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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
DEFLECTA-SHIELD CORPORATION
(Name of Subject Company)
ZEPHYROS ACQUISITION CORPORATION
LUND INTERNATIONAL HOLDINGS, INC.
(Bidders)
------------------------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
------------------------------
244764106
(CUSIP Number of Class of Securities)
------------------------------
WILLIAM J. MCMAHON
PRESIDENT
LUND INTERNATIONAL HOLDINGS, INC.
911 LUND BOULEVARD
ANOKA, MINNESOTA 55303
(612) 576-4200
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and Communications on Behalf of Bidder)
COPY TO:
LEONARD GUBAR, ESQ.
REID & PRIEST LLP
40 WEST 57TH STREET
NEW YORK, NEW YORK 10019
(212) 603-2000
------------------------
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$76,800,000 $15,360.00
</TABLE>
* For purposes of calculating fee only. This amount assumes the purchase of
4,800,000 outstanding shares of common stock of Deflecta-Shield Corporation
at $16.00 in cash per share. The amount of the filing fee calculated in
accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934,
as amended, equals 1/50 of one percentum of the cash to be offered.
/ / Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount previously paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
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SCHEDULE 14D-1
CUSIP NO. 244764106
1. Name of Reporting Person
Zephyros Acquisition Corporation
S.S. or I.R.S. Identification Nos. of Above Persons
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2. Check the Appropriate Box if a Member of a Group (a) / /
(b) / /
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3. SEC Use Only
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4. Source of Funds
AF
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5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f) / /
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6. Citizenship or Place of Organization
Delaware
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
10 shares of Common Stock
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8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares / /
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9. Percent of Class Represented by Amount in Row (7)
0.00%
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10. Type of Reporting Person
CO
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1
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SCHEDULE 14D-1
CUSIP NO. 244764106
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1. Name of Reporting Person
Lund International Holdings, Inc.
S.S. or I.R.S. Identification Nos. of Above Persons
41-1568618
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2. Check the Appropriate Box if a Member of a Group (a) / /
(b) / /
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3. SEC Use Only
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4. Source of Funds
WC and BK
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5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) / /
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6. Citizenship or Place of Organization
Delaware
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
10 shares of Common Stock
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8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares / /
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9. Percent of Class Represented by Amount in Row (7)
0.00%
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10. Type of Reporting Person
CO
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2
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TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Zephyros Acquisition Corporation, a Delaware corporation (the
"Purchaser") and a wholly-owned subsidiary of Lund International Holdings, Inc.
(the "Parent"), to purchase all of the outstanding shares (the "Shares") of
common stock, par value $.01 per share (the "Common Stock"), of Deflecta-Shield
Corporation, a Delaware corporation (the "Company"), at $16.00 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated November 28, 1997 (the "Offer to Purchase"), a copy
of which is attached hereto as Exhibit (a)(1), and in the related Letter of
Transmittal, a copy of which is attached hereto as Exhibit (a)(2) (which
together constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
<TABLE>
<S> <C>
(a) The name of the subject company is Deflecta-Shield Corporation and the address of its
principal executive offices is 1800 North Ninth Street, Indianola, Iowa 50125.
(b) The class of securities to which this Statement relates is the Common Stock. As of
November 25, 1997 there were 4,800,000 issued and outstanding shares of Common Stock.
The Purchaser is seeking to purchase all of the outstanding Shares at a purchase
price of $16.00 per Share, net to the seller in cash.
(c) The information set forth in "Section 6--Price Range of the Shares; Dividends" of the
Offer to Purchase is incorporated herein by reference.
</TABLE>
ITEM 2. IDENTITY AND BACKGROUND.
<TABLE>
<S> <C>
(a)-(d), (g) This Statement is being filed by the Purchaser and the Parent. The information set
forth in the "INTRODUCTION" and "Section 9--Certain Information Concerning the
Purchaser and the Parent" of the Offer to Purchase is incorporated herein by
reference. The name, business address, present principal occupation or employment,
the material occupations, positions, offices or employments for the past five
years and citizenship of each director and executive officer of the Parent and the
Purchaser and the name, principal business and address of any corporation or other
organization in which such occupations, positions, offices and employments are or
were carried on are set forth in Schedule I of the Offer to Purchase and
incorporated herein by reference.
</TABLE>
<TABLE>
<S> <C>
(e)-(f) During the last five years neither the Purchaser nor the Parent nor, to the best
knowledge of the Purchaser and the Parent, any of the persons listed in Schedule I
of the Offer to Purchase have been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction as a result of
which any such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violation of such laws.
</TABLE>
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
<TABLE>
<S> <C>
(a)(1) Other than the transactions described in Item 3(b) below, neither the Purchaser nor
the Parent, nor, to the best knowledge of the Purchaser and the Parent, any of the
persons listed in Schedule I of the Offer to Purchase, has entered into any
transaction with the Company, or any of the Company's affiliates which are
corporations, since the commencement of the Company's third full fiscal year
preceding the date of this Statement, the aggregate amount of which was equal to or
greater than one percent of the consolidated revenues of the Company for (i) the
fiscal year in which such transaction occurred or (ii) the portion of the current
fiscal year which has occurred if the transaction occurred in such year.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
(a)(2) Other than the transactions described in Item 3(b) below, neither the Purchaser nor
the Parent, nor, to the best knowledge of the Purchaser and the Parent, any of the
persons listed in Schedule I of the Offer to Purchase, has entered into any
transaction since the commencement of the Company's third full fiscal year preceding
the date of this Statement, with the executive officers, directors or affiliates of
the Company which are not corporations, in which the aggregate amount involved in
such transaction or in a series of similar transactions, including all periodic
installments in the case of any lease or other agreement providing for periodic
payments or installments, exceeded $40,000.
(b) The information set forth in the "INTRODUCTION", "Section 9--Certain Information
Concerning Parent and the Purchaser," "Section 11--Background of the Offer; Contacts
with the Company; Purpose of the Offer and the Merger; The Merger Agreement; The
Stockholder Agreements; Certain Other Agreements" and "Section 12--Plans for the
Company After the Offer and the Merger; Other Matters" of the Offer to Purchase is
incorporated herein by reference.
</TABLE>
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
<TABLE>
<S> <C>
(a)-(b) The information set forth in "Section 10--Financing of the Offer and the Merger" is
incorporated herein by reference.
(c) Not applicable.
</TABLE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
<TABLE>
<S> <C>
(a)-(e) The information set forth in the "INTRODUCTION", "Section 11--Background of the
Offer; Contacts with the Company; Purpose of the Offer and the Merger; The Merger
Agreement; The Stockholder Agreements; Certain Other Agreements" and "Section
12--Plans for the Company After the Offer and the Merger; Other Matters" of the Offer
to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in "Section 7--Effect of the Offer on the Market for the
Shares; Exchange Listing; Exchange Act Registration; Margin Regulations" of the Offer
to Purchase is incorporated herein by reference.
</TABLE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
<TABLE>
<S> <C>
(a)-(b) The information set forth in "Section 9--Certain Information Concerning the Purchaser
and Parent" of the Offer to Purchase is incorporated herein by reference.
</TABLE>
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "INTRODUCTION", "Section 10--Financing of
the Offer and the Merger," "Section 11--Background of the Offer; Contacts with
the Company; Purpose of the Offer and the Merger; The Merger Agreement; The
Stockholder Agreements; Certain Other Agreements" and "Section 12-- Plans for
the Company After the Offer and the Merger; Other Matters" of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Section 16--Fees and Expenses" of the Offer to
Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in "Section 9--Certain Information Concerning the
Purchaser and the Parent" of the Offer to Purchase is incorporated herein by
reference.
4
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ITEM 10. ADDITIONAL INFORMATION.
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<S> <C>
(a) Except as disclosed in Items 3 and 7 above, there are no present or proposed material
contracts, arrangements, understandings or relationships between the Purchaser or the
Parent, or to the best knowledge of the Purchaser and the Parent, any of the persons
listed in Schedule I of the Offer to Purchase, and the Company, or any of the
Company's executive officers, directors, controlling persons or subsidiaries.
(b)-(c) The information set forth in the "INTRODUCTION", "Section 11--Background of the
Offer; Contacts with the Company; Purpose of the Offer and the Merger; The Merger
Agreement; The Stockholder Agreements; Certain Other Agreements," "Section 12--Plans
for the Company After the Offer and the Merger; Other Matters," "Section
14--Conditions of the Offer" and "Section 15--Certain Legal Matters" of the Offer to
Purchase is incorporated herein by reference.
(d) The information set forth in "Section 7--Effect of the Offer on the Market for
Shares; Exchange Listing; Exchange Act Registration; Margin Regulations" and "Section
15--Certain Legal Matters" of the Offer to Purchase is incorporated herein by
reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of Transmittal, to
the extent not otherwise incorporated herein by reference, is hereby incorporated
herein by this reference.
</TABLE>
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated November 28, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Letter for use by Brokers, Dealers, Banks, Trust Companies and Nominees to their
Clients.
(a)(4) Letter to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
(a)(7) Press Release jointly issued by Parent and the Company dated November 26, 1997.
(a)(8) Form of Summary Advertisement dated November 28, 1997.
(a)(9) Fairness Opinion of Wasserstein Perella & Co., Inc., dated November 25, 1997.
(b)(1) Commitment Letter, dated November 24, 1997, from Heller Financial, Inc. to the
Parent.
(c)(1) Agreement and Plan of Merger, dated as of November 25, 1997, by and among the Parent,
the Purchaser and the Company.
(c)(2) Stockholder Agreement, dated November 25, 1997, by and between the Parent and Mark C.
Mamolen.
(c)(3) Stockholder Agreement, dated November 25, 1997, by and between the Parent and Charles
S. Meyer.
(c)(4) Confidentiality Agreement, dated October 31, 1997, by and between the Parent and the
Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
5
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: November 28, 1997
Zephyros Acquisition Corporation
By: /s/ WILLIAM J. MCMAHON
---------------------------------------------------------------------------
Name: William J. McMahon
Title: President
6
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: November 28, 1997
Lund International Holdings, Inc.
By: /s/ WILLIAM J. MCMAHON
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Name: William J. McMahon
Title: President
7
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEFLECTA-SHIELD CORPORATION
BY
ZEPHYROS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY
OF
LUND INTERNATIONAL HOLDINGS, INC.
AT
$16.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER DATED AS
OF NOVEMBER 25, 1997 AMONG ZEPHYROS ACQUISITION CORPORATION, LUND INTERNATIONAL
HOLDINGS, INC. AND DEFLECTA-SHIELD CORPORATION. THE BOARD OF DIRECTORS OF
DEFLECTA-SHIELD CORPORATION HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE HOLDERS OF THE COMMON STOCK AND UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER, AND THE OBLIGATION TO ACCEPT SHARES FOR PAYMENT, ARE CONDITIONED
UPON ONLY (I) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE
EXPIRATION OF THE OFFER, THAT NUMBER OF SHARES WHICH REPRESENTS AT LEAST A
MAJORITY OF THE SHARES OF COMMON STOCK OF THE COMPANY OUTSTANDING ON A FULLY
DILUTED BASIS (THE "MINIMUM CONDITION"), AND (II) THE SATISFACTION OF CERTAIN
OTHER CONDITIONS. SEE SECTION 14.
IMPORTANT
Any stockholder who desires to tender all or any portion of such
stockholder's Shares (as defined herein) should either (i) complete and sign the
Letter of Transmittal (or facsimile thereof) in accordance with the instructions
in the Letter of Transmittal, mail or deliver it and any other required
documents to the Depositary and either deliver the certificates for such Shares
to the Depositary or tender such Shares pursuant to the procedures for
book-entry transfer set forth in Section 3, or (ii) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Any stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, must tender such
Shares by following the procedures for guaranteed delivery set forth in Section
3.
Questions and requests for assistance may be directed to the Information
Agent at the location and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to
the Information Agent, or the Depositary, or to brokers, dealers, commercial
banks or trust companies. A stockholder also may contact brokers, dealers,
commercial banks or trust companies for assistance concerning the Offer.
------------------------
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
------------------------
November 28, 1997
<PAGE>
TABLE OF CONTENTS
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PAGE
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<S> <C> <C>
INTRODUCTION
THE OFFER
1. Terms of the Offer; Expiration Date.................................................................... 3
2. Acceptance for Payment and Payment for Shares.......................................................... 5
3. Procedure for Accepting the Offer and Tendering Shares................................................. 6
4. Withdrawal Rights...................................................................................... 8
5. Certain Federal Income Tax Consequences................................................................ 9
6. Price Range of the Shares; Dividends................................................................... 10
7. Effect of the Offer on the Market for the Shares; Exchange Listing; Exchange Act Registration; Margin
Regulations.......................................................................................... 10
8. Certain Information Concerning the Company............................................................. 11
9. Certain Information Concerning the Purchaser and the Parent............................................ 13
10. Financing of the Offer and the Merger.................................................................. 16
11. Background of the Offer; Contacts with the Company; Purpose of the Offer and the Merger; The Merger
Agreement; The Stockholder Agreements; Certain Other Agreements...................................... 17
12. Plans for the Company After the Offer and the Merger; Other Matters.................................... 32
13. Dividends and Distributions............................................................................ 36
14. Conditions of the Offer................................................................................ 36
15. Certain Legal Matters.................................................................................. 37
16. Fees and Expenses...................................................................................... 38
17. Miscellaneous.......................................................................................... 39
</TABLE>
SCHEDULE I--Directors and Executive Officers of the Parent and the Purchaser.
i
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF
DEFLECTA-SHIELD CORPORATION:
INTRODUCTION
Zephyros Acquisition Corporation, a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of Lund International Holdings, Inc., a Delaware
corporation (the "Parent"), hereby offers to purchase any and all issued and
outstanding shares of common stock (the "Common Stock"), par value $.01 per
share (the "Shares"), of Deflecta-Shield Corporation, a Delaware corporation
(the "Company"), at a price of $16.00 per Share (the "Offer Price"), net to the
seller in cash, upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements hereto or thereto, collectively constitute the
"Offer"). Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the sale of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses incurred by Morrow & Co., Inc., which
is acting as the Information Agent (the "Information Agent") in connection with
the Offer, and IBJ Schroder Bank & Trust Company, which is acting as the
Depositary (the "Depositary") in connection with the Offer.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER OF
SHARES OF COMMON STOCK WHICH REPRESENTS AT LEAST A MAJORITY OF THE SHARES OF
COMMON STOCK OF THE COMPANY OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION"). SEE SECTION 14. As used in this Offer to Purchase, "fully diluted
basis" takes into account all issued and outstanding shares of Common Stock and
the conversion or exercise of all outstanding options and other rights and
securities exercisable or convertible into shares of Common Stock. The Company
has informed the Purchaser that, as of November 25, 1997, there were 4,800,000
shares of Common Stock issued and outstanding and 473,000 shares of Common Stock
were reserved for issuance upon the conversion or exercise of all outstanding
options and other rights and securities exercisable or convertible into shares
of Common Stock. The Merger Agreement (as defined below)) provides, among other
things, that the Company will not, without the prior written consent of the
Parent, issue any additional Shares (except on the exercise of outstanding
options and other rights and securities). Based on the foregoing and giving
effect to the exercise of all outstanding options and other rights, the
Purchaser believes that the Minimum Condition will be satisfied if 2,636,501
shares of Common Stock are validly tendered and not withdrawn prior to the
expiration of the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 25, 1997 (the "Merger Agreement"), by and among the Parent, the
Purchaser and the Company. The Merger Agreement provides that, among other
things, as soon as practicable after the completion of the Offer and
satisfaction or waiver, if permissible, of all conditions to the Merger (as
defined below), the Purchaser will be merged with and into the Company and the
separate corporate existence of the Purchaser will thereupon cease. The merger,
as effected pursuant to the immediately preceding sentence, is referred to
herein as the "Merger," and the Company, as the surviving corporation to the
Merger, is sometimes herein referred to as the "Surviving Corporation." At the
effective time of the Merger (the "Effective Time"), each share of Common Stock
then outstanding (other than Shares held in the treasury of the Company or owned
by the Parent, the Purchaser or any direct or indirect wholly-owned subsidiary
of the Parent or of the Company, and other than Shares held by stockholders who
properly perfect their appraisal rights under the DGCL (as defined below)) will
be cancelled and extinguished and converted into the right to receive the Offer
Price or any higher price per Share paid in the Offer (the "Merger
Consideration"), in cash payable to the holder thereof without interest.
Following the consummation of the Merger, the Company will become a wholly-owned
subsidiary of the Parent. The Merger Agreement is more fully described in
Section 11.
As a condition and inducement to the Parent's and the Purchaser's entering
into the Merger Agreement and incurring the liabilities therein, Mark C. Mamolen
and Charles S. Meyer (collectively, the
1
<PAGE>
"Stockholders"), the holders, as of the date hereof, of an aggregate of
approximately 36.2% of the outstanding shares of Common Stock of the Company on
a fully diluted basis, concurrently with the execution and delivery of the
Merger Agreement, entered into Stockholder Agreements (the "Stockholder
Agreements") with the Parent. Pursuant to the Stockholder Agreements, the
Stockholders have agreed, among other things, to tender their Shares in the
Offer. The Stockholder Agreements are more fully described in Section 11.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE HOLDERS OF THE COMMON STOCK, AND UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
Wasserstein Perella & Co., Inc. ("Wasserstein Perella"), the Company's
financial advisor, has delivered to the Company's Board of Directors its written
opinion dated November 25, 1997 (the "Fairness Opinion") to the effect that, as
of such date and based upon and subject to certain matters stated therein, the
$16.00 per Share cash consideration to be received by the holders of Common
Stock pursuant to the Offer and under the terms of the Merger Agreement is fair
to such holders, from a financial point of view. The Fairness Opinion, which
sets forth the assumptions made, matters considered and limitations on the
review undertaken by Wasserstein Perella, is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
that is being mailed by the Company to its stockholders.
The Merger Agreement provides that the initial scheduled Expiration Date (as
defined below) of the Offer shall be 20 business days after the date the Offer
is commenced (i.e., December 26, 1997), but that if all conditions to the Offer
shall not have been satisfied or waived by such date, the Purchaser may extend
the Expiration Date for a period of 30 business days, provided, that if at any
scheduled Expiration Date, all conditions to the Offer have been satisfied other
than the condition that (i) the Company shall not have breached in any material
respect any material covenant or other agreement contained in the Merger
Agreement, (ii) any representation or warranty of the Company made in the Merger
Agreement which is qualified by a Material Adverse Effect (as defined in the
Merger Agreement) standard shall not be true and correct at any time prior to
expiration of the Offer as if made at such time or (iii) any other
representation or warranty of the Company made in the Merger Agreement shall not
be true and correct at any time prior to the expiration of the Offer as if made
at such time, which failure to be true and correct would have a Material Adverse
Effect, in each case which breach or which failure to be true and correct cannot
be or has not been cured within ten business days of the receipt of written
notice thereof, then, at the request of the Company, the Purchaser shall, and
the Parent shall cause the Purchaser to, extend the Offer from time to time,
subject to the right of the Purchaser and the Parent to terminate the Merger
Agreement pursuant to the terms thereof.
In addition, the Merger Agreement provides that the Purchaser shall, subject
only to the prior satisfaction or waiver of the conditions of the Offer, accept
for payment and purchase, as soon as permitted under applicable law, all Shares
validly tendered and not withdrawn prior to the expiration of the Offer;
PROVIDED, HOWEVER, that if, immediately prior to the initial expiration date of
the Offer, the Shares tendered and not withdrawn pursuant to the Offer equal
less than 90% of the then outstanding shares of Common Stock, but not less than
70% of such shares of Common Stock, the Purchaser may extend the Offer on one or
more occasions for an aggregate period not to exceed ten business days,
notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer, PROVIDED, FURTHER, that if the Purchaser extends
the Offer pursuant to the foregoing proviso, all conditions to the Offer (other
than the Minimum Condition) shall be irrevocably waived and deemed satisfied in
full. Notwithstanding anything in the foregoing to the contrary, the Purchaser
may not extend the Offer if the failure of any condition was a result directly
or proximately from a state of facts or action or inaction which constitutes a
breach of a
2
<PAGE>
representation, warranty or covenant of the Parent or the Purchaser. Pursuant to
the Merger Agreement, in addition to any other meaning attributed to it at law,
the word "proximately" includes any event which is a substantial factor in
causing the occurrence of another event. The Offer will not remain open
following the time Shares are accepted for payment.
The Merger Agreement further provides that, promptly upon the purchase by
the Purchaser of Shares pursuant to the Offer and from time to time thereafter,
the Parent shall be entitled to designate such number of directors, rounded up
to the next whole number, on the Board of Directors of the Company, as is equal
to the product of the total number of directors on such Board (giving effect to
the directors designated by the Parent pursuant to this sentence) multiplied by
the percentage that the number of Shares beneficially owned by the Purchaser or
any affiliate of the Purchaser bears to the total number of Shares then
outstanding. In furtherance thereof, the Company agreed to promptly increase the
size of the Board of Directors or use its best efforts to secure the
resignations of such number of incumbent directors as is necessary to enable the
Parent's designees to be elected to the Board in accordance with the terms of
the Merger Agreement, and the Board of Directors of the Company shall take all
actions available to the Company to cause the Parent's designees to be so
elected.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the stockholders of the Company. See Sections 11 and
14. Under the Company's Bylaws and the General Corporation Law of the State of
Delaware (the "DGCL"), the affirmative vote of the holders of a majority of the
outstanding Shares is required to approve and adopt the Merger Agreement and the
Merger. Consequently, if the Purchaser acquires (pursuant to the Offer or
otherwise) at least a majority of the outstanding Shares, the Purchaser will
have sufficient voting power to approve and adopt the Merger Agreement and the
Merger without the vote of any other stockholder of the Company.
Further, under the DGCL, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding shares of Common Stock of the
Company, the Purchaser will be able to approve and adopt the Merger Agreement
and the transactions contemplated thereby, including the Merger, without a vote
of the Company's stockholders. In such event, the Parent, the Purchaser and the
Company have agreed to take, at the request of the Purchaser, all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders. If, however, the Purchaser does not acquire at least 90% of the
then outstanding shares of Common Stock of the Company pursuant to the Offer or
otherwise and a vote of the Company's stockholders is required under the DGCL, a
longer period of time will be required to effect the Merger. See Sections 11 and
14.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
THE OFFER
1. Terms of the Offer; Expiration Date. Subject only to the conditions of
the Offer, the Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date (as defined below) and not theretofore
withdrawn in accordance with Section 4 of this Offer to Purchase. The term
"Expiration Date" shall mean 12:00 Midnight, New York City time, on Friday,
December 26, 1997, unless and until the Purchaser, the Parent or the Company, in
accordance with the terms of the Merger Agreement, shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition and certain other conditions. See Section 14.
3
<PAGE>
The Merger Agreement provides that the Purchaser may transfer or assign, in
whole or from time to time in part, to one or more of its affiliates, the right
to purchase Shares pursuant to the Offer, but any such transfer or assignment
will not relieve the Parent or the Purchaser of its respective obligations under
the Offer or prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
Without the prior written consent of the Company, which may be given or withheld
in the sole and absolute discretion of the Company, neither the Parent nor the
Purchaser shall (i) amend or waive the Minimum Condition; (ii) decrease the
Offer Price; (iii) decrease the number of Shares sought; (iv) amend the Offer in
any way other than to increase the Offer Price, including by means of adding any
conditions to the Offer; (v) change the form of consideration payable in the
Offer; or (vi) extend the expiration of the Offer (except as specifically
provided below); PROVIDED, HOWEVER, that if on the initial scheduled Expiration
Date, which is 20 business days after the date the Offer is commenced (i.e.,
December 26, 1997), all conditions to the Offer shall not have been satisfied or
waived, the Purchaser may extend the Expiration Date for a period of 30 business
days; PROVIDED, FURTHER, that if at any scheduled Expiration Date all conditions
to the Offer have been satisfied other than the condition that (i) the Company
shall not have breached in any material respect any material covenant or other
agreement contained in the Merger Agreement, (ii) any representation or warranty
of the Company made in the Merger Agreement which is qualified by a Material
Adverse Effect standard shall not be true and correct at any time prior to
expiration of the Offer as if made at such time, or (iii) any other
representation or warranty of the Company made in the Merger Agreement shall not
be true and correct at any time prior to the Expiration Date as if made at such
time, which failure to be true and correct would have a Material Adverse Effect,
in each case which breach or which failure to be true and correct cannot be or
has not been cured within ten business days of the receipt of written notice
thereof, then, at the request of the Company, the Purchaser shall, and the
Parent shall cause the Purchaser to, extend the Offer from time to time, subject
to the right of the Purchaser and the Parent to terminate the Merger Agreement
pursuant to the terms thereof. In addition, under the terms of the Merger
Agreement, if, immediately prior to the initial Expiration Date, the Shares
tendered and not withdrawn pursuant to the Offer equal less than 90% of the then
outstanding shares of Common Stock, but not less than 70% of such shares of
Common Stock, the Purchaser may extend the Offer on one or more occasions for an
aggregate period not to exceed ten business days, notwithstanding that all
conditions to the Offer are satisfied as of such Expiration Date, provided,
further, that if the Purchaser extends the Offer pursuant to the foregoing
proviso, all conditions to the Offer (other than the Minimum Condition) shall be
irrevocably waived and deemed satisfied in full. Notwithstanding anything in the
foregoing to the contrary, the Purchaser may not extend the Offer without the
prior written consent of the Company which may be given or withheld in its sole
and absolute discretion if the failure of any condition resulted directly or
proximately from a state of facts or action or inaction which constitutes a
breach of a representation, warranty or covenant of the Parent or the Purchaser.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 4. However, the ability of
the Purchaser to delay the payment for Shares which the Purchaser has accepted
for payment is limited by Rule 14e-l(c) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which requires that a
bidder pay the consideration offered or return the securities deposited by or on
behalf of holders of securities promptly after the termination or withdrawal of
the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 promulgated
under the Exchange Act. The minimum period during which the Offer must remain
open following
4
<PAGE>
material changes in the terms of the Offer or information concerning the Offer,
other than a change in price or a change in percentage of securities sought,
will depend upon the facts and circumstances then existing, including the
relative materiality of the changed terms or information. In a public release,
the Securities and Exchange Commission (the "Commission") has stated that in its
view an offer must remain open for a minimum period of time following a material
change in the terms of the Offer and that waiver of a material condition, such
as the Minimum Condition, is a material change in the terms of the Offer. The
release states that an offer should remain open for a minimum of five business
days from the date a material change is first published, sent or given to
securityholders and that, if material changes are made with respect to
information not materially less significant than the offer price and the number
of shares being sought, a minimum of ten business days may be required to allow
adequate dissemination and investor response. The requirement to extend the
Offer will not apply to the extent that the number of business days remaining
between the occurrence of the change and the then-scheduled Expiration Date
equals or exceeds the minimum extension period that would be required because of
such amendment. As used in this Offer to Purchase, "business day" has the
meaning set forth in Rule 14d-1 promulgated under the Exchange Act.
Any extension, delay, termination, waiver or amendment relating to the Offer
will be followed as promptly as practicable by a public announcement thereof,
such announcement in the case of an extension to be made no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(c)
and 14d-6(d) promulgated under the Exchange Act, which requires that material
changes be promptly disseminated to stockholders in a manner reasonably designed
to inform them of such changes), and without limiting the manner in which the
Purchaser may choose to make any public announcement, the Purchaser shall have
no obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed by the Purchaser to record holders of Shares and will be
furnished by the Purchaser to brokers, dealers, banks and similar persons whose
names, or the names of whose nominees, appear on the stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
The Parent shall cause the Purchaser to perform and comply timely with all
of the Purchaser's obligations in or with respect to the Offer.
2. Acceptance for Payment and Payment for Shares. Subject only to the
conditions of the Offer, the Purchaser will accept for payment and will pay for,
promptly after the Expiration Date, all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 4.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing such Shares (the "Share Certificates") or a timely Book-Entry
Confirmation (as defined below) of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 3, (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message (as defined below), and (iii) any other documents required by
the Letter of Transmittal. The term "Agent's Message" means a message
transmitted by the Book-Entry Transfer Facility to, and received by, the
Depositary and forming a part of a Book-Entry Confirmation (as defined below),
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the participant in the Book-Entry Transfer Facility
tendering the Shares that such participant has received and agrees to be bound
by the terms of the Letter of Transmittal and that the Purchaser may enforce
such agreement against the participant.
5
<PAGE>
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not properly withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Shares pursuant to the Offer. Payment for Shares accepted for payment pursuant
to the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Purchaser and transmitting payment to tendering
stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
TO BE PAID BY THE PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment and purchased pursuant
to the Offer for any reason, or if certificates representing shares of Common
Stock (the "Share Certificates") are submitted evidencing more Shares than are
tendered, Share Certificates evidencing unpurchased Shares will be returned,
without expense to the tendering stockholder (or, in the case of Shares
delivered by book-entry transfer of such Shares into the Depositary's account at
the Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3, such Shares will be credited to an account maintained at the Book-Entry
Transfer Facility), as promptly as practicable after the expiration or
termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to the Parent or to any affiliate of the Parent, the right
to purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. Procedure for Accepting the Offer and Tendering Shares.
VALID TENDER. For Shares to be validly tendered pursuant to the Offer,
either a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase and
either (i) the Share Certificates evidencing tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be tendered pursuant
to the procedures for book-entry transfer set forth below (and a Book-Entry
Confirmation must be received by the Depositary), in each case, prior to the
Expiration Date or (ii) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at the
Book-Entry Transfer Facility for purposes of the Offer within two business days
after the date of this Offer to Purchase. Any financial institution that is a
participant in the system of the Book-Entry Transfer Facility may make a
book-entry delivery of Shares by causing the Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account at the Book-Entry Transfer
Facility in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other required documents must,
in any case, be received by the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility is referred to herein
as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
6
<PAGE>
THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agent's Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all other
cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. If Share Certificates are registered in the name of a
person other than the person who or which signs the Letter of Transmittal, or if
payment is to be made, or a Share Certificate not tendered or not accepted for
payment is to be returned, to a person other than the registered holder of the
Share Certificates surrendered, then the tendered Share Certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on such Share
Certificates, with the signature(s) on such Share Certificates or stock powers
guaranteed by an Eligible Institution. See Instructions 1 and 5 to the Letter of
Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or such stockholder cannot deliver the Share Certificates and all
other required documents to the Depositary prior to the Expiration Date, or such
stockholder cannot complete the procedure for delivery by book-entry transfer on
a timely basis, such Shares may nevertheless be tendered, provided that all of
the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and any other documents required by the
Letter of Transmittal are received by the Depositary within three Trading
Days (as defined below) after the date of execution of such Notice of
Guaranteed Delivery. A Trading Day is any day on which the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares tendered and
accepted for payment pursuant to the Offer will, in all cases, be made only
after timely receipt by the Depositary of (i) Share Certificates evidencing such
Shares (or a timely Book-Entry Confirmation with respect to such Shares), (ii) a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message and (iii) any other documents required
by the Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE
7
<PAGE>
PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE SHARES, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
APPOINTMENT; OTHER REQUIREMENTS. By executing the Letter of Transmittal as
set forth above, a tendering stockholder will irrevocably appoint designees of
the Purchaser, and each of them, as such stockholder's attorneys-in-fact and
proxies in the manner set forth in the Letter of Transmittal, each with full
power of substitution, to the full extent of such stockholder's rights with
respect to the Shares tendered by such stockholder and accepted for payment by
the Purchaser (and with respect to any and all other Shares or other securities
or rights issued or issuable in respect of such Shares). The designees of the
Purchaser will thereby be empowered to exercise all voting and other rights with
respect to such Shares (and other securities or rights), including, without
limitation, in respect of any annual, special or adjourned meeting of the
Company's stockholders, actions by written consent in lieu of any such meeting
or otherwise, as they in their sole discretion deem proper. All such proxies
will be considered coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts for payment Shares tendered by such stockholder as provided herein. Upon
such appointment, all prior powers of attorney, proxies and consents given by
such stockholder with respect to such Shares (and such other securities and
rights) will, without further action, be revoked and no subsequent powers of
attorney, proxies, consents or revocations may be given by such stockholder
(and, if given, will not be deemed effective). The Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting, consent and other rights with respect to such
Shares (and other related securities or rights), including voting rights with
respect thereto at any meeting of stockholders.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser, in its reasonable discretion. The
Purchaser also reserves the absolute right, in its sole discretion, subject to
the provisions of the Merger Agreement, to waive any of the conditions of the
Offer or any defect or irregularity in the tender of any Shares of any
particular stockholder, whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed to
have been validly made until all defects or irregularities relating thereto have
been cured or waived. None of the Purchaser, the Parent, the Depositary, the
Information Agent, the Company or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
BACKUP WITHHOLDING. Under the federal income tax laws, the Depositary will
be required to withhold 31% of the amount of all payments made to tendering
stockholders pursuant to the Offer. To prevent backup federal income tax
withholding with respect to payments to tendering stockholders of the purchase
price for Shares purchased pursuant to the Offer, each such tendering
stockholder must provide the Depositary with such stockholder's correct taxpayer
identification number and certify that such stockholder is not subject to backup
federal income tax withholding by completing and signing the Substitute Form W-9
provided in the Letter of Transmittal. See Instruction 9 of the Letter of
Transmittal.
4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after January 26, 1998.
If the Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares or is unable to accept Shares for payment pursuant to the Offer for any
reason, then, without prejudice the Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and
8
<PAGE>
such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in this Section 4.
Any such delay will be by an extension of the Offer to the extent required by
law and permitted by the Merger Agreement.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and, unless such
Shares have been tendered by an Eligible Institution, the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution. If Shares
have been tendered pursuant to the procedures for book-entry transfer set forth
in Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with the Book-Entry Transfer Facility's
procedures.
Withdrawals of tenders of Shares may not be rescinded and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be re-tendered by again following
one of the procedures described in Section 3 any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Purchaser, in its reasonable
discretion. None of the Purchaser, the Parent, the Company, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. Certain Federal Income Tax Consequences. The receipt of cash for Shares
pursuant to the Offer or in the Merger will be a taxable transaction for U.S.
federal income tax purposes and also may be a taxable transaction under
applicable state, local or foreign tax laws. In general, a stockholder who
tenders Shares in the Offer or receives cash in exchange for Shares in the
Merger will recognize gain or loss for federal income tax purposes equal to the
difference, if any, between the amount of cash received in exchange for the
Shares sold and such stockholder's adjusted tax basis in the Shares sold. Such
gain or loss, generally, will be capital gain or loss if the Shares disposed of
were held as capital assets by the stockholder, and will be long-term capital
gain or loss if the Shares disposed of were held by such stockholder for more
than 18 months prior to the date of sale. The effective federal tax rate for
individuals with respect to capital gains for individuals is 20% for assets held
more than 18 months and 28% for assets held for not more than 18 months but more
than 12 months.
A holder of Shares who perfects such stockholder's appraisal rights under
the DGCL probably will recognize gain or loss at the Effective Time in an amount
equal to the difference between the "amount realized" and such stockholder's
adjusted tax basis in his, her or its Shares. For this purpose, although there
is no authority to this effect directly on point, the amount realized generally
should equal the trading value per share of the Shares at the Effective Time.
Ordinary income and/or capital gain (or capital loss, assuming that the Shares
were held as capital assets) should be recognized by such stockholder at the
time of actual receipt of payment, to the extent that such payment exceeds (or
is less than) the amount realized at the Effective Time.
THE FOREGOING SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY AND
CONSTITUTES A GENERAL DESCRIPTION OF CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES OF THE OFFER AND THE MERGER WITHOUT REGARD TO THE PARTICULAR FACTS
AND CIRCUMSTANCES OF EACH STOCKHOLDER OF THE COMPANY AND IS BASED ON THE
PROVISIONS OF THE INTERNAL
9
<PAGE>
REVENUE CODE OF 1986, AS AMENDED, TREASURY DEPARTMENT REGULATIONS ISSUED
PURSUANT THERETO AND PUBLISHED RULINGS AND COURT DECISIONS IN EFFECT AS OF THE
DATE HEREOF, ALL OF WHICH ARE SUBJECT TO CHANGE, POSSIBLY WITH RETROACTIVE
EFFECT. SPECIAL TAX CONSEQUENCES NOT DESCRIBED HEREIN MAY BE APPLICABLE TO
CERTAIN STOCKHOLDERS SUBJECT TO SPECIAL TAX TREATMENT (INCLUDING, BUT NOT
LIMITED TO, INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, FINANCIAL
INSTITUTIONS OR BROKER DEALERS, FOREIGN STOCKHOLDERS AND STOCKHOLDERS WHO
ACQUIRED THEIR SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR
OTHERWISE AS COMPENSATION). ALL STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES APPLICABLE TO THEM AS A RESULT OF
THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX AND ANY APPLICABLE STATE, LOCAL AND FOREIGN TAX LAWS.
6. Price Range of the Shares; Dividends. The shares of Common Stock of the
Company are traded on the Nasdaq National Market tier of the Nasdaq Stock Market
under the symbol "TRUX". The following table sets forth, for each of the
calendar quarters indicated, the high and low sales prices per share of Common
Stock on the Nasdaq National Market based on published financial sources. The
Company has not declared or paid cash dividends on its shares of Common Stock
since the Company's inception.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1995
First Quarter................................................................................. $ 10 3/4 $ 8 3/8
Second Quarter................................................................................ 11 1/2 7 3/4
Third Quarter................................................................................. 10 6 3/4
Fourth Quarter................................................................................ 7 1/4 4 5/8
1996
First Quarter................................................................................. $ 5 1/4 $ 3 3/4
Second Quarter................................................................................ 6 3/8 4 1/4
Third Quarter................................................................................. 7 7/8 5 1/4
Fourth Quarter................................................................................ 9 1/2 7
1997
First Quarter................................................................................. $ 10 3/8 $ 8 5/8
Second Quarter................................................................................ 9 1/2 8 1/4
Third Quarter................................................................................. 10 3/8 8
Fourth Quarter (through November 26, 1997).................................................... 15 7/8 8 3/8
</TABLE>
On November 25, 1997, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of the Purchaser's intention to
commence the Offer, the last reported sales price per share of Common Stock on
the Nasdaq National Market was $12.00. On November 26, 1997, the last full
trading day prior to the commencement of the Offer, the last reported sales
price per share of Common Stock on the Nasdaq National Market was $15.56.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company currently intends to retain its earnings for use in its business
and, therefore, does not anticipate declaring or paying any cash dividends on
its Common Stock in the foreseeable future. Any future determination to declare
or pay cash dividends on the Company's Common Stock will be made by the
Company's Board of Directors in light of factors deemed relevant by the Board,
including, among others, the Company's then earnings, financial position,
capital requirements and credit agreements. The Company's current credit
facility prohibits the Company's declaration or payment of dividends on its
Common Stock without the permission of the lender. In addition, under the terms
of the Merger Agreement, the Company is not permitted to declare or pay
dividends on its Common Stock.
7. Effect of the Offer on the Market for the Shares; Exchange Listing;
Exchange Act Registration; Margin Regulations.
MARKET FOR THE SHARES. The purchase of Shares by the Purchaser pursuant to
the Offer will reduce the number of Shares that might otherwise trade publicly
and will reduce the number of holders of Shares, which could adversely affect
the liquidity and market value of the remaining Shares held by the public.
10
<PAGE>
STOCK LISTING. The Common Stock is listed on the Nasdaq National Market
tier of the Nasdaq Stock Market. Depending upon the number of Shares purchased
pursuant to the Offer, the Shares may no longer meet the requirements of the
National Association of Securities Dealers, Inc. (the "NASD") for continued
inclusion on the NASDAQ System. For continued listing, the NASD requires, at a
minimum, that an issuer have (i) at least 500,000 publicly held shares held by
at least 300 stockholders, with such shares having a market value of at least $4
million, (ii) net tangible assets (i.e., total assets (excluding goodwill) minus
total liabilities) of at least $2 million or market capitalization of at least
$35 million or net income (in its latest fiscal year or two of the last three
fiscal years) of at least $500,000, and (iii) a minimum bid price of $1. If the
NASDAQ System were to cease to publish quotations for the Shares, it is possible
that the Shares would continue to trade in the over-the-counter market and that
price or other quotations would be reported by other sources. The extent of the
public market for such Shares and the availability of such quotations would
depend, however, upon such factors as the number of stockholders and/or the
aggregate market value of such securities remaining at such time, the interest
in maintaining a market in the Shares on the part of securities firms, the
possible termination of registration under the Exchange Act (as described below)
and other factors. The Purchaser cannot predict whether the reduction in the
number of Shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for, or marketability of, the Shares, or
whether future market prices would be greater or less than the Offer Price.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act,
assuming there are no other securities of the Company subject to registration,
would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement
pursuant to Section 14(a) in connection with stockholders' meetings and the
related requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Company. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144 or
Rule 144A promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), may be impaired or eliminated.
If registration of the Shares is not terminated prior to the Merger, then
the Parent intends to cause the Shares to be delisted from the Nasdaq Stock
Market. Similarly, registration of the Shares under the Exchange Act will be
terminated following the consummation of the Merger.
MARGIN REGULATIONS. The Shares presently are "margin securities," as such
term is defined under the rules and regulations of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"), which status has the
effect, among other things, of allowing brokers to extend credit on the
collateral of such securities. Depending upon factors similar to those described
above regarding listing and market quotations, it is possible that, following
the Offer, the Shares would no longer constitute "margin securities" for the
purposes of the margin regulations of the Federal Reserve Board, in which event
such Shares could no longer be used as collateral for loans made by brokers. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer qualify as "margin securities."
8. Certain Information Concerning the Company.
INTRODUCTION. Except as otherwise set forth herein, the information
concerning the Company contained in this Offer to Purchase, including the
selected financial information set forth below under the caption "Selected
Financial Information," has been furnished by the Company or has been taken from
or based upon publicly available documents and records on file with the
Commission and other public sources. Neither the Parent nor the Purchaser
assumes any responsibility for the accuracy or completeness
11
<PAGE>
of the information concerning the Company contained in such documents and
records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to the Parent or the Purchaser.
General. Deflecta-Shield Corporation is a company with subsidiaries involved
in the manufacture and marketing of accessories for light trucks and heavy
trucks primarily in the United States. Deflecta-Shield Corporation conducts its
business through its direct and indirect subsidiaries. The direct subsidiaries
are Belmor Autotron Corp. and DFM Corp. The indirect subsidiaries are BAC
Acquisition Co., Trailmaster Products, Inc. and Delta III, Inc., through which
the Company acquired its Fibernetics-TM-, Trailmaster-Registered Trademark- and
Delta III-TM- product lines, respectively. Deflecta-Shield Corporation and its
direct and indirect subsidiaries are referred to herein collectively as the
"Company."
The Company is a leading manufacturer and marketer of accessories for light
trucks (which include pick-up trucks, sport utility vehicles, mini-vans and
other vans) and heavy trucks in the United States. Its product lines for light
trucks include bug deflectors, which customize the relatively uniform look of
light trucks and protect hoods and windshields from insects, stones and other
road debris; fiberglass, aluminum, and ABS running boards; tool boxes; cab
visors; and suspension kits and related accessories. In addition to its light
truck accessories, the Company is the largest supplier in the United States of
winterfronts, bug screens, bug deflectors and rock guards for heavy trucks. The
Company also manufacturers and markets interior trim parts for heavy truck cabs.
The Company sells its products under several brand names including
Deflecta-Shield-Registered Trademark-, Streetmaster-TM-,
Trailmaster-Registered Trademark-, Delta III-TM-, Challenger-TM-,
Fibernetics-TM- and Belmor Autotron-TM-, and also sells its products through
private label/original equipment manufacturer ("OEM") lines. Its light truck
accessories are sold through a nationwide distribution system incorporating
automotive warehouse distributors, automotive specialty chain stores, OEMs,
catalog companies and dealer expediters. In these respective categories,
customers for light truck accessories include Reliable Automotive, Champion Auto
Stores, Ford Motor Company ("Ford"), Chrysler Corporation, Warshawsky & Company
(J.C. Whitney catalog) and Dulando Auto Screens. The Company's heavy truck
products are sold through heavy truck dealers and directly to heavy truck
manufacturers such as Ford, Freightliner, Kenworth, Navistar, Peterbilt, Volvo
and Western Star.
The Company is a corporation organized and existing under the laws of the
State of Delaware having principal executive offices located at 1800 North 9th
Street, Indianola, Iowa 50125; telephone no. (515) 961-6100. The Company was
incorporated in October 1993.
SELECTED FINANCIAL INFORMATION. Set forth below is certain selected
consolidated financial information relating to the Company which has been
excerpted or derived from the audited financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal years ended December 31,
1996 and 1995 (the "Forms 10-K") and the unaudited financial statements
contained in the Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1997 and 1996 (the "Forms 10-Q"). More comprehensive financial
information is included in the Forms 10-K, the Forms 10-Q and other documents
filed by the Company with the Commission. The following summary is qualified in
its entirety by reference to such reports and other documents, including the
financial information (and any related notes) contained therein. Such reports
and other documents, including the financial statements and related notes
contained therein, may be inspected and copies may be obtained from the
Commission in the manner set forth below.
12
<PAGE>
DEFLECTA-SHIELD CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
-------------------------- ----------------
1996 1995 1994 1997 1996
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
INCOME STATEMENT DATA:
Net Sales................................................................ $72,338 $68,239 $ 60,586 $53,732 $54,743
Operating Income......................................................... 7,452 4,348 8,031 4,952 5,548
Net Income............................................................... 3,933 1,728 4,147 2,662 2,924
Net Income per share..................................................... 0.82 0.36 0.90(1) 0.55 0.61
BALANCE SHEET DATA (AT END OF PERIOD):
Total Assets............................................................. $44,147 $45,410 $ 42,171 $48,862 $44,373
Total Liabilities........................................................ 15,604 20,799 19,289 17,657 16,838
Stockholders' Equity..................................................... 28,543 24,610 22,882 31,205 27,535
</TABLE>
- ------------------------
(1) Prior to January 27, 1994, the Company was organized as Belmor Manufacturing
Limited Partnership, a Delaware limited partnership (the "Predecessor
Partnership"). On January 27, 1994, the Company executed a Plan of
Recapitalization whereby (i) certain non-corporate partners of the
Predecessor Partnership contributed their interests in the Predecessor
Partnership to Deflecta-Shield Corporation, and (ii) the Predecessor
Partnership's corporate partners merged with and into Deflecta-Shield
Corporation. Upon completion of the Plan of Recapitalization, the assets and
liabilities of the Predecessor Partnership were owned and assumed by
Deflecta-Shield Corporation. The Predecessor Partnership's historical
carrying values for assets and liabilities carried over to Deflecta-Shield
Corporation upon consummation of the Plan of Recapitalization. The Company
issued 3,200,000 shares of Common Stock to the direct and indirect partners
of the Predecessor Partnership effective January 27, 1994. The Plan of
Recapitalization was consummated immediately prior to the public offering of
1,600,000 shares of Common Stock by Deflecta-Shield Corporation (the
"Offering"). The net proceeds of the Offering of approximately $18.6 million
were used to repay long-term debt (approximately $16.4 million) and other
obligations and provide additional working capital. Net Income per share is
presented on a pro forma basis giving effect to the aforementioned
recapitalization and the Offering.
AVAILABLE INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and
also should be available for inspection at the Commission's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60604. Copies of such materials may also be obtained by mail, upon payment of
the Commission's customary fees, by writing to its principal office at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a World Wide Web site that contains such materials. The address of the
site is http://www.sec.gov. This information should also be available for
inspection at the NASD, 1735 K Street, N.W., Washington, D.C. 20006.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT.
THE PURCHASER. The Purchaser is a newly incorporated corporation organized
and existing under the laws of the State of Delaware organized in connection
with the Offer and the Merger and has not carried on any activities other than
in connection with the Offer and the Merger. The principal offices of the
13
<PAGE>
Purchaser are located at 911 Lund Boulevard, Anoka, Minnesota 55303; telephone
no. (612) 576-4200. The Purchaser is a wholly-owned subsidiary of the Parent.
