SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Toastmaster Inc.
(Name of Registrant as Specified In Its Charter)
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
_________________________________________________________________
2) Aggregate number of securities to which transaction
applies:
_________________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated
and state how it was determined):
_________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________
5) Total fee paid:
_________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
____________________________________________________________
2) Form, Schedule or Registration Statement No.:
____________________________________________________________
3) Filing Party:
____________________________________________________________
4) Date Filed:
____________________________________________________________
<PAGE>
TOASTMASTER INC.
1801 North Stadium Boulevard
Columbia, Missouri 65202
December 1, 1998
Dear Shareholder:
You are cordially invited to attend the Special Meeting of
Shareholders of Toastmaster Inc. (the "Company"), to be held at
the principal executive offices of the Company, located at 1801
North Stadium Boulevard, Columbia, Missouri, on Thursday,
December 31, 1998, commencing at 9:00 a.m., local time.
At this important meeting, shareholders will be asked to
consider and vote upon a proposal to approve an Agreement and
Plan of Merger, dated as of August 26, 1998 (the "Merger
Agreement"), by and among Salton/Maxim Housewares, Inc., a
Delaware corporation ("Salton/Maxim"), its wholly-owned
subsidiary, Columbia Acquisition Corp., a Missouri corporation
("Acquisition Sub"), and the Company, pursuant to which
Acquisition Sub will merge with and into the Company (the
"Merger"). As a result of the Merger, each of the outstanding
shares of common stock of the Company will be converted into the
right to receive $7.00 in cash. A copy of the Merger Agreement
appears as Appendix A to the enclosed Notice of Special Meeting
of Shareholders and Proxy Statement.
The Board of Directors of the Company has determined that
the Merger is in the best interests of the Company's
shareholders. Accordingly, the Board unanimously approved the
Merger Agreement and recommends that all shareholders vote for
approval of the Merger Agreement. In making its determination,
the Board took into account, among other things, a written
opinion, dated as of August 25, 1998, of the Company's financial
advisor, Credit Suisse First Boston Corporation, stating that the
$7.00 per share cash consideration to be received by shareholders
in the Merger is fair to such shareholders from a financial point
of view. A copy of that opinion, which sets forth the
assumptions made, matters considered and limitations on the
review undertaken by Credit Suisse First Boston Corporation,
appears as Appendix B to the enclosed Notice of Special Meeting
of Shareholders and Proxy Statement.
Robert H. Deming, Chairman of the Board and Chief Executive
Officer of the Company, Daniel J. Stubler, President and Chief
Operating Officer of the Company, John E. Thompson, Executive
Vice President and Chief Financial Officer of the Company, and
spouses and related trusts, entered into a Stockholders Agreement
with Salton/Maxim concurrently with execution of the Merger
Agreement, in which they each granted an option to Salton/Maxim
to purchase all of the 2,983,729 shares of common stock of the
Company (representing 39.5% of the Company's outstanding shares)
owned by such persons at a price of $7.00 per share in cash.
That option is not permitted to be exercised unless, among other
things, the Merger is approved by the holders of at least two-
thirds of the outstanding shares of the Company's common stock.
Shareholders are urged to read carefully the enclosed Notice
of Special Meeting of Shareholders and Proxy Statement, including
the Appendices thereto, which contain important information about
the Merger and the Merger Agreement.
<PAGE>
Your Board of Directors joins with me in urging you to
attend the Special Meeting. Whether or not you plan to attend
the meeting, however, please complete, date, sign and return the
enclosed proxy card promptly. A prepaid return envelope is
provided for this purpose. You may revoke your proxy at any time
before it is exercised and it will not be used if you attend the
meeting and prefer to vote in person. If the Merger is
consummated, shareholders will receive instructions for
surrendering their common stock certificates (in exchange for
$7.00 in cash) and a letter of transmittal to be used for this
purpose. You should not submit your stock certificates for
exchange until you have received such instructions and the letter
of transmittal.
PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY
CARD IN THE ENCLOSED ENVELOPE.
Sincerely yours,
Robert H. Deming
Chairman of the Board
<PAGE>
TOASTMASTER INC.
1801 NORTH STADIUM BOULEVARD
COLUMBIA, MISSOURI 65202
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 31, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of the
Shareholders of Toastmaster Inc., a Missouri corporation
("Toastmaster"), will be held at the principal executive offices
of Toastmaster, located at 1801 North Stadium Boulevard,
Columbia, Missouri, on Thursday, December 31, 1998, commencing at
9:00 a.m., local time, and thereafter as it may from time to time
be adjourned, for the following purposes:
1. To consider and vote upon a proposal to approve and
adopt an Agreement and Plan of Merger, dated as of
August 26, 1998, by and among Salton/Maxim Housewares,
Inc., a Delaware corporation, its wholly-owned
subsidiary, Columbia Acquisition Corp., a Missouri
corporation ("Acquisition Sub"), and Toastmaster,
pursuant to which Acquisition Sub will merge with and
into Toastmaster and each of the outstanding shares of
Toastmaster common stock will be converted into the
right to receive $7.00 in cash, as more fully described
in the accompanying Proxy Statement; and
2. To transact such other business as properly may come
before the meeting and any adjournment or adjournments
thereof.
The Board of Directors of Toastmaster has fixed the close of
business on October 28, 1998 as the record date for determination
of the shareholders entitled to notice of, and to vote at, the
Special Meeting and any adjournment or adjournments thereof.
All shareholders are cordially invited to attend the
meeting. Whether or not you intend to be present at the meeting,
the Board of Directors of Toastmaster solicits you to sign, date
and return the enclosed proxy card promptly. A prepaid return
envelope is provided for this purpose. You may revoke your proxy
at any time before it is exercised and it will not be used if you
attend the meeting and prefer to vote in person. Your vote is
important and all shareholders are urged to be present in person
or by proxy.
By Order of the Board of Directors
Linda G. Arnold
Secretary
December 1, 1998
Columbia, Missouri
<PAGE>
TOASTMASTER INC.
1801 NORTH STADIUM BOULEVARD
COLUMBIA, MISSOURI 65202
__________________
PROXY STATEMENT
__________________
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 31, 1998
__________________
This Proxy Statement is being furnished to the shareholders
of Toastmaster Inc., a Missouri corporation ("Toastmaster" or the
"Company"), in connection with the solicitation of proxies by the
Board of Directors of Toastmaster for use at the Special Meeting
of Shareholders to be held on Thursday, December 31, 1998,
commencing at 9:00 a.m., local time, at the principal executive
offices of the Company, located at 1801 North Stadium Boulevard,
Columbia, Missouri 65202, and at any adjournment or adjournments
thereof (the "Special Meeting").
At the Special Meeting, shareholders will be asked to
consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of August 26, 1998 (the
"Merger Agreement"), by and among Salton/Maxim Housewares, Inc.,
a Delaware corporation ("Salton/Maxim"), its wholly-owned
subsidiary, Columbia Acquisition Corp., a Missouri corporation
("Acquisition Sub"), and the Company, pursuant to which (i)
Acquisition Sub will merge with and into the Company (the
"Merger"), and (ii) each share of common stock, par value $.10
per share ("Common Stock") of the Company (other than dissenting
shares or shares of Common Stock owned by the Company,
Salton/Maxim, Acquisition Sub or any of their subsidiaries)
issued and outstanding immediately prior to the effective time of
the Merger will be converted into the right to receive $7.00 in
cash. As of the date of mailing of this Proxy Statement, the
Company does not know of any other business to be brought before
the Special Meeting. A copy of the Merger Agreement appears as
Appendix A to this Proxy Statement. See "The Merger--Merger
Consideration."
Consummation of the Merger is conditioned upon, among other
things, approval of the Merger Agreement by the affirmative vote
of at least two-thirds of the shares of Common Stock, represented
in person or by proxy and entitled to vote at the Special
Meeting. There can be no assurance that the conditions to the
Merger will be satisfied or, where permissible, waived, or that
the Merger will be consummated. See "The Merger Agreement--
Conditions to Consummation of the Merger."
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT IN CONNECTION
WITH THE SOLICITATION OF PROXIES MADE HEREBY AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON.
ALL INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROXY STATEMENT HAS BEEN SUPPLIED BY THE COMPANY OTHER THAN
INFORMATION CONTAINED IN THIS PROXY STATEMENT RELATING
SPECIFICALLY TO SALTON/MAXIM AND TO ACQUISITION SUB, WHICH HAS
BEEN SUPPLIED BY SALTON/MAXIM.
This Proxy Statement and the enclosed form of proxy were
first mailed to the Company's shareholders on or about December
1, 1998.
__________________
The date of this Proxy Statement is December 1, 1998.
__________________
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
The Special Meeting . . . . . . . . . . . . . . . . . . . .4
Purpose of the Meeting . . . . . . . . . . . . . . . .4
Date, Place and Time . . . . . . . . . . . . . . . . .4
Required Vote. . . . . . . . . . . . . . . . . . . . .4
Proxies. . . . . . . . . . . . . . . . . . . . . . . .4
The Merger. . . . . . . . . . . . . . . . . . . . . . . . .4
Parties to the Merger. . . . . . . . . . . . . . . . .4
Form of the Merger . . . . . . . . . . . . . . . . . .4
Merger Consideration . . . . . . . . . . . . . . . . .4
Effective Time of the Merger . . . . . . . . . . . . .5
Conditions to the Merger . . . . . . . . . . . . . . .5
Termination of the Merger. . . . . . . . . . . . . . .6
Amendment. . . . . . . . . . . . . . . . . . . . . . .6
No Solicitation of Alternative Transactions. . . . . .6
Opinion of Financial Advisor. . . . . . . . . . . . . . . .6
Recommendation of the Board of Directors; Reasons for the
Merger . . . . . . . . . . . . . . . . . . . . . . . .6
Interests of Certain Persons in the Merger. . . . . . . . .7
Change of Control Payments . . . . . . . . . . . . . .7
Supplemental Executive Retirement Plans. . . . . . . .7
Stock Options. . . . . . . . . . . . . . . . . . . . .8
Salton/Maxim Stock Options . . . . . . . . . . . . . .8
Indemnification and Insurance. . . . . . . . . . . . .8
Salton/Maxim Stock Options. . . . . . . . . . . . . . . . .8
Dissenters' Rights of Appraisal . . . . . . . . . . . . . .8
Governmental and Regulatory Approvals . . . . . . . . . . .8
Certain Federal Income Tax Consequences . . . . . . . . . .8
Selected Financial Information. . . . . . . . . . . . . . .9
SPECIAL MEETING, VOTING AND PROXIES. . . . . . . . . . . . . . 11
Purpose of the Meeting. . . . . . . . . . . . . . . . . . 11
Date, Place and Time. . . . . . . . . . . . . . . . . . . 11
Voting at the Meeting . . . . . . . . . . . . . . . . . . 11
Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 12
Solicitation of Proxies . . . . . . . . . . . . . . . . . 12
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Parties to the Merger . . . . . . . . . . . . . . . . . . 13
Toastmaster. . . . . . . . . . . . . . . . . . . . . 13
Salton/Maxim and Acquisition Sub . . . . . . . . . . 13
Form of the Merger. . . . . . . . . . . . . . . . . . . . 13
Merger Consideration. . . . . . . . . . . . . . . . . . . 13
Background of the Merger. . . . . . . . . . . . . . . . . 14
Recommendation of the Board of Directors; Reasons for the
Merger . . . . . . . . . . . . . . . . . . . . . . . 18
Opinion of Financial Advisor. . . . . . . . . . . . . . . 18
General. . . . . . . . . . . . . . . . . . . . . . . 18
Summary of Analyses. . . . . . . . . . . . . . . . . 19
Fee and Other Information. . . . . . . . . . . . . . 20
<PAGE>
Interests of Certain Persons in the Merger. . . . . . . . 21
Change of Control Payments . . . . . . . . . . . . . 21
Supplemental Executive Retirement Plans. . . . . . . 21
Stock Options. . . . . . . . . . . . . . . . . . . . 22
Salton/Maxim Stock Options . . . . . . . . . . . . . 23
Indemnification and Insurance. . . . . . . . . . . . 23
Effective Time; Effect of the Merger. . . . . . . . . . . 23
Effective Time . . . . . . . . . . . . . . . . . . . 23
Effect of the Merger . . . . . . . . . . . . . . . . 23
Surrender of Stock Certificates . . . . . . . . . . . . . 23
Certain Federal Income Tax Consequences . . . . . . . . . 24
Accounting Treatment. . . . . . . . . . . . . . . . . . . 24
Dissenters' Rights of Appraisal . . . . . . . . . . . . . 24
Governmental and Regulatory Approvals . . . . . . . . . . 26
Antitrust Filings. . . . . . . . . . . . . . . . . . 26
Articles of Merger Filing. . . . . . . . . . . . . . 26
THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . 26
Representations and Warranties. . . . . . . . . . . . . . 26
Certain Covenants . . . . . . . . . . . . . . . . . . . . 27
General. . . . . . . . . . . . . . . . . . . . . . . 27
No Solicitation of Alternative Transactions. . . . . 27
Indemnification and Insurance. . . . . . . . . . . . 28
Conditions to Consummation of the Merger. . . . . . . . . 28
Termination . . . . . . . . . . . . . . . . . . . . . . . 29
Expenses and Termination Fee. . . . . . . . . . . . . . . 29
Waiver and Amendment. . . . . . . . . . . . . . . . . . . 30
THE STOCKHOLDERS AGREEMENT . . . . . . . . . . . . . . . . . . 30
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . 31
MARKET PRICE FOR COMMON STOCK AND DIVIDENDS. . . . . . . . . . 33
OWNERSHIP OF TOASTMASTER COMMON STOCK. . . . . . . . . . . . . 34
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . 35
OTHER BUSINESS OF THE MEETING. . . . . . . . . . . . . . . . . 35
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING. . . . . . . . . 35
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . 36
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . . . . . 36
Appendix A - Agreement and Plan of Merger dated as of August 26,
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Appendix B - Opinion of Credit Suisse First Boston . . . . . .B-1
Appendix C - Section 351.455 of the Missouri General and Business
Corporation Law. . . . . . . . . . . . . . . . . . . . . . . .C-1
<PAGE>
SUMMARY
The following is a summary of certain information contained
elsewhere in this Proxy Statement. The summary is necessarily
general and abbreviated and is qualified in its entirety by the
more detailed information contained elsewhere in this Proxy
Statement, the appendices hereto and the documents incorporated
by reference herein. Shareholders are urged to carefully read
this Proxy Statement, the appendices and such documents in their
entirety.
THE SPECIAL MEETING
PURPOSE OF THE MEETING. At the Special Meeting,
shareholders will be asked to consider and vote upon a proposal
to approve the Merger Agreement. See "Special Meeting, Voting
and Proxies--Purpose of the Meeting."
DATE, PLACE AND TIME. The Special Meeting will be held at
the principal executive offices of the Company, located at 1801
North Stadium Boulevard, Columbia, Missouri 65202, commencing at
9:00 a.m., local time, on Thursday, December 31, 1998. See
"Special Meeting, Voting and Proxies--Date, Place and Time."
REQUIRED VOTE. Only holders of record of shares of the
Company's common stock, par value $.10 per share ("Common
Stock"), as of the October 28, 1998 record date are entitled to
vote at the Special Meeting. On such date, there were 7,551,950
shares of Common Stock outstanding. The affirmative vote of at
least two-thirds of the shares of Common Stock, represented in
person or by proxy and entitled to vote at the Special Meeting,
is required for approval of the Merger Agreement. Shareholders
are entitled to one vote per share of Common Stock. Abstentions
will have the same effect as votes cast against the proposal to
approve the Merger Agreement. See "Special Meeting, Voting and
Proxies--Voting at the Meeting."
PROXIES. By completing and returning the enclosed form of
proxy, the shareholder authorizes the persons named therein to
vote all of the shareholder's shares on behalf of such
shareholder. A shareholder who has given a proxy may revoke it
at any time before it is exercised at the Special Meeting. See
"Special Meeting, Voting and Proxies--Proxies."
THE MERGER
PARTIES TO THE MERGER. Toastmaster designs, manufactures,
markets and services a wide array of electrical consumer
appliances and time pieces under the brand names of Toastmaster
[Registered Trademark] and Ingraham [Registered Trademark].
Salton/Maxim designs and markets an extensive line of kitchen and
home appliances, personal and beauty care products and decorative
quartz wall and alarm clocks. Acquisition Sub is a wholly-owned
subsidiary of Salton/Maxim organized for the sole purpose of
effecting the Merger. It has not conducted any business
operations. See "The Merger--Parties to the Merger."
FORM OF THE MERGER. At the effective time of the Merger,
Acquisition Sub will merge with and into the Company in
accordance with Missouri law. As a result of the Merger, the
separate corporate existence of Acquisition Sub will cease and
the Company, as the surviving corporation in the Merger, and will
continue its existence as a wholly-owned subsidiary of
Salton/Maxim under the name Toastmaster Inc. See "The Merger--
Form of the Merger" and "--Effective Time; Effect of the Merger."
MERGER CONSIDERATION. At the effective time of the Merger,
each share of Common Stock then outstanding (other than shares
held in the Company's treasury, shares owned by the Company,
Salton/Maxim, Acquisition Sub or any of their subsidiaries and
shares held by shareholders ("Dissenting Holders") who properly
have demanded and perfected their statutory dissenters' appraisal
rights) will be converted into the right to receive $7.00 in
cash. Shares of Common Stock held in treasury or owned by the
Company, Salton/Maxim, Acquisition Sub or any of their
subsidiaries will be canceled and retired pursuant to the Merger
Agreement without payment of any consideration therefor.
<PAGE>
The Company intends to cause all outstanding options to
purchase shares of Common Stock granted by it (whether or not
then exercisable) to be canceled immediately after the effective
time of the Merger. The holder of each such option that is so
canceled will be entitled to receive an amount equal to the
excess of $7.00 over the exercise price of such option,
multiplied by the number of shares subject to such option,
reduced by the amount of withholding or other taxes required by
law to be withheld. Each of the options granted by the Company
that currently are not vested will become vested on consummation
of a the Merger.
EFFECTIVE TIME OF THE MERGER. If the Merger Agreement is
approved by at least two-thirds of the shares of Common Stock,
represented in person or by proxy and entitled to vote at the
Special Meeting, and if all other conditions to the obligations
of the parties to consummate the Merger are satisfied or waived,
the Merger will become effective upon the filing of articles of
merger with the Secretary of State of Missouri in accordance with
applicable law. The filing of such articles of merger will take
place as soon as practicable following the Closing contemplated
by the Merger Agreement, which will take place as soon as
practicable following approval of the Merger Agreement by the
Company's shareholders and the satisfaction or waiver of the
other conditions to each party's obligations to consummate the
Merger as set forth more fully in the Merger Agreement. In this
regard, Salton/Maxim has informed the Company that it currently
expects to consummate the Merger by no later than March 15, 1999.
See "The Merger--Effective Time; Effect of the Merger" and "The
Merger Agreement--Conditions to Consummation of the Merger."
CONDITIONS TO THE MERGER. The obligations of each of the
Company, Salton/Maxim and Acquisition Sub to consummate the
Merger are subject to, among other things, the following
conditions: (i) the Merger Agreement and the transactions
contemplated thereby shall have been approved by at least two-
thirds of the outstanding shares of Common Stock at the Special
Meeting; (ii) the waiting periods applicable to the Merger under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, shall have been terminated or shall have expired; (iii)
the absence of any statute, rule, order, decree or regulation
issued by any governmental entity or any injunction, decree or
other order issued by any court of competent jurisdiction in the
United States prohibiting the performance of the Merger Agreement
or the consummation of the Merger; and (iv) the consummation of
the Merger shall not result in the violation of any applicable
federal or state law. In addition, the obligation of
Salton/Maxim to consummate the Merger is subject to, among other
things, the following conditions: (i) the accuracy of the
representations and warranties of the Company contained in the
Merger Agreement, except where the inaccuracy (without regard to
materiality qualifications) would not reasonably be expected to
have a material adverse effect on the business, assets,
liabilities, properties, financial conditions or results of
operations of the Company and its subsidiaries taken as a whole
(a "Material Adverse Effect"); (ii) the performance by the
Company of its obligations under the Merger Agreement (except for
nonperformance that does not have a Material Adverse Effect) and
the delivery by the Company of an officers' certificate
certifying to such performance; (iii) no material suit, action or
proceeding shall have been brought against Salton/Maxim,
Acquisition Sub, the Company or any of their respective
subsidiaries (A) seeking to restrain or prohibit consummation of
the Merger or Salton/Maxim's ownership or operation of the
Company, (B) seeking damages that are material in amount in
relation to the Company and its subsidiaries, taken as a whole,
or (C) which is reasonably likely to have a material adverse
effect on the Company; (iv) the absence of any statute, rule,
regulation, judgment, order or injunction by a governmental
entity that is substantially likely to give rise to any of the
consequences referred to in the immediately preceding clause
(iii); (v) the Company shall not have received notice of the
intent of shareholders holding an aggregate of 7.5% or more of
the outstanding shares of Common Stock to object to the Merger
and exercise appraisal rights under the Missouri General and
Business Corporation Law; and (vi) if Salton/Maxim has exercised
the option granted to it by certain shareholders of the Company,
the purchase of approximately 39.5% of the Company's outstanding
shares pursuant to such exercise shall have been consummated. The
obligation of the Company to consummate the Merger is subject to,
among other things, the following conditions: (i) the accuracy
of the representations and warranties of the Salton/Maxim and
Acquisition Sub contained in the Merger Agreement, except where
such inaccuracy (without giving effect to any materiality
qualifications) would not reasonably be expected to adversely
affect the ability of Salton/Maxim to consummate the Merger or to
perform the Merger Agreement; and (ii) the performance by
Salton/Maxim of its obligations under the Merger Agreement,
except where such nonperformance would not have <PAGE> a material
adverse effect on the ability of Salton/Maxim to consummate the
Merger or to perform the Merger Agreement. See "The Merger
Agreement--Conditions to Consummation of the Merger."
TERMINATION OF THE MERGER. The Merger Agreement may be
terminated prior to the effective time of the Merger, whether
prior to or after approval of the Merger Agreement at the Special
Meeting, under certain prescribed conditions. Certain fees and
expenses may become payable in the event of such termination.
See "The Merger Agreement--Termination" and "--Expenses and
Termination Fee."
AMENDMENT. Subject to compliance with applicable law, the
Merger Agreement may be amended with the agreement of
Toastmaster, Salton/Maxim and Acquisition Sub prior to the
effective time of the Merger. See "The Merger Agreement--Waiver
and Amendment."
NO SOLICITATION OF ALTERNATIVE TRANSACTIONS. The Merger
Agreement prohibits the Company and its representatives from
soliciting or initiating inquiries or proposals from, providing
confidential information to, or participating in discussions or
negotiations with third parties concerning a merger, sale of
assets not in the ordinary course of business or other similar
transaction involving the Company or any subsidiary or division
of the Company, or the sale of any shares of, or any equity
interest in, the Company or such subsidiaries (an "Acquisition
Proposal"). The Company is, however, permitted to furnish
information pursuant to an appropriate confidentiality agreement,
and to participate in discussions or negotiations, with third
parties regarding an Acquisition Proposal if (i) the Board of
Directors of the Company concludes in good faith, after
consultation with its financial advisor, that the third party has
made a bona fide Acquisition Proposal for a transaction more
favorable to the Company's shareholders from a financial point of
view than the Merger, and (ii) in the opinion of the Board of
Directors, after receipt of advice from independent legal counsel
to the Company, the failure to provide such information or
access, or to engage in such discussions or negotiations, would
cause the Board of Directors of the Company to violate its
fiduciary duties to the Company's shareholders under applicable
law (an Acquisition Proposal which satisfies clauses (i) and (ii)
is referred to as a "Superior Proposal"). If the Company enters
into an agreement with respect to a Superior Proposal, the
Company is required to pay Salton/Maxim a termination fee of
$2.0 million and Salton/Maxim's actual out-of-pocket expenses
incurred in connection with the Merger of up to $750,000. See
"The Merger Agreement--No Solicitation of Alternative
Transactions."
OPINION OF FINANCIAL ADVISOR
Credit Suisse First Boston Corporation has acted as
exclusive financial advisor to Toastmaster in connection with the
Merger, and delivered its written opinion, dated as of August 25,
1998, to the Board of Directors that, as of such date, the
consideration to be received by the shareholders of Toastmaster
in the Merger was fair to such shareholders from a financial
point of view. A copy of this opinion is attached hereto as
Appendix B and should be read carefully by shareholders in its
entirety with regard to the assumptions made, procedures
followed, matters considered and the limitations on the analyses
undertaken in arriving at such opinion. For its services to
Toastmaster in connection with the Merger, Credit Suisse First
Boston Corporation will be paid certain fees and receive
reimbursement for its reasonable out-of-pocket expenses. See
"The Merger-- Opinion of Financial Advisor."
RECOMMENDATION OF THE BOARD OF DIRECTORS; REASONS FOR THE MERGER
The Board of Directors unanimously has approved the Merger
Agreement and the transactions contemplated thereby and
recommends that shareholders vote for approval of the Merger
Agreement at the Special Meeting. The Board of Directors
believes that the Merger is fair to, and in the best interests
of, the Company and its shareholders. See "The Merger--
Recommendation of the Board of Directors; Reasons for the
Merger."
<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors
with respect to the Merger Agreement, shareholders should be
aware that certain members of management and the Board have
certain interests in the Merger that are in addition to or
different from those of shareholders generally. See "The Merger--
Interests of Certain Persons in the Merger."
CHANGE OF CONTROL PAYMENTS. The Company's employment
agreements with Robert H. Deming, Daniel J. Stubler and John E.
Thompson provide that the employee may terminate his employment,
upon ten days' prior written notice, at any time within one year
after a "Change of Control" (such as the Merger) and will be
entitled to receive two years' salary plus the proportionate
amount of any incentive bonus and other compensation, payments
and benefits which would otherwise have been received by the
employee with respect to the year in which employment was
terminated. See "The Merger--Interests of Certain Persons in the
Merger--Change of Control Payments."
In addition to the above-mentioned employment agreements,
the Company entered into change of control agreements with four
employees, including Linda G. Arnold, Vice President--Human
Resources and Secretary and Scott R. Thrasher, Senior Vice
President--Sales and Marketing. Under the terms of these
agreements, if employment is terminated (by the employee for
"good reason" or by the Company other than for "cause") within
one year of a "Change of Control" (such as the Merger), the
employee will be entitled to receive one year's salary (based on
the employee's highest monthly base salary for the then preceding
twelve-month period) plus (i) the proportionate amount of any
incentive bonus and other compensation, payments and benefits
which would otherwise have been received by the employee with
respect to the year in which employment was terminated, and (ii)
any accrued and unpaid vacation pay. See "The Merger--Interests
of Certain Persons in the Merger--Change of Control Payments."
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS. The Company has a
supplemental executive retirement plan ("SERP") for Robert H.
Deming, Daniel J. Stubler and John E. Thompson and a supplemental
executive retirement plan ("SERP II") for Ralph J. Ronalter, Jr.,
Vice President and General Manager--Time Products, and Scott R.
Thrasher. The SERP provides for a normal retirement benefit for
each of the three executives in the SERP in an amount equal to
50% of such executive's final average compensation, which amount
shall be reduced by the sum of (i) the pension benefit accrued
for such executive under the Company's defined benefit plan and
(ii) such executive's primary Social Security benefit. The SERP
II provides for a normal retirement benefit for each of the two
executives in the SERP II in an amount equal to the pension
benefit that such executive would have been entitled to receive
under the Company's defined benefit plan, reduced by the pension
benefit that such executive actually receives under such plan.
In connection with the execution of the Merger Agreement,
the SERP and SERP II each were amended. The SERP was amended
(i) to provide for the transfer of assets from the Rabbi Trusts
to the Secular Trusts with respect to the SERP and, (ii) to make
a one-time payment to the trusts of funds sufficient to provide
for the vested accrued payment obligations under the SERP and to
terminate future funding obligations, in each case in the event
of a change of control of the Company such as the Merger. In
addition, an Indemnification Agreement was entered into between
such persons and the Company to ensure that the amount each of
these persons will receive under all compensation arrangements
with the Company will not be reduced by any excise tax, in the
event any of such payments are considered to be "excess parachute
payments" under Section 280G of the Internal Revenue Code of
1986, as amended, or any gross-up payment made to reimburse them
for any income or other tax imposed with respect to such
indemnification payments. The SERP II was amended to make a one-
time payment to the trusts of funds sufficient to provide for the
vested accrued payment obligations under the SERP II and to
terminate future funding obligations, in the event of a change of
control of the Company such as the Merger. See "The Merger--
Interests of Certain Persons in the Merger--Supplemental
Executive Retirement Plans."
