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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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SPRECKELS INDUSTRIES, INC.
(NAME OF SUBJECT COMPANY)
SPRECKELS INDUSTRIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
Class A Common Stock, Par Value $0.01 Per Share
(Including the Associated Rights)
Warrants to Purchase Shares of Class A Common Stock
($9.17 Exercise Price Per Warrant)
Warrants to Purchase Shares of Class A Common Stock
($11.67 Exercise Price Per Warrant)
Warrants to Purchase Shares of Class A Common Stock
($15.00 Exercise Price Per Warrant)
Warrants to Purchase Shares of Class A Common Stock
($1.00 Exercise Price Per Warrant)
(TITLE OF CLASS OF SECURITIES)
849416201
(CUSIP NUMBER OF CLASS OF SECURITIES)
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DONALD C. ROOF
SPRECKELS INDUSTRIES, INC.
D/B/A YALE INTERNATIONAL, INC.
ONE MORROCROFT CENTRE
6805 MORRISON BLVD., SUITE 450
CHARLOTTE, NORTH CAROLINA 28211
(704) 367-4220
(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 Spreckels Industries, Inc. (doing
business as Yale International, Inc.), a Delaware corporation (the "Company"),
and the address of its principal executive offices is One Morrocroft Centre,
6805 Morrison Blvd., Suite 450, Charlotte, North Carolina 28211. The title of
each class of equity securities to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (this "Statement") relates is (i) the Class A
Common Stock, par value $0.01 per share (the "Common Stock"), of the Company,
including the associated Common Stock purchase rights (the "Rights") issued
pursuant to the Rights Agreement, dated as of November 11, 1995, between the
Company and ChaseMellon Shareholder Services L.L.C. (successor to Chemical
Mellon Shareholder Services L.L.C.) (the "Rights Agent"), as amended (the
"Rights Agreement"), and (ii) all outstanding warrants of the Company to
purchase Common Stock. As used herein, "Shares" means the outstanding shares
of the Common Stock.
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 August 30, 1996 (the "Schedule
14D-1"), by L Acquisition Corporation, a Delaware corporation ("Purchaser")
and a wholly owned subsidiary of Columbus McKinnon Corporation, a New York
corporation ("Parent"), to purchase (i) all outstanding shares of Common
Stock, including the associated Rights, at a purchase price of $24.00 per
Share (the "Per Share Amount") and (ii) all outstanding warrants of the
Company to purchase shares of Common Stock issued by the Company (the
"Warrants") at the Spread (as defined in the Offer to Purchase (as defined
below)), in each case 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 August 30, 1996 (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 Purchaser are located at 140 John James Audubon Pkwy., Amherst, New York
14228.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
August 24, 1996 (the "Merger Agreement"), among the Company, Parent and
Purchaser. 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 Purchaser 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.
At a meeting of the Board of Directors of the Company (the "Board" or the
"Board of Directors") held on July 17, 1996 (the "July 17 Meeting"), in order
to ensure the continued dedication and objectivity of certain key executives
and managers of the Company, the Board authorized the Company to enter into
amended severance compensation arrangements ("Amended Severance Agreements")
with seven of such executives and managers (such executives and managers, the
"Executives"). The Amended Severance Agreements modified the previously
effective severance agreement forms to (i) provide that an Executive will be
entitled to Severance
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(as defined below) based on the Annual Target Bonus (as defined below) rather
than the Executive's accrued bonus to the date of Termination (as defined
below), (ii) provide that an Executive will be entitled to Severance in the
event of an Executive's Termination of employment by the Company (or its
successor) within two years following a Change in Control (as defined below),
rather than one year for constructive Termination or six months from
resignation and (iii) modify the definitions of "Termination" and "Change in
Control".
Under the three-tiered severance structure adopted by the Board, each of Mr.
Tessitore, Chief Executive Officer of the Company, and Donald C. Roof, Chief
Financial Officer of the Company, are parties to Tier 1 Amended Severance
Agreements, one Executive is a party to a Tier 2 Amended Severance Agreement
and four Executives are parties to Tier 3 Amended Severance Agreements. Copies
of the forms of the Tier 1, Tier 2 and Tier 3 Amended Severance Agreements are
filed as Exhibits 2(a), 3 and 4 hereto, respectively, and are incorporated
herein by reference.
The Amended Severance Agreements provide for the payment of severance
benefits ("Severance") in the event of an Executive's termination of
employment by the Company (or its successor) within two years following a
Change in Control. Such Severance consists of (i) a lump sum payment equal to
the sum of (A) a multiplier (the "Severance Multiplier") times the Executive's
base salary immediately prior to the Change in Control and (B) the Severance
Multiplier times the Executive's target bonus as in effect for the year in
which the Termination occurs (or, if higher, the target bonus for the year in
which the Change in Control occurs) (the "Annual Target Bonus"); and (ii)
continued medical benefits until the second anniversary of the Executive's
termination or the first anniversary if the Executive has resigned. The
Severance Multipliers for the Tier 1, Tier 2 and Tier 3 Amended Severance
Agreements are 2, 1.5 and 1, respectively. In addition, the Executives are
entitled to payment of one half the amount otherwise due under their Amended
Severance Agreements upon any termination of employment by them within two
years of a Change in Control.
The Amended Severance Agreements also provide for the Executive to become
fully vested in all awards granted to him under all incentive compensation,
deferred compensation, stock option, stock appreciation rights, restricted
stock, phantom stock or similar plans maintained by the Company, any contrary
provisions of such plans notwithstanding.
A "Change in Control" for the purposes of the Amended Severance Agreements
is deemed to have occurred if: (i) the six persons who were directors of the
Company on September 1, 1995 (the "Incumbent Directors") cease (for any reason
other than death) to constitute a majority of the Board of Directors. For this
purpose, any director who was not a director on September 1, 1995 shall be
deemed to be an Incumbent Director if such director was elected or appointed
to the Board after July 24, 1996 in substitution of an Incumbent Director by,
or on the recommendation of, or with the approval of, at least a majority of
the directors who then qualified as Incumbent Directors (so long as such
director was not nominated by a person who has threatened to, or has entered
into an agreement to, effect a Change in Control); (ii) any person (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (excluding the Company or any Company
benefit plans) is or becomes the beneficial owner directly or indirectly of
securities of the Company representing more than 30% of the combined voting
power of the Company's then outstanding securities ordinarily (and apart from
rights accruing under special circumstances) having the right to vote at
elections of directors; (iii) the shareholders of the Company approve (A) a
merger or consolidation of the Company, with any other corporation or (B) an
agreement for the sale of 50% or more of the assets of the Company; or (iv)
any other event determined to be a Change in Control by a majority of the
Board.
Under the Amended Severance Agreements, "Cause" is defined as (i) a willful
failure by the Employee to substantially perform his duties, other than a
failure resulting from the Employee's complete or partial incapacity due to
physical or mental illness or impairment, (ii) a willful act by the Employee
which constitutes gross misconduct or fraud and which is materially injurious
to the Company, or (iii) a conviction of, or a plea of "guilty" or "no
contest" to, a felony, provided that no act or failure to act by the Employee
shall be considered "willful" unless committed without good faith and without
a reasonable belief that the act or omission was in the Company's best
interest.
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Under the Amended Severance Agreements, "Termination" or "Terminated" is
defined as any of the following: (i) the Employee has been terminated by the
Company for any reason other than Cause; (ii) elimination of the Employee's
position or job; (iii) a significant diminution of the Employee's duties,
responsibilities or authority without the Employee's consent; (iv) a reduction
in the Employee's Base Compensation after the Change in Control; (v) the
failure by the Company to provide substantially similar benefits as in effect
on the date thereof, including, without limitation, equity, incentive, bonus,
retirement, health, life insurance, vacation, change in control protection and
other fringe benefit arrangements; (vi) any breach of the Amended Severance
Agreement by the Company; or (vii) a requirement that the Employee relocate
his principal place of work by a distance of 50 miles or more.
On August 23, 1996, in connection with the Board's approval of the Merger
Agreement and its recommendation of the transactions contemplated thereby,
including the Offer and the Merger (as defined below), and in recognition and
consideration of the services provided and to be provided prior to the Merger,
the Board approved Amendatory Agreements to the Tier 1 Amended Severance
Agreements with the two Executives who are parties to Tier 1 Amended Severance
Agreements to remove the parachute limit imposed by Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and to provide that
amounts received by such Executives upon a Change in Control (whether or not
received pursuant to the Tier 1 Amended Severance Agreements) will be
increased by any amounts incurred by them as a result of the imposition of the
excise taxes imposed on any payments deemed made to them under such agreements
or otherwise under other agreements, plans or programs pursuant to Section
4999 of the Code. The foregoing description of the Amendatory Agreements to
the Tier 1 Amended Severance Agreements is qualified by reference to the
copies of the forms thereof between the Company and Gary L. Tessitore and
Donald C. Roof, respectively, filed as Exhibits 2(b) and 2(c) hereto,
respectively, and incorporated herein by reference.
On August 23, 1996, in consideration and recognition of their dedication to
the Company and services rendered for the Company in the past and to be
rendered to the Company until a Change in Control occurs and in connection
with its approval of the Merger Agreement, the Board also approved bonus
payments, payable upon a Change in Control, to (i) the two Executives who are
parties the Tier 1 Amended Severance Agreements in an aggregate amount equal
to $850,000, as provided in the Amendatory Agreements between each such
Executive and the Company, respectively, (ii) the Corporate Office Employees
of the Company in an aggregate amount equal to $150,000, as provided in the
Corporate Office Employees Bonus Plan, a copy of which is filed as Exhibit 5
hereto and incorporated herein by reference, and (iii) the members of the
Board in an aggregate amount equal to $425,000.
The Company also has indemnification agreements (the "Indemnification
Agreements") with each member of the Board and certain executive officers. The
Indemnification Agreements supplement the protections afforded to the
Company's directors and executive officers under the Company's Bylaws. In
general, the Indemnification Agreements provide that upon the occurrence of a
change in control, the Company will obtain an irrevocable standby letter of
credit in an amount not less than $1,000,000 per individual naming such
director or officer as the sole beneficiary (each, a "Letter of Credit"). Such
director or officer can draw amounts under a Letter of Credit upon the
certification by such indemnified person that (i) such indemnified person has
made a written request to the Company for such amount and the Company has
failed or refused to provide him with such amount in full for 30 days and (ii)
the indemnified party believes that he is entitled under the terms of the
Indemnification Agreement to the amount he is drawing down. The
Indemnification Agreements are binding on the Company and any successor to the
Company. Pursuant to the Merger Agreement, the Company has agreed to deliver
to Parent, on or prior to the initial expiration date of the Offer, a copy of
an amendment to each director's Indemnification Agreement, executed by the
Company and such director, pursuant to which the requirement of the Company to
obtain a Letter of Credit will cease to be effective upon consummation of a
change in control upon the consummation of the transactions contemplated by
the Merger Agreement.
The foregoing description of the Indemnification Agreements and the form of
Amendment to the Indemnification Agreements is qualified in its entirety by
reference to the forms thereof which are filed as Exhibits 6(a) and 6(b)
hereto, respectively, and are incorporated herein by reference.
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MERGER AGREEMENT
The following is a summary of the Merger Agreement, which summary is
qualified in its entirety by reference to the Merger Agreement which is filed
as Exhibit 1 hereto and incorporated herein by reference.
The Offer
The Merger Agreement provides for the commencement of the Offer as soon as
reasonably practicable, but in no event later than five business days after
the public announcement by the Company of the execution of the Merger
Agreement. The obligation of Purchaser to accept for payment Shares and
Warrants tendered is subject only to (i) the Minimum Condition (as defined
below under "Conditions of the Offer") and (ii) the satisfaction or waiver of
the other conditions described below under "Conditions of the Offer." Under
the Merger Agreement, Purchaser expressly reserves the right, in its sole
discretion, to waive any condition to the Offer (other than the Minimum
Condition) and to increase the Per Share Amount payable pursuant to the Offer
or make any other changes in the terms and conditions of the Offer (provided
that, without the written consent of the Company, no change may be made which
decreases the Per Share Amount payable in the Offer, changes the form of
consideration payable in the Offer (other than by adding consideration),
reduces the maximum number of Shares or Warrants to be purchased in the Offer
or imposes conditions to the Offer in addition to those set forth in
"Conditions of the Offer" below). The Merger Agreement provides that, subject
to the terms and conditions of the Merger Agreement and the Offer, including
but not limited to the conditions to the Offer, unless the Company otherwise
consents in writing, Purchaser will accept for payment and pay for Shares and
Warrants validly tendered and not properly withdrawn promptly following the
expiration of the Offer, provided that Purchaser may extend the Offer up to
the tenth business day after the later of (i) the tenth business day after the
initial expiration date of the Offer and (ii) the date on which all such
conditions shall first have been satisfied or waived.
The Merger
The Merger Agreement provides that upon the terms and subject to the
conditions thereof, and in accordance with the General Corporation Law of the
State of Delaware ("Delaware Law"), at the effective time of the merger (the
"Effective Time"), the Purchaser will be merged with and into the Company (the
"Merger"). As a result of the Merger, the separate corporate existence of
Purchaser will cease and the Company will continue as the surviving
corporation of the Merger (the "Surviving Corporation"). At the Effective
Time, by virtue of the Merger and without any action on the part of Purchaser,
the Company or the holders of any of the following securities: (i) each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares held in the treasury of the Company and each Share owned by Parent,
Purchaser or any other direct or indirect subsidiary of Parent or of the
Company, which will be cancelled, and any Shares held by stockholders who have
not voted in favor of or consented to the Merger and shall have delivered a
written demand for appraisal of such Shares in the time and manner provided in
Section 262 of Delaware Law and shall not have failed to perfect or shall not
have effectively withdrawn or lost their rights to appraisal and payment under
Delaware Law) will be cancelled, extinguished and converted into the right to
receive an amount equal to the Per Share Amount in cash or any higher price
that may be paid pursuant to the Offer (the "Merger Consideration") payable to
the holder thereof, without interest, less any required withholding taxes,
upon surrender of the certificate formerly representing such Share and (ii)
each share of common, preferred or other capital stock of Purchaser issued and
outstanding immediately prior to the Effective Time will be converted into and
become one validly issued, fully paid and nonassessable share of identical
common, preferred or other capital stock of the Surviving Corporation.
The Merger Agreement provides that immediately prior to the Effective Time,
each employee or director stock option and any related stock appreciation
right (together, an "Employee Option"), whether or not then exercisable, will
be cancelled by the Company, and each holder of a cancelled Employee Option
will be entitled to receive at the Effective Time or as soon as practicable
thereafter (or, if later, with respect to any Employee Option, the date six
months and one day following the grant of such Employee Option) from the
Company in consideration for the cancellation of such Employee Option an
amount in cash equal to the product of (i) the
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number of Shares previously subject to such Employee Option and (ii) the
excess, if any, of the Merger Consideration over the exercise price per Share
previously subject to such Employee Option.
The Merger Agreement provides that at the Effective Time and without any
further action on the part of the Company and Purchaser, the Restated
Certificate of Incorporation of the Company (as amended, the "Certificate of
Incorporation") as in effect immediately prior to the Effective Time will be
the certificate of incorporation of the Surviving Corporation until thereafter
and further amended as provided therein and under Delaware Law. The Merger
Agreement provides that, at the Effective Time and without any further action
on the part of the Company and Purchaser, the By-Laws of Purchaser will be the
By-Laws of the Surviving Corporation and thereafter may be amended or repealed
in accordance with their terms or the Certificate of Incorporation of the
Surviving Corporation and as provided by law. The Merger Agreement also
provides that the directors of Purchaser immediately prior to the Effective
Time will be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-Laws of the
Surviving Corporation, and the officers of the Company immediately prior to
the Effective Time will be the initial officers of the Surviving Corporation,
in each case until their respective successors are duly elected or appointed
(as the case may be) and qualified.
Agreements of Parent, Purchaser and the Company
Shareholders' Meeting. Pursuant to the Merger Agreement, the Company, acting
through its Board of Directors, will, if required in accordance with
applicable law and the Company's Certificate of Incorporation and By-Laws, (i)
duly call, give notice of, convene and hold a special meeting of its
stockholders as soon as practicable following consummation of the Offer for
the purpose of considering and taking action on the Merger Agreement and the
transactions contemplated thereby (the "Stockholders Meeting") and (ii)
subject to its fiduciary duties under applicable law, exercised after
consultation with independent legal counsel, (A) include in the Proxy
Statement the recommendation of the Board of Directors that the stockholders
of the Company vote in favor of the approval of the Merger Agreement and the
transactions contemplated thereby and the written opinion of the Financial
Advisor that the consideration to be received by the stockholders of the
Company pursuant to the Offer and the Merger is fair to such stockholders from
a financial point of view and (B) use its reasonable efforts to obtain the
necessary approval of the Merger Agreement and the transactions contemplated
thereby by its stockholders. At the Stockholders Meeting, Parent and Purchaser
will cause all Shares then owned by them and their subsidiaries to be voted in
favor of approval of the Merger Agreement and the transactions contemplated
thereby.
The Merger Agreement provides that in the event that Purchaser acquires at
least 90% of the outstanding Shares, the Company agrees, at the request of
Purchaser, subject to the conditions to the Merger set forth below in
"Conditions to the Merger", 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 stockholders, in
accordance with Section 253 of Delaware Law.
Proxy Statement. The Merger Agreement provides that if required by
applicable law, as soon as practicable following Parent's reasonable request,
the Company will file with the Securities and Exchange Commission (the
"Commission") under the Exchange Act, and will use its reasonable efforts to
have cleared by the Commission, the Proxy Statement with respect to the
Stockholders Meeting. The Company agrees to use its reasonable efforts, after
consultation with Parent and Purchaser, to respond promptly to any comments
made by the Commission with respect to the Proxy Statement and any preliminary
version thereof filed by it and cause such Proxy Statement to be mailed to the
Company's stockholders at the earliest practicable time.
Designation of Directors. The Merger Agreement provides that promptly upon
the purchase by Purchaser of Shares pursuant to the Offer (but subject to the
satisfaction of the Minimum Condition), and from time to time thereafter,
Purchaser will be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company
as shall give Purchaser representation on the Board of Directors equal to the
product of the total number of directors on such Board (giving effect to the
directors
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elected pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares beneficially owned by Purchaser or any affiliate of
Purchaser bears to the total number of Shares then outstanding, and the
Company will, at such time, promptly take all action necessary to cause
Purchaser's designees to be so elected, including by increasing the size of
the Board of Directors or securing the resignations of incumbent directors or
both. At such times, the Company will use its reasonable efforts to cause
persons designated by Purchaser to constitute the same percentage as is on the
Board of (i) each committee of the Board, (ii) each board of directors of each
subsidiary of the Company and (iii) each committee of each such board, in each
case only to the extent permitted by law.
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
from the date thereof to the Effective Time, the Company will , and will cause
its subsidiaries, officers, directors, employees, auditors and other agents
to, afford the officers, employees, auditors and other agents of Parent, and
financing sources who agree to be bound by the provisions thereof as though a
party thereto, reasonable access at all reasonable times to its officers,
employees, agents, properties, offices, plants and other facilities and to all
books and records, and will furnish Parent and such financing sources with all
financial, operating and other data and information as Parent, through its
officers, employees or agents, or such financing sources may from time to time
reasonably request. Parent and Purchaser have agreed to hold, and to cause
their respective officers, employees, auditors and other agents to hold, in
confidence all documents and information concerning the Company and its
subsidiaries furnished to Parent or Purchaser in connection with the
transactions contemplated in the Merger Agreement.
No Solicitation of Transactions. The Merger Agreement provides that the
Company, its affiliates and their respective officers, directors, employees,
representatives and agents shall immediately cease any existing discussions or
negotiations, if any, with any parties conducted theretofore with respect to
an Acquisition Proposal. Under the Merger Agreement, the term "Acquisition
Proposal" means any acquisition or exchange of all or any material portion of
the assets of, any equity interest in, or any merger, reorganization,
consolidation, or business combination or similar transaction involving the
Company or any of its subsidiaries or any proposal with respect thereto.
Neither the Company nor any of its affiliates, nor any of its or their
respective officers, directors, employees, representatives or agents, shall,
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent
and Purchaser, any affiliate or associate of Parent and Purchaser or any
designees of Parent or Purchaser) concerning an Acquisition Proposal.
Notwithstanding the preceding sentence, if, upon the advice of counsel and its
financial advisor, the Company's Board of Directors determines in good faith
that failing to take any of the following actions would constitute a breach of
the Company's Board of Directors' fiduciary duty under applicable law, the
Company may, directly or indirectly, (i) furnish information and access, in
each case only in response to a request for such information or access to any
person made after the date of the Merger Agreement which was not encouraged,
solicited or initiated by the Company or any of its affiliates or any of its
or their respective officers, directors, employees, representatives or agents
after the date of the Merger Agreement, pursuant to appropriate
confidentiality agreements, and (ii) participate in discussions and negotiate
with such entity or group concerning an Acquisition Proposal if such entity or
group has submitted a written proposal to the Company's Board of Directors
relating to any such Acquisition Proposal. The Company's Board of Directors is
required to provide a copy and/or terms of any Acquisition Proposal (whether
oral or written) to Parent immediately after receipt thereof, unless the
Company's Board of Directors determines that providing such a copy and/or
terms would constitute a breach of the Company's Board of Directors' fiduciary
duty under applicable law. Notwithstanding the foregoing, the Company is
required to notify Parent immediately if any Acquisition Proposal (whether
oral or written) is made and to keep Parent promptly advised of all
developments which could reasonably be expected to culminate in the Company's
Board of Directors withdrawing, modifying or amending its recommendation of
the Offer, the Merger and the other transactions contemplated by the Merger
Agreement. The Company agrees not to release any third party from, or waive
any provisions of, any confidentiality or standstill agreement to which the
Company is a party, unless the Board determines that failing to release such
third party or waive such provisions would constitute a breach of the
Company's Board of Directors' fiduciary duty under applicable law.
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Employee Benefit Matters. The Merger Agreement provides that Parent will
cause Purchaser to honor all employment, consulting and other arrangements of
the Company with individuals relating to employment and employee benefits
specified by the Company to Parent on or prior to the date of the Merger
Agreement.
Directors' and Officers' Indemnification and Insurance. The Merger Agreement
provides that from and after the Effective Time, Parent will cause Purchaser
to indemnify and hold harmless all past and present officers and directors of
the Company and of its subsidiaries to the full extent such persons may be
indemnified by the Company pursuant to the Company's Certificate of
Incorporation and By-laws as in effect on the date of the Merger Agreement for
acts or omissions occurring at or prior to the Effective Time, and will
advance reasonable litigation expenses incurred by such officers and directors
in connection with defending any action arising out of such acts or omissions.
No Amendment to the Rights Agreement. Pursuant to the Merger Agreement,
except as expressly contemplated thereby, the Company agrees not to amend the
Rights Agreement.
Further Action; Reasonable Efforts. The Merger Agreement provides that upon
the terms and subject to the conditions thereof, each of the parties thereto
will use its reasonable efforts to take, or cause to be taken, all appropriate
action, and to do or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement, including but
not limited to (i) cooperation in the preparation and filing of the Offer
Documents, the Schedule 14D-9, the Proxy Statement, any required filings under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and other laws and (ii) using its reasonable efforts to make all
required regulatory filings and applications and to obtain 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 the consummation of the transactions
contemplated by the Merger Agreement and to fulfill the conditions to the
Offer and the Merger. Pursuant to the Merger Agreement, the Company agrees to
cooperate with Parent and Purchaser with respect to consummating the financing
for the Offer and the Merger.
Warrants. Pursuant to the Merger Agreement, Parent agrees to cause the
Surviving Corporation to, and the Surviving Corporation agrees to, make
appropriate lawful provision so that, following the Effective Time, each
holder of a Warrant will be entitled to receive upon exercise of such Warrant
in accordance with the terms thereof (including payment of the Exercise Price
(as defined in each Warrant)) the Per Share Amount in cash.
