply with the
terms of the confidentiality agreement previously entered into by GKN (United
Kingdom) plc with the Company.
REASONABLE BEST EFFORTS. The Merger Agreement provides that, subject to
the terms and conditions thereof, each of the parties thereto shall (i) make
promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the Merger and the Offer and (ii)
use its reasonable best efforts to take, or cause to be taken, all action, and
to do, or cause to be done, in the case of the Company, consistent with the
fiduciary duties of the Board, and to assist and cooperate with the other
parties to the Merger Agreement in doing, as promptly as practicable, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Merger and the Offer. The Merger Agreement
also provides that parties thereto will together give notice of the Transactions
promptly to the Chairman of the Committee on Foreign Investment in the United
States pursuant to the Exon-Florio Provision, and each of the parties thereto
will make such additional filings and submissions as may be reasonably necessary
under the Exon-Florio Provision in respect of the Merger and the Offer. The
Company also will promptly provide the notification to the ODTC required by ITAR
and will request a waiver of the waiting period contemplated thereby. In
addition, pursuant to the Merger Agreement, if at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
the Merger Agreement, the proper officers and directors of each party to the
Merger Agreement shall use their reasonable best efforts to take all such
action.
CONSENTS. The Merger Agreement requires that each party will use its
reasonable best efforts to obtain as promptly as practicable all consents of any
Governmental Entity or any other person required in connection with, and waivers
of any violations that may be caused by, the consummation of the Offer and the
Merger. Each party must promptly inform the other of any material communication
from the FTC, the Antitrust Division or any other domestic or foreign government
or governmental or multinational authority (each, an "Antitrust Authority")
regarding either the Offer or the Merger. If any party or any affiliate thereof
receives a request for additional information or documentary material from any
such government or authority with respect to the Offer or the Merger, then such
party must endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request. If any Antitrust Authority
raises an objection to either of the Merger or the Offer or proposes or seeks to
impose any operating restrictions in connection therewith, Parent and the
Purchaser agree, expeditiously and in good faith, to discuss such objections and
restrictions and all other possible resolutions with such Antitrust Authority.
PUBLIC ANNOUNCEMENTS. The Merger Agreement provides that, as long as it is
in effect, Parent, the Purchaser and the Company must consult with each other
before issuing any press release or otherwise making any public statement with
respect to the Merger Agreement, the Offer and the Merger and may not issue any
press release or make any such public statement prior to such consultation,
except as may be
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required by law or any listing agreement with a national securities exchange to
which Parent, an affiliate of Parent or the Company is subject.
INDEMNIFICATION. Pursuant to the Merger Agreement, Parent agrees that all
rights to indemnification now existing in favor of any employee, agent, director
or officer of the Company and its subsidiaries (the "Indemnified Parties") as
provided in their respective charters or by-laws, in an agreement between an
Indemnified Party and the Company or one of its subsidiaries, or otherwise in
effect on the date of the Merger Agreement, will survive the Merger and continue
in full force and effect for a period of not less than six years from the
Effective Time. In addition, pursuant to the Merger Agreement, the Company will,
and after the Effective Time, the Surviving Corporation shall, indemnify all
Indemnified Parties to the fullest extent permitted by applicable law with
respect to all acts and omissions arising out of such Indemnified Parties'
services as officers, directors, employees or agents of the Company or any
Subsidiary or as trustees or fiduciaries of any plan for the benefit of
employees, or otherwise on behalf of the Company or any Subsidiary, occurring
prior to the Effective Time. The Merger Agreement also provides that the
Surviving Corporation must use its best efforts to maintain in effect for six
years from the Effective Time, if available, the current policies of the
directors' and officers' liability insurance maintained by the Company. However,
the Surviving Corporation will not be required to expend more than an amount per
year equal to 200% of current annual premiums paid by the Company for such
insurance, and if the Surviving Corporation is unable to obtain such insurance,
it will obtain as much comparable insurance as possible for an annual premium
equal to such amount.
NO SOLICITATION. The Merger Agreement provides that neither the Company
nor any of the Subsidiaries will, directly or indirectly, through any directors,
officers, employees, agents, affiliates, representatives or otherwise, solicit,
initiate or encourage any inquiries or the submission of any proposal or offer
from any person with respect to any tender offer, merger, consolidation,
liquidation, recapitalization, business combination, sale of significant assets,
sales of shares of capital stock or similar transactions involving the Company
or any Subsidiary or any division of the Company or any Subsidiary (an
"Acquisition Transaction") or participate in any negotiations regarding, or
furnish to any other person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other person (other than Parent, the Purchaser or
their respective directors, officers, employees, agents and representatives)
with respect to any Acquisition Transaction or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by the Merger
Agreement. The Merger Agreement also provides that the Company may, in response
to an unsolicited proposal with respect to an Acquisition Transaction (an
"Alternative Proposal") from a third party, furnish information to, and
negotiate, explore or otherwise engage in substantive discussions with, such
third party, if the Company's Board, in good faith, deems it necessary to do so
in the exercise of its fiduciary obligations after consultation with outside
counsel and an independent nationally recognized investment banking firm. In the
Merger Agreement, the Company agrees to notify Parent promptly in writing if any
such proposal or offer, or any inquiry or contact with any person with respect
thereto, is made or if any party makes any Alternative Proposal, and to indicate
in reasonable detail the terms and conditions of, and other information
regarding, such proposal. The Company also agrees immediately to cease and cause
to be terminated all existing discussions or negotiations with any parties with
respect to any Acquisition Transaction.
REDEMPTION OF RIGHTS. The Merger Agreement provides that the Board will
take such additional action as is necessary under the Rights Agreement to ensure
that the Distribution Date (as defined therein) does not occur, and that the
Rights do not become exercisable, by virtue of this Agreement or either the
Merger or the Offer. The Company shall, upon the request of the Purchaser, take
such action, including, without limitation, redeeming all outstanding Rights
immediately prior to the time of acceptance for payment by the Purchaser of any
Shares pursuant to the Offer or thereafter at the applicable Redemption Price
(as defined in the Rights Agreement), in order to render the Rights inapplicable
to the Merger or the Offer.
TERMINATION. The Merger Agreement may be terminated and the Merger and the
other transactions contemplated thereby may be abandoned at any time prior to
the Effective Time: (a) by the mutual written consent duly authorized by the
boards of directors of Parent and the Company; (b) by the Company, upon
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approval of the Board, if (i) the Purchaser fails to commence the Offer, or (ii)
the Purchaser shall not have accepted for payment and paid for Shares pursuant
to the Offer, within five months following the commencement of the Offer (unless
such failure to pay for Shares shall have been caused by or resulted from the
failure of the Company to perform in any material respect any of its covenants
or agreements as contained in the Merger Agreement or the material breach by the
Company of its representations and warranties as contained in the Merger
Agreement); (c) by Parent at any time prior to the acceptance of Shares for
payment pursuant to the Offer if, due to an occurrence or circumstance that
would result in a failure to satisfy any condition to the Offer, (i) the
Purchaser fails to commence the Offer or (ii) the Purchaser shall not have
accepted for payment and paid for shares pursuant to the Offer within five
months following the commencement of the Offer (unless such failure shall have
been caused by or resulted from the failure of Parent or the Purchaser to
perform in any material respect any covenant or agreement of either of them
contained in the Merger Agreement or the material breach by Parent or the
Purchaser of any representation or warranty of either of them contained in the
Merger Agreement); (d) by Parent or the Company upon approval by the Board if
the Offer has expired or been terminated pursuant to its terms on account of the
failure of any condition thereto without the Purchaser having purchased any
Shares thereunder (however, this right to terminate the Merger Agreement is not
available to any party whose failure to fulfill any obligation under the Merger
Agreement has been the cause of the failure of any such condition); (e) by
Parent or the Company if the Effective Time shall not have occurred on or before
June 7, 1999 (however, this right to terminate is not available to any party
whose failure to fulfill any obligation has been the cause of the failure of the
Effective Time to occur on or before such date); (f) by Parent or the Company if
any U.S. District Court or similar competition tribunal outside the United
States shall have issued, enacted, entered, promulgated or enforced any
injunction (or other similar order) prohibiting the Offer or the Merger and such
injunction (or other similar order) shall have become final and nonappealable;
(g) by the Company, at any time prior to the acceptance for payment of Shares by
the Purchaser pursuant to the Offer, if there is an Alternative Proposal which
the Board in good faith, in the exercise of its fiduciary duties to the
Company's stockholders, determines represents a superior transaction for the
stockholders of the Company as compared to the Offer and the Merger after
consultation with outside counsel and an independent nationally recognized
investment banking firm (however, this right to terminate the Merger Agreement
is not available if (i) the Company has breached in any material respect its
obligation not to solicit other transactions, (ii) the Company has not paid
certain fees and expenses contemplated by the Merger Agreement, or (iii) the
Company has not provided Parent with at least five business days' prior written
notice); and (h) by Parent, if the Board shall have failed to recommend, or
shall have withdrawn, modified or amended in a manner adverse to Parent or the
Purchaser, its approval or recommendation of the Offer or the Merger, or shall
have recommended acceptance of any Alternative Proposal, or shall have resolved
to do any of the foregoing.
FEES AND EXPENSES. The Merger Agreement provides that generally, whether
or not the Offer or the Merger is consummated, all costs and expenses incurred
in connection with the Offer, the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such expenses.
However, to compensate Parent and its affiliates for entering into the Merger
Agreement and taking action to consummate such transactions and incurring the
costs and expenses related thereto and other losses and expenses, the Company
and Parent agree that the Company will pay Parent $10,000,000 (the "Commitment
Amount") if the Merger Agreement is terminated (A) by the Company pursuant to
the provisions described in paragraph (g) above or (B) by Parent pursuant to the
provisions described in paragraph (h) above (unless the event described therein
occurs solely as a result of Parent's willful breach in any material respect of
its representations, warranties, covenants or agreements set forth in the Merger
Agreement). The Commitment Amount will be payable (1) at the time of termination
if such amount becomes payable pursuant to the provisions described in paragraph
(A) above and (2) on the next business day following termination if such amount
becomes payable pursuant to the provisions described in paragraph (B) above. In
addition, the Merger Agreement provides that the Company shall reimburse Parent
and its affiliates for the reasonable out-of-pocket expenses of the Purchaser
and its affiliates, not to exceed $2,000,000 in the aggregate, specifically
related to the Offer, the Merger, the Merger Agreement and the transactions
contemplated thereby (including, without limitation, amounts paid or payable to
banks and investment bankers, fees and expenses of
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counsel, accountants and consultants, and printing expenses), regardless of when
those expenses are incurred, if the Merger Agreement is terminated and the
Purchaser is entitled to the Commitment Amount.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
PURPOSE OF THE OFFER. The purpose of the Offer and the Merger is to enable
Parent to acquire control of, and the entire equity interest in, the Company.
The purpose of the Merger is to acquire all Shares not purchased pursuant to the
Offer. Upon consummation of the Merger, the Company will become a wholly owned
subsidiary of Parent. The Offer is being made pursuant to the Merger Agreement.
The acquisition of the Shares not owned by Parent or the Purchaser has been
structured as a cash tender offer followed by a cash merger in order to effect a
prompt and orderly transfer of ownership of the Company from the public
stockholders to the Purchaser and to provide such stockholders with cash for all
of their Shares.
Under the Company's Restated Certificate of Incorporation and Delaware Law,
the approval of the Board and the affirmative vote of the holders of at least
two-thirds (66 2/3%) of the outstanding Common Shares is required to approve the
Merger. The Board has unanimously approved the Merger, and, unless the Merger is
consummated pursuant to the short-form merger provisions under Delaware Law
described below, the only remaining required corporate action of the Company is
the approval of the Merger by the affirmative vote of the holders of at least
two-thirds (66 2/3%) of the outstanding Common Shares. Accordingly, if the
Minimum Condition is satisfied, the Purchaser will have sufficient voting power
to cause the approval and adoption of the Merger without the affirmative vote of
any other stockholder.
In the Merger Agreement, the Company has agreed, if required by the
Company's Restated Certificate of Incorporation and applicable law, to duly
call, give notice of, convene and hold a special meeting of its stockholders as
soon as practicable following consummation of the Offer for the purpose of
considering and taking action on the Merger Agreement and the Merger. Parent has
agreed that all Shares owned by it, the Purchaser or any of its other
subsidiaries will be voted in favor of the approval of the Merger and the
adoption of the Merger Agreement.
If the Purchaser purchases Shares pursuant to the Offer, the Merger
Agreement provides that the Purchaser will be entitled to designate
representatives to serve on the Board, on the boards of directors of
subsidiaries of the Company and, to the extent the Company is entitled to
designate members to its board of directors, Hoeganaes, in proportion to the
Purchaser's ownership of Shares following such purchase. See Section 10. The
Purchaser expects that such representation would permit it to exert substantial
influence over the Company's conduct of its business and operations. The Merger
Agreement provides that, from and after the election or appointment of the
Purchaser's designees and prior to the Effective Time, any amendment or
termination of the Merger Agreement by the Company, any extension by the Company
of the time for the performance of any of the obligations or other acts of
Parent or the Purchaser or waiver of any of the Company's rights thereunder, or
any other action taken by the Board in connection with the Merger Agreement,
will require the concurrence of a majority of the directors of the Company then
in office who neither were designated by the Purchaser nor are employees of the
Company.
Under Delaware Law, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Common Shares and at least 90%
of the then outstanding Series A Shares, the Purchaser will be able to approve
the Merger without a vote of the Company's stockholders. In such event, Parent,
the Purchaser and the Company have agreed in the Merger Agreement to take, at
the request of the Purchaser, all necessary and appropriate action to cause the
Merger to become effective as soon as reasonably practicable after such
acquisition. If, however, the Purchaser does not acquire, pursuant to the Offer
or otherwise, at least 90% of the then outstanding Common Shares and at least
90% of the then outstanding Series A Shares, if any Series A Shares are then
outstanding and a vote of the Company's stockholders is required under Delaware
Law, a significantly longer period of time would be required to effect the
Merger.
NO APPRAISAL RIGHTS ARE AVAILABLE IN CONNECTION WITH THE OFFER. However, if
the Merger is consummated, stockholders will have certain rights under Delaware
Law to dissent and demand appraisal of, and to receive
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payment in cash of the fair value of, their Shares (or Nonvoting Common Shares,
if any). Such rights to dissent, if the statutory procedures are complied with,
could lead to a judicial determination of the fair value of the Shares (or
Nonvoting Common Shares, if any), as of the day prior to the date on which the
stockholders' vote was taken approving the Merger or similar business
combination (excluding any element of value arising from the accomplishment or
expectation of the Merger), required to be paid in cash to such dissenting
holders for their Shares (or Nonvoting Common Shares, if any). In addition, such
dissenting stockholders would be entitled to receive payment of a fair rate of
interest from the date of consummation of the Merger on the amount determined to
be the fair value of their Shares (or Nonvoting Common Shares, if any). In
determining the fair value of such shares, the court is required to take into
account all relevant factors. Accordingly, such determination could be based
upon considerations other than, or in addition to, the market value of the
Shares (or Nonvoting Common Shares, if any), including, among other things,
asset values and earning capacity. In Weinberger v. UOP, Inc., the Delaware
Supreme Court stated, among other things, that "proof of value by any techniques
or methods which are generally considered acceptable in the financial community
and otherwise admissible in court" should be considered in an appraisal
proceeding. Therefore, the value so determined in any appraisal proceeding could
be the same, more or less than the price per share in the Offer Prices or the
Merger Consideration.
In addition, several decisions by Delaware courts have held that, in
certain circumstances, a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders that requires that the merger
be fair to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief may
be available if a merger is found to be the product of procedural unfairness,
including fraud, misrepresentation or other misconduct.
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 the Purchaser
seeks to acquire the remaining Shares not held by it. The Purchaser believes,
however, that Rule 13e-3 will not be applicable to the Merger. 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.
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 during the pendency, and following 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 in conjunction with Parent's businesses.
It is expected that the business and operations of the Company would form an
important part of Parent's future business plans in the United States.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals that relate to or would result in an extraordinary
corporate transaction such as a merger, reorganization or liquidation involving
the Company or any subsidiary of the Company, a sale or transfer of a material
amount of assets of the Company or any subsidiary of the Company or any material
change in the Company's capitalization or dividend policy or any other material
changes in the Company's corporate structure or business, or the composition of
the Board or the Company's management.
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Upon consummation of the Offer, the Company will be required under the
terms of its outstanding 12% Senior Notes due November 15, 2001 and 12 1/8%
Senior Subordinated Debentures due March 1, 2002 (collectively the "Notes") to
make an offer to purchase all of the Notes, at a purchase price equal to 101% of
the principal amount thereof, plus accrued and unpaid interest to the date of
purchase. If all of the Notes are not tendered in response to such offer, the
Parent expects to cause the Company to exercise its option to redeem the Notes
in accordance with their terms. The timing of any such redemptions will depend
upon a number of factors, including the then applicable redemption premiums and
Parent's review of the advisability of particular actions, as well as prevailing
interest rates and such other factors as Parent may deem appropriate. In
addition, the Company has an aggregate of $11.6 million of pollution control and
industrial revenue bonds outstanding that it may elect to redeem after the
Merger.
12. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that the Company shall not, between the date
of the Merger Agreement and the Effective Time, without the prior written
consent of Parent, (a) issue, reissue, sell, pledge, dispose of, grant, encumber
or authorize the issuance, reissuance or any sale, pledge, disposition, grant or
encumbrance of any shares of capital stock of any class of the Company or any
subsidiary of the Company or any warrants, options, convertible securities or
other rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom interest),
of the Company or any subsidiary of the Company (except for the issuance of a
maximum of (x) Common Shares and Nonvoting Common Shares upon conversion of any
Series A Shares and (y) a maximum of 2,000,000 Common Shares issuable pursuant
to employee stock options outstanding on the date hereof), (b) declare, set
aside, make or pay any dividend or other distribution payable in cash,
securities, property or otherwise, with respect to any of its capital stock,
except for the declaration and payment in the ordinary course of business and
consistent with past practice of any dividend (provided, however, in no event
shall Hoeganaes pay any dividend that has previously been deferred) or (c)
split, combine, subdivide, reclassify or redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock except for (y) any special
redemption of the Series A Shares at the Dividend Reference Value to which the
holders thereof may be entitled upon the occurrence of a Change of Control (as
such terms are defined in the Company's Restated Certificate of Incorporation)
and (z) the redemption of the Rights. See Section 10.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE COMMON SHARES, EXCHANGE LISTING
AND EXCHANGE ACT REGISTRATION.
The purchase of Shares by the Purchaser pursuant to the Offer will reduce
the number of Common Shares that might otherwise trade publicly and will reduce
the number of holders of Common Shares, which could adversely affect the
liquidity and market value of the remaining Common Shares held by the public and
the value of the Series A Shares. The Purchaser intends to cause the Common
Shares not to be listed for quotation on the NYSE following consummation of the
Offer.
Depending upon the number of Common Shares purchased pursuant to the Offer,
the Common Shares may no longer meet the requirements of the NYSE for continued
listing and may be delisted from the NYSE if the Purchaser does not cause the
Common Shares to be delisted. According to the NYSE's published guidelines, the
NYSE would consider delisting the Common Shares if, among other things, the
number of record holders of at least 100 Common Shares should fall below 1,200,
the number of publicly held Common Shares (exclusive of holdings of officers,
directors and their families and other concentrated holdings of 10% or more
("NYSE Excluded Holdings")) should fall below 600,000 or the aggregate market
value of publicly held Common Shares (exclusive of NYSE Excluded Holdings)
should fall below $5,000,000. If, as a result of the purchase of Common Shares
pursuant to the Offer or otherwise, the Common Shares no longer meet the
requirements of the NYSE for continued listing and the listing of Common Shares
is discontinued, the market for the Common Shares could be adversely affected.
If the NYSE were to delist the Common Shares, it is possible that the
Common 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 other sources. The extent of the public market for such
quotations and
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the availability of such quotations would depend, however, upon such factors as
the number of stockholders and/or the aggregate market value of Common Shares
remaining at such time, the interest in maintaining such a market in the Common
Shares on the part of securities firms, the possible termination of registration
under the Exchange Act as described below and other factors. The Parent and the
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse effect on the market price
for, or marketability of, the Common Shares or the marketability of the Series A
Shares, or whether it would cause future market prices to be greater or less
than the Offer Prices for the Common Shares and the Series A Shares.
The Common 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 such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer it is possible that the Common Shares
might no longer constitute "margin securities" for purposes of the margin
regulations of the Federal Reserve Board, in which event such Common Shares
could no longer be used as collateral for loans made by brokers.
The Common Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if the Common Shares are not listed on a national securities exchange and there
are fewer than 300 record holders. The termination of registration of the Common
Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Common 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 Common Shares. In addition,
"affiliates" of the Company and persons holding "restricted securities" of the
Company may be deprived of the ability to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended. If
registration of the Common Shares under the Exchange Act were terminated, the
Common Shares would no longer be "margin securities" or be eligible for
reporting on the National Association of Securities Dealers Automated Quotation
System. The Purchaser currently intends to seek to cause the Company to
terminate the registration of the Common Shares under the Exchange Act as soon
after consummation of the Offer as the requirements for termination of
registration are met.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Purchaser will not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of, and payment for, Shares tendered, if (i) there are not validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Common Shares and Series A Shares that (after giving effect to the conversion of
all such Series A Shares to Common Shares) represents at least two-thirds
(66 2/3%) of the outstanding Common Shares on a fully diluted basis on the date
of purchase (not taking into account the Rights), (ii) any applicable waiting
period under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer, (iii) the initial review period contemplated by the
Exon-Florio Provision shall not have expired prior to the expiration of the
Offer, (iv) the waiting period under ITAR shall not have expired or been waived
prior to the expiration of the Offer or (v) at any time on or after the date of
the Merger Agreement and prior to the Expiration Date, and prior to the
acceptance for payment of Shares, any of the following conditions exists:
(a) there shall have been instituted or be pending any action or
proceeding by any Governmental Entity before any court or governmental,
administrative or regulatory authority or agency of competent jurisdiction,
(i) challenging or seeking to make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit or make materially more costly
the making of the Offer, the acceptance for payment of, or payment for, any
Shares by Parent, the Purchaser or any other affiliate of Parent, or the
consummation of the Merger, or seeking to obtain material damages in
connection with the Merger or the
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Offer; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Parent or any of their subsidiaries of all or any
material portion of the business or assets of the Company, Parent or any of
their subsidiaries, or to compel the Company, 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, Parent or any of their subsidiaries,
as a result of the Merger or the Offer; (iii) seeking to impose or confirm
limitations on the ability of Parent, the Purchaser or any other affiliate
of 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 or otherwise on all matters properly
presented to the Company's stockholders, including, without limitation, the
approval and adoption of the Merger Agreement and the Merger or the Offer;
(iv) seeking to require divestiture by Parent, the Purchaser or any other
affiliate of Parent of any Shares; or (v) which otherwise has a Material
Adverse Effect on the Company or which is reasonably likely to materially
adversely affect the business, operations, financial condition, assets or
liabilities (including, without limitation, contingent liabilities) of
Parent; or
(b) there shall have been any action taken or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
(whether preliminary or permanent) enacted, entered, enforced, promulgated,
amended or issued or deemed applicable to (i) Parent, the Company or any
subsidiary or affiliate of Parent or the Company or (ii) the Merger or the
Offer, by any Governmental Entity other than the routine application of the
waiting period provisions of the HSR Act to the Offer or the Merger, which
is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
or
(c) there shall have occurred any change, condition, event or
development that, individually or in the aggregate, would have or has had a
Material Adverse Effect on the Company; or
(d) (i) it shall have been publicly disclosed or the Purchaser shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of Common Shares representing 15% or more of the then
outstanding Common Shares, on a fully diluted basis (not taking into
account the Rights), has been acquired by any person, other than Parent,
any of its affiliates, First Chicago Equity Corporation and First Chicago
NBD Corporation, or (ii) the Board or any committee thereof shall have (A)
withdrawn or modified in a manner adverse to Parent or the Purchaser the
approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Alternative Proposal or any other
acquisition of Shares other than the Offer and the Merger or (B) resolved
to do any of the foregoing; or
(e) the Company, the Purchaser and Parent shall have agreed that the
Purchaser shall terminate the Offer or postpone the acceptance for payment
of or payment for Shares thereunder; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms; or
(g) any representation or warranty of the Company in the Merger
Agreement which is qualified as to materiality shall not be true and
correct and any such representation or warranty that is not so qualified
shall not be true and correct in all material respects, in each case as if
such representation or warranty was made as of such time on or after the
date of this Agreement, if any such failure to be true and correct,
individually or in the aggregate, would have a Material Adverse Effect or
would materially increase the amount paid to the Company's stockholders in
the Offer and the Merger; or
(h) the Company shall have breached or failed to perform in any
material respect any of its material obligations, or to comply in any
material respect with any of its material covenants or agreements under the
Merger Agreement and, with respect to any such failure that could be
remedied, shall not have remedied such failure within seven business days
after the Purchaser shall have furnished the Company with written notice of
such breach or failure; or
(i) there shall have occurred, and continued to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the
New York Stock Exchange or in the London Stock Exchange for a period in
excess of ten consecutive trading hours or (ii) a declaration of any
banking moratorium by any
31
<PAGE> 34
United Kingdom or United States federal or state authorities or any
suspension of payments in respect of banks by any such authorities;
which, in the reasonable judgment of the Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
any of its affiliates) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the benefit of Parent and the Purchaser
and may be asserted by Parent or the Purchaser regardless of the circumstances
giving rise to any such condition and, except for the Minimum Condition, may be
waived by Parent or the Purchaser in whole or in part at any time and from time
to time in their reasonable discretion, in each case, subject to the terms of
the Merger Agreement. The failure by Parent or the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and
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 which may be
asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be returned
by the Depositary to the tendering stockholders.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
GENERAL. Basing its conclusions upon its examination of publicly available
information with respect to the Company and 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 the Purchaser nor Parent is aware of any license or
other regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by the acquisition of Shares by the Purchaser pursuant to the Offer or, except
as set forth below, of any approval or other action by any domestic (federal or
state) or foreign governmental, administrative or regulatory authority or agency
that would be required prior to the acquisition of Shares by the Purchaser
pursuant to the Offer. Should any such approval or other action be required, it
is the Purchaser's present intention to seek such approval or action. The
Purchaser does not currently intend, however, to delay the purchase of Shares
tendered pursuant to the Offer pending the outcome of any such action or the
receipt of any such approval (subject to the Purchaser's right to decline to
purchase Shares if any of the conditions in Section 14 shall have occurred).
