<PAGE> 1
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------------
SAFETY 1(ST), INC.
(Name of Subject Company)
------------------------------------
DIAMOND ACQUISITION SUBSIDIARY INC.
DOREL INDUSTRIES INC.
(OFFEROR)
(Names of Filing Persons (identifying status as offeror, issuer or other
person))
------------------------------------
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
------------------------------------
786475103
(CUSIP Number of Class of Securities)
------------------------------------
JEFFREY SCHWARTZ
DOREL INDUSTRIES INC.
1255 GREENE AVENUE, SUITE 300
WESTMOUNT, QUEBEC, CANADA H3Z 2A4
(514) 934-3034
(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications on Behalf of filing persons)
------------------------------------
Copy to:
BRUCE CZACHOR
SHEARMAN & STERLING
199 BAY STREET, SUITE 4405
TORONTO, ONTARIO
M5L 1E8
(416) 360-8484
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- -------------------------------------------------------------------------------------------------
$141,714,971 $28,343
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</TABLE>
* Estimated for purposes of calculating the amount of the filing fee only.
Calculated by multiplying $13.875, the per share tender offer price, by
8,680,682, number of currently outstanding shares of Common Stock sought in
the Offer plus $21,270,507.60, the amount paid to option holders.
** Calculated as 1/50 of 1% of the transaction value.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
</TABLE>
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes to designate any transactions to which the statement
relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
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<PAGE> 2
This Tender Offer Statement on Schedule TO (this "Schedule TO"), is filed
by Diamond Acquisition Subsidiary Inc., a Massachusetts corporation
("Purchaser") and a wholly owned subsidiary of Dorel Industries Inc., a Quebec,
Canada corporation ("Parent"). This Schedule TO relates to the offer by
Purchaser to purchase all outstanding shares of Common Stock, par value $.01 per
share (the "Shares"), of Safety 1(st), Inc., a Massachusetts corporation (the
"Company"), at a purchase price of $13.875 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated May 8, 2000 (the "Offer to Purchase") and in the related Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2)
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer"). The information set forth in the Offer to Purchase and
the related Letter of Transmittal is incorporated herein by reference with
respect to Items 1-9 and 11 of this Schedule TO. The Agreement and Plan of
Merger, dated as of April 22, 2000, among Parent, Purchaser and the Company, a
copy of which is attached as Exhibit (d)(1) hereto, the Commitment Letter, dated
April 18, 2000, between Parent and Royal Bank of Canada, a copy of which is
attached as Exhibit (b)(1), hereto and the Tender Agreement, dated as of April
22, 2000, among Parent, Purchaser and Michael Lerner, Michael S. Bernstein, DB
Capital Partners, Inc. (formerly BT Capital Partners, Inc.), Mark Owens and
Bear, Stearns & Co., Inc., a copy of which is attached as Exhibit (d)(3) hereto,
are incorporated herein by reference with respect to Items 5, 7 and 11 of this
Schedule TO, respectively.
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ITEM 10. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 12. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated May 8, 2000.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter dated May 8, 2000, from Innisfree M&A Incorporated to
Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees to Clients.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement published in The Wall Street
Journal on May 8, 2000.
(a)(8) Joint Press Release issued by Parent and the Company on
April 24, 2000 (incorporated by reference from Parent's
Schedule TO filed with the Commission on April 24, 2000).
(b)(1) Commitment Letter dated April 18, 2000 between Parent and
Royal Bank of Canada.
(d)(1) Agreement and Plan of Merger, dated as of April 22, 2000,
among Parent, Purchaser and the Company.
(d)(2) Confidentiality Agreement, dated as of February 17, 2000,
between Parent and the Company.
(d)(3) Tender Agreement, dated as of April 22, 2000, among Parent,
Purchaser and Michael Lerner, Michael S. Bernstein, DB
Capital Partners, Inc. (formerly BT Capital Partners, Inc.),
Mark Owens and Bear, Stearns & Co., Inc.
(g) None.
(h) None.
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Not applicable.
</TABLE>
2
<PAGE> 3
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: May 8, 2000
DIAMOND ACQUISITION SUBSIDIARY INC.
/s/ JEFFREY SCHWARTZ
By:
---------------------------------------
Name: Jeffrey Schwartz
Title: President and Treasurer
3
<PAGE> 4
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: May 8, 2000
DOREL INDUSTRIES INC.
/s/ JEFFREY SCHWARTZ
By:
---------------------------------------
Name: Jeffrey Schwartz
Title: Vice-President, Finance
4
<PAGE> 5
EXHIBIT INDEX
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EXHIBIT
NO.
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(a)(1) Offer to Purchase dated May 8, 2000.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter dated May 8, 2000 from Innisfree M&A Incorporated to
Brokers,
Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees to Clients.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement published in The Wall Street
Journal on May 8, 2000.
(a)(8) Joint Press Release issued by Parent and the Company on
April 24, 2000 (incorporated by reference from Parent's
Schedule TO filed with the Commission on April 24, 2000).
(b)(1) Commitment Letter dated April 18, 2000 between Parent and
Royal Bank of Canada.
(d)(1) Agreement and Plan of Merger, dated as of April 22, 2000,
among Parent, Purchaser and the Company.
(d)(2) Confidentiality Agreement, dated as of February 17, 2000,
between Parent and the Company.
(d)(3) Tender Agreement, dated as of April 22, 2000, among Parent,
Purchaser and Michael Lerner, Michael S. Bernstein, DB
Capital Partners, Inc. (formerly BT Capital Partners, Inc.),
Mark Owens and Bear Stearns & Co., Inc.
(g) None.
(h) None.
</TABLE>
5
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SAFETY 1(ST), INC.
AT
$13.875 NET PER SHARE
BY
DIAMOND ACQUISITION SUBSIDIARY INC.
A WHOLLY OWNED SUBSIDIARY OF
DOREL INDUSTRIES INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, JUNE 5, 2000, UNLESS THE OFFER IS EXTENDED
THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF AN AGREEMENT AND PLAN OF
MERGER DATED AS OF APRIL 22, 2000 (THE "MERGER AGREEMENT") AMONG DOREL
INDUSTRIES INC. ("DOREL"), DIAMOND ACQUISITION SUBSIDIARY INC. ("PURCHASER") AND
SAFETY 1(ST), INC. ("SAFETY 1(ST)").
THE BOARD OF DIRECTORS OF SAFETY 1(ST) HAS UNANIMOUSLY DETERMINED THAT THE
MERGER AGREEMENT (AS DEFINED HEREIN) AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING EACH OF THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN) ARE FAIR TO,
AND IN THE BEST INTEREST OF, THE HOLDERS OF SHARES, HAS APPROVED, ADOPTED AND
DECLARED ADVISABLE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING EACH OF THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE
HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER SHARES PURSUANT TO THE OFFER.
------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
THE NUMBER OF SHARES THAT SHALL CONSTITUTE TWO-THIRDS OF THE THEN OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (INCLUDING, WITHOUT LIMITATION, ALL SHARES
ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE EXERCISE
OF ANY OPTIONS (THE "MINIMUM CONDITION") AND (II) ANY APPLICABLE WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE
"HSR ACT"), HAVING EXPIRED OR BEEN TERMINATED, PRIOR TO THE EXPIRATION OF THE
OFFER (THE "HSR CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTIONS 1 AND 14, WHICH SET
FORTH IN FULL THE CONDITIONS TO THE OFFER.
------------------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the accompanying Letter of
Transmittal (or a manually signed facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver it together with
the certificate(s) evidencing tendered Shares, and any other required documents,
to the Depositary or tender such Shares pursuant to the procedure for book entry
transfer set forth in Section 3 or (ii) request such stockholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Any stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates evidencing
such Shares are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, may tender such Shares by
following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from the
Information Agent or from brokers, dealers, commercial banks or trust companies.
------------------------------------
The Information Agent for the Offer is:
LOGO
[INNISFREE'S LOGO TO COME]
May 8, 2000
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TABLE OF CONTENTS
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PAGE
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SUMMARY OF THE OFFER........................................ i
INTRODUCTION................................................ 1
1. Terms of the Offer; Expiration Date..................... 2
2. Acceptance for Payment and Payment for Shares........... 4
3. Procedures for Accepting the Offer and Tendering
Shares.................................................. 5
4. Withdrawal Rights....................................... 7
5. Certain Federal Income Tax Consequences................. 8
6. Price Range of Shares; Dividends........................ 9
7. Certain Information Concerning Safety 1(st)............. 9
8. Certain Information Concerning Purchaser and Dorel...... 11
9. Financing of the Offer and the Merger................... 12
10. Background of the Offer; Contacts with Safety 1(st); the
Merger Agreement and Related Agreements................. 13
11. Purpose of the Offer; Plans for Safety 1(st) After the
Offer and the Merger.................................... 24
12. Dividends and Distributions............................. 25
13. Possible Effects of the Offer on the Market for Shares,
Nasdaq Listing, Margin Regulations and Exchange Act
Registration............................................ 26
14. Certain Conditions of the Offer......................... 26
15. Certain Legal Matters and Regulatory Approvals.......... 28
16. Fees and Expenses....................................... 29
17. Miscellaneous........................................... 30
SCHEDULES
Schedule I. Information Concerning the Directors
and Executive Officers of Dorel and
Purchaser............................. I-1
Schedule II. Massachusetts Business Corporation Law
-- Dissenters' Rights................. II-1
Schedule III. Schedule of Transactions in Shares
During the Past 60 Days............... III-1
</TABLE>
2
<PAGE> 3
SUMMARY OF THE OFFER
This summary of the offer highlights selected information from this offer
to purchase and may not contain all of the information that is important to you.
To better understand our offer to stockholders of Safety 1(st), Inc. and for a
complete description of the legal terms of the offer, you should read this
entire offer to purchase carefully, as well as those additional documents to
which we have referred you. Questions or requests for assistance may be directed
to the Information Agent at its address and telephone number listed on the back
cover of this offer to purchase. All references to "$" are to U.S. dollars
unless otherwise indicated.
DOREL AND PURCHASER: Dorel Industries Inc. ("Dorel") is a corporation
incorporated in Quebec, Canada and is a
vertically-integrated consumer products manufacturer
and distributor specializing in three product areas:
ready to assemble ("RTA") furniture, juvenile
products and home furnishings. Dorel's products
include a wide variety of RTA furniture for home and
office use; juvenile furniture and accessories such
as infant car seats, strollers, high chairs, toddler
beds and cribs; and home furnishings such as metal
folding chairs, tables, bunk beds, futons and step
stools, as well as a mid-market line of case goods
consisting of bedroom sets, wall units and
entertainment units. Dorel has commenced this offer
to acquire Safety 1(st), Inc. ("Safety 1(st)")
through Diamond Acquisition Subsidiary Inc., a
Massachusetts corporation ("Purchaser") and a wholly
owned subsidiary of Dorel.
TERMS OF THE OFFER: Purchaser is offering to purchase all the shares of
common stock, par value $0.01 per share, of Safety
1(st), that are issued and outstanding for $13.875
per share, net to you in cash, upon the terms and
subject to the conditions contained in this offer to
purchase and in the related letter of transmittal.
BOARD RECOMMENDATION: The Board of Directors of Safety 1(st) (the "Board")
has unanimously:
- determined that each of the offer and merger is
fair to, and in the best interests of, the
stockholders of Safety 1(st);
- approved and adopted the merger agreement and the
merger; and
- recommended that stockholders accept the offer
and tender their shares pursuant to the offer.
CONDITIONS TO THE OFFER: Purchaser is not required to complete the offer
unless:
- at least two-thirds of the then outstanding
shares of Safety 1(st) common stock on a fully
diluted basis are validly tendered and not
withdrawn prior to the expiration of the offer;
and
- any applicable waiting period under the HSR Act
has expired or been terminated prior to the
expiration of the offer.
- See Sections 1 and 14 which set forth in full the
conditions to the offer.
SOURCE OF FUNDS: Purchaser will obtain all necessary funds to purchase
the shares of Safety 1(st) common stock from Dorel or
one of Dorel's other subsidiaries. Dorel has received
a commitment letter from Royal Bank of Canada to
enter into a credit facility. The funds necessary to
complete the offer and the merger will be borrowed
under this facility. Obtaining financing is not a
condition to the completion of the offer and if funds
under the credit facility are not available,
Purchaser must find other means to finance the offer
and the merger. For a more detailed description of
the financing of the offer and the merger, see
Section 9.
EXPIRATION OF OFFER: Unless Purchaser extends the offer, the offer will
expire at 12:00 midnight, New York City time, on
Monday, June 5, 2000.
i
<PAGE> 4
EXTENSION OF OFFER: Purchaser may, without the consent of Safety 1(st),
extend the expiration of the offer for up to an
additional 40 business days if, on or before Monday,
June 5, 2000, any of the conditions to Purchaser's
obligation to accept for payment, and to pay for, the
shares of Safety 1(st) common stock are not satisfied
or waived.
Purchaser is required to extend the expiration of the
offer if, on Monday, June 5, 2000, the sole condition
remaining unsatisfied is the failure of the waiting
period under the HSR Act to have expired or been
terminated. Purchaser shall extend the offer until
the earlier to occur of (i) August 31, 2000 or (ii)
the expiration or the termination of the applicable
waiting period under the HSR Act.
During any such extension of the offer, all tendered
shares of Safety 1(st) common stock may be retained
by the Depositary on behalf of Purchaser and such
shares may not be withdrawn except to the extent you
are entitled to withdrawal rights as described in
Section 4. See Section 4.
NOTIFICATION OF EXTENSION: Purchaser may effect any extension of the offer by
giving oral or written notice of such extension to
the Depositary. If Purchaser decides to extend the
offer, Purchaser may do so by announcing the
extension by issuing a press release by no later than
9:00 a.m., New York City time, on the next business
day after the previously scheduled expiration date.
PROCEDURE FOR ACCEPTING THE
OFFER AND TENDERING
SHARES: In order for you to validly tender shares of Safety
1(st) common stock pursuant to the offer, you must
deliver the following documentation to the Depositary
at one of its addresses listed on the back cover of
this offer to purchase, prior to the expiration of
the offer:
- a letter of transmittal (or a manually signed
facsimile thereof), properly completed and duly
executed (and any other documents required by the
letter of transmittal) and share certificates
evidencing tendered shares of Safety 1(st) common
stock;
- in the case of a book-entry transfer, an agent's
message (and any other documents required by the
letter of transmittal) and a book-entry
confirmation (including an agent's message if you
have not delivered a letter of transmittal); or
- if your share certificates are not immediately
available or you cannot deliver the share
certificates and all other required documents to
the Depositary prior to the expiration of the
offer, or you cannot complete the procedure for
delivery by book-entry transfer on a timely
basis, you may still tender your shares of Safety
1(st) common stock if you comply with the
guaranteed delivery procedures described in
Section 3 of this offer to purchase.
For a detailed description of the procedure for
tendering shares of Safety 1(st) common stock, see
Section 3.
WITHDRAWAL RIGHTS: Pursuant to the procedures in Section 4, you may
withdraw any tender of shares of Safety 1(st) common
stock at any time prior to the expiration of the
offer, and, unless Purchaser has previously accepted
them pursuant to the offer, you may also withdraw any
tender of shares of Safety 1(st) common stock at any
time after July 7, 2000. Except as provided in
Section 4, tenders of shares of Safety 1(st) common
stock are irrevocable.
WITHDRAWAL PROCEDURE: In order to effectively withdraw your tender of
shares of Safety 1(st) common stock, you must provide
a timely written or facsimile transmission notice of
withdrawal to the Depositary at one of its addresses
set forth on the back
ii
<PAGE> 5
cover of this offer to purchase. If you tendered
shares of Safety 1(st) common stock by giving
instructions to a broker or a bank, you must instruct
the broker or bank to arrange for the withdrawal of
your shares. For more details see Section 4.
MERGER AGREEMENT: The offer is being made pursuant to a merger
agreement which is dated as of April 22, 2000, among
Dorel, Purchaser and Safety 1(st). For a more
detailed description of the significant terms and
conditions of the merger agreement, see Section 10.
FAIRNESS OPINION: Goldman, Sachs & Co. has delivered to the Board its
opinion to the effect that, based upon and subject to
various considerations and assumptions set forth in
such opinion, the consideration to be received by you
pursuant to each of the offer and the merger is fair
from a financial point of view. A copy of this
opinion is included in Safety 1(st)'s
Solicitation/Recommendation Statement on Schedule
14D-9, which is being mailed to you concurrently with
this offer to purchase. WE ENCOURAGE YOU TO READ THIS
OPINION CAREFULLY.
THE MERGER: As promptly as practicable after the purchase of
shares of Safety 1(st) common stock pursuant to the
offer and the satisfaction of the other conditions
set forth in the merger agreement and in accordance
with the relevant provisions of Massachusetts law,
Purchaser will merge with and into Safety 1(st).
Safety 1(st) will continue as the surviving
corporation and will become a wholly owned subsidiary
of Dorel.
MERGER CONSIDERATION: If you decide not to tender your shares in the offer
and the merger occurs, you will receive the same
amount of cash per share, $13.875 per share (or any
greater amount per share paid pursuant to the offer)
as if you had tendered your shares in the offer.
STOCKHOLDER APPROVAL: Under Safety 1(st)'s Articles of Organization and
Massachusetts law, the affirmative vote of the
holders of at least a majority of the outstanding
shares of Safety 1(st) common stock is required to
approve and adopt the merger agreement and the
merger. Consequently, if Purchaser acquires in the
offer at least a majority of the outstanding shares
of Safety 1(st) common stock, then Purchaser will
have sufficient voting power to approve and adopt the
merger agreement and the merger without the vote of
any other stockholder. Certain stockholders of Safety
1(st), representing approximately 58% of the
outstanding shares of common stock of Safety 1(st),
have entered into a tender agreement dated April 22,
2000 (the "Tender Agreement"), which obligates each
stockholder who signed the Tender Agreement to tender
their shares of Safety 1(st) common stock into this
offer.
DISSENTERS' RIGHTS: If you have neither voted in favor of the merger nor
consented in writing to the merger and have demanded
and perfected your appraisal rights pursuant to the
Massachusetts Business Corporation Law, you may be
entitled to receive payment of the appraised value of
your shares of Safety 1(st) common stock held in
accordance with the provisions of the Massachusetts
Business Corporation Law. For a more detailed
discussion of your appraisal rights in connection
with the merger, see Section 11.
MARKET VALUE OF SHARES: On April 20, 2000, the last full trading day before
Purchaser announced its offer to purchase all the
shares of Safety 1(st) common stock that are issued
and outstanding, the last reported closing price per
share of Safety 1(st) common stock was $12.625.
Before deciding whether to tender your shares, you
should obtain a current market quotation for the
shares of Safety 1(st) common stock.
iii
<PAGE> 6
ADDITIONAL INFORMATION: Any questions or requests for additional information
or assistance may be directed to the Information
Agent at its address and telephone number on the last
page of this offer to purchase.
iv
<PAGE> 7
TO THE HOLDERS OF COMMON STOCK OF SAFETY 1(ST), INC:
INTRODUCTION
Diamond Acquisition Subsidiary Inc., a Massachusetts corporation
("Purchaser") and a wholly owned subsidiary of Dorel Industries Inc., a Quebec,
Canada corporation ("Dorel"), hereby offers to purchase all the shares of common
stock, par value $0.01 per share ("Shares"), of Safety 1(st), Inc., a
Massachusetts corporation ("Safety 1(st)"), that are issued and outstanding for
$13.875 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with this Offer to Purchase and
any amendments or supplements hereto or thereto, collectively constitute the
"Offer"). See Section 8 for additional information concerning Dorel and
Purchaser.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. However, any tendering stockholder or other
payee who fails to complete and sign the Substitute Form W-9 that is included in
the Letter of Transmittal may be subject to a required back-up U.S. federal
income tax withholding of 31% of the gross proceeds payable to such stockholder
or other payee pursuant to the Offer. See Section 5. Purchaser or Dorel will pay
all charges and expenses of Harris Trust Company of New York (the "Depositary")
and Innisfree M&A Incorporated (the "Information Agent") incurred in connection
with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF SAFETY 1(ST) (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE MERGER AGREEMENT (AS DEFINED BELOW) AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING EACH OF THE OFFER AND THE MERGER (AS DEFINED
BELOW) ARE FAIR TO, AND IN THE BEST INTEREST OF, THE HOLDERS OF SHARES, HAS
APPROVED, ADOPTED AND DECLARED ADVISABLE THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF THE OFFER AND THE MERGER,
AND RECOMMENDS THAT HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
Goldman, Sachs & Co. ("Goldman") has delivered to the Board its opinion to
the effect that based upon and subject to various considerations and assumptions
set forth in such opinion, the consideration to be received by the stockholders
pursuant to each of the Offer and the Merger is fair to the holders of Shares
from a financial point of view. A copy of the written opinion of Goldman is
contained in Safety 1(st)'s Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), which has been filed with the Securities and
Exchange Commission (the "Commission") in connection with the Offer and which is
being mailed to stockholders concurrently herewith, and stockholders are urged
to read such opinion carefully in its entirety for a description of the
assumptions made, matters considered and limitations of the review undertaken by
Goldman.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
THE NUMBER OF SHARES THAT SHALL CONSTITUTE TWO-THIRDS OF THE THEN OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (INCLUDING, WITHOUT LIMITATION, ALL SHARES
ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE EXERCISE
OF ANY OPTIONS) (THE "MINIMUM CONDITION") AND (II) ANY APPLICABLE WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE
"HSR ACT"), HAVING EXPIRED OR BEEN TERMINATED, PRIOR TO THE EXPIRATION OF THE
OFFER (THE "HSR CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTIONS 1 AND 14, WHICH SET
FORTH IN FULL THE CONDITIONS TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of April 22, 2000 (the "Merger Agreement"), among Dorel, Purchaser and Safety
1(st). The Merger Agreement provides, among other things, that as promptly as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction or waiver of the other conditions set forth in the Merger Agreement
and in accordance with the relevant provisions
1
<PAGE> 8
of the Massachusetts Business Corporation Law, as amended ("Massachusetts Law"),
Purchaser will be merged with and into Safety 1(st) (the "Merger"). As a result
of the Merger, Safety 1(st) will continue as the surviving corporation (the
"Surviving Corporation") and will become a wholly owned subsidiary of Dorel. At
the effective time of the Merger (the "Effective Time"), each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held in
the treasury of Safety 1(st) and Shares owned by the Purchaser, Dorel or any
wholly owned subsidiary of Dorel or of Safety 1(st) and other than Shares held
by stockholders who shall have demanded and perfected appraisal rights under
Massachusetts Law) shall be canceled and converted automatically into the right
to receive $13.875 in cash, or any higher price that may be paid per Share in
the Offer, without interest (the "Merger Consideration"). Stockholders who
demand and fully perfect appraisal rights under Massachusetts Law will be
entitled to receive, in connection with the Merger, cash for the fair value of
their Shares as determined pursuant to the procedures prescribed by
Massachusetts Law. See Section 11. The Merger Agreement is more fully described
in Section 10. Certain federal income tax consequences of the sale of Shares
pursuant to the Offer and the Merger, as the case may be, are described in
Section 5.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer and from time to time thereafter, Dorel shall be
entitled to designate up to such number of directors, rounded up to the next
whole number, on the Board as will give Dorel representation on the Board equal
to the product of the total number of directors on the Board (giving effect to
the directors elected pursuant to this section) multiplied by the percentage
that the aggregate number of Shares then beneficially owned by Purchaser or any
affiliate of Purchaser following such purchase bears to the total number of
Shares then outstanding. In the Merger Agreement, Safety 1(st) has agreed, at
such time, promptly to take all actions necessary to cause Dorel's designees to
be elected as directors of Safety 1(st), including increasing the size of the
Board or securing the resignations of incumbent directors, or both.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the consummation of the Offer, and the approval
and adoption of the Merger Agreement and the Merger by the requisite vote of the
stockholders of Safety 1(st). For a more detailed description of the conditions
to the Merger, see Section 10. Under Safety 1(st)'s Articles of Organization and
Massachusetts Law, the affirmative vote of the holders of at least a majority of
the outstanding Shares is required to approve and adopt the Merger Agreement and
the Merger. Consequently, if Purchaser acquires (pursuant to the Offer or
otherwise) at least a majority of the outstanding Shares, then Purchaser will
have sufficient voting power to approve and adopt the Merger Agreement and the
Merger without the vote of any other stockholder. See Sections 10 and 11.
Safety 1(st) has advised Dorel and Purchaser that as of May 1, 2000,
8,680,682 Shares were issued and outstanding and there were outstanding options
to purchase an aggregate of 2,540,934 Shares. The Merger Agreement provides,
among other things, that Safety 1(st) will not, without the prior written
consent of Dorel, issue any additional Shares (except on the exercise of
outstanding options and as otherwise permitted under the Merger Agreement).
Based on the foregoing, and assuming that all outstanding options are exercised,
the Minimum Condition would be satisfied if Purchaser acquired 7,481,077 Shares.
No appraisal rights are available in connection with the Offer; however,
stockholders may have appraisal rights in connection with the Merger. See
Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered (and not withdrawn in accordance with the procedures set forth in
Section 4) on or prior to the Expiration Date. "Expiration Date" means 12:00
midnight, New York City time, on Monday, June 5, 2000, unless and until
Purchaser (subject to the terms and conditions of the Merger Agreement) shall
have extended the period during which the Offer is open, in which case
Expiration Date shall mean the latest time and date at which the Offer, as may
be extended by Purchaser, shall expire.
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<PAGE> 9
The Offer is subject to the conditions set forth under Section 14,
including the satisfaction of the Minimum Condition and the HSR Condition.
Subject to the applicable rules and regulations of the Commission and subject to
the terms and conditions of the Merger Agreement, Purchaser expressly reserves
the right to waive any such condition in whole or in part, in its sole
discretion. Subject to the applicable rules and regulations of the Commission
and subject to the terms and conditions of the Merger Agreement, Purchaser also
expressly reserves the right to change the form or amount payable per Share in
the Offer and to make any other changes in the terms and conditions of the
Offer; provided, however, that without the prior written consent of Safety
1(st), Dorel shall not amend, or permit to be amended, the Offer to (i) decrease
the price per Share payable in the Offer; (ii) change the consideration into a
form other than cash, (iii) add any conditions to the obligation of Purchaser to
accept for payment and pay for Shares tendered pursuant to the Offer, (iv) amend
(other than to waive) the Minimum Condition or the other conditions set forth in
Annex A to the Merger Agreement, or (v) reduce the maximum number of Shares to
be purchased in the Offer.
The Merger Agreement provides that Purchaser may, without the consent of
Safety 1(st), extend the Offer beyond the scheduled expiration date (the
"Expiration Date"), which shall be 20 business days following the commencement
of the Offer, if, at the scheduled expiration of the Offer, any of the
conditions to Purchaser's obligation to accept for payment Shares, shall not be
satisfied or waived, provided, however, that except as set forth below, the
Expiration Date, as extended, shall be no later than the date that is 40
business days immediately following the initially scheduled expiration date of
the Offer. The Merger Agreement also provides that, if, on the initial scheduled
expiration date of the Offer, the sole condition remaining unsatisfied is the
failure of the waiting period under the HSR Act to have expired or been
terminated, then Purchaser shall extend the Offer until the earlier of (i)
August 31, 2000 or (ii) the expiration or termination of the applicable waiting
period under the HSR Act. During any such extension, all tendered Shares may be
retained by the Depositary on behalf of Purchaser and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to withdrawal
rights as described in Section 4. Under no circumstances will interest be paid
on the purchase price for tendered Shares, whether or not the Offer is extended.