<PAGE>
STOCK OPTIONS. Certain executive officers and directors of
the Company hold options to purchase shares of Toastmaster common
stock. Pursuant to the Merger Agreement, the Company has agreed
to use its reasonable best efforts, including obtaining any
necessary consents of optionholders, to cause all outstanding
options to purchase shares of Toastmaster common stock granted by
the Company (whether or not then exercisable) to be canceled
immediately after the effective time of the Merger. The holder
of each such option that is so canceled will be entitled to
receive an amount equal to the excess of $7.00 over the exercise
price of such option, multiplied by the number of shares subject
to such option, reduced by the amount of withholding or other
taxes required by law to be withheld. By their respective terms,
each of the options granted by the Company that currently are not
vested will become vested on consummation of a transaction such
as the Merger. See "The Merger--Interests of Certain Persons in
the Merger--Stock Options."
SALTON/MAXIM STOCK OPTIONS. In connection with the
execution of the Merger Agreement, Robert H. Deming, Daniel J.
Stubler, John E. Thompson, and certain of their spouses and
related trusts entered into a Stockholders Agreement with
Salton/Maxim. See "The Merger--Interests of Certain Persons in
the Merger--Stockholders Agreement" and "The Stockholders
Agreement."
INDEMNIFICATION AND INSURANCE. The Merger Agreement
provides that for a period of six years after the effective time
of the Merger, Salton/Maxim will preserve in effect the
indemnification protection afforded by Toastmaster's Charter, By-
laws and Indemnification Agreements with its directors and
executive officers to any individual who is or was an employee,
agent, director or officer of the Company or any of its
subsidiaries. In addition, Salton/Maxim has agreed to maintain
directors' and officers' liability insurance in effect for a
period of six years after the effective time of the Merger. See
"The Merger--Interests of Certain Persons in the Merger--
Indemnification and Insurance."
SALTON/MAXIM STOCK OPTIONS
In connection with the execution of the Merger Agreement,
Robert H. Deming, Daniel J. Stubler, John E. Thompson, and
certain of their spouses and related trusts entered into a
Stockholders Agreement in which they granted to Salton/Maxim an
option to purchase all, but not less than all, of the
2,983,729 shares of common stock of the Company (representing
39.5% of the Company's outstanding shares) owned by such persons
at a price of $7.00 per share. That option is not permitted to
be exercised unless, among other things, all of the conditions
precedent to the consummation of the Merger have been satisfied
or waived. See "The Stockholders Agreement" and "The Merger
Agreement--Conditions to Consummation of the Merger."
DISSENTERS' RIGHTS OF APPRAISAL
Shareholders are entitled to appraisal rights in connection
with the Merger under applicable law. See "The Merger--
Dissenters' Rights of Appraisal."
GOVERNMENTAL AND REGULATORY APPROVALS
Other than filings of certain information and materials made
under federal antitrust laws and the filing of articles of merger
with the Secretary of State of Missouri, the Company knows of no
such regulatory or other approvals required by law. See "The
Merger--Governmental and Regulatory Approvals."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash in exchange for shares of Common Stock
in the Merger will be a taxable transaction to Toastmaster
shareholders for Federal income tax purposes and also may be
taxable under applicable state, local, foreign and other tax
laws. EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH
SHAREHOLDER. See "The Merger--Certain Federal Income Tax
Consequences."
<PAGE>
SELECTED FINANCIAL INFORMATION
The following table sets forth selected financial
information for Toastmaster for the periods and at the dates
indicated. The financial information for each of the years in
the three-year period ended December 31, 1997 are derived from
the Company's consolidated financial statements which have been
audited by KPMG Peat Marwick LLP, independent public accountants.
Results for interim periods are not necessarily indicative of
results to be expected for any other interim period or for the
year as a whole. The information in the table should be read in
conjunction with the audited and unaudited consolidated financial
statements, related notes thereto and other information contained
in the annual and quarterly reports for each of these periods,
which are incorporated by reference herein.
Nine Months ended
Year ended December 31, September 30,
1997 1996 1995 1998 1997
STATEMENT OF
OPERATIONS DATA (In thousands, except per share amounts)
Net sales $154,347 $163,049 $188,509 $92,923 $98,281
Cost of sales/1/ 125,465 142,458 156,310 80,094 80,539
Gross profit 28,882 20,591 32,199 12,829 17,742
Selling, general 22,669 23,641 25,011 15,430 16,101
and administrative
expenses
Operating income 6,213 (3,050) 7,188 (2,601) 1,641
(loss)/2/
Interest expense 4,063 4,393 4,923 2,821 2,775
Interest income 639 32 25 0 343
Income (loss) before
income taxes 2,789 (7,411) 2,290 (5,422) (791)
Income tax expense
(benefit) 899 (2,720) 956 (1,905) (348)
Net income (loss)$ 1,890 $(4,691) $ 1,334 $(3,517) $ (443)
Weighted average
shares used in
computation:
Basic earnings
per common
shares 7,538 7,538 7,560 7,547 7,538
Diluted earnings
(loss) per
share 7,546 7,538 7,560 7,588 7,542
Basic earnings (loss)
per share $ 0.25 $ (0.62) $ 0.18 $ (0.47) $(0.06)
Diluted earnings
(loss) per
share $ 0.25 $ (0.62) $ 0.18 $ (0.46) $ (0.06)
/1/ Restructuring charges totaling $7,600,000 are reflected in cost of sales
for the year ended December 31, 1996
/2/ Operating income (loss) is net of depreciation and amortization for each
of the three years ended December 31, 1997 of approximately $4,372,000,
$4,148,000 and $3,622,000, respectively.
<PAGE>
December 31, September 30,
1997 1996 1995 1998 1997
BALANCE SHEET DATA
Working capital $ 59,735 $ 61,870 $ 79,764 $ 65,631 $ 64,881
Total assets 106,291 104,854 129,995 112,476 113,499
Current Install-
ments-LTD 2,104 2,145 2,176 2,054 2,117
Long-term debt 42,597 44,611 58,190 50,135 49,090
Stockholders'
equity 41,318 40,164 45,422 37,275 39,272
Dividends paid
per share $ 0.08 $ 0.08 $ 0.08 $ 0.06 $ 0.06
Book value
per share $ 5.48 $ 5.33 $ 6.02 $ 4.94 $ 5.21
<PAGE>
SPECIAL MEETING, VOTING AND PROXIES
PURPOSE OF THE MEETING
At the Special Meeting, shareholders will be asked to
consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of August 26, 1998 (the
"Merger Agreement"), by and among Salton/Maxim Housewares, Inc.,
a Delaware corporation ("Salton/Maxim"), its wholly-owned
subsidiary, Columbia Acquisition Corp., a Missouri corporation
("Acquisition Sub"), and the Company, pursuant to which (i)
Acquisition Sub will merge with and into the Company (the
"Merger"), and (ii) each share of common stock, par value $.10
per share ("Common Stock") of the Company (other than dissenting
shares or shares of common stock owned by the Company,
Salton/Maxim, Acquisition Sub or any of their subsidiaries)
issued and outstanding immediately prior to the effective time of
the Merger will be converted into the right to receive $7.00 in
cash. Pursuant to the Merger Agreement, the consummation of the
Merger is conditioned upon, among other things, approval of the
proposal by the affirmative vote of at least two-thirds of the
Common Stock represented in person or by proxy and entitled to
vote at the Special Meeting. As of the date of mailing of this
Proxy Statement, the Company does not know of any other business
to be brought before the Special Meeting. A copy of the Merger
Agreement appears as Appendix A to this Proxy Statement. See
"The Merger--Merger Consideration."
THE BOARD OF DIRECTORS, BY UNANIMOUS VOTE, HAS APPROVED THE
MERGER AGREEMENT AND THE MERGER CONTEMPLATED THEREBY AND
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT.
In considering the recommendation of the Board of Directors
with respect to the Merger Agreement contemplated thereby,
shareholders should be aware that certain members of management
and the Board have certain interests in the Merger that are in
addition to or different from those of shareholders generally.
See "The Merger--Interests of Certain Persons in the Merger."
DATE, PLACE AND TIME
The Special Meeting will be held at the principal executive
offices of the Company, located at 1801 North Stadium Boulevard,
Columbia, Missouri 65202, commencing at 9:00 a.m., local time, on
Thursday, December 31, 1998. Only holders of record of shares of
Common Stock, as of the close of business on October 28, 1998
(the "Record Date"), are entitled to notice of, and to vote at,
the Special Meeting or any adjournment or adjournments thereof.
As of the Record Date, 7,551,950 shares of Common Stock were
outstanding and entitled to be voted at the Special Meeting. The
Special Meeting may be adjourned or postponed to another date
and/or place for any proper purpose (including, without
limitation, for the purpose of soliciting additional proxies).
VOTING AT THE MEETING
For purposes of voting on the proposal described herein, the
presence in person or by proxy of shareholders holding a majority
of the total outstanding shares of Common Stock shall constitute
a quorum at the Special Meeting. Only holders of record of
shares of Common Stock as of the Record Date are entitled to vote
at the Special Meeting. Each share of Common Stock is entitled
to one vote on each matter properly to come before the Special
Meeting. Shares of Common Stock represented by a proxy which
directs that the shares be voted to abstain or to withhold a vote
on any matter will be counted in determining whether a quorum is
present. Shares of Common Stock as to which there is a broker
non-vote (i.e., when a broker holding shares for clients in
street name is not permitted to vote on certain matters without
instruction) also will be counted for quorum purposes.
The affirmative vote of at least two-thirds of the shares of
Common Stock, represented in person or by proxy and entitled to
vote at the Special Meeting, is required for approval of the
Merger Agreement. The affirmative vote of a majority of the
shares of Common Stock, represented in person or by proxy and
entitled to <PAGE> vote at the Special Meeting, is required for the
approval of such other matters as properly may come before the
Special Meeting.
As of the Record Date, the directors and executive officers
of Toastmaster, together with their affiliates as a group, held
3,250,628 shares of Common Stock (representing 43.0% of the
outstanding Common Stock as of the Record Date) entitled to vote
at the Special Meeting. Those persons have informed Toastmaster
they intend to vote all of those shares for approval of the
Merger Agreement.
A shareholder entitled to vote with respect to any matters
at the Special Meeting may abstain from voting on such matters.
Abstentions from the proposal to approve and adopt the Merger
Agreement or any other proposal are treated as votes against the
particular proposal. Broker non-votes on any proposal to be
voted on at the Special Meeting are treated as shares of Common
Stock as to which voting power has been withheld by the
respective beneficial holders and, therefore, as shares not
entitled to vote on the proposal as to which there is the broker
non-vote. Broker non-votes on a proposal therefore will be
treated as votes against the particular proposal.
PROXIES
Shareholders may vote either in person or by properly
executed proxy. By completing and returning the enclosed form of
proxy, the shareholder authorizes the persons named therein to
vote all of the shareholder's shares on his or her behalf. You
are requested to complete, date and sign the enclosed form of
proxy and return it promptly to the Company in the enclosed
postage prepaid envelope. Shares represented by properly
executed proxies will, unless such proxies previously have been
revoked, be voted in accordance with the shareholders'
instructions indicated in such proxies. If no instructions are
indicated, such shares will be voted in favor of the approval of
the Merger Agreement, and, as to any other matter that properly
may be brought before the Special Meeting, in accordance with the
discretion and judgment of the appointed proxies. A shareholder
who has given a proxy may revoke it at any time before it is
exercised at the Special Meeting by filing written notice of
revocation with the Secretary of the Company, by executing and
delivering to the Secretary of the Company a proxy bearing a
later date, or by appearing at the Special Meeting and voting in
person. Attendance at the Special Meeting will not in itself
constitute revocation of a proxy.
SOLICITATION OF PROXIES
This solicitation of proxies for the Special Meeting is
being made by the Company's Board of Directors. The Company will
bear all costs of such solicitation, including the cost of
preparing and mailing this Proxy Statement and the enclosed form
of proxy. After the initial mailing of this Proxy Statement,
proxies may be solicited by mail, telephone, telegram, facsimile
transmission or personally by directors, officers, employees or
agents of the Company. Brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward soliciting
materials to beneficial owners of shares held of record by them,
and their reasonable out-of-pocket expenses, together with those
of Toastmaster's transfer agent, will be paid by Toastmaster.
A list of shareholders entitled to vote at the Special
Meeting will be available for examination at least ten days prior
to the date of the Special Meeting during normal business hours
at the principal executive offices of Toastmaster located at 1801
North Stadium Boulevard, Columbia, Missouri. The list also will
be available at the Special Meeting.
THE MERGER
This section of the Proxy Statement describes certain
aspects of the Merger and the Merger Agreement. The following
description does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement, which is
attached to this Proxy Statement as Appendix A and is
incorporated herein by reference. <PAGE> Capitalized terms used in this
section but not defined in the Proxy Statement have the meanings
ascribed to them in the Merger Agreement. All shareholders are
urged to read the Merger Agreement in its entirety.
PARTIES TO THE MERGER
TOASTMASTER. The Company designs, manufactures, markets and
services a wide array of electrical consumer appliances and time
pieces under the brand names of Toastmaster [Registered
Trademark] and Ingraham [Registered Trademark]. These products
presently may be classified into two principal categories:
kitchen countertop appliances and time products. Although the
Company historically has been best known for its complete line of
toasters, including its Bagel Perfect [Registered Trademark]
toasters, its kitchen countertop appliances include a wide
variety of other popular electric products, such as the
Breadmaker's Hearth [Trademark], a combination
breadmaker/countertop oven, the Corner Bakery [Trademark]
breadmaker with dessert function, the Bread Box [Registered
Trademark] automatic breadmaker, the Cool Edge Grill [Trademark]
with sear section, Faultless [Trademark] by Toastmaster clothes
irons, Snackster [Registered Trademark] snack and sandwich
makers, countertop ovens, dessert and waffle bakers, griddles,
buffet ranges, Handi-Pan [Registered Trademark] mini-fry pans,
carving knives, hand mixers, can openers, blenders, food slicers
, coffee makers and grinders and tea kettles. The Company's time
products consist of an extensive line of clocks and timers,
including battery wall clocks, electric analog alarm clocks,
electric analog alarm clocks under the Timex [Registered
Trademark] and Indiglo [Registered Trademark] brand names,
decorator wall clocks and mechanical and electronic household
timers.
The Company's principal executive offices are located at
1801 North Stadium Boulevard, Columbia, Missouri 65202, and its
telephone number is (573) 445-8666.
SALTON/MAXIM AND ACQUISITION SUB. Salton/Maxim designs and
markets an extensive line of kitchen and home appliances,
personal and beauty care products and decorative quartz wall and
alarm clocks under the brand names Salton [Registered Trademark],
Maxim [Registered Trademark], Breadman [Registered Trademark],
Juiceman [Registered Trademark], Salton Creation [Registered
Trademark], Salton Time [Registered Trademark], White-Westinghouse
[Registered Trademark], and Farberware [Registered Trademark].
It also designs and markets a broad range of tabletop products,
including china, crystal and glassware, under the brand names
Block [Registered Trademark] China, Atlantis [Registered Trademark]
Crystal, and Gear [Registered Trademark].
Acquisition Sub is a wholly-owned subsidiary of Salton/Maxim
organized for the sole purpose of effecting the Merger. It has
not conducted any business operations.
The principal executive offices of Salton/Maxim and
Acquisition Sub are located at 550 Business Center Drive, Mount
Prospect, Illinois 60056, and their telephone number is (847)
803-4600.
FORM OF THE MERGER
Pursuant to the Merger Agreement, at the effective time of
the Merger, Acquisition Sub will merge with and into the Company
in accordance with Missouri law. As a result of the Merger, the
separate corporate existence of Acquisition Sub will cease and
the Company, as the surviving corporation in the Merger, will
continue its existence as a wholly-owned subsidiary of
Salton/Maxim and will continue under the name Toastmaster Inc.
MERGER CONSIDERATION
At the effective time of the Merger, each share of Common
Stock then outstanding (other than shares held in the Company's
treasury, shares owned by the Company, Salton/Maxim, Acquisition
Sub or any of their subsidiaries and shares held by shareholders
("Dissenting Holders") who properly have demanded and perfected
their statutory dissenters' appraisal rights) will be converted
into the right to receive $7.00 in cash.
The Merger Agreement provides that any issued and
outstanding shares of Common Stock held by a Dissenting Holder
("Dissenting Shares") shall not be converted as described above
but shall be converted, at the effective time of the Merger, into
the right to receive such consideration as may be determined to
be due to such Dissenting Holder pursuant to the Missouri General
and Business Corporation Law (the "MBCL"). However, if shares of
Common Stock are held by a Dissenting Holder who, after the
effective time of the Merger, withdraws <PAGE> his demand for appraisal
or loses his right of appraisal under the MBCL, each such share
shall be deemed to be converted as of the effective time of the
Merger into the right to receive $7.00 in cash. See "The Merger--
Dissenters' Rights of Appraisal."
At the effective time of the Merger, all shares of
Toastmaster common stock held in the Company's treasury or owned
by the Company, Salton/Maxim, Acquisition Sub or any of their
subsidiaries will be canceled and retired pursuant to the Merger
Agreement without payment of any consideration therefor. The
Merger Agreement provides that all shares of Acquisition Sub
common stock outstanding immediately prior to the effective time
of the Merger will be converted into that number of shares of
Common Stock of Toastmaster, as the surviving corporation, that
is equal to the number of shares of Toastmaster Common Stock
outstanding immediately prior to the effective time of the
Merger.
BACKGROUND OF THE MERGER
At various meetings in 1995, the Company's senior management
("Management") discussed with the Board of Directors its view of
the Company's strategic position in the markets for its two
principal product categories, kitchen countertop appliances and
time products. These discussions focused on the trends affecting
the Company's prospects. The Management reviewed with the Board
of Directors (on both a formal and informal basis) a number of
strategic alternatives designed to achieve the objective of
enhancing shareholder value. Management indicated that there was
a need to systematically explore these alternatives and therefore
engaged CS First Boston Corporation (which subsequently changed
its name to Credit Suisse First Boston Corporation) on
September 14, 1995 to act as the Company's exclusive financial
advisor (the "Financial Advisor") to assist in that undertaking.
The primary alternatives which were explored included: (i) the
acquisition of other vendors with a competitive or complimentary
product line in order to enhance the Company's competitive
position and its growth and earnings, (ii) remaining independent
and improving its profitability by, among other things, lowering
its cost structure, and (iii) the sale of the Company to
strategic or financial buyers. Management did not recommend that
any particular alternative be pursued to the exclusion of others
but undertook to periodically report to the Board on the results
of the exploration by it and the Financial Advisor of these
alternatives.
The Company investigated the possibility of acquiring
several different companies with competitive or complimentary
products during the period from 1995 through 1998. The Company
made offers to buy certain of these companies during this period.
The Company, however, elected not to make those acquisitions
because the winning bids were believed to be excessive in
relation to the Company's estimate of the future financial
performance of those companies.
With regard to the second alternative, Management prepared
and shared with the Board various analyses of the cost savings
and feasibility of closing of some or all of the Company's
domestic manufacturing facilities and having its products
manufactured in China. Management also prepared and shared with
the Board various analyses of ways in which greater use of
automation and re-engineering of its products could be
implemented to reduce manufacturing costs in order to become more
competitive with lower price point products produced overseas.
Partial implementation of this strategy resulted in closing of
the Boonville, Missouri facility in 1998 and production of
certain products in China such as the Company's waffle bakers.
While these sorts of strategic initiatives would likely be
pursued if the Merger is not consummated, Management recommended
to the Board, and the Board concurred in the view, that the risks
and uncertainties associated with these initiatives are less
certain of producing shareholder value in excess of the Merger
Consideration.
As a result of the foregoing analysis, exploration of the
sale of the Company gradually became the primary strategic
alternative pursued by Management and the Board. The Financial
Advisor contacted a number of potential acquirors, including both
strategic and financial buyers. Several of these potential
acquirors executed confidentiality agreements, conducted a due
diligence investigation of the Company, and were provided with a
memorandum prepared by the Financial Advisor containing
information concerning the Company. Certain of these potential
acquirors submitted a preliminary indication of interest, which
in certain cases included a non-binding <PAGE> expression of a proposed
purchase price. Those indications of interest did not, however,
result in an offer acceptable to the Company for a variety of
reasons, including timing considerations, the ability of the
potential acquirors to obtain financing, the Board's assessment
of the likelihood of consummating the sale, and the evaluation by
the Board at the time those proposals were received of the range
of the Company's intrinsic value.
Leonard Florence, a leading figure in the housewares
business, initiated substantive discussions with the Company in
the Fall of 1997 regarding the possibility of acquiring the
Company. Mr. Florence indicated that he had a committed source
of financing available for that purpose and that he was heading a
company that was willing to make a tender offer for all
outstanding shares of common stock of the Company at a price of
$7.00 per share in cash. Those discussions continued from time
to time for several months. Mr. Florence reiterated during these
discussions that such an offer would be made only on the
condition that Messrs. Deming, Stubler, Thompson and their
spouses and related trusts ("Principal Shareholders") each
granted an option to the acquiring company to purchase all of
their shares (accounting for approximately 40.6% of the Company's
outstanding shares) for cash at the same price. Mr. Florence
also indicated that no due diligence investigation or further
pursuit of the acquisition of the Company would be made until the
requested stock options had been granted.
A special meeting of the Company's Board was held by
conference telephone on May 8, and in person on May 26, 1998, to
brief the Board on the discussions with Mr. Florence and the
potential source of financing for the acquisition. The Company's
legal and financial advisors also briefed the Board on the legal
and financial aspects of Mr. Florence's proposal, including the
fiduciary duty and disclosure issues raised by the demand for the
aforementioned stock options. The Board authorized the Company's
management and legal and financial advisors to engage in further
negotiations with Mr. Florence and to determine whether competing
proposals could be elicited from other potential acquirors.
Other potential acquirors were contacted between May 8 and May 26
to determine whether there was any interest in pursuing the
acquisition of the Company at an equal or higher acquisition
price.
A special meeting of the Company's Board was held in New
York City on May 26, 1998 to discuss the intervening negotiations
regarding the terms and conditions of a proposed acquisition of
the Company by TMI Acquisition Corp. ("TMI"), a newly-formed
corporation which Mr. Florence indicated would effect the
acquisition. The Financial Advisor described its prior
solicitation of acquisition proposals and made a presentation
analyzing the fairness of the proposed acquisition price based on
several different methodologies. The Financial Advisor advised
the Board orally that such price was fair from a financial point
of view and stated that a written opinion confirming such oral
advice would be delivered after the Financial Advisor reviewed
the definitive acquisition agreement to determine that no unusual
provisions were included that would adversely effect that
conclusion. The Company's legal advisor also gave a presentation
on the fiduciary duties of the directors in conducting this
process and pursuing the best alternative reasonably available.
At the conclusion of the presentations and deliberations at
the May 26 meeting, the Board expressed its approval of pursuing
a transaction with TMI at a price per share in cash to the
shareholders of at least $7.00, subject to verifying the adequacy
of financing to consummate the transaction and to operate the
combined businesses thereafter. The Board, together with
Management and the Company's legal and financial advisors, also
developed a negotiating strategy to pursue improvement in the
price and other terms of the transaction and to avoid the
inclusion of a financing contingency in the acquisition
agreement. That negotiating strategy also focused on either
eliminating the stock option sought by TMI or, if it could not be
eliminated through negotiations, revising its terms so that it
would not preclude the possibility of receiving competitive bids
from third parties after the proposed transaction with TMI was
publicly announced.
During the period between May 26 and June 1, 1998, several
drafts of a letter agreement in the nature of a letter of intent
("TMI Letter of Intent") were exchanged which addressed the
proposed terms of the acquisition of the Company and the stock
options sought by TMI. The draft TMI Letter of Intent circulated
to the Company's Board in advance of its meeting on June 1, 1998
contemplated an acquisition by TMI of all of the outstanding
shares of Common Stock at an acquisition price of $7.00 per share
in cash and an obligation of the Company to <PAGE> use its bests efforts
to cause the Principal Shareholders to grant to TMI,
simultaneously with the execution of a definitive acquisition
agreement containing the aforementioned terms, an option to
purchase substantially all of the shares of common stock owned or
controlled by such persons. As a result of negotiations during
this time period, conditions to the exercise of the requested
stock options were included in the TMI Letter of Intent which had
the effect of preventing such exercise if TMI did not obtain
approval of the Company's shareholders to acquire those shares
and thus succeeded in acquiring the Company. However, if TMI did
gain such approval and succeed in acquiring the Company, it would
not have paid more than $7.00 in cash to the Principal
Shareholders to exercise those stock options even though it might
have to pay more than $7.00 per share to the other shareholders
of the Company. The Company would also have been required to pay
a termination fee and reimburse TMI's out-of-pocket expenses
incurred in connection with the acquisition of the Company if the
stock options were not obtained or certain other circumstances
occurred. The proposed TMI Letter of Intent prohibited the
Company or its representatives from soliciting, encouraging or
entering into discussions with third parties concerning a
competing acquisition transaction during a prescribed time period
in which TMI and its financing sources conducted their due
diligence investigation ("TMI Evaluation Period").
The Company's Board held a special meeting on June 1, 1998
to consider and act on the proposed TMI Letter of Intent. The
Financial Advisor updated the Board on its efforts to solicit
competing acquisition proposals and the basis for its opinion
that $7.00 per share in cash was fair from a financial point of
view. Management also updated its analysis of strategic
alternatives and the basis for its recommendation in support of
the TMI proposal. The Company's legal advisor described the
terms of the draft TMI Letter of Intent and their relationship to
the Board's fiduciary duties and why the revised terms of the
Letter of Intent and stock options would not preclude a superior
offer from being made after the proposed transaction was publicly
announced. Following extensive discussion and deliberation, the
Board concluded the TMI Letter of Intent, as revised, was fair
to, and in the best interests of, the Company and its
shareholders.
The TMI Letter of Intent was executed on June 2, 1998 by the
Company and TMI reflecting the terms described above. However,
on June 4, 1998, counsel to TMI contacted counsel to the Company
and informed him that TMI had assigned its rights under the TMI
Letter of Intent to Salton/Maxim and that Salton/Maxim wished to
pursue the acquisition on the same terms. A special meeting of
the Company's Board was held by conference telephone call on
June 8, 1998 to discuss this development. Management and the
Financial Advisor briefed the Board on background concerning
Salton/Maxim and its financial capability to pursue an
acquisition of the Company on the terms set forth in the TMI
Letter of Intent. The Company's legal advisor discussed the
legal issues raised by the purported assignment of TMI's rights
under the TMI Letter of Intent. The Board concluded that it
would be in the best interests of the Company and its
shareholders to pursue a transaction with Salton/Maxim on similar
terms, subject to gaining assurances that Salton/Maxim had the
financing necessary to consummate that acquisition and operate
its combined businesses thereafter. Following discussions with
Salton/Maxim, the Company agreed to abide by the terms of the TMI
Letter of Intent as if Salton/Maxim were a party thereto while a
definitive acquisition agreement was being negotiated and the
Company granted extensions of the Evaluation Period to permit
Salton/Maxim to conduct its due diligence review and concurrently
draft and negotiate the definitive acquisition agreement.
The first draft of the definitive acquisition agreement was
in the form of an Agreement and Plan of Merger ("Draft Merger
Agreement") prepared by Salton/Maxim and received by Company
counsel on July 17, 1998. That draft contemplated a merger of a
newly-formed, wholly-owned subsidiary of Salton/Maxim into the
Company and the conversion of all of the Company's outstanding
shares into $7.00 per share in cash. Salton/Maxim, however,
sought a higher termination fee and elimination of the $750,000
limit on reimbursement of its expenses incurred in connection
with the acquisition of the Company that had been set forth in
the TMI Letter of Intent. In addition, Salton/Maxim sought to
improve the terms of the stock option set forth in the TMI Letter
of Intent by proposing a separate shareholders agreement ("Draft
Stockholders Agreement") between Salton/Maxim and the Principal
Shareholders which would: (i) eliminate all conditions to the
exercise of the stock option, (ii) permit it to purchase less
than all of the shares owned by the Principal Shareholders,
(iii) permit the stock option to be exercised for a period of two
years after the draft Merger Agreement had been terminated by the
Company for specified reasons <PAGE> relating to acceptance or
recommendation of a third-party proposal to acquire the Company,
and (iv) if the Principal Shareholders received any cash or non-
cash consideration in connection with a third-party proposal for
the Company occurring within two years after termination by the
Company of the Draft Merger Agreement had been terminated for
specified reasons relating to acceptance or recommendation of
such a competing bid, then the Principal Shareholders would have
been required to pay to Salton/Maxim the difference between such
consideration and $7.00 per share. The Draft Stockholders
Agreement also included restrictions prohibiting the Principal
Shareholders from competing with the Company for a period of four
years after consummation of the acquisition of the Company by
Salton/Maxim.