Until immediately prior to the time that the Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because the Purchaser is newly formed and has
minimal assets and capitalization, no meaningful financial information regarding
the Purchaser is available.
THE PARENT. The Parent is a leading designer, manufacturer and marketer of
a broad line of appearance accessories for new and used light trucks, including
pickup trucks, sport utility vehicles, minivans and other vans. The Company's
products allow consumers to customize the relatively uniform look of light
trucks with stylish and functional accessories which are engineered and designed
to give an original equipment look and fit. The Company currently has 34 product
lines, each designed to fit a wide range of makes, models and years of light
trucks. The Company's major product categories are:
- External Visors, which give light trucks an aerodynamically-styled look
while reducing glare;
- Hood Shields/Bug Deflectors, which provide a distinctive look and protect
hoods and windshields from insects, stones and road debris;
- Running Boards, which provide an original equipment look, protect the
rocker panels of a vehicle and assist in passenger entry and exit;
- Tonneau Covers, which protect the bed of a pickup truck with a smooth
stylish look; and
- Other External Appearance Accessories, which include cab extenders,
styling covers for taillights and headlights, tailgate protectors, fender
extensions, custom grille inserts, rear window air deflectors, side window
covers, wiper cowls, rear valances, cargo trays, floor mats and bumper
covers.
The Parent is a corporation organized and existing under the laws of the
State of Delaware with principal offices located at 911 Lund Boulevard, Anoka,
Minnesota 55303; telephone no: (612) 576-4200. The Parent was incorporated in
1965 and first engaged in its present business in 1974.
MANAGEMENT OF THE PURCHASER AND THE PARENT. The name, citizenship, business
address, principal occupation or employment and five-year employment history for
each of the directors and executive officers of the Purchaser and the Parent and
certain other information are set forth on Schedule I hereto.
SELECTED FINANCIAL INFORMATION. Set forth below is certain selected
consolidated financial information relating to the Parent and its subsidiaries
which has been excerpted or derived from the audited financial statements
contained in the Parent's Annual Report on Form 10-K for the fiscal years ended
June 30, 1997 and 1996 and the unaudited financial statements contained in the
Parent's Quarterly Reports on Form 10-Q for the fiscal quarters ended September
30, 1997 and 1996. More comprehensive financial information is included in such
reports and other documents filed by the Parent with the Commission. The
following summary is qualified in its entirety by reference to such reports and
other documents, including the financial information (and any related notes)
contained therein. Such reports and other documents, including the financial
statements and related notes contained therein, may be inspected and copies may
be obtained from the Commission in the same manner as set forth with respect to
information about the Company set forth in Section 7.
14
<PAGE>
LUND INTERNATIONAL HOLDINGS, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE
FISCAL YEAR ENDED MONTHS ENDED
JUNE 30, SEPTEMBER 30,
------------------------- ----------------------
1997 1996 1995 1997 1996
------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
INCOME STATEMENT DATA:
Net Sales................................................................ $43,305 $46,423 $47,384 $ 10,028 $10,406
Operating Income (Loss).................................................. 2,766 6,797 10,278 (841)(1) 586
Net Income (Loss)........................................................ 2,196 4,622 6,980 (519)(1) 462
Net Income (Loss) per share.............................................. 0.50 1.05 1.58 (0.12)(1) 0.11
BALANCE SHEET DATA (AT END OF PERIOD):
Total Assets............................................................. $41,445 $40,320 $36,706 $ 40,841 $39,412
Total Liabilities........................................................ 8,592 9,813 11,202 8,450 8,377
Stockholders' Equity..................................................... 32,853 30,507 25,504 32,391 31,035
</TABLE>
- ------------------------
(1) Includes a $1,174 non-recurring charge on a pre-tax basis and $824 on an
after-tax basis or $0.19 per share.
OWNERSHIP OF SHARES AND CERTAIN TRANSACTIONS. With the exception of ten
shares of the Company beneficially owned by the Parent, and as otherwise
described in this Offer to Purchase, (i) none of the Purchaser, the Parent nor,
to the best knowledge of the Purchaser and the Parent, any of the persons listed
on Schedule I to this Offer to Purchase or any associate or majority-owned
subsidiary of the Purchaser, the Parent or any of the persons so listed
beneficially owns or has any right to acquire, directly or indirectly, any
Shares and (ii) none of the Purchaser, the Parent nor, to the best knowledge of
the Purchaser and the Parent, any of the persons or entities referred to above
nor any director, executive officer or subsidiary of any of the foregoing has
effected any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement and the Stockholders' Agreement
and as otherwise described in this Offer to Purchase, none of the Purchaser, the
Parent nor, to the best knowledge of the Purchaser and the Parent, any of the
persons listed on Schedule I to this Offer to Purchase, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, since January 1, 1994,
neither the Purchaser nor the Parent nor, to the best knowledge of the Purchaser
and the Parent, any of the persons listed on Schedule I hereto, has had any
business relationship or transaction with the Company or any of the Company's
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer to Purchase, since January 1, 1994, there have
been no contracts, negotiations or transactions between any of the Purchaser,
the Parent, or any of their respective subsidiaries or, to the best knowledge of
the Purchaser and the Parent, any of the persons listed on Schedule I to this
Offer to Purchase, on the one hand, and the Company or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
15
<PAGE>
10. FINANCING OF THE OFFER AND THE MERGER.
SUMMARY OF FINANCIAL DISCLOSURE. The Parent and the Purchaser estimate that
the total amount of funds required by the Parent and the Purchaser to finance
the purchase price of the Shares in the Offer and to finance and pay the fees
and expenses associated with the Merger will be approximately $82 million. Of
these funds, it is anticipated that approximately $30 million will be obtained
from an equity contribution to the Parent to be made by an affiliate of the
Parent, approximately $10 million will be contributed from the Parent's working
capital and approximately $42 million will be financed pursuant to a credit
facility (the "Tender Loan Facility") to be provided to the Purchaser by Heller
Financial, Inc. ("Heller"). The terms of the Tender Loan Facility have not yet
been finalized and are still being negotiated. Moreover, documentation
evidencing the Tender Loan Facility has not yet been finalized. Accordingly, the
following description of the Tender Loan Facility is preliminary and necessarily
incomplete and the ultimate financing instruments might contain certain terms
that are more or less onerous than those currently contemplated.
The following table sets forth the approximate amounts, proposed sources and
uses of funds necessary to consummate the Offer, the Merger and the related
refinancing.
<TABLE>
<CAPTION>
$ IN MILLIONS
-------------
<S> <C>
SOURCES:
Equity contribution to the Parent............................................. $ 30.0
Working capital of the Parent................................................. 10.0
Borrowings under the Tender Loan Facility..................................... 42.0
-----
TOTAL..................................................................... $ 82.0
-----
-----
USES:
Purchase Shares pursuant to the Offer......................................... $ 76.8
Fees and expenses associated with the Merger.................................. 5.2
-----
TOTAL..................................................................... $ 82.0
-----
-----
</TABLE>
EQUITY CONTRIBUTION IN THE PARENT. Concurrently with the execution of the
Merger Agreement, the Parent entered into an investment agreement with an
affiliate pursuant to which, among the other things, the Parent agreed to issue
and sell to such affiliate 874,400 shares of common stock of the Parent and
1,493,398 shares of Series A preferred stock of the Parent (the "Preferred
Stock") for an aggregate purchase price of $30 million. Under certain
circumstances, the Preferred Stock will convert to a newly created series of
non-voting common stock of the Parent. The closing of this equity investment is
conditioned upon, among other things, the consummation of the Offer.
TENDER LOAN FACILITY. In connection with the Offer, the Purchaser has
obtained a commitment from Heller to enter into the Tender Loan Facility. The
Tender Loan Facility will be made available to the Purchaser to finance the
purchase price of the Shares in the Offer and will mature upon the earlier to
occur of the Merger or June 30, 1998. Amounts outstanding under the Tender Loan
Facility will bear interest, at the Purchaser's option, of either: (i) a
floating rate per annum equal to 1.50% in excess of the "base rate" (as defined)
or (ii) a floating rate per annum equal to 2.75% in excess of the "Libor rate"
(as defined). The obligations of the Purchaser under the Tender Loan Facility
will be guaranteed by the Parent. As security for this guarantee, the Parent
will grant Heller a first and perfected security interest in all of the capital
stock of certain wholly-owned subsidiaries of the Parent, with the possible
exception of Lund International FSC, Inc. In addition, the Purchaser will grant
Heller a first and perfected security interest in 100% of the capital stock of
the Company owned by the Purchaser. In no event, however, may the Purchaser
borrow under the Tender Loan Facility more than 50% of the cost of acquired
Shares insofar as the Purchaser has purchased less than 90% of the Shares of the
Company.
16
<PAGE>
The Tender Loan Facility will contain certain restrictive covenants that
impose limitations on, among other things, the granting of liens, the incurrence
of debt, lease obligations, mergers and consolidations, sales, transfers or
other dispositions of assets, dividends and other distributions to stockholders
and changing the nature of the Purchaser's business. The Tender Loan Facility
will also contain a covenant requiring the Purchaser to maintain a fixed charge
coverage ratio of at least 1.0.
Heller's commitment to provide the Tender Loan Facility is subject to the
completion of documentation and, among other things, the absence of a material
adverse change in the business, condition (financial or otherwise), operations
or performance of either the Parent or the Company and their respective
subsidiaries, taken as a whole, since September 30, 1997.
The Company has also obtained a commitment from Heller to provide the
Purchaser with an $87 million line of credit following the consummation of the
Merger which would be available to the Purchaser for, among other things,
refinancing the Tender Loan Facility.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; PURPOSE OF THE OFFER
AND THE MERGER; THE MERGER AGREEMENT; THE STOCKHOLDER AGREEMENTS; CERTAIN OTHER
AGREEMENTS.
The following description was prepared by the Parent and the Company.
Information about the Company was provided by the Company and neither the
Purchaser nor the Parent takes any responsibility for the accuracy or
completeness of any information regarding meetings or discussions in which the
Parent or its representatives did not participate.
BACKGROUND OF THE OFFER.
In May 1997, the Company, through LaSalle Capital Group, Inc., was
approached by representatives of Mr. Allan Lund, the founder and then a
principal stockholder of the Parent, in an effort to determine whether the
Company would be interested in buying the shares of the Parent then held by Mr.
Lund. The Company considered this offer and responded, through LaSalle Capital
Group, Inc., that it was not interested in buying a minority position in the
Parent, but might be interested in buying all of the stock of the Parent. When
the Parent indicated that it was not interested in pursuing such a transaction,
those discussions were terminated. In September 1997, the shares held by Mr.
Lund were purchased by an affiliate of Harvest Partners, Inc., an equity
investment firm ("Harvest").
In early September 1997, representatives of the Parent contacted the Company
concerning a possible purchase of the Company by the Parent. On September 26,
1997, the Parent indicated that it would be interested in discussing an
acquisition of the Company at a price in the range of $13.00 per Share.
Representatives of the Company indicated that, although the Company was not for
sale, and although the Company was disappointed in the valuation of the Company
indicated by the Parent, the Company might be interested in pursuing further
discussions as to potential synergies in connection with a possible transaction.
On September 29, 1997, representatives of the Company and Wasserstein
Perella & Co., Inc., the Company's financial advisors ("Wasserstein Perella"),
met to discuss strategic alternatives. On September 30, 1997, the Board of
Directors of the Company met and authorized Mark C. Mamolen and Charles S.
Meyer, two of its members, to act as representatives to enter into discussions
on behalf of the Company with respect to the Parent's proposal.
On October 14, 1997, representatives of the Company, Wasserstein Perella,
the Parent and Harvest and their respective legal advisors, met in New York City
to discuss a possible transaction between the Company and the Parent. On October
17, 1997, the Board of the Company met to discuss the status of the discussions.
Between October 14, 1997 and October 24, 1997, discussions continued between
representatives of the Company and representatives of the Parent and Harvest
with respect to the potential synergistic value of a combination of the Company
and the Parent, potential allocation of such synergy values and resulting
valuation with respect to possible transactions. On October 24, 1997, the Parent
17
<PAGE>
indicated that its valuation of the Company for purposes of a transaction,
taking account of potential synergies, had increased to $16.00 per Share,
subject to completion of due diligence and acceptable legal documentation.
On October 27, 1997, representatives of the Company, the Parent and Harvest,
including counsel and Wasserstein Perella, met to continue discussions with
respect to the proposed transaction, possible conditions and due diligence
schedules. On October 29, 1997, representatives of the Company, the Parent and
Harvest, including counsel and Wasserstein Perella, conducted a conference call
to advise a limited group of executive officers of the Company and the Parent of
the existence of negotiations and to discuss the due diligence process.
On October 31, 1997, the Company, the Parent and Harvest entered into the
Confidentiality Agreement (as defined below). Also on October 31, 1997,
representatives of the Company, the Parent and Harvest, including the Parent's
accountants, met in Chicago with respect to the Parent's due diligence
investigation with respect to the Company.
During the weeks of November 3 and 10, 1997, due diligence meetings and
conference calls were conducted on an almost daily basis. During the week of
November 3, 1997, such due diligence activities included site visits by
representatives of the Company, the Parent and one of the Parent's potential
financing sources. On November 5, 1997, representatives of the Company and the
Parent met to discuss the status of the due diligence process. On November 7,
1997, the Board of Directors of the Company met to discuss the progress of the
proposed transaction.
On November 6, 1997, counsel to the Parent provided an initial draft of the
Merger Agreement. Throughout the next several weeks, extensive negotiations were
conducted with respect to the Merger Agreement and drafts were exchanged. The
Board of Directors of the Company met and held extensive discussions on November
19, 1997, and November 20, 1997, at which meetings the Board considered
presentations from, and reviewed the terms and conditions of the then current
draft of the Merger Agreement with, among others, senior executive officers of
the Company, the Company's legal counsel and Wasserstein Perella.
Negotiations continued through November 25, 1997, on which date the parties
reached an agreement with respect to the Merger Agreement. Accordingly, on
November 25, 1997, the Board of Directors of the Company met to consider the
terms of the proposed transaction. Wasserstein Perella made a presentation to
the Board of the Company and delivered its opinion as to the fairness, from a
financial point of view, of the $16.00 cash consideration to be paid in the
Offer and the Merger to the holders of the outstanding Shares. The Board of
Directors of the Company then unanimously approved and adopted the Merger
Agreement and approved the transactions contemplated thereby. That evening, the
parties executed the Merger Agreement. The parties announced the transaction the
next morning, pursuant to a press release, a copy of which has been filed with
the Commission as an exhibit to the Schedule 14D-1 of the Parent and the
Purchaser (the "Schedule 14D-1").
Concurrently with the execution of the Merger Agreement, the Stockholders
executed the Stockholder Agreements with the Parent.
On November 28, 1997, the Purchaser and the Parent commenced the Offer.
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer, the Merger and the Merger Agreement is for the
Parent to acquire control of, and the entire equity interest in, the Company.
The Offer is being made pursuant to the Merger Agreement and is intended to
increase the likelihood that the Merger will be effected. The purpose of the
Merger is for the Parent to acquire all outstanding Shares not purchased
pursuant to the Offer. The transaction is structured as a merger in order to
ensure the acquisition by the Parent of all outstanding Shares.
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If the Merger is consummated, the Parent's common equity interest in the
Company would increase to 100% and the Parent would be entitled to all benefits
resulting from that interest. These benefits include complete management with
regard to the future conduct of the Company's business and any increase in its
value. Similarly, the Parent will also bear the risk of any losses incurred in
the operation of the Company after the Merger and any decrease in the value of
the Company.
Stockholders of the Company who sell their Shares in the Offer will cease to
have any equity interest in the Company and to participate in the Company's
earnings and any future growth. If the Merger is consummated, stockholders will
have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under the DGCL. See Section
12. Similarly, stockholders of the Company will not bear the risk of any
decrease in the value of the Company after selling their Shares in the Offer or
the subsequent Merger.
The primary benefits of the Offer and the Merger to stockholders of the
Company are that such stockholders are being afforded an opportunity to sell all
of their Shares for cash at a price which represents a premium of approximately
33.3% over the closing market price for shares of the Common Stock on the last
full trading day prior to the public announcement that the Company, the Parent
and the Purchaser had executed the Merger Agreement and a 70.7% premium over the
market price of the Shares on August 29, 1997 (prior to the day negotiations
commenced between the Company and the Parent with respect to the Offer and the
Merger).
THE MERGER AGREEMENT
As of November 25, 1997, the Parent, the Purchaser and the Company entered
into the Merger Agreement, pursuant to which the Purchaser has agreed to make
the Offer. The following description of the Merger Agreement does not purport to
be complete and is qualified by reference to the text of the Merger Agreement, a
copy of which has been filed with the Commission as an exhibit to the Schedule
14D-1 and is incorporated herein by reference. Capitalized terms not otherwise
defined herein have the meanings set forth in the Merger Agreement. The Merger
Agreement may be examined and copies may be obtained at the places and in the
manner set forth in Section 8 of this Offer to Purchase.
THE OFFER. The Merger Agreement provides for the making of the Offer by the
Purchaser. The obligations of the Purchaser to accept for payment and to pay for
any Shares validly tendered on or prior to the Expiration Date and not withdrawn
are subject only to the Minimum Condition and the other conditions set forth in
Annex I to the Merger Agreement. See Section 14. The Merger Agreement further
provides that without the prior written consent of the Company, which may be
given or withheld in its sole and absolute discretion, neither the Parent nor
the Purchaser will (i) amend or waive the Minimum Condition; (ii) decrease the
Offer Price; (iii) decrease the number of Shares sought; (iv) amend the Offer in
any way other than to increase the Offer Price, including by means of adding any
conditions to the Offer; (v) change the form of consideration payable in the
Offer; or (vi) extend the expiration of the Offer (except as provided below);
PROVIDED, HOWEVER, that, subject to the termination rights set forth in the
Merger Agreement, if on the initial scheduled expiration date of the Offer,
which will be 20 business days after the date the Offer is commenced (i.e.,
December 26, 1997), all conditions to the Offer shall not have been satisfied or
waived at such time, the Purchaser may extend the expiration date of the Offer
for a period of 30 business days; and PROVIDED, FURTHER, that if at any
scheduled Expiration Date of the Offer, the condition set forth in paragraph (d)
of Annex I to the Merger Agreement shall not have been satisfied but all of the
other conditions set forth on such Annex I shall then have been satisfied, then,
at the request of the Company, the Purchaser will, and the Parent will cause the
Purchaser to, extend the Offer from time to time, subject to the right of the
Purchaser and the Parent to terminate the Merger Agreement pursuant to Section
8.1 thereof. The Purchaser will, and the Parent will cause the Purchaser to,
subject only to the prior satisfaction or waiver of the conditions of the Offer,
accept for payment and pay for Shares validly tendered as soon as it is legally
permitted to do so under applicable law; PROVIDED, HOWEVER, that if, immediately
prior to the initial Expiration Date of the Offer in accordance with the
foregoing, the Shares
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tendered and not withdrawn pursuant to the Offer equal less than 90% of the then
outstanding Shares, but not less than 70% of such Shares, the Purchaser may
extend the Offer on one or more occasions for an aggregate period not to exceed
ten business days, notwithstanding that all conditions to the Offer are
satisfied as of such expiration date of the Offer; PROVIDED, FURTHER, that if
the Purchaser extends the Offer pursuant to the foregoing proviso, all
conditions set forth on Annex I to the Merger Agreement will be irrevocably
waived and deemed satisfied in full. Notwithstanding anything to the contrary
contained in this paragraph, the Purchaser may not extend the Offer without the
prior written consent of the Company which may be given or withheld in its sole
and absolute discretion, if the failure of any condition was a result directly
or proximately from a state of facts or action or inaction which constitutes a
breach of a representation, warranty or covenant of the Purchaser or the Parent.
DESIGNATION OF DIRECTORS. The Merger Agreement provides that promptly upon
the purchase of Shares by the Purchaser pursuant to the Offer which when added
to any other Shares beneficially owned by the Parent, the Purchaser and their
affiliates, represent at least a majority of the Shares on a fully diluted
basis, and from time to time thereafter as Shares are acquired by the Purchaser,
the Parent shall be entitled to designate such number of directors, rounded up
to the next whole number, on the Board of Directors of the Company as is equal
to the product of the total number of directors on such Board of Directors
(giving effect to the directors designated by the Parent pursuant to this
sentence) multiplied by the percentage that the number of Shares beneficially
owned by the Purchaser or any affiliate of the Purchaser bears to the total
number of Shares then outstanding. In furtherance thereof, the Company has
agreed to increase promptly the size of the Board of Directors or use its best
efforts to secure the resignations of such number of its incumbent directors as
is necessary to enable the Parent's designees to be elected to the Board of
Directors in accordance with the terms of the Merger Agreement, and the Board of
Directors has agreed to take all actions available to the Company to cause the
Parent's designees to be so elected as provided in the Merger Agreement. The
Parent and the Purchaser have agreed not to seek any greater representation on
the Board of Directors of the Company prior to the Effective Time.
The Company's obligation to appoint the Parent's designees to the Board of
Directors of the Company is subject to compliance with Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. Pursuant to the Merger
Agreement, the Company promptly shall take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill the foregoing obligations. In addition, in the event that the
Parent's designees are elected to the Company's Board of Directors after the
acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time of the Merger, the affirmative vote of a majority of the
Independent Directors of the Company shall be required to (i) amend or terminate
the Merger Agreement on behalf of the Company, (ii) amend the Amended and
Restated Certificate of Incorporation or By-Laws of the Company, (iii) waive any
condition to the obligations of the Company under the Merger Agreement or
exercise or waive any of the Company's rights, benefits or remedies under the
Merger Agreement or grant any consents or provide any agreements of the Company
under the Merger Agreement, (iv) extend the time for performance of the
Purchaser's or the Parent's obligations or other acts under the Merger
Agreement, (v) approve any other action by the Company which would adversely
affect the rights of the stockholders of the Company under the or contemplated
by the Merger Agreement, or (vi) take any other action by the Company under or
in connection with the Merger Agreement required to be taken by the Board of
Directors of the Company (provided that if no Independent Directors are members
of the Board of Directors, no such action may be taken).
THE MERGER. The Merger Agreement provides that, at the Effective Time, the
Purchaser will be merged with and into the Company, the separate corporate
existence of the Purchaser will cease, and the Company will continue as the
Surviving Corporation. The Merger will become effective at the time of filing
with the Secretary of State of the State of Delaware of a Certificate of Merger,
or at such later time as may be specified in the Certificate of Merger (the
"Effective Time"). The parties expect to file the Certificate of Merger as soon
as practicable following the closing of the Merger, which will take place not
later than
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the second business day after the conditions to the parties' obligation to
effect the Merger have been satisfied or waived, unless another date is
otherwise agreed.
Each Share issued and outstanding immediately before the Effective Time
(other than Shares with respect to which appraisal rights have been properly
exercised and perfected and Canceled Shares (as defined below) will be converted
into the right to receive the Offer Price in cash. Each Share held in the
treasury of the Company and each Share owned by the Parent, the Purchaser or any
direct or indirect wholly-owned subsidiary of the Parent or the Purchaser
immediately prior to the Effective Time (collectively, the "Canceled Shares"),
will be canceled and extinguished and no payment or other consideration will be
made with respect thereto. Each share of common stock of the Purchaser issued
and outstanding immediately prior to the Effective Time will automatically be
converted into one share of Common Stock of the Surviving Corporation.
The Merger Agreement provides that the Certificate of Incorporation and
By-laws of the Purchaser will be the Certificate of Incorporation and By-laws of
the Surviving Corporation following the Effective Time. The Merger Agreement
also provides that the directors of the Purchaser at the Effective Time will be
the directors of the Surviving Corporation and that the officers of the Company
at the Effective Time will be the officers of the Surviving Corporation.
RECOMMENDATION. The Company represents in the Merger Agreement that the
Board of Directors of the Company has (i) determined that the Merger Agreement
and the transactions contemplated thereby, including the Merger and the Offer,
are fair to, and in the best interests of, the Company and the holders of the
Shares, (ii) duly authorized and approved the Merger Agreement and approved the
Merger and the other transactions contemplated thereby (including, but not
limited to, the Offer), and (iii) resolved to recommend that the stockholders of
the Company accept the Offer, tender their Shares pursuant to the Offer and to
the extent required by applicable law, authorize and approve the Merger
Agreement and the transactions contemplated thereby, including the Merger. The
Company has agreed to file with the Commission a Solicitation/Recommendation
Statement on Schedule 14D-9 containing the aforementioned recommendations and to
mail such Schedule 14D-9 to the stockholders of the Company contemporaneous with
the commencement of the Offer.
The Merger Agreement provides that except as set forth therein and as may be
inconsistent with the fiduciary duties of the Board of Directors or any
applicable law (including, without limitation, the Exchange Act and the rules
promulgated thereunder), neither the Board of Directors of the Company nor any
committee thereof will (i) withdraw or modify, or propose to withdraw or modify,
in a manner adverse to the Parent or the Purchaser, the approval or
recommendation by the Board of Directors or any such committee of the Offer, the
Merger Agreement or the Merger, (ii) approve or recommend or propose to approve
or recommend, any Takeover Proposal (as defined below), or (iii) enter into any
agreement with respect to any Takeover Proposal.
STOCK OPTIONS. At or immediately prior to the Effective Time, each then
outstanding option to purchase Shares (the "Options") granted under the
Company's 1993 Stock Option Plan, its 1996 Stock Option Plan and any other
stock-based incentive plan or arrangement of the Company (collectively, the
"Stock Plans"), whether or not then exercisable or vested, will be canceled and
the Company will purchase options to purchase 100,000 Shares issued in
connection with the acquisition by the Company of Trailmaster Products, Inc.
(the "Trailmaster Options") upon delivery by the holders thereof of certificates
or other documents representing the Trailmaster Options or reasonable
representations or indemnities of such holders reasonably acceptable to the
Company with respect thereto in connection with such purchase. In consideration
of such cancellation and purchase, the holders of such Options and Trailmaster
Options shall receive for each Share subject to such Option or Trailmaster
Option an amount (subject to any applicable withholding tax) in cash equal to
the product of (i) the excess, if any, of the Offer Price over the per Share
exercise price of such Option or Trailmaster Option and (ii) the number of
Shares subject to such Option or Trailmaster Option.
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INTERIM OPERATIONS; COVENANTS. Pursuant to the Merger Agreement, the
Company has agreed that prior to the acceptance for payment of Shares or, if the
Company fails to comply with the obligations under Section 1.3 of the Merger
Agreement, the time the designees of the Parent have been elected to, and shall
constitute a majority of, the Board of Directors of the Company pursuant to
Section 1.3 of the Merger Agreement, without the prior written approval of the
Parent and except as otherwise contemplated or permitted by the Merger
Agreement: (a) the business of the Company and its Subsidiaries will be
conducted only in the ordinary and usual course and each of the Company and its
Subsidiaries will, subject to the other restrictions contained in the Merger
Agreement, use its best efforts to preserve its business organization intact and
maintain its existing relations with customers, suppliers, employees, creditors
and business associates; (b) the Company will not, directly or indirectly, (i)
except upon exercise of the Options or other rights to purchase Shares
outstanding on the date of the Merger Agreement, issue, sell, transfer or pledge
or agree to sell, transfer or pledge any treasury stock of the Company or any
capital stock of any of its Subsidiaries beneficially owned by it; (ii) amend
its or any of its Subsidiaries' Certificate of the Incorporation or By-laws or
similar organizational documents; or (iii) split, combine or reclassify the
outstanding Shares or any outstanding capital stock of any of the Subsidiaries
of the Company; (c) other than the payment of dividends or other distribution by
Subsidiaries to the Company or to other Subsidiaries, neither the Company nor
any of its Subsidiaries will: (i) declare, set aside or pay any dividend or
other distribution payable in cash, stock or property with respect to its
capital stock; (ii) issue, sell, pledge, dispose of or encumber any additional
shares of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire (or stock
appreciation rights with respect to), capital stock of any class of the Company
or its Subsidiaries other than Shares reserved for issuance on the date of the
Merger Agreement, other than Shares reserved for issuance on the date of the
Merger Agreement pursuant to the exercise of Options or Trailmaster Options
outstanding on the date of the Merger Agreement; (iii) transfer, lease, license,
sell, mortgage, pledge, dispose of, or encumber any assets, other than in the
ordinary and usual course of business and consistent with past practice; or (iv)
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock; (d) neither the Company nor any of its Subsidiaries will make any
change in the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants, or to Persons providing management
services, enter into or amend any employment, severance, consulting, termination
or other employment-related agreement, arrangement or Benefit Plan or make any
loans to any of its officers, directors, employees, affiliates, agents or
consultants or make any change in its existing borrowing or lending arrangements
for or on behalf of any of such Persons pursuant to a Benefit Plan or otherwise,
in each case except for changes, agreements, amendments or loans made in the
ordinary course of business consistent with past practice; (e) except (i)
pursuant to Benefit Plans, agreements or arrangements existing at the date of
the Merger Agreement or as disclosed in the schedules thereto, or made in the
ordinary course of business consistent with past practice, (ii) as required by
any law, rule or regulation of any Governmental Entity, (iii) as disclosed in
the schedules to the Merger Agreement, (iv) accruals required by GAAP, and (v)
pursuant to Section 2.4 of the Merger Agreement, neither the Company nor any of
its Subsidiaries will pay or make, or amend or agree to amend any Benefit Plan,
agreement or arrangement existing at the date of the Merger Agreement to provide
for any accrual or arrangement for payment of any pension, retirement allowance
or other employee benefit pursuant to any existing Benefit Plan, agreement or
arrangement to any officer, director, employee or affiliate or pay or agree to
pay or make any accrual or arrangement for payment to any officers, directors,
employees or affiliates of the Company of any amount relating to unused vacation
adopt or pay, grant, issue, accelerate or accrue salary or other payments or
benefits pursuant to any pension, profit-sharing, bonus, extra compensation,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right or other stock based incentive, group insurance, severance
pay, retirement or other employee benefit plan, agreement or arrangement, or any
employment or consulting agreement with or for the benefit of any director,
officer, employee, agent or consultant, whether past or present; (f) the Company
will not modify, amend or terminate any of the material Company Agreements or
waive, release or assign any material rights on claims, except in the ordinary
course of business; (g) neither the Company nor any of its Subsidiaries will
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cancel or terminate any material insurance policy naming it as a beneficiary or
loss payable payee without notice to the Parent; (h) neither the Company nor any
of its Subsidiaries will (i) incur or assume any long-term debt, or any
short-term indebtedness, in each case, for borrowed money except in the ordinary
course of business under lines of credit in existence on the date of the Merger
Agreement; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for any material
obligations of any other Person (other than, with respect to (x) the Company,
any Subsidiary or (y) any Subsidiary, the Company or any other Subsidiary)
except in the ordinary course of business or make any loans, advances or capital
contributions to, or investments in, any other Person (other than, with respect
to (x) the Company, any Subsidiary of (y) any Subsidiary, the Company or any
other Subsidiary), except for any such matter undertaken in the ordinary course
of business consistent with past practice; or (iii) make any commitments for, or
make or authorize any, capital expenditures other than in amounts less than
$50,000 individually and $500,000 in the aggregate other than as disclosed in
the schedules to the Merger Agreement or the SEC Documents; (i) neither the
Company nor any of its Subsidiaries will (i) change any of the accounting
methods used by it unless required by GAAP or (ii) except as required by
applicable law, make any Tax election or change any Tax election already made,
adopt any Tax accounting method, change any Tax accounting method unless
required by applicable law, enter into any closing agreement, settle any Tax
claim or assessment or consent to any Tax claim or assessment or any waiver of
the statute of limitations for any such claim or assessment; (j) neither the
Company nor any or its Subsidiaries will pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction of
any such claims, liabilities or obligations, in the ordinary course of business
or any such payment, discharge or satisfaction that the Company or any of its
Subsidiaries is required to make by any law, rule or regulation of any
Government Entity or by any contractual obligation not prohibited by the Merger
Agreement; (k) neither the Company nor any of its Subsidiaries will adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger); (l) neither the Company nor any of its
Subsidiaries will knowingly take, or agree to commit to take, any action that
would result in any of the conditions to the Offer set forth in Annex I to the
Merger Agreement not being satisfied, or that would give rise to a right of
termination of the Merger Agreement for the Parent or the Purchaser pursuant to
the Merger Agreement; (m) the Company will not enter into an agreement,
contract, commitment or arrangement to do any of the foregoing, or to authorize
any of the foregoing; and (n) except to the extent disclosed in the Schedules to
the Merger Agreement, neither the Company nor any of its Subsidiaries will (i)
effect a plant closing or mass layoff affecting any site of employment or one or
more facilities or operating units within any site of employment or facility of
the Company or any Subsidiary without the prior written consent of the Parent or
(ii) terminate more than 49 employees within a site of employment or facility of
the Company or any Subsidiary or operating unit within a site of employment or
facility or operating unit of the Company or any Subsidiary without providing
prior written notice to the Parent.
TAKEOVER PROPOSALS. Pursuant to the Merger Agreement, the Company has
agreed that it will immediately cease and cause to be terminated any existing
discussions or negotiations, if any, with any Person conducted prior to the date
of the Merger Agreement with respect to any possibility or consideration of
making a Takeover Proposal. The Company has agreed to notify the Parent promptly
in writing if any proposals are received by, any information is requested from,
or any negotiations or discussions are sought to be initiated or continued with
the Company, its Subsidiaries or any of their officers, directors, employees,
investment bankers, attorneys, accountants or other agents, in each case in
connection with any Takeover Proposal, including, in connection with such
notice, a reasonable summary of the terms and conditions of any proposals or
offers and the identity of the Person making such proposal or offer, unless such
notice would violate the terms of any confidentiality or similar agreement
binding on the Company existing at the date of the Merger Agreement or, in
addition, with respect to the identity of such Person, except to the extent that
the Board of Directors is advised by outside legal counsel that identifying such
Person may be inconsistent with its fiduciary duties; PROVIDED, HOWEVER, that
such notice will only be
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required to be given with respect to any of the foregoing directed to an officer
or an employee of the Company or any of its Subsidiaries following such time as
an executive officer or director of the Company shall have actual knowledge
thereof. Except to the extent that the following may be inconsistent with the
fiduciary duties of the Board of Directors of the Company or violate, or subject
the Board of Directors of the Company or the Company to liability under,
applicable law, in each case as advised by outside legal counsel, the Company
agrees that it will keep the Parent informed promptly of any developments in the
status and terms of any Takeover Proposal, unless such notice would violate the
terms of any confidentiality or similar agreement binding on the Company
existing at the date of the Merger Agreement. "Takeover Proposal" means any
tender or exchange offer involving more than 35% of the Shares, any proposal for
a merger, consolidation or other business combination involving the Company, any
proposal or offer to acquire in any manner more than 35% of the Shares or a
substantial portion of the business or assets of the Company (other than (i)
immaterial or insubstantial assets; (ii) inventory in the ordinary course of
business; (iii) assets held for sale; or (iv) other assets sold or to be sold in
the ordinary course of business), or any proposal or offer with respect to any
recapitalization or restructuring with respect to the Company.
NO SOLICITATION. In the Merger Agreement, the Company has agreed that it
will not, nor will it authorize or permit its officers, directors, investment
bankers, attorneys, accountants, employees and other agents to, directly or
indirectly; (i) initiate or solicit any offer or proposal which constitutes any
Takeover Proposal; (ii) in the event of an unsolicited Takeover Proposal for the
Company, engage in negotiations or discussions with, or provide any information
to, any Person (other than the Parent, any of its affiliates or representatives
and except for information which has been previously publicly disseminated by
the Company) relating to or in connection with any Takeover Proposal; or (iii)
enter into any agreement with respect to any Takeover Proposal; PROVIDED,
HOWEVER, that nothing contained in the Merger Agreement prohibits the Company or
the Company's Board of Directors or any of its or their representatives from (i)
taking and disclosing to the Company's stockholders a position with respect to a
tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act or (ii) making such disclosure to the
Company's stockholders as the Board of Directors may determine in good faith is
required under applicable law after advice from outside legal counsel.
Notwithstanding the foregoing, prior to the acceptance for payment of Shares
pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any person pursuant to a customary
confidentiality agreement (provided that if any such confidentiality agreement
contains terms or provisions more favorable to such Person than the terms or
provisions with respect to the Parent and the Purchaser pursuant to the
Confidentiality Agreement (as hereinafter defined), then any confidentiality
terms of the Merger Agreement and of the Confidentiality Agreement shall be
deemed amended (without further action of the parties thereto), to conform to
such terms and provisions) and may discuss and negotiate and participate in
discussions and negotiations with such Person concerning a Takeover Proposal if
(x) such entity or group has made an inquiry or proposal unsolicited after the
date of the Merger Agreement relating to any such transaction and the Board of
Directors of the Company determines in good faith, after receiving advice from
Wasserstein Perella or another nationally recognized investment banking firm,
that to do so could lead to a Superior Proposal (as defined below) or (y) in the
good faith judgment of the Board of Directors of the Company, after receiving
advice from outside legal counsel to the Company, the failure to provide such
information or to engage in such discussions or negotiations would be
inconsistent with the fiduciary obligations of the Board of Directors to the
Company's stockholders or otherwise be inconsistent with applicable law. A
"Superior Proposal" means any Takeover Proposal which the Board of Directors of
the Company determines, in good faith after consultation with its financial
advisor, is on terms more favorable to the stockholders of the Company than the
Offer and the Merger pursuant to the Merger Agreement. In making its
determination whether a Takeover Proposal constitutes a Superior Proposal
pursuant to the preceding sentence, the Board of Directors shall take into
account (x) the extent to which financing for such Takeover Proposal is required
and, to the extent required, whether firm written commitments with respect to
such financing have been provided to the Company and, based upon the advice of
Wasserstein Perella or any other financial adviser
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selected by the Company, the extent to which the third party making such
Takeover Proposals is financially capable of obtaining such required financing
and (y) whether such Takeover Proposal has a reasonable prospect of being
consummated prior to June 30, 1998. The Company has agreed promptly, and in any
event within one business day following any determination by the Board of
Directors that a Takeover Proposal (or any amendment thereto) is a Superior
Proposal, to notify the Parent in writing (the "Notice of Superior Proposal") of
such determination of the same, which notice shall include the identity of the
bidder and a reasonable summary of the terms and conditions of the Superior
Proposal or, if a Superior Proposal is amended, the terms and conditions as so
amended. If the Parent does not, within five business days after the Parent's
receipt of a Notice of Superior Proposal or of such notice with respect to any
amended proposal (or, if earlier, prior to two business days before the
expiration of the Offer), make an irrevocable written offer or enter into a
definitive written agreement amending the Merger Agreement to provide for a
transaction which the Board of Directors has determined in its good faith
judgment (based on the advice of Wasserstein Perella or another nationally
recognized investment banking firm) to be more favorable to the Company's
stockholders than the Superior Proposal, the Company, by action of its Board of
Directors, may terminate the Merger Agreement and enter into an agreement with
respect to a Superior Proposal.
Except as set forth above and as may be inconsistent with the fiduciary
duties of the Board of Directors or any applicable law (including, without
limitation, the Exchange Act and the rules promulgated thereunder), 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 the Parent
or the Purchaser, the approval or recommendation by the Board of Directors or
any such committee of the Offer, the Merger Agreement or the Merger, (ii)
approve or recommend or propose to approve or recommend, any Takeover Proposal,
or (iii) enter into any agreement with respect to any Takeover Proposal.
COMPANY STOCKHOLDERS' MEETING. If required by applicable law to consummate
the Merger, the Company has agreed to: (i) duly call, give notice of, convene
and hold a special meeting of its stockholders (the "Special Meeting") as
promptly as practicable following the acceptance for payment and purchase of
Shares by the Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the approval of the Merger and the adoption of the Merger
Agreement; (ii) prepare and file with the Commission a preliminary proxy or
information statement relating to the Merger and the Merger Agreement and use
its best efforts, subject to the terms of the Merger Agreement, to obtain and
furnish the information required to be included by the Commission in the Proxy
Statement (as hereinafter defined) and, after consultation with the Parent, to
respond promptly to any comments made by the Commission with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement, including any amendment or supplement thereto (the "Proxy
Statement") to be mailed to its stockholders, provided that no amendment or
supplement to the Proxy Statement will be made by the Company without
consultation with the Parent and its outside legal counsel, and to obtain the
necessary approvals of the Merger and the Merger Agreement by its stockholders;
and (iii) subject to the terms of the Merger Agreement and fiduciary obligations
under applicable laws as advised by counsel, include in the Proxy Statement the
recommendation of the Board of Directors that stockholders of the Company vote
in favor of the approval of the Merger and the adoption of the Merger Agreement.
The Parent has agreed to vote, or cause to be voted, all of the Shares then
owned by it, the Purchaser or any of its other subsidiaries and affiliates in
favor of the approval of the Merger and the approval and adoption of the Merger
Agreement. However, in the event that the Parent, the Purchaser and any other
subsidiaries of the Parent shall acquire in the aggregate at least 90% of the
then outstanding Shares, pursuant to the Offer or otherwise, the parties to the
Merger Agreement will take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.
INDEMNIFICATION OF COMPANY OFFICERS AND DIRECTORS; LIABILITY INSURANCE. In
the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, in which
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any of the present or former officers, directors, employees and agents (the
"Indemnified Person(s)") of the Company or any of its Subsidiaries is, or is
threatened to be, made a party by reason of the fact that he or she is or was,
at or prior to the Effective Time, a director, officer, employee or agent of the
Company or any of its Subsidiaries or is or was, at or prior to the Effective
Time, serving as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise at the request of the
Company or any of its Subsidiaries, whether such claim arises before or after
the Effective Time, the Parent and the Surviving Corporation each have agreed to
indemnify and hold harmless, as and to the fullest extent permitted by
applicable law, each such Indemnified Person(s) against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such claim, action, suit, proceeding or investigation (including, without
limitation, any of the foregoing arising out of or related to the Merger
Agreement and/ or any of the transactions contemplated by the Merger Agreement).
Pursuant to the Merger Agreement, any Indemnified Person(s) wishing to claim
indemnification, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Parent and the Surviving Corporation
thereof (but the failure so to notify the Parent and the Surviving Corporation
shall not relieve the Parent or the Surviving Corporation from any liability
which they may have under the Merger Agreement except to the extent such failure
materially prejudices the Parent or the Surviving Corporation). The right to
indemnification under the Merger Agreement includes the right to receive
reimbursement of reasonable expenses incurred in connection therewith, upon (i)
written request by the Indemnified Person(s) accompanied by a copy of bills,
invoices or other documentation of such expenses and (ii) receipt of an
undertaking by the Indemnified Person(s) to repay any such amounts if it shall
ultimately be determined that such Person is not entitled to be indemnified as
provided therein.
The Merger Agreement further provides that until the Effective Time, the
Company will keep in effect Articles Tenth and Eleventh of its Certificate of
Incorporation and Section 6.7 of its By-Laws, and thereafter for a period of six
years the Surviving Corporation shall keep in effect in its Certificate of
Incorporation provisions which provide for indemnification and exculpation of
the Indemnified Person(s) to the extent provided by Articles Tenth and Eleventh
of the Company's Certificate of Incorporation on the date of the Merger
Agreement.
The Merger Agreement also provides that the Parent or the Surviving
Corporation shall maintain the Company's and its Subsidiaries' existing
officers' and directors' liability insurance (the "D&O Insurance") for a period
of six years after the Effective Time; PROVIDED, HOWEVER, that the Parent may
substitute therefor policies of substantially equivalent coverage and amounts
containing terms no less favorable to such former directors or officers (but
without creating any gaps in coverage); PROVIDED, FURTHER, that in no event
shall the Parent or the Surviving Corporation be required to pay aggregate
premiums for insurance pursuant to the Merger Agreement in excess of 200% of the
aggregate premiums paid by the Company in 1997 (the "1997 Premium"); and
PROVIDED, FURTHER, that if the Parent or the Surviving Corporation is unable to
obtain the amount of insurance required by the Merger Agreement for such
aggregate premium, the Parent or the Surviving Corporation shall obtain as much
insurance as can be obtained for an annual premium not in excess of 200% of the
1997 Premium.
The Merger Agreement provides further that in the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Parent and the Surviving Corporation will have the
right to assume the defense thereof and the Parent and the Surviving Corporation
will not be liable to any such Indemnified Person(s) for any legal expenses of
other counsel or any other expenses subsequently incurred by such Indemnified
Person(s) in connection with the defense thereof, (ii) the Parent and the
Surviving Corporation will vigorously prosecute the defense of any such matter,
(iii) the Indemnified Person(s) will cooperate in all respects as reasonably
requested by the Parent and the Surviving Corporation in the defense of any such
matter, (iv) the Parent and Surviving Corporation will not be liable for any
settlement effected without their prior consent (which consent shall not be
unreasonably withheld), and (v) the Parent and the Surviving Corporation will
not settle any claim the defense of which has been assumed by the Parent and the
Surviving Corporation pursuant to the Merger
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Agreement without the prior written consent of the Indemnified Person(s) (which
consent shall not be unreasonably withheld); PROVIDED, HOWEVER, if the Parent or
the Surviving Corporation does not assume the defense of any claim, action,
suit, proceeding or investigation pursuant to the Merger Agreement within a
reasonable period of time from the receipt of notice of such claim, the
Indemnified Person(s) as a group with respect to the same claim shall be
entitled to retain only one law firm to represent them with respect to any such
matter unless there is, under applicable standards of professional conduct, a
conflict of interest on any significant issue between the positions of any two
or more Indemnified Person(s), or any similar impediment to the joint
representation of multiple Indemnified Person(s) by a single law firm; PROVIDED,
FURTHER, that the Parent and the Surviving Corporation shall have no obligation
under the Merger Agreement to any Indemnified Person(s) when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and non-appealable, that indemnification of such Indemnified
Person(s) in the manner contemplated thereby is prohibited by applicable law.
In the Merger Agreement, the Parent, the Purchaser, the Company and the
Surviving Corporation have expressly acknowledged the provisions of Articles
Tenth and Eleventh of the Company's Certificate of Incorporation and Section 6.7
of the Company's By-Laws, as in effect on the date of the Merger Agreement, and
have agreed, from and after the Expiration Date, to honor in accordance with
their terms all such obligations and further acknowledged that said obligations
(along with the indemnification and like obligations in the Certificate of
Incorporation and By-Laws of the Surviving Corporation) constitute, to the
extent set forth therein, a contract between the Company or the Surviving
Corporation, as the case may be, on the one hand, and the Person entitled to the
benefits thereof (in accordance therewith), on the other hand, creating binding
obligations on the part of the Company and binding rights on the part of any
Person entitled to the benefit thereof (in accordance therewith).
EMPLOYEE BENEFITS. The Merger Agreement provides that on and after the
Effective Time, directors, officers and employees of the Company and its
Subsidiaries will be provided employee benefits, plans and programs which are no
less favorable in the aggregate than those generally available to similarly
situated directors, officers and employees of the Parent and its significant
subsidiaries. For purposes of eligibility to participate and vesting, waiting
periods, pre-existing conditions, limitations and all other purposes (but not
benefit accrual attributable to the period before the Effective Time) in all
benefits provided to directors, officers and employees, the directors, officers
and employees of the Company and its Subsidiaries will be credited with their
years of service with the Company and its Subsidiaries and prior employers to
the extent service with the Company and its Subsidiaries and prior employers is
taken into account under plans of the Company and its Subsidiaries. Nothing in
the Merger Agreement, however, shall be construed as restricting the ability of
the Parent and the Surviving Corporation and its Subsidiaries to establish such
types and levels of compensation and benefits or to modify or terminate such
compensation or benefits as they determine to be appropriate from time to time.