Any extension of the Offer may be effected by Purchaser giving oral or written
notice of such extension to the Depositary.
Purchaser shall pay for all Shares validly tendered and not withdrawn in
accordance with the procedures set forth in Section 4 promptly following the
acceptance of Shares for payment pursuant to the Offer. Notwithstanding the
immediately preceding sentence and subject to the applicable rules of the
Commission and the terms and conditions of the Offer, Purchaser also expressly
reserves the right (i) to delay payment for Shares in order to comply in whole
or in part with applicable laws (any such delay shall be effected in compliance
with Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which requires Purchaser to pay the consideration offered or to
return Shares deposited by or on behalf of stockholders promptly after the
termination or withdrawal of the Offer), (ii) to extend or terminate the Offer
and not to accept for payment or pay for any Shares not theretofore accepted for
payment or paid for, upon the occurrence of any of the conditions to the Offer
specified in Section 14, and (iii) to amend the Offer or to waive any conditions
to the Offer in any respect consistent with the provisions of the Merger
Agreement described above, in each case by giving oral or written notice of such
delay, termination, waiver or amendment to the Depositary and by making public
announcement thereof.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act, which require that material changes be
promptly disseminated to stockholders in a manner reasonably designed to inform
them of such changes) and without limiting the manner in which Purchaser may
choose to make any public announcement, Purchaser will have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a press release.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules l4d-4(c),
l4d-6(d) and 14e-1 under the Exchange Act. Subject to the terms of the Merger
Agreement, if, prior to the Expiration Date, Purchaser should decide to increase
the consideration being offered in the Offer, such increase in the consideration
being offered will be applicable to all stockholders whose Shares are accepted
for
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<PAGE> 10
payment pursuant to the Offer and, if at the time notice of any such increase in
the consideration being offered is first published, sent or given to holders of
such Shares, the Offer is scheduled to expire at any time earlier than the
period ending on the tenth business day from and including the date that such
notice is first so published, sent or given, the Offer will be extended at least
until the expiration of such ten business day period. As used in this Offer to
Purchase "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
Safety 1(st) has provided Purchaser with Safety 1(st)'s stockholder list
and security position listings, including the most recent list of names,
addresses and security positions of non-objecting beneficial owners in the
possession of Safety 1(st) for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed by Purchaser to record holders of Shares whose names appear on Safety
1(st)'s stockholder list and will be furnished, for subsequent transmittal to
beneficial owners of Shares, to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment all Shares validly tendered
(and not properly withdrawn in accordance with Section 4) prior to the
Expiration Date promptly after the occurrence of the Expiration Date. Purchaser
shall pay for all Shares validly tendered and not withdrawn promptly following
the acceptance of Shares for payment pursuant to the Offer. Notwithstanding the
immediately preceding sentence and subject to applicable rules and regulations
of the Commission and the terms of the Merger Agreement, Purchaser expressly
reserves the right to delay payment for Shares in order to comply in whole or in
part with applicable laws, including the HSR Act. See Sections 1 and 15.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3, (ii) the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined below), in connection with the book-entry
transfer and (iii) any other documents required under the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
Letter of Transmittal and that Purchaser may enforce such agreement against such
participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE
FOR SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If the Purchaser is delayed in its acceptance for payment of, or payment
for, Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (including such rights as are set forth in Sections 1 and 15), the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to exercise, and duly exercise, withdrawal rights as
described in Section 4.
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<PAGE> 11
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in Section 3, such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES
In order for a holder of Shares to validly tender Shares pursuant to the
Offer, the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message, and any
other documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase and either (i) the Share Certificates evidencing tendered Shares must
be received by the Depositary at such address or such Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary (including an Agent's
Message if the tendering stockholder has not delivered a Letter of Transmittal),
in each case prior to the Expiration Date, or (ii) the tendering stockholder
must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, together with any required signature guarantees, or
an Agent's Message, and any other required documents, must, in any case, be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure described below.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Security Transfer Agent Medallion
Signature Program, or by any other "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing
being referred to as an "Eligible Institution"), except in cases where Shares
are tendered (i) by a registered holder of Shares who has not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. If a Share Certificate is registered in the name of a
person other than the signer of the Letter of Transmittal, or if payment is to
be made, or a Share Certificate not accepted for payment or not tendered is to
be returned, to a person other than the registered holder(s), then the Share
Certificate must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear on
the
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<PAGE> 12
Share Certificate, with the signature(s) on such Share Certificate or stock
powers guaranteed by an Eligible Institution. See Instructions 1 and 5 of the
Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, is received
prior to the Expiration Date by the Depositary as provided below; and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required
signature guarantees or, in the case of a book-entry transfer, an
Agent's Message, and any other documents required by the Letter of
Transmittal are received by the Depositary within three Nasdaq
National Market ("Nasdaq") trading days after the date of execution
of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or by
facsimile transmission to the Depositary and must include a guarantee by an
Eligible Institution in the form set forth in the form of Notice of Guaranteed
Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message, and any other documents required by the Letter of Transmittal.
Determination of Validity. ALL QUESTIONS AS TO THE FORM OF DOCUMENTS AND
THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF RECEIPT) AND ACCEPTANCE FOR
PAYMENT OF ANY TENDER OF SHARES WILL BE DETERMINED BY PURCHASER, IN ITS SOLE
DISCRETION, WHICH DETERMINATION SHALL BE FINAL AND BINDING ON ALL PARTIES.
Purchaser reserves the absolute right to reject any and all tenders determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of its counsel, be unlawful. Purchaser also reserves the absolute
right to waive any condition of the Offer and the Merger Agreement or any defect
or irregularity in the tender of any Shares of any particular stockholder,
whether or not similar defects or irregularities are waived in the case of other
stockholders. NO TENDER OF SHARES WILL BE DEEMED TO HAVE BEEN VALIDLY MADE UNTIL
ALL DEFECTS AND IRREGULARITIES HAVE BEEN CURED OR WAIVED. NONE OF PURCHASER,
DOREL OR ANY OF THEIR RESPECTIVE AFFILIATES OR ASSIGNS, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE
NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN TENDERS OR INCUR ANY LIABILITY
FOR FAILURE TO GIVE ANY SUCH NOTIFICATION. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering stockholder's acceptance of the terms and conditions of
the Offer, as well as the tendering stockholder's representation and warranty to
Purchaser that (i) such stockholder has the full power and authority to tender,
sell, assign and transfer the tendered Shares (and any and all other Shares or
other securities issued or issuable in respect of such Shares), and (ii) when
the same are accepted for payment by Purchaser, Purchaser will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claims.
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
Appointment as Proxy. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's agents, attorneys-in-fact and proxies, each with
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<PAGE> 13
full power of substitution, in the manner set forth in the Letter of
Transmittal, to the full extent of such stockholder's rights with respect to the
Shares tendered by such stockholder and accepted for payment by Purchaser (and
with respect to any and all other Shares or other securities issued or issuable
in respect of such Shares on or after April 22, 2000). All such powers of
attorney and proxies shall be considered irrevocable and coupled with an
interest in the tendered Shares. Such appointment will be effective when, and
only to the extent that, Purchaser accepts such Shares for payment. Upon such
acceptance for payment, all prior powers of attorney and proxies given by such
stockholder with respect to such Shares (and such other Shares and securities)
will be revoked, without further action, and no subsequent powers of attorney or
proxies may be given nor any subsequent written consent executed by such
stockholder (and, if given or executed, will not be deemed to be effective) with
respect thereto. The designees of Purchaser will, with respect to the Shares for
which the appointment is effective, be empowered to exercise all voting and
other rights of such stockholder as they in their sole discretion may deem
proper at any annual or special meeting of Safety 1(st)'s stockholders or any
adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon Purchaser's payment for
such Shares, Purchaser must be able to exercise full voting consent and other
rights with respect to such Shares (and such other Shares and securities).
UNDER THE "BACKUP WITHHOLDING" PROVISIONS OF U.S. FEDERAL INCOME TAX LAW,
THE DEPOSITARY MAY BE REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS OF CASH PURSUANT
TO THE OFFER. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO
PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED
PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH
SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER ("TIN") AND CERTIFY
THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL. FOREIGN
STOCKHOLDERS, IF EXEMPT, SHOULD COMPLETE A FORM W-8, CERTIFICATE OF FOREIGN
STATUS, A COPY OF WHICH MAY BE OBTAINED FROM THE DEPOSITARY, IN ORDER TO AVOID
BACKUP WITHHOLDING. SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn pursuant to the procedures set forth below at any
time prior to the Expiration Date and, unless theretofore accepted for payment
by Purchaser pursuant to the Offer, may also be withdrawn at any time after July
7, 2000. If Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares or is unable to accept Shares for payment pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in this Section 4,
subject to Rule 14e-1(c) under the Exchange Act.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase. Any such notice
of withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of such Shares, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Share Certificates, the serial numbers shown on such Share
Certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution, unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3, any notice of withdrawal must specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with the Book-Entry Transfer Facility's
procedures.
ALL QUESTIONS AS TO THE FORM AND VALIDITY (INCLUDING TIME OF RECEIPT) OF
ANY NOTICE OF WITHDRAWAL WILL BE DETERMINED BY PURCHASER, IN ITS SOLE
DISCRETION, WHOSE DETERMINATION WILL BE FINAL AND BINDING. NONE OF PURCHASER,
DOREL OR ANY OF THEIR RESPECTIVE AFFILIATES OR ASSIGNS, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE ANY
NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR
INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
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Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted into the right to receive cash in the
Merger (whether upon receipt of the Merger Consideration or pursuant to the
proper exercise of dissenter's rights). The discussion applies only to holders
of Shares in whose hands Shares are capital assets, and may not apply to Shares
received pursuant to the exercise of employee stock options or otherwise as
compensation, or to holders of Shares who are not citizens or residents of the
United States of America.
THE TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION
PURPOSES ONLY AND IS BASED UPON PRESENT LAW. BECAUSE INDIVIDUAL CIRCUMSTANCES
MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR
TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED TO SUCH STOCKHOLDER AND
THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
The receipt of the offer price and the receipt of cash pursuant to the
Merger (whether as Merger Consideration or pursuant to the proper exercise of
dissenter's rights) will be a taxable transaction for federal income tax
purposes (and also may be a taxable transaction under applicable state, local
and other income tax laws). In general, for federal income tax purposes, a
holder of Shares will recognize gain or loss equal to the difference between
such holder's adjusted tax basis in the Shares sold pursuant to the Offer or
converted to cash in the Merger and the amount of cash received therefor. Gain
or loss must be determined separately for each block of Shares (i.e., Shares
acquired at the same cost in a single transaction) sold pursuant to the Offer or
converted to cash in the Merger. Such gain or loss will be capital gain or loss.
Individual holders will be subject to tax on the net amount of such gain at a
maximum rate of 20% provided that the Shares were held for more than 12 months.
Shares held less than one year may be subject to ordinary income tax rates of up
to 39.6% for individuals. Special rules (and generally lower maximum rates)
apply to individuals in lower tax brackets. The deduction of capital losses is
subject to certain limitations. Stockholders should consult their own tax
advisors in this regard.
Payments in connection with the Offer or the Merger may be subject to
backup withholding at a 31% rate. Backup withholding generally applies if a
stockholder (i) fails to furnish such stockholder's social security number or
TIN, (ii) furnishes an incorrect TIN, (iii) fails properly to report interest or
dividends or (iv) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN provided is such
stockholder's correct number and that such stockholder is not subject to backup
withholding. Backup withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an overpayment of
tax. Certain persons, including corporations and financial institutions
generally, are exempt from backup withholding. Certain penalties apply for
failure to furnish correct information and for failure to include the reportable
payments in income. Each stockholder should consult with such stockholder's own
tax advisor as to such stockholder's qualifications for exemption from
withholding and the procedure for obtaining such exemption.
8
<PAGE> 15
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are listed and principally traded on Nasdaq under the symbol
"SAFT". The following table sets forth, for the quarters indicated, the high and
low sales prices per Share on Nasdaq as reported by IDD Information Services,
Tradeline and the amount of cash dividends paid per Share according to published
financial sources.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------- ------ ---------
<S> <C> <C> <C>
1998:
First Quarter............................................... $ 8.625 $6.000 None
Second Quarter.............................................. 10.000 6.625 None
Third Quarter............................................... 7.500 4.750 None
Fourth Quarter.............................................. 8.250 2.000 None
1999:
First Quarter............................................... 6.250 2.250 None
Second Quarter.............................................. 6.000 3.750 None
Third Quarter............................................... 8.500 4.875 None
Fourth Quarter.............................................. 7.940 6.310 None
2000:
First Quarter (through April 20, 2000)...................... 12.625 6.063 None
</TABLE>
On April 20, 2000, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the last reported closing price per Share as reported on Nasdaq was
$12.625. On May 5, 2000, the last full trading day prior to the commencement of
the Offer, the last reported closing price per Share as reported on Nasdaq was
$13.69.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING SAFETY 1(ST).
Except as otherwise set forth in this Offer to Purchase, all of the
information concerning Safety 1(st) contained in this Offer to Purchase,
including financial information, has been furnished by Safety 1(st) or has been
taken from or based upon publicly available documents and records on file with
the Commission and other public sources. Neither Purchaser nor Dorel assumes any
responsibility for the accuracy or completeness of the information concerning
Safety 1(st) furnished by Safety 1(st) or contained in such documents and
records or for any failure by Safety 1(st) to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to Purchaser or Dorel.
General. Safety 1(st) is a Massachusetts corporation with its principal
executive offices located at 45 Dan Road, Canton, Massachusetts 02021, and its
telephone number is (781)364-3100. Safety 1(st) was incorporated in
Massachusetts in 1984. In March 1993, Safety 1(st) made its initial public
offering of common stock, which trades on Nasdaq under the symbol "SAFT". Safety
1(st) is a leading developer, marketer and distributor of juvenile products
offering a line of safety products ranging from items such as outlet plugs and
drawer and cabinet locks, to safety gates, bed rails and balcony guards. Safety
1(st)'s first products were the original yellow and black, diamond-shaped "Baby
on Board" and "Child on Board" automobile window displays. Safety 1(st) has
expanded its product offerings into related categories such as child care,
convenience and activity product categories. Among Safety 1(st)'s products are
baby monitors, walker alternatives, activity gyms, bath seats, toddler cups,
pacifiers, teethers, gates, potty trainers, booster seats, infant health care
items, bath accessories, feeding products and travel accessories.
Certain Projected Financial Data of Safety 1(st). Prior to entering into
the Merger Agreement, Dorel conducted a due diligence review of Safety 1(st) and
in connection with such review received certain projections of Safety 1(st)'s
future operating performance. The projections are included by Dorel and
Purchaser in this Offer to Purchase solely because such information was
forwarded to Dorel and Purchaser by Safety 1(st). Safety 1(st) does not in the
ordinary course publicly disclose projections and these projections were not
prepared with a view to public disclosure.
9
<PAGE> 16
Safety 1(st) has advised Dorel and Purchaser that these projections were
prepared by Safety 1(st)'s management based on numerous assumptions including,
among others, projections of revenues, operating income, benefits and other
expenses, depreciation and amortization, capital expenditure and working capital
requirements. No assurance can be given with respect to any such assumptions.
These projections do not give effect to the Offer or the potential combined
operations of Dorel and Safety 1(st) or any alterations Dorel may make to Safety
1(st)'s operations or strategy after the consummation of the Offer. The
information set forth below is presented for the limited purpose of giving
stockholders access to the material financial projections prepared by Safety
1(st)'s management that were made available to Dorel and Purchaser in connection
with the Merger Agreement and the Offer.
<TABLE>
<CAPTION>
YEAR END DECEMBER 31
---------------------------------------------------------------------------
PRO FORMA
1999(1) 2000 2001 2002 2003 2004 2005
--------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS OF DOLLARS, UNLESS OTHERWISE INDICATED)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales.............. $157,156 $180,729 $207,839 $228,623 $251,485 $276,633 $304,297
Growth Rate............ 29.6% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0%
Gross Profit........... $ 61,067 $ 68,858 $ 79,187 $ 87,105 $ 95,816 $105,397 $115,937
GP%(2)................. 38.8% 38.1% 38.1% 38.1% 38.1% 38.1% 38.1%
SG&A................... $ 44,988 $ 48,108 $ 52,120 $ 55,074 $ 60,082 $ 65,336 $ 70,578
SG&A%(2)............... 28.6% 26.6% 25.1% 24.1% 23.9% 23.6% 23.2%
EBITDA................. $ 23,386 $ 28,445 $ 35,813 $ 37,632 $ 41,534 $ 45,861 $ 50,659
% growth............... 117.4% 21.6% 25.9% 5.1% 10.4% 10.4% 10.5%
EBITDA%(2)............. 14.9% 15.7% 17.2% 16.5% 16.5% 16.6% 16.6%
Capital
Expenditures(3)...... $ 4,050 $ 4,050 $ 4,050 $ 4,550 $ 4,850 $ 4,850 $ 4,850
Net Senior Debt........ 54,892 42,088 28,677 18,436 3,143 n.a. n.a.
Net Senior Debt/
EBITDA............... 2.35x 1.48x 0.80x 0.49x 0.08x n.a. n.a.
Net Total/EBITDA....... 2.35x 1.48x 0.80x 0.49x 0.08x n.a. n.a.
EBITDA/Total Interest
Expense.............. 6.13x 6.21x 10.31x 14.39x 20.40x 34.56x 67.06x
Fixed Charge
Coverage............. 5.07x 3.25x 2.12x 1.74x 1.78x 1.83x 1.81x
</TABLE>
- ---------------
(1) Includes 7 months actual and 5 months projected.
(2) As a percentage of Net Sales.
(3) Includes purchases of property, plant and equipment and $150,000 per year of
intangible trademarks/patents.
Certain matters discussed herein, including, but not limited to these
projections, are forward-looking statements that involve risks and
uncertainties. Forward-looking statements include the information set forth
above under "Certain Projected Financial Data of Safety 1(st)". While presented
with numerical specificity, these projections were not prepared by Safety
1(st)in the ordinary course and are based upon a variety of estimates and
hypothetical assumptions which may not be accurate, may not be realized, and are
also inherently subject to significant business, economic and competitive
uncertainties and contingencies, all of which are difficult to predict, and most
of which are beyond the control of Safety 1(st). Accordingly, there can be no
assurance that any of the projections will be realized and the actual results
for the years ending 1999 through 2005 may vary materially from those shown
above. Forward-looking statements also include those preceded by, followed by or
that include the words "believes", "expects", "anticipates" or similar
expressions.
In addition these projections were not prepared in accordance with
generally accepted accounting principles, and neither Safety 1(st)'s nor Dorel's
independent accountants have examined or compiled any of these projections or
expressed any conclusion or provided any other form of assurance with respect to
these projections and accordingly assume no responsibility for these
projections. These projections were prepared with a limited degree of precision
and were not prepared with a view to public disclosure or compliance with the
published guidelines of the Commission or the guidelines established by the
American Institute of Certified Public Accountants regarding projections, which
would require a more complete presentation of data than as shown above. The
inclusion of these projections herein should not be regarded as a representation
by Dorel and Purchaser or any other person that the projected results will be
achieved. These projections should be read in conjunction with the
10
<PAGE> 17
historical financial information of Safety 1(st). Neither Dorel nor Purchaser
assumes any responsibility for the accuracy or validity of the foregoing
projections.
Available Information. Safety 1(st) is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning Safety 1(st)'s directors and
officers, their remuneration, stock options granted to them, the principal
holders of Safety 1(st)'s securities and any material interest of such persons
in transactions with Safety 1(st) is required to be disclosed in proxy
statements distributed to Safety 1(st)'s stockholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and also should be available for inspection at the Commission's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials may also be obtained by mail, upon
payment of the Commission's customary fees, by writing to its principal office
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a World Wide Website on the Internet at
http://www.sec.gov that contains reports and other information regarding issuers
that file electronically with the Commission.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND DOREL
General. Purchaser is a newly incorporated Massachusetts corporation
organized in connection with the Offer and the Merger and has not carried on any
activities other than in connection with the Offer and the Merger. The principal
offices of Purchaser are located at c/o CT Corporation Systems, 101 Federal
Street, Suite 300, Boston, MA 02110, and its telephone number is (617) 757-6401.
Purchaser is a wholly owned subsidiary of Dorel.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Dorel is a corporation organized under the laws of Quebec, Canada. Its
principal offices are located at 1255 Greene Avenue, Suite 300, Westmount,
Quebec, Canada H3Z 2A4, Canada. Dorel is a vertically-integrated consumer
products manufacturer and distributor specializing in three product areas: ready
to assemble ("RTA") furniture, juvenile products and home furnishings. Dorel's
products include a wide variety of RTA furniture for home and office use;
juvenile furniture and accessories such as infant car seats, strollers, high
chairs, toddler beds and cribs; and home furnishings such as metal folding
chairs, tables, bunk beds, futons and step stools, as well as a mid-market line
of case goods consisting of bedroom sets, wall units and entertainment units.
The common shares of Dorel are listed for trading on the Toronto Stock Exchange
and Nasdaq.
The name, citizenship, business address, business telephone number,
principal occupation or employment, and five-year employment history for each of
the directors and executive officers of Purchaser and Dorel and certain other
information are set forth in Schedule I hereto. Except as described in this
Offer to Purchase and in Schedule I hereto, none of Dorel, Purchaser or, to the
best knowledge of such corporations, any of the persons listed on Schedule I to
the Offer of Purchase has during the last five years (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) been a party to any judicial or administrative proceeding (except for
matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
Except as described in this Offer to Purchase, (i) none of Purchaser, Dorel
nor, to the best knowledge of Purchaser and Dorel, any of the persons listed in
Schedule I to this Offer to Purchase or any associate or majority owned
subsidiary of Purchaser, Dorel or any of the persons so listed, beneficially
owns or has any right to acquire any Shares and (ii) none of Purchaser, Dorel
nor, to the best knowledge of Purchaser and Dorel, any of the persons or
entities referred to above nor any director, executive officer or subsidiary of
any of the foregoing has effected any transaction in the Shares during the past
60 days.
11
<PAGE> 18
Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, none of Purchaser, Dorel nor, to the best knowledge of
Purchaser and Dorel, any of the persons listed in Schedule I to this Offer to
Purchase, has any agreement, arrangement, understanding, whether or not legally
enforceable, with any other person with respect to any securities of Safety
1(st), including, but not limited to, the transfer or voting of such securities,
joint ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations. Except as set forth in this Offer to Purchase, since April 22,
1998, neither Purchaser nor Dorel nor, to the best knowledge of Purchaser and
Dorel, any of the persons listed on Schedule I hereto, has had any transaction
with Safety 1(st) or any of its executive officers, directors or affiliates that
is required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
April 22, 1998, there have been no negotiations, transactions or material
contacts between any of Purchaser, Dorel, or any of their respective
subsidiaries or, to the best knowledge of Purchaser and Dorel, any of the
persons listed in Schedule I to this Offer to Purchase, on the one hand, and
Safety 1(st) or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer for or other acquisition of any class
of Safety 1(st')s securities, an election of Safety 1(st)'s directors or a sale
or other transfer of a material amount of assets of Safety 1(st).
9. FINANCING OF THE OFFER AND THE MERGER
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be approximately
$145 million.
The Offer is not conditioned upon any financing arrangements. Purchaser
will obtain all necessary funds from Dorel or its affiliates. Dorel intends to
provide such funds from a new credit facility to be provided by a syndicate of
financial institutions arranged through the Royal Bank of Canada.
Dorel has received a commitment letter from Royal Bank of Canada (the
"Commitment Letter") for a credit agreement among Dorel Investments L.P., Dorel
U.S.A. Inc. and certain operating companies in the United States, being all
wholly owned subsidiaries of Dorel, as borrowers (collectively, the "Borrowers",
individually, a "Borrower"), Dorel, Dorel Atlantic Co., Dorel Capital LLC and
all wholly owned Restricted Subsidiaries of Dorel (as defined in the Commitment
Letter), as guarantors, and a syndicate of financial institutions for which the
Royal Bank of Canada will act as administrative agent (the "Agent"). The maximum
amount of borrowings available under this facility (the "Facility") will be
$250,000,000. Funds under the Facility will be available to finance the Offer
and the Merger, refinance existing Safety 1(st) debt, refinance certain portions
of existing debt of Dorel, finance reasonable fees and expenses related to the
Offer and the Merger and for general corporate purposes, including working
capital. In addition, the Borrowers' ability to borrow under the Facility is
conditioned on the satisfaction of customary conditions, including without
limitations (a) that no events have occurred with respect to Dorel, the
Borrowers or the Restricted Subsidiaries since their last fiscal quarterly
reports which would be reasonably likely to have a material adverse effect on
Dorel and its Restricted Subsidiaries, taken as a whole or on Safety 1(st) and
its subsidiaries, taken as a whole, and (b) that there is no undisclosed
litigation or new litigation involving Safety 1(st) since March 30, 2000 which
would be reasonably likely to have a material adverse effect on Safety 1(st) and
its subsidiaries, taken as a whole or on Dorel and its Restricted Subsidiaries,
taken as a whole. The Agent's commitment to provide the Facility is subject to
there being no material adverse change in the financial condition of Dorel or
the Borrowers or in the North American bank loan syndication markets. Dorel
anticipates that any indebtedness incurred through borrowings under the Facility
will be repaid from a variety of sources, which may include, but may not be
limited to, funds generated internally by Dorel and its affiliates (including,
following the Merger, funds generated by Safety 1(st)) and sales of equity or
debt securities of Dorel or its affiliates in private or public offerings. No
decision has been made concerning the method Dorel will employ to repay such
indebtedness. Such decision will be made based on Dorel's review from time to
time of the advisability of particular actions, as well as on prevailing
interest rates and financial and other economic conditions and such other
factors as Dorel may deem appropriate. The preceding summary of the Commitment
Letter is qualified in its entirety by reference to the Commitment Letter which
is incorporated herein by reference, and a copy of which has been filed as an
exhibit to the Tender Offer Statement on Schedule TO (the "Schedule TO") filed
with the Commission by Purchaser and Dorel in connection with the Offer. Dorel
has not made alternative financing arrangements in the event funds under the
Facility are not available.
12
<PAGE> 19
10. BACKGROUND OF THE OFFER; CONTACTS WITH SAFETY 1(ST); THE MERGER AGREEMENT
AND RELATED AGREEMENTS
BACKGROUND OF THE OFFER AND CONTACTS WITH SAFETY 1(ST)
During the summer of 1998, Safety 1(st) initiated a process with its
investment banker, Goldman, to explore opportunities to enhance shareholder
value through the possible sale of Safety 1(st) in a limited auction process. At
that time, a number of parties expressed interest in acquiring Safety 1(st) and
discussions were held with, among others, Bidder A, the corporate parent of a
leading industry competitor, and Bidder B, a buyout firm. During the first
quarter of 1999, the Board terminated these discussions after determining that
the discussions were not likely to yield a price that adequately reflected the
long-term value of Safety 1(st).
On October 23, 1999, the President of Bidder A's subsidiary contacted
Michael Lerner, Chairman and Chief Executive Officer of Safety 1(st), and
expressed interest in renewing discussions regarding a strategic combination of
the two companies. As a result of that conversation, senior executives of Bidder
A met with Mr. Lerner and Richard E. Wenz, President and Chief Operating Officer
of Safety 1(st) on November 2, 1999. During this meeting, the participants
discussed the status of Safety 1(st)'s overall business as well as recent
business developments. Following the discussion, the parties agreed to consider
further the possibility of a business combination and to contact each other
again if they were interested in pursuing such a transaction. On November 18,
1999, during a regularly scheduled meeting of the Board, as part of a general
discussion about Safety 1(st)'s stock price and business prospects, Mr. Lerner
briefed the Board concerning the meeting with Bidder A and the potential for
renewed interest in a strategic transaction.