Numerous drafts of the Merger Agreement and Stockholders
Agreement were exchanged between July 17 and August 26, 1998 in
connection with telephone calls between counsel to the Company
and Salton/Maxim to negotiate the provisions of those agreements.
Input from Management and the Financial Advisor was obtained with
respect to each of these drafts and the related negotiating
strategy. Later drafts of these agreements were also sent to the
Company's Board for review in preparation for the special Board
meeting to consider and act on them. These negotiations resulted
in retaining the termination fee at $2.0 million and the limit on
reimbursable expenses at $750,000 in the Merger Agreement. The
negotiations regarding the Stockholders Agreement added the
conditions to exercise of the stock options described under "The
Stockholders Agreement" which will provide an opportunity for a
competitive acquisition proposal to be made by a third party
prior to the vote on the Merger. In addition, negotiation of the
Stockholders Agreement resulted in the elimination of all of the
improvements sought by Salton/Maxim described in the immediately
preceding paragraph.
A special meeting of the Company's Board was held by
telephone conference call after the close of the financial
markets in the United States on August 25, 1998 to consider and
act upon the Merger Agreement, the Stockholders Agreement and the
transactions contemplated thereby. The Company's legal advisor
described the terms of those agreements and the negotiations that
had taken place leading to those agreements. The Financial
Advisor updated its analysis of the fairness of $7.00 per share
in cash from a financial point of view under several different
methodologies. The Financial Advisor also summarized informal
inquiries that had been received since the last Board meeting
from third parties who had expressed an interest in possibly
acquiring the Company and noted that none of them had been
willing to make a proposal at a specific price. The Financial
Advisor also delivered a written opinion to the Board that a
price of $7.00 per share in cash was fair from a financial point
of view. Management also updated its analysis of strategic
alternatives but continued to recommend approval of the Merger
because the Merger was believed to be a preferable alternative in
light of the risk and uncertainty of producing superior
shareholder value through these other alternatives. Based on
this analysis and on its own deliberations, the Board concluded
that the Merger Agreement, the Stockholders Agreement and the
transactions contemplated thereby were fair to, and in the best
interests of, the Company and its shareholders and authorized
management to execute those agreements after receipt by
Salton/Maxim of a solvency opinion from its financial advisor
demonstrating that it would have sufficient capital to consummate
the Merger and operate its combined businesses thereafter.
Salton/Maxim's Board of Directors held a special meeting on
August 26, 1998 after the close of the financial markets in the
United States. At that meeting, Salton/Maxim's Board received
the aforementioned solvency opinion and approved the execution,
delivery and performance of the Merger Agreement, the
Stockholders Agreement and the transactions contemplated thereby.
The Merger Agreement and the Stockholders Agreement were
executed and delivered by the Company and Salton/Maxim on
August 26 following Salton/Maxim's Board meeting. A joint press
release announcing this action was disseminated by the Company
and Salton/Maxim before the financial markets in the United
States opened on August 27, 1998.
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS; REASONS FOR THE MERGER
The Board of Directors unanimously approved the Merger
Agreement and the transactions contemplated thereby and
recommends that shareholders vote for approval of the Merger
Agreement at the Special Meeting. The Board of Directors
believes that the Merger is fair to, and in the best interests
of, the Company and its shareholders.
The recommendation of the Merger by the Board of Directors
is the result of an extensive process of exploring strategic
alternatives for the Company and its shareholders, which process
is described above under "--Background of the Merger." As a
result of that process and analysis, the Board believes that the
Merger is the best alternative reasonably available to the
Company and its shareholders.
In making its recommendation of the Merger, the Board of
Directors considered a number of factors including: (i)
information relating to the business, assets, management,
competitive position and prospects of the Company if it were to
continue as an independent company, particularly in view of the
consolidation and increasing size of retailers and competing
vendors, (ii) the financial condition, cash flows and results of
operations of the Company, both on an historical and on a
prospective basis, (iii) historical market prices and trading
information with respect to the Common Stock, (iv) the price to
be received by shareholders in relation to the market price per
share of Common Stock prior to the Company's announcement on
August 27, 1998 of the execution of the Merger Agreement, (v) the
results of the solicitation of offers to purchase all or parts of
the Company in connection with the evaluation of the best
alternative reasonably available to the Company and its
shareholders, (vi) the terms of the Merger Agreement, and (vii)
the opinions, analyses and presentations of Credit Suisse First
Boston Corporation described under "--Opinion of Financial
Advisor" and "--Background of the Merger." In view of the wide
variety of factors considered in connection with its evaluation
of the Merger, the Board of Directors did not find it practical
to, and did not, quantify or otherwise attempt to assign specific
or relative weight to those factors.
THE BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO, AND
IN THE BEST INTERESTS OF, TOASTMASTER AND ITS SHAREHOLDERS, AND
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT AT THE SPECIAL MEETING.
In considering the recommendation of the Board of Directors
with respect to the Merger Agreement, shareholders should be
aware that certain members of management and the Board have
certain interests in the Merger that are in addition to or
different from those of shareholders generally. See "--Interests
of Certain Persons in the Merger."
OPINION OF FINANCIAL ADVISOR
GENERAL. Credit Suisse First Boston Corporation ("CSFB")
has acted as exclusive financial advisor to Toastmaster in
connection with the Merger and exploration of strategic
alternatives. CSFB is an internationally recognized investment
banking firm and is regularly engaged in the valuation of
businesses and securities in connection with mergers and
acquisitions, leveraged buyouts, negotiated underwritings,
competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for
estate, corporate and other purposes.
In connection with CSFB's engagement, Toastmaster requested
that CSFB evaluate the fairness to the shareholders of
Toastmaster of the consideration to be received by such
shareholders in the Merger, from a financial point of view. At
the meeting of the Board of Directors held on August 25, 1998,
CSFB delivered its written opinion to the Board that, as of such
date and based upon and subject to the limitations,
qualifications and assumptions discussed therein, the
consideration to be received by the shareholders of Toastmaster
in the Merger was fair to such shareholders from a financial
point of view.
<PAGE>
In arriving at its opinion, CSFB (i) reviewed the Merger
Agreement and certain publicly available business and financial
information relating to Toastmaster, (ii) reviewed certain other
information, including financial forecasts, provided to CSFB by
Toastmaster, (iii) met with the management of Toastmaster to
discuss the businesses and prospects of Toastmaster, (iv)
considered certain financial and stock market data of Toastmaster
and compared those data with similar data for other publicly held
companies in businesses similar to Toastmaster, (v) considered
the financial terms of certain other business combinations and
other transactions which have recently been effected, and (vi)
considered such other information, financial studies, analyses
and investigations and financial, economic and market criteria
which CSFB deemed relevant.
In connection with the CSFB opinion, CSFB did not assume any
responsibility for independent verification of any of the
information provided to or otherwise reviewed by CSFB and relied
upon its being complete and accurate in all material respects.
With respect to the financial forecasts reviewed, CSFB assumed
that they were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the management of
Toastmaster as to the future financial performance of
Toastmaster. In addition, CSFB was not asked to make, and did
not make, an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of Toastmaster, nor was
CSFB furnished with any such evaluations or appraisals. The CSFB
opinion is necessarily based on information available to it and
financial, economic, market and other conditions as they existed
and could be evaluated on the date of the CSFB opinion. Although
CSFB evaluated the fairness to the Toastmaster shareholders from
a financial point of view of the consideration received in the
Merger, CSFB was not requested to, and did not, recommend the
form or amount of consideration to be received in the Merger,
which was determined by Toastmaster and Salton/Maxim through
arm's-length negotiation. No other limitations were imposed by
Toastmaster on CSFB with respect to the investigations made or
procedures followed by CSFB.
The full text of the CSFB opinion, which sets forth the
assumptions made, matters considered and limitations on the
review undertaken by CSFB in connection with the opinion, is
attached as Appendix B to this Proxy Statement and is
incorporated herein by reference. CSFB has consented to the use
of the CSFB opinion in this Proxy Statement. SHAREHOLDERS ARE
URGED TO READ THE CSFB OPINION CAREFULLY IN ITS ENTIRETY. The
CSFB opinion is directed only to the fairness of the
consideration to be received by the shareholders of Toastmaster
in the Merger, from a financial point of view, and does not
address any other aspects of the Merger or any related
transaction and does not constitute a recommendation to any
shareholder as to how such shareholder should vote with respect
to the proposed Merger. The summary of the CSFB opinion set
forth in this Proxy Statement is qualified in its entirety by
reference to the full text of the CSFB opinion.
SUMMARY OF ANALYSES. The following is a summary of the
material financial analyses performed by CSFB in connection with
its presentation to the Board of Directors on August 25, 1998,
and delivery of the CSFB opinion. Such description does not
purport to be a complete description of the analyses concluded by
CSFB in arriving at its opinion.
Discounted Cash Flow Analysis. CSFB performed a
discounted cash flow analysis of the projected unlevered free
cash flows of Toastmaster for the years ended December 31, 1998
through 2009, based upon two different scenarios: a management
case (the "Management Case") and a conservative case (the
"Conservative Case"). The Conservative Case was developed by
CSFB and approved by Toastmaster management. The Conservative
Case reflects adjustments to the Management Case to provide for
slower revenue growth in 1998 and lower operating margin
improvements thereafter. CSFB calculated terminal values for
Toastmaster by applying a range of multiples of earnings before
interest, taxes, depreciation and amortization ("EBITDA") to the
fiscal year 2009 EBITDA from 6.5x to 9.5x for each scenario. The
unlevered free cash flow streams and terminal values were then
discounted to a present value using a range of discount rates
from 10% to 13%.
Comparable Company Analysis. CSFB performed a
comparable company analysis in which it compared certain
financial data of Toastmaster with certain publicly available
financial data and operating and stock market information of
selected publicly traded companies engaged in the small kitchen
appliance and consumer household products business which were
considered by CSFB to be reasonably comparable to the <PAGE> business of
Toastmaster. These comparable companies included: ECKO
Container Systems, Inc., Premark International Inc., Rival Co.,
National Presto Industries, Inc. and Windmere Durable Holdings,
Inc.
Comparable Acquisition Analysis. Using publicly
available information, CSFB reviewed selected business
combinations involving companies in the small kitchen appliance
and consumer household products business. The group of
transactions comprising the comparable acquisitions included:
Windmere Durable Holdings, Inc.; Black & Decker Household
Appliance Unit (Black & Decker Corp.); Sunbeam Corp.;Signature
Brands, Inc.; Goodman Holding Co.; Raytheon Appliance Group
(Raytheon Corp.); Hedstrom Corp./ERO Inc.; Windmere Durable
Holdings, Inc.; Salton/Maxim Housewares, Inc.; Rival Co.; Fasco
Industries, Inc.; and Health O Meter Inc./Mr. Coffee.
Equity Value Reference Range. Based upon the foregoing
analyses, CSFB determined an overall enterprise value range for
Toastmaster that did not exceed $90 million, and then made
adjustments based on amounts reported in Toastmaster's financial
statements for cash, total debt, investment in unconsolidated
subsidiaries and other outstanding liabilities, to determine an
equity valuation range for Toastmaster that did not exceed $5.88
per share. For purposes of calculating the appropriate per share
reference range, CSFB assumed the exercise of all the outstanding
options of Toastmaster.
Additional information. CSFB also reviewed with the
Board of Directors the per share daily closing market price of
Toastmaster common stock over the period beginning on March 3,
1992 and ending August 17, 1998 and an analysis of prices and
volumes at which shares of Toastmaster have been traded over the
period from August 17, 1995 to August 17, 1998.
The preparation of a fairness opinion is a complex process
and is not necessarily susceptible to partial analysis or summary
description. Selecting portions of its analyses and factors,
without considering all analyses and factors as a whole, could
create a misleading or incomplete view of the processes
underlying such analyses and the CSFB opinion. In performing the
foregoing analyses in order to determine the reference range set
forth above, CSFB did not form a conclusion as to whether any
individual analysis, considered singly, supported or failed to
support an opinion as to fairness from a financial point of view.
Rather, in reaching its conclusion, CSFB considered the results
of each analysis and ultimately reached its opinion as to
fairness based on the results of all such analyses taken as a
whole. Furthermore, in arriving at its fairness opinion, CSFB
did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. No
company or transaction used in the above analyses as a comparison
is identical to Toastmaster or the Merger. The analyses were
prepared solely for the purposes of CSFB providing its opinion to
Toastmaster as to the fairness of the consideration to be
received by the Toastmaster shareholders in the Merger from a
financial point of view, and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities
actually may be sold. Analyses based upon forecasts of future
results are not necessarily indicative of actual future results
which may be significantly more or less favorable than suggested
by such analyses. Such analyses are based upon numerous factors
or events beyond the control of Salton/Maxim, Toastmaster, their
respective advisors or any other person and are inherently
uncertain. Actual future results may be different from those
forecasts.
FEE AND OTHER INFORMATION. Pursuant to the terms of CSFB's
engagement, for its services in connection with the Merger,
Toastmaster paid to CSFB a financial advisory fee of $50,000. In
addition, Toastmaster has agreed to pay CSFB a transaction fee of
$1,250,000, payable upon consummation of the Merger. Toastmaster
also has agreed to reimburse CSFB for its reasonable out-of-pocket
expenses, including the fees and expenses of its counsel
not to exceed $25,000, and to indemnify CSFB and certain related
persons against certain liabilities, including liabilities under
the federal securities laws.
In the ordinary course of business, CSFB and its affiliates
may actively trade the debt and equity securities of both
Salton/Maxim and Toastmaster for their own account and for
accounts of customers and, accordingly, may at any time hold a
long or short position in such securities.
<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors
with respect to the Merger Agreement, shareholders should be
aware that certain members of management and the Board have
certain interests in the Merger that are in addition to or
different from those of shareholders generally. The Board of
Directors was aware of these interests and considered them, among
other matters, in approving the Merger Agreement and the
transactions contemplated thereby.
CHANGE OF CONTROL PAYMENTS. In 1991, the Company entered
into employment agreements with Robert H. Deming, Daniel J.
Stubler and John E. Thompson. The agreements expire on November
12, 1999, subject to automatic renewal for successive one year
periods unless Toastmaster or the employee gives notice that the
term will not be extended, and provide for the following
annualized base salaries during the term of the agreements, which
base salaries were increased from the previous base salaries,
effective March 1, 1997: Mr. Deming--$317,361; Mr. Stubler--
$234,201; Mr. Thompson--$181,335. In addition to other
circumstances under which employment may be terminated, the
agreements provide that the employee may terminate his
employment, upon ten days' prior written notice, at any time
within one year after a "Change of Control" and will be entitled
to receive two years' salary plus the proportionate amount of any
incentive bonus and other compensation, payments and benefits
which would otherwise have been received by the employee with
respect to the year in which employment was terminated. The
Merger will constitute a "Change of Control" of the sort
contemplated by the agreements.
In addition to the above-mentioned employment agreements,
the Company entered into change of control agreements with four
employees, including Linda G. Arnold and Scott R. Thrasher.
Under the terms of these agreements, if employment is terminated
(by the employee for "good reason" or by the Company other than
for "cause") within one year of a "Change of Control", the
employee will be entitled to receive one year's salary (based on
the employee's highest monthly base salary for the then preceding
twelve-month period) plus (i) the proportionate amount of any
incentive bonus and other compensation, payments and benefits
which would otherwise have been received by the employee with
respect to the year in which employment was terminated, and (ii)
any accrued and unpaid vacation pay. The Merger will constitute
a "Change of Control" of the sort contemplated by the agreements.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS. The Company has
adopted a supplemental executive retirement plan ("SERP") for
Robert H. Deming, Daniel J. Stubler and John E. Thompson and a
supplemental executive retirement plan ("SERP II") for Ralph J.
Ronalter, Jr. and Scott R. Thrasher. The SERP provides for a
normal retirement benefit for each of the three executives in the
SERP in an amount equal to 50% of such executive's final average
compensation, which amount shall be reduced by the sum of (i) the
pension benefit accrued for such executive under the Company's
defined benefit plan and (ii) such executive's primary Social
Security benefit. For these purposes, "final average
compensation" is the average base salary payment made to the
executive during the five consecutive full calendar years
immediately preceding such executive's termination of employment.
The SERP II provides for a normal retirement benefit for each of
the two executives in the SERP II in an amount equal to the
pension benefit that such executive would have been entitled to
receive under the Company's defined benefit plan, reduced by the
pension benefit that such executive actually receives under such
plan. The normal retirement benefit commences at age 65. In the
event an executive continues to be employed after age 65, the
payment of benefits under the SERP and SERP II would be delayed
until the date of his actual retirement and the amount of such
benefits would be actuarially adjusted to reflect the late
retirement. The SERP and SERP II each provides for early
retirement in the event the executive's employment is terminated,
except that SERP benefits are not payable prior to age 55 and in
no event prior to March 1, 1999 and SERP II benefits are not
payable prior to age 55. Early retirement benefits under the
SERP and SERP II would be actuarially adjusted to reflect the
earlier commencement of the benefit. The estimated annual
benefits under the SERP payable to Messrs. Deming, Stubler and
Thompson as a single life annuity upon reaching normal retirement
age are $113,806, $154,246 and $145,005, respectively. The
estimated annual benefits under the SERP II payable to Messrs.
Ronalter and Thrasher as a single life annuity upon reaching
normal retirement age are $24,603 and $27,996, respectively.
<PAGE>
In connection with the execution of the Merger Agreement,
the SERP and SERP II each were amended. The SERP was amended
(i) to provide for the transfer of assets from the Rabbi Trusts
to the Secular Trusts with respect to the SERP and, (ii) to make
a one-time payment to the trusts of funds sufficient to provide
for the vested accrued payment obligations under the SERP and to
terminate future funding obligations, in each case in the event
of a change of control of the Company such as the Merger. In
addition, an Indemnification Agreement was entered into between
such persons and the Company to ensure that the amount each of
these persons will receive under all compensation arrangements
with the Company will not be reduced by any excise tax, in the
event any of such payments are considered to be "excess parachute
payments" under Section 280G of the Internal Revenue Code of
1986, as amended, or any gross-up payment made to reimburse them
for any income or other tax imposed with respect to such
indemnification payments. The SERP II was amended to make a one-
time payment to the trusts of funds sufficient to provide for the
vested accrued payment obligations under the SERP II and to
terminate future funding obligations, in the event of a change of
control of the Company such as the Merger.
STOCK OPTIONS. Certain executive officers and directors of
the Company hold options to purchase shares of Toastmaster common
stock. Pursuant to the Merger Agreement, the Company has agreed
to use its reasonable best efforts, including obtaining any
necessary consents of optionholders, to cause all outstanding
options to purchase shares of Toastmaster common stock granted by
the Company (whether or not then exercisable) to be canceled
immediately after the effective time of the Merger. The holder
of each such option that is so canceled will be entitled to
receive an amount equal to the excess of $7.00 over the exercise
price of such option, multiplied by the number of shares subject
to such option, reduced by the amount of withholding or other
taxes required by law to be withheld. By their respective terms,
each of the options granted by the Company that currently are not
vested will become vested on consummation of a transaction such
as the Merger. As of November 23, 1998, there were options
outstanding to purchase an aggregate of 92,600 shares of
Toastmaster common stock (including options granted to executive
officers and directors of the Company for 30,500 shares) at a
weighted average exercise price of $3.4375.
The following table sets forth the number of options granted
by the Company to its executive officers and directors that were
outstanding on November 23, 1998 and the amount of cash that the
Company would be required to pay to such persons in cancellation
of such options after the effective time of the Merger (assuming
there is no exercise of such options prior to that time):
Number of Value of
Optionholder Options /1/ Options /2/
Edward J. Williams, Director 5,000 $17,812
James L. Hesburgh, Director 5,000 $17,812
S B. Rymer, Jr., Director 5,000 $17,812
Linda G. Arnold, Vice President
-- Human Resources and
Secretary 10,000 $35,625
Scott R. Thrasher, Senior Vice
President--Sales and
Marketing 5,500 $19,594
/1/ All of the options reported above have vested and are
exercisable except that options for 2,000 shares granted to
Ms. Arnold, and options for 2,000 shares granted to Mr.
Thrasher will vest on consummation of the Merger.
/2/ The value of each option is based on the excess of $7.00
over the exercise price of such option, multiplied by the
number of shares subject to such option. The value of
options granted to Ms. Arnold and Mr. Thrasher that will
vest on consummation of the Merger is $7,125 and $7,125,
respectively.
<PAGE>
SALTON/MAXIM STOCK OPTIONS. In connection with the
execution of the Merger Agreement, Robert H. Deming, Daniel J.
Stubler, John E. Thompson, and their spouses and related trusts,
entered into a Stockholders Agreement with Salton/Maxim. See
"The Stockholders Agreement."
INDEMNIFICATION AND INSURANCE. The Merger Agreement
provides that for a period of six years after the effective time
of the Merger, the indemnification provisions of the Restated
Articles of Incorporation and By-laws of the Company and in
certain Indemnification Agreements between the Company and each
of its directors and executive officers shall not be amended,
repealed or otherwise modified in any manner that would adversely
affect the rights of any individual who is or was an employee,
agent, director or officer of the Company or any of its
subsidiaries. In addition, Salton/Maxim has agreed that the
current policies of directors' and officers' liability insurance
maintained by the Company (or substitute policies of at least the
same coverage and containing terms not materially adverse to the
indemnified parties) will be continued in effect for a period of
six years after the effective time of the Merger to the extent
that such liability insurance can be maintained at an annual cost
not greater than 200% of the Company's last annual premium prior
to August 26, 1998.
EFFECTIVE TIME; EFFECT OF THE MERGER
EFFECTIVE TIME. If the Merger Agreement is approved by at
least two-thirds of the shares of Common Stock, represented in
person or by proxy and entitled to vote at the Special Meeting,
and if all other conditions to the obligations of the parties to
consummate the Merger are satisfied or waived, the Merger will
become effective upon the filing of articles of merger with the
Secretary of State of Missouri in accordance with the MBCL. The
filing of such articles of merger will take place as soon as
practicable following the Closing contemplated by the Merger
Agreement, which will take place as soon as practicable following
approval of the Merger Agreement by the Company's shareholders
and the satisfaction or waiver of the other conditions to each
party's obligations to consummate the Merger as set forth more
fully in the Merger Agreement. In this regard, Salton/Maxim has
informed the Company that it currently expects to consummate the
Merger by no later than March 15, 1999.
EFFECT OF THE MERGER. As of the effective time of the
Merger, Acquisition Sub will merge with and into the Company,
which will be the surviving corporation in the Merger, and the
separate corporate existence of Acquisition Sub will cease. The
effect of the Merger will be that, by operation of law upon the
consummation of the Merger, all of the assets and liabilities of
Acquisition Sub will be transferred to, and assumed by, the
Company, as the surviving corporation of the Merger. The Company
will become a wholly-owned subsidiary of Salton/Maxim and will
continue under the name Toastmaster Inc.
SURRENDER OF STOCK CERTIFICATES
At the effective time of the Merger, each share of Common
Stock then outstanding (other than shares held in the Company's
treasury, shares owned by the Company, Salton/Maxim, Acquisition
Sub or any of their subsidiaries and Dissenting Shares) will be
converted into the right to receive $7.00 in cash (the "Merger
Consideration").
From and after the effective time of the Merger, UMB Bank,
n.a., a bank or trust company designated by Salton/Maxim and
approved by the Company (the "Exchange Agent"), shall cause a
letter of transmittal to be sent to each shareholder of the
Company which will specify instructions for use in surrendering
certificates representing shares of Common Stock in exchange for
the Merger Consideration into which such shares have been
converted. SHAREHOLDERS SHOULD NOT FORWARD THEIR TOASTMASTER
STOCK CERTIFICATES UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS AND
INSTRUCTIONS. SHAREHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES
WITH THE ENCLOSED PROXY CARD.
At the effective time of the Merger, Salton/Maxim shall
deposit with the Exchange Agent sufficient cash to pay in full
the cash payments constituting the Merger Consideration to be
paid in exchange for the outstanding shares of Common Stock.
Until the certificates representing such shares are surrendered
for exchange after <PAGE> consummation of the Merger, holders of such
certificates will not be paid the Merger Consideration. No
interest will be paid or accrued on the amounts payable upon the
surrender of any stock certificates.
After the effective time of the Merger, there will be no
transfers on the stock transfer books of the Company of the
shares of Common Stock that were issued and outstanding
immediately prior to that time.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the Merger of Acquisition Sub with and into Toastmaster,
Toastmaster shareholders will receive cash consideration in
exchange for their shares of Common Stock. Toastmaster
shareholders are treated for Federal income tax purposes as
selling Common Stock to Salton/Maxim in exchange for cash.
Accordingly, as a result of the Merger, each Toastmaster
shareholder will recognize gain or loss in an amount equal to the
difference between (i) the amount of cash received and (ii) such
shareholder's basis in the Common Stock exchanged. If the Common
Stock is held as a capital asset by such shareholder, the gain or
loss will be capital gain or loss and will be long-term capital
gain or loss if, at the time of the Merger, the shareholder held
the Common Stock for more than one year. Under current Federal
income tax law, net long-term capital gains of individuals are,
in most circumstances, taxed at lower rates than items of
ordinary income. The deductibility of capital losses is subject
to certain limitations.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT
LAW. EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE TRANSACTION TO
SUCH SHAREHOLDER, INCLUDING THE APPLICATION AND EFFECT OF
FEDERAL, STATE, LOCAL AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS
OF CHANGES IN FEDERAL LAW OR OTHER TAX LAWS. THE FOREGOING
DISCUSSION DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR LISTING
OF ALL POTENTIAL TAX CONSEQUENCES AND DOES NOT ADDRESS THE
FEDERAL INCOME TAX CONSEQUENCES TO SPECIAL CLASSES OF TAXPAYERS
INCLUDING, WITHOUT LIMITATIONS, FOREIGN CORPORATIONS, TAX-EXEMPT
ENTITIES AND PERSONS WHO ACQUIRED THEIR SHARES OF TOASTMASTER
PURSUANT TO THE EXERCISE OF AN EMPLOYEE OPTION OR OTHERWISE AS
COMPENSATION.
ACCOUNTING TREATMENT
The Merger will be accounted for as a purchase for
accounting and financial reporting purposes with Salton/Maxim
viewed as the acquiring company. Accordingly, Salton/Maxim will
record at its cost the fair value of the acquired assets less the
fair value of the liabilities assumed, in each case at the
Effective Time, and with the excess of such cost over the
estimated fair value of such net assets reflected as goodwill.
The financial statements of Salton/Maxim will reflect the
combined operations from the date of the Merger.
DISSENTERS' RIGHTS OF APPRAISAL
Section 351.455 of the MBCL, a copy of which is attached
hereto as Appendix C, entitles each Dissenting Holder who follows
the procedures set forth in Section 351.455 to receive the fair
value of the holder's shares in cash. Under Section 351.455, a
holder of Common Stock may dissent and Toastmaster, as the
surviving corporation, will pay to such Dissenting Holder upon
surrender of his or her certificate or certificates representing
such shares, the fair value of such Dissenting Holder's shares as
of the day prior to the Special Meeting, if such Dissenting
Holder (i) files with Toastmaster prior to or at the Special
Meeting a written objection to the Merger; (ii) does not vote in
favor thereof; and (iii) within 20 days after the effective time
of the Merger makes a written demand to Toastmaster for payment
of the fair value of the shares held by such Dissenting Holder as
of the day prior to the date of the Special Meeting. Such demand
shall state the number and class of the shares owned by such
Dissenting Holder. Written objections to the Merger and demands
for the payment of fair value should be addressed to: Toastmaster
Inc., Corporate Secretary, 1801 North Stadium Boulevard,
Columbia, Missouri, 65202. <PAGE> Shareholders who have not complied
with all of these requirements shall be conclusively presumed to
have consented to the Merger and shall be bound by the terms
thereof. Toastmaster will provide written notice of the
effective time of the Merger to all shareholders who have timely
filed written notice of objection and not voted in favor of the
Merger.