The Parent and the Surviving Corporation have jointly and severally agreed that
the Surviving Corporation will (i) credit directors, officers and employees of
the Company and its Subsidiaries with any amounts paid by such persons toward
applicable deductible amounts and copayment and deductible maximums for the
calendar year under the medical and dental plans of the Company and its
Subsidiaries prior to the transition to any new medical or dental program toward
satisfaction of the applicable deductible amounts and copayment and deductible
maximums under any such new medical or dental program that covers such
directors, officers and employees; (ii) cause all benefits of directors,
officers and employees under Benefit Plans vested and accrued, prior to the
Effective Time to be provided to such directors, officers and employees in
accordance with the terms of such Benefit Plans as in effect on the date of the
Merger Agreement; and (iii) become the "Employer" under the Deflecta-Shield
Corporation Employee Profit Sharing and 401(k) Plan.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
by the Company as to, among other things, organization and qualification,
capitalization, subsidiaries, authorization, Commission documents, conflicts,
financial statements, undisclosed liabilities, absence of certain changes or
events, tax matters, litigation, ERISA compliance, environmental matters, real
property and leased property, change of control
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payments, takeover restrictions, intellectual property, contracts, compliance
with laws, insurance coverage, personnel, labor relations, customers, brokers
and finders and the opinion of Wasserstein Perella. The Parent and the Purchaser
have represented as to, among other things, organization and power,
authorization, conflicts, consents and approvals, financing of the Offer and the
Merger, Hart-Scott-Rodino filing matters and finder's fees.
CONDITIONS TO THE MERGER. The obligations of each of the Parent, the
Purchaser and the Company to effect the Merger are subject to the satisfaction
on or prior to the Closing Date of each of the following conditions, any and all
of which may be waived in whole or in part by the Company, the Parent or the
Purchaser, as the case may be, to the extent permitted by applicable law: (i)
the Merger and the Merger Agreement shall have been approved and adopted by the
requisite vote of the holders of the Shares, if required by the DGCL; (ii) no
statute, rule or regulation shall have been enacted or promulgated by any
governmental authority which prohibits the consummation of the Merger; and there
will be no order or injunction of a court of competent jurisdiction in effect
which prohibits consummation of the Merger; PROVIDED, HOWEVER, that each of the
Parent, the Purchaser and the Company shall have used reasonable efforts to
prevent the entry of any such order or injunction and to appeal as promptly as
possible any such order or injunction that may be entered; and (iii) the
Purchaser shall have made, or caused to be made, the Offer and shall have
accepted for payment the Shares tendered pursuant to the Offer; provided, that
this condition shall be deemed to have been satisfied with respect to the
obligation of the Parent and the Purchaser to effect the Merger if the Purchaser
fails to announce and make the Offer or accept for payment Shares tendered
pursuant to the Offer in violation of the terms of the Offer or of the Merger
Agreement. Further, the Purchaser shall not be required to accept for payment
any Shares tendered pursuant to the Offer, and, subject to the terms of the
Merger Agreement, may terminate the Offer if (i) by the Expiration Date of the
Offer, the Minimum Condition shall not have been satisfied or (ii) at any time
on or after the date of the Merger Agreement, and prior to the time for
acceptance for payment for any such Shares, any of the events set forth on Annex
I to the Merger Agreement shall occur and remain in effect other than as a
result directly or proximately from a state of facts or action or inaction which
constitutes a breach of a representation, warranty or covenant of the Purchaser
or the Parent.
TERMINATION. The Merger Agreement may be terminated and the transactions
contemplated therein may be abandoned at any time before the Effective Time,
whether before or after stockholder approval: (i) by mutual written consent of
the Parent and the Company, in each case acting through its Board of Directors;
or (ii) (a) by the Parent if the Offer shall have expired or been terminated in
accordance with its terms without any Shares being purchased thereunder by the
Purchaser, but only as a result of the occurrence of any of the events set forth
on Annex I to the Merger Agreement that shall not have resulted directly or
proximately from a state of facts or action or inaction which constitutes a
breach of a representation, warranty or covenant by the Purchaser or the Parent;
or (b) by the Company if any of the events specified in paragraph (a) of Annex I
to the Merger Agreement occurs prior to the Purchaser's acceptance for payment
of the Shares in the Offer; or (iii) by either the Parent or the Company if a
U.S. Court shall have issued an order, decree or ruling (which order, decree or
ruling the parties hereto shall use their best efforts to vacate), in each case
permanently restraining, enjoining or otherwise prohibiting the Offer and/or the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable and shall not have resulted directly or proximately, from a
state of facts or action or inaction which constitutes a breach of a
representation, warranty or covenant by the Purchaser or Parent; or (iv) by the
Parent if, without any material breach by the Parent or the Purchaser of its
representations, warranties or obligations under the Merger Agreement or the
Offer, the purchase of Shares pursuant to the Offer shall not have occurred on
or before June 30, 1998; or (v) by the Company if, without any material breach
by the Company of its representations, warranties or obligations under the
Merger Agreement, the purchase of Shares pursuant to the Offer shall not have
occurred on or before June 30, 1998; or (vi) by the Company (a) if the Parent or
the Purchaser shall have breached in any material respect any material covenant
or other agreement contained in the Merger Agreement or if any representation or
warranty of the Parent or the Purchaser made in the Merger Agreement shall fail
to be true and correct as
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if made at such time in any material respect, in each case which breach or which
failure to be true and correct cannot be or has not been cured within ten
business days of the receipt of written notice thereof; or (b) to allow the
Company to enter into an agreement in accordance with the Merger Agreement with
respect to a Superior Proposal; or (vii) by the Parent, if prior to the time the
Purchaser is required to accept Shares for payment in the Offer, (a) the Company
shall have breached in any material respect any material covenant or other
agreement contained in the Merger Agreement or (b) any representation or
warranty of the Company made in the Merger Agreement which is qualified as to
Material Adverse Effect shall not be true and correct when made or as if made at
such time or (c) any other representation or warranty of the Company made in the
Merger Agreement shall not be true and correct when made or as if made at such
time, which failure to be true and correct would have a Material Adverse Effect,
in each case which breach or which failure to be true and correct cannot be or
has not been cured within ten business days of the receipt of written notice
thereof; or (viii) by the Parent, at any time prior to the time the Purchaser is
required to accept Shares for payment in the Offer, (a) if the Board of
Directors of the Company shall have withdrawn or materially modified in a manner
adverse to the Purchaser its approval or recommendation of the Offer, the Merger
or the Merger Agreement or (b) the Company shall have entered into, or shall
have publicly announced its intention to enter into, a definitive written
agreement or written agreement in principle providing for a Takeover Proposal.
TERMINATION FEE AND EXPENSES. In the event of termination of the Merger
Agreement as provided for in Section 8.1 of the Merger Agreement, written notice
thereof shall forthwith be given to the other party or parties specifying the
provision of the Merger Agreement pursuant to which such terminations is made.
In the event of termination of the Merger Agreement by either the Company, on
one hand, or the Parent and the Purchaser on the other hand, as provided in
Section 8.1 of the Merger Agreement, except as provided in Sections 8.2 (d) and
(e) thereof, the Merger Agreement shall forthwith become null and void and there
shall be no liability on the part of the Parent, the Purchaser or the Company,
except (i) as set forth in Section 8.2(c) of the Merger Agreement and (ii)
nothing therein shall relieve the Parent or the Purchaser from liability for any
breach of the Merger Agreement, other than an immaterial breach, and nothing
therein shall relieve the Company from liability for any willful and material
breach of the Merger Agreement.
The Merger Agreement provides further that if the Parent terminates the
Merger Agreement pursuant to Section 8.1(g) thereof, then the Company will pay
to the Parent an amount, not in excess of $1,000,000, equal to the Purchaser's
actual and reasonably documented out-of-pocket expenses (including without
limitation, fees payable to all banks, investment banking firms and other
financial institutions and their respective counsel, and all fees of counsel,
accountants, financial printers, experts and consultants to the Parent, but
specifically excluding any fees payable to Harvest (the "Expense Reimbursement
Amount")) incurred by the Parent and the Purchaser in connection with the Offer,
the Merger, the Merger Agreement and the consummation of the transactions
contemplated thereby. Moreover, if (i) the Parent terminates the Merger
Agreement pursuant to Section 8.1(h) thereof or (ii) the Company terminates the
Merger Agreement pursuant to Section 8.1(f)(ii) thereof, then the Company will
pay to the Parent a termination fee (the "Termination Fee") of $2,300,000. The
Termination Fee and the Expense Reimbursement Fee shall be payable not later
than one business day after the date of termination by wire transfer. Upon
payment of such fees, the Company shall have no further obligation to the Parent
or the Purchaser under the Merger Agreement or otherwise; PROVIDED, FURTHER,
that if the Company fails to pay promptly the foregoing amounts, and in order to
obtain such payment, the Parent or the Purchaser commences a suit which results
in a final nonappealable judgment against the Company for such amounts, the
Company will pay to the Parent or the Purchaser (i) the costs and expenses
(including attorneys' fees) incurred by the Parent or the Purchaser in
connection with such suit and (ii) interest on all such amounts required to be
paid at the rate announced by Citibank, N.A. as its "reference rate" in effect
on the date such amounts were required to be paid.
PURCHASER COMPLIANCE. In the Merger Agreement, the Parent agreed to cause
the Purchaser to timely perform and comply with all of its obligations under or
related to the Merger Agreement, including,
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without limitation, all obligations in or with respcet to the Offer. The
stockholders of the Company are each third party beneficiaries of the foregoing
provision of the Merger Agreement and may seek relief for breach of the Merger
Agreement individually and in their own name.
FEES AND EXPENSES. Except as set forth in the Merger Agreement, each party
to the Merger Agreement shall bear all fees and expenses incurred by such party
in connection with, relating to or arising out of the execution, delivery and
performance of the Merger Agreement and the consummation of the Offer and the
Merger.
AMENDMENT. The Merger Agreement may be amended by the parties thereto by
action taken by or on behalf of their respective Boards of Directors at any time
before or after approval thereof by the stockholders of the Company, but, after
such approval, no amendment shall be made which reduces the amount or changes
the form of consideration to be paid in the Offer or in any way adversely
affects the rights of holders of the Shares without the further approval of such
holders.
STOCKHOLDER AGREEMENTS
The following is a summary of certain provisions of the Stockholder
Agreements. The following description of the Stockholder Agreements does not
purport to be complete and is qualified by reference to the text of the
Stockholder Agreements, copies of which have been filed with the Commission as
exhibits to the Schedule 14D-1 and are incorporated herein by reference. The
Stockholder Agreements may be examined and copies may be obtained at the places
and in the manner set forth in Section 8 of this Offer to Purchase.
In the Stockholder Agreements, each Stockholder agrees to tender and sell to
Purchaser all of his Shares pursuant to and in accordance with the terms of the
Offer. Each Stockholder agrees that he will deliver to the depositary for the
Offer, no later than the fifth business day following the commencement of the
Offer pursuant to the Merger Agreement, a letter of transmittal together with
any and all certificates representing such Shares (or such documentation as
required by the terms of the Offer with respect to lost stock certificates).
Notwithstanding any term of the Offer to the contrary, in the Stockholder
Agreements, each Stockholder agrees not to withdraw any such Shares tendered
into the Offer pursuant thereto during the term of the Stockholder Agreement.
Purchaser's obligation to accept for payment a Stockholders' Shares in the Offer
is subject to the terms and conditions of the Offer. Notwithstanding anything in
the Stockholder Agreements to the contrary, the Stockholder Agreements provide
that the foregoing shall not restrict a Stockholder from taking actions in his
capacity as a director, officer or employee of the Company to the extent and in
the circumstances permitted by the Merger Agreement or as required by applicable
law or by his fiduciary duty as a director, officer or employee of the Company.
In the Stockholder Agreements, each Stockholder, solely in his capacity as a
stockholder and not as a director, officer or employee of the Company, agrees
that, until the Termination Date (as defined below), at any meeting of the
stockholders of the Company, however called at which the following matters are
considered for a vote, such Stockholder will vote (or cause to be voted) his
Shares (a) in favor of the Merger, the execution and delivery by the Company of
the Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance hereof and thereof; (b) against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement or this
Agreement; and (c) except as specifically requested or agreed to in writing by
Parent in advance, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (i) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company; (ii) a sale, lease or transfer of a material
amount of assets of the Company or reorganization, recapitalization, dissolution
or liquidation of the Company; and (iii)(A) any change in the majority of the
board of directors of the Company; (B) any change in the present capitalization
of the Company or any amendment of the Company's Certificate of Incorporation or
By-Laws; (C) any other material change in the Company's corporate structure or
business; or (D) any other action which is intended, or could reasonably be
expected, to impede, interfere
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with, delay, postpone, discourage or adversely affect the Offer, the Merger or
the transactions contemplated by the Merger Agreement or the Stockholder
Agreement. Each Stockholder also agreed not to enter into any agreement with or
grant any proxy to any person or entity prior to the Termination Date to vote or
give instructions in any manner inconsistent with clauses (i), (ii) or (iii) of
the preceding sentence. It was agreed that the foregoing will not limit or
prohibit either Stockholder from entering into any agreement simultaneously with
or after termination of the Stockholder Agreement.
Also in the Stockholder Agreements, each Stockholder agreed that he would
not (directly or indirectly through advisors, agents or other intermediaries),
(a) solicit or initiate inquiries, proposals or offers from any Person (other
than Parent or any of its affiliates) relating to any Takeover Proposal or (b)
in connection with any of the foregoing, enter into or participate in any
discussions (knowingly) or negotiations or furnish to any other Person any
information with respect to the business, properties or assets of the Company or
any of its subsidiaries; provided, however, that the foregoing will not restrict
such Stockholder as a director, officer or employee of the Company from taking
actions in any such capacity to the extent and in the circumstances permitted by
the Merger Agreement or as required by applicable law or his fiduciary duties as
such director, officer or employee. If a Stockholder receives any inquiry or
proposal, in his capacity as a Stockholder and with respect to his Shares, then
such Stockholder promptly will inform Parent of the terms and conditions, if
any, of such inquiry or proposal and the identity of the person making it. Each
Stockholder agreed to immediately cease and cause his advisors, agents and other
intermediaries to cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing.
Prior to the Termination Date, each Stockholder agrees that he will not
directly or indirectly: (a) except pursuant to the terms of the Offer and the
Merger Agreement, and to Parent pursuant to the Stockholder Agreements, offer
for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose
of, enforce or permit the execution of the provisions of any redemption
agreement with the Company or enter into any contract, option or other binding
agreement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, or other disposition of, or
exercise any discretionary powers to distribute, any or all of the Shares owned
by him or any interest therein; (b) except as contemplated hereby, grant any
proxies or powers of attorney with respect to any such Shares, deposit any such
Shares into a voting trust or enter into a voting agreement with respect to any
such Shares; or (c) take any action that would make any representation or
warranty of such Stockholder contained in a Stockholder Agreement untrue or
incorrect in any material respect or have the effect of preventing or disabling
such Stockholder from performing its obligations under his Stockholder
Agreement. Anything to the contrary in a Stockholder Agreement notwithstanding,
each Stockholder may sell, dispose of and/or transfer all or any portion of his
Shares for tax, securities or estate planning purposes, for charitable donation
purposes or to any Section 501(c)(3) organization as long as the purchaser or
transferee of such Shares agrees to be bound by the provisions of and becomes a
party to the appropriate Stockholder's Stockholder Agreement.
In the Stockholder Agreements, each Stockholder waives any rights of
appraisal or rights to dissent from the Merger that such Stockholder may have.
Each of the Stockholder Agreements provides that if (a) the Merger Agreement
is terminated in accordance with Section 8.1(f)(ii) or Section 8.1(h) of the
Merger Agreement, (b) within three months after the Merger Agreement is
terminated, a contract or agreement relating to a Third Party Business
Combination, as defined below, is entered into and (c) a Stockholder receives,
within twelve months after the Merger Agreement is terminated, from any person
(other than Parent, Purchaser or any of their affiliates) any cash or non-cash
consideration in an amount per share greater than $16.00 (the "Third Party
Consideration") in respect of any sale or disposition of all or any portion of
his Shares in connection with and as part of a Third Party Business Combination,
then such Stockholder within two (2) Business Days of receipt thereof shall pay
to Parent or its designee an aggregate amount equal to fifty percent (50%) of
(A) the excess of the Third Party Consideration over $16.00 multiplied by (B)
the number of Shares with respect to which such Third Party Consideration was
received; provided that, (x) if the consideration
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received by the Stockholder shall be securities listed on a national securities
exchange or traded on the Nasdaq National Market, the per share value of such
consideration shall be equal to the closing price per share listed on such
national securities exchange or Nasdaq National Market on the date such
transaction is consummated, (y) if the consideration received by the Stockholder
shall be in a form other than such listed securities, the per share value shall
be determined as of the date such transaction is consummated in good faith by
Parent or its designee and the Stockholder or his designee or if the Parent and
its designee and the Stockholder and his designee cannot reach agreement, by a
nationally recognized investment banking firm reasonably acceptable to the
parties and (z) the Stockholder will pay Parent or its designee in kind and on a
pro rata basis (i.e., if the Third Party Consideration includes cash, listed
securities and/or other consideration, Parent or its designee will receive its
pro rata portion of each such item). The term "Third Party Business Combination"
means the occurrence of any of the following events: (i) the Company or any
subsidiaries whose assets constitute all or substantially all of the business or
assets of the Company is acquired by merger or otherwise by any person or group,
other than Parent or any affiliate thereof (a "Third Party"); (ii) the sale to a
Third Party of all or substantially all of the business or assets of the Company
and its subsidiaries, taken as a whole; and (iii) the Company, or both
Stockholders enter into a merger or other agreement with a Third Party which
contemplates, in a single transaction or series of related transactions, the
acquisition of all or substantially all of the Shares owned by both
Stockholders.
All obligations of the Stockholders under the Stockholder Agreements except
for the obligations in the immediately preceding paragraph (which obligations
will only survive for the period set forth therein), shall terminate upon the
first to occur of (a) the acceptance for payment of Shares of a Stockholder in
the Offer, (b) the Effective Time of the Merger and (c) the time the Merger
Agreement is terminated in accordance with its terms (such earlier time being
the "Termination Date").
CONFIDENTIALITY AGREEMENT
The following is a summary of certain provisions of the Confidentiality
Agreement, dated October 31, 1997, between the Company, the Parent and Harvest
(the "Confidentiality Agreement"). The following description of the
Confidentiality Agreement does not purport to be complete and is qualified by
reference to the text of the Confidentiality Agreement, a copy of which has been
filed with the Commission as an exhibit to the Schedule 14D-1 and is
incorporated herein by reference.
Effective October 31, 1997, the Company, the Parent and Harvest entered into
the Confidentiality Agreement. Pursuant to the Confidentiality Agreement, the
Parent and Harvest agreed to treat in strict confidence all information
furnished by the Company, and the Company agreed to treat in strict confidence
all information furnished by the Parent. In addition, the Parent and Harvest
agreed not to purchase any Shares or pursue an acquisition of the Company in any
manner for a period of 18 months without the prior written consent of the
Company. The Confidentiality Agreement specifically amends, restates and
supersedes a prior confidentiality agreement between the parties dated October
9, 1997.
12. PLANS FOR THE COMPANY AFTER THE OFFER AND THE MERGER; OTHER MATTERS.
PLANS FOR THE COMPANY. The Parent is conducting a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and will consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances which exist upon completion of the
Offer. Such changes could include changes in the Company's business, corporate
structure, certificate of incorporation, by-laws, capitalization, Board of
Directors, management or dividend policy, although, except as disclosed in this
Offer to Purchase, the Parent has no current plans with respect to any such
matters. It is presently expected that, initially following the Merger, the
business and operations of the Company will, except as set forth in this Offer
to Purchase, be continued substantially as they are currently being conducted.
The Parent, however, will continue to evaluate the business and operations of
the Company and will take such actions as it deems appropriate under the
circumstances then existing with a view to optimizing exploitation of the
Company's potential in conjunction with the Parent's businesses.
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<PAGE>
The Merger Agreement provides that, promptly upon the purchase by the
Purchaser of Shares pursuant to the Offer and from time to time thereafter, the
Parent will be entitled to designate up to such number of directors, rounded up
to the next whole number, on the Board of Directors of the Company, as is equal
to the product of the total number of directors on such Board (giving effect to
the directors designated by the Parent pursuant to this sentence) multiplied by
the percentage that the number of Shares beneficially owned by the Purchaser or
any affiliate of the Purchaser bears to the total number of Shares then
outstanding. See Section 11. The Merger Agreement further provides that the
directors of the Purchaser and the officers of the Company at the Effective Time
of the Merger will, from and after the Effective Time, be the initial directors
and officers, respectively, of the Surviving Corporation.
Except as disclosed in this Offer to Purchase, neither the Parent nor the
Purchaser has any present plans or proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of assets, involving
the Company or any of its subsidiaries, or any material changes in the Company's
corporate structure, business or composition of its management or personnel.
OTHER MATTERS
STOCKHOLDER APPROVAL. Under the DGCL, the approval of the Board of
Directors of the Company and the affirmative vote of the holders of a majority
of the outstanding Shares are required to adopt and approve the Merger Agreement
and the transactions contemplated thereby. The Company has represented in the
Merger Agreement that the execution and delivery of the Merger Agreement by the
Company and the consummation by the Company of the transactions contemplated by
the Merger Agreement have been duly authorized by all necessary corporate action
on the part of the Company, subject to the approval of the Merger by the
Company's stockholders in accordance with the DGCL. In addition, the Company has
represented that the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is the only vote of the holders of any class
or series of the Company's capital stock which is necessary to approve the
Merger Agreement and the transactions contemplated thereby, including the
Merger. Therefore, unless the Merger is consummated pursuant to the short-form
merger provisions under the DGCL described below (in which case no further
corporate action by the stockholders of the Company will be required to complete
the Merger), the only remaining required corporate action of the Company will be
the approval of the Merger Agreement and the transactions contemplated thereby
by the affirmative vote of the holders of a majority of the shares of Common
Stock. The Company, pursuant to the Merger Agreement, has agreed to take all
action necessary to convene a meeting of its stockholders as promptly as
practicable after the purchase of Shares pursuant to the Offer for the purpose
of considering and voting on the Merger Agreement and the transactions
contemplated thereby, if such action is required by the DGCL. The Merger
Agreement further provides that the Parent will vote, or will cause to be voted,
all Shares then owned by the Parent, the Purchaser or any of the Parent's other
subsidiaries and affiliates in favor of the approval of the Merger and the
adoption of the Merger Agreement. Accordingly, if the Minimum Condition is
satisfied, the Purchaser will have sufficient voting power to cause the approval
and adoption of the Merger Agreement and the transactions contemplated thereby
without the affirmative vote of any other stockholder.
SHORT-FORM MERGER. Pursuant to Section 253 of the DGCL, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge such other corporation
into itself without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the event
that the Parent, the Purchaser and any other subsidiaries of the Parent acquire,
in the aggregate, at least 90% of the outstanding shares of Common Stock
pursuant to the Offer or otherwise, then, at the election of the Parent, a
short-form merger could be effected without any approval of the Board of
Directors or the stockholders of the Company, subject to compliance with the
provisions of Section 253 of the DGCL. Even if the Parent and the Purchaser do
not own, in the aggregate, at least 90% of the outstanding shares of
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<PAGE>
Common Stock following consummation of the Offer, the Parent and the Purchaser
could seek to purchase additional Shares in the open market or otherwise in
order to reach the 90% threshold and employ a short-form merger. The per share
consideration paid for any Shares not acquired pursuant to the Offer may be
greater or less than the per share consideration paid in the Offer. The Parent
presently intends to effect a short-form merger with the Company if permitted to
do so under the DGCL.
DELAWARE STATE TAKEOVER LAW. Section 203 of the DGCL, in general, prohibits
a Delaware corporation such as the Company from engaging in a "Business
Combination" (defined as a variety of transactions, including mergers, as set
forth below) with an "Interested Stockholder" (defined generally as a person
that is the beneficial owner of 15% or more of a corporation's outstanding
voting stock) for a period of three years following the date that such person
became an Interested Stockholder unless (a) prior to the date such person became
an Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder, (b) upon consummation of the
transaction that resulted in the stockholder becoming an Interested Stockholder,
the Interested Stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding stock
held by directors who are also officers of the corporation and employee stock
ownership plans that do not provide employees with the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer or (c) on or subsequent to the date such person became
an Interested Stockholder, the Business Combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders, and
not be written consent, by the affirmative vote of the holders of at least
66 2/3% of the outstanding voting stock of the corporation not owned by the
Interested Stockholder.
Under Section 203 of the DGCL, the restrictions described above do not apply
if, among other things (a) the corporation's original certificate of
incorporation contains a provision expressly electing not to be governed by
Section 203; (b) the corporation, by action of its stockholders, adopts an
amendment to its certificate of incorporation or by-laws expressly electing not
to be governed by Section 203, PROVIDED THAT, in addition to any other vote
required by law, such amendment of the certificate of incorporation or by-laws
must be approved by the affirmative vote of a majority of the shares entitled to
vote, which amendment would not be effective until 12 months after the adoption
of such amendment and would not apply to any Business Combination between the
corporation and any person who became an Interested Stockholder of the
corporation on or prior to the date of such adoption; (c) the corporation does
not have a class of voting stock that is (1) listed on a national securities
exchange, (2) authorized for quotation on an inter-dealer quotation system of a
registered national securities association or (3) held of record by more than
2,000 stockholders, unless any of the foregoing results from action taken,
directly or indirectly, by an Interested Stockholder or from a transaction in
which a person became an Interested Stockholder; or (d) a stockholder becomes an
Interested Stockholder "inadvertently" and thereafter divests itself of a
sufficient number of shares so that such stockholder ceases to be an Interested
Stockholder. Under Section 203 of the DGCL, the restrictions described above
also do not apply to certain Business Combinations proposed by an Interested
Stockholder following the announcement or notification or one of certain
extraordinary transactions involving the corporation and a person who had not
been an Interested Stockholder during the previous three years or who became an
Interested Stockholder with the approval of a majority of the corporation's
directors.
Section 203 provides that, during such three-year period, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
Interested Stockholder or any affiliate or associate thereof, including, without
limitation, (a) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of all assets of the corporation determined on a
consolidated basis or the aggregate market value of all the outstanding stock of
a corporation; (b) any transaction which results in the issuance or transfer by
the corporation or by certain subsidiaries thereof of any stock of the
34
<PAGE>
corporation or such subsidiaries to the Interested Stockholder, except pursuant
to a transaction which effects a pro rata distribution to all stockholders of
the corporation; (c) any transaction involving the corporation or certain
subsidiaries thereof which has the effect of increasing the proportionate share
of the stock of any class or series, or securities convertible into the stock of
any class or series, of the corporation or any such subsidiary which is owned
directly or indirectly by the Interested Stockholder (except as a result of
immaterial changes due to fractional share adjustments); or (d) any receipt of
the Interested Stockholder of the benefit (except proportionately as a
stockholder of such corporation) of any loans, advances, guarantees, pledges or
other financial benefits provided by or through the corporation.
The Company has represented in the Merger Agreement that the provisions of
Section 203 of the DGCL are not applicable to any of the transactions
contemplated by the Merger Agreement, including the Merger and the purchase of
Shares in the Offer.
APPRAISAL RIGHTS. Holders of Shares do not have appraisal rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares at
the Effective Time of the Merger will have certain rights pursuant to the
provisions of Section 262 of the DGCL to dissent and demand appraisal of, and to
receive payment in cash of the fair value of, their Shares. Such rights to
dissent, if the statutory procedures are complied with, could lead to a judicial
determination of the fair value of the Shares, as of the day prior to the date
on which the stockholder vote was taken approving the Merger (excluding any
element of value arising from the accomplishment or expectation of the Merger)
required to be paid in cash to such dissenting holders for their Shares. In
addition, such dissenting stockholders would be entitled to receive payment of a
fair rate of interest from the date of consummation of the Merger on the amount
determined to be the fair value of their Shares. In determining the fair value
of the Shares, the court is required to take into account all relevant factors.
Accordingly, such determination could be based upon considerations other than,
or in addition to, the market value of the Shares, including, among other
things, asset values and earning capacity. In WEINBERGER V. UOP, INC., the
Delaware Supreme Court stated, among other things, that proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court should be considered in an appraisal
proceeding. Therefore, the value so determined in any appraisal proceeding could
be the same, more or less than the purchase price per Share in the Offer.
In addition, several decisions by Delaware courts have held that, in certain
circumstances, a controlling stockholder of a company involved in a merger has a
fiduciary duty to other stockholders which requires that the merger be fair to
such other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of consideration to be received by the stockholders and whether there was
fair dealing among the parties. The Delaware Supreme Court stated in WEINBERGER
AND RABKIN V. PHILIP A. HUNT CHEMICAL CORP. that the remedy ordinarily available
to minority stockholders in a cash-out merger is the right to appraisal
described above. However, a damages remedy or injunctive relief may be available
if a merger is found to be the product of procedural unfairness, including
fraud, misrepresentation or other misconduct.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE APPRAISAL RIGHTS. THE PRESERVATION AND
EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE
PROVISIONS OF THE DGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may, under
certain circumstances, be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which the
Purchaser seeks to acquire the remaining Shares not held by it. The Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger. If Rule
13e-3 were applicable to the Merger or any other business combination between
the Company and the Purchaser, such Rule would require, among other
35
<PAGE>
things, that certain financial information concerning the Company, and certain
information relating to the fairness of the proposed transaction and the
consideration offered to minority stockholders in such transaction, be filed
with the Commission and disclosed to minority stockholders prior to consummation
of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that the Company will not, prior to the
acceptance for payment of Shares pursuant to the Offer or, if the Company fails
to comply with its obligations under Section 1.3 of the Merger Agreement
(relating to the composition of the Company's Board of Directors), the time the
designees of the Parent have been elected to, and will constitute a majority of,
the Board of Directors of the Company pursuant to Section 1.3 of the Merger
Agreement, without the prior written approval of the Parent, and except as
otherwise contemplated or permitted by the Merger Agreement, directly or
indirectly (i) except upon exercise of Options or other rights to purchase
Shares outstanding on the date of the Merger Agreement, issue, sell, transfer or
pledge or agree to sell, transfer or pledge any treasury stock of the Company or
any capital stock of any of the Company's Subsidiaries beneficially owned by it,
(ii) split, combine or reclassify the outstanding Shares or any outstanding
capital stock of any of the Subsidiaries of the Company or (iii) other than the
payment of dividends or other distributions by Subsidiaries to the Company or to
other Subsidiaries (a) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property, with respect to its capital
stock, (b) issue, sell, pledge, dispose of or encumber any additional shares of,
or securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire (or stock appreciation rights with
respect to), capital stock of any class of the Company or its Subsidiaries,
other than Shares reserved for issuance on the date of the Merger Agreement
pursuant to the exercise of Options outstanding on the date of the Merger
Agreement or (c) redeem, purchase or otherwise acquire any of its capital stock.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Purchaser will not be
required to accept for payment any Shares tendered pursuant to the Offer, and,
subject to the terms of the Merger Agreement, may terminate the Offer if (i) by
the Expiration Date of the Offer, the Minimum Condition will not have been
satisfied or (ii) at any time on or after the date of the Merger Agreement, and
prior to the time for acceptance for payment for any such Shares, any of the
following events will occur and remain in effect other than as a result directly
or proximately from a state of facts or action or inaction which constitutes a
breach of a representation, warranty or covenant of the Purchaser or the Parent:
(a) there will be instituted or pending any suit, action or proceeding by a
Governmental Entity seeking to (1) make illegal or otherwise directly restrain
or prohibit the making of the Offer, the acquisition of any Shares by the
Purchaser pursuant to the Offer or the consummation of the Merger, (2) restrain
or prohibit the Parent's or the Purchaser's ownership or operation (or that of
their respective subsidiaries or affiliates) of all or any material portion of
the business or assets of the Company and its Subsidiaries, taken as a whole,
or, following consummation of the Offer or the Merger and as a result thereof,
of the Parent and its subsidiaries, taken as a whole, or to compel the Parent or
any of its subsidiaries or affiliates to dispose of or hold separate all or any
material portion of the business or assets of the Company and its Subsidiaries,
taken as a whole, or, following consummation of the Offer or the Merger and as a
result thereof, of the Parent and its subsidiaries, taken as a whole, (3) impose
material limitations on the ability of the Parent or any of its subsidiaries or
affiliates effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares to be acquired
pursuant to the Offer on all matters properly presented to the Company's
stockholders, or (4) require divestiture by the Parent or any of its
subsidiaries or affiliates of any Shares to be acquired pursuant to the Offer;
36
<PAGE>
(b) there shall be any statute, rule, regulation, injunction, order or
decree issued, promulgated, enacted, entered or enforced that results in any of
the consequences referred to in clauses (1) through (4) of paragraph (a) above;
(c) there shall have occurred (and the adverse effect of such occurrence
shall be continuing for more than three business days) (1) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange or on the Nasdaq National Stock Market (excluding any
trading halt triggered solely as a result of a specified decrease in a market
index), (2) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States or any limitation by United States
federal or state authorities on the extension of credit by banks or other
financial institutions, (3) a commencement of a war directly involving the armed
forces of the United States, a material commitment of the armed forces of the
United States or other international or national calamity directly involving the
armed forces of the United States, if, as a result of such war, commitment of
armed forces or other calamity, banks generally stop lending funds for middle
market acquisition transactions, but specifically other than in connection with
increases in interest rates or (4) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof;
(d) the Company shall have (1) breached in any material respect any material
covenant or other agreement contained in the Merger Agreement, (2) any
representation or warranty of the Company made in the Merger Agreement which is
qualified as to Material Adverse Effect shall fail to be true and correct at any
time prior to expiration of the Offer as if made at such time or (3) any other
representation or warranty of the Company made in the Merger Agreement shall
fail to be true and correct at any time prior to expiration of the Offer as if
made at such time, which failure to be true and correct would have a Material
Adverse Effect, in each case which breach or which failure to be true and
correct cannot be or has not been cured within ten business days of the receipt
of written notice thereof;
(e) the Merger Agreement shall have been terminated in accordance with its
terms;
(f) the Board of Directors of the Company shall have withdrawn or materially
modified in a manner adverse to the Parent or the Purchaser its approval or
recommendation of the Offer, the Merger or the Merger Agreement; or
(g) the Company shall have entered into, or shall have publicly announced
its intention to enter into, a definitive written agreement or agreement in
principle providing for a Takeover Proposal.
The foregoing conditions are for the sole benefit of the Parent and the
Purchaser, other than the Minimum Condition and other than the termination of
the Merger Agreement in accordance with its terms, and other than the Minimum
Condition and such termination, may be waived by the Purchaser, in whole or in
part. The failure by the Purchaser, at any time, to exercise any of the
foregoing rights shall not be deemed a waiver of any such rights; the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right which may be asserted at any time or from
time to time.
15. CERTAIN LEGAL MATTERS.
GENERAL. Except as described in this Section 15, and based upon its
examination of publicly available information with respect to the Company and
the review of certain information provided by the Company to the Parent, neither
the Purchaser nor the Parent is aware of any license or other regulatory permit
that appears to be material to the business of the Company which might be
adversely affected by the Purchaser's acquisition of Shares pursuant to the
Offer or of any approval or other action by a domestic (federal or state) or
foreign governmental, administrative or regulatory agency or authority that
would be required prior to the acquisition of Shares by the Purchaser pursuant
to the Offer. Should any such approval or other action be required, the
Purchaser and the Parent presently contemplate that such approval or other
action will be sought, except as described below under "Other State Takeover
Laws."
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There can be no assurance that any such approval or other action, if needed,
would be obtained without substantial conditions or that failure to obtain any
such approval or other action might not result in consequences adverse to the
Company's, the Purchaser's and/or the Parent's respective businesses or that
certain parts of the Company's, the Purchaser's and/or the Parent's respective
businesses might not have to be disposed of or held separate or other
substantial conditions complied with in the event that such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 14 for certain
conditions to the Offer, including conditions with respect to governmental
actions.
OTHER STATE TAKEOVER LAWS. The Company conducts business in a number of
states throughout the United States, some of which have enacted takeover laws
and regulations. Neither the Parent nor the Purchaser knows whether any or all
of these takeover laws and regulations will by their terms apply to the Offer,
and, except as set forth above with respect to Section 203 of the DGCL, neither
the Parent nor the Purchaser has currently complied with any other state
takeover statute or regulation. The Purchaser reserves the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer and nothing in this Offer to Purchase or any action taken in connection
with the Offer is intended as a waiver of such right. If it is asserted that any
state takeover statute is applicable to the Offer and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer, the
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and the Purchaser might be
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
or may be delayed in consummating the Offer. In such case, the Purchaser may not
be obligated to accept for payment or pay for any Shares tendered pursuant to
the Offer. Section 14.
FEDERAL RESERVE BOARD MARGIN CREDIT REGULATIONS. Federal Reserve Board
Regulations G, T, U and X (the "Margin Credit Regulations") restrict the
extension or maintenance of credit for the purpose of buying or carrying margin
stock, including the Shares, if the credit is secured directly or indirectly by
margin stock. Such secured credit may not be extended or maintained in an amount
that exceeds the maximum loan value of all the direct and indirect collateral
securing the credit, including margin stock and other collateral. Under the
Margin Credit Regulations, the Shares presently are margin stock and the maximum
loan value thereof is generally 50% of the Shares' current market value. All
financing for the Offer will be structured so as to be in full compliance with
the Margin Credit Regulations.
16. FEES AND EXPENSES. The Parent has retained Morrow & Co., Inc.
("Morrow"), as the Information Agent, and IBJ Schroder Bank & Trust Company, as
the Depositary, in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telex, telecopy, telegraph and personal
interview and may request banks, brokers, dealers and other nominee stockholders
to forward materials relating to the Offer to beneficial owners.
As compensation for acting as Information Agent in connection with the
Offer, Morrow will be paid a fee of $5,000 and will be reimbursed for
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection with the Offer, including certain liabilities under the
federal securities laws. The Parent will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
under federal securities laws.
Piper Jaffray Companies Inc. ("Piper Jaffray") acted as financial advisor to
the Parent in connection with the transactions contemplated by the Offer,
including the Merger. In consideration for such services, Piper Jaffray will be
paid a fee of $650,000.
Except as set forth above, the Purchaser will not pay any fees or
commissions to any broker or dealer or other person for making recommendations
or soliciting tenders in connection with the Offer. Brokers,
38
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dealers, commercial banks and trust companies will be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
17. MISCELLANEOUS. The Offer is being made to all holders of Shares other
than the Company. The Purchaser is not aware of any jurisdiction in which the
making of the Offer or the tender for Shares in connection therewith would not
be in compliance with the laws of such jurisdiction. If the Purchaser becomes
aware of any jurisdiction in which the making of the Offer or the tender for
Shares would not be in compliance with applicable law, the Purchaser will make a
good faith effort to comply with any such law. If, after such good faith effort,
the Purchaser cannot comply with any such law, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Shares
residing in such jurisdiction. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer will be deemed to be made on behalf of the Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PARENT OR THE PURCHASER NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 promulgated under the Exchange Act, the Purchaser and
the Parent have filed with the Commission the Schedule 14D-1, together with
exhibits, thereby furnishing certain additional information with respect to the
Offer. The Schedule 14D-1 and any amendments thereto, including exhibits, may be
inspected at, and copies may be obtained from, the offices of the Commission and
the NASD in the manner set forth in Section 8 of this Offer to Purchase (except
that they will not be available at the regional offices of the Commission).
Zephyros Acquisition Corporation
Lund International Holdings, Inc.
November 28, 1997
39
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SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS OF
THE PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT. Set forth below is the
name, business address and present principal occupation, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of the Parent. Unless otherwise indicated, the
current business address of each person is 911 Lund Boulevard, Anoka, Minnesota
55303. Each such person is a citizen of the United States of America.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT; MATERIAL POSITIONS HELD
NAME AND ADDRESS DURING THE PAST FIVE YEARS
------------------------------------------------ --------------------------------------------------------
<S> <C> <C>
<CAPTION>
DIRECTORS
------------------------------------------------
<S> <C> <C>
1. David E. Dovenberg Mr. Dovenberg has served as Chief Financial Officer of
1250 Northland Plaza Universal Hospital Services, a provider of movable
3800 West 80th Street medical equipment through Pay-Per- Use Equipment
Bloomington, Minnesota 55431 Management Programs, since May 1988.
2. Ira D. Kleinman Mr. Kleinman has served as General Partner of Harvest
Harvest Partners, Inc. since 1991. From 1984 to 1987, Mr. Kleinman served as
767 Third Avenue Controller of Harvest and since 1987, Mr. Kleinman has
New York, New York 10022 served as Chief Financial Officer of Harvest.
3. William J. McMahon Mr. McMahon has served as President and Chief Executive
Officer of the Parent since September 1994. From May
1991 to September 1994, Mr. McMahon served as Chief
Operating Officer for Anagram International, Inc., a
manufacturer and distributor of consumer products and
industrial packaging.
4. Robert R. Schoeberl Mr. Schoeberl is a retired executive of Montgomery Ward
since 1994, where Mr. Schoeberl spent 35 years. Mr.
Schoeberl is a member of the board of Directors of the
Automotive Foundation for the Aftermarket and a member
of the Automotive Parts and Accessories Association.
5. Dennis W. Vollmershausen Mr. Vollmershausen has served as Chairman of the Board
P.O. Box 10 of London Machinery, Inc., an equipment manufacturing
160 Maitland Road company, since 1990. In addition, Mr. Vollmershausen has
Goderich, Ontario served as Executive Vice President of Champion Road
N7A3Y6 Machinery, Ltd., a construction company ("Champion"),
from August 1996 to June 1997, and as President and
Chief Executive Officer of Champion since June 1997.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT; MATERIAL POSITIONS HELD
NAME AND ADDRESS DURING THE PAST FIVE YEARS
------------------------------------------------ --------------------------------------------------------
<S> <C> <C>
6. Harvey J. Wertheim Mr. Wertheim has served as Managing General Partner of
Harvest Partners, Inc. Harvest since 1981.
767 Third Avenue
New York, New York 10022
7. Lawrence C. Day Mr. Day has served as President and Chief Executive
Monro Muffler Brake, Inc. Officer of Monro Muffler Brake, Inc., a retail auto
200 Holleder Park service company with approximately 320 retail stores
Rochester, New York 14615 located throughout the eastern United States ("Monro"),
since April 1995. Mr. Day previously served as Executive
Vice President and Chief Operative Officer of Monro from
July 1993 through March 1995. From December 1991 through
June 1993, Mr. Day served as Vice President of the
Montgomery Ward Auto Express division of Montgomery
Ward.
<CAPTION>
EXECUTIVE OFFICERS
------------------------------------------------
<S> <C> <C>
1. William J. McMahon President and Chief Executive Officer. For further
information, see above.
2. Jay M. Allsup Mr. Allsup has served as Director of Finance and Chief
Financial Officer of the Parent since October 1993 and
June 1994, respectively. From April 1989 to October
1993, Mr. Allsup served as Chief Financial Officer of
Standun, Inc., a manufacturing holding company.
3. Bradley W. Andress Mr. Andress has served as Vice President of Marketing of
the Parent since October 1995. From August 1985 to
October 1995, Mr. Andress held various positions,
including Vice President of Marketing and Vice President
of Sales, at Plastics Inc. and Anchor-Hocking Plastics,
which are divisions of the Newell Companies.
4. Kathy R. Smith Ms. Smith has served as Executive Assistant to the Chief
Executive Officer of the Parent since April 1990. Ms.
Smith has also served as Corporate Secretary and
Investor Relations Officer of the Parent since February
1994.
5. William H. Toms Mr. Toms has served as Vice President of Operations of
the Parent since April 1995. From 1983 to April 1995,
Mr. Toms served as Vice President of Operations of
Anchor-Hocking Plastics, a manufacturer of household
storage containers and microwave cookware accessories,
and a division of the Newell Companies.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT; MATERIAL POSITIONS HELD
NAME AND ADDRESS DURING THE PAST FIVE YEARS
------------------------------------------------ --------------------------------------------------------
<S> <C> <C>
6. Stephen S. Treichel Mr. Treichel has served as Vice President of Strategic
and Human Information Systems of the Parent since
October 1995. From 1993 to October 1995, Mr. Treichel
served as President of Process Management International,
a management consulting firm. From 1990 to 1993, Mr.
Treichel served as a senior manager of strategic
services at McGladrey & Pullen, certified public
accountants and consultants.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. Set forth below is
the name, business address and present principal occupation or employment, and
material occupations, positions, offices or employments and business addresses
thereof for the past five years, of each director and executive officer of the
Purchaser. Unless otherwise indicated, the current business address of each
person is 911 Lund Boulevard, Anoka, Minnesota 55303. Each such person is a
citizen of the United States of America.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT; MATERIAL POSITIONS HELD
NAME AND ADDRESS DURING THE PAST FIVE YEARS
------------------------------------------------ --------------------------------------------------------
<S> <C> <C>
1. Ira D. Kleinman See Part 1 of this Schedule I.
2. William J. McMahon See Part 1 of this Schedule I.
3. Jay M. Allsup See Part 1 of this Schedule I.
</TABLE>
I-3
<PAGE>
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and Share Certificates evidencing Shares and any other required
documents should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
IBJ SCHRODER BANK &
TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSIONS BY HAND OR OVERNIGHT COURIER:
P.O. BOX 84 (FOR ELIGIBLE INSTITUTIONS 1 STATE STREET
BOWLING GREEN STATION ONLY) NEW YORK, NEW YORK 10004
NEW YORK, NEW YORK 10274-0084 (212) 858-2611 ATTN.: REORGANIZATION DEPT.
ATTN.: REORGANIZATION DEPT. CONFIRM RECEIPT OF FACSIMILE SECURITIES PROCESSING
BY TELEPHONE: WINDOW SC-1
(212) 858-2103
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A stockholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
DEFLECTA-SHIELD CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 28, 1997
BY
ZEPHYROS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
LUND INTERNATIONAL HOLDINGS, INC.
THIS OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED.
<TABLE>
<S> <C> <C>
THE DEPOSITARY FOR THE OFFER
IS:
IBJ SCHRODER BANK & TRUST COMPANY
BY MAIL: FACSIMILE TRANSMISSIONS: BY HAND OR OVERNIGHT COURIER:
P.O. Box 84 (FOR ELIGIBLE INSTITUTIONS 1 State Street
Bowling Green Station ONLY) New York, New York 10004
New York, New York 10274-0084 (212) 858-2611 Attn.: Reorganization Dept.
Attn.: Reorganization Dept. CONFIRM RECEIPT OF FACSIMILE Securities Processing
BY TELEPHONE: Window SC-1
(212) 858-2103
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE
SUBSTITUTE FORM W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES
<S> <C> <C> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
TOTAL NUMBER
OF
SHARES
REPRESENTED NUMBER OF
CERTIFICATE BY SHARES
NUMBER(S)* CERTIFICATES(S) TENDERED**
TOTAL SHARES
* Need not be completed by stockholders by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares being delivered to the
Depositary are being tendered. See Instruction 4.
</TABLE>
<PAGE>
This Letter of Transmittal is to be completed by stockholders of
Deflecta-Shield Corporation (the "Company") if certificates representing Shares
(as defined below) ("Share Certificates") are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase (as defined
below)) is utilized, if delivery of Shares is to be made by book-entry transfer
to the Depositary's account at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the book-entry transfer procedures set forth in
Section 3 of the Offer to Purchase. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Payment for Shares tendered and purchased pursuant to the Offer will be made
only after timely receipt by the Depositary of, among other things, such Share
Certificates, if such Share Certificates have been distributed to holders of
Shares.
Stockholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other documents required hereby
to the Depositary prior to the Expiration Date (as defined in the Offer to
Purchase), or who cannot comply with the book-entry transfer procedures on a
timely basis, may nevertheless tender their Shares pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution:
------------------------------------------------------------
Provide Account Number and
Transaction Code Number:
Account Number:
-----------------------------------------------------------------------
Transaction Code Number:
---------------------------------------------------------------
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY (PLEASE INCLUDE A
PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY) AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
---------------------------------------------------------
Window Ticket No. (if any):
--------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
----------------------------------------
Name of Institution which Guaranteed Delivery:
--------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Zephyros Acquisition Corporation, a
Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Lund
International Holdings, Inc., a Delaware corporation (the "Parent"), the
above-described shares of common stock, par value $.01 per share (the "Shares"),
of Deflecta-Shield Corporation, a Delaware corporation (the "Company"), pursuant
to the Purchaser's offer to purchase all outstanding Shares at a price of $16.00
per Share, net to the seller in cash (the "Offer Price"), without interest
thereon, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase, dated November 28, 1997 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Offer to Purchase, each as amended or
supplemented from time to time, constitute the "Offer").
Upon the terms of the Offer and subject to, and effective upon, acceptance
for payment of the Shares tendered herewith in accordance with the terms of the
Offer (including, if the Offer is extended or amended pursuant to its terms, the
terms and conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Purchaser all right,
title and interest in and to all the Shares that are being tendered hereby and
any and all other Shares or other securities issued or issuable in respect
thereof on or after November 28, 1997 (a "Distribution"), and irrevocably
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and any Distributions), with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) deliver certificates for such Shares
(individually, a "Share Certificate")(and any Distributions), or transfer
ownership of such Shares (and any Distributions) on the account books maintained
by the Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Purchaser, (b) present such Shares (and any Distributions) for transfer on
the books of the Company and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares (and any Distributions), all in
accordance with the terms and subject to the conditions of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints Ira D. Kleinman and William J. McMahon as proxies of the undersigned,
each with full power of substitution, to the fullest extent of the undersigned's
rights with respect to the Shares (and any Distributions) tendered by the
undersigned and accepted for payment by the Purchaser. The individuals named
above as proxies will, with respect to the Shares (and any Distributions), be
empowered to exercise all voting and other rights of the undersigned as they in
their sole discretion may deem proper at any annual, special, adjourned or
postponed meeting of the Company's stockholders, by written consent or
otherwise, and Purchaser reserves the right to require that, in order for Shares
(and any Distributions) to be deemed validly tendered, immediately upon
Purchaser's acceptance for payment of such Shares (and any Distributions),
Purchaser must be able to exercise full voting rights with respect to such
Shares (and any Distributions). All such proxies shall be considered coupled
with an interest in the tendered Shares. This appointment will be effective if,
when, and only to the extent that the Purchaser accepts such Shares (and any
Distributions) for payment pursuant to the Offer. Upon such acceptance for
payment, all prior proxies given by the undersigned with respect to such Shares,
Distributions and other securities will, without further action, be revoked, and
no subsequent proxies may be given.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions), and that when such Shares are accepted for
payment and payment is made by the Purchaser, the Purchaser will acquire good
title thereto, free and clear of all liens, restrictions, charges and
encumbrances, and that none of such Shares will be subject to any adverse claim.
The undersigned, upon request, shall execute and deliver all additional
documents reasonably deemed by the Depositary or the Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby (and any Distributions).
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned and be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned understands that the tender of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute an agreement
<PAGE>
between the undersigned and the Purchaser upon the terms and subject to the
conditions of the Offer. The undersigned acknowledges that under certain
circumstances specifically set forth in the Offer to Purchase, the Purchaser may
not be required to accept for payment any of the Shares tendered hereby.
Unless otherwise indicated in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not tendered or
not purchased, in the name(s) of the undersigned (and, in the case of Shares
tendered by book-entry transfer, by credit to the account at the Book-Entry
Transfer Facility). Similarly, unless otherwise indicated in the box entitled
"Special Delivery Instructions," please mail the check for the purchase price of
all Shares purchased and return all Share Certificates evidencing all Shares not
tendered or not purchased (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). In the
event that the boxes entitled "Special Payment Instructions" and "Special
Delivery Instructions" are both completed, please issue the check for the
purchase price of all Shares purchased and return all Share Certificates
evidencing Shares not tendered or not purchased in the name(s) of, and mail said
check and Share Certificates to, the person(s) so indicated. The undersigned
acknowledges that the Purchaser has no obligation, pursuant to the Special
Payment Instructions, to transfer any Shares from the name of the registered
holder(s) thereof if the Purchaser does not accept for payment any of the Shares
so tendered.
As set forth in the Merger Agreement and as described in the Offer to
Purchase, the Parent shall cause the Purchaser to perform and comply timely with
all of the Purchaser's obligations in or with respect to the Offer.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
and/or Share Certificates evidencing Shares not tendered or not purchased are to
be issued in the name of someone other than the undersigned.
Issue: / / Check / / Share Certificate(s) to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
________________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
and/or Share Certificates evidencing Shares not tendered or not purchased are to
be mailed to someone other than the undersigned, or to the undersigned at an
address other than shown above.
Mail: / / Check / / Share Certificate(s) to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
________________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
<PAGE>
IMPORTANT
STOCKHOLDERS: SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
____________________________________________________________________________
____________________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:____________, 1997
(Must be signed by the registered holder(s) exactly as such holder(s)
name(s) appear(s) on the Share Certificate(s) or on a security position
listing or by a person(s) authorized to become the registered holder(s) of
such Share Certificate(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Name(s) ____________________________________________________________________
(PLEASE PRINT)
Capacity (full title) ______________________________________________________
Address ____________________________________________________________________
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.: _______________________________________
Taxpayer Identification or Social Security No.: ____________________________
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
(PLEASE PRINT)
Title: _____________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _______________________________________________
Dated: ____________, 1997
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Instruction, includes any
participant in the Book-Entry Transfer Facility's systems whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(such participant, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be completed by Stockholders either if Share Certificates
are to be forwarded herewith or if Shares are to be delivered by book-entry
transfer pursuant to the procedures set forth in Section 3 of the Offer to
Purchase. Share Certificates evidencing all tendered Shares, or confirmation of
a book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility for all Shares delivered electronically, as well as a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message (as defined below), and any other
documents required by this Letter of Transmittal must be received by the
Depositary at one of its addresses set forth on the front page of this Letter of
Transmittal prior to the Expiration Date (as defined in the Offer to Purchase).
If Share Certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery. Stockholders whose Share Certificates are not immediately
available, who cannot deliver their Share Certificates and all other required
documents to the Depositary prior to the Expiration Date or who cannot complete
the procedure for book-entry transfer on a timely basis must tender their Shares
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by
or through an Eligible Institution; (b) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by Purchaser
herewith, must be received by the Depositary prior to the Expiration Date; and
(c) Share Certificates for all tendered Shares, in proper form for tender, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, together
with a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) with any required signature guarantees (or in the case
of a book-entry transfer, an Agent's Message), and any other document required
by this Letter of Transmittal, must be received by the Depositary within three
Trading Days (as defined in the Offer to Purchase) after the date of execution
of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer
to Purchase. The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility to, and received by the Depositary and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgement from the participant in the
Book-Entry Transfer Facility tendering the Shares, that such participant has
received and agrees to be bound by the terms of this Letter of Transmittal and
that the Purchaser may enforce such agreement against the participant.
<PAGE>
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND DELIVERY
OF SHARES WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. By
execution of this Letter of Transmittal (or a manually signed facsimile
thereof), all tendering stockholders waive any right to receive any notice of
the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all of the Shares represented by any Share Certificate
delivered to the Depositary herewith are to be tendered, fill in the number of
Shares which are to be tendered in the box entitled "Number of Shares Tendered."
In such case, a new Share Certificate evidencing the remainder of the Shares
that were evidenced by the Share Certificate delivered herewith to the
Depositary will be sent to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Delivery Instructions,"
as promptly as practicable following the expiration or termination of the Offer.
All Shares evidenced by Share Certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificate(s) evidencing such Shares without any change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the name of different
holders, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of such
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificate(s) or separate
stock powers are required, unless payment of the purchase price is to be made
to, or Share Certificate(s) evidencing Shares not tendered or not purchased are
to be issued in the name of, a person other than the registered holder(s), in
which case, the Share Certificate(s) evidencing the Shares tendered hereby must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on such Share
Certificate(s). Signatures on such Share Certificate(s) and stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on any
such Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing and proper evidence
satisfactory to the Purchaser of the authority of such person so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as provided in this Instruction 6, the
Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If,
<PAGE>
however, payment of the purchase price of any Shares purchased is to be made to,
or Share Certificate(s) evidencing Shares not tendered or not accepted for
payment are to be issued in the name of, a person other than the registered
holder(s) of such Shares, the amount of any stock transfer taxes (whether
imposed on the registered holder(s), such other person or otherwise) payable on
account of the transfer to such person will be deducted from the purchase price
of such Shares purchased, unless evidence satisfactory to the Purchaser of the
payment of such taxes, or exemption therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATE(S) LISTED IN THIS
LETTER OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate(s) is to be mailed to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered," the appropriate boxes on this Letter
of Transmittal must be completed.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at its
address or telephone numbers set forth below. Additional copies of the Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery, the
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 and other related materials may be obtained from the Information Agent
or from brokers, dealers, commercial banks and trust companies and such
materials shall be furnished at the Purchaser's expense.
9. SUBSTITUTE FORM W-9. Each tendering holder of Shares is required to
provide the Depositary with such holder's correct Taxpayer Identification Number
("TIN") on Substitute Form W-9 which is provided under "Important Tax
Information" below, and to certify, under penalties of perjury, that such number
is correct and that such stockholder is not subject to backup withholding of
federal income tax. If a tendering stockholder has been notified by the Internal
Revenue Service that such stockholder is subject to backup withholding, such
stockholder must cross out item (2) of the Certification box of the Substitute
Form W-9, unless such stockholder has since been notified by the Internal
Revenue Service that such stockholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to 31% federal income tax withholding on the
payment of the purchase price of all Shares purchased from such stockholder. If
the tendering stockholder has not been issued a TIN and has applied for one or
intends to apply for one in the near future, such stockholder should write
"Applied For" in the space provided for the TIN in Part III of the Substitute
Form W-9, and sign and date the Substitute Form W-9. If "Applied For" is written
in Part III and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% on all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace such Share Certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed Share Certificates have been
followed.
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF), PROPERLY COMPLETED AND DULY EXECUTED, WITH ANY REQUIRED SIGNATURE
GUARANTEES, OR AN AGENT'S MESSAGE (TOGETHER WITH SHARE CERTIFICATES OR
CONFIRMATION OF BOOK-ENTRY TRANSFER) AND ALL OTHER REQUIRED DOCUMENTS OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a holder of Shares whose tendered Shares
are accepted for payment is required by law to provide the Depositary (as payer)
with such holder's correct TIN on Substitute Form W-9 below. The holder of
Shares must also state that (i) such holder has not been notified by the
Internal Revenue Service that such holder is subject to backup withholding as a
result of a failure to report all interest or dividends or (ii) the Internal
Revenue Service has notified such holder that such holder is no longer subject
to backup withholding. If the Depositary is not provided with the correct TIN,
the holder of Shares may be subject to a $50 penalty imposed by the Internal
Revenue Service and payments made to such holder may be subject to backup
withholding.
Certain holders of Shares (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, such individual must submit a statement, signed under
penalties of perjury, attesting to such individual's exempt status. Forms of
such statements can be obtained from the Depositary. See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the holder of Shares. Backup withholding is not an
additional tax. Rather, the tax withheld pursuant to backup withholding rules
will be available as a credit against such holder's tax liabilities. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
WHAT NUMBER TO GIVE THE DEPOSITARY
If the holder of Shares is an individual, the correct TIN is his or her
social security number. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9 for additional guidance
on which number to report. If the tendering holder of Shares has not been issued
a TIN and has applied for a number or intends to apply for a number in the near
future, the holder should write "Applied For" in the space provided for the TIN
in Part III of the Substitute Form W-9, and sign and date the Substitute Form
W-9. If "Applied For" is written in Part III of the Substitute Form W-9 and the
Depositary is not provided with a TIN within 60 days, the Depositary may
withhold 31% of all payments of the purchase price to such holder until a TIN is
provided to the Depositary.
<PAGE>
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY
- -----------------------------
SUBSTITUTE PART I -- TAXPAYER Social Security Number OR
FORM W-9 IDENTIFICATION NUMBER -- For Employer Identification
DEPARTMENT OF THE TREASURY all accounts enter TIN in the Number
INTERNAL REVENUE SERVICE box at right. (For most
PAYOR'S REQUEST FOR TAXPAYER individuals this is your
IDENTIFICATION NO. (TIN) social security number. If
you do not have a number, see
Obtaining a Number in the
enclosed GUIDELINES.) Certify
by signing and dating below.
Note: If the account is in
more than one name, see chart
in the enclosed GUIDELINES to
determine which number to
give the payer.
------------------------------------------------------------------------------------------
PART II -- CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because (a) I have not been notified by
the Internal Revenue Service (IRS) that I am subject to backup withholding as a result
of a failure to report all interest or dividends, (b) the IRS has notified me that I
am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified
by the IRS that you are subject to backup withholding because of underreporting interest
or dividends on your tax return. However, if, after being notified by the IRS that you
were subject to backup withholding, you received another notification from the IRS that
you were no longer subject to backup withholding, do not cross out item (2). (Also see
instructions in the enclosed GUIDELINES.)
</TABLE>
<PAGE>
QUESTIONS AND REQUESTS FOR ASSISTANCE
OR ADDITIONAL COPIES OF THE
OFFER TO PURCHASE, LETTER OF TRANSMITTAL
AND OTHER TENDER OFFER MATERIALS MAY BE DIRECTED
TO THE INFORMATION AGENT FOR THE OFFER:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEFLECTA-SHIELD CORPORATION
BY
ZEPHYROS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
LUND INTERNATIONAL HOLDINGS, INC.
AT
$16.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED.
November 28, 1997
To Brokers, Dealers, Banks, Trust
Companies and Other Nominees:
We have been engaged by Zephyros Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Lund
International Holdings, Inc., a Delaware corporation ("Lund"), to act as
Information Agent in connection with the Purchaser's offer to purchase any and
all issued and outstanding shares of common stock, par value $.01 per share (the
"Common Stock" or the "Shares"), of Deflecta-Shield Corporation, a Delaware
corporation (the "Company"), at $16.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Purchaser's Offer to Purchase dated November 28, 1997 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer") enclosed
herewith. Please furnish copies of the enclosed materials to those of your
clients for whose account you hold Shares registered in your name or in the name
of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. Offer to Purchase dated November 28, 1997;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer (facsimile copies of the Letter of Transmittal may be
used to tender shares);
3. A letter to stockholders of the Company from Russell E. Stubbings,
President of the Company, together with a Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Securities and Exchange
Commission by the Company and mailed to stockholders of the Company.
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares registered in your name or in the name of a nominee,
with space provided for obtaining such clients' instructions with regard to
the Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to IBJ Schroder Bank & Trust Company (the
"Depositary").
<PAGE>
The Offer and the obligation to accept Shares for payment are conditioned
upon only (i) there being validly tendered and not withdrawn prior to the date
of expiration of the Offer (the "Expiration Date"), that number of Shares which
represents at least a majority of the Shares outstanding on a fully diluted
basis, and (ii) the satisfaction of certain other conditions set forth in the
Offer to Purchase. As used herein, "fully diluted basis" takes into account
issued and outstanding Shares and the conversion or exercise of all outstanding
options and other rights and securities exercisable or convertible into Shares.
The Board of Directors of the Company has determined that the Merger
Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby, including the Offer and the Merger (as defined in the
Offer to Purchase), are fair to and in the best interests of the stockholders of
the Company, has approved the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and recommends that the
stockholders of the Company accept the Offer and tender their Shares thereunder
to the Purchaser and, if required by applicable law, approve and adopt the
Merger Agreement and the Merger.
Upon the terms and subject to the conditions of the Offer, payment for
Shares tendered and accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Shares (or a
timely Book-Entry Confirmation (as defined in the Offer to Purchase) with
respect thereto) pursuant to the procedures set forth in the Offer to Purchase,
(ii) a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase)
and (iii) any other documents required by the Letter of Transmittal.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates or other required documents on or prior
to the Expiration Date or to complete the procedures for book-entry transfer
prior to the Expiration Date, a tender may be effected by following the
guaranteed delivery procedures specified in Section 3 of the Offer to Purchase.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS
PROMPTLY. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS EXTENDED.
Neither the Purchaser nor Lund will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent as described
in the Offer to Purchase) in connection with the solicitation of tenders of
Shares pursuant to the Offer. The Purchaser will, however, upon request,
reimburse brokers, dealers, commercial banks and trust companies for reasonable
and necessary costs and expenses incurred by them in forwarding materials to
their customers. The Purchaser will pay all transfer taxes applicable to its
purchase of Shares pursuant to the Offer, subject to Instruction 6 of the Letter
of Transmittal.
Additional copies of the enclosed materials may be obtained by contacting
the Information Agent at its location and telephone number as set forth on the
back cover of the enclosed Offer to Purchase.
Very truly yours,
MORROW & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, LUND, THE COMPANY, THE DEPOSITARY
OR THE INFORMATION AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO
THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEFLECTA-SHIELD CORPORATION
BY
ZEPHYROS ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
LUND INTERNATIONAL HOLDINGS, INC.
AT
$16.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated November 28,
1997 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the Offer by Zephyros Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Lund
International Holdings, Inc., a Delaware corporation, to purchase for cash any
and all issued and outstanding shares of common stock, par value $.01 per share
(the "Common Stock" or the "Shares"), of Deflecta-Shield Corporation, a Delaware
corporation (the "Company"). We are the holder of record of Shares held by us
for your account. A tender of such Shares can be made only by us as the holder
of record and pursuant to your instructions. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES
HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request your instructions as to whether you wish to tender
on your behalf any of or all of the Shares held by us for your account upon the
terms and subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The offer price is $16.00 per Share, net to the seller in cash,
without interest thereon.
2. The Offer is being made for all outstanding Shares.
3. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE MERGER
AGREEMENT (AS DEFINED IN THE OFFER TO PURCHASE) AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS DEFINED IN THE
OFFER TO PURCHASE), ARE FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF THE COMPANY, HAS APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER
THEIR SHARES THEREUNDER TO THE PURCHASER AND, IF REQUIRED BY APPLICABLE LAW,
APPROVE AND ADOPT THE MERGER AGREEMENT AND THE MERGER.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, December 26, 1997, unless the Offer is extended.
5. The Offer and the obligation to accept Shares for payment are
conditioned upon only (i) there being validly tendered and not withdrawn
prior to the expiration of the Offer, that number of shares which represents
at least a majority of the Shares outstanding on a fully diluted basis and
<PAGE>
(ii) the satisfaction of certain other conditions set forth in the Offer to
Purchase. As used herein, "fully diluted basis" takes into account issued
and outstanding Shares and the conversion or exercise of all outstanding
options and other rights and securities exercisable or convertible into
Shares.
6. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser pursuant to the Offer will be borne by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the expiration of the Offer. If you wish to
have us tender any or all of the Shares held by us for your account, please so
instruct us by completing, executing and returning to us the instruction form
accompanying this letter. An envelope to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the accompanying instruction form. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, the holders of Shares residing in any jurisdiction in which the
making or acceptance of the Offer would not be in compliance with the laws of
such jurisdiction. However, the Purchaser may, in its discretion, take such
actions as it may deem necessary to make the Offer in any jurisdiction and
extend the Offer to holders of Shares in such jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEFLECTA-SHIELD CORPORATION
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase dated November 28, 1997 and the related Letter of Transmittal in
connection with the offer by Zephyros Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Lund International Holdings, Inc.,
a Delaware corporation, to purchase for cash any and all issued and outstanding
shares of common stock, par value $.01 per share (the "Common Stock" or the
"Shares"), of Deflecta-Shield Corporation, a Delaware corporation.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in such Offer to Purchase and related Letter of
Transmittal.
Dated: ____________, 1997
NUMBER OF SHARES TO BE TENDERED*
______ SHARES
I (we) understand that if I (we) sign this instruction form without
indicating a lesser number of Shares in the space above, all Shares held by you
for my (our) account will be tendered.
<TABLE>
<S> <C>
---------------------------------------------
Signature(s)
---------------------------------------------
---------------------------------------------
Print Name(s)
---------------------------------------------
---------------------------------------------
Print Address(es)
---------------------------------------------
Area Code and Telephone Number
---------------------------------------------
Tax ID or Social Security Number
</TABLE>
- ------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by your
firm for my (our) account are to be tendered.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
DEFLECTA-SHIELD CORPORATION
As set forth in Section 3 of the Offer to Purchase (as defined below), this
Notice of Guaranteed Delivery or one substantially equivalent hereto must be
used to accept the Offer (as defined in the Offer to Purchase) if certificates
for shares of Common Stock, par value $.01 per share (the "Common Stock" or the
"Shares") of Deflecta-Shield Corporation, a Delaware corporation (the
"Company"), are not immediately available, or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary named below at the address set forth
below prior to the Expiration Date (as defined in the Offer to Purchase). This
Notice of Guaranteed Delivery may be delivered by hand to the Depositary or
transmitted by telegram, facsimile transmission or mail to the Depositary and
must include a guarantee by an Eligible Institution (as defined in the Offer to
Purchase). See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
P.O. Box 84 1 State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn.: Reorganization Dept.
Attn.: Reorganization Dept. Securities Processing Window SC-1
</TABLE>
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(212) 858-2611
CONFIRM RECEIPT OF FACSIMILE BY TELEPHONE:
(212) 858-2103
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO
THE DEPOSITARY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN ELIGIBLE INSTITUTION UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Zephyros Acquisition Corporation, a
Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Lund
International Holdings, Inc., a Delaware corporation, upon the terms and subject
to the conditions set forth in the Purchaser's Offer to Purchase dated November
28, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal,
receipt of which is hereby acknowledged, the number of Shares set forth below,
all pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
Certificate Nos. (if available):
PLEASE PRINT
Address(es):
ZIP CODE
(Check box if Shares will be
tendered by book-entry transfer)
/ / The Depository Trust Company Area Code and Tel. No.:
Account Number:
SIGNATURE(S)
Dated: , 1997 Dated: , 1997
</TABLE>
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation with respect to such
Shares, in either case together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, timely confirmation of
such transfer into the Depository's account at the Book-Entry Transfer Facility
(as defined in the Offer to Purchase), and any other documents required by the
Letter of Transmittal within three Trading Days (as defined in the Offer to
Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver such Letter of Transmittal and such
certificates for Shares, or such Book-Entry Confirmation, to the Depositary
within the time period shown herein. Failure to do so could result in a
financial loss to such Eligible Institution. All capitalized terms used herein
have the meanings set forth in the Offer to Purchase.
<TABLE>
<S> <C>
Name of Firm: ----------------------------- -------------------------------------------
Authorized Signature
Address: ---------------------------------- Name: ------------------------------------
Please Print
------------------------------------------- Title: -------------------------------------
Zip Code
Area Code and
Tel. No.: ---------------------------------- Dated: ----------------------------- , 1997
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH YOUR LETTER
OF TRANSMITTAL.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -----------------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(1)
6. Account in the name The ward, minor, or
of guardian or incompetent
committee for a person(3)
designated ward,
minor, or
incompetent person
7. a. The usual The grantor-
revocable savings trustee(1)
trust (grantor is
also trustee)
b. So-called trust
account that is The actual owner(1)
not a legal or
valid trust under
state law
8. Sole proprietorship The owner(4)
account
- -----------------------------------------------------
<CAPTION>
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
<S> <C> <C>
- -----------------------------------------------------
9. A valid trust, The legal entity (Do
estate or pension not furnish the
trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(5)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club, The organization
or other tax-exempt
organization
14. A broker or The broker or
registered nominee nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
EXHIBIT 99.(a)(7)
<TABLE>
<S> <C> <C>
Contacts: For Lund For Harvest Partners George For Deflecta-Shield Ron Fox
International Holdings Sard/Anton Nicholas Sard 515/961-6100
William J. McMahon/Kathy Verbinnen & Co 212-687-8080
Smith 612/576-4200
</TABLE>
LUND TO ACQUIRE DEFLECTA-SHIELD FOR $16 PER SHARE IN CASH,
CREATING LEADING MAKER OF LIGHT TRUCK APPEARANCE ACCESSORIES
HARVEST PARTNERS TO INCREASE OWNERSHIP OF LUND
ANOKA, MN, and INDIANOLA, IA, November 26, 1997 -- Lund International
Holdings Inc. (NASDAQ: LUND), a leading manufacturer of appearance accessories
for light trucks, and Deflecta-Shield Corporation (NASDAQ: TRUX), a leading
manufacturer of both light truck and heavy truck accessories, today announced
they have signed a definitive merger agreement that will create the preeminent
manufacturer of light truck appearance accessories and a leader across the
entire truck accessories market.
The agreement, approved unanimously by both Boards of Directors, provides
for Lund to acquire Deflecta-Shield for $16 per share in cash. Under the
agreement, Lund will make a tender offer for all 4.8 million Deflecta-Shield
shares and expects to commence the offer promptly. Two principal shareholders,
who in total own approximately 40% of Deflecta-Shield shares, have already
agreed to tender their shares. Any shares not tendered and purchased pursuant to
the tender offer will be cashed out in a subsequent merger at the net cash price
of $16 per share, subject to appraisal rights under applicable Delaware law.
The transaction, expected to close late next month, has a total value of
approximately $90 million including approximately $10 million in assumed debt.
The acquisition is expected to be accretive to Lund's earnings per share in 1998
and increasingly accretive thereafter. Revenues of the combined companies are
expected to be approximately $130 million in 1998.
As part of the transaction, an affiliate of Harvest Partners, a leading New
York private investment firm, will invest as equity approximately $30 million in
Lund to increase its ownership in the Company. Harvest acquired a 38.4% stake in
Lund from founder Allan Lund on September 9, 1997. Lund International also has
committed debt financing of $87 million from Heller Financial Inc. for the
acquisition of Deflecta-Shield and for working capital.
"This acquisition combines Lund's leading position and brand name strength
in accessories for pick-up trucks, sport utility vehicles and minivans with
Deflecta-Shield's complementary strengths and history of strong revenue growth
to create the leader in the truck appearance accessories market," said William
J. McMahon, Chief Executive of Lund International. "We believe this company will
create tremendous breadth and strength across a wide variety of products and
services for our customers. The acquisition should maximize value for our
shareholders by creating synergies while opening up new sales opportunities for
Lund in the heavy truck category and the OEM market. We are excited by the
superb growth prospects of the combined companies."
Russell E. Stubbings, President and Chief Executive Officer of
Deflecta-Shield, said, "Joining a first-class company like Lund International
- --with operations, products and services that complement our own so
well--creates significant benefits for both companies. This strategic
partnership will create tremendous products and services for our customers while
maximizing value for our shareholders. We look forward to working with Lund to
integrate the two companies quickly and effectively."
"The combination of Lund and Deflecta-Shield will create a powerhouse in the
fragmented $1.5 billion light truck accessories market, where no other company
in the markets we serve has annual sales in excess of $100 million," said Ira
Kleinman, a General Partner of Harvest Partners who recently became Chairman of
the Board of Lund International. "Lund is a superb platform for further growth,
and we intend to seek more acquisitions in this consolidating industry."
<PAGE>
The closing of the tender offer will be subject to a majority of the common
stock of Deflecta-Shield on a fully diluted basis being tendered, as well as to
other customary conditions. The merger agreement restricts Deflecta-Shield from
actively soliciting any other offers while, consistent with the fiduciary duties
of the Deflecta-Shield Board of Directors, providing that Deflecta-Shield may
respond to certain unsolicited offers or indications of interest. The agreement
also provides for appropriate break-up fees for Lund under certain
circumstances, including the termination of the merger agreement by
Deflecta-Shield to accept a superior proposal, in which event the shareholder
agreement to tender to Lund also terminates.
Piper Jaffray Companies Inc. is the financial advisor to Lund. Wasserstein
Perella & Co. LLC is the financial advisor to Deflecta-Shield and provided a
fairness opinion to the Company.
Based in Anoka, MN, Lund International Holdings is a leading designer,
manufacturer and marketer of a broad line of fiberglass and plastic appearance
accessories for new and used light trucks, including pick-up trucks, sport
utility vehicles, mini-vans and other vans.
With annual sales of $72 million, Deflecta-Shield manufactures fiberglass,
plastic and aluminum appearance accessories for light trucks and heavy trucks.
Based in Indianola, IA, the company also supplies suspension systems and shock
absorbers for light trucks.
Harvest Partners, Inc. is a private investment firm which focuses on
management buyouts and growth financings of medium-size manufacturing, specialty
services and distribution businesses. Founded in 1981, Harvest is best known for
its expertise in structuring multinational management buyouts and for its
successful platform acquisitions. Harvest currently has in excess of $600
million in capital under management from leading U.S. and multinational
institutions, including Asea Brown Boveri, Volvo, an equity affiliate of
Deutsche Bank, MassMutual, PPM America, and several leading public and private
U.S. pension funds. # # #
Statements in this press release relating to future financial results,
ongoing company operations, the effects of the acquisition, trends and market
analysis, among others, are forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These statements involve risks and
uncertainties which could cause results to differ materially from those
anticipated. Among the factors that could cause anticipated results of the
acquisition to differ materially are the following: inability to obtain expected
efficiencies, or to obtain them in a timely manner; inability to effectively
manage a larger enterprise, to integrate the two companies, or to control costs
associated with such integration; and the representations, warranties and
covenants made in the merger agreement proving to be materially untrue. In
addition, both Lund's business and Deflecta-shield's business and operations
(and anticipated results) including the following: consumer preference changes,
risk of expansion into new distribution channels, delays in designing,
developing, testing or shipping of products, increased competition, general
economic developments and trends, developments and trends in the light truck and
automotive accessory market and increased costs. This is not an exhaustive list
and the Company may supplement this list in future filings or releases or in
connection with the making of forward-looking statements.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated November 28, 1997 (the "Offer to Purchase") and
the related Letter of Transmittal and is being made to all holders of
Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction or any administrative
or judicial action pursuant thereto. In any jurisdiction where
securities, blue sky or other laws require the Offer to be made
by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of Zephyros Acquisition Corporation by one or
more registered brokers or dealers licensed under the laws of
such jurisdiction.
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DEFLECTA-SHIELD CORPORATION
AT
$16.00 NET PER SHARE
BY
ZEPHYROS ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF LUND INTERNATIONAL HOLDINGS, INC.
Zephyros Acquisition Corporation, a Delaware corporation (the "Purchaser")
and a wholly-owned subsidiary of Lund International Holdings, Inc., a Delaware
corporation ("Lund"), is offering to purchase any and all of the issued and
outstanding shares of common stock (the "Common Stock"), par value $.01 per
share (the "Shares"), of Deflecta-Shield Corporation, a Delaware corporation
(the "Company"), at a price of $16.00 per Share (the "Offer Price"), net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 25, 1997 (the "Merger Agreement"), by and among Lund, the
Purchaser and the Company. The Merger Agreement provides that, among other
things, as soon as practicable after the completion of the Offer and
satisfaction or waiver, if permissible, of all conditions to the Merger (as
defined below), the Purchaser will be merged with and into the Company and the
separate corporate existence of the Purchaser will thereupon cease. The merger,
as effected pursuant to the immediately preceding sentence, is referred to
herein as the "Merger," and the Company, as the surviving corporation to the
Merger, is sometimes herein referred to as the "Surviving Corporation." At the
effective time of the Merger (the "Effective Time"), each Share of Common Stock
of the Company then outstanding (other than Shares held in the treasury of the
Company or owned by Lund, the Purchaser or any direct or indirect wholly-owned
subsidiary of Lund or of the Company, and other than Shares held by stockholders
who properly perfect their appraisal rights under Delaware law) will be
cancelled and extinguished and converted into the right to receive the Offer
Price or any higher price per Share paid in the Offer, in cash payable to the
holder thereof without interest.
<PAGE>
The Board Of Directors of the Company has unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, and determined that the terms of Offer and the Merger are fair to, and
in the best interests of, the holders of the Common Stock, and unanimously
recommends that stockholders accept the offer and tender their shares.
The Offer and the obligation to accept Shares for payment are conditioned
upon only (i) there being validly tendered and not withdrawn prior to the
expiration of the Offer, that number of Shares which represents at least a
majority of the Shares of Common Stock of the Company outstanding on a fully
diluted basis (the "Minimum Condition"), and (ii) the satisfaction of certain
other conditions. As used herein, "fully diluted basis" takes into account
issued and outstanding Shares and the conversion or exercise of all outstanding
options and other rights and securities exercisable or convertible into Shares.
As a condition and inducement to Lund's and the Purchaser's entering into
the Merger Agreement and incurring the liabilities therein, the two largest
stockholders of the Company (collectively, the "Stockholders"), the holders, as
of the date hereof, of an aggregate of approximately 36.2% of the outstanding
Shares of Common Stock of the Company on a fully diluted basis, concurrently
with the execution and delivery of the Merger Agreement, entered into
Stockholder Agreements (the "Stockholder Agreements") with Lund. Pursuant to the
Stockholder Agreements, the Stockholders have agreed, among other things,
subject to the terms thereof, to tender their Shares in the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to IBJ
Schroder Bank & Trust Company (the "Depositary") of the Purchaser's acceptance
for payment of such Shares pursuant to the Offer. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Purchaser and transmitting payment to tendering
stockholders. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates for such Shares (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect thereto), (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase) and (iii) any other
documents required by the Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures set forth below at any time prior to the Expiration Date (as defined
in the Offer to Purchase) and, unless theretofore accepted for payment and paid
for by the Purchaser pursuant to the Offer, may also be withdrawn at any time
after January 26, 1998.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of such Shares, if different from that of the person who
tendered such Shares. If certificates for Shares evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and, unless such Shares
have been tendered by an Eligible Institution (as defined in the Offer to
Purchase), the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility (as defined in the Offer to Purchase)
to be credited with the withdrawn Shares and otherwise comply with such
Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered by again
<PAGE>
following one of the procedures described in Section 3 of the Offer to Purchase
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its reasonable
discretion. None of the Purchaser, Lund, the Depositary, the Information Agent,
or any other person will be under any duty to give notification of any defects
or irregularities in any notice of withdrawal, or incur any liability for
failure to give any such notification.
Pursuant to the Merger Agreement, the Purchaser has the right, in certain
circumstances, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and accordingly, the payment for, any
Shares, by giving oral or written notice of such extension to the Depositary.
Pursuant to the Merger agreement, the Parent shall cause the Purchaser to
perform and comply timely with all of the Purchaser's obligations in or with
respect to the Offer.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 promulgated under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the Letter of Transmittal and the
related relevant documents will be mailed by the Purchaser to record holders of
Shares, and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list, or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be directed
to the Information Agent, at the address and telephone numbers set forth below,
and copies will be furnished at the Purchaser's expense. The Purchaser will not
pay any fees or commissions to any broker or dealer or other person (other than
the Information Agent) for making recommendations or soliciting tenders in
connection with the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
November 28, 1997
<PAGE>
EXHIBIT (a)(9)
[LETTERHEAD OF WASSERSTEIN PERELLA & CO]
November 25, 1997
Board of Directors
Deflecta-Shield Corporation
1800 North Ninth St.
Indianola, IA 50125
Members of the Board:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the holders of the Common Stock, par value $0.01
per share (the "Shares"), of Deflecta-Shield Corporation (the "Company") of
the consideration to be received by such holders pursuant to the terms of the
Agreement and Plan of Merger, dated as of November 25, 1997 (the "Merger
Agreement"), among the Company, Lund International Holdings, Inc. ("Parent"),
and Zephyros Acquisition Corporation ("Purchaser"). The Merger Agreement
provides for, among other things, a cash tender offer by Purchaser to acquire
all of the outstanding Shares at a price of $16.00 per Share (the "Tender
Offer"), and for a subsequent merger of Purchaser with and into the Company
pursuant to which each outstanding Share will be converted into the right to
receive $16.00 in cash (the "Merger" and, together with the Tender Offer, the
"Transaction"). The terms and conditions of the Transaction are set forth in
more detail in the Merger Agreement relating to the Tender Offer (the "Offer
to Purchase").
In connection with rendering our opinion we have reviewed a draft of
the Merger Agreement, and for purposes hereof we have assumed that the final
form of the Merger Agreement will not differ in any material respect from the
draft provided to us. We have also reviewed and analyzed certain publicly
available business and financial information relating to the Company for
recent years and interim periods to date, as well as certain internal
financial and operating information, including financial forecasts, analyses
and projections prepared by or on behalf of the Company and provided to us
for purposes of our analysis, and we have met with management of the Company
to review and discuss such information and, among other matters, the
Company's business, operations, assets, financial condition and future
prospects.
We have reviewed and considered certain financial and stock market data
relating to the Company, and we have compared that data with similar data for
certain other companies, the securities of which are publicly traded, that we
believe may be relevant or comparable in certain respects to the Company and
we have reviewed and considered the financial terms of certain recent
acquisitions and business combination transactions in the automotive
equipment industry specifically, and in other industries generally, that we
believe to be reasonably comparable to the Transaction or otherwise relevant
to our inquiry. We have also performed such other studies, analyses and
investigations and reviewed such other information as we considered
appriopriate for purposes of this opinion.
In our review and analysis and in formulating our opinion, we have
assumed and relied upon the accuracy and completeness of all the financial
and other information provided to or discussed with us or publicly available,
and we have not assumed any responsibility for
<PAGE>
Board of Directors
November 25, 1997
Page 2
independent verification of any of such information. We have also relied
upon the reasonableness and accuracy of the financial projections, forecasts
and analyses provided to us and we have assumed, with your consent, that such
projections, forecasts and analyses were reasonably prepared in good faith
and on bases reflecting the best currently available judgments and estimates
of the Company's management, and we express no opinion with respect to such
projections, forecasts and analyses or the assumptions upon which they are
based. In addition, we have not reviewed any of the books and records of the
Company, or assumed any responsibility for obtaining an independent valuation
or appraisal of the assets or liabilities of the Company, and no such
independent valuation or appraisal was provided to us. We have assumed that
the transactions described in the Merger Agreement will be consummated on the
terms set forth therein, without material waiver or modification. Our
opinion is necessarily based on business, economic and market conditions and
other circumstances as they exist and can be evaluated by us as of the date
hereof.
It should be noted that in the context of our engagement by the
Company, we have not been authorized to and have not solicited alternative
offers for the Company or its assets, or investigated any other alternative
transactions that may be available to the Company.
We are acting as financial advisor to the Company in connection with
the proposed Transaction and will receive a fee for our services, a major
portion of which is contingent upon the consummation of the Transaction. In
the ordinary course of our business, we may actively trade the debt and
equity securities of the Company and Parent for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
Our opinion addresses only the fairness from a financial point of view
to the stockholders of the Company of the consideration to be received by
such stockholders pursuant to the Transaction, and we do not express any
views on any other terms of the Transaction. Specifically, our opinion does
not address the Company's underlying business decision to effect the
transactions contemplated by the Merger Agreement.
It is understood that this letter is for the benefit and use of the
Board of Directors of the Company in its consideration of the Transaction
and, except for inclusion in its entirety in a registration statement or
proxy statement or both relating to the Merger or in a
Solicitation/Recommendation Statement on Schedule 14D-9 of the Company
relating to the Tender Offer, may not be quoted, used or reproduced for any
other purpose without our prior written consent. This opinion does not
constitute a recommendation to any stockholder with respect to whether such
holder should tender Shares pursuant to the Tender Offer or as to how such
holder should vote with respect to the Merger, and should not be relied upon
by any stockholder as such.
Based upon and subject to the foregoing, including the various
assumptions and limitations set forth herein, it is our opinion that, as of
the date hereof, the $16.00 per Share cash consideration to be received by
the stockholders of the Company pursuant to the Transaction is fair to such
stockholders from a financial point of view.
Very truly yours,
/s/ Wasserstein, Perella & Co., Inc.
<PAGE>
EXHIBIT 99.(b)1
November 24, 1997
Mr. Ira D. Kleinman Mr. William J. McMahon
Chairman of the Board President and Chief Executive Officer
Lund International Holdings, Inc. Lund International Holdings, Inc.
767 Third Avenue 911 Lund Boulevard
New York, NY 10017 Anoka, Minnesota 55303
Dear Ira and Bill,
You have advised Heller Financial, Inc. ("HELLER") that Lund International
Holdings, Inc. ("LUND") will form a single purpose wholly-owned acquisition
subsidiary ("ACQUISITION CO.") which will seek to acquire (the "ACQUISITION") a
corporation previously identified by you to Heller in writing ("TARGET"). The
Acquisition will be accomplished through a tender offer (the "TENDER OFFER") to
be made by Acquisition Co. for shares of common stock (the "SHARES") of Target,
followed by a merger (the "MERGER") of Target and Acquisition Co. (the surviving
corporation of such merger, the "NEW COMPANY", which will be a wholly-owned
subsidiary of Lund following the Merger). Pursuant to the Tender Offer,
Acquisition Co. will offer to purchase not less than a majority of the shares of
Target for cash, in amounts consistent with the cost of the Acquisition
previously disclosed in writing to Heller. Following the merger, Lund and its
wholly owned subsidiaries, Lund Industries, Inc., Lund Acquisition Corp. and
Lund International FSC, Inc. (the "LUND SUBSIDIARIES"), together with New
Company will be borrowers under a credit facility to be provided by Heller.
Heller is pleased to advise you of its commitment to provide up to the full
amount of a $42,000,000 credit facility (the "TENDER LOAN FACILITY") and an
$87,000,000 credit facility (the "TAKE-OUT FACILITY", and together with the
Tender Loan Facility, the "CREDIT FACILITIES"), on the terms and conditions
summarized in this letter and in the Summary of Terms and Conditions attached to
this letter as Exhibit A and Exhibit B, respectively (collectively, the "TERM
SHEETS"). The Tender Loan Facility will be used to finance the purchase price
of the Shares in the Tender Offer, and the Take-Out Facility will be used (i) to
finance the Merger and to pay fees and expenses of the Acquisition, (ii) to
refinance the Tender Loan Facility, (iii) to refinance certain existing
indebtedness of Target, (iv) to refinance certain existing indebtedness of Lund
Subsidiaries, (v) for general corporate purposes and (vi) to provide liquidity
for future acquisitions.
<PAGE>
Mr. Ira D. Kleinman
Mr. William J. McMahon
Lund International Holdings, Inc.
November 24, 1997
Page 2
It is understood that the Tender Loan Facility will be used by Acquisition Co.
to finance the purchase of Shares of Target. Notwithstanding the funding of the
Tender Loan Facility and the purchase of the Shares pursuant to the Tender
Offer, there is no obligation for Heller to fund the Take-Out Facility pursuant
to this commitment unless all conditions thereto in this letter and the related
Exhibit B attached have been met to Heller's satisfaction.
Although Heller is committing to provide all of the Credit Facilities on a fully
underwritten basis, Heller expects that a portion of the Credit Facilities will
be made available by other financial institutions (such lenders including
Heller, the "Lenders"). It is agreed that Heller will act as the sole
administrative agent (in such capacity, the "ADMINISTRATIVE AGENT") for the
Credit Facilities. Heller will be responsible for preparing and negotiating
definitive documentation for the Credit Facilities and Heller will manage the
syndication effort of forming the syndicate of lenders that will make the Credit
Facilities available. No additional agents, co-agents or arrangers will be
appointed unless Lund and Heller so agree.
You agree to assist Heller in forming any such syndicate and to provide Heller
and the other Lenders, promptly upon request, with all information reasonably
deemed necessary by them (consistent with past practice) to complete
successfully the syndication, including, but not limited to, (i) an information
package for delivery to potential syndicate members and participants and (ii)
all information and projections prepared by you or your advisers relating to the
transactions described herein. From the date hereof, you agree to refrain from
any financings other than the Credit Facilities with respect to the Acquisition
until the Tender Offer and syndication process of both Credit Facilities are
complete unless otherwise agreed to by Heller. You further agree to make
appropriate officers and representatives of Lund and its subsidiaries available
to participate in information meetings for potential syndicate members and
participants at such times and places as Heller may reasonably request.
You represent and warrant and covenant that (i) all information which has been
or is hereafter made available to Heller by you or any of your representatives
in connection with the transactions contemplated hereby is and will be complete
and correct in all material respects with respect to the matters such
information purports to cover and does not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not materially misleading in light of
the circumstances under which such statements have been or will be made and (ii)
all financial projections that have been or are hereafter prepared by you and
made available to Heller or any other participants in the Credit Facilities have
been or will be prepared in good faith based upon reasonable assumptions. You
agree to supplement the information
<PAGE>
Mr. Ira D. Kleinman
Mr. William J. McMahon
Lund International Holdings, Inc.
November 24, 1997
Page 3
and projections referred to in clauses (i) and (ii) above from time to time
until completion of the syndication so that the representations and warranties
in the preceding sentence remain correct. In arranging and syndicating the
Credit Facility, Heller may use and rely on such information and projections
without independent verification thereof.
In connection with the syndication of the Credit facilities, Heller may, in its
discretion, allocate to other Lenders portions of any fees payable to Heller in
connection with the Credit Facilities. You agree that no Lender will receive
any compensation of any kind for its participation in the Credit Facilities,
except as expressly provided in the Fee Letter referred to below.
Please note, however, that the terms and conditions of this commitment and
undertaking are not limited to those set forth in this letter. Those matters
that are not covered or made clear herein or in the Summary of Terms and
Conditions attached hereto as Exhibit A and Exhibit B or in the Fee Letter are
subject to mutual agreement of the parties. In addition, this commitment and
undertaking is subject to: (a) receipt by Heller of that portion of the fees to
have been paid to it on the date hereof in accordance with the terms of the Fee
Letter; (b) the preparation, execution and delivery of mutually acceptable loan
documentation, including a credit agreement incorporating substantially the
terms and conditions outlined herein and in the Term Sheets; (c) with respect to
the Tender Loan Facility, the absence of (i) a material adverse change in the
business, condition (financial or otherwise), operations or performance of
either Lund or Target and their respective subsidiaries, taken as a whole, since
September 30, 1997, or (ii) an occurrence (and the adverse effect of such
occurrence continuing for more than three (3) business days) of (1) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange or on the NASDAQ National Stock Market (excluding any
trading halt triggered solely as a result of a specified decrease in a market
index), (2) a declaration of a banking moratorium or any suspension of payments
in respect of banks or other financial institutions in the United States or any
limitation by United States federal or state authorities on the extension of
credit by banks or other financial institutions, or (3) a commencement of a war,
a material commitment of the armed forces of the United States or other
international or national calamity directly involving the armed forces of the
United States if, as a result of such war, commitment of armed forces or
calamity, banks or other financial institutions generally stop lending funds for
transactions of the type contemplated by the Acquisition; (d) with respect to
the Take-Out Facility, the absence of (i) a material adverse change in the
business, condition (financial or otherwise), operations, performance or
prospects of either Lund or Target and their respective subsidiaries, taken as a
whole, since September 30, 1997, or (ii) any material adverse change in the loan
syndication or financial or capital market conditions generally from those
currently in effect; (e) the accuracy and completeness of all representations
that you make to us and
<PAGE>
Mr. Ira D. Kleinman
Mr. William J. McMahon
Lund International Holdings, Inc.
November 24, 1997
Page 4
all information that you furnish to us in connection with this commitment and
undertaking and your compliance with the terms of this letter; (f) with respect
to the Take-Out Facility, no development or change occurring after the date
hereof, and no information becoming known after the date hereof, that (i)
results in or could reasonably be expected to result in a material change in, or
material deviation from, the information previously delivered by you or could
reasonably be expected to be materially adverse to you or any of your
subsidiaries or to the Administrative Agent or the Lenders, or to the legal,
tax, accounting or financial aspects of the Acquisition, or (ii) has had or
could reasonably be expected to have a Material Adverse Effect (as defined under
the section "Conditions Precedent to Initial Extension of Credit" in the Summary
of Terms and Conditions set forth in Exhibit B hereto); and (g) the negotiation
and delivery of definitive documentation on or before December 31, 1997. This
commitment is also subject to a favorable and final recommendation by the Board
of Directors of Target to Target shareholders with respect to the Tender Offer.