In a telephone conversation with Michael Lerner on December 21, 1999, the
President of Bidder A's subsidiary re-emphasized Bidder A's interest in
continuing discussions concerning a potential business combination between the
two companies. In the same conversation, he also indicated that Bidder A's
initial indication of a proposed value of Safety 1(st) would be provided by
mid-January 2000. Following this conversation, Safety 1(st) informed Goldman of
Bidder A's renewed interest and Goldman became actively involved in advising
Safety 1(st) concerning this renewed interest in a strategic transaction. During
the week of January 10, 2000, Bidder B indicated to Messrs. Lerner and Wenz that
it was interested in renewing discussions concerning pursuing a strategic
transaction with Safety 1(st) and developing a formal proposal to acquire Safety
1(st) at a price of approximately $10 per share in a leveraged recapitalization
transaction that would include a management rollover of equity.
On January 20, 2000, the Board met telephonically to receive an update from
Mr. Lerner regarding Safety 1(st) and its strategic alternatives, including the
potential sale of Safety 1(st) to Bidder A or Bidder B.
On January 21, 2000, Bidder A provided to Safety 1(st) a request for
selected information for due diligence purposes. On February 3, 2000, senior
management of Safety 1(st) and representatives of Goldman had a conference call
with the members of Bidder A's acquisition team and their investment banker to
discuss various matters relating to the due diligence information request and
the proposed due diligence process.
Also on February 3, 2000, Mr. Lerner received an unsolicited telephone call
from Jeff Segel, Vice-President, Sales and Marketing of Dorel, another industry
competitor, expressing interest in exploring a strategic combination between
Safety 1(st) and Dorel. Mr. Lerner agreed to meet with members of Dorel's senior
management on February 5, 2000 to discuss a possible business combination.
On February 4, 2000, Mr. Lerner received a call from Bidder B emphasizing
its high level of interest in acquiring Safety 1(st) and its desire to visit
Safety 1(st) to conduct due diligence as soon as possible. Later that same day,
the Board met telephonically to discuss the status of negotiations. During the
meeting, the Board was updated on the status of Mr. Lerner's discussions with
Bidder A, Bidder B and Dorel.
On February 5, 2000, Mr. Lerner met with Mr. Segel, Martin Schwartz,
President and Chief Executive Officer of Dorel and Alan Schwartz,
Vice-President, Operations of Dorel. The parties discussed Safety 1(st)'s
business operations and prospects and possible synergies and strategic benefits
from a business combination between the two companies. Subsequent to the
meeting, Dorel informed Mr. Lerner that its preliminary indication of value for
Safety 1(st) was approximately $11-12 cash per share. On February 17, 2000,
Dorel executed a confidentiality agreement with Safety 1(st) (the
"Confidentially Agreement") and, on February 22, 2000, submitted a due diligence
request for information to Safety 1(st).
13
<PAGE> 20
On February 14, 2000, Safety 1(st) received a due diligence request for
information from Bidder B. Upon receipt of a signed confidentiality agreement
from Bidder B, Safety 1(st) made due diligence information available to Bidder
B. On February 24, 2000, Bidder A provided Safety 1(st) and Goldman with a
letter of interest proposing an acquisition of Safety 1(st) for a price of
$11-13 cash per share.
At a telephonic Board meeting on February 29, 2000, Mr. Lerner updated the
Board on the status of discussions involving the potential acquisition of Safety
1(st). On March 1, 2000, Safety 1(st) received a revised due diligence
information request from Bidder A and Bidder A executed a confidentiality
agreement. On March 2-3, 2000, the acquisition team from Bidder A visited a
"data room," which had been established, and conducted due diligence procedures.
On March 6, 2000, Safety 1(st) received a proposal from Bidder B offering
$11 per share and contemplating a management retaining a portion of its equity.
On March 7, 2000, the senior management of Dorel visited Safety 1(st)'s
offices and attended a management presentation by Messrs. Lerner and Wenz.
Subsequently, during the weeks of March 7 and March 14, representatives from
Dorel and their acquisition team visited Safety 1(st)'s "data room" and
performed additional due diligence.
During a telephonic meeting on March 8, 2000, Mr. Lerner updated the Board
with respect to the status of ongoing due diligence by the interested parties.
At this meeting, the Board agreed to meet via telephone once a week while
discussions of a possible acquisition were actively continuing. At this stage,
the Board believed that discussions should continue in the context of
negotiations over definitive documentation and, in connection with these
negotiations, on March 8, 2000, Safety 1(st)'s counsel, Goodwin, Procter & Hoar
LLP distributed a draft merger agreement to each of Bidder A and Dorel.
Following consultation with Goldman, Mr. Lerner met with the senior
management of Dorel in Montreal on March 14, 2000 to discuss the possible
synergies and opportunities that could result from a combination of Safety 1(st)
and Dorel. On a March 15, 2000 conference call, the Board was updated on the
status of discussions with Dorel.
On March 20, 2000, after consultation with Goldman, Mr. Lerner discussed
with Bidder B the proposed terms of its offer to acquire Safety 1(st). Given
that $11 per share appeared to be the upper limit of the range that Bidder B
could offer and that the proposal would require that management retain its
equity in connection with the transaction, the parties agreed to terminate
discussions at that time.
During a telephonic meeting on March 22, 2000, Mr. Lerner updated the Board
on the ongoing due diligence activities of both Bidder A and Dorel and Safety
1(st)'s response to Bidder B's offer. On March 28, 2000, senior management of
Bidder A and its subsidiary visited Safety 1(st)'s offices and listened to a
presentation by senior management concerning Safety 1(st).
At a telephonic meeting on March 29, 2000, Mr. Lerner updated the Board
concerning the ongoing process of due diligence and contract negotiations
between Safety 1(st) and each of Bidder A and Dorel. On April 3, 2000, the Board
again met to discuss the status of ongoing discussions and negotiations with the
three interested parties. At this meeting, Goldman presented an analysis of the
financial terms of the three proposals that had been received or were
contemplated. Goodwin, Proctor & Hoar LLP reviewed the status of contract
negotiations with each of Bidder A and Dorel. Following these presentations, the
Board discussed the appropriate strategy for continued discussions with the
interested parties.
A senior executive of Bidder A telephoned Mr. Lerner on April 4, 2000 to
make a verbal cash offer of $11.75 per share for the acquisition of Safety
1(st). Subsequently, Safety 1(st) and its counsel engaged in contract
negotiations with Bidder A and its counsel that focused on, among other things,
the scope of the representations, warranties and covenants contained in the
merger agreement, the conditions under which the acquiring party would be
obligated to close the tender offer, the obligations of the parties with respect
to obtaining antitrust approval, the ability of Safety 1(st) to terminate the
merger agreement and to enter into an agreement with a party who made a superior
proposal and the amount of the termination fee to be paid to Bidder A in such
circumstances.
On April 10, 2000, the President of Dorel called Mr. Lerner to make a
verbal cash offer of $13 per share for the acquisition of Safety 1(st). In the
subsequent week, Safety 1(st) and its counsel negotiated with Dorel and its
counsel a variety of points raised by Dorel in its response. These discussions
focused on, among other things, the
14
<PAGE> 21
conditions under which Dorel would be obligated to close the tender offer, the
amount of the termination fee to be paid to Dorel if Safety 1(st) terminated the
Merger Agreement in order to enter into an agreement with a party who made a
Superior Proposal, and issues relating to Dorel's financing arrangements for the
transaction.
On April 11, 2000, Safety 1(st)'s counsel distributed a revised draft of
the Merger Agreement to Dorel and, on April 12, 2000, Safety 1(st)'s counsel
distributed a revised draft of the merger agreement to Bidder A. Later on April
12, 2000, the Board held a telephonic meeting and Safety 1(st)'s legal and
financial advisors updated the Board on negotiations with both Bidder A and
Dorel.
During the week of April 13, 2000, a senior executive of Bidder A, called
Mr. Lerner to inform him that they were contemplating increasing their offer to
the mid $12 range.
On April 13, 2000, Dorel provided Safety 1(st) with a draft of its
financing commitment letter. On April 14, 2000, Safety 1(st) and Goldman
conveyed to Dorel their comments on the draft of the commitment letter. On April
18, 2000, Dorel provided Safety 1(st) with a final version of the financing
commitment letter, which responded to certain of the comments provided to Dorel.
Later the same day, Safety 1(st)'s counsel distributed a revised draft of the
merger agreement to Dorel.
On April 19, 2000, after reviewing the status of both offers with Goldman,
Mr. Lerner telephoned the Chief Financial Officer of Bidder A and explained that
their offer price was lower than another interested party and that more
substantial contract points remained unresolved than remained with the other
interested party. In response, the Chief Financial Officer of Bidder A suggested
that a face-to-face meeting might expedite a resolution of the outstanding
contract issues. On the next day, April 20, 2000, members of the Bidder A
management team and their outside counsel met with Messrs. Lerner and Wenz,
Safety 1(st)'s counsel and a representative of Goldman. The parties made
substantial progress in resolving outstanding contract issues, although
significant points, including the parties' obligations with respect to obtaining
antitrust approval and the amount of the termination fee, remained outstanding
at the end of the meeting. Bidder A indicated that they were contemplating
raising their offer price and would inform Safety 1(st) the next day if they
decided to do so.
On April 21, 2000, the Board met telephonically to discuss the status of
negotiations with the interested parties. Mr. Lerner informed the Board that at
Safety 1(st)'s direction, Goldman instructed both Bidder A and Dorel to have
their final bids and contracts submitted by 5:00 p.m. on Friday, April 21, 2000.
Bidder A responded by increasing its bid to $13.00 per share and Dorel increased
its bid to $13.875 per share. Following the receipt of the bids and contracts,
additional discussions were held with both parties to evaluate the specifics of
their bids.
A Board meeting was held on Saturday, April 22, 2000 to review the final
bids. During the meeting, Goldman presented to the Board an analysis of the
financial terms of the final offers of Dorel and Bidder A and commented on the
price and structure of the two proposals. Following their presentation, Goldman
delivered its oral opinion to the effect that the consideration to be received
from Purchaser by Safety 1(st)'s stockholders in the Offer and the Merger was
fair from a financial point of view to Safety 1(st)'s stockholders. After
extensive discussions among the Board members and Safety 1(st)'s advisors, the
Board concluded that Dorel's final bid of $13.875 per share represented a
superior price to Bidder A's proposed price of $13.00 per share and the Merger
Agreement negotiated with Dorel contained more favorable terms than the one
negotiated with Bidder A, particularly with respect to the parties' obligations
to obtain antitrust approval. The Board then determined that the Offer and the
Merger were fair to and in the best interest of Safety 1(st) and its
stockholders, unanimously approved and adopted the Merger Agreement and the
transactions contemplated thereby, and recommended that all holders of shares
tender their Shares pursuant to the Offer. Subsequently, Dorel, Purchaser and
Safety 1(st) executed the Merger Agreement and publicly announced the
transaction.
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
This summary is qualified in its entirety by reference to the Merger Agreement,
which is incorporated herein by reference, and a copy of which has been filed as
an exhibit to the Schedule TO. The Merger Agreement may be examined and copies
may be obtained at the places set forth in Section 7. Defined terms used herein
and not defined herein shall have the respective meanings assigned to those
terms in the Merger Agreement.
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The Offer. The Merger Agreement provides for the commencement of the Offer
as soon as practicable after the date of the Merger Agreement. The obligation of
Purchaser to accept for payment Shares tendered pursuant to the Offer is subject
to the satisfaction of the Minimum Condition and certain other conditions that
are described in Section 14 hereof. Purchaser and Dorel have agreed that no
change in the Offer may be made which decreases the price per Share payable in
the Offer, which changes the consideration into a form other than cash, which
reduces the maximum number of Shares to be purchased in the Offer, which imposes
additional conditions to the Offer in addition to those set forth in Section 14
or amends the conditions to the Offer set forth in Section 14.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Massachusetts Law, Purchaser
shall be merged with and into Safety 1(st). As a result of the Merger, the
separate corporate existence of Purchaser will cease and Safety 1(st) will
continue as the Surviving Corporation and will become a wholly owned subsidiary
of Dorel. Upon consummation of the Merger, each issued and then outstanding
Share (other than any Shares held in the treasury of Safety 1(st), or owned by
Purchaser, Dorel or any direct or indirect wholly owned subsidiary of Dorel or
of Safety 1(st) and any Shares which are held by stockholders who have not voted
in favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing appraisal for such Shares in accordance with
Massachusetts Law) shall be canceled and converted automatically into the right
to receive the Merger Consideration.
Pursuant to the Merger Agreement, each share of common stock, no par value,
of Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid and
non-assessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of Safety 1(st) immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation.
Subject to the Merger Agreement, at the Effective Time the Articles of
Organization of Purchaser, as in effect immediately prior to the Effective Time,
will be the Articles of Organization of the Surviving Corporation; provided,
however, that, at the Effective Time, Article I of the Articles of Incorporation
of the Surviving Corporation will be amended to read as follows: "The name of
the corporation is Safety 1(st), Inc." Subject to the Merger Agreement, at the
Effective Time, the By-laws of Purchaser, as in effect immediately prior to the
Effective Time, will be the By-laws of the Surviving Corporation.
Stockholders' Meeting. Pursuant to the Merger Agreement, Safety 1(st)
shall duly call, give notice of, convene and hold an annual or special meeting
of its stockholders as promptly as practicable following consummation of the
Offer for the purpose of considering and taking action on the Merger Agreement
and the Merger (the "Stockholders' Meeting"). If Purchaser acquires at least a
majority of the outstanding Shares, Purchaser will have sufficient voting power
to approve the Merger, even if no other stockholder votes in favor of the
Merger.
Proxy Statement. The Merger Agreement provides that Safety 1(st) shall
file with the Commission under the Exchange Act a proxy statement and related
proxy materials (the "Proxy Statement") with respect to the Stockholders'
Meeting and shall cause the Proxy Statement and all required amendments and
supplements thereto to be mailed to the holders of Shares. Safety 1(st) has
agreed to include in the Proxy Statement the recommendation of the Board that
the stockholders of Safety 1(st) approve and adopt the Merger Agreement and the
Merger and to obtain such approval and adoption. Dorel and Purchaser have agreed
to cause all Shares then owned by them and their subsidiaries to be voted in
favor of approval and adoption of the Merger Agreement and the Merger.
Conduct of Business by Safety 1(st) Pending the Merger. Pursuant to the
Merger Agreement, Safety 1(st) has covenanted and agreed that, between the date
of the Merger Agreement and the Effective Time, the businesses of Safety 1(st)
and its subsidiaries (the "Subsidiaries" and, individually, a "Subsidiary") will
be conducted only in, and Safety 1(st) and the Subsidiaries shall not take any
action except, in the usual, regular and ordinary course, consistent with past
practice, and use their best efforts to preserve intact their present business
organizations, keep available the services of their present advisors, managers,
officers and employees and preserve their relationships with customers,
suppliers, licensors and others having business dealings with them and continue
existing contracts as in effect on the date of the Merger Agreement (for the
term provided in such contracts).
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The Merger Agreement provides that, without limitation, except as contemplated
therein or to the extent that Dorel shall otherwise consent in writing, neither
Safety 1(st) nor any Subsidiary shall, between the date of the Merger Agreement
and the Effective Time, directly or indirectly, do any of the following: (a)
split, combine or reclassify any shares of capital stock of Safety 1(st) or
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of any shares of
capital stock of Safety 1(st), except for dividends paid by any Subsidiary to
Safety 1(st) or any Subsidiary that is, directly or indirectly, wholly owned by
Safety 1(st); (b) authorize for issuance, issue or sell or agree or commit to
issue or sell (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any other securities or equity equivalents (including, without
limitation, stock appreciation rights) (other than the issuance of Shares upon
the exercise of Options outstanding on the date of the Merger Agreement in
accordance with their existing terms); (c) acquire, sell, lease, encumber,
transfer or dispose of any assets outside the ordinary course of business which
are material to Safety 1(st) or any of the Subsidiaries (whether by asset
acquisition, stock acquisition or otherwise), except pursuant to obligations in
effect on the date of the Merger Agreement or as set forth in the disclosure
schedules of the Merger Agreement; (d) except up to $10,000,000 pursuant to
credit facilities in existence on the date hereof, incur any amount of
indebtedness for borrowed money, guarantee any indebtedness, issue or sell debt
securities, make any loans, advances or capital contributions, mortgage, pledge
or otherwise encumber any material assets, create or suffer any material lien
thereupon other than in the ordinary course of business, except, in each case,
pursuant to credit facilities in existence on the date of the Merger Agreement;
(e) except pursuant to any mandatory payments under any credit facilities in
existence on April 22, 2000, pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than any payment, discharge or satisfaction (i) in the
ordinary course of business consistent with past practice, or (ii) in connection
with the Offer and Merger; (f) change any of the accounting principles or
practices used by it (except as required by generally accepted accounting
principles, in which case written notice will be provided to Dorel and Purchaser
prior to any such change); (g) except as required by law, (i) enter into, adopt,
amend or terminate any Company Benefit Plan (as defined in the Merger
Agreement), (ii) enter into, adopt, amend or terminate any agreement,
arrangement, plan or policy between Safety 1(st) or any of the Subsidiaries and
one or more of their directors or officers, or (iii) except for normal increases
in the ordinary course of business consistent with past practice, increase in
any manner the compensation or fringe benefits of any non-executive officer or
employee or pay any benefit not required by any Safety 1(st) benefit plan or
arrangement as in effect as of April 22, 2000; (h) adopt any amendments to the
Articles of Organization or the Bylaws except as expressly provided by the terms
of the Merger Agreement; (i) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or reorganization (other
than plans of complete or partial liquidation or dissolution of inactive
Subsidiaries); (j) settle or compromise any litigation (whether or not commenced
prior to April 22, 2000) other than settlements or compromises for litigation
where the amount paid (after giving effect to insurance proceeds actually
received) in settlement or compromise does not exceed $100,000; (k) amend any
term of any outstanding security of Safety 1(st) or any Subsidiary; (l) other
than in the ordinary course of business, neither Safety 1(st) nor any Subsidiary
shall modify or amend any Material Contract (as defined in the Merger Agreement)
to which Safety 1(st) or any Subsidiary is a party or waive, release or assign
any material rights or claims under any such Material Contract; (m) authorize,
commit to or make any equipment purchases or capital expenditures other than in
the ordinary course of business and consistent with past practice; or (n) enter
into an agreement to take any of the foregoing actions.
Board Representation. The Merger Agreement provides that, promptly upon
the purchase by Purchaser of Shares pursuant to the Offer, Dorel shall be
entitled to designate up to such number of directors, rounded up to the next
whole number, on the Board as shall give Dorel representation on the Board equal
to the product of the total number of directors on the Board (giving effect to
the directors elected pursuant to this sentence), multiplied by the percentage
that the total votes represented by such number of Shares purchased by Purchaser
bears to the total votes represented by the number of Shares then outstanding.
Safety 1(st) shall, upon request by Dorel, promptly increase the size of the
Board and/or exercise its best efforts to secure the resignations of such number
of its directors as is necessary to enable Dorel's designees to be elected to
the Board and shall take all actions to cause Dorel's designees to be so elected
to the Board. The Merger Agreement also provides that, at such time, Safety
1(st) shall take all actions to cause persons designated by Dorel to constitute
the same
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percentage (rounded up to the next whole number) as persons designated by Dorel
shall constitute of the Board of (i) each committee of the Board, (ii) each
board of directors (or similar body) of each Subsidiary, and (iii) each
committee (or similar body) of each such board. Notwithstanding the foregoing,
in the event that Dorel's designees are elected to the Board, until the
Effective Time, Safety 1(st) will have at least two members of the Board who are
directors as of the date of the Merger Agreement ("Independent Directors") to
remain members of the Board.
The Merger Agreement provides that, following the election or appointment
of Dorel's designees in accordance with the immediately preceding paragraph and
prior to the Effective Time, any amendment or termination of the Merger
Agreement by Safety 1(st), the exercise or waiver of any of Safety 1(st)'s
rights, benefits or remedies under the Merger Agreement or any extension by
Safety 1(st) of the time for the performance of any of the obligations of Dorel
or Purchaser under the Merger Agreement, will require the affirmative vote of a
majority of the Independent Directors.
In the Merger Agreement, the Company has agreed to take all action required
pursuant to Section 14(f) and Rule 14f-1 of the Exchange Act in order to fulfill
its obligations under the Merger Agreement, including mailing to stockholders
the information required by such Section 14(f) and Rule 14f-1 as is necessary to
enable Purchaser's designees to be elected to the Board.
Access to Information. Pursuant to the Merger Agreement, until the
Effective Time, Safety 1(st) shall, and shall cause the Subsidiaries and the
officers, directors, employees, auditors and agents of Safety 1(st) and the
Subsidiaries to, afford to Dorel and the officers, employees and agents of Dorel
complete access at all reasonable times to the officers, employees, agents,
properties, books, records and contracts of Safety 1(st) and each Subsidiary,
and shall furnish Dorel with such financial, operating and other data and
information as Dorel may reasonably request. Dorel and Purchaser have agreed to
keep such information confidential, except in certain circumstances as set out
in the Confidentiality Agreement (as defined herein).
No Solicitation of Transactions. Safety 1(st) has agreed that neither it
nor any Subsidiary or their respective officers, directors, or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it, directly or indirectly, shall (i) solicit,
initiate or encourage (including by way of furnishing non-public information),
or take any other action to facilitate, any inquiries or the making of any
proposal that constitutes an Acquisition Proposal (as defined herein), or (ii)
participate in any discussions or negotiations regarding an Acquisition
Proposal. Notwithstanding anything to the contrary in the Merger Agreement, if
Safety 1(st) receives an Acquisition Proposal that was unsolicited or that did
not otherwise result from a breach of the Merger Agreement, and the Board
determines in good faith (after consulting with its outside legal counsel and
its financial advisor) that such Acquisition Proposal is reasonably likely to
lead to a Superior Proposal (as defined herein), Safety 1(st) (x) may furnish
non-public information with respect to Safety 1(st) and the Subsidiaries to the
person who made such Acquisition Proposal (a "Third Party") and (y) may
participate in negotiations regarding such Acquisition Proposal. Notwithstanding
anything to the contrary in the Merger Agreement, Safety 1(st) will notify Dorel
after receipt of any Acquisition Proposal, but shall not be required to disclose
to Dorel or Purchaser the identity of the Third Party making any such
Acquisition Proposal and shall have no duty to notify or update Dorel or
Purchaser on the status of discussions or negotiations (including the status of
such Acquisition Proposal or any amendments or proposed amendments thereto)
between Safety 1(st) and such Third Party.
Safety 1(st) has represented to Dorel and Purchaser that as of the
execution of the Merger Agreement it had terminated any discussions or
negotiations relating to, or that may have been reasonably expected to lead to,
any Acquisition Proposal and agreed to promptly request the return of all
confidential information regarding Safety 1(st) provided to any third party
prior to the date of the Merger Agreement pursuant to the terms of any
confidentiality agreements.
Safety 1(st) has also agreed that the Board shall not withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Dorel or Purchaser, its
approval or recommendation of the Merger Agreement, the Offer or the Merger
unless the Board shall have received an Acquisition Proposal reasonably likely
to lead to a Superior Proposal and shall have determined in good faith, after
consulting with its outside legal counsel and its financial advisor, that the
Merger Agreement, the Offer or the Merger is no longer in the best interests of
Safety 1(st)'s stockholders and that such withdrawal or modification is required
to satisfy its fiduciary duties to Safety 1(st)'s stockholders under applicable
law.
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As used herein, the term "Acquisition Proposal" shall mean any proposed or
actual (i) merger, consolidation or similar transaction involving Safety 1(st),
(ii) sale, lease or other disposition, directly or indirectly, by merger,
consolidation, share exchange or otherwise, of any assets of Safety 1(st) or the
Subsidiaries representing 15% or more of the consolidated assets of Safety 1(st)
and the Subsidiaries, (iii) issue, sale or other disposition by Safety 1(st) of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing 15% or more of the
votes associated with the outstanding securities of Safety 1(st), (iv) tender
offer or exchange offer in which any person shall acquire beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act), or the right to
acquire beneficial ownership, or any "group" (as such term is defined under the
Exchange Act), or the right to acquire beneficial ownership, or any "group" (as
such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 15% or
more of the outstanding shares of Safety 1(st) common stock, (v)
recapitalization, restructuring, liquidation, dissolution, or other similar type
of transaction with respect to Safety 1(st) or (vi) transaction which is similar
in form, substance or purpose to any of the foregoing transactions; provided
however, that the term "Acquisition Proposal" shall not include the Merger and
the Offer.
As used herein, the term "Superior Proposal" shall mean an Acquisition
Proposal that the Board determines in good faith, after consulting with its
outside legal counsel and its financial advisor, would, if consummated, result
in a transaction that is more favorable to the stockholders of Safety 1(st) than
the Offer and the Merger.
Stock Options. The Merger Agreement also provides that each holder of an
option ("Option") granted under the Safety 1(st) Stock Option Plans (as defined
in the Merger Agreement) that is outstanding (whether or not currently
exercisable) as of immediately prior to the date on which Purchaser accepts for
payment Shares pursuant to the Offer (the "Acceptance Date") and which has not
been exercised or canceled prior thereto shall, on the Acceptance Date, be
canceled and in exchange therefor, Purchaser shall pay to the holder thereof,
cash in an amount equal to the product of (i) the number of Shares provided for
in such Option and (ii) the excess, if any, of the Offer Price over the exercise
price per Share provided for in such Option, which cash payment shall be treated
as compensation and shall be net of any applicable federal or state withholding
tax. Notwithstanding the foregoing, if the exercise price per Share provided for
in any Option exceeds the Offer Price, no cash shall be paid with regard to such
Option to the holder of such Option. In the Merger Agreement Safety 1(st) agreed
to take all actions necessary to ensure that (i) all Options, to the extent not
exercised prior to the Acceptance Date, shall terminate and be canceled as of
the Acceptance Date and thereafter be of no further force or effect, (ii) no
Options are granted after the date of the Merger Agreement, and (iii) as of the
Acceptance Date, Safety 1(st) Stock Option Plans and all Options issued
thereunder shall terminate.
Except as may be otherwise agreed to by Dorel or Purchaser and Safety
1(st), the Safety 1(st) Stock Option Plans shall terminate as of the Acceptance
Date and the provisions in any other plan, program or arrangement providing for
the issuance or grant of any other interest in respect of the capital stock of
Safety 1(st) or any of the Subsidiaries shall be of no further force and effect
and shall be deemed to be deleted as of the Acceptance Date and no holder of an
Option or any participant in any Safety 1(st) Stock Option Plan or any other
plans, programs or arrangements shall have any right thereunder to acquire any
equity securities of Safety 1(st), the Surviving Corporation or any Subsidiary
thereof.
Directors' and Officers' Indemnification. The Merger Agreement provides
for the indemnification of directors and officers of Safety 1(st) by Safety
1(st) prior to the Effective Date and by the Surviving Corporation after the
Effective Time, subject to certain conditions.
The Merger Agreement further provides that Dorel and Purchaser agree that
all rights to indemnification existing in favor of, and all limitations on the
personal liability of, the directors, officers, employees and agents of Safety
1(st) and the Subsidiaries provided for in the Articles of Organization or
Bylaws of Safety 1(st) as in effect as of the date of the Merger Agreement with
respect to matters occurring prior to the Effective Time, and including the
Offer and the Merger, shall continue in full force and effect for a period of
not less then six years from the Effective Time; provided, however, that all
rights to indemnification in respect of any claims (each a "Claim") asserted or
made within such period shall continue until the disposition of such Claim.
