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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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THE RAYMOND CORPORATION
(NAME OF SUBJECT COMPANY)
THE RAYMOND CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $1.50 PER SHARE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
0007546881
(CUSIP NUMBER OF CLASS OF SECURITIES)
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PAUL J. STERNBERG, ESQ.
THE RAYMOND CORPORATION
20 SOUTH CANAL STREET
GREENE, NEW YORK 11378
(607) 656-2311
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS ON
BEHALF OF THE PERSON(S) FILING STATEMENT)
Copy to:
PHILIP T. RUEGGER III, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3954
(212) 455-2000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is The Raymond Corporation, a New York
corporation (the "Company"), and the address of its principal executive offices
is 20 South Canal Street, Greene, New York 13778. The title of the equity
securities to which this Solicitation/Recommendation Statement on Schedule 14D-9
(this "Statement") relates is the Common Stock, par value $1.50 per share (the
"Common Stock"), of the Company, including the associated common share purchase
rights (the "Rights") issued pursuant to the Rights Agreement, dated as of March
1, 1997 (as amended, the "Rights Agreement"), between the Company and American
Stock Transfer & Trust Company, as Rights Agent. Unless the context otherwise
requires, references herein to the Shares shall include the Common Stock
together with the associated Rights.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer (the "Offer") disclosed in a
Tender Offer Statement on Schedule 14D-1 dated June 20, 1997 (the "Schedule
14D-1") by Lift Acquisition Company, Inc., a New York corporation (the
"Offeror") and an indirect wholly owned subsidiary of BT Industries AB, a
corporation incorporated under the laws of Sweden ("Parent"), to purchase all
outstanding Shares at a price of $33.00 per share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated June 20, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which Schedule 14D-1, Offer to Purchase, Letter
of Transmittal and other documents, together with any supplements or amendments
thereto, are referred to herein collectively as the "Offer Documents").
According to the Schedule 14D-1, the principal executive offices of Parent
and the Offeror are located at Svarvargatan 8, SE-595-81, Mjolby, Sweden.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of June 16, 1997 (the "Merger Agreement"), among Parent, the Offeror and the
Company. A copy of the Merger Agreement is filed as Exhibit 1 to this Statement
and is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b) Except as set forth in this Item 3(b), to the knowledge of the Company,
as of the date hereof, there are no material contracts, agreements, arrangements
or understandings and no actual or potential conflicts of interest between the
Company or its affiliates and (i) the Company, its executive officers, directors
or affiliates or (ii) Parent or the Offeror or their respective executive
officers, directors or affiliates.
SEVERANCE AND RELATED MATTERS
Certain contracts, agreements, arrangements or understandings between the
Company and certain of its executive officers, directors and affiliates are
described in Annex B hereto and incorporated herein by reference.
DESCRIPTION OF AGREEMENTS AND SEVERANCE PROVISIONS
On March 24, 1997, at a special meeting of the Board of Directors of the
Company (the "Board"), in order to ensure the continued dedication and
objectivity of certain key executives and employees of the Company
("Executives") in the context of a potential change of control of the Company,
the Board authorized the Company to enter into an amended and restated
employment agreement with Mr. Ross K. Colquhoun (the "Employment Agreement") and
severance compensation arrangements ("Severance Agreements") with such
Executives. There are three types of severance arrangements, with the type of
agreement with each executive being determined by reference to a three-tiered
severance structure adopted by the Board: one Executive, Mr. Ross K. Colquhoun,
is party to the Employment Agreement which provides for certain severance
arrangements and there are four Tier II Severance Agreements and six Tier III
Severance Agreements. Copies of the forms of Mr. Colquhoun's Employment
Agreement and the Tier II and Tier III
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Severance Agreements are filed as Exhibits 2(a), 2(b) and 2(c) hereto,
respectively, and are incorporated herein by reference.
The agreements provide for certain severance benefits to those individuals
in the event of certain terminations of their employment following a Change in
Control (as defined below). The Employment Agreement has an indefinite term and
each of the Severance Agreements has a three-year term.
Mr. Colquhoun's Employment Agreement provides for payment of severance
benefits in the event of the termination of his employment by the Company (or
its successor) within three years following a Change in Control, termination at
the request of a potential purchaser and a Change in Control occurs within one
year or upon any termination of employment by him within 18 months following a
Change in Control.
Mr. Colquhoun's Employment Agreement provides for severance benefits
related to a Change in Control consisting of (i) a lump sum payment equal to
three times the sum of his base salary in effect on the event of termination and
his target annual bonus (or, if higher, the average of Mr. Colquhoun's actual
annual bonuses for the three fiscal years immediately preceding the event of
termination); (ii) a lump sum payment equal to Mr. Colquhoun's pro rata portion
of his target annual bonus for the fiscal year in which the event of termination
occurs; (iii) continued benefits, compensation and perquisites (including life,
medical, dental, travel, accident and disability insurance) for a period of
three years following the event of termination; (iv) retiree medical and life
insurance for the remainder of Mr. Colquhoun's life; and (v) a gross-up payment
for any excise taxes imposed on any "excess parachute payments" under the
Internal Revenue Code. In addition, upon an event of termination (i) the Company
will purchase an annuity contract (or fully pay and convert to an annuity any
life insurance policy then in effect) sufficient to pay to Mr. Colquhoun a
supplemental pension benefit as provided in the Employment Agreement, (ii) Mr.
Colquhoun will have the option of taking an actuarially reduced benefit under
such contract, (iii) the Company shall contribute such contract to a grantor
trust and (iv) any amounts transferred to the grantor trust will become payable
to Mr. Colquhoun to the extent necessary to provide him with a full supplemental
pension benefit.
The Tier II and Tier III Severance Agreements provide for payment of
severance benefits ("Severance") in the event of an Executive's termination of
employment by the Company (or its successor) without Cause (as defined below) or
by the Executive in certain circumstances, in either case, within three years
following a Change in Control.
The Tier II Severance Agreements provide for Severance consisting of (i) a
lump sum payment equal to the greater of (x) all salary and estimated bonus
payments that would have been payable to the Executive during the remainder of
the three-year period after the Change of Control, had no termination occurred
or (y) two times the sum of the Executive's base salary in effect immediately
prior to the termination and the Executive's target annual bonus (or, if higher,
the average of the Executive's actual annual bonuses for the three fiscal years
immediately preceding the year in which the termination occurred); (ii) a lump
sum payment equal to the Executives's pro rata portion of his target annual
bonus for the fiscal year in which the event of termination occurs; and (iii)
continued benefits (or equivalent payments) under the provisions of (x) any
stock option, restricted stock, pension and/or profit sharing plans or other
incentive compensation arrangements and (y) all medical, life insurance, split
dollar life insurance and other employee benefit plans, programs and
arrangements as if he were still employed during the remainder of the three-year
period after the Change of Control. In addition, upon a Change in Control, all
equity-based awards held by the Executive will fully vest, and such awards will
be fully exercisable pursuant to the terms of the plans under which such awards
were granted. Furthermore, following a Change in Control, the Company will pay
the Executive a stay bonus in the amount of an additional month's salary for
each month (up to a maximum of six months) that the Executive remains employed
by the Company following a Change in Control.
The Tier III Severance Agreements provide for Severance consisting of (i) a
lump sum payment equal to all salary and bonus payments that would have been
payable to the Executive during the remainder of the three-year period after the
Change of Control had no termination occurred and (ii) continued benefits (or
equivalent payments) under the provisions of (x) any stock option, restricted
stock, pension and/or profit sharing plans or other incentive compensation
arrangements and (y) all medical, life insurance, split dollar life
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insurance and other employee benefit plans, programs and arrangements as if he
were still employed during the remainder of the three-year period after the
Change of Control.
Payments and benefits under the Tier II and Tier III Severance Agreements
shall be limited to the extent necessary to ensure that such payments and
benefits will not constitute "excess parachute payments" under Section 280G of
the Internal Revenue Code of 1986, as amended, unless an Executive would realize
a greater net after tax benefit if no limitation were imposed.
Under the Tier II and Tier III Severance Agreements, the Executive may
resign from his employment and receive the applicable Severance upon the
occurrence of any of the following events: (i) a significant change in the
nature or scope of the Executive's authorities or duties, a reduction in total
compensation and/or benefits or the breach by the Company of any provision of
the Severance Agreement; or (ii) a reasonable determination by the Executive
that, as the result of a Change of Control and a change in circumstances
thereafter significantly affecting his position, he is unable to exercise the
authorities, powers, functions or duties attached to his position or (iii) a
failure by the Company to assign the Severance Agreement to its successors and
assigns.
Under the Tier II Severance Agreements, "Cause" means any material
misappropriation of funds or property of the Company by the Executive;
unreasonable and persistent neglect or refusal by the Executive to perform his
duties, which results in material harm to the Company; or conviction of the
Executive of a felony.
Under the Tier III Severance Agreements, "Cause" means gross misconduct or
willful and material breach of the Severance Agreement by the Executive.
Under the Employment Agreement and each Severance Agreement, a "Change in
Control" means a change of control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of the Severance Agreement or, if Item
6(e) is no longer in effect, any regulations issued by the Securities and
Exchange Commission (the "Commission") pursuant to the Exchange Act which serves
similar purposes; provided that, without limitation, a Change of Control shall
be deemed to have occurred if and when:
(i) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act) is or becomes a beneficial owner, directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) individuals who on the date the Employment Agreement or Severance
Agreement, as the case may be, constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors, or whose nomination for election by the shareholders of the
Company, was approved by a vote of a majority of the directors of the
Company then still in office who were either directors on the date of the
Employment Agreement or Severance Agreement, as the case may be, or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of the
Company then in office; or
(iii) the shareholders of the Company approve any transaction or
series of transactions under which the Company is merged or consolidated
with any other company, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) more
than 75% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger
or consolidation; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
In addition, under Mr. Colquhoun's Employment Agreement a Change of Control
shall also be deemed to have occurred if and when any person is or becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing 20% or more of a combined voting power of the Company's then
outstanding securities, and, at any time within twenty-four months after such
event, individuals who were members of the
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Board of Directors of the Company immediately prior to such event (but excluding
any individuals who constituted any part of such "person") shall not constitute
at least 75% of the Board of Directors of the Company.
Also at the March 24, 1997 special meeting of the Board, the Board
authorized the Company to adopt The Raymond Corporation 1996 Deferred Stock Unit
Plan for Non-Employee Directors (the "Directors Plan"). Under the Directors
Plan, as of May 22, 1996, a Deferred Stock Unit ("DSU") account was established
for each director of the Company who was not a current or former employee of the
Company (each a "Participant"), with the initial balance for each Participant
being equal to the net present value of the product of a $12,000 annual retainer
times each year of such Participant's prior service on the Board as of May 22,
1996, converted into equivalent DSUs by dividing such net present value by
$18 3/8. If a Change in Control (as defined above with respect to the Severance
Agreements) occurs or if any Participant is not re-elected to the Board as a
result of an actual or threatened proxy contest, any benefits or rights accrued
and unpaid to a Participant in the Directors Plan (whether or not the
Participant has terminated from the Board, if applicable, and whether or not
such benefits or rights are vested) shall be paid in a lump sum to such
Participant no later than 30 days after the date on which the Change in Control
or non-election occurs.
In addition, at the March 24, 1997 special meeting of the Board, the Board
authorized the Company to amend, and the Company so amended, The Raymond
Corporation 1970 Deferred Compensation Plan (the "Deferred Compensation Plan")
and The Raymond Corporation Stock Option Plan (1995) and The Raymond Corporation
Stock Option Plan (1991) (collectively, the "Stock Plans") to provide (i) with
respect to the Deferred Compensation Plan, that no later than 30 days after a
Change in Control (as defined above with respect to the Severance Agreements),
the Company will contribute assets in an amount equal to all amounts deferred
under the Deferred Compensation Plan to a grantor trust and that the Board shall
not amend, suspend or discontinue any deferred compensation account under the
Deferred Compensation Plan without the express written consent of the affected
participant and (ii) with respect to the Stock Plans, that upon a Change in
Control (as defined above with respect to the Severance Agreements), all
unexercised options awarded under the Stock Plans shall immediately vest and
that the Board shall not amend, suspend or discontinue any option under the
Stock Plans without the express written consent of the affected optionee.
Copies of the Directors Plan and the amendments to the Stock Plans and the
Deferred Compensation Plan are filed as Exhibits 2(e), 2(f), 2(g) and 2(h)
hereto, respectively, and are incorporated herein by reference.
MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE MERGER AGREEMENT.
THE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT
WHICH IS INCORPORATED HEREIN BY REFERENCE.
The Offer. The Merger Agreement provides that, subject to the terms and
conditions thereof, the Purchaser will commence the Offer. Parent and the
Offeror may waive any of the conditions described in Section 14, except that,
without the consent of the Company, Parent and the Offeror may not waive the
Minimum Condition. Parent and the Offeror have reserved the right to modify the
terms of the Offer, including, without limitation, to extend the Offer beyond
any scheduled expiration date; provided, however, that without the prior written
consent of the Company, the Offeror shall not (i) reduce the number of Shares to
be purchased in the Offer, (ii) reduce the Offer Price, (iii) modify or add to
the conditions of the Offer, (iv) change the form of consideration payable in
the Offer or (v) make any other change in the terms of the Offer that is
materially adverse to the holders of the Shares. Subject to the terms and
conditions set forth in the Merger Agreement (including the rights to terminate,
extend or modify the Offer) and the terms and conditions of the Offer, Parent
agrees to cause the Offeror to, and the Offeror agrees to use its reasonable
best efforts to, consummate the Offer.
In the Merger Agreement, the Company consented to the Offer and the Merger
and represented that (a) the Board has by unanimous vote (i) determined that
each of the Offer and the Merger is fair to and in the best interests of the
holders of Shares, (ii) approved the Offer and the Merger and adopted the Merger
Agreement in accordance with the provisions of New York Law, (iii) recommended
acceptance of the Offer
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and approval and adoption of the Merger Agreement by the shareholders of the
Company and (iv) taken all other action necessary to render (x) Section 912 of
the New York Law and other state takeover statutes, (y) Article SEVENTH of the
Company's Restated and Amended Certificate of Incorporation and (z) the Rights
Agreement inapplicable to the Offer and the Merger; and (b) Lehman Brothers has
delivered to the Board its opinion that the consideration to be received by the
holders of Shares pursuant to the Offer and the Merger is fair, from a financial
point of view, to holders of Shares, subject to the assumptions and
qualifications contained in such opinion. The Merger Agreement provides that the
Schedule 14D-9 shall contain such recommendations.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with New York Law, the Offeror shall be
merged with and into the Company as soon as practicable following the
fulfillment or waiver of the conditions set forth in the Merger Agreement which
are described below. Following the Merger, the separate corporate existence of
the Offeror will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation").
In the Merger, each Share then issued and outstanding (other than (i) any
Shares that are held by any subsidiary of the Company or in the treasury of the
Company, or which are held, directly or indirectly, by Parent, or any direct or
indirect subsidiary of Parent (including the Offeror), all of which Shares will
be cancelled and none of which shall receive any payment with respect thereto,
and (ii) Shares, if any, held by shareholders who perfect their appraisal rights
under New York Law) will by virtue of the Merger and without any action on the
part of Parent, the Offeror, the Company or the holder thereof, be cancelled and
converted into and represent the right to receive an amount in cash, without
interest, equal to the price paid for each Share pursuant to the Offer.
On the date and time on which the Merger becomes effective (the "Effective
Time"), each share of common stock, par value $0.01 per share, of the Offeror
then issued and outstanding will, by virtue of the Merger and without any action
on the part of Parent, the Offeror, the Company or the holder thereof, be
converted into one fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation.
The Merger Agreement provides that the respective obligations of Parent and
the Offeror, on the one hand, and the Company, on the other hand, to effect the
Merger are subject to the satisfaction or waiver (subject to applicable law) at
or prior to the Effective Time of each of the following conditions: (i) to the
extent required by applicable law, the Merger Agreement and the Merger shall
have been approved and adopted by holders of two-thirds of the outstanding
Shares entitled to vote in accordance with applicable law (if required by
applicable law) and the Company's Restated and Amended Certificate of
Incorporation and By-Laws; (ii) any waiting period (and any extension thereof)
under the HSR Act, applicable to the Merger shall have expired or been
terminated; (iii) the review periods, if applicable, under Section 721 of the
Defense Production of 1950, as amended ("Exon-Florio"), shall have expired or
have been terminated; (iv) no preliminary or permanent injunction or other order
shall have been issued by any court or by any governmental or regulatory agency,
body or authority which prohibits the consummation of the Offer or the Merger
and the transactions contemplated by the Merger Agreement and which is in effect
at the Effective Time; provided, however, that, in the case of a decree,
injunction or other order, each of the parties shall have used reasonable best
efforts to prevent the entry of any such injunction or other order and to appeal
as promptly as possible any decree, injunction or other order that may be
entered; (v) no statute, rule, regulation, executive order, decree or order of
any kind shall have been enacted, entered, promulgated or enforced by any court
or governmental authority which prohibits the consummation of the Offer or the
Merger or has the effect of making the purchase of the Shares illegal and (vi)
Offeror shall have purchased Shares pursuant to the Offer in a number sufficient
to satisfy the Minimum Condition.
The Board. The Merger Agreement provides that, promptly upon the
acceptance for payment of, and payment by the Offeror in accordance with the
Offer for, Shares equal to at least a two-thirds of the outstanding Shares
pursuant to the Offer, the Offeror shall be entitled to designate up to such
number of directors on the Board, rounded up to the next whole number, as will
give the Offeror, subject to compliance with Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder, representation on the Board
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equal to that number of directors which equals the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
this sentence) multiplied by a fraction, the numerator of which shall be the
number of Shares beneficially owned by Parent and the Offeror and the
denominator of which shall be the number of Shares then outstanding, and the
Company and Board shall, at such time, take any and all such action needed to
cause the Offeror's designees to be appointed to the Board (including using its
reasonable best efforts to cause directors to resign). Subject to applicable
law, the Company has agreed to take all action requested by Parent which is
reasonably necessary to effect any such election, including mailing to its
shareholders the information statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder; and the
Company agrees to make such mailing with the mailing of the Schedule 14D-9 so
long as Offeror shall have provided to the Company on a timely basis all
information required to be included in the information statement with respect to
the Offeror's designees.
The Merger Agreement provides that following the election or appointment of
such designees and prior to the Effective Time any amendment or termination of
the Merger Agreement or the Restated and Amended Certificate of Incorporation or
By-Laws of the Company, any termination of the Merger Agreement by the Company,
any extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or the Offeror or waiver of any of the
Company's rights thereunder, and any other consent or action by the Board under
the Merger Agreement, will require the concurrence of a majority (which shall be
at least two) of the directors of the Company then in office who are directors
on the date thereof and who voted to approve the Merger Agreement or were
designated by a majority of the directors of the Company who were directors on
June 16, 1997 and who voted to approve the Merger Agreement.
Shareholders' Meeting. Pursuant to the Merger Agreement, promptly
following the purchase of Shares pursuant to the Offer, if required by New York
Law in order to consummate the Merger, the Company has agreed that, acting
through the Board, it shall, in accordance with applicable law, duly call,
convene and hold a meeting of its shareholders (the "Shareholders' Meeting") for
the purpose of voting upon the Merger Agreement and the Merger and that the
Merger Agreement and the Merger shall be submitted at such meeting. The Merger
Agreement provides that if shareholder approval of the Merger is required by law
or by the Company's Restated and Amended Certificate of Incorporation or
By-laws, as promptly as practicable, following Parent's request, the Company
will prepare and file a preliminary proxy statement with the Commission and will
use its reasonable best efforts to respond to the comments of the Commission, if
any, in connection therewith and to furnish all information regarding the
Company required in the definitive proxy statement (including, without
limitation, financial statements and supporting schedules and certificates and
reports of independent public accountants). Promptly after the expiration or
termination of the Offer, if required by the New York Law in order to consummate
the Merger, the Company will cause the definitive proxy statement to be mailed
to the shareholders of the Company and, if necessary, after the definitive proxy
statement shall have been so mailed, promptly circulate amended, supplemental or
supplemented proxy material and, if required in connection therewith, resolicit
proxies. The Company has agreed in the Merger Agreement to use its reasonable
best efforts to solicit from its shareholders proxies, and shall take all other
action necessary and advisable, to secure the vote of shareholders required by
applicable law and the Company's Restated and Amended Certificate of
Incorporation and By-Laws to obtain the approval for the Merger Agreement.
Subject to the provisions of the Merger Agreement relating to the Company's
obligation, except under limited circumstances, not to solicit other offers, the
Company agrees that it will include in the proxy statement the recommendation of
the Board that holders of Shares approve and adopt the Merger Agreement and
approve the Merger. If the Offeror acquires at least two-thirds of the
outstanding Shares, the Offeror will have sufficient voting power to approve the
Merger, even if no other shareholder votes in favor of the Merger.
Interim Operations. The Merger Agreement provides that, except as
permitted, required or specifically contemplated by, or otherwise described in,
the Merger Agreement or otherwise consented to or approved in writing by Parent
(which consent or approval shall not be unreasonably withheld), during the
period commencing on the date of the Merger Agreement until such time as
nominees of Parent shall comprise two-thirds of the members of the Board or the
Merger Agreement shall have been terminated pursuant to the terms thereof, (a)
the Company and each of its subsidiaries will conduct their respective
operations only
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according to their ordinary course of business, consistent with past practice,
and will use their reasonable best efforts to preserve intact their respective
business organization, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors, suppliers,
distributors, clients, joint venture partners, and others having significant
business relationships with them, (b) neither the Company nor any of its
subsidiaries shall (i) make any change in or amendment to its Restated and
Amended Certificate of Incorporation or By-Laws (or comparable governing
documents); (ii) issue or sell any shares of its capital stock (other than in
connection with the exercise of Options (as defined herein) outstanding on the
date of the Merger Agreement) or any of its other securities, or issue any
securities convertible into, or options, warrants or rights to purchase or
subscribe to, or enter into any arrangement or contract with respect to the
issuance or sale of, any shares of its capital stock or any of its other
securities, or make any other changes in its capital structure; (iii) sell or
pledge or agree to sell or pledge any stock owned by it in any of its
subsidiaries except pursuant to certain call options in respect of the capital
stock of certain of its dealership subsidiaries; (iv) declare, pay, set aside or
make any dividend (other than regular quarterly cash dividends of $.0625 per
Share) or other distribution or payment with respect to, or split, combine,
redeem or reclassify, or purchase or otherwise acquire any shares of its capital
stock or its other securities; (v) (A) enter into any contract or commitment
with respect to capital expenditures in excess of $1.0 million, individually, or
enter into contracts or commitments with respect to capital expenditures with a
value in excess of, or requiring expenditures by the Company and its
subsidiaries in excess of, $3.0 million, in the aggregate (B) acquire (by
merger, consolidation, or acquisition of stock or assets) any corporation,
partnership or other business or division thereof; or (C) enter into, amend,
modify, supplement or cancel any other material contract, (vi) except in the
ordinary course of business, consistent with past practice, acquire a material
amount of assets or securities or release or relinquish any material contract
rights; (vii) except in the ordinary course of business, consistent with past
practice, and except to the extent required under existing employee and director
benefit plans, agreements or arrangements as in effect on the date of the Merger
Agreement, increase the compensation or fringe benefits of any of its directors,
officers or employees, except for increases in salary or wages of employees of
the Company or its subsidiaries who are not officers of the Company in the
ordinary course of business in accordance with past practice, or grant any
severance or termination pay not currently required to be paid under existing
severance plans or enter into any employment, consulting or severance agreement
or arrangement with any present or former director, officer or other employee of
the Company or any of its subsidiaries (other than certain employment
contracts), or establish, adopt, enter into or amend or terminate any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees; (viii)
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of,
encumber or subject to any lien, any material assets or incur or modify any
indebtedness or other material liability, other than in the ordinary course of
business, or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for the obligations of any
person or, other than in the ordinary course of business consistent with past
practice, make any loan or other extension of credit; (ix) agree to the
settlement of any material claim or litigation; (x) make any material tax
election or settle or compromise any material tax liability; (xi) permit any
insurance policy naming it as beneficiary or a loss payable payee to be
cancelled without notice to Parent; (xii) except as required by applicable law
or generally accepted accounting principles, make any material change in its
method of accounting; (xiii) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries not constituting an
inactive subsidiary (other than the Merger); or (xiv) agree, in writing or
otherwise, to take any of the foregoing actions; and (c) the Company shall not,
and shall not permit any of its subsidiaries to, (i) take any action, engage in
any transaction or enter into any agreement which would cause any of the
representations or warranties contained in the Merger Agreement to be untrue as
of the Closing Date, or (ii) purchase or acquire, or offer to purchase or
acquire, any shares of capital stock of the Company.
No Solicitation. The Merger Agreement provides that the Company and its
affiliates and each of their respective officers, directors, employees,
representatives and agents shall immediately upon the execution of the Merger
Agreement cease any discussions or negotiations with any other parties that may
be ongoing with respect to any Acquisition Proposal (as defined below). Neither
the Company nor any of its affiliates shall,
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directly or indirectly, take (and the Company shall not authorize or permit its
affiliates, officers, directors, employees, representatives, consultants,
investment bankers, attorneys, accountants or other agents or affiliates to so
take) any action to (i) encourage, solicit or initiate the making of any
Acquisition Proposal, (ii) enter into any agreement with respect to any
Acquisition Proposal or (iii) participate in any way discussions or negotiations
with, or furnish or disclose any information to, any person or entity (other
than Parent or the Offeror) in connection with, or take any other action to
facilitate, any inquiries or the making of any proposal (including without
limitation by taking any action that would make the Rights Agreement, Section
912 of New York Law or the provisions of Article SEVENTH of the Company's
Restated and Amended Certificate of Incorporation inapplicable to an Acquisition
Proposal) that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal, provided, however, that the Company, in response to an
unsolicited Acquisition Proposal and in compliance with certain disclosure
obligations contained in the Merger Agreement, as more fully described in the
next succeeding paragraph, may participate in discussions or negotiations with
or furnish information to any third party which proposes a transaction which the
Board reasonably determines will result in a Superior Proposal (as defined
below) if the Board believes (and has been advised by independent outside
counsel) that failing to take such action would constitute a breach of its
fiduciary duties. In addition, neither the Board nor any committee thereof shall
(x) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or the Offeror the approval and recommendation of the Offer and the
Merger Agreement or (y) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal, provided that the Company may recommend to
its shareholders an Acquisition Proposal and in connection therewith withdraw or
modify its approval or recommendation of the Offer or the Merger if (i) the
Board has determined that the Acquisition Proposal is a Superior Proposal, (ii)
all the conditions to the Company's right to terminate the Merger Agreement in
accordance with the terms thereof have been satisfied (including the expiration
of the three business day period described therein and the payment of the
Termination Fee (as defined below) and all other amounts required pursuant to be
paid pursuant thereto) and (iii) simultaneously with such withdrawal,
modification or recommendation, the Merger Agreement is terminated in accordance
with its terms.
In addition to the obligations of the Company set forth in the preceding
paragraph, on the date of receipt thereof, the Company has agreed, pursuant to
the Merger Agreement, to advise Parent of any request for information or of any
Acquisition Proposal, or any inquiry or proposal with respect to any Acquisition
Proposal, the material terms and conditions of such request or Acquisition
Proposal, and the identity of the person making any such request or Acquisition
Proposal. The Company has further agreed to keep Parent fully informed of the
status and details (including amendments or proposed amendments) of any such
request or Acquisition Proposal and keep Parent fully informed as to the details
of any information requested of or provided by, the Company and as to the
details of all discussions or negotiations with respect to any such request,
takeover proposal or inquiry.