If such favorable and final recommendation is not forthcoming or is withdrawn
Heller's obligations hereunder are terminated.
The costs and expenses of Heller (including, without limitation, the reasonable
fees and expenses of its counsel and its syndication and other out-of-pocket
expenses) in connection with the preparation, execution and delivery of this
letter and the definitive financing agreements shall be for your account. You
further agree to indemnify and hold harmless Heller and each director, officer,
employee and affiliate or control person thereof (each an "indemnified person")
from and against any and all actions, suits, proceedings (including any
investigations or inquiries), claims, losses, damages, liabilities or expenses
of any kind or nature whatsoever which may be incurred by or asserted against or
involve Heller or any such indemnified person as a result of or arising out of
or in any way related to or resulting from the Acquisition, or this letter or
any eventual extension of credit, and, upon demand, to pay and reimburse Heller
and each indemnified person for any legal or other out-of-pocket expenses
incurred in connection with investigating, defending or preparing to defend any
such action, suit, proceeding (including any inquiry or investigation) or claim
(whether or not Heller or any such person is a party to any action or proceeding
out of which any such expenses arise); PROVIDED, HOWEVER, that you shall not
have to indemnify any indemnified person against any loss, claim, damage,
expense or liability which resulted solely from the gross negligence or willful
misconduct of such indemnified person. This letter is issued for your benefit
only and no other person or entity may rely hereon. Neither Heller nor any of
its affiliates shall be responsible or liable to you or any other person for any
damages which may be alleged as a result of this letter.
The provisions of this letter are supplemented as set forth in a separate fee
letter dated the date hereof from us to you (the "FEE LETTER") and are subject
to the terms of such Fee Letter. By executing this
<PAGE>
Mr. Ira D. Kleinman
Mr. William J. McMahon
Lund International Holdings, Inc.
November 24, 1997
Page 5
letter, you acknowledge that this letter, Exhibit A hereto, Exhibit B hereto and
the Fee Letter are the only agreements between you and Heller with respect to
the Credit Facilities and set forth the entire understanding of the parties with
respect thereto. Neither this letter nor Exhibit A hereto nor Exhibit B hereto
nor the Fee Letter may be changed except pursuant to a writing signed by each of
the parties hereto.
Your obligations under this letter and the Fee Letter with respect to fees,
indemnification, costs and expenses, and confidentiality shall survive the
expiration or termination of this letter.
This letter is intended to be solely for the benefit of the parties hereto and
is not intended to confer any benefits upon, or create any rights in favor of,
any person other than the parties hereto and shall not be assignable by you
without the prior written consent of Heller. This letter may be executed in any
number of counterparts, each of which shall be an original and all of which,
when taken together, shall constitute one agreement. This letter shall be
governed by, and construed in accordance with, the laws of the State of New
York.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
Mr. Ira D. Kleinman
Mr. William J. McMahon
Lund International Holdings, Inc.
November 24, 1997
Page 6
If you are in agreement with the foregoing, please sign and return to Heller the
enclosed copies of this letter and the Fee Letter no later than 5:00 P.M., New
York time, on November 26, 1997. This offer shall terminate at such time unless
prior thereto we shall have received duly signed and completed copies of such
letters.
We look forward to working with you on this transaction.
Very truly yours,
HELLER FINANCIAL, INC.
By:
-------------------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
LUND INTERNATIONAL HOLDINGS, INC. ZEPHYROS ACQUISITION CORPORATION,
as Acquisition Co.
By: By:
---------------------------- -------------------------------
Name: Ira D. Kleinman Name:
Title: Chairman of the Board Title:
By:
----------------------------
Name: William J. McMahon
Title: President and Chief Executive Officer
Mr. Ira D. Kleinman
Mr. William J. McMahon
Lund International Holdings, Inc.
November 24, 1997
Page 7
<PAGE>
EXHIBIT A
TENDER LOAN FACILITY
ACQUISITION CO.
$42,000,000 SENIOR SECURED CREDIT FACILITY
SUMMARY OF TERMS AND CONDITIONS
NOVEMBER 24, 1997
TRANSACTION: Lund will form a single-purpose wholly-owned subsidiary,
Acquisition Co. (the "Borrower"), to effect the transactions
referenced in the Commitment Letter of which these Terms and
Conditions are a part.
BORROWER: Acquisition Co., known as "Company" or "Borrower", in a
legal and loan structure acceptable to Heller Financial,
Inc. (individually, "Heller")
AGENT: Heller will act as sole administrative agent (the
"Administrative Agent") for the Lenders.
LENDERS: Heller and financial institutions acceptable to
Administrative Agent and Borrower.
USE OF PROCEEDS: To acquire the capital stock of Target pursuant to the
Tender Offer.
CREDIT FACILITY: A $42,000,000 Tender Loan Facility which will be available
for up to three draws. Any amounts borrowed and then
repaid, may not be reborrowed.
The Tender Loan Facility is provided on a short term basis
to acquire the shares of Target and then outstandings will
be refinanced with proceeds provided in the credit structure
as outlined in the Take-Out Facility Summary of Terms and
Conditions (see Exhibit B to the Commitment Letter).
CLOSING: On or before December 31, 1997.
MATURITY: Upon the earlier to occur of Merger or June 30, 1998.
<PAGE>
INTEREST
RATES/PRICING: Initially, the Borrower will be required to pay interest on
the outstanding daily balance of the Credit Facility at the
Borrower's option of either: (i) a floating rate per annum
equal to 1.50% in excess of the Base Rate (hereafter
defined); or (ii) a floating rate per annum equal to 2.75%
in excess of the LIBOR Rate (hereafter defined). The loan
made on the date of the Closing will be a Base Rate loan and
will remain so for five business days. The difference
between the Base Rate and LIBOR Rate and the rate of
interest paid on borrowings under the Credit Facility will
be the "Borrowing Margins". After expiration of the five
business day period immediately following Closing, the
Borrower will be required to provide Administrative Agent
with three business days' prior notice for subsequent LIBOR
Rate borrowings. Any LIBOR Rate borrowings requested by the
Borrower will be limited to one (1) month maximum maturity.
The Borrower will not be able to select LIBOR Rate as the
basis for borrowings if less than 30 days are remaining from
the expiration of a LIBOR Rate period and Maturity.
In the event that the Credit Facility is not repaid at
Maturity, the Borrower will be in default. The rate of
interest for a default consisting of a failure to pay all
amounts due on the Tender Loan Facility at maturity will
change over time, with the borrowing rate and compensation
owed Lenders for the delinquent outstanding increasing over
time. The Borrowing Margins will increase by 2.0% over the
above stated Borrowing Margins beginning with the first day
after Maturity and thereafter until the 90th day after such
Maturity and for each 90 day period thereafter that
principal remains outstanding and unpaid beyond Maturity,
the rate of interest will increase by an additional 1.0%
beginning the first day of such 90 day period. The rate of
interest will continue to increase to a maximum rate of 18%
per annum. Beginning effective upon the first day of the
quarter in which the rate of interest to be charged would be
greater than or equal to 18% but for the cap of 18% (the
"Cap Period"), Heller will become vested in options (at an
option cost of $0.01/share) equal to 2% of the fully diluted
shares/equity of Lund. For each 90 day period beyond the
Cap Period for which any principal remains outstanding under
the Credit Facility, Heller will vest in options equal to an
additional 2% of the fully diluted shares/equity of Lund.
Upon acceptance of the Commitment Letter, Lund's Board of
Directors will be required to take all corporate action to
accommodate the pricing mechanism as outlined above.
2
<PAGE>
For the purpose of this letter, "Base Rate" means a variable
rate of interest per annum calculated daily on the basis of
a 360 day year equal to the rate of interest from time to
time published by the Board of Governors of the Federal
Reserve System in Federal Reserve statistical release
H.15(519) entitled "Selected Interest Rates" as the Bank
prime loan rate. Base Rate also includes rates published in
any successor publications of the Federal Reserve System
reporting the Bank prime loan rate or its equivalent. The
statistical release generally sets forth a Bank prime loan
rate for each business day. The applicable Bank prime loan
rate for any date not set forth shall be the rate set forth
for the last preceding date. In the event the Board of
Governors of the Federal Reserve System ceases to publish a
Bank prime loan rate or equivalent, the term "Base Rate"
shall mean a variable rate of interest per annum equal to
the highest of the "prime rate," "reference rate," "base
rate," or other similar rate as determined by Heller
announced from time to time by any of Citibank N.A., Bankers
Trust Company or The Chase Manhattan Bank (with the
understanding that any such rate may merely be a reference
rate and may not necessarily represent the lowest or best
rate actually charged to any customer by such bank).
For purposes of this letter, "LIBOR Rate" means, for each
Interest Period (LIBOR Rate borrowings shall be for a one
month period (each being an "Interest Period")), the rate of
interest determined by the Administrative Agent at which
deposits in U.S. dollars (in amounts substantially equal to
the LIBOR Rate borrowing to be made by Borrower) for the
relevant Interest Period are offered based on information
presented on the Reuters Screen LIBO Page as of 11:00 a.m.
(London time) on the day which is two (2) business days
prior to the first day of such Interest Period, or if
Reuters ceases to provide LIBOR quotations, the rate at
which deposits in U.S. dollars are offered by any of
Citibank N.A., Bankers Trust Company or The Chase Manhattan
Bank to prime banks in the London interbank market at
approximately 11:00 a.m. (London Time) two business days
prior to the commencement of a new "Interest Period" (as
such term would be defined in the loan documentation), in
each case, adjusted for reserve requirements.
Interest on the Credit Facility with reference to the Base
Rate will be billed on the first business day of each month,
in arrears. In the event that the Borrower elects to have
interest computed on the Tender Loan Facility with reference
to the LIBOR Rate, interest will be calculated daily on the
basis of a 360-day year for the actual number
3
<PAGE>
of days elapsed and billed on the last day of the respective
Interest Period. In the event that the Borrower repays any
amount bearing interest with reference to the LIBOR Rate on
a day other than the last day of the Interest Period
applicable to such amount or fail to borrow any such amount
on the date scheduled for such borrowing, the Borrower will
reimburse Lenders for any loss attributable to such
repayment or failure to borrow.
OPTIONAL
PREPAYMENT: The Tender Loan Facility may be prepaid in whole or in part
at any time without premium or penalty.
UNUSED
FACILITY FEE: 0.50% per annum of the average daily balance of the unused
portion of the Credit Facility, payable monthly in arrears.
COMMITMENT FEE: As set forth in the Fee Letter.
ANNUAL
ADMINISTRATIVE FEE:As set forth in the Fee Letter.
GUARANTOR: Lund International Holdings, Inc. ("Lund") shall
unconditionally and irrevocably guarantee all obligations of
Borrower including principal, interest, fees and expenses.
As security of the guarantee, Lund will grant a first and
perfected security interest in all of the capital stock of
Lund Subsidiaries (as defined in the Commitment Letter),
with the possible exception of Lund International FSC, Inc.
SECURITY: First and perfected security interest in (100%) of the
capital stock of Target owned by Borrower. Lund and
Borrower shall agree that it and its subsidiaries shall not
incur any liens (other than in favor of Administrative Agent
and Lenders, the existing IDRB lien and other permitted
liens to be set forth in the loan documentation) on their
respective assets until the Credit Facility is paid in full.
CAPITALIZATION: On date of first funding, Borrower will have common equity,
on terms acceptable to Heller, of no less than $35,000,000
and no outstanding indebtedness, except pursuant to the
Credit Facility. In no event shall Heller provide more than
50% of the cost of acquired shares of Target insofar as
Borrower has purchased less than 90% of Shares of Target.
CONDITIONS
PRECEDENT TO
4
<PAGE>
INITIAL EXTENSION
OF CREDIT: Those customarily found in credit agreements for similar
secured financings and others appropriate in the judgment of
Heller, including, without limitation, the following:
(a) The final terms and conditions of the Agreement and
Plan of Merger among Lund International Holdings, Inc.,
Zephyros Acquisition Corporation and Deflecta-Shield
Corporation dated as of November 25, 1997 (including any
appendices, annexes and exhibits thereto, the "Merger
Agreement") (i) shall be as described herein and otherwise
consistent with the description thereof received in writing
as part of the Pre-Commitment information (as hereinafter
defined) and (ii) shall be otherwise satisfactory to Heller;
and all documentation relating to the Credit Facility shall
be in form and substance satisfactory to Heller. The
Acquisition shall have been consummated in accordance with
the Merger Agreement, without any waiver or amendment of any
term or condition therein not consented to by Lenders and in
compliance with all applicable laws and all necessary
approvals; and Lenders shall be satisfied that any
applicable state takeover law and any applicable
supermajority charter provisions are not applicable to the
Acquisition or that any conditions to avoiding such
restrictions have been satisfied.
(b) All documentation relating to the Credit Facility,
including a credit agreement incorporating substantially the
terms and conditions outlined herein, shall be in form and
substance satisfactory to Heller.
(c) Heller shall be satisfied with the corporate and legal
structure and capitalization of the Borrower and the
Guarantor, including, without limitation, the charter and
bylaws of the Borrower and Guarantor and each agreement or
instrument relating thereto.
(d) Lenders shall have a valid and perfected first priority
(subject to certain exceptions to be set forth in the loan
documentation) lien and security interest in the capital
stock described in the "Guarantor" and "Security" paragraphs
above; all filings, recordations and searches necessary or
desirable in connection with such liens and security
interests shall have been duly made; and all filing and
recording fees and taxes shall have been duly paid.
(e) There shall have occurred no material adverse change in
the business, condition (financial or otherwise),
operations, performance, or properties of either (i) Lund
and its subsidiaries, taken as a whole,
5
<PAGE>
since September 30, 1997 or (ii) Target and its
subsidiaries, taken as a whole, since September 30, 1997.
(f) Any of the conditions to Borrower's obligations to
purchase shares pursuant to the Tender Offer or the Merger
Agreement shall have been satisfied in all material
respects; provided, however, that any waiver of any
condition by any party to the Merger Agreement will not
constitute a waiver by Heller for purposes of this
condition.
(g) All of the information provided by or on behalf of Lund
or any of its subsidiaries or by or on behalf of the Target
or any of its subsidiaries to the Administrative Agent and
Lenders prior to their commitment (the "Pre-Commitment
Information") shall be true and correct in all material
respects.
(h) Lund shall have purchased all of the issued and
outstanding common stock of Borrower for an aggregate
purchase price of not less than $35,000,000.
(i) All loans made by the Lenders to the Borrower or any of
its affiliates shall be in full compliance with the Federal
Reserve's Margin Regulations, including, without limitation,
Regulations G, U and X.
(j) Lenders shall have received all additional financial,
business and other information regarding the Borrower, the
Target, Lund and their respective subsidiaries and
properties as Heller shall have reasonably requested.
(k) Lenders shall have received (i) satisfactory opinions
of counsel for the Borrower and the Guarantor, of counsel
for the Administrative Agent and of local and special
counsel for Heller as to the transactions contemplated
hereby and (ii) such corporate resolutions, certificates and
other documents as Heller shall have reasonably requested.
(l) There shall exist no default under any of the loan
documentation, and the representations and warranties of the
Borrower, the Guarantor and each of their respective
subsidiaries therein shall be true and correct immediately
prior to, and after giving effect to, the initial extension
of credit under the loan documentation.
6
<PAGE>
(m) All accrued fees and expenses of the Administrative
Agent and the Lenders (including the fees and expenses of
counsel for the Administrative Agent and local counsel for
the Administrative Agent) shall have been paid.
(n) Lund, Borrower and each of their respective
subsidiaries shall have given the Administrative Agent and
Lenders such access to their books and records as the
Administrative Agent or Lenders may have requested in order
to carry out its investigations, appraisals and analyses.
CONDITIONS
PRECEDENT TO
SUBSEQUENT
EXTENSIONS
OF CREDIT: There shall exist no default under any of the loan
documentation, and the representations and warranties of the
Borrower, each of the Guarantor and each of their respective
subsidiaries therein shall be true and correct immediately
prior to, and after giving effect to such extension of
credit.
REPRESENTATION AND
WARRANTIES: Those customarily found in credit agreements for similar
secured financings and others appropriate in the judgment of
Heller.
COVENANTS: Those affirmative, negative and financial covenants
customarily found in credit agreements for similar secured
financings (applicable to Lund and the Borrower and each of
their respective subsidiaries) and others appropriate in the
judgment of Heller, including, without limitation, the
following:
(a) Affirmative Covenants - (i) Compliance with laws and
regulations (including, without limitation, ERISA and
environmental laws); (ii) payment of taxes and other
obligations; (iii) maintenance of appropriate and adequate
insurance; (iv) preservation of corporate existence, rights
(charter and statutory), franchises, permits, licenses and
approvals; (v) preparation of environmental reports; (vi)
visitation and inspection rights; (vii) keeping of proper
books in accordance with generally accepted accounting
principles; (vii) maintenance of properties; (viii)
performance of leases, related documents and other material
agreements; (ix) conducting transactions with affiliates on
terms equivalent to those obtainable on an arm's-length
basis; (x) further assurances as to perfection and priority
of security interests; (xi) grant of security on additional
7
<PAGE>
property and assets upon the occurrence of an Event of
Default; (xii) Lund and Borrower use their best efforts to
merge Target into Borrower as soon as practicable; and
(xiii) customary financial and other reporting requirements
(including, without limitation, audited annual financial
statements and monthly and quarterly unaudited financial
statements, in each case prepared on a consolidated and a
consolidating basis, notices of defaults, compliance
certificates, annual business plans and forecasts, reports
to shareholders and other creditors and other business and
financial information as any Lender shall reasonably
request).
(b) Negative Covenants - Restrictions on (i) liens (other
than liens securing the Credit Facilities); (ii) debt,
guaranties or other contingent obligations; (iii) lease
obligations in excess of an amount to be agreed between the
Borrower and Lenders; (iv) mergers and consolidations; (v)
sales, transfers and other dispositions of assets (other
than sales of inventory in the ordinary course of business);
(vi) loans, acquisitions, joint ventures and other
investments; (vii) dividends and other distributions to
stockholders; (viii) issuing or repurchasing shares of
capital stock, (ix) prepaying, redeeming or repurchasing
debt; (x) capital expenditures; (xi) granting negative
pledges other than to Administrative Agent and the Lenders;
(xii) changing the nature of its business; (xiii) amending
organizational documents, or amending or otherwise modifying
any debt, any related document or any other material
agreement; and (xiv) changing accounting policies or
reporting practices; in each of the foregoing cases, with
such exceptions as may be agreed upon in the loan
documentation.
FINANCIAL
COVENANTS: Borrower shall maintain a Fixed Charge Coverage Ratio of at
least 1.0.
EVENTS OF DEFAULT: Those customarily found in credit agreements for similar
secured financings and others appropriate in the judgment of
Heller, including, without limitation, (a) failure to pay
principal when due, or to pay interest, fees and other
amounts within five (5) business days after the same becomes
due, under the loan documentation; (b) any representation or
warranty proving to have been materially incorrect when made
or confirmed; (c) failure to perform or observe covenants
set forth in the loan documentation within a specified
period of time, where customary and appropriate, after
notice or knowledge of such failure; (d) cross-defaults to
other indebtedness in an amount to be agreed in the loan
documentation; (e) bankruptcy and insolvency defaults (with
grace period for involuntary proceedings)
8
<PAGE>
(f) monetary judgment defaults in an amount to be agreed in
the loan documentation and nonmonetary judgment defaults
that could reasonably be expected to have a Material Adverse
Effect; (g) impairment of loan documentation or security;
and (h) change of ownership or operating control.
EXPENSES: Lund shall pay all of Administrative Agent's due diligence,
syndication (including printing, distribution and bank
meetings), transportation, computer, duplication, appraisal,
audit, insurance, consultant search, filing and recording
fees and all other out-of-pocket expenses incurred by
Administrative Agent (including the fees and expenses of
counsel for Administrative Agent), whether or not any of the
transactions contemplated hereby are consummated, as well as
all expenses of Administrative Agent in connection with the
administration of the loan documentation. The Borrower
shall also pay the expenses of the Administrative Agent and
the Lenders in connection with the enforcement of any of the
loan documentation.
INDEMNITY: Lund and Borrower jointly and severally will indemnify and
hold harmless the Administrative Agent, each Lender and each
of their affiliates and their officers, directors,
employees, agents and advisors (each an "Indemnified Party")
from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or
by reason of, or in connection with the preparation for a
defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with (a) the
Acquisition or any related transaction of Lund, Borrower or
any of their respective subsidiaries or their other
affiliates and any of the other transactions contemplated in
the loan documentation, (b) any acquisition or proposed
acquisition or similar business combination or proposed
business combination by Lund, Borrower or any of their
respective subsidiaries or affiliates of all or any portion
of the shares of capital stock or substantially all of the
property and assets of any other person, (c) the Credit
Facility and any use made or proposed to be made with the
proceeds thereof or (d) the actual or alleged presence of
hazardous materials on any property of Lund, Borrower or any
of their respective subsidiaries or any environmental action
or proceeding relating in any way to Lund, the Borrower or
any of their respective subsidiaries or any of their
respective properties, in each case, whether or not such
investigation, litigation or proceeding is brought by Lund,
the Borrower, their respective
9
<PAGE>
shareholders or creditors or an Indemnified Party or an
Indemnified Party is otherwise a party thereto and whether
or not the Acquisition is consummated, except to the extent
such claim, damage, loss, liability or expense is found in a
final, nonappealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct. Lund and the
Borrower will further agree that no Indemnified Party shall
have any liability (whether direct or indirect, in contract
or tort or otherwise) to Lund, the Borrower or any of their
respective subsidiaries or to their respective security
holders or creditors arising out of, related to or in
connection with the Acquisition or any of the transactions
contemplated in the Credit Facilities, except for direct, as
opposed to consequential, damages determined in a final
nonappealable judgment by a court of competent jurisdiction
to have resulted from such Indemnified Party's gross
negligence or willful misconduct.
REQUIRED CONSENT
LENDERS: Greater than 66 2/3%; provided that unanimous consent shall
be required for matters customarily requiring such consent.
ASSIGNMENTS AND
PARTICIPANTS: Assignment may be non-pro rata and must be to Eligible
Assignees and, in each case other than an assignment to any
of the Lenders or an assignment of the entirety of a
Lender's interest in the Credit Facility, in a minimum
amount of $5,000,000. Each of the Lenders will also have
the right, without consent of the Borrower or the
Administrative Agent, to assign (i) as security all or part
of its rights under the loan documentation to any Federal
Reserve Bank and (ii) all or part of its rights or
obligations under the loan documentation to any of its
affiliates. No participation shall include voting rights,
other than for reductions or postponements of amounts
payable or releases of all or substantially all of the
collateral. A processing and recordation fee of $3,000
shall be payable to the Administrative Agent for each
assignment.
TAXES: All payments to be free and clear of any present or future
taxes, withholdings or other deductions whatsoever (other
than income taxes in the jurisdiction of the Lenders'
applicable lending office). The Lenders will use reasonable
efforts (consistent with their respective internal policies
and legal and regulatory restrictions and so long as such
efforts would not otherwise be disadvantageous to such
Lenders) to minimize to the extent possible any applicable
taxes,
10
<PAGE>
and the Borrower will indemnify the Lenders and the
Administrative Agent for such taxes paid by the Lenders or
the Administrative Agent.
MISCELLANEOUS: Standard yield protection (including compliance with
risk-based capital guidelines, increased costs, payments
free and clear of withholding taxes and interest period
breakage indemnities), Eurodollar illegality and similar
provisions, defaulting lender provisions, waiver of jury
trial and submission to jurisdiction.
GOVERNING LAW: New York.
COUNSEL FOR THE
ADMINISTRATIVE
AGENT: Winston & Strawn.
This term sheet has been issued in reliance upon the accuracy of all information
furnished to Heller by or on behalf of Lund and Target.
11
<PAGE>
Exhibit (c)(1)
=============================================================
AGREEMENT AND PLAN OF MERGER
AMONG
LUND INTERNATIONAL HOLDINGS, INC.,
ZEPHYROS ACQUISITION CORPORATION
AND
DEFLECTA-SHIELD CORPORATION
DATED AS OF NOVEMBER 25, 1997
=============================================================
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I THE OFFER..................................................... 2
SECTION 1.1 The Offer................................................ 2
SECTION 1.2 Action by the Company.................................... 4
SECTION 1.3 Directors................................................ 5
SECTION 1.4 The Merger............................................... 6
SECTION 1.5 Effective Time........................................... 7
SECTION 1.6 Closing.................................................. 7
SECTION 1.7 Directors and Officers of the Surviving Corporation...... 7
SECTION 1.8 Effect of the Merger..................................... 7
SECTION 1.9 Subsequent Actions....................................... 7
SECTION 1.10 Certificate of Incorporation; By-Laws.................... 8
SECTION 1.11 Stockholders' Meeting.................................... 8
SECTION 1.12 Merger Without Meeting of Stockholders................... 9
ARTICLE II CONVERSION OF SECURITIES...................................... 9
SECTION 2.1 Conversion of Securities................................. 9
SECTION 2.2 Dissenting Shares........................................ 10
SECTION 2.3 Surrender of Shares; Stock Transfer Books................ 10
SECTION 2.4 Stock Plans.............................................. 12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 13
SECTION 3.1 Organization and Qualification........................... 13
SECTION 3.2 Capitalization........................................... 13
SECTION 3.3 Subsidiaries............................................. 14
SECTION 3.4 Authorization............................................ 15
SECTION 3.5 SEC Documents............................................ 15
SECTION 3.6 No Conflicts............................................. 16
SECTION 3.7 Financial Statements..................................... 16
SECTION 3.8 No Undisclosed Liabilities............................... 17
SECTION 3.9 Absence of Certain Changes or Events..................... 17
SECTION 3.10 Tax Matters.............................................. 17
SECTION 3.11 Litigation............................................... 19
SECTION 3.12 ERISA Compliance......................................... 19
SECTION 3.13 Environmental Matters.................................... 21
SECTION 3.14 Real Property and Leased Property........................ 21
SECTION 3.15 Change of Control Payments; Takeover Restrictions........ 22
i
<PAGE>
Page
----
SECTION 3.16 Intellectual Property.................................... 22
SECTION 3.17 Contracts................................................ 23
SECTION 3.18 Compliance with Laws..................................... 23
SECTION 3.19 Insurance Coverage....................................... 23
SECTION 3.20 Personnel; Labor Relations............................... 24
SECTION 3.21 Customers................................................ 24
SECTION 3.22 Brokers and Finders...................................... 25
SECTION 3.23 Opinion of Financial Advisor............................. 25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER........ 25
SECTION 4.1 Organization and Power................................... 25
SECTION 4.2 Authorization............................................ 26
SECTION 4.3 No Conflicts............................................. 26
SECTION 4.4 Consents and Approvals................................... 26
SECTION 4.5 Financing of the Offer and the Merger.................... 26
SECTION 4.6 No Obligation to Make a Hart-Scott-Rodino Filing......... 26
SECTION 4.7 Finder's Fees............................................ 27
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER........................ 27
SECTION 5.1 Interim Operations of the Company........................ 27
SECTION 5.2 Takeover Proposals....................................... 30
SECTION 5.3 No Solicitation.......................................... 31
ARTICLE VI ADDITIONAL AGREEMENTS......................................... 32
SECTION 6.1 Proxy Statement.......................................... 32
SECTION 6.2 Meeting of Stockholders of the Company................... 32
SECTION 6.3 Additional Agreements.................................... 33
SECTION 6.4 Notification of Certain Matters.......................... 33
SECTION 6.5 Access; Confidentiality.................................. 33
SECTION 6.6 Publicity................................................ 34
SECTION 6.7 Directors' and Officers' Insurance and Indemnification... 35
SECTION 6.8 Employee Benefits........................................ 37
SECTION 6.9 Purchaser Compliance..................................... 38
SECTION 6.10 Best Efforts............................................. 38
ARTICLE VII CONDITIONS.................................................... 39
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Merger................................................... 39
ARTICLE VIII TERMINATION................................................... 39
SECTION 8.1 Termination.............................................. 39
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Page
----
SECTION 8.2 Effect of Termination.................................... 41
ARTICLE IX GENERAL PROVISIONS............................................ 42
SECTION 9.1 Amendment................................................ 42
SECTION 9.2 Waiver................................................... 42
SECTION 9.3 Non-Survival of Representations and Warranties........... 42
SECTION 9.4 Notices.................................................. 43
SECTION 9.5 Headings................................................. 43
SECTION 9.6 Exhibits, Schedules and Annexes.......................... 44
SECTION 9.7 Counterparts............................................. 44
SECTION 9.8 Governing Law............................................ 44
SECTION 9.9 Pronouns................................................. 44
SECTION 9.10 Time Periods............................................. 44
SECTION 9.11 No Strict Construction................................... 44
SECTION 9.12 Entire Agreement......................................... 44
SECTION 9.13 Severability............................................. 45
SECTION 9.14 Successors and Assigns................................... 45
SECTION 9.15 Fees and Expenses........................................ 45
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ANNEX I
Conditions of the Offer............................................... A-1
ANNEX II
Form of Stockholder Agreement...........................................B-1
EXHIBITS
Exhibit 6.6 - Form of Press Release
Exhibit 8.2 - Wire Transfer Instructions
INDEX OF DEFINED TERMS
----------------------
TERM LOCATION
- ---- --------
Affidavit of Loss.........................................................2.3(e)
Agreement...............................................................Preamble
Appointment Date............................................................ 5.1
Benefit Plan.............................................................3.12(a)
Board of Directors......................................................Recitals
Certificates..............................................................2.3(b)
Closing......................................................................1.6
Closing Date.................................................................1.6
Code.....................................................................3.12(a)
Common Stock..............................................................3.2(a)
Company.................................................................Preamble
Company Agreements...........................................................3.6
Company Letter.......................................................Article III
Confidentiality Agreement.................................................6.5(a)
D&O Insurance.............................................................6.7(c)
Delaware Law............................................................Recitals
Dissenting Shares.........................................................2.2(a)
Effective Time...............................................................1.5
Encumbrances.............................................................3.14(a)
ERISA....................................................................3.12(a)
ERISA Affiliate..........................................................3.12(a)
Exchange Agent............................................................2.3(a)
Exchange Act..............................................................1.1(a)
Expense Reimbursement Amount..............................................8.2(c)
Financial Statements.........................................................3.7
GAAP......................................................................3.2(b)
Governmental Entity..........................................................3.6
HSR Act......................................................................4.6
Indemnified Person(s).....................................................6.7(a)
Independent Directors.....................................................1.3(c)
Intellectual Property.......................................................3.16
Leased Property..........................................................3.14(b)
Material Adverse Effect...................................................3.1(b)
Merger.......................................................................1.4
Merger Consideration......................................................2.l(a)
Minimum Condition.........................................................1.1(a)
1997 Premium..............................................................6.7(c)
1996 Fiscal Year............................................................3.21
Notice of Superior Proposal...............................................5.3(b)
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Offer...................................................................Recitals
Offer Documents...........................................................1.l(b)
Offer Price.............................................................Recitals
Offer to Purchase.........................................................1.1(a)
Options......................................................................2.4
Other Intellectual Property.................................................3.16
Parent..................................................................Preamble
Permitted Encumbrance....................................................3.14(a)
Person....................................................................2.3(d)
Preferred Stock...........................................................3.2(a)
Purchaser...............................................................Preamble
Proxy Statement......................................................1.11(a)(ii)
Real Property............................................................3.14(a)
Registered Intellectual Property............................................3.16
Schedule 14D-1............................................................1.1(b)
Schedule 14D-9............................................................1.2(b)
SEC.......................................................................1.l(b)
SEC Documents.............................................................3.5(a)
Securities Act............................................................3.5(a)
Shares..................................................................Recitals
Special Meeting.......................................................1.11(a)(i)
Stock Plans..................................................................2.4
Stockholder Agreements..................................................Recitals
Subsidiary...................................................................3.3
Superior Proposal.........................................................5.3(b)
Surviving Corporation........................................................1.4
Takeover Proposal............................................................5.2
Tax...................................................................3.10(f)(i)
Taxable...............................................................3.10(f)(i)
Taxes.................................................................3.10(f)(i)
Tax Return...........................................................3.10(f)(ii)
Termination Fee...........................................................8.2(c)
U.S. Court..................................................................3.11
WARN Act....................................................................3.20
Wasserstein.................................................................3.23
Trailmaster Options..........................................................2.4
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of November 25, 1997,
among Lund International Holdings, Inc., a Delaware corporation ("Parent"),
Zephyros Acquisition Corporation., a Delaware corporation and a wholly-owned
subsidiary of Parent (the "Purchaser"), and Deflecta-Shield Corporation, a
Delaware corporation (the "Company").
RECITALS:
WHEREAS, the Board of Directors of each of Parent, the Purchaser and the
Company has approved, and deems it advisable and in the best interests of its
respective stockholders to consummate, the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that the Purchaser will
make a cash tender offer (the "Offer") to acquire all shares (the "Shares") of
the issued and outstanding common stock, $.01 par value, of the Company for
$16.00 per Share, net to the seller in cash (such price, or any such higher
price per Share as may be paid in the Offer, being referred to herein as the
"Offer Price"); and
WHEREAS, also in furtherance of such acquisition, the Boards of Directors
of the Company, Parent and the Purchaser have each approved the Merger (as
defined hereinafter) following the Offer in accordance with the General
Corporation Law of the State of Delaware (the "Delaware Law") and upon the terms
and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
has determined that the consideration to be paid for each Share in the Offer and
the Merger is fair to the holders of such Shares and has resolved to recommend
that the holders of such Shares accept the Offer and approve this Agreement and
each of the transactions contemplated hereby upon the terms and subject to the
conditions set forth herein; and
WHEREAS, as a condition and inducement to Parent's and the Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
Mark C. Mamolen and Charles S. Meyer (the "Stockholders"), who in the aggregate
beneficially own 1,909,374 Shares, concurrently herewith are entering into
Stockholder Agreements (the "Stockholder Agreements"), dated as of the date
hereof, with Parent, in the form attached hereto as Annex II, pursuant to which
the Stockholders have agreed, among other things, to tender the Shares held by
them in the Offer, upon the terms and subject to the conditions set forth
therein; and
WHEREAS, the Company, Parent and the Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and Merger.
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NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 hereof and none of the events set forth in Annex I
shall have occurred and be continuing, the Purchaser shall, and Parent shall
cause the Purchaser to, (i) not later than 9:00 a.m. New York City time on the
first business day after the execution of this Agreement, publicly announce the
execution of this Agreement and the intention to commence the Offer pursuant to
the terms hereof, (ii) as promptly as practicable (but in no event later than
five (5) business days after the public announcement of the execution of this
Agreement), commence (within the meaning of Rule 14d-2(a) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), the Offer at the Offer
Price, and (iii) subject only to there being validly tendered and not withdrawn
prior to the expiration of the Offer that number of Shares which represents at
least a majority of the Shares then outstanding on a fully diluted basis (after
giving effect to the conversion, exchange or exercise of all outstanding options
and other rights and securities convertible into or exchangeable for Shares)
(the "Minimum Condition") and to the other conditions set forth in Annex I
hereto, consummate the Offer promptly in accordance with its terms. The
obligations of the Purchaser to accept for payment and to pay for any Shares
validly tendered on or prior to the expiration of the Offer and not withdrawn
shall be subject only to the Minimum Condition and the other conditions set
forth in Annex I hereto. The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") containing only the terms set forth in this
Agreement, the Minimum Condition and the other conditions set forth in Annex I
hereto. Without the prior written consent of the Company, which may be given or
withheld in its sole and absolute discretion, neither Parent nor the Purchaser
shall (i) amend or waive the Minimum Condition; (ii) decrease the Offer Price;
(iii) decrease the number of Shares sought; (iv) amend the Offer in any way
other than to increase the Offer Price, including by means of adding any
conditions to the Offer; (v) change the form of consideration payable in the
Offer; or (vi) extend the expiration of the Offer (except as specifically
provided in this Section 1.1); PROVIDED, HOWEVER, that, subject to Section 8.1,
if on the initial scheduled expiration date of the Offer, which shall be twenty
(20) business days after the date the Offer is commenced, all conditions to the
Offer shall not have been satisfied or waived at such time, the Purchaser may
extend the expiration date of the Offer for a period of thirty (30) business
days; and PROVIDED, FURTHER, that if at any scheduled expiration date of the
Offer, the condition set forth in paragraph (d) of Annex I hereto shall not have
been satisfied but all of the other conditions set forth on Annex I hereto shall
then have been satisfied, then, at the request of the
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Company (which shall subsequently be confirmed in writing), the Purchaser shall,
and Parent shall cause the Purchaser to, extend the Offer from time to time,
subject to the right of the Purchaser and Parent to terminate this Agreement
pursuant to Section 8.1 hereto. The Purchaser shall, and Parent shall cause the
Purchaser to, subject only to the prior satisfaction or waiver of the conditions
of the Offer, accept for payment and pay for Shares validly tendered as soon as
it is legally permitted to do so under applicable law; PROVIDED, HOWEVER, that
if, immediately prior to the initial expiration date of the Offer in accordance
with the foregoing, the Shares tendered and not withdrawn pursuant to the Offer
equal less than 90% of the then outstanding Shares, but not less than 70% of
such Shares, the Purchaser may extend the Offer on one or more occasions for an
aggregate period not to exceed ten (10) business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer;
PROVIDED, FURTHER, that if the Purchaser extends the Offer pursuant to the
foregoing proviso, all conditions set forth on Annex I hereto shall be
irrevocably waived and deemed satisfied in full. Notwithstanding anything to
the contrary contained in this Section 1.1(a), the Purchaser may not extend the
Offer, without the prior written consent of the Company which may be given or
withheld in its sole and absolute discretion, if the failure of any condition
resulted directly or proximately from a state of facts or action or inaction
which constitutes a breach of a representation, warranty or covenant of Parent
or the Purchaser.
(b) As soon as practicable on the date the Offer is commenced, Parent and
the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 shall include,
as exhibits, and incorporate by reference, the Offer to Purchase and a form of
letter of transmittal and summary advertisement (which documents, together with
any amendments and supplements thereto, and any other SEC schedule or form which
is filed in connection with the Offer and related transactions, are referred to
collectively herein as the "Offer Documents"). The Offer Documents shall comply
in all material respects with the provisions of applicable federal securities
laws and, on the date filed with the SEC and on the date first published, mailed
or given to the Company's stockholders and at all times thereafter, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or the Purchaser
with respect to information furnished by the Company to Parent or the Purchaser,
in writing, expressly for inclusion in the Offer Documents. The information
supplied by the Company to Parent or the Purchaser, in writing, expressly for
inclusion in the Offer Documents and by Parent or the Purchaser to the Company,
in writing, expressly for inclusion in the Schedule 14D-9 (as hereinafter
defined) shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Parent and the Purchaser agree promptly to correct the
Offer Documents if and to the extent that they shall have become false or
misleading in any material respect (and the Company, with respect to written
information supplied by it specifically for use
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in the Offer Documents, promptly shall notify Parent and the Purchaser of any
required corrections of such information and cooperate with the Parent and the
Purchaser with respect to correcting such information) and to supplement the
information contained in the Offer Documents to include any information that
shall become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading in any material
respect. Parent and the Purchaser further agree to take all steps necessary to
cause the Offer Documents so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its outside legal counsel
shall be given a reasonable opportunity to review and comment on the Offer
Documents before such documents are filed with the SEC. In addition, the
Purchaser agrees to provide the Company and its outside legal counsel, in
writing, with any comments, whether written or oral, that the Purchaser or its
outside legal counsel may receive from time to time from the SEC or its staff
with respect to the Offer Documents promptly after the receipt of such comments
or other communications.
SECTION 1.2 ACTION BY THE COMPANY.
(a) The Company hereby approves of and consents to the making of the Offer
and represents that the Board of Directors, at a meeting duly called and held on
November 25, 1997, at which a majority of the Directors was present, has
unanimously (i) determined that this Agreement and the transactions contemplated
hereby, including the Merger and the Offer, are fair to, and in the best
interests of, the Company and the holders of the Shares, (ii) duly authorized
and approved this Agreement and approved the Merger and the other transactions
contemplated hereby (including but not limited to the Offer), and (iii) resolved
to recommend that the stockholders of the Company accept the Offer, tender their
Shares pursuant to the Offer and, to the extent required by applicable law,
authorize and approve this Agreement and the transactions contemplated hereby,
including the Merger. Subject to the terms of this Agreement, the Company
hereby consents to the inclusion in the Offer Documents prepared in connection
with the Offer of the recommendation of the Board of Directors of the Company
described in the preceding sentence.
(b) As soon as practicable on the date the Offer is commenced, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any and all amendments or supplements thereto and including
the exhibits thereto, the "Schedule 14D-9"). The Schedule 14D-9 shall comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published, mailed or
given to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information furnished by
Parent or the Purchaser, in writing, expressly for inclusion in the Schedule
14D-9. The Company shall mail, or cause to be mailed, such Schedule 14D-9 to
the stockholders of the Company at the same time the Offer Documents are first
mailed to the
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stockholders of the Company. The Schedule 14D-9 and the Offer Documents shall
contain the recommendations of the Board of Directors described in Section
1.2(a) hereof, subject to the terms of this Agreement. The Company agrees
promptly to correct the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect (and each of Parent and the
Purchaser, with respect to written information supplied by it specifically for
use in the Schedule 14D-9, promptly shall notify the Company of any required
corrections of such information and cooperate with the Company with respect to
correcting such information) and to supplement the information contained in the
Schedule 14D-9 to include any information that shall become necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading in any material respect. The Company further agrees
to take all steps necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws. The Purchaser
and its outside legal counsel shall be given the opportunity to review and
comment on the Schedule 14D-9 before it is filed with the SEC. In addition, the
Company agrees to provide the Purchaser and its outside legal counsel, in
writing, with any comments, whether written or oral, that the Company or its
outside legal counsel may receive from time to time from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments
or other communications.
(c) In connection with the Offer, the Company shall promptly furnish or
cause to be furnished to the Purchaser mailing labels containing the names and
addresses of all record holders of Shares and security position listings of
Shares held in stock depositories, each as of a recent date, and shall promptly
furnish the Purchaser with such additional information (including, but not
limited to, updated lists of stockholders and their addresses, mailing labels
and security position listing) and related assistance as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares.
SECTION 1.3 DIRECTORS.
(a) Promptly upon the purchase of Shares by the Purchaser pursuant to the
Offer which when added to any other Shares beneficially owned by Parent, the
Purchaser and their affiliates, represent at least a majority of the Shares on a
fully diluted basis, and from time to time thereafter as Shares are acquired by
the Purchaser, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
is equal to the product of the total number of directors on such Board of
Directors (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the number of Shares beneficially
owned by the Purchaser or any affiliate of the Purchaser bears to the total
number of Shares then outstanding. In furtherance thereof, the Company promptly
shall increase the size of the Board of Directors or use its best efforts to
secure the resignations of such number of its incumbent directors as is
necessary to enable Parent's designees to be elected to the Board of Directors
in accordance with the terms of this Section 1.3, and the Board of Directors
shall take all actions available to the Company to cause Parent's designees to
be so elected as provided herein. Parent and the Purchaser agree not to
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seek any greater representation on the Board of Directors of the Company prior
to the Effective Time (as defined in Section 1.5 hereof).
(b) The Company's obligation to appoint designees to the Board of
Directors of the Company shall be subject to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder. The Company promptly shall take all
actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under Section 1.3(a)
hereof, and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if the Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required to be disclosed under Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under Section 1.3(a) hereof. Parent or the
Purchaser shall timely supply the Company, and be solely responsible for, the
information with respect to either of them and their nominees, officers,
directors and affiliates required to be disclosed by such Section 14(f) and Rule
14f-1.
(c) In the event that Parent's designees are elected to the Board of
Directors, subject to the other terms of this Agreement, until the Effective
Time, the Board of Directors shall have at least two (2) directors who are
directors on the date hereof and who are neither officers of the Company nor a
designee, stockholder, affiliate or associate (within the meaning of the federal
securities laws) of Parent (one or more of such directors, the "Independent
Directors"); PROVIDED, HOWEVER, that if the number of Independent Directors
shall be reduced below two (2) because of death, disability or resignation, the
remaining Independent Director shall be entitled to designate a person to fill
such vacancy, which person shall be deemed an Independent Director for purposes
of this Agreement. Notwithstanding anything in this Agreement to the contrary,
in the event that Parent's designees are elected to the Company's Board of
Directors after the acceptance for payment of Shares pursuant to the Offer and
prior to the Effective Time (as hereinafter defined), the affirmative vote of a
majority of the Independent Directors shall be required to (i) amend or
terminate this Agreement on behalf of the Company, (ii) amend the Amended and
Restated Certificate of Incorporation or By-Laws of the Company, (iii) waive any
condition to the obligations of the Company hereunder or exercise or waive any
of the Company's rights, benefits or remedies hereunder or grant any consents or
authorize or enter into any agreements of the Company hereunder, (iv) extend the
time for performance of the Purchaser's or Parent's obligations or other acts
hereunder, (v) approve any other action by the Company which would adversely
affect the rights of the stockholders of the Company hereunder or contemplated
hereby, or (vi) take any other action by the Company under or in connection with
this Agreement required to be taken by the Board of Directors (it being
understood that if no Independent Directors are members of the Board of
Directors, no such action will be taken).
SECTION 1.4 THE MERGER. Upon the terms and subject to the conditions of
this Agreement and in accordance with the Delaware Law, at the Effective Time,
the Purchaser shall be merged with and into the Company (the "Merger"), the
separate corporate existence of the Purchaser shall cease, and the Company shall
continue as the surviving corporation. The
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Company as the surviving corporation after the Merger is sometimes referred to
hereinafter as the "Surviving Corporation."
SECTION 1.5 EFFECTIVE TIME. Subject to the provisions of this
Agreement, the parties hereto shall cause a certificate of merger to be executed
and filed on the Closing Date (as defined in Section 1.6 hereof) (or on such
other date as Parent and the Company may agree) with the Secretary of State of
Delaware in such form as required by, and executed in accordance with, the
relevant provisions of the Delaware Law. The Merger shall become effective on
the date on which the certificate of merger is duly filed with the Secretary of
State of the State of Delaware or such time as is agreed upon by the parties and
specified in the certificate of merger, and such time is hereinafter referred to
as the "Effective Time."
SECTION 1.6 CLOSING. Unless this Agreement shall have been terminated
pursuant to Section 8.1 hereof and subject to the satisfaction or waiver of all
conditions set forth in Article VII hereof, the closing of the Merger (the
"Closing") shall take place at 10:00 a.m. on a date (the "Closing Date") to be
specified by the parties hereto, which shall be no later than the second
business day after satisfaction or waiver of all of the conditions set forth in
Article VII hereof provided that all such conditions continue to be so satisfied
or waived on such second business day, and if not so satisfied or waived, the
Closing shall be automatically extended from time to time until the first
subsequent business day on which all such conditions are again so satisfied or
waived, subject, however, to Article VIII hereof, at the offices of Reid &
Priest LLP, 40 West 57th Street, New York, New York, unless another date or
place is agreed to in writing by the parties hereto.
SECTION 1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of the Purchaser immediately before the Effective Time shall be the
initial directors of the Surviving Corporation, and the officers of the Company
immediately before the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and the By-laws of the
Surviving Corporation. If, at the Effective Time, a vacancy shall exist on the
board of directors or in any office of the Surviving Corporation, such vacancy
may thereafter be filled in the manner provided by the Delaware Law.
SECTION 1.8 EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of the Company and the Purchaser shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company and the Purchaser shall become
the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.9 SUBSEQUENT ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments,
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assurances or any other actions or things are necessary or desirable 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, properties or assets
of either of the Company or the Purchaser acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of either the Company or the Purchaser, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of each of such corporations or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
SECTION 1.10 CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) Unless otherwise determined by the Company before the Effective Time,
at the Effective Time the Certificate of Incorporation of the Company, as in
effect immediately before the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by the Delaware Law and such Certificate of Incorporation.