A proxy marked "AGAINST" the Merger will not be deemed to be
a written notice of objection to the Merger. A shareholder who
wishes to dissent from the Merger and assert appraisal rights
must provide a separate written notice of objection at or prior
to the Special Meeting, must not vote "FOR" the Merger and must
make written demand for payment within 20 days after the
effective time of the Merger. A proxy marked "AGAINST" or
"ABSTAIN" or a shareholder's failure to vote with respect to the
Merger will suffice as not voting in favor of the Merger.
A beneficial owner of shares who is not the record owner may
not assert appraisal rights. If the shares are owned of record
in a fiduciary capacity, such as by a trustee, guardian or
custodian, or by a nominee, the written demand asserting
appraisal rights must be executed by the fiduciary or nominee.
If the shares are owned of record by more than one person, as in
a joint tenancy or tenancy in common, the demand must be executed
by all joint owners. An authorized agent, including an agent for
two or more joint owners, may execute the demand for a
shareholder of record; however, the agent must identify the
record owner and expressly disclose the fact that, in executing
the demand, he is acting as agent for the record owner.
If within 30 days after the effective time of the Merger the
value of such shares is agreed upon between the Dissenting Holder
and the Company, payment therefor shall be made within 90 days
after the effective time of the Merger, upon the surrender by
such Dissenting Holder of the certificate or certificates
representing such shares. Upon payment of the agreed value, the
Dissenting Holder shall cease to have any interest in such shares
or in the Company.
If within such 30-day period, a Dissenting Holder and the
Company do not so agree as to value, then the Dissenting Holder
may, within 60 days after the expiration of the 30-day period,
file a petition in any court of competent jurisdiction within
Boone County, Missouri, asking for a finding and determination of
the fair value of such shares, and shall be entitled to judgment
against the Company for the amount of such fair value as of the
day prior to the date of the Special Meeting, together with
interest thereon to the date of such judgment. The judgment
shall be payable only upon, and simultaneously with, the
surrender to the Company of the certificate or certificates
representing shares with respect to which appraisal rights have
been exercised. Upon the payment of the judgment, the Dissenting
Holder shall cease to have any interest in such shares or in the
Company. Unless the Dissenting Holder shall file such petition
within the 60-day period, such shareholder and all persons
claiming under such shareholder shall be conclusively presumed to
have approved and ratified the Merger and shall be bound by the
terms thereof.
The right of a Dissenting Holder to be paid the fair value
of the shareholder's shares shall cease if the shareholder fails
to comply with the procedures set forth in Section 351.455 and
described above, or if the Merger Agreement is terminated for any
reason.
The foregoing does not purport to be a complete statement of
the procedures to be followed by shareholders desiring to
exercise appraisal rights and, in view of the fact that exercise
of such rights requires strict adherence to the relevant
provisions of the MBCL, shareholders who desire to exercise
appraisal rights are advised to review with care all applicable
provisions of law and to obtain legal counsel concerning proper
compliance with applicable provisions of the MBCL. See Appendix
C.
One of the conditions precedent to the obligation of
Salton/Maxim to consummate the Merger is that the Company shall
not have received notice of the intent of Shareholders holding an
aggregate of 7.5% or more of the outstanding shares of Common
Stock to object to the Merger and exercise appraisal rights under
the MBCL.
<PAGE>
GOVERNMENTAL AND REGULATORY APPROVALS
Consummation of the Merger is conditioned upon receipt by
Toastmaster and Salton/Maxim of such regulatory and other
approvals as are required under applicable law. Other then the
matters referred to below, the Company knows of no such
regulatory or other approvals required by law.
ANTITRUST FILINGS. The Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the
rules and regulations thereunder, provide that certain
transactions (including the Merger) may not be consummated until
certain information and materials have been submitted to the
Antitrust Division of the Department of Justice (the "Antitrust
Division") and the Federal Trade Commission ("FTC") and specified
HSR Act waiting period requirements have been satisfied. The
expiration or earlier termination of the HSR Act waiting period
would not preclude the Antitrust Division or the FTC from
challenging the Merger on antitrust grounds. The Company does
not believe that the Merger will violate federal antitrust laws.
Salton/Maxim and the Company filed the required information and
materials with the Antitrust Division and the FTC, and the 30-day
waiting period commenced on October 13, 1998. The waiting period
may be extended for an additional 20 days after compliance with a
request for additional information by the Antitrust Division or
the FTC. The Antitrust Division and the FTC together may
terminate the initial or extended waiting period before it
expires either on their own motion or upon the request of
Salton/Maxim or the Company. Both Salton/Maxim and the Company
requested early termination of the waiting period, and on
November 12, 1998 the waiting period expired. The requirements
of the HSR will be satisfied if the Merger is consummated within
one year from the expiration of the last waiting period.
ARTICLES OF MERGER FILING. In order for the Merger to be
consummated, the appropriate articles of merger must be filed
with, and accepted by, the Secretary of State of Missouri in
accordance with the MBCL. The filing of such articles of merger
will take place as soon as practicable following the Closing
contemplated by the Merger Agreement.
THE MERGER AGREEMENT
This section of the Proxy Statement describes certain terms
of the Merger Agreement. The following description does not
purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, which is attached to this
Proxy Statement as Appendix A and is incorporated herein by
reference. Capitalized terms used in this section but not
defined in the Proxy Statement have the meanings ascribed to them
in the Merger Agreement. All shareholders are urged to read the
Merger Agreement in its entirety.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and
warranties made by the Company, Salton/Maxim and Acquisition Sub.
In particular, each party to the Merger Agreement provided
representations and warranties relating to, among other things
and subject to certain qualifications: (i) its due organization,
power, authority, good standing and similar corporate matters;
(ii) its capital structure; (iii) its authorization, execution,
delivery and enforceability of the Merger Agreement; (iv) its
non-contravention of its charter, bylaws, agreements or law, and
(v) the absence of litigation that is likely to prevent or delay
the consummation of the Merger; and (vi) that it has not employed
a broker or finder other than brokers or finders whose fees and
commissions are payable by it.
The Company also provided representations and warranties
relating to, among other things and subject to certain
qualifications: (i) reports and financial statements filed by it
with the Securities and Exchange Commission and the accuracy of
the information contained therein; (ii) the absence of events, or
pending or threatened litigation, having a material adverse
effect on the Company's business, assets, liabilities,
properties, financial condition or results of operations; (iii)
its compliance with applicable law and with certain agreements;
(iv) its employee benefit plans; (v) its employment relations;
(vi) its environmental matters; (vii) title to and <PAGE> condition of
its real and personal properties; (viii) its intellectual
property rights; (ix) continuation of insurance coverage; (x)
inapplicability of the Missouri Business Combination Statute;
(xi) its accurate preparation and timely filing of tax returns
and payment of taxes owed; (xii) its substantial customers;
(xiii) the absence of interested party transactions, (xiv) the
accuracy of information in this Proxy Statement; (xv) the vote
required for the Merger; (xvi) the delivery of the fairness
opinion by the Financial Advisor; and (xvii) the Board's
recommendation of the Merger. Salton/Maxim also provided
representations and warranties relating to, among other things,
and subject to certain qualifications: (i) the accuracy of
information supplied for use in this Proxy Statement, and (ii)
the receipt of an opinion from its financial advisor with respect
to the solvency of Salton/Maxim and its subsidiaries on a
consolidated basis after giving effect to the Merger.
CERTAIN COVENANTS
General. Pursuant to the Merger Agreement, the Company has
agreed that, during the period from the date of the Merger
Agreement until the effective time of the Merger, it will, among
other things and subject to certain qualifications: (i) conduct
its business in the ordinary course and use its reasonable
efforts to preserve intact its business organization, assets,
employees, officers and advantageous business relationships; (ii)
not sell, pledge or dispose of any assets having a value of more
than $100,000 individually and $500,000 in the aggregate, except
in the ordinary course of business; (iii) not amend its charter
or bylaws, (iv) not split, combine, reclassify its capital stock,
or declare or pay any dividend or distribution on its capital
stock except for dividends consistent with prior practice; (v)
not redeem or otherwise acquire any shares of its capital stock;
(vi) not adopt a plan of liquidation; (vii) not issue or sell any
additional shares of its capital stock (other than shares
issuable upon the exercise of outstanding options) or securities
convertible into or exercisable for its capital stock; (viii) not
make any material acquisition or disposition of assets (other
than dispositions in the ordinary course of business) or make any
loan or capital contributions; (ix) not incur or become liable
for any indebtedness, except in the ordinary course of business;
(x) not change its capitalization; (xi) not adopt, amend or
accelerate any rights or benefits under any benefit plan or
arrangement (other than certain actions with respect to the SERP
and the trusts related thereto); and (xii) not take any action
that would make any of its representations or warranties untrue
or incorrect.
NO SOLICITATION OF ALTERNATIVE TRANSACTIONS. The Merger
Agreement prohibits the Company and its representatives from
soliciting or initiating inquiries or proposals from, providing
confidential information to, or participating in discussions or
negotiations with third parties concerning a merger, sale of
assets not in the ordinary course of business or other similar
transaction involving the Company or any subsidiary or division
of the Company, or the sale of any shares of, or any equity
interest in, the Company or such subsidiaries (an "Acquisition
Proposal"). The Company is, however, permitted to furnish
information pursuant to an appropriate confidentiality agreement,
and to participate in discussions or negotiations, with third
parties regarding an Acquisition Proposal if (i) the Board of
Directors of the Company concludes in good faith, after
consultation with its financial advisor, that the third party has
made a bona fide Acquisition Proposal for a transaction more
favorable to the Company's shareholders from a financial point of
view than the Merger, and (ii) in the opinion of the Board of
Directors, after receipt of advice from independent legal counsel
to the Company, the failure to provide such information or
access, or to engage in such discussions or negotiations, would
cause the Board of Directors of the Company to violate its
fiduciary duties to the Company's shareholders under applicable
law (an Acquisition Proposal which satisfies clauses (i) and (ii)
is referred to as a "Superior Proposal").
The Merger Agreement prohibits the Board of Directors from
withdrawing or modifying its approval of the Merger Agreement,
approving or recommending a Superior Proposal or entering into an
agreement with respect to a Superior Proposal until after the
second business day after Salton/Maxim's receipt of written
notice that the Company has received a Superior Proposal and
specifying the material terms thereof and identifying the person
making such Superior Proposal. However, the Company is not
permitted to enter into an agreement with respect to a Superior
Proposal unless it has given such notice two business days in
advance of entering into such an agreement and has caused its
financial and legal advisors to negotiate with Salton/Maxim to
make such amendments to the terms and conditions of the Merger
Agreement as would make it at least as favorable to the Company's
shareholders from a financial point of view as the Superior
Proposal (without taking into account <PAGE> Salton/Maxim's stock
options under the Stockholders Agreement), except that the
Company is not required to make such amendments if the Company's
Board of Directors determines in good faith that the transactions
contemplated by the Merger Agreement as so amended are not
reasonably capable of being consummated.
If the Company enters into an agreement with respect to a
Superior Proposal, the Company is required to pay Salton/Maxim a
termination fee of $2.0 million and Salton/Maxim's actual out-of-
pocket expenses incurred in connection with the Merger of up to
$750,000. Such fee and expenses are also payable under certain
other circumstances described under "Expenses and Termination
Fee."
INDEMNIFICATION AND INSURANCE. The Merger Agreement
provides that for a period of six years after the effective time
of the Merger, the indemnification provisions of the Restated
Articles of Incorporation and By-laws of the Company and in
certain Indemnification Agreements between the Company and each
of its directors and executive officers shall not be amended,
repealed or otherwise modified in any manner that would adversely
affect the rights of any individual who is or was an employee,
agent, director or officer of the Company or any of its
subsidiaries. In addition, Salton/Maxim has agreed that the
current policies of directors' and officers' liability insurance
maintained by the Company (or substitute policies of at least the
same coverage and containing terms not materially adverse to the
indemnified parties) will be continued in effect for a period of
six years after the effective time of the Merger to the extent
that such liability insurance can be maintained at an annual cost
not greater than 200% of the Company's last annual premium prior
to August 26, 1998.
CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of each of the Company, Salton/Maxim and
Acquisition Sub to consummate the Merger are subject to, among
other things, the following conditions: (i) the Merger Agreement
and the transactions contemplated thereby shall have been
approved by at least two-thirds of the outstanding shares of
Toastmaster common stock at the Special Meeting; (ii) the waiting
periods applicable to the Merger under the HSR Act, shall have
been terminated or shall have expired; (iii) the absence of any
statute, rule, order, decree or regulation issued by any
governmental entity or any injunction, decree or other order
issued by any court of competent jurisdiction in the United
States prohibiting the performance of the Merger Agreement or the
consummation of the Merger; and (iv) the consummation of the
Merger shall not result in the violation of any applicable
federal or state law.
In addition, the obligation of Salton/Maxim to consummate
the Merger is subject to, among other things, the following
conditions: (i) the accuracy of the representations and
warranties of the Company contained in the Merger Agreement,
except where the inaccuracy (without regard to materiality
qualifications) would not reasonably be expected to have a
material adverse effect on the business, assets, liabilities,
properties, financial conditions or results of operations of the
Company and its subsidiaries taken as a whole (a "Material
Adverse Effect"); (ii) the performance by the Company of its
obligations under the Merger Agreement (except for nonperformance
that does not have a Material Adverse Effect) and the delivery by
the Company of an officers' certificate certifying to such
performance; (iii) no material suit, action or proceeding shall
have been brought against Salton/Maxim, Acquisition Sub, the
Company or any of their respective subsidiaries (A) seeking to
restrain or prohibit consummation of the Merger or any other
transactions contemplated by the Merger Agreement, (B) seeking
damages that are material in amount in relation to the Company
and its subsidiaries, taken as a whole, (C) seeking to impose
material limitations on the ability of Salton/Maxim to acquire,
hold or exercise full rights of ownership (including voting
rights) to, any shares of common stock of Toastmaster as the
surviving corporation, (D) seeking to prohibit or impose material
limitations on the ability of Salton/Maxim to effectively control
in any material respect the business or operations of the
Company; or (E) which is reasonably likely to have a Material
Adverse Effect, (iv) the absence of any statute, rule,
regulation, judgment, order or injunction by a governmental
entity that is substantially likely to give rise to any of the
consequences referred to in the immediately preceding clause
(iii); (v) the Company shall not have received notice of the
intent of shareholders holding an aggregate of 7.5% or more of
the outstanding shares of Common Stock to object to the Merger
and exercise appraisal rights under the MBCL; and (v) if
Salton/Maxim has exercised the stock options granted to it under
the Stockholders Agreement, the purchase of shares pursuant to
such exercise shall have been consummated.
<PAGE>
In addition, the obligation of the Company to consummate the
Merger is subject to, among other things, the following
conditions: (i) the accuracy of the representations and
warranties of the Salton/Maxim and Acquisition Sub contained in
the Merger Agreement, except where such inaccuracy (without
giving effect to any materiality qualifications) would not
reasonably be expected to adversely affect the ability of
Salton/Maxim to consummate the Merger or to perform the Merger
Agreement; and (ii) the performance by Salton/Maxim of its
obligations under the Merger Agreement, except where such
nonperformance would not have a material adverse effect on the
ability of Salton/Maxim to consummate the Merger or to perform
the Merger Agreement.
TERMINATION
The Merger Agreement may be terminated at any time prior to
the effective time of the Merger, whether before or after
approval of the Merger by the Company's shareholders: (i) by
mutual written consent of the Company and Salton/Maxim, (ii) by
either the Company or Salton/Maxim if any federal or state
governmental body or regulatory authority issues an order, decree
or ruling or takes any other action permanently enjoining,
restraining or prohibiting the Merger and such order, decree or
ruling or other action has become final and nonappealable; (iii)
by either the Company or Salton/Maxim if the Merger is not
consummated on or before March 31, 1999 (other than due to the
failure of the party seeking termination to perform its material
obligations under the Merger Agreement); (iv) by either the
Company or Salton/Maxim if the Merger Agreement is not approved
by at least two-thirds of the outstanding shares of Common Stock
at the Special Meeting.
In addition, the Board of Directors of Salton/Maxim may
terminate the Merger Agreement if: (i) the Company has breached
any of its representations and warranties or failed to comply
with any of its covenants or agreements contained in the Merger
Agreement, and such breach or failure results in a Material
Adverse Effect and is not cured within 20 business days after the
Company receives notice thereof; (ii) the Company receives from a
third party a bona fide proposal to acquire the Company which is
accepted by the Company's Board of Directors, or (iii) the
Company's Board of Directors fails to recommend to shareholders
that they approve the Merger Agreement at the Special Meeting or
withdraws or modifies in any manner adverse to Salton/Maxim or
Acquisition Sub the Board's approval or recommendation with
respect to the Merger.
The Company's Board of Directors may terminate the Merger
Agreement if: (i) Salton/Maxim or Acquisition Sub has breached
any of its representations and warranties or failed to comply
with any of its covenants or agreements contained in the Merger
Agreement, and such breach or failure is not cured within 20
business days after the breaching party receives notice thereof
and results in a material adverse effect on Salton/Maxim, or (ii)
the Company enters into a written agreement concerning a
transaction that constitutes a Superior Proposal.
In the event of termination of the Merger Agreement by
either the Company or Salton/Maxim pursuant to one of the
circumstances described above, there will be no liability on the
part of the Company, Salton/Maxim or Acquisition Sub or their
respective officers, directors, employees or agents, subject to
the following exceptions: (i) Salton/Maxim and its affiliates
and representatives will continue to be obligated to protect the
confidentiality of Company information under the Confidentiality
Agreement dated as of July 15, 1998, and (ii) the obligation to
pay the termination fee and reimburse Salton/Maxim for certain
out-of-pocket expenses under the circumstances described under
"--Expenses and Termination Fee."
EXPENSES AND TERMINATION FEE
The Merger Agreement provides that all costs and expenses
incurred in connection with the Merger Agreement and the
transactions contemplated thereby will be paid by the party
incurring such expenses, except that the Company is required to
pay Salton/Maxim a termination fee of $2.0 million and
Salton/Maxim's actual out-of-pocket expenses incurred in
connection with the Merger of up to $750,000 (such termination
fee and expenses are collectively referred to as the "Termination
Amount") upon the occurrence of the events described below. The
Company's obligation to pay Salton/Maxim the Termination Amount
is triggered by a termination of the Merger <PAGE> Agreement resulting
from the occurrence of any of the following events: (i) the
Merger Agreement and the transactions contemplated thereby are
not approved by at least two-thirds of the outstanding shares of
Common Stock at the Special Meeting; (ii) the Board of Directors
fails to recommend to shareholders that they approve the Merger
Agreement at the Special Meeting or withdraws or modifies in any
manner adverse to Salton/Maxim or Acquisition Sub the Board's
approval or recommendation with respect to the Merger; (iii) the
Company receives from a third party a bona fide proposal to
acquire the Company which is accepted by the Company's Board of
Directors; or (iv) the Company enters into a written agreement
concerning a transaction that constitutes a Superior Proposal.
WAIVER AND AMENDMENT
At any time prior to the effective time of the Merger, any
of the Company, Salton/Maxim or Acquisition Sub may (i) extend
the time for the performance of any of the obligations or other
acts of the other parties to the Merger Agreement, or (ii)
subject to compliance with the MBCL in obtaining the further
approval of shareholders for any waiver that has the effect of
amending the Merger Agreement in a manner that by law would
require shareholder approval, waive compliance with any of the
agreements or conditions contained in the Merger Agreement.
Subject to compliance with the MBCL, the Merger Agreement
may be amended by the parties thereto at any time before or after
obtaining shareholders approval for the Merger Agreement at the
Special Meeting. After obtaining such approval, however, no
amendment to the Merger Agreement may be made that would require
further shareholder approval under the MBCL without obtaining
such further shareholder approval.
THE STOCKHOLDERS AGREEMENT
In connection with the execution of the Merger Agreement,
Robert H. Deming, Daniel J. Stubler, John E. Thompson, and their
spouses and related trusts, entered into a Stockholders Agreement
with Salton/Maxim. The Stockholders Agreement grants the option
to Salton/Maxim to purchase all, but not less than all, of the
2,983,729 shares of common stock of the Company (representing
39.5% of the Company's outstanding shares) owned by such persons
at a price of $7.00 per share.
Salton/Maxim may exercise the option granted under the
Stockholders Agreement at any time prior to the Closing of the
Merger, with the closing of such option exercise to occur
immediately prior to the Closing of the Merger. The obligations
of each of the parties to the Stockholders Agreement to
consummate the closing of the option exercise are subject to,
among other things, the following conditions: (i) no court,
arbitrator or governmental entity shall have issued any order,
decree or ruling (which has not been stayed or suspended pending
appeal) and there shall not be any effective statute, rule or
regulation restraining, enjoining or prohibiting the consummation
of the purchase and sale of shares pursuant to Salton/Maxim's
exercise of the option; (ii) any waiting period applicable to the
consummation of the purchase and sale of shares pursuant to
Salton/Maxim's exercise of the option under the HSR Act shall
have expired or been terminated; and (iii) all of the conditions
precedent to the consummation of the Merger set forth in
Section VII of the Merger Agreement (which conditions precedent
are summarized under "The Merger Agreement--Conditions to
Consummation of the Merger) have been satisfied or waived.
Pursuant to the terms of the Stockholders Agreement, each
shareholder party thereto has agreed, in his or her capacity as a
shareholder of Toastmaster, not to directly or indirectly solicit
or respond to any inquiries or the making of any proposal to
acquire the Company, except that a shareholder who is also a
director of the Company is not prohibited from taking any actions
permitted under the Merger Agreement in his capacity as a
director. Each shareholder party to the Stockholders Agreement
also has agreed to notify Salton/Maxim promptly if any such
inquiries or proposals are received by such shareholder.
<PAGE>
Additionally, each shareholder party to the Stockholders
Agreement has agreed, subject to certain limited exceptions, not
to (i) offer to sell, sell, transfer, pledge, assign or otherwise
dispose of (each, a "Transfer") or enter into any contract,
option or other arrangement with respect to the Transfer of, any
of such shareholder's shares of Common Stock, other than pursuant
to the Merger Agreement or to Salton/Maxim pursuant to the
Stockholders Agreement, (ii) grant any proxies or powers of
attorney with respect to such shareholder's shares of Common
Stock, deposit any such shares into a voting trust or enter into
a voting agreement with respect to such shares, or (iii) take any
actions that would make such shareholder's representations and
warranties under the Stockholders Agreement untrue or incorrect,
or have the effect of preventing such shareholder from performing
its obligations under such agreement. Each such shareholder has
waived any rights of appraisal or rights to dissent from the
Merger that he or she may have.
In the event the Merger Agreement is terminated in
accordance with its terms, the Stockholders Agreement also will
terminate.
SELECTED FINANCIAL INFORMATION
The following table sets forth selected financial
information for Toastmaster for the periods and at the dates
indicated. The financial information for each of the years in
the three-year period ended December 31, 1997 are derived from
the Company's consolidated financial statements which have been
audited by KPMG Peat Marwick LLP, independent public accountants.
Results for interim periods are not necessarily indicative of
results to be expected for any other interim period or for the
year as a whole. The information in the table should be read in
conjunction with the audited and unaudited consolidated financial
statements, related notes thereto and other information contained
in the annual and quarterly reports for each of these periods,
which are incorporated by reference herein.
<PAGE>
Nine Months ended
Year ended December 31, September 30,
1997 1996 1995 1998 1997
STATEMENT OF OPERATIONS
DATA (In thousands, except per share amounts)
Net sales $154,347 $163,049 $188,509 $92,923 $98,281
Cost of sales/1/ 125,465 142,458 156,310 80,094 80,539
Gross profit 28,882 20,591 32,199 12,829 17,742
Selling, general 22,669 23,641 25,011 15,430 16,101
and administrative
expenses
Operating income 6,213 (3,050) 7,188 (2,601) 1,641
(loss)/2/
Interest expense 4,063 4,393 4,923 2,821 2,775
Interest income 639 32 25 0 343
Income (loss) 2,789 (7,411) 2,290 (5,422) (791)
before income
taxes
Income tax 899 (2,720) 956 (1,905) (348)
expense (benefit)
Net income (loss)$ 1,890 $(4,691) $ 1,334 $(3,517) $ (443)
Weighted average
shares used in
computation:
Basic earnings
per common
shares 7,538 7,538 7,560 7,547 7,538
Diluted earnings
(loss) per share 7,546 7,538 7,560 7,588 7,542
Basic earnings
(loss) per share $ 0.25 $ (0.62) $ 0.18 $ (0.47) $ (0.06)
Diluted earnings
(loss) per share $ 0.25 $(0.62) $ 0.18 $ (0.46) $ (0.06)
/1/ Restructuring charges totaling $7,600,000 are reflected in cost of sales
for the year ended December 31, 1996
/2/ Operating income (loss) is net of depreciation and amortization for each
of the three years ended December 31, 1997 of approximately $4,372,000,
$4,148,000 and $3,622,000, respectively
<PAGE>
December 31, September 30,
1997 1996 1995 1998 1997
BALANCE SHEET DATA
Working capital $ 59,735 $ 61,870 $ 79,764 $ 65,631 $ 64,881
Total assets 106,291 104,854 129,995 112,476 113,499
Current Install-
ments-LTD 2,104 2,145 2,176 2,054 2,117
Long-term debt 42,597 44,611 58,190 50,135 49,090
Stockholders'
equity 41,318 40,164 45,422 37,275 39,272
Dividends paid
per share $ 0.08 $ 0.08 $ 0.08 $ 0.06 $ 0.06
Book value
per share $ 5.48 $ 5.33 $ 6.02 $ 4.94 $ 5.21
MARKET PRICE FOR COMMON STOCK AND DIVIDENDS
The Common Stock is listed on the New York Stock Exchange
("NYSE") under the symbol "TM" and has been traded on that
exchange since Toastmaster became a publicly held company on
March 3, 1992. As of October 28, 1998, there were approximately
260 holders of record of Common Stock. The following table sets
forth the range of high and low sales prices of Common Stock by
quarter, as reported on the NYSE Composite Tape and the quarterly
cash dividends paid by the Company, for each quarter of 1997 and
1996 and the first three quarters of 1998.
1998 1997
High Low Dividends High Low Dividends
First quarter $7 $4 $.02 $4 1/4 $2 7/8 $.02
Second quarter $7 3/4 $5 1/16 $.02 $4 1/4 $3 $.02
Third quarter $6 3/4 $4 7/8 $.02 $5 9/16 $3 5/16 $.02
Fourth quarter -- -- -- $5 3/8 $4 1/16 $.02
1996
High Low Dividends
First quarter $5 1/2 $3 3/4 $.02
Second quarter $6 1/4 $4 1/4 $.02
Third quarter $4 5/8 $3 5/8 $.02
Fourth quarter $4 $2 7/8 $.02
The Company has paid quarterly cash dividends for each
quarter of 1997 and 1996 and for the first three quarters of
1998. At the October 20, 1998 meeting of the Company's Board of
Directors, it was determined not to authorize the declaration or
payment of a cash dividend in the fourth quarter of 1998. No
determination was made by the Board as to when or whether
dividends would be declared in the future. The payment and
amount of any future dividends will be determined by the Board of
Directors, from time to time, after taking into account various
factors such as the Company's financial condition, results of
operations, and current and anticipated cash needs. The
Company's agreement with its revolving credit lender contains
certain provisions which restrict the payment of cash dividends
generally to an amount not to exceed $500,000 per quarter,
provided that the amount of such dividends and all prior cash
distributions does not exceed 30% of the Company's net earnings
after January 1, 1992.
On August 26, 1998, the last trading day preceding the
Company's public announcement of the execution of the Merger
Agreement, the high, low and closing sales prices per share of
the Company's common stock as reported on the NYSE Composite Tape
was $6.75, $6.00 and $6.125, respectively. On November 24,
1998, the last trading day prior to printing of this Proxy
Statement, the closing price per share of the Company's common
<PAGE>
stock as reported on the NYSE Composite Tape was $6.3125.
SHAREHOLDERS ARE ADVISED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE COMPANY'S COMMON STOCK.
OWNERSHIP OF TOASTMASTER COMMON STOCK
The following table sets forth certain information as of
October 28, 1998 regarding the beneficial ownership of Common
Stock by each person known to the Board of Directors to own
beneficially 5% or more of the Common Stock, by each director and
executive officer of the Company, and by all directors and
executive officers of the Company as a group. All information
with respect to beneficial ownership has been furnished by the
respective directors, officers or 5% or more shareholders, as the
case may be.