Prior to the Effective Time, Safety 1(st) shall purchase an extended reporting
period endorsement under Safety 1(st')s existing directors' and officers'
liability insurance coverage for Safety 1(st')s directors and officers in a form
acceptable to
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Safety 1(st) which shall provide such directors and officers with coverage for
six years following the Effective Time of not less than the existing coverage
under, and have other terms not materially less favorable on the whole to, the
insured persons than the directors' and officers' liability insurance coverage
presently maintained by Safety 1(st).
Dorel, Purchaser and Safety 1(st) have also agreed that in the event Dorel
or the Surviving Corporation or any of their respective successors or assigns
(a) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(b) transfers or conveys all or substantially all of its properties and assets
to any person or entity, then and in each such case, proper provision shall be
made so that the successors and assigns of Dorel or the Surviving Corporation,
as the case may be, shall assume the foregoing indemnity obligations.
Employee Benefit Arrangements. After the closing of the Merger, Dorel
shall cause Purchaser or Safety 1(st) to honor all obligations under (i) the
existing terms of the employment and severance agreements to which Safety
1(st)or any Subsidiary is presently a party, except as may otherwise be agreed
to by the parties thereto, and (ii) Safety 1(st')s and any Subsidiary's general
severance policy. Following the Effective Time, Safety 1(st')s employees will be
permitted to participate in the employee benefit plans of Dorel as in effect on
the date thereof on terms substantially similar to those provided to employees
of Dorel. Until such time as Dorel causes employees of Safety 1(st) to
participate in the employee benefit plans of Dorel, employees of Safety
1(st)will continue to participate in the currently existing benefit plans of
Safety 1(st) (other than stock option or stock purchase plans) on substantially
similar terms to those currently in effect.
If any employee of Safety 1(st) or any of the Subsidiaries becomes a
participant in any employee benefit plan, practice or policy of Dorel, any of
its affiliates or the Surviving Corporation, such employee shall be given credit
under such plan for all service prior to the Effective Time with Safety 1(st)
and the Subsidiaries and prior to the time such employee becomes such a
participant, for purposes of eligibility (including, without limitation, waiting
periods) and vesting, and such employees will be given credit for such service
for purposes of any vacation policy. In addition, if any employees of Safety
1(st) or any of the Subsidiaries employed as of the closing of the Merger become
covered by a medical plan of Dorel, any of its affiliates or the Surviving
Corporation, such medical plan shall not impose any exclusion on coverage for
preexisting medical conditions with respect to these employees.
Further Action. The Merger Agreement provides that each of the parties
thereto shall use its best efforts to take all such action as may be necessary
or appropriate in order to effectuate the Merger under Massachusetts Law as
promptly as practicable following the purchase of the Shares pursuant to the
Offer. If at any time after the Effective Time any further action is necessary
or desirable to carry out the purposes of the Merger Agreement and to vest the
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of both of Safety 1(st) and
Purchaser, the officers of such corporations are fully authorized in the name of
their corporation or otherwise to take, and shall take, all such lawful and
necessary action. In addition, to the extent Richard E. Wenz exercises stock
options prior to Monday, June 5, 2000, Safety 1(st) agrees to use its best
efforts to have him enter into the Tender Agreement (as defined herein) as soon
as possible after such exercise.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including
representations by Safety 1(st) as to the absence of certain changes or events
concerning Safety 1(st')s business, compliance with law, capitalization, absence
of litigation, employee benefit plans, labor matters, property and leases,
intellectual property, environmental matters, taxes, material contracts, opinion
of financial advisors and brokers.
Conditions to 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 and to
the extent required by Massachusetts Law, the Merger Agreement and the Merger
shall have been approved and adopted by the affirmative vote of the stockholders
of Safety 1(st); (b) any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired or been
terminated; (c) all necessary approvals, authorizations and consents of any
governmental or regulatory entity required to consummate the Merger shall have
been obtained and remain in full force and effect, and all waiting periods
relating to such approvals, authorizations and consents shall have expired or
been terminated, except where such failure would not have a material adverse
effect with respect to Safety 1(st) or Dorel, as the
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case may be, or would not affect adversely the ability of Safety 1(st) or
Purchaser, as the case may be, to consummate the Merger; (d) no statute, order,
decree, ruling or permanent injunction shall have been enacted, entered,
promulgated or enforced by any governmental entity which prohibits the
consummation of the Merger on the terms contemplated by the Merger Agreement;
provided that the party seeking to rely upon this condition has fully complied
with and performed its obligations to make all necessary filings with applicable
governmental entities as required by the Merger Agreement; (e) all consents
relating to any Material Contracts set forth in the Merger Agreement that are
necessary as a result of the consummation of the transactions contemplated by
the Merger Agreement shall have been received; and (f) Dorel, Purchaser or their
affiliates shall have purchased all Shares validly tendered and not withdrawn
pursuant to the Offer.
Termination. The Merger Agreement provides that it may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval and adoption of the Merger Agreement and the Merger by
the stockholders of Safety 1(st) (a) by mutual written consent of each of Dorel,
Purchaser and Safety 1(st); or (b) by either Dorel, Purchaser or Safety 1(st)
(i) if any Governmental Entity shall have enacted, entered, promulgated or
enforced a final and nonappealable injunction (which injunction the parties
hereto shall have used their best efforts to lift), which prohibits the
consummation of the Merger on the terms contemplated by the Merger Agreement
(provided that the party seeking to rely upon this condition has fully complied
with and performed its obligations pursuant to the Merger Agreement), or
permanently enjoins the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger; (ii) if, without any material breach by the
terminating party of its obligations under this Agreement, Dorel or Acquisition
Sub shall not have purchased Shares pursuant to the Offer on or prior to the
Expiration Date; provided, however, that neither Dorel, Purchaser nor Safety
1(st) shall terminate the Merger Agreement prior to August 31, 2000 if Shares
shall not have been purchased by Purchaser by reason of any applicable waiting
period (and any extension thereof) under the HSR Act in respect of the Offer not
having expired or been terminated or the pendency of a non-final injunction, and
Dorel, Purchaser and Safety 1(st) shall use their best efforts to cause such
condition to be satisfied (including, without limitation, by complying with the
requirements of the FTC or other comparable Governmental Entity to divest of
assets or otherwise in connection with the consummation of the Offer and Merger
or in settlement of any action brought by it) or have any such injunction stayed
or reversed; or (iii) by either Safety 1(st) or Dorel if, at the special meeting
of stockholders (including any adjournment or postponement thereof) called
pursuant to the Merger Agreement the requisite vote of the stockholders of
Safety 1(st) for the Merger shall not have been obtained; (c) by Safety 1(st):
(i) if Parent or Purchaser shall have failed to commence the Offer on or prior
to the tenth business day following the date of the initial public announcement
of the Offer; (ii) if the Board shall have (A) withdrawn, or modified or changed
in a manner adverse to Dorel its approval or recommendation of the Merger
Agreement or the Offer, or resolved to do any of the foregoing, and (B)
determined in good faith, after consultation with its outside legal counsel and
its financial advisor, that an Acquisition Proposal is a Superior Proposal;
(iii) if Dorel or Purchaser shall have breached in any material respect any of
their respective representations, warranties, covenants or other agreements
contained in the Merger Agreement, which breach cannot be or has not been cured
within 30 days after the giving of written notice to Dorel or Purchaser except,
in any case, for such breaches which would not affect adversely Dorel's or
Purchaser's ability to consummate the Offer or the Merger provided, however,
that no cure period shall be applicable to the matters set forth in clause (i)
of this paragraph; or (iv) if the Minimum Condition shall not have been
satisfied, in which case neither Dorel, Purchaser nor any of their affiliates
shall be permitted to accept for payment or pay for any Shares unless and until
Safety 1(st) shall have provided Dorel with written notice stating that Safety
1(st) is not exercising its right to terminate the Merger Agreement; (d) by
Dorel or Purchaser if: (i) Safety 1(st) shall have breached any representation,
warranty, covenant or other agreement contained in the Merger Agreement which
breach (A) would give rise to the failure of a condition set forth in paragraph
(b), (c) or (e) of Annex A to the Merger Agreement, and (B) cannot be or has not
been cured within 30 days after the giving of written notice to Safety 1(st); or
(ii) if the Board shall have withdrawn, modified or changed in a manner adverse
to Dorel its approval or recommendation of the Merger Agreement or the Offer or
shall have executed an agreement in principle or definitive agreement relating
to an Acquisition Proposal with a person or entity other than Dorel or its
affiliates or resolved to do any of the foregoing.
Effect of Termination. In the event of the termination of the Merger
Agreement, the Merger Agreement shall forthwith become null and void and have no
effect, and there shall be no liability on the part of any party or its
affiliates, trustees, directors, officers or stockholders and all rights and
obligations of any party shall cease
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thereto, except (i) as set forth below under the section entitled "Fees and
Expenses" and (ii) nothing in the Merger Agreement shall relieve any party from
liability for any breach thereof prior to the date of such termination,
provided, however, that the Confidentiality Agreement shall survive any
termination of the Merger Agreement.
Fees and Expenses. The Merger Agreement provides that subject to the
termination of the Merger Agreement, whether or not the Merger is consummated,
all fees, costs and expenses incurred in connection with this Agreement and the
Offer and Merger shall be paid by the party incurring such fees, costs or
expenses.
If Safety 1(st) or Dorel terminates the Merger Agreement because of the
Board's decision to withdraw, modify or change in a manner adverse to Dorel its
approval or recommendation of the Merger Agreement or the Offer or because
Safety 1(st) shall have executed an agreement in principle or definitive
agreement relating to an Acquisition Proposal with a person or entity other than
Dorel or its affiliates or resolved to do any of the foregoing, then Safety
1(st) shall as soon as possible thereafter pay to Dorel an amount in cash equal
to 4% of the sum of (a) the product of (i) the Merger Consideration and (ii) the
total number of issued and outstanding Shares, and (b) the amount to be paid for
Options pursuant to the Merger Agreement.
TENDER AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE TENDER AGREEMENT,
DATED AS OF APRIL 22, 2000, AMONG DOREL, PURCHASER AND EACH OF MICHAEL LERNER,
MICHAEL BERNSTEIN, DB CAPITAL PARTNERS, INC. (FORMERLY BT CAPITAL PARTNERS,
INC.), MARK OWENS AND BEAR, STEARNS & CO., INC. (THE "TENDER AGREEMENT"). THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE TENDER AGREEMENT, WHICH
IS INCORPORATED HEREIN BY REFERENCE, AND A COPY OF WHICH HAS BEEN FILED WITH THE
COMMISSION AS AN EXHIBIT TO THE SCHEDULE TO. THE TENDER AGREEMENT MAY BE
EXAMINED AND COPIES MAY BE OBTAINED AT THE PLACES SET FORTH IN SECTION 7.
Dorel, Purchaser and each of Michael Lerner, Michael Bernstein, DB Capital
Partners, Inc., Mark Owens and Bear, Stearns & Co., Inc. have entered into the
Tender Agreement, obligating each of Michael Lerner, Michael Bernstein, DB
Capital Partners, Inc., Mark Owens and Bear, Stearns & Co., Inc. to tender their
respective Shares pursuant to the Offer. To the extent that Richard Wenz
exercises stock options prior to Monday, June 5, 2000, Safety 1(st) agrees to
use its best efforts to have him enter into the Tender Agreement as soon as
possible after such exercise. The stockholders who have entered into the Tender
Agreement represent approximately 58% of the total outstanding shares of Safety
1(st). Pursuant to the Tender Agreement, each of the stockholders has agreed to
validly tender and not withdraw, pursuant to and in accordance with the Offer,
all of the Shares such stockholder owns as of the date of the Tender Agreement
including any additional Shares that such stockholder may own, whether acquired
by purchase, exercise of Options or otherwise, at any time prior to the
termination of the Tender Agreement. The Tender Agreement terminates at the
earlier of the Effective Time and the termination of the Merger Agreement in
accordance with the provisions of the Merger Agreement.
Each stockholder who has signed the Tender Agreement has agreed, at any
meeting of the stockholders of Safety 1(st), however called, or in connection
with any written consent of the stockholders of Safety 1(st), to vote (or cause
to be voted) the Shares (if any) then held of record or beneficially owned by
such stockholder, (i) in favor of the Merger, the execution and delivery by
Safety 1(st) of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and the Tender
Agreement and any actions required in furtherance thereof, and (ii) against any
Acquisition Proposal and against any action or agreement that would impede,
prevent or nullify the Tender Agreement, or result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
Safety 1(st) under the Merger Agreement or which would result in any of the
conditions to the Offer or the Merger not being fulfilled.
Each of the stockholders who has signed the Tender Agreement has agreed not
to (i) transfer (which term shall include, without limitation, any sale, gift,
pledge or other disposition), or consent to any transfer of, any or all of such
stockholder's Shares, Options or any interest therein, (ii) enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all of such Shares, Options or any interest therein, (ii)
grant any proxy, power-of-attorney or other authorization in or with respect to
such Shares or Options, (iv) deposit such Shares or Options into a voting trust
or enter into a voting agreement or arrangement with respect to such Shares or
Options, or (v) take any other action that would in any way restrict, limit or
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interfere with the performance of its obligations under the Tender Agreement or
the transactions contemplated thereby or by the Merger Agreement.
Each stockholder who has signed the Tender Agreement has agreed, in its
capacity as a stockholder or otherwise, that neither such stockholder nor any of
its subsidiaries or affiliates shall (and such stockholder shall use its best
efforts to cause its officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), 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 Dorel, any
of its affiliates or representatives) concerning any Acquisition Proposal or
take any other action prohibited by the Merger Agreement. Each stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal.
Each stockholder who has signed the Tender Agreement has waived any rights
of appraisal or rights to dissent from the Merger that such stockholder may
have.
CONFIDENTIALITY AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE CONFIDENTIALITY
AGREEMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
CONFIDENTIALITY AGREEMENT, WHICH IS INCORPORATED HEREIN BY REFERENCE, AND A COPY
OF WHICH HAS BEEN FILED WITH THE COMMISSION AS AN EXHIBIT TO THE SCHEDULE TO.
THE CONFIDENTIALITY AGREEMENT MAY BE EXAMINED AND COPIES MAY BE OBTAINED AT THE
PLACES SET FORTH SET FORTH IN SECTION 7.
On February 17, 2000, Dorel and Safety 1(st), executed a Confidentiality
Agreement (the "Confidentiality Agreement"). Pursuant to the terms of the
Confidentiality Agreement, Safety 1(st) agreed to provide to Dorel or an
affiliate certain confidential and proprietary information concerning Safety
1(st), and, on behalf of itself and any of its affiliates which received any of
the confidential information, Dorel agreed among other things: (1) to keep the
confidential information confidential, (2) not to use the confidential
information for any purpose other than to evaluate a possible acquisition
transaction with Safety 1(st), (3) not to disclose the fact that the
confidential information had been made available to Dorel and (4) that neither
Dorel nor any of its affiliates would in any manner, directly or indirectly,
except at the specific invitation of Safety 1(st), for a period of two years
after the date of the Confidentiality Agreement, (a) acquire or agree, offer,
seek or propose to acquire, or cause to be acquired, ownership (including, but
not limited to, beneficial ownership as defined in Rule 13d-1 under the Exchange
Act) of any of the assets or businesses of the Disclosing Party (as defined in
the Confidentiality Agreement) or any of its subsidiaries or of any securities
of the Disclosing Party or any of its subsidiaries, or any rights or options to
acquire any such ownership (including from a third party), except as approved in
writing by Safety 1(st), or (b) make, or in any way participate in, any
solicitation of proxies (as such terms are used in the Exchange Act) to vote or
seek to advise or influence in any manner whatsoever any person or entity with
respect to the voting of any securities of the Disclosing Party or any of its
subsidiaries, or (c) form, join, or in any way participate in a group (within
the meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting
securities of the Disclosing Party or any of its subsidiaries, or (d) arrange,
or in any way participate in, any financing for the purchase of any voting
securities or securities convertible or exchangeable into or exercisable for any
voting securities or assets of the Disclosing Party or any of its subsidiaries,
or (e) otherwise act, whether alone or in concert with others, to seek to
propose to the Disclosing Party or any of its stockholders any merger, business
combination, restructuring, recapitalization or similar transaction to or with
the Disclosing Party or any of its subsidiaries or otherwise act, whether alone
or in concert with others, to seek to control, change or influence the
management, board of directors or policies of the Disclosing Party, or nominate
any person as a director of the Disclosing Party who is not nominated by the
then incumbent directors, or propose any matter to be voted upon by the
stockholders of the Disclosing Party, or (f) solicit, negotiate with, or provide
any information to, any person with respect to a merger, exchange offer or
liquidation of the Disclosing Party or any of its subsidiaries, or any other
acquisition of the Disclosing Party or any of its subsidiaries, any acquisition
or voting securities of or all or any portion of the assets of the Disclosing
Party or any of its subsidiaries, or any other similar transaction, or (g)
announce an intention to, or enter into any discussion, negotiations,
arrangements or understandings with any third party with respect to, any of the
foregoing, or (h) disclose any intention, plan or arrangement inconsistent with
the foregoing, or (i) advise, assist or encourage any other person in connection
with any of the foregoing.
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11. PURPOSE OF THE OFFER; PLANS FOR SAFETY 1(ST) AFTER THE OFFER AND THE MERGER
Purpose of the Offer. The Offer is being made pursuant to the Merger
Agreement. The purpose of the Offer is for Dorel to acquire control of, and the
entire equity interest in, Safety 1(st). The purpose of the Merger is for Dorel
to acquire all Shares not purchased pursuant to the Offer. Upon consummation of
the Merger, Safety 1(st) will become a wholly owned subsidiary of Dorel.
Under Massachusetts Law, the approval of the Board and the affirmative vote
of the holders of two-thirds of the outstanding Shares is required to approve
and adopt the Merger Agreement and the transactions contemplated thereby,
including the Merger, unless the Articles of Organization specifically states
that the affirmative vote of holders of only a majority of the outstanding votes
is required. Safety 1(st)'s Articles of Organization permit approval of the
Merger by an affirmative vote of a majority of the outstanding shares of Safety
1(st). The Board has unanimously determined that each of the Offer and the
Merger is fair to, and in the best interests of, the holders of Shares, has
approved, adopted and declared advisable the Merger Agreement and the Merger
(such approval and adoption having been made in accordance with Massachusetts
Law) and recommends that stockholders accept the Offer and tender their Shares
pursuant to the Offer. The only remaining required corporate action of Safety
1(st) is the approval and adoption of the Merger Agreement and the Merger by the
affirmative vote of the holders of at least a majority of the Shares.
Accordingly, if the Minimum Condition is satisfied, Purchaser will have
sufficient voting power to cause the approval and adoption of the Merger
Agreement and the Merger without the affirmative vote of any other stockholder.
In the Merger Agreement, Safety 1(st) has agreed to duly call, give notice
of, convene and hold an annual or special meeting of its stockholders as
promptly as practicable following consummation of the Offer for the purpose of
considering and taking action on the Merger Agreement and the Merger. Dorel and
Purchaser have agreed that all Shares owned by them and their subsidiaries will
be voted in favor of the approval and adoption of the Merger Agreement and the
Merger.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer, Purchaser will be entitled to designate
representatives to serve on the Board in proportion to Purchaser's ownership of
Shares following such purchase. See Section 10. Purchaser expects that such
representation would permit Purchaser to exert substantial influence over Safety
1(st)'s conduct of its business and operations.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders who have not tendered
their Shares will have certain rights under Massachusetts Law to dissent from
the Merger and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. Stockholders who perfect such rights by complying with
the procedures set forth in Sections 85 to 98 of Massachusetts Law ("Appraisal
Sections") will have the "fair value" of their Shares (exclusive of any element
of value arising from the accomplishment or expectation of the Merger)
judicially determined and will be entitled to receive a cash payment equal to
such fair value for the Surviving Corporation; provided, however, that all
Shares held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such Shares under the
provisions of Massachusetts Law shall thereupon be deemed to have been canceled
and retired and to have been converted, as of the Effective Time, into the right
to receive the Merger Consideration, without interest, in the manner provided in
the Merger Agreement. Persons who have perfected statutory rights with respect
to Dissenting Shares (as defined in the Merger Agreement) as aforesaid will not
be paid by the Surviving Corporation as provided in this Agreement and will have
only such rights as are provided by the Appraisal Sections of Massachusetts Law
with respect to such Dissenting Shares. Notwithstanding anything in the Merger
Agreement to the contrary, if Dorel or Purchaser abandons or is finally enjoined
or prevented from carrying out, or the stockholders rescind their adoption of,
this Agreement, the right of each holder of Dissenting Shares to receive the
fair value of such Dissenting Shares in accordance with the provision of
Massachusetts Law will terminate, effective as of the time of such abandonment,
injunction, prevention or rescission.
Dorel does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any stockholder and the demand
for appraisal of, and payment in cash for the fair value of, the Shares. Dorel
intends, however, to cause the Surviving Corporation to argue in an appraisal
proceeding that, for purposes of such proceeding, the fair value of each Share
is less than or equal to the Merger Consideration. In this regard, stockholders
should be aware that opinions of investment banking firms as to the fairness
from a
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financial point of view (including Goldman's) are not necessarily opinions as to
"fair value" under the Appraisal Sections of Massachusetts Law.
The foregoing summary of the rights of dissenting stockholders under
Massachusetts Law does not purport to be a complete statement of the procedures
to be followed by stockholders desiring to exercise any dissenters' rights under
Massachusetts Law. The preservation and exercise of dissenters' rights require
strict adherence to the applicable provisions of Massachusetts Law. The text of
the Appraisal Sections of Massachusetts Law is attached to this Offer to
Purchase at Schedule II.
Going Private Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes that Rule 13e-3 will not be applicable to the Merger. Rule 13e-3
requires, among other things, that certain financial information concerning
Safety 1(st) and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the Commission and disclosed to stockholders prior to
consummation of the transaction.
Plans for Safety 1(st). It is expected that, initially following the
Merger, the business and operations of Safety 1(st) will, except as set forth in
this Offer to Purchase, be continued by Safety 1(st) substantially as they are
currently being conducted. Dorel will continue to evaluate the business and
operations of Safety 1(st) during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. Dorel intends to seek
additional information about Safety 1(st) during this period. Thereafter, Dorel
intends to review such information as part of a comprehensive review of Safety
1(st)'s business, operations, capitalization and management with a view to
optimizing exploitation of Safety 1(st)'s potential in conjunction with Dorel's
businesses. It is expected that the business and operations of Safety 1(st)
would form an important part of Dorel's future business plans.
Except as indicated in this Offer to Purchase, Dorel does not have any
present plans or proposals which relate to or would result in (a) any
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, relocation of any operations of Safety 1(st) or any of its
subsidiaries, (b) any purchase, sale or transfer of a material amount of assets,
involving Safety 1(st) or any of its subsidiaries, (c) any material change in
Safety 1(st)'s present indebtedness, capitalization or dividend policy, (d) any
change in the present board of directors or management of Safety 1(st), (e) any
other material change in Safety 1(st)'s corporate structure or business, (f) any
class of equity security of Safety 1(st) being delisted from a national stock
exchange or ceasing to be authorized to be quoted in an automated quotation
system operated by a national securities association, (g) any class of equity
securities of Safety 1(st) becoming eligible for termination of registration
under Section 12(g)(4) of the Exchange Act, (h) the suspension of Safety 1(st)'s
obligation to file reports under Section 15(d) of the Act, (i) the acquisition
by any person of additional securities of Safety 1(st), or the disposition of
securities of Safety 1(st), or (j) any changes in Safety 1(st)'s charter,
Articles of Organization, Bylaws or other governing instruments or other actions
that could impede the acquisition of control of Safety 1(st).
12. DIVIDENDS AND DISTRIBUTIONS
As described above, the Merger Agreement provides that, from the date of
the Merger Agreement to the Effective Time (unless Dorel agrees otherwise in
writing), Safety 1(st) will not, and will not permit any Subsidiary to, declare,
set aside or pay any dividend or make any other distribution (whether in cash,
stock or property or any combination thereof) with respect to any shares of its
capital stock, except for dividends paid by any Subsidiary to Safety 1(st) or
any Subsidiary that is directly or indirectly wholly owned by Safety 1(st).
Furthermore, Safety 1(st) will not and will not permit its Subsidiaries to (a)
adopt any amendments to the Articles of Organization or Bylaws, (b) issue or
sell or commit to issue or sell (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities or equity equivalents (including,
without limitation, stock appreciation rights) other than the issuances of
Shares upon the exercise of options outstanding on the date of the Merger
Agreement in accordance with their terms on the date of the Merger Agreement,
(c) effect any stock split, combination or reclassification with respect to any
shares of capital stock of Safety 1(st) or (d) amend any term of any outstanding
security of Safety 1(st) or any Subsidiary.
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In addition, Safety 1(st) will not, and will not permit any Subsidiary to,
sell, lease, encumber, transfer or dispose of any assets outside the ordinary
course of business which are material to Safety 1(st) or any of the Subsidiaries
except pursuant to obligations in effect on the date of the Merger Agreement or
as set forth in the Merger Agreement.
13. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR SHARES, NASDAQ LISTING,
MARGIN REGULATIONS AND EXCHANGE ACT REGISTRATION
Possible Effects of the Offer on the Market for Shares. The purchase of
Shares by Purchaser pursuant to the Offer will reduce the number of Shares that
might otherwise trade publicly and will reduce the number of holders of Shares,
which could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Dorel intends to cause the delisting of the Shares by Nasdaq following
consummation of the Offer.
Nasdaq Listing. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued listing on
Nasdaq. According to Nasdaq's published guidelines, the Shares would not be
eligible to be included for listing if, among other things, the number of Shares
publicly held falls below 100,000, the number of holders of Shares falls below
300 or the market value of such publicly held Shares is not at least $200,000.
If, as a result of the purchase of Shares pursuant to the Offer, the Merger, the
Stock Purchase Agreement or otherwise, the Shares no longer meet the
requirements of Nasdaq for continued listing, the listing of the Shares will be
discontinued. In such event, the market for the Shares would be adversely
affected. In the event the Shares were no longer eligible for listing on Nasdaq,
quotations might still be available from other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of holders of such Shares remaining at such time, the
interest in maintaining a market in such Shares on the part of securities firms,
the possible termination of registration of such Shares under the Exchange Act
as described below and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by Safety
1(st) to the Commission if the Shares are not listed on a "national securities
exchange" and there are fewer than 300 record holders. The termination of the
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by Safety 1(st) to holders of Shares and to
the Commission and would make certain provisions of the Exchange Act, such as
the short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with stockholders' meetings pursuant
to Section 14(a) or 14(c) of the Exchange Act and the related requirements of an
annual report, and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions, no longer applicable to the Shares. In
addition, "affiliates" of Safety 1(st) and persons holding "restricted
securities" of Safety 1(st) may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended. If registration of the Shares under the Exchange Act were terminated,
the Shares would no longer be eligible for Nasdaq reporting. Purchaser currently
intends to seek to cause Safety 1(st) to terminate the registration of the
Shares under the Exchange Act as soon after consummation of the Offer as the
requirements for termination of registration are met.
Margin Regulations. The Shares are currently "margin securities", as such
term is defined under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer it is possible that the Shares might no
longer constitute "margin securities" for purposes of the margin regulations of
the Federal Reserve Board, in which event such Shares could no longer be used as
collateral for loans made by brokers. In addition, if registration of the Shares
under the Exchange Act were terminated, the Shares would no longer constitute
"margin securities".