Delivery of Director Agreements. The Merger Agreement provides that the
Company will deliver to Parent, on or prior to the initial expiration date of
the Offer, a copy of an amendment to each Company director's Indemnification
Agreement, executed by the Company and such director, pursuant to which the
provisions to such agreement requiring the Company to obtain a Letter of
Credit in the event of a change of control will be eliminated upon the
consummation of the transactions contemplated by the Merger Agreement.
Conduct of Business of the Company Pending the Merger. Pursuant to the
Merger Agreement, the Company has covenanted and agreed that, during the
period from the date of the Merger Agreement until such time as Parent or
Purchaser shall beneficially own a majority of the Shares, unless Parent shall
otherwise agree in writing, the businesses of the Company and its subsidiaries
will be conducted only in, and the Company and its subsidiaries will not take
any action except in, the ordinary course of business and in a manner
consistent with past practice and in compliance with applicable laws; and the
Company and its subsidiaries will each use its reasonable efforts to preserve
intact the business organization of the Company and its subsidiaries, to keep
available the services of the present officers, employees and consultants of
the Company and its subsidiaries and to preserve the present relationships of
the Company and its subsidiaries with customers, suppliers and other persons
with which the Company or any of its subsidiaries has significant business
relations.
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, between the date of the Merger Agreement and the Effective
Time, directly or indirectly, except as contemplated by the Merger Agreement,
without the prior written consent of Parent: (ii) amend or otherwise change
its Certificate of
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Incorporation or By-Laws or equivalent organizational documents; (iii) issue,
deliver, sell, pledge, dispose of or encumber, or authorize or commit to the
issuance, sale, pledge, disposition or encumbrance of, (A) any shares of
capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of capital stock, or any
other ownership interest (including but not limited to stock appreciation
rights or phantom stock), of the Company or any of its subsidiaries (except
for the issuance of up to an aggregate of 604,894 shares of Class A Common
Stock (less any shares of Class A Common Stock issued upon the exercise of
Employee Options since August 21, 1996) issuable in accordance with the terms
of Employee Options outstanding as of August 23, 1996 and the Warrants or (B)
any assets of the Company or any of its subsidiaries, except, in the case of
this clause (B), in the ordinary course of business; (iv) declare, set aside,
make or pay any dividend or other distribution; (v) reclassify, combine,
split, subdivide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock; (vi) (A) acquire (by merger,
consolidation, or acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division thereof,
(B) incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans, advances or
capital contributions to, or investments in, any other person, except for such
of the foregoing incurred in the ordinary course of business; or (C) enter
into or amend any contract, agreement, commitment or arrangement with respect
to any of the matters set forth in (v) above; (vii)(A) except with respect to
collective bargaining agreements entered into in accordance with clause (B)
below and except as may be required by law or as contemplated by the Merger
Agreement, enter into, adopt or amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase
agreement, pension, retirement, deferred compensation, employment, severance
or other employee benefit agreement, trust, plan, fund or other arrangement
for the benefit or welfare of any director, officer or employee in any manner,
or (except for normal increases in the ordinary course of business consistent
with past practice that, in the aggregate, do not result in a material
increase in benefits or compensation expense to the Company, and as required
under existing agreements or in the ordinary course of business generally
consistent with past practice) increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the date of the Merger
Agreement (including, without limitation, the granting of stock appreciation
rights or performance units); or (B) enter into any collective bargaining
agreement with any union after the date of the Merger Agreement that would
have or constitute a Material Adverse Effect after the date of the Merger
Agreement; (viii) acquire, sell, lease or dispose of any assets outside the
ordinary course of business or any assets which in the aggregate are material
to the Company and its subsidiaries taken as a whole, or enter into any
commitment or transaction outside the ordinary course of business consistent
with past practice which would be material to the Company and its subsidiaries
taken as whole; (ix) except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the accounting
principles or practices used by it; (x) revalue in any material respect any of
its assets, including, without limitation, writing down the value of inventory
or writing-off notes or accounts receivable other than in the ordinary course
of business; (xi) authorize any new capital expenditure or expenditures which,
individually, is in excess of $1,000,000, or in the aggregate, are in excess
of $10,000,000; (xii) make any tax election or settle or compromise any tax
liability material to the Company and its subsidiaries taken as a whole;
(xiii) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of business
of liabilities reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company and
its subsidiaries or incurred in the ordinary course of business consistent
with past practice; (xiv) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated by the Merger
Agreement; (xv) permit any insurance policy naming it as a beneficiary or
loss-payable payee to be cancelled or terminated except in the ordinary and
usual course of business; (xvi) enter into any material joint venture
agreement, acquisition agreement or partnership agreement; (xvii) enter into
any material arrangement, agreement or contract with respect to any assets or
otherwise that, individually or in the aggregate with other material
agreements and contracts entered into after the date of the Merger Agreement,
would have or constitute a Material Adverse Effect (defined to mean any change
or effect that is or is reasonably likely to be materially adverse to the
business, assets, financial condition or results of operations of the Company
and its subsidiaries
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taken as a whole) after the date of the Merger Agreement; or (xviii) enter
into any agreement to take any of the actions described in (i) through (xiv).
Representation and Warranties
The Merger Agreement contains various customary representations and
warranties of the parties thereto including representations and warranties by
the Company as to organization and qualification; certificate of incorporation
and bylaws; capitalization; authority relative to the Merger Agreement; no
conflict, required filings and consents; material contracts; compliance with
law; Commission filings and financial statements; absence of certain changes
or events concerning the Company's business; no undisclosed liabilities
concerning the Company's business; absence of litigation; taxes; environmental
liability; licenses and permits; offer documents, proxy statement; brokers;
inapplicability of state takeover laws; and treatment of Warrants in
connection with the Merger.
The Company has also represented in the Merger Agreement that the Board of
the Company has taken all necessary action to amend the terms of the Rights
Agreement so that none of the execution of the Merger Agreement, the making of
the Offer, the acquisition of Shares pursuant to the Offer or the consummation
of the Merger will (a) cause the Rights issued pursuant to the Rights
Agreement to become exercisable, (b) cause any person to become an Acquiring
Person (as such term is defined in the Rights Agreement) or (c) give rise to a
Distribution Date (as such term is defined in the Rights Agreement).
Conditions of the Offer
Under the terms of the Merger Agreement, Purchaser will not be required to
accept for payment or pay for any Shares tendered pursuant to the Offer, and
may postpone the acceptance for payment or, subject to the restriction
referred to above, payment for any Shares tendered pursuant to the Offer, and
may amend or terminate the Offer (whether or not any Shares have theretofore
been purchased or paid for) if, prior to the expiration of the Offer, (i) a
number of shares of Common Stock which, together with any Shares owned by
Parent or Purchaser, constitutes at least 51% of the voting power (determined
on a fully-diluted basis, including the exercise in full of all options and
warrants outstanding, other than Warrants validly tendered and accepted for
payment pursuant to the Offer), on the date of purchase, of all the securities
of the Company entitled to vote generally in the election of directors or in a
merger shall not have been validly tendered and available for acceptance
pursuant to the Offer (the "Minimum Condition"), (ii) Purchaser is not, in its
reasonable discretion, satisfied that (x) the Rights will not become
exercisable upon consummation of the Offer, (y) upon consummation of the
Offer, the restrictions contained in Section 203 of Delaware Law will not
apply to the Merger or (z) no supermajority vote will be required by the
Company's Certificate of Incorporation to approve the Merger or, after
consummation of the Offer, Purchaser will otherwise possess sufficient voting
power to effect the Merger without the affirmative vote of any person other
than Purchaser or (iii) at any time on or after August 24, 1996 and prior to
the acceptance for payment of Shares, any of the following conditions occurs
or has occurred or Purchaser makes a good faith determination, which, in the
reasonable judgment of Purchaser with respect to each and every matter
referred to below, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger:
(a) there shall have been any action or proceeding brought by any
governmental authority before any federal or state court, or any order or
preliminary or permanent injunction entered in any action or proceeding
before any federal or state court or governmental, administrative or
regulatory authority or agency, located or having jurisdiction within the
United States, or any other action taken, proposed or threatened, or
statute, rule, regulation, legislation, interpretation, judgment or order
proposed, sought, enacted, entered, enforced, promulgated, amended, issued
or deemed applicable to Purchaser, the Company or any subsidiary or
affiliate of Purchaser or the Company or the Offer or the Merger, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency located or having jurisdiction within the
United States, which could reasonably be expected to have the effect of:
(i) making
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illegal, or otherwise directly or indirectly restraining or prohibiting or
making materially more costly, the making of the Offer, the acceptance for
payment of, payment for, or ownership, directly or indirectly, of some of
or all the Shares by Parent or Purchaser, the consummation of any of the
transactions contemplated by the Merger Agreement or materially delaying
the Merger; (ii) prohibiting or materially limiting the ownership or
operation by the Company or any of its subsidiaries, or by Parent,
Purchaser or any of Parent's subsidiaries of all or any material portion of
the business or assets of the Company or any of its material subsidiaries
or Parent or any of its subsidiaries, or compelling Purchaser, Parent or
any of Parent's subsidiaries to dispose of or hold separate all or any
material portion of the business or assets of the Company or any of its
material subsidiaries or Parent or any of its subsidiaries, as a result of
the transactions contemplated by the Offer or the Merger Agreement; (iii)
imposing or confirming limitations on the ability of Purchaser, Parent or
any of Parent's subsidiaries effectively to acquire or hold or to exercise
full rights of ownership of Shares, including, without limitation, the
right to vote any Shares acquired or owned by Parent or Purchaser or any of
Parent's subsidiaries on all matters properly presented to the stockholders
of the Company, including, without limitation, the adoption and approval of
the Merger Agreement and the Merger or the right to vote any shares of
capital stock of any subsidiary (other than immaterial subsidiaries)
directly or indirectly owned by the Company; or (iv) requiring divestiture
by Parent or Purchaser, directly or indirectly, of any Shares;
(b) 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 in the United States, (ii) any
extraordinary or material adverse change in the market price of the Shares
or in the United States securities or financial markets generally,
including, without limitation, a decline of at least 20% in either the Dow
Jones Average of Industrial Stocks or the Standard & Poor's 500 index from
the date of the Merger Agreement, (iii) any material adverse change or any
condition, event or development involving a prospective material adverse
change in United States or other material international currency exchange
rates or a suspension of, or limitation on, the markets therefor, (iv) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, or (v) a commencement of a war or
armed hostilities or other national or international calamity directly or
indirectly involving the United States which would have a Material Adverse
Effect or materially adversely affect (or materially delay) the
consummation of the Offer;
(c) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this Section as set forth in Rule 13d-3 promulgated under the Exchange Act)
of 15% or more of the outstanding Shares has been acquired by any
corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or any of its
affiliates and other than any Grandfathered Person (as presently defined)
so long as such person remains a Grandfathered Person (as presently
defined) or (ii) (A) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Purchaser the approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any takeover proposal or any
other acquisition of Shares other than the Offer and the Merger, (B) any
such corporation, partnership, person or other entity or group shall have
entered into a definitive agreement or an agreement in principle with the
Company with respect to a tender offer or exchange offer for any Shares or
a merger, consolidation or other business combination with or involving the
Company or any of its subsidiaries or (C) the Board of Directors of the
Company or any committee thereof shall have resolved to do any of the
foregoing;
(d) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to materiality shall not be true
and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made at the time of
such determination;
(e) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
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(f) the Merger Agreement shall have been terminated in accordance with
its terms or the Offer shall have been amended or terminated with the
consent of the Company;
(g) any waiting periods under the HSR Act applicable to the purchase of
Shares pursuant to the Offer shall not have expired or been terminated, or
any material approval, permit, authorization, consent or waiting period of
any domestic, foreign or supranational governmental, administrative or
regulatory agency (federal, state, local, provincial or otherwise) located
or having jurisdiction within the United States or any country or economic
region in which either the Company or Parent, directly or indirectly, has
material assets or operations, shall not have been obtained or satisfied;
or
(h) the Company and Purchaser (or any affiliate of Purchaser) shall have
entered into an agreement (which by its terms supersedes the Merger
Agreement) providing for the acquisition of the Company by Purchaser or any
affiliate of Purchaser by merger or other similar business combination, or
by purchase of shares of capital stock or assets of the Company, or the
Company and Purchaser shall have entered into any other agreement pursuant
to which it is agreed that the Offer will be terminated.
Conditions of the Merger
Under the Merger Agreement, the respective obligations of each party to
effect the Merger are subject to the satisfaction at or prior to the Effective
Time of the following conditions: (a) if required by Delaware Law, the Merger
Agreement shall have been approved by the affirmative vote of the stockholders
of the Company by the requisite vote in accordance with the Company's
Certificate of Incorporation and Delaware Law (which the Company has
represented shall be solely the affirmative vote of a majority of the
outstanding Shares); (b) no statute, rule, regulation, executive order,
decree, ruling, injunction or other order (whether temporary, preliminary or
permanent) shall have been enacted, entered, promulgated or enforced by any
United States or state court or governmental authority which prohibits,
restrains, enjoins or restricts the consummation of the Merger; (c) any
waiting period applicable to the Merger under the HSR Act shall have
terminated or expired; and (d) Purchaser shall have purchased Shares pursuant
to the Offer in a number sufficient to satisfy the Minimum Condition.
Termination; Fees and Expenses
The Merger Agreement may be terminated and the Merger contemplated thereby
may be abandoned at any time prior to the Effective Time, notwithstanding
approval thereof by the stockholders of the Company:
(a) By mutual written consent of Parent, Purchaser and the Company;
(b) By Parent or the Company, if the Effective Time has not occurred on
or before 150 days from August 24, 1996 (the "Outside Date"); provided that
the right to terminate the Merger Agreement under this clause (b) will not
be available to any party whose misrepresentation in the Merger Agreement
or whose failure to perform any of its covenants and agreements or to
satisfy any obligation under the Merger Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date;
(c) By Parent or the Company if any court of competent jurisdiction or
other governmental body located or having jurisdiction within the United
States has issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Offer or the
Merger and such order, decree, ruling or other action is or shall have
become final and nonappealable;
(d) By Parent if due to an occurrence or circumstance which would result
in a failure to satisfy any of the Offer Conditions, Purchaser has (i)
failed to commence the Offer, (ii) terminated the Offer or (iii) failed to
pay for Shares pursuant to the Offer on or prior to the Outside Date;
(e) By the Company if (i) there has not been a material breach of any
representation, warranty, covenant or agreement on the part of the Company,
and Purchaser has (A) terminated the Offer or (B) failed to pay for Shares
pursuant to the Offer on or prior to the Outside Date or (ii) the Company
receives an Acquisition Proposal on terms the Company's Board of Directors,
upon the advice of counsel and its financial advisor, determines in good
faith to be more favorable to the Company's stockholders than the
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terms of the Offer and the Merger, and the Board, upon the advice of
counsel and its financial advisor, determines in good faith, that it is
legally required for the discharge of its fiduciary duties, (A) not to
continue to recommend that holders of Shares or Warrants accept the Offer
and tender their Shares or Warrants pursuant to the Offer and (B) to accept
such Acquisition Proposal; or
(f) By Parent prior to the appointment or election of Purchaser's
designees to a majority of the positions on the Company's Board of
Directors if (i) there has been a breach of any representation or warranty
on the part of the Company which would either have a Material Adverse
Effect on the Company or which would prevent the consummation of the Offer,
(ii) there has been a breach of any covenant or agreement on the part of
the Company which would either have a Material Adverse Effect or prevent
the consummation of the Offer, which has not been cured prior to the
earlier of (A) 10 business days following notice of such breach and (B) two
business days prior to the date on which the Offer expires, or (iii) the
Board has withdrawn or modified (including by amendment of this Statement)
in a manner adverse to Purchaser its approval or recommendation of the
Offer, the Merger Agreement or the Merger or the Company's Board of
Directors, upon request by Parent, fails to reaffirm such approval or
recommendation within two business days of such request or has recommended
another offer or transaction, or has resolved to effect any of the
foregoing.
The Merger Agreement provides that the Company, if requested by Parent,
shall promptly, but in no event later than two days after the date of such
request, pay Parent a fee of $10,000,000 plus accountable expenses which
amount shall be payable in same day funds (an "Alternative Proposal Fee") if
(x)(i) after the date of the Merger Agreement, any corporation, partnership,
person, other entity or group (as defined in Section 13(d)(3) of the Exchange
Act) other than Parent or Purchaser or any of their respective affiliates
shall become the beneficial owner of 10% or more of the outstanding Shares or
to the extent there exists a holder of 10% or more of the outstanding Shares
as of the date of the Merger Agreement, such holder purchases any additional
shares of stock of the Company, and (ii) the Minimum Condition shall not have
been satisfied and the Offer is terminated in accordance with the Merger
Agreement without the Purchase of any Shares thereunder, or (y) Parent has
terminated the Merger Agreement pursuant to clause (f)(iii) above. The
Alternative Proposal Fee must also be paid by the Company if the Company has
terminated the Merger Agreement pursuant to clause (e)(ii) above.
Except as provided by the foregoing, each party will bear its own expenses
in connection with the Merger Agreement and the transactions contemplated
thereby.
Amendment and Waivers. Any provision of the Merger Agreement may be amended
by the parties thereto by action taken by or on behalf of their respective
Boards of Directors at any time prior to the Effective Time; provided,
however, after approval of the Merger by the stockholders of the Company, no
amendment may be made which would reduce the amount or change the type of
consideration into which each Share shall be converted upon consummation of
the Merger. The Merger Agreement may not be amended except by an instrument in
writing signed by the parties thereto. At any time prior to the Effective
Time, any party to the Merger Agreement may (a) extend the time for
performance of any of the obligations or other acts of the other parties
thereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant thereto and (c) waive
compliance with any of the agreements or conditions contained therein. Any
such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
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 August 23,
1996, 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 holders of Shares and Warrants, and approved the
Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, in all respects.
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THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS AND HOLDERS OF
WARRANTS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES AND WARRANTS
TO PURCHASER 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), Purchaser will
accept for payment and pay for all Shares and Warrants validly tendered on or
prior to the initial expiration date and not properly withdrawn. Shareholders
and holders of Warrants considering not tendering their Shares or Warrants in
order to wait for the Merger should note that Purchaser 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 the signing of
the Merger Agreement is filed as Exhibit 7(b) to this Statement and is
incorporated herein by reference.
(b) Background of the Offer; Factors Considered by the Board
Background of the Offer
Events With Respect to the American Enterprises Tender Offer. On November
14, 1995, Bart A. Brown, Jr., Chairman of the Board of the Company, was
informed by Philip W. Knisely, President of American Enterprises, L.L.C.
("American Enterprises"), that American Enterprises had acquired shares of the
Company and would be filing a Schedule 13D. On November 18, 1995, American
Enterprises filed a Schedule 13D in which it disclosed that it had acquired
1,201,260 shares of Common Stock in order to obtain a substantial equity
position in the Company.
On May 16, 1996, the Company received a letter from Metropolitan Capital
Advisors, Inc. ("Metropolitan"), the general partner of Bedford Fall
Investors, LP, in which Metropolitan indicated its intention to seek control
of the Board at the next shareholders' meeting, with a slate of directors that
Metropolitan said would be committed to the near-term maximization of the
value of the Common Stock. On May 16, 1996, Mr. Knisely of American
Enterprises called Mr. Tessitore and a meeting was arranged for May 24 to
discuss possible responses by the Company to the Metropolitan letter. On May
24, 1996, Mr. Brown, Mr. Tessitore, Mr. Knisely and Messrs. Mitchell and
Steven Rales of American Enterprises met. Messrs. Rales and Mr. Knisely
indicated American Enterprises's interest in a potential transaction pursuant
to which the Company would amend its then effective Rights Agreement to permit
American Enterprises to acquire approximately 40% of the Common Stock through
open market purchases and an issuance of additional shares. In connection with
such potential transaction, American Enterprises also requested representation
on the Board. Mr. Brown and Mr. Tessitore told the American Enterprises
representatives that they would consider this proposal as well as other
alternatives.
On June 7, 1996, after evaluation of a number of investment banking firms,
the Company notified Salomon Brothers Inc ("Salomon Brothers") that the
Company desired to engage Salomon Brothers to assist in the evaluation of the
proposal made by American Enterprises and other financial and strategic
alternatives available to the Company.
On July 17, 1996, the Board held a meeting at which Salomon Brothers made a
presentation to the Board with respect to various strategic alternatives
available to the Company. Following this presentation, the Board discussed and
considered, among other matters, American Enterprises's May 24, 1996 proposal.
On July 19, 1996, American Enterprises commenced an unsolicited $16.50 per
Share tender offer for the Common Stock (and for the Warrants at a price equal
to the excess of the $16.50 per Share tender offer price and the exercise
price of the Warrants, to the extent exercisable) (the "American Enterprises
Tender Offer").
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On July 23, 1996, the Board held a meeting, in which its legal and financial
advisors participated, to discuss the American Enterprises Tender Offer and
possible responses to it. During the meeting, the Board considered, among
other matters, the time it would have to respond to the American Enterprises
Tender Offer and the provisions of its Rights Agreement, as then in effect,
and after discussing the matter with its legal and financial advisors, the
Board determined to amend the Rights Agreement so that the Rights would expire
upon consummation of an all cash tender offer for the Common Stock if, among
other requirements which previously were in effect, the offer is consummated
no earlier than 90 days after it is commenced. On July 24, 1996, the Company
issued a press release announcing the amendment to the Rights Plan and
including the following quote from Mr. Tessitore, the Company's Chief
Executive Officer: "This amendment provides the Board of Directors adequate
time to review the proposal announced last week by American Enterprises and to
explore all options available to the Company. It will assist us in our desire
to act in the best interests of our shareholders."
On August 1, 1996, the Company filed its Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the American Enterprises Tender
Offer and mailed to the Company's stockholders its recommendation contained
therein that the Company's stockholders should reject the American Enterprises
Tender Offer. The Company also reiterated in its letter to stockholders: "Your
Board of Directors continues to be committed to the enhancement of shareholder
value. In this regard, the Board has authorized management and the Company's
financial advisor to explore all strategic alternatives and to report back to
the Board at an early date." On July 30, 1996, the last full trading day prior
to the Board's meeting to consider the American Enterprises Tender Offer, the
closing price of the Common Stock on the Nasdaq National Market was $18.375
per share.
On August 15, 1996, the American Enterprises Tender Offer was extended until
5:00 p.m., New York City time, on Monday, September 16, 1996. American
Enterprises also said in its press release issued on August 15, 1996 that, as
of the close of business on August 14, 1996, approximately 3,625 Shares and no
Warrants had been tendered in the American Enterprises Tender Offer.
Contacts and Negotiations With Third Parties and Parent. In response to the
Board's commitment to the enhancement of stockholder value, during the period
from July 7, 1996 until the afternoon of August 23, 1996, the Company and its
financial advisor contacted 46 potential transaction partners for the Company,
including 10 potential transaction partners who received certain confidential
information concerning the Company, subject to confidentiality agreements with
the Company.
In early July 1996, Bear, Stearns & Co. Inc. ("Bear Stearns"), Parent's
financial advisor, contacted representatives of the Company and a meeting was
arranged for July 10, 1996. Herbert P. Ladds, Jr., Parent's Chief Executive
Officer, Mr. Brown, Mr. Tessitore, Mr. Roof and representatives of Bear
Stearns attended the July 10 meeting. At the meeting, the participants had a
general discussion regarding the Company and its prospects, as well as the
possibility of a possible merger transaction between Parent and the Company.
On July 29, 1996, the Company and Parent entered into a confidentiality
agreement, which provided, among other things, that any information furnished
by the Company to Parent or its representatives would be held in confidence.
Also on that date, Mr. Ladds and Robert L. Montgomery, Jr., Parent's Chief
Financial Officer, met with Messrs. Tessitore and Roof to discuss further
Parent's interest in acquiring the Company and to commence Parent's due
diligence, which continued in several additional meetings among
representatives of the Company and Parent.
By early August 1996, the Company and Salomon Brothers had received several
indications of interest in a possible transaction with the Company, certain of
which were conditioned on exclusive negotiations or conclusion of a definitive
acquisition agreement with the Company within a short time period. The
Company, with its legal and financial advisors, engaged in active discussions
and negotiations with these potential transaction partners.
