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FILE NO. 5-44017
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
AMENDMENT NO. 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)
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COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
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244764106
(CUSIP Number of Class of Securities)
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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
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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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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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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.
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(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.
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ITEM 2. IDENTITY AND BACKGROUND.
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(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.
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(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.
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ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
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(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.
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(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.
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(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.
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(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.
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ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
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(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.
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ITEM 10. ADDITIONAL INFORMATION.
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(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.
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(a)(1)(i) Offer to Purchase, dated November 28, 1997.*
(a)(1)(ii) Supplement, dated December 19, 1997, to Offer to Purchase
(a)(2) Letter of Transmittal.*
(a)(3) Letter for use by Brokers, Dealers, Banks, Trust Companies and Nominees.*
(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)(i) Agreement and Plan of Merger, dated as of November 25, 1997, by and among the
Parent, the Purchaser and the Company.*
(c)(1)(ii) Letter Agreement, dated December 18, 1997, among the Parent, the Purchaser and the
Company amending the Merger Agreement.
(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>
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* Previously filed.
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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: December 19, 1997
Zephyros Acquisition Corporation
By: /s/ WILLIAM J. MCMAHON
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Name: William J. McMahon
Title: President
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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: December 19, 1997
Lund International Holdings, Inc.
By: /s/ WILLIAM J. MCMAHON
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Name: William J. McMahon
Title: President
7
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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.
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THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
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November 28, 1997
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TABLE OF CONTENTS
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PAGE
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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
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SCHEDULE I--Directors and Executive Officers of the Parent and the Purchaser.
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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
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"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
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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. Each of such audited and unaudited financial statements is
specifically incorporated herein by reference. 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 Harvest
(as defined below), 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 LIH
Holdings II, LLC, a Delaware limited liability company ("LIH Holdings II") and
an affiliate of Harvest, pursuant to which, among the other things, the Parent
agreed to issue and sell to LIH Holdings II 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 excess, if any, of the Offer Price over the per Share exercise price of 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
cancel or terminate any material insurance policy naming it as a beneficiary or
loss payable payee without
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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 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
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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 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
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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 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
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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 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
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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 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.
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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 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
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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, 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
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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 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.
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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 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
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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.
Harvest and the Parent are parties to a Management Agreement pursuant to
which Harvest, among other things, provides the Parent with certain financial
and advisory services in consideration for an annual fee. As a result, Harvest
was made a party to the Confidentiality Agreement so that Harvest could analyze,
on behalf of the Parent, certain confidential information relating to the
Company and assist the Parent in structuring the Offer and the related Merger
Agreement. With the exception of the foregoing activities, Harvest has not been
involved, and will not otherwise become involved, in the Offer.
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
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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,
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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>
EXHIBIT (A)(1)(II)
SUPPLEMENT DATED DECEMBER 19, 1997 TO
OFFER TO PURCHASE DATED NOVEMBER 28, 1997 OF
ZEPHYROS ACQUISITION CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF
LUND INTERNATIONAL HOLDINGS, INC.
To the Holders of Common Stock
of Deflecta-Shield Corporation:
This Supplement amends and supplements the Offer to Purchase dated November
28, 1997 (and related documents) (collectively, the 'Offer to Purchase') of
Zephyros Acquisition Corporation, a Delaware corporation (the 'Purchaser') and a
wholly-owned subsidiary of Lund International Holdings, Inc., a Delaware
corporation (the 'Parent'), with respect to the tender offer made by the
Purchaser to purchase all of the outstanding shares of common stock, par value
$.01 per share (the 'Common Stock'), of Deflecta-Shield Corporation, a Delaware
corporation (the 'Company'), at a price of $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. Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Offer to Purchase.
1. The following subsection is hereby added to Section 8 of the Offer to
Purchase, 'Certain Information Concerning the Company,' immediately after the
subsection entitled 'Selected Financial Information':
Certain Company Projections. To the knowledge of the Parent and the
Purchaser, the Company does not, as a matter of course, make public forecasts as
to its future financial performance. However, in connection with discussions
concerning the Offer and the Merger, the Company furnished the Parent with
financial projections. These projections were prepared by the chief financial
officer of the Company, but without significant involvement on the part of the
Company's operating executives, managers, and site controllers. Consequently,
they may have been different if such other persons within the Company had been
consulted.
The Company's projections for 1997 anticipated net sales of approximately
$73.2 million, increasing to $79.9 million for 1998, $85.6 million for 1999 and
$91.8 million for 2000. Earnings before interest and taxes were projected to be
approximately $6.5 million for 1997, increasing to $10.1 million for 1998, $12.2
million for 1999 and $13.9 million for 2000. Net income was projected to be
approximately $3.5 million, resulting in estimated earnings of approximately
$0.73 per share, for 1997, increasing to net income of $5.8 million, or earnings
of $1.20 per share, for 1998, net income of $7.2 million, or earnings of $1.50
per share, for 1999, and net income of $8.4 million, or earnings of $1.74 per
share, for 2000.