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, but subject to the terms
of the Merger Agreement, Purchaser shall not be required to accept for payment
any Shares tendered pursuant to the Offer, and may extend, terminate or amend
the Offer if (i) immediately prior to the expiration of the Offer, the Minimum
Condition shall not have been satisfied, (ii) any applicable waiting period
under the HSR Act shall not have
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expired or been terminated prior to the expiration of the Offer, or (iii) at any
time on or after April 22, 2000 and prior to the Expiration Date, any of the
following conditions shall exist:
(a) any Governmental Entity shall have enacted, entered, promulgated or
enforced a final and nonappealable injunction (which injunction the
parties hereto shall have used their best efforts to lift), which (i)
prohibits Dorel or Purchaser from owning or operating all of the
material portions of the business and assets of Safety 1(st) and the
Subsidiaries taken as a whole or (ii) prohibits the consummation of
the Merger on the terms contemplated by the Merger Agreement (provided
that the party seeking to rely upon this condition has fully complied
with and performed its obligations pursuant to the Merger Agreement),
or permanently enjoins the acceptance for payment of, or payment for,
Shares pursuant to the Offer or the Merger;
(b) (i) any of the representations and warranties of Safety 1(st) set
forth in the Agreement which are qualified by a material adverse
effect with respect to Safety 1(st) or words of similar effect shall
not have been, or cease to be, true and correct (except to the extent
such representations and warranties expressly relate to a specific
date or as of the date of the Merger Agreement, in which case such
representations and warranties shall not have been true and correct as
of such date); or (ii) any of the representations and warranties of
Safety 1(st) set forth in the Merger Agreement which are not so
qualified shall not have been, or cease to be, true and correct
(except to the extent such representations and warranties expressly
relate to a specific date or as of the date hereof, in which case such
representations and warranties shall not have been true and correct in
all material respects as of such date), except for such inaccuracies
as, individually or in the aggregate, would not have a material
adverse effect with respect to Safety 1(st);
(c) Safety 1(st) shall not have performed all obligations required to be
performed by it under the Merger Agreement, including, without
limitation, the covenants contained in Article VI or VII thereof,
except where any failure to perform would, individually or in the
aggregate, not materially impair or significantly delay the ability of
Purchaser to consummate the Offer;
(d) the Merger Agreement shall have been terminated in accordance with its
terms;
(e) any consent, authorization, order or approval of (or filing or
registration with) any governmental commission, board, other
regulatory body or other third party required to be made or obtained
by Safety 1(st) or any of the Subsidiaries or affiliates in connection
with the execution, delivery and performance of the Merger Agreement
shall not have been obtained or made, except where the failure to have
obtained or made any such consent, authorization, order, approval,
filing or registration, would not have a material adverse effect with
respect to Safety 1(st);
(f) Safety 1(st) shall have executed a definitive agreement or agreement
in principle with any person relating to an Acquisition Proposal with
a person or entity other than Dorel or its affiliates;
(g) the Board shall have (A) withdrawn, or modified or changed in a manner
adverse to Dorel its approval or recommendation of the Merger
Agreement or the Offer, or resolved to do any of the foregoing, and
(B) determined in good faith, after consultation with its outside
legal counsel and its financial advisor, that an Acquisition Proposal
is a Superior Proposal; or
(h) there shall have occurred, after the date of this Agreement, any
change concerning Safety 1(st) or the Subsidiaries which has had a
material adverse effect on the business, assets, results of operations
or financial condition of Safety 1(st) and the Subsidiaries taken as a
whole ("Material Adverse Change"), provided, however, that any change
(i) that primarily results from the Merger Agreement, the Merger, the
Offer and the transactions contemplated thereby or the announcement
thereof, (ii) generally affecting the industries in which Safety 1(st)
operates, including changes due to actual or proposed changes in law
or regulations, or (iii) related to a general drop in stock prices in
the United States shall be excluded in determining whether a Material
Adverse Change has occurred.
The foregoing conditions may be asserted by Dorel or Purchaser regardless
of the circumstances (including, any action or inaction by Dorel or any of its
affiliates other than a material breach of the Merger Agreement and are for the
sole benefit of Purchaser and Dorel) giving rise to any such condition. The
foregoing conditions may be waived by Purchaser or Dorel in whole or in part at
any time and from time to time in their sole discretion. The failure by Dorel or
Purchaser at any time to exercise any of the foregoing rights shall not be
27
<PAGE> 34
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.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS
General. Based upon its examination of publicly available information with
respect to Safety 1(st) and the review of certain information furnished by
Safety 1(st) to Dorel and discussions between representatives of Dorel with
representatives of Safety 1(st) during Dorel's investigation of Safety 1(st)
(see Section 10), neither Purchaser nor Dorel is aware of (i) any license or
other regulatory permit that appears to be material to the business of Safety
1(st) or any of its subsidiaries, taken as a whole, which might be adversely
affected by the acquisition of Shares by Purchaser pursuant to the Offer or (ii)
except as set forth below, of any approval or other action by any domestic
(federal or state) or foreign governmental authority which would be required
prior to the acquisition of Shares by Purchaser pursuant to the Offer. Should
any such approval or other action be required, it is Purchaser's present
intention to seek such approval or action. Purchaser does not currently intend,
however, to delay the purchase of Shares tendered pursuant to the Offer pending
the outcome of any such action or the receipt of any such approval (subject to
Purchaser's right to decline to purchase Shares if any of the conditions in
Section 14 shall have occurred). There can be no assurance that any such
approval or other action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to the business of
Safety 1(st), Purchaser or Dorel or that certain parts of the businesses of
Safety 1(st), Purchaser or Dorel might not have to be disposed of or held
separate or other substantial conditions complied with in order to obtain such
approval or other action or in the event that such approval was not obtained or
such other action was not taken. Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section 15.
See Section 14 for certain conditions of the Offer.
State Takeover Laws. Safety 1(st) is incorporated under the laws of the
Commonwealth of Massachusetts. The Massachusetts control share acquisition
statute (the "Control Share Acquisition Statute") provides that shares acquired
in a "control share acquisition" do not possess voting rights except to the
extent authorized by a majority vote of the stockholders of Safety 1(st). A
"control share acquisition" is defined as the acquisition by any person of
beneficial ownership of shares of a Massachusetts corporation meeting certain
criteria (Safety 1(st) meets such criteria) which, together with all other
shares owned by such person, would entitle such person to vote or direct the
voting of shares having voting power of (i) 20% to 33%, (ii) 33% to 50%, or
(iii) 50% or more; subject to certain exceptions, including that an acquisition
of shares pursuant to a tender offer, merger or consolidation that is made
pursuant to an agreement with the issuing corporation is not a control share
acquisition.
Safety 1(st) in its By-Laws has opted out of the Massachusetts Control
Share Acquisition Statute.
Pursuant to Sections 78 and 79 of Massachusetts Law, a merger with a
Massachusetts corporation must be approved by a vote of at least two-thirds (or
such lesser threshold equal to at least a majority, if so stated in a company's
articles) of each class of stock outstanding of the Massachusetts corporation.
Safety 1(st)'s Articles of Organization provide that a simple majority of
stockholders may approve a merger under these sections.
Pursuant to Section 82 of Massachusetts Law, each stockholder who objects
to a merger may demand payment for such stockholder's stock. If the corporation
and the stockholder cannot agree on the value of the stock, then such value
shall be determined by the superior court of the county where the corporation
has its principal offices.
Safety 1(st), directly or through its Subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Purchaser will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be
28
<PAGE> 35
delayed in continuing or consummating the Offer, and the Merger. In such case,
Purchaser may not be obligated to accept for payment any Shares tendered. See
Section 14.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by Purchaser pursuant to the Offer are subject to such requirements.
See Section 2.
Pursuant to the HSR Act, Dorel expects to file a Premerger Notification and
Report Form in connection with the purchase of Shares pursuant to the Offer with
the Antitrust Division and the FTC on or about May 8, 2000. Under the provisions
of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the
Offer may not be consummated until the expiration of a 15 calendar day waiting
period following the filing by Dorel. Accordingly, the waiting period under the
HSR Act applicable to the purchase of Shares pursuant to the Offer will expire
at 11:59 p.m., New York City time, on or about May 23, 2000, unless such waiting
period is earlier terminated by the FTC and the Antitrust Division or extended
by a request from the FTC or the Antitrust Division for additional information
or documentary material prior to the expiration of the waiting period. Pursuant
to the HSR Act, Dorel has requested early termination of the waiting period
applicable to the Offer. There can be no assurance, however, that the 15 day HSR
Act waiting period will be terminated early. If either the FTC or the Antitrust
Division were to request additional information or documentary material from
Dorel with respect to the Offer, the waiting period with respect to the Offer
would expire at 11:59 p.m., New York City time, on the tenth calendar day after
the date of substantial compliance with such request. Thereafter, the waiting
period could be extended only by court order. If the acquisition of Shares is
delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
Offer may, but need not, be extended and, in any event, the purchase of and
payment for Shares will be deferred until 10 days after the request is
substantially complied with, unless the waiting period is sooner terminated by
the FTC and the Antitrust Division. Only one extension of such waiting period
pursuant to a request for additional information is authorized by the HSR Act
and the rules promulgated thereunder, except by court order. Any such extension
of the waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See Section 4. It is a condition to the Offer
that the waiting period applicable under the HSR Act to the Offer expire or be
terminated. See Section 2 and Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Dorel, Safety 1(st) or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Dorel
relating to the businesses in which Dorel, Safety 1(st) and their respective
subsidiaries are engaged, Dorel and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, what the result would be. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation.
16. FEES AND EXPENSES
Except as set forth below, Purchaser will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer.
Purchaser and Dorel have retained Innisfree M&A Incorporated, as the
Information Agent, and Harris Trust Company of New York as the Depositary, in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telecopy, telegraph and personal interview and may
request banks, brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners. As compensation for acting
as Information Agent in connection with the Offer, Innisfree M&A Incorporated
will be paid reasonable and customary compensation for its services and will
also be reimbursed for certain out-of-pocket expenses and may be indemnified
against certain liabilities and expenses in connection with the Offer, including
certain liabilities under the federal securities laws.
29
<PAGE> 36
Purchaser will pay the Depositary reasonable and customary compensation for
its services in connection with the Offer, plus reimbursement for out-of-pocket
expenses, and will indemnify the Depositary against certain liabilities and
expenses in connection therewith, including under federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
17. MISCELLANEOUS
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to holders of Shares. Purchaser is not
aware of any jurisdiction where the making of the Offer is prohibited by any
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with any such state statute. If, after such good faith
effort, Purchaser cannot comply with any such state statute, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR SAFETY 1(ST) NOT CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Dorel and Purchaser have filed with the Commission the Schedule
TO, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule TO and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 (except that they will not be
available at the regional offices of the Commission).
DIAMOND ACQUISITION SUBSIDIARY INC.
Dated: May 8, 2000
30
<PAGE> 37
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF DOREL AND PURCHASER
1. Directors and Executive Officers of Dorel. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of Dorel. Unless otherwise indicated, the current
business address of each person is 1255 Greene Avenue, Suite 300, Westmount,
Quebec, Canada H3Z 2A4. Unless otherwise indicated, each such person is a
citizen of Canada and has held his or her present position as set forth below
for the past five years. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to employment with Dorel.
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION AND FIVE YEAR EMPLOYMENT HISTORY
- ---- -------------------------------------------------------------
<S> <C>
Martin Schwartz...................... President and Chief Executive Officer of Dorel
Jeff Segal........................... Vice-President, Sales and Marketing of Dorel
Alan Schwartz........................ Vice-President, Operations of Dorel
Jeffrey Schwartz..................... Vice-President, Finance of Dorel
Pierre Dupuis........................ Chief Operating Officer of Dorel. Prior to joining Dorel in
October 1999, Mr. Dupuis held senior positions in building
materials and printing industries in Canada and the United
States
Frank Rana........................... Treasurer, Corporate Controller of Dorel
Nick Costides........................ President of Cosco, Inc., a subsidiary of Dorel (United
States citizen)
Richard Jackson...................... President of Ameriwood Industries Inc., a subsidiary of Dorel
since 1998 and prior to that, President of Charleswood
Corporation, a subsidiary of Dorel (United States citizen)
Robert Klassen....................... Executive Vice-President, Chief Operating Officer of
Ameriwood Industries Inc. since 1998 and prior to that, Chief
Operating Officer of Ridgewood Corporation, a subsidiary of
Dorel
Douglas Crozier...................... Chief Operating Officer of Dorel Home Products division since
1994
Kees Spreeuwenberg................... Managing Director of Maxi-Miliaan B.V., a subsidiary of Dorel
(citizen of the Netherlands)
Michael Silberstein.................. President of Infantino, Inc., a subsidiary of Dorel (United
States citizen)
Michael Caplan....................... Managing Director of Dorel (U.K.) Limited since 1996. Prior
to 1996, Mr. Caplan was Managing Director of Write On Demand
and Stylus Music Limited (citizen of the United Kingdom)
Dr. Laurent Picard................... Director of Dorel, Retired Professor of McGill University and
a director of The Jean Coutu Group (PJC) Inc.
Bruce Kaufman........................ Director of Dorel, President, Kaufel Group Ltd.
Maurice Tousson...................... Director of Dorel, President, Medi-Trust Pharmacy Inc.
</TABLE>
2. Directors and Executive Officers of Purchaser. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of Purchaser. Unless otherwise indicated, the
current business address of each person is 1255 Greene Avenue, Suite 300,
Westmount, Quebec, Canada H3Z 2A4. Unless otherwise indicated, each such person
is a citizen of Canada, and each occupation set forth opposite an individual's
name, refers to employment with Purchaser.
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION AND FIVE YEAR EMPLOYMENT HISTORY
- ---- -------------------------------------------------------------
<S> <C>
Jeffrey Schwartz..................... Treasurer of the Purchaser since 2000, Vice-President,
Finance of Dorel
Frank Rana........................... President and Vice-President and Secretary of the Purchaser
since 2000, Treasurer of Dorel
</TABLE>
I-1
<PAGE> 38
SCHEDULE II
MASSACHUSETTS BUSINESS CORPORATION LAW
CHAPTER 156B: SECTIONS 86 TO 98
DISSENTERS' RIGHTS
Section 85. [Payment for Stock of Dissenting Stockholder].
A stockholder in any corporation organized under the laws of Massachusetts
which shall have duly voted to consolidate or merge with another corporation or
corporations under the provisions of sections seventy-eight or seventy-nine who
objects to such consolidation or merger may demand payment for his stock from
the resulting or surviving corporation and an appraisal in accordance with the
provisions of sections eighty-six to ninety-eight, inclusive, and such
stockholder and the resulting or surviving corporation shall have the rights and
duties and follow the procedure set forth in those sections. This section shall
not apply to the holders of any shares of stock of a constituent corporation
surviving a merger if, as permitted by subsection (c) of section seventy-eight,
the merger did not require for its approval a vote of the stockholders of the
surviving corporation.
Section 86. [Right of Appraisal].
If a corporation proposes to take a corporate action as to which any
section of this chapter provides that a stockholder who objects to such action
shall have the right to demand payment for his shares and an appraisal thereof,
sections eighty-seven to ninety-eight, inclusive, shall apply except as
otherwise specifically provided in any section of this chapter. Except as
provided in sections eighty-two and eighty-three, no stockholder shall have such
right unless (1) he files with the corporation before the taking of the vote of
the shareholders on such corporate action, written objection to the proposed
action stating that he intends to demand payment for his shares if the action is
taken and (2) his shares are not voted in favor of the proposed action.
Section 87. [Notice of Stockholders Meeting to Contain Statement as to
Appraisal Rights].
The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the corporation
before the taking of the vote on the approval of such action, written objection
to the proposed action stating that he intends to demand payment for his shares
if the action is taken and (2) whose shares are not voted in favor of such
action has or may have the right to demand in writing from the corporation (or,
in the case of a consolidation or merger, the name of the resulting or surviving
corporation shall be inserted), within twenty days after the date of mailing to
him of notice in writing that the corporate action has become effective, payment
for his shares and an appraisal of the value thereof. Such corporation and any
such stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 88 to 98, inclusive, of chapter 156B of the
General Laws of Massachusetts."
Section 88. [Notice to Objecting Stockholder that Corporate Action has
become Effective].
The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock. The notice shall be sent by registered or certified mail,
addressed to the stockholder at his last known address as it appears in the
records of the corporation.
II-1
<PAGE> 39
Section 89. [Demand for Payment by Objecting Stockholder].
If within twenty days after the date of mailing of a notice under
subsection (e) of section eighty-two, subsection (f) of section eighty-three, or
section eighty-eight any stockholder to whom the corporation was required to
give such notice shall demand in writing from the corporation taking such
action, or in the case of a consolidation or merger from the resulting or
surviving corporation, payment for his stock, the corporation upon which such
demand is made shall pay to him the fair value of his stock within thirty days
after the expiration of the period during which such demand may be made.
Section 90. [Determination of Value of Stock by Superior Court].
If during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county where
the corporation in which such objecting stockholder held stock had or has its
principal office in the commonwealth.
Section 91. Bill in Equity to Determine Value of Stock of Objecting
Stockholders on Failure to Agree on Value thereof etc.; Parties to Bill etc.;
Service of Bill on Corporation; Notice to Stockholder Parties etc.
If the bill is filed by the corporation, it shall name as parties
respondent all stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof. If the
bill is filed by a stockholder, he shall bring the bill in his own behalf and in
behalf of all other stockholders who have demanded payment for their shares and
with whom the corporation has not reached agreement as to the value thereof and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
Section 92. Bill in Equity to Determine Value of Stock of Objecting
Stockholders on Failure to Agree on Value thereof, etc.; Entry of Decree
Determining Value of Stocks; Date on which Value is to be Determined.
After hearing the court shall enter a decree determining the fair value of
the stock of those stockholders who have become entitled to the valuation of and
payment for their shares, and shall order the corporation to make payment of
such value, together with interest, if any, as hereinafter provided, to the
stockholders entitled thereto upon the transfer by them to the corporation of
the certificates representing such stock if certificated or, if uncertificated,
upon receipt of an instruction transferring such stock to the corporation. For
this purpose, the value of the shares shall be determined as of the day
preceding the date of the vote approving the proposed corporate action and shall
be exclusive of any element of value arising from the expectation or
accomplishment of the proposed corporate action.
Section 93. Bill in Equity to Determine Value of Stock of Objecting
Stockholders on Failure to Agree on Value thereof, etc.; court may refer Bill,
etc., to Special Master to hear Parties, etc.
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report the
same to the court, all in accordance with the usual practice in suits in equity
in the superior court.
II-2
<PAGE> 40
Section 94. Bill in Equity to Determine Value of Stock of Objecting
Stockholders on Failure to Agree on Value thereof, etc.; Stockholder Parties may
be Required to submit their Stock Certificates for Notation thereon of Pendency
of Bill, etc.
On motion the court may order stockholder parties to the bill to submit
their certificates of stock to the corporation for the notation thereon of the
pendency of the bill, and may order the corporation to note such pendency in its
records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
Section 95. Bill in Equity to Determine Value of Stock of Objecting
Stockholders on Failure to Agree on Value thereof, etc.; Taxation of Costs,
etc.; Interest on Award, etc.
The costs of the bill, including the reasonable compensation and expenses
of any master appointed by the court, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to the bill, or any of them, in such manner as appears to be
equitable, except that all costs of giving notice to stockholders as provided in
this chapter shall be paid by the corporation. Interest shall be paid upon any
award from the date of the vote approving the proposed corporate action, and the
court may on application of any interested party determine the amount of
interest to be paid in the case of any stockholder.
Section 96. Stockholder Demanding Payment for Stock not Entitled to Notice
of Stockholders' Meetings or to Vote Stock or to Receive Dividends, etc.;
Exceptions.
Any stockholder who has demanded payment for his stock as provided in this
chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation,
or in the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to and
an acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
Section 97. Certain Shares paid for by Corporation to have Status of
Treasury Stock, etc.
The shares of the corporation paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock; or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not objected to such consolidation or merger
shall have the status of treasury stock or securities.
Section 98. Enforcement by Stockholder of Right to Receive Payment for his
Shares to be Exclusive Remedy; Exception.
The enforcement by a stockholder of his right to receive payment for his
shares in the manner provided in this chapter shall be an exclusive remedy
except that this chapter shall not exclude the right of such stockholder to
bring or maintain an appropriate proceeding to obtain relief on the ground that
such corporate action will be or is illegal or fraudulent as to him.
II-3
<PAGE> 41
SCHEDULE III
SCHEDULE OF TRANSACTIONS IN SHARES
DURING THE PAST 60 DAYS
No transactions were effected by or on behalf of Dorel or Purchaser or any
directors or officers thereof within the past 60 days.
III-1
<PAGE> 42
Manually signed facsimiles of the Letter of Transmittal, properly
completed, will be accepted. The Letter of Transmittal and certificates
evidencing Shares and any other required documents should be sent or delivered
by each stockholder or his broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
Tel: 212-701-7624 New York, NY 10005
Tel: 212-701-7624
</TABLE>
Other Information:
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A stockholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th floor
New York, New York 10022
(212) 750-5833
Call Toll Free: (888) 750-5834
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
SAFETY 1(ST), INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MAY 8, 2000
OF
DIAMOND ACQUISITION SUBSIDIARY INC.
A WHOLLY OWNED SUBSIDIARY OF
DOREL INDUSTRIES INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 5, 2000, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
- -------------------------------------------------------------------------
By Mail: By Hand/Overnight Delivery:
- -------------------------------------------------------------------------
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
- -------------------------------------------------------------------------
</TABLE>
By Facsimile Transmission: (212) 701-7636
For Information Telephone: (212) 701-7624
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARE SHARES EVIDENCED
CERTIFICATE BY SHARE NUMBER OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
TOTAL SHARES
- ---------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate
delivered to the Depositary are being tendered hereby. See Instruction 4.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be completed by stockholders of Safety
1(st), Inc. either if certificates evidencing Shares (as defined below) are to
be forwarded herewith or if delivery of Shares is to be made by book-entry
transfer to an account maintained by the Depositary at the Book-Entry Transfer
Facility (as defined in and pursuant to the procedures set forth in Sections 2
and 3 of the Offer to Purchase). DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose certificates evidencing Shares ("Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis and who wish
to tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution:
Account Number:
Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
Window Ticket No. (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution that Guaranteed Delivery
If delivery is by book-entry transfer, give the following information:
Account Number:
Transaction Code Number:
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Diamond Acquisition Subsidiary Inc., a
Massachusetts corporation ("Purchaser") and a wholly owned subsidiary of Dorel
Industries Inc., a Quebec, Canada corporation, the above-described shares of
common stock, par value $0.01 per share ("Shares"), of Safety 1(st), Inc., a
Massachusetts corporation ("Safety 1(st)"), pursuant to Purchaser's offer to
purchase all Shares at $13.875 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated May 8, 2000 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, together with the
Offer to Purchase and any amendments or supplements hereto or thereto,
collectively constitute the "Offer"). The undersigned understands that Purchaser
reserves the right to transfer or assign, in whole or from time to time in part,
to one or more of its affiliates the right to purchase all or any portion of
Shares tendered pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), and
subject to, and effective upon, acceptance for payment of Shares tendered
herewith, in accordance with the terms of the Offer, the undersigned hereby
sells, assigns and transfers to or upon the order of Purchaser all right, title
and interest in and to all Shares that are being tendered hereby and all
dividends, distributions (including, without limitation, distributions of
additional Shares) and rights declared, paid or distributed in respect of such
Shares on or after April 22, 2000 (collectively, "Distributions") and
irrevocably appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and all
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares (and all Distributions), or transfer
ownership of such Shares (and all Distributions) on the account books maintained
by the Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares (and all Distributions) for transfer on the
books of Safety 1(st) and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares (and all Distributions), all in
accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Martin Schwartz, Jeffrey Schwartz and Frank Rana, and each of them, and
any other designees of the Purchaser, the attorneys and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his substitute shall, in his sole discretion,
deem proper and otherwise act (by written consent or otherwise) with respect to
all Shares tendered hereby which have been accepted for payment by Purchaser
prior to the time of such vote or other action and all Shares and other
securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of stockholders of Safety 1(st)
(whether annual or special and whether or not an adjourned or postponed meeting)
or consent in lieu of any such meeting or otherwise. This proxy and power of
attorney is coupled with an interest in Shares tendered hereby, is irrevocable
and is granted in consideration of, and is effective upon, the acceptance for
payment of such Shares by Purchaser in accordance with other terms of the Offer.
Such acceptance for payment shall revoke all other proxies and powers of
attorney granted by the undersigned at any time with respect to such Shares (and
all Shares and other securities issued in Distributions in respect of such
Shares), and no subsequent proxies, powers of attorney, consents or revocations
may be given by the undersigned with respect thereto (and if given will not be
deemed effective). The undersigned understands that, in order for Shares or
Distributions to be deemed validly tendered, immediately upon Purchaser's
acceptance of such Shares for payment, Purchaser must be able to exercise full
voting and other rights with respect to such Shares (and any and all
Distributions), including, without limitation, voting at any meeting of Safety
1(st)'s stockholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer Shares tendered
hereby and all Distributions, that when such Shares are accepted for payment by
Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restriction,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
3
<PAGE> 4
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of Shares
tendered hereby and all Distributions. In addition, the undersigned shall remit
and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of Shares tendered hereby, accompanied by appropriate
documentation of transfer, and pending such remittance and transfer or
appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of Shares tendered hereby, or deduct from such purchase price,
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer (and if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment).
Unless otherwise indicated below in the box entitled "Special Payment
Instructions", please issue the check for the purchase price of all Shares
purchased and return all Share Certificates evidencing Shares not tendered or
not accepted for payment in the name(s) of the registered holder(s) appearing
above under "Description of Shares Tendered". Similarly, unless otherwise
indicated below in the box entitled "Special Delivery Instructions", please mail
the check for the purchase price of all Shares purchased and return all Share
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing above under "Description of Shares Tendered" on the reverse
hereof. In the event that the boxes below entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and return all
Share Certificates evidencing Shares not tendered or not accepted for payment in
the name(s) of, and deliver such check and return such Share Certificates (and
any accompanying documents, as appropriate) to, the person(s) so indicated.
Unless otherwise indicated below in the box entitled "Special Payment
Instructions", please credit any Shares tendered hereby and delivered by
book-entry transfer that are not accepted for payment by crediting the account
at the Book-Entry Transfer Facility designated above. The undersigned recognizes
that Purchaser has no obligation, pursuant to the Special Payment Instructions,
to transfer any Shares from the name of the registered holder(s) thereof if
Purchaser does not accept for payment any Shares tendered hereby.
4
<PAGE> 5
<TABLE>
<S> <C>
- -------------------------------------------- --------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
To be completed ONLY if the check for To be completed ONLY if the check for
the purchase price of Shares and Share the purchase price of Shares purchased and
Certificates evidencing Shares not tendered Share Certificates evidencing Shares not
or not purchased are to be issued in the tendered or not purchased are to be mailed
name of someone other than the undersigned. to someone other than the undersigned, or
the undersigned at an address other than
Issue Check and Share Certificate(s) to: that shown under "Description of Shares
Tendered".