As part of the Company's process with the potential transaction partners who
appeared most interested in a transaction with the Company at what the Company
considered to be appropriate valuation levels, on Monday, August 19, 1996, a
draft agreement and plan of merger was furnished to Parent and its advisors.
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On Tuesday, August 20, 1996, the Company's management and its legal and
financial advisors met with representatives of Parent and its legal and
financial advisors, as well as a representative of Fleet Bank, Parent's
potential financing source, to discuss a possible transaction. Mr. Brown also
attended this meeting. Following this meeting, it was determined that the
Company should proceed to negotiate with Parent to try to reach a definitive
agreement for an acquisition of the Company by Parent.
On Wednesday, August 21, 1996, the Board met and discussed with the
Company's management and its financial and legal advisors the status of the
process of seeking potential transactions for the Company, including the
possibility of a transaction with Parent. At the Board meeting, the Board
indicated that, if sufficient progress in the negotiations with Parent could
be made, the Board would be prepared to meet on August 23, 1996 to consider a
transaction.
Negotiations on the Merger Agreement proceeded through the evening of
Tuesday, August 20, 1996 and into Friday, August 23, 1996. On Friday, August
23, 1996, the Board met to consider the terms of the Merger Agreement and,
after discussion and consideration of the factors referred to in this Item 4
under "--Reasons for the Recommendation; Factors Considered by the Board"
below, the Board 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 holders of Shares and Warrants, and
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, in all respects, and resolved to make the
recommendation referred to herein. On August 24, 1996, the Merger Agreement
was executed. On August 26, the Company publicly announced the transaction.
Reasons for the Recommendation; Factors Considered by the Board
Reasons for the Recommendation; Factors Considered by the Board. In
approving the Offer and 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 financial and other terms and conditions of the Offer and Merger
Agreement, including the ability of Parent to finance the purchase price in
the Offer and the Merger -- in this regard, the Board indicated that
management was to receive evidence that Parent had a signed commitment from
a commercial bank to finance the Offer and the Merger prior to executing
the Merger Agreement with Parent;
(b) the Company's business, financial condition, results of operations
and future prospects, especially as such factors would affect the Company's
ability to enhance shareholder value in the future;
(c) management's recommendation of the Offer and the Merger Agreement,
and its assessment of whether an alternative transaction would be
obtainable at a higher price in the near future;
(d) a presentation by Salomon Brothers at the August 23, 1996 Board
meeting concerning the Company and the financial aspects of the Offer, as
well as its progress in locating alternative transactions for the Company;
(e) the written opinion of Salomon Brothers, dated August 23, 1996, to
the effect that, as of the date of such opinion and based upon certain
matters considered relevant by Salomon Brothers, the $24 per Share in cash
to be received by the holders of Shares (other than Parent and its
affiliates) pursuant to the Offer and the Merger Agreement was fair to such
holders, from a financial point of view. The full text of such opinion,
dated August 23, 1996, which sets forth the assumptions made and matters
considered and limitations set forth by Salomon Brothers, is included as
Annex A hereto and should be read in its entirety;
(f) the price of the Common Stock on the Nasdaq National Market, which,
at the close of trading on the Nasdaq National Market on August 23, 1996,
was $19.375 per share, and the fact that the $24 per Share price pursuant
to the Offer represents a premium of approximately 24% over such closing
price and a premium of approximately 45% over the American Enterprises
Tender Offer price;
16
<PAGE>
(g) the fact that the terms of the Merger Agreement should not unduly
discourage other third parties 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
duties, 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;
(h) the Board's belief, based in part on the factors referred to above,
that the $24 per Share cash price pursuant to the Offer reflects the
current value of the Company; and
(i) the Board's commitment to protecting the best interests of the
Company's shareholders and the enhancement of shareholder value.
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.
Based on the foregoing factors, the Board believed that the Merger
Agreement, including the Offer and the Merger, represented the best
transaction available to the Company that could be consummated in a reasonably
prompt period. As a result, the Board concluded 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 holders of Shares and Warrants.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to the terms of the engagement letter dated June 7, 1996, the
Company has retained Salomon Brothers to render financial advisory services to
the Company, and in accordance with such engagement, Salomon Brothers has
advised the Company with respect to the Offer and related matters.
The Company has paid or will pay to Salomon Brothers fees aggregating
$650,000 in connection with its retainer, the commencement of the American
Enterprises Tender Offer and its delivery of its opinion with respect to the
inadequacy of the consideration offered in the American Enterprises Tender
Offer. Salomon Brothers will be entitled to receive an additional fee equal to
1.1% of the aggregate consideration in connection with any combination
transaction (less any other fees paid, including the amounts referred to in
the first sentence of this paragraph), such as the Offer and the Merger, such
additional fee to be contingent upon the consummation of a combination
transaction and payable at the closing thereof. Salomon Brothers would also be
entitled to certain lesser fees if a change of control of the Company has not
occurred on or before June 7, 1997.
The Company has also agreed to reimburse Salomon Brothers for its reasonable
expenses, including travel and out-of-pocket expenses, and also including the
reasonable fees and disbursements of outside counsel and other professional
advisors should they be engaged with the Company's consent, and to indemnify
Salomon Brothers and certain related persons against certain liabilities in
connection with their engagement, including certain liabilities under the
federal securities laws.
In the ordinary course of its business, Salomon Brothers may from time to
time effect transactions and hold positions in securities of the Company and
Parent.
17
<PAGE>
The Company has retained Georgeson & Company, Inc. ("Georgeson") to
distribute information on behalf of the Company in connection with the Offer
and related matters with respect to any meeting of shareholders with respect
to the Merger. Such firm will receive customary compensation for its services
in an amount to be agreed upon with the Company and will be reimbursed for
certain out-of-pocket expenses.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations
or recommendations to others with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(i) Except as set forth below, there have been no transactions in Shares
which were 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 July 1, 1996, Larry Katsoulis, President of the
Material Handling Division, exercised 5,166 options granted in 1994 and 1995
at prices ranging from $8.125 to $8.875 per option.
(ii) To the best knowledge of the Company, (i) none of its executive
officers, directors, affiliates or subsidiaries presently intends to tender
Shares to the Purchaser 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 and
access, in each case only in response to a request for such information or
access to any person made after the date of the Merger Agreement which was not
encouraged, solicited or initiated by the Company or any of its affiliates or
any of its or their respective officers, directors, employees, representatives
or agents after the date of the Merger Agreement, pursuant to appropriate
confidentiality agreements, and (ii) participate in discussions and negotiate
with such entity or group concerning an Acquisition Proposal if such entity or
group has submitted a written proposal to the Company's Board of Directors
relating to any such Acquisition Proposal.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
RIGHTS AGREEMENT
On November 11, 1995, the Board declared a dividend distribution of one-half
Right for each outstanding Share to stockholders of record at the close of
business on November 24, 1995. Except as set forth below each whole Right,
when exercisable, entitles the registered holder to purchase from the Company
one share of Common Stock at a price of $45.00 per share (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement.
18
<PAGE>
The following is a general description only and is qualified in its entirety
by the Rights Agreement, as amended, which is filed as Exhibits 8(a), 8(b),
8(c) and 8(d) hereto and is incorporated herein by reference. All undefined
capitalized terms used in the discussion below are used as defined in the
Rights Agreement.
Initially, the Rights will be attached to all certificates representing
Shares then outstanding, and no separate Rights certificates will be
distributed. The Rights will separate from the Common Stock and a distribution
date (the "Distribution Date") will occur upon the earlier of (i) a public
announcement that a Person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of securities representing 15% or more of the voting power of all
outstanding voting securities of the Company (the "Stock Acquisition Date") or
(ii) 10 days (unless such date is extended by the Board) following the
commencement of (or a public announcement of an intent to make) a tender offer
or exchange offer which would result in any Person or group of affiliated or
associated Persons becoming an Acquiring Person. The Rights Agreement provides
that the term "Acquiring Person" shall not include any Person who as of the
close of business on the later of (i) November 13, 1995 or (ii) or the date as
of which such Person can demonstrate to the Company it first received notice
of the authorization of the Rights, beneficially owed owned securities
representing 15% (the "Percentage Limitation") or more of the shares of Common
Stock then outstanding, provided such Person does not acquire after the Record
Date beneficial ownership of additional shares of Common Stock (other than as
a result of stock splits, stock dividends or other actions affecting the stock
ownership of all of the holders of the Common Stock as a group or as a result
of grants of options or purchases of Common Stock pursuant to the Company's
employee benefit plans). At its meeting on July 23, 1996, the Board resolved
to defer the Distribution Date until the earlier of (i) the date any person
becomes an Acquiring Person and (ii) such other time as shall be determined by
the Board.
Until the Distribution Date, the Rights (i) will be evidenced by the Common
Stock certificates, and will be transferred with and only with the Common
Stock certificates, (ii) new Common Stock certificates issued after November
24, 1995 upon transfer or new issuance of the 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 Common Stock outstanding will
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
or terminate at the earliest of (i) November 23, 2005, (ii) consummation of a
merger transaction with a Person or group who acquired shares of Common Stock
pursuant to a Permitted Offer (as defined below), and is offering in the
merger the same price per share and form of consideration paid in the
Permitted Offer, or (iii) redemption or exchange of the Rights by the Company
as described below.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates alone will
evidence the Rights. Except as otherwise determined by the Board, only shares
of Common Stock issued prior to the Distribution Date will be issued with
Rights.
In the event that a Person or group of affiliated or associated Persons
becomes the beneficial owner of securities representing the Percentage
Limitation or more of the then outstanding shares of Common Stock (unless
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock at a price and on terms which are determined prior to the date of
the first acceptance of payment for any of such shares by at least a majority
of the members of the Board who are not officers of the Company and are not
Acquiring Persons or affiliates or associates thereof to be both adequate and
otherwise in the best interests of the Company and its shareholders
("Permitted Offer")), then proper provision shall be made so that each holder
of a whole Right (other than an Acquiring Person) will for a 60-day period
(subject to extension under certain circumstances) have the right to receive
upon exercise one Share for each whole Right then held, at the price of $1.00
per Share to the extent available (such Right being called the "Subscription
Right" and the price referred to above to exercise the same being called the
"Subscription Right Price") and then (after all authorized and unreserved
Shares have
19
<PAGE>
been issued) a common stock equivalent (such as another equity security with
at least the same economic value as the Shares) with the Shares to the extent
available being issued first. In the event that following the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such, the Company is involved in a merger or consolidation
(whether or not the Company is the surviving corporation), or 50% or more of
the Company's assets or earning power are sold (in one transaction or a series
of transactions), proper provision shall be made so that each holder of a
whole Right (other than such Acquiring Person) shall thereafter have the right
to receive, upon the exercise thereof at the Subscription Right Price that
number of shares of Common Stock of either the Company, in the event that it
is the surviving corporation of a merger or consolidation, or the acquiring
company (or, in the event there is more than one acquiring company, the
acquiring company receiving the greatest portion of the assets or earning
power transferred) which at the time of such transaction would be equal to the
result obtained by dividing (i) the product determined by multiplying the
Purchase Price per share of the Common Stock of the Company by the numbers of
shares of Common Stock into which a Right is then exercisable by (ii) 50% of
the current market price per share of the Company or such other party (such
right being called the "Merger Right"). The holder of a Right will continue to
have the Merger Right whether or not such holder exercises the Subscription
Right. Notwithstanding the foregoing, upon the occurrence of any of the events
giving rise to the exercisability of the Merger Right or the Subscription
Right, any Rights that are or were at any time after the Distribution Date
owned by an Acquiring Person shall immediately become null and void.
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 Common Stock or convertible securities at
less than the 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 quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued and in lieu thereof,
an adjustment in cash will be made based on the market price of the Common
Stock on the last trading date prior to the date of exercise.
At any time prior to the earlier to occur of (i) a Stock Acquisition Date or
(ii) the expiration of the Rights, the Company may redeem the Rights in whole,
but not in part, at a price of $.001 per Right (the "Redemption Price"), which
redemption shall be effective upon the action of the Board of Directors.
Additionally, the Company may thereafter redeem the then outstanding Rights in
whole, but not in part, at the Redemption Price (i) if such redemption is
incidental to a merger, consolidation or sale of 50% or more of the Company's
assets or earning power but not involving an Acquiring Person or certain
related Persons or (ii) following an event giving rise to, and the expiration
of the exercise period for, the Subscription Right if and for as long as an
Acquiring Person beneficially owns securities representing less than the
Percentage Limitation of the outstanding Common Stock. The redemption of
Rights described in the preceding sentence shall be effective only as of such
time when the Subscription Right is not exercisable, and in any event, only
after ten Business Days' prior notice. Upon the effective date of the
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. All Rights shall expire upon the consummation of an all cash tender
offer for all of the outstanding shares as a result of which an Acquiring
Person becomes the beneficial owner of 85% or more of the Common Stock;
provided that the Person making such tender offer discloses a commitment (i)
to make a tender offer for the untendered shares or (ii) to cause a merger of
the Company with such Person, in each case, for at least the same cash
consideration as paid in the original tender offer; and, provided, further,
that such all cash tender offer shall not have been consummated earlier than
the date which is the 90th calendar day after the commencement thereof (the
"Rights Expiration Condition").
Subject to applicable law, the Board of Directors, at its option, may at any
time after a Person becomes an Acquiring Person (but not after the acquisition
by such Person of 50% or more of the outstanding Common
20
<PAGE>
Stock), exchange all or part of the then outstanding and exercisable Rights
(except for Rights which have become void) for shares of Common Stock in the
ratio of one share of Common Stock per Right or, alternatively, for substitute
consideration consisting of cash, securities of the Company or other assets
(or any combination thereof).
Fractional shares of Common Stock will not be issuable upon exercise of the
Rights. In lieu of fractional shares, an adjustment in cash will be made based
on the market price of the Common Stock on the last trading date prior to the
date of exercise.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights will not be
subject to federal taxation to shareholders or to the Company, shareholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration)
of the Company or for Common Stock of the acquiring company as set forth
above.
The Board may therein supplement or amend the Rights Agreement without
approval of any holders of Rights or Rights Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained therein
which may be defective or inconsistent with any other provisions therein,
(iii) prior to the Distribution Date to change or supplement any provision
thereunder in any manner which the Company may deem necessary or desirable or
(iv) on or following the Distribution Date, to change or supplement any
provision thereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock.
Effective August 23, 1996, the Rights Agreement was amended (the
"Amendment") to provide that neither Parent nor any of its affiliates will
become an Acquiring Person in connection with the Merger Agreement, the Offer,
the Merger or the other transactions contemplated by the Merger Agreement, and
that the Rights will expire upon consummation of the Offer. The foregoing
description of the Amendment to the Rights Agreement is qualified by reference
to the form of Amendment which is filed as Exhibit 8(d) hereto and
incorporated herein by reference.
21
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
Exhibit 1 Agreement and Plan of Merger dated August 24, 1996 among Parent,
Purchaser and the Company.*
Exhibit 2(a) Form of Tier 1 Severance Compensation Agreement. (Incorporated
by reference to Exhibit 2 to the Company's Schedule 14D-9
filed with respect to the American Enterprises Tender Offer
(the "A.E. 14D-9"))
Exhibit 2(b) Form of Amendatory Agreement between the Company and Gary L.
Tessitore. (Incorporated by reference to Exhibit 11(a) to
Amendment No. 1 to the A.E. 14D-9.)
Exhibit 2(c) Form of Amendatory Agreement between the Company and Donald C.
Roof. (Incorporated by reference to Exhibit 11(b) to Amendment
No. 1 to the A.E. 14D-9.)
Exhibit 3 Form of Tier 2 Severance Compensation Agreement. (Incorporated
by reference to Exhibit 3 to the A.E. 14D-9.)
Exhibit 4 Form of Tier 3 Severance Compensation Agreement. (Incorporated
by reference to Exhibit 4 to the A.E. 14D-9.)
Exhibit 5 Form of Corporate Office Employee Bonus Plan. (Incorporated by
reference to Exhibit 11(c) to Amendment No. 1 to the A.E. 14D-
9.)
Exhibit 6(a) Form of Indemnification Agreement. (Incorporated by reference
to Exhibit 10.16 of the Company's Registration Statement on
Form S-1 (File No. 33-18053) filed with the Commission on
November 16, 1987.)
Exhibit 6(b) Form of Amendment to Indemnification Agreement, dated as of
August 24, 1996.*
Exhibit 7(a) Letter to Shareholders dated August 30, 1996.+*
Exhibit 7(b) Press Release, dated August 26, 1996. (Incorporated by
reference to Exhibit 99.6 to the Company's Current Report on
Form 8-K filed with the Commission on August 26, 1996.)
Exhibit 8(a) Rights Agreement, dated as of November 11, 1995, between the
Company and ChaseMellon Shareholder Services L.L.C.
(Incorporated by reference to Exhibit 1 to the Company's
Current Report on Form 8-K filed with the Commission on
November 17, 1995.)
Exhibit 8(b) Amendment to the Rights Agreement, dated as of January 8,
1996. (Incorporated by reference to Exhibit 1 to the Company's
Current Report on Form 8-K filed with the Commission on
February 5, 1996.)
Exhibit 8(c) Form of Amendment to Rights Agreement, dated as of July 23,
1996. (Incorporated by reference to Exhibit 8(c) to the A.E.
14D-9.)
Exhibit 8(d) Form of Amendment to the Rights Agreement, dated as of August
23, 1996. (Incorporated by reference to Exhibit 14 to
Amendment No. 1 to the A.E. 14D-9.)
Exhibit 9 Opinion of Salomon Brothers Inc dated August 23, 1996.++*
- --------
*Filed herewith.
+Included in copy mailed to stockholders.
++Included as Annex A in copy mailed to shareholders.
22
<PAGE>
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.
Spreckels Industries, Inc.
/s/ Gary L. Tessitore
By: _________________________________
GARY L. TESSITORE
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Dated: September 3, 1996
23
<PAGE>
ANNEX B
INFORMATION STATEMENT PURSUANT TO SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
NO VOTE OR OTHER ACTION OF THE SHAREHOLDERS IS REQUIRED IN
CONNECTION WITH THIS INFORMATION STATEMENT. NO PROXIES ARE BEING
SOLICITED AND YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
This Information Statement is being mailed on or about September 3, 1996 as
part of the Company's Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") to the holders of record of shares of Common Stock. You
are receiving this Information Statement in connection with the possible
election of persons designated by Purchaser to a majority of the seats on the
Board. The Merger Agreement requires the Company, at the request of the
Purchaser, to take all action necessary to cause Purchaser's designees (the
"Purchaser Designees") to be elected or appointed to the Board under the
circumstances described therein. This Information Statement is required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
You are urged to read this Information Statement carefully. YOU ARE NOT,
HOWEVER, REQUIRED TO TAKE ANY ACTION PURSUANT TO THIS INFORMATION STATEMENT.
Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the Schedule 14D-9.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on
August 30, 1996. The Offer is scheduled to expire at 12:00 midnight on
September 27, 1996, New York City time, unless extended.
The information contained in this Information Statement concerning Purchaser
and Parent has been furnished to the Company by Purchaser and Parent, and the
Company assumes no responsibility for the accuracy or completeness of such
information.
The Merger Agreement provides that promptly upon the purchase by Purchaser
of Shares pursuant to the Offer (but subject to the satisfaction of the
Minimum Condition), and from time to time thereafter, Purchaser shall be
entitled to designate up to such number of directors, rounded up to the next
whole number, on the Board of Directors of the Company as shall give Purchaser
representation on the Board of Directors equal to the product of the total
number of directors on such Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser or any affiliate of Purchaser
bears to the total number of Shares then outstanding, and the Company shall,
at such time, promptly take all action necessary to cause Purchaser's
designees to be so elected, including by increasing the size of the Board of
Directors or securing the resignations of incumbent directors or both. At such
times, the Company will use its reasonable efforts to cause persons designated
by Purchaser to constitute the same percentage as is on the Board of (i) each
committee of the Board, (ii) each board of directors of each subsidiary of the
Company and (iii) each committee of each such board, in each case only to the
extent permitted by law. The Company's obligations to appoint designees to its
Board of Directors shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder.
Following the election or appointment of the Purchaser's Designees and prior
to the Effective Time, any amendment of the Merger Agreement or the
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 Purchaser or waiver
of any of the Company's rights thereunder, and any other consent or action by
the Board of Directors thereunder, will require the concurrence of a majority
(which shall be at least two) of the directors of the Company then in office
who are neither designated by Purchaser nor are employees of the Company (the
"Disinterested Directors").
The terms of the Merger Agreement, a summary of the events leading up to the
Offer and the execution of the Merger Agreement and certain other information
concerning the Offer and the Merger are contained in the Schedule 14D-9.
Certain other documents (including the Merger Agreement) were filed with the
Securities and
B-1
<PAGE>
Exchange Commission (the "Commission") as exhibits to the Schedule 14D-9 and
as exhibits to the Tender Offer Statement on Schedule 14D-1 of the Purchaser
and Parent (the "Schedule 14D-1"). The exhibits to the Schedule 14D-9 and the
Schedule 14D-1 may be examined at, and copies thereof may be obtained from the
regional offices of and public reference facilities maintained by, the
Commission (except that the exhibits thereto cannot be obtained from the
regional offices of the Commission) in the manner set forth in the Offer to
Purchase.
No action is required by the shareholders of the Company in connection with
the election or appointment of the Purchaser's Designees to the Board.
However, Section 14(f) of the Exchange Act requires the mailing to the
Company's shareholders of the information set forth in this Information
Statement prior to a change in majority of the Company's directors otherwise
than at a meeting of the Company's shareholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
GENERAL
The outstanding voting securities of the Company as of August 23, 1996
consisted of 6,090,941 shares of Common Stock (plus any shares of Common Stock
issued upon exercise of Employee Options since August 21, 1996), and each
share of Common Stock is entitled to one vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 29, 1996 as
to shares of the Common Stock beneficially owned by: (i) each person who is
known by the Company to own beneficially more than 5% of the Common Stock,
(ii) each of the Company's directors, (iii) each of the Company's officers
named in the Summary Compensation Table and (iv) all directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1) OWNED(1)
------------------------ ------------ ------------
<S> <C> <C>
American Enterprises, L.L.C.(2) ..................... 1,201,260 19.7%
Metropolitan Capital Advisors, Inc. (3) ............. 455,636 7.2%
Scoggin Capital Management, L.P. (4) ................ 386,333 6.2%
Joshua S. Friedman................................... 256,500 4.3%
James E. Boyd(5)(6)(7)(8)............................ 74,270 1.2%
Donald C. Roof(5)(6)(7)(8)........................... 40,822 *
Gary L. Tessitore(6)................................. 30,000 *
Bart A. Brown, Jr.(6)................................ 25,000 *
George A. Poole, Jr.(6).............................. 10,833 *
Stewart M. Kasen(6).................................. 9,333 *
William J. Nightingale(6)............................ 9,333 *
S. Donley Ritchey(6)................................. 9,333 *
Steven Van Dyke...................................... 5,000 *
Michael L. Sarina(6)................................. 3,001 *
All directors and executive officers as a group (12
persons)(6)(7)(8)................................... 471,925 7.8%
</TABLE>
- --------
*Less than 1%.
(1) The number of shares beneficially owned includes shares which could be
acquired upon exercise of warrants or options to acquire Common Stock if
such warrants or options are exercisable within 60 days thereof. Except as
set forth below, to the Company's knowledge, the person listed has sole
voting power and sole investment power with respect to the shares
beneficially owned.
B-2
<PAGE>
(2) As of July 19, 1996, as reported in a Joint Schedule 14D-1 and Amendment
No. 2 to a Schedule 13D filed with the Commission on July 19, 1996.
American Enterprises, L.L.C. holds the sole power to vote or direct the
vote and to dispose or direct the disposition of 1,201,260 shares of
Common Stock of the Company. By virtue of their limited liability interest
in American Enterprises, L.L.C., Mitchell P. Rales and Steven M. Rales may
be deemed to share the power to vote or direct the vote and the power to
dispose or direct the disposition of, all the shares of Common Stock of
the Company owned by American Enterprises, L.L.C.