The foregoing projections do not reflect recent developments which have
occurred since they were prepared, such as the Offer and the proposed Merger.
This reference to the projections is provided solely because such projections
have been provided to the Purchaser and neither the Purchaser, the Parent, nor
the Company believes that such projections should be relied upon.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS OR FORECASTS. THESE FORWARD-LOOKING STATEMENTS (AS THAT TERM IS
DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995) ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE PROJECTIONS. THE PROJECTIONS REFLECT NUMEROUS ASSUMPTIONS
AND WERE PREPARED BY THE CHIEF FINANCIAL OFFICER OF THE COMPANY, BUT WITHOUT
SIGNIFICANT INVOLVEMENT ON THE PART OF THE COMPANY'S OPERATING EXECUTIVES,
MANAGERS AND SITE CONTROLLERS. CONSEQUENTLY, THEY MAY HAVE BEEN DIFFERENT IF
SUCH OTHER PERSONS HAD
<PAGE>
BEEN CONSULTED. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE
IN PREPARING THE PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY BE
MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE PROJECTIONS. THE
INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT
ANY OF THE PARENT, THE PURCHASER, THE COMPANY OR THEIR RESPECTIVE AFFILIATES OR
REPRESENTATIVES CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A RELIABLE
PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED UPON AS
SUCH. NEITHER THE PARENT, THE PURCHASER, THE COMPANY NOR ANY OF THEIR RESPECTIVE
AFFILIATES OR REPRESENTATIVES HAS MADE, OR MAKES ANY REPRESENTATION TO ANY
PERSON REGARDING THE INFORMATION CONTAINED IN THE PROJECTIONS, AND NONE OF THEM
INTENDS TO UPDATE OR OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES
EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS
EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS
ARE SHOWN TO BE IN ERROR.
2. The following paragraph is hereby added to the subsection
"Confidentiality Agreement" set forth in Section 11 of the Offer to Purchase,
"Background of the Offer; Contacts with the Company; Purpose of the Offer and
the Merger; The Merger Agreement; The Stockholder Agreements; Certain Other
Agreements."
Harvest and the Parent are parties to a Management Agreement pursuant to
which Harvest, among other things, provides the Parent with certain financial
and advisory services in consideration for an annual fee. As a result, Harvest
was made a party to the Confidentiality Agreement so that Harvest could obtain
and analyze, on behalf of the Parent, certain confidential information relating
to the Company. Two of the seven directors of the Parent are principals of
Harvest, including one who serves as Chairman of the Board, in which capacity he
participated in negotiations with the Company. LIH Holdings II, an affiliate of
Harvest, will provide to the Parent the equity contribution which will be used
to finance a portion of the purchase price of the Shares in the Offer.
3. Subsequent to the mailing to stockholders of the Company of the Offer to
Purchase, President Clinton declared Friday, December 26, 1997, a federal
holiday. Pursuant to Rule 14e-1 promulgated by the Commission under the Exchange
Act, a tender offer must remain open for twenty business days from the date such
tender offer is first published or sent to securityholders. Rule 14d-1
promulgated by the Commission under the Exchange Act provides that a 'business
day' does not include a federal holiday. ACCORDINGLY, THE EXPIRATION DATE OF THE
OFFER IS HEREBY BEING EXTENDED TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY,
DECEMBER 29, 1997. All references to the Expiration Date of the Offer contained
in the Offer to Purchase (and all related documents) are hereby revised to give
effect to the foregoing.
<PAGE>
Exhibit (c)(1)(ii)
December 18, 1997
Deflecta-Shield Corporation
1275 Sherman Drive
Longmont, CO 80502
1. Reference is made to the Agreement and Plan of Merger among Lund
International Holdings, Inc., Zephyros Acquisition Corporation and
Deflecta-Shield Corporation, dated as of November 25, 1997 (the "Merger
Agreement"). Terms that are defined terms in the Merger Agreement shall have
the same meaning when used herein unless otherwise specifically stated.
2. The second sentence of Section 2.4 of the Merger Agreement hereby
is amended to read in its entirety as follows: "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 excess,
if any, of the Offer Price over the per Share exercise price of such Option or
Trailmaster Option."
3. Except as herein stated the Merger Agreement shall continue in
full force and effect.
4. This letter 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.
Please indicate your agreement to the terms and conditions of this
letter agreement by executing it in the space provided below.
Lund International Holdings, Inc.
By:
-------------------------------------
Zephyros Acquisition Corporation
By:
-------------------------------------
Agreed to:
Deflecta-Shield Corporation
By:
-------------------------