AMOUNT AND NATURE OF PERCENTAGE
OF BENEFICIAL OF SHARES
NAME OWNERSHIP/1/ OUTSTANDING/1/
Robert H. Deming /2//3/ 3,578,379 47.4%
Beverly A. Deming /2//3/ 1,214,593 16.1%
Daniel J. Stubler /2//4/ 1,032,271 13.7%
Andrea F. Stubler /2//4/ 1,032,271 13.7%
John E. Thompson /2//5/ 691,865 9.2%
Scott R. Thrasher /6/ 24,052 *
Linda G. Arnold /7/ 43,558 *
Ralph J. Ronalter, Jr. /2//8/ 162,591 2.2%
Edward J. Williams /9//10/ 5,500 *
S B. Rymer, Jr. /10/ 52,198 *
James L. Hesburgh /10/ 5,500 *
All directors and
executive officers as
a group (9 persons) /11/ 3,862,338 51.0%
* Less than one percent
/1/ Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission which
generally attribute beneficial ownership of securities to
persons who possess sole or shared voting power and/or
investment power with respect to those securities. Unless
otherwise indicated, the persons or entities identified in
this table have sole voting and investment power with
respect to all shares shown as beneficially owned by them.
Percentage ownership calculations are based on 7,551,950
shares of common stock outstanding.
/2/ Each of these persons, together with certain other
shareholders and the Company, is a party to a Stockholders'
Agreement, pursuant to which each such person has given his
or her irrevocable proxy to Robert H. Deming to vote shares
of Toastmaster common stock with respect to the election of
directors. The address for Messrs. Deming, Stubler and
Thompson, Mrs. Deming and Mrs. Stubler is 1801 North Stadium
Boulevard, Columbia, Missouri 65202.
/3/ Includes 47,684 shares owned of record by Mr. Deming,
345,445 shares owned of record by Mr. Deming's wife, and
866,464 shares owned of record by Mr. Deming's wife as
trustee of trusts established for the benefit of Deming
family members. Mr. Deming and his wife share voting power
with respect to such shares pursuant to the Stockholders'
Agreement referred to in Note /2/, and otherwise share
voting and investment power with respect thereto. Included
for Mr. Deming are 2,318,786 shares owned of record by
various other shareholders of the Company, as to which Mr.
Deming has no investment power but has shared voting power
pursuant to the Stockholders' Agreement referred to in Note
/2/.
<PAGE>
/4/ Includes 900,000 shares owned of record jointly by Mr. and
Mrs. Stubler. Mr. and Mrs. Stubler share investment power
with respect to such shares and they, together with Mr.
Deming, share voting power with respect to such shares
pursuant to the Stockholders' Agreement referred to in Note
/2/. Also includes 132,271 shares owned of record by Mrs.
Stubler as trustee of trusts established for the benefit of
Mr. and Mrs. Stubler's three adult children. Mr. and Mrs.
Stubler share voting and investment power with respect to
such shares.
/5/ Includes 55,300 shares owned of record by Mr. Thompson and
609,685 shares owned of record by Mr. Thompson as trustee of
a trust established for the benefit of Thompson family
members. Mr. Thompson has sole investment power with
respect to such 664,985 shares but shares with Mr. Deming
the voting power with respect thereto pursuant to the
Stockholders' Agreement referred to in Note /2/. Also
includes 26,880 shares owned of record by Mr. Thompson's
wife as custodian for their two children. Mr. Thompson has
shared voting and investment power with respect to such
shares.
/6/ Includes 20,000 shares owned of record by Mr. Thrasher, 163
shares held in the Company's 401(k) Savings and Investment
Plan for his account and 389 shares held in the Company's
Stock Purchase Plan (which 552 shares were acquired prior to
Mr. Thrasher becoming an executive officer of the Company),
and 3,500 shares issuable pursuant to the exercise of stock
options.
/7/ Includes 8,000 shares issuable pursuant to the exercise of
stock options
/8/ Mr. Ronalter has sole investment power with respect to these
shares but shares with Mr. Deming the voting power with
respect thereto pursuant to the Stockholders' Agreement
referred to in Note /2/.
/8/ Includes 500 shares owned of record by Mr. Williams as
trustee of a trust for the benefit of Mr. Williams.
/10/ Includes 5,000 shares issuable to each of these persons
pursuant to the exercise of stock options.
/11/ Includes 26,500 shares issuable pursuant to the exercise of
stock options.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP has served as the Company's
independent auditors since 1987. A representative of KPMG Peat
Marwick LLP is expected to be present at the Special Meeting.
Such representative will have an opportunity to make a statement
if he or she desires to do so and will be available to respond to
appropriate questions.
OTHER BUSINESS OF THE MEETING
The Board of Directors is not aware of, and does not intend
to present, any matter for action at the Special Meeting other
than those referred to in this Proxy Statement. If, however, any
other matter properly comes before the Special Meeting or any
adjournment, it is intended that the holders of the proxies
solicited by the Board of Directors will vote on such matters in
their discretion in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
If the Merger is not consummated, it is presently
anticipated that the 1999 Annual Meeting of Shareholders will be
held on May 11, 1999. Shareholder proposals intended for
inclusion in the proxy statement for the 1999 Annual Meeting of
Shareholders must be received at the Company's offices, located
at 1801 North Stadium Boulevard, Columbia, Missouri 65202, within
a reasonable time before the solicitation with respect to the
meeting is made, but in no event later than November 27, 1998.
Such proposals must also comply with the other <PAGE> requirements of
the proxy solicitation rules of the Securities and Exchange
Commission. Shareholder proposals should be addressed to the
attention of the Secretary of Toastmaster.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 and in accordance therewith
files reports, proxy statements and other information with the
Securities and Exchange Commission. Such reports, proxy
statements and other information can be inspected and copied at
the public reference facilities of the Commission located at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and also should be available for inspection and copying at
the regional offices of the Commission located at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission, at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. The public may
obtain information on the operation of the Public Reference Room
by calling the Commission at 1-800-SEC-0330. Materials also may
be obtained from the Commission's Internet web site
(http://www.sec.gov), which contains reports, proxy and
information statements and other information regarding companies
that file electronically with the Commission. Any such material
also is available for inspection at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement incorporates certain documents by
reference which are not presented herein or delivered herewith.
These documents are available upon request from Toastmaster Inc.,
Corporate Secretary, 1801 North Stadium Boulevard, Columbia,
Missouri, 65202, telephone number (573) 445-8666. In order to
ensure timely delivery of these documents, any request should be
made by December 15, 1998.
The Company hereby undertakes to provide without charge to
each person, including any beneficial owner of Toastmaster common
stock to whom a copy of this Proxy Statement has been delivered,
upon the written or oral request of any such person, a copy of
any and all of the documents referred to below which have been or
may be incorporated therein by reference, other than exhibits to
such documents, unless such exhibits are specifically
incorporated herein by reference. Requests for such documents
should be directed to the Company's Corporate Secretary at the
address indicated in the immediately preceding paragraph.
The following documents, which have been filed with the
Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, are hereby incorporated by reference into
this Proxy Statement: (i) the Company's annual report on Form
10-K for the year ended December 31, 1997; (ii) the Company's
quarterly reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998; and (iii) the
Company's current report on Form 8-K dated August 26, 1998.
All documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
after the date of this Proxy Statement and prior to the date of
the Special Meeting shall be deemed to be incorporated by
reference in this Proxy Statement and to be a part hereof from
the date of filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes
of this Proxy Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Proxy Statement.
By Order of the Board of Directors
Linda G. Arnold
Secretary
December 1, 1998
Columbia, Missouri
<PAGE>
Appendix A
AGREEMENT AND PLAN OF MERGER DATED AS OF AUGUST 26, 1998
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated
as of August 26, 1998, is by and among Salton/Maxim Housewares,
Inc. a Delaware corporation ("Parent"), Columbia Acquisition
Corp., a Missouri corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and Toastmaster Inc., a Missouri
corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Company,
Parent and Purchaser have determined that the merger of Purchaser
with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement, would be
fair and in the best interests of their respective stockholders,
and such Boards of Directors have approved such Merger, pursuant
to which each issued and outstanding share of common stock, par
value $.10 per share ("Common Stock"), of the Company (the
"Shares") (other than (a) Shares owned, directly or indirectly,
by the Company or any subsidiary (as defined in Section 9.4) of
the Company or by Parent and (b) Dissenting Shares) will be
converted into the right to receive $7.00 per share in cash;
WHEREAS, the Merger and this Agreement require the
affirmative vote, in accordance with applicable law and the
Restated Articles of Incorporation and By-laws of the Company, of
at least two-thirds of the outstanding Shares entitled to vote
thereon for the approval thereof (the "Company Shareholder
Approval");
WHEREAS, Parent and Purchaser are unwilling to enter into
this Agreement unless, contemporaneously with the execution and
delivery of this Agreement, certain beneficial and record
stockholders of the Company enter into an agreement (the
"Shareholders Agreement") granting to Parent an option to
purchase all Shares beneficially owned by such shareholders under
certain circumstances;
WHEREAS, Parent, Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various
conditions to the Merger; and
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement,
the parties agree as follows:
ARTICLE I.
THE MERGER
1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with
the provisions of The General and Business Corporation Law of
Missouri (the "MBCL"), Purchaser shall be merged with and into
the Company at the Effective Time (as defined in Section 1.3).
Upon the Effective Time, the separate existence of Purchaser
shall cease, and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall continue,
under the name "Toastmaster Inc.," to be governed by the laws of
<PAGE>
the State of Missouri. Purchaser and the Company are sometimes
hereinafter referred to collectively as "Constituent
Corporations."
1.2. Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have
been abandoned pursuant to Section 8.1 and subject to the
satisfaction or waiver in writing by the applicable party or
parties of the latest to occur of the conditions set forth in
Article VII, the closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date not later than the second business
day after such satisfaction or waiver of the conditions set forth
in Article VII (or as soon as practicable thereafter) (the
"Closing Date"), at the offices of Sonnenschein Nath & Rosenthal,
8000 Sears Tower, Chicago, Illinois 60606, unless another date,
stime or place is agreed to in writing by the parties hereto.
1.3. Effective Time. As soon as practicable following the
satisfaction, or waiver in writing by the applicable party or
parties, of the conditions set forth in Article VII, the parties
shall execute appropriate Articles of Merger (the "Articles of
Merger") as provided in the MBCL and shall make such other
filings, recordings or publications required under the MBCL in
connection with the Merger. The Merger shall become effective
upon the date on which the Articles of Merger have been received
for filing by the Secretary of the State of Missouri, or such
later date as is agreed upon by the parties and specified in the
Articles of Merger, and the time of such effectiveness is
hereinafter referred to as the "Effective Time."
1.4. Effects Of The Merger. The Merger shall have the
effects set forth in Section 351.450 of the MBCL.
1.5. Articles Of Incorporation; By-laws; Purposes. (a) At
the Effective Time of the Merger, and without any further action
on the part of the Company, Parent or Purchaser, the Restated
Articles of Incorporation of Purchaser, as in effect immediately
prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation, until thereafter
amended, as provided therein and under the MBCL.
(b) At the Effective Time of the Merger, and
without any further action on the part of the Company or Parent
or Purchaser, the By-laws of Purchaser as in effect at the
Effective Time shall be the By-laws of the Surviving Corporation
until thereafter amended as provided therein or by applicable
law.
1.6. Directors. The directors of Purchaser at the
Effective Time shall be the initial directors of the Surviving
Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified,
as the case may be.
1.7. Officers. The officers of the Company at the
Effective Time shall be the initial officers of the Surviving
Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected or appointed
and qualified, as the case may be.
<PAGE>
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1. Conversion of Shares. At the Effective Time and by
virtue of the Merger, automatically and without any action on the
part of the holders of the Shares or of the capital stock of
Parent or Purchaser:
(a) Each Share issued and outstanding immediately
prior to the Effective Time (other than Shares to be cancelled
pursuant to Subsection 2.1(b) below and Dissenting Shares) shall
be converted into the right to receive $7.00 in cash (the "Merger
Consideration"). All such Shares, when so converted, shall no
longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the
Merger Consideration therefor, without interest, upon the
surrender of such certificate in accordance with Section 2.3.
(b) Each Share held in the treasury of the Company,
if any, and each Share owned by Parent, Purchaser or the Company,
or by any direct or indirect subsidiary of any of them, shall be
cancelled and retired without payment of any consideration
therefor.
(c) All shares of common stock, par value $.01 per
share, of Purchaser issued and outstanding immediately prior to
the Effective Time shall be converted into that number of validly
issued, fully paid and non-assessable shares of common stock, par
value $.01 per share, of the Surviving Corporation equal to the
aggregate number of shares of the Company issued and outstanding
immediately prior to the Effective Time.
2.2. Stock Options. The Company shall (i) terminate its
Non-Statutory Stock Option Plan, Non-Employee Directors Stock
Option Plan, 1997 Non-Employee Directors Stock Option Plan and
Incentive Stock Option Plan (collectively the "Option Plans"),
immediately prior to the Effective Time without prejudice to the
rights of the holders of options awarded pursuant thereto and
(ii) grant no additional options or similar rights under the
Option Plans or otherwise on or after the date hereof. As used
hereafter in this Section 2.3, "Options" shall include each stock
option granted by the Company, whether pursuant to the Option
Plans or otherwise.
The Company shall use its reasonable best efforts to obtain
the consent of each holder of any Options (whether or not then
exercisable) that it does not have the right to cancel to the
cancellation of his Options (irrespective of their exercise
price), and upon obtaining such consent, shall cancel the options
covered by such consent or, in the case of Options that the
Company has the right to cancel, shall cancel such Options, such
cancellation (whether or not consent is required therefor) to
take effect immediately after the Effective Time. In
consideration of each cancellation of Options, the Company shall
agree to and shall pay to such holders, immediately after the
Effective Time, in respect of each Option (whether or not then
exercisable) so cancelled, an amount equal to the excess, if any,
of the Merger Consideration over the exercise price thereof,
<PAGE>
multiplied by the number of Shares subject thereto, reduced by
the amount of withholding or other taxes required by law to be
withheld.
2.3. Surrender of Certificates.
(a) From and after the Effective Time, a bank or
trust company to be designated by Parent, with the prior approval
of the Company (the "Exchange Agent"), shall act as exchange
agent in effecting the exchange, for the Merger Consideration
multiplied by the number of Shares formerly represented thereby,
of certificates (the "Certificates") that, prior to the Effective
Time, represented Shares entitled to payment pursuant to
Section 2.1. As of the Effective Time, Parent shall, on behalf
of Purchaser, deposit with the Exchange Agent, for the benefit of
the holders of Shares (excluding any Shares described in
Section 2.1(b) and Dissenting Shares, if any), for the payment in
accordance with this Article II, through the Exchange Agent, cash
in an amount equal to the Merger Consideration multiplied by the
number of outstanding Shares immediately prior to the Effective
Time (excluding any Shares described in Section 2.1(b) and
Dissenting Shares, if any) (such cash being hereinafter referred
to as the "Payment Fund"). Upon the surrender of each
Certificate and the delivery by the Exchange Agent of the Merger
Consideration in exchange for the Shares represented by such
Certificate multiplied by the number of Shares represented by
such Certificate, such Certificate shall forthwith be cancelled.
Until so surrendered and exchanged, each such Certificate (other
than Certificates representing Shares held by Parent, Purchaser
or the Company or any direct or indirect subsidiary of Parent,
Purchaser or the Company and Dissenting Shares, if any) shall
represent solely the right to receive the Merger Consideration
applicable to the Shares represented by such Certificate
multiplied by the number of Shares represented by such
Certificate. No interest shall be paid or shall accrue on any
amount payable on and after the Effective Time by reason of the
Merger upon the surrender of any such Certificate. Upon the
surrender and exchange of such an outstanding Certificate, the
holder shall receive the Merger Consideration applicable to the
Shares represented thereby, without any interest thereon. If the
Merger Consideration is to be paid to a person other than the
person in whose name the Certificate representing Shares
surrendered in exchange therefor is registered, it shall be a
condition to such payment or exchange that such Certificate so
surrendered be properly endorsed or otherwise be in proper form
for transfer, and that the person requesting such payment or
exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of the payment of such Merger
Consideration to a person other than the registered holder of the
Certificate surrendered, or such person shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or
is not applicable. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder
of Shares for any Merger Consideration or interest delivered to a
public official pursuant to applicable abandoned property,
escheat or similar laws.
(b) Promptly following the date of the first
anniversary of the Effective Time, the Exchange Agent shall
return to the Surviving Corporation all cash in its possession
relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder
of a Certificate formerly representing Shares may surrender such
Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat or similar laws) receive
in exchange therefor the Merger Consideration applicable to the
<PAGE>
Shares represented thereby, without any interest thereon, but
shall have no greater rights against the Surviving Corporation
than may be accorded to general creditors of the Surviving
Corporation under applicable law.
(c) Promptly after the Effective Time, the Exchange
Agent shall mail, to each record holder of Certificates that
immediately prior to the Effective Time represented Shares, a
form of letter of transmittal and instructions, approved by the
parties, for use in surrendering such Certificates and receiving
the Merger Consideration therefor.
(d) At and after the Effective Time, holders of
Certificates shall cease to have any rights as shareholders of
the Company except for the right to surrender such Certificates
in exchange for the Merger Consideration applicable to the Shares
represented thereby or the right, if any, to receive payment from
the Surviving Corporation of the "fair value" of such Shares as
determined in accordance with Section 351.455 of the MBCL and
Section 2.4 hereof, and there shall be no transfers on the stock
transfer books of the Company or the Surviving Corporation of any
Shares that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented
to the Surviving Corporation or the Exchange Agent, they shall be
cancelled and exchanged for the Merger Consideration, as provided
in Section 2.1 hereof, subject to applicable law in the case of
Dissenting Shares.
(e) The Exchange Agent shall invest any cash
included in the Payment Fund, as directed by the Surviving
Corporation, provided that such investment shall be
(i) securities issued or directly and fully guaranteed or insured
by the United States government or any agency or instrumentality
thereof having maturities of not more than six months from the
Effective Time, (ii) certificates of deposit, eurodollar time
deposits and bankers' acceptances with maturities not exceeding
six months and overnight bank deposits with any commercial bank,
depository institution or trust company incorporated or doing
business under the laws of the United States of America, any
state thereof or the District of Columbia, provided that such
commercial bank, depository institution or trust company has, at
the time of investment, (A) capital and surplus exceeding
$250 million and (B) outstanding short-term debt securities which
are rated at least A-1 by Standard & Poor's Rating Group Division
of The McGraw-Hill Companies, Inc. or at least P-1 by Moody's
Investors Services, Inc. or carry an equivalent rating by a
nationally recognized rating agency if both of the two named
rating agencies cease to publish ratings of investment, (iii)
repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clauses (i) and
(ii) above entered into with any financial institution meeting
the qualifications specified in clause (ii) above, (iv)
commercial paper having a rating in the highest rating
categories from Standard & Poor's Rating Group Division of The
McGraw-Hills Companies, Inc. or Moody's Investors Services, Inc.
or carrying an equivalent rating by a nationally recognized
rating agency if both of the two named rating agencies cease to
publish ratings of investments and in each case maturing within
six months of the Effective Time and (v) money market mutual or
similar funds having assets in excess of $1 billion. Any
interest and other income resulting from such investments shall
be paid to the Surviving Corporation.
Section 2.4. Dissenting Shares. Notwithstanding any
provision of this Agreement to the contrary, if required by the
MBCL, but only to the extent required thereby, Shares which are
<PAGE>
issued and outstanding immediately prior to the Effective Time
and which are held by holders of such Shares who have properly
demanded appraisal rights with respect thereto in accordance with
Section 351.455 of the MBCL, and who have not failed to perfect
or who have not effectively withdrawn or who have not lost their
rights to appraisal and payment under Section 351.455 of the MBCL
(the "Dissenting Shares") will not be converted into the right to
receive the Merger Consideration, but such holder thereof shall
be entitled only to such rights to appraisal and payment under
the MBCL. If, after the Effective Time, any such holder fails to
perfect or effectively withdraws or loses such right, such Shares
will thereupon be treated as if they had been converted into and
have become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration, without any interest thereon,
as provided in Section 2.1 hereof. Upon the Company's receipt of
any notice of election to dissent in accordance with the
provisions of such Section 351.455, the Company shall promptly
provide Parent with a copy of such notice of election to dissent.
The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any such election to
dissent or offer to settle or settle any such election to
dissent.
Section 2.5. Withholding Rights. The Surviving
Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any
person such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code (as defined
herein), or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by the Surviving
Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to a person in
respect of which such deduction and withholding was made by the
Surviving Corporation.
Section 2.6. Lost Certificates. If any Certificates
shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and, if required by the Surviving
Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will pay the
Merger Consideration in accordance with the terms of this
Agreement to the registered owner of such Shares.
Section 2.7. Further Assurances. If at any time after
the Effective Time the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments or assurances
or any other acts or things are necessary, desirable or proper
(a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises,
properties or assets of either of the Constituent Corporations,
or (b) otherwise to carry out the purposes of this Agreement, the
Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations
in the Merger, all such deeds, bills of sale, assignments and
assurances and do, in the name and on behalf of such Constituent
Corporations, all such other acts and things necessary, desirable
or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation
and otherwise to carry out the purposes of this Agreement.
<PAGE>
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser
as follows:
Section 3.1. Organization, Standing and Power. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of Missouri and has all requisite
corporate power and authority to own, operate and lease its
properties and to carry on its business as now being conducted.
The Company is duly qualified to do business, and is in good
standing, in each jurisdiction set forth in Schedule 3.1, which
are the only jurisdictions where the character of its properties
owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect. For purposes
of this Agreement, a "Material Adverse Change" or "Material
Adverse Effect" means any change or effect, either individually
or in the aggregate, that is or may be reasonably expected to be
materially adverse to the business, assets, liabilities,
properties, financial condition or results of operations of the
Company and its subsidiaries taken as a whole. Attached to
Schedule 3.1 are complete and correct copies of the Restated
Articles of Incorporation and By-Laws of the Company as currently
in effect.
Section 3.2. Capital Structure. (a) The authorized
capital stock of the Company consists of 20,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, par value
$0.01 per share ("Preferred Stock"). At the close of business on
July 31, 1998: (i) 7,551,950 shares of Common Stock were issued
and outstanding; (ii) 93,900 shares of Common Stock were reserved
for issuance upon the exercise of outstanding options; and
(iii) 44,825 shares of Common Stock were held in the treasury of
the Company. At the close of business on July 31, 1998: (i) no
shares of Preferred Stock were issued and outstanding; and
(ii) no shares of Preferred Stock were held in the treasury of
the Company. Except as set forth above, no shares of capital
stock or other equity securities of the Company are issued,
reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are validly issued, fully paid and
nonassessable and not subject to preemptive rights. Since
July 31, 1998, (i) no shares of the Company's capital stock have
been issued other than pursuant to the exercise of Company stock
options already in existence and outstanding on such date, and
(ii) the Company has not granted any stock options, warrants,
convertible securities or other rights to acquire any capital
stock of the Company.
(b) At the close of business on July 31, 1998, there are
outstanding options issued by the Company to purchase 93,900
shares of Common Stock. Schedule 3.2 contains a complete and
correct list of each outstanding option to purchase shares of
Common Stock, including: (i) the name of the holder of such
option issued by the Company; (ii) the number of shares subject
thereto; (iii) the exercise or "strike" price; (iv) the grant
date; (v) the expiration date; and (vi) the vesting terms. The
Company has delivered to Parent complete and correct copies of
all outstanding options to purchase Shares. There are no
outstanding bonds, debentures, notes or other indebtedness or
other securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the
right to vote) on any matters on which <PAGE> stockholders of the
Company may vote. As of August 24, 1998, the only outstanding
indebtedness for borrowed money of the Company and its
subsidiaries is: (i) debt under the Loan and Security Agreement
dated as of November 19, 1993, as amended, between the Company
and Fleet Capital Corporation (successor in interest to Barclays
Credit Inc.) of $46,156,993; and (ii) other indebtedness for
borrowed money not exceeding $1,752,790, the sources of which,
and amounts attributable to each such source, are set forth in
Schedule 3.2.
(c) Except as otherwise set forth in this Section 3.2 or
in Schedule 3.2, there are no outstanding securities, options,
warrants, rights, calls, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of
the Company or any of its subsidiaries, including any securities
pursuant to which rights to acquire capital stock become
exercisable only after a change of control of the Company or upon
the acquisition of a specified amount of the Common Stock or
voting powers of the Company, or obligating the Company or any of
its subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, agreement arrangement or
undertaking.
(d) Except as set forth in Schedule 3.2, there are no
outstanding contractual obligations, commitments, understandings
or arrangements of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire or make any payment in
respect of any shares of capital stock of the Company or any of
its subsidiaries and there are no irrevocable proxies with
respect to shares of capital stock of the Company or any of its
subsidiaries. Except as set forth in Schedule 3.2, there are no
agreements or arrangements pursuant to which the Company is or
could be required to register any Shares or other securities
under the Securities Act of 1933, as amended (the "Securities
Act") or other agreements or arrangements with or among the
Company and any securityholders of the Company with respect to
securities of the Company. Except as set forth in Schedule 3.2,
there are no securities issued by the Company or any of its
subsidiaries or agreements, arrangements or other understandings
to which the Company or any of its subsidiaries is a party giving
any person any right to acquire equity securities of the
Surviving Corporation or any of its subsidiaries at or following
the Effective Time and all securities, agreements, arrangements
and understandings relating to the right to acquire equity
securities of the Company (whether pursuant to the exercise of
options, warrants or otherwise) provide that, at and following
the Effective Time, such right shall entitle the holder thereof
to receive the consideration such holder would have received in
the Merger had such holder exercised such right immediately
before the Effective Time.
(e) Except as set forth in Schedule 3.2, there are no
voting trusts or other agreements or understandings with respect
is the voting of the capital stock of the Company or any of its
subsidiaries to which the Company or any of its subsidiaries is a
party.
Section 3.3. Subsidiaries. (a) Schedule 3.3 sets forth
each subsidiary of the Company and the jurisdiction of
incorporation of such subsidiary. Except as set forth in
Schedule 3.3, all of the outstanding shares of capital stock and
other ownership interests of the Company's subsidiaries have been
validly issued and are fully paid and nonassessable and are
<PAGE>
owned, directly or indirectly, by the Company. Except as set
forth in Schedule 3.3, none of the shares or ownership interests
of the subsidiaries owned or held by the Company, directly or
indirectly, is subject to any Lien (as defined in Section
3.4(b)).
(b) Each subsidiary of the Company is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has all
requisite corporate power and authority to own, operate and lease
its properties and to carry on its business as currently
conducted. Each subsidiary of the Company is duly qualified to
do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the
nature of its activities make such qualification necessary,
except where the failure to be so qualified would not have a
Material Adverse Effect. The Company has delivered to Parent
complete and correct copies of the respective articles or
certificates of incorporation or by-laws, as amended to the date
hereof, of each of its subsidiaries.
(c) Except for its subsidiaries or as otherwise set forth
in Schedule 3.3, the Company does not directly or indirectly own
any capital stock of or other equity interest in any corporation,
partnership or other person and neither the Company nor any of
its subsidiaries is a member of or participant in any
partnership, joint venture or similar person.
Section 3.4. Authority and Absence of Conflict.
(a) Subject to obtaining the Company Shareholder
Approval, the Company has the requisite corporate power and
authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly and unanimously
authorized by the Board of Directors of the Company, and, except
for the Company Shareholder Approval, no other corporate
proceedings on the part of the Company are necessary to authorize
the execution, delivery and performance of this Agreement and the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and (subject, with respect
to consummation of the Merger, to the receipt of the Company
Shareholder Approval, and assuming that this Agreement
constitutes the valid and binding obligation of Parent and
Purchaser) constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect affecting the
enforcement of creditors' rights generally, or by general
equitable principles regardless of whether enforceability is
considered in a proceeding in equity or at law.