(3) As of August 26, 1996, as reported in Amendment No. 3 to a Schedule 13D
filed with the Commission on August 29, 1996. Such Amendment reported that
(i) Bedford Falls Investors, L.P. had the sole power to vote or dispose of
or direct the voting or disposition of 455,636 shares of Common Stock of
the Company, of which 296,236 are represented by currently exercisable
warrants, and (ii) such voting and dispositive power may be exercised on
behalf of Bedford Falls Investors, L.P. by its General Partner,
Metropolitan Capital Advisors, L.P., which acts through its corporate
General Partner, Metropolitan Capital Advisors, Inc. By virtue of its
position as General Partner of Metropolitan Capital Advisors, L.P., the
General Partner of Bedford Falls Investors, L.P., Metropolitan Capital
Advisors, Inc. may be deemed to have shared voting and dispositive power
over the 455,636 shares of Common Stock of the Company beneficially owned
by Bedford Falls Investors, L.P. In addition, by virtue of its
discretionary trading authority over 42,297 shares of the Company's Common
Stock, 31,097 of which may be acquired upon exercise of currently
exercisable warrants, held in a managed account, Metropolitan Capital
Advisors may be deemed to be the beneficial owner of an aggregate amount
of 497,933 shares of Common Stock of the Company. Such Amendment also
reported that (i) Jeffrey E. Schwarz did not own any shares of Common
Stock directly but may be deemed to be the beneficial owner of 497,933
shares (7.9%) of the Common Stock of the Company, of which 327,333 are
represented by currently exercisable warrants, as a result of his being a
director, executive officer and controlling stockholder of Metropolitan
Capital Advisors, Inc. and (ii) Karen Finerman did not own any shares of
Common Stock directly but may be deemed to be the beneficial owner of the
aforementioned 497,933 shares of Common Stock of the Company by virtue of
her being a director and executive officer of Metropolitan Capital
Advisors, Inc.
(4) As of December 1, 1996, as reported in a Schedule 13D filed with the
Commission on December 11, 1996. The Schedule 13D reported that Scoggin
Capital Management, L.P. beneficially owns 386,333 shares of Common Stock
of the Company. Such shares consist of 155,500 shares of Common Stock
owned by Scoggin Capital Management, L.P., 163,683 shares issuable upon
exercise of currently exercisable warrants to purchase Common Stock owned
by Scoggin Capital Management, L.P., 37,000 shares of Common Stock held in
managed customer accounts, and 29,650 shares issuable upon the exercise of
currently exercisable warrants to purchase Common Stock in such managed
customer accounts.
(5) Includes 53,069: 24,590; and 77,659 shares subject to warrants to purchase
Common Stock held by Messrs Boyd and Roof, and all directors and executive
officers as a group, respectively.
(6) Includes 9,334; 9,667; 30,000; 25,000; 8,333; 8,333; 8,333; 8,333; 3,000;
and 110,333 shares subject to options to purchase Common Stock held by
Messrs. Boyd, Roof, Tessitore, Brown, Poole, Kasen, Nightingale, Ritchey
and Sarina, and all directors as a group, respectively.
(7) Includes 5,381 and 3,575 shares of Common Stock held by the Company's
Incentive Savings Plan allocated to Messrs. Boyd and Roof.
(8) Includes 1,175, 1,001 and 1 shares of Common Stock held by the Company's
Employee Stock Ownership Plan allocated to Messrs. Boyd, Roof and Sarina,
respectively.
B-3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
PURCHASER'S DESIGNEES
The Company has been informed by Purchaser that, as of the date of this
Information Statement, one or more of the individuals listed in Schedule I to
the Offer to Purchase, filed by Purchaser with the Commission on August 30,
1996 as Exhibit (a)(1) to the Schedule 14D-1, which is incorporated herein by
reference, have been selected as the Purchaser Designees.
CURRENT DIRECTORS
The individuals set forth below are presently directors of the Company and
have served continuously since first becoming directors.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
<S> <C> <C>
Bart A. Brown, Jr. ........ 64 Chairman of the Board of Directors and Chief
Executive Officer of Color Tile Inc.
Joshua S. Friedman......... 40 Founding Director and Officer of Canyon Partners
Incorporated
Stewart M. Kasen........... 57 President and Chief Executive Officer of Best
Products, Inc.
F. Kenneth Iverson......... 70 Chairman of the Board of Directors and Chief
Executive Officer of Nucor Corporation
William J. Nightingale..... 67 Senior Advisor of Nightingale & Associates,
Inc., Corporate Director
George A. Poole, Jr. ...... 65 Private Investor
S. Donley Ritchey.......... 63 Managing Partner of Alpine Partners
Gary L. Tessitore.......... 51 President and Chief Executive Officer of the
Company
Steven Van Dyke............ 37 President of Tower Investment Group
</TABLE>
Bart A. Brown, Jr., has served as Chairman of the Board of Directors of the
Company since July 14, 1994, its Chief Executive Officer from July 14, 1994 to
May 15, 1995 and a director since September, 1993. Since April, 1996 he has
served as a consultant to Investcorp International, Inc. He also served as
Chairman of the Board of Directors and Chief Executive Officer of Color Tile,
Inc. from August, 1995 to March, 1996. From June, 1990 to August, 1995, he was
Chairman of Circle K Corporation and its Chief Executive Officer from June,
1991 through July, 1993. Prior to joining Circle K, he was an attorney
practicing in Cincinnati, Ohio for over 30 years. Mr. Brown serves on the
Board of Directors of Barry's Jewelers, Inc., and Firstcity Financial
Corporation. He received his B.S. in Accounting and Bachelor of Law degree
from the University of Louisville along with a Masters of Law from Georgetown
University. Mr. Brown is admitted to practice law in both Kentucky and Ohio.
Joshua S. Friedman is a founding director and officer of Canyon Partners
Incorporated ("CPI"), a California corporation, positions he has held since
1990, and holds similar positions or limited partnership interests in its
subsidiaries and affiliates. Mr. Friedman is in charge of CPI's merchant
banking and direct investment activities. Prior to the formation of CPI, Mr.
Friedman was an Executive Vice President and Co-Director of the Capital
Markets Services Group of Drexel Burnham Lambert. Prior to 1984, he worked in
the Mergers & Acquisitions Department of Goldman, Sachs & Company in New York.
Mr. Friedman is a graduate of Harvard College (B.A.), Oxford University
(M.A.), Harvard Law School (J.D.) and Harvard Business School (M.B.A.). Mr.
Friedman currently holds no position as an officer of the Company. In 1995,
Mr. Friedman was elected to the board of directors of Showbiz Pizza Time, Inc.
Stewart M. Kasen became a director of the Company in September, 1993. He
served as President and Chief Executive Officer of Best Products, Inc.
(discount retail stores) until earlier this year. Mr. Kasen joined Best in
October, 1989 as President and Chief Operating Officer. He previously served
as President of Emporium Capwell
B-4
<PAGE>
(retail stores) and President of Thalhimers (retail stores). He also serves on
the Board of Directors of Markel Corporation. Mr. Kasen received his B.S.
degree from Seton Hall University.
F. Kenneth Iverson became a director of the Company on February 14, 1996. He
has served as Chief Executive Officer of Nucor Corporation, a Charlotte-based
steel manufacturer company, since 1965 and as its Chairman since 1984. Mr.
Iverson serves on the Board of Directors of Wikoff Color Corporation, Citizens
for a Sound Economy and Tultex Corporation and is a former director of
Wachovia Corporation and Wal-Mart Stores. He received his Bachelor's degree in
Aeronautical Engineering from the University of Cornell and a Master's Degree
from Purdue University. He also holds honorary doctorates from the University
of Nebraska and Purdue University.
William J. Nightingale became a director of the Company in September 1993.
He has been a Senior Advisor of Nightingale & Associates, Inc., a general
management consulting firm, since July 1995, after serving as the firm's
Chairman and President since July 1975. In this previous capacity, he has
provided executive management services for a number of companies. Prior to
founding Nightingale & Associates, he was President and Chief Executive
Officer of the Bali Company, Inc. Mr. Nightingale also serves as a director of
Glasstech, Inc. and Rings End Inc., as well as a trustee of the Narragansett
Tax Free Bond Fund (Rhode Island), Churchill Money Market Fund and Churchill
Tax Free Bond Fund (Kentucky). He received his B.A. degree in Economics from
Bowdoin College and an M.B.A. from Harvard Business School.
George A. Poole, Jr. became a director of the Company in September 1993, and
has been a private investor for more than the past five years. He currently
serves as a director of U.S. Home Corporation, Bucyrus-Erie Company and Rock
Island Foods, Inc. Mr. Poole received his B.A. degree from Yale University and
his J.D. from Stanford University.
S. Donley Ritchey became a director of the Company in September 1993, and
currently serves on the Board of Directors of Pacific Telesis Group, McClatchy
Newspapers, Inc., De La Salle Institute and Hughes Markets, Inc. Since May
1981, he has been the managing partner of Alpine Partners, an investment
partnership. Mr. Ritchey has also served as Council Member/Mayor of the Town
of Danville, California since December 1987. He is the former President, Chief
Executive Officer and Chairman of the Board of Lucky Stores, Inc. where he
worked for over 30 years prior to his retirement. He has previously served as
a director of Lucky Stores, Inc., York International Corp., Levolor
Corporation and Crocker National Bank. Mr. Ritchey received both his B.S. and
M.S. degrees from San Diego State University.
Gary L. Tessitore became the President, Chief Executive Officer and a
director of the Company on May 15, 1995. Prior to joining the Company, Mr.
Tessitore was the President and Chief Operating Officer of Breed Technologies,
Inc., a manufacturer of automotive safety equipment, from March 1993 to
January 1995, an Executive Vice President and General Manager of the
agricultural equipment and components group of J.I. Case Company from July
1990 to March 1993, and its Senior Vice President and Chief Financial Officer
from 1988 to 1990. From 1968 to 1988, he held various positions with Ford
Motor Company, an automobile manufacturer, including Vice President and
Controller of its Ford New Holland Division. Mr. Tessitore received his B.S.
degree from Villanova University in 1966 and his M.B.A. degree from the
University of Maryland in 1968.
Steven Van Dyke became a director of the Company on February 14, 1996. He
has served as President of Tower Investment Group on Tampa, Florida since
1989. He received his B.A. degree in Finance from the University of Kentucky.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has standing audit and compensation committees.
Members of the Compensation Committee are Messrs. Stewart M. Kasen, William
J. Nightingale and S. Donley Ritchey. The functions of this Committee are to
review annually and recommend to the Board of
B-5
<PAGE>
Directors the level of total compensation of the Chairman of the Board; review
annually the recommendations of the Chairman of the Board concerning the
salaries and incentive awards of certain senior officers; administer the
Company's stock option plans; and review and make recommendations to the Board
of Directors for changes in the Company's compensation and benefit plans and
practices. The Compensation Committee held four meetings during the fiscal
year ended June 30, 1996.
Members of the Audit Committee are Messrs. Joshua S. Friedman, George A.
Poole, Jr. and S. Donley Ritchey. The functions of this Committee are to
receive from and review with the Company's independent auditors the annual
report of such auditors: review with the independent auditors the scope of the
succeeding annual examination; nominate the independent auditors to be
selected each year by the Company's Board of Directors; ascertain the
existence of adequate internal accounting and control systems; and review with
management and the auditors current and emerging accounting and financial
reporting requirements and practices affecting the Company. The Audit
Committee held three meetings during the fiscal year ended June 30, 1996.
The Board of Directors held 12 meetings during the fiscal year ended June
30, 1996. Each of the directors attended seventy-five percent (75%) or more of
the aggregate number of meetings of the Board of Directors and of the
committees on which such director served during the fiscal year ended June 30,
1996.
COMPENSATION OF DIRECTORS
Each director of the Company who is not also an employee of the Company
receives an annual fee of $10,000, plus $2,000 for each Board meeting
attended, $500 for each committee meeting attended that is held on the day
immediately preceding or following a Board meeting, $750 for each committee
meeting attended that is not held on the same day or day immediately preceding
or following a Board meeting and $500 for participation in each telephonic
meeting. During the fiscal year ended June 30, 1996, an aggregate amount of
$187,750 in fees was paid to directors. Directors are also reimbursed for
reasonable out-of-pocket expenses incurred in attending Board of Directors and
committee meetings.
Under the 1993 Directors' Stock Option Plan (the "Directors' Plan"), each
director was granted an option to purchase 5,000 shares of Class A Common
Stock at an exercise price of $10.00 per share plus an option to purchase
5,000 shares of Class A Common Stock at an exercise price of $11.67 per share.
Of each such grant, 1,000 shares vested on September 2, 1994, 1,500 shares
vested on September 2, 1995 and 2,500 will vest on September 2, 1996.
In addition, on August 29, 1994, options to purchase 5,000 shares of Class A
Common Stock were granted to each of the directors (other than Mr. Brown) at
an exercise price of $8.875 per share under the New Management Stock Option
Plan. The options vest in one-third increments on June 30, 1995, 1996 and
1997. Finally, effective June 13, 1996, options to purchase 10,000 shares of
Class A Common Stock were granted to Messrs. Friedman, Iverson and Van Dyke at
an exercise price of $15.625 per share under the New Management Stock Option
Plan. See "Option Grants and Exercises" below.
B-6
<PAGE>
EXECUTIVE COMPENSATION TABLE
The following table sets forth a summary of annual and long-term
compensation for the fiscal years ended June 30, 1996, 1995 and 1994 awarded
to, earned by or paid to each Chief Executive Officer of the Company during
the fiscal year ended June 30, 1996 and each of the four most highly
compensated executive officers of the Company (other than the Chief Executive
Officers) whose total annual salary and bonus for the fiscal year ended June
30, 1996 were in excess of $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------- ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL SALARY BONUSES OTHER ANNUAL OPTIONS/ ALL OTHER
POSITION YEAR ($)(1) ($)(2) COMPENSATION($) SARS(#) COMPENSATION($)(3)
------------------ ---- ------- ------- --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Bart A. Brown, Jr. ..... 1996 48,000 50,000 0 0 0
Chairman of the Board 1995 0 0 327,202(4) 60,000(5) 18,500(5)
1994 0 0 0 10,000 0
Gary L. Tessitore....... 1996 350,000 358,112 188,862(8) 30,000 3,000
President and Chief Ex- 1995 47,115 0 0 60,000 0
ecutive Officer 1994 0 0 0 0 0
Donald C. Roof.......... 1996 182,000 167,787 117,336(8) 20,000 3,000
Senior Vice President- 1995 164,323 25,000 0 22,000 0
Chief Financial Officer 1994 156,655 24,000 0 16,500(7) 1,615
James E. Boyd(6) ....... 1996 175,000 113,257 0 0 3,000
President 1995 166,440 79,342 0 21,500 3,000
Duff-Norton Company, 1994 146,630 25,820 0 19,500(7) 3,000
Inc.
Michael L. Sarina....... 1996 114,000 71,112 114,775(8) 3,800 3,000
Controller, Chief Ac- 1995 110,000 0 0 9,000 0
counting Officer 1994 8,462 0 0 0 0
and Secretary
</TABLE>
- --------
(1) Amounts shown include the dollar value of base salary (cash and noncash)
earned by the executive officers named above, and any salary deferred
under a Company-sponsored 401(k) or other deferred compensation plan.
(2) Amounts shown include the dollar value of bonuses (cash and noncash)
earned by the executive officers named above, as well as accrued interest
on certain bonuses not yet paid, and any bonus deferred under a Company-
sponsored 401(k) or other deferred compensation plan.
(3) Except as otherwise indicated, the amounts shown consist of contributions
made by the Company to the Company-sponsored 401(k).
(4) Consists of consulting payments of $267,500, office reimbursements in the
amount of $52,500 and payments made by the Company amounting to $7,202 for
an automobile.
(5) Mr. Brown was granted options to purchase 60,000 shares of Class A Common
Stock during fiscal year 1995; options covering 35,000 of such shares were
canceled on June 30, 1995 in exchange for a payment of $17,500, which
amount is included under "All Other Compensation." See "Compensation
Committee Report on Executive Compensation" below. The remaining $10,000
of such compensation consists of director's fees.
(6) Mr. Boyd resigned from the Company effective June 30, 1996 and received
severance in the amount of $290,750, $115,750 in cash and the balance in
monthly installments of $14,583 per month beginning July 1, 1996 and
vacation payments of $16,825. The Company will provide Mr. Boyd with
medical benefits for a period of one year subsequent to June 30, 1996.
(7) Of the options granted during the fiscal year ended June 30, 1994, one-
third were forfeited as of each June 30, 1994, June 30, 1995 and June 30,
1996. See "Option Grants and Exercises" below.
(8) Represents reimbursement of moving expenses.
B-7
<PAGE>
OPTION GRANTS AND EXERCISES
The following tables summarize option grants to each of the Company's
officers named in the Summary Compensation Table during the last fiscal year.
OPTION GRANTS IN FISCAL YEAR 1996(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERMS(2)
--------------------------------------------------- ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
GRANTED (#) FISCAL YEAR(3) PRICE ($/SH) DATE 5%($) 10%($)
----------- -------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gary L. Tessitore....... 30,000(3) 19.6 15.625 6/30/2006 294,794 747,067
Donald C. Roof.......... 20,000(3) 13.1 15.625 6/30/2006 196,530 498,045
Michael L. Sarina....... 3,800(3) 2.5 15.625 6/30/2006 37,341 94,629
</TABLE>
- --------
(1) There were no SAR grants during the fiscal year ended June 30, 1996.
(2) The five percent (5%) and ten percent (10%) assumed rates of appreciation
are mandated by the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of the future Class A
Common Stock price.
(3) Such options vest in one-third increments on June 30, 1997, 1998 and 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND 1996 FISCAL YEAR-END
OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AT FISCAL OPTIONS AT FISCAL
YEAR END(#) YEAR END($)(2)
-------------------- -----------------
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- -------------------- -----------------
<S> <C> <C> <C> <C>
Bart A. Brown, Jr. 0 0 25,000/0 0/171,875
Gary L. Tessitore 0 0 30,000/60,000 217,500/217,500
Donald C. Roof 0 0 9,667/32,333 70,210/92,289
James E. Boyd 0 0 9,667/0 70,210/0
Michael L. Sarina 1,500 8,813 3,000/8,300 21,750/21,750
</TABLE>
- --------
(1) There were no SAR exercises during the fiscal year ended June 30, 1996.
(2) Calculated on the basis of the fair market value of the underlying
securities at June 30, 1996 ($15.75 per share) minus the exercise price.
The Company has adopted the New Management Stock Option Plan (the "Option
Plan") which authorizes the granting of options covering up to 564,894 shares
of Class A Common Stock of the Company to key employees and directors. In
August 1993, options to purchase 376,494 shares were issued at an exercise
price of $0.01 per share. Such options vest in one-third increments at the
close of the fiscal years ending June 30, 1994, 1995 and 1996 if the Company's
EBITDA (earnings before interest, taxes, depreciation and amortization) for
the relevant year is at least equal to the targets set forth in the Option
Plan. The Company's EBITDA for the
B-8
<PAGE>
fiscal years ended June 30, 1994, June 30, 1995 and June 30, 1996 were less
than the respective targets for those years set forth in the Option Plan, so
options representing 376,494 shares of Class A Common Stock have been
forfeited.
Options to purchase 188,298 shares along with any forfeited shares may be
granted under the Option Plan at exercise prices and upon such other terms as
determined by the Company's Board of Directors. Options to purchase 60,000
shares of Class A Common Stock at an exercise price of $7.875 were granted to
Bart A. Brown, Jr., upon becoming Chairman and Chief Executive Officer on July
14, 1994. All of these options were vested at the time of grant. Options
covering 35,000 of such shares were canceled on June 30, 1995. On August 29,
1994, options to purchase an additional 200,000 shares of Class A Common Stock
at an exercise price of $8.875 per share were granted to certain officers and
directors of the Company, including Messrs. Kasen, Nightingale, Poole,
Ritchey, Boyd, Roof and Sarina. These options vest in one-third increments on
June 30, 1995, 1996 and 1997. On June 30, 1995, options to purchase an
additional 193,150 shares of Class A Common Stock at an exercise price of
$8.125 per share were granted to certain officers of the Corporation,
including Messrs. Tessitore, Boyd, Roof and Sarina. These options vest in one-
third increments on June 30, 1996, 1997 and 1998, except for 60,000 shares
issued to Mr. Tessitore which vest in one-fourth increments on June 30, 1995,
1996, 1997 and 1998.
On June 13, 1996, options to purchase 152,815 shares of Class A Common Stock
at an exercise price of $15.625 were granted to certain officers of the
Company, including Messrs. Tessitore, Roof, Sarina, Iverson, Friedman and Van
Dyke. These options vest in one-third increments on June 30, 1997, 1998 and
1999.
OTHER COMPENSATION
PENSION PLANS
The following two tables show estimated pension benefits for certain
employees of the Company. The first table shows the estimated annual pension
payable under the Excess Plan.
The second table shows the estimated annual pension payable under the
Retirement Plan for Salaried Employees of the Company (the "Plan"), in
conjunction with any benefit payable under the Excess Plan. The calculations
relate to employees at various earnings classifications retiring on June 30,
1996 at age 65, with representative years of service, assuming that the
employees had elected a single life annuity form of payment. Prior to June 30,
1979, employees were required to contribute to the Plan in order to accrue any
benefit, and the calculations assume that the employees made contributions to
that plan prior to June 30, 1979 and had begun participation at the earliest
possible date.
While the Plan is a funded, qualified plan, the Excess Plan is an unfunded,
nonqualified plan. The Excess Plan pays those benefits that exceed the
limitations of the Code applicable to qualified pension plans. For example,
for the 1996 fiscal year the Plan may base a benefit on compensation in excess
of $150,000, and since 1994 the annual compensation that may be taken into
account under the plans has been subject to a $150,000 indexed limit. In
addition, no qualified plan may pay out an annual age 65 benefit in excess of
$120,000 in 1996. Thus, any benefit accrued in excess of these limits would be
payable from the Excess Plan.
B-9
<PAGE>
PENSION PLAN TABLES
THE PLAN
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$125,000 $27,800 $37,000 $ 46,300 $ 55,500 $ 64,800
150,000 33,400 44,500 55,600 66,800 77,900
175,000 39,000 53,000 65,000 78,000 91,000
200,000 48,600 59,500 74,400 89,300 104,100
225,000 50,300 67,000 83,800 100,500 117,300
250,000 55,900 78,500 93,100 111,800 130,400
300,000 67,100 89,500 111,900 134,300 156,600
400,000 89,600 119,500 149,400 179,300 209,100
450,000 100,900 134,500 168,100 201,800 235,400
500,000 112,100 149,500 186,900 224,300 261,600
EXCESS PLAN
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$150,000 $ 32,000 $ 43,000 $ 54,000 $ 65,000 $ 76,000
175,000 38,000 51,000 63,000 76,000 89,000
200,000 44,000 58,000 73,000 87,000 102,000
225,000 49,000 66,000 82,000 99,000 115,000
250,000 55,000 73,000 91,000 110,000 128,000
300,000 66,000 88,000 110,000 132,000 154,000
400,000 89,000 118,000 148,000 177,000 207,000
450,000 100,000 133,000 166,000 200,000 233,000
500,000 111,000 148,000 185,000 222,000 259,000
</TABLE>
Messrs. Tessitore, Roof, Boyd and Sarina participate in the Excess Plan. At
the close of fiscal year 1996, Messrs. Roof, Boyd, Tessitore and Sarina were
credited with 11.25, 21.6, 1.7 and 2.08 years of service, respectively, under
the Excess Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company established a Compensation Committee in September 1993, the
current members of which are Messrs. Stewart M. Kasen, William J. Nightingale
and S. Donley Ritchey, none of whom are or have been officers or employees of
the Company or any of its subsidiaries.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was established in
September 1993 and is comprised entirely of independent outside directors. The
Committee approves compensation objectives for all management employees,
reviews and approves compensation for the Company's executive officers and
certain of the Company's compensation plans.