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, the Purchaser or Parent or that
certain parts of the businesses of the Company, the 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. The
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 15. See Section 14.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of Delaware Law prevents an
"interested stockholder" (generally a person who owns or has the right to
acquire 15% 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 Delaware corporation for
a period of three 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 the
transaction in which the interested stockholder became an interested
stockholder. On December 4, 1998, prior to the execution of the Merger
Agreement, the Board of Directors of the Company, by unanimous vote of all
directors approved the Merger Agreement, and determined that each of the Offer
and the Merger is fair to, and in the best interest of, the stockholders of the
Company. Accordingly, Section 203 is inapplicable to the Offer and the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such
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<PAGE> 35
states. In Edgar v. Mite Corp., the Supreme Court of the United States held that
the Illinois Business Takeover Act, which involved state securities laws that
made the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that the State of Indiana could, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining shareholders, provided that
such laws were applicable only under certain conditions.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer or the Merger and has not complied with any such
laws. Should any person seek to apply any state takeover law, the Purchaser will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer and the Merger. In such case,
the Purchaser may not be obligated to accept for payment any Shares tendered.
See Section 14.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by the Purchaser pursuant to the Offer is subject to such
requirements. See Section 2.
Pursuant to the HSR Act, GKN filed a Premerger Notification and Report Form
in connection with the purchase of Shares pursuant to the Offer with the
Antitrust Division and the FTC on December 8, 1998. Under the provisions of the
HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer
may not be consummated until the expiration of a 15-calendar-day waiting period
following the filing by GKN. Accordingly, the waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer will expire at 11:59
p.m., New York City time, on December 23, 1998, unless such waiting period is
earlier terminated by the FTC and the Antitrust Division or extended by a
request from the FTC or the Antitrust Division for additional information or
documentary material prior to the expiration of the waiting period. Thereafter,
the waiting period could be extended only by court order. Pursuant to the HSR
Act, GKN has requested early termination of the waiting period applicable to the
Offer. There can be no assurance, however, that the 15-day HSR Act waiting
period will be terminated early. If the acquisition of Shares is delayed because
the HSR waiting period is extended by a request by the FTC or the Antitrust
Division for additional information and documentary material, the Offer may be
extended and, in any event, the purchase of and payment for Shares will be
deferred until ten calendar days after the request is substantially complied
with, unless the waiting period is sooner terminated by the FTC and the
Antitrust Division. Only one extension of the waiting period under the HSR Act
pursuant to a request for additional information is authorized by the HSR Act
and the rules promulgated thereunder, except by court order. Any such extension
of the waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See Section 4. It is a condition to the Offer
that the waiting period applicable to the Offer under the HSR Act expire or be
terminated. See Section 2 and Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by the Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
the Purchaser or the divestiture of substantial assets of Parent, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Parent
relating to the businesses in which Parent, the Company and their respective
subsidiaries are engaged, Parent
33
<PAGE> 36
and the Purchaser believe that the Offer will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, what the
result would be. See Section 14 for certain conditions to the Offer, including
conditions with respect to litigation.
EXON-FLORIO. Under the Exon-Florio Provision, the President of the United
States is authorized to prohibit or suspend an acquisition, merger or takeover
by a foreign person of a person engaged in interstate commerce in the United
States if the President determines, after investigation, that (i) there is
credible evidence that leads him to believe that such a foreign person in
exercising control of such an acquired person might take action that threatens
to impair the national security of the United States and (ii) other provisions
of existing law do not provide adequate authority to protect national security.
Pursuant to the Exon-Florio Provision, notice of an acquisition, merger or
takeover by a foreign person may be made to CFIUS either voluntarily by the
parties to such proposed transaction or by any member of CFIUS. CFIUS comprises
representatives of the Departments of the Treasury, State, Commerce, Defense,
and Justice, the Offices of Management and Budget and Science and Technology
Policy, the United States Trade Representative and the Council of Economic
Advisors, as well as the Assistants to the President for National Security
Affairs and for Economic Policy.
A determination that a formal investigation is called for must be made
within 30 days after notification of a proposed acquisition, merger, or takeover
is first filed with CFIUS. If CFIUS decides to initiate a formal investigation,
it must complete the investigation and make a recommendation to the President
within 45 calendar days after the commencement thereof. Thereafter, the
President must reach his decision within 15 calendar days. If CFIUS declines to
investigate, it will send a letter to the parties stating that action under the
Exon-Florio Provision is concluded. The Exon-Florio Provision does not require
the filing of a notification, nor does it prohibit the consummation of an
acquisition, merger or takeover if a notification is not made. If no
notification is made, however, such an acquisition, merger or takeover may
remain indefinitely subject to divestment should the President subsequently
determine that the national security of the United States may be threatened or
impaired.
The Purchaser and the Company expect, on or about the date hereof, to file
with CFIUS a joint voluntary notice of the Offer and the Merger. Although the
Purchaser believes that the Offer and the Merger should not raise any national
security concerns, there can be no assurance that CFIUS will not determine to
conduct an investigation thereof and, if an investigation is commenced, there
can be no assurance regarding the outcome of such investigation.
ITAR requires companies, like the Company, that are registered with ODTC to
manufacture defense articles to notify ODTC 60 days in advance of a transfer of
ownership or control to a foreign person. On December 7, 1998, the Company filed
with the ODTC of the United States Department of State a notification of the
proposed change in the ownership and control of Hoeganaes. The Company has
requested a waiver of the 60-day notice requirement, although there can be no
assurance that this request will be granted.
16. FEES AND EXPENSES.
Except as set forth below, the Purchaser will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Shares pursuant to the Offer.
Warburg Dillon Read LLC ("WDR") is acting as Dealer Manager in connection
with the Offer and has provided certain financial advisory services in
connection with the acquisition of the Company. Parent has agreed to pay WDR
reasonable and customary compensation for its services. Parent has also agreed
to reimburse WDR for expenses reasonably incurred by it in entering into and
performing services pursuant to the engagement letter, including the reasonable
fees and expenses of legal counsel, and to indemnify WDR against certain
liabilities and expenses in connection with its engagement. GKN has agreed to
guarantee these obligations of Parent.
The Purchaser has retained MacKenzie Partners, Inc., as the Information
Agent, and IBJ Schroder Bank & Trust Company, as the Depositary, in connection
with the Offer. The Information Agent may contact
34
<PAGE> 37
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 Purchaser will pay the Information Agent reasonable and customary
compensation for its services in connection with the Offer, and will also be
reimbursed for certain out-of-pocket expenses and may be indemnified against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws. The Purchaser will pay the
Depositary reasonable and customary compensation for its services in connection
with the Offer, plus reimbursement for out-of-pocket expenses, and will
indemnify the Depositary against certain liabilities and expenses in connection
therewith, including under federal securities laws. Brokers, dealers, commercial
banks and trust companies will be reimbursed by the Purchaser for customary
handling and mailing expenses incurred by them in forwarding material to their
customers.
17. MISCELLANEOUS.
The 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 the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, the Purchaser will make a good faith effort to comply with any such
state statute. If, after such good faith effort, the Purchaser cannot comply
with any such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by the Dealer Manager or 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 THE 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, GKN, Parent and the 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 (except
that they will not be available at the regional offices of the Commission).
GKN NORTH AMERICA
MANUFACTURING INC.
December 10, 1998
35
<PAGE> 38
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
GKN, PARENT AND THE PURCHASER
A. DIRECTORS AND EXECUTIVE OFFICERS OF GKN. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years, of each
director and executive officer of GKN.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND
PRINCIPAL BUSINESS ADDRESS AT WHICH MATERIAL OCCUPATIONS
NAME SUCH OCCUPATION IS CONDUCTED WITHIN THE LAST 5 YEARS CITIZENSHIP
- ---- ----------------------------------- ----------------------- -----------
<S> <C> <C> <C>
Sir David Lees......... Chairman, Sir David Lees was appointed U.K.
GKN Chairman and Chief Executive
Sugar Quay of GKN in 1988 and became
Lower Thames Street London EC3R 6DQ non-executive Chairman on
England 1st January, 1997. He also
is non-executive Chairman of
Tate and Lyle PLC and a non-
executive director of The
Bank of England and the
Royal Opera House, Covent
Garden Ltd. He was
non-executive director of
Courtaulds plc from May 1991
until July 1996 and was
non-executive Chairman from
July 1996 until September
1998.
C.K. Chow.............. Chief Executive, Between January 1993 and U.K.
GKN January 1994, Mr. Chow was
7 Cleveland Row Group Operating Officer and
London, SW1A 1DB Chief Executive-Gases of The
England BOC Group plc. In January
1994, he was appointed to
the Board of The BOC Group
plc as Managing Director and
Chief Executive-Gases. Mr.
Chow joined GKN in July 1996
as Chief Executive designate
and became Chief Executive
on 1st January 1997. He is
also a non-executive
director of Standard
Chartered Bank plc.
Marcus Beresford....... Managing Director, Mr. Beresford joined GKN as U.K
Industrial Services an executive Director on 1st
7 Cleveland Row August 1992 and on 1st
London SW1A 1DB November 1992 he was
England appointed Managing Director,
GKN Industrial Services. He
is a non-executive director
of Aggregate Industries plc.
</TABLE>
I-1
<PAGE> 39
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND
PRINCIPAL BUSINESS ADDRESS AT WHICH MATERIAL OCCUPATIONS
NAME SUCH OCCUPATION IS CONDUCTED WITHIN THE LAST 5 YEARS CITIZENSHIP
- ---- ----------------------------------- ----------------------- -----------
<S> <C> <C> <C>
Trevor C. Bonner, Managing Director, Mr. Bonner was appointed a U.K.
CBE.................. Automotive and Agritechnical Director of GKN in 1985, a
Products Managing Director in 1987
P.O. Box 4128 Chester Road, and became Managing
Erdington, Birmingham B24 0AW Director, GKN Automotive and
England Agritechnical Products in
1994. He is a non-executive
director of Avon Rubber PLC
and LDV Ltd.
David J. Wright, CBE... Managing Director, Mr. Wright joined GKN in U.K.
Aerospace 1989 as Managing Director of
Yeovil Somerset, BA20 2YD GKN Defence. He became Chief
England Executive of GKN Defence in
May 1991 and was appointed
to the Board in April 1995
as Managing Director, GKN
Aerospace and Special
Vehicles. He is a non-
executive director of Legal
and General Recovery
Investment Trust plc.
Sarkis Kalyandjian..... Executive Director and Chief Mr. Kalyandjian joined GKN U.S.A.
Executive, in 1992. He was appointed
GKN Automotive Driveline Division Chief Executive, GKN
Postfach 1152 Automotive Driveline
53784 Lohmar Division in October 1996 and
Germany to the Board in August 1997.
Richard W. Etches...... Human Resources Director, GKN Mr. Etches joined GKN on U.K.
7 Cleveland Row appointment to the Board on
London SW1A 1DB 1st October 1997. Between
England October 1991 and November
1996 Mr. Etches was Senior
Vice President of Human
Resources of Grand
Metropolitan PLC's USA Food
Sector.
David J. Turner........ Finance Director, Mr. Turner joined GKN in U.K.
GKN November 1993 on appointment
7 Cleveland Row to the Board as Finance
London SW1A 1DB Director. He is director of
England the Iron Trades Insurance
Group.
Roy D. Brown........... Business Group President for Food In May 1992 Mr. Brown was U.K.
and Beverages in Europe, appointed Regional Director-
Unilever plc Africa and Middle East,
Weena 455, 3013 AL Central and Eastern Europe
Rotterdam of Unilever plc and in
Netherlands January 1997 he was
appointed Business Group
President for Food and
Beverages in Europe. He is a
director of Unilever plc and
Unilever NV. He was
appointed a non-executive
director of GKN in January
1996.
</TABLE>
I-2
<PAGE> 40
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND
PRINCIPAL BUSINESS ADDRESS AT WHICH MATERIAL OCCUPATIONS
NAME SUCH OCCUPATION IS CONDUCTED WITHIN THE LAST 5 YEARS CITIZENSHIP
- ---- ----------------------------------- ----------------------- -----------
<S> <C> <C> <C>
The Baroness Hogg...... Chairman, Between 1990 and 1995, U.K.
London Economics Baroness Hogg was Head of
(Holdings) the Policy Unit at No. 10
66 Chiltern Street Downing Street. In December
London W1M 1PR 1995 she became a Director
England of London Economics and was
appointed Chairman in
January 1997. The Baroness
was appointed a
non-executive director of
GKN in November 1996.
Dr. Klaus H. Murmann... Chairman and Chief Executive Dr. Murmann has been German
Officer, Chairman and Chief Executive
Sauer-Sundstrand Group Officer of Sauer-Sundstrand
Krokamp 35, Postfach 2460 Group since April 1989. He
24531 Neumunster, was appointed a
Germany non-executive director of
GKN in 1995.
Sir Bryan Nicholson.... Chairman, Sir Bryan has been Chairman U.K.
British United of British United Provident
Provident Association Ltd Association (BUPA) since
BUPA House March 1992. In December
15-19 Bloomsbury Way 1991, he was appointed a
London WC1A 2BA non- executive director of
England GKN plc. He was appointed
Chairman of the Cookson
Group plc on 1st October
1998.
Dr. T. John Parker..... Chairman, Dr. Parker was appointed U.K.
Babcock International Group plc Joint Deputy Chairman and
The Lodge Badminton Court Chief Executive of Babcock
Church Street Amersham International Group plc in
Bucks HP7 0DD October 1993 and became
England Chairman in July 1994. He
was appointed a
non-executive Director of
GKN in 1993.
Grey Denham............ Company Secretary, Mr. Denham joined GKN in U.K.
GKN 1980, became Head of Legal
P.O. Box 55 Ipsley House Department in 1986, Chairman
Ipsley Church Lane of GKN Group Services Ltd in
Redditch, Worcestershire 1995 and was appointed
B98 OTL Company Secretary in May
England 1996.
</TABLE>
I-3
<PAGE> 41
B. DIRECTORS AND EXECUTIVE OFFICERS 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 and business addresses thereof for the past five years, of each
director and executive officer of Parent
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND
PRINCIPAL BUSINESS ADDRESS AT WHICH MATERIAL OCCUPATIONS
NAME SUCH OCCUPATION IS CONDUCTED WITHIN THE PAST FIVE YEARS CITIZENSHIP
- ---- ----------------------------------- -------------------------- -----------
<S> <C> <C> <C>
Grey Denham............ President of Parent; Mr. Denham joined GKN in U.K.
Company Secretary, 1980, became Head of Legal
GKN Department in 1986, Chairman
P.O. Box 55, Ipsley House of GKN Group Services Ltd in
Ipsley Church Lane, Redditch 1995 and was appointed
Worcestershire, B98 OTL Company Secretary in May
England 1996.
Ken Walker............. Director of Parent; Between July 1992 and U.S.A.
President and Chief Executive February 1996, he was
Officer, President and Chief
Meineke Discount Muffler Shops Inc. Executive Officer of GKN
128 S. Tyron Street Parts Industries
Suite 900 Corporation. He was
Charlotte, North Carolina 28202 appointed President and
U.S.A. Chief Executive Officer of
Meineke Discount Muffler
Shops Inc. in February 1996.
Tom Stone.............. Director of Parent; Mr. Stone was appointed Vice U.S.A.
Chief Executive Officer, President, Operations of GKN
GKN Automotive Inc. in May 1997
Automotive Inc. and Chief Executive Officer
Operations Center in January 1998. He was Vice
6400 Durham Road President of Varity from
Timberlake, North Carolina 27583 February 1995 until
U.S.A. September 1996 and Vice
President of Lucas Varity
from September 1996 until
May 1997.
Jean G. Hanson......... Director of Parent; Between 1993 and 1994, she U.S.A.
Partner of Fried Frank, was General Counsel of the
Harris Shiver and Jacobson United States Department of
1 New York Plaza the Treasury. From 1994, she
New York, NY 10004-1980 has been a Partner at the
U.S.A. law firm Fried Frank, Harris
Shiver and Jacobson.
David Rood............. Director of Parent; Mr. Rood was appointed Group U.K.
Chief Accountant, Chief Accountant, GKN in
GKN April 1991.
P.O. Box 55, Ipsley House
Ipsley Church Lane, Redditch
Worcestershire, B98 OTL
England
Nigel M. Stein......... Director of Parent; Between March 1994 and U.K.
Vice President Finance and Chief January 1998, he was
Financial Officer, Director and Controller of
GKN GKN Sankey Ltd. He was
Sinter Metals Division appointed Vice President
3300 University Drive Finance and Chief Financial
Auburn Hills, MI 48326-2362 Officer of GKN Sinter
U.S.A. Metals, Inc. in January
1998.
</TABLE>
I-4
<PAGE> 42
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND
PRINCIPAL BUSINESS ADDRESS AT WHICH MATERIAL OCCUPATIONS
NAME SUCH OCCUPATION IS CONDUCTED WITHIN THE PAST FIVE YEARS CITIZENSHIP
- ---- ----------------------------------- -------------------------- -----------
<S> <C> <C> <C>
John Hughes............ Vice President of Parent; Between May 1993 and April U.K.
Deputy Finance Director, 1996, he was Deputy Finance
GKN Director and Treasurer of
P.O. Box 55, Ipsley House GKN and in April 1996 he
Ipsley Church Lane, Redditch became Deputy Finance
Worcerstershire, B98 OTL Director, GKN.
England
John Giannangeli....... Vice President and Secretary of He was appointed Vice U.S.A.
Parent; Vice President-Finance and President Finance and
Administration and Treasurer, Administration and Treasurer
GKN Automotive Inc. of GKN Automotive Inc. in
3300 University Drive 1990.
Auburn Hills, MI 48326-2362
U.S.A.
Alan Tatum............. Secretary of Parent; Between 1990 and December U.S.A.
U.S. Tax Manager, 1996 he was a tax accountant
GKN Group with Ford Motor Company. In
3300 University Drive December 1996 he became the
Auburn Hills, MI 48326-2362 U.S. Tax Manager for the GKN
U.S.A. Group.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name, address, citizenship and present principal occupation or
employment, and material occupations, positions, offices or employments and
business addresses thereof for the past five years, of each director and
executive officer of the Purchaser.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND
PRINCIPAL BUSINESS ADDRESS AT WHICH MATERIAL OCCUPATIONS
NAME SUCH OCCUPATION IS CONDUCTED WITHIN THE PAST FIVE YEARS CITIZENSHIP
- ---- ----------------------------------- -------------------------- -----------
<S> <C> <C> <C>
David J. Turner........ Chairman of the Board and Mr. Turner joined GKN in U.K.
President, November 1993 on appointment
GKN North America Manufacturing to the Board as Finance
Inc. Director. He is a director
3300 University Drive of the Iron Trades Insurance
Auburn Hills, MI 48326-2362 Group.
U.S.A.
Finance Director, GKN
7 Cleveland Row
London SWIA 4DW
England
Seifollah Ghasemi...... Director and Vice President, GKN Mr. Ghasemi was President of U.S.A.
North America Manufacturing Inc. B0C Gases Americas from 1993
3300 University Drive until 1998. In February
Auburn Hills, MI 48326-2362 1998, he became Chief
U.S.A. Executive Officer and
President of GKN Sinter
Chief Executive Officer and Metals Division
President,
GKN Sinter Metals Division
3300 University Drive
Auburn Hills, MI 48326-2362
U.S.A.
</TABLE>
I-5
<PAGE> 43
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND
PRINCIPAL BUSINESS ADDRESS AT WHICH MATERIAL OCCUPATIONS
NAME SUCH OCCUPATION IS CONDUCTED WITHIN THE PAST FIVE YEARS CITIZENSHIP
- ---- ----------------------------------- -------------------------- -----------
<S> <C> <C> <C>
Rufus Ogilvie Smals.... Treasurer and Secretary, Mr. Ogilvie Smals joined GKN U.K.
GKN North America Manufacturing in 1975, became Deputy Head
Inc. of Legal Department in 1987
3300 University Drive and was appointed Head of
Auburn Hills, MI 48326-2362 Legal Department of GKN in
U.S.A. October 1995.
Head of Legal Department, GKN
Ipsley House
Ipsley Church Lane
Redditch B98 OTL
England
Simon C.C. Pryce....... Director, Between 1993 and August 1996 U.K.
GKN North America Manufacturing he was a director at Lazard
Inc. Brothers & Co. Ltd. In
3300 University Drive August 1996, he was
Auburn Hills, MI 48326-2362 appointed Senior Vice
U.S.A. President of Morgan
Guarantee Trust Company and
Director of Corporate Finance, GKN in February 1998, he was
7 Cleveland Row appointed Director of
London SWIA 40W Corporate Finance of GKN.
England
</TABLE>
I-6
<PAGE> 44
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 or her broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand:
</TABLE>
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Courier:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank and Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing
Attn: Reorganization Operations Department Windon, Subcellar One (SC-1)
</TABLE>
Facsimile Transmission Number:
(For Eligible Institutions Only)
(212) 858-2611
Confirm Receipt of Facsimile by Telephone:
(212) 858-2103
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of 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:
LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL FREE: 1-800-322-2885
The Dealer Manager for the Offer is:
WARBURG LOGO
299 Park Avenue
New York, NY 10171
Tel.: (212) 821-2873
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
AND
SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
OF
THE INTERLAKE CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 10, 1998
BY
GKN NORTH AMERICA MANUFACTURING INC.
A WHOLLY OWNED SUBSIDIARY OF
GKN NORTH AMERICA INCORPORATED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JANUARY 8, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Courier:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing
Attn: Reorganization Operations Department Windon, Subcellar One, (SC-1)
</TABLE>
Facsimile Transmission Number:
(For Eligible Institutions Only)
(212) 858-2611
Confirm Receipt of Facsimile by Telephone:
(212) 858-2103
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or if tender of Shares is to be
made by book-entry transfer to the account maintained by the Depositary at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedure set forth in Section 3 of the Offer to Purchase (as defined below).
Stockholders who tender Shares by book-entry transfer are referred to herein as
"Book-Entry Stockholders" and other stockholders are referred to herein as
"Certificate Stockholders." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates (or who cannot comply with the book-entry
transfer procedure on a timely basis) and all other documents required hereby to
the Depositary prior to the Expiration Date (as defined in the Offer to
Purchase) must tender their Shares according to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR FACSIMILE COPY HEREOF (TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY FOR SHARES, MUST BE RECEIVED BY
THE DEPOSITARY PRIOR TO THE EXPIRATION DATE. DELIVERY OF THIS INSTRUMENT TO AN
ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA
FACSIMILE OR TELEX OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
<PAGE> 2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTION 2 AND 4)
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED BY NUMBER
CERTIFICATE SHARE OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
any certificate(s) delivered to the Depositary are being tendered hereby.
See Instruction 4.
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
Window Ticket No. (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution that Guaranteed Delivery
If delivery is by book-entry transfer, give the following:
DTC Account Number
Transaction Code Number
- --------------------------------------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
GKN North America Manufacturing Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of GKN North America Incorporated, a
Delaware corporation ("Parent"), hereby offers to purchase all of the issued and
outstanding shares of Common Stock, par value $1.00 per share (the "Common
Shares") (including the associated Common Share purchase rights (the "Rights")
issued pursuant to that certain Rights Agreement dated as of January 26, 1989
between the Company and The First National Bank of Chicago, as Rights Agent, as
amended), of The Interlake Corporation, a Delaware corporation (the "Company"),
at a price per Common Share of $7.25, net to the seller in cash, and all of the
outstanding shares of Series A Convertible Exchangeable Preferred Stock, par
value $1.00 per share, of the Company (the "Series A Shares," and, together with
the Common Shares, the "Shares"), at a price per Series A Share of $1,980.87,
net to the seller in cash, in each case, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated as of December 10, 1998 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, as amended, together with the Offer to Purchase,
constitute the "Offer"). The undersigned understands that the Purchaser reserves
the right to transfer or assign, in whole or from time to time in part, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer.