Name: ----------------------------------
(Please Print) Mail Check and Share Certificate(s) to:
Address: -------------------------------- Name: --------------------------------
(Please Print)
----------------------------------------
Address: --------------------------------
----------------------------------------
(Zip Code) ----------------------------------------
---------------------------------------- ----------------------------------------
(Tax Identification or Social Security (Zip Code)
Number)
(See Substitute Form W-9 on reverse side) ----------------------------------------
(Tax Identification or Social Security
Account Number)
Number: ------------------------------ (See Substitute Form W-9 on reverse side)
- --------------------------------------------
--------------------------------------------
</TABLE>
5
<PAGE> 6
- --------------------------------------------------------------------------------
IMPORTANT
SHAREHOLDERS SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Stockholder(s)
Dated: ____________________________ , 2000
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificate(s) and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please set forth
full title and see Instruction 5.)
Name(s):
--------------------------------------------------------------------------
(Please Print)
Capacity (full title):
--------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
--------------------------------------------------------------------------
Tax Identification or Social Security No.):
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
SEE INSTRUCTIONS 1 AND 5)
FOR USE BY ELIGIBLE INSTITUTIONS ONLY,
PLACE MEDALLION GUARANTEE IN SPACE BELOW
Authorized Signature:
--------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------
(Please Type or Print)
Address:
--------------------------------------------------------------------------
(Include Zip Code)
Name of Firm:
--------------------------------------------------------------------------
Area Code and Telephone Number:
--------------------------------------------------------------------------
Dated: ____________________________ , 2000
- --------------------------------------------------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of the Security Transfer Agent
Medallion Signature Program, or by any other "eligible guarantor institution",
as such term is defined in Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended (each of the foregoing being an "Eligible
Institution") unless (i) this Letter of Transmittal is signed by the registered
holder(s) of Shares (which term, for purposes of this document, shall include
any participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) tendered hereby and such
holder(s) has (have) not completed the box entitled "Special Payment
Instructions" or "Special Delivery Instructions" on the reverse hereof or (ii)
such Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if tenders are to be made pursuant to the procedures for tenders by
book-entry transfer pursuant to the procedure set forth in Section 3 of the
Offer to Purchase. Share Certificates evidencing all physically tendered Shares,
or a confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered by book-entry transfer, as
well as a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof, or an Agent's message (as defined in Section
2 of the Offer to Purchase), in the case of a book-entry transfer) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth below prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase). If Share Certificates are
forwarded to the Depositary in multiple deliveries, a properly completed and
duly executed Letter of Transmittal must accompany each such delivery.
Stockholders whose Share Certificates are not immediately available, who cannot
deliver their Share Certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a manually signed facsimile thereof, or an Agent's message, in
the case of a book-entry transfer), properly completed and duly executed, with
any required signature guarantees (or in the case of a book-entry transfer, an
Agent's Message) and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three Nasdaq National Market
("Nasdaq") trading days after the date of execution of such Notice of Guaranteed
Delivery, all as described in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a manually signed facsimile hereof), all tendering stockholders waive any
right to receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided on the reverse hereof under
"Description of Shares Tendered" is inadequate, the Share Certificate numbers,
the number of Shares evidenced by such Share Certificates and the number of
Shares tendered should be listed on a separate signed schedule and attached
hereto.
7
<PAGE> 8
4. Partial Tenders (not applicable to stockholders who tender by
book-entry transfer). If fewer than all Shares evidenced by any Share
Certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares that are to be tendered in the box entitled "Number of
Shares Tendered". In such cases, new Share Certificate(s) evidencing the
remainder of Shares that were evidenced by the Share Certificates delivered to
the Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the Expiration
Date or the termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Shares tendered hereby is held of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any Shares tendered hereby are registered in different names, it will be
necessary to complete, sign and submit as many separate Letters of Transmittal
as there are different registrations of such Shares.
If this Letter of Transmittal is signed by the registered holder(s) of
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not accepted for payment are to be issued in
the name of, a person other than the registered holder(s). If the Letter of
Transmittal is signed by a person other than the registered holder(s) of the
Share Certificate(s) evidencing Shares tendered, the Share Certificate(s)
tendered hereby must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear(s)
on such Share Certificate(s). Signatures on such Share Certificate(s) and stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of Shares tendered hereby, the Share Certificate(s)
evidencing Shares tendered hereby must be endorsed or accompanied by appropriate
stock powers, in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on such Share Certificate(s). Signatures on such Share
Certificate(s) and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not accepted for payment are to
be issued in the name of, any person other than the registered holder(s) or if
tendered certificates are registered in the name of any person other than the
person(s) signing the Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s), or such other person, or
otherwise) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased, unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption therefrom,
is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share Certificates evidencing Shares
tendered hereby.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued in the name of, and/or Share
Certificate(s) evidencing Shares not tendered or not accepted for payment are to
be issued in the name of and/or returned to, a person other than the person(s)
signing this Letter of Transmittal or if such check or any such Share
Certificate is to be sent to a person other
8
<PAGE> 9
than the signor of this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes herein must be completed.
8. Questions and Requests for Assistance or Additional Copies. Questions
and requests for assistance may be directed to the Information Agent at its
address or telephone number set forth below. Additional copies of the Offer to
Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and the
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 may be obtained from the Information Agent.
9. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalty of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such stockholder. If the tendering stockholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such stockholder until a TIN is provided to
the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR MANUALLY SIGNED FACSIMILE
HEREOF), PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED
SIGNATURE GUARANTEES (OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S
MESSAGE) AND SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL
OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION
DATE (AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under U.S. federal income tax law, a stockholder whose tendered Shares are
accepted for payment is generally required to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 provided herewith. If
such stockholder is an individual, the TIN generally is such stockholder's
social security number. If the Depositary is not provided with the correct TIN,
the stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service and payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%. In
addition, if a stockholder makes a false statement that results in no imposition
of backup withholding, and there was no reasonable basis for making such
statement, a $500 penalty may also be imposed by the Internal Revenue Service.
Certain stockholders (including, among others, corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement (Internal Revenue Service
Form W-8), signed under penalties of perjury, attesting to such individual's
exempt status. Forms of such statements can be obtained from the Depositary. See
the enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional instructions. A stockholder should consult
his or her tax advisor as to such stockholder's qualification for exemption from
backup withholding and the procedure for obtaining such exemption.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an
9
<PAGE> 10
overpayment of taxes, a refund may be obtained provided that the required
information is furnished to the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying that (a) the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (b)(i)
such stockholder has not been notified by the Internal Revenue Service that he
is subject to backup withholding as a result of a failure to report all interest
or dividends or (ii) the Internal Revenue Service has notified such stockholder
that such stockholder is no longer subject to backup withholding.
What Number to Give the Depositary
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record holder of
Shares tendered hereby. If Shares are in more than one name or are not in the
name of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report. If the tendering stockholder has not been issued a
TIN and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and dated the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
10
<PAGE> 11
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
- -------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- Taxpayer Identification ------------------------------
Number -- For all accounts, enter Social security number
FORM W-9 your taxpayer identification
DEPARTMENT OF THE TREASURY number in the box at right. (For or
INTERNAL REVENUE SERVICE most individuals, this is your ------------------------------
social security number. If you do Employer identification number
PAYER'S REQUEST FOR TAXPAYER not have a number, see "Obtaining
IDENTIFICATION NUMBER (TIN) a Number" in the enclosed (If awaiting TIN write
Guidelines.) Certify by signing "Applied For")
and dating below. Note: If the
account is in more than one name,
see the chart in the enclosed
Guidelines to determine which
number to give the payer.
- -------------------------------------------------------------------------------------------------------------------
PART II -- For Payees Exempt from Backup Withholding, see the enclosed
Guidelines and complete as instructed therein.
- -------------------------------------------------------------------------------------------------------------------
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be
issued to me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not
been notified by the Internal Revenue Service (the "IRS") that I am subject to back-up withholding as a result
of failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding.
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are
currently subject to backup withholding because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup withholding you received another
notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also
see instructions in the enclosed Guidelines.)
- -------------------------------------------------------------------------------------------------------------------
SIGNATURE ------------------------------------------------------------ DATE -------------------- , 2000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THIS OFFER. PLEASE REVIEW
THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING A TAXPAYER
IDENTIFICATION NUMBER.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS
NOT BEEN ISSUED TO ME, AND EITHER (1) I HAVE MAILED OR DELIVERED AN
APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE OR
(2) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I
UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER BY THE
TIME OF PAYMENT, 31% OF ALL REPORTABLE CASH PAYMENTS MADE TO ME THEREAFTER
WILL BE WITHHELD UNTIL I PROVIDE A TAXPAYER IDENTIFICATION NUMBER.
SIGNATURE: ---------------------------------------- DATE: ------------------
- --------------------------------------------------------------------------------
11
<PAGE> 12
Facsimiles of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal and Share Certificates and
any other required documents should be sent or delivered by each stockholder or
such stockholder's broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
- -------------------------------------------------------------------------
By Mail: By Hand/Overnight Delivery:
- -------------------------------------------------------------------------
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
- -------------------------------------------------------------------------
</TABLE>
By Facsimile Transmission: (212) 701-7636
For Information Telephone: (212) 701-7624
------------------------
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers listed below. Additional copies of
the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A stockholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, New York 10022
Telephone (212) 750-5833
Call toll free: (888) 750-5834
12
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
SAFETY 1(ST), INC.
TO
DIAMOND ACQUISITION SUBSIDIARY INC.
A WHOLLY OWNED SUBSIDIARY OF
DOREL INDUSTRIES INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of common stock, par value $0.01 per
share ("Shares"), of Safety 1(st), Inc., a Massachusetts corporation ("Safety
1(st)"), are not immediately available, (ii) if Share Certificates and all other
required documents cannot be delivered to the Depositary at the address set
forth below prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase (as defined below)) or (iii) if the procedure for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram,
or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
</TABLE>
By Facsimile Transmission:
(212) 701-7636
For Information Telephone:
(212) 701-7624
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Diamond Acquisition Subsidiary Inc., a
Massachusetts corporation and a wholly owned subsidiary of Dorel Industries
Inc., a Quebec, Canada corporation, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated May 8, 2000 (the "Offer to Purchase"),
and the related Letter of Transmittal (which, together with the Offer to
Purchase and any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of each of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
- ---------------------------------------------- ----------------------------------------------
--------------------------------------------
Number of Shares: Signature(s) of Holder(s)
-----------------------------------
Dated:
Certificate Nos. (If Available): -----------------------------------------,
2000
[ ] Check this box if Shares will be
delivered by book-entry transfer: Please Type or Print
--------------------------------------------
Book-Entry Transfer Facility Address
--------------------------------------------
Account No. Zip Code
----------------------------------------- --------------------------------------------
- ---------------------------------------------- Daytime Area Code and Telephone No.
----------------------------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program or an "eligible guarantor institution," as such term is defined in Rule
17 Ad-15 under the Securities Exchange Act of 1934, as amended, guarantees to
deliver to the Depositary either certificates representing the Shares tendered
hereby, in proper form for transfer, or confirmation of book-entry transfer of
such Shares, in each case with delivery of a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase), and any other documents required by the Letter of Transmittal, within
three trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
All capitalized terms used herein have the meanings set forth in the Offer to
Purchase.
<TABLE>
<S> <C>
Name of Firm: -----------------------------------------------
- ------------------------------------------
Authorized Signature
Address: Name:
- ----------------------------------------------- -----------------------------------------------
Please Type or Print
- ----------------------------------------------- Title:
-----------------------------------------------
Zip Code
Area Code and Tel. No.: Dated:
- ------------------------------ --------------------------------------------,
2000
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SAFETY 1(ST), INC.
AT
$13.875 NET PER SHARE
BY
DIAMOND ACQUISITION SUBSIDIARY INC.
A WHOLLY OWNED SUBSIDIARY OF
DOREL INDUSTRIES INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 5, 2000 UNLESS THE OFFER IS EXTENDED.
May 8, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Diamond Acquisition Subsidiary Inc., a
Massachusetts corporation ("Purchaser") and a wholly owned subsidiary of Dorel
Industries Inc., a Quebec, Canada corporation ("Parent"), to act as Information
Agent in connection with Purchaser's offer to purchase all the shares of common
stock, par value $0.01 per share ("Shares"), of Safety 1(st), Inc. a
Massachusetts corporation (the "Company"), that are issued and outstanding for
$13.875 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase, dated May 8, 2000 (the
"Offer to Purchase"), and the related Letter of Transmittal (which, together
with the Offer to Purchase and any amendments or supplements thereto,
collectively constitute the "Offer") enclosed herewith. Please furnish copies of
the enclosed materials to those of your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
THE NUMBER OF SHARES THAT SHALL CONSTITUTE TWO-THIRDS OF THE THEN OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (INCLUDING, WITHOUT LIMITATION, ALL SHARES
ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE EXERCISE
OF ANY OPTIONS) AND (II) ANY APPLICABLE WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, HAVING EXPIRED
OR BEEN TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated May 8, 2000;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available
or cannot be delivered to Harris Trust Company of New York (the
"Depositary") prior to the Expiration Date (as defined in the Offer
to Purchase) or if the procedure for book-entry transfer cannot be
completed prior to the Expiration Date;
<PAGE> 2
4. A letter to stockholders of the Company from Michael Lerner, Chairman
and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with
regard to the Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 5, 2000, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility (as
defined in the Offer to Purchase)), (ii) a Letter of Transmittal (or manually
signed facsimile thereof) properly completed and duly executed with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase) and (iii) any other required
documents.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedure described in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Depositary and the Information Agent as described
in the Offer to Purchase) in connection with the solicitation of tenders of
Shares pursuant to the Offer. However, Purchaser will reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. Purchaser will pay or cause to be paid any
stock transfer taxes payable with respect to the transfer of Shares to it,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Innisfree M&A Incorporated (the "Information Agent") at its address and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent, at the address and telephone number set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
Innisfree M&A Incorporated
501 Madison Avenue,
20th Floor
New York, New York 10022
Telephone: (212) 750-5833
or
Call Toll Free (888) 750-5834
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE INFORMATION
AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THE FOREGOING, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT
ON BEHALF OF ANY OF THE FOREGOING IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SAFETY 1(ST), INC.
AT
$13.875 NET PER SHARE
BY
DIAMOND ACQUISITION SUBSIDIARY INC.
A WHOLLY OWNED SUBSIDIARY OF
DOREL INDUSTRIES INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 5, 2000, UNLESS THE OFFER IS EXTENDED.
May 8, 2000
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated May 8, 2000
(the "Offer to Purchase"), and a related Letter of Transmittal (which, together
with the Offer to Purchase and any amendments or supplements thereto,
collectively constitute the "Offer") in connection with the offer by Diamond
Acquisition Subsidiary Inc., a Massachusetts corporation ("Purchaser") and a
wholly owned subsidiary of Dorel Industries Inc., a Quebec, Canada corporation
("Dorel"), to purchase all the shares of common stock, par value $0.01 per share
("Shares") of Safety 1(ST), Inc., a Massachusetts corporation ("Safety 1(st)"),
that are issued and outstanding for $13.875 per share (such amount being the
"Per Share Amount"), net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase. We are (or our nominee is)
the holder of record of Shares held for your account. A TENDER OF SUCH SHARES
CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS. THE ENCLOSED LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all Shares held by us for your account, upon the terms and subject
to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $13.875 per Share, net to you in cash.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of Safety 1(st) has unanimously determined
that the Agreement and Plan of Merger dated as of April 22, 2000 (the
"Merger Agreement") and the transactions contemplated thereby,
including each of the Offer and the Merger, are fair to, and in the
best interest of, the holders of Shares, has approved, adopted and
declared advisable the Merger Agreement and the transactions
contemplated thereby, including each of the Offer and the Merger, and
recommends that holders of Shares accept the Offer and tender their
Shares pursuant to the Offer.
4. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, MONDAY, JUNE 5, 2000, UNLESS THE OFFER IS EXTENDED.
5. The Offer is conditioned upon, among other things, (i) there having
been validly tendered and not withdrawn prior to the expiration of
the Offer at least the number of Shares that shall constitute two-
thirds of the then outstanding shares on a fully diluted basis
(including, without limitation, all Shares
<PAGE> 2
issuable upon the conversion of any convertible securities or upon the exercise
of any options, warrants, or rights) and (ii) any applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
having expired or been terminated prior to the expiration of the Offer.
The Offer is also subject to certain other conditions contained in the
Offer to Purchase. See Sections 1 and 14 of the Offer to Purchase, which
set forth in full the conditions to the Offer.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the
purchase of Shares by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to holders of Shares. Purchaser is not
aware of any jurisdiction where the making of the Offer is prohibited by any
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with such state statute. If, after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF
SAFETY 1(ST), INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated May 8, 2000, and the related Letter of Transmittal
(which, together with the Offer to Purchase and any amendments or supplements
thereto, collectively constitute the "Offer") in connection with the offer by
Diamond Acquisition Subsidiary Inc., a Massachusetts corporation and a wholly
owned subsidiary of Dorel Industries Inc., a Quebec, Canada corporation, to
purchase all the shares of common stock, par value $0.01 per share ("Shares"),
of Safety 1(st), Inc., a Massachusetts corporation, that are issued and
outstanding.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Dated: , 2000
<TABLE>
<S> <C>
- ---------------------------------------------- ----------------------------------------------
Number of Shares: SIGN HERE
To be Tendered: --------------------------------------------
- ----------------------------------------- Signature(s)
Shares (1) --------------------------------------------
- ---------------------------------------------- Please type or print names(s)
--------------------------------------------
--------------------------------------------
Please type or print address
--------------------------------------------
Area Code and Telephone Number
--------------------------------------------
Taxpayer Identification or Social Security
Number
----------------------------------------------
</TABLE>
- ---------------
(1) Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-000-000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF -
- ------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of the
individuals (1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person (1)
4. Custodian account of a The minor (2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor (1)
6. Account in the name of The ward; minor, or
guardian or committee for incompetent person
a designated ward, minor, (3)
or incompetent person
7. a. The usual revocable The grantor-trustee
savings trust account (1)
(grantor is also
trustee)
b. So-called trust The actual owner (4)
account that is not a
legal or valid trust
under State law
- ------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
GIVE THE
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF -
- ------------------------------------------------------
<S> <C>
8. Sole proprietorship The owner (4)
account
9. A valid trust, estate or The legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account title.)
(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name
of a public entity (such
as a state or local
government, school
district, or prison) that
receives agricultural
program payments
- ------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted for backup withholding on ALL payments include
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free convenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE SUBSTITUTE FORM W-9 WITH THE
PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE
OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS
OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under section 6041, 6041(A)(a),
6045 and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report to payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail
to include any portion of an includible payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an underpayment attributable to that
failure.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE> 1
Exhibit (a)(7)
This announcement is neither an offer to purchase nor a
solicitation of an offer to sell Shares (as defined below). The Offer (as
defined below) is being made solely by the Offer to Purchase dated May 8, 2000
and the related Letter of Transmittal, and is being made to holders of Shares.
Purchaser (as defined below) is not aware of any jurisdiction where the making
of the Offer is prohibited by any administrative or judicial action pursuant to
any valid state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with such state
statute. If, after such good faith effort, Purchaser cannot comply with such
state statute, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares in such state. In any jurisdiction where
the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
Notice Of Offer To Purchase For Cash
All Outstanding Shares Of Common Stock
Of
SAFETY 1ST, INC.
At
$13.875 Net Per Share
By
DIAMOND ACQUISITION SUBSIDIARY INC.
A Wholly Owned Subsidiary Of
DOREL INDUSTRIES INC.
Diamond Acquisition Subsidiary Inc., a Massachusetts
corporation ("Purchaser") and a wholly owned subsidiary of Dorel Industries
Inc., a Quebec, Canada corporation ("Dorel"), is offering to purchase all the
shares of common stock, par value $0.01 per share (the "Shares"), of Safety 1st,
Inc., a Massachusetts corporation (the "Company"), that are issued and
outstanding for $13.875 per Share, net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated May 8, 2000 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with the Offer to Purchase and any amendments or
supplements thereto, collectively constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 5, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, (i) there
having been validly tendered and not withdrawn prior to the expiration of the
Offer at least the number of Shares that shall constitute two-thirds of the then
outstanding shares on a fully diluted basis (including, without limitation, all
Shares issuable upon the conversion of any convertible securities or upon the
exercise of any options) and (ii) any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having expired
or been terminated prior to the expiration of the Offer.
The Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of April 22, 2000 (the "Merger Agreement"), among Dorel,
Purchaser and the Company. The Merger Agreement provides, among other things,
that as promptly as practicable after the purchase of Shares pursuant to the
Offer and the satisfaction or waiver of the other conditions set forth in the
Merger Agreement and in accordance with relevant provisions of the Massachusetts
Business Corporation Law, as amended ("Massachusetts Law"), Purchaser will be
merged with and into the Company (the "Merger"). As a result of the Merger, the
Company will continue as the surviving corporation (the "Surviving Corporation")
and will become a wholly owned subsidiary of Dorel. At the effective time of the
Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective
<PAGE> 2
Time (other than Shares held in the treasury of the Company and Shares owned by
Purchaser, Dorel or any wholly owned subsidiary of Dorel or of the Company, and
other than Shares held by stockholders who shall have demanded and perfected
appraisal rights under Massachusetts Law) will be canceled and converted
automatically into the right to receive $13.875 in cash, or any higher price
that may be paid per Share in the Offer, without interest.
The Board of Directors of the Company has unanimously
determined that the Merger Agreement and the transactions contemplated thereby,
including each of the Offer and the Merger, are fair to, and in the best
interest of, the holders of Shares, has approved, adopted and declared advisable
the Merger Agreement and the transactions contemplated thereby, including each
of the Offer and the Merger, and recommends that the holders of Shares accept
the Offer and tender their Shares pursuant to the Offer.
Concurrently with entering into the Merger Agreement, Dorel,
Purchaser and certain stockholders of the Company (the "Majority Stockholders")
entered into a Tender Agreement, dated as of April 22, 2000 (the "Tender
Agreement"), pursuant to which the Majority Stockholders have agreed, among
other things, (i) to validly tender (and not withdraw) their Shares into the
Offer and (ii) to vote their Shares in favor of the Merger. On April 22, 2000,
the Majority Stockholders owned (either beneficially or of record) 5,019,333
Shares, constituting approximately 58% of the outstanding Shares (or
approximately 45% of the outstanding Shares on a fully diluted basis).
For purposes of the Offer, Purchaser will be deemed to have
accepted for payment (and thereby purchased) Shares validly tendered and not
properly withdrawn as, if and when Purchaser gives oral or written notice to
Harris Trust Company of New York (the "Depositary") of Purchaser's acceptance
for payment of such Shares pursuant to the Offer. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payments from Purchaser and transmitting such payments to tendering
stockholders whose Shares have been accepted for payment. Under no circumstances
will interest on the purchase price for Shares be paid, regardless of any delay
in making such payment. In all cases, payment for Shares tendered and accepted
for payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) the certificates evidencing such Shares (the "Share
Certificates") or timely confirmation of a book-entry transfer of such Shares
into the Depositary's account at the Book-Entry Transfer Facility (as defined in
Section 2 of the Offer to Purchase) pursuant to the procedure set forth in
Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees or an Agent's Message (as defined in Section 2
of the Offer to Purchase) and (iii) any other documents required under the
Letter of Transmittal.
The Merger Agreement provides that Purchaser may, without the
consent of the Company, extend the Offer beyond the scheduled expiration date
(the "Expiration Date"), which shall be 20 business days following the
commencement of the Offer, if, at the scheduled expiration of the Offer, any of
the conditions to Purchaser's obligation to accept for payment Shares, shall not
be satisfied or waived, provided, however, that except as set forth below, the
Expiration Date, as extended, shall be no later than the date that is 40
business days immediately following the initially scheduled expiration date of
the Offer. The Merger Agreement also provides that, if, on the initial scheduled
expiration date of the Offer, the sole condition remaining unsatisfied is the
failure of the waiting period under the HSR Act to have expired or been
terminated, then Purchaser shall extend the Offer until the earlier of (i)
August 31, 2000 or (ii) the expiration or termination of the applicable waiting
period under the HSR Act. During any such extension, all tendered Shares may be
retained by the Depositary on behalf of Purchaser and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to withdrawal
rights as described in Section 4 of the Offer to Purchase. Under no
circumstances will interest be paid on the purchase price for tendered Shares,
whether or not the Offer is extended. Any extension of the Offer may be effected
by Purchaser giving oral or written notice of such extension to the Depositary.
Tender of Shares made pursuant to the Offer are irrevocable
except that such Shares may be withdrawn pursuant to the procedures set forth
below at any time prior to the Expiration Date and, unless theretofore accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after July 7, 2000. For the withdrawal to be effective, a written or
facsimile transmission notice of withdrawal must be timely received by
2
<PAGE> 3
the Depositary at one of its addresses set forth on the back cover page of the
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If Share Certificates
evidencing Shares to be withdrawn have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such Share Certificates,
the serial numbers shown on such Share Certificates must be submitted to the
Depositary and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution (as defined in Section 3 of the Offer to Purchase),
unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares. All
questions as to the form and validity (including the time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(d)(1)
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's
stockholder list and security position listings, including the most recent list
of names, addresses and security positions of non-objecting beneficial owners in
the possession of the Company, for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares whose names appear on the Company's
stockholder lists and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal
contain important information which should be read before any decision is made
with respect to the Offer.
Questions and requests for assistance or for additional copies
of the Offer to Purchase and the related Letter of Transmittal and other tender
offer materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at Purchaser's expense. No fees or commissions
will be paid to brokers, dealers or other persons (other than the Information
Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Telephone: (212) 750-5833
or
Call Toll Free (888) 750-5834
May 8, 2000
3
<PAGE> 1
EXHIBIT (B)(1)
DOREL INDUSTRIES INC. CONFIDENTIAL
DOREL INDUSTRIES INC.
US$250,000,000 SYNDICATED CREDIT FACILITY
SUMMARY OF TERMS & CONDITIONS
This summary is for the confidential use of Dorel, and is not to be disclosed to
any third party without the prior consent of Royal Bank of Canada. Confidential
information which would not appear in any summary sent to prospective lenders
appears in italics. All amounts are in us dollars unless otherwise specified.
BORROWERS: Dorel Investments L.P. (a Delaware company), Dorel U.S.A.
Inc., and certain operating companies in the US (to be
determined) and the Parent of Acquisition Sub ("a newly formed
company for the purposes of acquiring "SAFETY 1ST""), being
all wholly-owned subsidiaries of Dorel.
GUARANTORS: Dorel Industries Inc. ("DOREL"), Dorel Atlantic Co
("Atlantic"), Dorel Capital LLC ("Capital") and all
wholly-owned Restricted Subsidiaries which may or may not be
Borrowers under the credit facility, [whether now existing or
hereafter formed] will provide an unconditional solidary
Guarantee of the obligations of all Borrowers (collectively,
such guarantees are referred to as the "GUARANTEES").
LEAD ARRANGER &
BOOKRUNNER: RBC Dominion Securities ("RBC DS").
ADMINISTRATIVE
AGENT: Royal Bank of Canada ("RBC" and/or "AGENT").
UNDERWRITING
COMMITMENT: RBC (the "UNDERWRITER") will underwrite 100% of the Credit
Facility up to $250,000,000. Dorel understands that the
Underwriter will seek to syndicate its commitment, and that
the Underwriter's final hold will be $50,000,000. Dorel also
understands that the actual amounts available under Tranche A1
and B1 is conditional upon receipt by the Agent of sufficient
commitments from Tranche 1 Lenders. Any amounts not available
under Tranche A1 and B1 will be funded under Tranche A2 or B2,
as applicable.