"Acquisition Proposal", as used herein, shall mean any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition or purchase
of a substantial amount of assets of the Company or any of its subsidiaries or
of over 10% of any class of equity securities of the Company or any of its
subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 10% or more of any class of equity
securities of the Company or any of its subsidiaries, any merger, consolidation,
business combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its subsidiaries, other than the transactions contemplated by the Merger
Agreement, or any other transaction the consummation of which could reasonably
be expected to impede, interfere with, prevent or materially delay the Offer or
the Merger or which would reasonably be expected to dilute materially the
benefits to Parent of the transactions contemplated by the Merger Agreement. As
used herein, "Superior Proposal" shall mean a bona fide proposal made by a third
party to acquire all of the outstanding shares of the Company pursuant to a
tender offer, a merger or a sale of all of the assets of the Company (x) on
terms which a majority of the members of the Board determines in its good faith
reasonable judgment (based on the advice of independent outside financial and
legal advisors) to be more favorable to the Company and its shareholders than
the transactions contemplated by the Merger Agreement and (y) for which
financing is then available (it being understood that financing evidenced by
highly confident letters and similar letters shall not be considered "available"
for purposes making such
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determination). Any actions permitted under, and taken in compliance with, this
provision of the Merger Agreement shall not be deemed a breach of any other
covenant or agreement of such party contained in the Merger Agreement.
Directors' and Officers' Insurance and Indemnification. Parent has agreed
in the Merger Agreement that the certificate of incorporation and the by-laws of
the Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the Company's
Restated and Amended Certificate of Incorporation and By-Laws on the date of the
Merger Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals, who, on or prior to
the Effective Time, were directors, officers, employees or agents of the
Company, unless such modification is required by law. In addition, pursuant to
the Merger Agreement, the Surviving Corporation shall for the six year period
commencing on the Effective Time either (x) maintain in effect the Company's
current directors' and officers' liability insurance policy covering those
persons who are were covered on the date of the Merger Agreement by the
Company's directors' and officers' liability insurance policy (the "Indemnified
Parties"); provided, however, that in no event shall Parent be required to
expend in any one year an amount in excess of 150% of the annual premiums paid
by the Company for such insurance; provided further, that if the annual premiums
of such insurance coverage exceed such amount, the Surviving Corporation shall
be obligated to obtain a policy with the greatest coverage available for a cost
not exceeding such amount; and provided further, that the Surviving Corporation
may substitute for such Company policies, policies with at least the same
coverage containing terms and conditions which are no less advantageous and
provided that said substitution does not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time or (y)
cause the Parent's directors' and officers' liability insurance then in effect
to cover those persons who are covered on the date of the Merger Agreement by
the Company's directors' and officers' liability insurance policy with respect
to those matters covered by the Company's directors' and officers' liability
policy.
Compensation and Benefits. Parent has agreed that, until the first
anniversary of the Effective Time, (a) Parent shall ensure that all employees
and officers of the Company receive compensation and benefits in the aggregate
substantially comparable to the compensation and benefits received by such
individuals immediately prior to the date of the Merger Agreement and (b) Parent
shall keep in effect all severance policies that are applicable to employees and
officers of the Company immediately prior to the date of the Merger Agreement.
In addition, Parent has agreed pursuant to the Merger Agreement that, following
the Effective Time, (w) Parent will ensure that no employee welfare benefit plan
adopted by the Company shall have any preexisting condition limitations, (x)
Parent shall honor all premiums and deductibles paid by the employees, officers
and directors of the Company under all Employee Benefit Plans (as defined in the
Merger Agreement) up to (and including) the Effective Time, (y) for purposes of
eligibility and vesting, Parent shall honor all service credit accrued by the
employees, officers and directors of the Company under all Employee Benefit
Plans up to (and including) the Effective Time and (z) Parent will honor all
employment contracts with employees and officers and all contracts for services
rendered with directors of the Company.
Options. Pursuant to the Merger Agreement, prior to the Effective Time,
each of the Board (or, if appropriate, any committee thereof) and the Company
shall use its reasonable best efforts to obtain the consent of the holders of
stock options to purchase Shares (the "Options") granted prior to the date of
the Merger Agreement under any stock option plan of the Company (the "Stock
Plans") to provide for the cancellation, effective at the Effective Time, of all
the outstanding Options as follows: Immediately prior to the Effective Time,
each Option, whether or not then vested or exercisable, shall no longer be
exercisable for the purchase of Shares but shall entitle each holder thereof, in
cancellation and settlement therefor, to payments in cash (subject to any
applicable withholding taxes, the "Cash Payment"), at the Effective Time, equal
to the product of (x) the total number of Shares subject to such Option as to
which such Option could have been exercisable and (y) the excess of the Merger
Consideration over the exercise price per Share subject to such Option, each
such Cash Payment to be paid to each holder of an outstanding Option at the
Effective Time. Pursuant to the Merger Agreement, all Stock Plans shall
terminate as of the Effective Time and the provisions in any other Employee
Benefit Plan providing for the issuance, transfer or grant of any capital stock
of the Company or any interest in respect of any capital stock of the Company
shall be deleted as of the Effective Time.
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The Company has agreed to use its reasonable best efforts to ensure that
any outstanding stock appreciation rights or limited stock appreciation rights
shall be cancelled as of immediately prior to the Effective Time without any
payment therefor. As provided in the Merger Agreement, the Stock Plans and any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any subsidiary
shall terminate as of the Effective Time.
Agreement to Use Reasonable Best Efforts. Pursuant to the Merger Agreement
and subject to the terms and conditions thereof, each of the Company, Parent and
the Offeror shall, and the Company shall cause each of its subsidiaries to,
cooperate and use their respective reasonable best efforts to take, or cause to
be taken, all appropriate action, and to make, or cause to be made, all filings
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by the Merger
Agreement, including, without limitation, their respective reasonable best
efforts to obtain, prior to the closing date of the Merger, all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company and its
subsidiaries as are necessary for consummation of the transactions contemplated
by the Merger Agreement and to fulfill the conditions to the Offer and the
Merger; provided, however, that no loan agreement or contract for borrowed money
shall be repaid except as currently required by its terms, in whole or in part,
and no contract shall be amended to increase the amount payable thereunder or
otherwise to be more burdensome to the Company or any of its subsidiaries in
order to obtain any such consent, approval or authorization without first
obtaining the written approval of Parent or the Offeror.
In addition, the Merger Agreement provides that Parent, the Offeror and the
Company will (i) take promptly all actions necessary to make the filings
required of Parent, the Offeror or any of their affiliates under the applicable
Antitrust Laws (as defined below), (ii) comply at the earliest practicable date
with any request for additional information or documentary material received by
Parent, the Offeror, the Company or any of their affiliates from the Federal
Trade Commission (the "FTC") or the Antitrust Division and (iii) cooperate with
one another in connection with any filing under applicable Antitrust Laws and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by the Merger Agreement commenced by any of the FTC,
the Antitrust Division of the Department of Justice or state attorneys general.
Parent, the Offeror and the Company shall in addition each use all reasonable
best efforts to resolve such objections, if any, as may be asserted with respect
to the transactions contemplated by the Merger Agreement under any Antitrust
Law.
"Antitrust Laws" means the Sherman Act, as amended, the Clayton Act, as
amended, the HSR Act, the FTC Act, as amended, and all other federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
Real Property Transfer Taxes. Parent has agreed to pay any New York State
Real Estate Transfer Tax and New York City Real Property Transfer Tax (the
"Transfer Taxes") and any similar taxes in any other jurisdiction (and any
penalties and interest with respect to such taxes) that become payable in
connection with the Offer and the Merger, on behalf of the shareholders of the
Company. Parent and the Company have agreed to cooperate in the preparation,
execution and filing of any required returns with respect to such taxes
(including returns on behalf of the shareholders of the Company) and in the
determination of the portion of the consideration allocable to the real property
of the Company and the subsidiaries in New York State and City (or in any other
jurisdiction, if applicable). The shareholders of the Company shall be deemed to
have agreed to be bound by such allocation in the preparation of any return with
respect to the Transfer Taxes and any similar taxes, if applicable.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Offeror with
respect to, among other things, its organization, corporate authority,
capitalization, financial statements, public filings, conduct of business,
compliance with laws, consent and approvals, opinions of financial advisors,
vote required, undisclosed liabilities and the absence of any material adverse
changes in the Company since December 31, 1996.
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Termination. The Merger Agreement may be terminated and the transactions
contemplated thereby may be abandoned, at any time prior to the Effective Time,
whether before or after approval of the Merger by the Company's shareholders:
(a) by mutual consent of the Company, on the one hand, and of Parent and the
Offeror, on the other hand; (b) by either Parent, on the one hand, or the
Company, on the other hand, if any court of competent jurisdiction or any
governmental or regulatory agency shall have issued an order, decree or ruling
or taken any other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, Shares pursuant to
the Offer or the Merger and such order, decree or ruling or other action shall
have become final and nonappealable; (c) by Parent, on the one hand, or the
Company, on the other hand, if the Effective Time shall not have occurred within
180 days after commencement of the Offer (the "Outside Date") unless the
Effective Time shall not have occurred because of a material breach of any
representation, warranty, obligation, covenant, agreement or condition set forth
in the Merger Agreement on the part of the party seeking to terminate the Merger
Agreement; (d) by Parent if the Offer is terminated or expires in accordance
with its terms without the Offeror having purchased any Shares thereunder due to
an occurrence which would result in a failure to satisfy certain conditions set
forth in the Merger Agreement hereof, unless any such failure shall have been
caused by or resulted from the failure of Parent or the Offeror to perform in
any material respect any covenant or agreement of either of them contained in
the Merger Agreement or the material breach by Parent or the Offeror of any
representation or warranty of either of them contained in the Merger Agreement;
(e) by the Parent, in the event of a breach by the Company of any
representation, warranty, covenant or agreement contained in the Merger
Agreement which (A) would give rise to the failure of a condition set forth in
clause (e) or (g) of the conditions set forth in Section 14 hereof, (B) cannot
or has not been cured prior to the earlier of (i) 15 days after the giving of
written notice of such breach to the Company and (ii) two business days prior to
the date on which the Offer expires and (C) has not been waived by Parent
pursuant to the provisions of the Merger Agreement; (f) by either Parent, on the
one hand, or the Company, on the other hand, if the Board determines that an
Acquisition Proposal constitutes a Superior Proposal and the Board believes (and
has been advised by independent outside counsel) that a failure to terminate the
Merger Agreement and enter into an agreement to effect the Superior Proposal
would constitute a breach of its fiduciary duties; provided, however the Company
may not terminate the Merger Agreement in this manner unless and until three
business days have elapsed following delivery to the other party of a written
notice of such determination by the Board and during such three business day
period the Company has fully cooperated with the Parent, including, without
limitation, informing Parent of the terms and conditions of such Superior
Proposal, and the identity of the person or entity making such proposal, with
the intent of enabling both parties to agree to a modification of the terms and
conditions of the Merger Agreement so that the transactions contemplated hereby
may be effected; and provided further that at the end of such three business day
period the Board determines that the Acquisition Proposal constitutes a Superior
Proposal and the Board continues to believe (and has again been advised by
independent outside counsel) that a failure to terminate the Merger Agreement
and enter into an agreement to effect the Superior Proposal would constitute a
breach of its fiduciary duties; provided further that the Merger Agreement shall
not terminate in this manner unless (i) prior to such termination Parent has
received the fees and expenses set forth in the Merger Agreement and described
below by wire transfer in same day funds and (ii) simultaneously with such
termination the Company enters into a definitive acquisition, merger or similar
agreement to effect the Superior Proposal which acquisition agreement permits
the Company to terminate the acquisition agreement in the event the Board
determines to effect a transaction with Parent; (g) by the Company, in the event
of a breach by Parent or the Offeror of any representation, warranty, covenant
or agreement contained in the Merger Agreement which cannot or has not been
cured within 15 days after the giving of written notice of such breach to Parent
and the Offeror, except in any case where such breaches are not reasonably
likely to affect adversely Parent's or the Offeror's ability to complete the
Offer or Merger; or (h) by the Company, if Parent or the Offeror shall have (i)
failed to commence the Offer within ten days following the date of the Merger
Agreement, (ii) terminated the Offer or (iii) failed to pay for Shares pursuant
to the Offer on or prior to the Outside Date, unless in the case of (i), (ii) or
(iii) such failure shall have been caused by the failure of the Company to
satisfy certain conditions set forth in the Merger Agreement.
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The Merger Agreement provides that, in the event of termination pursuant to
the provisions described above by Parent or the Offeror, on the one hand, or the
Company, on the other hand, written notice thereof shall forthwith be given to
the other party or parties specifying the provision hereof pursuant to which
such termination is made, and the Merger Agreement shall become void and have no
effect, and there shall be no liability hereunder on the part of Parent, the
Offeror or the Company, except that certain provisions of the Merger Agreement
relating to confidentiality and certain fees and expenses shall survive any
termination of the Merger Agreement. Nothing in this provision shall relieve any
party to the Merger Agreement of liability for breach of the Merger Agreement.
Payment of Certain Fees and Expenses Upon Termination. Except as provided
in the next succeeding sentence, all costs and expenses incurred in connection
with the Merger Agreement and the consummation of the transactions contemplated
thereby shall be paid by the party incurring such costs and expenses. If the
Merger Agreement is terminated other than solely because of a material breach of
the representations or warranties of Parent or the Offeror or a failure of
Parent or the Offeror to fulfill a material covenant or condition contained
therein, then the Company shall (except as required to be earlier paid in
accordance with the termination provisions of the Merger Agreement) within two
days after termination has occurred, pay to Parent in same day funds all of
Parent's reasonably documented out-of-pocket expenses (the "Expenses"). If the
Merger Agreement is terminated by Parent in accordance with the certain events
specified in the Merger Agreement or if the Merger Agreement is terminated by
the Company in accordance with clause (f) under the heading "-- Termination"
above, then the Company shall (except as required to be earlier paid in
accordance with the provisions of the Merger Agreement) pay to Parent in same
day funds, in addition to the Expenses, $12,000,000 (the "Termination Fee"), as
compensation to the Parent and its affiliates for incurring the costs and
expenses related to the Offer and the Merger and for their foregoing other
opportunities.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Company's Board of Directors
The Board of Directors, at a meeting duly called and held on June 15, 1997,
unanimously determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are fair to and in the
best interests of the Company and the holders of Shares and approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, in all respects.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF THE
COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE OFFEROR UNDER THE OFFER.
See "Background of the Offer; Reasons for the Recommendation -- Reasons for the
Recommendation; Factors Considered by the Board" for a discussion of the factors
considered by the Board in making its recommendation.
As set forth in the Offer, upon the terms and subject to the conditions of
the Offer (including satisfaction of the Minimum Condition), the Offeror will
accept for payment and pay for all Shares validly tendered on or prior to the
expiration date and not properly withdrawn. Shareholders considering not
tendering their Shares in order to wait for the Merger should note that the
Offeror is not obligated to purchase any Shares, and can terminate the Offer and
the Merger Agreement and not proceed with the Merger, if the Minimum Condition
is not satisfied or any of the other conditions to the Offer are not satisfied.
A copy of the press release issued by the Company announcing signing of the
Merger Agreement is filed as Exhibit 4 to this Statement and is incorporated
herein by reference.
(b) Background of the Offer; Reasons for the Recommendation
Background of the Offer
On February 18, 1997, Metropolitan Capital Advisors, Inc., the general
partner of Bedford Fall Investors, L.P. ("MetCap"), filed a Schedule 13D with
the Commission stating that MetCap and its affiliates had acquired a 7.4% stake
in the Company and that MetCap had formed a shareholder group, which included
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George Raymond, Jr., a member of the Company's Board, which had control over
24.3% of the Company's shares of Common Stock. MetCap's Schedule 13D sets forth
a February 18, 1997 letter to the Company which states in part:
As described in the Schedule 13D, Metropolitan Capital and affiliates
have acquired the Common Stock for investment, believing that the Company's
Common Stock has substantially greater value than is reflected in its
current market price. As you know, for the year ended January 5, 1997 (the
day before Metropolitan Capital and affiliates began their purchase of the
Company's Common Stock), the Company's share price experienced a
significant decline in value, as compared to a significant increase in the
S&P 500 Index. Based upon discussions with investment bankers who have
contacted potential acquirers, we believe that shareholders can attain the
highest value through a strategic transaction such as the sale or merger of
the Company. To date, management had not aggressively pursued such a
strategy. We believe that a Board of Directors more representative of the
Company's shareholders may be necessary to do so.
We are writing to request a meeting with management, on or before
March 4, 1997, at which we can discuss the Company's strategic alternatives
and the addition of shareholder representatives to the Company's Board of
Directors. Pending the results of those conversations, it is our current
intention to propose for shareholder approval at the Company's Annual
Meeting on May 3, 1997, Amendments to the By-laws by which shareholders
will be authorized to increase the size of the Board to thirteen members
(the maximum provided by the Company's Certificate of Incorporation), fill
the newly created vacancies by shareholder vote at such Annual Meeting, and
take such other action as may be necessary to accomplish such expansion and
election as soon as possible.
On February 27, 1997, the Board (i) appointed a special committee of
directors (the "Initial Special Committee") consisting of Messrs. James J.
Malvaso, Michael R. Porter, James F. Matthews, John E. Mott, Arthur M.
Richardson, Ross K. Colquhoun, Michael O. Womack, Dr. M. Richard Rose and John
V. Sponyoe to consider the response to MetCap and to make recommendations to the
Board and (ii) rescinded previous resolutions of the Board which fixed a meeting
date and record date for the Company's 1997 annual meeting of shareholders.
On March 1, 1997, the Board (i) adopted the Rights Agreement described in
Item 8 herein, (ii) eliminated the Initial Special Committee and replaced it
with a special committee consisting of Messrs. Richardson, Matthews, Porter,
Sponyoe and Dr. Rose (the "Special Committee") to oversee the process of
enhancing shareholder value and (iii) retained Lehman Brothers Inc. ("Lehman
Brothers") to provide the Special Committee with advice and assistance in
exploring strategic business alternatives.
On March 24, 1997, the Board fixed June 2, 1996 as the date for the
Company's 1997 annual meeting of shareholders, which, on April 29, 1997, was
reset to August 6, 1997.
From March 1997 through May 1997, the Special Committee with the assistance
of Lehman Brothers explored possible transactions with potential buyers.
Beginning on May 16, 1997, Lehman Brothers on behalf of the Company,
informed certain selected potential buyers of the Company that binding
definitive proposals to acquire the Company be submitted by June 13, 1997.
On June 15, 1997, the Board held a special meeting, in which its financial
and legal advisors participated, at which the Board approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger. In addition, the Company's 1997 annual meeting of shareholders was
postponed indefinitely.
Reasons for the Recommendation; Factors Considered by the Board. In
approving the Merger Agreement and recommending that all shareholders tender
their Shares pursuant to the Offer, the Board considered a number of factors
including:
(a) the familiarity of the Board with the financial condition, results
of operations, competitive position, business and prospects of the Company,
as reflected in the Company's historical financial
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information, current economic and market conditions and the nature of the
industry in which it operates, and the possible alternatives for the
Company in light of such factors;
(b) management's recommendation of the Offer and the Merger Agreement;
(c) the presentation by Lehman Brothers at the June 15, 1997 Board
meeting and the opinion of Lehman Brothers to the effect that, as of the
date of such opinion and based upon certain matters considered relevant by
Lehman Brothers, the $33.00 per Share in cash to be offered to the holders
of Shares in connection with the Offer and the Merger is fair, from a
financial point of view, to such holders. THE FULL TEXT OF SUCH OPINION,
DATED JUNE 16, 1997, WHICH SETS FORTH THE ASSUMPTIONS MADE AND MATTERS
CONSIDERED AND LIMITATIONS SET FORTH BY LEHMAN BROTHERS, IS INCLUDED AS
ANNEX A HERETO AND SHOULD BE READ IN ITS ENTIRETY;
(d) the financial and other terms and conditions of the Offer and
Merger Agreement, including, without limitation, the fact that the terms of
the Merger Agreement should not unduly discourage other interested third
parties, if any, from making bona fide proposals to acquire the Company
subsequent to the execution of the Merger Agreement and, if any such
proposals were made, the Board, in its exercise of its fiduciary
responsibilities, could determine to provide information to and engage in
negotiations with any such third party, subject to the terms and conditions
of the Merger Agreement;
(e) historical market prices of, and recent trading activity in, the
Shares, particularly the fact that the Offer and the Merger will enable the
shareholders of the Company to realize a premium of approximately 66% over
the closing price of the Shares on February 7, 1997, the last trading day
prior to the events relating to the initial filing of the Schedule 13D by
MetCap; and
(f) the fact that the obligations of Parent and the Offeror to
consummate the Offer and the Merger pursuant to the terms of the Merger
Agreement are not conditioned upon financing.
The foregoing discussion of the information and factors considered and
given weight by the Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation, the Board did
not find it practicable to and did not quantify or otherwise assign relative
weights to the specific factors considered in reaching its determinations and
recommendation. In addition, individual members of the Board may have given
different weight to different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to the terms of a letter agreement dated March 3, 1997 (the
"Engagement Letter"), the Company has retained Lehman Brothers as its exclusive
financial advisor in connection with evaluating strategic alternatives available
to the Company. Pursuant to the terms of the Engagement Letter, the Company has
agreed to pay Lehman Brothers a retainer fee of $150,000 and will pay Lehman
Brothers an additional fee of $3,250,000 upon consummation of the Offer. The
Company has also agreed to reimburse Lehman Brothers for its reasonable
expenses, including the reasonable fees and disbursements of outside counsel,
and to indemnify Lehman Brothers and certain related persons against certain
liabilities in connection with their engagement, including certain liabilities
under the federal securities laws. Lehman Brothers has also performed various
investment banking services for the Company in the past and has received
customary fees for such services. In the ordinary course of business, Lehman
Brothers actively trades in the securities of the Company for its own account
and for the accounts of its customers and, accordingly, may at any time hold a
long or short position in such securities.
Neither the Company nor any person acting on its behalf has or currently
intends to employ, retain or compensate any person to make solicitations or
recommendations to the stockholders of the Company on its behalf with respect to
the Offer.
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ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(i) Except as set forth below, no transactions in Shares have been effected
during the past 60 days by the Company, or to the best knowledge of the Company,
by any executive officer, director, affiliate or subsidiary of the Company.
On June 19, 1997, each of James F. Matthews, John E. Mott, Michael R.
Porter, Arthur M. Richardson, Dr. M. Richard Rose, John V. Sponyoe and Michael
D. Womack received 308 shares and George G. Raymond, Jr. received 55 shares from
the Company as consideration for their services as non-employee directors.
On May 30, 1997, James B. Bennett, III, Vice President of Sales and Dealer
Development, acquired 2,743 shares of Common Stock at a purchase price of $18.21
per share through an exercise of options and sold 1,521 shares of Common Stock
at $32.25 per share.
(ii) To the best knowledge of the Company, (i) each of its executive
officers, directors, affiliates or subsidiaries presently intends to tender all
of their Shares to the Offeror pursuant to the Offer and (ii) none of its
executive officers, directors, affiliates or subsidiaries presently intends to
otherwise sell any Shares which are owned beneficially or held of record by such
persons. The foregoing does not include any Shares over which, or with respect
to which, any such executive officer, director or affiliate or subsidiary acts
in a fiduciary or representative capacity or is subject to instructions from a
third party with respect to such tender.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Statement, no negotiation is being
undertaken or is underway by the Company in response to the Offer which relates
to or would result in (i) an extraordinary transaction such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as set forth in this Statement, there are no transactions, Board
resolutions, agreements in principle or signed contracts in response to the
Offer that relate to, or would result in, one or more of the events referred to
in Item 7(a) above. Subject to the terms of the Merger Agreement described
herein, the Company may, directly or indirectly, (i) furnish information only in
response to an unsolicited request for such information by any person made after
the date of the Merger Agreement, pursuant to appropriate confidentiality
agreements, and (ii) participate in discussions, investigations and/or
negotiations with such entity or group concerning a Takeover Proposal.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
RIGHTS AGREEMENT
On March 1, 1997, the Board of Directors of the Company declared a dividend
of one Right for each outstanding share of Common Stock. The dividend was
payable on March 11, 1997 (the "Record Date") to the shareholders of record on
that date. Each Right entitles the registered holder to purchase from the
Company one share of Common Stock of the Company at a price of $90 per share of
Common Stock (the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement dated as of March 1,
1997, as the same may be amended from time to time (the "Rights Agreement"),
between the Company and American Stock Transfer & Trust Company, as Rights Agent
(the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of 20% or more of the outstanding
shares of Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer,
15
<PAGE> 17
or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding shares of
Common Stock (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common Stock certificate
together with a copy of this Summary of Rights. Notwithstanding the foregoing,
(i) if a person or group would be deemed an Acquiring Person upon the adoption
of the Rights Agreement, such person or group will not be deemed an Acquiring
Person for any purposes of the Rights Agreement unless and until such person or
group becomes the beneficial owner of any additional shares of Common Stock
after the adoption of the Rights Agreement.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Stock. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Stock certificates issued after the
Record Date upon transfer or new issuances of Common Stock will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for shares of Common Stock outstanding as of the
Record Date, will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on March 1, 2007 (the "Final Expiration Date") unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Stock, (ii) upon the grant to holders of the Common Stock of certain rights or
warrants to subscribe for or purchase Common Stock at a price, or securities
convertible into Common Stock with a conversion price, less than the then-
current market price of the Common Stock or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
regular periodic cash dividends or dividends payable in Common Stock) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights are also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right at the then
current exercise price of the Right, that number of shares of Common Stock
having a market value of two times the exercise price of the Right.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction
(other than the Merger) or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
(other than Rights beneficially owned by an Acquiring Person which will have
become void) will thereafter have the right to receive, upon the exercise of the
Right at the then current exercise price of the Right, that number of shares of
common stock of the person with whom the Company has engaged in the foregoing
transaction which number of shares at the time of such transaction will have a
market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock or the occurrence of an event described in the prior
paragraph, the Board of Directors of the Company may exchange the Rights (other
than
16
<PAGE> 18
Rights owned by such person or group which will have become void), in whole or
in part, at an exchange ratio of one share of Common Stock (or of a share of a
class or series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
At any time prior to the time an Acquiring Person becomes such, the Board
of Directors of the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish. Immediately upon
any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
For so long as the Rights are then redeemable, the Company may, except with
respect to the redemption price, amend the Rights in any manner. After the
Rights are no longer redeemable, the Company may, except with respect to the
redemption price, amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, as the same
may be amended from time to time, which is hereby incorporated herein by
reference.
Effective June 16, 1997, the Rights Agreement was amended (the "Amendment")
to provide that (i) so long as the Merger Agreement has not been terminated
pursuant to its terms, neither Parent nor any of its affiliates will become an
Acquiring Person nor will a Distribution Date be deemed to occur, in each case,
solely as a result of the execution, delivery and performance of the Merger
Agreement or the announcement, making or consummation of the Offer, the
acquisition of the Shares pursuant to the Offer or the Merger, the consummation
of the Merger or any other transactions contemplated by the Merger Agreement and
(ii) the Rights will expire immediately prior to the effective time of the
Merger. The foregoing description of the Amendment to the Rights Agreement is
qualified by reference to Amendment which is filed as Exhibit 6 hereto and
incorporated herein by reference.
17
<PAGE> 19
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
<TABLE>
<S> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of June 16, 1997, among Parent, the
Offeror and the Company.
Exhibit 2(a) Employment Agreement dated as of November 3, 1987 amended as of June 14,
1994 and as of November 1, 1995 and amended and restated as of March 24,
1997 between Ross K. Colquhoun and The Raymond Corporation. (Incorporated by
reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996).