Subject to and effective upon acceptance for payment of the Shares tendered
herewith, in accordance with the terms of the Offer, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Purchaser all right,
title and interest in and to all the Shares that are being tendered hereby and
all dividends, distributions (including, without limitation, distributions of
additional Shares) and rights declared, paid or distributed in respect of such
Shares on or after December 5, 1998 (collectively, "Distributions") and
irrevocably appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates (as defined in Section 3 of the Offer to Purchase) evidencing
such Shares and all Distributions, or transfer ownership of such Shares and all
Distributions on the account books maintained by a Book-Entry Transfer Facility,
together, in either case, with all accompanying evidences of transfer and
authenticity, to or upon the order of the Purchaser, (ii) present such Shares
and all Distributions for transfer on the books of the Company and (iii) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares and all Distributions, all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints the Purchaser and any other
designees of the Purchaser as the attorneys and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or his substitute shall, in his sole discretion, deem proper and
otherwise act (by written consent or otherwise) with respect to all the Shares
tendered hereby which have been accepted for payment by the Purchaser prior to
the time of such vote or other action and all Shares and other securities issued
in Distributions in respect of such Shares, which the undersigned is entitled to
vote at any meeting of stockholders of the Company (whether annual or special
and whether or not an adjourned or postponed meeting) or consent in lieu of any
such meeting or otherwise. This proxy and power of attorney is coupled with an
interest in the Shares tendered hereby, is irrevocable and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares by the Purchaser in accordance with other terms of the Offer. Such
acceptance for payment shall revoke all other proxies and powers of attorney
granted by the undersigned at any time with respect to such Shares (and all
Shares and other securities issued in Distributions in respect of such Shares),
and no subsequent proxy or power of attorney shall be given or written consent
executed (and if given or executed, shall not be effective) by the undersigned
with respect thereto. The undersigned understands that, in order for Shares to
be deemed validly tendered, immediately upon the Purchaser's acceptance of such
Shares for payment, the Purchaser must be able to exercise full voting and other
rights with respect to such Shares, including, without limitation, voting at any
meeting of the Company's stockholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that when such Shares are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restriction, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
assignment and transfer of the Shares tendered hereby and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of the Purchaser all Distributions in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and
pending such remittance and transfer or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby, or deduct from such the Purchaser price, the amount or value of such
Distribution as determined by the Purchaser in its sole discretion.
<PAGE> 4
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. The Purchaser's acceptance of such Shares for
payment will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions", please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered". Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions", please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered". In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions", please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased by crediting the
account at the Book-Entry Transfer Facility. The undersigned recognizes that the
Purchaser has no obligation, pursuant to the Special Payment Instructions, to
transfer any Shares from the name of the registered holder(s) thereof if the
Purchaser does not purchase any of the Shares tendered hereby.
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned, or if Shares delivered by book-entry transfer which are
not accepted for payment are to be returned by credit to an account
maintained at a Book-Entry Transfer Facility other than account indicated
above.
Issue [ ] Check [ ] Certificate(s) to:
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
ZIP Code
------------------------------------------------------------
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 on reverse side)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase of Shares accepted
for payment are to be sent to someone other than the undersigned, or to
the undersigned at an address other than that below.
Issue [ ] Check [ ] Share Certificate(s) to:
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
ZIP Code
------------------------------------------------------------
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 on reverse side)
------------------------------------------------------------
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated:
- --------------------------- , 199__
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing by a person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 5).
Name(s):------------------------------------------------------------------------
PLEASE PRINT
Capacity (full title):
----------------------------------------------------------------
Address:
-------------------------------------------------------------------------
ZIP Code
Area Code and Telephone No.:
--------------------------------------------------------
<PAGE> 6
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
----------------------------------------------------------------
Name: --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT
Name of Firm:
---------------------------------------------------------------------
Address:
-------------------------------------------------------------------------
ZIP Code
Area Code and Telephone Number:
-----------------------------------------------------
Dated:--------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR USE BY FINANCIAL INSTITUTION ONLY.
FINANCIAL INSTITUTIONS: PLACE MEDALLION
GUARANTEE IN SPACE BELOW.
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) which is a participant in the Securities Transfer Agents Medallion
Program, or the Stock Exchange Medallion Program (each of the foregoing
constitutes an "Eligible Institution"). Signatures on the Letter of Transmittal
need not be guaranteed (a) if this Letter of Transmittal is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares) tendered herewith and such holder(s)
has (have) not completed the instruction entitled "Special Payment Instruments"
and/or "Special Delivery Instructions" on this Letter of Transmittal or (b) if
such Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates are to be
forwarded herewith or if tenders are to be made pursuant to the procedure for
delivery by book-entry transfer set forth in Section 3 of the Offer to Purchase.
For a stockholder validly to tender Shares, certificates for all physically
tendered Shares or any Book-Entry Confirmation (as defined in the Offer to
Purchase), as the case may be, as well as a properly completed and duly executed
Letter of Transmittal must be received by the Depositary at one of its addresses
set forth herein prior to the Expiration Date (as defined in the Offer to
Purchase), or the tendering stockholder must comply with the guaranteed delivery
procedures set forth below and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedure for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery for Shares pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedures, (i) such tender must be made by or through an
Eligible Institution, (ii) a properly completed and duly executed Notice of
guaranteed Delivery for Shares substantially in the form provided by the
Purchaser must be received by the Depositary prior to the Expiration Date and
(iii) the certificates (or a Book-Entry Transfer Confirmation) representing all
tendered Shares, in proper form for transfer, in each case together with this
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
this Letter of Transmittal are received by the Depositary within three New York
Stock Exchange ("NYSE") trading days after the date of execution of such Notice
of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES AND THE OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF SENT BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares and for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
SIGNED schedule and attached hereto.
4. PARTIAL TENDERS. If fewer than all the Shares evidenced by any
certificate submitted are to be tendered, fill in the number of Shares which are
to be tendered in the box entitled "Number of Shares Tendered." In such case,
new certificate(s) for the remainder of the Shares that were evidenced by the
old certificate(s) will be sent to the registered holder(s), unless otherwise
provided in the appropriate box on the Letter of Transmittal, as soon as
practicable after the Expiration or Date. All Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
joint holders, all such holders must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
<PAGE> 8
When this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made, or certificates
for Shares not tendered or purchased are to be issued, to any person other than
the registered holder(s). Signatures on such certificate(s) and stock powers
must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person or persons other than
the registered holder(s) of the certificate(s) listed, then the certificate(s)
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holder or holders
appear(s) on the certificates. Signatures on certificates or stock powers
required by this Instruction 5 must be guaranteed by an Eligible Institution,
unless the signature is that of an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
person should so indicate when signing, and proper evidence satisfactory to
Purchaser of their authority so to act must be submitted.
6. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name(s) of, and/or certificates for unpurchased or untendered Shares are
to be issued to, a person(s) other than the signer(s) of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to someone other than the signer of this Letter of Transmittal or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer may request that Shares not purchased be credited to such account
maintained at the Book-Entry Transfer Facility. If no such instructions are
given, such Shares not purchased will be returned by crediting the account at
the Book-Entry Transfer Facility designated above.
7. STOCK TRANSFER TAXES. The Purchaser will pay or cause to be paid any
stock transfer taxes applicable with respect to the transfer and sale of
purchased Shares to the Purchaser pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or if certificate(s) for Shares not
tendered or not accepted for payment are to be registered in the name of, any
person(s) other than the person(s) signing this Letter of Transmittal, the
amount of any stock transfer taxes (whether imposed on the registered owner or
such person(s)) payable on account of the transfer to such person(s) will be
deducted from the purchase price unless satisfactory evidence of the payment of
such taxes, or exemption therefrom, is submitted. Except as provided in this
Instruction 7, it will not be necessary for transfer tax stamps to be affixed to
the certificates listed in this Letter of Transmittal.
8. WAIVER OF CONDITIONS. Subject to the Agreement and Plan of Merger
dated as of December 5, 1998 among Parent, the Purchaser and the Company, the
Purchaser reserves the absolute right, in its sole discretion, to waive any of
the specified conditions of the Offer, in whole or in part, in the case of any
Shares tendered.
9. REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase, this Letter
of Transmittal, the Notice of Guaranteed Delivery for Shares and the Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 may
be obtained from, the Information Agent or the Dealer Manager at their addresses
set forth below or from your broker, dealer, commercial bank or trust company.
10. SUBSTITUTE FORM W-9. Each tendering stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the stockholder's social security or federal employer's identification
number, on Substitute Form W-9, which is provided below. You must cross out item
(2) in the Certification box on Substitute Form W-9 if you are subject to backup
withholding. Failure to provide the information on the form may subject the
tendering stockholder or other payee with respect to Shares purchased pursuant
to the Offer. The box in Part 3 of the form may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked and the
Depositary is not provided with a TIN within sixty (60) days, thereafter the
Depositary will withhold 31% on all such payments of the purchase price until a
TIN is provided to the Depositary.
IMPORTANT TAX INFORMATION
Under the federal tax law, a stockholder whose tendered Shares are accepted
for payment is required by law to provide the Depositary with stockholder's
correct TIN on Substitute Form W-9 below. If such stockholder is an individual,
the TIN is his social security number. If the Depositary is not provided with
the correct TIN, the stockholder or other payee may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made to
such stockholder or other payee with respect to Shares purchased pursuant to the
Offer may be subject to backup withholding.
<PAGE> 9
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit to the Depositary a properly completed
Internal Revenue Form W-8, signed under penalties of perjury, attesting to that
stockholder's exempt status. A Form W-8 can be obtained from the Depositary. See
the enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder or other payee. Backup withholding is
not an additional tax. Rather, the federal income tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made to a stockholder or other
payee with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of the stockholder's correct TIN by completing
the form below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such stockholder is awaiting a TIN) and that (1) the
stockholder has not been notified by the Internal Revenue Service that the
stockholder is subject to backup withholding as a result of a failure to report
all interest or dividends or (2) the Internal Revenue Service has notified the
stockholder that the stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
<PAGE> 10
PAYER'S NAME:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1 -- Taxpayer Identification Number -- For -------------------------------
FORM W-9 all accounts, enter your taxpayer Social Security Number
PAYER'S REQUEST FOR TAXPAYER identification number in the box at right. (For OR --------------------------------
IDENTIFICATION NUMBER (TIN) most individuals, this is your social security Employer Identification
number. If you do not have a number, see Number
Obtaining a Number in the enclosed Guidelines.) (If awaiting TIN write
Certify by signing and dating below. Note: If "Applied For")
the account is in more than one name, see the
chart in the enclosed Guidelines to determine
which number to give the payer.
----------------------------------------------------------------------------------------
PART II -- For Payees Exempt from Backup Withholding, see the enclosed Guidelines and
complete as instructed therein.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of failure to report all interest or
dividends, or the IRS has notified me that 1 am no longer subject to
backup withholding.
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
- --------------------------------------------------------------------------------
SIGNATURE DATE , 199
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THIS OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 11
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll Free: 1-800-332-2885
The Dealer Manager for the Offer is:
[WARBURG DILLON READ LLC LOGO]
299 Park Avenue
New York, NY 10171
(212) 821-2873
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
AND
SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
OF
THE INTERLAKE CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 10, 1998
BY
GKN NORTH AMERICA MANUFACTURING INC.
A WHOLLY OWNED SUBSIDIARY OF
GKN NORTH AMERICA INCORPORATED
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of Common Stock, par value $1.00 per
share (the "Common Shares")(including the associated Common Share purchase
rights (the "Rights") issued pursuant to that certain Rights Agreement dated as
of January 26, 1986 between the Company and The First National Bank of Chicago,
as Rights Agent, as amended), of The Interlake Corporation, a Delaware
corporation (the "Company"), and shares of Series A Convertible Exchangeable
Preferred Stock, par value $1.00 per share (the "Series A Shares" and, together
with the Common Shares, the "Shares"), of the Company, are not immediately
available and (ii) if Share Certificates and all other required documents cannot
be delivered to the Depositary prior to the expiration of the Offer (as defined
in Section 1 of the Offer to Purchase) or (iii) if the procedure for delivery of
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram
or facsimile transmission to the Depositary. See Section 3 in the Offer to
Purchase.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Courier:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing
Attn: Reorganization Operations Department Windon, Subcellar One (SC-1)
</TABLE>
Facsimile Transmission Number:
(For Eligible Institutions Only)
(212) 858-2611
Confirm Receipt of Facsimile by Telephone:
(212) 858-2103
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If
a signature on a Letter of Transmittal is required to be guaranteed by an
"Eligible Institution" under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the signature box on the Letter
of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to GKN North America Manufacturing Inc. (the
"Purchaser"), upon the terms and subject to the conditions set forth in the
Offer to Purchase dated December 10, 1998 and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer"), receipt of which is hereby acknowledged, the number
(indicated below) of Shares pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase.
Number of Shares being tendered hereby: Shares
<TABLE>
<S> <C>
- ------------------------------------------------ ------------------------------------------------
Certificate No(s). SIGN HERE:
(if available):
----------------------------------------------
- ---------------------------------------------- (Signature(s))
If Shares will be tendered by book-entry ----------------------------------------------
transfer: (Name(s) of Record Holders)
(Please Print)
Name of Tendering Institution
------------------------- ----------------------------------------------
(Address)
Account No. at
----------------------------------------------
The Depository Trust Company (Zip Code)
----------------------------------------------
(Telephone No.)
- ------------------------------------------------ ------------------------------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) which is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program, or the Stock Exchange Medallion Program, hereby (a)
represents that the above named person(s) "own(s)" the Shares tendered hereby
within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as
amended, (b) represents that such tender complies with Rule 14e-4 and (c)
guarantees to deliver to the Depositary the Shares tendered hereby, together
with a properly completed and duly executed Letter(s) of Transmittal (or
facsimile(s) thereof) or an Agent's Message as defined in the Offer to Purchase
in the case of a book-entry delivery, and any other required documents, all
within three New York Stock Exchange trading days of the date hereof.
<TABLE>
<S> <C>
- ------------------------------------------------ ------------------------------------------------
---------------------------------------------- ----------------------------------------------
(Name of Firm) (Authorized Signature)
---------------------------------------------- ----------------------------------------------
(Address) (Name)
---------------------------------------------- ----------------------------------------------
(Zip Code) (Title)
----------------------------------------------
(Telephone No.)
Dated:
----------------------------------------- , 199
----- .
- ------------------------------------------------ ------------------------------------------------
</TABLE>
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM.
YOUR STOCK CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL.
<PAGE> 1
WARBURG DILLON READ LLC
299 PARK AVENUE
NEW YORK, NY 10171
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
AND
SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
OF
THE INTERLAKE CORPORATION
AT
$7.25 NET PER SHARE OF COMMON STOCK
AND
$1,980.87 NET PER SHARE OF SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
BY
GKN NORTH AMERICA MANUFACTURING INC.
A WHOLLY OWNED SUBSIDIARY
OF
GKN NORTH AMERICA INCORPORATED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JANUARY 8, 1999, UNLESS THE OFFER IS EXTENDED.
December 10, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by GKN North America Manufacturing Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of GKN North America
Incorporated, a Delaware corporation ("Parent"), to act as Dealer Manager in
connection with the Purchaser's offer to purchase all of the issued and
outstanding shares of Common Stock, par value $1.00 per share (the "Common
Shares")(including the associated Common Share purchase rights (the "Rights")
issued pursuant to that certain Rights Agreement dated as of January 26, 1989
between the Company and The First National Bank of Chicago, as Rights Agent, as
amended), of The Interlake Corporation, a Delaware corporation (the "Company"),
at a price per Common Share of $7.25, net to the seller in cash, and all of the
outstanding shares of Series A Convertible Exchangeable Preferred Stock, par
value $1.00 per share, of the Company (the "Series A Shares," and, together with
the Common Shares, the "Shares"), at a price per Series A Share of $1,980.87,
net to the seller in cash, in each case upon the terms and subject to the
conditions set forth in the Agreement and Plan of Merger dated as of December 5,
1998 and the Offer to Purchase dated as of December 10, 1998 and the related
Letter of Transmittal which, together may be amended from time to time,
constitute the "Offer".
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
COMMON SHARES AND SERIES A SHARES THAT (AFTER GIVING EFFECT TO THE CONVERSION OF
ALL SUCH SERIES A SHARES TO COMMON SHARES) REPRESENT AT LEAST TWO-THIRDS
(66 2/3%) OF THE ISSUED AND OUTSTANDING COMMON SHARES OF THE COMPANY ON A FULLY
DILUTED BASIS (NOT TAKING INTO ACCOUNT THE COMMON
<PAGE> 2
SHARE PURCHASE RIGHTS) AND (2) THE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976 APPLICABLE TO THE PURCHASE OF THE SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated December 10, 1998;
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients, together with Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding (facsimile copies of the
Letter of Transmittal may be used to tender Shares);
3. Notice of Guaranteed Delivery to be used to accept the Offer if
the certificates for the Shares being tendered and all other required
documents cannot be delivered to the Depositary by the Expiration Date as
defined in the Offer to Purchase or if the procedure for book-entry
transfer cannot be completed by the Expiration Date;
4. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer; and
5. A letter to the Company's stockholders from the President and
Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9, filed with the
Securities and Exchange Commission by the Company and mailed to
stockholders of the Company recommending that the Company's stockholders
accept the Offer and tender their Shares.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT NEW YORK CITY TIME, ON JANUARY 8, 1999, UNLESS THE
OFFER IS EXTENDED.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay for the Shares
which are validly tendered prior to the expiration of the Offer and not
theretofore properly withdrawn when, as and if the Purchaser gives oral or
written notice to the Depositary of the Purchaser's acceptance of such Shares
for payment pursuant to the Offer. Payment for the Shares purchased pursuant to
the Offer will in all cases be made only after timely receipt by the Depositary
of certificates for the Shares or timely confirmation of a book-entry transfer
of such Shares into the Depositary's account at The Depository Trust Company,
pursuant to the procedure described in Section 3 of the Offer to Purchase, a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) or an Agent's Message in connection with a book-entry
transfer, and all other documents required by the Letter of Transmittal.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents on or prior to the
expiration of the Offer or to comply with the book-entry transfer procedure on a
timely basis, a tender may be effected by following the guaranteed delivery
procedure specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than to the Dealer Manager as described in the Offer to
Purchase) for soliciting tenders of the Shares pursuant to the Offer. The
Purchaser will, however, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding materials to their customers. The Purchaser will
pay all stock transfer taxes applicable to its purchase of Shares pursuant to
the Offer, subject to Instruction 7 of the Letter of Transmittal.
2
<PAGE> 3
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, any of
the Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover page of the Offer to Purchase and the Letter of
Transmittal.
Very truly yours,
WARBURG DILLON READ LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF THE PURCHASER, THE DEALER MANAGER, THE INFORMATION
AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
AND
SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
OF
THE INTERLAKE CORPORATION
AT
$7.25 NET PER SHARE OF COMMON STOCK
AND
$1,980.87 NET PER SHARE OF SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
BY
GKN NORTH AMERICA MANUFACTURING INC.
A WHOLLY OWNED SUBSIDIARY OF
GKN NORTH AMERICA INCORPORATED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JANUARY 8, 1999, UNLESS THE OFFER IS EXTENDED.
December 10, 1998
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated December
10, 1998 (the "Offer to Purchase"), and a related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer") in connection
with the Offer by GKN North America Manufacturing Inc., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of GKN North America
Incorporated, a Delaware corporation ("Parent"), to purchase all of the issued
and outstanding shares of Common Stock, par value $1.00 per share (the "Common
Shares")(including the associated Common Share purchase rights (the "Rights")
issued pursuant to that Certain Rights Agreement dated as of January 26, 1989
between the Company and The First National Bank of Chicago, as Rights Agent, as
amended), of The Interlake Corporation, a Delaware Corporation (the "Company"),
at a price per Common Share of $7.25, net to the seller in cash, and all of the
outstanding shares of Series A Convertible Exchangeable Preferred Stock, par
value $1.00 per share, of the Company (the "Series A Shares" and, together with
the Common Shares, the "Shares"), at a price per Series A Share of $1,980.87,
net to the seller in cash, in each case, upon the terms and subject to the
conditions set forth in the Agreement and Plan of Merger dated as of December 5,
1998 (the "Merger Agreement"), among Parent, the Purchaser and the Company, and
the Offer to Purchase. The Offer is being made pursuant to the Merger Agreement.
The Merger Agreement provides, among other things, that, subject to the
satisfaction of the conditions to consummation of the Merger as set forth in the
Merger Agreement and in accordance with the applicable provisions of the General
Corporation law of the State of Delaware, the Purchaser will be merged with and
into the Company (the "Merger"). We are the holder of record of Shares held by
us for your account. A tender of such Shares can be made only by us as the
holder of record and pursuant to your instructions. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
<PAGE> 2
PLEASE NOTE CAREFULLY THE FOLLOWING:
1. The tender price is $7.25 per Common Share, net to the seller in
cash, and $1,980.87 per Series A Share, net to the seller in cash.
2. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on January 8, 1999, unless the Offer is extended.
3. The Offer is being made for all the issued and outstanding Shares
(including the Rights).
4. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF COMMON SHARES AND SERIES A SHARES THAT (AFTER GIVING EFFECT TO
THE CONVERSION OF ALL SUCH SERIES A SHARES TO COMMON SHARES) REPRESENT AT
LEAST TWO-THIRDS (66-2/3%) OF THE ISSUED AND OUTSTANDING COMMON SHARES OF
THE COMPANY ON A FULLY DILUTED BASIS (NOT TAKING INTO ACCOUNT THE RIGHTS)
AND (2) THE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976 APPLICABLE TO THE PURCHASE OF THE SHARES PURSUANT
TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED.
5. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 7 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by the Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
set forth below. An envelope to return your instructions to us is enclosed. If
you authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified in your instructions.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
JANUARY 8, 1999, UNLESS THE PURCHASER EXTENDS THE OFFER.
The Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with such state statute. If,
after such good faith effort, the Purchaser cannot comply with such state
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares in such state.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
AND
SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
OF
THE INTERLAKE CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated December 10, 1998, and the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer") in connection with the offer by GKN North America Manufacturing Inc., a
Delaware corporation and a wholly owned subsidiary of GKN North America
Incorporated, a Delaware corporation, to purchase all of the issued and
outstanding shares of Common Stock, par value $1.00 per share (the "Common
Shares")(including the associated Common Share purchase rights issued pursuant
to that certain Rights Agreement dated as of January 26, 1989 between the
"Company" and the First National Bank of Chicago, as Rights Agent, as amended
(the "Rights Agreement")), of The Interlake Corporation, a Delaware corporation
(the "Company") and all of the outstanding shares of Series A Convertible
Exchangeable Preferred Stock, par value $1.00 per share, of the Company (the
"Series A Shares," and together with the Common Shares, the "Shares").
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
- --------------------------------------------------------------------------------
Number of Shares to be Tendered:
-------------------- Shares(1)
Account Number:
--------------------------------------------
Dated:
-----------------------------, 199_
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s):
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Print Name(s):
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Print Address(es):
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
--------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
----------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------
(1) Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. TWO or more individuals (Joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(l)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(l)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(l)
trustee)
b. So-called trust account that is The actual owner(l)
not a legal or valid trust
under state law
6. Sole proprietorship account The owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
7. A valid trust, estate or pension The legal entity
trust (Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
8. Corporate account The corporation
9. Religious, charitable or The organization
educational organization account
10. Partnership account held in the The partnership
name of the business
11. Association, club or other tax- The organization
exempt organization
12. A broker or registered nominee The broker or
nominee
13. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state or
local government, school district
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a Social Security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your Social Security number or
employer identification number (if you have one).
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEE EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under Section 501(a) or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United States or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government or any
agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An exempt charitable remainder trust or a nonexempt trust described in
Section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations. Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041(a), 6045
and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest
or other payments to give taxpayer identification numbers to payers who must
report the payments to the IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated December 10, 1998 and the related Letter of
Transmittal, and is being made to all holders of Shares. The Purchaser (as
defined below) is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with such state statute. If,
after such good faith effort, the Purchaser cannot comply with such state
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares in such state. In any jurisdiction where the
securities, blue sky or other laws require the offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Warburg Dillon Read LLC or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Common Stock Purchase Rights)
and
Series A Convertible Exchangeable Preferred Stock
of
The Interlake Corporation
at
$7.25 Net Per Share of Common Stock
and
$1,980.87 Net Per Share of Series A Convertible Exchangeable Preferred Stock
by
GKN North America Manufacturing Inc.
a Wholly Owned Subsidiary of
GKN North America Incorporated
GKN North America Manufacturing Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of GKN North America Incorporated, a
Delaware corporation ("Parent"), hereby offers to purchase all of the issued and
outstanding shares of Common Stock, par value $1.00 per share (the "Common
Shares") (including the associated Common Share purchase rights (the "Rights")
issued pursuant to that certain Rights Agreement dated as of January 26, 1989
between the Company and The First National Bank of Chicago, as Rights Agent, as
amended (the "Rights Agreement")), of The Interlake Corporation, a Delaware
corporation (the "Company"), at a price per Common Share of $7.25 (the "Common
Share Offer Price"), net to the seller in cash, and all of the outstanding
shares of Series A Convertible Exchangeable Preferred Stock, par value $1.00 per
share, of the Company (the "Series A Shares" and, together with the Common
Shares, the "Shares"), at a price per Series A Share of $1,980.87 (the "Series A
Share Offer Price" and, together with the Common Share Offer Price, the "Offer
Prices"), net to the seller in cash, in each case, upon the terms and subject to
the conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JANUARY 8, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Common Shares and Series A Shares that (after giving effect to the conversion of
all Series A Shares to Common Shares) represent at least two-thirds (66 2/3%) of
the outstanding Common Shares on a fully diluted basis on the date of purchase
(not taking into account the Rights) (the "Minimum Condition") and (2) the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
applicable to the purchase of Shares pursuant to the Offer having expired or
been terminated. See Section 14 of the Offer to Purchase, which sets forth a
description of the conditions to the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 5, 1998 (the "Merger Agreement"), among Parent, the Purchaser and
the Company. The Merger Agreement provides, among other things, that, subject to
the satisfaction of the conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware ("Delaware Law"), the Purchaser will be merged with and into
the Company (the "Merger"). Following consummation of the Merger, the Company
will continue as the surviving corporation and will become a wholly owned
subsidiary of Parent and an indirect wholly owned subsidiary of GKN plc. At the
effective time of the Merger (the "Effective Time"), (a) each Common Share and
each share of Nonvoting Common Stock, par value $1.00 per share, of the Company
(the "Nonvoting Common Shares") issued and outstanding immediately prior to the
Effective Time (other than any Common Shares and Nonvoting Common Shares held by
Parent, the Purchaser, any wholly owned subsidiary of Parent or the Purchaser,
in the treasury of the Company or any wholly owned subsidiary of the Company and
other than Common Shares and Nonvoting Common Shares held by stockholders who
shall have demanded and perfected appraisal rights, if any, under Delaware Law)
will be cancelled and converted automatically into the right to receive $7.25 in
cash, without interest, less any withholding taxes, and (b) each Series A Share
issued and outstanding immediately prior to the Effective Time (other than any
Series A Shares held by Parent, the Purchaser, any wholly owned subsidiary of
Parent or the Purchaser, in the treasury of the Company or any wholly owned
subsidiary of the Company and other than Series A Shares held by stockholders
who shall have demanded and perfected appraisal rights, if any, under Delaware
Law) will be cancelled and converted automatically into the right to receive
$1,980.87 in cash, without interest, less any withholding taxes.