(b) The By-Laws of the Company, as in effect immediately before the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by the Delaware Law, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.11 STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") as promptly as practicable
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon the approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and use its best
efforts, subject to the terms of this Agreement, to obtain and furnish the
information required to be included by the SEC in the Proxy Statement (as
hereinafter defined) and, after consultation with Parent, to respond
promptly to any comments made by the SEC with respect to the preliminary
proxy or information statement and cause a definitive proxy or information
statement, including any amendment or supplement thereto (the "Proxy
Statement"), to be mailed to its stockholders, provided that no amendment
or supplement to the Proxy Statement will be made by the Company without
consultation with Parent
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and its outside legal counsel, and to obtain the necessary approvals of the
Merger and this Agreement by its stockholders; and
(iii) subject to the terms of this Agreement and fiduciary
obligations under applicable laws as advised by outside legal counsel,
include in the Proxy Statement the recommendation of the Board of Directors
that stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then owned
by it, the Purchaser or any of its other subsidiaries and affiliates in favor of
the approval of the Merger and the approval and adoption of this Agreement.
SECTION 1.12 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
Section 1.11 hereof, in the event that Parent, the Purchaser and any other
subsidiaries of Parent shall acquire in the aggregate at least 90% of the then
outstanding Shares, pursuant to the Offer or otherwise, the parties hereto shall
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the Delaware Law.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of the Parent, the Purchaser,
the Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately before the Effective
Time (other than any Shares to be canceled pursuant to Section 2.1(b) hereof and
any Dissenting Shares (as defined in Section 2.2(a) hereof, if any)), without
any action on the part of the holder thereof, shall be converted into and
represent the right to receive the Offer Price in cash payable to the holder
thereof, without interest (the "Merger Consideration"), payable to the holder
thereof upon surrender of the certificate representing such Share or an
Affidavit of Loss in the manner provided in Section 2.3 hereof. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate or provision of an Affidavit of
Loss in accordance with Section 2.3 hereof, without interest.
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(b) Each Share held in the treasury of the Company and each Share owned by
Parent, the Purchaser or any direct or indirect wholly-owned subsidiary of
Parent or the Purchaser immediately before the Effective Time shall be canceled
and extinguished and no payment or other consideration shall be made with
respect thereto.
(c) Each share of common stock, par value $.01 per share, of the Purchaser
issued and outstanding immediately before the Effective Time shall thereafter
represent one validly issued, fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
SECTION 2.2 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary, any
Shares held by a holder who has demanded and perfected his demand for appraisal
of his Shares in accordance with the Delaware Law and as of the Effective Time
has neither effectively withdrawn nor lost his right to such appraisal
("Dissenting Shares") shall not be converted into or represent a right to
receive cash pursuant to Section 2.1 hereof, but the holder thereof shall be
entitled to only such rights as are granted by the Delaware Law.
(b) Notwithstanding the provisions of Section 2.2(a) hereof, if any holder
of Shares who demands appraisal of his Shares under the Delaware Law shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to appraisal, then as of the Effective Time or the occurrence of such event,
whichever occurs later, such holder's Shares shall automatically be converted
into and represent only the right to receive the Merger Consideration as
provided in Section 2.1(a) hereof, without interest thereon, upon surrender of
the certificate or certificates representing such Shares or provision of an
Affidavit of Loss pursuant to Section 2.3 hereof.
(c) The Company shall give the Purchaser (i) prompt notice of any written
demands for appraisal, withdrawals of such demands, and any other instruments
served pursuant to Section 262 of the Delaware Law and received by the Company,
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the Delaware Law. The Company shall not
voluntarily make any payment with respect to any such demands for appraisal and
shall not, except with the prior written consent of the Purchaser, settle or
offer to settle any such demands.
SECTION 2.3 SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Before the Effective Time, the Purchaser shall designate a bank or
trust company reasonably acceptable to the Company to act as paying agent for
the Company and agent for holders of Shares in connection with the Merger (the
"Exchange Agent") to receive and pay the funds necessary to make the payments
contemplated by Section 2.l(a) hereof. At the Effective Time, the Purchaser
shall deposit, or cause to be deposited, in trust with the Exchange Agent for
the benefit of holders of Shares the aggregate cash consideration to which such
holders shall
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be entitled at the Effective Time pursuant to Section 2.1(a) hereof. The funds
held by the Exchange Agent pursuant to this Section 2.3 shall not be used for
any purpose other than the payment of the Merger Consideration pursuant hereto.
(b) Each holder of a certificate or certificates representing any Shares
canceled upon the Merger, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") whose Shares were converted
pursuant to Section 2.1(a) hereof may thereafter surrender such Certificate or
Certificates to the Exchange Agent, as agent for such holder, to effect the
surrender of such Certificate or Certificates on such holder's behalf for a
period ending six (6) months after the Effective Time. The Purchaser agrees
that promptly after the Effective Time it shall cause the distribution to
holders of record of Shares as of the Effective Time of materials to facilitate
such surrender pursuant to Section 2.3(c) hereof. Upon the surrender of
Certificates, the Purchaser shall cause the Exchange Agent to pay the holder of
such Certificates in exchange therefor cash in an amount equal to the Merger
Consideration multiplied by the number of Shares represented by such
Certificates. Until so surrendered, each Certificate (other than Certificates
representing Dissenting Shares and Certificates representing Shares held by the
Purchaser or in the treasury of the Company) shall represent solely the right to
receive the aggregate Merger Consideration relating thereto.
(c) Promptly after the Effective Time, the Exchange Agent shall send to
each record holder, as of the Effective Time, of a Certificate or Certificates
theretofore evidencing Shares, other than Certificates formerly representing
Shares to be canceled pursuant to Section 2.1 (b) hereof, a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions advising such holder of the
procedure for surrendering to the Exchange Agent such Certificates for exchange
into the Merger Consideration. Upon the surrender of a Certificate to the
Exchange Agent together with and in accordance with such transmittal form duly
executed and any other documents reasonably required by such instructions, the
holder thereof shall be entitled to receive promptly in exchange therefor the
Merger Consideration payable in respect of each Share formerly represented
thereby and such Certificate shall forthwith be canceled. Upon such surrender,
the Exchange Agent promptly will pay the Merger Consideration.
(d) If payment of the Merger Consideration is to be made to an individual,
general partnership, limited partnership, corporation, limited liability company
or any other legal entity (each a "Person"), other than the Person in whose name
a surrendered Certificate or instrument is registered, it shall be a condition
to such payment that the Certificate or instrument so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that the
Person requesting such payment in a name other than that of the registered
holder of the Certificate or instrument surrendered shall pay to the Exchange
Agent any transfer or other taxes payable by reason of the foregoing or
establish to the satisfaction of the Purchaser or the Exchange Agent that such
taxes either have been paid or are not applicable.
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(e) In the event any Certificate 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 ("Affidavit of Loss") and the
delivery of an indemnity bond in form and substance and with surety reasonably
satisfactory to the Surviving Corporation, the Surviving Corporation will pay or
cause to be paid in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
with this Article II.
(f) At the Effective Time, the stock transfer books of the Company shall
be closed and there shall not be any further registration of transfers of Shares
or any shares of capital stock thereafter on the records of the Company. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for cash as provided in this
Article II. No interest shall accrue or be paid on any cash payable upon the
surrender of a Certificate or Certificates which immediately before the
Effective Time represented outstanding Shares.
(g) Promptly following the date which is six (6) months after the
Effective Time, the Surviving Corporation shall be entitled to require the
Exchange Agent to deliver to it any cash (including any interest received with
respect thereto), Certificates and other documents in its possession relating to
the transactions contemplated hereby, which had been made available to the
Exchange Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to Parent and to the Surviving
Corporation (subject to abandoned property, escheat or similar laws) only as
general creditors thereof with respect to the Merger Consideration payable upon
due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) The Merger Consideration paid in the Merger shall be net to the holder
of Shares in cash, subject to reduction only for any applicable federal back-up
withholding or, as set forth in Section 2.3(d), stock transfer taxes payable by
such holder.
SECTION 2.4 STOCK PLANS. At or immediately prior to the Effective Time,
each then outstanding option to purchase Shares (the "Options") granted under
the Company's 1993 Stock Option Plan, the 1996 Stock Option Plan and any other
stock-based incentive plan or arrangement of the Company (collectively, the
"Stock Plans") whether or not then exercisable or vested, shall be canceled and
the Company shall purchase options to purchase 100,000 Shares issued in
connection with the acquisition by the Company of Trailmaster Products, Inc.
(the "Trailmaster Options") upon delivery by the holders thereof of certificates
or other instruments, documents or agreements representing or evidencing the
Trailmaster Options or reasonable representations or indemnities of such holders
reasonably acceptable to the Company with respect thereto in connection with
such purchase. In consideration of such cancellation and purchase, the holders
of such Options and Trailmaster Options shall receive for each Share subject to
such Option or Trailmaster Option an amount (subject to any applicable
withholding
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tax) in cash equal to the product of (A) the excess, if any, of the Offer Price
over the per Share exercise price of such Option or Trailmaster Option and (B)
the number of Shares subject to such Option or Trailmaster Option.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as set
forth in this Article III, except to the extent provided in that certain letter
delivered by the Company to Parent and the Purchaser (the "Company Letter") and
subject to Section 9.6 herein:
SECTION 3.1 ORGANIZATION AND QUALIFICATION.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has all
requisite corporate power and authority to carry on its business as it is now
being conducted and to own, lease and operate its assets.
(b) The Company is duly qualified or licensed to do business as a foreign
corporation in good standing in every jurisdiction where the character of its
properties, owned or leased, or the nature of its activities make such
qualification necessary, except where the failure to be so qualified would not
have, individually or in the aggregate, a "Material Adverse Effect." As used in
this Agreement, "Material Adverse Effect" means any material adverse change in
or effect on the business, operations, properties (including intangible
properties), financial condition, results of operations or assets and
liabilities of the Company and its Subsidiaries taken as a whole.
(c) The Company has heretofore delivered to Parent complete and correct
copies of the Company's Certificate of Incorporation, as amended, and By-Laws,
as amended, each as in effect on the date hereof.
SECTION 3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 20,000,000
shares of common stock, par value $.01 per share (the "Common Stock"), and
2,500,000 shares of preferred stock ("Preferred Stock"). As of the date hereof,
(i) 4,800,000 Shares are issued and outstanding, (ii) no Shares are issued and
held in the treasury of the Company, (iii) a total of 450,000 Shares are
reserved under the Company's Stock Plans in respect of outstanding and future
awards, of which (A) 139,000 Shares are reserved for issuance pursuant to
outstanding Options and 61,000 Shares are reserved for issuance pursuant to
future awards under the Company's 1996 Stock Option Plan, and (B) 234,000 Shares
are reserved for issuance pursuant
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to outstanding Options and 16,000 Shares are reserved for issuance pursuant to
future awards under the Company's 1993 Stock Option Plan, and (iv) a total of
100,000 Shares are reserved for issuance under the Trailmaster Options. Section
3.2(a) of the Company Letter discloses the number of Shares subject to each
outstanding Option and the exercise price thereof. All the outstanding shares
of the Company's capital stock are, and all Shares which may be issued pursuant
to the exercise of outstanding Options will be, when issued in accordance with
the terms thereof, duly authorized, validly issued, fully paid and
non-assessable. Except as disclosed in this Section 3.2(a) or as set forth in
Section 3.2(a) of the Company Letter, (i) there are no shares of capital stock
of the Company authorized, issued or outstanding, (ii) there are no existing
options, warrants, calls, preemptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of the Company obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or other equity interest in the Company or
securities convertible or exchangeable for such shares or equity interests or
obligating the Company or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment, and (iii) except as disclosed in Section 3.2(a) of
the Company Letter, there are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any Shares, or the capital stock of the Company or of any Subsidiary of the
Company. Except as disclosed in Section 3.2(a) of the Company Letter, there are
no voting trusts or other agreements to which the Company or any of its
Subsidiaries is a party with respect to the voting of the capital stock of the
Company.
(b) As of September 30, 1997, other than as set forth in Section 3.2(b) of
the Company Letter, there is no outstanding Indebtedness (as hereinafter
defined) of the Company or any of its Subsidiaries. The Company heretofore has
made available to Parent, true and complete copies of all material agreements,
instruments and documents (including exhibits and schedules thereto) with
respect to such Indebtedness. For purposes of this Agreement, "Indebtedness"
shall mean (i) all indebtedness for borrowed money, (ii) any other indebtedness
which is evidenced by a note, bond or debenture, (iii) all obligations under
capitalized leases under United States generally accepted accounting principles
("GAAP") consistently applied with the Company's financial statements, and (iv)
all guarantees of the foregoing obligations, except as between the Company and
each of its Subsidiaries.
SECTION 3.3 SUBSIDIARIES. Each Subsidiary (as hereinafter defined) of
the Company is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has the corporate power to carry
on its business as it is now being conducted. Each Subsidiary is duly qualified
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not have, individually or in the aggregate, a Material Adverse Effect.
All of the outstanding shares of capital stock of each Subsidiary are validly
issued, fully paid and nonassessable and owned directly or indirectly by the
Company free and clear of all liens, claims or encumbrances and were not
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issued in violation of any preemptive right. There are no existing options,
calls or commitments of any character relating to the issued or unissued capital
stock of any Subsidiary, or any securities convertible into, or exchangeable or
exercisable for, or otherwise evidencing the right to acquire, any shares of
capital stock of any Subsidiary. No Subsidiary of the Company has been
organized under the laws of any jurisdiction outside of the United States of
America. For purposes of this Agreement, the term "Subsidiary" shall mean any
corporation or other entity a majority of whose outstanding voting stock or
ownership interests ordinarily entitled to vote for the election of a majority
of the Board of Directors or other governing body is owned by the Company or one
or more other Subsidiaries.
SECTION 3.4 AUTHORIZATION.
(a) The Company has all requisite corporate power to execute and deliver
this Agreement and all other documents and instruments to be executed and
delivered by it in connection herewith and, subject to the adoption of this
Agreement by the stockholders of the Company, if required, to consummate the
transactions contemplated hereby. The execution, delivery and performance by
the Company of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly and validly authorized by its Board of
Directors and no other corporate action on the part of the Company is necessary
to authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby, except that the
consummation of the Merger may require approval of the Company's stockholders as
contemplated by Section 1.10 hereof. This Agreement constitutes a valid and
legally binding agreement of the Company enforceable in accordance with its
terms, except to the extent that enforcement thereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws, now or hereafter in effect, relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(b) The Company opted out of Section 203 of the Delaware Law effective
October 28, 1993. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is the only vote of the holders of any class
or series of the Company's capital stock which is necessary to approve this
Agreement and the other transactions contemplated hereby, including the Merger,
subject to the applicability of Section 253 of the Delaware Law and Section 1.11
hereof.
SECTION 3.5 SEC DOCUMENTS.
(a) The Company has filed with the SEC, and heretofore has made available
to Parent, true and complete copies of all reports, schedules, forms, statements
and other documents required to be so filed by it from January 1, 1995 through
the date hereof under the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act"), including (i) the annual reports on Form 10-K for all
fiscal years ended during such period, (ii) the quarterly reports on Form 10-Q
required for all fiscal quarters during such period, and (iii) its proxy or
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information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held during such period (the "SEC
Documents").
(b) As of its respective date, or if amended, as of the date of the last
such amendment, each SEC Document, including, without limitation, any financial
statements or schedules included therein (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (b) except as
disclosed in Section 3.5(b) of the Company Letter, complied in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations promulgated by
the SEC thereunder. None of the Company's Subsidiaries has any class of
securities registered under the Exchange Act.
SECTION 3.6 NO CONFLICTS. Except as disclosed in Section 3.6 of the
Company Letter and for filings, permits, authorizations, consents and approvals
as may be required under, and other applicable requirements of, the Exchange
Act, the execution, delivery or performance of this Agreement by the Company,
the consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation, the By-Laws or similar organizational documents of the Company or
any of its Subsidiaries, (ii) require on the part of the Company any filing
with, or permit, authorization, consent or approval of, any court,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity"), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to (x) any right of termination, amendment, cancellation
or acceleration or to receive any other or additional payments or (y) loss of
any benefit) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets is bound (the
"Company Agreements"), or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, except in the case of clauses (ii), (iii)
and (iv) for any matter otherwise covered by such clauses which would not have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 3.7 FINANCIAL STATEMENTS. The consolidated financial statements
included in the SEC Documents (the "Financial Statements") fairly present, in
all material respects, the consolidated financial position and the consolidated
results of operations and cash flows (and changes in financial position, if any)
of the Company and its consolidated Subsidiaries as of the times and for the
periods referred to therein, subject, in the case of unaudited, interim
financial statements, to the lack of footnotes and normal year-end adjustments
and to any other adjustments or exceptions described therein, all in accordance
with GAAP applied on a consistent basis throughout the periods involved (except
as may be indicated therein or in the notes thereto).
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SECTION 3.8 NO UNDISCLOSED LIABILITIES. Since September 30, 1997, there
have not been incurred any liabilities by the Company or its Subsidiaries of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, which would be required by GAAP, applied on a basis consistent
with the Financial Statements, to be disclosed in the consolidated balance sheet
of the Company and its Subsidiaries and the notes thereto, other than: (i)
liabilities disclosed in the Company's SEC Documents or in Section 3.8 of the
Company Letter; (ii) liabilities incurred in the ordinary course of business
consistent with past practice, which would not have, individually or in the
aggregate, a Material Adverse Effect; (iii) liabilities under or in connection
with this Agreement; (iv) liabilities or obligations that otherwise are
disclosed pursuant to any other representation or warranty herein or which are
not required to be disclosed pursuant to any other representation or warranty
herein; or (v) any other liability which would not have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except to the extent
disclosed in Section 3.9 of the Company Letter or in the SEC Documents filed
prior to the date hereof, or as contemplated by this Agreement, since September
30, 1997 the Company and its Subsidiaries have not suffered a Material Adverse
Effect or conducted their businesses in any material respect other than in the
ordinary course consistent with past practices, except for such changes which
have not had, and are not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect. From September 30, 1997 through the date
of this Agreement, there has not occurred any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the equity interests of the Company.
SECTION 3.10 TAX MATTERS.
(a) Each of the Company and its Subsidiaries has properly completed and
timely filed all Tax Returns (as defined below) that are required to be filed by
or with respect to the Company and its consolidated Subsidiaries, except in each
case where the failure to properly complete or file any such Tax Return would
not have, individually or in the aggregate, a Material Adverse Effect. The
Company has afforded Parent the opportunity to examine correct and complete
copies of all material federal and state income Tax Returns, examination
reports, ruling requests and statements of deficiencies assessed against or
agreed to by the Company or any of its consolidated Subsidiaries.
(b) Each of the Company and its Subsidiaries have timely paid all Taxes
(as defined below) reflected on such Tax Returns as due and payable (except for
Taxes that are being contested in good faith by appropriate proceedings) and
except in each case where the failure to so pay such amounts would not have,
individually or in the aggregate, a Material Adverse Effect or for which
reserves, which are adequate under GAAP, have been established.
(c) Each of the Company and its Subsidiaries has complied with all
applicable laws, rules and regulations relating to the withholding of Taxes and
has timely withheld and paid to
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the proper governmental authorities all amounts required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor or stockholder, except where any such failure would not
have, individually or in the aggregate, a Material Adverse Effect.
(d) Except as disclosed in Section 3.10(d) of the Company Letter, to the
knowledge of the Company, (i) no audits or other administrative or court
proceedings are presently pending with regard to any Taxes for which the Company
or any of its Subsidiaries could be liable, (ii) no dispute or claim concerning
any Taxes for which the Company or any of its Subsidiaries could be liable has
been claimed or raised by any Tax Authority in writing, and (iii) no claim has
been made in writing by any authority in a jurisdiction where the Company and
its Subsidiaries do not file Tax Returns that the Company or any such Subsidiary
is, or may be, subject to taxation by that jurisdiction, in each case of clauses
(i) through (iii), which is likely to be determined adversely to the Company and
its Subsidiaries and which, if so adversely determined, individually or in the
aggregate with other such matters so adversely determined, would have,
individually or in the aggregate, a Material Adverse Effect.
(e) No claim has been asserted in writing that the Company or any of its
Subsidiaries is liable for any Taxes (i) of the Company or its Subsidiaries or
(ii) with respect to any group of entities other than the Company and its
Subsidiaries (by law, contract or otherwise), in each case, which claim is
likely to be determined adversely to the Company and its Subsidiaries and which,
if so adversely determined, after giving effect to rights and remedies of the
Company and its Subsidiaries under any agreement in force pursuant to which such
liability is the obligation of any third party or pursuant to which any third
party is obligated to provide indemnity with respect thereto, would have,
individually or in the aggregate, a Material Adverse Effect.
(f) For purposes of this Agreement:
(i) "Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") means (x) any net income, gross income, gross receipts,
sales, use, ad valorem, transfer, transfer gains, franchise, profits,
license, withholding, payroll, employment, social security (or
similar), unemployment, disability, excise, severance, stamp, rent,
recording, registration, occupation, premium, real or personal
property, intangibles, environmental (including taxes under Section
59A of the Code (as hereinafter defined)) or windfall profits tax,
alternative or add-on minimum tax, capital stock, customs duty or
other tax, fee, duty, levy, impost, assessment or charge of any kind
whatsoever (including but not limited to taxes assessed to real
property and water and sewer rents relating thereto), together with
any interest and any fine, penalty, addition to tax or additional
amount or deductions imposed by any governmental body (domestic or
foreign) (a "Tax Authority") responsible for the imposition of any
such tax, whether disputed or not, including any liability arising
under any tax sharing agreement, with respect to the Company or any of
its Subsidiaries; (y) any liability for the
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payment of any amount of the type described in the immediately
preceding clause (x) as a result of the Company or any of its
Subsidiaries being a member of an affiliated or combined group with
any other corporation at any time on or prior to the Closing Date; and
(z) any liability of the Company or any of its Subsidiaries for the
payment of any amounts of the type described in the immediately
preceding clause (x) as a result of a contractual obligation to
indemnify any other person.
(ii) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
SECTION 3.11 LITIGATION. Except as set forth in the SEC Documents or as
disclosed in Section 3.11 of the Company Letter, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened in writing
against the Company or any of its Subsidiaries, including but not limited to any
suit or action involving a products liability claim, at law or in equity or
before any United States federal or state court of competent jurisdiction (a
"U.S. Court") which is likely to be determined adversely to the Company and its
Subsidiaries and which, if so adversely determined, individually or in the
aggregate with other such suits, actions or proceedings so adversely determined,
would have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.12 ERISA COMPLIANCE.
(a) The Company has delivered to Parent correct and complete copies of all
"employee benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and all other material bonus,
deferred compensation, pension, profit-sharing, retirement, medical, life,
disability income, severance, stock purchase, stock option, incentive or other
employee benefit plans (other than any employment or personnel policy, practice
or procedure) currently maintained, or contributed to, or required to be
maintained or contributed to, by the Company or any of its Subsidiaries or any
other Person that, together with the Company, is treated as a single employer
under Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended (the "Code"), (each an "ERISA Affiliate") for the benefit of any current
or former employees, officers or directors of the Company or any ERISA Affiliate
(individually, a "Benefit Plan").
(b) Each Benefit Plan has been established and administered in accordance
with its terms except where the failure to do so would not have, individually or
in the aggregate, a Material Adverse Effect. The Company, each ERISA Affiliate
and each Benefit Plan are in compliance in all material respects with applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations,
except for any noncompliance that would not have, individually or in the
aggregate, a Material Adverse Effect.
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(c) (i) All Benefit Plans intended to be qualified under Section 401(a) of
the Code have been the subject of determination letters from the Internal
Revenue Service to the effect that such Benefit Plans are qualified and exempt
from federal income Taxes under Section 401(a) and 501(a), respectively, of the
Code, and (ii) to the best knowledge of the Company nothing has occurred,
whether by action or failure to act, that could reasonably be expected to cause
the loss of such qualification, except where such loss would not have,
individually or in the aggregate, a Material Adverse Effect. Except as
disclosed in Section 3.12(c) of the Company Letter, no such Benefit Plan
intended to be qualified under Section 401(a) of the Code has been amended since
the date of its most recent determination letter or application therefor in any
respect that would have, individually or in the aggregate, a Material Adverse
Effect. All reports, returns and similar documents with respect to Benefit
Plans required to be filed with any governmental agency or distributed to any
Benefit Plan participant have been fully and timely filed and distributed except
for any failure to file that would not have, individually or in the aggregate, a
Material Adverse Effect.
(d) To the best knowledge of the Company, no event has occurred and no
condition exists that would subject the Company, either directly or by reason of
its affiliation with an ERISA Affiliate, to any Tax, fine, lien, penalty or
other liability imposed by ERISA, the Code or other applicable laws, rules and
regulations in connection with a Benefit Plan that would have, individually or
in the aggregate, a Material Adverse Effect.
(e) Neither the Company nor any ERISA Affiliate maintains, contributes to,
or at any time maintained, contributed to or was obligated to contribute to, any
Benefit Plan which is subject to Title IV of ERISA or Section 412 of the Code,
or which is a multiemployer plan (within the meaning of Section 3(37) or Section
4001(a)(3) of ERISA), except where such maintenance of or contribution to any
such Benefit Plan would not have, individually or in the aggregate, a Material
Adverse Effect.
(f) None of the Company, any ERISA Affiliate, any employee of the Company
or of any ERISA Affiliate, or any other person or persons, has engaged in a
non-exempt "prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) or in any other breach of fiduciary
responsibility that could subject the Company or any ERISA Affiliate, or any
employee of the Company or of any ERISA Affiliate, to a direct or indirect Tax,
penalty or liability under ERISA, the Code or other applicable law which would
have, individually or in the aggregate, a Material Adverse Effect. Neither any
of the Benefit Plans nor any of their related trusts or other funding
arrangements has been terminated which would have, individually or in the
aggregate, a Material Adverse Effect.
(g) With respect to any Benefit Plan that is an employee welfare benefit
plan, no such Benefit Plan is funded (or has during the past six (6) years been
funded) through a voluntary employees' beneficiary association (within the
meaning of Section 501(c)(9) of the Code) or through a "welfare benefit fund,"
as such term is defined in Section 419(e) of the Code, except where such funding
would not have, individually or in the aggregate, a Material Adverse Effect.
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(h) To the knowledge of executive officers of the Company, no
representations or communications in writing with respect to participation,
eligibility for benefits, vesting, benefit accrual coverage or other material
terms of any of the Benefit Plans, which representations or communications would
create additional legal liability of the Company and would have, individually or
in the aggregate, a Material Adverse Effect, have been made prior to the date
hereof to any employee, beneficiary or other Person other than those which are
in accordance with the terms and provisions of each such Benefit Plan as in
effect immediately prior to the date hereof.
SECTION 3.13 ENVIRONMENTAL MATTERS. The Company and its Subsidiaries
are, and at all times in the past have been, in compliance with all applicable
legal requirements, laws, rules, orders, regulations, licenses and permits
related to environmental, natural resource, health or safety matters, including
but not limited to those promulgated, adopted or enforced by the United States
Environmental Protections Agency and by similar agencies in states in which the
Company or its Subsidiaries conduct their business, except where non-compliance
would not have, individually or in the aggregate, a Material Adverse Effect. To
the knowledge of the Company, neither the Company nor any of its Subsidiaries is
a party to any suit, action or proceeding now pending before any U.S. Court or
United States federal, state or local administrative body or threatened in
writing by any Person which is likely to be determined adversely to the Company
and its Subsidiaries and which, if so adversely determined, individually or in
the aggregate with other such suits, actions or proceedings so adversely
determined, would have, individually or in the aggregate, a Material Adverse
Effect, (i) for alleged noncompliance with any environmental law, rule,
regulation, license or permit or (ii) relating to the discharge or release into
the environment of any hazardous substance, pollutant, or waste at or on a site
presently or formerly owned, leased, operated or used for off-site treatment or
disposal by the Company or any Subsidiary.
SECTION 3.14 REAL PROPERTY AND LEASED PROPERTY.
(a) Section 3.14(a) of the Company Letter sets forth a complete list of
all real property owned by the Company or any of its Subsidiaries (the "Real
Property"). Except as set forth in Section 3.14(a) of the Company Letter, the
Company or one of its Subsidiaries has good and valid title to the Real
Property, free and clear of all liens, claims, restrictions and encumbrances
("Encumbrances"), other than Permitted Encumbrances (as hereinafter defined),
except in all cases where the failure to have such title would not have a
Material Adverse Effect. As used in this Agreement, the term "Permitted
Encumbrances" means (i) those Encumbrances set forth in Section 3.14(a) of the
Company Letter, (ii) Encumbrances, including, without limitation, by easements,
granted in favor of any governmental entity or utility company for the customary
provision of utilities and services to the Real Property or any improvements
thereon, (iii) Encumbrances for water and sewage charges and current taxes not
yet due and payable or being contested in good faith, (iv) mechanics',
carriers', workers', repairers', materialmen's, warehousemen's and other similar
Encumbrances arising or incurred in the ordinary course of business,
(v) Encumbrances arising or resulting from any action taken by Parent or the
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Purchaser, or (vi) such other Encumbrances as would not have, individually or in
the aggregate, a Material Adverse Effect.
(b) Set forth in Section 3.14(b) of the Company Letter is a correct and
complete list of all leases under which the Company or any Subsidiary is a
lessee ("Leased Property"). The Company and each of its Subsidiaries enjoys
peaceful and undisturbed possession under all such leases, all of such leases
are valid and none of them is in default under any such lease, except for any
matters otherwise covered by this sentence which do not have, individually or in
the aggregate, a Material Adverse Effect.
(c) The Company and its Subsidiaries have obtained all appropriate
licenses, permits, easements and rights of way required to use and operate the
Real Property in the manner in which the Real Property and Leased Property
currently is being used and operated, except for such licenses, permits,
easements or rights of way the failure of which to have obtained would not have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 3.15 CHANGE OF CONTROL PAYMENTS; TAKEOVER RESTRICTIONS.
(a) Except as disclosed in Section 3.15(a) of the Company Letter or as
required by law, neither the Company nor its Subsidiaries has any plans or
agreements to which they are parties, or by which they or their properties are
bound, pursuant to which payments, including with respect to the acceleration of
benefits, will be required upon (i) or as a result of a "change of control" of
the Company or (ii) the termination or closing of any of the Company's
operations or facilities.
(b) To the best knowledge of the Company, no state takeover statute or
similar statute or regulation of any state or other jurisdiction applies to this
Agreement or any of the transactions contemplated hereby, including the Merger.
No provision of the Certificate of Incorporation or By-laws of the Company or
any Subsidiary would, directly or indirectly, restrict or impair the ability of
the Purchaser or its affiliates to vote, or otherwise to exercise the rights of
a stockholder with respect to, securities of the Company or any Subsidiary that
may be acquired or controlled by the Purchaser or its affiliates pursuant to
this Agreement or permit any stockholder to acquire securities of the Company on
a basis not available to the Purchaser in the event that the Purchaser were to
acquire securities of the Company.
SECTION 3.16 INTELLECTUAL PROPERTY. The Company and each Subsidiary has
exclusive ownership of and title to each issued patent, pending patent
application, registered trademark, registered trade name, registered service
mark and registered copyright owned or used in and material to the business of
the Company and its Subsidiaries taken as a whole (collectively, the "Registered
Intellectual Property"), and to the knowledge of the Company, the Company and
each Subsidiary has exclusive ownership of and rights to use each material
patent application, unregistered trademark, trademark application, unregistered
trade name, unregistered service mark, unregistered copyright and other trade
secret or other proprietary intellectual
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property (the "Other Intellectual Property" and collectively with the Registered
Intellectual Property, the "Intellectual Property") owned by or used in and
material to the business of the Company and its Subsidiaries taken as a whole,
and, to the Company's knowledge, the current use by the Company and each
Subsidiary of such Intellectual Property does not infringe upon the rights of
any other Person, except for any matters otherwise covered by this sentence
which do not, individually or in the aggregate, have a Material Adverse Effect.
To the knowledge of the Company, no other Person is infringing upon the rights
of the Company or any Subsidiary in any such Intellectual Property, except for
any such infringements, that would not be reasonably expected, individually or
in the aggregate, to have a Material Adverse Effect.
SECTION 3.17 CONTRACTS. Except as disclosed in Section 3.17 of the
Company Letter or filed as exhibits to the SEC Documents, there are not any
Company Agreements that are material to the business, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole. To
the knowledge of the Company, (x) each of the Company Agreements is valid,
binding and enforceable and in full force and effect, except where failure to be
valid, binding and enforceable and in full force and effect would not have,
individually or in the aggregate, a Material Adverse Effect, and (y) there are
no defaults (nor does there exist any condition which upon the passage of time
or the giving of notice would cause such a default) under the Company
Agreements, except those defaults that would not have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 3.18 COMPLIANCE WITH LAWS. Except for laws, rules and
regulations relating to tax matters, ERISA compliance, environmental matters and
intellectual property (which are exclusively provided for in Sections 3.10,
3.12, 3.13 and 3.16 hereof), the operations of the business of the Company and
its Subsidiaries as currently conducted are not in violation of, nor is the
Company or any of its Subsidiaries in default under, or violation of, any
federal, state, local or foreign law, statute or regulation or any order,
judgment or decree of any federal, state, local or foreign governmental
authority, regulatory or administrative agency, commission, court or tribunal to
which the Company or any of its Subsidiaries are bound, except for such
violations or defaults as have not had and could not reasonably be expected to
have a Material Adverse Effect. The Company and its Subsidiaries have been duly
granted all authorizations necessary for the conduct of its business as
currently conducted, except those, the failure of which to obtain would not
have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.19 INSURANCE COVERAGE. The Company and each of its
Subsidiaries have policies of insurance and bonds of the type reasonably
appropriate for the conduct of the business or ownership and operation of the
assets of the Company and its Subsidiaries. There is no claim pending under any
of such policies or bonds as to which coverage has been denied or disputed in
writing by the underwriters of such policies or bonds and which denial or
dispute is likely to be adversely determined to the Company and its
Subsidiaries, and which if so adversely determined, in whole or in part, would
have, individually or in the aggregate, a Material Adverse Effect. All premiums
due and payable under all such policies and bonds have been paid and the Company
and its Subsidiaries are otherwise in compliance with the terms of
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such policies and bonds, except where failure to pay such premiums or to comply
with such terms would have, individually or in the aggregate, any Material
Adverse Effect. The Company has no knowledge of any threatened termination of,
or material premium increase with respect to, any of such policies that would
have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.20 PERSONNEL; LABOR RELATIONS. Except as disclosed in Section
3.20 of the Company Letter, (i) neither the Company nor any Subsidiary is the
subject of any action, arbitration, governmental or other examination or
investigation, hearing, administrative or other proceeding asserting that the
Company or any Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or comparable state law) or seeking
to compel the Company or any Subsidiary to bargain with any labor organization
as to wages or conditions of employment which is likely to be adversely
determined, which if so adversely determined, individually or in the aggregate
with other such proceedings so adversely determined, would have, individually or
in the aggregate, a Material Adverse Effect, (ii) neither the Company nor any
Subsidiary is party to any collective bargaining agreement, (iii) there is not
any strike or other labor dispute involving the Company or any Subsidiary,
pending or, to the Company's knowledge, threatened, or any activity involving
any of their respective employees seeking to certify a collective bargaining
unit or engaging in any other labor organizing activity, in each case that would
have, individually or in the aggregate, a Material Adverse Effect, and (iv)
since January 1, 1995, neither the Company nor any Subsidiary has effected (A) a
plant closing affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the Company or any
Subsidiary or (B) a mass layoff affecting any site of employment or facility or
operating unit within any site of employment or facility of the Company or any
Subsidiary, nor has the Company or any Subsidiary engaged in layoffs or
employment terminations sufficient in number to trigger application of the
Worker Adjustment and Retraining Notification Act (the "WARN Act") or of any
state or local law equivalent to the WARN Act, except where any of the foregoing
would not have, individually or in the aggregate, a Material Adverse Effect.
For the purposes of this Section 3.20, "plant closing," "mass layoff," "site of
employment," "operating unit" and "employment loss" shall have the meanings
ascribed to such terms in the WARN Act or the implementing regulations thereof,
or any state or local law equivalent to the WARN Act.
SECTION 3.21 CUSTOMERS. Since September 30, 1997 (but with respect to
the Belmor Heavy Duty Truck Division, since January 1, 1997) and prior to
November 25, 1997, except as disclosed in the SEC Documents, no customer of the
Company or any of its Subsidiaries that accounted for revenues thereof of
$1,500,000 or more during the fiscal year ended December 31, 1996 (the "1996
Fiscal Year") has (i) cancelled in writing its relationship with the Company and
its Subsidiaries or (ii) as of November 25, 1997, to the Company's knowledge,
indicated in writing its intention to so cancel its relationship, including as a
result of any transaction that would result in a "change of control" of the
Company, or to decrease the dollar amount of its purchases from the Company or
its Subsidiaries during the fiscal year ending December 31, 1997 or 1998 by more
than 50% from the dollar amount so purchased during the 1996 Fiscal
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Year. For purposes of this Section 3.21 only, the Company's knowledge shall
mean those facts that are actually known as of November 25, 1997 by any of the
following persons: Keith P. Boulac, James Chick, Ronald C. Fox, James T.
Jurinak, Richard D. Minehart, Jr., Russell Stubbings, James Covone, David L.
Hochstetler, Tony Bednarik and John A. Daniels. As used in this Agreement, the
term "Material Adverse Effect" shall not include the termination or modification
of the relationship of the Company or any of its Subsidiaries after November 25,
1997 with any customer.
SECTION 3.22 BROKERS AND FINDERS. Except for fees and expenses described
in Section 3.16 of the Company Letter, no broker, finder or investment banker is
entitled to any brokerage fees, commissions or finders' fees in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of the Company.
SECTION 3.23 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Wasserstein, Perella & Co., Inc. ("Wasserstein"), dated the date
hereof, to the effect that, as of such date, the consideration to be received in
the Offer and the Merger by the Company's stockholders is fair to the Company's
stockholders from a financial point of view, a copy of which opinion has been
delivered to Parent and the Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and the Purchaser, jointly and severally, hereby represent and
warrant to the Company as follows:
SECTION 4.1 ORGANIZATION AND POWER.
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Parent has all requisite
corporate power to enter into this Agreement, and all other documents and
instruments to be executed and delivered by it in connection herewith, and to
carry out its obligations hereunder and thereunder, and to own, operate and
lease its properties and to carry out its business as it is now being conducted.
(b) The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Purchaser has all
requisite corporate power to enter into this Agreement, and all other documents
and instruments to be executed and delivered by it in connection herewith, and
to carry out its obligations hereunder and thereunder. The Purchaser is a
wholly-owned subsidiary of Parent, has been organized solely for the purpose of
consummating the Merger and the Offer, has conducted no business or operations
of any nature and has incurred no obligations or liabilities other than those
created by or in connection with this Agreement.
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SECTION 4.2 AUTHORIZATION. The execution and delivery of this Agreement
and all other documents and instruments to be executed and delivered by them in
connection herewith, and the due consummation by Parent and Purchaser of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Parent and the Purchaser. This
Agreement constitutes (and each document and instrument contemplated by this
Agreement, when executed and delivered in accordance with the provisions hereof,
will constitute) a valid and legally binding agreement of each of Parent and the
Purchaser and enforceable against them in accordance with its terms.
SECTION 4.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement by Parent and the Purchaser and the consummation of the
transactions contemplated hereby or in connection herewith, including, without
limitation, the financing thereof, will not constitute a conflict with, breach
or violation of or default (or an event which with notice or lapse of time or
both would become a default) under (i) Parent's Certificate of Incorporation or
By-Laws, as amended to date; (ii) the Purchaser's Certificate of Incorporation
or By-laws, as amended to date; (iii) any material agreement, instrument,
license, franchise or permit to which Parent or the Purchaser is subject or by
which Parent or the Purchaser is bound; (iv) any statute, administrative
regulation, order, writ, injunction, decree or arbitration award to which Parent
or the Purchaser is subject or by which Parent or the Purchaser is bound; or (v)
any statutory or decisional law (or any duty or obligation thereunder, derived
therefrom or related thereto), rule or regulation to which Parent, the
Purchaser, their respective officers, directors or affiliates is subject or to
which such Person is bound.
SECTION 4.4 CONSENTS AND APPROVALS. Except for filings, approvals or
consents required by (i) the Secretary of State of the State of Delaware; (ii)
the Exchange Act; and (iii) such other statutes, rules or regulations which may
require registrations, authorizations, consents or approvals relating to matters
that, in the aggregate, are not material to the Purchaser or Parent, neither
Parent nor the Purchaser is required to submit any notice, report, registration,
declaration or other filing with or obtain any consent, approval or
authorization from any governmental authority or third party in connection with
the execution and delivery by Parent or the Purchaser of this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 4.5 FINANCING OF THE OFFER AND THE MERGER. In order to finance
the transactions contemplated by this Agreement, Parent and the Purchaser have
(i) entered into a binding agreement with respect to equity financing in an
amount equal to $30,000,000 and (ii) obtained a binding commitment letter from
Heller Financial, Inc. for additional debt financing. Parent and the Purchaser
have provided to the Company copies of each of such agreements and commitments,
none of which has been amended.
SECTION 4.6 NO OBLIGATION TO MAKE A HART-SCOTT-RODINO FILING. Neither
Parent nor the Purchaser is a "person which has total assets or annual net sales
of $100,000,000 or more" for purposes of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended
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(the "HSR Act"), and no Person "controls" or will "control" (including by virtue
of any debt or equity financing provided in connection with the Offer, the
Merger or any other transaction contemplated hereby), prior to the consummation
of the Merger, the Parent or Purchaser (other than Parent, in the case of
Purchaser) as that term is defined in Section 801.1(a)(3) of the regulations
promulgated under the HSR Act.
SECTION 4.7 FINDER'S FEES. No broker, finder, investment banker or
other Person or entity, other than Piper Jaffray & Co., whose compensation
arrangement is set forth in the letter agreement between such firm and Parent, a
copy of which has been delivered by Parent to the Company in connection
herewith, is entitled, in connection with the transactions contemplated hereby,
to any broker's commission, finder's fee, investment banker's fee or similar
payment from Parent, the Purchaser or the Company based upon arrangements made
by or on behalf of Parent or the Purchaser.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants
and agrees that, prior to the acceptance for payment of Shares or, if the
Company fails to comply with the obligations under Section 1.3 hereof, the time
the designees of Parent have been elected to, and shall constitute a majority
of, the Board of Directors of the Company pursuant to Section 1.3 hereof (such
applicable date being the "Appointment Date"), without the prior written
approval of Parent and except as otherwise contemplated or permitted by this
Agreement:
(a) the business of the Company and its Subsidiaries shall be conducted
only in the ordinary and usual course and each of the Company and its
Subsidiaries shall, subject to the other restrictions contained in this
Agreement, use its best efforts to preserve its business organization intact and
maintain its existing relations with customers, suppliers, employees, creditors
and business associates;
(b) the Company shall not, directly or indirectly, (i) except upon
exercise of Options or other rights to purchase Shares outstanding on the date
hereof, issue, sell, transfer or pledge or agree to sell, transfer or pledge any
treasury stock of the Company or any capital stock of any of its Subsidiaries
beneficially owned by it; (ii) amend its or any of its Subsidiaries' Certificate
of Incorporation or By-laws or similar organizational documents; or (iii) split,
combine or reclassify the outstanding Shares or any outstanding capital stock of
any of the Subsidiaries of the Company;
(c) other than the payment of dividends or other distributions by
Subsidiaries to the Company or to other Subsidiaries, neither the Company nor
any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or
other distribution payable in cash, stock or property,
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with respect to its capital stock; (ii) issue, sell, pledge, dispose of or
encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire (or stock appreciation rights with respect to), capital stock of any
class of the Company or its Subsidiaries, other than Shares reserved for
issuance on the date hereof pursuant to the exercise of Options or Trailmaster
Options outstanding on the date hereof; (iii) transfer, lease, license, sell,
mortgage, pledge, dispose of, or encumber any assets, other than in the ordinary
and usual course of business and consistent with past practice; or (iv) redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(d) neither the Company nor any of its Subsidiaries shall make any change
in the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants, or to Persons providing management
services, enter into or amend any employment, severance, consulting, termination
or other employment-related agreement, arrangement or Benefit Plan or make any
loans to any of its officers, directors, employees, affiliates, agents or
consultants or make any change in its existing borrowing or lending arrangements
for or on behalf of any of such Persons pursuant to a Benefit Plan or otherwise,
in each case except for changes, agreements, amendments or loans made in the
ordinary course of business consistent with past practice;
(e) except (i) pursuant to Benefit Plans, agreements or arrangements
existing at the date hereof, or as disclosed in Section 3.15(a) of the Company
Letter or made in the ordinary course of business consistent with past practice,
(ii) as required by any law, rule or regulation of any Governmental Entity,
(iii) as disclosed in Section 5.1(e) of the Company Letter, (iv) accruals
required by GAAP and (v) pursuant to Section 2.4 hereof, neither the Company nor
any of its Subsidiaries shall pay or make, or amend or agree to amend any
Benefit Plan, agreement or arrangement existing at the date hereof to provide
for any accrual or arrangement for payment of any pension, retirement allowance
or other employee benefit pursuant to any existing Benefit Plan, agreement or
arrangement to any officer, director, employee or affiliate or pay or agree to
pay or make any accrual or arrangement for payment to any officers, directors,
employees or affiliates of the Company of any amount relating to unused vacation
days, adopt or pay, grant, issue, accelerate, or accrue salary or other payments
or benefits pursuant to any pension, profit-sharing, bonus, extra compensation,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right or other stock-based incentive, group insurance, severance
pay, retirement or other employee benefit plan, agreement or arrangement, or any
employment or consulting agreement with or for the benefit of any director,
officer, employee, agent or consultant, whether past or present;
(f) the Company shall not modify, amend or terminate any of the material
Company Agreements or waive, release or assign any material rights or claims,
except in each case in the ordinary course of business;
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(g) neither the Company nor any of its Subsidiaries shall cancel or
terminate any material insurance policy naming it as a beneficiary or a loss
payable payee without notice to Parent;
(h) neither the Company nor any of its Subsidiaries shall (i) incur or
assume any long-term debt or any short-term indebtedness, in each case, for
borrowed money except in the ordinary course of business under lines of credit
in existence on the date hereof; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
any material obligations of any other Person (other than, with respect to (x)
the Company, any Subsidiary or (y) any Subsidiary, the Company or any other
Subsidiary) except in the ordinary course of business or make any loans,
advances or capital contributions to, or investments in, any other Person,
(other than, with respect to (x) the Company, any Subsidiary or (y) any
Subsidiary, the Company or any other Subsidiary), except for any such matter
undertaken in the ordinary course of business consistent with past practice; or
(iii) make any commitments for, or make or authorize any, capital expenditures
other than in amounts less than $50,000 individually and $500,000 in the
aggregate other than as disclosed in Section 5.1(h) of the Company Letter or the
SEC Documents;
(i) neither the Company nor any of its Subsidiaries shall (i) change any
of the accounting methods used by it unless required by GAAP or (ii) except as
required by applicable law, make any Tax election or change any Tax election
already made, adopt any Tax accounting method, change any Tax accounting method
unless required by applicable law, enter into any closing agreement, settle any
Tax claim or assessment or consent to any Tax claim or assessment or any waiver
of the statute of limitations for any such claim or assessment;
(j) neither the Company nor any of its Subsidiaries shall pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction of any such claims, liabilities or obligations, in the ordinary
course of business or any such payment, discharge or satisfaction that the
Company or any of its Subsidiaries is required to make by any law, rule or
regulation of any Governmental Entity or by any contractual obligation not
prohibited by this Section 5.1;
(k) neither the Company nor any of its Subsidiaries shall adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger);
(l) neither the Company nor any of its Subsidiaries shall knowingly take,
or agree to commit to take, any action that would result in any of the
conditions to the Offer set forth in Annex I not being satisfied, or that would
give rise to a right of termination of this Agreement for Parent or Purchaser
pursuant to Section 8.1 hereof;
(m) the Company shall not enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or to authorize any of the foregoing;
and
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(n) except to the extent disclosed in Section 5.1(n) of the Company
Letter, neither the Company nor any of its Subsidiaries shall (i) effect a plant
closing or mass layoff affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of the
Company or any Subsidiary without the prior written consent of Parent or (ii)
terminate more than forty-nine (49) employees within a site of employment or
facility of the Company or any Subsidiary or operating unit within a site of
employment or facility or operating unit of the Company or any Subsidiary
without providing prior written notice to Parent. For the purposes of this
Section 5.1(n), "plant closing," "operating unit," and "employment loss" shall
have the meanings ascribed to such terms in Section 3.20 of this Agreement.