(b) Except as set forth in Schedule 3.4, and assuming the
receipt of the Company Shareholder Approval, neither the
execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the provisions
hereof, will (i) violate, conflict with, or result in a breach of
any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default)
under, or <PAGE> result in the termination of, or accelerate the
performance or payment required by, or result in a right of
termination or acceleration under, or result in the creation of
any lien, security interest, charge or other encumbrance
(collectively, "Liens") upon any of the properties or assets of
the Company or any of its subsidiaries under, any of the terms,
conditions or provisions of (x) the Restated Articles of
Incorporation or by-laws of the Company or any of its
subsidiaries, or (y) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or
obligation to which the Company or any of its subsidiaries is a
party or to which any of them or any of their respective
properties or assets may be subject, or (ii) violate any
judgment, ruling, order, writ, injunction, decree, statute, rule
or regulation applicable to the Company and its subsidiaries or
any of their respective properties or assets, except for (A) any
such violation, conflict, breach, default, termination,
acceleration, Lien that would not have a Material Adverse Effect
or prevent or delay the consummation of the transactions
contemplated hereby, (B) the filing of premerger notification
reports by the parties under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and the
expiration of the applicable waiting period, (C) the filing with
the Securities and Exchange Commission (the "Commission") of a
proxy statement in definitive form relating to the meeting of the
Company's shareholders to be held in connection with the Merger
(the "Proxy Statement") and such reports under Section 13(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and such other compliance with the Exchange Act and the
rules and regulations thereunder, as may be required in
connection with this Agreement and the transactions contemplated
hereby, and (D) the filing of the Missouri Articles of Merger
with the Secretary of the State of Missouri.
(c) Other than in connection with or in compliance with
the provisions of the MBCL, the HSR Act, and the Exchange Act, no
notice to, filing with, or authorization, consent or approval of,
any state or local government or any court, tribunal,
administrative agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental
Entity") is necessary for the consummation by the Company of the
transactions contemplated by this Agreement.
Section 3.5. SEC Documents. (a) Since January 1, 1996,
the Company has filed with the Commission all reports, schedules,
statements and other documents required to be filed by it under
the Securities Act of 1933, as amended (the "Securities Act"), or
the Exchange Act (as such documents have been filed prior to the
date hereof, and amended since the time of their filing prior to
the date hereof, and in each case including all exhibits and
schedules thereto and documents incorporated by reference
therein, collectively, the "Company SEC Documents"). As of their
respective dates (or if amended or superseded by a filing prior
to the date hereof, then on the date of such filing), the Company
SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the
case may be, and none of the Company SEC Documents (including any
and all financial statements included therein) contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated
financial statements of the Company included in all of the
Company SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules
and regulations of the Commission with respect thereto, have been
prepared in accordance with United States generally accepted
accounting principles ("GAAP") (except, in the case of unaudited
consolidated quarterly <PAGE> statements, as permitted by Form 10-Q of
the Commission) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes
thereto) and fairly present the consolidated financial position
of the Company and its consolidated subsidiaries as at the dates
thereof and the results of their operations and cash flows for
the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(b) Except as set forth in the Company SEC Documents,
neither the Company nor any of its subsidiaries 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 (i) liabilities and obligations
incurred in the ordinary course of business consistent with past
practice since January 1, 1998 which could not reasonably be
expected to have a Material Adverse Effect, and (ii) liabilities
incurred under this Agreement.
(c) The Company has heretofore made available or promptly
shall make available to Parent a complete and correct copy of any
amendments or modifications, which have not yet been filed with
the Commission, to agreements, documents or other instruments
which previously have been filed with the Commission pursuant to
the Exchange Act.
Section 3.6. Absence of Certain Events. Except as set
forth on Schedule 3.6, since January 1, 1998, the Company and its
subsidiaries have operated their respective businesses only in
the ordinary course consistent with past practice and, except as
set forth in Schedule 3.6 or in the Company SEC Documents, there
has not occurred (i) any event, occurrence or condition which,
individually or in the aggregate, has, or is reasonably likely to
have, a Material Adverse Effect; (ii) any entry into any
commitment or transaction that, individually or in the aggregate,
has or is reasonably likely to have, a Material Adverse Effect;
(iii) any change by the Company in its accounting methods,
principles or practices; (iv) any amendments or changes in the
respective articles or certificate of incorporation or
organization or by-laws of the Company or any of its
subsidiaries; (v) any revaluation by the Company or any of its
subsidiaries of any of their respective assets; (vi) any damage,
destruction or loss which resulted in or is reasonably likely to
result in a Material Adverse Effect; (vii) any declaration,
setting aside or payment of any dividend or other distribution
with respect to any shares of capital stock of the Company or any
of its subsidiaries, or any repurchase, redemption or other
acquisition by the Company or any of its subsidiaries of any
outstanding shares of capital stock or other securities of, or
other ownership interests in, the Company or any of its
subsidiaries; (viii) any grant of any severance or termination
pay to any director, officer or employee of the Company or any of
its Subsidiaries; (ix) any entry into any employment, deferred
compensation or other similar agreement (or any amendment to any
such existing agreement) with any director, officer or employee
of the Company or any of its subsidiaries; (x) any increase in
benefits payable under any existing severance or termination pay
policies or employment agreements with any director, officer or
employee of the Company or any of its subsidiaries; (xi) any
increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any of its
subsidiaries (except for salary increases to employees other than
officers in the ordinary course of business); or (xii) any other
action that would be prohibited by Section 5.1 on and after the
date of this Agreement.
<PAGE>
Section 3.7. Litigation. Except as set forth in
Schedule 3.7 or the Company SEC Documents, there are no actions,
suits or proceedings pending or, to the best of the Company's
knowledge, threatened against the Company or any of its
subsidiaries, at law or in equity, or before or by any federal,
state or local government or any court, tribunal, administrative
agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity") or any arbitrator
or arbitration tribunal, and no development has occurred with
respect to any pending or threatened action, suit or proceeding
that is reasonably likely to result in a Material Adverse Effect
or prevent or delay the consummation of the transactions
contemplated hereby.
Section 3.8. Compliance with Applicable Law. The
Company and its subsidiaries hold and at all required times have
held, all permits, licenses, variances, exceptions, orders and
approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "Permits"), except
for the failure to hold any such Permit that could not reasonably
be expected to have a Material Adverse Effect. The Company and
its subsidiaries are, and at all times have been, in compliance
with the terms of the Permits, except for any failure to comply
which could not reasonably be expected to have a Material Adverse
Effect. The businesses of the Company and its subsidiaries are
not being, and have not been, conducted in violation of any
applicable law, ordinance or regulation of any Governmental
Entity, except for any failure to comply which could not
reasonably be expected to have a Material Adverse Effect. Except
as set forth in Schedule 3.8, no investigation or review by any
Governmental Entity with respect to the Company or any of its
subsidiaries is pending or, to the best of the Company's
knowledge, threatened, nor has any Governmental Entity, to the
best of the Company's knowledge, indicated an intention to
conduct the same.
Section 3.9. Employee Plans. (a) Schedule 3.9 is a list
of each "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (hereinafter a "Pension Plan"),
"employee welfare benefit plan" (as defined in Section 3(1) of
ERISA, hereinafter a "Welfare Plan"), and each other agreement,
plan, arrangement, program or policy relating to any bonus,
profit sharing, retirement, pension, group insurance, death
benefit, cafeteria, flexible spending account, medical, dependent
care, stock options, stock purchases, stock appreciation rights,
savings, compensation, employment, consulting, deferred
compensation, severance, termination pay, fringe benefits or
other employee benefits, in each case maintained or contributed
to, or required to be maintained or contributed to, by the
Company, any of its subsidiaries or any other person that,
together with the Company, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code (as hereinafter
defined) (each a "Commonly Controlled Entity") for the benefit of
any present or former employees of the Company or any of its
subsidiaries (all the foregoing being herein called "Benefit
Plans"). The Company has made available to Parent true, complete
and correct copies of (i) each Benefit Plan, (ii) the most recent
annual report on Form 5500 as filed with the Internal Revenue
Service with respect to each applicable Benefit Plan, (iii) the
most recent summary plan description (or similar document) with
respect to each applicable Benefit Plan and (iv) each trust
agreement and insurance or annuity contract relating to any
Benefit Plan.
<PAGE>
(b) Except as set forth in Schedule 3.9, each Benefit
Plan has been administered in all material respects in accordance
with its terms. Except as set forth in Schedule 3.9, the
Company, its subsidiaries and all the Benefit Plans are in
compliance in all material respects with the applicable
provisions of ERISA, the Code, and all other laws, ordinances or
regulations of any Governmental Entities. Except as set forth in
Schedule 3.9, to the best of the Company's knowledge, there are
no investigations by any Governmental Entities, termination
proceedings or other claims (except claims for benefits payable
in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting
any rights to or claims for benefits under any Benefit Plan.
(c) Except as set forth in Schedule 3.9, (i) all
contributions to the Benefit Plans required to be made by the
Company or any of its subsidiaries in accordance with the terms
of the Benefit Plans, any applicable collective bargaining
agreement and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made, (ii) there has
been no application for or waiver of the minimum funding
standards imposed by Section 412 of the Code with respect to any
Benefit Plan that is a Pension Plan, excluding any Pension Plan
which is a multiemployer pension plan as defined in
Section 4001(a)(3) of ERISA (hereinafter a "Company Pension
Plan") and (iii) no Company Pension Plan had an "accumulated
funding deficiency" within the meaning of Section 412(a) of the
Code as of the end of the most recently completed plan year.
(d) Except as set forth in Schedule 3.9, (i) each Company
Pension Plan that is intended to be a tax-qualified plan has been
the subject of a determination letter from the Internal Revenue
Service to the effect that such Company Pension Plan and each
related trust is qualified and exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code,
(ii) no such determination letter has been revoked, and to the
best of the Company's knowledge, revocation has not been
threatened, (iii) no event has occurred and no circumstances
exist that would adversely affect the tax-qualification of such
Company Pension Plan and (iv) such Company Pension Plan has not
been amended since the effective date of its most recent
determination letter in any respect that might adversely affect
its qualifications, increase its cost or require security under
Section 307 of ERISA. The Company has made available to Parent a
copy of the most recent determination letter received with
respect to each Company Pension Plan for which such a letter has
been issued, as well as a copy of any pending application for a
determination letter. The Company has also provided to Parent a
list of all Company Pension Plan amendments as to which a
favorable determination letter has not yet been received.
(e) Except as set forth in Schedule 3.9: (i) no non-
exempt "prohibited transaction" (as defined in Section 4975 of
the Code or Section 406 of ERISA) has occurred that involves the
assets of any Benefit Plan; (ii) no Company Pension Plan has been
terminated or has been the subject of a "reportable event" (as
defined in Section 4043 of ERISA and the regulations thereunder)
for which the 30-day notice requirement has not been waived by
the Pension Benefit Guaranty Corporation ("PBGC"); and (iii) none
of the Company, any of its subsidiaries or, to the best of the
Company's knowledge, any trustee, administrator or other
fiduciary of any Benefit Plan has engaged in any transaction or
acted in a manner that could, or has failed to act so as to,
subject the Company, any such subsidiary or any trustee,
administrator or other fiduciary to any liability for breach of
fiduciary duty under ERISA or any other applicable law.
<PAGE>
(f) Except as set forth in Schedule 3.9, as of the most
recent valuation date for each Company Pension Plan that is a
"defined benefit pension plan" (as defined in Section 3(35) of
ERISA (hereinafter a "Defined Benefit Plan")), there was not any
material amount of "unfunded benefit liabilities" (as defined in
Section 4001(a)(18) of ERISA) under such Defined Benefit Plan,
and the Company is not aware of any facts or circumstances that
would change the funded status of any such Defined Benefit Plan.
The Company has made available to Parent the most recent
actuarial report or valuation with respect to each Defined
Benefit Plan.
(g) Except as set forth in Schedule 3.9, no Commonly
Controlled Entity has incurred any liability to a Pension Plan
(other than for contributions not yet due) or to the PBGC (other
than for the payment of premiums not yet due).
(h) No Commonly Controlled Entity has (i) engaged in a
transaction described in Section 4069 of ERISA that could subject
the Company to a liability at any time after the date hereof or
(ii) acted or failed to act, in a manner that could reasonably be
excepted to result in fines, penalties, taxes or related charges
under (x) Section 502(c), (i) or (1) of ERISA, (y) Section 4071
of ERISA or (z) Chapter 43 of the Code.
(i) Except as set forth in Schedule 3.9, no Commonly
Controlled Entity has announced an intention to withdraw, but has
not yet completed withdrawal, from a "multiemployer pension plan"
(as defined in Section 4001(a)(3) of ERISA). Except as set forth
in Schedule 3.9, no action has been taken, and no circumstances
exist, that could reasonably be excepted to result in either a
partial or complete withdrawal from such a multiemployer pension
plan by any Commonly Controlled Entity. Schedule 3.9 also lists
for each Benefit Plan that is a multiemployer pension plan the
Company's reasonable estimate, based upon the information
supplied to it by each multiemployer pension plan, of the amount
of withdrawal liability that would be incurred if each Commonly
Controlled Entity were to make a complete withdrawal from each
such plan as of the dates specified in Schedule 3.9.
Schedule 3.9 also lists for each Benefit Plan that is a
multiemployer pension plan the Company's reasonable estimate,
based upon the information supplied to it by each multiemployer
pension plan, of the amount of "unfunded vested benefits" (within
the meaning of Section 4211 of ERISA) as of the dates specified
in Schedule 3.9.
(j) The list of Welfare Plans in Schedule 3.9 discloses
whether each Welfare Plan is (i) unfunded, (ii) funded through a
"welfare benefit fund", as such term is defined in Section 419(e)
of the Code, or other funding mechanism or (iii) insured. Except
as disclosed in Schedule 3.9, and to the best of the Company's
knowledge, there are no understandings, agreements or
undertakings, written or oral, that would prevent any such
Welfare Plan from being amended or terminated at any time after
the Closing Date. The Company and its subsidiaries comply with
the applicable requirements of Section 4980B(f) of the Code with
respect to each Benefit Plan that is a group health plan, as such
term is defined in Section 5000(b)(1) of the Code.
(k) Except as provided in the employment and severance
agreements listed in Schedule 3.9, no employee of the Company or
any of its subsidiaries will be entitled to any <PAGE> additional
material benefits or vesting of any benefits under any Benefit
Plan as a result of the transactions contemplated by this
Agreement.
(l) Except as set forth in Schedule 3.9, during the
period beginning on January 1, 1998 and ending on the date of
this Agreement, there has been no change (i) in any actuarial or
other assumption used to calculate funding obligations with
respect to any Company Pension Plan or (ii) in the manner in
which contributions to any Company Pension Plan are made or the
basis on which such contributions are determined.
(m) Except as set forth in Schedule 3.9, any amount that
could be received (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by
this Agreement by any employee, officer or director of the
Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangements or Benefit
Plans currently in effect would not be characterized as an
"excess parachute payment" (as such term is defined in
Section 280G(B)(1) of the Code). Schedule 3.9 sets forth (i) the
Company's reasonable estimate of the maximum amount that could be
paid to each executive officer of Company as a result of the
transactions contemplated by this Agreement under all employment,
severance and termination agreements, other compensation
arrangements and Benefit Plans currently in effect and (ii) the
Company's reasonable estimate of the "base amount" (as such term
is defined in Section 280(b)(3) of the Code) for each such
executive officer calculated as of the date of this Agreement.
Section 3.10. Employment Relations. Except as set forth
in Schedule 3.10 and except for any acts or omissions to act or
matters referred to below which could not reasonably be expected
to have a Material Adverse Effect, (i) the Company and its
subsidiaries are, in compliance with all federal, state or other
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and are
not engaged in any unfair labor practice; (ii) no unfair labor
practice complaint against the Company or any of its subsidiaries
is pending before the National Labor Relations Board; (iii) there
is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against or involving the Company or any of
its subsidiaries; (iv) no representation question has been raised
with the Company respecting the employees of the Company or any
of its subsidiaries; (v) neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement;
(vi) no collective bargaining agreement is currently being
negotiated by the Company or any of its subsidiaries; (vii) no
grievance is pending or threatened against the Company or any of
its subsidiaries; (viii) neither the Company nor any of its
subsidiaries is liable for any severance pay or other payments to
any employee or former employee arising from the termination of
employment under any benefit or severance policy, practice,
agreement, plan, or program of the Company or any of its
subsidiaries, nor will the Company or any of its subsidiaries
have any liability which exists or arises, or may be deemed to
exist or arise, under any applicable law or otherwise, as a
result of or in connection with the transactions contemplated
hereunder or as a result of the termination by the Company and
each of its subsidiaries of any persons employed by the Company
or any of its subsidiaries on or prior to the Effective Time;
(ix) each of the Company and each of its subsidiaries is in
compliance with its obligations pursuant to the Worker Adjustment
and <PAGE> Retraining Notification Act of 1988, and all other employee
notification and bargaining obligations arising under any
collective bargaining agreement, statute or otherwise; and (x)
neither the Company nor any of its subsidiaries has experienced
any strike, threatened strike, picketing or union election during
the last three years.
Section 3.11. Contracts. To the best of the Company's
knowledge, Schedule 3.11 sets forth a complete and accurate list
of any of the following (including all amendments and/or
modifications to the following) to which the Company or any of
its subsidiaries is a party or by which Company or any of its
subsidiaries is bound (collectively, "Scheduled Contracts"):
(i) all deeds, indentures, leases, subleases or
other instruments by which an ownership, leasehold or other
interest in real property is held by the Company or any of
its subsidiaries;
(ii) all contracts, commitments or agreements,
including contracts or licenses pertaining to the payment of
royalties, to the extent that any such agreement
individually includes provisions that do or could involve
payments or commitments (whether fixed or contingent) to or
from the Company or any of its subsidiaries for a fixed
amount, or a reasonably expected amount, in excess of
$100,000;
(iii) all management, compensation, employment or
severance contracts, commitments or agreements or contracts
or agreements entered into with any director, officer or
employee of the Company or any of its subsidiaries;
(iv) all contracts or agreements under which the
Company or any of its subsidiaries has any outstanding
indebtedness, obligation or liability for borrowed money or
the deferred purchase price of property or has the
obligation to incur any such indebtedness, obligation or
liability, in each case in an amount greater than $100,000;
(v) all bonds or agreements of guarantee or
indemnification in which the Company or any of its
subsidiaries acts as surety, guarantor or indemnitor with
respect to any individual obligation (fixed or contingent)
in a fixed amount or a reasonably expected amount greater
than $100,000; and
(vi) all secrecy, noncompete or other agreements
which (A) restrict the right of the Company or any of its
subsidiaries to engage in any business or (B) would restrict
the right of Parent or any of affiliates to engage in any
business after the consummation of the transactions
contemplated by this Agreement;
Except as set forth on Schedule 3.11, (i) neither the
Company nor any of its subsidiaries is in default under the terms
of any Scheduled Contract, (ii) no other party thereto is in
default under the terms of any Scheduled Contract and (iii) each
Material Contract is in full force and effect.
<PAGE>
Section 3.12. Environmental Laws and Regulations. Except
as disclosed in Schedule 3.12 and to the best of the Company's
knowledge:
(i) The Company and its subsidiaries hold and
are in material compliance with all Environmental Permits
(as defined below), and the Company and its subsidiaries are
otherwise in compliance with all Environmental Laws (as
defined below), except for any failure to hold any
Environmental Permit, or be in compliance with any
Environmental Permit or Environmental Law that could not
reasonably be expected to have a Material Adverse Effect,
and there are no conditions that might prevent or interfere
in any material respect with such compliance in the future;
(ii) As of the date hereof, neither the
Company nor any of its subsidiaries has received any
Environmental Claim (as defined below) and there is no
threatened Environmental Claim;
(iii) Neither the Company nor any of its
subsidiaries has entered into any consent decree, order or
agreement under any Environmental Law;
(iv) There are no (A) underground storage
tanks, (B) polychlorinated biphenyls, (C) friable asbestos
or asbestos-containing materials, (D) surface impoundments,
or (E) landfills, or present at any facility currently
owned, leased or operated by the Company or any of its
subsidiaries;
(v) There are no past (including, without
limitation, with respect to assets or businesses formerly
owned, leased or operated by the Company or any of its
subsidiaries) or present actions, activities, events,
conditions or circumstances, including without limitation
the release, threatened release, emission, discharge,
generation, treatment, storage or disposal of Hazardous
Materials;
(vi) No modification, revocation, reissuance,
alteration, transfer, or amendment of the Environmental
Permits, or any review by, or approval of, any third party
of the Environmental Permits is required in connection with
the execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby or the
continuation of the business of the Company or its
subsidiaries following such consummation;
(vii) Hazardous Materials have not been
generated, transported, treated, stored, disposed of,
released or threatened to be released at, on, from or under
any of the properties or facilities currently owned, leased
or otherwise used by the Company or any of its subsidiaries,
in violation of, or so as could result in liability under,
any Environmental Laws;
(viii) None of the Company or its subsidiaries
has contractually assumed any liabilities or obligations
under any Environmental Laws;
<PAGE>
(ix) For purposes of this Agreement, the
following terms shall have the following meanings:
(A) "Environmental Claim" means any written notice, claim,
demand, action, suit, complaint, proceeding or other
communication by any person alleging liability or potential
liability (including without limitation liability or
potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages,
property damage, personal injury, fines or penalties)
arising out of, relating to, based on or resulting from (1)
the presence, discharge, emission, release or threatened
release of any Hazardous Materials at any location, owned,
leased or operated by the Company or any of its subsidiaries
or (2) circumstances forming the basis of any violation or
alleged violation of any Environmental Law or Environmental
Permit or (3) otherwise relating to obligations or
liabilities under any Environmental Laws; (B) "Environmental
Permits" means all permits, licenses, registrations and
other governmental authorizations required under
Environmental Laws for the Company and its subsidiaries to
conduct their operations and businesses on the date hereof
and consistent with past practices; (C) "Environmental Laws"
means all applicable federal, state and local statutes,
rules, regulations, ordinances, orders, decrees and common
law relating in any manner to contamination, pollution or
protection of the environment, including without limitation
the Comprehensive Environmental Response, Compensation and
Liability Act, the Solid Waste Disposal Act, the Clean Air
Act, the Clean Water Act, the Toxic Substances Control Act,
the Occupational Safety and Health Act, the Emergency
Planning and Community-Right-to-Know Act, the Safe Drinking
Water Act, all as amended, and similar state laws; and
(D) "Hazardous Materials" means all hazardous or toxic
substances, wastes, materials or chemicals, petroleum
(including crude oil or any fraction thereof) and petroleum
products, friable asbestos and asbestos-containing
materials, pollutants, contaminants and all other materials,
and substances regulated pursuant to, or that could
reasonably be expected to provide the basis of liability
under, any Environmental Law.
Section 3.13. Property and Leases. (a) Schedule 3.13
sets forth all of the real property owned by the Company and each
of its subsidiaries (the "Owned Real Property"). Schedule 3.13
sets forth all of the real property and interests in real
property leased by the Company and each of its subsidiaries (the
"Leased Real Property", and together with the Owned Real
Property, the "Company Property"). Each of the Company or its
subsidiaries, as the case may be, has good and marketable fee
title to the Owned Real Property, subject only to Permitted Liens
(as defined below) and those Liens described in (b) below, except
for (a) Liens set forth on Schedule 3.13, (b) Liens reflected in
the Company SEC Documents, and (c) Liens, easements, restrictions
and reservations that are reflected in the title reports or
surveys, if any, delivered to Purchaser in connection with the
transactions contemplated hereby. Each of the Company or its
subsidiaries, as the case may be, has a valid and existing
leasehold interest in all Leased Real Property, subject only to
Permitted Liens and those Liens described in (b) below, except
for (a) Liens set forth on Schedule 3.13 and (b) Liens reflected
in the Company SEC Documents.
(b) All Company Property and personal properties owned by
the Company or any of its subsidiaries are owned free and clear
of all Liens or leased free and clear of all Liens applicable to
such leasehold interest, except for (i) Liens for taxes and
assessments or governmental charges or levies which are not at
the time of Closing due or payable or which are being contested
in good <PAGE> faith and (ii) Liens in respect of pledges or deposits
under workers' compensation laws or similar legislation,
carriers', warehousemen's, mechanics', laborers' and
materialmen's and similar Liens, which have been incurred in the
ordinary course of business, so long as the obligations secured
by such Liens are not then delinquent or which are being
contested in good faith. The Owned Real Property and personal
properties owned by the Company or any of its subsidiaries are
not subject to any Liens, building or use restrictions,
exceptions, variances, reservations or limitations of any nature
whatsoever which interfere with or are violated by the existence
of the improvements thereon or the current use and operation of
each such Owned Real Property or personal properties,
respectively, to which it relates in the business of the Company
and its subsidiaries as currently conducted, except for any
interference or violation that could not reasonably be expected
to have a Material Adverse Effect.
Section 3.14. Intellectual Property. (a) Schedule 3.14
lists all Intellectual Property (as defined below) owned or used
by the Company or its subsidiaries, which is the subject of a
registration or application for registration submitted to any
Governmental Entity, and summarizes the nature of the Company's
or its subsidiaries' rights therein and thereto.
(b) The Company and its subsidiaries own or have the
right to use all Intellectual Property reasonably necessary for
the Company and its subsidiaries to conduct their business as it
is currently conducted and consistent with past practice.
(c) Except as set forth on Schedule 3.14 and except for
acts or omissions or matters referred to below which could not
reasonably be expected to have a Material Adverse Effect:
(i) all of the registered Intellectual Property of the Company
and its subsidiaries listed on Schedule 3.14 is subsisting and
unexpired, free of all Liens, has not been abandoned and, to the
best of the Company's knowledge, does not infringe or otherwise
impair the intellectual property rights of any third party;
(ii) none of the Intellectual Property owned by the Company or
its subsidiaries is the subject of any license, security interest
or other agreement granting rights therein to any third party;
(iii) to the best of the Company's knowledge, no judgment,
decree, injunction, rule or order has been rendered by any
Governmental Entity which would limit, cancel or question the
validity of, or the Company's or its subsidiaries' rights in and
to, any Intellectual Property; (iv) the Company has not received
notice of any pending or threatened suit, action or proceeding
that seeks to limit, cancel or question the validity of, or the
Company's or its subsidiaries' rights in and to, any Intellectual
Property; and (v) the Company and its subsidiaries take
reasonable steps to protect, maintain and safeguard the
Intellectual Property owned by the Company or its subsidiaries,
including any Intellectual Property for which improper or
unauthorized disclosure would impair its value or validity.
(d) For purposes of this Agreement "Intellectual
Property" shall mean all rights, privileges and priorities
provided under U.S., state and foreign law relating to
intellectual property, including without limitation all
(i) (A) inventions, discoveries, processes, formulae, designs,
methods, techniques, procedures, concepts, developments,
technology, new and useful improvements thereof and know-how
relating thereto, whether or not patented or eligible for patent
protections; (B) copyrights and copyrightable works, including
computer applications, programs, software, databases and related
items; (C) trademarks, service marks, trade names, and <PAGE> trade
dress, the goodwill of any business symbolized thereby, and all
common-law rights relating thereto; (D) trade secrets and other
confidential information; and (ii) all registrations,
applications, recordings, and licenses or other similar
agreements related to the foregoing.
Section 3.15. Insurance. The Company has provided to
Parent copies of all policies of insurance maintained by or on
behalf of the Company or its subsidiaries. The insurance
coverage provided by such policies of insurance will be continued
through the Effective Time and will not terminate or lapse by
reason of the transactions contemplated by this Agreement.
Except as set forth in Schedule 3.15, neither the Company nor any
of its subsidiaries has been denied insurance coverage by any
carrier in the last three years.
Section 3.16. Takeover Statutes. The Board of Directors
of the Company has taken all appropriate action to render the
restrictions on business combinations contained in
Section 351.459 of the MBCL inapplicable to this Agreement and
the Shareholders Agreement and the consummation of the
transactions contemplated hereunder and thereunder, including,
without limitation, the purchase of securities pursuant to the
Shareholders Agreement.
Section 3.17. Taxes. (a) For purposes of this Agreement,
(i) "Tax" or "Taxes" shall mean all Federal, state, county,
local, municipal, foreign and other taxes, assessments, duties or
similar charges of any kind whatsoever, including all corporate
franchise, income, sales (including bulk sales), use, ad valorem,
intangible, receipts, value added, profits, license, withholding,
payroll, employment, excise, premium, real property, personal
property, personal property, customs, net worth, estimated,
capital, gains, transfer, stamp, documentary, social security,
alternative minimum, accumulated earnings, goods and services,
recapture, recording, severance, environmental (including but not
limited to, taxes under Section 59A of the Code), occupation and
other taxes, and including any interest, penalties and additions
imposed with respect to such amounts; (ii) "Code" shall mean the
Internal Revenue Code of 1986, as amended, and reference to any
Section of the Code shall refer to that Section in effect at the
date hereof; (iii) "Taxing Authority" shall mean any domestic,
foreign, federal, national, state, county or municipal or other
local government, any subdivision, agency, commission or
authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising Tax regulatory
authority; and (iv) "Return" or "Returns" shall mean all returns,
reports, estimates, information returns and statements, including
any related or supporting information filed with respect to any
of the foregoing, maintained, filed or to be filed with any
Taxing Authority in connection with the determination,
assessment, collection or administration of any Taxes.