<PAGE> 2
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
FIRST CHICAGO EQUITY CORPORATION, THE HOLDER OF 31,500 SERIES A SHARES,
CONVERTIBLE INTO COMMON SHARES REPRESENTING APPROXIMATELY 24% OF THE OUTSTANDING
COMMON SHARES OF THE COMPANY ON A FULLY DILUTED BASIS (NOT TAKING INTO ACCOUNT
THE RIGHTS), HAS CONSENTED TO THE OFFER AND THE MERGER AND HAS ADVISED GKN PLC
THAT IT INTENDS TO TENDER ALL OF ITS SERIES A SHARES IN THE OFFER.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to IBJ
Schroder Bank & Trust Company (the "Depositary") of the Purchaser's acceptance
for payment of such Shares pursuant to the Offer. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payments from the Purchaser and transmitting such payments to
tendering stockholders whose Shares have been accepted for payment. Under no
circumstances will interest on the purchase price for Shares be paid, regardless
of any delay in making such payment. In all cases, payment for Shares tendered
and accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) the certificates evidencing such Shares (the
"Share Certificates") or timely confirmation of a book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility (as
defined in Section 2 of the Offer to Purchase) pursuant to the procedure set
forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or
a facsimile thereof), properly completed and duly executed, with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message (as defined in Section 2 of the Offer to Purchase) and (iii) any other
documents required under the Letter of Transmittal.
The Purchaser expressly reserves the right (subject to the terms and
conditions of the Merger Agreement), from time to time, to extend the period of
time during which the Offer is open, by giving oral or written notice of such
extension to the Depositary, for the shortest time periods that Parent
reasonably believes are necessary until consummation of the Offer. Any such
extension will be followed as promptly as practicable by public announcement
thereof, such announcement to be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date
(as defined in Section 1 of the Offer to Purchase). During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the rights of a tendering stockholder to withdraw its, his or
her Shares. In addition, the Purchaser shall be permitted to extend the Offer
for an aggregate period of up to ten business days beyond the latest expiration
date if, as of such date, all of the conditions set forth in the Merger
Agreement are satisfied or waived by Parent, but the number of Common Shares
validly tendered and not withdrawn pursuant to the Offer equals 80% or more but
less than 90%, of the then outstanding Common Shares on a fully diluted basis
(not taking into account the Rights).
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City
time, on January 8, 1999 (or the latest time and date at which the Offer, if
extended by the Purchaser, shall expire) and, unless theretofore accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after February 7, 1999. For the withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
page of the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holder of such Shares, if
different from that of the person who tendered such Shares. If Share
Certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase), unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares. All
questions as to the form and validity (including the time of receipt) of any
notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and 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 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 information required to be disclosed by Rule 14d-6(e)(1)(vii) 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 OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the Offer
to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent or the Dealer Manager as set
forth below, and copies will be furnished promptly at the Purchaser's expense.
No fees or commissions will be paid to brokers, dealers or other persons (other
than the Information Agent and the Dealer Manager) for soliciting tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
[MACKENZIE LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll Free (800) 322-2885
The Dealer Manager for the Offer is:
WARBURG DILLON READ LLC
299 Park Avenue
New York, NY 10171
(212) 821-2873
December 10, 1998
<PAGE> 1
Exhibit (a)(8)
7 December 1998
GKN plc to acquire The Interlake Corporation of the US
GKN plc announces that it has today entered into a merger agreement to acquire
The Interlake Corporation in a move that strengthens the group's powdered metals
and aerospace businesses.
Under the agreement GKN will acquire The Interlake Corporation for $553
million ((pound)335 million) including the assumption of approximately $292
million ((pound)177 million) of debt. GKN will shortly commence a tender offer
for all of the outstanding common shares at $7.25 per share and for the Series
A preferred stock at a price equivalent to $7.25 per underlying common share.
The consideration for the tender offer will be satisfied in cash from GKN's
existing resources.
First Chicago Equity Corporation, the holder of 31,500 shares of preferred stock
of Interlake, convertible into approximately 25% of the fully diluted equity of
Interlake, has consented to the transaction and has advised GKN that it intends
to tender all of its shares in the offer. The transaction is subject to the
expiration or waiver of applicable regulatory waiting periods and other
customary conditions and the tender offer is expected to close in January 1999.
The Interlake Corporation comprises three businesses, all leaders in their
respective markets.
The Hoeganaes Corporation in which Hoganas AB of Sweden has a 20% minority
interest, is the leading supplier of ferrous powdered metals in North
America, the main material used by GKN Sinter Metals.
Chem-tronics Inc. is the leading US producer of advanced, lightweight
structural components for aerospace engines in the civil, military and
<PAGE> 2
space markets and has a strong position in the aftermarket for engine
fan blade repair.
Interlake Material Handling is the leader in pallet and container racking,
dynamic storage and conveyor system markets in the US and produces a range
of storage systems for use in distribution centres, warehouses, and retail
facilities.
Interlake's audited financial statement for the year ended 28 December 1997, as
adjusted for businesses sold during 1997, showed sales of $483.5 million
((pound)293 million) and operating profit of $44.4 million ((pound)26.9
million). Interlake reported total pre-tax profits of $37.3 million ((pound)22.6
million) reflecting a gain on disposal of $35.6 million ((pound)21.6 million)
partially offsetting the interest cost of its high coupon debt. Sales and
operating profit for the nine months to 27 September, 1998 were $396.2 million
((pound)240.1 million) and $42.5 million ((pound)25.8 million) respectively, 11%
and 12% higher than the continuing operations reported for the same period last
year.
A meeting for analysts and investors of GKN plc has been organised at 9:30am
today at the Warburg Dillon Read Conference Centre, 1 Finsbury Avenue, London
EC2 followed by a media briefing at 11.00am.
At this meeting it will be reported that GKN's existing businesses are
continuing to trade satisfactorily. Looking forward to 1999, GKN is confident of
further progress driven by increasing deliveries in its Aerospace business and
continued growth in Industrial Services. While the market environment for
automotive operations is likely to be less favourable, these businesses are
strongly positioned to compete in a challenging environment.
<PAGE> 3
CK Chow, GKN's Chief Executive commenting on the Interlake acquisition said:
"The acquisition of Interlake presents a unique opportunity to build upon two of
our growth platforms in a single acquisition. We believe that the addition of
Hoeganaes will allow us to build on its technology to drive rapid growth in the
powder metal markets. At the same time Chem-tronics builds further upon our
recent aerospace acquisitions in the US and brings with it a number of exciting
future civil and military programmes. Interlake Material Handling will be
managed in our Industrial Services portfolio selling to similar customers and
markets as Chep.
"This is a strategically important acquisition for GKN and another important
step forward in our well established and successful growth strategy. It is
expected to be earnings enhancing before goodwill amortisation in the first
year."
Powder Metal - The Hoeganaes Corporation
Projected 1998 Sales $200m
The Hoeganaes Corporation is the leading supplier of ferrous powdered metals in
North America. It is a major supplier to GKN Sinter Metals. It is a low cost
producer utilising both the atomising and sponge production process and is also
a technology leader with a number of patented products and processes. It has
four operations in the USA; New Jersey, Pennsylvania (2 sites) and Tennessee and
employs 520 people.
<PAGE> 4
About 60% of Hoeganaes' customers are auto parts manufacturers for structural
applications such as transmissions, engines and suspension systems. The
combination of Hoeganaes' material technologies and GKN Sinter Metals' product
expertise and manufacturing skills, will lead to even more powder metal
components replacing cast and forged structural parts.
There is also a significant market for metal powders in welding, chemicals,
friction applications such as brake pads and linings, photocopiers and by
pharmaceutical companies in blood thinning agents and iron supplements.
Hoeganaes is 80% owned by Interlake and 20% by Hoganas AB of Sweden with which
it has an on-going technology agreement. This is expected to continue after the
acquisition. It is intended that under GKN ownership Hoeganaes will be managed
as a separate entity and will continue to supply other powder metal component
companies in the US.
Aerospace - Chem-tronics Inc
Projected 1998 Sales $135m
Chem-tronics is a leading producer of lightweight, fabricated structural
products for aerospace engines in the commercial, military, aerospace and space
markets and provides jet engine fan blade repair services. Chem-tronics'
products include rings, cases and modules for large commercial aircraft jet
engines, titanium ducts for military jet engines and space launch vehicles, and
other complex fabrications for a variety of aerospace applications. It is based
in California and Oklahoma and employs some 900 people.
Chem-tronics is a key supplier to a number of high growth commercial and
military programmes. Major customers, with whom Chem-tronics has significant
multi-year agreements, include Rolls-Royce, Allison, Pratt & Whitney and GE.
In addition to its fabrication business, Chem-tronics provides comprehensive
repair services for jet engine fan and compressor blades, discs, combustion
liners and fan cases. Repair customers include major US and international
airlines, all jet engine manufacturers, and overhaul centres.
<PAGE> 5
Industrial Services - Interlake Material Handling
Projected 1998 Sales $200m
Interlake Material Handling designs, manufactures and sells racking for pallets
and containers, conveyors and related equipment for use in warehouses,
distribution centres, retail stores and other applications in North America.
It is the market leader in the US with around 20% market share and a wide range
of products. In 1997 the business suffered from a number of one-off events
including implementation of a new computer system which depressed the operating
performance. 1998 has been a year of significant recovery.
Interlake Material Handling currently has four facilities in the USA and employs
1,100 people. After the acquisition the business will be managed within the GKN
Industrial Services portfolio.
Balance Sheet
Due to the highly leveraged nature of the balance sheet, Interlake had net
liabilities (excluding preferred stock and after adjusting for outstanding stock
options) of $146 million ((pound)88 million) as at 27 September, 1998 which
included net debt of $292 million ((pound)170 million).
Ends
For further information please contact
GKN Corporate Communications 0171 568 0584
after 2.00pm 0171 930 2424
Notes to Editors
<PAGE> 6
GKN plc
GKN plc is a global industrial company with annual sales in excess of (pound)3.3
billion (US$5.4 billion). It has operations in more than 40 countries and
employs 35,000 people in subsidiaries and a further 12,500 in joint ventures.
GKN's operations include automotive and off-highway vehicle products, aerospace,
and pallet pooling and waste management.
GKN Sinter Metals
GKN Sinter Metals, headquartered in Detroit, has operations in 10 countries
around the world and annual sales in excess of $550 million ((pound)333
million). It is the world's largest producer of powder metal components. The
business employs more than 5,000 people and produces more than 4,000 components
for the automotive, lawn and garden, power tool and home appliance markets.
GKN Aerospace
GKN Aerospace has operations in the UK, Germany and the USA and has 4,800
employees. It is a first tier supplier to propulsion systems companies and
supplies composite structures in three main product areas: aerostructures,
nacelles and transmissions, to prime contractors. Annualised sales for 1998 are
in excess of (pound)320 million ($528 million).
GKN Industrial Services
GKN has three industrial services businesses - Chep, Cleanaway and Meineke. The
largest of these is Chep which is a world market leader in the provision of
pooling services for pallets, crates and other packaging for grocery dry goods
and other products such as automotive components. Cleanaway is a waste
management business based in Europe. With the exception of Chep South Africa
both businesses are 50:50 joint ventures with Brambles Industries of Australia.
Meineke is a US based specialist exhaust franchise with approximately 900
discount muffler stores throughout the country.
<PAGE> 1
Exhibit (a)(9)
FOR IMMEDIATE RELEASE - LISLE, IL., DECEMBER 7, 1998
THE INTERLAKE CORPORATION AND GKN plc
ENTER INTO MERGER AGREEMENT
Lisle, Illinois, December 7, 1998 -- The Interlake Corporation today
announced that it has entered into a merger agreement with GKN North America
Incorporated, a subsidiary of GKN plc of England, for the acquisition of
Interlake by GKN.
Under the agreement, a newly-formed GKN subsidiary will tender for all
of the issued and outstanding shares of common stock and convertible preferred
stock of The Interlake Corporation, at a price per share of $7.25 in cash (on an
as-if-converted basis for the preferred shares). GKN's obligation to purchase
the shares is conditioned upon the tender of two-thirds of the eligible shares,
the expiration or waiver of the applicable regulatory waiting periods, and other
customary conditions. GKN will finance the purchase from currently available
sources. The closing of the tender is expected to occur in January, to be
followed by a merger.
First Chicago Equity Corporation, the holder of preferred shares
convertible into 25% of the outstanding common shares of The Interlake
Corporation on a fully diluted basis, has consented to the merger and has
advised Interlake that it intends to tender all of its shares in the offer.
Interlake's rights plan has been amended so as not to be effective with respect
to the transaction.
GKN plc is a global manufacturer of automotive and aerospace products,
and a provider of industrial services, with 1997 revenues exceeding $5.4
billion. Its GKN Sinter Metals subsidiary, headquartered in Auburn Hills,
Michigan, is the world's leader in powder metallurgy components with annual
sales in excess of $500 million. GKN's defense products include Westland
helicopters, and its industrial services businesses, Chep and Cleanaway, offer
equipment pooling and waste management services.
The Interlake Corporation, of Lisle, Illinois, is engaged in the
design, manufacture and sale or distribution of products for the automotive,
aerospace and material handing industries, with annual sales in excess of $500
million. Its Hoeganaes Corporation subsidiary is North America's leading
manufacturer of ferrous metal powders. Interlake's aerospace and material
handling businesses are also leaders in their markets. The aerospace business
offers large component fabrication and repair services through its Chem-tronics
subsidiary. Interlake also manufactures and sells pallet storage rack and
conveyor systems under the Interlake Material Handling name.
"The acquisition of Interlake presents a unique opportunity to build
upon several of our growth platforms in a single acquisition," said C. K. Chow,
chief executive officer of GKN plc. "We believe that the addition of Hoeganaes
will allow us to build on its technology to drive rapid growth in powder
metallurgy. At the same time, Chem-tronics is a significant addition to our
aerospace structures businesses, and Interlake Material Handling will complement
our Chep pallet services business."
<PAGE> 2
W. Robert Reum, Chairman, president and chief executive officer of
Interlake, indicated that although all of Interlake's businesses are doing well,
have ample liquidity and anticipate future growth, the GKN offer rewards that
anticipated growth now and offers excellent value to shareholders. "The offer
price represents a significant premium over the market price," said Reum, "and
GKN represents a good fit for our businesses and employees. As for our
customers, GKN has the resources to invest in these businesses in order to
maintain and enhance their emphasis on high quality products."
GKN plc indicated that it does not plan any changes to the current
senior management of Interlake's three business units and would maintain
employee benefits at comparable levels.
In a joint statement, Robert J. Fulton, president of Hoeganaes
Corporation, and Seifi Ghasemi, president and chief executive officer of GKN
Sinter Metals, stated that the Hoeganaes powder metal business would continue to
be run as an independent business with its own board of directors. "Hoeganaes
will continue to do all that it can to meet all of its customers' needs for
products and services, at competitive prices" said Fulton. According to Ghasemi,
"the addition of an independent Hoeganaes to the GKN family represents a unique
opportunity to further strong growth throughout the entire powdered metal
industry. The combined strength of the Hoeganaes technology and GKN Sinter
Metals' processing know-how will increase the rate of conversion of automotive
parts to powdered metal."
<PAGE> 1
Exhibit (a)(10)
NEWS FROM GKN SINTER METALS
CONTACT: Robert Hilliard 248-371-0829 or
Art Rogers 248-371-0806 FOR IMMEDIATE RELEASE
GKN Sinter Metals + Hoeganaes Corp.
WORLD'S LARGEST PRODUCER OF POWDER METAL PARTS IS LINKED
WITH AMERICA'S LEADING FERROUS POWDERED METAL SUPPLIER
U.K.-based GKN plc Acquired America's Interlake Corp.,
Including Hoeganaes Subsidiary
AUBURN HILLS, MI, December 7, 1998 -- GKN Sinter Metals today reported
that its parent company, U.K.-based GKN plc, had entered into an agreement
to acquire The Interlake Corporation, Lisle, IL, which includes Hoeganaes
Corporation of Riverton, NJ.
According to C.K. Chow, GKN's Chief Executive, "The acquisition of
Hoeganaes, North America's leading supplier of ferrous powdered metals,
secures a raw material supply source which GKN Sinter Metals can combine
with its manufacturing expertise to develop and market powder metal
components."
About half of Hoeganaes' customers are auto parts manufacturers for
structural applications such as transmissions, engines, and suspension
systems.
Seifi Ghasemi, President & CEO of GKN Sinter Metals, said that "the
combined strength of Hoeganaes technology and GKN Sinter Metals processing
know-how will increase the rate of conversion of automotive parts to
powdered metal parts."
He went on to say that ferrous powdered metals is the main raw
material used by GKN Sinter Metals, and that Hoeganaes is a low-cost
producer utilizing both the atomizing and sponge production processes, and
also is a technology leader with a number of patented products and
processes.
Mr. Ghasemi noted that in addition to the vast automotive market,
there are significant markets for metal powders in welding, chemicals,
friction applications such as brake pads and linings, photocopiers, and by
pharmaceutical companies in blood thinning agents and iron supplements.
<PAGE> 2
He confirmed that Hoeganaes' powder metal business would continue to
be run as an independent business with its own board; that GKN Sinter
Metals' parent company, GKN plc, indicated that it did not plan any changes
to current senior management, and that Hoeganaes would continue to service
its existing customer base.
GKN Sinter Metals, with global headquarters in Auburn Hills, MI, has
operations in 10 countries and annual sales in excess of $550 million. It
is the world's largest producer of powder metal parts. The business
employs more than 5,000 people, and produces more than 4,000 parts for the
automotive, lawn & garden, power tool, and home appliance markets.
Hoeganaes Corporation, headquartered in Riverton, NJ, is the leading
supplier of ferrous powdered metals in the Americas. It employs 520 people
and has four U.S. operations -- one in New Jersey, two in Pennsylvania, and
one in Tennessee.
GKN plc is a global manufacturer of automotive and aerospace products,
and a provider of industrial services, with 1997 revenues exceeding $5.4
billion.
<PAGE> 1
EXHIBIT (a)(11)
FOR IMMEDIATE RELEASE:
Contact:
Bob Marese
212-929-5500
MacKenzie Partners, Inc.
GKN COMMENCES TENDER OFFER FOR INTERLAKE
NEW YORK, DECEMBER 10, 1998 - GKN plc (LSE: GKN) today announced that, in
accordance with the previously announced merger agreement, GKN North America
Manufacturing Inc., a GKN Company, today commenced a fully financed tender
offer for all the common shares of The Interlake Corporation (NYSE: IK) at
$7.25 per share and all the Series A preferred shares at a purchase price of
$1,980.87 per share (representing an amount equal to $7.25 per underlying
common share). First Chicago Equity Corporation, the holder of 31,500 Series A
preferred shares (approximately 24% of fully diluted shares) has consented to
the offer and the merger and has advised GKN that it intends to tender all of
its holdings into the offer.
The offer will expire at 12:00 midnight, New York City time, on Friday, January
8, 1999, unless the offer is extended. The offer is subject to the expiration
or termination of applicable regulatory waiting periods and certain other
customary conditions that are described in an Offer to Purchase being mailed to
all shareholders of The Interlake Corporation.
IBJ Schroder Bank & Trust Company will act as depositary for the tender,
MacKenzie Partners, Inc. will act as information agent and Warburg Dillon Read
LLC will act as dealer manager. Contact GKN Corporate Communications.
###
<PAGE> 1
Exhibit (c)(1)
[CONFORMED COPY]
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 5, 1998
AMONG
GKN NORTH AMERICA INCORPORATED,
GKN NORTH AMERICA MANUFACTURING INC.