LENDERS: RBC and a syndicate of financial institutions to be agreed
upon between the Arranger and the Borrower (individually a
"LENDER", and collectively the "LENDERS"). Tranche A1 and B1
shall be provided by US Lending offices of Schedule I Banks in
Canada ("TRANCHE 1 LENDERS"). Tranche A2 and B2 shall be
provided by Banks resident in the United States of America
("TRANCHE 2 LENDERS").
CREDIT FACILITY: Up to $250,000,000.
PURPOSE: TRANCHE A: To finance the acquisition of Safety 1st, refinance
existing debt at Safety 1st, for general corporate purposes
including working capital and any future non-hostile
acquisitions.
TRANCHE B: To finance the acquisition of Safety 1st, refinance
existing debt at Safety 1st, refinance existing debt at Dorel
and to finance reasonable fees and expenses related to the
acquisition of Safety 1st.
AVAILABILITY: TRANCHE A: Up to $100,000,000.
Committed 364 day revolving credit facility. A maximum of two
extensions will be permitted for Tranches A1 and A2, and the
final maturity date of Tranches A1 and A2 shall not be any
later than the final maturity date of Tranches B1 and B2.
Tranche A1: Up to $60,000,000.
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<PAGE> 2
DOREL INDUSTRIES INC. CONFIDENTIAL
Tranche A2: Up to $40,000,000.
The amount available under Tranche A1 may be reduced if the
Agent is unable to obtain sufficient commitments from Tranche
1 Lenders, in which case the amount available under Tranche A2
would be increased in the same amount.
The Borrower may request only two annual extensions of
Tranches A1 and A2 for an additional 364 days by giving notice
to the Agent for delivery to each Lender not more than 90 and
not less than 60 days prior to the then current maturity date
of Tranches A1 and A2. No earlier than 30 days and no later
than 25 days prior to the then applicable maturity date, each
Lender shall notify the Agent of its election to extend or not
extend the then current maturity date of Tranches A1 and A2.
Subject to the consent of the Lenders holding more than 66 2/3
percent in each of Tranches A1 and A2, Tranches A1 and A2 may
be extended for an additional 364 day period, such extension
applying only to those Lenders which provided their consent to
the extension.
At the option of the Borrower, any Lender not consenting to an
extension (a "NON-CONSENTING BANK"):
(i) may be replaced by one or more Tranche 1 or Tranche 2
Lenders, as the case may be, or by a new Tranche 1 or
Tranche 2 Lender, as the case may be, satisfactory to
the Borrower and the Agent; or
(ii) may have any amount not assumed by a Tranche 1 or
Tranche 2 Lender, as the case may be, under (i) prepaid
by the Borrower with a corresponding permanent reduction
in the amount of the Credit Facility.
If, and to the extent that, the full amount of the commitments
of the Non-Consenting Banks are not assumed or prepaid, the
remaining commitment of each Non-Consenting Bank shall mature
at the original maturity date.
TRANCHE B: $150,000,000.
Committed three (3) year revolving term facility.
Tranche B1: Up to $90,000,000.
Tranche B2: Up to $60,000,000.
The amount available under Tranche B1 may be reduced if the
Agent is unable to obtain sufficient commitments from Tranche
1 Lenders, in which case the amount available under Tranche B2
would be increased in the same amount.
MATURITY
DATE: Tranches A1 and A2, 364 days from the date of execution
of the Credit Agreement, subject to the extension option
detailed above.
Tranches B1 and B2 shall mature three years from the date of
execution of the Credit Agreement.
BORROWING
OPTIONS: The Credit Facility will be available in US$ by way of:
(a) LIBOR-based loans in US$ ("LIBOR LOANS"); and
(b) U.S. Prime Rate Loans in US$ ("US PRIME LOANS").
(Individually a "BORROWING", and collectively the
"BORROWINGS").
FEES AND
INTEREST RATES: As set forth in the attached Appendix I.
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<PAGE> 3
DOREL INDUSTRIES INC. CONFIDENTIAL
CONVERSION: A Borrowing may be converted into another basis of Borrowing
provided that
(a) Libor Loans may only be converted on their respective
maturity dates;
(b) the minimum amounts required for an original Borrowing
are met.
PREPAYMENT OR
CANCELLATION: The Borrower may prepay and/or cancel undrawn portions of the
Credit Facility without penalty upon five (5) Business Days
prior written notice to the Agent, and in minimum amounts of
$5,000,000 and multiples of $1,000,000. Amounts canceled may
not be reinstated.
The Borrower shall reimburse each Lender for any loss, cost or
expense (including without limitation the cost to each Lender
of redeploying funds obtained to fund or maintain outstanding
Libor Loans) incurred in respect of outstanding Libor Loans as
a result of the prepayment of all or any portion thereof prior
to the expiry of a related Libor Interest Period.
DOCUMENTATION/
SECURITY: Credit Agreement, and all other certificates and documents
delivered in connection with the Credit Facility (collectively
the "DOCUMENTATION") each in form and substance satisfactory
to the Agent and Lenders' Counsel. The Credit Facility will be
secured, as soon as possible after the closing of the Merger,
by a pledge of shares of the surviving corporation's stock
(being the entity resulting from the Merger of Safety 1st and
Acquisition Sub.) accompanied by irrevocable proxies, shares
certificates endorsed in blank, etc. and guarantees from
Dorel, Atlantic, Capital, all Borrowers and all Restricted
Subsidiaries to the extent permitted by law in form and
substance satisfactory to the Agent and the Lenders.
If required by the Agent and the Lenders, an intercreditor
agreement amongst the Lenders, the note holders and the
Borrowers.
REPRESENTATIONS
AND WARRANTIES: Usual and customary in credit agreements of this
nature with respect to Dorel, the Borrowers and the Restricted
Subsidiaries, including but not limited to:
(a) Dorel, the Borrowers and each Restricted Subsidiary is a
corporation which is duly incorporated and has the
necessary corporate power and authority to carry on its
business;
(b) The Credit Agreement and all ancillary loan documents
are duly authorized and constitute valid and legally
binding obligations of the parties thereto enforceable
in accordance with their terms;
(c) The execution and delivery of the Credit Agreement will
not result in any violation of the articles or the
bylaws of Dorel, the Borrowers or any Restricted
Subsidiary or result in a breach of any other loan,
credit, note or similar agreement or any applicable law;
(d) The audited consolidated financial statements of Dorel
for the fiscal year ended December 31, 1999 are prepared
in accordance with Canadian generally accepted
accounting principles and fairly represent the financial
condition of Dorel and its Subsidiaries as of the date
thereof;
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<PAGE> 4
DOREL INDUSTRIES INC. CONFIDENTIAL
(e) There are no actions or suits which could, if
determined, adversely have or could have, separately or
in the aggregate, a Material Adverse Effect;
(f) Dorel, the Borrowers and the Restricted Subsidiaries and
their respective businesses and operations are
materially in compliance with all applicable laws
including environmental laws, have all necessary
consents, authorizations, approvals, orders,
certificates and permits from, and have made all
necessary filings (including tax filings, subject to
materiality and good faith contestations) with, all
federal, provincial, territorial, state and local
authorities to conduct their business;
(g) No event has occurred and is continuing which
constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be
given or time elapse or both;
(h) The Borrowers and the Restricted Subsidiaries are in
compliance with ERISA;
(i) Year 2000 compliance on a consolidated basis;
(j) Labor matters;
(k) Material contracts in full force and effect;
(l) Each of the Tender offer and the Merger agreements in
respect of the acquisition of Safety 1st ("the
Transaction") have been filed with all governmental and
regulatory bodies and comply with all applicable laws;
and
(m) Representations and Warranties on the Transaction and
the Transaction documents.
CONDITIONS
PRECEDENT
TO CLOSING
AND INITIAL
BORROWING: Usual and customary in credit agreements of this nature with
respect to Dorel, the Borrowers and the Restricted
Subsidiaries, including but not limited to:
(a) Execution and delivery of a Credit Agreement and related
Documentation, including security documents,
resolutions, constating documents and other corporate
documents in form and substance satisfactory to the
Agent and the Lenders;
(b) Nothing shall have occurred (nor shall any Lender become
aware of any facts not previously known) with respect to
Dorel, the Borrowers or the Restricted Subsidiaries
since each of their last fiscal quarterly reports which
is reasonably likely to have a Material Adverse Effect;
(c) Fulfillment of conditions in form and substance similar
to those contained in the Tender Offer and the Merger
Agreement;
(d) Agent shall be satisfied that existing capital market
debt and any other debt of Dorel or Safety 1st will not
need to be refinanced or alternative financing has been
arranged to the Agent's satisfaction;
(e) The Borrowers and all of Dorel's subsidiaries and Safety
1st shall have repaid or made arrangements to repay and
cancel concurrently all existing bank credit facilities;
(f) Sources and uses of funds in connection with the
transaction contemplated;
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<PAGE> 5
DOREL INDUSTRIES INC. CONFIDENTIAL
(g) Receipt of all documents related to the acquisition
transaction including the final version of the Tender
Offer and Merger Agreement (drafts of which, dated
respectively as of March, 8 and April, 6 2000, were
provided to the Agent);
(h) Receipt of a certificate from Dorel that all conditions
of the Offer have been met or, subject to the Agent's
consent, have been waived by Dorel;
(i) The Board of Directors of Safety 1st shall have
published its recommendation that the shareholders of
Safety 1st tender their shares pursuant to the Tender
Offer and the process of acquisition/merger of Safety
1st shall not be deemed hostile and shall be in
compliance with all applicable laws;
(j) Evidence satisfactorily to the Agent that there has been
validly deposited under the Tender Offer and not
withdrawn such number of shares of Safety 1st as are
required to ensure successful authorization of the
merger and the complete privatization of Safety 1st such
that it becomes a wholly-owned subsidiary of Dorel;
(k) All necessary shareholder, corporate, Government, third
party consent and approvals for the Safety 1st
acquisition and merger shall have been obtained;
(l) No amalgamation, merger, material asset disposition,
material change in the capital structure (other than
acquisition of shares of Safety 1st pursuant to options
or rights outstanding on the date hereof) or other
corporate reorganization involving Safety 1st and
companies, other than Acquisition Sub, and no dividends
or distributions on shares of Safety 1st;
(m) No undisclosed litigation or new litigation involving
Safety 1st since March 30, 2000 pending prior to the
date of the initial advance which would reasonably be
likely to have Material Adverse Effect;
(n) Any "poison pill" or other defensive tactics which
Safety 1st has implemented or undertaken shall have been
revoked or set aside to the satisfaction of the Agent;
CONDITIONS
PRECEDENT
TO ALL
BORROWINGS: Usual and customary in credit agreements of this nature with
respect to Dorel, the Borrowers and the Restricted
Subsidiaries, including but not limited to:
(a) Accuracy of representations and warranties;
(b) No default or Event of Default exists at the time of, or
after giving effect to, the making of such Borrowing;
and
(c) Notice of Borrowings.
COVENANTS: Usual and customary in transaction of this type, including,
without limitation, that Dorel, the Borrowers and the
Restricted Subsidiaries will:
Affirmative Covenants
(a) Punctually pay all sums when due under the Credit
Agreement;
(b) Maintenance of corporate existence, conduct of business
in a proper and efficient manner including obtaining and
maintaining all material licenses, permits, and
regulatory approvals;
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<PAGE> 6
DOREL INDUSTRIES INC. CONFIDENTIAL
(c) Any borrowing under the Credit Facility will rank at
least pari passu with all other senior unsecured
indebtedness for borrowed money of Dorel, the Borrowers
and the Restricted Subsidiaries;
(d) Provide prompt notice of any Event of Default or any
event which, with notice or lapse of time or both, would
constitute an Event of Default and a notice of any
litigation, action or suits which could, if determined
adversely, require the payment of monies in excess of $2
million;
(e) Make all regulatory filings required by governmental and
regulatory authorities including material change
reports;
(f) Compliance in all material respects with all applicable
laws including without limitation, ERISA, all
environmental laws and obtain and maintain all necessary
environmental permits;
(g) Maintain insurance in amounts, terms and coverage in
accordance with prudent industry practice;
(h) Use all funds advanced solely for the purposes as
defined;
(i) Payment of taxes and all other amounts and liabilities
that might result in a lien on any of the properties;
(j) Give the right of all Lenders and/or the Agent to
inspect property, books and records;
(k) Dorel shall maintain, directly or indirectly, 100%
ownership of the Borrowers and each Restricted
Subsidiary;
(l) Ensure that all purchases of derivatives and hedging
instruments will be solely for the purpose of hedging
interest rate, commodity and foreign exchange exposure,
and not for the purpose of speculation;
(m) Ensure that there are no restrictions on any payments or
distributions from Restricted Subsidiaries to the
Borrowers or on any distributable earnings in any of the
Restricted Subsidiaries to service the indebtedness of
the Borrowers;
(n) Any more restrictive covenants given by any of the
Borrower (s) to any other creditor under any unsecured
indebtedness shall be automatically deemed to apply to
this Credit Facility except when such unsecured
indebtedness expressly ranks subordinate in all ways (to
the satisfaction of the Agent) to the Credit Facility.
The Borrower (s), shall execute, after notice to the
Agent, any documentation confirming that such covenants
apply for the benefit of the Lenders;
(o) If a subsidiary becomes a Restricted Subsidiary, Dorel
shall cause such Restricted Subsidiary to provide to the
Administrative Agent for the benefit of Lenders, a
Restricted Subsidiary Guarantee;
(p) The Borrower will obtain the Lender's prior written
consent 15 business days prior to the usage of the
Credit Facility for any acquisition greater than
$30,000,000;
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<PAGE> 7
DOREL INDUSTRIES INC. CONFIDENTIAL
(q) Take promptly all necessary steps to ensure a 100%
privatisation of Safety 1st so that it becomes a
wholly-owned subsidiary of Dorel; and
(r) Maintain the Guarantees and the pledge of shares in full
force and effect.
The foregoing limitations and prohibitions shall provide
exceptions which are usual and customary for financings
of this type.
Negative Covenants
(a) Except for usual and permitted liens customary for
corporations similar in size and credit worthiness of
Dorel, not to grant, create, assume or suffer to exist
any lien affecting any of its properties, assets or
other rights;
(b) Not to sell, transfer or lease all or a substantial
portion of its capital or other assets other than for
sales or disposals in the ordinary course of business,
provided that, any sale or transfer of assets in any
period of 12 consecutive months having a book value or
market value, whichever is greater, in excess of 5% of
total assets shall be permitted if the net proceeds are
used to (i) prepay and reduce the Credit Facility or
(ii) purchase assets of equivalent value and within the
Borrower(s) core business within 6 months of the asset
sale;
(c) Subject to paragraph (b), not to merge, amalgamate,
consolidate or otherwise enter into any other similar
form of business combination with any other person,
other than with a Borrower or Guarantor, unless the
resulting entity is bound by the provisions of the
Credit Agreement, provided however that Guarantors and
the Borrowers may merge, amalgamate, consolidate or
enter into a similar form or combination with each other
from time to time, without the consent of the Lenders;
(d) Not to make any change whereby the nature of the
business carried on by Dorel, the Borrowers or the
Restricted Subsidiaries (taken on a consolidated basis)
would be materially altered;
(e) Not to incur any indebtedness for borrowed money except
(i) indebtedness related to the outstanding senior notes
(ii) indebtedness supported by permitted liens as in (a)
above and (iii) senior unsecured indebtedness ranking
pari passu with the Credit Facility which, when the
total of (i), (ii) and (iii) taken in the aggregate, is
not greater than 5% of total assets, provided that, any
such additional indebtedness which exceeds 5% of total
assets shall be permitted if all proceeds from such
additional indebtedness are used to permanently repay
the Credit Facility;
(f) Not to use proceeds greater than $5.0 million from the
Credit Facility to make any investments or acquisitions
other than in Restricted Subsidiaries or in companies
that will become Restricted Subsidiaries upon investment
or acquisition;
(g) Not to make any acquisition in any unrelated business at
any time;
(h) Not modify the corporate structure;
(i) In the case of Dorel alone, not to pay dividends,
repurchase stock or declare or make any distribution if
a Default or an Event of Default exists or such action
would cause a Default or an Event of Default;
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<PAGE> 8
DOREL INDUSTRIES INC. CONFIDENTIAL
(j) Not make any loans, guarantees or other forms of
financial assistance to Non Restricted Subsidiaries and
third parties except in the ordinary course of business
and in an aggregate amount not to exceed 2.5% of total
assets over the term of the Credit Facility; in
addition, not to purchase, acquire or lease (or sell,
dispose or lease) any property to any affiliate except
on a third party, arms-length value;
(k) No material amendments and no termination of material
contracts;
(l) Not to sell any capital stock of any Borrower or any
Restricted Subsidiary;
(m) Not to terminate or amend the Transaction documents
without the consent of Majority Lenders.
Financial Covenants
To be calculated on a quarterly basis based on the
consolidated financial statements of Dorel.
a) Minimum Fixed Charge Coverage of 1.5:1.
b) Ratio of Funded Debt to EBITDA not to exceed 2.75:1
through to the quarter ending June 30, 2000 and 2.5:1
thereafter.
c) Maximum ratio of Funded Debt to Capitalization not to
exceed 60% through until the quarter ending December 31,
2000, then 55% through until the quarter ending
September 30, 2001, and 45% thereafter.
Acquisitions
EBITDA:
EBITDA may include, in the event of an acquisition by Dorel, a
Restricted Subsidiary or a corporation which becomes a
Restricted Subsidiary, the EBITDA of the newly acquired
company for its immediately preceding four quarters, as
referenced to historical audited financial statements.
For purposes of clarity, prior to any acquisition the Borrower
must demonstrate that the financial covenants, based on the
pro-forma financial statements giving effect to the
acquisition, will be satisfied.
Reporting Covenants:
The Borrowers will covenant, as applicable, to provide:
(a) Annual audited consolidated financial statements of
Dorel and the unconsolidated and unaudited financial
statements of each of Dorel's operating divisions and
where available, the financial statements of each of the
Borrowers, in addition, the consolidating working sheets
of Dorel, (all prepared in accordance with GAAP) within
90 days of fiscal year end and accompanied by the
external auditors' report;
(b) Unaudited quarterly consolidated financial statements of
Dorel and the unconsolidated financial statements of
each of Dorel's operating divisions and where available
the financial statements of each of the Borrowers, in
addition, the consolidating working sheets of Dorel,
within 45 days of each quarter end (all prepared in
accordance with GAAP);
[RBC DOMINION SECURITIES LOGO] - 8 - APRIL 13,2000
<PAGE> 9
DOREL INDUSTRIES INC. CONFIDENTIAL
(c) Compliance certificates of each of the Borrowers signed
by its Chief Financial Officer or Treasurer within 45
days of each fiscal quarter end and within 90 days of
each fiscal year end, which will include, in the case of
Dorel, inter alia, sufficient detail to calculate the
Financial Covenants and an updated list of Restricted
Subsidiaries;
(d) Annual budget and financial plan including financial
projections and details as to the underlying
assumptions, all updated for a period covering the
remaining term of the Credit Facility, within 90 days of
each fiscal year end;
(e) Copies of all material public documents filed with any
stock exchange, securities commissions or similar
entities;
(f) Prior to 15 business days of the usage of the Credit
Facility for any acquisition greater than US$30MM,
provide:
(i) notice of the acquisition and information
regarding its purchase price etc.;
(ii) historical audited financial statements of the
target company (or if not available, financial
statements which have been reviewed and confirmed
by a nationally recognised accounting firm);
(iii) proforma balance sheet and income statement of the
target company integrated with Dorel taking into
effect the acquisition;
(iv) confirmation that Dorel is satisfied, as a result
of its due diligence, that the acquisition will
not result in the assumption of material
liabilities; and
(v) officer's certificate stating that, as of the date
of the acquisition and on a consolidated
post-acquisition basis after giving effect to the
acquisition, there shall be no Event of Default
under the Credit Agreement (including all
financial covenants being met);
For acquisitions greater than US$10MM but less than
US$30MM, the Borrower will covenant to provide
information as per (i) and (v) above;
(g) Provide prompt notice of:
(i) any material litigation, disputes with
governmental bodies, legal proceedings; and
(ii) any material adverse change or Event of Default or
any event which, with notice or lapse of time or
both, would constitute a material adverse change
or Event of Default;
(h) Other information reasonably requested by the Agent.
EVENTS OF
DEFAULT: Usual and customary in credit agreements of this nature with
respect to Dorel, the Borrowers and the Restricted
Subsidiaries, including but not limited to:
(a) Non-payment when due of principal or failure to pay
within three (3) days of the due date of any interest or
any other amounts due under the Credit Agreement;
(b) Breach by the Borrowers or Guarantors of any provisions
of the Credit Agreement or the other documents subject
to materiality and reasonable cure periods;
[RBC DOMINION SECURITIES LOGO] - 9 - APRIL 13,2000
<PAGE> 10
DOREL INDUSTRIES INC. CONFIDENTIAL
(c) Representations or warranties false in any material
respect when made;
(d) Cross default to other indebtedness of Dorel, the
Borrowers or Restricted Subsidiaries (to include
indebtedness for borrowed money, letters of credit or
treasury contracts, but to exclude Non-recourse Debt)
where the aggregate amount of such indebtedness is in
excess of $2.0 million;
(e) A writ, execution or attachment or similar process is
issued or levied against a substantial part of the
property of Dorel, the Borrowers or a Restricted
Subsidiary in connection with any judgement against it,
or if a writ, execution or attachment or similar process
is issued or levied against the property of the
Borrowers or a Restricted Subsidiary in connection with
any judgement against it in an amount which exceeds $2.0
million in aggregate or if judgment or orders are
rendered which requires in the aggregate payment of
monies in excess of $2 million and payment thereof is
not made prior to same becoming executory;
(f) Insolvency and bankruptcy related events of Dorel, the
Borrowers or Restricted Subsidiaries;
(g) There shall have occurred a Material Adverse Change in
the financial condition, operations or business
prospects including the loss of a material contract of
Dorel the Borrowers or a Restricted Subsidiary or
material litigation regarding one of its
products/operations on a consolidated basis, in the sole
determination of the Lenders acting reasonably.
(h) Decrease in percentage of total voting control held in
the aggregate by, directly or indirectly, the Schwartz
Family, other members of senior management under 51% of
total voting rights in respect of Dorel;
(i) Invalidity or enforceability of any material provision
of the Credit Agreement or the other loan documents; and
(j) If the Transaction is terminated or if the merger of
Acquisition Sub with Safety 1st does not occur prior to
a date to be agreed upon between the Agent and Dorel.
ASSIGNMENT BY
LENDERS: The Lenders may from time to time, assign and sell
participations in their rights and obligations under the
Credit Agreement to any other financial institution in minimum
amounts of $5,000,000 and in $1,000,000 increments, provided
that:
(a) The Borrower and the Agent shall have consented to such
assignment, such consent not to be unreasonably
withheld. No Borrower consent will be required upon an
Event of Default;
(b) The Borrower shall not be under any obligation to pay by
way of withholding tax or otherwise any greater amount
than it would have been obliged to pay if the Lender had
not made an assignment;
(c) No Lender, after giving effect to a partial assignment,
shall hold less than $5,000,000;
(d) An assignment fee of $3,500 will be payable by the
assignor to the Agent for each assignment; and
(e) No assignment or participation prior to the take-up date
under the Offer.
[RBC DOMINION SECURITIES LOGO] - 10 - APRIL 13,2000
<PAGE> 11
DOREL INDUSTRIES INC. CONFIDENTIAL
MAJORITY
LENDERS: Lenders whose commitments exceed 66 2/3% of the aggregate
amount of the Credit Facility.
WAIVERS AND
AMENDMENTS: The consent of all Lenders shall be required for any amendment
or waiver relating to:
(a) rates/margin or fees or payments;
(b) amount of the Credit Facility or payments thereof;
(c) term of the Credit Facility;
(d) a change of the Borrowers or an assignment or transfer
of its rights or obligations under the Credit Facility;
(e) a change in the Financial Covenant(s);
(f) the types of Borrowings available;
(g) Notice period for Borrowings; and
(h) a change in the definition of Majority Lenders;
All other matters will be decided upon by the Majority
Lenders.
EXPENSES: All out-of-pocket expenses of the Agent (including but not
limited to legal fees and disbursements) relating to the
negotiation and preparation of the Credit Agreement, the other
documents and syndication (including publicity costs) and
operation of the Credit Facility are for the account of Dorel,
regardless of whether or not the Credit Agreement is signed.
All expenses of the Agent and the Lenders in enforcing or
preserving the rights under the Credit Agreement are for the
account of the Borrowers.
TAXES: All payments by the Borrowers will be made free and clear of
all present and future taxes, with no withholdings or
deductions whatsoever and the Borrower will provide the
appropriate indemnity in this regard. The Borrowers will also
be responsible for the due payment of any levies, duties or
charges in connection with the Credit Facility.
INCREASED
COSTS: Documentation will include usual and customary provisions
requiring the Borrowers to reimburse the Lenders for any
increased costs (including costs of complying with capital
adequacy guidelines) which are incurred as a result of
regulatory changes announced subsequent to the signing date of
the Credit Agreement.
INDEMNITY: Standard indemnification by the Borrowers of the Arranger, the
Agent, and the Lenders and their respective affiliates and
their respective directors, officers, employees, attorneys,
agents and controlling persons (collectively the "INDEMNIFIED
PERSONS") against any loss, liability, cost or expense arising
out of the Credit Agreement, except if resulting from gross
negligence or willful misconduct.
GOVERNING LAW: Province of Quebec and/or Canada as applicable therein.
LEGAL COUNSEL: Ogilvy Renault as Canadian counsel and Mayer Brown for US
counsel.
INFORMATION
MEMORANDUM: The Borrowers and Dorel will cooperate in assisting actively
the Agent in achieving a timely syndication that is reasonably
satisfactory to the Agent, such assistance to include, among
other things, (a) direct contact during the syndication
between Dorel's senior management, officers, representatives
[RBC DOMINION SECURITIES LOGO] - 11 - APRIL 13,2000
<PAGE> 12
DOREL INDUSTRIES INC. CONFIDENTIAL
and advisors, on one hand, and prospective Lenders, on the
other hand at such times and place as the Lead Arranger may
request. The Information Memorandum will include, inter alia,
the corporate structure, analysis of the industry sectors in
which Dorel and the Borrowers operates, summary proforma cash
flow, income and balance sheets for each of the next three (3)
years for Dorel along with assumptions in these forecasts, and
historical financial information for Dorel and Safety 1st for
the past 3 years.
CHANGE IN
CIRCUMSTANCES: This offer is subject to there being, in the reasonable
opinion of the Arranger and the Agent, after notification to
Dorel, no material adverse change in the North American bank
loan syndication markets or in the financial condition of
Dorel or the Borrowers (other than has already been disclosed)
prior to the execution of the Credit Agreement. In addition,
the Arranger will be entitled, to increase the interest rates
and fees and amend the structure to reflect market conditions,
if such changes are advisable in order to ensure a successful
syndication, provided that the total aggregate amount of the
Credit Facility may not be amended without Dorel's consent.
However, any increases in the interest rate margins will be
limited to a maximum of 75 basis points.
<PAGE> 13
APPENDIX 1 - FEES AND INTEREST RATES
INTEREST RATES,
MARGINS AND
FEES: The Margins and the Facility Fee (expressed in basis points
per annum) will be determined quarterly based on the ratio of
Funded Debt to EBITDA
<TABLE>
<CAPTION>
TRANCHES A1 & A2 </= 1.5:1 > 1.5:1 >2.0:1 >2.5:1
364 DAY </= 2.0:1 </= 2.5:1
---------------- --------- --------- --------- -------
<S> <C> <C> <C> <C>
FACILITY FEE 17.5 20.0 22.5 30.0
LIBOR SPREAD 70.0 92.5 102.5 120.0
US PRIME Nil 12.5 25.0 50.0
ALL-IN DRAWN 87.5 112.5 125.0 150.0
</TABLE>
Initial pricing will be set at >2.5:1 through until the
quarter ending December 31, 2000, after which it will be based
on the above grid.