(b) Except as set forth in Schedule 3.17, the Company and
each of its subsidiaries has timely filed, with the appropriate
Taxing Authority all material Returns required to be filed on or
prior to the date hereof and each such Return was complete in all
material respects at the time of filing.
(c) Except as set forth on Schedule 3.17, all Taxes
(including Taxes for which no Returns are required to be filed
and including payroll and wage withholding Taxes) of the Company
and any of its subsidiaries ("Covered Taxes"), which are due and
payable have been duly and timely paid.
<PAGE>
(d) Except as set forth on Schedule 3.17, the Company has
made available for inspection by Parent (i) complete and correct
copies of all Returns of the Company and each of its
subsidiaries, with respect to Federal, state, provincial, county,
local, municipal, foreign and other income, profits, corporate
franchise, receipts, sales, excise, property, net worth and all
other Taxes, that are or have been required to be filed for
taxable periods ending with or within the last five calendar
years (ii) complete and correct copies of all material ruling
requests, private letter rulings, revenue agent reports,
information document requests and responses thereto, notices of
proposed deficiencies, deficiency notices, applications for
changes in method of accounting, protests, petitions, closing
agreements, settlement agreements, and any similar documents
submitted by, received by or agreed to by or on behalf of the
Company or any of the subsidiaries and relating to Covered Taxes.
(e) Except as set forth on Schedule 3.17 and for taxes
not yet due, no material Liens for Taxes exist with respect to
any of the assets or properties of the Company or any of its
subsidiaries. Schedule 3.17 lists all federal, state and local
income Returns filed with respect to the Company for taxable
periods ended on or after December 31, 1994, indicates those
Returns that have been audited, and indicates those Returns that
currently are the subject of audit or any administrative or
judicial proceeding. Except as set forth on Schedule 3.17, each
deficiency resulting from any audit or examination relating to
Covered Taxes by any Taxing Authority has been paid and no issues
were raised in writing by the relevant Taxing Authority during
any such audit or examination that might apply to taxable periods
other than the taxable period to which such audit or examination
related. Except as set forth on Schedule 3.17, (i) to the best
of the Company's knowledge, no Returns with respect to Federal
income Taxes are currently under audit or examination by the
Internal Revenue service and any other Taxing Authority, (ii) to
the best of the Company's knowledge, no audit or examination
relating to Covered Taxes is currently being conducted by the
Internal Revenue Service or any other Taxing Authority and
(iii) neither the Internal Revenue Service nor any other Taxing
Authority has given notice in writing that it will commence any
such audit or examination.
(f) Except as set forth on Schedule 3.17, as of the date
hereof no Taxing Authority is asserting or, to the best of the
Company's knowledge, threatening to assert, any deficiency or
claim for Covered Taxes or any adjustment to any item of income,
gain, deduction, loss, credit, or tax basis entering into the
computation of Covered Taxes.
(g) Except as set forth in Schedule 3.17, (i) no person
has made with respect to the Company or any of its subsidiaries,
or with respect to any property held by the Company or any of its
subsidiaries, any consent under Section 341 of the Code, (ii) no
property owned by the Company or any of its subsidiaries
constitutes "tax-exempt use property" (as defined in
Section 169(h) of the Code), (iii) to the best of the Company's
knowledge, neither the Company nor any of its Subsidiaries is a
party to any lease made pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect prior to
the date of enactment of the Tax Equity and Fiscal Responsibility
Act of 1982 and (iv) none of the assets owned by the Company or
any of its Subsidiaries is subject to a lease under
Section 7701(h) of the Code or under any predecessor.
<PAGE>
(h) There is no agreement extending, or having the effect
of extending, the period of assessment or collection of any
Covered Taxes and no unrevoked power of attorney with respect to
any Covered Taxes has been executed or filed with the Internal
Revenue Service or any other Taxing Authority.
(i) Since January 1, 1995, the Company has not been a
member of any affiliated or consolidated, combined, unitary or
aggregate group for purposes of filing Returns or paying Taxes at
any time except for a group for which the Company is a parent.
(j) Except as set forth in Schedule 3.17, none of the
Company or any of its subsidiaries is a party to or is bound by
any Tax sharing agreements with any of its affiliates, or with
any Taxing Authority.
(k) Except as set forth on Schedule 3.17, none of the
Company or any of the subsidiaries will be required in a taxable
period beginning on or after the Closing Date to include any
amount in income pursuant to Section 481 of the Code, by reason
of a change in accounting methods or otherwise, as a result of
actions taken prior to the Closing Date.
(l) Schedule 3.17 lists each state, county, local,
municipal or foreign jurisdiction in which Company or any of the
subsidiaries files or, has filed a Return or is or has been
liable for Tax on a "nexus" basis for the current and preceding
three years.
(m) The Company has an estimated consolidated net
operating carryover for regular Federal income tax purposes as of
December 31, 1997 of approximately $3,400,000 for the year ended
December 31, 1997 and approximately $507,000 for the year ended
December 31, 1996. The Company has tax credit carryforwards as
of December 31, 1997 of approximately $300,000 for the year ended
December 31, 1993 and approximately $222,000 for the year ended
December 31, 1996.
Section 3.18. Customers. Schedule 3.18 sets forth a list
of the twenty (20) largest customers of the Company and its
subsidiaries, as measured by the dollar amount of purchases by
such customers, during the year ended December 31, 1997 and the
six months ended June 30, 1998, calculated based on the
approximate total sales by the Company and its subsidiaries to
each such customer during each such period. To the best of the
Company's knowledge, since December 31, 1997, no customer listed
on Schedule 3.18 has (i) cancelled or otherwise terminated, or
threatened to cancel or otherwise terminate, its relationship
with the Company or any of its subsidiaries, or (ii) materially
changed, or requested a material change in the price or quantity
of the goods, services and products sold by the Company or any of
its subsidiaries to such customer.
Section 3.19. Interests of Certain Persons. Except as
disclosed in Schedule 3.19, no officer or director of the
Company, or any "associate" (as such term is defined in Rule 14a-
1 under the Exchange Act) of any such officer or director, has
any interest in any contract or property (real or personal),
tangible or intangible, used in or pertaining to the business of
the <PAGE> Company or any of its subsidiaries or has indebtedness owing
to the Company or any of its subsidiaries.
Section 3.20. Information Supplied. None of the
information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Proxy Statement
(as defined in Section 6.1(a)) will, at the date it is first
mailed to the Company's shareholders or at the time of the
Shareholders Meeting (as defined in Section 6.1(c)), contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under
which they are made, not misleading. The Proxy Statement will
comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by the Company
with respect to statements made or incorporated by reference
therein based on information supplied in writing by or on behalf
of Parent or Purchaser specifically for inclusion therein.
Section 3.21. Required Company Vote. The Company
Shareholder Approval, being the affirmative vote of at least
two-thirds of the outstanding Shares, are the only votes of the
holders of any class or series of the Company's securities
necessary to approve this Agreement, the Merger and the other
transactions contemplated hereby.
Section 3.22. Opinion Of Financial Advisor. The Company
has received the opinion of Credit Suisse First Boston
Corporation (the "Company Financial Advisor"), dated the date of
this Agreement, to the effect that, as of such date, the Merger
Consideration to be received by the Company's shareholders
pursuant to the Merger is fair to such holders of Shares from a
financial point of view.
Section 3.23. Board Recommendation. The Board of
Directors of the Company, at a meeting duly called and held, has
duly and unanimously, subject to the terms and conditions set
forth herein, (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, are fair
to and in the best interests of the shareholders of the Company
and (ii) subject to Section 6.1(c) hereof, resolved to recommend
that the holders of Shares approve this Agreement and the
transactions contemplated herein, including the Merger.
Section 3.24. Brokers. No broker, investment banker or
other person, other than the Company Financial Advisor, the fees
and expenses of which will be paid by the Company, is entitled to
any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. A
copy of the engagement letter between the Company Financial
Advisor and the Company setting forth the fees and expenses to be
paid by the Company in connection with the transactions
contemplated by this Agreement has been provided to Parent.
<PAGE>
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser each represent and warrant, jointly and
severally, to the Company as follows:
4.1. Organization and Qualification. Each of Parent and
Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation and is in good standing as a foreign corporation in
each jurisdiction where the properties owned, leased or operated
by it, or the business conducted by it, requires such
qualification and where failure to so qualify or be in good
standing would have an Acquiror Material Adverse Effect. For
purposes of this Agreement, an "Acquiror Material Adverse Effect"
means any change or effect, either individually or in the
aggregate, that is or may be reasonably expected to be materially
adverse to the business, assets, liabilities, properties,
financial condition or results of operations of Parent and its
subsidiaries taken as a whole. Each of Parent and Purchaser has
the requisite corporate power and authority to own, operate and
use its respective properties to carry on its respective
businesses as they are now being conducted. Copies of the
respective charter documents and by-laws of Parent and Purchaser
have heretofore been delivered to the Company, and such copies
are complete and correct as of the date hereof.
4.2. Capital Stock of Parent and Purchaser. As of the
date hereof, and at all times thereafter up to and including the
Effective Time, all of the outstanding shares of common stock,
par value $.01 per share, of Purchaser shall be duly authorized,
validly issued, fully paid, non-assessable and owned directly by
Parent, free and clear of all Liens.
4.3. Authority and Absence of Conflict.
(a) Each of Parent and Purchaser has the requisite
corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Purchaser and the consummation by
Parent and Purchaser of the transactions contemplated hereby have
been duly authorized by the respective Boards of Directors of
Parent and Purchaser, and by Parent as sole shareholder of
Purchaser, and no other corporate proceedings on the part of
Parent or Purchaser are necessary to authorize the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Purchaser and (assuming that this
Agreement constitutes the valid and binding obligation of the
Company) constitutes a valid and binding obligation of each of
them, enforceable against each of them in accordance with its
terms except to the extent that its enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws now or hereafter in effect affecting the
enforcement of creditors' rights generally or by general
equitable principles regardless of whether enforceability is
considered in a proceeding in equity or at law.
(b) Neither the execution and delivery of this
Agreement by Parent or Purchaser, nor the consummation by them of
the transactions contemplated hereby, nor compliance by Parent or
Purchaser with any of the provisions hereof, will (i) violate,
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination of, or <PAGE> accelerate the performance required by, or
result in a right of termination or acceleration under, or result
in the creation of any Lien upon any of the properties or assets
of Parent or Purchaser under any of the terms, conditions or
provisions of (x) the charter documents or by-laws of Parent or
Purchaser or (y) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or
obligation to which Parent or Purchaser is a party, or to which
any of them, or any of their respective properties or assets, may
be subject, or (ii) subject to compliance with the statutes and
regulations referred to in the next subsection, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule
or regulation applicable to Parent or Purchaser or any of their
respective properties or assets; except, in the case of each of
clauses (i)(y) and (ii) above, for such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of
Liens which would not prevent or delay in any material respect
the consummation of the Merger.
(c) Other than in connection with or in compliance
with the provisions of the MBCL, the HSR Act and the Exchange
Act, no notice to, filing with, or authorization, consent or
approval of, any Governmental Entity is necessary for the
consummation by Parent and Purchaser of the transactions
contemplated by this Agreement, except where the failure to give
such notices, make such filings, or obtain authorizations,
consents or approvals would not prevent or delay in any material
respect the consummation of the Merger.
4.4. Litigation. Except as set forth in Schedule 4.4,
there are no actions, suits or proceedings pending or, to
Parent's knowledge, threatened against Parent or any of its
subsidiaries, at law or in equity, or before or by any
Governmental Entity or any arbitrator or arbitration tribunal,
and no development has occurred with respect to any pending or
threatened action, suit or proceedings that is reasonably likely
to prevent or delay the consummation of the transactions
contemplated hereby.
4.5. Brokers. No agent, broker, investment banker,
financial advisor or other person or entity, other than Houlihan
Lockey Howard & Zukin Financial Advisors, Inc. ("Houlihan"), the
fees and expenses of which will be paid by Parent, is or will be
entitled to any brokerage commission, finder's fee or like
payment in connection with any of the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of
Parent or Purchaser.
4.6. Proxy Statement. None of the information supplied in
writing by Parent or Purchaser specifically for inclusion in the
Proxy Statement will, at the date it is first mailed to the
shareholders of the Company, at the time of the Shareholders
Meeting or at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
4.7. Solvency Opinion. Parent has received the opinion of
Houlihan, dated the date of this Agreement, with respect to the
solvency of the Parent and its consolidated subsidiaries after
giving effect to the Merger and the related financings necessary
to consummate the transactions contemplated by this Agreement. A
copy of this opinion has been provided to the Company.
<PAGE>
ARTICLE V.
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
5.1. Conduct Of Business Of The Company. Except as
otherwise contemplated hereby or as expressly set forth in
Schedule 5.1, the Company covenants and agrees that, unless
Parent shall otherwise agree in writing prior to the Effective
Time:
(a) The business of the Company and its subsidiaries shall
be conducted only in, and the Company and its subsidiaries shall
not take any action except in, the ordinary course of business,
and the Company shall use its reasonable best efforts to maintain
and preserve intact its and its subsidiaries' business
organization, assets, employees, officers and advantageous
business relationships.
(b) Neither the Company nor any of its subsidiaries shall
directly or indirectly do any of the following: (i) except in
the ordinary course of business, sell, pledge, dispose of or
encumber any assets of the Company or of any of its subsidiaries
other than any such assets the value of which do not exceed
$100,000 individually and $500,000 in the aggregate; (ii) amend
its charter or by-laws or similar organizational documents;
(iii) except with respect to the creation, amendment, or exercise
of rights under any shareholders rights plan (provided that
Parent, Purchaser and its affiliates and the transactions
contemplated by this Agreement and the Shareholders Agreement
are, and continue to be, exempt from the operation of such plan),
split, combine or reclassify any shares of its capital stock or
declare, set aside, make or pay any dividend or distribution
payable in cash, stock, property or otherwise with respect to any
of its capital stock (except for dividends by wholly-owned
subsidiaries of the Company); (iv) redeem, purchase or otherwise
acquire or offer to redeem, purchase or otherwise acquire any
capital stock of the Company; (v) adopt a plan of liquidation or
resolutions providing for the liquidation, dissolution, merger,
consolidation or other reorganization of the Company; or
(vi) authorize or propose any of the foregoing, or enter into any
contract, agreement, commitment or arrangement to do any of the
foregoing, except to the extent otherwise permitted herein.
(c) Neither the Company nor any of its subsidiaries shall,
directly or indirectly, (i) except for Shares issuable upon
exercise of options outstanding under the Option Plans on the
date hereof, issue, sell, pledge, dispose of or encumber, or
authorize, propose or agree to the issuance, sale, pledge,
disposition or encumbrance of, any shares of, or any options,
warrants or rights of any kind to acquire any shares of or any
securities convertible into or exchangeable or exercisable for
any shares of, its capital stock of any class or any other
securities in respect of, in lieu of, or in substitution for
Shares outstanding on the date hereof; (ii) make any material
acquisition, by means of merger, consolidation or otherwise, or
material disposition (other than disposition of assets in the
ordinary course of business), of assets or securities, or make
any loans, advances or capital contributions to, or investment
in, any individual or entity (other than to the Company or a
wholly-owned subsidiary of the Company); (iii) except in the
ordinary course of business, incur any indebtedness or issue any
debt securities or assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or
otherwise) for, the obligations of any other individual or
entity; (iv) change the capitalization of the Company (other than
the incurrence of <PAGE> indebtedness otherwise permitted in this
Agreement); (v) except in the ordinary course, change any
assumption underlying, or method of calculating, any bad debt,
contingency or other reserve; (vi) pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued,
contingency or otherwise), other than the payment, discharge or
satisfaction of liabilities in the ordinary course of business or
as required by applicable law; (vii) waive, release, grant or
transfer any rights of value or modify or change in any material
respect any existing license, lease, contract or other document,
other than in the ordinary course of business; or
(viii) authorize any of the foregoing, or enter into or modify
any contract, agreement, commitment or arrangement to do any of
the foregoing.
(d) Neither the Company nor any of its subsidiaries shall
(except as required pursuant to any agreements in effect at the
date hereof) adopt or amend or take any actions to accelerate any
rights or benefits under (except as may be required by law) any
bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment, severance,
termination or other employee benefit plan, agreement, trust,
fund or other arrangement for the benefit or welfare of any
employee or any officer or director or former employee or,
increase (except for increases to employees other than officers
in the ordinary course of business) the compensation or fringe
benefits of any employee or former employee or pay any benefit
not permitted by any existing plan, arrangement or agreement;
provided, however, the Company may take the action, prior to the
Effective Time, with respect to the SERP (as defined in Section
6.8) and the Rabbi and Secular Trusts, as contemplated by Section
6.8.
(e) Except in the ordinary course of business, neither the
Company nor any of its subsidiaries shall make any tax election
or, except in the ordinary course of business, settle or
compromise any federal, state, local or foreign income tax
liability.
(f) Except in the ordinary course of business, neither the
Company nor any of its subsidiaries shall permit any insurance
policy naming it as beneficiary or a loss payee to be cancelled
or terminated without notice to Parent.
(g) Neither the Company nor any of its subsidiaries shall
agree, in writing or otherwise, to take any of the foregoing
actions or any action which would make any representation or
warranty in Article III hereof untrue or incorrect.
ARTICLE VI.
ADDITIONAL AGREEMENTS
6.1. Preparation Of Proxy Statement; Shareholders Meeting.
(a) Promptly following the date of this Agreement, the Company
shall prepare a proxy statement relating to the Shareholders
Meeting (the "Proxy Statement"), and the Company shall prepare
and file with the Commission the Proxy Statement. Parent will
cooperate with the Company in connection with the preparation of
the Proxy Statement including, but not limited to, furnishing to
the Company any and all information regarding Parent and
Purchaser and their affiliates as may be required to <PAGE> be disclosed
therein. The information provided and to be provided by Parent
and the Company, respectively, for use in the Proxy Statement
shall, at the date it is first mailed to the Company's
shareholders and on the date of the Shareholders Meeting referred
to below, be true and correct in all material respects and shall
not omit to state any material fact required to be stated therein
or necessary in order to make the statements in such information,
in light of the circumstances under which they are made, not
misleading, and the Company and Parent each agree to correct any
information provided by it for use in the Proxy Statement which
shall have become false or misleading in any material respect.
(b) The Company will as promptly as practicable notify
Parent of (i) the receipt of any comments from the Commission and
(ii) any request by the Commission for any amendment to the Proxy
Statement or for additional information. All filings by the
Company with the Commission, including the Proxy Statement and
any amendment thereto, and all mailings to the Company's
shareholders in connection with the Merger, including the Proxy
Statement, shall be subject to a reasonable opportunity to review
and comment thereon and receipt of approval by Parent (such
approval not to be unreasonably withheld or delayed). Parent
will furnish to the Company the information relating to it and
its affiliates, including Purchaser, the financing for the
transactions contemplated by this Agreement and the Shareholders
Agreement and any other matters required by the Exchange Act and
the rules and regulations promulgated thereunder to be set forth
in the Proxy Statement.
(c) The Company will: (i) as promptly as practicable
following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of its shareholders (the "Shareholders
Meeting") for the purpose of approving this Agreement and the
transactions contemplated hereby to the extent required by the
MBCL and the Company's Restated Articles of Incorporation; and
(ii) through its Board of Directors, recommend to its
shareholders approval of the foregoing matters; provided; however
that the Board of Directors may fail to make or withdraw such
recommendation, but only if the Board of Directors of the Company
shall have concluded in good faith on the basis of written advice
from outside counsel that such action is required to prevent the
Board of Directors of the Company from breaching its fiduciary
duties to the shareholders of the Company under applicable law.
Any such recommendation, together with a copy of the opinion
referred to in Section 3.22, shall be included in the Proxy
Statement.
6.2. Access To Information; Confidentiality. (a) From and
after the date of this Agreement and until the earlier of the
Effective Time or termination of this Agreement, the Company
shall, and shall cause its subsidiaries, officers, directors,
employees and agents to, afford to Parent, and to the officers,
employees and agents of Parent, reasonable access, during normal
business hours, to the officers, employees, agents, properties,
books, records and contracts of the Company and its subsidiaries,
provided that such access shall not unreasonably disrupt the
Company's business or employees and the Company receives
reasonable advance notice of a request for such access.
(b) Parent and Purchaser each hereby confirms to the
Company that the confidentiality agreement dated as of July 15,
1998 by and between Parent and the Company ("the Confidentiality
Agreement") is in full force and effect. Purchaser hereby agrees
to be bound by <PAGE> and to comply with the Confidentiality Agreement
to the same extent as Parent is bound thereby, and Parent and
Purchaser each agrees that it will cause the affiliates of Parent
and Purchaser to be bound by and to comply with that Agreement to
the same extent that Parent is bound thereby, and Parent and
Purchaser shall cause Parent's, Purchaser's and such affiliates'
officers, employees, agents and representatives, including,
without limitation, attorneys, accountants, consultants,
financial advisers and lenders and their respective counsel to
comply therewith as though they were parties thereto.
6.3. Filings; Commercially Reasonable Best Efforts. (a)
Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its commercially reasonable best
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations or otherwise to consummate and
effect the transactions contemplated by this Agreement and the
Shareholders Agreement, including but not limited to
(i) determining whether any filings are required to be made or
consents, approvals, waivers, licenses, permits or authorizations
are required to be obtained (or, which if not obtained, would
result in an event of default, termination or acceleration of any
agreement) under any applicable law or regulation or from any
governmental entities or third parties, including parties to loan
agreements or other debt instruments, in connection with the
transactions contemplated by this Agreement, including the Merger
and the transactions contemplated hereby, (ii) promptly making
any such filings, furnishing information required in connection
therewith and timely seeking to obtain any such consents,
approvals, permits or authorizations, (iii) obtaining the
necessary approval of this Agreement and the transactions
contemplated hereby by the shareholders of the Company, and
(iv) doing all things necessary, proper or advisable to remove
any injunctions or other impediments or delays, legal or
otherwise, to the consummation of the Merger and the other
transactions contemplated by this Agreement.
(b) In the event Parent elects to engage in a debt
offering between the date hereof and the Effective Time, then
upon the request of Parent, the Company will use its reasonable
best efforts to cause its independent accountants to promptly
deliver to Parent a consent and letter in form reasonably
satisfactory to Parent and customary in scope for comfort letters
with respect to the Company's financial information included in
the debt offering memorandum.
(c) Notwithstanding the foregoing, none of Parent,
Purchaser or the Company shall be obligated to use its
commercially reasonable best efforts or take any action pursuant
to this Section 6.3 if it determines in good faith, based on the
advice of outside legal counsel, that such actions would be in
breach of its Board of Directors' fiduciary duties under
applicable law.
6.4. Public Announcements. Parent, Purchaser and the
Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to
the Merger, and shall not issue any such press release or make
any such public statement prior to such consultation, except as
may be required by law, legal process or any listing agreement
with a national securities exchange.
<PAGE>
6.5. Notification of Certain Matters. The Company, Parent
and Purchaser each agree to give prompt notice (a "Default
Notice") to each other at any time from the date hereof to the
Effective Time of the obtaining by it of knowledge as to the
occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause a breach of any covenant,
representation or warranty contained in this Agreement so as to
result in a Material Adverse Effect or in an Acquiror Material
Adverse Effect; provided that delivery of any such notice
pursuant to this Section 6.5 shall not cure such breach or
noncompliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
6.6. Indemnification And Insurance. (a) The Restated
Articles of Incorporation and By-laws of the Company (and the
articles of incorporation and By-laws of the Surviving
Corporation after the Effective Time) shall contain the
provisions with respect to indemnification set forth in the
Restated Articles of Incorporation and By-Laws of the Company on
the date of this Agreement, which provisions, and the provisions
of those certain Indemnification Agreements in effect as of the
date hereof between the Company and the persons identified on
Schedule 6.6, shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in
any manner that would adversely affect the rights thereunder of
any individual who at any time prior to the Effective Time was
an employee, agent, director or officer of the Company or any of
the Company's subsidiaries, together with each such person's
heirs, representatives, successors and assigns (individually, an
"Indemnified Party" and collectively the "Indemnified Parties")
in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions
contemplated by the Agreement). Parent shall cause the Company
(or the Surviving Corporation if after the Effective Time) to,
and the Company (or the Surviving Corporation if after the
Effective Time) shall, maintain in effect for not less than six
years after the Effective Time the current policies of
directors' and officers' liability insurance maintained by the
Company and the Company's subsidiaries on the date hereof
(provided that the Company may substitute therefor policies
having at least substantially the same coverage and containing
terms and conditions which are no less advantageous in any
material respect to the persons currently covered by such
policies as insureds) with respect to matters existing or
occurring at or prior to the Effective Time ; provided, however,
that if the aggregate annual premiums for such insurance at any
time during such period shall exceed 200% of the per annum rate
of premium currently paid by the Company and its subsidiaries for
such insurance on the date of this Agreement, then Parent shall
cause the Company (or the Surviving Corporation if after the
Effective Time) to, and the Company (or the Surviving Corporation
if after the Effective Time) shall, provide the maximum coverage
that shall then be available at an annual premium equal to 200%
of such rate. The Company represents to Parent that such per
annum rate of premium currently paid by the Company and its
subsidiaries is approximately $95,000. Without limiting the
foregoing, in the event any Indemnified Party becomes involved in
any capacity in any action, proceeding or investigation based in
whole or in part on, or arising in whole or in part out of, any
matter, including the transactions contemplated hereby, existing
or occurring at or prior to the Effective Time , then to the
extent permitted by law, Parent shall cause the Company (or the
Surviving Corporation if after the Effective Time) to, and the
Company (or the Surviving Corporation if after the Effective
Time) shall, periodically advance to such Indemnified Party its
legal and other expenses (including the cost of any investigation
and preparation incurred in connection therewith), subject to the
provision by such Indemnified Party of an undertaking to
<PAGE>
reimburse the amounts so advanced in the event of a final
determination by a court of competent jurisdiction that such
Indemnified Party is not entitled thereto. Parent shall cause
the Company (or the Surviving Corporation if after the Effective
Time) to, and the Company (or the Surviving Corporation if after
the Effective Time) shall, pay all expenses, including attorneys'
fees, that may be incurred by any Indemnified Party in enforcing
the indemnity and other obligations provided for in this Section 6.6.
(b) The provisions of this Section 6.6 are intended for the
benefit of, and shall be enforceable by, the respective
Indemnified Parties and shall be binding on all successors and
assigns of Parent, Purchaser, the Company and the Surviving
Corporation.