B-10
<PAGE>
Policies and Objectives
The Compensation Committee believes that the overall objective of its
executive compensation policies is to provide programs that motivate key
executives to advance both the short-term and long-term interests of the
Company's stockholders. The Committee's goals are to:
. provide compensation incentives that are linked to the overall
performance of the Company, its business segments and units, and
individual employees;
. align the interests of the Company's executive employees with those of
its stockholders through stock ownership; and
. provide competitive compensation and benefits at levels which enable the
Company to attract and retain high quality employees.
Compensation Programs
The Company's executive compensation program includes base salary, annual
incentive bonuses and stock options, each of which is tied to performance and
objectives. In addition, during fiscal 1995 the Compensation Committee engaged
a leading compensation consulting firm to review the structure and levels of
the Company's executive compensation program and to recommend changes
necessary to remain competitive and properly encourage performance.
Executive officer base salary levels consider salary survey information for
similar companies, as determined by the Committee's compensation consultant
and reviewed by the Committee. The Committee approves the base salary of each
executive officer based on the recommendations of the Chief Executive Officer
and review by the Committee of the individual performance of each executive,
taking into consideration the overall performance of the Company and, where
applicable, the performance of the business units or segment for which the
executive had management responsibility. The Chief Executive Officer's base
salary is determined by the Committee's evaluation of individual and Company
performance.
Annual incentive bonus awards are determined with reference to internal
performance targets and objectives set at the beginning of each fiscal year.
The performance targets for fiscal 1996 for executives with business unit
responsibility were specific operating earnings and working capital targets
for such business units. Executives with overall corporate responsibilities
had performance targets based on the net income results of the Company for the
year. In addition, the individual performance of each executive officer is
reviewed by the Committee in considering incentive bonus payments.
Individual executive stock options awards are based on the level of
position, individual contribution and the Company's stock ownership objectives
for executives. The purpose of option grants is to closely align the financial
interests of executive officers with those of stockholders, particularly over
the long term. Compensation from stock options is ultimately determined by the
Company's long-term performance, since stock option value is entirely
dependent on the long-term growth of the Company's stock price.
Compensation of the Chief Executive Officer
Mr. Brown became the Chief Executive Officer of the Company on July 14, 1994
and received a monthly fee of $25,000 plus $5,000 for office expenses under
the terms of a consulting contract with the Company. Mr. Brown was granted
options to purchase 60,000 shares of Class A Common Stock of the Company at
$7.875 per share on July 14, 1994. No incentive bonus payments were made to
Mr. Brown for fiscal 1995. Mr. Brown remains Chairman of the Board of the
Company, but resigned as Chief Executive Officer on May 15, 1995. On June 30,
1995, options held by Mr. Brown covering 35,000 shares were canceled and Mr.
Brown received a payment of $17,500, representing the difference between the
exercise price for the options and $8.125, the market value of the stock on
June 30, 1995.
B-11
<PAGE>
Mr. Tessitore became Chief Executive Officer of the Company on May 15, 1995
at a base salary of $350,000 which was determined in accordance with the base
salary guidelines set forth in this report. Mr. Tessitore did not receive an
incentive bonus for fiscal 1995. Mr. Tessitore was granted options to purchase
60,000 shares of Class A Common Stock of the Company at an exercise price of
$8.125 per share on June 30, 1995. The options vest in 15,000 share increments
on June 30 of each of the years 1995-98.
CERTAIN TRANSACTIONS
Under the indenture governing the Company's 11 1/2% Senior Secured Notes and
under its secured revolving credit facility, the Company is generally
precluded from entering into any transaction with any affiliate of the Company
(including officers and directors) or any five percent (5%) stockholder unless
the Board of Directors determines in good faith that the transaction is as
favorable to the Company as terms that could be obtained at the time for
comparable transactions in arm's-length dealings with unaffiliated parties.
SECTION 16(a) REPORTING
Pursuant to Commission regulations, the Company is required to identify the
names of persons who failed to file or filed late a report required under
Section 16(a) of the Securities Exchange Act of 1934. Generally, the reporting
regulations under Section 16(a) require directors, executive officers and
greater than 10% stockholders to report changes in ownership of Company
securities. To the Company's knowledge, based solely on review of the copies
of such reports furnished to the Company and written representations that no
other reports were required, for the fiscal year ended June 30, 1996, the
Company believes that all of its directors, officers and greater than 10%
beneficial owners complied with all filing requirements applicable to them.
B-12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C>
Exhibit 1 Agreement and Plan of Merger dated August 24, 1996 among Parent, Purchaser
and the Company.*
Exhibit 2(a) Form of Tier 1 Severance Compensation Agreement. (Incorporated by reference
to Exhibit 2 to the Company's Schedule 14D-9 filed with respect to the
American Enterprises Tender Offer (the "A.E. 14D-9"))
Exhibit 2(b) Form of Amendatory Agreement between the Company and Gary L. Tessitore.
(Incorporated by reference to Exhibit 11(a) to Amendment No. 1 to the A.E.
14D-9.)
Exhibit 2(c) Form of Amendatory Agreement between the Company and Donald C. Roof.
(Incorporated by reference to Exhibit 11(b) to Amendment No. 1 to the A.E.
14D-9.)
Exhibit 3 Form of Tier 2 Severance Compensation Agreement. (Incorporated by reference
to Exhibit 3 to the A.E. 14D-9.)
Exhibit 4 Form of Tier 3 Severance Compensation Agreement. (Incorporated by reference
to Exhibit 4 to the A.E. 14D-9.)
Exhibit 5 Form of Corporate Office Employee Bonus Plan. (Incorporated by reference to
Exhibit 11(c) to Amendment No. 1 to the A.E. 14D-9.)
Exhibit 6(a) Form of Indemnification Agreement. (Incorporated by reference to Exhibit
10.16 of the Company's Registration Statement on Form S-1 (File No. 33-
18053) filed with the Commission on November 16, 1987.)
Exhibit 6(b) Form of Amendment to Indemnification Agreement, dated as of August 24,
1996.*
Exhibit 7(a) Letter to Shareholders dated September 3, 1996.+*
Exhibit 7(b) Press Release, dated August 26, 1996. (Incorporated by reference to Exhibit
99.6 to the Company's Current Report on Form 8-K filed with the Commission
on August 26, 1996.)
Exhibit 8(a) Rights Agreement, dated as of November 11, 1995, between the Company and
ChaseMellon Shareholder Services L.L.C. (Incorporated by reference to
Exhibit 1 to the Company's Current Report on Form 8-K filed with the
Commission on November 17, 1995.)
Exhibit 8(b) Amendment to the Rights Agreement, dated as of January 8, 1996.
(Incorporated by reference to Exhibit 1 to the Company's Current Report on
Form 8-K filed with the Commission on February 5, 1996.)
Exhibit 8(c) Form of Amendment to Rights Agreement, dated as of July 23, 1996.
(Incorporated by reference to Exhibit 8(c) to the A.E. 14D-9.)
Exhibit 8(d) Form of Amendment to the Rights Agreement, dated as of August 23, 1996.
(Incorporated by reference to Exhibit 14 to Amendment No. 1 to the A.E.
14D-9.)
Exhibit 9 Opinion of Salomon Brothers Inc dated August 23, 1996.++*
</TABLE>
- --------
* Filed herewith.
+ Included in copy mailed to stockholders.
++ Included as Annex A in copy mailed to shareholders.
<PAGE>
EXHIBIT 1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
AMONG
COLUMBUS MCKINNON CORPORATION,
L ACQUISITION CORPORATION
AND
SPRECKELS INDUSTRIES, INC.
(KNOWN AS YALE INTERNATIONAL, INC.)
DATED AUGUST 24, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
THE OFFER........................... 1
SECTION 1.1 The Offer.......................................... 1
SECTION 1.2 Company Action..................................... 3
ARTICLE II
THE MERGER........................... 4
SECTION 2.1 The Merger........................................ 4
SECTION 2.2 Effective Time.................................... 4
SECTION 2.3 Effects of the Merger............................. 4
SECTION 2.4 Certificate of Incorporation; By-Laws............. 5
SECTION 2.5 Directors and Officers............................ 5
SECTION 2.6 Conversion of Securities.......................... 5
SECTION 2.7 Treatment of Employee and Director
Options........................................ 6
SECTION 2.8 Dissenting Shares and Section 262
Shares......................................... 6
SECTION 2.9 Surrender of Shares; Stock Transfer
Books.......................................... 7
SECTION 2.10 Withholding Taxes................................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 9
SECTION 3.1 Organization and Qualification;
Subsidiaries.................................. 9
SECTION 3.2 Certificate of Incorporation and By-
Laws.......................................... 9
SECTION 3.3 Capitalization.................................. 9
SECTION 3.4 Authority Relative to This Agreement............ 11
SECTION 3.5 No Conflict; Required Filings and
Consents..................................... 11
SECTION 3.6 Material Contracts.............................. 12
SECTION 3.7 Compliance...................................... 12
SECTION 3.8 SEC Filings; Financial Statements............... 12
SECTION 3.9 Absence of Certain Changes or Events............ 14
SECTION 3.10 No Undisclosed Liabilities...................... 14
SECTION 3.11 Absence of Litigation........................... 14
SECTION 3.13 Tax Matters..................................... 16
SECTION 3.14 Environmental Liability......................... 17
SECTION 3.15 Licenses and Permits............................ 18
SECTION 3.16 Offer Documents; Proxy Statement................ 18
SECTION 3.17 Rights Agreement................................ 19
SECTION 3.18 Brokers......................................... 19
-i-
<PAGE>
Page
----
SECTION 3.19 State Takeover Laws....................... 19
SECTION 3.20 Exercise of Warrants...................... 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER.................... 20
SECTION 4.1 Corporate Organization.................... 20
SECTION 4.2 Authority Relative to This Agreement...... 20
SECTION 4.3 No Conflict; Required Filings and
Consents.............................. 20
SECTION 4.4 Offer Documents; Proxy Statement.......... 21
SECTION 4.5 Financing................................. 21
SECTION 4.6 Brokers................................... 22
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER.......... 22
SECTION 5.1 Conduct of Business of the Company
Pending the Merger.................... 22
ARTICLE VI
ADDITIONAL AGREEMENTS................. 25
SECTION 6.1 Stockholders Meeting...................... 25
SECTION 6.2 Proxy Statement........................... 25
SECTION 6.3 Company Board Representation; Section
14(f)............................... 26
SECTION 6.4 Access to Information; Confidentiality.... 27
SECTION 6.5 No Solicitation of Transactions........... 28
SECTION 6.6 Employee Benefits Matters................. 29
SECTION 6.7 Directors' and Officers' Indemnification
and Insurance....................... 29
SECTION 6.8 No Amendment to the Rights Agreement...... 29
SECTION 6.9 Further Action; Reasonable Efforts........ 29
SECTION 6.10 Public Announcements...................... 30
SECTION 6.11 Warrants.................................. 30
SECTION 6.12 Delivery of Director Agreements........... 30
ARTICLE VII
CONDITIONS OF MERGER................. 30
SECTION 7.1 Conditions to Obligation of Each Party
to Effect the Merger............... 30
SECTION 7.2 Conditions to Obligations of Purchaser ... 31
-ii-
<PAGE>
Page
----
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER................. 31
SECTION 8.1 Termination.......................................... 31
SECTION 8.2 Effect of Termination................................ 33
SECTION 8.3 Termination Fee...................................... 33
SECTION 8.4 Fees and Expenses.................................... 33
SECTION 8.5 Amendment............................................ 34
SECTION 8.6 Waiver............................................... 34
ARTICLE IX
GENERAL PROVISIONS ......................... 34
SECTION 9.1 Non-Survival of Representations,
Warranties and Agreements........................ 34
SECTION 9.2 Notices.............................................. 34
SECTION 9.3 Certain Definitions.................................. 35
SECTION 9.4 Severability......................................... 36
SECTION 9.5 Entire Agreement; Assignment......................... 37
SECTION 9.6 Parties in Interest.................................. 37
SECTION 9.7 Governing Law........................................ 37
SECTION 9.8 Headings............................................. 37
SECTION 9.9 Counterparts......................................... 37
SECTION 9.10 Disclosure Schedule.................................. 37
Annex A -- Offer Conditions
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated August 24, 1996 (this
"Agreement"), among COLUMBUS MCKINNON CORPORATION, a New York corporation
---------
("Parent"), L ACQUISITION CORPORATION, a Delaware corporation and a wholly owned
- --------
subsidiary of Parent formed solely for the purpose of effecting the transactions
contemplated herein ("Purchaser"), and SPRECKELS INDUSTRIES, INC. (known as YALE
---------
INTERNATIONAL, INC.), a Delaware corporation (the "Company").
-------
WHEREAS, the Board of Directors of the Company has (i) determined that
the consideration to be paid for each outstanding share (collectively, the
"Shares") of Class A Common Stock, par value $.01 per share (the "Class A Common
- ------- --------------
Stock") pursuant to the Offer and in the Merger (each as defined below) is fair
- -----
to and in the best interests of the stockholders of the Company, (ii) approved
this Agreement and the transactions contemplated hereby and (iii) resolved to
recommend acceptance of the Offer and the Merger and approval of this Agreement
by such stockholders; and
WHEREAS, the Board of Directors of Parent and Purchaser have each
approved the merger (the "Merger") of Purchaser with and into the Company in
------
accordance with the General Corporation Law of the State of Delaware ("Delaware
--------
Law"), upon the terms and subject to the conditions set forth herein;
- ---
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this Agreement shall not
---------
have been terminated in accordance with Section 8.1 and no event shall have
occurred and no circumstance shall exist which could result in a failure to
satisfy any of the conditions or events set forth in Annex A hereto (the "Offer
-----
Conditions"), as soon as reasonably practicable after the execution hereof (but
- ----------
in no event later than five business days after the public announcement by the
Company of the execution hereof) Purchaser shall, and Parent shall cause
Purchaser to, commence an offer to purchase (i) all of the outstanding Shares of
the Company, at a price of $24 per Share (the "Per Share Amount"), and (ii) all
----------------
of the outstanding Warrants (as defined below), at a price equal to the
applicable Spread (as defined below), in each case net to the seller in cash
(the "Offer"). The obligation of Purchaser to accept for payment Shares and
-----
Warrants tendered shall be subject to the satisfaction of the
<PAGE>
Offer Conditions. Purchaser expressly reserves the right, in its sole
discretion, to waive any Offer Condition (other than the Minimum Condition (as
defined in Annex A hereto)) and to increase the Per Share Amount payable
pursuant to the Offer or make any other changes in the terms and conditions of
the Offer (provided that, without the written consent of the Company, no change
--------
may be made which decreases the Per Share Amount payable in the Offer, changes
the form of consideration payable in the Offer (other than by adding
consideration), reduces the maximum number of Shares or Warrants to be purchased
in the Offer or imposes conditions to the Offer in addition to the Offer
Conditions). Purchaser covenants and agrees that, subject to the terms and
conditions of this Agreement and the Offer, including but not limited to the
Offer Conditions, unless the Company otherwise consents in writing, Purchaser
will accept for payment and pay for Shares and Warrants validly tendered and not
properly withdrawn promptly following the expiration of the Offer, provided that
--------
Purchaser may extend the Offer up to the tenth business day after the later of
(i) the tenth business day after the initial expiration date of the Offer and
(ii) the date on which all such conditions shall first have been satisfied or
waived. It is agreed that the Offer Conditions are for the sole benefit of
Purchaser and may be asserted by Purchaser, regardless of the circumstances
giving rise to any such condition (including any action or inaction by Purchaser
or Parent not inconsistent with the terms hereof) or, except with respect to the
Minimum Condition, may be waived by Purchaser, in whole or in part at any time
and from time to time, in its sole discretion. For purposes of this Agreement,
the term "Warrants" means, collectively, the Company's issued and outstanding
--------
warrants to purchase shares of its Class A Common Stock at exercise prices of
$9.17 per share (the "$9.17 Warrants"), $11.67 per share (the "$11.67
-------------- ------
Warrants"), $15.00 per share (the "$15.00 Warrants") and $1.00 per share (the
---------------
"$1.00 Warrants"), respectively. For purposes of this Agreement, the term
- ---------------
"Spread" means, with respect to each Warrant, an amount equal to the difference,
- -------
if positive, between the Per Share Amount and the exercise price of such
Warrant.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Purchaser shall file with the Securities and Exchange Commission (the
"SEC") 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") (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"). Each of Parent, Purchaser and the Company agrees
---------------
promptly to correct any information provided by it for use in the Offer
Documents that shall have become false or misleading in any material respect,
and Parent and Purchaser further agree to take all steps
-2-
<PAGE>
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given an opportunity to
review the Schedule 14D-1 prior to its being filed with the SEC. Each of Parent
and Purchaser agrees to provide the Company and its counsel in writing with any
written comments Parent and Purchaser or their counsel may receive from the SEC
with respect to the Offer Documents promptly after the receipt of such comments.
SECTION 1.2 Company Action. (a) The Company hereby approves of and
--------------
consents to the Offer and represents and warrants that: (i) its Board of
Directors, at a meeting duly called and held on August 23, 1996, has unanimously
(A) determined that this Agreement and the transactions contemplated hereby,
including each of the Offer and the Merger, are fair to and in the best
interests of the holders of Shares and Warrants, (B) approved this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, in all
respects and (C) resolved to recommend that the stockholders and holders of
Warrants (the "Warrantholders") of the Company accept the Offer, tender their
--------------
Shares and Warrants to Purchaser thereunder and approve this Agreement and the
transactions contemplated hereby; and (ii) Salomon Brothers Inc (the "Financial
---------
Advisor") has delivered to the Board of Directors of the Company its written
- -------
opinion (or oral opinion confirmed in writing) that the consideration to be
received by holders of Shares, other than Parent and Purchaser, pursuant to each
of the Offer and the Merger is fair to such holders from a financial point of
view. The Company has been authorized by the Financial Advisor to permit,
subject to prior review and consent by the Financial Advisor (such consent not
to be unreasonably withheld), the inclusion of such fairness opinion (or a
reference thereto) in the Offer Documents and in the Schedule 14D-9 referred to
below and the Proxy Statement referred to in Section 3.14. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Company's Board of Directors described in this Section 1.2(a).
(b) The Company shall file with the SEC, as soon as practicable after
the commencement of the Offer, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9"), containing the recommendations of the Company's Board of
- ---------------
Directors described in Section 1.2(a)(i) and shall promptly mail the Schedule
14D-9 to the stockholders and Warrantholders of the Company. Each of the
Company, Parent and Purchaser agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 that shall have become false or
misleading in any material respect, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and disseminated to holders of Shares and
-3-
<PAGE>
Warrants, in each case as and to the extent required by applicable federal
securities laws.
(c) In connection with the Offer, if requested by Purchaser, the
Company shall promptly furnish Purchaser with mailing labels, security position
listings, any non-objecting beneficial owner lists and any available listings or
computer files containing the names and addresses of the record holders of
Shares and Warrants, each as of a recent date, and shall promptly furnish
Purchaser with such additional information (including but not limited to updated
lists of stockholders, mailing labels, security position listings and non-
objecting beneficial owner lists) and such other assistance as Parent, Purchaser
or their agents may reasonably require in communicating the Offer to the record
and beneficial holders of Shares and Warrants.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
----------
of this Agreement, and in accordance with Delaware Law, at the Effective Time
(as defined in Section 2.2), Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation"). With the Company's
---------------------
prior written consent (which consent shall not be unreasonably withheld), Parent
may elect to structure the Merger so that (i) the Company is merged with and
into Parent, Purchaser or any other direct or indirect wholly owned subsidiary
of Parent or (ii) any direct or indirect wholly owned subsidiary of Parent other
than Purchaser is merged with and into the Company. In the event of such an
election and the Company's consent thereto, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect such election.
SECTION 2.2 Effective Time. As soon as practicable after the
--------------
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, the parties hereto shall cause the Merger to be consummated by filing this
Agreement or a certificate of merger or a certificate of ownership and merger
(the "Certificate of Merger") with the Secretary of State of the State of
---------------------
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, Delaware Law. The date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware (or
such later time as is specified in the Certificate of Merger) will be the
"Effective Time".
- ---------------
SECTION 2.3 Effects of the Merger. The Merger shall have the effects
---------------------
set forth in the applicable provisions of Delaware Law. Without limiting the
generality of the foregoing,
-4-
<PAGE>
and subject thereto, at the Effective Time all the property, rights, privileges,
immunities, powers and franchises of the Company and Purchaser shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Purchaser shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.4 Certificate of Incorporation; By-Laws. (a) At the
-------------------------------------
Effective Time and without any further action on the part of the Company and
Purchaser, the Restated Certificate of Incorporation of the Company (as amended,
the "Certificate of Incorporation") as in effect immediately prior to the
----------------------------
Effective Time shall be the certificate of incorporation of the Surviving
Corporation until thereafter and further amended as provided therein and under
Delaware Law.
(b) At the Effective Time and without any further action on the part
of the Company and Purchaser, the By-Laws of Purchaser shall be the By-Laws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
SECTION 2.5 Directors and Officers. The directors of Purchaser
----------------------
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
SECTION 2.6 Conversion of Securities. At the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section
2.6(b)) and any Dissenting Shares (as defined in Section 2.8(a))) shall be
cancelled, extinguished and converted into the right to receive an amount
equal to the Per Share Amount in cash or any higher price that may be paid
pursuant to the Offer (the "Merger Consideration") payable to the holder
--------------------
thereof, without interest, upon surrender of the certificate formerly
representing such Share in the manner provided in Section 2.9.
(b) Each share of Class A Common Stock held in the treasury of the
Company and each Share owned by Parent, Purchaser or any other direct or
indirect subsidiary of Parent or of the Company, in each case immediately
prior to
-5-
<PAGE>
the Effective Time, shall be cancelled and retired without any conversion
thereof and no payment or distribution shall be made with respect thereto.
(c) Each share of common, preferred or other capital stock of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
nonassessable share of identical common, preferred or other capital stock
of the Surviving Corporation.
SECTION 2.7 Treatment of Employee and Director Options. Immediately
------------------------------------------
prior to the Effective Time, each employee or director stock option and any
related stock appreciation right (together, an "Employee Option"), whether or
---------------
not then exercisable, shall be cancelled by the Company, and each holder of a
cancelled Employee Option shall be entitled to receive at the Effective Time or
as soon as practicable thereafter (or, if later, with respect to any Employee
Option, the date six months and one day following the grant of such Employee
Option) from the Company in consideration for the cancellation of such Employee
Option an amount in cash equal to the product of (i) the number of Shares
previously subject to such Employee Option and (ii) the excess, if any, of the
Merger Consideration over the exercise price per Share previously subject to
such Employee Option.
SECTION 2.8 Dissenting Shares and Section 262 Shares. (a)
----------------------------------------
Notwithstanding anything in this Agreement to the contrary, shares of Class A
Common Stock that are issued and outstanding immediately prior to the Effective
Time and which are held by stockholders who have not voted in favor of or
consented to the Merger and shall have delivered a written demand for appraisal
of such shares of Class A Common Stock in the time and manner provided in
Section 262 of Delaware Law and shall not have failed to perfect or shall not
have effectively withdrawn or lost their rights to appraisal and payment under
Delaware Law (the "Dissenting Shares") shall not be converted into the right to
-----------------
receive the Merger Consideration, but shall be entitled to receive the
consideration as shall be determined pursuant to Section 262 of Delaware Law;
provided, however, that if such holder shall have failed to perfect or shall
- -------- -------
have effectively withdrawn or lost his, her or its right to appraisal and
payment under Delaware Law, such holder's shares of Class A Common Stock shall
thereupon be deemed to have been converted, at the Effective Time, into the
right to receive the Merger Consideration set forth in Section 2.6(a) of this
Agreement, without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands
for appraisal pursuant to Section 262 received by the Company, withdrawals of
such demands, and any other instruments served pursuant to Delaware Law and
received by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under Delaware Law. The
-6-
<PAGE>
Company shall not, except with the prior written consent of Parent, make any
payment with respect to any such demands for appraisal or offer to settle or
settle any such demands.