Exhibit 2(b) Sample form of Executive Agreement (Tier II) between The Raymond Corporation
and Company Executives. (Incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996).
Exhibit 2(c) Sample form of Executive Agreement (Tier III) between The Raymond
Corporation and Company Executives. (Incorporated by reference to Exhibit
10.8 to the Company's Annual Report on Form 10-K for the year ended December
31, 1996).
Exhibit 2(d) The Raymond Corporation Retirement Benefits Equalization Plan. (Incorporated
by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996).
Exhibit 2(e) The Raymond Corporation 1996 Deferred Stock Unit Plan for Non-Employee
Directors. (Incorporated by reference to Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996).
Exhibit 2(f) The Raymond Corporation Stock Option Plan (1991) amended as of March 24,
1997. (Incorporated by reference to Exhibit 10.11 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996).
Exhibit 2(g) The Raymond Corporation Stock Option Plan (1995) as amended as of March 24,
1997. (Incorporated by reference to Exhibit 10.12 to the Company's Current
Report on Form 10-K for the year ended December 31, 1996).
Exhibit 2(h) The Raymond Corporation Deferred Compensation Plan for Exempt Employees
restated as of September 1, 1994, amended as of March 24, 1997 (Incorporated
by reference to Exhibit 10.13 to the Company's Current Report on Form 10-K
for the year ended December 31, 1996).
Exhibit 2(i) The Raymond Corporation Officer Performance Bonus Plan Formula (Incorporated
by reference to Exhibit 10.15 to the 1992 Form 10-K Annual Report of the
Company at page 357 and incorporated herein by reference).
Exhibit 3 Letter to Stockholders dated June 20, 1997.+
Exhibit 4 Press Release, dated June 16, 1997.
Exhibit 5 Rights Agreement, dated as of March 1, 1997 between the Company and American
Stock Transfer and Trust Company, as Rights Agent (incorporated by reference
to the Company's Current Report on Form 8-K dated March 11, 1997).
Exhibit 6 Amendment No. 1 to the Rights Agreement, dated as of June 16, 1997.
Exhibit 7 Opinion of Lehman Brothers dated June 16, 1997.++
</TABLE>
- ---------------
+ Included in copy mailed to stockholders.
++ Included as Annex A in copy mailed to stockholders.
18
<PAGE> 20
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
THE RAYMOND CORPORATION
By: /s/ PAUL J. STERNBERG
------------------------------------
Name: Paul J. Sternberg
Title: Vice President, Secretary &
General Counsel
Dated: June 20, 1997
19
<PAGE> 21
ANNEX A
LEHMAN BROTHERS
June 16, 1997
Board of Directors of The Raymond Corporation
The Raymond Corporation
20 South Canal Street
Greene, New York 13778
Members of the Board of Directors:
We understand that The Raymond Corporation ("Raymond" or the "Company") and
BT Industries AB ("BT Industries") have entered into an agreement pursuant to
which BT Industries will commence a tender offer as soon as practicable to
purchase all issued and outstanding shares of common stock of the Company at a
price per share equal to $33.00 in cash and, following consummation of such
tender offer, the Company will be merged with a wholly-owned subsidiary of BT
Industries and each share of common stock of the Company then outstanding will
be converted into the right to receive $33.00 per share in cash (collectively,
the "Proposed Transaction"). The terms and conditions of the Proposed
Transaction are set forth in more detail in the Agreement and Plan of Merger
dated as of June 16, 1997 (the "Agreement") by and among BT Industries, Lift
Acquisition Company, Inc. and the Company.
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to the
Company's stockholders of the consideration to be offered to such stockholders
in the Proposed Transaction. We have not been requested to opine as to, and our
opinion does not in any manner address, the Company's underlying business
decision to proceed with or effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the specific terms of the Proposed Transaction, (2) such publicly available
information concerning the Company that we believe to be relevant to our
analysis, (3) financial and operating information with respect to the business,
operations and prospects of the Company furnished to us by the Company, (4) a
trading history of the Company's common stock from January 1, 1992 to the
present and a comparison of that trading history with those of other companies
that we deemed relevant, (5) a comparison of the historical financial results
and present financial condition of the Company with those of other companies
that we deemed relevant, (6) a comparison of the financial terms of the Proposed
Transaction with the financial terms of certain other recent transactions that
we deemed relevant and (7) the results of our efforts to solicit indications of
interest and proposals from third parties with respect to a purchase of the
Company. In addition, we have had discussions with the management of the Company
concerning its business, operations, assets, financial condition and prospects
and have undertaken such other studies, analyses and investigations as we deemed
appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of management of the Company that they
are not aware of any facts or circumstances that would make such information
inaccurate or misleading. With respect to the financial forecasts of the
Company, upon advice of the Company we have assumed that such forecasts have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of the Company as to the future
financial performance of the Company, and we have relied upon such forecasts in
arriving at our opinion. In arriving at our opinion, we have conducted only a
limited physical inspection of certain properties and facilities of the Company
and have not made or obtained
LEHMAN BROTHERS INC.
3 WORLD FINANCIAL CENTER NEW YORK, NY 10285
A-1
<PAGE> 22
June 16, 1997
Page Two
any evaluations or appraisals of the assets or liabilities of the Company. Our
opinion necessarily is based upon market, economic and other conditions as they
exist on, and can be evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
offered to the stockholders of the Company in the Proposed Transaction is fair
to such stockholders.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services which is contingent
upon the consummation of the Proposed Transaction. In addition, the Company has
agreed to indemnify us for certain liabilities that may arise out of the
rendering of this opinion. We also have performed various investment banking
services for the Company in the past and have received customary fees for such
services. In the ordinary course of our business, we actively trade in the
securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Board of Directors in connection with its
consideration of the Proposed Transaction. This opinion is not intended to be
and does not constitute a recommendation to any stockholder of the Company as to
whether to accept the consideration to be offered to the stockholders in
connection with the Proposed Transaction.
Very truly yours,
LEHMAN BROTHERS
A-2
<PAGE> 23
ANNEX B
INFORMATION STATEMENT PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about June 20, 1997, as
part of The Raymond Corporation's (the "Company") Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the tender offer by Lift Acquisition
Company, Inc. (the "Offeror") (the "Schedule 14D-9") to the holders of
record of the Company's Common Stock, par value $1.50 per share, including the
associated common share purchase right (collectively, the "Shares"). Capitalized
terms used and not otherwise defined herein shall have the meaning set forth in
the Schedule 14D-9. You are receiving this Information Statement in connection
with the possible election of persons designated by the Offeror to a majority of
the seats on the Board of Directors of the Company (the "Board"). The Merger
Agreement provides that, if requested by Parent, promptly upon the acceptance
for payment of, and payment by the Offeror, in accordance with the Offer for,
shares of Common Stock equal to at least two-thirds of the outstanding shares of
Common Stock pursuant to the Offer, the Offeror shall be entitled to designate
up to such number of directors on the Board of Directors of the Company, rounded
up to the next whole number, as will give the Offeror, subject to compliance
with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder,
representation on such Board of Directors equal to that number of directors
which equals the product of the total number of directors on the Board of
Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock beneficially owned by the Offeror or Parent and the denominator
of which shall be the number of shares of Common Stock then outstanding, and the
Company and its Board of Directors shall, at such time, take any and all such
action needed to cause the Offeror's designees to be appointed to the Company's
Board of Directors (including to cause directors to resign).
You are urged to read this Information Statement carefully. You are not,
however, required to take any action.
The Offer to Purchase is scheduled to expire at 12:00 midnight, New York
City time, on July 18, 1997, at which time, if all conditions to the Offer have
been satisfied or waived, the Offeror has informed the Company that it intends
to purchase all of the Shares validly tendered pursuant to the Offer and not
properly withdrawn.
The information contained in this Information Statement concerning the
Offeror and Parent has been furnished to the Company by Parent and the Company
assumes no responsibility for the accuracy, completeness or fairness of any such
information.
At the close of business on June 10, 1997, there were 10,736,604 shares of
Common Stock issued and outstanding, which is the only class of securities
outstanding having the right to vote for the election of directors of the
Company, each of which entitles its record holder to one vote.
OFFEROR DESIGNEES
The Purchaser has informed the Company that it currently intends to choose
the designees (the "Offeror Designees") it has the right to designate to the
Board pursuant to the Merger Agreement from the directors and executive officers
of Parent listed in Schedule I of the Offer to Purchase, a copy of which is
being mailed to shareholders. The information with respect to such directors and
executive officers in Schedule I is hereby incorporated herein by reference in
its entirety. As of June 16, 1997, the ages of each of such officers are as
follows: Bengt Eskilson -- 54; Jan Ohlsson -- 47; Hakan Soderback -- 50; Leif
Ostling -- 52; Bengt Johansson -- 51; Elisableth Karlsson -- 41; Carl-Erik
Ridderstrale -- 55; and Fritz Ahlqvist -- 64; Erik Berg -- 55; Ulf Brodin -- 61;
Ditlef Furst -- 55; Christes Hogberg -- 50; Dan Hoij -- 48; Per Zaunders -- 46.
It is expected that the Offeror Designees may assume office at any time
following the purchase by the Offeror of Shares pursuant to the Offer, which
purchase cannot be earlier than July 18, 1997, and that, upon assuming office,
the Offeror Designees will thereafter constitute at least two-thirds of the
Board.
None of the executive officers and directors of Parent or the Offeror
currently is a director of, or holds any position with, the Company. The Company
has been advised that, to the best knowledge of Parent and the Offeror, none of
Parent's or the Offeror's directors or executive officers beneficially owns any
equity securities, or rights to acquire any equity securities, of the Company
and none has been involved in any transactions with the Company or any of its
directors, executive officers, affiliates or associates which are required to be
disclosed pursuant to the rules and regulations of the Securities and Exchange
Commission.
B-1
<PAGE> 24
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
Based on filings with the Securities and Exchange Commission, the following
persons and institutions are known by the Company to beneficially own more than
five percent of the outstanding shares of Common Stock of Raymond as of June 19,
1997:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) % OF CLASS
- ------------------------- ------------------------------------------- ------------ ----------
<S> <C> <C> <C>
Common Stock............. Metropolitan Capital Advisors, Inc. 2,572,684(2) 23.96%
660 Madison Avenue
20th Floor
New York, New York 10021
Common Stock............. George G. Raymond, Jr., 1,401,239(3) 13.05%
Ellen R. Raymond (a/k/a Ellen Robinson
Raymond), Madeleine R. Young, Jean C.
Raymond, George G. Raymond, III
c/o George G. Raymond, Jr.
7920 Grand Bay Drive
Naples, FL 34108
Common Stock............. The Huntington Trust Company, N.A. 1,031,559(4) 9.61%
41 S. High Street
Columbus, Ohio 43215
Common Stock............. ICM Asset Management, Inc. 612,363(5) 5.70%
601 W. Main Avenue
Ste. 600
Spokane, Washington 99201
Common Stock............. Palisade Capital Management, L.L.C. 574,500 5.35%
One Bridge Plaza
Suite 695
Fort Lee, New Jersey 07024
</TABLE>
- ---------------
(1) Shareholder has sole voting and sole dispositive power unless otherwise
indicated.
(2) Metropolitan Capital Advisors, Inc. ("Metcap") reports shared voting power
over 2,572,684 (24.27%) shares, no sole dispositive power and shared voting
and dispositive power over 488,800 shares. Metcap has reached voting
agreements and understandings with certain stockholders who, in the
aggregate, hold voting power over 1,776,484 shares (16.76%) of Raymond's
Common Stock. The remaining shares that Metcap has shared voting and/or
dispositive power over include 488,800 shares (4.61%) of Common Stock
beneficially owned by Bedford Falls Investors, L.P. over which Metcap has
indirect voting control, an aggregate of 294,400 shares (2.78%) beneficially
owned by a managed brokerage account and Metropolitan Capital Advisors
International Limited, the voting of which shares are controlled by
affiliates of Metcap and 13,000 (.12%) beneficially owned by Robert J.
Lietzow, Jr., an executive officer of Metcap. On February 15, 1997, George
G. Raymond, Jr. and his spouse, Ellen Robinson Raymond (as holders of an
aggregate of 664,806 shares, (6.27%) agreed with Metcap to enter into a
voting agreement (the "Agreement") pursuant to which they agreed to vote all
shares held by them in favor of Metcap's nominees for election to Raymond's
Board of Directors, and in favor of other actions which may deem necessary
to elect such nominees. The Agreement, executed on February 17, 1997,
generally has a term expiring following the conclusion of the second Annual
Meeting of Shareholders after execution, or September 30, 1997, if Metcap
has not earlier nominated candidates for election to Raymond's Board of
Directors. Following the execution of the Agreement by Mr. Raymond, Scoggin,
Inc. ("Scoggin") entered into a voting agreement with Metcap respecting
549,101 shares (5.18%) held by it. Such voting agreement provides that
Scoggin will vote such shares in support of the Metcap nominees for election
to Raymond's Board of Directors, and otherwise in a manner similar to the
Agreement entered into between Metcap and George G. Raymond, Jr. On February
18, 1997, Metcap entered into voting agreements with the following
beneficial holders of Raymond's Common Stock, all of whom are related to
George G. Raymond, Jr.; Jean C. Raymond, holder of 114,229 shares (1.08%),
Madeleine Raymond Young, holder
B-2
<PAGE> 25
of 95,774 shares (.90%) and George G. Raymond III, holder of 99,723 shares
(.94%). On February 18, 1997, Huntington Trust Co., trustee of certain
trusts for the benefit of George G. Raymond, Jr. and Madeleine Raymond
Young, notified Metcap of its intention to vote, as trustee, an aggregate of
252,851 shares (2.38%) in favor of Metcap's nominees.
(3) As a group, the Raymond family has sole voting power over 974,532 shares,
shared voting power over 173,856 shares, sole dispositive power over 114,229
shares and shared dispositive power over 1,287,010 shares. As reported in
their 13D filing dated February 15, 1997, George G. Raymond, Jr. and other
members of his family entered into a voting agreements with Metcap with
respect to election of directors and related matters. Named Raymond family
members entered into or are expected to enter into a written stockholders'
agreement with Metcap dated February 17, 1997 the terms of which are
described above.
(4) The Huntington Trust Company, N.A. ("Huntington") reports sole voting power
over 17,207 shares, shared voting power over 384,987 shares, sole
dispositive power over 15,153 shares and shared dispositive power over
1,014,352 shares. 1,031,559 shares are held in trusts of which Huntington is
a trustee or co-trustee after various Raymond family-owned shares.
(5) ICM Asset Management, Inc. reports sole voting power over 429,758 shares.
Security Ownership of Management
The following table sets forth, as of June 19, 1997, the number of shares
of Raymond's Common Stock beneficially owned by each of its Directors and
nominees for Director, each executive officer named in the Summary Compensation
Table, and all Directors and officers as a group, based upon information
obtained from such persons:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------------------
SOLE VOTING OPTIONS
AND EXERCISABLE OTHER
INVESTMENT WITHIN BENEFICIAL PERCENT OF
NAME OF INDIVIDUAL OR GROUP POWER 60 DAYS OWNERSHIP CLASS
- ---------------------------------------------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Ross K. Colquhoun................................... 168,526 29,185 -0- 1.8%
James J. Malvaso.................................... 402 -0- 5,358(1) *
43,962(2)
James F. Matthews................................... -0- 3,938 5,820(1) *
John E. Mott........................................ 2,305 9,987 -0- *
Michael R. Porter................................... 1,697 9,987 -0- *
George G. Raymond, Jr............................... 629,420 -0- 166,622(3) 9.8%
259,944(4)
Arthur M. Richardson................................ 1,372 10,907 43,962(2) *
Dr. M. Richard Rose................................. 7,275 11,625 -0- *
John V. Sponyoe..................................... 1,358 2,766 -0- *
Michael O. Womack................................... 27,897 2,766 43,962(2) *
Jerome R. Dinn...................................... 8,393 -0- -0- *
Margaret L. Gallagher............................... 34,386 -0- -0- *
William B. Lynn..................................... -0- -0- 30,492(1)
43,962(2) *
All officers and Directors as a group (18
persons).......................................... 939,688 81,161 517,676 14.3%
</TABLE>
- ---------------
* Indicates less than one percent ownership.
(1) Shares held jointly with spouse.
(2) Shares held in Raymond's Profit Sharing Plans, of which Messrs. Lynn,
Malvaso, Richardson and Womack are trustees.
(3) Shares held by the Raymond Foundation, of which Mr. Raymond is a trustee.
(4) Shares held in family trusts, of which Mr. Raymond is co-trustee.
B-3
<PAGE> 26
DIRECTORS AND EXECUTIVE OFFICERS
CURRENT DIRECTORS AND EXECUTIVE OFFICERS NAMED IN THE SUMMARY COMPENSATION TABLE
The names, ages and positions of all the Directors of The Raymond
Corporation ("Raymond"), as of March 14, 1997, are listed below together with
their business experience during the past five years. The Board of Directors is
currently comprised of 10 Directors and divided into three classes as nearly
equal in number as possible. At each Annual Meeting, Directors constituting one
class are nominated for election. Directors of Raymond serve for terms of three
(3) years and until their respective successors are elected and qualified. There
are no family relationships among the Executive Officers or Directors of
Raymond, nor any arrangement or understanding between any Executive Officer or
Director or any other person pursuant to which the Executive Officer or Director
was elected.
Ross K. Colquhoun, 66, a Director since 1984, was named Chairman of the
Board and Chief Executive Officer of Raymond in August 1995. Previously, Mr.
Colquhoun served as President and Chief Executive Officer of Raymond from July
1987 to August 1995. Mr. Colquhoun is also Chairman of the Board of G.N.
Johnston Equipment Co., Ltd. and Associated Material Handling Industries, Inc.,
both subsidiary distributors of the Company's products, and a member of the
Board of Directors of Material Handling Associates, Inc. ("M.H.A."), Raymond's
joint venture company with Mitsubishi Caterpillar Forklift America Inc. Mr.
Colquhoun's term of office as a Director expires at the 1998 Annual Meeting.
James J. Malvaso, 47, a Director since 1995, was named President and Chief
Operating Officer of Raymond in August 1995 and served as Vice
President -- Operations from 1993 to 1995. Prior to joining Raymond, Mr. Malvaso
held the position of Vice President of Operations of Pfaudler -- U.S., Inc. from
1990 to 1993. Pfaudler -- U.S., Inc. is a leading manufacturer of glass-lined
reactors, pressure vessels and accessories with revenues in excess of $130
million. Mr. Malvaso's term of office as a Director expires at the 1999 Annual
Meeting.
James F. Matthews, 62, a Director since 1994, is a nominee for election as
Director. Mr. Matthews has been the President of The Matco Group, Inc., a
diversified holding company, since 1965. He is a Director or trustee of several
civic and charitable organizations including the Northeast Regional Advisory
Board of Chase Manhattan Bank, Broome County Charities, Lourdes Hospital, Mom's
House and Syracuse Cancer Research Institute.
John E. Mott, 72, a Director since 1974, is a nominee for election as
Director. Mr. Mott is Secretary of Raymond Industrial Equipment, Limited, a
wholly-owned Canadian subsidiary of the Company. Formerly, he served as Chairman
of the Board of Raymond Industrial Equipment, Limited and Vice President --
International Operations of Raymond. Mr. Mott is also President of Twenty-Five
Investments Ltd., a Canadian investment company.
Michael R. Porter, 51, a Director since 1989, has been President of Nexus
Corporation, a greenhouse manufacturing company, since January 1994. Previously,
during 1993-1994, he was President of Phiji Group, Inc., an investment company,
and prior thereto he was President and General Manager of Diversified
Transmission Products, Borg Warner Automotive Inc. from 1991 to 1993. Mr.
Porter's term of office as a Director expires at the 1999 Annual Meeting.
George G. Raymond, Jr., 75, a Director since 1946, served as Chairman of
the Board of Raymond from 1973 to August 1995. He is a lifetime trustee of
Alfred University. Mr. Raymond's term of office as a Director expires at the
1999 Annual Meeting.
Arthur M. Richardson, 70, a Director since 1984, is a nominee for election
as Director. Mr. Richardson has been President of Richardson Capital
Corporation, a venture capital company, since 1985. He is a member of the Boards
of Directors of Rochester Gas and Electric Corporation, Transmation Corp. and
Horus Therapeutic Inc. Mr. Richardson also serves as a trustee of the University
of Rochester.
Dr. M. Richard Rose, 64, a Director since 1979, served as President of
Rochester Institute of Technology from 1979 to 1992. He is a member of the
Boards of Directors of Rochester Gas and Electric Corporation and
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<PAGE> 27
Baldwin Technology Company, Inc. Dr. Rose also serves as a trustee of Roberts
Wesleyan College and Vice Chairman of the Seneca County Redevelopment Authority.
Dr. Rose's term of office as a Director expires at the 1999 Annual Meeting.
John V. Sponyoe, 58, a Director since 1995, has been the President of
Lockheed Martin Federal Systems -- Owego since March 1994. Lockheed Martin
Federal Systems -- Owego, a division of Lockheed Martin Corporation, formerly
known as Loral Federal Systems -- Owego, a division of Loral Corporation, is a
developer and manufacturer of hardware and software systems located in Owego,
New York. From June 1987 through February 1994, Mr. Sponyoe was Vice President
and General Manager of IBM Federal Systems Company -- Owego. Mr. Sponyoe is a
member of the Boards of Directors of BSB Bank & Trust Company and Guthrie
Healthcare Systems and a Director or trustee of several educational, civic and
charitable organizations, including Roberson Museum & Science Center and
Binghamton University School of Management. Mr. Sponyoe's term of office as a
Director expires at the 1998 Annual Meeting.
Michael O. Womack, 56, a Director since 1995, has been the President of
Womack Material Handling Systems, Inc. since June 1978. Located in Wallingford,
Connecticut, Womack Material Handling Systems, Inc. is a member of the Company's
Dealer Network. Mr. Womack's term of office as a Director expires at the 1998
Annual Meeting.
Committees of the Board of Directors
Committees of the Board include the Executive, Finance, Human Resource,
Executive Compensation, Audit and Pension Plan Review Committees. There is no
nominating committee. The nominating function is fulfilled by the Human Resource
Committee. The Human Resource Committee will consider nominees for Directors
recommended by shareholders. Although no formal procedure has been established,
shareholders may submit recommendations to the Secretary of the Company at P.O.
Box 130, Greene, New York, 13778 at the time set forth for submitting
shareholder proposals.
The Executive Committee presently has four members: Messrs. Colquhoun,
Matthews, Richardson and Sponyoe. The function of this committee is to act in
place of the Board between Board Meetings in the event a matter requires
immediate attention. This committee held two meetings in 1996.
The Finance Committee presently has four members: Messrs. Richardson,
Malvaso, Rose and Sponyoe. The function of this committee is to review capital
requirements and make recommendations to the Board of Directors with respect
thereto. This committee held two meetings in 1996.
The Human Resource Committee presently has four members: Messrs. Rose,
Matthews, Porter and Richardson. The Committee has the responsibility of
reviewing management practices and matters of employee relations, training
programs and affirmative action. The Human Resource Committee held three
meetings in 1996.
The Executive Compensation Committee presently has four members: Messrs.
Rose, Matthews, Porter and Richardson. The Executive Compensation Committee
reviews Raymond's compensation philosophy and programs, sets compensation for
the Chief Executive Officer and authorizes executive compensation to officers.
It also is responsible for the administration of Raymond's Stock Option Plans.
The Executive Compensation Committee held one meeting in 1996.
The Audit Committee presently has four members: Messrs. Porter, Matthews,
Mott and Sponyoe. The functions of the Audit Committee are to receive and review
the audits of Raymond's books by outside independent auditors, to review the
internal audit function, to consider matters of accounting policy and to
investigate and make a recommendation to the Board of Directors each year with
respect to the appointment of independent auditors for the following year. The
committee held three meetings in 1996.
The Pension Plan Review Committee presently has four members: Messrs.
Womack, Malvaso, Mott and Richardson. This Committee reviews the Pension Plans
of Raymond and makes recommendations to the Board with respect thereto. This
committee held two meetings in 1996.
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<PAGE> 28
Pursuant to the Bylaws of Raymond, Mr. Colquhoun is an ex officio member of
all committees of the Board except for the Audit Committee and the Executive
Compensation Committee.
The Board of Directors met six times during Fiscal 1996. During 1996, all
incumbent Directors attended 100% of the Board Meetings and meetings of
committees on which they served.
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the Chief
Executive Officer and the four most highly compensated other executive officers
of Raymond.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------------
AWARDS
------------------
ANNUAL COMPENSATION
-------------------------------------- (F)
(A) (E) SECURITIES (G)
NAME AND (B) (C) (D) OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS/SARS(#)(1) COMPENSATION($)
- ----------------------- ---- --------- -------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Ross K. Colquhoun...... 1996 439,490 400,587 29,185 50,378(2)(3)(4)(5)
Chairman of the Board & 1995 381,471 325,751 23,538 52,143
C.E.O. 1994 318,101 314,660 25,005 43,962
James J. Malvaso....... 1996 165,398 219,117 9,056 17,009(2)(3)(4)(5)
President & C.O.O. 1995 132,788 203,594 6,009 14,177
1994 114,423 124,830 6,135 11,705
William B. Lynn........ 1996 170,298 219,117 9,345 17,778(2)(3)(4)(5)
Executive Vice
President 1995 159,328 203,594 9,757 19,557
1994 150,421 124,830 9,376 15,933
Jerome R. Dinn......... 1996 129,553 175,294 5,014 14,347(2)(3)(4)(5)
Vice President -- 1995 125,470 162,876 4,465 15,747
National Accounts 1994 121,397 124,830 4,978 14,067
Margaret L.
Gallagher............ 1996 125,175 175,294 5,528 13,212(2)(3)(4)(5)
Vice President -- 1995 119,106 162,876 5,788 14,991
Marketing 1994 117,769 124,830 7,698 12,886
</TABLE>
- ---------------
(1) Adjusted to reflect the 1996 5% stock dividend.
(2) Includes insurance premiums paid for the benefit of Mr. Colquhoun, $7,301,
Mr. Malvaso, $996, Mr. Lynn, $1,466, Mr. Dinn, $1,654 and Ms. Gallagher,
$891.
(3) Includes cash profit sharing amounts of $17,038 to Mr. Colquhoun, $6,537 to
Mr. Malvaso, $6,750 to Mr. Lynn, $5,183 to Mr. Dinn and $4,991 to Ms.
Gallagher.
(4) Includes deferred profit sharing amounts of $3,704 for Mr. Colquhoun and
each named executive officer.
(5) Includes deferred profit sharing amounts under supplemental benefits
equalization plan of $22,335 to Mr. Colquhoun, $5,772 to Mr. Malvaso, $5,858
to Mr. Lynn, $3,806 to Mr. Dinn and $3,626 to Ms. Gallagher.
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<PAGE> 29
The following table shows, as to the Chief Executive Officer and the four
most highly compensated other executive officers of Raymond, information about
option grants in the last fiscal year under The Raymond Corporation Stock Option
Plan (1995).
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE ----------------------
NAME GRANTED(#)(1) FISCAL 1996 ($/SH) EXPIRATION DATE 5%($)(2) 10%($)(2)
- ---------------------- ------------ ------------ ----------- --------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ross K. Colquhoun..... 29,185 33.6% $ 18.21 3/01/06 $334,168 $847,241
James J. Malvaso...... 9,056 10.4 18.21 3/01/06 103,691 262,896
William B. Lynn....... 9,345 10.8 18.21 3/01/06 107,000 271,285
Jerome R. Dinn........ 5,014 5.8 18.21 3/01/06 57,410 145,556
Margaret L.