6.7. Solicitation. (a) The Company (and its subsidiaries
and affiliates) will not, and the Company (and its subsidiaries
and affiliates) will use their reasonable best efforts to ensure
that their respective directors, officers, employees,
representatives and agents do not, directly or indirectly,
solicit or initiate inquiries or proposals from, or provide any
confidential information to, or participate in any discussions or
negotiations with, any person or entity (other than Parent and
its subsidiaries and their respective directors, officers,
employees, representatives and agents) concerning (i) any merger,
sale of assets not in the ordinary course (except for any sale of
assets otherwise permitted under the terms of this Agreement), or
other similar transaction involving the Company or any subsidiary
or division of the Company, or the sale of any equity interest in
the Company or any subsidiary, or (ii) any sale by the Company or
its subsidiaries of authorized but unissued Shares or of any
shares (whether or not outstanding) of any of the Company's
subsidiaries (all such inquiries and proposals being referred to
herein as "Acquisition Proposals"), provided, however, that
nothing contained in this Section 6.7 shall prohibit the Company
or its Board of Directors from (i) subject to the provisions of
Section 6.4, issuing a press release, filing any report, proxy
statement or other document with the Commission pursuant to the
Exchange Act or otherwise publicly disclosing the terms of this
Agreement, including, without limitation, this Section 6.7;
(ii) proceeding with the transactions contemplated by this
Agreement; or (iii) communicating to the Company's shareholders a
position as contemplated by Rule 14e-2 promulgated under the
Exchange Act; and, provided, further, that the Board of Directors
of the Company may, on behalf of the Company, furnish or cause to
be furnished information and may direct the Company, its
directors, officers, employees, representatives or agents to
furnish information, in each case pursuant to appropriate
confidentiality agreements, and to participate in discussions or
negotiations with any person or entity concerning any Acquisition
Proposal which was not solicited by the Company or any of its
subsidiaries or affiliates or any of their respective directors,
officers, employees, representatives or agents, or which did not
otherwise result from a breach of this Section 6.7, if (x) the
Board of Directors of the Company shall conclude in good faith,
after consultation with its financial advisor, that such person
or entity has made a bona fide Acquisition Proposal for a
transaction more favorable to the Company's shareholders from a
financial point of view than the transactions contemplated
hereby, and (y), in the opinion of the Board of Directors of the
Company, only after receipt of advice from independent legal
counsel to the Company, the failure to provide such information
or access or to engage in such discussions or negotiations would
cause the Board of Directors of the Company to violate its
fiduciary duties to the Company's shareholders under applicable
law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Company
will <PAGE> immediately notify Parent of the terms of any proposal,
discussion, negotiation or inquiry (and will disclose any written
materials received by the Company in connection with such
proposal, discussion negotiation, or inquiry) and the identity of
the party making such proposal or inquiry which it may receive in
respect of any such transaction. The Company shall, and shall
cause each subsidiary to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations
by the Company, any subsidiary of the Company or any officer,
director or employee of, or investment banker, attorney,
accountant or other advisor or representative of, the Company or
any subsidiary with parties conducted heretofore with respect to
any of the foregoing.
(b) Except as set forth herein, neither the Board of
Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or the Purchaser, the approval or
recommendation by the Board of Directors of the Company or any
such committee of this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition
Proposal, or (iii) enter into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, the Board
of Directors of the Company may (subject to the terms of this and
the following sentence) withdraw or modify its approval or
recommendation of this Agreement or the Merger, approve or
recommend a Superior Proposal or enter into an agreement with
respect to a Superior Proposal at any time after the second
business day following Parent's receipt of written notice
advising Parent that the Board of Directors of the Company has
received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person
making such Superior Proposal; provided that the Company shall
not enter into an agreement with respect to a Superior Proposal
unless the Company shall have furnished Parent with written
notice not later than noon (Chicago time) two business days in
advance of any date that it intends to enter into such agreement
and shall have caused its financial and legal advisors to
negotiate with Parent to make such amendments to the terms and
conditions of this Agreement as would make this Agreement as so
amended at least as favorable to the Company's shareholders from
a financial point of view as the Superior Proposal (without
taking into account Parent's option to purchase Shares
beneficially owned by certain shareholders of the Company
pursuant to the Shareholders Agreement); provided further that
the Company shall not be required to make such amendments if the
Board of Directors in good faith determines that the transactions
contemplated by this Agreement as so amended are not reasonably
capable of being consummated. In addition, if the Company enters
into an agreement with respect to any Acquisition Proposal, it
shall concurrently with entering into such agreement pay, or
cause to be paid, to Parent the Termination Amount (as defined in
Section 9.2) subject to the provisions of Section 9.2.
6.8. Supplemental Executive Retirement Plan Funding.
Immediately prior to the Closing, the Company (a) shall fund
fully the obligations under the Company's Supplemental Executive
Retirement Plan (the "SERP"), and (b) shall execute and deliver
the amendment to the SERP, the amendment to the Supplemental
Executive Retirement Plan II and the indemnification agreement in
the form previously delivered to Parent.
6.9. TMI Letter Agreement. The letter agreement dated
June 2, 1998 between TMI Acquisition Corp. and the Company, as
amended and supplemented to date (the "TMI Letter") hereby is
terminated and is of no further force or effect. Each of Parent
and Purchaser jointly and <PAGE> severally agrees to indemnify and hold
harmless the Company and its subsidiaries and their respective
directors, officers, employees, representatives, agents and
attorneys from, against and in respect of any and all damages,
liabilities, losses, obligations and reasonable costs and
expenses (including reasonable attorneys' fees and expenses)
arising out of any claim, action or proceeding by TMI Acquisition
Corp. or any of its current or former shareholders, officers,
directors, employees, representatives, agents, attorneys or any
other person or entity that has any financial or other interests
arising out of or based upon the TMI Letter.
ARTICLE VII.
CONDITIONS PRECEDENT
7.1. Conditions To Each Party's Obligation To Effect The
Merger. The respective obligation of each party to effect the
Merger is subject to the satisfaction or waiver in writing on or
prior to the Closing on the Closing Date of the following
conditions:
(a) Company Shareholder Approval. The Company Shareholder
Approval shall have been obtained.
(b) Antitrust. The waiting periods (and any extensions
thereof) applicable to the Merger under the HSR Act shall have
been terminated or shall have expired and, if applicable, the
waiting periods (and any extensions thereof) applicable to the
transactions contemplated by this Agreement under the HSR Act
shall have been terminated or shall have expired.
(c) Statutes. No statute, rule, order, decree or
regulation shall have been enacted or promulgated by any domestic
government or any governmental agency or authority of competent
jurisdiction which prohibits the consummation of the Merger or
the transactions contemplated hereby or the performance of this
Agreement.
(d) Violation of Law. Consummation of the Merger shall not
result in violation of any applicable United States federal or
state law.
(e) Litigation. No preliminary or permanent injunction,
decree or other order issued by any federal or state court of
competent jurisdiction in the United States preventing the
consummation of the Merger or the transactions contemplated
hereby or the performance of this Agreement shall be in effect;
provided, however, that the parties hereto shall use their
reasonable best efforts to have any such injunction or order
vacated.
7.2. Conditions To Obligations Of Parent. The obligations
of Parent to effect the Merger are further subject to the
following conditions:
(a) Representations And Warranties. The representations
and warranties of the Company set forth in this Agreement shall
be true and correct in each case as of the date of this Agreement
and (except to the extent such representations and warranties
speak as of an earlier date) as of the <PAGE> Closing as though made on
the Closing Date and as of the Closing, except where the failure
of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not reasonably
be expected to have a Material Adverse Effect.
(b) Performance Of Obligations Of The Company. The Company
shall have performed the obligations required to be performed by
it under this Agreement at or prior to the Closing (except for
such failures to perform as have not had a Material Adverse
Effect), and Parent shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer and the
Chief Financial Officer of the Company to such effect, to their
best knowledge.
(c) No Litigation. There shall not be instituted or
pending any suit, action or proceeding (having a substantial
likelihood of success) against Parent, Purchaser, the Company or
any subsidiary of the Company (i) challenging the acquisition by
Parent or Purchaser of any Shares, seeking to restrain or
prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement or the performance of
this Agreement or seeking to obtain from the Company, Parent or
Purchaser any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (ii) seeking to
prohibit or limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries of any material
portion of the business or assets of the Company, Parent or any
of the respective subsidiaries or to compel the Company, Parent
or any of their respective subsidiaries to dispose of or hold
separate any material portion of the business or assets of the
Company or Parent and their respective subsidiaries, in each case
taken as a whole, (iii) seeking to impose material limitations on
the ability of Parent or Purchaser to acquire or hold, or
exercise full rights of ownership of, the shares of capital stock
of the Surviving Corporation, including the right to vote such
capital stock on all matters properly presented to the
stockholders of the Surviving Corporation, (iv) seeking to
prohibit or impose material limitations on the ability of Parent
to effectively control in any material respect the business or
operations of the Company or its subsidiaries or (v) which
otherwise is reasonably likely to have a Material Adverse Effect.
(d) Statutes. There shall not be any statute, rule,
regulation, judgment, order or injunction enacted, entered,
enforced, promulgated, or deemed applicable, pursuant to an
authoritative interpretation by or on behalf of a governmental
entity, to the Merger, or any other action shall be taken by any
governmental entity, other than the application or the Merger of
applicable waiting periods under HSR Act or any other applicable
foreign law, that is substantially likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i)
through (v) of Section 7.2(c) above.
(e) Dissenters Rights. The Company shall not have
received notice of the intent of shareholders of the Company
holding an aggregate of 7.5% or more of the outstanding Shares to
object to the Merger and exercise appraisal rights pursuant to
the MBCL in respect of the Merger.
<PAGE>
(f) Shareholders Agreement. If Parent shall have
exercised the Acquiror Option (as defined in the Shareholders
Agreement), the closing of the purchase of Shares pursuant to the
Acquiror Option shall have been consummated.
7.3. Conditions To Obligation Of The Company. The
obligation of the Company to effect the Merger is further subject
to the following conditions:
(a) Representations And Warranties. The
representations and warranties of Parent and Purchaser set forth
in this Agreement shall be true and correct, in each case as of
the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of
the Closing as though made on the Closing Date and as of the
Closing, except where the failure of such representations and
warranties to be so true and correct (without giving effect to
any limitation as to "materiality" or "material adverse effect"
set forth therein) would not reasonably be expected to adversely
affect the ability of Parent to consummate the Merger and the
transactions contemplated hereby or to perform this Agreement.
(b) Performance Of Obligations Of Parent. Parent
shall have performed the obligations required to be performed by
it under this Agreement at or prior to the Closing Date (except
for such failures to perform as have not had a material adverse
effect on the ability of Parent to consummate the Merger and the
transactions contemplated hereby or to perform this Agreement).
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
8.1. Termination. This Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before
or after approval of matters presented in connection with the
Merger by the shareholders of the Company:
(a) by mutual written consent of Parent and the
Company; or
(b) by either Parent or the Company if any
governmental body or regulatory authority of the United States of
America or any state thereof shall have issued an order, decree
or ruling or taken any other action, in each case permanently
enjoining, restraining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become
final and non-appealable; provided that the right to terminate
this Agreement pursuant to this Section 8.1(b) shall not be
available to any party that has breached any of its material
agreements or obligations under Section 6.3; or
(c) by either Parent or the Company if the Merger
shall not have been consummated on or before March 31, 1999
(other than due to the failure of the party seeking to terminate
this Agreement) to perform its material obligations under this
Agreement required to be performed at or prior to the Effective
Time); or
<PAGE>
(d) by either Parent or the Company if at the duly
held meeting of the shareholders of the Company (including any
adjournment thereof) held for the purpose of voting on the
Merger, this Agreement and the consummation of the transactions
contemplated hereby, the holders at least two-thirds of the
outstanding Shares shall not have approved the Merger, this
Agreement and the consummation of the transactions contemplated
hereby; or
(e) by the Board of Directors of Parent, (i) if the
Company shall have breached any of its representations and
warranties or failed to comply with any of the covenants or
agreements (without, in each instance, giving effect to any
limitation as to "materiality" or "material adverse effect" set
forth therein) contained in this Agreement to be complied with or
performed by the Company at or prior to consummation of the
Merger and such breach or failure shall have resulted in a
Material Adverse Effect and shall not have been cured within 20
business days following receipt by the Company of notice of such
breach or failure, or (ii) the Company shall have received from a
third party a bona fide Acquisition Proposal, and the Board of
Directors of the Company, shall have accepted such a proposal or
(iii) the Board of Directors of the Company shall have failed to
recommend to the Company Shareholders that they give the Company
Shareholder Approval or shall have withdrawn or modified in a
manner adverse to Parent or Purchaser its approval or
recommendation with respect to the Merger, or
(f) by the Board of Directors of the Company, if
(i) Parent or Purchaser shall have breached any of its
representations and warranties or failed to comply with any of
the covenants or agreements (without, in each instance, giving
effect to any limitation as to "materiality" or "material adverse
effect" set forth therein) contained in this Agreement to be
complied with or performed by Parent or Purchaser at or prior to
consummation of the Merger and such breach or failure shall have
resulted in an Acquiror Material Adverse Effect and shall not
have been cured within 20 business days following receipt by the
breaching party of notice of such breach or failure, or (ii) if
the Company enters into a written agreement concerning a
transaction that constitutes a Superior Proposal, provided that
the Company shall have complied with the provisions of
Section 6.7(a) and (b) hereof (including the payment of the
Termination Amount).
8.2. Effect Of Termination. In the event of termination
of this Agreement by either the Company or Parent as provided in
Section 8.1, no party hereto (or any of its directors, officers,
employees, agents, legal and financial advisors or other
representatives) shall have any liability or further obligation
to any other party to this Agreement, except as provided in this
Section 8.1 and Sections 6.2(b), 9.1 and 9.2 of this Agreement,
and except that nothing herein will relieve any party from
liability for its breach of this Agreement.
ARTICLE IX.
GENERAL PROVISIONS
9.1. Nonsurvival Of Representations And Warranties. The
representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall expire
with, and be terminated and extinguished upon, consummation of
the Merger. This <PAGE> Section 9.1 have no effect upon any other
obligation of the parties hereto, whether to be performed before
or after the Effective Time. The Confidentiality Agreement shall
survive the termination of this Agreement and the provisions of
such Confidentiality Agreement shall apply to all information and
material delivered by any party hereunder.
9.2. Payment Of Certain Fees and Expenses. (a) All costs
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the
party incurring such expenses.
(b) Notwithstanding the foregoing, if this
Agreement is terminated pursuant to Section 8.1(d), 8.1(e)(ii) or
(iii) or 8.1(f)(ii) hereof, then the Company shall pay to Parent
(i) concurrently with such termination, an amount equal to U.S.
$2.0 million (the "Termination Fee"), plus (ii) promptly, but in
no event later than two days after being furnished documentation
in respect thereto by Parent ("Documentation"), Parent's or its
affiliates' out-of-pocket fees and expenses (including legal,
investment banking, financing commitment fees, and commercial
banking fees and expenses) actually incurred in connection with
the Merger, due diligence investigation, the negotiation and
execution of this Agreement and the transactions contemplated
hereby in an amount not to exceed $750,000 in the aggregate (the
"Termination Expenses"), and together with the Termination Fee,
the "Termination Amount"). Any payments required to be made
pursuant to this Section shall be made by wire transfer of same
day funds to an account designated by Parent.
9.3. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly given; as of the date of delivery, if delivered personally;
upon receipt of confirmation, if telecopied or upon the next
business day when delivered during normal business hours to an
overnight courier service, such as Federal Express, in each case
to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice;
unless the sending party has knowledge that such notice or other
communication hereunder was not received by the intended
recipient:
(a) If to Parent or Purchaser:
Salton/Maxim Housewares, Inc.
550 Business Center Drive
Mount Prospect, Illinois 60056
Attention: Chairman
Telecopy: (847) 803-8080
<PAGE>
with a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Neal Aizenstein, esq.
Telecopy: (312) 876-7934
If to the Company:
Toastmaster Inc.
1801 North Stadium Boulevard
Columbia, Missouri 65202
Attention: Chairman
Telecopy: (573) 446-5646
with a copy to:
Stinson, Mag & Fizzell P.C.
1201 Walnut Street
Kansas City, Missouri 64106
Attention: John A. Granda
Telecopy: (816) 641-3495
9.4. Certain Definitions; Interpretation. (a) When a
reference is made in this Agreement to subsidiaries of Parent,
Purchaser or the Company, the word "subsidiaries" means any
corporation 50 percent or more of whose outstanding voting
securities, or any partnership, joint venture or other entity 50
percent or more of whose total equity interest, is directly or
indirectly owned by Parent, Purchaser or the Company, as the case
may be. As used in this Agreement, the term "affiliate(s)" shall
have the meaning set forth in Rule 12b-2 under the Exchange Act
and the term "knowledge" means the actual knowledge of any of the
executive officers of the parties and, with respect to Section
3.9 and Section 3.12, the actual knowledge of the most senior
officer or employee in charge of employee benefit and
environmental matters, respectively, in each cause with the
requirement of due inquiry but without any attribution of
knowledge from any other person.
(b) References to "includes" and "including" mean
"includes without limitation" and "including without limitation.
(c) No provision of this Agreement or the
Shareholders Agreement shall be interpreted in favor of, or
against, any of the parties by reason of the extent to which any
such party or its counsel participated in the drafting thereof or
by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.
<PAGE>
9.5. Entire Agreement. This Agreement (including the
Schedules and the exhibits hereto), the Shareholders Agreement
and the Confidentiality Agreement contain the entire agreement
between the parties with respect to the transactions contemplated
hereby, and supersedes all written or oral negotiations,
representations, warranties, commitments, offers, bids, bid
solicitations, and other understandings prior to the date hereof,
including, without limitation, the letter agreement dated June 2,
1998 between TMI Acquisition Corp and the Company.
9.6. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
9.7. Severability. If any term or provision of this
Agreement or the Shareholders Agreement or the application
thereof to either party or set of circumstances shall, in any
jurisdiction and to any extent, be finally held invalid or
unenforceable, such term or provision shall only be ineffective
as to such jurisdiction, and only to the extent of such
invalidity or unenforceability, without invalidating or rendering
unenforceable any other terms or provisions of this Agreement or
the Shareholders Agreement under any other circumstances, and the
parties shall negotiate in good faith a substitute provision
which comes as close as possible to the invalidated or
unenforceable term or provision, and which puts each party in a
position as nearly comparable as possible to the position it
would have been in but for the finding of invalidity or
unenforceability, while remaining valid and enforceable.
9.8. Captions. The captions of the various Articles and
Sections of this Agreement have been inserted only for
convenience of reference and shall not be deemed to modify,
explain, enlarge or restrict any provision of this Agreement or
affect the construction hereof.
9.9. Amendment. Subject to the applicable provisions of
the MBCL, this Agreement may be amended by the parties hereto, at
any time before or after any required approval of matters
presented in connection with the Merger by the shareholders of
the Company; provided, however, that after any such approval,
there shall be made no amendment that by law requires further
approval by such shareholders without the further approval of
such shareholders. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
9.10. Waiver. Subject to the applicable provisions of the
MBCL, at any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, or
(b) subject to the proviso of Section 9.9, waive compliance with
any of the agreements or conditions contained herein. At any
time prior to consummation of the Merger any party hereto may
waive any inaccuracies in the representations and warranties
contained herein or in any documents delivered pursuant hereto.
Any agreement on the part of a party hereto to any such extension
or waiver shall be valid only if set forth in an instrument in
writing signed by such party. Except as otherwise provided in
this Agreement, neither the failure nor any delay by a any party
in exercising any right, power or privilege under this Agreement
or the document referred to in this Agreement or therein will
operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power or <PAGE> privilege
will preclude any other or further exercise of such right, power
or privilege or the exercise of any other right, power or
privilege.
9.11. No Third-Party Beneficiaries; Assignability. Except
for Sections 2.2, 2.3 and 6.6 (which are intended for the benefit
of, and may be enforced by, the persons or entities specified
therein), this Agreement is not intended to confer or impose upon
any person not a party hereto any rights, remedies, obligations
or liabilities hereunder. This Agreement shall not be assigned
by any party hereto, by operation of law or otherwise. Subject
to the preceding two sentences, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns.
9.12. Inclusion of Information in Schedules. The inclusion
of any information in any disclosure schedule (i) shall not be
deemed an admission that any such information is material for
purposes of the representation and warranty to which it relates
or any other representation and warranty or for any other purpose
related to the Agreement or the transactions contemplated hereby,
including, without limitation, for purposes of any covenants,
closing conditions or any other remedies the parties may have,
and (ii) shall not be used or interpreted in any manner to create
a standard of materiality for any such purpose.
9.13. Exclusive Jurisdiction and Consent to Service of
Process. The parties agree that any action arising out of or
relating to this Agreement or the transactions contemplated
hereby shall be brought by the parties only in a Missouri state
court or a federal court sitting in that state, which shall be
the exclusive venue of any such action. Each party waives any
objection which such party may now or hereafter have to the
laying of venue of any such action, and irrevocably consents and
submits to the jurisdiction of any such court (and the
appropriate appellate courts) in any such action. Any and all
service of process and any other notice in any such action shall
be effective against such party when transmitted in accordance
with Section 9.3. Nothing contained herein shall be deemed to
affect the right of any party to serve process in any manner
permitted by law.
9.14. Waiver of Jury Trial. THE COMPANY, PARENT AND
PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT
THAT THEY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
9.15. Governing Law. The validity, interpretation and
effect of this Agreement shall be governed exclusively by the
laws of the State of Missouri, without giving effect to the
principles of conflict of laws thereof.
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written
above by their respective officers thereunder duly authorized.
SALTON/MAXIM HOUSEWARES, INC.
By: ____________________________
Title: Chairman and Chief
Executive Officer
COLUMBIA ACQUISITION CORP.
By: _____________________________
Title: President
TOASTMASTER INC.
By: _____________________________
Title: President
<PAGE>
APPENDIX B
OPINION OF CREDIT SUISSE FIRST BOSTON
August 25, 1998
Board of Directors
Toastmaster Inc.
1801 North Stadium Boulevard
Columbia, Missouri 65202
Members of the Board:
You have asked us to advise you with respect to the fairness to
the stockholders of Toastmaster Inc. (the "Company"), from a
financial point of view, of the consideration to be received by
such stockholders pursuant to the terms of the Agreement and Plan
of Merger, dated as of August 26, 1998 (the "Merger Agreement"),
among the Company, Salton/Maxim Housewares Inc. ("Parent") and
Columbia Acquisition Corp. ("Sub"). The Merger Agreement
provides for the merger (the "Transaction") of Sub with and into
the Company pursuant to which the Company will be the surviving
corporation and become a wholly owned subsidiary of Parent and
each outstanding share of common stock, par value $0.10 per
share, of the Company will be converted into the right to receive
$7.00 in cash.
In arriving at our opinion, we have reviewed certain publicly
available business and financial information relating to the
Company, as well as the Merger Agreement. We have also reviewed
certain other information, including financial forecasts,
provided to us by the Company and have met with the Company's
management to discuss the business and prospects of the Company.
We have also considered certain financial and stock market data
of the Company, and we have compared those data with similar data
for other publicly held companies in businesses similar to the
Company and we have considered the financial terms of certain
other business combinations and other transactions which have
recently been effected. We also considered such other
information, financial studies, analyses and investigations and
financial, economic and market criteria which we deemed relevant.
In connection with our review, we have not assumed any
responsibility for independent verification of any of the
foregoing information and have relied on its being complete and
accurate in all material respects. With respect to the financial
forecasts, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available
estimates and judgments of the Company's management as to the
future financial performance of the Company and that the Company
is not aware of any information or facts that would make the
information provided to us incomplete or misleading. In
addition, we have not been requested to make, and have not made,
an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of the Company nor have we
been furnished with any such evaluations or appraisals. Our
opinion is necessarily based upon information furnished to us and
financial, economic, market and other conditions as they exist
and can be evaluated on the date hereof. In connection with our
engagement, we approached third parties to solicit indications of
interest in a possible acquisition of the Company and held
preliminary discussions with certain of these parties prior to
the date hereof.
<PAGE>
We have acted as financial advisor to the Company in connection
with the Transaction and will receive a fee for our services, a
significant portion of which is contingent upon the consummation
of the Transaction. We will also receive a fee for rendering
this opinion.
In the ordinary course of our business, we and our affiliates may
actively trade the debt and equity securities of both the Company
and the Parent for our and such affiliates' own accounts and for
the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.
It is understood that this letter is for the information of Board
of Directors of the Company in connection with its consideration
of the Transaction, does not constitute an opinion or
recommendation to any stockholder as to how such stockholder
should vote at the stockholder's meeting to be held in connection
with the Transaction, and is not to be quoted or referred to, in
whole or in part, in any registration statement, prospectus or
proxy statement, or in any other document used in connection with
the offering or sale of securities, nor shall this letter be used
for any other purposes, without our prior written consent.
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the consideration to be received by the
stockholders of the Company in the Transaction is fair to such
stockholders, from a financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
/s/ Todd E. Warnock
Todd E. Warnock
Managing Director
<PAGE>
APPENDIX C
SECTION 351.455 OF
THE MISSOURI GENERAL AND BUSINESS CORPORATION LAW
351.455. Shareholder who objects to merger may demand value of
shares, when.--
1. If a shareholder of a corporation which is a party to a
merger or consolidation shall file with such corporation, prior
to or at the meeting of shareholders at which the plan of merger
or consolidation is submitted to a vote, a written objection to
such plan of merger or consolidation, and shall not vote in favor
thereof, and such shareholder, within twenty days after the
merger or consolidation is effected, shall make written demand on
the surviving or new corporation for payment of the fair value of
his shares as of the day prior to the date on which the vote was
taken approving the merger or consolidation, the surviving or new
corporation shall pay to such shareholder, upon surrender of his
certificate or certificates representing said shares, the fair
value thereof. Such demand shall state the number and class of
the shares owned by such dissenting shareholder. Any shareholder
failing to make demand within the twenty day period shall be
conclusively presumed to have consented to the merger or
consolidation and shall be bound by the terms thereof.
2. If within thirty days after the date on which such
merger or consolidation was effected the value of such shares is
agreed upon between the dissenting shareholder and the surviving
or new corporation, payment therefor shall be made within ninety
days after the date on which such merger or consolidation was
effected, upon the surrender of his certificate or certificates
representing said shares. Upon payment of the agreed value the
dissenting shareholder shall cease to have any interest in such
shares or in the corporation.
3. If within such period of thirty days the shareholder and
the surviving or new corporation do not so agree, then the
dissenting shareholder may, within sixty days after the
expiration of the thirty day period, file a petition in any court
of competent jurisdiction within the county in which the
registered office of the surviving or new corporation is
situated, asking for a finding and determination of the fair
value of such shares, and shall be entitled to judgment against
the surviving or new corporation for the amount of such fair
value as of the day prior to the date on which such vote was
taken approving such merger or consolidation, together with
interest thereon to the date of such judgment. The judgment
shall be payable only upon and simultaneously with the surrender
to the surviving or new corporation of the certificate or
certificates representing said shares. Upon the payment of the
judgment, the dissenting shareholder shall cease to have any
interest in such shares, or in the surviving or new corporation.
Such shares may be held and disposed of by the surviving or new
corporation as it may see fit. Unless the dissenting shareholder
shall file such petition within the time herein limited, such
shareholder and all persons claiming under him shall be
conclusively presumed to have approved and ratified the merger or
consolidation, and shall be bound by the terms thereof.
4. The right of a dissenting shareholder to be paid the
fair value of his shares as herein provided shall cease if and
when the corporation shall abandon the merger or consolidation.
<PAGE>
APPENDIX I -- PROXY CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
SPECIAL MEETING OF SHAREHOLDERS OF TOASTMASTER INC.
The undersigned hereby appoints Robert H. Deming, Daniel J.
Stubler and John E. Thompson, and each of them, each with the
power to act alone and with full power of substitution and
revocation, as attorneys and proxies of the undersigned to attend
the Special Meeting of Shareholders of Toastmaster Inc., a Missouri
corporation ("Toastmaster"), to be held at the principal executive
offices of Toastmaster, located at 1801 North Stadium Boulevard,
Columbia, Missouri, on Thursday, December 31, 1998, commencing at 9:00
a.m., local time, and at all adjournments thereof, and to vote
all shares of capital stock of Toastmaster which the undersigned
is entitled to vote with respect to the following matters, all as
set forth in the Notice of Special Meeting of Shareholders and
Proxy Statement, dated December 1, 1998:
THE BOARD OF DIRECTORS OF TOASTMASTER
RECOMMENDS A VOTE "FOR" THIS ITEM.
ITEM 1: Proposal to approve and adopt an Agreement and Plan of
Merger, dated as of August 26, 1998, by and among
Salton/Maxim Housewares, Inc., a Delaware corporation,
its wholly-owned subsidiary, Columbia Acquisition
Corp., a Missouri corporation ("Acquisition Sub"), and
Toastmaster, pursuant to which Acquisition Sub will
merge with and into Toastmaster and each of the
outstanding shares of Toastmaster common stock will be
converted into the right to receive $7.00 in cash, as
more fully described in the aforementioned Notice of
Special Meeting of Shareholders and Proxy Statement.
[__] FOR [__] AGAINST [__] ABSTAIN
In their discretion, the proxies are authorized to vote upon
such other business as properly may come before the Special
Meeting.
<PAGE>
This Proxy, when properly executed, will be voted in the
manner directed herein by the undersigned shareholder(s). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" ITEM 1.
Dated: ____________________, 1998
__________________________________
Signature
___________________________________
Signature (if held jointly)
Please sign exactly as name appears
hereon. When shares are held by
joint tenants, both should sign.
When signing as an attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please
sign in full corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED POSTAGE PREPAID ENVELOPE