AND
THE INTERLAKE CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
THE OFFER
<S> <C> <C>
1.01 The Offer............................................................................................2
1.02 Company Actions......................................................................................3
1.03 Directors............................................................................................5
ARTICLE II
THE MERGER
2.01 The Merger...........................................................................................6
2.02 Effective Time; Closing..............................................................................6
2.03 Effects of the Merger................................................................................7
2.04 Certificate of Incorporation and By-Laws of the Surviving Corporation................................7
2.05 Directors............................................................................................7
2.06 Officers.............................................................................................7
2.07 Conversion of Shares.................................................................................7
2.08 Conversion of the Purchaser Common Stock.............................................................8
2.09 Company Option Plans; Discharge of Certain Severance Obligations.....................................9
2.10 Stockholders' Meeting................................................................................9
2.11 Merger Without Meeting of Stockholders..............................................................10
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
3.01 Dissenting Shares...................................................................................10
3.02 Payment for Shares..................................................................................11
</TABLE>
ARTICLE IV
<PAGE> 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
<TABLE>
<S> <C> <C>
4.01 Organization and Qualification; Subsidiaries........................................................13
4.02 Certificate of Incorporation and ByLaws.............................................................14
4.03 Capitalization......................................................................................14
4.04 Authority Relative to This Agreement................................................................15
4.05 No Conflict; Required Filings and Consents..........................................................15
4.06 SEC Reports and Financial Statements................................................................16
4.07 Information.........................................................................................17
4.08 Litigation..........................................................................................18
4.09 Compliance with Applicable Laws.....................................................................18
4.10 Employee Benefit Plans..............................................................................18
4.11 Labor Matters.......................................................................................20
4.12 Intellectual Property...............................................................................20
4.13 Environmental Matters...............................................................................21
4.14 Absence of Certain Changes or Events................................................................22
4.15 Real Property.......................................................................................22
4.16 Tax Matters.........................................................................................22
4.17 Certain Approvals...................................................................................23
4.18 Required Vote of Company Stockholders...............................................................23
4.19 Opinion of Financial Advisor........................................................................23
4.20 Rights Agreement....................................................................................23
4.21 Brokers.............................................................................................24
</TABLE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
<TABLE>
<S> <C> <C>
5.01 Organization and Qualification......................................................................24
5.02 Authority Relative to This Agreement................................................................24
5.03 No Conflict; Required Filings and Consents..........................................................24
5.04 Information.........................................................................................25
5.05 Financing...........................................................................................25
5.06 Ownership of Company Common Stock...................................................................26
5.07 Brokers.............................................................................................26
</TABLE>
ARTICLE VI
COVENANTS
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
6.01 Conduct of Business of the Company..................................................................26
6.02 Access to Information...............................................................................28
6.03 Reasonable Best Efforts.............................................................................29
6.04 Consents............................................................................................30
6.05 Public Announcements................................................................................30
6.06 Employee Benefit Arrangements.......................................................................31
6.07 Indemnification.....................................................................................31
6.08 No Solicitation.....................................................................................32
6.09 Notification of Certain Matters.....................................................................32
6.10 Redemption of Rights................................................................................33
6.11 State Takeover Laws.................................................................................33
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions..........................................................................................33
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
8.01 Termination.........................................................................................34
8.02 Effect of Termination...............................................................................35
8.03 Fees and Expenses...................................................................................36
8.04 Amendment...........................................................................................36
8.05 Extension; Waiver...................................................................................36
ARTICLE IX
MISCELLANEOUS
9.01 NonSurvival of Representations and Warranties.......................................................37
9.02 Entire Agreement; Assignment........................................................................37
9.03 Validity............................................................................................37
9.04 Notices.............................................................................................37
9.05 Governing Law.......................................................................................38
9.06 Jurisdiction........................................................................................39
9.07 Descriptive Headings................................................................................39
9.08 Counterparties......................................................................................39
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
9.09 Parties in Interest.................................................................................39
9.10 Certain Definitions.................................................................................39
9.11 Specific Performance................................................................................40
9.12 Severability........................................................................................40
9.13 Waiver of Jury Trial................................................................................40
</TABLE>
ANNEX I Conditions to the Offer
(iv)
<PAGE> 6
Index to Defined Terms
<TABLE>
<CAPTION>
Page
<S> <C>
1998 Balance Sheet...............................................................................................17
Acquiring Person.................................................................................................23
Acquisition Transaction..........................................................................................32
affiliate ....................................................................................................39
Agreement .....................................................................................................1
Alternative Proposal.............................................................................................32
Antitrust Authority..............................................................................................30
Blue Sky Laws....................................................................................................16
Board .....................................................................................................1
Certificates ....................................................................................................11
Code ....................................................................................................19
Collective Bargaining Agreements.................................................................................20
Commitment Amount................................................................................................36
Common Share Merger Price.........................................................................................8
Common Share Offer Price..........................................................................................1
Common Shares.....................................................................................................1
Company .....................................................................................................1
Company Disclosure Statement.....................................................................................13
Company Representatives..........................................................................................29
Condition .....................................................................................................1
Confidentiality Agreement........................................................................................37
Consent ....................................................................................................16
control ....................................................................................................39
controlled by....................................................................................................39
controlling ....................................................................................................39
Dissenting Shares................................................................................................10
Distribution Date................................................................................................24
Effective Time....................................................................................................6
Employee Benefit Arrangement.....................................................................................28
Environmental Law................................................................................................21
ERISA ....................................................................................................18
Exchange Act .....................................................................................................2
Exon-Florio Provision............................................................................................16
Fairness Opinion..................................................................................................4
GAAP ....................................................................................................16
GCL .....................................................................................................1
Governmental Entity..............................................................................................16
group ....................................................................................................39
Hazardous Substance..............................................................................................22
</TABLE>
(v)
<PAGE> 7
<TABLE>
<S> <C>
HB .....................................................................................................5
HC 2000 Project..................................................................................................22
Hoeganaes .....................................................................................................5
HSR Act ....................................................................................................16
Indemnified Parties..............................................................................................31
Initial Expiration Date...........................................................................................2
Intellectual Property............................................................................................21
International Traffic in Arms Regulations........................................................................16
IRS..............................................................................................................19
Laws ....................................................................................................18
Licensed Intellectual Property...................................................................................20
Lien ....................................................................................................15
Material Adverse Effect on the Company...........................................................................13
Merger .....................................................................................................1
Merger Consideration..............................................................................................8
Minimum Condition.................................................................................................1
Morgan Stanley....................................................................................................4
Nonvoting Common Shares...........................................................................................8
Nonvoting Merger Price............................................................................................8
Offer .....................................................................................................1
Offer Documents...................................................................................................2
Offer Prices .....................................................................................................1
Offer to Purchase.................................................................................................2
Option .....................................................................................................9
Option Plans .....................................................................................................9
Other Filings....................................................................................................17
Owned Intellectual Property......................................................................................20
Parent .....................................................................................................1
Parent Representatives...........................................................................................29
Paying Agent ....................................................................................................11
person ....................................................................................................39
Phase II Budget..................................................................................................22
Plans ....................................................................................................18
Proportionate Percentage..........................................................................................5
Proxy Statement..................................................................................................10
Purchaser .....................................................................................................1
Qualified Plans..................................................................................................19
Quarterly Financial Statements...................................................................................17
Research Agreement...............................................................................................21
Rights .....................................................................................................1
Rights Agreement..................................................................................................1
Schedule 14D-9....................................................................................................3
SEC .....................................................................................................2
</TABLE>
(vi)
<PAGE> 8
<TABLE>
<S> <C>
SEC Reports ....................................................................................................16
Series A Merger Price.............................................................................................8
Series A Share Offer Price........................................................................................1
Series A Shares...................................................................................................1
Share Acquisition Date...........................................................................................23
Shares .....................................................................................................1
Significant Subsidiary...........................................................................................13
Special Meeting...................................................................................................9
subsidiaries ....................................................................................................39
Subsidiary ................................................................................................13, 39
Surviving Corporation.............................................................................................6
Tax Return ....................................................................................................23
Taxes ....................................................................................................23
Transactions .....................................................................................................1
under common control with........................................................................................39
Violation ....................................................................................................15
Voting Debt ....................................................................................................14
</TABLE>
(vii)
<PAGE> 9
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 5, 1998
(this "Agreement"), by and among GKN NORTH AMERICA INCORPORATED, a Delaware
corporation ("Parent"), GKN NORTH AMERICA MANUFACTURING INC., a Delaware
corporation and wholly-owned subsidiary of Parent (the "Purchaser"), and THE
INTERLAKE CORPORATION, a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, the
Purchaser and the Company have each determined that it is in the best interests
of their respective stockholders for Parent to acquire the Company upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause the Purchaser to commence a cash tender offer (as it may be amended
from time to time as permitted under this Agreement, the "Offer") to purchase
(i) all of the issued and outstanding shares of Common Stock, par value $1.00
per share, of the Company (the "Common Shares") (including the associated Common
Share purchase rights (the "Rights") issued pursuant to that certain Rights
Agreement dated as of January 26, 1989 between the Company and The First
National Bank of Chicago, as Rights Agent (the "Rights Agreement")) at a price
per Common Share of $7.25 (such price, as it may hereafter be increased, the
"Common Share Offer Price"), net to the seller in cash, and (ii) all of the
outstanding shares of Series A Convertible Exchangeable Preferred Stock, par
value $1.00 per share, of the Company (the "Series A Shares" and, together with
the Common Shares, the "Shares"), at a price per Series A Share of $1,980.87
(such price, as it may hereafter be increased, the "Series A Share Offer Price"
and, together with the Common Share Offer Price, the "Offer Prices"), net to the
seller in cash, in each case, upon the terms and subject to the conditions set
forth in this Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (hereinafter
sometimes referred to as the "Board") has unanimously approved the Offer and the
Merger (as hereinafter defined) and resolved and agreed to recommend that the
Company's stockholders tender their Shares pursuant to the Offer;
WHEREAS, the respective Boards of Directors of Parent, the
Purchaser and the Company have approved the merger of the Purchaser with and
into the Company, as set forth below (the "Merger") and, together with the
Offer, the "Transactions", in accordance with the General Corporation Law of the
State of Delaware (the "GCL") following the consummation of the Offer and upon
the terms and subject to the conditions set forth in this Agreement, whereby
each issued and outstanding Share and Nonvoting Common Share (as hereinafter
defined), if any, not owned directly or indirectly by Parent or the Company will
be converted into the right to receive the Merger Consideration (as hereinafter
defined) applicable thereto; and
<PAGE> 10
WHEREAS, Parent, the Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger and also to prescribe various conditions to the Offer
and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, Parent, the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) Provided that this Agreement shall not have been terminated
in accordance with Section 8.01 and none of the events set forth in clauses (a)
through (i) of Annex I hereto (as hereinafter provided) shall have occurred or
be existing, the Purchaser shall, and Parent shall cause the Purchaser to,
commence (within the meaning of Rule 14d-2(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) as promptly as reasonably practicable
after the date hereof, but in any event not later than five business days after
the initial public announcement of the Purchaser's intent to commence the Offer,
the Offer for all outstanding Shares at the Offer Price applicable to such
Shares. The Offer Prices shall, subject to applicable withholding taxes, be net
to the seller in cash upon the terms and subject to the conditions of the Offer.
The initial expiration date for the Offer shall be the twentieth business day
from and after the date the Offer is commenced, including the date of
commencement as the first business day in accordance with Rule 14d-2 under the
Exchange Act (the "Initial Expiration Date"). As soon as reasonably practicable,
the Purchaser shall file with the Securities and Exchange Commission (the "SEC")
the Purchaser's Tender Offer Statement on Schedule 14D-1 (together with any
supplements or amendments thereto, the "Offer Documents"), which shall contain
(as an exhibit thereto) the Purchaser's Offer to Purchase (the "Offer to
Purchase"), which shall be mailed to the holders of Shares with respect to the
Offer. The obligation of Parent to accept for payment or pay for any Shares
tendered pursuant to the Offer will be subject only to the satisfaction of the
conditions set forth in Annex I hereto. The Purchaser expressly reserves the
right to waive any such condition, to increase the price per Share payable in
the Offer, and to make any other changes in the terms and conditions of the
Offer; provided, however, that without the prior written consent of the Company,
the Purchaser shall not decrease the price per Share or change the form of
consideration payable in the Offer, decrease the number of Shares sought to be
purchased in the Offer, change the conditions set forth in Annex I (or broaden
the scope thereof) or waive the Minimum Condition (as defined in Annex I).
Subject to the terms of the Offer and this Agreement and the satisfaction or
waiver (to the extent permitted by this Agreement) of all the conditions of the
Offer set forth in Annex I hereto as of any expiration date, the Purchaser will
accept for payment and pay for all Shares validly tendered and not
2
<PAGE> 11
withdrawn pursuant to the Offer as soon as practicable after such expiration
date of the Offer. Subject to Section 8.01, if the conditions set forth in Annex
I hereto are not satisfied or, to the extent permitted by this Agreement, waived
by Parent, as of the Initial Expiration Date (or any subsequently scheduled
expiration date), the Purchaser shall be permitted to extend the Offer from time
to time for the shortest time periods which Parent reasonably believes are
necessary until the consummation of the Offer. In addition, the Purchaser shall
be permitted to extend the Offer on one or more occasions for an aggregate
period of not more than ten business days beyond the latest expiration date if,
as of such date, all of the conditions set forth in Annex I are satisfied or
waived by Parent, but the number of Common Shares and Series A Shares validly
tendered and not withdrawn pursuant to the Offer (after giving effect to the
conversion of all such Series A Shares to Common Shares) equals 80% or more but
less than 90% of the then outstanding Common Shares on a fully diluted basis
(not taking into account the Rights). The Purchaser agrees that if the
conditions set forth in clauses (a) and (b) of Annex I are not satisfied on any
scheduled expiration date of the Offer, the Purchaser shall extend the Offer
from time to time until such condition is satisfied or waived; provided,
however, that the Purchaser shall not be required to extend the Offer beyond the
date five months following the commencement of the Offer.
(b) The Offer Documents will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed with
the SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or the Purchaser with respect to information supplied by the Company for
inclusion in the Offer Documents. Each of Parent and the Purchaser, on the one
hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect, and the
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
stockholders of the Company, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
the opportunity to review and comment on the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC.
SECTION 1.02 Company Actions.
(a) As soon as reasonably practicable on the date of commencement
of the Offer, the Company shall file with the SEC and mail to the holders of
Shares a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to
the Offer (together with any amendments or supplements thereto, the "Schedule
14D-9"). The Company hereby approves of and consents to the Offer and
represents, and the Schedule 14D-9 will set forth, that (i) the Board, at a
meeting duly called and held on December 4, 1998, has unanimously adopted
resolutions (A) determining that this Agreement and the transactions
contemplated hereby,
3
<PAGE> 12
including each of the Offer and the Merger, are fair to and in the best
interests of the Company and its stockholders, (B) approving and adopting this
Agreement and the transactions contemplated hereby, the Offer and the Merger in
accordance with Section 203 of the GCL, and (C) recommending acceptance of the
Offer and approval and adoption of the Merger and this Agreement and the
transactions contemplated hereby by the Company's stockholders (in accordance
with the requirements of the Company's Restated Certificate of Incorporation and
of applicable law), and (ii) Morgan Stanley & Co. Incorporated ("Morgan
Stanley") has delivered to the Board of Directors of the Company its written
opinion that the Common Share Offer Price and the Common Share Merger Price are
fair, from a financial point of view, to the holders of Common Shares (the
"Fairness Opinion"); provided, however, that such recommendation and approval of
the Board of Directors of the Company may be withdrawn, modified or amended to
the extent that the Board deems it necessary to do so in the exercise of its
fiduciary obligations after being advised with respect thereto by outside
counsel. The Company hereby consents to the inclusion in the Offer Documents of
the recommendation of the Board described in the immediately preceding sentence.
The Company hereby represents and warrants that it has been authorized by Morgan
Stanley to permit the inclusion of the Fairness Opinion and references thereto,
subject to prior review by Morgan Stanley, in the Offer Documents, the Schedule
14D-9 and the Proxy Statement (as hereinafter defined). The Company has been
advised by each of W. Robert Reum, Stephen Gregory, Stephen R. Smith and its
directors that they intend to tender all Shares beneficially owned by them to
the Purchaser pursuant to the Offer or to vote such Shares in favor of the
approval and adoption by the stockholders of the Company of this Agreement and
the Merger.
(b) Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, agrees promptly to correct any information
provided by any of them for use in the Schedule 14D-9 that shall have become
false or misleading, and the Company further agrees to take all steps necessary
to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the stockholders of the Company, in each case as and to the
extent required by applicable federal securities laws. Parent, the Purchaser and
their counsel shall be given an opportunity to review the Schedule 14D-9 and any
amendments thereto prior to the filing thereof with the SEC.
(c) The Company shall promptly furnish the Purchaser with mailing
labels containing the names and addresses of all record holders of Shares and
with security position listings of Shares held in stock depositories, each as of
a recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish the Purchaser with such
additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance as Parent, the Purchaser or their agents may
reasonably request. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and the
Purchaser shall hold in confidence the information contained in such labels,
4
<PAGE> 13
listings and files, shall use such information only in connection with the Offer
and the Merger, and, if this Agreement shall be terminated in accordance with
Section 8.01, shall deliver to the Company all copies of such information then
in their possession.
SECTION 1.03 Directors.
(a) Subject to compliance with applicable law, promptly upon the
payment by the Purchaser for Shares pursuant to the Offer which fulfills the
Minimum Condition, and from time to time thereafter, Purchaser shall be entitled
to designate such number of directors, rounded up to the next whole number, on
the Board of Directors of the Company as is equal to the product of the total
number of directors on the Board (determined after giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
the aggregate number of Common Shares and Series A Shares (after giving effect
to the conversion of all such Series A Shares to Common Shares) beneficially
owned by the Purchaser or its affiliates following such purchase bears to the
total number of fully diluted Common Shares (not taking into account the Rights)
then outstanding (the "Proportionate Percentage"), and the Company shall, upon
request of Parent, promptly take all actions necessary to cause the Purchaser's
designees to be so elected, including increasing the size of the Board or
securing the resignations of incumbent directors or both. At such times, the
Company shall use its reasonable best efforts to cause persons designated by the
Purchaser to constitute the Proportionate Percentage of (i) each committee of
the Board, (ii) each board of directors of each domestic Subsidiary (other than
Hoeganaes (as defined below)), (iii) each committee of each such board, in each
case to the extent permitted by applicable law, and (iv) the directors that the
Company is entitled to nominate to the board of directors of Hoeganaes
Corporation, a Delaware corporation and an 80% subsidiary of the Company
("Hoeganaes"), pursuant to the Amended and Restated Stockholders Agreement,
dated as of September 28, 1994, among The Interlake Companies, Inc., a Delaware
corporation, Hoganas AB, a Swedish corporation ("HB") and Hoeganaes.
Notwithstanding the foregoing, until the earlier of (i) the time the Purchaser
acquires that number of Common Shares and Series A Shares that (after giving
effect to the conversion of all such Series A Shares to Common Shares)
represents at least two-thirds (662/3%) of the outstanding Common Shares on a
fully diluted basis (not taking into account the Rights) and (ii) the Effective
Time, the Company shall use its reasonable best efforts to ensure that all the
members of the Board and each committee of the Board and such boards and
committees of the domestic Subsidiaries as of the date hereof who are not
employees of the Company shall remain members of the Board and of such boards
and committees.
(b) The Company's obligations to appoint the Purchaser's
designees to the Board shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder. The Company shall promptly take all actions required
pursuant to such Section and Rule in order to fulfill its obligations under this
Section 1.03 and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors as is required under such
Section and Rule in order to fulfill its obligations under this Section 1.03.
Parent or the
5
<PAGE> 14
Purchaser will supply to the Company any information with respect to itself and
its nominees, officers, directors and affiliates required by such Section and
Rule.
(c) From and after the election or appointment of the Purchaser's
designees pursuant to this Section 1.03 and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Parent or the Purchaser or waiver of any of the Company's rights hereunder,
or any other action taken by the Board in connection with this Agreement, will
require the concurrence of a majority of the directors of the Company then in
office who neither were designated by the Purchaser nor are employees of the
Company.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with the applicable
provisions of this Agreement and the GCL, at the Effective Time (as defined in
Section 2.02), the Purchaser shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of the Purchaser shall
cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and a wholly-owned subsidiary of Parent. At the option
of Parent and provided that such amendment does not delay the Effective Time,
the Merger may be structured so that, and this Agreement shall thereupon be
amended to provide that, the Company shall be merged with and into the Purchaser
or another direct or indirect wholly-owned subsidiary of Parent, with the
Purchaser or such other subsidiary of Parent continuing as the Surviving
Corporation; provided, however, that the Company shall be deemed not to have
breached any of its representations and warranties herein if and to the extent
such breach would have been attributable to such election. In such event, the
parties agree to execute an appropriate amendment to this Agreement in order to
reflect the foregoing and to provide that the Purchaser or another wholly-owned
subsidiary of Parent shall be the Surviving Corporation.
SECTION 2.02 Effective Time; Closing. As soon as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the Company shall execute in the manner required by the GCL and
deliver to the Secretary of State of the State of Delaware a duly executed and
verified certificate of merger, or, if permitted, a certificate of ownership and
merger, and the parties shall take such other and further actions as may be
required by law to make the Merger effective. The time the Merger becomes
effective in accordance with applicable law is referred to as the "Effective
Time". Prior to such filing, a closing shall be held at the offices of Shearman
& Sterling, 599 Lexington Avenue, New York, New York 10022, or such other place
as the parties shall agree, for the purpose of confirming the satisfaction or
waiver, as the case may be, of the conditions set forth in Article VII.
6
<PAGE> 15
SECTION 2.03 Effects of the Merger. At the Effective Time, the
Merger shall have the effects set forth in Section 259 of the GCL. 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 2.04 Certificate of Incorporation and By-Laws of the
Surviving Corporation.
(a) Unless otherwise determined by Parent prior to the
Effective Time, at the Effective Time the Restated Certificate of Incorporation
of the Company, as in effect immediately prior to the Effective Time, shall be
the certificate of incorporation of the Surviving Corporation, until thereafter
amended as provided by law and such certificate of incorporation; provided,
however, that, at the Effective Time, the Restated Certificate of Incorporation
of the Company shall be amended in its entirety to be substantially identical to
the certificate of incorporation of the Purchaser.
(b) Subject to the provisions of Section 6.07 of this
Agreement, the by-laws of the Purchaser in effect at the Effective Time shall be
the by-laws of the Surviving Corporation, until thereafter amended as provided
by law, the certificate of incorporation of the Surviving Corporation and such
by-laws.
SECTION 2.05 Directors. Subject to applicable law, the
directors of the Purchaser immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the certificate of incorporation and by-laws of the Surviving
Corporation.
SECTION 2.06 Officers. The officers of the Company immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
SECTION 2.07 Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the Purchaser, the
Company or the holders thereof, (a) each Common Share issued and outstanding
immediately prior to the Effective Time (other than any Common Shares held by
Parent, the Purchaser, any wholly-owned subsidiary of Parent or the Purchaser,
in the treasury of the Company or by any wholly-owned subsidiary of the Company,
which Common Shares, by virtue of the Merger and without any action on the part
of the holder thereof, shall be cancelled and retired and shall cease to exist
with no payment being made with respect thereto, and other than Dissenting
Shares (as defined in Section 3.01)) shall be cancelled and shall be converted
automatically into the right to receive in cash the Common Share Offer Price,
payable to the holder thereof, without any interest thereon, less any required
7
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withholding taxes (the "Common Share Merger Price"), upon surrender and exchange
of the Certificates (as defined in Section 3.02(a)), (b) each Series A Share
issued and outstanding immediately prior to the Effective Time (other than any
Series A Shares held by Parent, the Purchaser, any wholly-owned subsidiary of
Parent or the Purchaser, in the treasury of the Company or by any wholly-owned
subsidiary of the Company, which Series A Shares, by virtue of the Merger and
without any action on the part of the holder thereof, shall be cancelled and
retired and shall cease to exist with no payment being made with respect
thereto, and other than Dissenting Shares) shall be cancelled and shall be
converted automatically into the right to receive in cash the Series A Share
Offer Price payable to the holder thereof, without any interest thereon, less
any required withholding taxes (the "Series A Merger Price"), upon surrender and
exchange of Certificates, and (c) each share of Nonvoting Common Stock, par
value $1.00 per share, of the Company (the "Nonvoting Common Shares") issued and
outstanding immediately prior to the Effective Time (other than any Nonvoting
Common Shares held by Parent, the Purchaser, any wholly-owned subsidiary of
Parent or the Purchaser, in the treasury of the Company or by any wholly-owned
subsidiary of the Company, which Nonvoting Common Shares, by virtue of the
Merger and without any action on the part of the holder thereof, shall be
cancelled and retired and shall cease to exist with no payment being made with
respect thereto, and other than Dissenting Shares) shall be cancelled and shall
be converted automatically into the right to receive in cash the Common Share
Offer Price, payable to the holder thereof, without any interest thereon, less
any required withholding taxes (the "Nonvoting Merger Price" and, together with
the Common Share Merger Price and the Series A Merger Price, the "Merger
Consideration"), upon surrender and exchange of the Certificates. The holders of
such Certificates previously evidencing Shares or Nonvoting Common Shares, as
the case may be, outstanding immediately prior to the Effective Time shall cease
to have any rights with respect to the Common Shares, the Series A Shares or the
Nonvoting Common Shares, except as otherwise provided herein or by law and, upon
the surrender of such Certificates in accordance with the provisions of Section
3.02(b), shall only represent the right to receive for such Shares or Nonvoting
Common Shares, the aggregate Merger Consideration relating thereto without any
interest thereon.
SECTION 2.08 Conversion of the Purchaser Common Stock. At the
Effective Time, each share of common stock, par value $.01 per share, of the
Purchaser issued and outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
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SECTION 2.09 Company Option Plans; Discharge of Certain
Severance Obligations.
(a) Parent and the Company shall take all actions
necessary so that, immediately prior to the acceptance for payment and purchase
of Shares by the Purchaser pursuant to the Offer, (i) each outstanding option to
purchase Common Shares (an "Option") granted under the Company's 1986, 1989,
1997 and 1998 Stock Incentive Programs (collectively, the "Option Plans"),
whether or not then exercisable or vested, shall become fully exercisable and
vested, (ii) each Option that is then outstanding shall be cancelled and (iii)
in consideration of such cancellation, and except to the extent that Parent or
the Purchaser and the holder of any such Option otherwise agree, immediately
following consummation of the Offer, the Company shall pay to such holders of
Options an amount in respect thereof equal to the product of (A) the excess of
the Common Share Offer Price over the exercise price thereof and (B) the number
of Common Shares subject thereto (such payment to be net of taxes required by
law to be withheld with respect thereto); provided that the foregoing shall be
subject to the obtaining of any necessary consents of holders of Options, it
being agreed that the Company and Parent will use their reasonable best efforts
to obtain any such consents.
(b) Parent and the Company shall take all actions
necessary so that, at the Effective Time of the Merger, (i) the employment of
each of Messrs. W. Robert Reum, Stephen Gregory and Stephen R. Smith is deemed
to be terminated following a change in control, and (ii) all obligations to each
of said Company officers upon a termination following a change in control that
are dischargeable in cash, as set forth in those certain Severance Pay
Agreements dated as of March 1, 1994 between the Company and each of said
officers and in that certain Trust Agreement dated as of February 17, 1988
between the Company and U.S. Trust Company of California, N.A., as amended to
date, shall have been so discharged.
SECTION 2.10 Stockholders' Meeting.
(a) If required by the Company's Restated Certificate of
Incorporation and/or applicable law in order to consummate the Merger, the
Company, acting through the Board, shall, in accordance with applicable law and
the Company's Restated Certificate of Incorporation and by-laws:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") as soon as
practicable following consummation of the Offer for the purpose of
considering and taking action upon this Agreement and the Merger;
(ii) prepare and file, in cooperation with Parent
and the Purchaser, with the SEC a preliminary proxy statement relating
to the Merger and this Agreement and use its reasonable best efforts
(x) to obtain and furnish the information
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required to be included by the SEC in the Proxy Statement (as
hereinafter defined) and, after consultation with Parent, to respond
promptly to any comments made by the SEC with respect to the
preliminary proxy statement and cause a definitive proxy statement (the
"Proxy Statement") to be mailed to its stockholders and (y) to obtain
the necessary approvals of the Merger and this Agreement by its
stockholders; and
(iii) subject to the fiduciary obligations of the Board under
applicable law as advised by outside 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
this Agreement and the Merger.
(b) Parent agrees that it will vote, or cause to be
voted, all of the Common Shares then owned by it, the Purchaser or any of its
other subsidiaries in favor of the approval of the Merger and the adoption of
this Agreement.
SECTION 2.11 Merger Without Meeting of Stockholders.