Gallagher........... 5,528 6.4 18.21 3/01/06 63,296 160,478
</TABLE>
- ---------------
(1) Stock options granted on March 2, 1996 under Raymond's Stock Option Plan.
Options became fully exercisable on March 2, 1997.
(2) The assumed annual rates of appreciation of five and ten percent would
result in the price of Raymond's Common Stock increasing to $29.66 and
$47.24, respectively, from the $18.21 market price on the date of grants.
Over the last 10 years, the market price of Raymond's Common Stock has
increased at a compounded annual rate of 1.3%.
The following table shows aggregate option exercises in the last fiscal
year and fiscal year-end option values for the Chief Executive Officer and the
four most highly compensated other executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
DECEMBER 31, 1996 DECEMBER 31, 1996(1)
(#) ($)
--------------------------- ---------------------------
(B) (C)
(A) SHARES ACQUIRED VALUE (D) (D) (E) (E)
NAME ON EXERCISE(#)(2) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ross K. Colquhoun...... -0- -0- 73,258 29,185 $ 148,344 N/A
James J. Malvaso....... -0- -0- 6,009 9,056 6,628 N/A
William B. Lynn........ 5,948 $21,470 43,443 9,345 101,362 N/A
Jerome R. Dinn......... -0- -0- 16,157 5,014 34,191 N/A
Margaret L.
Gallagher............ -0- -0- 44,569 5,528 255,544 N/A
</TABLE>
- ---------------
(1) Computed based upon the difference between aggregate fair market value on
December 31, 1996 and aggregate exercise price.
(2) Amounts represent the number of securities underlying Options/SARs
exercised. The actual shares acquired on exercise were 977. Note: share
amounts have been adjusted to reflect the March 1996 5% stock dividend.
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<PAGE> 30
Defined Benefit or Actuarial Plan Disclosure
(1) Pension Plan Table
Raymond has trusteed non-contributory defined benefit pension plans. All
present U.S. employees over age 21 who have one or more years of service and who
became employees prior to age 60 and Canadian employees with more than three
months of service are eligible under these plans. A total of 1,979 individuals
participated in 1996.
As permitted by the Employee Retirement Income Security Act of 1974,
Raymond has adopted a supplemental plan which is designed to provide the amount
of retirement benefit which cannot be paid from the pension plans by reason of
certain Internal Revenue Code limitations on qualified plan benefits. The
amounts in the Pension Plan Table include the amounts payable under the
supplemental plan.
Estimated annual pensions at age 65, the assumed normal retirement age,
calculated on a straight-life annuity basis, for representative years of benefit
service are as follows:
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE YEARS OF CREDITED SERVICE
THREE YEAR AVERAGE ------------------------------------------------------------------------
EARNINGS 15 20 25 30 35 40
- -------------------------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 250,000................. $24,854 $ 33,138 $ 41,423 $ 49,707 $ 57,992 $ 66,276
300,000................ 29,824 39,776 49,707 59,648 69,590 79,531
350,000................ 34,795 46,393 57,992 69,590 81,188 92,786
400,000................ 39,766 53,021 66,276 79,531 92,786 106,042
450,000................ 44,736 59,648 74,561 89,473 104,385 119,297
500,000................ 49,707 66,276 82,845 99,414 115,983 132,552
550,000................ 54,678 72,904 91,130 109,355 127,581 145,807
600,000................ 59,648 79,531 99,414 119,297 139,180 159,062
650,000................ 64,619 86,159 107,699 129,238 150,778 172,318
700,000................ 69,590 92,786 115,983 139,180 162,376 185,573
750,000................ 74,561 99,414 124,268 149,121 173,975 198,828
800,000................ 79,531 106,042 132,552 159,062 185,573 212,083
850,000................ 84,502 112,669 140,837 169,004 197,171 225,338
900,000................ 89,473 119,297 149,121 178,945 208,769 238,594
950,000................ 94,443 125,924 157,406 188,887 220,368 251,849
1,000,000................ 99,414 132,552 165,690 198,828 231,966 265,104
</TABLE>
Benefits under the pension plans are based primarily on 0.6% of the
participant's average compensation (salary and bonus) for the highest three
consecutive years of compensation during the ten year period prior to
termination or retirement, whichever is earlier, multiplied by the number of
years of credited service. Benefits are non-forfeitable after five years of
vesting service, and actuarially reduced benefits are available for participants
who retire on or after age 55 after five years of vesting service. Plan benefits
are not reduced by any social security or other non-plan benefits to which the
participant is entitled.
Three year average covered compensation for the Chief Executive Officer,
Mr. Colquhoun and the named executives as of the end of fiscal year 1996 is: Mr.
Colquhoun $833,299, Mr. Malvaso $315,378, Mr. Lynn $346,960, Mr. Dinn $284,013,
and Ms. Gallagher $276,199. Covered compensation for the named executives is
reported in the Summary Compensation Table.
The years of credited service for the Chief Executive Officer and named
executives are: 40 years for Mr. Colquhoun, 3 years for Mr. Malvaso, 22 years
for Mr. Lynn, 12 years for Mr. Dinn and 20 years for Ms. Gallagher.
The above information reflects a 1994 amendment to the U.S. Pension Plan
which permits service as an employee at G.N. Johnston Equipment Co. Ltd. to be
counted toward Service and Benefit Service under the U.S. Plan if the individual
becomes an employee of Raymond.
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<PAGE> 31
Compensation of Directors
(1) Standard Arrangements
Directors who are employees of Raymond receive no compensation for their
services as Directors or members of committees. Each Director who is not an
employee of Raymond ("outside Director") receives or is credited with the
following fees: $12,000 per year, 50% to be paid in stock and 50% in cash; $800
for each Board Meeting attended; $800 for each committee meeting attended with a
maximum of one said committee meeting fee per day.
(2) Other Arrangements.
Members of the Board of Directors participate in The Raymond Corporation's
Stock Option Plan. The Plan provides each of the outside Directors with
automatic annual option grants to purchase for up to ten years that number of
shares of Raymond's Common Stock equal to the average compensation paid to the
outside Directors divided by the fair market value per share on the date of the
grant.
Outside Directors also may participate in Raymond's Deferred Compensation
Plan for Exempt Employees, which permits deferral of compensation and provides
for interest at the prime rate on the amounts deferred. In 1996, Director James
J. Matthews participated in the Plan.
Each director of Raymond who is not a current or former employee of the
Company participates in the Deferred Stock Unit Plan for Non-Employee Directors.
On the fourth Wednesday of May of each year subsequent to 1996, each participant
is credited with deferred stock units equal to 100% of the annual retainer for
that year, using the average of the high and low trading prices of Raymond's
Common Stock on such date. The deferred stock units become 50% vested after five
years of service. Thereafter, the vested percentage increases 10% a year until
the units become fully vested at ten years of service. The Plan was established
to provide benefits for non-employee directors of Raymond in order to serve as
an inducement for their continued service to Raymond and to align such
directors' financial interests with those of the shareholders.
Employment and Change in Control Agreements
At the 1988 Annual Meeting, shareholders ratified an employment agreement
entered into by Raymond with Ross K. Colquhoun, (the "Employment Agreement"),
now Chairman of the Board and Chief Executive Officer of Raymond. Pursuant to
the Employment Agreement as amended, he is entitled to participate in benefits
generally available to executive officers. In December 1995, Mr. Colquhoun
became eligible to receive a supplemental annual pension payment of 50% of his
most recent base salary. In April 1997, the Company agreed to increase Mr.
Colquhoun's supplemental annual pension payment to 60% of his December 1995 base
salary.
If Mr. Colquhoun resigns prior to a change in control, other than because
of a material breach of the Employment Agreement by Raymond, or if he is
terminated by Raymond for cause, or as a result of death or permanent
disability, he will not be entitled to further compensation, but shall be
eligible for any payments and benefits otherwise provided under Raymond's
compensation and benefit plans. If, other than following a change in control,
Mr. Colquhoun resigns as a result of a material breach of the Employment
Agreement or is terminated without cause, he will be entitled to receive a lump
sum in an amount equal to his current base salary and receive all other vested
benefits under Raymond's compensation and benefit plans. "Change in Control"
shall be deemed to have occurred if and when: a) any person acquires 25% of
voting securities; b) members of the Board of Directors as of March 24, 1997
cease to be a majority; c) any person acquires 20% of Raymond and, within 24
months, Board members immediately prior to such event cease to constitute 75% of
the Board; d) merger or consolidation of Raymond with 75% or less of stock in
existence or e) liquidation or sale of substantially all of Raymond's assets.
"Cause" is defined as a material misappropriation of funds or property,
unreasonable and persistent neglect of or refusal to perform ones duties,
conviction of a felony and neglect or refusal that results in material harm to
Raymond.
If Mr. Colquhoun's employment terminates as a result of a change in control
by Raymond, Mr. Colquhoun will be entitled to receive an amount equal to three
times the sum of (1) Mr. Colquhoun's
B-9
<PAGE> 32
base salary in effect on termination and (2) Mr. Colquhoun's target annual
bonus, or, if higher, the average of Mr. Colquhoun's actual annual bonuses (paid
or accrued) for the three fiscal years immediately preceding the termination,
payable in a lump sum within 30 days following the termination; (3) an amount
equal to Mr. Colquhoun's target annual bonus for the fiscal year in which the
termination occurs, multiplied by a fraction, the numerator of which is the
number of days in such fiscal year that Mr. Colquhoun was employed by Raymond
and the denominator of which is 365, payable in a lump sum within 30 days
following termination. In addition, Raymond will continue for a period of three
years following termination, all benefits, compensation and perquisites in
effect immediately prior to termination. After the three year period, Mr.
Colquhoun would receive retiree medical and life insurance in such amounts and
with such benefits equivalent to that in effect on termination.
Raymond has agreements with James J. Malvaso, William B. Lynn, Jerome R.
Dinn and Margaret Gallagher which provide, in the event of a change in control
of Raymond, for continuing the employment of the executive for a period of three
years at salary bonus or target bonus and benefit levels not less than that
which existed immediately prior to the change in control. In the event of
termination of employment without cause during this three year period, the
executive's non-cash benefits continue for the remainder of the three year
period together with a single advance payment of any cash due for the remainder
of the three year period. Under the agreements, the resignation of the executive
may occur following a change in control if: a) there is a significant change in
the nature or scope of authorities or duties, reduction in compensation or
breach of agreement by Raymond, or b) there is a reasonable determination that
the executive is unable to perform his authorities, powers, functions or duties
of his position or c) there is a failure by Raymond to assign the agreement to
its successors and assigns.
Compensation Committee Interlocks and Insider Participation
Directors Dr. M. Richard Rose, James F. Matthews, Michael R. Porter and
Arthur M. Richardson comprise Raymond's Executive Compensation Committee.
Messrs. Rose, Matthews, Porter, and Richardson are nonemployee Directors of
Raymond and none of them are a former officer of Raymond or any of its
subsidiaries.
James F. Matthews is the President and 100% owner of The Matco Group, Inc.
The Company does business with several of Mr. Matthews' companies, including
Wholesale Electric Supply Corp., a supplier of electric wiring materials, U.S.
Assemblies Endicott, Inc., a supplier of assembled printed circuit boards,
American Board Company, a supplier of bare circuit boards and Matthews Leasing
Corp., an automobile leasing company. In 1996, the Company paid approximately
$3,146,000 for services and materials supplied by Mr. Matthews' companies to the
Company in the ordinary course of business.
Board Compensation Committee Report on Executive Compensation
The Executive Compensation Committee of the Board of Directors (the
"Committee") is comprised of three independent nonemployee Directors. As noted
earlier in Item 10 to this Form 10-K Report, the Committee's duties include
recommending to the Board of Directors the base salary for the Chief Executive
Officer ("CEO") and all other executive officers and administering Raymond's
Stock Option Plan.
COMPENSATION POLICY AND OVERALL OBJECTIVES
The Committee believes that compensation of Raymond's key executive
employees should:
- attract, retain and motivate a high caliber of executives, since the
performance of these employees on a long-term basis is vital to the
success of the business.
- link rewards to business results and shareholder returns.
- provide variable, at risk compensation that is dependent upon the level
of success in meeting specified individual and corporate goals.
B-10
<PAGE> 33
- encourage executives to become shareholders of the Company promoting
identification with the Company's shareholders and their interests.
The Committee annually reviews and compares Raymond's compensation programs
for its executive officers with that of other North American durable goods
manufacturing companies including those of comparable sales volume, employment
levels, product and service offerings. A number of these companies are included
in the Value Line Machinery Peer Group referred to in the performance graph.
The key elements of Raymond's executive compensation policy are base
salary, annual incentives in the form of a cash bonus and long-term incentives
in the form of stock options. The Committee evaluates base salaries in
accordance with its policy of focusing on individual performance and competitive
market conditions. The other two components, annual cash incentives and
long-term incentives are designed to increase motivation for achieving strategic
objectives. Compensation received from these two components are directly linked
to business results.
BASE SALARY
Base salaries are targeted to be competitive to pay levels of executive
officers in comparable North American durable goods manufacturing companies, as
noted previously. The Committee also reviews salary information supplied by
consultants Watson Wyatt, William M. Mercer, Incorporated and The Conference
Board when establishing base salary structures.
Salaries within these structures vary by individual and when reviewing each
executive officer's salary, the Committee considers the executive's level of
performance, responsibility, prior experience, breadth of knowledge, abilities,
equity issues relating to pay of other Corporate executives and external pay
practices. In making salary recommendations or decisions, the Committee
exercises its discretion and judgment based on these factors. No specific
formula is applied to determine the weight of any one factor.
The base salary for Raymond's CEO, Ross K. Colquhoun, was reviewed in March
1996 by the Committee. The Committee reviewed Mr. Colquhoun's salary based on
its assessment of Raymond's financial and non-financial performance. The
Committee has identified several factors which are critical to Raymond's success
including growth in shareholder value, sales growth, earnings per share growth
and the development of new products. As a result of Mr. Colquhoun's leadership,
Raymond again set new records in orders, revenues and profits. The Committee
concluded that Mr. Colquhoun's efforts improved Raymond's presence in domestic
and international markets and enabled Raymond to expand its manufacturing sales
base.
For the year 1996, the Committee authorized a base salary of $439,490 for
Mr. Colquhoun. This amount places him slightly below the average level of
salaries for CEO's in comparable North American durable goods manufacturing
companies as reported in the reports of Watson Wyatt Data Services Top
Management and William M. Mercer, Incorporated.
ANNUAL CASH INCENTIVE
Consistent with the overall objectives described above, annual cash
incentives are awarded pursuant to Raymond's Executive Bonus Plan. This Plan
promotes Raymond's "pay for performance" philosophy by providing executives with
financial reward in the form of annual cash bonuses based upon the achievement
of specific, predetermined goals and Raymond's profit after providing for return
on shareholders' equity.
In 1995, the specifically measured performance goals established for 1996
included the completion of the manufacturing facility in Greene, expanding the
sales base, increasing the sales volume and sustaining profitability to enable
the payment of a cash dividend.
The Executive Bonus Plan for the 1996 fiscal year was based on the
relationship of pre-tax profits to Raymond's shareholders' equity. The Committee
believes that a bonus based on this formula aligns the executives' reward
directly to shareholder value.
Mr. Colquhoun was awarded a bonus of $350,587 in 1996 based on the formula
and the remaining bonus pool was distributed among designated senior executives
in Raymond.
B-11
<PAGE> 34
An additional bonus of $50,000 was awarded by the Executive Compensation
Committee to Mr. Colquhoun in 1996 based on his outstanding performance in
leading Raymond in its achievements as indicated above.
LONG-TERM INCENTIVES
The Raymond Corporation Stock Option Plan is a stock-based incentive
compensation plan under which employees selected by the Committee may receive
awards of stock options and stock appreciation rights. Raymond encourages the
recipients to hold the common stock issued pursuant to the Plan so that the
employees' interests will continue to be aligned with the long-term interests of
Raymond's shareholders.
No option awards are made in the absence of satisfactory performance by the
eligible employees. Performance is evaluated by the Committee based on the
employee's individual contribution to the long-term health of Raymond and
Raymond's performance. The number of options granted annually is determined
according to a formula based on the market price of Raymond's Common Stock, base
salary and performance level, without regard to the number of options held by
the optionee. The Committee granted non-qualified and incentive stock options to
executive officers and other eligible employees in March 1996 at an exercise
price per share of $18.21 per share, the average price of the common stock on
the NASDAQ (National Association of Securities Dealers Quotations System) market
on the date of grant, adjusted for the 1996 5% stock dividend. In the event that
the stock price declines to a level below the option grant price options are not
revalued or reissued. Stock options expire ten (10) years from the date of
grant.
In accordance with the Plan, the CEO was awarded 23,699 non-qualified stock
options and 5,486 incentive stock options at a fair market value of $18.21 per
share in 1996, adjusted for the 1996 stock dividend. Compliance with Internal
Revenue Code Section 162(m).
Section 162(m) of the Internal Revenue Code generally limits to $1 million
the annual corporate federal income tax deduction for certain "non-performance
based" compensation paid to the CEO or any of the four other highest paid
officers of a publicly-held corporation.
The Committee has determined that it is unlikely that Raymond would pay
compensation in fiscal 1997 that would result in the loss of federal income tax
deduction under Section 162(m) of the Internal Revenue Code of 1986, and has
therefore not recommended that any special actions be taken or plans or programs
be revised at this time. The Committee will continue to monitor the
applicability of Section 162(m) to Raymond's programs and will determine at a
later date what actions Raymond should take.
Respectfully submitted,
The Executive Compensation Committee
Dr. M. Richard Rose, Chairman
James F. Matthews
Michael R. Porter
Arthur M. Richardson
B-12
<PAGE> 35
PERFORMANCE GRAPH
The following performance graph compares the performance of Raymond's
Common Stock for the last five fiscal years to the Standard & Poors' 500 Index
and the Value Line Machinery Peer Group, which consists of 29 companies.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
(PERFORMANCE RESULTS THROUGH FISCAL YEAR ENDED 12/21/96)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD THE RAYMOND STANDARD & POORS
(FISCAL YEAR COVERED) CORPORATION 500 MACHINERY
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 166.67 107.79 110.69
1993 186.11 118.66 140.90
1994 215.83 120.56 138.15
1995 278.69 165.78 160.56
1996 224.42 204.32 191.91
</TABLE>
Assumes $100 invested at the close of trading 12/31/91 in The Raymond
Corporation Common Stock, Standard & Poors' 500 Index and Value Line Machinery
Peer Group.
* Cumulative total return assumes reinvestment of dividends.
B-13
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------ ------------
<C> <S> <C>
1 Agreement and Plan of Merger, dated as of June 16, 1997, among Parent,
the Offeror and the Company.
2(a) Employment Agreement dated as of November 3, 1987 amended as of June 14,
1994 and as of November 1, 1995 and amended and restated as of March 24,
1997 between Ross K. Colquhoun and The Raymond Corporation.
(Incorporated by reference to Exhibit 10.6 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996).
2(b) Sample form of Executive Agreement (Tier II) between The Raymond
Corporation and Company Executives. (Incorporated by reference to
Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996).
2(c) Sample form of Executive Agreement (Tier III) between The Raymond
Corporation and Company Executives. (Incorporated by reference to
Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996).
2(d) The Raymond Corporation Retirement Benefits Equalization Plan.
(Incorporated by reference to Exhibit 10.9 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996).
2(e) The Raymond Corporation 1996 Deferred Stock Unit Plan for Non-Employee
Directors. (Incorporated by reference to Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996).
2(f) The Raymond Corporation Stock Option Plan (1991) amended as of March 24,
1997. (Incorporated by reference to Exhibit 10.11 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996).
2(g) The Raymond Corporation Stock Option Plan (1995) as amended as of March
24, 1997. (Incorporated by reference to Exhibit 10.12 to the Company's
Current Report on Form 10-K for the year ended December 31, 1996).
2(h) The Raymond Corporation Deferred Compensation Plan for Exempt Employees
restated as of September 1, 1994, amended as of March 24, 1997
(Incorporated by reference to Exhibit 10.13 to the Company's Current
Report on Form 10-K for the year ended December 31, 1996).
2(i) The Raymond Corporation Officer Performance Bonus Plan Formula
(Incorporated by reference to Exhibit 10.15 to the 1992 Form 10-K Annual
Report of the Company at page 357 and incorporated herein by reference).
3 Letter to Stockholders dated June 20, 1997.+
4 Press Release, dated June 16, 1997.
5 Rights Agreement, dated as of March 1, 1997 between the Company and
American Stock Transfer and Trust Company, as Rights Agent (incorporated
by reference to the Company's Current Report on Form 8-K dated March 11,
1997).
6 Amendment No. 1 to the Rights Agreement, dated as of June 16, 1997.
7 Opinion of Lehman Brothers dated June 16, 1997.++
</TABLE>
- ---------------
+ Included in copy mailed to stockholders.
++ Included as Annex A in copy mailed to stockholders.
<PAGE> 1
[EXECUTION COPY]
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BT INDUSTRIES AB,
LIFT ACQUISITION COMPANY, INC.
AND
THE RAYMOND CORPORATION
Dated as of June 16, 1997
================================================================================
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I THE OFFER............................................................. 1
1.01 The Offer..................................................................... 1
1.02 Company Actions............................................................... 3
1.03 Composition of the Board of Directors......................................... 4
ARTICLE II THE MERGER AND RELATED MATTERS........................................ 5
2.01 The Merger.................................................................... 5
2.02 Conversion of Stock........................................................... 6
2.03 Dissenting Stock.............................................................. 6
2.04 Surrender of Certificates..................................................... 7
2.05 Payment ...................................................................... 8
2.06 No Further Rights of Transfers................................................ 8
2.07 Stock Option and Other Plans.................................................. 9
2.08 Certificate of Incorporation of the Surviving Corporation..................... 10
2.09 By-Laws of the Surviving Corporation.......................................... 10
2.10 Directors and Officers of the Surviving Corporation........................... 10
2.11 Closing ...................................................................... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES........................................ 10
3.01 Representations and Warranties of the Company................................. 10
(a) Due Organization, Good Standing and Corporate Power.............. 11
(b) Authorization and Validity of Agreement.......................... 11
(c) Capitalization................................................... 12
(d) Consents and Approvals; No Violations............................ 13
(e) Company Reports and Financial Statements......................... 14
(f) Absence of Certain Changes....................................... 14
(g) Title to Properties; Encumbrances................................ 15
(h) Compliance with Laws............................................. 15
(i) Litigation....................................................... 15
(j) Employee Benefit Plans........................................... 16
(k) Employment Relations and Agreements.............................. 18
(l) Taxes ....................................................... 18
(m) Liabilities...................................................... 20
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
(n) Intellectual Properties.......................................... 20
(o) Proxy Statement, Schedule l4D-9 and Schedule l4D-1............... 22
(p) Broker's or Finder's Fee......................................... 22
(q) Environmental Laws and Regulations............................... 23
(r) State Takeover Statutes; Charter Provisions...................... 24
(s) Voting Requirements.............................................. 24
(t) Rights Agreement................................................. 24
(u) Opinion of Financial Advisor..................................... 25
3.02 Representations and Warranties of Parent and Sub.............................. 25
(a) Due Organization; Good Standing and Corporate Power.............. 25
(b) Authorization and Validity of Agreement.......................... 25
(c) Consents and Approvals; No Violations............................ 26
(d) Offer Documents, Schedule l4D-9 and Proxy Statement.............. 26
(e) Broker's or Finder's Fee......................................... 27
(f) Financing ....................................................... 27
ARTICLE IV TRANSACTIONS PRIOR TO CLOSING DATE.................................... 27
4.01 Access to Information Concerning Properties and Records....................... 27
4.02 Confidentiality............................................................... 28
4.03 Conduct of the Business of the Company Pending the Closing Date............... 28
4.04 Proxy Statement............................................................... 30
4.05 Shareholder Approval.......................................................... 30
4.06 Reasonable Best Efforts....................................................... 31
4.07 No Solicitation of Other Offers............................................... 31
4.09 HSR Act ...................................................................... 33
4.10 Exon-Florio................................................................... 35
4.11 Employee Benefits............................................................. 35
4.13 Rights Agreement.............................................................. 37
4.14. Public Announcements......................................................... 37
4.15 Transfer Tax.................................................................. 37
ARTICLE V CONDITIONS PRECEDENT TO MERGER........................................ 38
5.01 Conditions Precedent to Obligations of Parent, Sub and the Company............ 38
(a) Approval of Company's Shareholders............................... 38
(b) HSR Act ....................................................... 38
(c) Exon-Florio...................................................... 38
(d) Injunction....................................................... 38
(e) Statutes ....................................................... 39
(f) Minimum Condition................................................ 39
ARTICLE VI TERMINATION AND ABANDONMENT........................................... 39
6.01 Termination................................................................... 39
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
6.02 Effect of Termination......................................................... 41
ARTICLE VII MISCELLANEOUS......................................................... 41
7.01 Fees and Expenses............................................................. 41
7.02 Representations and Warranties................................................ 42
7.03 Extension; Waiver............................................................. 42
7.04 Notices ...................................................................... 42
7.05 Entire Agreement.............................................................. 43
7.06 Binding Effect; Benefit; Assignment........................................... 44
7.07 Amendment and Modification.................................................... 44
7.08 Further Actions............................................................... 44
7.09 Headings...................................................................... 44
7.10 Counterparts.................................................................. 44
7.11 Applicable Law................................................................ 44
7.12 Severability.................................................................. 44
7.13 Certain Definitions........................................................... 45
7.14 Parent Guarantee.............................................................. 45
7.15 Submission to Jurisdiction.................................................... 45
ANNEX A...................................................................................A-1
</TABLE>
(iii)
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 16, 1997 (this
"Agreement"), by and among BT INDUSTRIES, INC., a corporation incorporated under
the laws of Sweden ("Parent"), LIFT ACQUISITION COMPANY, INC., a New York
corporation and a direct or indirect wholly-owned subsidiary of Parent ("Sub"),
and THE RAYMOND CORPORATION, a New York corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent;
WHEREAS, in contemplation thereof it is proposed that Sub will make a
tender offer (the "Offer") to purchase all the issued and outstanding shares of
common stock, $1.50 par value, of the Company ("Common Stock"), subject to the
terms and conditions of this Agreement, at a price of $33.00 per share net to
the seller in cash (the "Offer Price");
WHEREAS, to complete such acquisition, the respective Boards of
Directors of Parent, Sub and the Company, have approved the merger of the
Company into Sub (the "Merger"), pursuant to and subject to the terms and
conditions of this Agreement; and
WHEREAS, the Directors of the Company have unanimously determined that
each of the Offer and the Merger are fair to, and in the best interests of, the
holders of Common Stock, approved the Offer and the Merger and recommended the
acceptance of the Offer and approval and adoption of this Agreement by the
shareholders of the Company; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE OFFER
1.01 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Article VI hereof and so long as none of the
events set forth in Annex A hereto (the "Tender Offer Conditions") shall have
occurred and are continuing, as promptly as practicable, but in no event later
than the fifth business day after the date of this Agreement, Parent and Sub
shall, and Parent shall cause Sub to, commence the Offer at the Offer Price. The
obligations of Sub to accept for payment and to pay for any shares of
<PAGE> 6
Common Stock tendered shall be subject only to the Tender Offer Conditions, any
of which may be waived by Parent or Sub in their sole discretion; provided,
however, that Sub shall not waive the Minimum Condition (as defined in Annex A)
without the prior written consent of the Company. The Tender Offer Conditions
are for the sole benefit of Parent and Sub and may be asserted by Parent and Sub
regardless of the circumstances giving rise to any such Tender Offer Conditions
or, except as expressly set forth herein, may be waived by Parent and Sub in
whole or in part. Parent and Sub expressly reserve the right to modify the terms
of the Offer, including without limitation to extend the Offer beyond any
scheduled expiration date; provided; however, without the prior written consent
of the Company, Sub shall not (i) reduce the number of shares of Common Stock to
be purchased in the Offer, (ii) reduce the Offer Price, (iii) modify or add to
the Tender Offer Conditions, (iv) change the form of consideration payable in
the Offer or (v) make any other change in the terms of the Offer which is
materially adverse to the holders of the Common Stock. Upon the terms and
subject to the conditions of the Offer, Sub shall purchase all shares of Common
Stock which are validly tendered on or prior to the expiration of the Offer and
not withdrawn.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Parent and Sub shall file, and Parent shall cause Sub to file, with
the Securities and Exchange Commission (the "Commission") a Tender Offer
Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer. The Schedule 14D-1
shall contain (included as an exhibit) or shall incorporate by reference an
offer to purchase (the "Offer to Purchase") and a form of the related letter of
transmittal (the "Letter of Transmittal"), as well as all other information and
exhibits required by law (which Schedule 14D-1, Offer to Purchase, Letter of
Transmittal and such other information and exhibits, together with any
supplements or amendments thereto, are referred to herein collectively as the
"Offer Documents"). The Schedule 14D-1 will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed with
the Commission and the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading, except that no representation is made by Parent or Sub
with respect to any information supplied by the Company in writing for inclusion
in the Schedule 14D-1. Each of Parent and Sub agrees promptly to correct any
information provided by it for use in the Offer Documents that shall be, or have
become, false or misleading in any material respect, and Parent and Sub further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected
to be filed with the Commission and the other Offer Documents as so corrected to
be disseminated to holders of Common Stock, in each case as and to the extent
required by applicable federal securities laws. Each of Parent and Sub agrees to
provide the Company and its counsel with copies of any written comments Parent
and Sub or their counsel may receive from the Commission or its staff with
respect to the Offer Documents promptly
-2-
<PAGE> 7
after the receipt of such comments and shall provide the Company and its counsel
an opportunity to participate, including by participating with Parent and its
counsel in any discussions with the Commission or its staff, in the response of
Parent or Sub to such comments.