SECTION 5.2 Takeover Proposals. The Company agrees that it will
immediately cease and cause to be terminated any existing discussions or
negotiations, if any, with any Person conducted heretofore with respect to any
possibility or consideration of making a Takeover Proposal (as hereinafter
defined). The Company shall notify Parent promptly in writing if any proposals
are received by, any information is requested from, or any negotiations or
discussions are sought to be initiated or continued with the Company, its
Subsidiaries or any of their officers, directors, employees, investment bankers,
attorneys, accountants or other agents, in each case in connection with any
Takeover Proposal including, in connection with such notice, a reasonable
summary of the terms and conditions of any proposals or offers and the identity
of the Person making such proposal or offer, unless such notice would violate
the terms of any confidentiality or similar agreement binding on the Company
existing at the date hereof or, in addition, with respect to the identity of
such Person, except to the extent that the Board of Directors is advised by
outside legal counsel that identifying such Person may be inconsistent with its
fiduciary duties; PROVIDED, HOWEVER, that such notice shall only be required to
be given with respect to any of the foregoing directed to an officer or an
employee of the Company or any of its Subsidiaries following such time as an
executive officer or director of the Company shall have actual knowledge
thereof. Except to the extent that the following may be inconsistent with the
fiduciary duties of the Board of Directors of the Company or violate, or subject
the Board of Directors of the Company or the Company to liability under,
applicable law, in each case as advised by outside legal counsel, the Company
agrees that it shall keep Parent informed promptly of any developments in the
status and terms of any Takeover Proposal, unless such notice would violate the
terms of any confidentiality or similar agreement binding on the Company
existing at the date hereof. As used in this Agreement, "Takeover Proposal"
shall mean any tender or exchange offer involving more than 35% of the Shares,
any proposal for a merger, consolidation or other business combination involving
the Company, any proposal or offer to acquire in any manner more than 35% of the
Shares or a substantial portion of the business or assets of the Company (other
than (i) immaterial or insubstantial assets, (ii) inventory in the ordinary
course of business, (iii) assets held for sale or (iv) other assets sold or to
be sold in the ordinary course of business), or any proposal or offer with
respect to any recapitalization or restructuring with respect to the Company.
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SECTION 5.3 NO SOLICITATION.
(a) The Company will not, nor will it authorize or permit its officers,
directors, investment bankers, attorneys, accountants, employees and other
agents to, directly or indirectly: (i) initiate or solicit any offer or
proposal which constitutes any Takeover Proposal; (ii) in the event of an
unsolicited Takeover Proposal for the Company, engage in negotiations or
discussions with, or provide any information to, any Person (other than Parent,
any of its affiliates or representatives and except for information which has
been previously publicly disseminated by the Company) relating to or in
connection with any Takeover Proposal; or (iii) enter into any agreement with
respect to any Takeover Proposal; PROVIDED, HOWEVER, that nothing contained in
this Section 5.3(a) or any other provision of this Agreement shall prohibit the
Company or the Company's Board of Directors or any of its or their
representatives from (i) taking and disclosing to the Company's stockholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act or (ii) making such
disclosure to the Company's stockholders as the Board of Directors may determine
in good faith is required under applicable law after advice from outside legal
counsel.
(b) Notwithstanding the foregoing, prior to the acceptance for payment of
Shares pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any Person pursuant to a customary
confidentiality agreement (provided that if any such confidentiality agreement
contains terms or provisions more favorable to such Person than the terms or
provisions with respect to Parent and Purchaser pursuant to the Confidentiality
Agreement (as hereinafter defined), then any confidentiality terms of this
Agreement and of the Confidentiality Agreement shall be deemed amended (without
further action of the parties thereto) to conform to such terms and provisions
and may discuss and negotiate and participate in discussions and negotiations
with such Person concerning a Takeover Proposal if (x) such entity or group has
made an inquiry or proposal unsolicited after the date hereof relating to any
such transaction and the Board of Directors determines in good faith, after
receiving advice from Wasserstein or another nationally recognized investment
banking firm, that to do so could lead to a Superior Proposal (as hereinafter
defined) or (y) in the good faith judgment of the Board of Directors, after
receiving advice from outside legal counsel to the Company, the failure to
provide such information or to engage in such discussions or negotiations would
be inconsistent with the fiduciary obligations of the Board of Directors to the
Company's stockholders or otherwise be inconsistent with applicable law. A
"Superior Proposal" shall be any Takeover Proposal which the Board of Directors
determines, in good faith after consultation with its financial advisor, is on
terms more favorable to the stockholders of the Company than the Offer and the
Merger pursuant to this Agreement. In making its determination whether a
Takeover Proposal constitutes a Superior Proposal pursuant to the preceding
sentence, the Board of Directors shall take into account (x) the extent to which
financing for such Takeover Proposal is required and, to the extent required,
whether firm written commitments with respect to such financing have been
provided to the Company and, based upon the advice of Wasserstein or any other
financial adviser selected by the Company, the extent to which the third party
making such
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Takeover Proposal is financially capable of obtaining such required financing
and (y) whether such Takeover Proposal has a reasonable prospect of being
consummated prior to June 30, 1998. The Company shall promptly, and in any
event within one (1) business day following any determination by the Board of
Directors that a Takeover Proposal (or any amendment thereto) is a Superior
Proposal, notify Parent in writing ("Notice of Superior Proposal") of such
determination of the same, which notice shall include the identity of the bidder
and a reasonable summary of the terms and conditions of the Superior Proposal
or, if a Superior Proposal is amended, the terms and conditions as so amended.
If Parent does not, within five (5) business days after Parent's receipt of a
Notice of Superior Proposal or of any such notice with respect to any amended
proposal (or, if earlier, prior to two business days before the expiration of
the Offer), make an irrevocable written offer or enter into a definitive written
agreement amending this Agreement to provide for a transaction which the Board
of Directors has determined in its good faith judgment (based on the advice of
Wasserstein or another nationally recognized investment banking firm) to be more
favorable to the Company's stockholders than the Superior Proposal, the Company,
by action of its Board of Directors, may terminate this Agreement pursuant to
clause (ii) of Section 8.1(f) and enter into an agreement with respect to a
Superior Proposal.
(c) Except as set forth in Sections 5.3(a) or (b), and except as may be
inconsistent with the fiduciary duties of the Board of Directors or any
applicable law (including, without limitation, the Exchange Act and the rules
promulgated thereunder), 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 or any such committee of the Offer,
this Agreement or the Merger, (ii) approve or recommend, or propose to approve
or recommend, any Takeover Proposal or (iii) enter into any agreement with
respect to any Takeover Proposal.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 PROXY STATEMENT. As promptly as practicable after the
consummation of the Offer and if required by the Exchange Act, the Company shall
prepare and file with the SEC, and shall use all reasonable efforts to have
cleared by the SEC, and promptly thereafter shall mail to stockholders of the
Company, the Proxy Statement.
SECTION 6.2 MEETING OF STOCKHOLDERS OF THE COMPANY. Subject to Section
5.3 hereof, at the Special Meeting, if any, the Company shall use its best
efforts to solicit from stockholders of the Company proxies in favor of the
Merger and shall take all other action necessary or, in the reasonable opinion
of the Purchaser, advisable to secure any vote or consent of stockholders
required by Delaware Law to effect the Merger. The Purchaser agrees that it
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shall vote, or cause to be voted, in favor of the Merger all Shares directly or
indirectly beneficially owned by it.
SECTION 6.3 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
hereof, the Company, Parent and Purchaser each shall take all reasonable actions
necessary to comply in all material respects with all applicable laws and legal
requirements to achieve the satisfaction of the Minimum Condition and all
conditions set forth in Annex I attached hereto and Article VII hereof, and to
consummate and make effective the Merger and the other transactions contemplated
hereby. Each of the parties hereto agrees to take all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) in a
timely manner those third party consents mutually agreed to be desirable in
connection with the transactions contemplated by this Agreement. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement in accordance with its terms, the
proper officers and directors of the Company, Parent and the Purchaser shall use
all reasonable efforts to take, or cause to be taken, all such necessary
actions.
SECTION 6.4 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to the Purchaser and the Purchaser shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence of any event whose occurrence,
or non-occurrence would be likely to cause either (A) any representation or
warranty made by the Company contained in this Agreement which is qualified as
to Material Adverse Effect to be untrue or inaccurate at any time from the date
hereof to the Effective Time, (B) any other representation or warranty made by
the Company contained in this Agreement to be untrue or inaccurate at any time
from the date hereof to the Effective Time (other than such untruth or
inaccuracy which would not, individually or in the aggregate, have a Material
Adverse Effect), or (C) any condition set forth in Annex I to be unsatisfied at
any time from the date hereof to the date the Purchaser purchases Shares
pursuant to the Offer and (ii) any failure of the Company, the Purchaser, or
Parent, as the case may be, to comply with or satisfy in any material respect
any material covenant, condition or agreement to be complied with or satisfied
by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
this Section 6.4 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice or the right of such party to
terminate this Agreement.
SECTION 6.5 ACCESS; CONFIDENTIALITY.
(a) Subject to any restrictions under applicable law, the Company shall
continue to give (and shall cause each of its Subsidiaries to give) the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, reasonable access for reasonable purposes in light of
the transactions contemplated by this Agreement, during normal business hours
during the period prior to the Appointment Date to all its properties, books,
contracts, commitments and records and, during such period, the Company shall
(and shall cause each of its Subsidiaries to) furnish promptly to the Parent (a)
a copy of each report, schedule, registration statement and other document
publicly filed or received by it during such period pursuant to the requirements
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of federal securities laws and (b) all other information concerning its
business, properties and personnel as Parent may reasonably request; PROVIDED,
HOWEVER, that the Company shall not be required to waive any legal privilege by
virtue of this Section 6.5. Parent and the Purchaser expressly agree that from
the date hereof until the Appointment Date, without the prior written consent of
the Company, they shall not undertake any further environmental studies or tests
with respect to the Company, its business or properties requiring sampling of
soil, surface or ground water or air or other types of intrusive testing.
Unless otherwise required by law and until the Appointment Date, Parent and the
Purchaser shall hold any such information which is non-public and information
provided pursuant to Section 1.2(c) in confidence and shall not use such
information in accordance with, and shall otherwise abide by, the provisions of
the Confidentiality Agreement, dated October 31, 1997 entered into between
Parent, Harvest Partners, Inc. and the Company (the "Confidentiality
Agreement"). No investigation pursuant to this Section 6.5(a) shall affect any
representation or warranty made by the Company hereunder.
(b) Prior to the Closing, the Company and its accountants, counsel, agents
and other representatives shall cooperate with the Purchaser by providing
information about the Company which is necessary for the Purchaser and its
accountants, agents, counsel and other representatives to prepare the Disclosure
Documents. Notwithstanding the penultimate sentence of Section 6.5(a), the
Purchaser may disclose, or cause its representatives to disclose, and at the
request of the Purchaser, the Company shall and shall cause its Subsidiaries to,
disclose information concerning the Company and its Subsidiaries, and their
respective businesses, assets and properties, and the transactions contemplated
by this Agreement to prospective financing sources in connection therewith,
provided that such financing sources agree to hold such information in
confidence in accordance with, and shall otherwise abide by, the provisions of
the Confidentiality Agreement.
SECTION 6.6 PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release in the form attached
hereto as Exhibit 6.6. Thereafter, so long as this Agreement is in effect and
subject to the other provisions of this Agreement, neither the Company, Parent
nor any of their respective affiliates shall issue or cause the publication of
any press release or other announcement with respect to the Merger, this
Agreement or the other transactions contemplated hereby without the prior
consent of the other party, except after receiving the advice of outside legal
counsel, and after informing all the parties hereto, that such release or
announcement is required by law or by any listing agreement with a national
securities exchange or trading market. If so advised, Parent and Company shall
consult with each other before issuing, and provide each other the opportunity
to comment upon, any such press release or other public statements with respect
to such transactions.
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SECTION 6.7 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, in which
any of the present or former officers, directors, employees and agents (the
"Indemnified Person(s)") of the Company or any of its Subsidiaries is, or is
threatened to be, made a party by reason of the fact that he or she is or was,
at or prior to the Effective Time, a director, officer, employee or agent of the
Company or any of its Subsidiaries or is or was, prior to the Effective Time,
serving as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise at the request of the
Company or any of its Subsidiaries, whether such claim arises before or after
the Effective Time, Parent and the Surviving Corporation shall each indemnify
and hold harmless, as and to the fullest extent permitted by applicable law,
each such Indemnified Person(s) against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such claim, action, suit, proceeding or investigation (including, without
limitation, any of the foregoing arising out of or related to this Agreement
and/or any of the transactions contemplated hereby). Any Indemnified Person(s)
wishing to claim indemnification hereunder, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the Parent and
the Surviving Corporation thereof (but the failure so to notify the Parent and
the Surviving Corporation shall not relieve Parent or the Surviving Corporation
from any liability which they may have under this Section 6.7 except to the
extent such failure materially prejudices the Parent or the Surviving
Corporation). The right to indemnification hereunder includes the right to
receive reimbursement of reasonable expenses incurred in connection therewith,
upon (i) written request by the Indemnified Person(s) accompanied by a copy of
bills, invoices or other documentation of such expenses and (ii) receipt of an
undertaking by the Indemnified Person(s) to repay any such amounts if it shall
ultimately be determined that such Person is not entitled to be indemnified as
provided herein.
(b) Until the Effective Time the Company shall keep in effect Articles
Tenth and Eleventh of its Certificate of Incorporation and Section 6.7 of its
By-Laws, and thereafter for a period of six (6) years the Surviving Corporation
shall keep in effect in its Certificate of Incorporation provisions which
provides for indemnification and exculpation of the Indemnified Person(s) to the
extent provided by Articles Tenth and Eleventh of the Company's Certificate of
Incorporation on the date hereof.
(c) Parent or the Surviving Corporation shall maintain the Company's and
its Subsidiaries' existing officers' and directors' liability insurance ("D&O
Insurance") for a period of six (6) years after the Effective Time; PROVIDED,
HOWEVER, that the Parent may substitute therefor policies of substantially
equivalent coverage and amounts containing terms no less favorable to such
former directors or officers (but without creating any gaps in coverage);
PROVIDED, FURTHER, that in no event shall Parent or the Surviving Corporation be
required to pay aggregate premiums for insurance under this Section 6.7(c) in
excess of 200% of the aggregate premium paid by the Company in 1997 (the "1997
Premium"), which true and correct amount
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is set forth in Section 6.7(c) of the Company Letter; and PROVIDED, FURTHER,
that if Parent or the Surviving Corporation is unable to obtain the amount of
insurance required by this Section 6.7(c) for such aggregate premium, Parent or
the Surviving Corporation shall obtain as much insurance as can be obtained for
an annual premium not in excess of 200% of the 1997 Premium.
(d) In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Parent
and the Surviving Corporation shall have the right to assume the defense thereof
and Parent and the Surviving Corporation shall not be liable to any such
Indemnified Person(s) for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Person(s) in connection with
the defense thereof, (ii) Parent and the Surviving Corporation shall vigorously
prosecute the defense of any such matter, (iii) the Indemnified Person(s) will
cooperate in all respects as reasonably requested by the Parent and Surviving
Corporation in the defense of any such matter, (iv) the Parent and Surviving
Corporation shall not be liable for any settlement effected without its prior
consent (which consent shall not be unreasonably withheld) and (v) Parent and
the Surviving Corporation shall not settle any claim the defense of which has
been assumed by Parent and the Surviving Corporation pursuant to this Section
6.7(d) without the prior written consent of the Indemnified Person(s) (which
consent shall not be unreasonably withheld); PROVIDED, HOWEVER, if Parent or the
Surviving Corporation does not assume the defense of any claim, action, suit,
proceeding or investigation pursuant to this Section 6.7(d) within a reasonable
period of time from the receipt of notice of such claim, the Indemnified Persons
as a group with respect to the same claim shall be entitled to retain only one
(1) law firm to represent them with respect to any such matter unless there is,
under applicable standards of professional conduct, a conflict of interest on
any significant issue between the positions of any two or more Indemnified
Person(s), or any similar impediment to the joint representation of multiple
Indemnified Person(s) by a single law firm; PROVIDED, FURTHER, that the Parent
and Surviving Corporation shall have no obligation hereunder to any Indemnified
Person(s) when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and non-appealable,
that indemnification of such Indemnified Person(s) in the manner contemplated
hereby is prohibited by applicable law.
(e) Parent, the Purchaser, the Company and the Surviving Corporation
expressly acknowledge the provisions of Article Tenth and Eleventh of the
Company's Certificate of Incorporation and Section 6.7 of the Company's By-Laws,
as in effect on the date hereof, and hereby agree, from and after the Expiration
Date, to honor in accordance with their terms all such obligations and further
acknowledge that said obligations (along with the indemnification and like
obligations in the Certificate of Incorporation and By-Laws of the Surviving
Corporation) constitute, to the extent set forth therein, a contract between the
Company or the Surviving Corporation, as the case may be, on the one hand, and
the Persons entitled to the benefits thereof (in accordance therewith), on the
other hand, creating binding obligations on the part of the Company and binding
rights on the part of any Person entitled to the benefit thereof (in accordance
therewith).
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(f) If Parent or the Surviving Corporation or any of their respective
successors or assigns shall transfer all or substantially all of its properties
and assets to any individual, corporation or other entity, then and in each such
case, proper provisions shall be made so that the successors and assigns thereof
shall assume the obligations set forth in this Section 6.7; PROVIDED, HOWEVER,
no such assignment or assumption shall relieve Parent or the Surviving
Corporation (or any successor or assign) of its obligations set forth in (or
imposed pursuant to) this Section 6.7.
(g) This Section 6.7 is intended for the benefit of, and shall be
enforceable by the Indemnified Person(s), their heirs and personal
representatives and shall be binding upon Parent, the Company and the Surviving
Corporation and their respective successors and assigns. The Surviving
Corporation shall reimburse an Indemnified Person(s) for its reasonable expenses
in enforcing its rights under this Section 6.7, including reasonable attorneys'
fees, unless a court of competent jurisdiction shall determine, and such
determination shall have become final and non-appealable, that indemnification
of such Indemnified Person in the manner contemplated hereby is prohibited by
applicable law.
SECTION 6.8 EMPLOYEE BENEFITS. On and after the Effective Time,
directors, officers and employees of the Company and its Subsidiaries shall be
provided employee benefits, plans and programs which are no less favorable in
the aggregate than those generally available to similarly situated directors,
officers and employees of Parent and its significant subsidiaries. For purposes
of eligibility to participate and vesting, waiting periods, pre-existing
conditions, limitations and all other purposes (but not benefit accrual
attributable to the period before the Effective Time) in all benefits provided
to directors, officers and employees, the directors, officers and employees of
the Company and its Subsidiaries will be credited with their years of service
with the Company and its Subsidiaries and prior employers to the extent service
with the Company and its Subsidiaries and prior employers is taken into account
under plans of the Company and its Subsidiaries. Nothing in this Section 6.8
shall be construed as restricting the ability of Parent and the Surviving
Corporation and its Subsidiaries to establish such types and levels of
compensation and benefits or to modify or terminate such compensation or
benefits as they determine to be appropriate from time to time. Parent and the
Surviving Corporation jointly and severally agree that the Surviving Corporation
shall (i) credit directors, officers and employees of the Company and its
Subsidiaries with any amounts paid by such persons toward applicable deductible
amounts and copayment and deductible maximums for the calendar year under the
medical and dental plans of the Company and its Subsidiaries prior to the
transition to any new medical or dental program toward satisfaction of the
applicable deductible amounts and copayment and deductible maximums under any
such new medical or dental program that covers such directors, officers and
employees; (ii) cause all benefits of directors, officers and employees under
Benefit Plans vested and accrued, prior to the Effective Time to be provided to
such directors, officers and employees in accordance with the terms of such
Benefit Plans as in effect on the date hereof and (iii) become the "Employer"
under the Deflecta-Shield Corporation Employee Profit Sharing and 401(k) Plan.
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SECTION 6.9 PURCHASER COMPLIANCE. Parent shall cause the Purchaser to
timely perform and comply with all of its obligations under or related to this
Agreement, including, without limitation, all obligations in or with respect to
the Offer. Notwithstanding anything to the contrary contained in this Agreement,
the stockholders of the Company are each third party beneficiaries of this
Section 6.9 and may seek relief for breach hereof individually and in their own
name.
SECTION 6.10 BEST EFFORTS.
(a) Prior to the Closing, upon the terms and subject to the terms,
provisions and conditions of this Agreement, the Purchaser and the Company (but
in the case of the Company, not inconsistent with the fiduciary obligations of
the Board of Directors of the Company as advised by outside legal counsel to the
Company) agree to use their respective 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 to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable.
(b) Prior to the Closing, each party shall promptly consult with the other
parties hereto with respect to, provide any necessary information with respect
to, and provide the other (or its counsel) copies of, all filings made by such
party with any governmental authority or any other information supplied by such
party to a Governmental Entity in connection with this Agreement and the
transactions contemplated by this Agreement. Each party hereto shall promptly
inform the other of any communication from any Governmental Entity regarding any
of the transactions contemplated by this Agreement. If any party hereto or
affiliate thereof receives a request for information or documentary material
from any such Government Entity with respect to the transactions contemplated by
this Agreement, then such party shall endeavor in good faith to make, or cause
to be made, as soon as reasonably practicable and after consultation with the
other party, an appropriate response in compliance with such request. To the
extent that transfers of permits are required as a result of execution of this
Agreement or consummation of the transactions contemplated hereby, the Company
will reasonably cooperate with Purchaser to effect such transfers.
(c) No party shall wilfully perform any act which if performed, or
wilfully omit to perform any act which if omitted to be performed, would prevent
or excuse the consummation of the Offer and/or the Merger.
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ARTICLE VII
CONDITIONS
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction on or prior to the Closing Date of each of the following
conditions, any and all of which may be waived in whole or in part by the
Company, Parent or the Purchaser, as the case may be, to the extent permitted by
applicable law:
(a) The Merger and this Agreement shall have been approved and adopted by
the requisite vote of the holders of the Shares, if required by the Delaware
Law;
(b) No statute, rule or regulation shall have been enacted or promulgated
by any governmental authority which prohibits the consummation of the Merger;
and there shall be no order or injunction of a court of competent jurisdiction
in effect which prohibits consummation of the Merger; PROVIDED, HOWEVER, that
each of the parties hereto shall have used reasonable efforts to prevent the
entry of any such order or injunction and to appeal as promptly as possible any
such order or injunction that may be entered; and
(c) The Purchaser shall have made the Offer and shall have accepted for
payment the Shares tendered pursuant to the Offer; provided, that this condition
shall be deemed to have been satisfied with respect to the obligation of Parent
and the Purchaser to effect the Merger if the Purchaser fails to announce and
make the Offer or accept for payment Shares tendered pursuant to the Offer in
violation of the terms of the Offer or of this Agreement.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time before the
Effective Time, whether before or after stockholder approval:
(a) By mutual written consent of the Parent and the Company, in each case
acting through its board of directors; or
(b) (i) By Parent if the Offer shall have expired or been terminated in
accordance with its terms without any Shares being purchased thereunder by the
Purchaser, but only as a result of the occurrence of any of the events set forth
in Annex I that shall not have resulted directly or proximately from a state of
facts or action or inaction which constitutes a breach of a representation,
warranty or covenant by the Purchaser or Parent; or
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(ii) By the Company if any of the events specified in paragraph (a) of
Annex I occurs prior to Purchaser's acceptance for payment of the Shares in the
Offer; or
(c) By either Parent or the Company if a U.S. Court shall have issued an
order, decree or ruling (which order, decree or ruling the parties hereto shall
use their best efforts to vacate), in each case permanently restraining,
enjoining or otherwise prohibiting the Offer and/or the Merger and such order,
decree, ruling or other action shall have become final and nonappealable and
shall not have resulted directly or proximately from a state of facts or action
or inaction which constitutes a breach of a representation, warranty or covenant
by the Purchaser or Parent; or
(d) By Parent if, without any material breach by Parent or the Purchaser
of its representations, warranties or obligations under this Agreement or the
Offer, the purchase of Shares pursuant to the Offer shall not have occurred on
or before June 30, 1998; or
(e) By the Company if, without any material breach by the Company of its
representations, warranties or obligations under this Agreement, the purchase of
Shares pursuant to the Offer shall not have occurred on or before June 30, 1998;
or
(f) By the Company (i) if Parent or the Purchaser shall have breached in
any material respect any material covenant or other agreement contained in this
Agreement or if any representation or warranty of Parent or the Purchaser made
in this Agreement shall fail to be true and correct as if made at such time in
any material respect, in each case which breach or which failure to be true and
correct cannot be or has not been cured within ten (10) business days of the
receipt of written notice thereof; or (ii) to allow the Company to enter into an
agreement in accordance with Section 5.3(b) hereof with respect to a Superior
Proposal; or
(g) By Parent, if prior to the time Purchaser is required to accept Shares
for payment in the Offer, (i) the Company shall have breached in any material
respect any material covenant or other agreement contained in this Agreement or
(ii) any representation or warranty of the Company made in this Agreement which
is qualified as to Material Adverse Effect shall not be true and correct when
made or as if made at such time or (iii) any other representation or warranty of
the Company made in this Agreement shall not be true and correct when made or as
if made at such time, which failure to be true and correct would have a Material
Adverse Effect, in each case which breach or which failure to be true and
correct cannot be or has not been cured within ten (10) business days of the
receipt of written notice thereof; or
(h) By Parent, at any time prior to the time Purchaser is required to
accept Shares for payment in the Offer, (i) if the Board of Directors of the
Company shall have withdrawn or materially modified in a manner adverse to the
Purchaser its approval or recommendation of the Offer, the Merger or this
Agreement or (ii) the Company shall have entered into, or shall have publicly
announced its intention to enter into, a definitive written agreement or written
agreement in principle providing for a Takeover Proposal.
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SECTION 8.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement as provided in Section
8.1 hereof, written notice thereof shall forthwith be given to the other party
or parties specifying the provision hereof pursuant to which such termination is
made;
(b) In the event of termination of this Agreement by either the Company,
on one hand, or Parent and Purchaser on the other hand, as provided in Section
8.1, except as provided in Sections 8.2 (d) and (e), this Agreement shall
forthwith become null and void and there shall be no liability on the part of
Parent, the Purchaser or the Company, except (i) as set forth in Section 8.2(c)
hereof and (ii) nothing herein shall relieve Parent or Purchaser from liability
for any breach of this Agreement, other than an immaterial breach, and nothing
herein shall relieve the Company from liability for any willful and material
breach of this Agreement. Without implication that the contrary would otherwise
be true and notwithstanding anything to the contrary contained in this Section
8.2 or elsewhere in this Agreement, Section 6.9 shall survive any termination of
this Agreement.
(c) If (i) Parent shall have terminated this Agreement pursuant to Section
8.1(g) then the Company shall pay to Parent an amount, not in excess of
$1,000,000, equal to the Purchaser's actual and reasonably documented
out-of-pocket expenses (including without limitation, fees payable to all banks,
investment banking firms and other financial institutions and their respective
counsel, and all fees of counsel, accountants, financial printers, experts and
consultants to Parent, but specifically excluding any fees payable to Harvest
Partners, Inc. (the "Expense Reimbursement Amount")) incurred by Parent and
Purchaser in connection with the Offer, the Merger, this Agreement and the
consummation of the transactions contemplated hereby. If (i) Parent shall have
terminated this Agreement pursuant to Section 8.1(h) or (ii) the Company shall
have terminated this Agreement pursuant to Section 8.1(f)(ii), then the Company
shall pay to Parent a termination fee (the "Termination Fee") of $2,300,000.
The Termination Fee and the Expense Reimbursement Fee shall be payable not later
than one business day after the date of termination by wire transfer in
accordance with the instructions set forth in Exhibit 8.2(c) attached hereto or
to such other account as Parent may designate in writing to the Company. Upon
payment of the fees required to be paid pursuant to this Section 8.2(c), the
Company shall have no further obligation to Parent or the Purchaser, under this
Agreement or otherwise; PROVIDED, FURTHER, that if the Company fails to pay
promptly the amounts required pursuant to this Section 8.2(c) and in order to
obtain such payment Parent or the Purchaser commences a suit which results in a
final nonappealable judgment against the Company for such amounts, the Company
shall pay to Parent or the Purchaser (i) the costs and expenses (including
attorneys' fees) incurred by Parent or the Purchaser in connection with such
suit and (ii) interest on all such amounts required to be paid at the rate
announced by Citibank N.A. as its "reference rate" in effect on the date such
amounts were required to be paid;
(d) Each party, if so requested by the other party, will return promptly
every document furnished to it by or on behalf of the other party in connection
with the transactions
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<PAGE>
contemplated hereby, whether so obtained before or after the execution of this
Agreement, and any copies thereof (except for copies of documents publicly
available) which may have been made, and will use reasonable efforts to cause
its representatives and any representatives of financial institutions and
investors and others to whom such documents were furnished promptly to return
such documents and any copies thereof any of them may have made; and
(e) The obligations of Parent and Purchaser under Section 6.5 shall
continue indefinitely notwithstanding any termination of this Agreement. This
Section 8.2 shall survive any termination of this Agreement and the
Confidentiality Agreement will remain in full force and effect in the event of
such termination.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time before or after approval hereof by the stockholders of the Company,
but, after such approval, no amendment shall be made which reduces the amount or
changes the form of consideration to be paid in the Offer or in any way
adversely affects the rights of holders of the Shares without the further
approval of such holders. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of each of the parties hereto.
SECTION 9.2 WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken by their respective Boards of Directors, may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties of the other parties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
satisfaction of any of the conditions contained herein. 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 on behalf of such party.
SECTION 9.3 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Sections
6.5, 6.7, 6.8 and 6.9 and this Article IX, and, without limitation by the
specific enumeration of the foregoing, each and every other agreement contained
in this Agreement or any certificate or other document delivered pursuant to
this Agreement and which contemplates performance after the Effective Time,
shall survive the Merger. None of the representations, warranties and
agreements (other than those agreements referred to in the previous sentence of
this Section 9.3) contained in this Agreement or in any exhibit, disclosure
schedule, certificate or other instrument delivered pursuant to this Agreement
shall survive the earliest to occur of the Expiration Date, the Effective Time
and the termination of this Agreement.
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<PAGE>
SECTION 9.4 NOTICES. Any notice, request, instruction or other document
to be given hereunder by any party to the others shall be deemed given if in
writing and delivered personally or sent by overnight courier (providing proof
of delivery), postage prepaid or by facsimile (which is confirmed).
if to Parent or the Purchaser:
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, Minnesota 55303
Facsimile: (612) 576-4297
with a copy to:
Leonard Gubar, Esq.
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Facsimile: (212) 603-2001
if to the Company:
Deflecta-Shield Corporation
1275 Sherman Drive
Longmont, Colorado 80502
Facsimile: (303) 776-4723
with a copy to:
John E. Lowe, Esq.
Peter Lieberman, Esq.
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606-7482
Facsimile: (312) 715-4800
or to such other address as may have been designated in a prior notice. Notices
shall be deemed to have been given when received.
SECTION 9.5 HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
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<PAGE>
SECTION 9.6 EXHIBITS, SCHEDULES AND ANNEXES. The Exhibits, Schedules
and Annexes referred to in this Agreement shall be deemed to be an integral part
of this Agreement as if fully rewritten herein. To the extent applicable, a
disclosure set forth on any one such document will serve as a disclosure for
purposes of all other such documents. Without limitation of the foregoing, any
disclosure set forth in any section of the Company Letter shall serve as
disclosure for purposes of all other applicable sections of the Company Letter
and the related representations and warranties if it is reasonably evident that
such disclosure also is applicable to such other sections of the Company Letter
and the related representations and warranties. For purposes of this Agreement,
including Annex I hereto, in addition to any other meaning attributed to it at
law, the word "proximately" includes any event which is a substantial factor in
causing the occurrence of another event.
SECTION 9.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
SECTION 9.8 GOVERNING LAW. This Agreement, including all matters of
construction, validity and performance, shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, as applied to
contracts made, executed and to be fully performed in such state by citizens of
such state, without regard to conflict of laws principles.
SECTION 9.9 PRONOUNS. The use of a particular pronoun herein shall not
be restrictive as to gender or number but shall be interpreted in all cases as
the context may require.
SECTION 9.10 TIME PERIODS. Unless otherwise provided herein, any action
required hereunder to be taken within a certain number of days shall be taken
within that number of calendar days; PROVIDED, HOWEVER, that if the last day for
taking such action falls on a weekend or a holiday, the period during which such
action may be taken shall be automatically extended to the next business day.
SECTION 9.11 NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against either
party.
SECTION 9.12 ENTIRE AGREEMENT. This Agreement and the agreements and
documents referred to in this Agreement or delivered hereunder are the exclusive
statement of the agreement between the parties concerning the subject matter
hereof. All negotiations and prior agreements between the parties (other than
those incorporated herein, including the Confidentiality Agreement) are merged
into this Agreement, and there are no representations, warranties, covenants,
understandings, or agreements, oral or otherwise, in relation thereto among the
parties other than those incorporated herein and to be delivered hereunder.
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<PAGE>
SECTION 9.13 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
SECTION 9.14 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto except that Purchaser may
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase shares pursuant to the Offer, but any such
transfer or assignment will not relieve Parent or the Company of its obligations
under the Offer or prejudice the rights of tendering stockholders to receive
payment for shares of the Company validly tendered and accepted for payment
pursuant to the Offer. Except for Sections 6.7, 6.8 and 6.9, and except as
otherwise provided in this Agreement, nothing in this Agreement is intended or
shall be construed to confer on any Person other than the parties hereto any
rights or benefits hereunder.
SECTION 9.15 FEES AND EXPENSES. Except as otherwise set forth in this
Agreement, each party hereto shall bear all fees and expenses incurred by such
party in connection with, relating to or arising out of the execution, delivery
and performance of this Agreement and the consummation of the Offer and the
Merger.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By:
------------------------------
Name:
Title:
ZEPHYROS ACQUISITION CORPORATION
By:
------------------------------
Name:
Title:
DEFLECTA-SHIELD CORPORATION
By:
------------------------------
Name:
Title:
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<PAGE>
ANNEX I
TO
AGREEMENT AND PLAN OF MERGER
CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer,
the Purchaser shall not be required to accept for payment any Shares tendered
pursuant to the Offer, and, subject to the terms of this Agreement, may
terminate the Offer if (i) by the expiration date of the Offer, the Minimum
Condition shall not have been satisfied or (ii) at any time on or after the date
of this Agreement, and prior to the time for acceptance for payment for any such
Shares, any of the following events shall occur and remain in effect other than
as a result directly or proximately from a state of facts or action or inaction
which constitutes a breach of a representation, warranty or covenant of the
Purchaser or Parent;
(a) there shall be instituted or pending any suit, action or proceeding by
a Governmental Entity seeking to (i) make illegal or otherwise directly restrain
or prohibit the making of the Offer, the acquisition of any Shares by the
Purchaser pursuant to the Offer or the consummation of the Merger, (ii) restrain
or prohibit Parent's or the Purchaser's ownership or operation (or that of their
respective subsidiaries or affiliates) of all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or,
following consummation of the Offer or the Merger and as a result thereof, of
Parent and its subsidiaries, taken as a whole, or to compel Parent or any of its
subsidiaries or affiliates to dispose of or hold separate all or any material
portion of the business or assets of the Company and its Subsidiaries, taken as
a whole, or, following consummation of the Offer or the Merger and as a result
thereof, of Parent and its subsidiaries, taken as a whole, (iii) impose material
limitations on the ability of Parent or any of its subsidiaries or affiliates
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares to be acquired pursuant to the
Offer on all matters properly presented to the Company's stockholders, or (iv)
require divestiture by Parent or any of its subsidiaries or affiliates of any
Shares to be acquired pursuant to the Offer.
(b) there shall be any statute, rule, regulation, injunction, order or
decree issued, promulgated, enacted, entered or enforced that results in any of
the consequences referred to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred (and the adverse effect of such occurrence
shall be continuing for more than three business days) (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange or on the NASDAQ National Stock Market (excluding any
trading halt triggered solely as a result of a specified decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States or any limitation by United States
federal or state authorities on the extension of credit by banks or other
financial institutions, (iii) a commencement of a war directly involving the
armed forces of the United States, a material
A-1
<PAGE>
commitment of the armed forces of the United States, or other international or
national calamity directly involving the armed forces of the United States if,
as a result of such war directly involving the armed forces of the United
States, commitment of armed forces or calamity, banks generally stop lending
funds for middle market acquisition transactions, but specifically other than in
connection with increases in interest rates, or (iv) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(d) the Company shall have (i) breached in any material respect any
material covenant or other agreement contained in this Agreement, (ii) any
representation or warranty of the Company made in this Agreement which is
qualified as to Material Adverse Effect shall fail to be true and correct at any
time prior to expiration of the Offer as if made at such time, or (iii) any
other representation or warranty of the Company made in this Agreement shall
fail to be true and correct at any time prior to expiration of the Offer as if
made at such time, which failure to be true and correct would have a Material
Adverse Effect, in each case which breach or which failure to be true and
correct cannot be or has not been cured within ten (10) business days of the
receipt of written notice thereof;
(e) this Agreement shall have been terminated in accordance with its
terms;
(f) the Board of Directors of the Company shall have withdrawn or
materially modified in a manner adverse to Parent or the Purchaser its approval
or recommendation of the Offer, the Merger or this Agreement; or
(g) the Company shall have entered into, or shall have publicly announced
its intention to enter into, a definitive written agreement or agreement in
principle providing for a Takeover Proposal.
The foregoing conditions are for the sole benefit of the Parent and
Purchaser other than the Minimum Condition and other than the termination of the
Agreement in accordance with its terms and, other than the Minimum Condition and
such termination, may be waived by the Purchaser, in whole or in part. The
failure by the Purchaser, at any time, to exercise any of the foregoing rights
shall not be deemed a waiver of any such rights; the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right which may be asserted at any time or from time to time.
Terms used in this Annex I but not defined herein shall have the meanings
ascribed to such terms in the Agreement to which this Annex I is a part.
A-2
<PAGE>
Exhibit (c)(2)
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of November 25,
1997, by and among Lund International Holdings, Inc., a Delaware corporation
("Parent"), and Mark C. Mamolen (hereinafter referred to as "Stockholder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently herewith, Parent, Zephyros Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent
("Purchaser"), and Deflecta-Shield Corporation, a Delaware corporation (the
"Company"), will enter into an Agreement and Plan of Merger of even date
herewith (the "Merger Agreement"; capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement), pursuant to which
(and subject to the terms and conditions specified therein) Purchaser will make
a cash tender offer (as defined in the Merger Agreement, the "Offer") for all
outstanding shares of Common Stock, par value $.01 per share, of the Company
("Company Common Stock") and, following consummation of the Offer, Purchaser
will be merged with and into the Company, with the Company continuing as the
surviving corporation and as a wholly-owned subsidiary of Parent (the "Merger"),
whereby each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger will be converted into the right to
receive the Merger Consideration, other than (i) shares of Company Common Stock
owned, directly or indirectly, by the Company or any subsidiary of the Company
or by Parent, Purchaser or any other affiliate of Parent and (ii) Dissenting
Shares; and
WHEREAS, Stockholder is a stockholder of the Company and, as a
condition to Parent and Purchaser entering into the Merger Agreement, Parent
requires that Stockholder enter into, and Stockholder has agreed to enter into,
this Agreement with Parent.
NOW, THEREFORE, in consideration of the representations and warranties
and covenants set forth herein and in the Merger Agreement, Parent and
Stockholder, intending to be legally bound hereby each agree as follows:
1. Representations and Warranties of the Stockholder. Stockholder
hereby represents and warrants to Parent as follows:
1.1 Validity of Agreement. Stockholder has the legal capacity to
enter into and perform all of Stockholder's obligations under this Agreement.
This Agreement has been duly executed and delivered by Stockholder and
constitutes a valid and binding obligation of Stockholder enforceable against
Stockholder in accordance with its terms,
<PAGE>
except that (a) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought and (c) no representation is made with respect to the
enforceability, validity or binding effect of the third sentence of Section 4.1
under applicable provisions of the Exchange Act. If Stockholder is married, and
his Stockholder Shares (as hereinafter defined) constitute community property,
this Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, Stockholder's spouse, enforceable
against such person in accordance with its terms (subject to the exceptions set
forth in the immediately preceding sentence).
1.2 Consents and Approvals; No Violations. The execution, delivery
and performance of this Agreement by Stockholder shall not (a) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which Stockholder
is a party or by which Stockholder or any of his properties or assets is
bound or affected or (b) violate any order, writ, injunction, decree or
judgment, specifically applicable by its terms to Stockholder or any of his
properties or assets. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any state, federal or
foreign public body or authority is required by or with respect to
Stockholder in connection with the execution and delivery of this Agreement
by Stockholder or the consummation by Stockholder of any of the transactions
contemplated by this Agreement, except for filings pursuant to the Exchange
Act and except as may be required by the Merger. Without implication that the
following consent is required by that certain Voting Agreement, dated January
27, 1994, by and between Stockholder and Charles S. Meyer (the
"Co-Stockholder"), Stockholder hereby (i) consents, if such consent is
required by the Voting Agreement, to Co-Stockholder entering into and
performing a stockholder agreement with Parent, of even date herewith (the
"Co-Stockholder Agreement"), substantially identical to this Agreement and
(ii) acknowledges and agrees that this Agreement and the Co-Stockholder
Agreement supersede the Voting Agreement with respect to the matters set
forth herein and in the Co-Stockholder Agreement. The parties hereto
acknowledge that Co-Stockholder is a third party beneficiary of the foregoing.
1.3 Ownership of Shares. (a) Stockholder is the record and/or
beneficial owner of that number of shares of Company Common Stock set forth
opposite Stockholder's name on Annex 1 attached hereto (such shares hereinafter
referred to as the "Existing Shares," and together with any shares of Company
Common Stock acquired of record or beneficially by Stockholder in any capacity
after the date hereof and prior to the termination hereof, whether upon exercise
of options, conversion of convertible securities, purchase, exchange or
otherwise, referred to as the "Stockholder Shares"). Notwithstanding the
-2-
<PAGE>
foregoing, neither the Existing Shares nor the Stockholder Shares include any
shares of Company Common Stock owned of record by Co-Stockholder.
(b) Except for shares of Company Common Stock owned by the
Co-Stockholder subject to the Voting Agreement, on the date hereof, the
Existing Shares constitute all of the outstanding shares of Company Common
Stock owned of record and/or beneficially by Stockholder.
(c) Except as provided by the Voting Agreement, Stockholder has
sole power of disposition with respect to all of the Existing Shares owned
by him and sole voting power with respect to the matters set forth in
Section 3.1 hereof and sole power to demand dissenter's or appraisal
rights, in each case with respect to all of the Existing Shares owned by
him with no restrictions on such rights, subject to any restrictions
imposed by applicable federal securities laws, Delaware law and the terms
of this Agreement.
(d) Except as provided by the Voting Agreement, Stockholder will
have sole power of disposition with respect to shares of Company Common
Stock other than Existing Shares, if any, which become beneficially owned
by Stockholder and will have sole voting power with respect to the matters
set forth in Section 3.1 hereof and sole power to demand dissenter's or
appraisal rights, in each case with respect to all such shares, if any,
which become beneficially owned by Stockholder with no restrictions on such
rights, subject to any restrictions imposed by applicable federal
securities laws and the terms of this Agreement.
1.4 No Encumbrances. The Existing Shares and the certificates
representing such shares are now, and the Stockholder Shares and the
certificates representing such shares at all times during the term hereof will
be, held by Stockholder, free and clear of all claims, liens, charges, security
interests, proxies, voting trusts or agreements, understandings or arrangements
and any other encumbrances of any kind or nature whatsoever, except as otherwise
provided in this Agreement and except as set forth in the Voting Agreement.
Certificates representing the Existing Shares contain legends reflecting the
Voting Agreement and the restrictions on transfer of Existing Shares under the
Securities Act.
1.5 Brokers and Intermediaries. No broker, investment banker,
financial adviser or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Stockholder. It is agreed and acknowledged that the Company has retained
Wasserstein, Perrella & Co. in connection with the Offer and the Merger and the
transactions contemplated by the Merger Agreement.
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<PAGE>
1.6 Reliance. Stockholder understands and acknowledges that Parent
and Purchaser are entering into the Merger Agreement in reliance upon
Stockholder's execution and delivery of this Agreement with Parent.
2. Representations and Warranties of Parent. Parent hereby
represents and warrants to Stockholder as follows:
2.1 Organization; Authorization; Validity of Agreement. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and no other corporate proceedings on the
part of Parent are necessary to authorize this Agreement or any of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and constitutes a valid and binding obligation of Parent
enforceable against Parent in accordance with its terms, except that (a) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and (b)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
2.2 Consents and Approvals; No Violations. The execution, delivery
and performance of this Agreement by Parent shall not (a) conflict with or
result in any breach of the certificate of incorporation or by-laws of Parent,
(b) result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent is a party or by which
Parent or any of its properties or assets is bound or affected or (c) violate
any order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to Parent or any of Parent's properties or assets. Except as
provided in the Merger Agreement, no consent, approval, order or authorization
of, or registration, declaration or filing with, or notice to, any state,
federal or foreign public body or authority is required by or with respect to
Parent in connection with the execution and delivery of this Agreement by Parent
or the consummation by Parent of any of the transactions contemplated by this
Agreement.
2.3 Broker and Intermediaries. No broker, finder, investment banker
or other Person or entity, other than Piper Jaffray & Co., is entitled in
connection with the transactions contemplated by the Merger Agreement to any
broker's commission, finder's fee, investment banker's fee or similar payment in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of Parent or Purchaser.
-4-
<PAGE>
2.4 Reliance. Parent understands and acknowledges that Stockholder
is entering into this Agreement in reliance upon Parent's execution and delivery
of this Agreement with Stockholder and upon Parent's and Purchaser's execution
of the Merger Agreement.
3. Agreement to Vote. Stockholder, solely in his capacity as a
stockholder and not as a director, officer or employee of the Company, hereby
agrees that, until the Termination Date (as defined in Section 9), at any
meeting of the stockholders of the Company, however called at which the
following matters are considered for a vote, Stockholder shall vote (or cause to
be voted) the Stockholder Shares (a) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance hereof and thereof; (b)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or this Agreement; and (c) except as specifically
requested or agreed to in writing by Parent in advance, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company; (ii) a sale,
lease or transfer of a material amount of assets of the Company or
reorganization, recapitalization, dissolution or liquidation of the Company; and
(iii)(A) any change in the majority of the board of directors of the Company;
(B) any change in the present capitalization of the Company or any amendment of
the Company's Certificate of Incorporation or By-Laws; (C) any other material
change in the Company's corporate structure or business; or (D) any other action
which is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone, discourage or adversely affect the Offer, the Merger or the
transactions contemplated by the Merger Agreement or this Agreement.