Notwithstanding Section 2.10, in the event that Parent, the Purchaser or any
other subsidiary of Parent shall acquire at least 90% of the outstanding shares
of each class of stock of the Company pursuant to the Offer or otherwise, the
parties hereto agree, subject to Article VII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition without a meeting of stockholders of the
Company, in accordance with Section 253 of the GCL.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.01 Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, Shares or Nonvoting Common Shares outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
properly in writing appraisal for such Shares or Nonvoting Common Shares in
accordance with Section 262 of the GCL, if such Section 262 provides for
appraisal rights for such Shares or Nonvoting Common Shares in the Merger
("Dissenting Shares"), shall not be converted into or represent the right to
receive the applicable Merger Consideration as provided in Section 2.07, unless
and until such holder fails to perfect or withdraws or otherwise loses his right
to appraisal and payment under the GCL. If, after the Effective Time, any such
holder fails to perfect or withdraws or loses his right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been converted as of
the Effective Time into the right to receive the applicable Merger Consideration
to which such holder is entitled, without any interest or dividends thereon. The
Company shall give Parent prompt notice of any demands received by the Company
for appraisal of Shares or Nonvoting Common Shares, withdrawals of such demands,
and any other instruments served pursuant to the GCL
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and, prior to the Effective Time, Parent shall have the opportunity to direct
all negotiations and proceedings with respect to such demands for appraisal
under the GCL. Prior to the Effective Time, the Company shall not, except with
the prior written consent of Parent, make any payment with respect to, or settle
or offer to settle, any such demands.
SECTION 3.02 Payment for Shares.
(a) From and after the Effective Time, a bank or
trust company designated by Parent or the Purchaser shall act as paying agent
(the "Paying Agent") in effecting the payment of the applicable Merger
Consideration in respect of certificates (the "Certificates") that, prior to the
Effective Time, represented Shares or Nonvoting Common Shares entitled to
payment of the applicable Merger Consideration pursuant to Section 2.07. Parent
or the Purchaser shall cause the Surviving Corporation to provide the Paying
Agent with cash in amounts necessary to pay for all the Shares and Nonvoting
Common Shares pursuant to Section 2.07, as and when such amounts are needed by
the Paying Agent. Such funds shall be invested by the Paying Agent as directed
by the Surviving Corporation, provided that such investments shall be in
obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America,
in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors
Services, Inc. or Standard & Poor's Corporation, respectively, or in deposit
accounts, certificates of deposit or banker's acceptances of, repurchase or
reverse repurchase agreements with, or Eurodollar time deposits purchased from,
commercial banks with capital, surplus and undivided profits aggregating in
excess of $50 million (based on the most recent financial statements of such
bank which are then publicly available at the SEC or otherwise).
(b) Promptly after the Effective Time, the Paying
Agent shall mail to each record holder of Certificates that immediately prior to
the Effective Time represented Shares or Nonvoting Common Shares (other than
Certificates representing Dissenting Shares and Certificates representing Shares
or Nonvoting Common Shares held by Parent or the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly-owned subsidiary of the Company), (i) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and (ii) instructions for use in surrendering such
Certificates in exchange for payment therefor. Upon the surrender of each such
Certificate, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the Paying Agent
shall pay the holder of such Certificate the applicable Merger Consideration
multiplied by the number of Shares or Nonvoting Common Shares formerly
represented by such Certificate, in consideration therefor, and such Certificate
shall forthwith be cancelled. Until so surrendered, each such Certificate (other
than Certificates representing Dissenting Shares and Certificates representing
Shares or Nonvoting Common Shares held by Parent or the Purchaser, any
wholly-owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly-owned subsidiary of the Company) shall
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represent solely the right to receive the aggregate Merger Consideration
relating thereto. No interest or dividends shall be paid or accrued on the
Merger Consideration. If the Merger Consideration (or any portion thereof) is to
be paid to any person other than the person in whose name the Certificate
formerly representing Shares or Nonvoting Common Shares surrendered therefor is
registered, it shall be a condition to such right to receive such payment that
the Certificate so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the person surrendering such Certificate shall
pay to the Paying Agent any transfer or 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 establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable.
(c) At any time following the sixth month after the
Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver any funds which had been made available to the Paying
Agent and not disbursed to holders of Shares or Nonvoting Common Shares
(including, without limitation, all interest and other income received by the
Paying Agent in respect of all funds made available to it), Certificates and
other documents in its possession relating to the Transactions, and the Paying
Agent's duties shall terminate. Thereafter, each holder of a Certificate
formerly representing Shares or Nonvoting Common Shares may surrender such
Certificate to the Surviving Corporation and receive in consideration therefor
the aggregate Merger Consideration relating thereto, without any interest or
dividends thereon. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Paying Agent shall be liable to any holder of a Share or a
Nonvoting Common Share for any Merger Consideration delivered in respect of such
Share or Nonvoting Common Share to a public official pursuant to any abandoned
property, escheat or other similar law.
(d) At the close of business on the day of the
Effective Time, the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of any Shares or Nonvoting Common Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing Shares or Nonvoting Common Shares are
presented to the Surviving Corporation or the Paying Agent, they shall be
surrendered and cancelled in return for the payment of the aggregate Merger
Consideration relating thereto, as provided in this Article III, subject to
applicable law in the case of Dissenting Shares. From and after the Effective
Time, the holders of Shares or Nonvoting Common Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares or Nonvoting Common Shares, except as otherwise provided herein or by
applicable law.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the
Purchaser that, except as set forth in the Company Disclosure Statement
delivered to Parent and the Purchaser prior to the execution of this Agreement
(the "Company Disclosure Statement"):
SECTION 4.01 Organization and Qualification; Subsidiaries. (a)
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each subsidiary of the Company
(a "Subsidiary") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Company
and each Subsidiary has the requisite corporate power and authority and all
necessary governmental approvals to own, operate or lease its properties and to
carry on its business as it is now being conducted, and is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the character of the
properties owned, operated or leased by it makes such qualification, licensing
or good standing necessary, except where the failure to have such power or
authority, or the failure to be so qualified, licensed or in good standing,
would not have a Material Adverse Effect on the Company. The term "Material
Adverse Effect on the Company," as used in this Agreement, means any change or
effect that is or is reasonably likely to be materially adverse to the business,
operations, financial condition, assets or liabilities (including, without
limitation, contingent liabilities) of the Company and its Subsidiaries taken as
a whole, except for (i) any change or effect resulting from general economic,
financial or market conditions, (ii) any change or effect resulting from
conditions or circumstances generally affecting the automotive, aerospace and/or
storage rack industries, or (iii) any change or effect resulting from (x) legal
or market actions taken by any customer of the Company or any Subsidiary or any
minority stockholder of a Subsidiary or (y) the departure of any employee of the
Company or any Subsidiary, in either case, in response to the announcement of
the Transactions. A true and complete list of all the Subsidiaries, together
with the jurisdiction of incorporation of each Subsidiary and the percentage of
the outstanding capital stock of each Subsidiary owned by the Company and each
other Subsidiary, is set forth in Section 4.01 of the Company Disclosure
Statement. Except as disclosed in Section 4.01 of the Company Disclosure
Statement, the Company does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity.
(b) Each Subsidiary that is material to the business,
operations, properties, condition (financial or otherwise), assets or
liabilities (including, without limitation, contingent liabilities) of the
Company and the Subsidiaries taken as a whole is so identified in Section 4.01
of the Disclosure Schedule and is referred to herein as a "Significant
Subsidiary".
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SECTION 4.02 Certificate of Incorporation and By-Laws. The
Company has heretofore furnished to Parent and the Purchaser a complete and
correct copy of the Certificate of Incorporation and the by-laws or equivalent
organizational documents, each as amended to date, of the Company and each
Significant Subsidiary. Such Certificates of Incorporation, by-laws and
equivalent organizational documents of the Company and of each Significant
Subsidiary are in full force and effect. Neither the Company nor any Significant
Subsidiary is in violation of any of the provisions of its Certificate of
Incorporation, by-laws or equivalent organizational documents in any material
respect.
SECTION 4.03 Capitalization. The authorized capital stock of
the Company consists of (i) 100,000,000 Common Shares, (ii) 15,000,000 Nonvoting
Common Shares and (iii) 2,000,000 shares of Serial Preferred Stock, par value
$1.00 per share. As of the date hereof, there are 23,175,142 Common Shares and
40,000 Series A Shares issued and outstanding, all of which are validly issued,
fully paid and nonassessable and free of preemptive rights, and the Company has
no other shares of capital stock issued or outstanding other than 355,313 Common
Shares held in the treasury of the Company. The Company has no shares of capital
stock reserved for issuance, except that, as of the date hereof, there are (i)
3,213,920 Common Shares reserved for issuance pursuant to the Option Plans, (ii)
10,471,204 Common Shares reserved for issuance upon conversion of the Series A
Shares and (iii) 23,530,455 Common Shares reserved for issuance pursuant to the
Rights Agreement. Since September 27, 1998, the Company (i) has not issued any
shares of capital stock except pursuant to the exercise of Options, (ii) has not
granted any options to purchase Common Shares under the Option Plans and (iii)
has not split, combined, converted or reclassified any of its shares of capital
stock. All Common Shares which may be issued pursuant to the exercise of
outstanding Options and the conversion of Series A Shares will be, when issued
in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights. There are no
bonds, debentures, notes or other indebtedness having general voting rights (or
convertible into Shares having such rights) ("Voting Debt") of the Company or
any Subsidiary issued and outstanding. Except as set forth in this Section 4.03,
there are no options, warrants, calls, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of the Company or any Subsidiary or obligating the
Company or any Subsidiary to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any Subsidiary or securities convertible into
or exchangeable for such shares or equity interests or obligations of the
Company or any Subsidiary to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment. Except (i) as contemplated by the Rights Agreement, (ii) the Series
A Shares, and (iii) the Company's obligations under the Option Plans, there are
no outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any Common Shares or the capital stock
of the Company or any Subsidiary or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any Subsidiary or
any other person. Each outstanding share of capital stock (or other ownership
interests having by their terms ordinary voting power to elect directors or
others performing similar functions with
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respect to such Subsidiary) of each Subsidiary is duly authorized, validly
issued, fully paid and nonassessable, and is owned, directly or indirectly, by
the Company free and clear of any lien, claim, pledge, option, charge, security
interest, right of first refusal, agreement, limitation, encumbrance and
restriction of any kind (any of the foregoing being a "Lien").
SECTION 4.04 Authority Relative to This Agreement. The Company
has all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized and
approved by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize or approve
this Agreement or to consummate the Transactions (other than, with respect to
the Merger, the approval and adoption of the Merger and this Agreement by
holders of the Common Shares, to the extent required by the Company's Restated
Certificate of Incorporation and by applicable law). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due and
valid authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this
Agreement by the Company, the performance of this Agreement by the Company, the
consummation by the Company of the Transactions or compliance by the Company
with any of the provisions hereof will (i) conflict with or violate the Restated
Certificate of Incorporation or by-laws of the Company or the comparable
organizational documents of any Subsidiary, (ii) conflict with or violate any
laws, statute, ordinance, rule, regulation, order, judgment or decree applicable
to the Company or the Subsidiaries, or by which any of them or any of their
respective properties or assets is bound or affected, or (iii) result in a
violation or breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
any loss of any material benefit, or the creation of any Lien on any of the
properties or assets of the Company or any Subsidiary (any of the foregoing
referred to in clause (ii) or this clause (iii) being a "Violation") pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties is bound or affected except
in the case of the foregoing clauses (ii) or (iii), for any such Violations
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Company.
(b) None of the execution, delivery and performance
of this Agreement by the Company, the consummation by the Company of the
Transactions or compliance by the Company with any of the provisions hereof will
require any consent, waiver,
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approval, authorization or permit of, or registration or filing with or
notification to (any of the foregoing being a "Consent"), any government or
subdivision thereof, or any administrative, governmental or regulatory
authority, agency, legislative body, court, commission, tribunal or body,
domestic, foreign or supranational (a "Governmental Entity"), except for (i)
compliance with any applicable requirements of the Exchange Act or any state
securities or "blue sky" laws ("Blue Sky Laws"), (ii) the filing and recordation
of a certificate of merger, or, if permitted, a certificate of ownership and
merger, pursuant to the GCL, (iii) the pre-merger notification requirements of
the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (iv) the requirements of Section 721 of Title VII of the Defense
Production Act of 1950, as amended, and the rules and regulations promulgated
thereunder (the "Exon-Florio Provision"), (v) the notification requirements of
the applicable International Traffic in Arms Regulations of the U.S. Department
of State (the "International Traffic in Arms Regulations") and (vi) Consents the
failure of which to obtain or make would not prevent or delay consummation of
the Offer or the Merger, or otherwise prevent the Company from performing its
obligations under this Agreement, and would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms,
reports, schedules, registration statements, definitive proxy statements and
documents required to be filed by the Company with the SEC since December 24,
1995 (collectively, the "SEC Reports"), and the Company has heretofore delivered
to Parent such SEC Reports, in the form filed with the SEC. As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Exchange Act or the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder that are applicable,
as the case may be, to such SEC Reports, and none of the SEC Reports contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading. No
Subsidiary currently has, or since December 24, 1995 has had, an independent
obligation to file any form, report or other document with the SEC.
(b) Each of the audited consolidated balance sheets
and the related consolidated statements of operations, stockholders' equity and
cash flows (including the related notes and schedules thereto) of the Company
contained in the SEC Reports present fairly the consolidated financial position
and the consolidated results of operations and cash flows of the Company and the
consolidated Subsidiaries as at the respective dates thereof or for the
respective periods presented therein in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods indicated except as otherwise noted therein, including the related
notes.
(c) The consolidated balance sheets and the related
consolidated statements of operations and cash flows (including, in each case,
the related notes thereto) of the
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Company contained in the Forms 10-Q for the periods ended September 27, 1998,
June 28, 1998 and March 29, 1998 included in the SEC Reports (collectively, the
"Quarterly Financial Statements") have been prepared in accordance with the
requirements for interim financial statements contained in Regulation S-X. The
Quarterly Financial Statements present fairly the consolidated financial
position, results of operations and cash flows of the Company and its
consolidated Subsidiaries for all periods presented therein in accordance with
GAAP applied on a consistent basis throughout the periods indicated except (i)
for normal and recurring year-end audit adjustments and (ii) conformity of the
related notes to GAAP requirements.
(d) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the Subsidiaries as at September 27, 1998,
including the notes thereto (the "1998 Balance Sheet"), neither the Company nor
any Subsidiary has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on a
balance sheet, or in the notes thereto, prepared in accordance with GAAP, except
for liabilities and obligations incurred in the ordinary course of business
consistent with past practice since September 27, 1998, which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(e) The Company has heretofore furnished to Parent complete
and correct copies of all amendments and modifications that have not been filed
by the Company with the SEC to all agreements, documents and other instruments
that previously had been filed by the Company with the SEC and are currently in
effect, to the extent that such amendment or modification materially modifies
the terms of such agreement, document or other instrument.
SECTION 4.07 Information. Neither the Schedule 14D-9 nor any
information supplied by the Company for inclusion or incorporation by reference
in (i) the Offer Documents, (ii) the Proxy Statement or (iii) any other document
to be filed with the SEC or any other Governmental Entity in connection with the
Transactions (the "Other Filings") or any amendments or supplements thereto
will, at the respective times filed with the SEC or other Governmental Entity or
when first published, sent or given to stockholders of the Company, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
Proxy Statement to be sent to the stockholders of the Company in connection with
the Special Meeting, shall not, at the date the Proxy Statement (or any
amendment or supplement thereto) is first mailed to stockholders of the Company,
at the time of the Special Meeting and at the Effective Time, be false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not misleading
or necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Special Meeting which shall have become
false or misleading. The Schedule 14D-9 and the Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder, except that no representation is made by
the Company with
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respect to statements made therein based on information supplied by Parent or
the Purchaser for inclusion in the Proxy Statement.
SECTION 4.08 Litigation. Except as set forth in the SEC Reports, as
of the date hereof, there is no suit, action, claim, proceeding, investigation
or audit pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary or any property or asset of the Company
or any Subsidiary, before any court, arbitrator or Governmental Entity, that,
individually or in the aggregate, would have a Material Adverse Effect on the
Company. As of the date hereof, neither the Company nor any Subsidiary nor any
property or asset of the Company or any Subsidiary is subject to any judgment,
decree, injunction, order, writ, determination or award of any Governmental
Entity or arbitrator having, individually or in the aggregate, a Material
Adverse Effect on the Company. Except as set forth in the SEC Reports, no
Governmental Entity has provided notification to the Company or a Subsidiary of
its intention to conduct any audit, investigation or other review with respect
to the Company or such Subsidiary, which audit, investigation or review would,
if adversely determined, individually or in the aggregate, have a Material
Adverse Effect on the Company. Since January 1, 1995, there has not been any
product recall or post-sale warning by the Company or any Subsidiary or any of
their customers concerning any products manufactured, shipped, sold, marketed,
distributed, processed or merchandised by the Company or any Subsidiary.
SECTION 4.09 Compliance with Applicable Laws. Except as set forth in
the SEC Reports, neither the Company nor any Subsidiary is in violation of any
foreign, federal, state or local law, regulation, order, statute, ordinance,
rule, judgment, ruling or decree ("Laws") of any Governmental Entity applicable
to the Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or affected, except for violations which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. Except as set forth in the SEC Reports, the business operations of
the Company and its Subsidiaries are not being conducted in violation of any
Laws, except for violations which, individually or in the aggregate, would not
have a Material Adverse Effect on the Company.
SECTION 4.10 Employee Benefit Plans.
(a) Section 4.10(a) of the Company Disclosure Statement
includes a complete list of all material employee benefit and compensation plans
and programs providing benefits to any employee or former employee of the
Company and its Subsidiaries sponsored or maintained by the Company or any of
its Subsidiaries or to which the Company or any of its Subsidiaries contributes
or is obligated to contribute (collectively, the "Plans"). Without limiting the
generality of the foregoing, the term "Plans" includes all employee welfare
benefit plans within the meaning of Section 3(l) of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations thereunder
("ERISA"), and all employee pension benefit plans within the meaning of Section
3(2) of ERISA. Neither the Company nor any Subsidiary has any commitment to (i)
create, incur liability with respect to, or cause to exist any other employee
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benefit plans, (ii) enter into any contract or agreement to provide compensation
or benefits to any individual, or (iii) modify, change or terminate any Plan,
other than with respect to any modification, change or termination required by
ERISA or the Internal Revenue Code of 1986, as amended (the "Code").
(b) With respect to each Plan, the Company has made available
to Parent a true, correct and complete copy of: (i) all plan documents, benefit
schedules, trust agreements, and insurance contracts and other funding vehicles;
(ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule,
if any; (iii) the current summary plan description, if any; (iv) the most recent
annual financial report, if any; (v) the most recent actuarial report, if any;
and (vi) the most recent determination letter from the Internal Revenue Service
(the "IRS"), if any.
(c) Each of the Company and each of its Subsidiaries has
complied, and is now in compliance, in all material respects with all provisions
of ERISA, the Code and all laws and regulations applicable to the Plans. With
respect to each Plan that is intended to be a "qualified plan" within the
meaning of Section 401 (a) of the Code ("Qualified Plans"), the IRS has issued a
favorable determination letter, and nothing has occurred since the date of such
determination letter to adversely affect the qualified status of any Qualified
Plan.
(d) All contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, for any period through the date hereof have been timely made
or paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected in the financial statements of the
Company included in the SEC Reports to the extent required under generally
accepted accounting principles.
(e) With respect to any Plan which is subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code, there does not now
exist, nor do any circumstances exist that could result in, any liability under
(i) Title IV of ERISA, (ii) Section 302 of ERISA or (iii) Sections 412 and 4971
of the Code, and there is no circumstance that exists that otherwise could
reasonably be expected to result in liability to the Company or any Subsidiary
pursuant to Title IV of ERISA. The Company's group benefit Plans comply in all
material respects with the continuation coverage requirements of Section 601 et
seq. of ERISA and Section 4980B of the Code.
(f) Neither the Company nor any Subsidiary has maintained,
sponsored or been obligated to contribute, on behalf of any current or former
employees of the Company, to a multiemployer plan (as defined in Section 3(37)
of ERISA) or is liable for any withdrawal liability under Section 4201 of ERISA.
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(g) Except as set forth in the SEC Reports, no current or
former employee or director of the Company or any Subsidiary is entitled to any
benefit under any Plan by reason of the Transactions, including, but not limited
to, severance, stay-pay or retention bonuses, or to any acceleration, vesting,
distribution or increase in benefits or obligations to fund benefits.
SECTION 4.11 Labor Matters.
(a) Except as set forth in Section 4.11 of the Company
Disclosure Statement, neither the Company nor any Subsidiary is a party or
otherwise subject to any collective bargaining agreement or other labor union
contracts. The contracts and agreements listed in Section 4.11 of the Company
Disclosure Statement are hereinafter referred to as "Collective Bargaining
Agreements."
(b) Expect as set forth in the SEC Reports or as would not,
individually and in the aggregate, have a Material Adverse Effect on the
Company, (i) neither the Company nor any Subsidiary has breached or otherwise
failed to comply with any material provision of such Collective Bargaining
Agreements and there are no grievances outstanding against the Company or any
Subsidiary under any such Collective Bargaining Agreements; (ii) there are no
unfair labor practice complaints pending against the Company or any Subsidiary
before the National Labor Relations Board or any current union representation
questions involving employees of the Company or any Subsidiary; and (iii) there
is no strike, slowdown, work stoppage or lockout, or, to the best knowledge of
the Company, threat thereof, by or with respect to any employees of the Company
or any Subsidiary. The consent of any labor unions which are parties to such
Collective Bargaining Agreements listed in Section 4.11 of the Company
Disclosure Statement is not required to consummate the Transactions.
SECTION 4.12 Intellectual Property.
(a) Except as would not, individually and in the aggregate,
have a Material Adverse Effect on the Company, (i) the Company and each
Subsidiary owns, or is licensed or otherwise has the right to use (in each case,
clear of any liens or encumbrances of any kind), all Intellectual Property (as
defined below) used in or necessary for the conduct of its business as currently
conducted, (ii) no claims are pending or, to the best knowledge of the Company,
threatened that the Company or any Subsidiary is infringing on or otherwise
violating the rights of any person with regard to any Intellectual Property and
(iii) to the best knowledge of the Company, no person is infringing on or
otherwise violating any right of the Company or any Subsidiary with respect to
any Intellectual Property owned by and/or licensed to the Company or any
Subsidiary. Section 4.12 of the Company Disclosure Statement contains a list of
all material Intellectual Property owned by the Company or any Subsidiary
(collectively, the "Owned Intellectual Property") and a list of all material
Intellectual Property licensed to the Company or any Subsidiary or licensed by
the Company or any Subsidiary to any third party (the "Licensed Intellectual
Property").
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(b) For purposes of this Agreement, "Intellectual Property"
shall mean trademarks (registered or unregistered), service marks, brand names,
trade dress, trade names, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing; and trade secrets and rights in any jurisdiction to
limit the use or disclosure thereof by any person.
(c) Except as would not have a Material Adverse Effect on the
Company, the rights of the Company or any Subsidiary in or to the Owned
Intellectual Property do not conflict with, misappropriate, or infringe upon the
Intellectual Property right of any third party. Neither the Company nor any
Subsidiary has granted any license, sublicense or other right to any other
person with respect to the Owned Intellectual Property or the Licensed
Intellectual Property. Except as set forth in the SEC Reports, no claims have
been made or asserted or are pending, nor, to the best knowledge of the Company,
have any such claims been threatened, against the Company or any Subsidiary (i)
based upon or challenging or seeking to deny or restrict the use by the Company
or any Subsidiary of any of the Owned Intellectual Property or Licensed
Intellectual Property, or (ii) alleging that any Licensed Intellectual Property
is being licensed, or used in violation of any Intellectual Property right of
any third party.
(d) The Amended and Restated Research and Development
Agreement between Hoeganaes and HB dated September 28, 1994 (the "Research
Agreement") (i) is valid and binding on each party thereto, (ii) is in full
force and effect, (iii) has not been amended or modified and (iv) by its terms
will continue after, and be unaffected by, the consummation of the Offer and the
Merger. Neither Hoeganaes, nor, to the best knowledge of the Company, HB is, in
any material respect, in breach of or default under, the Research Agreement or
has granted to any other person any rights, adverse or otherwise, under the
Research Agreement.
(e) The statements of the Company made in the SEC Reports
regarding the Company's Year 2000 compliance and the cost related thereto are
true and complete in all material respects.
SECTION 4.13 Environmental Matters. Except as would not reasonably
be expected to have a Material Adverse Effect on the Company, (i) no real
property currently or formerly owned or operated by the Company or any
Subsidiary is contaminated with any Hazardous Substances to an extent or in a
manner or condition requiring remediation or other action under any
Environmental Law, (ii) no judicial or administrative proceeding is pending or,
to the knowledge of the Company, threatened relating to liability for any
off-site disposal or contamination, (iii) neither the Company nor any Subsidiary
has received in writing any claims or notices alleging liability under any
Environmental Law, and the Company has no knowledge of any circumstances that
would reasonably be expected to result in such claims, and (iv) the Company and
each Subsidiary are and have been in compliance with all applicable
Environmental Laws and all permits, approvals, licenses and other authorizations
issued pursuant thereto. "Environmental Law" means any applicable federal,
state, local or foreign law, regulation, order, decree or judicial opinion, or
other agency requirement having the force and
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effect of law, and relating to noise, odor, Hazardous Substances or the
protection of the environment, health, safety or natural resources. "Hazardous
Substance" means any waste or toxic or hazardous substance that is regulated by
or under authority of any Environmental Law, including any petroleum products,
asbestos or polychlorinated biphenyls.
SECTION 4.14 Absence of Certain Changes or Events.