1.02 Company Actions. The Company hereby consents to the Offer and the
Merger and represents that (a) its Board of Directors (at a meeting duly called
and held) has (i) determined by the unanimous vote of the Directors that each of
the Offer and the Merger is fair to, and in the best interests of, the holders
of Common Stock, (ii) approved the Offer and the Merger and adopted this
Agreement in accordance with the provisions of the New York Business Corporation
Law, (iii) recommended acceptance of the Offer and approval and adoption of this
Agreement by the shareholders of the Company, (iv) taken all other applicable
action necessary to render (x) Section 912 of the New York Business Corporation
Law and other state takeover statutes, (y) Article SEVENTH of the Company's
Restated and Amended Certificate of Incorporation and (z) the Rights Agreement
dated as of March 1, 1997 (the "Rights Agreement") inapplicable to the Offer and
the Merger; and (b) Lehman Brothers has delivered to the Board of Directors of
the Company its opinion that the consideration to be received by the holders of
Common Stock, other than Parent and Sub, pursuant to the Offer and the Merger is
fair to such holders of Common Stock from a financial point of view, subject to
the assumptions and qualifications contained in such opinion. The Company shall
file with the Commission, as soon as practicable on the date of the commencement
of the Offer, a Solicitation/Recommendation Statement on Schedule 14D-9,
(together with all amendments and supplements thereto, the "Schedule l4D-9"),
containing the recommendations referred to in clause (a) of the preceding
sentence and shall disseminate the Schedule 14D-9 as required by Rule 14d-9
under the Exchange Act. Parent and Sub and their counsel shall be given the
opportunity to review and comment upon the Schedule l4D-9 prior to its filing
with the Commission. The Schedule 14D-9 will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the Commission and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by Parent or Sub in
writing for inclusion in the Schedule 14D-9. The Company agrees to provide
Parent and its counsel with any comments the Company or its counsel may receive
from the Commission or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments and shall provide Parent and its counsel an
opportunity to participate, including by participating with the Company and its
counsel in any discussions with the Commission or its staff, in the response of
the Company to such comments. In connection with the Offer, the Company will
promptly furnish Sub with mailing labels, security position listings and any
available listing or computer list containing the names and
-3-
<PAGE> 8
addresses of the record holders of the Common Stock as of the most recent
practicable date and shall furnish Sub with such additional information
(including, but not limited to, updated lists of holders of Common Stock and
their addresses, mailing labels and lists of security positions) and such other
assistance as Sub or its agents may reasonably request in communicating the
Offer to the Company's shareholders. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Merger, Parent and
its affiliates and associates shall hold in confidence the information contained
in any such labels, listings and files, will use such information only in
connection with the Offer and the Merger, and, if this Agreement is terminated,
shall deliver to the Company all copies of such information in their possession.
The Company has been advised that each of its directors and executive officers
intends to tender pursuant to the Offer all shares of Common Stock owned of
record and beneficially by him or her except to the extent such tender would
violate applicable securities laws.
1.03 Composition of the Board of Directors. (a) Promptly upon the
acceptance for payment of, and payment by Sub in accordance with the Offer for,
shares of Common Stock equal to at least two-thirds of the outstanding shares of
Common Stock, pursuant to the Offer, Sub shall be entitled to designate up to
such number of directors on the Board of Directors of the Company, rounded up to
the next whole number, as will give Sub, subject to compliance with Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, representation
on such Board of Directors equal to at least that number of directors which
equals the product of the total number of directors on the Board of Directors
(giving effect to the directors elected pursuant to this sentence) multiplied by
a fraction, the numerator of which shall be the number of shares of Common Stock
beneficially owned by Sub and Parent and the denominator of which shall be the
number of shares of Common Stock then outstanding, and the Company and its Board
of Directors shall, at such time, take any and all such action needed to cause
Sub's designees to be appointed to the Company's Board of Directors (including
using its reasonable best efforts to cause directors to resign). Subject to
applicable law, the Company shall take all action requested by Parent which is
reasonably necessary to effect any such election, including mailing to its
shareholders the Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the
Company agrees to make such mailing with the mailing of the Schedule 14D-9 so
long as Sub shall have provided to the Company on a timely basis all information
required to be included in the Information Statement with respect to Sub's
designees. Parent or Sub will be solely responsible for any information with
respect to either of them and their nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1. In furtherance thereof, the Company
will increase the size of the Company's Board of Directors (subject to the
limitations set forth in the Company's Restated and Amended Certificate of
Incorporation and By-Laws), or use its reasonable efforts to secure the
resignation of directors, or both, as is necessary to permit Sub's designees to
be elected to the Company's
-4-
<PAGE> 9
Board of Directors. At the Effective Time (as defined in Section 2.01(a)
hereof), the Company, if so requested, will use its reasonable efforts to cause
persons designated by Sub to constitute the same percentage of each committee of
such board, each board of directors of each Subsidiary and each committee of
each such board (in each case to the extent of the Company's ability to elect
such persons).
(b) Following the election or appointment of Sub's designees pursuant
to this Section 1.03 and prior to the Effective Time (as hereinafter defined),
any amendment or termination of this Agreement or the Restated and Amended
Certificate of Incorporation or By-Laws of the Company, any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent and Sub or waiver
of any of the Company's rights hereunder, and any other consent or action by the
Board of Directors hereunder, will require the concurrence of a majority (which
shall be at least two) of the directors of the Company then in office who are
directors on the date hereof and who voted to approve this Agreement or are
designated by a majority of the directors of the Company who are directors on
the date hereof and who voted to approve this Agreement.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.01 The Merger. (a) Subject to the terms and conditions of this
Agreement, at the time of the Closing (as defined in Section 2.11 hereof), a
certificate of merger (the "Certificate of Merger") shall be duly prepared,
executed and acknowledged by Sub and the Company in accordance with the New York
Business Corporation Law and shall be filed on the Closing Date (as defined in
Section 2.11 hereof). The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of New York in
accordance with the provisions and requirements of the New York Business
Corporation Law. The date and time when the Merger shall become effective is
hereinafter referred to as the "Effective Time."
(b) At the Effective Time, Sub shall be merged with and into the
Company and the separate corporate existence of Sub shall cease, and the Company
shall continue as the surviving corporation under the laws of the State of New
York under the name of "The Raymond Corporation" (the "Surviving Corporation").
(c) From and after the Effective Time, the Merger shall have the
effects set forth in the applicable provisions of the New York Business
Corporation Law.
-5-
<PAGE> 10
2.02 Conversion of Stock. At the Effective Time:
(a) Each share of Common Stock then issued and outstanding (other than
(i) any shares of Common Stock which are held by any Subsidiary or in the
treasury of the Company, or which are held, directly or indirectly, by
Parent or any direct or indirect subsidiary of Parent (including Sub), all
of which shall be cancelled and none of which shall receive any payment
with respect thereto and (ii) shares of Common Stock held by Dissenting
Shareholders (as defined in Section 2.03 hereof)) shall, by virtue of the
Merger and without any action on the part of Parent, Sub, the Company or
the holder thereof, be cancelled and converted into and represent the right
to receive an amount in cash, without interest, equal to the price paid for
each share of Common Stock pursuant to the Offer (the "Merger
Consideration"); and
(b) Each share of common stock, par value $0.01 per share, of Sub then
issued and outstanding shall, by virtue of the Merger and without any
action on the part of Parent, Sub, the Company or the holder thereof,
become one fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation.
2.03 Dissenting Stock. Notwithstanding anything in this Agreement to
the contrary but only to the extent required by New York Business Corporation
Law, shares of Common Stock that are issued and outstanding immediately prior to
the Effective Time and are held by holders of Common Stock who comply with all
the provisions of New York law concerning the right of holders of Common Stock
to dissent from the Merger and require appraisal of their shares of Common Stock
("Dissenting Shareholders") shall not be converted into the right to receive the
Merger Consideration but shall become the right to receive such consideration as
may be determined to be due such Dissenting Shareholder pursuant to the law of
the State of New York; provided, however, that (i) if any Dissenting Shareholder
shall subsequently deliver a written withdrawal of his or her demand for
appraisal (with the written approval of the Surviving Corporation, if such
withdrawal is not tendered within 60 days after the Effective Time), or (ii) if
any Dissenting Shareholder fails to establish and perfect his or her entitlement
to appraisal rights as provided by applicable law, then such Dissenting
Shareholder or Shareholders, as the case may be, shall forfeit the right to
appraisal of such shares and such shares shall thereupon be cancelled and be
deemed to have been converted into the right to receive, as of the Effective
Time, the Merger Consideration, without interest. The Company shall give Parent
and Sub (A) prompt notice of any written demands for appraisal, withdrawals of
demands for appraisal and any other related instruments received by the Company,
and (B) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal. The Company will not, except with the prior written
consent of Parent,
-6-
<PAGE> 11
voluntarily make any payment with respect to any demands for appraisal or settle
or offer to settle any such demand.
2.04 Surrender of Certificates. (a) Prior to the Effective Time, Parent
shall designate a bank or trust company located in the United States to act as
paying agent (the "Paying Agent") for purposes of making the cash payments
contemplated hereby. As soon as practicable after the Effective Time, Parent
shall cause the Paying Agent to mail and/or make available to each holder of a
certificate theretofore evidencing shares of Common Stock (other than those
which are held by any Subsidiary or in the treasury of the Company or which are
held directly or indirectly by Parent or any direct or indirect subsidiary of
Parent (including Sub)) a notice and letter of transmittal advising such holder
of the effectiveness of the Merger and the procedure for surrendering to the
Paying Agent such certificate or certificates which immediately prior to the
Effective Time represented outstanding Common Stock (the "Certificates") in
exchange for the Merger Consideration deliverable in respect thereof pursuant to
this Article II. Upon the surrender for cancellation to the Paying Agent of such
Certificates, together with a letter of transmittal, duly executed and completed
in accordance with the instructions thereon, and any other items specified by
the letter of transmittal, the Paying Agent shall promptly pay to the Person (as
defined in Section 7.14 hereof) entitled thereto the Merger Consideration
deliverable in respect thereof. Until so surrendered, each Certificate shall be
deemed, for all corporate purposes, to evidence only the right to receive upon
such surrender the Merger Consideration deliverable in respect thereof to which
such Person is entitled pursuant to this Article II. No interest shall be paid
or accrued in respect of such cash payments.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to the Paying Agent any transfer or other
taxes payable by reason of the foregoing or establish to the satisfaction of the
Paying Agent that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article II,
provided that, the Person to whom the Merger Consideration is paid shall, as a
condition precedent to the payment thereof, give the Surviving Corporation a
bond in such sum as it may direct or otherwise indemnify the Surviving
Corporation in a manner satisfactory
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<PAGE> 12
to it against any claim that may be made against the Surviving Corporation with
respect to the Certificate claimed to have been lost, stolen or destroyed.
2.05 Payment. Concurrently with or immediately prior to the Effective
Time, Parent or Sub shall deposit in trust with the Paying Agent cash in United
States dollars in an aggregate amount equal to the product of (i) the number of
shares of Common Stock outstanding immediately prior to the Effective Time
(other than shares of Common Stock which are held by any Subsidiary or in the
treasury of the Company or which are held directly or indirectly by Parent or
any direct or indirect subsidiary of Parent (including Sub) or a Person known at
the time of such deposit to be a Dissenting Shareholder) and (ii) the Merger
Consideration (such amount being hereinafter referred to as the "Payment Fund").
The Payment Fund shall be invested by the Paying Agent as directed by Parent in
direct obligations of the United States, obligations for which the full faith
and credit of the United States is pledged to provide for the payment of
principal and interest, commercial paper rated of the highest quality by Moody's
Investors Services, Inc. or Standard & Poor's Ratings Group or certificates of
deposit, bank repurchase agreements or bankers' acceptances of a commercial bank
having at least $100,000,000 in assets (collectively "Permitted Investments") or
in money market funds which are invested in Permitted Investments, and any net
earnings with respect thereto shall be paid to Parent as and when requested by
Parent. The Paying Agent shall, pursuant to irrevocable instructions, make the
payments referred to in Section 2.02(a) hereof out of the Payment Fund. The
Payment Fund shall not be used for any other purpose except as otherwise agreed
to by Parent. Promptly following the date which is six months after the
Effective Time, the Paying Agent shall return to the Surviving Corporation all
cash, certificates and other instruments in its possession that constitute any
portion of the Payment Fund (other than net earnings on the Payment Fund which
shall be paid to Parent), and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate may surrender such Certificate to the
Surviving Corporation and (subject to applicable abandoned property, escheat and
similar laws) receive in exchange therefor the Merger Consideration, without
interest, but shall have no greater rights against the Surviving Corporation or
Parent than may be accorded to general creditors of the Surviving Corporation or
Parent under applicable law. Notwithstanding the foregoing, neither the Paying
Agent nor any party hereto shall be liable to a holder of shares of Common Stock
for any Merger Consideration delivered to a public official pursuant to
applicable abandoned property, escheat and similar laws.
2.06 No Further Rights of Transfers. At and after the Effective Time,
each holder of a Certificate shall cease to have any rights as a shareholder of
the Company, except for, in the case of a holder of a Certificate (other than
shares to be cancelled pursuant to Section 2.02(a) hereof and other than shares
held by Dissenting Shareholders), the right to surrender his or her Certificate
in exchange for payment of the Merger Consideration or, in the case of a
Dissenting Shareholder, to perfect his or her right to receive payment for his
or her shares
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<PAGE> 13
pursuant to New York law if such holder has validly perfected and not withdrawn
his or her right to receive payment for his or her shares, and no transfer of
shares of Common Stock shall be made on the stock transfer books of the
Surviving Corporation. Certificates presented to the Surviving Corporation after
the Effective Time shall be cancelled and exchanged for cash as provided in this
Article II. At the close of business on the day of the Effective Time the stock
ledger of the Company with respect to Common Stock shall be closed.
2.07 Stock Option and Other Plans. (a) Prior to the Effective Time,
each of the Board of Directors of the Company (or, if appropriate, any Committee
thereof) and the Company shall use its reasonable best efforts to obtain the
consent of all of the holders of options to purchase Common Stock (the
"Options") heretofore granted under any stock option plan of the Company (the
"Stock Plans") to provide for the cancellation, effective at the Effective Time,
of all the outstanding Options, as follows: Immediately prior to the Effective
Time, each Option, whether or not then vested or exercisable, shall no longer be
exercisable for the purchase of shares of Common Stock but shall entitle each
holder thereof, in cancellation and settlement therefor, to payments in cash
(subject to any applicable withholding taxes, the "Cash Payment"), at the
Effective Time, equal to the product of (x) the total number of shares of Common
Stock subject to such Option as to which such Option could have been exercisable
and (y) the excess of the Merger Consideration over the exercise price per share
of Common Stock subject to such Option, each such Cash Payment to be paid to
each holder of an outstanding Option at the Effective Time. The Company will use
its reasonable best efforts to ensure that any then-outstanding stock
appreciation rights or limited stock appreciation rights shall be cancelled as
of immediately prior to the Effective Time without any payment therefor. As
provided herein, the Stock Plans and any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any Subsidiary (collectively with the Stock
Plans, referred to as the "Stock Incentive Plans") shall terminate as of the
Effective Time. The Company will use its reasonable best efforts to take all
steps necessary to ensure that neither the Company nor any of its Subsidiaries
is or will be bound by any Options, other options, warrants, rights or
agreements which would entitle any Person, other than Parent or its affiliates
(including Sub), to own any capital stock of the Surviving Corporation or except
for certain call options in respect of the capital stock of certain of its
dealership subsidiaries, as more fully set forth in Section 3.01(c)(ii) of the
Company Disclosure Letter, any of its subsidiaries or to receive any payment in
respect thereof. The Company will use its reasonable best efforts to obtain all
necessary consents to ensure that after the Effective Time, the only rights of
the holders of Options to purchase shares of Common Stock in respect of such
Options will be to receive the Cash Payment in cancellation and settlement
thereof.
(b) All Stock Plans shall terminate as of the Effective Time and the
provisions in any other Employee Benefit Plan providing for the issuance,
transfer or grant of
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<PAGE> 14
any capital stock of the Company or any interest in respect of any capital stock
of the Company shall be deleted as of the Effective Time, and the Company shall
use its reasonable best efforts to ensure that following the Effective Time no
holder of an option to purchase Common Stock or any participant in any Stock
Plan shall have any right thereunder to acquire any capital stock of the
Company, Parent or the Surviving Corporation.
2.08 Certificate of Incorporation of the Surviving Corporation. The
Restated and Amended Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation and shall be amended as set forth on
Annex B attached hereto.
2.09 By-Laws of the Surviving Corporation. The By-Laws of the Company,
as in effect immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation.
2.10 Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
shareholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company immediately prior to the Effective Time shall,
subject to the applicable provisions of the Certificate of Incorporation and
By-Laws of the Surviving Corporation, be the officers of the Surviving
Corporation until their respective successors shall be duly elected or appointed
and qualified.
2.11 Closing. Unless this Agreement shall have been terminated pursuant
to Article VI hereof, and the transactions contemplated thereby shall have been
abandoned, the closing of the Merger (the "Closing") shall take place at the
offices of White & Case, 1155 Avenue of the Americas, New York, New York, as
soon as practicable after the last of the conditions set forth in Article V
hereof is fulfilled or waived (subject to applicable law) but in no event later
than the fifth business day thereafter, or at such other time and place and on
such other date as Parent and the Company shall mutually agree (the "Closing
Date").
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<PAGE> 15
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Sub as follows:
(a) Due Organization, Good Standing and Corporate Power. Each of the
Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and each such corporation has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and
authority would not have a material adverse effect on the business,
properties, assets, operations, results of operations or financial
condition (the "Condition") of the Company and its Subsidiaries taken as a
whole. Each of the Company and its Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be so qualified or licensed and in good
standing would not have a material adverse effect on the Condition of the
Company and its Subsidiaries taken as a whole. The Company has made
available to Parent and Sub complete and correct copies of the Restated and
Amended Certificate of Incorporation and By-Laws of the Company and the
comparable governing documents of each of its Subsidiaries, in each case as
amended to the date of this Agreement. Other than as set forth in Section
3.01(a) of the Company's disclosure letter (the "Company Disclosure
Letter") delivered concurrently with the delivery of this Agreement, the
respective certificates of incorporation and by-laws or other
organizational documents of the Subsidiaries of the Company do not contain
any provision limiting or otherwise restricting the ability of the Company
to control such Subsidiaries.
(b) Authorization and Validity of Agreement. The Company has full
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the
Company, and the consummation by it of the transactions contemplated
hereby, have been duly authorized and unanimously approved by its Board of
Directors and no other corporate action on the part of the Company is
necessary to authorize the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby (other than the approval of this Agreement by the
holders of at
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<PAGE> 16
least two thirds of the outstanding shares of Common Stock entitled to vote
and the filing of appropriate merger documents as required by New York
law). This Agreement has been duly executed and delivered by the Company
and is a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
(c) Capitalization. (i) The authorized capital stock of the Company
consists of 15,000,000 shares of Common Stock and no shares of preferred
stock. As of June 10, 1997, (1) 10,738,604 shares of Common Stock are
issued and outstanding, (2) 148,586 shares of Common Stock are reserved for
issuance pursuant to outstanding Options granted under the Stock Plans and
(3) 20,758 shares of Common Stock are held in the Company's treasury. All
issued and outstanding shares of Common Stock have been validly issued and
are fully paid and nonassessable, and are not subject to, nor were they
issued in violation of, any preemptive rights. Except as set forth in this
Section 3.01(c) or in Section 3.01(c) of the Company Disclosure Letter, (i)
there are no shares of capital stock of the Company authorized, issued or
outstanding and (ii) there are not as of the date hereof, and at the
Effective Time there will not be, any outstanding or authorized options,
warrants, rights, subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities, or other commitments,
contingent or otherwise, relating to Common Stock or any other shares of
capital stock of the Company, pursuant to which the Company is or may
become obligated to issue shares of Common Stock, any other shares of its
capital stock or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of the capital stock of
the Company. The Company has no authorized or outstanding bonds,
debentures, notes or other indebtedness the holders of which have the right
to vote (or convertible or exchangeable into or exercisable for securities
having the right to vote) with the shareholders of the Company or any of
its Subsidiaries on any matter ("Voting Debt").
(ii) Section 3.01(c)(ii) of the Company Disclosure Letter lists all of
the Company's Subsidiaries. All of the outstanding shares of capital stock
of each of the Company's Subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable, are not subject to, nor were
they issued in violation of, any preemptive rights, and are owned, of
record and beneficially, by the Company, free and clear of all liens,
encumbrances, options or claims whatsoever, except as set forth in Section
3.01(c)(ii) of the Company Disclosure Letter. Except as set forth in
Section 3.01(c)(ii) of the Company Disclosure Letter, no shares of capital
stock of any of the Company's Subsidiaries are reserved for issuance and
there are no outstanding or authorized
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<PAGE> 17
options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to the capital stock of any
Subsidiary, pursuant to which such Subsidiary is or may become obligated to
issue any shares of capital stock of such Subsidiary or any securities
convertible into, exchangeable for, or evidencing the right to subscribe
for, any shares of such Subsidiary. There are no restrictions of any kind
which prevent the payment of dividends by any of the Company's
Subsidiaries. Except for the Subsidiaries listed on Section 3.01(c)(ii) of
the Company Disclosure Letter, the Company does not own, directly or
indirectly, any capital stock or other equity interest in any Person or
have any direct or indirect equity or ownership interest in any Person and
neither the Company nor any of its Subsidiaries is subject to any
obligation or requirement to provide funds for or to make any investment
(in the form of a loan, capital contribution or otherwise) to or in any
Person. The Company's Subsidiaries have no Voting Debt.
(d) Consents and Approvals; No Violations. Assuming (i) the filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), are made and the waiting period thereunder has
been terminated or has expired, (ii) voluntary notification under Section
721 of the Defense Production Act of 1950, as amended ("Exon-Florio"), is
made, (iii) the requirements of the Exchange Act relating to the Proxy
Statement and the Offer are met, (iv) the filing of the Certificate of
Merger and other appropriate merger documents, if any, as required by New
York Business Corporation Law, are made and (v) approval of the Merger and
this Agreement by holders of at least two thirds of the outstanding shares
of Common Stock entitled to vote, if required by the New York Business
Corporation Law or the Restated and Amended Certificate of Incorporation or
By-Laws of the Company, is received, the execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not: (1) violate any provision of the
Restated and Amended Certificate of Incorporation or By-Laws of the Company
or the comparable governing documents of any of its Subsidiaries; (2)
violate any statute, ordinance, rule, regulation, order or decree of any
court or of any governmental or regulatory body, agency or authority
applicable to the Company or any of its Subsidiaries or by which any of
their respective properties or assets may be bound; (3) require any filing
with, or permit, consent or approval of, or the giving of any notice to,
any governmental or regulatory body, agency or authority; or (4) except as
set forth in Section 3.01(d) of the Company Disclosure Letter, result in a
violation or breach of, conflict with, constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, payment or acceleration) under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of
the properties or assets of the Company or any of
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<PAGE> 18
its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, agreement,
lease, franchise agreement or other instrument or obligation to which the
Company or any of its Subsidiaries is a party, or by which it or any of
their respective properties or assets are bound or subject except for in
the case of clauses (3) and (4) above for such filing, permit, consent,
approval or violation, which would not have a material adverse effect on
the Condition of the Company and its Subsidiaries, taken as a whole, or
would prevent or materially delay consummation of the transactions
contemplated by this Agreement.
(e) Company Reports and Financial Statements. (i) Since January 1,
1994, the Company has filed all forms, reports and documents with the
Commission required to be filed by it pursuant to the federal securities
laws and the Commission rules and regulations thereunder, and all forms,
reports and documents filed with the Commission by the Company have
complied in all material respects with all applicable requirements of the
federal securities laws and the Commission rules and regulations
promulgated thereunder. The Company has, prior to the date of this
Agreement, made available to Parent true and complete copies of all forms,
reports, registration statements and other filings filed by the Company
with the Commission since January 1, 1994, (such forms, reports,
registration statements and other filings, together with any exhibits, any
amendments thereto and information incorporated by reference therein, are
sometimes collectively referred to as the "Commission Filings"). As of
their respective dates, the Commission Filings did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets as of the end of the fiscal years ended
December 31, 1996, December 31, 1995, and December 31, 1994, and the
consolidated statements of income, consolidated statements of shareholders'
equity and consolidated statements of cash flows for the fiscal years ended
December 31, 1996, December 31, 1995, and December 31, 1994, included in
the Commission Filings, were prepared in accordance with generally accepted
accounting principles (as in effect from time to time) applied on a
consistent basis (except as may be indicated therein or in the notes or
schedules thereto) and present fairly, in all material respects, the
consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and changes in cash flows for the periods then ended.
(f) Absence of Certain Changes. Except as previously disclosed in the
Commission Filings, since December 31, 1996, (i) there has not been any
material adverse change in the Condition of the Company and its
Subsidiaries taken as a whole; (ii) the businesses of the Company and each
of its Subsidiaries have been conducted
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<PAGE> 19
only in the ordinary course; (iii) neither the Company nor any of its
Subsidiaries has incurred any material liabilities (direct, contingent or
otherwise) or engaged in any material transaction or entered into any
material agreement outside the ordinary course of business; (iv) the
Company and its Subsidiaries have not increased the compensation of any
officer or granted any general salary or benefits increase to their
employees other than in the ordinary course of business; (v) neither the
Company nor any of its Subsidiaries has taken any action referred to in
Section 4.03 hereof except as permitted thereby; (vi) there has been no
declaration, setting aside or payment of any dividend or other distribution
with respect to the capital stock of the Company; and (vii) there has been
no change by the Company in accounting principles, practices or methods.