SECTION 2.9 Surrender of Shares; Stock Transfer Books. (a) Prior to
-----------------------------------------
the Effective Time, Purchaser shall designate a bank or trust company to act as
agent for the holders of Shares in connection with the Merger (the "Paying
------
Agent") to receive the Merger Consideration to which holders of Shares shall
become entitled pursuant to Section 2.6(a). When and as needed, Parent or
Purchaser will make available to the Paying Agent sufficient funds to make all
payments pursuant to Section 2.9(b). Such funds shall be invested by the Paying
Agent as directed by Purchaser or, after the Effective Time, the Surviving
Corporation, provided that such investments shall be in obligations of or
--------
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard &
Poor's Rating Services, respectively, or in certificates of deposit, bank
repurchase agreements or banker's acceptances of commercial banks with capital
exceeding $100 million. Any net profit resulting from, or interest or income
produced by, such investments will be payable to the Surviving Corporation or
Parent, as Parent directs.
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented Shares (the "Certificates"), a form of letter of transmittal
------------
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon surrender
to the Paying Agent of a Certificate, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration for each Share formerly represented by such Certificate,
and such Certificate shall then be cancelled. No interest shall be paid or
accrued for the benefit of holders of the Certificates on the Merger
Consideration payable upon the surrender of the Certificates. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the
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<PAGE>
satisfaction of the Surviving Corporation that such tax either has been paid or
is not applicable.
(c) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been made available to the Paying Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
to the Surviving Corporation (subject to abandoned property, escheat or other
similar laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Class A Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares except as otherwise provided for
herein or by applicable law.
SECTION 2.10 Withholding Taxes. Parent and Purchaser shall be
-----------------
entitled to deduct and withhold from the consideration otherwise payable to a
holder of Shares or Warrants pursuant to the Offer or the Merger or any
provision of this Agreement, and the Company shall deduct and withhold from the
consideration otherwise payable to a holder of a cancelled Employee Option
pursuant to Section 2.7 hereof, (i) such amounts as are required under any
applicable provision of the Internal Revenue Code of 1986, as amended (the
"Code") (including, without limitation, Code Sections 1441 through 1446, 3401
----
through 3406, and 6041 through 6049), and (ii) such amounts as are required
under any applicable provision of foreign, state or local tax law. To the
extent that amounts are so withheld by the Parent, Purchaser or the Company,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares, Warrants or Employee Options, as
applicable, in respect of which such deduction and withholding was made by
Parent, Purchaser or the Company.
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<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 3.1 Organization and Qualification; Subsidiaries. Each of
--------------------------------------------
the Company and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and any
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect (as defined below). Each of the Company and each of its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing which would not, individually
or in the aggregate, either have a Material Adverse Effect or prevent the
consummation of the transactions contemplated hereby. When used in connection
with the Company or any of its subsidiaries, the term "Material Adverse Effect"
-----------------------
means any change or effect that is or is reasonably likely to be materially
adverse to the business, assets, financial condition or results of operations of
the Company and its subsidiaries taken as a whole.
SECTION 3.2 Certificate of Incorporation and By-Laws. The Company
----------------------------------------
has heretofore furnished to Parent a complete and correct copy of the
Certificate of Incorporation and the By-Laws of the Company as currently in
effect. Such Certificate of Incorporation and By-Laws are in full force and
effect and no other organizational documents are applicable to or binding upon
the Company. The Company is not in violation of any of the provisions of its
Certificate of Incorporation or By-Laws.
SECTION 3.3 Capitalization. The authorized capital stock of the
--------------
Company consists of 15,000,000 shares of Class A Common Stock. As of August 23,
1996, (i) 6,090,941 shares of Class A Common Stock (plus any shares of Class A
Common Stock issued upon the exercise of Employee Options since August 21, 1996)
were issued and outstanding, all of which were validly issued, fully paid and
nonassessable and were issued free of preemptive (or similar) rights, (ii) no
shares of Class A Common Stock were held in the treasury of the Company, (iii)
an aggregate of 604,894 shares of Class A Common Stock (less any shares of Class
A Common Stock issued upon the exercise of Employee Options since August 21,
1996) were reserved for
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<PAGE>
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding Employee Options issued pursuant to the Plans (as
defined in Section 3.10) and (iv) an aggregate of 900,000 shares, 600,000
shares, 1,050,000 shares and 300,000 shares of Class A Common Stock,
respectively, were reserved for issuance in connection with exercise of the
$9.17 Warrants, the $11.67 Warrants, the $15.00 Warrants and the $1.00 Warrants,
respectively. Since August 1, 1996, no options to purchase shares of Class A
Common Stock have been granted and no shares of Class A Common Stock have been
issued except for shares issued pursuant to the exercise of Employee Options
outstanding as of July 31, 1996. As of the date hereof, no shares of Class B
Common Stock are issued and outstanding and no shares of Class A Common Stock
are reserved for issuance upon exercise of the rights (the "Rights") issued
------
pursuant to the Rights Agreement, dated as of November 11, 1995, as amended (the
"Rights Agreement"), between the Company and ChaseMellon Shareholder Services
----------------
L.L.C. (the "Rights Agent"). Except as set forth above, except for the Rights,
------------
and except as a result of the exercise of Employee Options outstanding as of
July 31, 1996 or the exercise of the Warrants, there are outstanding (i) no
shares of capital stock or other voting securities of the Company, (ii) no
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company, (iii) no options or other rights to
acquire from the Company, and no obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company and (iv) no equity
equivalents, interests in the ownership or earnings of the Company or other
similar rights (collectively, "Company Securities"). There are no outstanding
------------------
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any Company Securities. There are no other options, calls,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
of its subsidiaries to which the Company or any of its subsidiaries is a party.
All shares of Class A Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable and free of preemptive (or similar) rights. Except as set
forth in Section 3.3 of the Disclosure Schedule (as defined below), each of the
outstanding shares of capital stock of each of the Company's subsidiaries is
duly authorized, validly issued, fully paid and nonassessable and is owned free
and clear of all security interests, liens, claims, pledges, agreements,
limitations in voting rights, charges or other encumbrances of any nature
whatsoever. Section 3.3 of the Disclosure Schedule delivered by the Company to
Parent on or prior to the date hereof (the "Disclosure Schedule") sets forth a
-------------------
list of the subsidiaries of the Company which evidences, among other things, the
amount of capital stock or other equity interests owned by the Company, directly
or indirectly, in such subsidiaries.
-10-
<PAGE>
SECTION 3.4 Authority Relative to This Agreement. The Company has
------------------------------------
all necessary corporate 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 the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than, with respect to the Merger, the
approval of this Agreement by the holders of a majority of the outstanding
shares of Class A Common Stock if and to the extent required by applicable law,
and the filing of appropriate merger documents as required by Delaware Law).
This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery hereof by Parent and
Purchaser, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. The only vote
required to authorize the Merger is the affirmative vote of a majority of the
outstanding Shares.
SECTION 3.5 No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution, delivery and performance of this Agreement by the Company do not and
will not: (i) conflict with or violate the Certificate of Incorporation or By-
Laws of the Company or the equivalent organizational documents of any of its
subsidiaries; (ii) assuming that all consents, approvals and authorizations
contemplated by clauses (i), (ii) and (iii) of subsection (b) below have been
obtained and all filings described in such clauses have been made, violate any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which its or any of their respective properties
are bound or affected; or (iii) except as set forth in Section 3.5 of the
Disclosure Schedule result in any breach or violation of or constitute a default
(or an event which with notice or lapse of time or both could become a default)
or result in the loss of a material benefit under, or give rise to any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective properties are bound or affected, except, in the case of clauses (ii)
and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not except as set forth in Section 3.5 of the Disclosure
Schedule, individually or in the aggregate, have a Material Adverse Effect or
prevent the consummation of the Offer or the Merger.
-11-
<PAGE>
(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the Merger by the Company do not and will not
require any consent, approval, authorization or permit of, action by, filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except for (i) applicable requirements, if any, of the Exchange Act,
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
---
Act"), and state securities, takeover and Blue Sky laws, (ii) the filing and
- ---
recordation of appropriate merger or other documents as required by Delaware Law
and (iii) such consents, approvals, authorizations, permits, actions, filings or
notifications the failure of which to make or obtain would not (x) prevent
consummation of the Offer or the Merger or materially delay the Merger, (y)
otherwise prevent or delay the Company from performing its obligations under
this Agreement or (z) individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.6 Material Contracts. The Company has filed with the SEC,
------------------
or disclosed in Section 3.6 of the Disclosure Schedule, a list of all written
contracts, agreements, commitments, arrangements, leases (including with respect
to personal property, employment, indemnification or a change of control) and
other instruments to which it or any of its subsidiaries is a party or by which
it or any such subsidiary is bound, the loss, default, breach or violation of
which would have a Material Adverse Effect ("Material Contracts"). Except as
------------------
set forth in Section 3.6 of the Disclosure Schedule or in the SEC Reports (as
defined below), neither the Company nor any of its subsidiaries is, or has
received any notice or has any knowledge that any other party is, in default in
any respect under any such Material Contract, except for those defaults which
would not in the aggregate have a Material Adverse Effect; and to the Company's
knowledge there has not occurred any event that with the lapse of time or the
giving of notice or both would constitute such a material default.
SECTION 3.7 Compliance. Neither the Company nor any of its
----------
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties are bound
or affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except for any such conflicts, defaults or violations which would not,
individually or in the aggregate, either have a Material Adverse Effect or
prevent the consummation of the Offer or the Merger.
SECTION 3.8 SEC Filings; Financial Statements. (a) The Company has
---------------------------------
filed all forms, reports, statements and
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<PAGE>
documents required to be filed with the SEC since September 2, 1993
(collectively, the "SEC Reports"), each of which has complied in all material
-----------
respects with the applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, each as in effect on the
--------------
date so filed. The Company has heretofore delivered or promptly will deliver to
Parent, in the form filed with the SEC (including any amendments thereto), (i)
its Annual Reports on Form 10-K for each of the fiscal years ended June 30, 1994
and 1995 and its Quarterly Reports on Form 10-Q for each of the quarterly
periods ended September 30, 1995, December 31, 1995 and March 31, 1996, (ii) all
definitive proxy statements relating to the Company's meetings of stockholders
(whether annual or special) held since September 2, 1993 and (iii) all other
reports or registration statements filed by the Company with the SEC since
September 2, 1993. None of such forms, reports or documents filed by the
Company contained, when filed, any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the audited and unaudited consolidated interim financial
statements of the Company (including, in each case, any related notes thereto)
included in its Annual Reports on Form 10-K for each of the two fiscal years
ended June 30, 1994 and 1995 and in its Quarterly Reports on Form 10-Q for its
fiscal quarters ended September 30, 1995, December 31, 1995 and March 31, 1996,
which have previously been furnished to Parent, has been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and each fairly presents the consolidated financial position of the
Company and its subsidiaries at the respective dates thereof and the
consolidated results of its operations and changes in cash flows for the periods
indicated, except that the unaudited interim financial statements are subject to
normal and recurring year-end adjustments.
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and its subsidiaries at June 30, 1995, as otherwise
disclosed in the SEC Reports or as set forth in Section 3.8(c) of the Disclosure
Schedule, including the notes thereto, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on a
balance sheet or in the notes thereto prepared in accordance with generally
accepted accounting principles, except for liabilities or obligations incurred
in the ordinary course of business since June 30, 1995.
(d) The reserves in connection with product liability claims
reflected on the unaudited June 30, 1996 balance sheet heretofore presented to
Parent are adequate.
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<PAGE>
(e) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC, to agreements (including the Rights Agreement), documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Securities Act or the Exchange Act. The Company has heretofore furnished
to Parent a preliminary copy of its consolidated financial statements for the
fiscal year ended June 30, 1996.
SECTION 3.9 Absence of Certain Changes or Events. Except as
------------------------------------
contemplated by this Agreement, disclosed in the SEC Reports filed since June
30, 1995 or disclosed in Section 3.9 of the Disclosure Schedule, since June 30,
1995, the Company and its subsidiaries have conducted their businesses only in
the ordinary course and there has not been a Material Adverse Effect (without
regard, however, to changes in conditions generally applicable to the industries
in which the Company and its subsidiaries are involved or general economic
conditions).
SECTION 3.10 No Undisclosed Liabilities. Except (a) for liabilities
--------------------------
incurred in the ordinary course of business consistent with past practice, (b)
transaction expenses incurred in connection with this Agreement, (c) liabilities
which singly or in the aggregate would not reasonably be expected to have a
Material Adverse Effect, and (d) as set forth in Section 3.10 of the Disclosure
Schedule, from June 30, 1995 until the date hereof, neither the Company nor any
of its subsidiaries has incurred any liabilities that would be required to be
reflected or reserved against in a consolidated balance sheet of the Company and
its subsidiaries prepared in accordance with generally accepted accounting
principles as applied in preparing the consolidated balance sheet of the Company
and its subsidiaries as of June 30, 1995 contained in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1995.
SECTION 3.11 Absence of Litigation. Except as disclosed in the SEC
---------------------
Reports filed prior to the date of this Agreement or in Section 3.11 of the
Disclosure Schedule, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any properties or rights of the
Company or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, that (i) individually or in the aggregate, would have a Material
Adverse Effect or (ii) seek to materially delay or prevent the consummation of
the transactions contemplated hereby. As of the date hereof, neither the
Company nor any of its subsidiaries nor any of their respective properties is or
are subject to any order, writ, judgment, injunction, decree, determination or
award having, or which would have, a Material Adverse Effect or which would
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<PAGE>
prevent or delay the consummation of the transactions contemplated hereby.
SECTION 3.12 Employee Benefits; Labor Matters. (a) (i) A copy (or,
--------------------------------
if unwritten, a summary thereof) of each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health or other plan, agreement, policy or
arrangement that covers employees, directors, former employees or former
directors of the Company and its subsidiaries ("Company Personnel") and which
-----------------
are sponsored, maintained or contributed to by the Company or its subsidiaries
(the "Benefit Plans") and any trust agreements or insurance contracts forming a
-------------
part of such Benefit Plans has been made available to Purchaser prior to the
date hereof, together with (x) copies of any annual, financial or actuarial
reports and Internal Revenue Service determination letters relating to the
Benefit Plans and (y) copies of all summary plan descriptions (whether or not
required to be furnished under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and employee communications relating to the Benefit
-----
Plans and distributed to Company Personnel within the past five years. The
Benefit Plans are listed in Section 3.12(a)(i) of the Disclosure Schedule and
each Benefit Plan which is an "employee pension benefit plan" ("Pension Plan")
------------
as that term is defined in Section 3(2) of ERISA has been identified as such on
such Disclosure Schedule.
(ii) With respect to all the Benefit Plans, except as set forth in
the SEC Reports and except as would not individually or in the aggregate, have a
Material Adverse Effect: (1) all Benefit Plans are in substantial compliance
with all applicable law, including the Code and ERISA, including in compliance
with all filing and reporting requirements; (2) the aggregate accumulated
benefit obligations of each Pension Plan that is subject to Title IV of ERISA
(as of the date of the most recent actuarial valuation prepared for such Plan)
do not exceed the fair market value of the assets of such Pension Plan (as of
the date of such valuation), and no material adverse change has occurred with
respect to the financial condition of such Plan since such last valuation; (3)
each Pension Plan that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service, and the Company is not aware of any circumstances likely to result in
revocation of any such favorable determination letter; (4) there is no pending
or, to the knowledge of the officers of the Company, threatened litigation or
administrative agency proceeding relating to any Benefit Plan (other than
benefit claims in the ordinary course); and (5) neither the Company, its
subsidiaries nor any entity that is treated as a single employer with the
Company or its subsidiaries under Section 414(b), (c), (m) or (o) of the Code
(an "ERISA Affiliate") has incurred or reasonably expects to incur any lien or
---------------
liability to the Pension
-15-
<PAGE>
Benefit Guaranty Corporation, any Pension Plan or otherwise under Title IV of
ERISA (other than the payment of contributions or premiums, none of which are
overdue) or under Section 412 of the Code.
(iii) Except as specifically contemplated by this Agreement or as
disclosed in Section 3.12(a)(iii) of the Disclosure Schedule, the consummation
of the Merger and the other transactions contemplated by this Agreement will not
(x) entitle any Company Personnel to severance pay, or (y) accelerate the time
of payment or vesting or trigger any payment of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Benefit Plans.
(b) (i) Except as disclosed in the SEC Reports and except as would
not, individually or in the aggregate, have a Material Adverse Effect: (1) there
is no labor strike, labor dispute, work slowdown, stoppage or lockout actually
pending, or to the knowledge of the executive officers of the Company,
threatened against or affecting the Company or any of its subsidiaries; (2)
there is no unfair labor practice or labor arbitration proceeding pending or, to
the knowledge of the executive officers of the Company, threatened against the
Company or any of its subsidiaries relating to their business; and (3) the
Company and its subsidiaries are in compliance in all respects with all
applicable laws and regulations of the United States and of the various states
thereof and of such foreign jurisdictions in which they operate with respect to
employment, employment practices, labor relations, safety and health, wages,
hours and terms and conditions of employment.
(ii) The Company has made available to Purchaser true and complete
copies of (x) all agreements with employees or directors of the Company or its
subsidiaries relating to employment, termination of employment, severance pay or
other compensation rights and (y) all collective bargaining agreements with
union representatives of employees of the Company or its subsidiaries.
SECTION 3.13 Tax Matters. (a) The Company and each of its
-----------
subsidiaries, and any consolidated, combined, unitary or aggregate group for Tax
(as defined below) purposes of which the Company or any of its subsidiaries is
or has been a member (i) has timely filed all Tax Returns (as defined below)
required to be filed by it and all information contained in such Tax Returns is
true, correct and complete in all material respects and (ii) has timely paid in
full all Taxes shown to be due on such Tax Returns and has provided adequate
reserves in its financial statements in accordance with generally accepted
accounting principles for any Taxes that have not been paid, except where the
failure to make such filings, pay such taxes or provide for such reserves has
not had, and would not have, individually or in the aggregate, a Material
Adverse Effect.
-16-
<PAGE>
(b) Except as disclosed in Section 3.13 of the Disclosure Schedule,
neither the Company nor any of its subsidiaries has received written notice of
any claim or assessment against, or any audit or investigation of, the Company
or any of its subsidiaries with respect to any liability of the Company or any
of its subsidiaries for Taxes.
(c) Except as disclosed in Section 3.13 of the Disclosure Schedule,
there is no contract or agreement in existence under which the Company or any of
its subsidiaries has, or may at any time in the future have, an obligation to
contribute to the payment of any portion of a Tax (or pay any amount calculated
with reference to any portion of a Tax) of any group of corporations of which
the Company or its subsidiaries is or was a part other than the group of which
the Company is currently the common parent.
(d) Except as disclosed in Section 3.13 of the Disclosure Schedule,
neither the Company nor any of its subsidiaries is a party to any contracts,
agreements or arrangements that, individually or in the aggregate, could give
rise to the payment of any "excess parachute payment" within the meaning of
Section 280G of the Code, nor, except as disclosed in Section 3.13 of the
Disclosure Schedule, will any of the transactions contemplated by this Agreement
give rise to any such payment.
(e) As used herein, "Taxes" shall mean any taxes of any kind,
-----
including but not limited to those on or measured by or referred to as income,
gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
value added, property or windfall profits taxes, customs, duties or similar
fees, assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
governmental authority, domestic or foreign. As used herein, "Tax Return" shall
----------
mean any return, report or statement required to be filed with any governmental
authority with respect to Taxes.
SECTION 3.14 Environmental Liability. Except as disclosed in the SEC
-----------------------
Reports prior to the date hereof, except as disclosed in Section 3.14 of the
Disclosure Schedule and except for such matters that, alone or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect, (i) the
Company and its subsidiaries are in compliance with all applicable Environmental
Laws (as defined below); (ii) the properties presently or formerly owned or
operated by the Company or its subsidiaries (including soil, groundwater or
surface features and buildings or structures thereon) (the "Properties") do not
----------
contain any Hazardous Substances (as defined below) other than as permitted
under applicable Environmental Law and do not contain, and have not contained,
any underground storage tanks; (iii) neither the Company nor any of its
subsidiaries has
-17-
<PAGE>
received any claims, notices, demand letters or requests for information
alleging that the Company may be in violation of, or liable under, any
Environmental Law and none of the Company, its subsidiaries or the Properties
are subject to any agreement, order or decree involving liability under any
Environmental Law; (iv) no Hazardous Substance has been disposed of or released
on any of the Properties; (v) the Company and its subsidiaries are not subject
to liability for any off-site disposal or contamination; and (vi) there are no
other circumstances involving the Company or its subsidiaries that could be
expected to result in any claims, liability, costs or losses or any restrictions
on the ownership, use, or transfer of any Property pursuant to any Environmental
Law.
"Environmental Law" means any law, regulation, order, decree, opinion
-----------------
or agency requirement relating to pollution, contamination, wastes, Hazardous
Substances, human health or safety, or the environment and "Hazardous Substance"
-------------------
means any waste, mixture or matter containing any substance that is listed,
classified under or regulated by any government authority pursuant to any
Environmental Law including petroleum compounds, asbestos, lead and
polychlorinated biphenyls.
SECTION 3.15 Licenses and Permits. Except as disclosed in Section
--------------------
3.15 of the Disclosure Schedule, each of the Company and its subsidiaries holds
all licenses, permits, certificates of authority or franchises (collectively,
"Permits") that are required by any governmental entity to permit each of them
- --------
to conduct their respective businesses as now conducted, and all such permits
are valid and in full force and effect and will remain so upon consummation of
the transactions contemplated by this Agreement, except where the failure to
hold any such Permits or the failure to keep such Permits in effect would not,
individually or in the aggregate, have a Material Adverse Effect. To the
knowledge of the executive officers of the Company, no suspension, cancellation
or termination of any such Permits is threatened or imminent that would have a
Material Adverse Effect.
SECTION 3.16 Offer Documents; Proxy Statement. Neither the Schedule
--------------------------------
14D-9, nor any of the information supplied by the Company for inclusion in the
Offer Documents, shall, at the respective times such Schedule 14D-9, the Offer
Documents or any amendments or supplements thereto are filed with the SEC or are
first published, sent or given to stockholders, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Neither the proxy statement to be sent to the stockholders of the Company in
connection with the Stockholders Meeting (as defined in Section 6.1) or the
information statement to be sent to such stockholders, as appropriate (such
proxy statement or information statement, as amended or supplemented, is herein
referred to as the "Proxy Statement"), shall, at the date the Proxy Statement
---------------
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(or any amendment thereof or supplement thereto) is first mailed to stockholders
and at the time of the Stockholders Meeting and at the Effective Time, be false
or misleading with respect to any material fact, or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Stockholders Meeting which
has become false or misleading. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information supplied by
Parent or Purchaser or any of their respective representatives which is
contained in the Schedule 14D-9 or the Proxy Statement. The Schedule 14D-9 and
the Proxy Statement will comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder.
SECTION 3.17 Rights Agreement. The Company has heretofore provided
----------------
Parent with a complete and correct copy of the Rights Agreement, including all
amendments and exhibits thereto. The Company has taken all necessary action so
that none of the execution of this Agreement, the making of the Offer, the
acquisition of Shares pursuant to the Offer or the consummation of the Merger
will (a) cause the Rights issued pursuant to the Rights Agreement to become
exercisable, (b) cause any person to become an Acquiring Person (as such term is
defined in the Rights Agreement) or (c) give rise to a Distribution Date (as
such term is defined in the Rights Agreement).
SECTION 3.18 Brokers. No broker, finder or investment banker (other
-------
than the Financial Advisor) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and the Financial Advisor pursuant to which such firm would
be entitled to any payment relating to the transactions contemplated hereby.