(a) Since September 27, 1998 and prior to the date of this
Agreement, the Company and the Subsidiaries have conducted their businesses only
in the ordinary course and in a manner consistent with past practice and there
has not been any change or effect that is or is reasonably likely to be
materially adverse to the business, operations, financial condition, assets or
liabilities (including, without limitation, contingent liabilities) of the
Company or any Subsidiary having, or that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(b) (i) Phase I of the HC 2000 Project is substantially
complete and largely operational; (ii) Phase I of the HC 2000 Project will be
fully operational by December 31, 1998 and will not require additional
expenditures of more than approximately $2,000,000 and (iii) Section 4.14(b) of
the Company Disclosure Statement sets forth the budget and the target dates for
completion of Phase II of the HC 2000 Project (the "Phase II Budget"). For
purposes of this Agreement, the "HC 2000 Project" means the currently planned
improvements at the Gallatin facility of Hoeganaes.
SECTION 4.15 Real Property. The Company or a Subsidiary either owns
in fee or holds a leasehold interest in all real property material to the
business and operations of the Company and the Subsidiaries, taken as a whole.
The Company or a Subsidiary, as applicable, has good fee title or leasehold
interest, as applicable, to such real property free and clear of all Liens
subject only to (a) mortgages or deeds of trust disclosed in Section 4.15 of the
Company Disclosure Statement, (b) liens for Taxes not yet due and payable and
(c) such other Liens as, individually or in the aggregate, do not materially
interfere with the business and operations of the Company and the Subsidiaries,
taken as a whole, as presently conducted. The Company has delivered to Parent
true and complete copies of the leases, including any amendments thereto, for
the Ridgway, Pennsylvania (River Road) and El Cajon, California (Gillespie
Field) properties and each such lease is in full force and effect, and neither
the Company nor any Subsidiary is in material breach of either thereof or has
received any notice of termination or default thereunder, which default has not
been cured.
SECTION 4.16 Tax Matters.
(a) (i) The Company and each of the Subsidiaries has filed all
United States federal, and all material state, local and foreign Tax Returns
required to be filed by each of them; (ii) the Company and each of the
Subsidiaries have, within the time and in the manner prescribed by law, paid all
Taxes that are currently due and payable, except for those contested in
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good faith and for which adequate reserves have been taken; (iii) there are no
tax liens upon the assets of the Company or of any of the Subsidiaries except
for statutory liens for current Taxes not yet due or being contested in good
faith; and (iv) no deficiency for any income Taxes has been proposed, asserted
or assessed against the Company or any of the Subsidiaries which has not been
resolved and paid in full.
(b) For purposes of this Section 4.16 (i) "Tax Return" shall
mean any report, return, information statement, payee statement or other
information required to be provided to any federal, state, local or foreign
Governmental Authority, or otherwise retained, with respect to Taxes and (ii)
"Taxes" shall mean any and all taxes, levies, imposts, duties, assessments,
charges and withholdings imposed or required to be collected by or paid over to
any federal, state, local, supra-national or foreign Governmental Authority or
any political subdivision thereof, including without limitation income, gross
receipts, ad valorem, value added, minimum tax, franchise, sales, use, excise,
license, real or personal property, unemployment, disability, stock transfer,
mortgage recording, estimated, withholding or other tax, governmental fee or
other like assessment or charge of any kind whatsoever, and including any
interest, penalties, fines, assessments or additions to tax imposed in respect
of the foregoing, or in respect of any failure to comply with any requirement
regarding Tax Returns.
SECTION 4.17 Certain Approvals. Assuming the accuracy of Parent's
representation in Section 5.06 of this Agreement, the Company has taken all
action necessary such that the provisions of Section 203 of the GCL will not
apply to either of the Transactions.
SECTION 4.18 Required Vote of Company Stockholders. Unless the
Merger may be consummated in accordance with Section 253 of GCL, the only vote
of the stockholders of the Company required to adopt this Agreement and approve
the Merger is the affirmative vote of the holders of Common Shares representing
at least two-thirds (662/3%) of the total outstanding.
SECTION 4.19 Opinion of Financial Advisor. The Company has received
the written opinion of Morgan Stanley that the Common Share Offer Price and the
Common Share Merger Price are fair, from a financial point of view, to the
holders of Common Shares.
SECTION 4.20 Rights Agreement.
(a) The Board has taken all necessary action to irrevocably
amend the Rights Agreement so that neither the execution or delivery of this
Agreement nor the making of the Offer or the acceptance for payment or payment
for Shares by the Purchaser pursuant to the Offer will cause (i) the Rights to
become exercisable under the Rights Agreement, (ii) Parent or Purchaser or any
of their affiliates to be deemed an "Acquiring Person" (as defined in the Rights
Agreement) or (iii) the "Share Acquisition Date" (as defined in the Rights
Agreement) to occur upon any such event.
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(b) The "Distribution Date" (as defined in the Rights
Agreement) has not occurred.
SECTION 4.21 Brokers. Except for the engagement of Morgan Stanley,
none of the Company, any Subsidiary, or any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's fees in connection
with the Transactions. The Company has heretofore furnished to Parent a complete
and correct copy of all agreements between the Company and Morgan Stanley
pursuant to which such firm would be entitled to any payment relating to the
Transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware. The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
SECTION 5.02 Authority Relative to This Agreement. Each of Parent
and the Purchaser has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and the
Purchaser and the consummation by Parent and the Purchaser of the Transactions
have been duly and validly authorized and approved by the Boards of Directors of
Parent and the Purchaser and by Parent as stockholder of the Purchaser and no
other corporate proceedings on the part of Parent or the Purchaser are necessary
to authorize or approve this Agreement or to consummate the Transactions. This
Agreement has been duly executed and delivered by each of Parent and the
Purchaser and, assuming the due and valid authorization, execution and delivery
of this Agreement by the Company, constitutes a legal, valid and binding
obligation of each of Parent and the Purchaser enforceable against each of them
in accordance with its terms.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) None of the execution, delivery and performance of this
Agreement by Parent or the Purchaser, the consummation by Parent or the
Purchaser of the Transactions or compliance by Parent or the Purchaser with any
of the provisions hereof will (i) conflict with or violate the organizational
documents of Parent or the Purchaser, (ii) conflict with or violate any laws,
statute, ordinance, rule, regulation, order, judgment or decree applicable to
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Parent or the Purchaser, or by which any property or asset of either of them is
bound or affected, or (iii) result in a Violation pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or the Purchaser is a party or by
which any property or asset of either of them is bound or affected, except in
the case of the foregoing clauses (ii) and (iii) for any such Violations which,
individually or in the aggregate, would not materially adversely affect the
ability of Parent or the Purchaser to consummate the Transactions.
(b) None of the execution and delivery of this Agreement by
Parent and the Purchaser, the performance of this Agreement by Parent or the
Purchaser, the consummation by Parent and the Purchaser of the Transactions or
compliance by Parent and the Purchaser with any of the provisions hereof will
require any Consent of any Governmental Entity, except for (i) compliance with
any applicable requirements of the Exchange Act, (ii) the filing and recordation
of a certificate of merger, or, if permitted, a certificate of ownership and
merger, pursuant to the GCL, (iii) the pre-merger notification requirements of
the HSR Act, (iv) the requirements of the Exon-Florio Provision, (v) the
notification requirements of the applicable International Traffic in Arms
Regulations and (vi) Consents the failure of which to obtain or make would not
materially adversely affect the ability of Parent or the Purchaser to consummate
the Transactions.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser for inclusion in the Offer Documents will,
at the time filed with the SEC or when first published, sent or given to
stockholders of the Company, as the case may be, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The information
supplied by Parent for inclusion in the Proxy Statement will not, on the date
the Proxy Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, at the time of the Special Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact, or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Special Meeting which shall have become
false or misleading. Notwithstanding the foregoing, Parent and Purchaser make no
representation or warranty with respect to any information supplied by the
Company or any of its representatives which is contained in any of the foregoing
documents or the Offer Documents. The Offer Documents shall comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
SECTION 5.05 Financing. Parent or the Purchaser has available to it
the funds necessary to consummate the Offer and the Merger on a timely basis.
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SECTION 5.06 Ownership of Company Common Stock. As of the date of
this Agreement, neither Parent nor the Purchaser beneficially owns any shares of
capital stock of the Company.
SECTION 5.07 Brokers. Except for the engagement of Warburg Dillon
Read LLC, none of Parent, the Purchaser, or any of their respective
Subsidiaries, officers, directors or employees, has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the Transactions.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. The Company
covenants and agrees that, during the period from the date of this Agreement to
the Effective Time, unless Parent shall otherwise agree in writing, the
businesses of the Company and the Subsidiaries shall be conducted only in the
ordinary course of business and in a manner consistent with past practice; and
the Company will use its reasonable best efforts to preserve intact the business
organization of the Company and the Subsidiaries, to keep available the services
of the current officers, employees and consultants of the Company and the
Subsidiaries and to preserve the current relationships of the Company and the
Subsidiaries with customers, suppliers and other persons with which the Company
or any Subsidiary has significant business relations. Without limiting the
generality of the foregoing, and except as otherwise contemplated by this
Agreement, neither the Company nor any Subsidiary shall, between the date of
this Agreement and the Effective Time, directly or indirectly do, or propose to
do, any of the following without the prior written consent of Parent:
(a) adopt any amendment to its Certificate of Incorporation or
by-laws or equivalent organizational documents or the Rights Agreement;
(b) issue, reissue, sell, pledge, dispose of, grant or
encumber or authorize the issuance, reissuance, or any sale, pledge,
disposition, grant or encumbrance of (i) any shares of capital stock of any
class of the Company or any Subsidiary, or any warrants, options, convertible
securities or other rights of any kind to acquire any shares of such capital
stock, or any other ownership interest (including, without limitation, any
phantom interest), of the Company or any Subsidiary (except for the issuance of
(x) Common Shares and Nonvoting Common Shares upon conversion of any Series A
Shares or Nonvoting Common Shares and (y) a maximum of 2,000,000 Common Shares
issuable pursuant to employee stock options outstanding on the date hereof) or
(ii) any assets of the Company or any Subsidiary, except for sales in the
ordinary course of business and in a manner consistent with past practice;
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(c) declare, set aside, make or pay any dividend or other
distribution payable in cash, securities, property or otherwise, with respect to
any of its capital stock, except for the declaration and payment in the ordinary
course of business and consistent with past practice of any dividend; provided,
however, in no event shall Hoeganaes pay any dividend that has previously been
deferred;
(d) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock except
for (y) any special redemption of the Series A Shares at the Dividend Reference
Value to which the holders thereof may be entitled upon the occurrence of a
Change of Control (as such terms are defined in the Company's Restated
Certificate of Incorporation) and (z) the redemption of the Rights;
(e) except for (i) increases in salary, wages and benefits of,
and, after consultation with Parent, the establishing of annual incentive plans
for, officers or employees of the Company or its Subsidiaries in the ordinary
course of business and consistent with past practice (which incentive plans, in
the case of Messrs. Reum, Gregory and Smith may be adopted at any time after
December 1, 1998), (ii) increases in salary, wages and benefits granted to
officers and employees of the Company or the Subsidiaries in the ordinary course
of business and consistent with past practice in conjunction with new hires,
promotions or other changes in job status, (iii) increases in salary, wages and
benefits to employees of the Company pursuant to collective bargaining
agreements entered into in the ordinary course of business, (iv) the payment in
calendar year 1998 with respect solely to Messrs. Reum, Gregory and Smith, of
(x) annual bonuses payable in respect of the fiscal year ending December 27,
1998 and (y) bonuses payable for the three-year period from 1996 through 1998
pursuant to the Long-Term Plan under the 1996 Senior Executive Incentive
Compensation Plan, it being understood that the bonuses to be paid in calendar
year 1998 shall not exceed the bonuses that would have otherwise been payable,
(v) with respect solely to Messrs. Reum, Gregory and Smith, the acceleration of
vesting into calendar year 1998 of any outstanding Options which vest by their
terms upon a change in control, (vi) to the extent set forth in the Company
Disclosure Statement, the funding or amendment of "rabbi trusts" with respect to
the Directors Post-Retirement Income Plan, the deferred compensation agreements
of Grant L. Johnson and Frederick C. Langenberg, and/or certain Key Executive
Severance Agreements, (vii) to the extent set forth in the Company Disclosure
Statement, the settlement of any outstanding non-qualified pension obligations,
and (viii) to the extent set forth in the Company Disclosure Statement, the
payment or transfer from The Interlake Corporation Retirement Savings Plan
and/or Employee Stock Ownership Plan of the account balances of Messrs. Reum,
Gregory and Smith, increase the compensation or fringe benefits payable or to
become payable to its directors, officers or key employees (whether from the
Company or any of the Subsidiaries), or pay any benefit not required by any
existing plan or arrangement (including, without limitation, the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units) or grant any severance or termination pay to (except pursuant
to existing agreements, plans or policies), or enter into any employment or
severance agreement with, any director, officer or other key employee of the
Company or any of the Subsidiaries or establish, adopt, enter into, or amend any
collective bargaining, bonus, profit sharing, thrift,
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compensation, stock option, restricted stock, pension, retirement, savings,
welfare, deferred compensation, employment, termination, severance or other
employee benefit plan, agreement, trust, fund, policy or arrangement for the
benefit or welfare of any directors, officers or current or former employees
(any of the foregoing being an "Employee Benefit Arrangement"), except in each
case to the extent required by applicable law or regulation; provided, however,
that nothing herein will be deemed to prohibit the payment of benefits as they
become payable in accordance with the terms of an Employee Benefit Arrangement;
(f) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership,
other business organization or any division thereof or any material amount of
assets; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person, or make any loans or
advances, except in the ordinary course of business and consistent with past
practice; (iii) enter into any supply or purchase agreements that will take in
excess of 12 months to perform, or enter into any other contract or agreement
other than in the ordinary course of business, consistent with past practice;
(iv) authorize or commit to any capital expenditure, which is in excess of the
amounts allocated for any and all periods and/or any and all projects specified
in the Company's 1999 Strategic Plan heretofore furnished to Parent or, with
respect to the HC 2000 Project, the amount that is expressly contemplated by the
Phase II Budget for any and all periods and/or any and all projects specified in
the HC 2000 Project or (v) enter into or amend any contract, agreement,
commitment or arrangement with respect to any matter set forth in this Section
6.01(f);
(g) 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);
(h) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(i) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or reserved
against in the 1998 Balance Sheet or subsequently incurred in the ordinary
course of business and consistent with past practice; or
(j) agree in writing or otherwise to take any of the foregoing
actions.
SECTION 6.02 Access to Information. From the date hereof until the
Effective Time, the Company will, and will cause the Subsidiaries, and each of
their respective officers, directors, employees, auditors, counsel, advisors and
representatives (collectively, the
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"Company Representatives") to, provide Parent and the Purchaser and their
respective officers, directors, employees, auditors, counsel, advisors and
representatives (collectively, the "Parent Representatives") reasonable access
(subject, however, to existing confidentiality and similar nondisclosure
obligations and the preservation of attorney client and work product
privileges), during normal business hours and upon reasonable notice, to the
officers, employees, agents, properties, offices, plants and other facilities
and to the books and records of the Company and the Subsidiaries, and will
permit Parent and the Purchaser to make inspections of such as either of them
may reasonably require, and will cause the Company Representatives and the
Subsidiaries to furnish Parent, the Purchaser and the Parent Representatives
with all financial, operating and other data and information with respect to the
business and operations of the Company and the Subsidiaries as Parent and the
Purchaser, through its officers, employees or agents, may from time to time
reasonably request; provided that nothing in this Section 6.02 shall be deemed
to require the Company to make available to Parent or the Purchaser any
facilities of, or information or materials with respect to, Hoeganaes to the
extent the Company and its advisors determine that to do so would be contrary to
its obligations to the minority stockholder of Hoeganaes. Unless otherwise
required by Law, Parent and the Purchaser will, and will cause the Parent
Representatives to, hold any such information in confidence until such time as
such information otherwise becomes publicly available through no wrongful act of
Parent, the Purchaser or the Parent Representatives. In the event of termination
of this Agreement for any reason in accordance with Section 8.01, Parent and the
Purchaser will, and will use their reasonable best efforts to cause the Parent
Representatives to, return to the Company all copies of written information
furnished by the Company or any of the Company Representatives to Parent or the
Purchaser or the Parent Representatives (other than such documents as may have
been filed with the SEC or otherwise be publicly available) and destroy all
memoranda, notes and other writings prepared by Parent, the Purchaser or the
Parent Representatives based upon or including the information furnished by the
Company or any of the Company Representatives to Parent or the Purchaser or the
Parent Representatives (and Parent will certify to the Company that such
destruction has occurred). In addition, Parent will comply with the terms of the
Confidentiality Agreement (as hereinafter defined). No investigation pursuant to
this Section 6.02 shall affect any representation or warranty in this Agreement
of any party hereto or any condition to the obligations of the parties hereto.
SECTION 6.03 Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto shall (i) make promptly its respective filings, and
thereafter make any other required submissions, under the HSR Act with respect
to the Transactions and (ii) use its reasonable best efforts to take, or cause
to be taken, all action, and to do, or cause to be done, in the case of the
Company, consistent with the fiduciary duties of the Board, and to assist and
cooperate with the other parties hereto in doing, as promptly as practicable,
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the Transactions. The parties hereto shall
together give notice of the Transactions promptly to the Chairman of the
Committee on Foreign Investment in the United States pursuant to the
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Exon-Florio Provision, and each of the parties hereto shall make such additional
filings and submissions as may be reasonably necessary under the Exon-Florio
Provision in respect of the Transactions. The Company shall promptly provide the
notification to the U.S. Department of State required by the International
Traffic in Arms Regulations and shall request a waiver of the waiting period
contemplated thereby. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement,
including the execution of additional instruments, the proper officers and
directors of each party to this Agreement shall take all such action.
(b) In addition, if at any time prior to the Effective Time
any event or circumstance relating to either the Company or Parent or the
Purchaser or any of their respective Subsidiaries should be discovered by the
Company or Parent, as the case may be, and which should be set forth in an
amendment to the Offer Documents or the Schedule 14D-9, the discovering party
will promptly inform the other party of such event or circumstance.
SECTION 6.04 Consents.
(a) Each of the parties will use its reasonable best efforts
to obtain as promptly as practicable all Consents of any Governmental Entity or
any other person required in connection with, and waivers of any Violations that
may be caused by, the consummation of the transactions contemplated by the Offer
and this Agreement.
(b) Each party hereto shall promptly inform the others of any
material communication from the United States Federal Trade Commission, the
Department of Justice or any other domestic or foreign government or
governmental or multinational authority (collectively, an "Antitrust Authority")
regarding either of the Transactions. If any party or any affiliate thereof
receives a request for additional information or documentary material from any
such government or authority with respect to the Transactions, then such party
will endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request. If any Antitrust Authority raises an objection
to either of the Transactions or proposes or seeks to impose any operating
restrictions in connection therewith, Parent and the Purchaser agree,
expeditiously and in good faith, to discuss such objections and restrictions and
all other possible resolutions with such Antitrust Authority. Parent will advise
the Company promptly in respect of any understandings, undertakings or
agreements (oral or written) which Parent proposes to make or enter into with
the Federal Trade Commission, the Department of Justice or any other domestic or
foreign government or governmental or multinational authority in connection with
the Transactions.
SECTION 6.05 Public Announcements. So long as this Agreement is in
effect, Parent, the Purchaser and the Company shall consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement or either Transaction and shall not issue any such
press release or make any such public statement prior to
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such consultation, except as may be required by law or any listing agreement
with a national securities exchange to which Parent, an affiliate of Parent or
the Company is subject.
SECTION 6.06 Employee Benefit Arrangements. Parent agrees that the
Company will honor and, from and after the Effective Time, Parent will cause the
Surviving Corporation to honor, all Employee Benefit Arrangements to which the
Company or any of its Subsidiaries is presently a party. Nothing herein shall be
construed to limit the Company or the Purchaser from amending or terminating an
Employee Benefit Arrangement to the extent permitted under the terms of the
applicable Employee Benefit Arrangement.
SECTION 6.07 Indemnification.
(a) Parent agrees that all rights to indemnification now
existing in favor of any employee, agent, director or officer of the Company and
its Subsidiaries (the "Indemnified Parties") as provided in their respective
charters or by-laws, in an agreement between an Indemnified Party and the
Company or one of its Subsidiaries, or otherwise in effect on the date hereof,
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time; provided that in the
event any claim or claims are asserted or made within such six-year period, all
rights to indemnification in respect of any such claim or claims shall continue
until final disposition of any and all such claims. The Company shall, and after
the Effective Time, the Surviving Corporation shall, indemnify all Indemnified
Parties to the fullest extent permitted by applicable law with respect to all
acts and omissions arising out of such individuals' services as officers,
directors, employees or agents of the Company or any Subsidiary or as trustees
or fiduciaries of any plan for the benefit of employees, or otherwise on behalf
of the Company or any Subsidiary, occurring prior to the Effective Time,
including, without limitation, the Transactions. Without limitation of the
foregoing, in the event any such Indemnified Party is or becomes involved in any
action, proceeding or investigation in connection with any matter, including,
without limitation, the Transactions, occurring prior to, and including, the
Effective Time, (i) the Company or the Surviving Corporation, as the case may
be, shall pay the reasonable fees and expenses incurred by any Indemnified
Party, including reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company or the Surviving Corporation, promptly after statements therefor are
received, and (ii) the Company and the Surviving Corporation shall cooperate in
the defense of any such matter; provided, however, that neither the Company nor
the Surviving Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld); and
provided further that neither the Company nor the Surviving Corporation shall be
obligated pursuant to this Section 6.07(a) to pay the fees and expenses of more
than one counsel for all Indemnified Parties in any single action except to the
extent that two or more of such Indemnified Parties shall have conflicting
interests in the outcome of such action.
(b) The Surviving Corporation shall use its best efforts to
maintain in effect for six years from the Effective Time, if available, the
current policies of the directors' and
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officers' liability insurance maintained by the Company; provided that the
Surviving Corporation may substitute therefor policies issued by a similarly
rated insurance company of at least the same coverage containing terms and
conditions which are not less favorable (taken as a whole) and provided that
such substitution shall not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time; and provided further
that the Surviving Corporation shall not be required to expend pursuant to this
Section 6.07(b) more than an amount per year equal to 200% of current annual
premiums paid by the Company for such insurance (which premiums the Company
represents and warrants to be approximately $300,000 in the aggregate for the
current year), and if the Surviving Corporation is unable to obtain the
insurance required by this Section 6.07(b), it shall obtain as much comparable
insurance as possible for an annual premium equal to such amount.
SECTION 6.08 No Solicitation. Neither the Company nor any Subsidiary
shall, directly or indirectly, through any directors, officers, employees,
agents, affiliates, representatives or otherwise, solicit or initiate any
inquiries or the submission of any proposal or offer from any person with
respect to any tender offer, merger, consolidation, liquidation,
recapitalization, business combination, sale of significant assets, sales of
shares of capital stock or similar transactions involving the Company or any
Subsidiary or any division of the Company or any Subsidiary (an "Acquisition
Transaction") or participate in any negotiations regarding, or furnish to any
other person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in or facilitate, any effort or attempt by any
other person (other than Parent, the Purchaser or their respective directors,
officers, employees, agents and representatives) with respect to any Acquisition
Transaction or enter into any agreement, arrangement or understanding requiring
it to abandon, terminate or fail to consummate the Merger or any other
transactions contemplated by this Agreement; provided that the Company may, in
response to an unsolicited proposal with respect to an Acquisition Transaction
(an "Alternative Proposal") from a third party, furnish information to, and
negotiate, explore or otherwise engage in substantive discussions with such
third party, in each case only if the Company's Board, in good faith, deems it
necessary to do so in the exercise of its fiduciary obligations after
consultation with outside counsel and an independent nationally recognized
investment banking firm. The Company immediately shall cease and cause to be
terminated all existing discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Transaction. The Company shall notify
Parent promptly in writing if any such proposal or offer, or any inquiry or
contact with any person with respect thereto, is made or if any party makes any
Alternative Proposal and shall, in any such written notice to Parent, indicate
in reasonable detail the identity of the person making such proposal, offer,
inquiry, contact or Alternative Proposal and the terms and conditions of such
proposal, offer, inquiry, contact or Alternative Proposal and any subsequent
developments with respect thereto. 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.
SECTION 6.09 Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence, or non-occurrence of any
fact or event the
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occurrence, or non-occurrence of which would be reasonably likely (i) to cause
(x) any representation or warranty contained in this Agreement that is qualified
as to materiality to be untrue or inaccurate in any respect or (y) any
representation or warranty contained in this Agreement that is not qualified by
materiality to be untrue or inaccurate in any material respect, or (ii) to cause
any covenant, condition or agreement hereunder not to be complied with or
satisfied and (b) any failure of the Company or Parent, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that no such notification shall
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 6.10 Redemption of Rights.
(a) The Board shall take such additional action as is
necessary under the Rights Agreement to ensure that the Distribution Date (as
defined therein) does not occur, and that the Rights do not become exercisable,
by virtue of this Agreement or either Transaction.
(b) The Company shall, upon the request of the Purchaser, take
such action, including, without limitation, redeeming all outstanding Rights
immediately prior to the time of acceptance for payment by the Purchaser of any
Shares pursuant to the Offer or thereafter at the applicable Redemption Price
(as defined in the Rights Agreement), in order to render the Rights inapplicable
to the Transactions.