(g) Title to Properties; Encumbrances. The Company and each of its
Subsidiaries has good, valid and marketable title to (i) all of its
material tangible properties and assets (real and personal), including,
without limitation, all the properties and assets reflected in the
consolidated balance sheet as of December 31, 1996 except as indicated in
the notes thereto and except for properties and assets reflected in the
consolidated balance sheet as of December 31, 1996 which have been sold or
otherwise disposed of in the ordinary course of business after such date
and except where the failure to have such good, valid and marketable title
would not have a material adverse effect on the Condition of the Company
and its Subsidiaries taken as a whole, and (ii) all the tangible properties
and assets purchased by the Company and any of its Subsidiaries since
December 31, 1996 except for such properties and assets which have been
sold or otherwise disposed of in the ordinary course of business and except
where the failure to have such good, valid and marketable title would not
have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole; in each case subject to no encumbrance,
lien, charge or other restriction of any kind or character, except for (1)
liens reflected in the consolidated balance sheet as of December 31, 1996,
(2) liens consisting of zoning or planning restrictions, easements, permits
and other restrictions or limitations on the use of real property or
irregularities in title thereto which do not materially detract from the
value of, or impair the use of, such property by the Company or any of its
Subsidiaries in the operation of its respective business, (3) liens for
current taxes, assessments or governmental charges or levies on property
not yet due and delinquent and (4) such encumbrances, liens, charges or
other restrictions which would not have a material adverse effect on the
Condition of the Company and its Subsidiaries taken as a whole.
(h) Compliance with Laws. Except as disclosed in the Commission
Filings, the Company and its Subsidiaries are in compliance with all
applicable laws, regulations, orders, judgments and decrees except where
the failure to so comply would not have a material adverse effect on the
Condition of the Company and its Subsidiaries
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<PAGE> 20
taken as a whole or would prevent or materially delay consummation of the
transactions contemplated by this Agreement.
(i) Litigation. Except as disclosed in the Commission Filings or as
set forth in Section 3.01(i) of the Company Disclosure Letter, there is no
action, suit, proceeding at law or in equity, or any arbitration or any
administrative or other proceeding by or before (or to the knowledge of the
Company any investigation by) any governmental or other instrumentality or
agency, pending, or, to the knowledge of the Company, threatened, against
or affecting the Company or any of its Subsidiaries, or any of their
properties or rights which would have a material adverse effect on the
Condition of the Company and its Subsidiaries taken as a whole or would
prevent or materially delay consummation of the transactions contemplated
by this Agreement. There are no such suits, actions, claims, proceedings or
investigations pending or, to the knowledge of the Company, threatened,
seeking to prevent or challenging the transactions contemplated by this
Agreement. Except as disclosed in the Commission Filings, neither the
Company nor any of its Subsidiaries is subject to any judgment, order or
decree entered in any lawsuit or proceeding which would have a material
adverse effect on the Condition of the Company and its Subsidiaries taken
as a whole or would prevent or materially delay consummation of the
transactions contemplated by this Agreement.
(j) Employee Benefit Plans. Set forth in Section 3.01(j) of the
Company Disclosure Letter is an accurate and complete list of each domestic
and foreign employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations thereunder ("ERISA"), and each stock option, stock
appreciation right, restricted stock, incentive, bonus, employment,
severance or salary or benefits continuation plan, program, arrangement or
agreement maintained by the Company or any of its Subsidiaries (including,
for this purpose and for the purpose of all of the representations in this
Section 3.01(j), all employers (whether or not incorporated) that would be
treated together with the Company and/or any of its Subsidiaries as a
single employer within the meaning of Section 414 of the Internal Revenue
Code of 1986, as amended, and the rules and regulations thereunder (the
"Code")) or to which the Company or any such Subsidiary contributes (or has
any obligation to contribute), has any liability or is a party
(collectively, the "Employee Benefit Plans"); and, except to the extent
that a breach of any of the following representations would not have a
material adverse effect on the Condition of the Company and its
Subsidiaries, taken as a whole, (i) each Employee Benefit Plan is in
substantial compliance with applicable law (including, without limitation,
ERISA and the Code) and has been administered and operated in all respects
in accordance with its terms; (ii) each Employee Benefit Plan which is
intended to be "qualified" within the meaning of Section 401(a) of the Code
has received a
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<PAGE> 21
favorable determination letter from the Internal Revenue Service, and each
foreign Employee Benefit Plan which is intended to have a similar status
under applicable non-U.S. law has received a determination of such status
from the relevant governmental authority, and, to the knowledge of the
Company, no event has occurred and no condition exists which could
reasonably be expected to result in the revocation of any such
determination; (iii) no complete or partial termination of any Employee
Benefit Plan covered by Title IV of ERISA has occurred and no proceedings
have been instituted to terminate or appoint a trustee to administer any
such Employee Benefit Plan; (iv) neither the Company nor any of its
Subsidiaries has incurred any unsatisfied liability to the Pension Benefit
Guaranty Corporation (the "PBGC") with respect to any "single-employer
plan" (within the meaning of Section 4001(a)(15) of ERISA), including,
without limitation, any liability under Section 4069 of ERISA or any
penalty imposed under Section 4071 of ERISA, except for payments of
premiums to the PBGC; (v) no Employee Benefit Plan subject to Section 412
or 418B of the Code or Section 302 of ERISA has incurred any accumulated
funding deficiency within the meaning of such sections of the Code or
ERISA; (vi) the actuarial present value of the accumulated plan benefits
(whether or not vested and determined in accordance with the actuarial
assumptions which are set forth in the most recent actuarial valuation
report of the applicable plan) under any Employee Benefit Plan covered by
Title IV of ERISA or the benefits of which are actuarially determined, as
of the close of its most recent plan year did not exceed the fair value of
the assets allocable thereto; (vii) full payment has been timely made of
all amounts which the Company or any of its Subsidiaries is required under
applicable law or under any Employee Benefit Plan to have paid as of the
last day of the most recent fiscal year of such Employee Benefit Plan ended
prior to the date hereof, and the Company and its Subsidiaries have made
adequate provisions, in accordance with generally accepted accounting
principles, in their financial statements for all obligations and
liabilities under all Employee Benefit Plans that have accrued but have not
been paid because they are not yet due under the terms of any such Employee
Benefit Plan or applicable law; (viii) no Employee Benefit Plan currently
contributed to by the Company or any of its Subsidiaries is a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA, or a
"multiple employer plan" within the meaning of the Code or ERISA and
neither the Company nor any of its Subsidiaries has incurred any
unsatisfied withdrawal liability under Title IV of ERISA with respect to
any such plan; (ix) neither the Company nor any Subsidiary has incurred any
material liability (including, without limitation, additional
contributions, fines, taxes, penalties or loss of tax deduction) as a
result of a failure to administer or operate any Employee Benefit Plan that
is a "group health plan" (as such term is defined in Section 607(1) of
ERISA or Section 5000(b)(1) of the Code) in compliance with the applicable
requirements of Part 6 of Subtitle B of Title I of ERISA or Section 4980B
of the Code; (x) except as set forth in Section 3.01(j)(x) of the Company
Disclosure Letter or the financial
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<PAGE> 22
statements of the Company and its Subsidiaries included in the Commission
Filings, neither the Company nor any of its Subsidiaries has any unfunded
liabilities pursuant to any "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA) that is not intended to be "qualified"
under Section 401(a) of the Code; (xi) none of the Company, any of its
Subsidiaries or affiliates or, to Company's knowledge, any other
"disqualified person" or "party in interest" (as defined in Section
4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has
engaged in any transaction, act or omission to act in connection with any
Employee Benefit Plan that could reasonably be expected to result in the
imposition of a penalty pursuant to Section 502 of ERISA, damages pursuant
to Section 409 of ERISA or a tax pursuant to Section 4975 of the Code;
(xii) set forth in Section 3.01(j)(xii) of the Company Disclosure Letter
are all Employee Benefit Plans and agreements, which (either alone or upon
the occurrence of any additional or subsequent event) will or may result in
any payment, "parachute payment" (as such term is defined in Section 280G
of the Code), severance, bonus, retirement or job security or similar-type
benefit, or increase any benefits or accelerate the payment or vesting of
any benefits to any employee or former employee or director of the Company
or any Subsidiary as a result of the execution of this Agreement and the
consummation of the transactions contemplated hereby; and (xiii) no
liability, claim, action, audit, examination or litigation has been made,
commenced or, to the Company's knowledge, threatened with respect to any
Employee Benefit Plan (other than for benefits payable in the ordinary
course).
(k) Employment Relations and Agreements. (i) Each of the Company and
its Subsidiaries is in substantial compliance with all federal, state or
other applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, and has not and is not
engaged in any unfair labor practice; (ii) no material unfair labor
practice charge or complaint against the Company or any of its Subsidiaries
is pending before the National Labor Relations Board; (iii) there is no
labor strike, slowdown, stoppage or material dispute actually pending or,
to the knowledge of the Company, threatened against or involving the
Company or any of its Subsidiaries; (iv) no representation question exists
respecting the employees of the Company or any of its Subsidiaries; and (v)
no collective bargaining agreement is currently being negotiated by the
Company or any of its Subsidiaries and neither the Company nor any of its
Subsidiaries is or has been a party to a collective bargaining agreement;
and (vii) neither the Company nor any of its Subsidiaries has experienced
any material labor difficulty during the last three years. Except as
disclosed in Section 3.01(k) of the Company Disclosure Letter or in the
Commission Filings, there exist no employment, consulting, severance,
indemnification agreements or deferred compensation agreements between the
Company and any director, officer or employee
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of the Company or any agreement that would give any Person the right to
receive any payment from the Company as a result of the Offer or the
Merger.
(l) Taxes. Except as provided in Section 3.01(l) of the Company
Disclosure Letter:
(i) Tax Returns. The Company and each of its subsidiaries, has timely
filed or caused to be timely filed with the appropriate taxing authorities
all Federal and other material returns, statements, forms and reports for
Taxes (as hereinafter defined) ("Returns") that are required to be filed
by, or with respect to, the Company and such subsidiaries. The Returns
reflect accurately all material liability for Taxes of the Company and such
subsidiaries for the periods covered thereby. "Taxes" means all taxes,
assessments, charges, duties, fees, levies or other governmental charges,
including, without limitation, all Federal, state, local, foreign and other
income, franchise, profits, capital gains, capital stock, transfer, sales,
use, occupation, property, excise, severance, windfall profits, stamp,
license, payroll, withholding and other taxes, assessments, charges,
duties, fees, levies or other governmental charges of any kind whatsoever
(whether payable directly or by withholding and whether or not requiring
the filing of a Return), all estimated taxes, deficiency assessments,
additions to tax, penalties and interest and shall include any liability
for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify any person or other entity.
(ii) Payment of Taxes. All material Taxes and Tax liabilities of the
Company and its subsidiaries have been timely paid or adequately disclosed
and fully provided for as a liability on the financial statements of the
Company and its subsidiaries in accordance with generally accepted
accounting principles.
(iii) Other Tax Matters. (A) Section 3.01(l)(iii)(A) of the Company
Disclosure Letter sets forth (1) each taxable year or other taxable period
of the Company or any of its subsidiaries for which an audit or other
examination of Taxes by the appropriate tax authorities of any nation,
state or locality is currently in progress (or scheduled to be conducted)
together with the names of the respective tax authorities conducting (or
scheduled to conduct) such audits or examinations and a description of the
material subject matter of such audits or examinations, (2) the most recent
taxable year or other taxable period for which an audit or other
examination relating to Federal income taxes of the Company and its
subsidiaries has been finally completed and the disposition of such audit
or examination, (3) the taxable years or other taxable periods of the
Company or any of its subsidiaries which will not be subject to the
normally applicable statute of limitations by reason of the existence of
circumstances that would
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<PAGE> 24
cause any material statute of limitations for applicable Taxes to be
extended, (4) the amount of any proposed adjustments (and the principal
reason therefor) relating to any Returns for Tax liability of the Company
or any of its subsidiaries which have been proposed or assessed by any
taxing authority and (5) a list of all notices received by the Company or
any of its subsidiaries from any taxing authority relating to any issue
which could affect the Tax liability of the Company or any of its
subsidiaries, which issue has not been finally determined and which, if
determined adversely to the Company or any such subsidiaries, could result
in a material Tax liability.
(B) Neither the Company nor any of its subsidiaries has been
included in any "consolidated," "unitary" or "combined" Return (other than
Returns which include only the Company and any subsidiaries of the Company)
provided for under the law of the United States, any foreign jurisdiction
or any state or locality with respect to Taxes for any taxable period for
which the statute of limitations has not expired.
(C) All material Taxes which the Company or any of its
subsidiaries is (or was) required by law to withhold or collect have been
duly withheld or collected, and have been timely paid over to the proper
authorities to the extent due and payable.
(D) There are no tax sharing, allocation, indemnification or
similar agreements or arrangements in effect as between the Company, any
subsidiary, or any predecessor or affiliate thereof and any other party
under which Parent, Purchaser or the Company (or any of its subsidiaries)
could be liable for any Taxes or other claims of any party other than the
Company or any subsidiary of the Company.
(E) No indebtedness of the Company or any of its subsidiaries
consists of "corporate acquisition indebtedness" within the meaning of
Section 279 of the Code.
(F) Neither the Company nor any of its subsidiaries has been
required to include in income any adjustment pursuant to Section 481 of the
Code by reason of a voluntary change in accounting method initiated by the
Company or any of its subsidiaries, and the Internal Revenue Service has
not initiated or proposed any such adjustment or change in accounting
method.
(m) Liabilities. Neither the Company nor any of its Subsidiaries has
any claims, liabilities or indebtedness, contingent or otherwise,
outstanding except (i) as set forth in the consolidated balance sheet of
the Company as of December 31, 1996, or referred to in the footnotes
thereto, (ii) for liabilities incurred subsequent to December 31, 1996 in
the ordinary course of business not involving borrowings by the Company or
any of its Subsidiaries, (iii) as otherwise disclosed in the Commission
Filings or (iv)
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<PAGE> 25
such claims, liabilities or indebtedness which would not have a material
adverse effect on the Condition of the Company and its Subsidiaries taken
as a whole. Neither the Company nor any of its Subsidiaries is in default
in respect of the material terms and conditions of any indebtedness or
other agreement.
(n) Intellectual Properties. In the operation of its business the
Company and its Subsidiaries have used, and currently use, domestic and
foreign patents, patent applications, patent licenses, software licenses,
know-how licenses, trade names, trademarks, copyrights, unpatented
inventions, service marks, trademark registrations and applications,
service mark registrations and applications, copyright registrations and
applications, trade secrets and other confidential proprietary information
(collectively, as so used, the "Intellectual Property"). Section 3.01(n) of
the Company Disclosure Letter contains an accurate and complete list of all
Intellectual Property which is of material importance to the operation of
the business of the Company and its Subsidiaries. The Company (or the
Subsidiary indicated) owns the entire right, title and interest in and to
the Intellectual Property listed on such Section 3.01(n) of the Company
Disclosure Letter (including, without limitation, the exclusive right to
use and license the same), except where the failure to own such right,
title or interest would not have a material adverse effect on the Condition
of the Company and its Subsidiaries taken as a whole, and each item
constituting part of the Intellectual Property which is owned by the
Company or a Subsidiary and listed on Section 3.01(n) of the Company
Disclosure Letter has been, to the extent indicated in Section 3.01(n) of
the Company Disclosure Letter, duly registered with, filed in or issued by,
as the case may be, the United States Patent and Trademark Office or such
other government entities, domestic or foreign, as are indicated in Section
3.01(n) of the Company Disclosure Letter and such registrations, filings
and issuances remain in full force and effect, except where the failure to
be so registered, filed or issued or for such registrations, filings or
issuances would not have a material adverse effect on the Condition of the
Company and its Subsidiaries taken as a whole. There are no pending, or to
the knowledge of the Company, threatened proceedings or litigation or other
adverse claims affecting or with respect to the Intellectual Property of
the Company. Section 3.01(n) of the Company Disclosure Letter lists all
notices or claims currently pending or received by the Company or any of
its Subsidiaries during the past two years which claim infringement,
contributory infringement, inducement to infringe, misappropriation or
breach by the Company or any of its Subsidiaries of any domestic or foreign
patents, patent applications, patent licenses and know-how licenses, trade
names, trademark registrations and applications, service marks, copyrights,
copyright registrations or applications, unpatented inventions, trade
secrets or other confidential proprietary information. There is, to the
knowledge of the Company, no reasonable basis upon which a claim may be
asserted against the Company or any of its Subsidiaries, for
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<PAGE> 26
infringement, contributory infringement, inducement to infringe,
misappropriation or breach of any domestic or foreign patents, patent
applications, patent licenses, know-how licenses, trade names, trademark
registrations and applications, common law trademarks, service marks,
copyrights, copyright registrations or applications, trade secrets or other
confidential proprietary information, other than as would not have a
material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole. To the knowledge of the Company, no Person
is infringing the Intellectual Property.
(o) Proxy Statement, Schedule l4D-9 and Schedule l4D-1. The definitive
proxy statement and related materials, if required, to be furnished to the
holders of Common Stock in connection with the Merger pursuant to Section
4.04 hereof (the "Proxy Statement") will comply in all material respects
with the Exchange Act and the rules and regulations thereunder and any
other applicable laws. If at any time prior to the Shareholders' Meeting
(as defined herein) any event occurs which should be described in an
amendment or supplement to the Proxy Statement, the Company will file and
disseminate, as required, an amendment or supplement which complies in all
material respects with the Exchange Act and the rules and regulations
thereunder and any other applicable laws. Prior to its filing with the
Commission, the amendment or supplement shall be delivered to Parent and
Sub and their counsel. None of the information supplied by the Company for
inclusion or incorporation by reference in (i) the documents pursuant to
which the Offer will be made, including the Offer Documents or (ii) the
Proxy Statement, will, in the case of the Offer Documents, at the
respective times the Offer Documents are filed with the Commission, or in
the case of the Proxy Statement at the date such information is supplied
and at the Effective Time, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements made, in light of the circumstance under which they are made,
not misleading. None of the information supplied by the Company in the
Schedule 14D-9, at the respective times the Schedule 14D-9 is filed with
the Commission, will contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in
light of the circumstances under which they are made, not misleading.
Notwithstanding the foregoing, no representation or warranty is made with
respect to any information with respect to Parent, Sub or their officers,
directors or affiliates provided to the Company by Parent or Sub in writing
for inclusion in the Schedule 14D-9. The Schedule l4D-9 will comply in all
material respects with the Exchange Act and the rules and regulations
thereunder and any other applicable laws. If at any time prior to the
expiration or termination of the Offer any event occurs which should be
described in an amendment or supplement to the Schedule l4D-9 or any
amendment or supplement thereto, the Company will file and disseminate, as
required, an amendment or supplement which complies in all material
respects with
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<PAGE> 27
the Exchange Act and the rules and regulations thereunder and any other
applicable laws. Prior to its filing with the Commission, the amendment or
supplement shall be delivered to Parent and Sub and their counsel.
(p) Broker's or Finder's Fee. Except for Lehman Brothers (whose fees
and expenses will be paid by the Company in accordance with the Company's
agreement with such firm, a true and correct copy of which has been
previously delivered to Parent by the Company) and the fees referred to in
Section 7.01(b) hereof, no agent, broker, Person or firm acting on behalf
of the Company is, or will be, entitled to any fee, commission or broker's
or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
(q) Environmental Laws and Regulations. Except as set forth on Section
3.01(q) of the Company Disclosure Letter and except as would not reasonably
be expected to have a material adverse effect on the Condition of the
Company and its Subsidiaries, to the knowledge of the Company, (a)
Hazardous Materials have not at any time been Released or disposed of on
any Company Property or, any property adjoining or adjacent to any Company
Property, (b) the Company and each of its Subsidiaries are in compliance in
all material respects with all Environmental Laws and the requirements of
any permits issued under such Environmental Laws with respect to any
Company Property, (c) there are no past, pending or threatened material
Environmental Claims against the Company or any of its Subsidiaries or any
Company Property and (d) there are no facts or circumstances, conditions or
occurrences regarding any Company Property or any property adjoining or
adjacent to any Company Property, that could reasonably be anticipated (A)
to form the basis of a material Environmental Claim against the Company or
any of its Subsidiaries or any Company Property or (B) to cause such
Company Property to be subject to any material restrictions on its
ownership, occupancy, use or transferability under any Environmental Law.
For purposes of this Agreement, the following terms shall have the
following meanings: (A) "Company Property" means any real property and
improvements owned or leased by the Company or any of its Subsidiaries; (B)
"Hazardous Materials" means (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
that contain dielectric fluid containing levels of polychlorinated
biphenyls, and radon gas; (ii) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous
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<PAGE> 28
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," or words of similar import, under
any applicable Environmental Law; and (iii) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
governmental authority; (C) "Environmental Law" means any federal, state or
local statute, law, rule, regulation, ordinance, code or rule of common law
in effect and in each case as amended as of the date hereof and Closing
Date, and any judicial or administrative interpretation thereof applicable
to the Company or its operations or property as of the date hereof and
Closing Date, including any judicial or administrative order, consent
decree or judgment, relating to the environment, health, safety or
Hazardous Materials, including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601 et seq.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Clean Air
Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 3808 et seq.; and (D) "Environmental Claims" means any and all
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings under any Environmental Law or any permit
issued under any such Environmental Law (for purposes of this subclause
(D), "Claims"), including without limitation (i) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law and (ii) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment;
and (E) "Release" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying or seeping into or
upon any land or water or air, or otherwise entering into the environment.
(r) State Takeover Statutes; Charter Provisions. The Board of
Directors of the Company has approved the Offer, the Merger and this
Agreement and such approval is sufficient to render inapplicable to the
Offer, the Merger and this Agreement and the other transactions
contemplated by this Agreement, the provisions of Section 912 of the New
York Business Corporation Law and the provisions of Article SEVENTH of the
Company's Restated and Amended Certificate of Incorporation.
(s) Voting Requirements. The affirmative vote of the holders of at
least two thirds of the outstanding shares of Company Common Stock entitled
to be cast approving this Agreement is the only vote of the holders of any
class or series of the
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<PAGE> 29
Company's capital stock necessary to approve this Agreement and the
transactions contemplated by this Agreement.
(t) Rights Agreement. (i) The Company and the Board of Directors of
the Company have taken and will maintain in effect all necessary action to
(i) render the Rights Agreement inapplicable with respect to the Offer, the
Merger and the other transactions contemplated by this Agreement and (ii)
ensure that (y) neither Parent nor Sub nor any of their Affiliates (as
defined in the Rights Agreement) or Associates (as defined in the Rights
Agreement) is considered to be an Acquiring Person (as defined in the
Rights Agreement) and (z) the provisions of the Rights Agreement, including
the occurrence of a Distribution Date (as defined in the Rights Agreement),
are not and shall not be triggered by reason of the announcement or
consummation of the Offer, the Merger or the consummation of any of the
other transactions contemplated by this Agreement. The Board of Directors
of the Company, at a meeting duly called and held, has resolved that the
Rights shall be redeemed immediately prior to the acceptance for payment
and purchase of any of the outstanding shares of Common Stock pursuant to
the Offer in accordance with the terms of this Agreement provided that this
Agreement shall not have been terminated in accordance with its terms. The
Company has delivered to Parent a complete and correct copy of the Rights
Agreement as amended and supplemented to the date of this Agreement.
(u) Opinion of Financial Advisor. The Company has received the opinion
of Lehman Brothers to the effect that, as of the date of this Agreement,
the consideration to be received in the Offer and the Merger by the
Company's shareholders, other than Parent and Sub, is fair to such
shareholders from a financial point of view, subject to the qualifications
and assumptions contained therein, and a complete and correct signed copy
of such opinion has been, or promptly upon receipt thereof will be,
delivered to Parent.
3.02 Representations and Warranties of Parent and Sub. Each of Parent
and Sub represents and warrants to the Company as follows:
(a) Due Organization; Good Standing and Corporate Power. Parent is a
corporation duly organized and validly existing and in good standing under
the laws of Sweden. Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York.
(b) Authorization and Validity of Agreement. Each of Parent and Sub
has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The
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<PAGE> 30
execution, delivery and performance of this Agreement by Parent and Sub,
and the consummation by each of them of the transactions contemplated
hereby, have been duly authorized by the Board of Directors of Parent and
the Board of Directors of Sub. No other corporate action on the part of
either of Parent or Sub is necessary to authorize the execution, delivery
and performance of this Agreement by each of Parent and Sub and the
consummation of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each of Parent and Sub and is a valid
and binding obligation of each of Parent and Sub, enforceable against each
of Parent and Sub in accordance with its terms, except that such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally, and general equitable principles.
(c) Consents and Approvals; No Violations. Assuming (i) the filings
required under the HSR Act are made and the waiting period thereunder has
been terminated or has expired, (ii) voluntary notification under
Exon-Florio is made, (iii) the requirements of the Exchange Act relating to
the Proxy Statement and the Offer are met and (iv) the filing of the
Certificate of Merger and other appropriate merger documents, if any, as
required by the laws of the State of New York is made, the execution and
delivery of this Agreement by Parent and Sub and the consummation by Parent
and Sub of the transactions contemplated hereby will not: (1) violate any
provision of the Articles of Association of Parent or the Certificate of
Incorporation or By-Laws of the Sub; (2) violate any statute, ordinance,
rule, regulation, order or decree of any court or of any governmental or
regulatory body, agency or authority applicable to Parent or Sub or by
which either of their respective properties or assets may be bound; (3)
require any filing with, or permit, consent or approval of, or the giving
of any notice to any governmental or regulatory body, agency or authority;
or (4) result in a violation or breach of, conflict with, constitute (with
or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, or result in
the creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of the Parent, Sub or any of their subsidiaries
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, lease or other
instrument or obligation to which Parent or Sub or any of their
subsidiaries is a party, or by which they or their respective properties or
assets may be bound except for in the case of clauses (3) and (4) above for
such filing, permit, consent, approval or violation, which would not
reasonably be expected to have a material adverse effect on the Condition
of the Parent and Sub, taken as a whole, or could be reasonably likely to
prevent or materially delay consummation of the transactions contemplated
by this Agreement.
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<PAGE> 31
(d) Offer Documents, Schedule l4D-9 and Proxy Statement. The Offer
Documents will comply in all material respects with the Exchange Act and
the rules and regulations thereunder and any other applicable laws. If at
any time prior to the expiration or termination of the Offer any event
occurs which should be described in an amendment or supplement to the
Schedule l4D-1 or any amendment or supplement thereto, Sub will file and
disseminate, as required, an amendment or supplement which complies in all
material respects with the Exchange Act and the rules and regulations
thereunder and any other applicable laws. Prior to its filing with the
Commission, the amendment or supplement shall be delivered to the Company
and its counsel. The written information supplied or to be supplied by
Parent and Sub for inclusion in the Proxy Statement and the Schedule l4D-9
of the Company will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements made, in light of the circumstances under
which they are made, not misleading. Notwithstanding the foregoing, no
representation or warranty is made with respect to any information with
respect to the Company or its officers, directors and affiliates provided
to Parent or Sub by the Company in writing for inclusion in the Offer
Documents or amendments or supplements thereto.
(e) Broker's or Finder's Fee. Except for Salomon Brothers, Inc (whose
fees and expenses as financial advisor to Parent and Sub will be paid by
Parent or Sub), no agent, broker, Person or firm acting on behalf of Parent
or Sub is, or will be, entitled to any fee, commission or broker's or
finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
(f) Financing. Parent has entered into two credit facilities with a
Swedish bank (copies of which have been delivered to the Company) pursuant
to which credit agreements such bank, subject to certain conditions set
forth in such credit agreements, will provide all funds necessary, together
with funds available to the Parent and Sub, to consummate the transactions
contemplated hereby.