SECTION 3.19 State Takeover Laws. Pursuant to the Certificate of
-------------------
Incorporation of the Company, Section 203 of Delaware Law will not be applicable
to this Agreement or the transactions contemplated hereby. The Board of
Directors of Company has taken all such action required to be taken by it to
provide that this Agreement and the transactions contemplated hereby shall be
exempt from the requirements of any "moratorium," "control share," "fair price"
or other anti-takeover laws or regulations of any state of the United States.
SECTION 3.20 Exercise of Warrants. Assuming Parent and the Surviving
--------------------
Corporation fulfill their obligations pursuant to Section 6.11 hereof, the
Warrantholders shall be entitled to receive upon exercise of the Warrants
(including payment of the Exercise Price), only the Per Share Amount in cash.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.1 Corporate Organization. Each of Parent and Purchaser is
----------------------
a corporation duly organized, validly existing and in good standing under the
laws of the States of New York and Delaware, respectively, and has the requisite
corporate power and authority and any necessary governmental authority to own,
operate or lease its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power, authority and governmental approvals would not,
individually or in the aggregate, prevent the consummation of the Offer or the
Merger.
SECTION 4.2 Authority Relative to This Agreement. Each of Parent and
------------------------------------
Purchaser has all necessary corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Purchaser and the consummation by each of
Parent and Purchaser of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Purchaser
other than filing and recordation of appropriate merger documents as required by
Delaware Law. This Agreement has been duly executed and delivered by Parent and
Purchaser and, assuming due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of each of Parent and
Purchaser enforceable against it in accordance with its terms.
SECTION 4.3 No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution, delivery and performance of this Agreement by Parent and Purchaser do
not and will not: (i) conflict with or violate the respective certificates of
incorporation or by-laws of Parent or Purchaser; (ii) assuming that all
consents, approvals and authorizations contemplated by clauses (i), (ii) and
(iii) of subsection (b) below have been obtained and all filings described in
such clauses have been made, violate any law, rule, regulation, order, judgment
or decree applicable to Parent or Purchaser or by which either of them or their
respective properties are bound or affected; or (iii) result in any breach or
violation of or constitute a default (or an event which with notice or lapse of
time or both could become a default) or result in the loss of a material benefit
under, or give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the property or
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assets of Parent or Purchaser pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or Purchaser is a party or by which Parent or
Purchaser or any of their respective properties are bound or affected, except,
in the case of clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in the
aggregate, prevent the consummation of the Offer or the Merger.
(b) The execution, delivery and performance of this Agreement by
Parent and Purchaser do not and will not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except for (i)
applicable requirements, if any, of the laws referred to in clause (i) of the
exception to Section 3.5(b), (ii) the filing and recordation of appropriate
merger or other documents as required by Delaware Law and (iii) such consents,
approvals, authorizations, permits, actions, filings or notifications the
failure of which to make or obtain would not, individually or in the aggregate,
prevent the consummation of the Offer or the Merger.
SECTION 4.4 Offer Documents; Proxy Statement. The Offer Documents
--------------------------------
will not, at the time such Offer Documents are filed with the SEC or are first
published, sent or given to stockholders, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The information supplied by Parent for inclusion in the Proxy
Statement shall not, on the date the Proxy Statement is first mailed to
stockholders, at the time of the Stockholders Meeting (as defined in Section
6.1) or at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or shall omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading. Notwithstanding the
foregoing, Parent and Purchaser make no representation or warranty with respect
to any information supplied by the Company or any of its representatives which
is contained in any of the foregoing documents or the Offer Documents. The
Offer Documents will comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder.
SECTION 4.5 Financing. Upon the terms and subject to the conditions
---------
of this Agreement and the Offer, Parent and Purchaser have, as of the date
hereof, received a commitment from Fleet Bank of New York with respect to, and
will have available
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to them, upon consummation of the Offer and at the Effective Time, all funds
necessary to satisfy the obligation to pay the Per Share Amount and the Spread
pursuant to the Offer and the Merger Consideration pursuant to the Merger.
SECTION 4.6 Brokers. No broker, finder or investment banker (other
-------
than Bear, Stearns & Co. Inc.) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of Parent or Purchaser.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending the Merger.
-----------------------------------------------------
The Company covenants and agrees that, during the period from the date hereof
until such time as Parent or Purchaser shall beneficially own a majority of the
Shares, except pursuant to the terms hereof, as disclosed in the SEC Reports
filed prior to the date hereof or as disclosed in Section 5.1 of the Disclosure
Schedule, or unless Parent shall otherwise agree in writing, the businesses of
the Company and its subsidiaries shall be conducted only in, and the Company and
its subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice and in compliance with
applicable laws; and the Company and its subsidiaries shall each use its
reasonable efforts to preserve intact the business organization of the Company
and its subsidiaries, to keep available the services of the present officers,
employees and consultants of the Company and its subsidiaries and to preserve
the present relationships of the Company and its subsidiaries with customers,
suppliers and other persons with which the Company or any of its subsidiaries
has significant business relations. By way of amplification and not limitation,
neither the Company nor any of its subsidiaries shall, between the date of this
Agreement and the Effective Time, directly or indirectly do, or propose or
commit to do, any of the following, except as contemplated by this Agreement, as
previously disclosed in the SEC Reports filed prior to the date hereof or as set
forth in Section 5.1 of the Disclosure Schedule without the prior written
consent of Parent:
(a) Amend or otherwise change its Certificate of Incorporation or By-
Laws or equivalent organizational documents;
(b) Issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or
encumbrance of, (A) any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership
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interest (including but not limited to stock appreciation rights or phantom
stock), of the Company or any of its subsidiaries (except for the issuance
of up to an aggregate of 604,894 shares of Class A Common Stock (less any
shares of Class A Common Stock issued upon the exercise of Employee Options
since August 21, 1996) issuable in accordance with the terms of Employee
Options outstanding as of August 23, 1996 and the Warrants or (B) any
assets of the Company or any of its subsidiaries, except, in the case of
this clause (B), in the ordinary course of business;
(c) Declare, set aside, make or pay any dividend or other
distribution;
(d) Reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) Acquire (by merger, consolidation, or acquisition of stock or
assets or otherwise) any corporation, partnership or other business
organization or division thereof (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of
any person, or make any loans, advances or capital contributions to, or
investments in, any other person, except for such of the foregoing incurred
in the ordinary course of business; or (iii) enter into or amend any
contract, agreement, commitment or arrangement with respect to any of the
matters set forth in this Section 5.1(e);
(f) (i) except with respect to collective bargaining agreements
entered into in accordance with clause (ii) below and except as may be
required by law or as contemplated by this Agreement, enter into, adopt or
amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreement, trust, plan, fund or other arrangement for the benefit
or welfare of any director, officer or employee in any manner, or (except
for normal increases in the ordinary course of business consistent with
past practice that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Company, and as required under
existing agreements or in the ordinary course of business generally
consistent with past practice) increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock appreciation rights
or performance units); or (ii)
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<PAGE>
enter into any collective bargaining agreement with any union after the
date hereof that would have or constitute a Material Adverse Effect after
the date hereof;
(g) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or any assets which in the aggregate are material to the
Company and its subsidiaries taken as a whole, or enter into any commitment
or transaction outside the ordinary course of business consistent with past
practice which would be material to the Company and its subsidiaries taken
as whole;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off
notes or accounts receivable other than in the ordinary course of business;
(j) authorize any new capital expenditure or expenditures which,
individually, is in excess of $1,000,000, or in the aggregate, are in
excess of $10,000,000;
(k) make any Tax election or settle or compromise any Tax liability
material to the Company and its subsidiaries taken as a whole;
(l) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in, or contemplated
by, the consolidated financial statements (or the notes thereto) of the
Company and its subsidiaries or incurred in the ordinary course of business
consistent with past practice;
(m) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(n) permit any insurance policy naming it as a beneficiary or loss-
payable payee to be cancelled or terminated except in the ordinary and
usual course of business;
(o) enter into any material joint venture agreement, acquisition
agreement or partnership agreement;
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<PAGE>
(p) enter into any material arrangement, agreement or contract with
respect to any assets or otherwise that, individually or in the aggregate
with other material agreements and contracts entered into after the date
hereof, would have or constitute a Material Adverse Effect after the date
hereof; or
(q) Enter into any agreement to take any of the actions described in
Sections 5.1(a) through 5.1(p).
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholders Meeting. (a) The Company, acting through
--------------------
its Board of Directors, shall, if required in accordance with applicable law and
the Company's Certificate of Incorporation and By-Laws, (i) duly call, give
notice of, convene and hold a special meeting of its stockholders as soon as
practicable following consummation of the Offer for the purpose of considering
and taking action on this Agreement and the transactions contemplated hereby
(the "Stockholders Meeting") and (ii) subject to its fiduciary duties under
--------------------
applicable law, exercised after consultation with independent legal counsel, (A)
include in the Proxy Statement the recommendation of the Board of Directors that
the stockholders of the Company vote in favor of the approval of this Agreement
and the transactions contemplated hereby and the written opinion of the
Financial Advisor that the consideration to be received by the stockholders of
the Company pursuant to the Offer and the Merger is fair to such stockholders
from a financial point of view and (B) use its reasonable efforts to obtain the
necessary approval of this Agreement and the transactions contemplated hereby by
its stockholders. At the Stockholders Meeting, Parent and Purchaser shall cause
all Shares then owned by them and their subsidiaries to be voted in favor of
approval of this Agreement and the transactions contemplated hereby.
(b) Notwithstanding the provisions of Section 6.1(a), in the event
that Purchaser shall acquire at least 90% of the outstanding Shares, the Company
agrees, at the request of Purchaser, subject to Article VII, to take all
necessary and appropriate action to cause the Merger to become effective as soon
as reasonably practicable after such acquisition, without a meeting of the
Company's stockholders, in accordance with Section 253 of Delaware Law.
SECTION 6.2 Proxy Statement. If required by applicable law, as soon
---------------
as practicable following Parent's reasonable request, the Company shall file
with the SEC under the Exchange Act, and shall use its reasonable efforts to
have cleared by the SEC, the Proxy Statement with respect to the Stockholders
Meeting. Parent, Purchaser and the Company will
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<PAGE>
cooperate with each other in the preparation of the Proxy Statement. Without
limiting the generality of the foregoing, each of Parent and Purchaser will
furnish to the Company the information relating to it required by the Exchange
Act to be set forth in the Proxy Statement. The Company agrees to use its
reasonable efforts, after consultation with the other parties hereto, to respond
promptly to any comments made by the SEC with respect to the Proxy Statement and
any preliminary version thereof filed by it and cause such Proxy Statement to be
mailed to the Company's stockholders at the earliest practicable time.
SECTION 6.3 Company Board Representation; Section 14(f). (a)
-------------------------------------------
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer (but
subject to the satisfaction of the Minimum Condition), and from time to time
thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as shall give Purchaser representation on the Board of Directors equal
to the product of the total number of directors on such Board (giving effect to
the directors elected pursuant to this sentence) multiplied by the percentage
that the aggregate number of Shares beneficially owned by Purchaser or any
affiliate of Purchaser bears to the total number of Shares then outstanding, and
the Company shall, at such time, promptly take all action necessary to cause
Purchaser's designees to be so elected, including by increasing the size of the
Board of Directors or securing the resignations of incumbent directors or both.
At such times, the Company will use its reasonable efforts to cause persons
designated by Purchaser to constitute the same percentage as is on the Board of
(i) each committee of the Board, (ii) each board of directors of each subsidiary
of the Company and (iii) each committee of each such board, in each case only to
the extent permitted by law.
(b) The Company's obligations to appoint designees to its Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 6.3 and shall, if requested by Parent, include in the
Schedule 14D-9 or a separate Rule 14f-1 Statement provided to stockholders such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 to fulfill its obligations under
this Section 6.3. Parent or Purchaser will supply to the Company and 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.
(c) Following the election or appointment of Purchaser's designees
pursuant to this Section 6.3 and prior to the Effective Time, any amendment of
this Agreement or the Certificate of Incorporation or By-Laws of the Company,
any termination of this Agreement by the Company, any extension by
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the Company of the time for the performance of any of the obligations or other
acts of Purchaser 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 neither designated by Purchaser nor are employees
of the Company (the "Disinterested Directors").
-----------------------
SECTION 6.4 Access to Information; Confidentiality. (a) From the
--------------------------------------
date hereof to the Effective Time, the Company shall, and shall cause its
subsidiaries, officers, directors, employees, auditors and other agents to,
afford the officers, employees, auditors and other agents of Parent, and
financing sources who shall agree to be bound by the provisions of this Section
6.4 as though a party hereto, reasonable access at all reasonable times to its
officers, employees, agents, properties, offices, plants and other facilities
and to all books and records, and shall furnish Parent and such financing
sources with all financial, operating and other data and information as Parent,
through its officers, employees or agents, or such financing sources may from
time to time reasonably request.
(b) Each of Parent and Purchaser will hold and will cause its
officers, employees, auditors and other agents to hold in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all documents and information concerning the Company and
its subsidiaries furnished to Parent or Purchaser in connection with the
transactions contemplated in this Agreement (except to the extent that such
information can be shown to have been (i) previously known by Parent or
Purchaser from sources other than the Company, or its directors, officers,
auditors or other agents, (ii) in the public domain through no fault of Parent
or Purchaser or (iii) later lawfully acquired by Parent or Purchaser on a non-
confidential basis from other sources who are not known by Parent or Purchaser
to be bound by a confidentiality agreement (after inquiry of such sources) or
otherwise prohibited from transmitting the information to Parent or Purchaser by
a contractual, legal or fiduciary obligation) and will not release or disclose
such information to any other person, except its auditors and other advisors in
connection with this Agreement who need to know such information. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained for a period of three years from the date hereof and, if
requested by or on behalf of the Company, Parent and Purchaser will, and will
use all reasonable efforts to cause their auditors and other agents to, return
to the Company or destroy all copies of written information furnished by the
Company to Parent and Purchaser or their agents, representatives or advisors.
(c) No investigation pursuant to this Section 6.4 shall affect any
representations or warranties of the parties hereto contained herein or the
conditions to the obligations of the parties hereto.
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SECTION 6.5 No Solicitation of Transactions. The Company, its
-------------------------------
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to an Acquisition
Proposal. The term "Acquisition Proposal" shall mean any acquisition or
--------------------
exchange of all or any material portion of the assets of, any equity interest
in, or any merger, reorganization, consolidation, or business combination or
similar transaction involving the Company or any of its subsidiaries or any
proposal with respect thereto. Neither the Company nor any of its affiliates,
nor any of its or their respective officers, directors, employees,
representatives or agents, shall, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent and Purchaser, any affiliate or associate of Parent and
Purchaser or any designees of Parent or Purchaser) concerning an Acquisition
Proposal. Notwithstanding the preceding sentence, if, upon the advice of
counsel and its financial advisor, the Company's Board of Directors determines
in good faith that failing to take any of the following actions would constitute
a breach of the Company's Board of Directors' fiduciary duty under applicable
law, the Company may, directly or indirectly, (i) furnish information and
access, in each case only in response to a request for such information or
access to any person made after the date hereof which was not encouraged,
solicited or initiated by the Company or any of its affiliates or any of its or
their respective officers, directors, employees, representatives or agents after
the date hereof, pursuant to appropriate confidentiality agreements, and (ii)
participate in discussions and negotiate with such entity or group concerning an
Acquisition Proposal if such entity or group has submitted a written proposal to
the Company's Board of Directors relating to any such Acquisition Proposal. The
Company's Board of Directors shall provide a copy and/or terms of any
Acquisition Proposal (whether oral or written) to Parent immediately after
receipt thereof, unless the Company's Board of Directors determines that
providing such a copy and/or terms would constitute a breach of the Company's
Board of Directors' fiduciary duty under applicable law. Notwithstanding the
foregoing, the Company shall notify Parent immediately if any Acquisition
Proposal (whether oral or written) is made and shall keep Parent promptly
advised of all developments which could reasonably be expected to culminate in
the Company's Board of Directors withdrawing, modifying or amending its
recommendation of the Offer, the Merger and the other transactions contemplated
by this Agreement. Nothing in this Section 6.5 shall prevent the Company's
Board of Directors from taking, and disclosing to the Company's stockholders, a
position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to any tender offer; provided, however, that the Company's Board
-------- -------
of Directors shall not recommend that the stockholders of the Company tender
their Shares in connection with any such tender offer unless the
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Company's Board of Directors, upon the advice of counsel and its financial
advisor, determines in good faith that failing to take such action would
constitute a breach of the Company's Board of Directors' fiduciary duty under
applicable law. The Company agrees not to release any third party from, or
waive any provisions of, any confidentiality or standstill agreement to which
the Company is a party, unless the Board determines that failing to release such
third party or waive such provisions would constitute a breach of the Company's
Board of Directors' fiduciary duty under applicable law.
SECTION 6.6 Employee Benefits Matters. Parent shall cause Purchaser
-------------------------
to honor all employment, consulting and other arrangements of the Company with
individuals relating to employment and employee benefits which are listed on
Section 6.6 of the Disclosure Schedule.
SECTION 6.7 Directors' and Officers' Indemnification and Insurance.
------------------------------------------------------
From and after the Effective Time, Parent shall cause Purchaser to indemnify and
hold harmless all past and present officers and directors of the Company and of
its subsidiaries to the full extent such persons may be indemnified by the
Company pursuant to the Company's Certificate of Incorporation and By-laws as in
effect on the date of this Agreement for acts or omissions occurring at or prior
to the Effective Time, and shall advance reasonable litigation expenses incurred
by such officers and directors in connection with defending any action arising
out of such acts or omissions.
SECTION 6.8 No Amendment to the Rights Agreement. The Company
------------------------------------
covenants and agrees that it will not amend the Rights Agreement, except as
expressly contemplated by this Agreement.
SECTION 6.9 Further Action; Reasonable Efforts. Upon the terms and
----------------------------------
subject to the conditions hereof, each of the parties hereto shall use its
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including but not limited to (i)
cooperation in the preparation and filing of the Offer Documents, the Schedule
14D-9, the Proxy Statement, any required filings under the HSR Act and other
laws described in clause (i) of the exception in Section 3.5(b), and any
amendments to any thereof and (ii) using its reasonable efforts to make all
required regulatory filings and applications and to obtain 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 the consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Offer and
the Merger. The Company will cooperate with Parent and Purchaser with respect
to consummating the financing for the Offer and the Merger. In case at any time
after the Effective Time any further
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action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use
their reasonable efforts to take all such necessary action.
SECTION 6.10 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 Offer or the Merger and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with its
securities exchange.
SECTION 6.11 Warrants. Parent agrees to cause the Surviving
--------
Corporation to, and the Surviving Corporation shall, make appropriate lawful
provision so that, following the Effective Time, each holder of a Warrant will
be entitled to receive upon exercise of such Warrant in accordance with the
terms thereof (including payment of the Exercise Price (as defined in each
Warrant)) the Per Share Amount in cash.
SECTION 6.12 Delivery of Director Agreements. The Company shall
-------------------------------
deliver to Parent, on or prior to the initial expiration date of the Offer, a
copy of an amendment to each Company directors' Indemnity Agreement, executed by
the Company and such director, pursuant to which the provisions of Section 3(b)
of such Indemnity Agreement will cease to be effective upon consummation of a
Change in Control (as defined in each Indemnity Agreement) upon the consummation
of the transactions contemplated by this Agreement.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
----------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
- ------
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) If required by Delaware Law, this Agreement shall have been
approved by the affirmative vote of the stockholders of the Company by the
requisite vote in accordance with the Company's Certificate of
Incorporation and Delaware Law (which the Company has represented shall be
solely the affirmative vote of a majority of the outstanding Shares).
(b) No statute, rule, regulation, executive order, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent)
shall have been enacted, entered, promulgated or enforced by any United
States or state court or governmental authority which
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<PAGE>
prohibits, restrains, enjoins or restricts the consummation of the Merger.
(c) Any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired.
(d) Purchaser shall have purchased Shares pursuant to the Offer in a
number sufficient to satisfy the Minimum Condition.
SECTION 7.2 Conditions to Obligations of Purchaser. The obligation
--------------------------------------
of Purchaser to effect the Merger is also subject to the satisfaction or waiver
by Purchaser at or prior to the Effective Time of the following conditions:
(a) The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Effective Time, unless such non-performance occurs following the
appointment or election of Purchaser's designees to a majority of the
positions on the Company's Board of Directors. In addition, Purchaser
shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to
such effect.
(b) The Rights shall not have become nonredeemable, exercisable,
distributed or triggered pursuant to the terms of the Rights Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
-----------
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company:
(a) By mutual written consent of Parent, Purchaser and the Company;
(b) By Parent or the Company, if the Effective Time shall not have
occurred on or before 150 days from the date hereof (the "Outside Date");
------------
provided that the right to terminate this Agreement under this clause (b)
--------
shall not be available to any party whose misrepresentation in this
Agreement or whose failure to perform any of its covenants and agreements
or to satisfy any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date;
(c) By Parent or the Company if any court of competent jurisdiction
or other governmental body located or having
-31-
<PAGE>
jurisdiction within the United States shall have issued a final order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the Offer or the Merger and such order, decree,
ruling or other action is or shall have become final and nonappealable;
(d) By Parent if due to an occurrence or circumstance which would
result in a failure to satisfy any of the Offer Conditions, Purchaser shall
have (i) failed to commence the Offer as provided in Section 1.1, (ii)
terminated the Offer or (iii) failed to pay for Shares pursuant to the
Offer on or prior to the Outside Date;
(e) By the Company if (i) there shall not have been a material breach
of any representation, warranty, covenant or agreement on the part of the
Company, and Purchaser shall have (A) terminated the Offer or (B) failed to
pay for Shares pursuant to the Offer on or prior to the Outside Date or
(ii) the Company receives an Acquisition Proposal on terms the Company's
Board of Directors, upon the advice of counsel and its financial advisor,
determines in good faith to be more favorable to the Company's stockholders
than the terms of the Offer and the Merger, and the Board, upon the advice
of counsel and its financial advisor, determines in good faith, that it is
legally required for the discharge of its fiduciary duties, (A) not to
continue to recommend that holders of Shares or Warrants accept the Offer
and tender their Shares or Warrants pursuant to the Offer and (B) to accept
such Acquisition Proposal; provided, however, that the Company shall not be
-------- -------
permitted to terminate this Agreement pursuant to this Section 8.1(e)(ii)
unless it has provided Parent and Purchaser with two business days prior
written notice of its intent to so terminate this Agreement together with a
detailed summary of the terms and conditions (including proposed financing,
if any) of such Acquisition Proposal; provided, further, that Parent shall
-------- -------
receive the fee set forth in Section 8.3 immediately prior to any
termination pursuant to this Section 8.1(e)(ii) by wire transfer in same
day funds; or
(f) By Parent prior to the appointment or election of Purchaser's
designees to a majority of the positions on the Company's Board of
Directors if (i) there shall have been a breach of any representation or
warranty on the part of the Company which would either have a Material
Adverse Effect on the Company or which would prevent the consummation of
the Offer, (ii) there shall have been a breach of any covenant or agreement
on the part of the Company which would either have a Material Adverse
Effect or prevent the consummation of the Offer, which shall not have been
cured prior to the earlier of (A) 10 business days following notice of such
breach and (B) two business days prior to the date on which the Offer
expires, or (iii) the Board shall have withdrawn or modified (including by
amendment of the Schedule 14D-9)
-32-
<PAGE>
in a manner adverse to Purchaser its approval or recommendation of the
Offer, this Agreement or the Merger or the Company's Board of Directors,
upon request by Parent, shall fail to reaffirm such approval or
recommendation within two business days of such request or shall have
recommended another offer or transaction, or shall have resolved to effect
any of the foregoing.
SECTION 8.2 Effect of Termination. In the event of the termination
---------------------
of this Agreement pursuant to Section 8.1, this Agreement, except for the
provisions of Sections 6.4(b), 8.3, 8.4 and 9.1, shall forthwith become void and
there shall be no liability on the part of any party hereto; provided, however,
-------- -------
that nothing herein shall relieve any party from liability for any breach
hereof.