SECTION 6.11 State Takeover Laws. The Company shall, upon the
request of the Purchaser, take all reasonable steps to assist in any challenge
by the Purchaser to the validity or applicability to the Transactions, including
the Offer and the Merger, of any state takeover law.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions. The respective obligations of Parent, the
Purchaser and the Company to effect the Merger are subject to the satisfaction,
at or before the Effective Time, of each of the following conditions:
(a) Stockholder Approval. The stockholders of the Company
shall, if required under the Company's Restated Certificate of Incorporation or
applicable law, have duly approved and adopted this Agreement and the Merger
pursuant to the requirements of the Company's Restated Certificate of
Incorporation and applicable law.
(b) Purchase of Securities. The Purchaser shall have purchased
all Shares validly tendered and not withdrawn pursuant to the Offer in
accordance with the terms
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thereof; provided that this condition shall be deemed to have been satisfied
with respect to Parent and the Purchaser if the Purchaser fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer in breach of
this Agreement or the terms of the Offer.
(c) Injunctions; Illegality. No Governmental Entity or court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of making the acquisition of Shares by Parent or the Purchaser or
any affiliate of either of them illegal or otherwise restricting, preventing or
prohibiting consummation of the Transactions.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Transactions may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement and the
Merger by the stockholders of the Company:
(a) by the mutual written consent duly authorized by the
boards of directors of Parent and the Company;
(b) by the Company, upon approval of the Board, if (i) the
Purchaser shall have failed to commence the Offer as provided in Section 1.01
hereof or (ii) the Purchaser shall not have accepted for payment and paid for
Shares pursuant to the Offer in accordance with the terms thereof within five
months following the commencement of the Offer, unless such failure to pay for
Shares shall have been caused by or resulted from the failure of the Company to
perform in any material respect any of its covenants or agreements contained in
this Agreement or the material breach by the Company of any of its
representations or warranties contained in this Agreement;
(c) by Parent at any time prior to the acceptance of Shares
for payment pursuant to the Offer if, due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex I hereto,
(i) the Purchaser shall have failed to commence the Offer as provided in Section
1.01 hereof or (ii) the Purchaser shall not have accepted for payment and paid
for shares pursuant to the Offer in accordance with the terms thereof within
five months following the commencement of the Offer, unless such failure to
accept for payment or pay for Shares shall have been caused by or resulted from
the failure of Parent or the Purchaser to perform in any material respect any
covenant or agreement of either of them contained in this Agreement or the
material breach by Parent or the Purchaser of any representation or warranty of
either of them contained in this Agreement;
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(d) by Parent or the Company upon approval by the Board if the
Offer shall have expired or been terminated pursuant to its terms on account of
the failure of any condition specified in Annex I without the Purchaser having
purchased any Shares thereunder; provided, however, that the right to terminate
this Agreement pursuant to this Section 8.01(d) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of any such condition;
(e) by Parent or the Company if the Effective Time shall not
have occurred on or before June 7, 1999; provided, however, that the right to
terminate this Agreement under this Section 8.01(e) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on or
before such date;
(f) by Parent or the Company if any U.S. District Court or
similar competition tribunal outside the United States shall have issued,
enacted, entered, promulgated or enforced any injunction (or other similar
order) prohibiting the Offer or the Merger and such injunction (or similar
order) shall have become final and nonappealable;
(g) by the Company at any time prior to the acceptance for
payment of Shares by the Purchaser pursuant to the Offer, if there shall be an
Alternative Proposal which the Board in good faith, in the exercise of its
fiduciary duties to the Company's stockholders, determines represents a superior
transaction for the stockholders of the Company as compared to the Offer and the
Merger after consultation with outside counsel and an independent nationally
recognized investment banking firm; provided, however, that the right to
terminate this Agreement pursuant to this Section 8.01(g) shall not be available
(i) if the Company shall have breached in any material respect its obligations
under Section 6.08, other than, in the case of an Alternative Proposal from HB,
a breach solely of the covenant contained in Section 6.08 not to solicit or
initiate any inquiries or the submission of any proposal or offer, or (ii) if,
prior to or concurrently with any purported termination pursuant to this Section
8.01(g), the Company shall not have paid the fees and expenses contemplated by
Section 8.03, or (iii) if the Company shall not have provided Parent and the
Purchaser with at least five business days' prior written notice of its intent
to so terminate this Agreement together with a summary of the material terms and
conditions of the Alternative Proposal; and
(h) by Parent, if the Board shall have failed to recommend, or
shall have withdrawn, modified or amended in a manner adverse to Parent or the
Purchaser, its approval or recommendation of the Offer or the Merger, or shall
have recommended acceptance of any Alternative Proposal, or shall have resolved
to do any of the foregoing.
SECTION 8.02 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
or its directors, officers or stockholders, other than the provisions of this
Section 8.02, Section 8.03 and the second to the last and third to
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the last sentences of Section 6.02, which shall survive any such termination.
Nothing contained in this Section 8.02 shall relieve any party from its
liability for any breach of this Agreement or the Confidentiality Agreement.
SECTION 8.03 Fees and Expenses.
(a) Except as provided in Section 8.03(b), whether or not the
Offer or the Merger is consummated, all costs and expenses incurred in
connection with the Offer, this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
(b) (i) To compensate Parent and its affiliates for entering
into this Agreement and taking action to consummate the Transactions and
incurring the costs and expenses related thereto and other losses and expenses,
including the forgoing by Parent of other opportunities, the Company and Parent
agree that the Company shall pay to Parent $10,000,000 (the "Commitment Amount")
if this Agreement is terminated (A) by the Company pursuant to Section 8.01(g)
or (B) by Parent pursuant to Section 8.01(h) (unless the event described therein
occurs solely as a result of Parent's breach in any material respect of its
representations, warranties, covenants or agreements set forth in this
Agreement).
The Commitment Amount shall be payable (1) at the time of
termination if such amount becomes payable pursuant to clause (A) above and (2)
on the next business day following termination if such amount becomes payable
pursuant to clause (B) above.
(ii) The Company shall reimburse Parent and its
affiliates for the reasonable out-of-pocket expenses of the Purchaser and its
affiliates, not to exceed $2,000,000 in the aggregate, specifically related to
the Offer, the Merger, this Agreement and the Transactions (including, without
limitation, amounts paid or payable to banks and investment bankers, fees and
expenses of counsel, accountants and consultants, and printing expenses),
regardless of when those expenses are incurred, if this Agreement is terminated
and the Purchaser is entitled to the Commitment Amount.
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement
may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the approval and adoption of this Agreement and
the Merger by the stockholders of the Company, no amendment may be made which
decreases the Merger Consideration or which adversely affects the rights of the
Company's stockholders hereunder without the approval of such stockholders. This
Agreement may not be amended, except by an instrument in writing signed on
behalf of all of the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any
time prior to the Effective Time, any party hereto, by action taken by or on
behalf of its boards of
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directors, may (a) extend the time for the performance of any of the obligations
or other acts of any other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein by any other party or in any
document, certificate or writing delivered pursuant hereto by any other
applicable party or (c) waive compliance with any of the agreements of any other
party or with any conditions to its own obligations. Any agreement on the part
of any party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Section 3.02, the last sentence of Section 6.03(a), Section 6.06 and Section
6.07 shall survive the Effective Time indefinitely (except to the extent that a
shorter period of time is explicitly specified therein).
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the
instruments referred to herein) and the letter agreement by and between the
Purchaser and the Company, dated August 26, 1998 (the "Confidentiality
Agreement"), constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
SECTION 9.03 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by overnight courier or facsimile to
the respective parties at the following addresses:
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If to Parent or the Purchaser:
GKN North America Incorporated
3300 University Drive
Auburn Hills, MI 48326-2362
Attention: Seifi Ghasemi
Telecopier No.: (248) 371-0808
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Attention: Bonnie Greaves, Esq.
Telecopier No.: (212) 848-7179
If to the Company:
The Interlake Corporation
550 Warrenville Road
Lisle, Illinois 60532-4387
Attention: Stephen R. Smith
Vice President, Secretary
and General Counsel
Telecopier No.: (630) 719-7242
with copies to:
Winston & Strawn Jones Day Reavis & Pogue
35 West Wacker Drive 77 West Wacker Drive
Chicago, Illinois 60601 Chicago, Illinois 60601
Attention: James M. Reum, Esq. Attention: William P. Ritchie, Esq.
Telecopier No.: (312) 558-5700 Telecopier No.: (312) 782-8585
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
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SECTION 9.06 Jurisdiction. Each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the actions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this Agreement or the
Transactions in any court other than a federal or state court sitting in the
State of Delaware.
SECTION 9.07 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.08 Counterparties. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
SECTION 9.09 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except with
respect to the rights of the individuals directly or indirectly named or
referred to in Sections 1.03(c), 2.09 and 6.07 to enforce the provisions of such
Sections (for purposes of which provisions such individuals shall be deemed to
be third-party beneficiaries with privity to enforce such provisions), nothing
in this Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
SECTION 9.10 Certain Definitions. As used in this Agreement:
(a) the term "affiliate," as applied to any person, shall mean
any other person directly or indirectly controlling, controlled by, or under
common control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;
(b) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(c) the term "subsidiary" or "subsidiaries" means, with
respect to Parent, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the Company or
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, stock or other equity
interests the holders of which are generally entitled to more than 50% of the
vote for the
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election of the board of directors or other governing body of such corporation
or other legal entity.
SECTION 9.11 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 9.12 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect as long as the economic or legal
substance of the Transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
Transactions be consummated as originally contemplated to the fullest extent
possible.
SECTION 9.13 Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
[signature pages follow]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its respective officer thereunto duly authorized,
all as of the day and year first above written.
GKN NORTH AMERICA
INCORPORATED
By: /s/ Grey Denham
----------------------------------
Name: Grey Denham
Title: President
GKN NORTH AMERICA
MANUFACTURING INC.
By: /s/ Seifi Ghasemi
----------------------------------
Name: Seifi Ghasemi
Title: Vice President
THE INTERLAKE CORPORATION
By: /s/ W. Robert Reum
----------------------------------
Name: W. Robert Reum
Title: Chairman, President and
Chief Executive Officer
<PAGE> 50
GKN plc hereby unconditionally guarantees the obligations of Parent
and the Purchaser hereunder.
GKN plc
By: /s/ David J. Turner
----------------------------------
Name: David J. Turner
Title: Finance Director
<PAGE> 51
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer, the Purchaser
shall not be required to accept for payment or pay for any tendered Shares, and
may, subject to the terms of the Merger Agreement, terminate or amend the Offer
or postpone the acceptance for payment of or payment for tendered Shares if (i)
there are not validly tendered and not withdrawn prior to the expiration of the
Offer that number of Common Shares and Series A Shares that (after giving effect
to the conversion all such Series A Shares to Common Shares) represents at least
two-thirds (66-2/3%) of the outstanding Common Shares on a fully diluted basis
on the date of purchase (not taking into account the Rights) (the "Minimum
Condition"), (ii) any applicable waiting period under the HSR Act shall not have
expired or been terminated prior to the expiration of the Offer, (iii) the
initial review period contemplated by the Exon-Florio Provision shall not have
expired prior to the expiration of the Offer, (iv) the waiting period under the
International Traffic in Arms Regulations shall not have expired or been waived
prior to the expiration of the Offer or (v) at any time on or after the date of
the Merger Agreement and prior to the acceptance for payment of Shares, any of
the following conditions (each, a "Condition") shall exist:
(a) there shall have been instituted or be pending any action
or proceeding by any Governmental Entity before any court or governmental,
administrative or regulatory authority or agency of competent
jurisdiction, (i) challenging or seeking to make illegal, materially delay
or otherwise directly or indirectly restrain or prohibit or make
materially more costly the making of the Offer, the acceptance for payment
of, or payment for, any Shares by Parent, the Purchaser or any other
affiliate of Parent, or the consummation of the Merger, or seeking to
obtain material damages in connection with either Transaction; (ii)
seeking to prohibit or limit materially the ownership or operation by the
Company, Parent or any of their Subsidiaries of all or any material
portion of the business or assets of the Company, Parent or any of their
Subsidiaries, or to compel the Company, 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, Parent or any of their
Subsidiaries, as a result of the Transactions; (iii) seeking to impose or
confirm limitations on the ability of Parent, the Purchaser or any other
affiliate of 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 or otherwise on all
matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the
Transactions; (iv) seeking to require divestiture by Parent, the Purchaser
or any other affiliate of Parent of any Shares; or (v) which otherwise has
a Material Adverse Effect on the Company or which is reasonably likely to
materially adversely affect the business, operations, financial
A-1
<PAGE> 52
condition, assets or liabilities (including, without limitation,
contingent liabilities) of Parent;
(b) there shall have been any action taken or any statute,
rule, regulation, legislation, interpretation, judgment, order or
injunction (whether preliminary or permanent) enacted, entered, enforced,
promulgated, amended or issued or deemed applicable to (i) Parent, the
Company or any subsidiary or affiliate of Parent or the Company or (ii)
either Transaction, by any Governmental Entity other than the routine
application of the waiting period provisions of the HSR Act to the Offer
or the Merger, which is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above; or
(c) there shall have occurred any change, condition, event or
development that, individually or in the aggregate, would have or has had
a Material Adverse Effect on the Company; or
(d) (i) it shall have been publicly disclosed or the Purchaser
shall have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under
the Exchange Act) of Common Shares representing 15% or more of the then
outstanding Common Shares, on a fully diluted basis (not taking into
account the Rights), has been acquired by any person, other than Parent,
any of its affiliates, First Chicago Equity Corporation and First Chicago
NBD Corporation, or (ii) the Board or any committee thereof shall have (A)
withdrawn or modified in a manner adverse to Parent or the Purchaser the
approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Alternative Proposal or any
other acquisition of Shares other than the Offer and the Merger or (B)
resolved to do any of the foregoing; or
(e) the Company, the Purchaser and Parent shall have agreed
that the Purchaser shall terminate the Offer or postpone the acceptance
for payment of or payment for Shares thereunder; or
(f) the Merger Agreement shall have been terminated in
accordance with its terms; or
(g) any representation or warranty of the Company in the
Merger Agreement which is qualified as to materiality shall not be true
and correct and any such representation or warranty that is not so
qualified shall not be true and correct in all material respects, in each
case as if such representation or warranty was made as of such time on or
after the date of this Agreement if any such failure to be true and
correct, individually or in the aggregate, would have a Material Adverse
Effect or would materially increase the amount paid to the Company's
stockholders in the Offer and the Merger; or
A-2
<PAGE> 53
(h) the Company shall have breached or failed to perform in
any material respect any of its material obligations, or to comply in any
material respect with any of its material covenants or agreements under
the Merger Agreement and, with respect to any such failure that could be
remedied, shall not have remedied such failure within seven business days
after the Purchaser shall have furnished the Company with written notice
of such breach or failure; or
(i) there shall have occurred, and continued to exist, (i) any
general suspension of, or limitation on prices for, trading in securities
on the New York Stock Exchange or in the London Stock Exchange for a
period in excess of ten consecutive trading hours or (ii) a declaration of
any banking moratorium by any United Kingdom or United States federal or
state authorities or any suspension of payments in respect of banks by any
such authorities;
which, in the reasonable judgment of the Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
any of its affiliates) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such condition and, except for the Minimum
Condition, may be waived by Parent or the Purchaser in whole or in part at any
time and from time to time in their reasonable discretion, in each case, subject
to the terms of the Merger Agreement. The failure by Parent or the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right; the waiver of any such right with respect to particular facts
and 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 which
may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered Shares not theretofore accepted for payment shall forthwith be
returned by the depositary to the tendering stockholders.
The capitalized terms used in this Annex I shall have the meanings
set forth in the Merger Agreement to which it is annexed.
A-3
<PAGE> 1
Exhibit (c)(2)
[THE INTERLAKE CORPORATION LETTERHEAD]
August 26, 1998
GKN (United Kingdom) plc
7 Cleveland Road
London SW1A 1DB
Attention: Mr. Simon Pryce
Director, Corporate Finance
Gentlemen:
In connection with your evaluation (the "Evaluation") of a possible
negotiated transaction (a "Transaction") with The Interlake Corporation and/or
its subsidiaries or affiliates (collectively, the "Company"), the Company is
prepared to furnish to you certain information which is confidential,
proprietary or otherwise not generally available to the public. As a condition
to, and in consideration of, the Company furnishing the Information, you agree
as follows:
1. Nondisclosure of Information. The Information will (a) be kept
confidential by you, (b) not be used by you in any manner detrimental to the
Company, and (c) not be used other than in connection with the Evaluation. You
may, however, disclose the Information to your Representatives, but only if your
Representatives reasonably need to know the Information in connection with the
Evaluation. You will (i) inform each of your Representatives receiving
Information of the confidential nature of the Information and of this letter
agreement, (ii) direct your Representatives to treat the Information
confidentially and not to use it other than in connection with the Evaluation,
and (iii) be responsible for any improper use of the Information by you or your
Representatives (including, without limitation, your Representatives who,
subsequent to the first date of disclosure of Information hereunder, become your
former Representatives) and take all reasonable measures to restrain your
Representatives from prohibited or unauthorized disclosure or use of the
Information. Without the prior consent of the Company, you will not, and will
direct your Representatives not to, disclose to any person (1) that the
Information has been made available to you, (2) that discussions are taking
place, or (3) any of the terms, conditions or other facts with respect thereto
(including the status thereof).
<PAGE> 2
The Interlake Corporation
Page 2
2. Notice Preceding Compelled Disclosure. If you or any of your
Representatives are compelled by law or the rules of any relevant Stock
Exchange, pursuant to a subpoena, civil investigative demand or similar process,
to disclose any Information or your possible interest in the Transaction, you
will promptly notify the Company to permit the Company to seek a protective
order or take other appropriate action. You will also cooperate in the Company's
efforts to obtain a protective order or other reasonable assurance that
confidential treatment will be accorded the Information. If, in the absence of a
protective order, you or any of your Representatives are, in the written opinion
of your counsel addressed to the Company, compelled by law or the rules of any
relevant Stock Exchange to disclose the Information, you or your Representative
will disclose to the party compelling disclosure only that part of the
Information which you are advised by written opinion of counsel is legally
required to be disclosed (in which case, prior to such disclosure, if
practicable you will advise and consult with the Company and its counsel as to
such disclosure and the nature and wording of such disclosure), and you will use
your best efforts to obtain confidential treatment for any Information so
disclosed.
3. Treatment of Information. You will keep a record in reasonable
detail of the Information furnished to you and of the location of the
Information. As soon as possible upon the Company's written request or upon the
termination of the Evaluation by you or the Company, you and your
Representatives will return to the Company all tangible Information (and all
copies thereof) which has been provided to you and will destroy (or, at your
option, return to the Company) all Information (and all copies thereof) prepared
by you or your Representatives. Such destruction (or return) will be confirmed
in writing to the Company. Notwithstanding the return or destruction of the
Information, you and your Representatives will continue to be bound by your
obligations of confidentiality and other obligations hereunder until the second
anniversary of the date of this letter agreement. You hereby acknowledge that
you are aware and that your Representatives have been advised that the United
States securities laws prohibit any person who has material, non-public
information about a company from purchasing or selling securities of such
company or from communicating the information to any other person under
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell such securities.
4. Public Information. This letter agreement will not apply to such
portions of the Information that (a) are or become generally available to the
public through no action by you or your Representatives or (b) are or become
available to you on a nonconfidential basis from a source, other than the
Company or its Representatives, which you believe, after reasonable inquiry, is
not prohibited from disclosing such portions to you by a contractual, legal or
fiduciary obligation.
5. No Warranty of Accuracy. You understand that the Company will
endeavor to include in the Information materials it believes to be relevant for
the Evaluation, but you acknowledge that neither the Company nor any
Representative of the Company (including, without limitation, Morgan Stanley &
Co. Incorporated ("Morgan Stanley") or any of the Company's
<PAGE> 3
The Interlake Corporation
Page 3
directors, officers, employees or agents) makes any representation or warranty,
express or implied, as to the accuracy or completeness of any Information. You
agree that neither the Company nor any of its Representatives will have any
liability to you or your Representatives resulting from the use of the
Information by you or any of your Representatives or relating to any errors
therein or omissions therefrom. Representations and warranties that are made to
you in a Definitive Agreement will (subject to such limitations and
qualifications as may be specified in such Definitive Agreement) have legal
effect.
6. Certain Actions. (a) During the course of the Evaluation, neither
you nor your Representatives will, except in accordance with the terms of a
specific written request from the Company or any of its authorized
Representatives, initiate contact with any director, officer, employee or person
known by you, or who reasonably should be known by you, to hold securities of
the Company in connection with any matter referred to in this letter agreement.
It is understood that Morgan Stanley will arrange for appropriate contacts for
due diligence purposes. It is further understood that all (i) communications
regarding a possible negotiated transaction, (ii) requests for additional
information, (iii) requests for facility tours or management meetings, and (iv)
discussions or questions regarding procedures, will be submitted or directed to
Morgan Stanley.
(b) You further agree that, for a period of one year from the date of
this letter agreement, you will not solicit for employment any of the current
officers or employees of the Company with whom you have had contact or who was
specifically identified to you during the period of the Evaluation, without
obtaining the prior written consent of the Company. This provision shall exclude
recruitment through a general recruitment campaign or advertisement.
7. Certain Obligations Only on Definitive Agreement. No agreement
providing for any Transaction will be deemed to exist unless and until a
Definitive Agreement has been executed and delivered by the Company and each of
the other parties thereto, and you hereby irrevocably waive any claims
(including, without limitation, claims related to an alleged breach of contract)
in connection with any Transaction unless and until a Definitive Agreement has
been so executed and delivered and then only in accordance with the terms
thereof and applicable law. Unless and until a Definitive Agreement has been so
executed and delivered, none of the Company or any of its Representatives has
any legal obligation to you of any kind with respect to any Transaction because
of this letter agreement or any other written or oral expression with respect to
any Transaction, except, in the case of this letter agreement, for the matters
specifically agreed to herein. The Company reserves the right, in its sole
discretion, to reject any and all proposals made by you or any of your
Representatives with regard to a Transaction, and to terminate discussions and
negotiations with you at any time. The Company and its Representatives will be
free to conduct the process for any Transaction as they in their sole discretion
determine (including, without limitation, changing any procedures relating to
such process or Transaction, or negotiating with and entering into a definitive
agreement with any other person, without in any such case giving prior notice to
you or
<PAGE> 4
The Interlake Corporation
Page 4
to any other person). You agree that you will not have any claims against the
Company or any of its Representatives arising out of or relating to any
Transaction other than those claims, if any, arising out of or relating to a
Definitive Agreement with the Company and then only in accordance with the terms
of such Definitive Agreement.
8. General Provisions. No failure or delay in exercising any right
hereunder will operate as a waiver thereof, nor will any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right. No provision of this letter agreement can be waived or
amended except by written consent of the Company. No document or other action
purporting to have been signed on behalf of or to bind the Company will be
operative for purposes of this letter agreement unless it is in writing and is
signed by the Chairman, President or Vice President of the Company while such
person was still in office. This letter agreement is for the benefit of the
Company, Morgan Stanley and their directors, officers, stockholders, owners,
affiliates and agents, and will be binding on the parties hereto and their
respective successors and assigns. Money damages would not be a sufficient
remedy for any violation of the terms of this letter agreement and, accordingly,
the Company will be entitled to specific performance and injunctive relief as
remedies for any violation, in addition to all other remedies available at law
or equity. You hereby consent to personal jurisdiction in any action brought in
any federal or state court within the State of Illinois having subject matter
jurisdiction in the matter for purposes of any action arising out of this letter
agreement. This letter agreement will be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to the principles
of conflict of laws thereof.
9. Certain Definitions. As used in this letter agreement, (a) the terms
or phrases "affiliate," "beneficial owner," "election contest," "equity
security," "group," "participant," "person," "proxy," "security," and
"solicitation" (and the plurals thereof) will be ascribed a meaning no less
broad than the broadest definition or meaning of such terms under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, (b) the term "you" and "your" includes the entity named as the
addressee of this letter agreement and its affiliates, (c) the information
furnished to you as contemplated by this letter agreement, whether furnished by
the Company or any of its Representatives, together with all written or
electronically stored documentation prepared by you or your Representatives
based upon, reflecting or incorporating, in whole or in part, such information
or the Evaluation is herein referred to as the "Information," (d) any director,
officer, employee, agent, lender, partner or representative, including, without
limitation, any accountant, attorney, and financial advisor, is herein referred
to as a "Representative," and (e) a definitive, written agreement providing for
a Transaction that is executed by us and you and that states it is intended to
be binding is herein referred to as a "Definitive Agreement;" provided, however,
that a Definitive Agreement does not include a letter of intent or any other
preliminary agreement, whether or not executed, nor does it include any actual
or purported written or verbal acceptance of any offer or bid.
<PAGE> 5
The Interlake Corporation
Page 5
Please sign and return one copy of this letter agreement to evidence
your acceptance of and agreement to the foregoing, whereupon this letter
agreement will become the binding obligation of each of the undersigned.
<PAGE> 6
The Interlake Corporation
Page 6
THE INTERLAKE CORPORATION
By: /s/ Stephen R. Smith
-----------------------------
Stephen R. Smith
Vice President, Secretary and
General Counsel
Accepted and agreed to as of
the date first above written:
By: /s/ J. H. Hughes
------------------------------
Name: J. H. Hughes
Title: Deputy Finance Director