ARTICLE IV
TRANSACTIONS PRIOR TO CLOSING DATE
4.01 Access to Information Concerning Properties and Records. During
the period commencing on the date hereof and ending on the earlier of (x) the
Closing Date and
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<PAGE> 32
(y) the date on which this Agreement is terminated pursuant to Section 6.01
hereof, the Company shall, and shall cause each of its Subsidiaries to, upon
reasonable notice, afford Parent and Sub, and their respective counsel,
accountants, consultants and other authorized representatives, reasonable access
during normal business hours to the employees, properties, books and records of
the Company and its Subsidiaries in order that they may have the opportunity to
make such investigations as they shall desire of the affairs of the Company and
its Subsidiaries; such investigation shall not, however, affect the
representations and warranties made by the Company in this Agreement. The
Company shall furnish promptly to Parent and Sub (a) a copy of each report,
schedule, registration statement and other document filed by it or its
Subsidiaries during such period pursuant to the requirements of Federal or state
securities laws and (b) all other information concerning its or its
Subsidiaries' business, properties and personnel as Parent and Sub may
reasonably request. The Company agrees to cause its officers and employees to
furnish such additional financial and operating data and other information and
respond to such inquiries as Parent and Sub shall from time to time request.
4.02 Confidentiality. Information obtained by Parent, Sub and their
respective counsel, accountants, consultants and other authorized
representatives pursuant to Section 4.01 hereof shall be subject to the
provisions of the Confidentiality Agreement between the Company and Parent dated
April 4, 1997 (the "Confidentiality Agreement").
4.03 Conduct of the Business of the Company Pending the Closing Date.
The Company agrees that, except as permitted, required or specifically
contemplated by, or otherwise described in, this Agreement or otherwise
consented to or approved in writing by Parent (which consent or approval shall
not be unreasonably withheld), during the period commencing on the date hereof
until such time as nominees of Parent shall comprise two thirds of the members
of the Board of Directors of the Company or this Agreement shall have been
terminated pursuant to Section 6.01 hereof:
(a) The Company and each of its Subsidiaries will conduct their
respective operations only according to their ordinary and usual course of
business consistent with past practice and will use their reasonable best
efforts to preserve intact their respective business organization, keep
available the services of their officers and employees and maintain
satisfactory relationships with licensors, suppliers, distributors,
clients, joint venture partners, and others having significant business
relationships with them;
(b) Neither the Company nor any of its Subsidiaries shall (i) make any
change in or amendment to its Restated and Amended Certificate of
Incorporation or By-Laws (or comparable governing documents); (ii) issue or
sell any shares of its capital stock (other than in connection with the
exercise of Options outstanding on the date hereof) or any of its other
securities, or issue any securities convertible into, or options,
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<PAGE> 33
warrants or rights to purchase or subscribe to, or enter into any
arrangement or contract with respect to the issuance or sale of, any shares
of its capital stock or any of its other securities, or make any other
changes in its capital structure; (iii) sell or pledge or agree to sell or
pledge any stock owned by it in any of its Subsidiaries except pursuant to
certain call options in respect of the capital stock of certain of its
dealership subsidiaries, as set forth in Section 3.01(c)(ii) of the Company
Disclosure Letter; (iv) declare, pay, set aside or make any dividend (other
than regular quarterly cash dividends of $.0625 per share of Common Stock)
or other distribution or payment with respect to, or split, combine, redeem
or reclassify, or purchase or otherwise acquire any shares of its capital
stock or its other securities, ; (v) (A) enter into any contract or
commitment with respect to capital expenditures with a value in excess of,
or requiring expenditures by the Company and its Subsidiaries in excess of,
$1.0 million, individually, or enter into contracts or commitments with
respect to capital expenditures with a value in excess of, or requiring
expenditures by the Company and its Subsidiaries in excess of, $3.0
million, in the aggregate; (B) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other
business or division thereof; or (C) enter into, amend, modify, supplement
or cancel any other material contract, (vi) except in the ordinary course
of business, consistent with past practice, acquire a material amount of
assets or securities or release or relinquish any material contract rights;
(vii) except in the ordinary course of business, consistent with past
practice, and except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the date
of this Agreement, increase the compensation or fringe benefits of any of
its directors, officers or employees, except for increases in salary or
wages of employees of the Company or its subsidiaries who are not officers
of the Company in the ordinary course of business in accordance with past
practice, or grant any severance or termination pay not currently required
to be paid under existing severance plans or enter into any employment,
consulting or severance agreement or arrangement with any present or former
director, officer or other employee of the Company or any of its
Subsidiaries (other than employment contracts with the individuals listed
on Section 4.03(b)(vii) of the Company Disclosure Letter), or establish,
adopt, enter into or amend or terminate any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any directors, officers or employees; (viii) transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of, encumber or
subject to any lien, any material assets or incur or modify any
indebtedness or other material liability, other than in the ordinary course
of business, or issue any debt securities or assume, guarantee or endorse
or otherwise as an accommodation become responsible for the obligations of
any person or, other than in the ordinary course of business consistent
with past practice, make any
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<PAGE> 34
loan or other extension of credit; (ix) agree to the settlement of any
material claim or litigation; (x) make any material tax election or settle
or compromise any material tax liability; (xi) permit any insurance policy
naming it as beneficiary or a loss payable payee to be cancelled without
notice to Parent; (xii) except as required by applicable law or generally
accepted accounting principals, make any material change in its method of
accounting; (xiii) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its Subsidiaries not
constituting an inactive Subsidiary (other than the Merger); or (xiv)
agree, in writing or otherwise, to take any of the foregoing actions; and
(c) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) take any action, engage in any transaction or enter
into any agreement which would cause any of the representations or
warranties set forth in Section 3.01 hereof to be untrue as of the Closing
Date, or (ii) purchase or acquire, or offer to purchase or acquire, any
shares of capital stock of the Company.
4.04 Proxy Statement. If shareholder approval of the Merger is
required by law or by the Company's Restated and Amended Certificate of
Incorporation or By-Laws, as promptly as practicable, following Parent's request
the Company will prepare and file a preliminary Proxy Statement with the
Commission and will use its reasonable best efforts to respond to the comments
of the Commission, if any, in connection therewith and to furnish all
information regarding the Company required in the definitive Proxy Statement
(including, without limitation, financial statements and supporting schedules
and certificates and reports of independent public accountants). Parent, Sub and
the Company will cooperate with each other in the preparation of the Proxy
Statement. Without limiting the generality of the foregoing, each of Parent and
Sub will furnish to the Company the information relating to it required by the
Exchange Act to be set forth in the Proxy Statement. Promptly after the
expiration or termination of the Offer, if required by the New York Business
Corporation Law in order to consummate the Merger, the Company will cause the
definitive Proxy Statement to be mailed to the shareholders of the Company and,
if necessary, after the definitive Proxy Statement shall have been so mailed,
promptly circulate amended, supplemental or supplemented proxy material and, if
required in connection therewith, resolicit proxies. The Company will not use
any proxy material in connection with the meeting of its shareholders without
Parent's prior approval.
4.05 Shareholder Approval. (a) Promptly following the purchase of
shares of Common Stock pursuant to the Offer, if required by New York Business
Corporation Law in order to consummate the Merger, the Company, acting through
its Board of Directors, shall, in accordance with applicable law, duly call,
convene and hold a meeting of the holders of
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Common Stock (the "Shareholders' Meeting") for the purpose of voting upon this
Agreement and the Merger and the Company agrees that this Agreement and the
Merger shall be submitted at such meeting. The Company shall use its reasonable
best efforts to solicit from its shareholders proxies, and shall take all other
action necessary and advisable, to secure the vote of shareholders required by
applicable law and the Company's Restated and Amended Certificate of
Incorporation or By-Laws to obtain the approval for this Agreement. Subject to
Section 4.07 hereof, the Company agrees that it will include in the Proxy
Statement the recommendation of its Board of Directors that holders of Common
Stock approve and adopt this Agreement and approve the Merger. Parent will cause
all shares of Common Stock owned by Parent and its Subsidiaries (including Sub)
to be voted in favor of this Agreement and the Merger.
(b) Notwithstanding the foregoing, in the event that Sub shall acquire
at least 90% of the outstanding Company Common Stock, the Company agrees, at the
request of Parent and Sub, subject to Article V, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
shareholders, in accordance with Section 905 of the New York Business
Corporation Law.
4.06 Reasonable Best Efforts. Subject to the terms and conditions
provided herein, each of the Company, Parent and Sub shall, and the Company
shall cause each of its Subsidiaries to, cooperate and use their respective
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to make, or cause to be made, all filings necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
their respective reasonable best efforts to obtain, prior to the Closing Date,
all licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with the Company and
its Subsidiaries as are necessary for consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Offer and
the Merger; provided, however, that no loan agreement or contract for borrowed
money shall be repaid except as currently required by its terms, in whole or in
part, and no contract shall be amended to increase the amount payable thereunder
or otherwise to be more burdensome to the Company or any of its Subsidiaries in
order to obtain any such consent, approval or authorization without first
obtaining the written approval of Parent and Sub.
4.07 No Solicitation of Other Offers. (a) The Company and its
affiliates and each of their respective officers, directors, employees,
representatives and agents shall immediately cease any discussions or
negotiations with any other parties that may be ongoing with respect to any
Acquisition Proposal (as defined below). Neither the Company nor any of its
affiliates, shall, directly or indirectly, take (and the Company shall not
authorize or permit
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its or its affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or other agents or
affiliates, to so take) any action to (i) encourage, solicit or initiate the
making of any Acquisition Proposal, (ii) enter into any agreement with respect
to any Acquisition Proposal or (iii) participate in any way in discussions or
negotiations with, or, furnish or disclose any information to, any Person (other
than Parent or Sub) in connection with, or take any other action to facilitate
any inquiries or the making of any proposal (including without limitation by
taking any action that would make the Rights Agreement, Section 912 of the New
York Business Corporation Law or the provisions of Article SEVENTH of the
Company's Restated and Amended Certificate of Incorporation inapplicable to an
Acquisition Proposal) that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal, provided, however, that the Company, in response
to an unsolicited Acquisition Proposal and in compliance with its obligations
under Section 4.07(b) hereof, may participate in discussions or negotiations
with or furnish information to any third party which proposes a transaction
which the Board of Directors of the Company reasonably determines will result in
a Superior Proposal if the Board of Directors believes (and has been advised by
independent outside counsel) that failing to take such action would constitute a
breach of its fiduciary duties. In addition, neither the Board of Directors of
the Company nor any Committee thereof shall (x) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Sub the approval and
recommendation of the Offer and this Agreement or (y) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, provided that the
Company may recommend to its shareholders an Acquisition Proposal and in
connection therewith withdraw or modify its approval or recommendation of the
Offer or the Merger if (i) the Board of Directors of the Company has determined
that the Acquisition Proposal is a Superior Proposal, (ii) all the conditions to
the Company's right to terminate this Agreement in accordance with Section
6.01(f) hereof have been satisfied (including the expiration of the three
Business Day period described therein and the payment of all amounts required
pursuant to Section 7.01 hereof) and (iii) simultaneously with such withdrawal,
modification or recommendation, this Agreement is terminated in accordance with
Section 6.01(f) hereof. Any actions permitted under, and taken in compliance
with, this Section 4.07 shall not be deemed a breach of any other covenant or
agreement of such party contained in this Agreement.
"Acquisition Proposal" shall mean any inquiry, proposal or offer from
any Person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company or any of its Subsidiaries or of
over 10% of any class of equity securities of the Company or any of its
Subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 10% or more of any class of equity
securities of the Company or any of its Subsidiaries, any merger, consolidation,
business combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its Subsidiaries, other than the transactions contemplated by
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this Agreement, or any other transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer or the Merger or which would reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated hereby.
"Superior Proposal" shall mean a bona fide proposal made by a third party to
acquire all of the outstanding shares of the Company pursuant to a tender offer,
a merger or a sale of all of the assets of the Company (x) on terms which a
majority of the members of the Board of Directors of the Company determines in
its good faith reasonable judgment (based on the advice of independent outside
financial and legal advisors) to be more favorable to the Company and its
shareholders than the transactions contemplated hereby and (y) for which
financing is then available (it being understood that financing evidenced by
highly confident letters and similar letters shall not be considered "available"
for purposes of this Section).
(b) In addition to the obligations of the Company set forth in
paragraph (a), on the date of receipt thereof, the Company shall advise Parent
of any request for information or of any Acquisition Proposal, or any inquiry or
proposal with respect to any Acquisition Proposal, the material terms and
conditions of such request or Acquisition Proposal, and the identity of the
person making any such Acquisition Proposal. The Company will keep Parent fully
informed of the status and details (including amendments or proposed amendments)
of any such request or Acquisition Proposal and keep Parent fully informed as to
the details of any information requested of or provided by, the Company and as
to the details of all discussions or negotiations with respect to any such
request, takeover proposal or inquiry.
(c) Immediately following the purchase of Shares pursuant to the
Offer, the Company will request each person which has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring the
Company or any portion thereof (the "Confidentiality Agreements") to return all
confidential information heretofore furnished to such person by or on behalf of
the Company.
4.08 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent and Sub shall give prompt notice to the Company, of
the occurrence, of failure to occur, of any event, which occurrence or failure
to occur would be likely to cause any representation or warranty contained in
this Agreement to be untrue in any material respect at any time from the date of
this Agreement to the Effective Time. Each of the Company and Parent shall give
prompt notice to the other party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
4.09 HSR Act. (a) Each party hereto shall (i) take promptly all
actions necessary to make the filings required of it or any of its affiliates
under the applicable Antitrust
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Laws (as defined in Section 4.09(e) hereof) in connection with this Agreement
and the transactions contemplated hereby, (ii) comply at the earliest
practicable date with any request for additional information or documentary
material received by it or any of its affiliates from the Federal Trade
Commission (the "FTC") or the Antitrust Division of the Department of Justice
(the "Antitrust Division") and (iii) cooperate with one another in connection
with any filing under applicable Antitrust Laws and in connection with resolving
any investigation or other inquiry concerning the transactions contemplated by
this Agreement initiated by any Antitrust Authority (as defined in Section
4.09(e) hereof).
(b) Each party hereto shall use its reasonable best efforts to resolve
such objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any Antitrust Law. Without limiting the
generality of the foregoing, "reasonable best efforts" shall include, without
limitation:
(i) in the case of each of Parent and the Company:
(A) filing with the appropriate Antitrust Authorities no later
than the fifth Business Day following the date hereof a Notification
and Report Form with respect to the transactions contemplated by this
Agreement; and
(B) if Parent or the Company receives a second request for
information and documents from an Antitrust Authority, substantially
complying with such second request within 60 days following the date
of its receipt thereof;
(ii) in the case of Parent only, taking any and all actions reasonably
necessary, proper or advisable to cause the HSR Condition and Section
5.01(b) hereof to be satisfied and to permit the Closing to occur as soon
as possible, but in any event on or prior to the Outside Date (as defined
below) (it being understood that, without limiting Parent's obligations
hereunder, the timing of the Closing shall be as set forth in Section
2.11); provided, however, that Parent's obligations hereunder shall not
include agreeing to dispose of or hold separately all or any material
portion of the business or assets of Parent and its subsidiaries, taken as
a whole or the Company and its Subsidiaries, taken as a whole, or to take
any other action which would materially and adversely effect the business,
assets or operations of Parent and its subsidiaries taken as a whole or the
Company and its Subsidiaries taken as a whole; and
(iii) in the case of the Company only, subject to Parent's compliance
with clauses (i) and (ii) above, not frustrating or impeding Parent's
strategy or negotiating positions with any Antitrust Authority.
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(c) Notwithstanding the foregoing, Parent's obligations pursuant to
Section 4.09(b)(ii) above shall not include defending any administrative,
judicial or legislative action brought by any Antitrust Authority or other
Person or otherwise litigating against any Antitrust Authority or other person.
Should Parent nonetheless elect to litigate against any Antitrust Authority or
other person, the Company shall cooperate with Parent in any such proceeding.
(d) Each party hereto shall promptly inform the other parties of any
material communication made to, or received by such party from, any Antitrust
Authority or any other governmental or regulatory authority regarding any of the
transactions contemplated hereby. In addition, and without limiting the
generality of the foregoing, Parent and the Company each shall cause its counsel
to (i) afford to the other party's counsel the opportunity to receive and to
review for a reasonable period in advance of filing or submission to any
Antitrust Authority all forms, letters and memoranda (excluding documents
submitted as attachments or enclosed with such forms, letters or memoranda)
proposed to be filed or submitted to any Antitrust Authority regarding the
transactions contemplated hereby, and give reasonable consideration to any
comments or proposals such counsel may make with respect to any such forms,
letters or memoranda, (ii) give reasonable advance notice to the other party's
counsel of each meeting or pre-arranged telephone call with any Antitrust
Authority regarding the transactions contemplated hereby, so that such counsel
may request to attend or otherwise participate therein, and to give reasonable
consideration to such request, and (iii) promptly inform the other party's
counsel of the substance of each other material communication (written or oral,
in person or by telephone) with any Antitrust Authority regarding the
transactions contemplated hereby.
(e) For purposes hereof, (i) "Antitrust Authorities" means the FTC,
the Antitrust Division and the attorneys general of the several states of the
United States and (ii) "Antitrust Law" means the Sherman Act, as amended, the
Clayton Act, as amended, the Antitrust Improvements Act, the Federal Trade
Commission Act, as amended, and all other federal and state statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines, and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
4.10 Exon-Florio. The Company and Parent shall, as soon as possible
and in any event within ten days of the date of this Agreement, file a voluntary
notification pursuant to, and in compliance with, Exon-Florio and shall use
their best efforts to respond to any inquiries from governmental officials with
respect thereto.
4.11 Employee Benefits. (a) Until the first anniversary of the
Effective Time, Parent shall ensure that all employees and officers of the
Company receive compensation and benefits in the aggregate substantially
comparable to the compensation and benefits received by such individuals
immediately prior to the date hereof.
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(b) Until the first anniversary of the Effective Time, Parent shall
keep in effect all severance policies that are applicable to employees and
officers of the Company immediately prior to the date hereof.
(c) Following the Effective Time, (i) Parent shall ensure that no
employee welfare benefit plan adopted by the Company shall have any preexisting
condition limitations and (ii) Parent shall honor all premiums and deductibles
paid by the employees, officers and directors of the Company under all Employee
Benefit Plans up to (and including) the Effective Time.
(d) Following the Effective Time, for purposes of eligibility and
vesting, Parent shall honor all service credit accrued by the employees,
officers and directors of the Company under all Employee Benefit Plans up to
(and including) the Effective Time.
(e) Following the Effective Time, Parent shall honor all employment
contracts with employees and officers and all contracts for services rendered
with directors of the Company.
4.12 Directors' and Officers' Insurance; Indemnification. (a) The
certificate of incorporation and the by-laws of the Surviving Corporation shall
contain the provisions with respect to indemnification and exculpation from
liability set forth in the Company's certificate of incorporation and by-laws on
the date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who on
or prior to the Effective Time were directors, officers, employees or agents of
the Company, unless such modification is required by law.
(b) For six years from the Effective Time, the Surviving Corporation
shall either (x) maintain in effect the Company's current directors' and
officers' liability insurance covering those persons who are currently covered
on the date of this Agreement by the Company's directors' and officers'
liability insurance policy (a copy of which has been heretofore delivered to
Parent) (the "Indemnified Parties"); provided, however, that in no event shall
Parent be required to expend in any one year an amount in excess of 150% of the
annual premiums currently paid by the Company for such insurance which the
Company represents to be $80,050 for the twelve month period ending on July 1,
1997; and provided further that if the annual premiums of such insurance
coverage exceed such amount, the Surviving Corporation shall be obligated to
obtain a policy with the greatest coverage available for a cost not exceeding
such amount; provided further that the Surviving Corporation may substitute for
such Company policies, policies with at least the same coverage containing terms
and conditions which are no less advantageous and provided that said
substitution does not result in any gaps
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or lapses in coverage with respect to matters occurring prior to the Effective
Time or (y) cause the Parent's, directors' and officers' liability insurance
then in effect to cover those persons who are covered on the date of this
Agreement by the Company's directors' and officers' liability insurance policy
with respect to those matters covered by the Company's directors' and officers'
liability policy.
(c) In furtherance of and not in limitation of the preceding
paragraph, Parent and Sub agree that the officers and directors of the Company
that are defendants in any litigation commenced by shareholders of the Company
with respect to (x) the performance of their duties as officers and/or directors
of the Company under federal or state law (including litigation under federal
and state securities laws) and (y) Sub's offer or proposal to acquire the
Company, including, without limitation, any and all such litigation commenced on
or after the date of this Agreement (the "Subject Litigation") shall be entitled
to be represented, at the reasonable expense of the Company, in the Subject
Litigation by one counsel (including, if appropriate, one local counsel in each
jurisdiction in which a case is pending) each of which such counsel shall be
selected by a plurality of such director and officer defendants; provided that
neither Parent nor the Company shall be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld) and that a condition to the indemnification payments provided in
Section 4.12(a) hereof shall be that such officer/director defendant not have
settled any Subject Litigation without the consent of Parent; and provided
further that neither Parent nor the Company shall have any obligation hereunder
to any officer/director defendant 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 officer/director defendant in the
manner contemplated hereby is prohibited by applicable law.
(d) At the Effective Time, the Company shall remain liable for all of
its obligations under the existing indemnification agreements with each of the
directors and officers of the Company.
4.13 Rights Agreement. The Company shall not redeem the Rights or
amend (other than to delay the Distribution Date (as defined therein) or to
render the Rights inapplicable to the Offer and the Merger) or terminate the
Rights Agreement prior to the Effective Time without the consent of the Parent,
unless required to do so by a court of competent jurisdiction.
4.14. Public Announcements. Parent and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation and review by the other party of
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such release or statement or without the prior consent of the other party, which
shall not be unreasonably withheld; provided, however, that a party may, without
the prior consent of the other party, issue such press release or make such
public statement as may be required by law or any listing agreement with a
national securities exchange or automated quotation system which Parent or the
Company is a party if it has used all reasonable efforts to consult with the
other party and to obtain such party's consent but has been unable to do so in a
timely manner.
4.15 Transfer Tax. Parent shall pay any New York State Real Estate
Transfer Tax and New York City Real Property Transfer Tax (the "Transfer Taxes")
and any similar taxes in any other jurisdiction (and any penalties and interest
with respect to such taxes), which become payable in connection with the Offer
and the Merger, on behalf of the shareholders of the Company. Parent and the
Company shall cooperate in the preparation, execution and filing of any required
returns with respect to such taxes (including returns on behalf of the
shareholders of the Company) and in the determination of the portion of the
consideration allocable to the real property of the Company and the Subsidiaries
in New York State and City (or in any other jurisdiction, if applicable). The
terms of the Offer to Purchase and of the Proxy Statement shall provide that the
shareholders of the Company shall be deemed to have agreed to be bound by the
allocation established pursuant to this Section 4.14 in the preparation of any
return with respect to the Transfer Taxes and any similar taxes, if applicable.
ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.01 Conditions Precedent to Obligations of Parent, Sub and the
Company. The respective obligations of Parent and Sub, on the one hand, and the
Company, on the other hand, to effect the Merger are subject to the satisfaction
or waiver (subject to applicable law) at or prior to the Effective Time of each
of the following conditions:
(a) Approval of Company's Shareholders. To the extent required by
applicable law, this Agreement and the Merger shall have been approved and
adopted by holders of two thirds of the outstanding share of the Common
Stock of the Company entitled to vote in accordance with applicable law (if
required by applicable law) and the Company's Certificate of Incorporation
and By-Laws;
(b) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated;
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(c) Exon-Florio. The review periods, if applicable, under Exon-Florio
shall have expired or have been terminated.
(d) Injunction. No preliminary or permanent injunction or other order
shall have been issued by any court or by any governmental or regulatory
agency, body or authority which prohibits the consummation of the Offer or
the Merger and the transactions contemplated by this Agreement and which is
in effect at the Effective Time, provided, however, that, in the case of a
decree, injunction or other order, each of the parties shall have used
reasonable best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any decree, injunction or
other order that may be entered;
(e) Statutes. No statute, rule, regulation, executive order, decree or
order of any kind shall have been enacted, entered, promulgated or enforced
by any court or governmental authority which prohibits the consummation of
the Offer or the Merger or has the effect of making the purchase of the
Common Stock illegal; and
(f) Minimum Condition. Sub shall have purchased shares of Common Stock
pursuant to the Offer in a number sufficient to satisfy the Minimum
Condition.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval of the Merger by the Company's
shareholders:
(a) by mutual consent of the Company, on the one hand, and of Parent
and Sub, on the other hand;
(b) by either Parent, on the one hand, or the Company, on the other
hand, if any court of competent jurisdiction or any governmental or
regulatory agency shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting
the acceptance for payment of, or payment for, shares of Common Stock
pursuant to the Offer or the Merger and such order, decree or ruling or
other action shall have become final and nonappealable;
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(c) by Parent, on the one hand, or the Company, on the other hand, if
the Effective Time shall not have occurred within 180 days after
commencement of the Offer (the "Outside Date") unless the Effective Time
shall not have occurred because of a material breach of any representation,
warranty, obligation, covenant, agreement or condition set forth in this
Agreement on the part of the party seeking to terminate this Agreement;
(d) by Parent if the Offer is terminated or expires in accordance with
its terms without Sub having purchased any Common Stock thereunder due to
an occurrence which would result in a failure to satisfy any of the
conditions set forth on Exhibit A hereto, unless any such failure shall
have been caused by or resulted from the failure of Parent or Sub to
perform in any material respect any covenant or agreement of either of them
contained in this Agreement or the material breach by Parent or Sub of any
representation or warranty of either of them contained in this Agreement;
(e) by the Parent, in the event of a breach by the Company of any
representation, warranty, covenant or agreement contained in this Agreement
which (A) would give rise to the failure of a condition set forth in
paragraph (e) or (g) of Annex A, (B) cannot or has not been cured prior to
the earlier of (i) 15 days after the giving of written notice of such
breach to the Company and (ii) two business days prior to the date on which
the Offer expires and (C) has not been waived by Parent pursuant to the
provisions hereof;
(f) by either Parent, on the one hand, or the Company, on the other
hand, if the Board of Directors of the Company determines that an
Acquisition Proposal constitutes a Superior Proposal and the Board believes
(and has been advised by independent outside counsel) that a failure to
terminate this Agreement and enter into an agreement to effect the Superior
Proposal would constitute a breach of its fiduciary duties; provided,
however the Company may not terminate this Agreement pursuant to this
Section 6.01(f) unless and until three Business Days have elapsed following
delivery to the other party of a written notice of such determination by
the Board of Directors and during such three Business Day period the
Company has fully cooperated with the Parent, including, without
limitation, informing the Parent of the terms and conditions of such
Superior Proposal, and the identity of the Person making such Proposal,
with the intent of enabling both parties to agree to a modification of the
terms and conditions of this Agreement so that the transactions
contemplated hereby may be effected; and provided further that at the end
of such three Business Day period the Board of Directors of the Company
determines that the Acquisition Proposal constitutes a Superior Proposal
and the Board continues to believe (and has again been advised by
independent outside counsel) that a failure to terminate this Agreement and
enter into
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an agreement to effect the Superior Proposal would constitute a breach of
its fiduciary duties; provided further that this Agreement shall not
terminate pursuant to this Section 6.01(f) unless (i) prior to such
termination Parent has received all fees and expenses set forth in Section
7.01 hereof by wire transfer in same day funds and (ii) simultaneously with
such termination the Company enters into a definitive acquisition, merger
or similar agreement to effect the Superior Proposal which acquisition
agreement permits the Company to terminate the acquisition agreement in the
event the Board of Directors of the Company determines to effect a
transaction with Parent;
(g) by the Company, in the event of a breach by the Parent or Sub of
any representation, warranty, covenant or agreement contained in this
Agreement which cannot or has not been cured within 15 days after the
giving of written notice of such breach to the Parent and Sub, except, in
any case where such breaches are not reasonably likely to affect adversely
Parent's or Sub's ability to complete the Offer or Merger; or
(h) by the Company if Parent or Sub shall have (i) failed to commence
the Offer within ten days following the date of this Agreement, (ii)
terminated the Offer or (iii) failed to pay for shares of Common Stock
pursuant to the Offer on or prior to the Outside Date, unless in the case
of (i), (ii) or (iii) such failure shall have been caused by the failure of
the Company to satisfy the conditions set forth in paragraph (e) or (g) of
Annex A.