Stockholder shall not enter into any agreement with or grant any proxy to any
person or entity prior to the Termination Date to vote or give instructions in
any manner inconsistent with clauses (i), (ii) or (iii) of the preceding
sentence. The foregoing shall not limit or prohibit Stockholder from entering
into any agreement simultaneously with or after termination of this Agreement.
4. Certain Covenants of the Stockholder. Except in accordance with
the terms of this Agreement, Stockholder hereby agrees as follows:
4.1 Tender of Stockholder Shares. Stockholder agrees to tender and
sell to Purchaser all of the Stockholder Shares pursuant to and in accordance
with the terms of the Offer. Stockholder agrees that he shall deliver to the
depositary for the Offer, no later than the fifth Business Day (as defined
below) following the commencement of the Offer pursuant to Section 1.1 of the
Merger Agreement, a letter of transmittal together with any and all certificates
representing the Stockholder Shares owned by him (or such documentation as
required by the terms of the Offer with respect to lost stock certificates).
Notwithstanding
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any term of the Offer to the contrary, Stockholder agrees not to withdraw any
Stockholder Shares tendered into the Offer pursuant to this Section 4.1 during
the term of this Agreement. Stockholder hereby acknowledges and agrees that
Purchaser's obligation to accept for payment the Stockholder Shares in the Offer
is subject to the terms and conditions of the Offer. Stockholder hereby permits
Parent and Purchaser to publish and disclose in the Offer Documents (including,
without limitation, all documents and schedules filed with the SEC), the
identity of the Stockholder (subject, however, to the prior approval of
Stockholder which approval shall not be unreasonably withheld or delayed) and
the nature of his commitments, arrangements and understandings under this
Agreement. Notwithstanding anything in this Agreement to the contrary, the
foregoing shall not restrict a Stockholder from taking actions in his capacity
as a director, officer or employee of the Company to the extent and in the
circumstances permitted by the Merger Agreement or as required by applicable law
or by his fiduciary duty as a director, officer or employee of the Company. For
purposes of this Agreement, "Business Day" shall mean a day on which banks are
not required or authorized to be closed in the City of New York.
4.2 No Solicitation. Prior to the Termination Date, Stockholder
shall not (directly or indirectly through advisors, agents or other
intermediaries), (a) solicit or initiate inquiries, proposals or offers from any
Person (other than Parent or any of its affiliates) relating to any Takeover
Proposal or (b) in connection with any of the foregoing, enter into or
participate in any discussions (knowingly) or negotiations or furnish to any
other Person any information with respect to the business, properties or assets
of the Company or any of its Subsidiaries; provided, however, that the foregoing
shall not restrict Stockholder as a director, officer or employee of the Company
from taking actions in any such capacity to the extent and in the circumstances
permitted by the Merger Agreement or as required by applicable law or his
fiduciary duties as such director, officer or employee. If Stockholder receives
any inquiry or proposal, in his capacity as a Stockholder and with respect to
the Stockholder Shares, then Stockholder promptly shall inform Parent of the
terms and conditions, if any, of such inquiry or proposal and the identity of
the person making it. Stockholder immediately will cease and cause his
advisors, agents and other intermediaries to cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing.
4.3 Restriction on Transfer, Proxies and Non-Interference;
Restriction on Withdrawal. Prior to the Termination Date, Stockholder shall not
directly or indirectly: (a) except pursuant to the terms of the Offer and the
Merger Agreement, and to Parent pursuant to this Agreement, offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
enforce or permit the execution of the provisions of any redemption agreement
with the Company or enter into any contract, option or other binding agreement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, or other disposition of, or exercise any
discretionary powers to distribute, any or all of the Stockholder Shares owned
by him or any interest therein; (b) except as contemplated hereby, grant any
proxies or powers of attorney with respect to any
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Stockholder Shares, deposit any Stockholder Shares into a voting trust or enter
into a voting agreement with respect to any Stockholder Shares; or (c) take any
action that would make any representation or warranty of Stockholder contained
herein untrue or incorrect in any material respect or have the effect of
preventing or disabling Stockholder from performing its obligations under this
Agreement. Anything to the contrary in this Agreement notwithstanding,
Stockholder may sell, dispose of and/or transfer all or any portion of the
Stockholder Shares for tax, securities or estate planning purposes, for
charitable donation purposes or to any Section 501(c)(3) organization as long as
the purchaser or transferee of such Stockholder Shares under this subsection
agrees to be bound by the provisions of and becomes a party to this Agreement.
4.4 Waiver of Appraisal and Dissenter's Rights. Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that
Stockholder may have.
5. Third Party Business Combination.
If (a) the Merger Agreement is terminated in accordance with Section
8.1(f)(ii) or Section 8.1(h) of the Merger Agreement, (b) within three months
after the Merger Agreement is terminated, a contract or agreement relating to a
Third Party Business Combination, as defined below, is entered into and (c)
Stockholder receives, within twelve months after the Merger Agreement is
terminated, from any Person (other than Parent, Purchaser or any of their
affiliates) any cash or non-cash consideration in an amount per share greater
than $16.00 (the "Third Party Consideration") in respect of any sale or
disposition of all or any portion of the Stockholder Shares in connection with
and as part of a Third Party Business Combination, then Stockholder within two
(2) Business Days of receipt thereof shall pay to Parent or its designee an
aggregate amount equal to fifty percent (50%) of (A) the excess of the Third
Party Consideration over $16.00 multiplied by (B) the number of Stockholder
Shares with respect to which such Third Party Consideration was received;
provided that, (x) if the consideration received by Stockholder shall be
securities listed on a national securities exchange or traded on the NASDAQ
National Market ("NASDAQ"), the per share value of such consideration shall be
equal to the closing price per share listed on such national securities exchange
or NASDAQ National Market on the date such transaction is consummated, (y) if
the consideration received by Stockholder shall be in a form other than such
listed securities, the per share value shall be determined as of the date such
transaction is consummated in good faith by Parent or its designee and the
Stockholder or his designee or if the Parent and its designee and Stockholder
and his designee cannot reach agreement, by a nationally recognized investment
banking firm reasonably acceptable to the parties and (z) Stockholder will pay
Parent or its designee in kind and on a pro rata basis (i.e., if the Third Party
Consideration includes cash, listed securities and/or other consideration,
Parent or its designee will receive its pro rata portion of each such item).
The term "Third Party Business Combination" means the occurrence of any of the
following events: (i) the Company or any Subsidiaries whose assets constitute
all or substantially all of
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the business or assets of the Company is acquired by merger or otherwise by any
person or group, other than Parent or any affiliate thereof (a "Third Party");
(ii) the sale to a Third Party of all or substantially all of the business or
assets of the Company and its Subsidiaries, taken as a whole; and (iii) the
Company, or Stockholder and Co-Stockholder enter into a merger or other
agreement with a Third Party which contemplates, in a single transaction or
series of related transactions, the acquisition of all or substantially all of
the Stockholder Shares and the Shares owned by the Co-Stockholder.
6. Further Assurances. From time to time, at any other party's
reasonable request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further action
as may be necessary to consummate and make effective the transactions
contemplated by this Agreement.
7. Certain Events. Stockholder agrees, to the extent permitted by
applicable law, that this Agreement and the obligations hereunder shall attach
to all Stockholder Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of such Stockholder Shares shall pass,
whether by operation of law or otherwise.
8. Stop Transfer. Except in connection with transfers permitted
under Section 4.3, Stockholder agrees with, and covenants to Parent that it
shall not request that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of the
Stockholder Shares.
9. Termination. All obligations of Stockholder under this
Agreement, except for the obligations under Section 5 above (which obligations
will only survive for the period set forth therein), shall terminate upon the
first to occur of (a) the acceptance for payment of Stockholder Shares in the
Offer, (b) the Effective Time of the Merger and (c) the time the Merger
Agreement is terminated in accordance with its terms (such earlier time being
the "Termination Date").
10. Miscellaneous.
10.1 Entire Agreement; Assignment. This Agreement (a) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (b)
shall not be assigned by operation of law or otherwise without the prior written
consent of the other parties, provided that Parent may assign, in its sole
discretion, its rights and obligations hereunder to any affiliate of Parent, but
no such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
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10.2 Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
10.3 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
(a) if to Parent, to
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, Minnesota 55303
Telephone: (612) 576-4200
Telecopy: (612) 576-4297
Attention: William J. McMahon
with a copy to
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Telephone: (212) 603-2000
Telecopy: (212) 603-2001
Attention: Leonard Gubar, Esq.
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(b) if to the Stockholder, to
Mark C. Mamolen
155 W. Burton Place
Unit #2
Chicago, IL 60610
Telephone: (312) 337-4141
Telecopy: (312) 337-4116
Attention:
with a copy to:
Barack Ferrazzano Kirschbaum
Perlman & Nagelberg
333 West Wacker Drive
Suite 2700
Chicago, Illinois 60606
Telephone: (312) 984-3100
Telecopy: (312) 984-3150
Attention: David Selmer, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
10.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
10.5 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
10.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
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10.7 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
10.8 Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
10.9 Definitions. For purposes of this Agreement:
(a) "beneficially own" or "beneficial ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act). Except as otherwise
referred to herein, without duplicative counting of the same securities by the
same holder, securities beneficially owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" as described in Section 13(d)(3) of the Exchange Act.
(b) "Person" shall mean an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity.
(c) In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Stockholder Shares" shall be deemed to refer to and include the Stockholder
Shares as well as all such stock dividends and distributions and any shares into
which or for which any or all of the Stockholder Shares may be changed or
exchanged.
10.10 Stockholder Capacity. Notwithstanding anything in this
Agreement to the contrary, if and to the extent that Stockholder is or becomes
during the term hereof a director, officer or employee of the Company,
Stockholder makes no agreement or understanding herein in his or her capacity as
such director, officer or employee, and the agreements set forth herein shall in
no way restrict any director, officer or employee of the Company in the exercise
of his or her fiduciary duties as such director, officer or employee of the
Company. Stockholder has executed this Agreement solely in his capacity as the
record and/or beneficial holder of Stockholder Shares. To the extent that the
Company or its directors, officers, or agents are permitted to engage in
discussions or negotiations with
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respect to any Takeover Proposal (or any inquiry or proposal with respect
thereto) pursuant to the Merger Agreement, Stockholder, in his capacity as such,
also shall be entitled, notwithstanding anything to the contrary contained in
this Agreement, to participate in such discussions and negotiations, including
without limitation, with respect to Existing Shares and the Stockholder Shares
and the related matters subject to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By:
------------------------------
Name:
Title:
---------------------------------
Mark C. Mamolen
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Exhibit (c)(3)
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of November 25,
1997, by and among Lund International Holdings, Inc., a Delaware corporation
("Parent"), and Charles S. Meyer (hereinafter referred to as "Stockholder").
W I T N E S S E T H:
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WHEREAS, concurrently herewith, Parent, Zephyros Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent
("Purchaser"), and Deflecta-Shield Corporation, a Delaware corporation (the
"Company"), will enter into an Agreement and Plan of Merger of even date
herewith (the "Merger Agreement"; capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement), pursuant to which
(and subject to the terms and conditions specified therein) Purchaser will make
a cash tender offer (as defined in the Merger Agreement, the "Offer") for all
outstanding shares of Common Stock, par value $.01 per share, of the Company
("Company Common Stock") and, following consummation of the Offer, Purchaser
will be merged with and into the Company, with the Company continuing as the
surviving corporation and as a wholly-owned subsidiary of Parent (the "Merger"),
whereby each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger will be converted into the right to
receive the Merger Consideration, other than (i) shares of Company Common Stock
owned, directly or indirectly, by the Company or any subsidiary of the Company
or by Parent, Purchaser or any other affiliate of Parent and (ii) Dissenting
Shares; and
WHEREAS, Stockholder is a stockholder of the Company and, as a
condition to Parent and Purchaser entering into the Merger Agreement, Parent
requires that Stockholder enter into, and Stockholder has agreed to enter into,
this Agreement with Parent.
NOW, THEREFORE, in consideration of the representations and warranties
and covenants set forth herein and in the Merger Agreement, Parent and
Stockholder, intending to be legally bound hereby each agree as follows:
1. Representations and Warranties of the Stockholder. Stockholder
hereby represents and warrants to Parent as follows:
1.1 Validity of Agreement. Stockholder has the legal capacity to
enter into and perform all of Stockholder's obligations under this Agreement.
This Agreement has been duly executed and delivered by Stockholder and
constitutes a valid and binding obligation of Stockholder enforceable against
Stockholder in accordance with its terms,
<PAGE>
except that (a) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought and (c) no representation is made with respect to the
enforceability, validity or binding effect of the third sentence of Section 4.1
under applicable provisions of the Exchange Act. If Stockholder is married, and
his Stockholder Shares (as hereinafter defined) constitute community property,
this Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, Stockholder's spouse, enforceable
against such person in accordance with its terms (subject to the exceptions set
forth in the immediately preceding sentence).
1.2 Consents and Approvals; No Violations. The execution, delivery
and performance of this Agreement by Stockholder shall not (a) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which Stockholder
is a party or by which Stockholder or any of his properties or assets is
bound or affected or (b) violate any order, writ, injunction, decree or
judgment, specifically applicable by its terms to Stockholder or any of his
properties or assets. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any state, federal or
foreign public body or authority is required by or with respect to
Stockholder in connection with the execution and delivery of this Agreement
by Stockholder or the consummation by Stockholder of any of the transactions
contemplated by this Agreement, except for filings pursuant to the Exchange
Act and except as may be required by the Merger. Without implication that the
following consent is required by that certain Voting Agreement, dated January
27, 1994, by and between Stockholder and Mark C. Mamolen (the
"Co-Stockholder"), Stockholder hereby (i) consents, if such consent is
required by the Voting Agreement, to Co-Stockholder entering into and
performing a stockholder agreement with Parent, of even date herewith (the
"Co-Stockholder Agreement"), substantially identical to this Agreement and
(ii) acknowledges and agrees that this Agreement and the Co-Stockholder
Agreement supersede the Voting Agreement with respect to the matters set
forth herein and in the Co-Stockholder Agreement. The parties hereto
acknowledge that Co-Stockholder is a third party beneficiary of the foregoing.
1.3 Ownership of Shares. (a) Stockholder is the record and/or
beneficial owner of that number of shares of Company Common Stock set forth
opposite Stockholder's name on Annex 1 attached hereto (such shares hereinafter
referred to as the "Existing Shares," and together with any shares of Company
Common Stock acquired of record or beneficially by Stockholder in any capacity
after the date hereof and prior to the termination hereof, whether upon exercise
of options, conversion of convertible securities, purchase, exchange or
otherwise, referred to as the "Stockholder Shares"). Notwithstanding the
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foregoing, neither the Existing Shares nor the Stockholder Shares include any
shares of Company Common Stock owned of record by Co-Stockholder.
(b) Except for shares of Company Common Stock owned by the
Co-Stockholder subject to the Voting Agreement, on the date hereof, the
Existing Shares constitute all of the outstanding shares of Company Common
Stock owned of record and/or beneficially by Stockholder.
(c) Except as provided by the Voting Agreement, Stockholder has
sole power of disposition with respect to all of the Existing Shares owned
by him and sole voting power with respect to the matters set forth in
Section 3.1 hereof and sole power to demand dissenter's or appraisal
rights, in each case with respect to all of the Existing Shares owned by
him with no restrictions on such rights, subject to any restrictions
imposed by applicable federal securities laws, Delaware law and the terms
of this Agreement.
(d) Except as provided by the Voting Agreement, Stockholder will
have sole power of disposition with respect to shares of Company Common
Stock other than Existing Shares, if any, which become beneficially owned
by Stockholder and will have sole voting power with respect to the matters
set forth in Section 3.1 hereof and sole power to demand dissenter's or
appraisal rights, in each case with respect to all such shares, if any,
which become beneficially owned by Stockholder with no restrictions on such
rights, subject to any restrictions imposed by applicable federal
securities laws and the terms of this Agreement.
1.4 No Encumbrances. The Existing Shares and the certificates
representing such shares are now, and the Stockholder Shares and the
certificates representing such shares at all times during the term hereof will
be, held by Stockholder, free and clear of all claims, liens, charges, security
interests, proxies, voting trusts or agreements, understandings or arrangements
and any other encumbrances of any kind or nature whatsoever, except as otherwise
provided in this Agreement and except as set forth in the Voting Agreement.
Certificates representing the Existing Shares contain legends reflecting the
Voting Agreement and the restrictions on transfer of Existing Shares under the
Securities Act.
1.5 Brokers and Intermediaries. No broker, investment banker,
financial adviser or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Stockholder. It is agreed and acknowledged that the Company has retained
Wasserstein, Perrella & Co. in connection with the Offer and the Merger and the
transactions contemplated by the Merger Agreement.
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1.6 Reliance. Stockholder understands and acknowledges that Parent
and Purchaser are entering into the Merger Agreement in reliance upon
Stockholder's execution and delivery of this Agreement with Parent.
2. Representations and Warranties of Parent. Parent hereby
represents and warrants to Stockholder as follows:
2.1 Organization; Authorization; Validity of Agreement. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and no other corporate proceedings on the
part of Parent are necessary to authorize this Agreement or any of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and constitutes a valid and binding obligation of Parent
enforceable against Parent in accordance with its terms, except that (a) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and (b)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
2.2 Consents and Approvals; No Violations. The execution, delivery
and performance of this Agreement by Parent shall not (a) conflict with or
result in any breach of the certificate of incorporation or by-laws of Parent,
(b) result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent is a party or by which
Parent or any of its properties or assets is bound or affected or (c) violate
any order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to Parent or any of Parent's properties or assets. Except as
provided in the Merger Agreement, no consent, approval, order or authorization
of, or registration, declaration or filing with, or notice to, any state,
federal or foreign public body or authority is required by or with respect to
Parent in connection with the execution and delivery of this Agreement by Parent
or the consummation by Parent of any of the transactions contemplated by this
Agreement.
2.3 Broker and Intermediaries. No broker, finder, investment banker
or other Person or entity, other than Piper Jaffray & Co., is entitled in
connection with the transactions contemplated by the Merger Agreement to any
broker's commission, finder's fee, investment banker's fee or similar payment in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of Parent or Purchaser.
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2.4 Reliance. Parent understands and acknowledges that Stockholder
is entering into this Agreement in reliance upon Parent's execution and delivery
of this Agreement with Stockholder and upon Parent's and Purchaser's execution
of the Merger Agreement.
3. Agreement to Vote. Stockholder, solely in his capacity as a
stockholder and not as a director, officer or employee of the Company, hereby
agrees that, until the Termination Date (as defined in Section 9), at any
meeting of the stockholders of the Company, however called at which the
following matters are considered for a vote, Stockholder shall vote (or cause to
be voted) the Stockholder Shares (a) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance hereof and thereof; (b)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or this Agreement; and (c) except as specifically
requested or agreed to in writing by Parent in advance, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company; (ii) a sale,
lease or transfer of a material amount of assets of the Company or
reorganization, recapitalization, dissolution or liquidation of the Company; and
(iii)(A) any change in the majority of the board of directors of the Company;
(B) any change in the present capitalization of the Company or any amendment of
the Company's Certificate of Incorporation or By-Laws; (C) any other material
change in the Company's corporate structure or business; or (D) any other action
which is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone, discourage or adversely affect the Offer, the Merger or the
transactions contemplated by the Merger Agreement or this Agreement.
Stockholder shall not enter into any agreement with or grant any proxy to any
person or entity prior to the Termination Date to vote or give instructions in
any manner inconsistent with clauses (i), (ii) or (iii) of the preceding
sentence. The foregoing shall not limit or prohibit Stockholder from entering
into any agreement simultaneously with or after termination of this Agreement.
4. Certain Covenants of the Stockholder. Except in accordance with
the terms of this Agreement, Stockholder hereby agrees as follows:
4.1 Tender of Stockholder Shares. Stockholder agrees to tender and
sell to Purchaser all of the Stockholder Shares pursuant to and in accordance
with the terms of the Offer. Stockholder agrees that he shall deliver to the
depositary for the Offer, no later than the fifth Business Day (as defined
below) following the commencement of the Offer pursuant to Section 1.1 of the
Merger Agreement, a letter of transmittal together with any and all certificates
representing the Stockholder Shares owned by him (or such documentation as
required by the terms of the Offer with respect to lost stock certificates).
Notwithstanding
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any term of the Offer to the contrary, Stockholder agrees not to withdraw any
Stockholder Shares tendered into the Offer pursuant to this Section 4.1 during
the term of this Agreement. Stockholder hereby acknowledges and agrees that
Purchaser's obligation to accept for payment the Stockholder Shares in the Offer
is subject to the terms and conditions of the Offer. Stockholder hereby permits
Parent and Purchaser to publish and disclose in the Offer Documents (including,
without limitation, all documents and schedules filed with the SEC), the
identity of the Stockholder (subject, however, to the prior approval of
Stockholder which approval shall not be unreasonably withheld or delayed) and
the nature of his commitments, arrangements and understandings under this
Agreement. Notwithstanding anything in this Agreement to the contrary, the
foregoing shall not restrict a Stockholder from taking actions in his capacity
as a director, officer or employee of the Company to the extent and in the
circumstances permitted by the Merger Agreement or as required by applicable law
or by his fiduciary duty as a director, officer or employee of the Company. For
purposes of this Agreement, "Business Day" shall mean a day on which banks are
not required or authorized to be closed in the City of New York.
4.2 No Solicitation. Prior to the Termination Date, Stockholder
shall not (directly or indirectly through advisors, agents or other
intermediaries), (a) solicit or initiate inquiries, proposals or offers from any
Person (other than Parent or any of its affiliates) relating to any Takeover
Proposal or (b) in connection with any of the foregoing, enter into or
participate in any discussions (knowingly) or negotiations or furnish to any
other Person any information with respect to the business, properties or assets
of the Company or any of its Subsidiaries; provided, however, that the foregoing
shall not restrict Stockholder as a director, officer or employee of the Company
from taking actions in any such capacity to the extent and in the circumstances
permitted by the Merger Agreement or as required by applicable law or his
fiduciary duties as such director, officer or employee. If Stockholder receives
any inquiry or proposal, in his capacity as a Stockholder and with respect to
the Stockholder Shares, then Stockholder promptly shall inform Parent of the
terms and conditions, if any, of such inquiry or proposal and the identity of
the person making it. Stockholder immediately will cease and cause his
advisors, agents and other intermediaries to cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing.
4.3 Restriction on Transfer, Proxies and Non-Interference;
Restriction on Withdrawal. Prior to the Termination Date, Stockholder shall not
directly or indirectly: (a) except pursuant to the terms of the Offer and the
Merger Agreement, and to Parent pursuant to this Agreement, offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
enforce or permit the execution of the provisions of any redemption agreement
with the Company or enter into any contract, option or other binding agreement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, or other disposition of, or exercise any
discretionary powers to distribute, any or all of the Stockholder Shares owned
by him or any interest therein; (b) except as contemplated hereby, grant any
proxies or powers of attorney with respect to any
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<PAGE>
Stockholder Shares, deposit any Stockholder Shares into a voting trust or enter
into a voting agreement with respect to any Stockholder Shares; or (c) take any
action that would make any representation or warranty of Stockholder contained
herein untrue or incorrect in any material respect or have the effect of
preventing or disabling Stockholder from performing its obligations under this
Agreement. Anything to the contrary in this Agreement notwithstanding,
Stockholder may sell, dispose of and/or transfer all or any portion of the
Stockholder Shares for tax, securities or estate planning purposes, for
charitable donation purposes or to any Section 501(c)(3) organization as long as
the purchaser or transferee of such Stockholder Shares under this subsection
agrees to be bound by the provisions of and becomes a party to this Agreement.
4.4 Waiver of Appraisal and Dissenter's Rights. Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that
Stockholder may have.
5. Third Party Business Combination.
If (a) the Merger Agreement is terminated in accordance with Section
8.1(f)(ii) or Section 8.1(h) of the Merger Agreement, (b) within three months
after the Merger Agreement is terminated, a contract or agreement relating to a
Third Party Business Combination, as defined below, is entered into and (c)
Stockholder receives, within twelve months after the Merger Agreement is
terminated, from any Person (other than Parent, Purchaser or any of their
affiliates) any cash or non-cash consideration in an amount per share greater
than $16.00 (the "Third Party Consideration") in respect of any sale or
disposition of all or any portion of the Stockholder Shares in connection with
and as part of a Third Party Business Combination, then Stockholder within two
(2) Business Days of receipt thereof shall pay to Parent or its designee an
aggregate amount equal to fifty percent (50%) of (A) the excess of the Third
Party Consideration over $16.00 multiplied by (B) the number of Stockholder
Shares with respect to which such Third Party Consideration was received;
provided that, (x) if the consideration received by Stockholder shall be
securities listed on a national securities exchange or traded on the NASDAQ
National Market ("NASDAQ"), the per share value of such consideration shall be
equal to the closing price per share listed on such national securities exchange
or NASDAQ National Market on the date such transaction is consummated, (y) if
the consideration received by Stockholder shall be in a form other than such
listed securities, the per share value shall be determined as of the date such
transaction is consummated in good faith by Parent or its designee and the
Stockholder or his designee or if the Parent and its designee and Stockholder
and his designee cannot reach agreement, by a nationally recognized investment
banking firm reasonably acceptable to the parties and (z) Stockholder will pay
Parent or its designee in kind and on a pro rata basis (i.e., if the Third Party
Consideration includes cash, listed securities and/or other consideration,
Parent or its designee will receive its pro rata portion of each such item).
The term "Third Party Business Combination" means the occurrence of any of the
following events: (i) the Company or any Subsidiaries whose assets constitute
all or substantially all of
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<PAGE>
the business or assets of the Company is acquired by merger or otherwise by any
person or group, other than Parent or any affiliate thereof (a "Third Party");
(ii) the sale to a Third Party of all or substantially all of the business or
assets of the Company and its Subsidiaries, taken as a whole; and (iii) the
Company, or Stockholder and Co-Stockholder enter into a merger or other
agreement with a Third Party which contemplates, in a single transaction or
series of related transactions, the acquisition of all or substantially all of
the Stockholder Shares and the Shares owned by the Co-Stockholder.
6. Further Assurances. From time to time, at any other party's
reasonable request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further action
as may be necessary to consummate and make effective the transactions
contemplated by this Agreement.
7. Certain Events. Stockholder agrees, to the extent permitted by
applicable law, that this Agreement and the obligations hereunder shall attach
to all Stockholder Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of such Stockholder Shares shall pass,
whether by operation of law or otherwise.
8. Stop Transfer. Except in connection with transfers permitted
under Section 4.3, Stockholder agrees with, and covenants to Parent that it
shall not request that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of the
Stockholder Shares.
9. Termination. All obligations of Stockholder under this
Agreement, except for the obligations under Section 5 above (which obligations
will only survive for the period set forth therein), shall terminate upon the
first to occur of (a) the acceptance for payment of Stockholder Shares in the
Offer, (b) the Effective Time of the Merger and (c) the time the Merger
Agreement is terminated in accordance with its terms (such earlier time being
the "Termination Date").
10. Miscellaneous.
10.1 Entire Agreement; Assignment. This Agreement (a) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (b)
shall not be assigned by operation of law or otherwise without the prior written
consent of the other parties, provided that Parent may assign, in its sole
discretion, its rights and obligations hereunder to any affiliate of Parent, but
no such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
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<PAGE>
10.2 Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
10.3 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
(a) if to Parent, to
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, Minnesota 55303
Telephone: (612) 576-4200
Telecopy: (612) 576-4297
Attention: William J. McMahon
with a copy to
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Telephone: (212) 603-2000
Telecopy: (212) 603-2001
Attention: Leonard Gubar, Esq.
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<PAGE>
(b) if to the Stockholder, to
Charles S. Meyer
Three First National Plaza, #5710
Chicago, IL 60602
Telephone: (312) 236-7041
Telecopy: (312) 236-0720
Attention:
with a copy to:
Barack Ferrazzano Kirschbaum
Perlman & Nagelberg
333 West Wacker Drive
Suite 2700
Chicago, Illinois 60606
Telephone: (312) 984-3100
Telecopy: (312) 984-3150
Attention: David Selmer, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
10.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
10.5 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
10.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
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<PAGE>
10.7 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
10.8 Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
10.9 Definitions. For purposes of this Agreement:
(a) "beneficially own" or "beneficial ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act). Except as otherwise
referred to herein, without duplicative counting of the same securities by the
same holder, securities beneficially owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" as described in Section 13(d)(3) of the Exchange Act.
(b) "Person" shall mean an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity.
(c) In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Stockholder Shares" shall be deemed to refer to and include the Stockholder
Shares as well as all such stock dividends and distributions and any shares into
which or for which any or all of the Stockholder Shares may be changed or
exchanged.
10.10 Stockholder Capacity. Notwithstanding anything in this
Agreement to the contrary, if and to the extent that Stockholder is or becomes
during the term hereof a director, officer or employee of the Company,
Stockholder makes no agreement or understanding herein in his or her capacity as
such director, officer or employee, and the agreements set forth herein shall in
no way restrict any director, officer or employee of the Company in the exercise
of his or her fiduciary duties as such director, officer or employee of the
Company. Stockholder has executed this Agreement solely in his capacity as the
record and/or beneficial holder of Stockholder Shares. To the extent that the
Company or its directors, officers, or agents are permitted to engage in
discussions or negotiations with
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<PAGE>
respect to any Takeover Proposal (or any inquiry or proposal with respect
thereto) pursuant to the Merger Agreement, Stockholder, in his capacity as such,
also shall be entitled, notwithstanding anything to the contrary contained in
this Agreement, to participate in such discussions and negotiations, including
without limitation, with respect to Existing Shares and the Stockholder Shares
and the related matters subject to this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By:
------------------------------
Name:
Title:
---------------------------------
Charles S. Meyer
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<PAGE>
Exhibit (c)(4)
DEFLECTA-SHIELD CORPORATION
1800 North Ninth Street
Indianola, IA 50125
October 31, 1997
PERSONAL AND CONFIDENTIAL
Harvest Partners, Inc.
767 Third Avenue
New York, New York
Attn: Ira D. Kleinman
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, Minnesota 55303
Ladies and Gentlemen:
Deflecta-Shield Corporation, a Delaware corporation ("Deflecta") and Lund
International Holdings, Inc. ("Lund"; each of Deflecta and Lund also being
referred to as a "Company" and together as the "Companies") each have expressed
an interest in exploring a significant transaction involving the two companies
(a "Transaction"). In order to allow the Companies to evaluate a possible
Transaction, each would like the other to deliver certain information about
itself. The Companies agree that certain of such information is confidential and
that damage could result if such information were disclosed to a third party or
used for purposes other than to evaluate a possible Transaction. The Companies
have further agreed to certain other matters respecting their respective due
diligence and their conduct should a Transaction not be consummated and
otherwise.
For purposes of this agreement, the following terms will have the
following meanings: (a) "Disclosing Party" -- Deflecta or Lund and its
respective subsidiaries, as applicable, when it is disclosing information to the
other; and (b) "Receiving Party" -- Deflecta or Lund and its respective
subsidiaries, as applicable, when it is receiving information from the other.
For purposes of this agreement, all information concerning the Disclosing
Party to be provided to a Receiving Party or its employees, agents, advisors or
other representatives (including, without limitation, lawyers, accountants,
consultants and investment bankers or advisors), or subsidiaries or affiliates,
or prospective financing sources (collectively, ""Representatives," which term
shall include, without limitation, with respect to Lund, Harvest Partners, Inc.
("Harvest")), together with any other information respecting the Disclosing
Party, or its subsidiaries or affiliates, which has already been provided to a
Receiving Party or its Representatives (whether prepared by
<PAGE>
Harvest Partners, Inc.
Lund International Holdings, Inc.
October 31, 1997
Page 2
a Company, its agents, advisors or otherwise and irrespective of the form of
communication), is hereafter collectively referred to as the "Confidential
Material." The term "Confidential Material" also includes all notes, analyses,
compilations, studies, interpretations or other material prepared by the
Receiving Party or its Representatives containing or based, in whole or in part,
on any Confidential Material furnished by a Company or its representatives.
The term "Confidential Material" does not include information which (i)
was or becomes generally available to the public other than as a result,
directly or indirectly, of any disclosure by the Receiving Party or its
Representatives in violation of the terms hereof; (ii) was or becomes available
to the Receiving Party or its Representatives on a nonconfidential basis from a
source other than the Disclosing Party or its Representatives, provided that
such source is not to the knowledge of the Receiving Party or the knowledge of
its Representatives (x) bound by a confidentiality agreement with the Disclosing
Party or (y) otherwise prohibited from transmitting the information to the
Receiving Party by a contractual, legal or fiduciary obligation; or (iii) was
within the Receiving Party's possession prior to its being furnished to the
Receiving Party or its Representatives by or on behalf of the Disclosing Party,
provided that the source of such information was not known by it or its
Representatives to be bound by a confidentiality agreement with the Disclosing
Party, or to be otherwise prohibited from transmitting the information to the
Receiving Party by a contractual, legal or fiduciary obligation.
Each of the Companies desires to maintain the confidentiality of the
Confidential Material and is making it available to the other and its
Representatives only upon the terms and conditions set forth below. In
consideration of the opportunity to review the Confidential Material, each of
the Companies and Harvest hereby agrees for itself and its Representatives with
respect to the Confidential Information of the other or of the Company other
than the one of which it is an affiliate, and otherwise, as follows:
1. Not to use for any purpose any portion of the Confidential
Material except to evaluate a possible Transaction.
2. Not to disclose to any person any portion of the Confidential
Material except to its Representatives who need to know such information
for the purpose of evaluating a possible Transaction and who, prior to
being provided with the Confidential Material, shall be advised by the
Receiving Party of this agreement and shall agree to comply with the terms
hereof (and you shall cause them to so comply) to the same extent as if
they were parties hereto. Each Receiving Party shall maintain a list of
those Representatives to whom Confidential Information is disclosed, which
list will be available to the Disclosing Party upon request.
<PAGE>
Harvest Partners, Inc.
Lund International Holdings, Inc.
October 31, 1997
Page 3
3. Lund and Harvest agree not to disclose to any person except to
Lund's Representatives (i) that this agreement exists or that the
Confidential Material has been made available to them, (ii) the fact that
discussions or negotiations are taking place concerning a possible
Transaction, and (iii) any of the terms, conditions, or other facts with
respect to such possible Transaction, including the status thereof or the
termination of discussions with respect thereto, unless in the opinion of
its counsel disclosure is required to be made under the Securities Act of
1933, the Securities Exchange Act of 1934 or the corporate governance
rules of or Lund's listing agreement with the National Association of
Securities Dealers, Inc. Stock Market, provided that if either of them
proposes to make any disclosure based upon the opinion of its counsel as
aforesaid it will advise and consult with Deflecta prior to such
disclosure concerning the information proposed to be disclosed. The term
"person" as used herein shall be interpreted broadly to include, without
limitation, any corporation, entity, partnership or individual and shall
also include members or representatives of the media.
4. Not to make copies of the Confidential Material, except as
necessary to assist in its investigation, and to use all reasonable and
prudent efforts to protect and safeguard the Confidential Material from
misuse, loss, theft, publication or the like.
5. To return promptly to the Disclosing Party all copies of the
Confidential Material provided to the Receiving Party or its
Representatives, without retaining, in whole or in part, any copy, extract
or other reproduction thereof, and to destroy any documents, analyses,
memoranda, notes and other writing it or its Representatives may have
prepared in connection therewith (i) in the event the Receiving Party or
one of its affiliates does not proceed with a Transaction within a
reasonable time or (ii) at any earlier time upon written notice from the
Disclosing Party. Any such destruction shall be certified in writing to
the Disclosing Party by an authorized officer supervising the same. The
Receiving Party and its Representatives will continue to be bound by their
obligations hereunder notwithstanding the return or destruction of the
Confidential Material.
6. Without the prior written consent of Deflecta, for a period of
eighteen months from the date hereof, Lund and its Representatives
(including present affiliates and persons who become affiliates in the
future) shall not, directly or indirectly, (i) acquire, offer to acquire,
or agree to acquire, by purchase or otherwise, any assets, businesses or
securities (including direct or indirect warrants, rights or options to
acquire any securities) of Deflecta; (ii) make any public announcement
with respect to, or submit any proposal for, a transaction between
Deflecta or any of its security holders and Lund and/or any of its
affiliates (including, without limitation, any tender or exchange offer,
merger or other business combination, whether or not any other parties are
also involved, directly or indirectly, in such
<PAGE>
Harvest Partners, Inc.
Lund International Holdings, Inc.
October 31, 1997
Page 3
proposal or transaction) unless such proposal is directed and disclosed
solely to the Board of Directors of Deflecta and Deflecta shall have
requested in writing in advance the submission of such proposal; (iii)
submit any proposals for the vote or consideration of shareholders, make,
or in any way participate in any "solicitation" of "proxies" to vote (as
such terms are used in the proxy rules of the Securities and Exchange
Commission) or seek to advise or influence any person or entity with
respect to the voting or not voting of, or giving or withholding of
consents with respect to, any voting securities of Deflecta; (iv) form,
join or in any way participate in a "group" within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, with respect
to any securities of the Company; (v) otherwise act, alone or in concert
with others, to seek to control or influence the management, Board of
Directors, policies or affairs of Deflecta, or seek representation on the
Board of Directors of Deflecta or (vi) initiate any communications with
any employee of Deflecta concerning the Confidential Material or any
possible transaction involving Deflecta, or solicit the employment of any
current or future employee of Deflecta. Lund and Harvest also agree during
such period not to request Deflecta (or its directors, officers, employees
or agents), directly or indirectly, to amend or waive any provision of
this paragraph, (including this sentence) or to take any action which
would require Deflecta to make a public announcement regarding a proposed
transaction or such request. For purposes of this paragraph, the term
"Deflecta" shall include Deflecta's affiliates. The foregoing restrictions
(i) shall terminate in the event Deflecta enters into an agreement
providing for the sale of all or substantially all of Deflecta's assets,
an acquisition of equity securities representing ownership of more than
50% of Deflecta's outstanding securities, any merger or other
extraordinary transaction involving Deflecta, or any material change in
Deflecta's capital structure, or makes any public announcement to the
effect that Deflecta is "for sale"; (ii) shall not preclude the
acquisition by Lund and its Representative (including present affiliates
and persons who become affiliates in the future) of up to 5% of Deflecta's
outstanding securities and (iii) shall not preclude any investment banking
firm retained by Lund from acting as dealer, underwriter or market maker
of Deflecta's securities in the ordinary course of business without a
control intent.
Deflecta hereby agrees that it will not disclose to any person except to
its Representatives the names of Harvest and Lund in connection with any
disclosure (i) that this agreement exists or that the Confidential Material has
been made available, (ii) that discussions or negotiations are taking place
concerning a possible Transaction or (iii) of any of the terms, conditions, or
other facts with respect to such possible Transaction, including the status
thereof or the termination of discussions, unless disclosure of such names is
required to be made under the Securities Act of 1933, the Securities Exchange
Act of 1934 or the corporate governance rules of or the Company's listing
agreement with the National Associates of Securities Dealers, Inc. Stock Market,
or disclosure of
<PAGE>
Harvest Partners, Inc.
Lund International Holdings, Inc.
October 31, 1997
Page 5
such names is requested or required by legal or regulatory process; provided
that if Deflecta proposes to make any such disclosure, it will use reasonable
efforts to advise and consult with Lund prior to such disclosure.
It is the responsibility of each Company to ensure that its
Representatives who are given access to the Confidential Material will be bound
by and will conduct their investigation in accordance with the terms of this
agreement. Each Company will be responsible for any breach of this agreement by
its Representatives and hereby agrees, at its sole expense, to take all
reasonable measures (including, but not limited to, court proceedings) to
restrain its Representatives from prohibited or unauthorized disclosure or use
of the Confidential Material.
If either Company or any or its Representatives is requested or required
(by oral questions, interrogatories, requests for information or documents in
legal proceedings, subpoenas, civil investigative demands or similar processes)
to disclose any Confidential Material, it is agreed that it will provide the
other Company with prompt notice of such request or requirement so that the
other Company may seek a protective order or other appropriate remedy and/or
waive your compliance with the provisions of this agreement. If in the absence
of a protective order or other remedy or the receipt of a waiver hereunder
either Company or any of its Representatives is, nonetheless, in the opinion of
its counsel, compelled under law to disclose information concerning the other
Company or else stand liable for contempt or suffer other censure or penalty, it
is further agreed that it will give the other Company written notice of the
information to be disclosed as far in advance as is practicable. Each Company
will cooperate with the other Company (at the other Company's expense) in
obtaining a protective order and confidential treatment for information
disclosed pursuant to this paragraph. Neither the Companies nor any of their
respective Representatives shall not be liable hereunder for disclosure pursuant
to the second preceding sentence.
Although each Company has endeavored to include in the Confidential
Material all information it believes to be relevant for the purpose of the other
Company's investigation, neither the Companies nor their respective affiliates
nor their Representatives make any representation or warranty as to the accuracy
or completeness of the Confidential Material, it being understood that only
those representations and warranties that may be made in a definitive written
agreement with respect to a transaction when, as and if executed and subject to
the limitations as may be specified therein, shall have any legal effect.
Accordingly, neither Company nor their affiliates nor their Representatives
shall have any liability to the other Company or its Representatives relating to
or resulting from the Confidential Material or any errors or omissions therein.
<PAGE>
Harvest Partners, Inc.
Lund International Holdings, Inc.
October 31, 1997
Page 6
If during the period beginning on the date of this Agreement and ending
on November 24, 1997 Deflecta or its Representatives, directly or indirectly,
shall contact or be contacted by any person (other than Lund or any subsidiary
or affiliate of Lund) with respect to a possible Acquisition Transaction and, in
such event, not later than December 23, 1997, the Board of Directors of Deflecta
shall authorize entry into, and Deflecta shall enter into a written agreement
providing for an Acquisition Transaction with such person or any subsidiary or
affiliate of such person, then Deflecta shall reimburse Lund by wire transfer
(not later than five business days after receipt of notice from Lund) for all
documented reasonable out-of-pocket fees and expenses up to $500,000 incurred by
or on behalf of Lund in connection with the transactions contemplated hereby,
including, without limitation, fees and expenses payable to investment bankers,
accountants and counsel, due diligence expenses and fees and expenses payable by
Lund to potential financing sources (in each case other than any fees payable by
Lund to Harvest); provided that Lund shall not be entitled to be so reimbursed
if (i) Lund fails to proceed in good faith (in light of the type of possible
Transaction under consideration and the terms considered in connection with
transactions of similar structure and size by potential parties thereto) with
respect to the negotiation of definitive documentation with respect to a
possible Transaction as previously discussed or (ii) Lund does not in good faith
use reasonable efforts to secure financing and complete its due diligence
investigation, in each case with respect to the possible Transaction as
previously discussed, in light of, among other things, the structure and terms
under consideration, then prevailing market conditions for similar transactions
and the respective financial conditions of Deflecta and Lund or (iii) a
definitive written agreement is entered into by Deflecta with Lund or any of its
subsidiaries or affiliates providing for an Acquisition Transaction.
"Acquisition Transaction" shall mean the acquisition of all or substantially all
of the assets of Deflecta or more than 50% of the voting power of Deflecta,
whether by merger, consolidation, share exchange, tender or exchange offer or
other similar transaction other than ordinary course trading of such securities.
It is understood and agreed that money damages would not be a sufficient
remedy for any breach of this agreement and that each Company, its affiliates or
any party described in paragraph numbered 6 above shall be entitled, without the
requirement of the posting of a bond or other security (which requirement is
hereby waived), to specific performance and injunctive or other equitable relief
as a remedy for any such breach. Such remedy shall not be deemed to be the
exclusive remedy for any such breach of this agreement but shall be in addition
to all other remedies available at law or equity. Each Company also agrees to
reimburse the other Company for all reasonable costs and expenses, including
reasonable attorney's fees, incurred by it in enforcing the obligations owed to
it hereunder.
Each party hereto hereby irrevocably and unconditionally submits to the
jurisdiction of any court sitting in Delaware or any federal court sitting in
Delaware for purposes of any suit, action or
<PAGE>
Harvest Partners, Inc.
Lund International Holdings, Inc.
October 31, 1997
Page 7
other proceeding arising out of this agreement (and each party agrees not to
commence any action, suit or proceeding relating thereto except in such courts)
and agrees that service of any process, summons, notice or document by U.S.
registered mail to its address set forth above or below shall be effective
service of process for any action, suit or proceeding brought against it in any
such court. Each party hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this agreement or of the transactions contemplated hereby, in the courts of
Delaware or any federal court sitting in Delaware and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
Each Company agrees that unless and until a definitive written agreement
with respect to any Transaction has been executed and delivered, neither Company
will be under any legal obligation of any kind whatsoever with respect thereto
except, in the case of this agreement, for the matters specifically agreed to
herein. The agreement set forth in this letter may be modified or waived only by
a separate writing by each party which expressly modifies or waives such
agreement.
Lund acknowledges and agrees that Deflecta reserves the right, in its sole
discretion, to reject any and all proposals made by Lund or any of its
Representatives regarding a proposed transaction and to terminate discussions
and negotiations with Lund and its Representatives at any time. Lund further
acknowledges that if the Board of Directors of Deflecta determines to pursue a
transaction, it may establish procedures and guidelines for the submission of
proposals with respect to any transaction with or involving Deflecta, its
affiliates or their respective securities, businesses or assets if and as it in
its sole discretion shall determine (including, without limitation, negotiating
with any other parties and entering into a definitive agreement without prior
notice to Lund, its Representatives or any other persons), and any procedures
relating to such process or transaction may be changed at any time without
notice to Lund, its Representatives or any other persons.
Each party hereto hereby acknowledges that it is aware and will advise its
Representatives who are informed as to matters which are the subject of this
agreement, that the United States securities laws prohibit any person who has
received from an issuer material, non-public information from purchasing or
selling securities of such issuer or from communicating such information to any
other person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities. Each party hereto further
acknowledges that it is aware of the provisions of the Insider Trading and
Securities Fraud Enforcement Act of 1988 and will take precautions adequate to
protect the interests of the other parties in that regard.
It is understood and agreed that no failure or delay by any party hereto,
its affiliates or any party described in paragraph number 6 above in exercising
any right, power or privilege hereunder
<PAGE>
Harvest Partners, Inc.
Lund International Holdings, Inc.
October 31, 1997
Page 8
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise of any right, power or privilege
hereunder.
In the event any provision of this agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this agreement shall not in any way be affected or impaired
thereby. The parties hereto acknowledge that the limitations on disclosure of
Confidential Material imposed by this agreement are reasonable and necessary for
the protection of the Companies' interests. If a court of competent jurisdiction
finally determines that any such limitation is unreasonable, each party hereby
submits to a reduction of such limitation so that it is enforceable against it
to the maximum extent permissible under law.
This agreement shall inure to the benefit of any purchaser of all or
substantially all of the assets of a Company as well as any person that may
acquire after the date hereof any subsidiary or division of a Company with
respect to Confidential Material concerning the business or affairs of such
subsidiary or division. This agreement amends, restates and supersedes the
agreement dated October 9, 1997 among the parties hereto.
This agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute the same
agreement.
This agreement shall be governed and construed in accordance with the laws
of the State of Delaware.
<PAGE>
Harvest Partners, Inc.
Lund International Holdings, Inc.
October 31, 1997
Page 9
If you are in agreement with the foregoing, please sign and return one
copy of this letter which will constitute our agreement with you and your
affiliates with respect to the subject matter of this letter. Should you have
any questions, please feel free to call Russell E. Stubbings, President and
Chief Executive Officer, at (515) 961-6100.
Very truly yours,
DEFLECTA-SHIELD CORPORATION
By: /s/ Ronald C. Fox
-------------------------
Name: Ronald C. Fox
Title: Vice President
ACCEPTED AND AGREED:
HARVEST PARTNERS, INC.
By: /s/ Ira D. Kleinman
--------------------------
Name: Ira D. Kleinman
Title: General Partner
LUND INTERNATIONAL HOLDINGS, INC.
By: /s/ Jay M. Allsup
--------------------------
Name: Jay M. Allsup
Title: CFO