SECTION 8.3 Termination Fee. If (x)(i) after the date hereof, any
---------------
corporation, partnership, person, other entity or group (as defined in Section
13(d)(3) of the Exchange Act) other than Parent or Purchaser or any of their
respective affiliates shall become the beneficial owner of 10% or more of the
outstanding Shares or to the extent there exists a holder of 10% or more of the
outstanding Shares as of the date hereof, such holder purchases any additional
shares of stock of the Company, and (ii) the Minimum Condition shall not have
been satisfied and the Offer is terminated in accordance with this Agreement
without the Purchase of any Shares thereunder, or (y) Parent shall have
terminated this Agreement pursuant to Section 8.1(f)(iii) hereof, then the
Company, if requested by Parent, shall promptly, but in no event later than two
days after the date of such request, pay Parent a fee of $10,000,000 plus
accountable expenses which amount shall be payable in same day funds, or if the
Company shall have terminated this Agreement pursuant to Section 8.1(e)(ii)
hereof, then the Company shall, in accordance with Section 8.1(e)(ii), pay
Parent prior to such termination a fee of $10,000,000 plus accountable expenses
which amount shall be payable in same day funds. The Company acknowledges that
the agreements contained in this Section 8.3 are an integral part of the
transactions contemplated in this Agreement, and that, without such agreements,
Parent and Purchaser would not enter into this Agreement; accordingly, if the
Company fails to pay promptly the amount due pursuant to this Section 8.3, and,
in order to obtain such payment, Parent or Purchaser commences a suit which
results in a judgment against the Company for the fee set forth in this Section
8.3, the Company shall pay to Parent or Purchaser its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on the amount of the fee at the prime lending rate for money borrowed of Fleet
Bank of New York on the date such payment was required to be made.
SECTION 8.4 Fees and Expenses. Except as provided in Section 8.3,
-----------------
each party shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
-33-
<PAGE>
SECTION 8.5 Amendment. Subject to Section 6.3, this Agreement may be
---------
amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the stockholders of the
- -------- -------
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share shall be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.6 Waiver. Subject to Section 6.3, at any time prior to the
------
Effective Time, any party hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall
be valid if set forth in an instrument in writing signed by the party or parties
to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements. The representations, warranties and agreements in this Agreement
- ----------
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Sections 8.1(a), 8.1(c), 8.1(e)(ii) or 8.1(f)(iii), as the case may
be, except that the agreements set forth in Article II, Section 6.6, Section
6.7, Section 6.9 and Article IX shall survive the Effective Time indefinitely
and those set forth in Section 6.4, Section 8.3, Section 8.4 and Article IX
shall survive termination indefinitely.
SECTION 9.2 Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
if to Parent or Purchaser:
Columbus McKinnon Corporation
140 John James Audobon Pkwy.
Amherst, New York 14228
Attention: President and Chief Executive Officer
Telecopier: (716) 689-5598
-34-
<PAGE>
with a copy to:
Phillips, Lytle, Hitchcock, Blaine & Huber
3400 Marine Midland Center
Buffalo, New York 14203
Attention: Frederick G. Attea, Esq.
Telecopier: (716) 852-6100
if to the Company:
Yale International, Inc.
One Morrocroft Centre
6805 Morrison Boulevard, Suite 450
Charlotte, North Carolina 28211
Attention: President and Chief Executive Officer
Telecopier: (704) 367-1854
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Philip T. Ruegger, Esq.
Telecopier: (212) 455-2502
SECTION 9.3 Certain Definitions. For purposes of this Agreement, the
-------------------
term:
(a) "affiliate" of a person means a person that directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(b) "beneficial owner" with respect to any Shares means a person who
----------------
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 of the Exchange Act) has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise,
or (B) the right to vote pursuant to any agreement, arrangement or
understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares;
-35-
<PAGE>
(c) "control" (including the terms "controlled by" and "under common
------- ------------- ------------
control with") means the possession, directly or indirectly or as trustee
------------
or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(d) "generally accepted accounting principles" means the generally
----------------------------------------
accepted accounting principles set forth in the opinions and pronouncements
of the Accounting Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity
as may be approved by a significant segment of the accounting profession in
the United States, in each case applied on a basis consistent with the
manner in which the audited financial statements for the fiscal year of the
Company ended December 31, 1993 were prepared;
(e) "knowledge" means knowledge after reasonable inquiry;
---------
(f) "person" means an individual, corporation, partnership,
------
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(g) "subsidiary" or "subsidiaries" of the Company, the Surviving
---------- ------------
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holder
of which is generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal
entity.
SECTION 9.4 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
-36-
<PAGE>
SECTION 9.5 Entire Agreement; Assignment. This Agreement constitutes
----------------------------
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
This Agreement shall not be assigned by operation of law or otherwise, except
that Parent and Purchaser may assign all or any of their respective rights and
obligations hereunder to any direct or indirect wholly owned subsidiary or
subsidiaries of Parent, provided that no such assignment shall relieve the
--------
assigning party of its obligations hereunder if such assignee does not perform
such obligations.
SECTION 9.6 Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.7 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.8 Headings. The descriptive headings contained in this
--------
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.10 Disclosure Schedule. For purposes of this Agreement,
-------------------
any information disclosed in the Disclosure Schedule shall be deemed to be a
representation and warranty of the Company that such information is accurate in
all material respects, and any information disclosed in one section of the
Disclosure Schedule shall be deemed to be disclosed in all sections of the
Disclosure Schedule.
-37-
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
COLUMBUS MCKINNON CORPORATION
By:/s/ H.P. Ladds, Jr.
---------------------------
Name: H.P. Ladds, Jr.
Title: President
L ACQUISITION CORPORATION
By:/s/ R.L. Montgomery
--------------------------
Name: R.L. Montgomery
Title: Treasurer
SPRECKELS INDUSTRIES, INC.
By:/s/ Gary L. Tessitore
----------------------------
Name: Gary L. Tessitore
Title: President and Chief
Executive Officer
-38-
<PAGE>
ANNEX A
-------
Offer Conditions
----------------
The capitalized terms used in this Annex A have the meanings set forth
in the attached Agreement, except that the term "Merger Agreement" shall be
----------------
deemed to refer to the attached Agreement and the term "Commission" shall be
----------
deemed to refer to the SEC.
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for any Shares
tendered pursuant to the Offer, and may postpone the acceptance for payment or,
subject to the restriction referred to above, payment for any Shares tendered
pursuant to the Offer, and may amend or terminate the Offer (whether or not any
Shares have theretofore been purchased or paid for) if, prior to the expiration
of the Offer, (i) a number of shares of Class A Common Stock which, together
with any Shares owned by Parent or Purchaser, constitutes at least 51% of the
voting power (determined on a fully-diluted basis, including the exercise in
full of all options and warrants outstanding, other than Warrants validly
tendered and accepted for payment pursuant to the Offer), on the date of
purchase, of all the securities of the Company entitled to vote generally in the
election of directors or in a merger shall not have been validly tendered and
available for acceptance pursuant to the Offer (the "Minimum Condition"), (ii)
-----------------
Purchaser is not, in its reasonable discretion, satisfied that (x) the Rights
will not become exercisable upon consummation of the Offer, (y) upon
consummation of the Offer, the restrictions contained in Section 203 of Delaware
Law will not apply to the Merger or (z) no supermajority vote will be required
by the Company's Certificate of Incorporation to approve the Merger or, after
consummation of the Offer, Purchaser will otherwise possess sufficient voting
power to effect the Merger without the affirmative vote of any person other than
Purchaser or (iii) at any time on or after August 24, 1996 and prior to the
acceptance for payment of Shares, any of the following conditions occurs or has
occurred or Purchaser makes a good faith determination that any of the following
conditions has occurred:
(a) there shall have been any action or proceeding brought by any
governmental authority before any federal or state court, or any order or
preliminary or permanent injunction entered in any action or proceeding
before any federal or state court or governmental, administrative or
regulatory authority or agency, located or having jurisdiction within the
United States, or any other action taken, proposed or threatened, or
statute, rule, regulation, legislation, interpretation, judgment or order
proposed, sought, enacted, entered, enforced, promulgated, amended,
<PAGE>
issued or deemed applicable to Purchaser, the Company or any subsidiary or
affiliate of Purchaser or the Company or the Offer or the Merger, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency located or having jurisdiction within the
United States, which could reasonably be expected to have the effect of:
(i) making illegal, or otherwise directly or indirectly restraining or
prohibiting or making materially more costly, the making of the Offer, the
acceptance for payment of, payment for, or ownership, directly or
indirectly, of some of or all the Shares by Parent or Purchaser, the
consummation of any of the transactions contemplated by the Merger
Agreement or materially delaying the Merger; (ii) prohibiting or materially
limiting the ownership or operation by the Company or any of its
subsidiaries, or by Parent, Purchaser or any of Parent's subsidiaries of
all or any material portion of the business or assets of the Company or any
of its material subsidiaries or Parent or any of its subsidiaries, or
compelling Purchaser, Parent or any of Parent's subsidiaries to dispose of
or hold separate all or any material portion of the business or assets of
the Company or any of its material subsidiaries or Parent or any of its
subsidiaries, as a result of the transactions contemplated by the Offer or
the Merger Agreement; (iii) imposing or confirming limitations on the
ability of Purchaser, Parent or any of Parent's subsidiaries effectively to
acquire or hold or to exercise full rights of ownership of Shares,
including, without limitation, the right to vote any Shares acquired or
owned by Parent or Purchaser or any of Parent's subsidiaries on all matters
properly presented to the stockholders of the Company, including, without
limitation, the adoption and approval of the Merger Agreement and the
Merger or the right to vote any shares of capital stock of any subsidiary
(other than immaterial subsidiaries) directly or indirectly owned by the
Company; or (iv) requiring divestiture by Parent or Purchaser, directly or
indirectly, of any Shares;
(b) 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 in the United States, (ii) any
extraordinary or material adverse change in the market price of the Shares
or in the United States securities or financial markets generally,
including, without limitation, a decline of at least 20% in either the Dow
Jones Average of Industrial Stocks or the Standard & Poor's 500 index from
the date hereof, (iii) any material adverse change or any condition, event
or development involving a prospective material adverse change in United
States or other material international currency exchange rates or a
suspension of, or limitation on, the markets therefor, (iv) a declaration
of a banking moratorium or any suspension of payments in respect
A-2
<PAGE>
of banks in the United States, or (v) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States which would have a Material Adverse
Effect or materially adversely affect (or materially delay) the
consummation of the Offer;
(c) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this Section as set forth in Rule 13d-3 promulgated under the Exchange Act)
of 15% or more of the outstanding Shares has been acquired by any
corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or any of its
affiliates and other than any Grandfathered Person (as presently defined)
so long as such person remains a Grandfathered Person (as presently
defined) or (ii) (A) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Purchaser the approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any takeover proposal or any
other acquisition of Shares other than the Offer and the Merger, (B) any
such corporation, partnership, person or other entity or group shall have
entered into a definitive agreement or an agreement in principle with the
Company with respect to a tender offer or exchange offer for any Shares or
a merger, consolidation or other business combination with or involving the
Company or any of its subsidiaries or (C) the Board of Directors of the
Company or any committee thereof shall have resolved to do any of the
foregoing;
(d) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality shall
not be true and correct or any such representations and warranties that are
not so qualified shall not be true and correct in any material respect, in
each case as if such representations and warranties were made at the time
of such determination;
(e) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
(f) the Merger Agreement shall have been terminated in accordance
with its terms or the Offer shall have been amended or terminated with the
consent of the Company;
(g) any waiting periods under the HSR Act applicable to the purchase
of Shares pursuant to the Offer shall not have expired or been terminated,
or any material approval,
A-3
<PAGE>
permit, authorization, consent or waiting period of any domestic, foreign
or supranational governmental, administrative or regulatory agency
(federal, state, local, provincial or otherwise) located or having
jurisdiction within the United States or any country or economic region in
which either the Company or Parent, directly or indirectly, has material
assets or operations, shall not have been obtained or satisfied; or
(h) the Company and Purchaser (or any affiliate of Purchaser) shall
have entered into an agreement (which by its terms supersedes the
Agreement) providing for the acquisition of the Company by Purchaser or any
affiliate of Purchaser by merger or other similar business combination, or
by purchase of shares of capital stock or assets of the Company, or the
Company and Purchaser shall have entered into any other agreement pursuant
to which it is agreed that the Offer will be terminated;
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above, makes it inadvisable to proceed with the Offer or with
such acceptance for payment of or payment for Shares or to proceed with the
Merger.
The foregoing conditions are for the sole benefit of Purchaser and may
be asserted by Purchaser regardless of the circumstances giving rise to any such
condition or may be waived by 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 Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
A-4
<PAGE>
EXHIBIT 6(b)
AMENDMENT TO INDEMNITY AGREEMENT
--------------------------------
THIS AMENDMENT TO INDEMNITY AGREEMENT (this "Amendment") is entered into as
---------
of August 24, 1996, between SPRECKELS INDUSTRIES, INC., a Delaware corporation
known as YALE INTERNATIONAL, INC. (the "Company"), and __________________
-------
("Indemnitee"), amending the Indemnity Agreement, dated as of __________ __,
- ------------
199 , as amended from time to time (the "Indemnity Agreement").
- -------------------
W I T N E S S E T H:
WHEREAS, the Company proposes to enter into an Agreement and Plan of
Merger, to be dated August 24, 1996, among Columbus McKinnon Corporation, a New
York corporation ("CMC"), L Acquisition Corporation, a Delaware corporation and
---
a wholly owned subsidiary of CMC and the Company (the "Merger Agreement"); and
----------------
WHEREAS, under Section 3(b) of the Indemnity Agreement, the Company is
required to obtain an irrevocable standby letter of credit meeting the
requirements set forth in Section 3(b) at the time of any Change in Control (as
defined in the Indemnity Agreement) and
WHEREAS, in connection with the transactions contemplated by the Merger
Agreement, the Company and Indemnitee desire to amend the Indemnity 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 Indemnity Agreement and used
-------------
herein shall have the meanings given to them in the Indemnity Agreement.
2. Amendments to Section 3. (a) Section 3(b) of the Indemnity Agreement
-----------------------
is hereby deleted in its entirety.
(b) Section 3(c) of the Indemnity Agreement is hereby deleted in its
entirety.
3. Effectiveness. This Amendment shall be deemed effective only upon a
-------------
Change in Control arising upon the consummation of the transactions contemplated
by the Merger Agreement.
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 may be
executed in any number of counterparts, each of such counterparts shall for all
purposes
<PAGE>
2
be deemed an original and all such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
SPRECKELS INDUSTRIES, INC.
By:
------------------------
Title:
INDEMNITEE
By:
------------------------
Name:
<PAGE>
EXHIBIT 7(a)
YALE YALE INTERNATIONAL, INC.
September 3, 1996
Dear Yale Stockholder:
We are pleased to inform you that, pursuant to the Agreement and Plan of
Merger dated August 24, 1996 (the "Merger Agreement") among Yale
International, Inc., Columbus McKinnon Corporation ("Columbus McKinnon") and L
Acquisition Corporation, a wholly owned subsidiary of Columbus McKinnon (the
"Purchaser"), Columbus McKinnon and the Purchaser have commenced a tender
offer for all of the outstanding shares of Yale's common stock and all of the
outstanding warrants to purchase Yale common stock. In the tender offer,
stockholders who tender their Yale shares will receive $24 per share in cash
and warrantholders who tender their Yale warrants will receive for each
warrant an amount in cash equal to the excess of the $24 per share tender
offer price over the exercise price of the warrant.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE COLUMBUS
MCKINNON TENDER OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF
YALE'S STOCKHOLDERS AND WARRANTHOLDERS, AND RECOMMENDS THAT ALL STOCKHOLDERS
AND WARRANTHOLDERS 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
Yale's management to enhance stockholder 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 Yale 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; Yale's business, financial condition,
results of operations and future prospects; management's recommendation of the
tender offer and the Merger Agreement, and its assessment of whether an
alternative transaction would be obtainable at a higher price in the near
future; the presentation by, and opinion of, Salomon Brothers Inc, the
Company's financial advisor; and Yale's stock price, including the
approximately 24% premium that the $24 per share price in the tender offer
represents over the closing price of Yale's shares on the Nasdaq National
Market on August 23, 1996, the last trading day prior to the public
announcement of the Merger Agreement, and the approximately 45% premium over
the price offered by American Enterprises, L.L.C. and its affiliate in their
tender offer for Yale's shares and warrants which was commenced on July 19,
1996 and which the Board previously rejected.
Salomon Brothers Inc, the Company's financial advisor, has rendered to the
Board of Directors its written opinion that, as of the date of such opinion,
the $24 per share in cash to be received by the holders of Yale's common stock
pursuant to the Columbus McKinnon tender offer and the merger is fair, from a
financial point of view, to such holders. The full
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text of Salomon Brothers' opinion, dated August 23, 1996, which sets forth the
assumptions made, matters considered and limitations on the review undertaken
by Salomon Brothers, is included as Annex A to the attached Schedule 14D-9 and
should be read in its entirety.
The Columbus McKinnon tender offer is conditioned upon, among other things,
there being validly tendered and not withdrawn prior to the expiration of the
tender offer a number of shares of Yale common stock which, when added to any
shares owned by Columbus McKinnon, constitutes at least 51% of the voting
power (determined on a fully-diluted basis, including the exercise in full of
all outstanding options and warrants to purchase Yale common stock, other than
any such warrants validly tendered and accepted for payment pursuant to the
tender offer) of all Yale 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 stockholder approval, by a merger in which
non-tendering stockholders will receive the same consideration for each Yale
share as was paid in the tender offer and Yale will become a wholly owned
subsidiary of Columbus McKinnon.
Enclosed with this letter is a copy of Yale'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. You are urged to read and carefully consider the enclosed Schedule
14D-9 and your individual circumstances.
You also should read and carefully consider Columbus McKinnon's Offer to
Purchase and related materials, including the letter of transmittal to be used
for tendering your Yale shares, which Columbus McKinnon has distributed. 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 Yale shares.
If you have any questions or require assistance in tendering your shares,
you may contact Georgeson & Company, Inc., which is assisting Yale in
connection with the tender offer, at 1-800-223-2064 (toll-free). Please note
that the tender offer is scheduled to expire at 12:00 midnight, New York City
time, on Friday, September 27, 1996, unless extended.
We thank you for your continued support.
Gary L. Tessitore
President and Chief Executive
Officer
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EXHIBIT 9
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
212-783-7000
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SALOMON BROTHERS
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August 23, 1996
Board of Directors
Yale International, Inc.
6805 Morrison Boulevard, Suite 450
One Morrocroft Centre
Charlotte, North Carolina 28211
Ladies and Gentlemen:
You have requested our opinion as investment bankers as to the fairness, from
a financial point of view, to the holders of shares of Class A Common Stock, par
value $0.01 per share (the "Shares"), of Yale International, Inc. ("Yale" or the
"Company") of the consideration to be received by such holders in the proposed
acquisition of the Company by Columbus McKinnon Corp. ("Acquiror") pursuant to
the Agreement and Plan of Merger (the "Agreement"), dated August 24, 1996, among
Acquiror, L Acquisition Corporation and the Company.
As more specifically set forth in the Agreement, L Acquisition Corporation
will commence a tender offer (the "Proposed Tender Offer") to purchase all
outstanding Shares, including the common stock purchase rights (the "Rights")
associated therewith, at a price of $24.00 per Share (and associated Right) (the
"Per Share Amount"). Following consummation of the Proposed Tender Offer, L
Acquisition Corporation will be merged with and into the Company (the "Proposed
Merger" and, collectively with the Proposed Tender Offer, the "Proposed
Transaction") and each then outstanding Share (other than Shares held in the
treasury of the Company, Shares owned by Acquiror, L Acquisition Corporation or
any other direct or indirect subsidiary of Acquiror or of the Company, and
Shares as to which appraisal rights have been properly exercised under
applicable law) will be converted, with the associated Right, into the right to
receive, in cash, the Per Share Amount, or any higher price that may be paid
pursuant to the Proposed Tender Offer (the "Merger Consideration").
As you are aware, we have acted as financial advisor to the Board of Directors
of the Company in connection with the Proposed Transaction and will receive a
fee for our services a substantial portion of which is contingent upon
consummation of the Proposed Transaction. In addition, in the ordinary course of
our business, we may actively trade the debt and equity securities of both the
Company and Acquiror for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
In connection with rendering our opinion, we have reviewed and analyzed
material bearing upon the financial and operating condition and prospects of the
Company including, among other things, the following: (i) the final draft of the
Agreement; (ii) certain publicly available information concerning Yale,
including the Annual Reports on Form 10-K
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SALOMON BROTHERS INC
2
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SALOMON BROTHERS
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of the Company for the years ended June 30, 1994 and June 30, 1995, the
Quarterly Reports on Form 10-Q of the Company for the quarters ended September
30, 1995, December 31, 1995 and March 31, 1996 and the Current Report on Form 8-
K of the Company filed on April 19, 1996; (iii) certain internal information of
the Company, primarily financial in nature (including projections, forecasts and
analyses prepared by or on behalf of the Company's management), concerning the
business, assets, liabilities, operations and prospects of the Company furnished
to us by the Company for purposes of our analysis; (iv) certain publicly
available information concerning the trading of, and the trading market for, the
Shares; (v) certain publicly available information with respect to certain
publicly traded companies that we believe to be comparable to the Company and
the trading markets for certain of such other companies' securities; and (vi)
certain publicly available information concerning the nature and terms of
certain other acquisition transactions that we consider relevant to our inquiry.
We have also considered such other information, financial studies, analyses,
investigations and financial, economic and market criteria that we deemed
relevant. We have also met with certain officers and employees of the Company to
discuss matters we believe relevant to our inquiry including the past and
current business operations, financial condition and prospects of the Company.
In our review and analysis and in arriving at our opinion, we have assumed and
relied upon the accuracy and completeness of all of the financial and other
information provided to us or publicly available and have neither attempted
independently to verify nor assumed any responsibility for verifying any of such
information. With respect to financial projections and forecasts, we have
assumed that they were reasonably prepared and reflect the best currently
available estimates and judgment of the Company's management as to the future
financial performance of the Company and we express no view with respect to such
projections or forecasts or the assumptions on which they were based. We have
not made or obtained or assumed any responsibility for making or obtaining any
independent evaluations or appraisals of any of the Company's assets, properties
or facilities, nor have we been furnished with any such evaluations or
appraisals.
In conducting our analysis and arriving at our opinion as expressed herein, we
have considered such financial and other factors as we have deemed appropriate
under the circumstances including, among others, the following: (i) the
historical and current financial position and results of operations of the
Company; (ii) the business prospects of the Company; (iii) the historical and
current market for the Shares and for the equity securities of certain other
companies that we believe to be comparable to the Company; and (iv) the nature
and terms of certain other acquisition transactions that we believe to be
relevant. We have also taken into account our assessment of general economic,
market and financial conditions as well
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SALOMON BROTHERS INC
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SALOMON BROTHERS
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as our experience in connection with similar transactions and securities
valuation generally. We have also considered the process that resulted in the
negotiation of the Proposed Transaction, including discussions with other
potential acquirors. Our opinion necessarily is based upon conditions as they
exist and can be evaluated on the date hereof and we assume no responsibility to
update or revise our opinion based upon circumstances or events occurring after
the date hereof. Our opinion is for the sole benefit of the Board of Directors
in its consideration of the Proposed Transaction and is, in any event, limited
to the fairness, from a financial point of view, of the consideration to be
received by the holders of Shares in the Proposed Tender Offer and the Proposed
Merger and does not address the Company's underlying business decision to effect
the Proposed Transaction or constitute a recommendation to any holder of Shares
or Warrants as to whether such holder should tender Shares or Warrants in the
Proposed Tender Offer or to any holder of Shares as to how such holder should
vote with respect to the Proposed Merger, if such a vote is taken.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that as of the date hereof, the consideration to be received by the
holders of Shares in the Proposed Tender Offer and the Proposed Merger is fair,
from a financial point of view, to such holders.
Very truly yours,
/s/ Salomon Brothers Inc.