6.02 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 6.01 hereof by Parent or Sub, on the one hand, or
the Company, on the other hand, written notice thereof shall forthwith be given
to the other party or parties specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall become void and have no
effect, and there shall be no liability hereunder on the part of Parent, Sub or
the Company, except that Sections 4.02, 3.01(p) and 7.01 hereof and this Section
6.02 shall survive any termination of this Agreement. Nothing in this Section
6.02 shall relieve any party to this Agreement of liability for breach of this
Agreement.
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ARTICLE VII
MISCELLANEOUS
7.01 Fees and Expenses. (a) Except as provided in paragraph (b) below,
all costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
(b) If this Agreement is terminated other than solely because of a
material breach of the representations or warranties of Parent or Sub or a
failure of Parent or Sub to fulfill a material covenant or condition contained
herein, then the Company shall (except as required to be earlier paid in
accordance with Section 6.01(f) hereof) within two days after termination has
occurred, pay to Parent in same day funds all of Parent's reasonably documented
out-of-pocket expenses.
(c) If this Agreement is terminated by Parent in accordance with
Section 6.01(d) or (e) hereof because of the occurrence of any of the events set
forth in clause (iv)(e), (f) or (g) of Annex A or if this Agreement is
terminated by the Company in accordance with Section 6.01(f) hereof, then the
Company shall (except as required to be earlier paid in accordance with Section
6.01(f) hereof) pay to Parent in same day funds, in addition to the amounts
required to be paid pursuant to Section 7.01(b), $12,000,000.
7.02 Representations and Warranties. The respective representations
and warranties of the Company, on the one hand, and Parent and Sub, on the other
hand, contained herein or in any certificates or other documents delivered prior
to or at the Closing shall not be deemed waived or otherwise affected by any
investigation made by any party. Each and every such representation and warranty
shall expire with, and be terminated and extinguished by, the Closing and
thereafter none of the Company, Parent or Sub shall be under any liability
whatsoever with respect to any such representation or warranty. This Section
7.02 shall have no effect upon any other obligation of the parties hereto,
whether to be performed before or after the Effective Time.
7.03 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company, Parent or Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any
-42-
<PAGE> 47
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
7.04 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows:
(a) if to the Company, to it at:
The Raymond Corporation
P.O. Box 130
South Canal Street
Greene, New York 13778-0130
Attention: President
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10016
Attention: Philip T. Ruegger, III, Esq.
(b) if to either Parent or Sub, to it at:
Lift Acquisition Company, Inc.
c/o BT Industries AB
5-595 81 Mjolby
Sweden
Attention: President and Chief
Executive Officer
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<PAGE> 48
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third business day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
7.05 Entire Agreement. This Agreement and the annex, schedules and
other documents referred to herein or delivered pursuant hereto, collectively
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersede all prior agreements and
understandings, oral and written, with respect thereto, other than the
Confidentiality Agreement.
7.06 Binding Effect; Benefit; Assignment. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and, with respect to
the provisions of Section 4.12 hereof, shall inure to the benefit of the persons
or entities benefitting from the provisions thereof who are intended to be
third-party beneficiaries thereof and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties. Except as provided in the
immediately preceding sentence, nothing in this Agreement, expressed or implied,
is intended to confer on any Person other than the parties hereto or their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
7.07 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in writing by the parties
hereto in any and all respects before the Effective Time (notwithstanding any
shareholder approval), by action taken by the respective Boards of Directors of
Parent, Sub and the Company or by the respective officers authorized by such
Boards of Directors, provided, however, that after any such shareholder
approval, no amendment shall be made which by law requires further approval by
such shareholders without such further approval.
-44-
<PAGE> 49
7.08 Further Actions. Each of the parties hereto agrees that, subject
to its legal obligations, it will use its best efforts to fulfill all conditions
precedent specified herein, to the extent that such conditions are within its
control, and to do all things reasonably necessary to consummate the
transactions contemplated hereby.
7.09 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only, do not constitute
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
7.10 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
7.11 Applicable Law. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws rules
thereof.
7.12 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
7.13 Certain Definitions. (a) "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, a group and a government or other department or
agency thereof.
(b) "Subsidiary" with respect to the Company, shall mean and include
(x) any partnership of which the Company or any Subsidiary is a general partner
or (y) any other entity in which the Company or any of its Subsidiaries owns or
has the power to vote 50% or more of the equity interests in such entity having
general voting power to participate in the election of the governing body of
such entity.
7.14 Parent Guarantee. Parent agrees to take all action necessary to
cause Sub to perform all of its agreement, covenants and obligations under this
Agreement. Parent shall be liable for any breach of any representation,
warranty, agreement, covenant or obligation of Sub under this Agreement.
7.15 Submission to Jurisdiction. Each party hereto hereby irrevocably
and unconditionally:
-45-
<PAGE> 50
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement of any
judgment in respect thereof, to the general jurisdiction of the courts of the
State of New York sitting in the City of New York, the courts of the United
States of America for the Southern District of New York and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
will be in accordance with the laws of the State of New York and agrees to
appoint an agent for service of process in the State of New York within 20
business days of the date hereof;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law.
[SIGNATURE PAGE FOLLOWS]
-46-
<PAGE> 51
IN WITNESS WHEREOF, each of Parent, Sub and the Company have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date first above written.
BT INDUSTRIES AB
By /s/ Carl-Erik Ridderstrale
------------------------------------------
Name: Carl-Erik Ridderstrale
Title: President and Chief Executive Officer
By /s/ Per Zaunders
------------------------------------------
Name: Per Zaunders
Title: Vice President and Chief Financial
Officer
LIFT ACQUISITION COMPANY, INC.
By /s/ Carl-Erik Ridderstrale
------------------------------------------
Name: Carl-Erik Ridderstrale
Title: President
THE RAYMOND CORPORATION
By /s/ Ross K. Colquhoun
------------------------------------------
Name: Ross K. Colquhoun
Title: Chairman of the Board of Directors
and Chief Executive Officer
-47-
<PAGE> 52
ANNEX A
to
Agreement and
Plan of Merger
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex A is
appended and "Purchaser" shall be deemed to refer to Sub.
Notwithstanding any other provision of the Offer or the Merger
Agreement, Purchaser shall not be required to accept for payment or subject to
any applicable rules and regulations of the Commission, including Rule 14e-1c
under the Exchange Act, pay for any shares of Common Stock tendered pursuant to
the Offer and may terminate or amend the Offer and may postpone the acceptance
of, and payment for, shares of Common Stock, if (i) there shall not have been
validly tendered and not withdrawn prior to the expiration of the Offer a number
of shares of Common Stock which, together with shares of Common Stock owned by
Parent or Purchaser (or any affiliate of Parent or Purchaser), represent
two-thirds of the total voting power of all shares of capital stock of the
Company outstanding on a fully diluted basis (the "Minimum Condition"), (ii) any
applicable waiting period (and any extension thereof) under the HSR Act shall
not have expired or been terminated (the "HSR Condition"), (iii) any applicable
waiting period under Exon-Florio shall not have expired or been terminated (the
"Exon-Florio condition") or (iv) if, at any time on or after the date of the
Merger Agreement and at or before the time of payment for any such shares of
Common Stock (whether or not any shares of Common Stock have theretofore been
accepted for payment or paid for pursuant to the Offer) any of the following
shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding by any government or governmental authority or agency, domestic
or foreign, or by any other Person, domestic or foreign, before any court
of competent jurisdiction or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to, or which could reasonably be
expected to make illegal, impede, delay or otherwise directly or indirectly
restrain, prohibit or make materially more costly the Offer or the Merger
or seeking to obtain material damages, (ii) seeking to prohibit or
materially limit the ownership or operation by Parent or Purchaser of all
or any material portion of the business or assets of the Company and its
Subsidiaries taken as a whole or to compel Parent or Purchaser to dispose
of or hold separately all or any material portion of the business or assets
of Parent or the Company and its Subsidiaries taken as a whole, or seeking
to impose any limitation on the ability of Parent or Purchaser to conduct
its business or own such assets, (iii) seeking to impose limitations on the
ability of Parent or Purchaser effectively to exercise full rights of
ownership of the shares of Common Stock, including, without limitation, the
right to vote any shares of Common Stock acquired or owned by Sub or Parent
on all matters properly presented to the Company's shareholders, (iv)
seeking to require divestiture by Parent or Purchaser of any shares of
Common Stock; (v) seeking any material diminution in the
<PAGE> 53
ANNEX A
Page A-2
benefits expected to be derived by Parent or Purchaser as a result of the
transactions contemplated by the Offer or the Merger, (vi) otherwise
directly or indirectly relating to the Offer or the Merger and which, would
have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole or Parent and its subsidiaries taken as a
whole or the value of the shares of Common Stock, or (vii) otherwise
materially adversely affecting the Condition of the Company and its
Subsidiaries taken as a whole;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
Parent, Purchaser, the Company or any Subsidiary or (ii) the Offer or the
Merger, by any legislative body, court, government or governmental,
administrative or regulatory authority or agency, domestic or foreign,
other than the routine application of the waiting period provisions of the
HSR Act or Exon-Florio to the Offer or to the Merger, which could
reasonably be expected to directly or indirectly, result in any of the
consequences referred to in clauses (i) through (vii) of paragraph (a)
above;
(c) any change shall have occurred, or Parent shall have become aware
of any fact, that has had or would have a material adverse effect on the
Condition of the Company and its Subsidiaries taken as a whole;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market (excluding any coordinated
trading halt triggered solely as a result of a specified decrease in a
market index), (ii) any decline in either the Dow Jones Industrial Average
or the Standard & Poor's Index of 500 Industrial Companies or in the New
York Stock Exchange Composite Index in excess of 20% measured from the
close of business on the trading day next preceding the date of the Merger
Agreement, (iii) any material adverse change in the general political,
market, economic or financial conditions in the United States or abroad
that would have a material adverse effect upon the Condition of the Company
and its Subsidiaries taken as a whole, (iv) any material change in United
States or any other currency exchange rates or a suspension of, or
limitation on, the markets therefor, (v) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or any other jurisdiction in which any bank or other financial
institution in any manner involved with the financing of the Offer or the
Merger is incorporated, (vi) any material limitation (whether or not
mandatory) by any Federal, state or foreign
<PAGE> 54
ANNEX A
Page A-3
governmental authority or agency on, the extension of credit by banks or
other lending institutions, (vii) a commencement or escalation of a war or
armed hostilities or other national or international calamity directly or
indirectly involving the United States or (viii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, an
acceleration or worsening thereof;
(e) any of the representations or warranties made by the Company in
the Merger Agreement that are qualified as to materiality shall be untrue
or incorrect in any respect or any such representations and warranties that
are not so qualified shall be untrue or incorrect in any material respect,
in each case as of the date of this Agreement and the scheduled expiration
date of the Offer, except (i) for changes specifically permitted by this
Agreement and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of
such date;
(f) the Company's Board of Directors shall have withdrawn, modified or
amended in any respect adverse to Parent or Purchaser its recommendation of
the Offer or the Merger, or shall have resolved to do so;
(g) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under this Agreement; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms,
which, in the reasonable judgment of Purchaser, in any such case and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Parent and
the Purchaser and may be asserted by the Parent of the Purchaser, or may be
waived by the Parent or the Purchaser, in whole or in part at any time and from
time to time in its sole discretion (subject to the terms of the Merger
Agreement). The failure by the Parent or the Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time. Any determination by the Parent or the Purchaser
concerning the events described in this Annex A will be final and binding upon
all parties.
<PAGE> 55
EXHIBIT B
CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION
The Restated and Amended Certificate of Incorporation of The Raymond
Corporation shall be amended to read as follows:
FIRST: The name of the corporation shall be THE RAYMOND CORPORATION
(the "Corporation").
SECOND: The purpose of the Corporation shall be to engage in any lawful
act or activity for which corporations may be organized under the BCL, provided
that the Corporation is not formed to engage in any act or activity requiring
the consent or approval of any official, department, board, agency or other
body without such prior consent or approval first being obtained.
THIRD: The duration of the Corporation shall be perpetual.
FOURTH: The office of the Corporation in the State of New York shall be
located in the Village of Greene, County of Chenango.
FIFTH: The total authorized capital stock of the Corporation shall be
One Thousand shares of Common Stock, par value one cent ($0.01) per share.
No holder of any of the shares of the capital stock of the Corporation
shall be entitled as of right to purchase or to subscribe for any unissued
stock of any class, or any additional shares of any class, to be issued by
reason of any increase of the authorized capital stock of the Corporation of
any class, or bonds, certificates of indebtedness, debentures, or other
securities convertible into stock of the Corporation or carrying any right to
purchase stock of any class, but any such unissued stock, or such additional
authorized issue to any stock, or of other securities convertible into stock or
carrying any right to purchase stock, may be issued and disposed of pursuant to
resolutions of the Board of Directors, to such persons, firms, corporations, or
associations and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its discretion.
SIXTH: The By-Laws may be adopted, amended or repealed by the Board of
Directors by a vote of a majority of the directors then holding office.
<PAGE> 56
EXHIBIT B
Page 2
SEVENTH: The Secretary of State is designated as the agent of the
Corporation upon whom process against the Corporation may be served, and the
address to which the Secretary of State shall mail a copy of any process
against the Corporation served upon the Secretary of State is The Raymond
Corporation, Greene, New York.
EIGHTH: A director of the Corporation shall not be personally liable
to the Corporation or its shareholders for damages for any breach of duty in
such capacity except that the liability of a director shall not be eliminated
or limited if a judgment or other final adjudication adverse to the director
establishes that his/her acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law or that the director
personally gained in fact a financial profit or other advantage to which the
director was not legally entitled or that his/her acts violated Section 719 of
the BCL. If the BCL is hereafter amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of directors of the Corporation shall be eliminated or limited to the fullest
extent permitted by the BCL, as so amended. Any repeal of this Article, or any
amendment of this Article insofar as it would in any way enlarge the liability
of any director of the Corporation, shall be ineffective with respect to any
acts or omissions occurring prior to the date of such repeal or amendment.
NINTH: The Corporation shall, to the fullest extent permitted by
applicable law, indemnify any person who is or was made, or threatened to be
made, a party to an action or proceeding, whether civil or criminal, including
an action by or in the right of any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, which any director or officer of the Corporation is
serving or served in any capacity at the request of the Corporation, by reason
of the fact that he/she, his/her testator or intestate, is or was a director or
officer of the Corporation, or is serving or served such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity, against judgments, fines, amounts paid in settlement and
expenses, including attorneys' fees, or any appeal therein. Permissible
indemnification may be provided, as a matter of discretion, to any other person
in accordance with the provisions of the BCL, as from time to time amended, or
other applicable law. Any director or officer of the Corporation serving
(i) another corporation, of which a majority of the shares entitled to vote
in the election of its directors is held, directly or indirectly, by the
Corporation, or (ii) any employee benefit plan of either, in any capacity,
shall be deemed to be doing so at the request of the Corporation.
<PAGE> 57
EXHIBIT B
Page 3
Any person entitled to be indemnified as a matter of right pursuant to
this provision may elect, to the extent permitted by law, to have the right to
indemnification interpreted on the basis of the applicable law in effect at the
time of the occurrence of the event or events giving rise to the action or
proceeding, or on the basis of the applicable law in effect at the time
indemnification is sought. The right to be indemnified pursuant to this
provision shall be a contract right and shall include the right to be paid by
the Corporation expenses incurred in defending any action or proceeding in
advance of its final disposition; provided, however, that, the payment of such
expenses incurred by a director or officer in his/her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including without limitation, service
to an employee benefit plan) in advance of the final disposition of such action
or proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it should ultimately be determined that such director or officer
is not entitled to be indemnified under this provision.
If a claim is not paid in full by the Corporation within ninety days
after a written claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled also to be paid the expense of prosecuting such claim. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he/she has met the applicable standard of conduct, nor
an actual determination by the Corporation (including its Board of Directors,
independent legal counsel or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant had not met the applicable standard of conduct.
<PAGE> 1
THE RAYMOND CORPORATION
20 SOUTH CANAL STREET
GREENE, NEW YORK 11378
June 20, 1997
Dear Shareholder:
We are pleased to inform you that, pursuant to the Agreement and Plan of
Merger dated June 16, 1997 (the "Merger Agreement"), among The Raymond
Corporation ("Raymond"), BT Industries AB ("BT"), and Lift Acquisition Company,
Inc., an indirect wholly owned subsidiary of BT (the "Purchaser"), BT and the
Purchaser today commenced a tender offer for all of the outstanding shares of
Raymond's common stock. In the tender offer, stockholders who tender their
Raymond shares will receive $33.00 per share in cash.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE BT TENDER OFFER
AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF RAYMOND'S SHAREHOLDERS
AND RECOMMENDS THAT ALL SHAREHOLDERS ACCEPT THE TENDER OFFER AND TENDER ALL OF
THEIR SHARES AND WARRANTS PURSUANT TO THE TENDER OFFER.
The tender offer is the culmination of the steps taken by your Board and
Raymond's management to enhance shareholder value. In approving the tender offer
and the Merger Agreement and recommending that all shareholders tender their
shares pursuant to the tender offer, as more fully described in the attached
Solicitation/Recommendation Statement on Schedule 14D-9 filed by Raymond with
the Securities and Exchange Commission, your Board considered a number of
factors including, among others, the financial and other terms and conditions of
the tender offer and the Merger Agreement; Raymond's business, financial
condition, results of operations and future prospects; management's
recommendation of the tender offer and the Merger Agreement; the presentation
by, and opinion of, Lehman Brothers Inc. ("Lehman Brothers"), the Company's
financial advisor; and Raymond's stock price performance, including the
approximately 66% premium that the $33.00 per share price in the tender offer
represents over the closing price of Raymond's shares on the Nasdaq National
Market on February 6, 1997, the last trading day prior to the events relating to
the filing of a Schedule 13D by Metropolitan Capital Advisors, Inc. ("MetCap")
in which MetCap requested that Raymond seek a sale or merger of Raymond.
Lehman Brothers, the Company's financial advisor, has rendered to the Board
of Directors its written opinion that, as of the date of such opinion and
subject to the limitations set forth therein, the $33.00 per share in cash to be
offered to the holders of Raymond's common stock pursuant to the BT tender offer
and the merger is fair, from a financial point of view, to such holders. The
full text of Lehman Brothers' opinion, dated June 16, 1997, which sets forth the
assumptions made, matters considered and limitations on the review undertaken by
Lehman Brothers, is included as Annex A to the attached Schedule 14D-9.
The BT tender offer is conditioned upon, among other things, there being
validly tendered and not properly withdrawn in the tender offer a number of
shares of Raymond common stock which, taken together with any shares owned by BT
or its affiliates, constitutes at least two-thirds of the voting power of all
Raymond securities entitled to vote generally in the election of directors or in
a merger. The consummation of the tender offer is also conditioned upon receipt
of certain regulatory approvals and/or termination of certain waiting periods.
Under the Merger Agreement, if the tender offer is completed, it will be
followed, subject to any necessary shareholder approval, by a merger in which
non-tendering shareholders will receive the same consideration for each Raymond
share as was paid in the tender offer and Raymond will become an indirect wholly
owned subsidiary of BT.
<PAGE> 2
Enclosed with this letter is a copy of Raymond's Schedule 14D-9 which
contains important information regarding the factors considered by your Board in
its deliberations and describes in more detail the reasons for your Board's
conclusions and certain other information regarding the tender offer and the
merger. Also enclosed is BT's Offer to Purchase and related materials, including
a letter of transmittal to be used for tendering your Raymond shares. These
documents set forth in detail the terms and conditions of the tender offer and
the merger and provide instructions on how to tender your Raymond shares. You
are urged to read and carefully consider the enclosed material and your
individual circumstances. If you have any questions or require assistance in
tendering your shares, you may contact MacKenzie Partners, Inc., which is
assisting BT with the tender offer, at (800) 322-2885 (toll-free). Please note
that the tender offer is scheduled to expire at 12:00 midnight, New York City
time, on Friday, July 18, 1997, unless extended.
We thank you for your continued support.
Ross K. Colquhoun
Ross K. Colquhoun
Chairman of the Board and
Chief Executive Officer
2
<PAGE> 1
FOR IMMEDIATE RELEASE
JOINT PRESS RELEASE
BT INDUSTRIES AB AGREES TO ACQUIRE
THE RAYMOND CORPORATION
GREENE, NEW YORK, June 16, 1997 - BT Industries AB ("BT") and
The Raymond Corporation (Nasdaq: RAYM) ("Raymond") announced today that they
have entered into a definitive merger agreement, pursuant to which BT will
acquire all of the outstanding capital stock of Raymond for $33.00 per share in
cash. The agreement, which was unanimously approved by the Board of Directors of
Raymond, provides for a tender offer for Raymond's outstanding shares to be
launched by Lift Acquisition Company, Inc., a wholly-owned subsidiary of BT.
BT, headquartered in Mjolby, Sweden, is one of the leading
European manufacturers of lift-trucks and related materials handling equipment,
and markets its products in the United States under BT PRIME-MOVER(TM) brand
name. BT's ordinary shares are traded on the Stockholm stock exchange. BT's 1996
revenues were approximately $600 million.
The Raymond Corporation is one of the recognized leaders in
supplying equipment used in the transportation, storage and selection of
products in manufacturing, warehousing and shipping applications. Raymond sells
products under its RAYMOND(TM) and DOCKSTOCKER(TM) brands and produces OEM
equipment for sale under a variety of brand names.
In announcing the acquisition of Raymond, Carl-Erik
Ridderstrale, President and Chief Executive Officer of BT, stated "BT
<PAGE> 2
and Raymond have complimentary product lines and distribution channels and the
combination of the companies will increase BT's geographic presence and position
BT for continued growth in an increasingly global marketplace."
Mr. Ridderstrale continued, "We look forward to working with
Raymond's highly competent and dedicated employees, management team and dealer
network and are committed to supporting Raymond's future growth with all the
resources available to us."
Ross K. Colquhoun, Chairman of the Board and Chief Executive
Officer of Raymond declared, "Raymond's Board of Directors is pleased to
announce the sale of the company at a price which we believe represents an
excellent value to our shareholders. BT's offer represents a 27% premium to the
stock price on February 28, 1997, the day prior to the announcement of our
intention to seek to enhance shareholder value."
"We are also pleased that our employees and dealers will be
affiliated with a well-regarded company that is committed and able to continue
the growth of the RAYMOND(TM) and DOCKSTOCKER(TM) brands. This represents an
opportunity and challenge that we believe will be attractive to all of them."
Salomon Brothers Inc acted as financial advisor to BT in this
transaction and Lehman Brothers acted as financial advisor to Raymond.
-2-
<PAGE> 1
Exhibit 6
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 TO RIGHTS AGREEMENT (this "Amendment") is
entered into as of June 16, 1997 by and between THE RAYMOND CORPORATION, a New
York Corporation (the "Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY,
as rights agent (the "Rights Agent"), amending the Rights Agreement, dated as of
March 1, 1997, between the Company and the Rights Agent (the "Rights
Agreement").
Recitals of the Company:
The Company has duly authorized the execution and delivery of this
Amendment, and all things necessary to make this Amendment a valid agreement of
the Company have been done. This Amendment is entered into pursuant to Section
27 of the Rights Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Defined Terms. Terms defined in the Rights Agreement and used
herein shall have the meanings given to them in the Rights Agreement.
2. Amendments to Section 1. (a) Section 1(a) of the Rights Agreement
is amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary, so long
as the Merger Agreement has not been terminated pursuant to the terms
thereof, or at any time after the purchase of shares of Common Stock
pursuant to the Offer, neither BT Industries AB nor any Affiliate of BT
Industries AB shall be deemed to be an Acquiring Person solely by reason
of the execution, delivery or performance of the Merger Agreement or the
announcement, making or consummation of the Offer, the acquisition of
Common Stock pursuant to the Offer or the Merger, the consummation of the
Merger or any other transactions contemplated by the Merger Agreement."
(b) Section 1 of the Rights Agreement is amended to add the
following provisions at the end thereof:
"(p) For purposes of this Agreement:
'Effective Time' shall have the meaning assigned to such
term in the Merger Agreement;
'Merger Agreement' shall mean the Agreement and Plan of
Merger dated as of June 16, 1997 among BT Industries AB, a
corporation incorporated under the laws of Sweden,
<PAGE> 2
Lift Acquisition Company, Inc., a New York corporation and a wholly
owned subsidiary of BT Industries AB, and the Company, as amended
from time to time in accordance with its terms;
'Merger' shall have the meaning assigned to such term in
the Merger Agreement;
'Offer' shall have the meaning assigned to such term in
the Merger Agreement; and
1. Amendment of Section 3(a). Section 3(a) of the Rights Agreement
is amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Rights Agreement to the
contrary, so long as the Merger Agreement has not been terminated
pursuant to the terms thereof, or at any time after the purchase of
shares of Common Stock pursuant to the Offer, a Distribution Date
shall not be deemed to have occurred solely as the result of the
execution, delivery or performance of the Merger Agreement or the
announcement, making or consummation of the Offer, the acquisition
of Common Shares pursuant to the Offer or the Merger, the
consummation of the Merger or any other transactions contemplated by
the Merger Agreement."
2. Amendment of Section 7(a). Section 7(a) of the Rights Agreement
is amended by deleting the word "or" in the penultimate line of such subsection
and substituting in its place", "and inserting immediately after the word
"hereof" in the last line thereof the following clause: "or (iv) immediately
after the acquisition of shares of Common Stock pursuant to the Offer (the
earliest of (i), (ii), (iii) or (iv) being herein referred to as the "Expiration
Date"). Upon the Expiration Date, the Rights shall expire."
3. Effectiveness. This Amendment shall be deemed effective as of
June 16, 1997 as if executed on such date. Except as amended hereby, the Rights
Agreement shall remain in full force and effect and shall be otherwise
unaffected hereby.
4. Miscellaneous. This Amendment shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such state. This
Amendment may be executed in any number of counterparts, each of such
counterparts shall for all purposes be deemed an original and all such
counterparts shall together constitute but one and the same instrument.
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<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested, all as of the day and year first above written.
Attest: THE RAYMOND CORPORATION
/s/ Paul J. Sternberg /s/ James J. Malvaso
- ------------------------------ ------------------------------
By: Paul J. Sternberg By: James J. Malvaso
Title: Vice President, General Title:President and Chief
Counsel and Secretary Operating Officer
AMERICAN STOCK TRUST &
Attest: TRANSFER COMPANY
/s/ Susan Silber /s/ Herbert J. Lemmer
- ------------------------------ ------------------------------
By: Susan Silber By: Herbert J. Lemmer
Title: Assistant Secretary Title: Vice President
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