<TABLE>
<CAPTION>
TRANCHES B1 & B2 </= 1.5:1 > 1.5:1 >2.0:1 >2.5:1
3 YEAR TERM </= 2.0:1 </= 2.5:1
---------------- --------- --------- --------- -------
<S> <C> <C> <C> <C>
FACILITY FEE 18.75 22.5 27.5 35.0
LIBOR SPREAD 68.75 90.0 97.5 115.0
US PRIME Nil 12.5 25.0 50.0
ALL-IN DRAWN 87.5 112.5 125.0 150.0
</TABLE>
[RBC DOMINION SECURITIES LOGO] - 12 - APRIL 13,2000
<PAGE> 14
DOREL INDUSTRIES INC. CONFIDENTIAL
Initial pricing will be set at >2.5:1 through until the
quarter ending December 31, 2000, after which it will be based
on the above grid.
Any adjustment to Interest Rates and Fees shall be made on a
retroactive basis commencing on the first day of each fiscal
quarter preceding the first quarter for which the consolidated
financial statements of Dorel are available to calculate and
advise the Agent of any Funded Debt to EBITDA ratio change.
Dorel will notify the Agent within five (5) Business Days of
the release of its financial statements of any change in the
above ratio.
FACILITY
FEES: Commencing on the date of execution of the Credit Agreement,
calculated on the amount of the Credit Facility (whether drawn
or not), at the per annum rate set out below, on a 365 day
basis, payable quarterly in arrears
OVERDUE
PAYMENTS: Past due payments shall accrue interest at the per annum
interest rate for prime loans plus 2.00%.
[RBC DOMINION SECURITIES LOGO] - 13 - APRIL 13,2000
<PAGE> 15
APPENDIX II - DEFINITIONS
"EBITDA" means, consolidated revenues (other than extraordinary revenues) of
Dorel Industries Inc. less i) selling, general and administrative expenses, in
accordance with Dorel Industries Inc.'s consolidated statements of operations,
ii) any non-wholly owned subsidiary, and iii) any subsidiary whereby a guarantee
has not been provided.
"Business Day" means any day other than a Saturday, Sunday or other day on which
commercial banks in Montreal are required to be closed and, if the applicable
Business Day relates to dealings in US$, such day will also include a day in New
York, New York for a US Prime Loan or Libor Loan and London, England for Libor
Loan.
"Capitalization" means, as the end of a fiscal quarter the sum of Funded Debt
and Shareholders' Equity.
"Fixed Charge Coverage" means, for any period, the ratio of EBITDA minus
unfunded capital expenditures (i.e. total capital expenditures excluding any
portion of which is financed with proceeds of debt or equity) to Fixed Charges.
"Fixed Charges" means, for any period, the sum of Interest Expense, the current
portion of long term debt, cash taxes, dividends, lease payments.
"Funded Debt to EBITDA" means, the ratio of Funded Debt of such date to EBITDA
for the previous four quarters.
"Funded Debt" means, at the end of a fiscal quarter, and as determined in
accordance with Generally Accepted Accounting Principles ("GAAP") on a
consolidated basis for Dorel, the sum of all interest bearing debt including
without duplication, all contingent liabilities, letters of credit, and
guarantees.
"Funded Debt to Capitalization" means, as of the last day of the Fiscal Quarter,
the ratio of Debt of such date to Capitalization.
"Interest Expense" means for such period the aggregate cost, whether capitalized
or expensed, of obtaining advances of credit during such period including, inter
alia, interest charges, the interest component of capital leases, including
accrued and unpaid interest, fees and charges; to be adjusted to include four
quarter interest burden which reflects the incremental debt drawn to effect any
acquisition calculated at Dorel's average senior debt rate for such period.
"Material Adverse Effect" means a material adverse effect on the business,
condition, operations or properties of Dorel and its Restricted Subsidiaries
taken as a whole or of Safety 1st or on the ability of the Borrowers or
Guarantors to perform their financial obligations under the loan documents or on
the legality, validity, binding effect or enforceability of the loan documents.
"Non-Restricted Subsidiary" means all subsidiaries of the Borrower that are not
Restricted Subsidiaries. The total assets of Non-Restricted Subsidiaries must
not represent more than 10% of consolidated total assets, gross revenues, or
EBITDA.
[RBC DOMINION SECURITIES LOGO] APRIL 13, 2000
<PAGE> 16
DOREL INDUSTRIES INC. CONFIDENTIAL
"Restricted Subsidiary" means (i) directly or indirectly each wholly-owned
subsidiary of Dorel on the date hereof and (ii) newly acquired company (ies) in
which: (a) Dorel or a wholly-owned subsidiary of Dorel has at least 66 2/3%
ownership interest for a period of only six months after acquisition on or
before which time Dorel will have a 100% ownership interest, (b) Dorel has
stated in writing, at the time of acquisition, that it intends to acquire the
remaining interest in order to have 100% ownership interest within the
aforementioned time period and (c) for which there is no restriction in any
payment of dividends, management fees etc. from such company to Dorel or such
wholly-owned subsidiary. For greater certainty, should Dorel not obtain 100%
ownership interest in the newly acquired company (ies) within 6 months as in
(ii) above, such company (ies) will be excluded from the definition of
Restricted Subsidiaries at the earlier of Dorel determining it will not obtain
100% ownership interest or 6 months from acquisition. For greater certainty,
Safety 1st, LLP and Atlantic are Restricted Subsidiaries.
"Shareholders' Equity" means, at any time, consolidated shareholders' equity of
Dorel as defined in accordance with GAAP.
"SUBSIDIARY" means any corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors are directly or indirectly owned or controlled (within the
meaning of the CBCA) by the Borrower.
CONDITIONS RE PRIME LOANS:
"US Prime Rate" is the rate of interest per annum in effect from time to time
that is equal to the greater of: (i) the U.S. prime rate of the Administrative
Agent, being the rate of interest publicly announced by it from time to time as
its reference rate then in effect for determining interest rates for commercial
loans in US$ made by the Administrative Agent in the United States of America;
and (ii) the overnight Federal Funds rate (usually designated the "Federal Funds
Effective Rate") in effect from time to time plus a margin of 50 basis points
per annum.
Minimum Amount: $5,000,000 and multiples of $1,000,000 thereafter.
Interest shall be calculated and paid monthly in arrears at the rates set out
accruing daily on the actual number of days elapsed and based on a year of 365
days. One (1) Business Day's notice is required for Borrowings by way of prime
Loans provided that up to US$10,000,000 shall be available on same day notice.
CONDITIONS RE LIBOR LOANS:
"Libor" shall mean, the rate of interest per annum appearing on Reuters page
Libor01 (at or about 11:00 am London, England time) two Business Days prior to
drawdown for the interest period selected, provided that if Reuters page Libor01
is unavailable, then Libor shall be determined by the Agent with reference to
page 3750 of the Telerate screen as of 11:00 am London time, provided that if
Telerate page 3750 is unavailable, then Libor shall be determined by the Agent
as the rate at which deposits are offered by it to prime banks in the London
inter bank market at or about 11:00 a.m. London, England time.
Minimum Amount: $5,000,000 and multiples of $1,000,000 thereafter.
Interest Periods (at Borrower's Option): One, two, three or six months. No
Interest Period shall expire beyond the last day of the Facility. Subject to
availability. Three (3) Business Day's notice is required for Borrowings by way
of Libor Loans.
Libor shall be determined on the "Interest Determination Date" which shall mean
the date which is two (2) Business Days prior to the first day of a LIBOR
Interest Period;
Interest shall be paid at the end of each Interest Period, but not less than
quarterly, calculated in arrears at the rates set out above, accruing daily on
the actual numbers of days elapsed and based on a year of 360 days. If the
Borrower fails to select and to notify the Agent of the Interest Period
applicable to a maturing LIBOR Loans, the Borrower shall be deemed to have
converted the LIBOR Loan to a US Prime rate Loan.
Usual and customary clauses for indemnification, availability and illegality.
[RBC DOMINION SECURITIES LOGO] - 14 - APRIL 13,2000
<PAGE> 1
Exhibit (d)(1)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
DOREL INDUSTRIES, INC.,
DIAMOND ACQUISITION SUBSIDIARY, INC.
AND
SAFETY 1ST, INC.
Dated as of April 22, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I The Offer...................................................................5
1.1 The Offer...................................................................5
1.2 Company Actions.............................................................6
1.3 Board Representation........................................................7
1.4 Company Stock Options and Related Matters...................................8
ARTICLE II The Merger..................................................................9
2.1 The Merger..................................................................9
2.2 Effective Time..............................................................9
2.3 Closing.....................................................................9
2.4 Directors and Officers.....................................................10
2.5 Stockholders' Meeting......................................................10
2.6 Conversion of Securities...................................................10
2.7 Taking of Necessary Action; Further Action.................................11
ARTICLE III Payment for Shares; Dissenting Shares......................................11
3.1 Payment for Shares of Company Common Stock.................................11
3.2 Appraisal Rights...........................................................13
ARTICLE IV Representations and Warranties of Parents and Acquisition Sub..............13
4.1 Existence; Good Standing; Authority; Compliance With Law...................14
4.2 Authorization; Validity of Agreement; Necessary Action.....................14
4.3 Consents and Approvals; No Violations......................................14
4.4 Required Financing.........................................................15
ARTICLE V Representations and Warranties of the Company..............................15
5.1 Existence; Good Standing; Authority; Compliance With Law...................15
</TABLE>
1
<PAGE> 3
<TABLE>
<S> <C> <C>
5.2 Authorization, Validity and Effect of Agreements...........................16
5.3 Capitalization.............................................................17
5.4 Subsidiaries...............................................................17
5.5 Other Interests............................................................18
5.6 No Violation; Consents.....................................................18
5.7 Commission Documents.......................................................18
5.8 Litigation.................................................................19
5.9 Absence of Certain Changes.................................................19
5.10 Taxes......................................................................19
5.11 Properties.................................................................20
5.12 Intellectual Property......................................................21
5.13 Environmental Matters......................................................21
5.14 Employee Benefit Plans.....................................................22
5.15 Labor Matters..............................................................24
5.16 No Brokers.................................................................24
5.17 Opinion of Financial Advisor...............................................24
5.18 Material Contracts.........................................................24
5.19 Definition of the Company's Knowledge......................................25
ARTICLE VI Conduct of Business Pending the Merger.....................................25
6.1 Conduct of Business by the Company.........................................25
ARTICLE VII Additional Agreements......................................................26
7.1 HSR and Other Filings......................................................26
7.2 Fees and Expenses..........................................................28
7.3 No Solicitations...........................................................28
7.4 Officers' and Directors' Indemnification...................................29
7.5 Access to Information; Confidentiality.....................................31
7.6 Financial and Other Statements.............................................31
</TABLE>
2
<PAGE> 4
<TABLE>
<S> <C> <C>
7.7 Public Announcements.......................................................32
7.8 Employee Benefit Arrangements..............................................32
7.9 Required Financing.........................................................32
7.10 Further Assurances.........................................................33
ARTICLE VIII Conditions to the Merger...................................................33
8.1 Conditions to the Obligations of Each Party to Effect the Merger...........33
ARTICLE IX Termination, Amendment and Waiver..........................................34
9.1 Termination................................................................34
9.2 Effect of Termination......................................................35
9.3 Amendment..................................................................36
9.4 Extension; Waiver..........................................................36
ARTICLE X General Provisions.........................................................37
10.1 Notices....................................................................37
10.2 Interpretation.............................................................37
10.3 Non-Survival of Representations, Warranties, Covenants and Agreements......38
10.4 Miscellaneous..............................................................38
10.5 Assignment.................................................................38
10.6 Severability...............................................................38
10.7 Choice of Law/Consent to Jurisdiction......................................38
10.8 No Agreement Until Executed................................................39
ANNEX A ....................................................................................A-1
</TABLE>
3
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF Dorel Industries, Inc., a Quebec
corporation ("Parent"), Diamond Acquisition Subsidiary, Inc., a Massachusetts
corporation and a wholly-owned subsidiary of Parent ("Acquisition Sub"), and
Safety 1st, Inc., a Massachusetts corporation (the "Company").
RECITALS
WHEREAS, the Board of Directors of each of Parent, Acquisition
Sub and the Company has approved, and deems it advisable and in the best
interests of its respective stockholders to consummate, the acquisition of the
Company by Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent, the Acquisition Sub and each of Michael
Lerner and Michael Bernstein have entered into a Tender Agreement, dated as of
the date hereof obligating each of them to tender his Shares (as defined below)
pursuant to the Offer (as defined below), substantially in the form of Exhibit A
hereto and the Company agrees to use its best efforts to have BT Capital
Partners, Inc. and Bear, Stearns & Co., Inc. enter into the Tender Agreement;
4
<PAGE> 6
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, Parent, Acquisition Sub and the Company hereby
agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with its terms, Acquisition Sub shall, as soon as
practicable after the date hereof, commence (within the meaning of Rule 14d-2(a)
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "Exchange Act")), an offer to purchase (as such
offer to purchase may be amended in accordance with the terms of this Agreement,
the "Offer") all of the issued and outstanding shares ("Shares") of common
stock, par value $0.01 per share, of the Company (the "Company Common Stock") at
a price of not less than $13.875 per Share, net to the seller in cash (less
applicable withholding taxes, if any) (such price, or such other price per Share
as may be paid in the Offer, being referred to herein as the "Offer Price").
After the commencement of the Offer, the Offer and the obligation of Acquisition
Sub to accept for payment and pay for Shares tendered pursuant to the Offer
shall be subject only to the conditions set forth in Annex A hereto and the
condition (the "Minimum Condition") that there be validly tendered and not
withdrawn prior to the expiration of the Offer at least two-thirds of the Shares
on a fully diluted basis (the "Minimum Percentage"). Parent and Acquisition Sub
expressly reserve the right to waive any condition set forth in Annex A, to
change the form or amount payable per Share in the Offer (including the Offer
Price) and to make any other changes in the terms and conditions of the Offer;
provided, however, that without the prior written consent of the Company, Parent
shall not amend, or permit to be amended, the Offer to (i) decrease the Offer
Price, (ii) change the consideration into a form other than cash, (iii) add any
conditions to the obligation of Acquisition Sub to accept for payment and pay
for Shares tendered pursuant to the Offer, (iv) amend (other than to waive) the
Minimum Condition or the other conditions set forth in Annex A, or (v) reduce
the maximum number of Shares to be purchased in the Offer. If on the initial
scheduled expiration date of the Offer (the "Initial Expiration Date"), which
shall be 20 business days after the date the Offer is commenced, all conditions
to the Offer shall not have been satisfied or waived, Acquisition Sub may, from
time to time, in its sole discretion, extend the expiration date of the Offer
(the "Expiration Date"); provided, however, that, except as set forth below, the
Expiration Date, as extended, shall be no later than the date that is 40
business days immediately following the Initial Expiration Date. Notwithstanding
the foregoing, if on the Initial Expiration Date, the applicable waiting period
(and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") in respect of the Offer shall not have expired or
been terminated and all other conditions to the Offer shall have been satisfied
or waived other than the Minimum Condition, Acquisition Sub shall be required to
extend the Expiration Date until such waiting period shall have expired or been
terminated, subject to the provisions of Section 9.1(b)(ii). Acquisition Sub
shall, on the terms and subject to the prior satisfaction or waiver of the
conditions of the Offer, accept for payment and pay for Shares tendered as soon
as practicable as it is legally permitted to do so under this Agreement and
applicable law. The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") containing the terms set forth in this Agreement, the
Minimum Percentage and the conditions set forth in Annex A hereto.
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(b) On the date the Offer is commenced, Parent and Acquisition
Sub shall file or cause to be filed with the Securities and Exchange Commission
(the "Commission") a Tender Offer Statement on Schedule TO (together with all
amendments or supplements thereto, the "Schedule TO"), which shall include as an
exhibit or incorporate by reference, the Offer to Purchase (or portions thereof)
and forms of the related letter of transmittal and summary advertisement (such
Schedule TO, the Offer to Purchase and related documents, together with all
amendments or supplements thereto, are collectively referred to herein as the
"Offer Documents"). Parent and Acquisition Sub shall take all necessary steps to
cause the Offer Documents (other than the Schedule TO), together with the
Schedule 14D-9 (as hereinafter defined), to be disseminated to the holders of
Common Stock as soon as practicable following commencement of the Offer. The
Offer Documents shall comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the Commission
and on the date first published, sent or given to the Company's stockholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Parent or Acquisition
Sub with respect to information furnished by the Company for inclusion in the
Offer Documents. The information supplied in writing by the Company for
inclusion in the Offer Documents and by Parent or Acquisition Sub for inclusion
in the Schedule TO (as hereinafter defined) shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Parent,
Acquisition Sub and the Company each agrees promptly to amend or supplement any
information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect or as otherwise required by applicable federal securities laws, and
Parent and Acquisition Sub each further agrees to take all steps necessary to
cause the Offer Documents, as so amended or supplemented, to be filed with the
Commission and disseminated to the 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 a reasonable opportunity to review and comment upon the
Offer Documents and all amendments and supplements thereto prior to the filing
thereof with the Commission or the dissemination thereof to the holders of
Shares.
1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that the Board of Directors of the Company (the
"Company Board"), at a meeting duly called and held, has unanimously (i)
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger (as hereinafter defined) taken together, are
fair to and in the best interests of the Company and its stockholders, (ii)
approved this Agreement and the transactions contemplated hereby, including,
without limitation, the Merger and the Offer (collectively, the "Transactions"),
and such approval constitutes approval of the Transactions for purposes of
Chapter 110F of the Massachusetts General Laws, as amended (the "MGL"), and
(iii) voted to recommend that the stockholders of the Company accept the Offer,
tender their Shares thereunder to Acquisition Sub and approve and adopt this
Agreement and the Merger, subject to the Company's rights under Section 7.3
hereof.
(b) Concurrently with the commencement of the Offer and the
filing by or on behalf of Parent and Acquisition Sub of the Schedule TO, the
Company shall file with the Commission a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with all amendments or supplements thereto, the
"Schedule 14D-9"), containing (among other things) the
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recommendation referred to in clause (iii) of Section 1.2(a) hereof, subject to
the Company's rights under Section 7.3 hereof. The Schedule 14D-9 shall comply
in all material respects with the provisions of applicable federal securities
laws and, on the date filed with the Commission and on the date first published,
sent or given to the Company's stockholders, shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information furnished by
Parent or Acquisition Sub for inclusion in the Schedule 14D-9. The Company,
Parent and Acquisition Sub each agrees promptly to correct, amend or supplement
any information provided by it for use in the Schedule 14D-9 if and to the
extent that such information shall have become false or misleading in any
material respect or as otherwise required by applicable federal securities laws,
and the Company further agrees to take all steps necessary to cause the Schedule
14D-9, as so amended or supplemented, to be filed with the Commission and
disseminated to the holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Parent, Acquisition Sub and
their counsel shall be given a reasonable opportunity to review and comment upon
the Schedule 14D-9 and all amendments and supplements thereto prior to the
filing thereof with the Commission or the dissemination thereof to the holders
of Shares.
(c) In connection with the Offer, the Company shall promptly
furnish Parent and Acquisition Sub with a list of the names and addresses of all
record holders of Shares and security position listings of Shares, each as of a
recent date, and shall promptly furnish Parent and Acquisition Sub with such
additional information, including updated lists of the stockholders of the
Company, lists of the holders of the Company's outstanding stock options,
mailing labels, security position listings and such other assistance and
information as Parent or Acquisition Sub or their agents may reasonably request.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer, each of Parent and Acquisition Sub shall use the
information described in the preceding sentence only in connection with the
Offer, and if this Agreement is terminated in accordance with its terms, each of
them shall, upon the Company's request, deliver to the Company all such
information and any copies or extracts thereof then in its possession or under
its control.
1.3 Board Representation.
Promptly upon the purchase of Shares by Acquisition Sub
pursuant to the Offer, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Company Board as is equal
to the product of (a) the total number of directors on the Company Board (after
giving effect to the directors designated by Parent pursuant to this sentence)
and (b) the percentage that the total votes represented by such number of Shares
in the election of directors of the Company so purchased by Acquisition Sub
bears to the total votes represented by the number of Shares outstanding. In
furtherance thereof, the Company shall, upon request by Parent, promptly
increase the size of the Company Board and/or exercise its best efforts to
secure the resignations of such number of its directors as is necessary to
enable Parent's designees to be elected to the Company Board and shall take all
actions to cause Parent's designees to be so elected to the Company Board. At
such time, the Company shall also cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number) as
is on the Company Board of (i) each committee of the Company Board, (ii) each
board of directors (or similar body) of each Subsidiary (as defined in Section
10.2 hereof) of the Company (each, a "Company Subsidiary") and (iii) each
committee (or similar
7
body) of each such board. The Company shall take, at its expense, all action
required pursuant to Section 14(f) and Rule 14f-1 of the Exchange Act in order
to fulfill its obligations under this Section 1.3 and shall include in the
Schedule 14D-9 to its stockholders such information with respect to the Company
and its officers and directors as is required by such Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this Section 1.3. Parent will
supply to the Company in writing and be solely responsible for any information
with respect to itself and its nominees, officers, directors and affiliates
required by such Section 14(f) and Rule 14f-1. Notwithstanding the foregoing, in
the event that Parent's designees are elected to the Company Board, until the
Effective Time (as hereinafter defined), the Company Board shall have at least
two directors who are directors on the date hereof (the "Independent
Directors"); provided that, in such event, if the number of Independent
Directors shall be reduced below two for any reason whatsoever, the remaining
Independent Director shall be entitled to designate a person to fill such
vacancy who shall be deemed to be an Independent Director for purposes of this
Agreement, or if no Independent Director then remains, the other directors shall
designate two persons to fill such vacancies who shall not be stockholders,
affiliates or associates of Parent or Acquisition Sub and such persons shall be
deemed to be Independent Directors for purposes of this Agreement.
Notwithstanding anything in this Agreement to the contrary, in the event that
Parent's designees are elected to the Company Board, after the acceptance for
payment of Shares pursuant to the Offer and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required to
(a) amend or terminate this Agreement by the Company, (b) exercise or waive any
of the Company's rights, benefits or remedies hereunder, or (c) extend the time
for performance of Parent's and Acquisition Sub's respective obligations
hereunder.
1.4 Company Stock Options and Related Matters.
(a) Each option (collectively, the "Options") granted under
the Company Stock Option Plans (as hereinafter defined), which is outstanding
(whether or not currently exercisable) as of immediately prior to the date on
which Acquisition Sub accepts for payment Shares pursuant to the Offer (the
"Acceptance Date") and which has not been exercised or canceled prior thereto
shall, on the Acceptance Date, be canceled and in exchange therefor, Parent
shall pay to the holder thereof cash in an amount equal to the product of (i)
the number of Shares provided for in such Option and (ii) the excess, if any, of
the Offer Price over the exercise price per Share provided for in such Option,
which cash payment shall be treated as compensation and shall be net of any
applicable federal or state withholding tax. Notwithstanding the foregoing, if
the exercise price per Share provided for in any Option exceeds the Offer Price,
no cash shall be paid with regard to such Option to the holder of such Option.
The Company shall take all actions necessary to ensure that (i) all Options, to
the extent not exercised prior to the Acceptance Date, shall terminate and be
canceled as of the Acceptance Date and thereafter be of no further force or
effect, (ii) no Options are granted after the date of this Agreement, and (iii)
as of the Acceptance Date, the Company Stock Option Plans and all Options issued
thereunder shall terminate.
(b) Except as may be otherwise agreed to by Parent or
Acquisition Sub and the Company, the Company Stock Option Plans shall terminate
as of the Acceptance Date and the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any of the Company Subsidiaries shall be
of no further force and effect and shall be deemed to be deleted as of the
Acceptance Date and no holder of an Option or any participant in any Company
Stock Option Plan or any other plans, programs or arrangements shall have any
right thereunder to acquire any
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equity securities of the Company, the Surviving Corporation (as hereinafter
defined) or any Subsidiary thereof.
ARTICLE II
THE MERGER
2.1 The Merger.
Subject to the terms and conditions of this Agreement, at
the Effective Time, the Company and Acquisition Sub shall consummate a merger
(the "Merger") pursuant to which (a) Acquisition Sub shall be merged with and
into the Company and the separate corporate existence of Acquisition Sub shall
thereupon cease, (b) the Company shall be the successor or surviving corporation
in the Merger (sometimes referred to herein as the "Surviving Corporation") and
shall continue to be governed by the laws of the Commonwealth of Massachusetts,
and (c) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. The Company shall take such steps as are permitted under the
Massachusetts Business Corporation Law ("MBCL") to (i) amend the Articles of
Organization of the Company (the "Articles of Organization") so that the
Articles of Organization of Acquisition Sub, as in effect immediately prior to
the Effective Time, shall be the Articles of Organization of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Organization, and (ii) amend the Bylaws of the Company (the "Bylaws") so that
the Bylaws of Acquisition Sub, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter amended
as provided by law, by the Articles of Organization of the Surviving Corporation
and by such Bylaws. The Merger shall have the effects specified in the MBCL. The
purpose, powers, rights and privileges permitted in the Articles of Organization
are not to be deemed to be in limitation of similar, other or additional powers,
rights and privileges granted or permitted to the Company by the MBCL, it being
intended that the Company shall be authorized to have and shall have all the
powers, rights, and privileges granted or permitted to a corporation by such
statutes.
2.2 Effective Time.
As promptly as practicable after all of the conditions set
forth in Article VIII shall have been satisfied or, if permissible, waived by
the party entitled to the benefit of the same, Acquisition Sub and the Company
shall duly execute and file articles of merger (the "Articles of Merger") with
the Secretary of the Commonwealth of Massachusetts in accordance with the MBCL.
The Merger shall become effective at such time as the Articles of Merger,
accompanied by payment of the filing fee (as provided in Section 114 of the
MBCL), have been examined by and received the endorsed approval of the Secretary
of State of the Commonwealth of Massachusetts (the "Effective Time").
2.3 Closing.
The closing of the Merger (the "Closing") shall take place
at such time and on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of all of the
conditions set forth in Article VIII hereof (the "Closing Date"), at the offices
of Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts 02109,
unless another date or place is agreed to by the parties hereto.
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2.4 Directors and Officers.
The directors of Acquisition Sub immediately prior to the
Effective Time shall be the initial directors 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, each to hold office in accordance
with the Articles of Organization and Bylaws of the Surviving Corporation.
2.5 Stockholders' Meeting.
If required by applicable law in order to consummate the
Merger, the Company, acting through the Company Board, shall, in accordance with
applicable law:
(a) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") as promptly as
practicable following the Acceptance Date for the purpose of considering and
taking action upon the approval of the Merger and the adoption of this
Agreement;
(b) prepare and file in consultation with Parent with
the Commission a preliminary proxy or information statement relating to the
Merger and this Agreement containing the information required by the Commission
to be included in the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any comments made by the
Commission with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any amendment or
supplement thereto (the "Proxy Statement"), to be mailed to its stockholders,
provided that no amendment or supplement to the Proxy Statement will be made by
the Company without the consultation and approval of Parent and its counsel
(which shall not be unreasonably withheld), and to obtain the necessary
approvals of the Merger and this Agreement by its stockholders; and
(c) include in the Proxy Statement the recommendation
of the Company Board that stockholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement.
In the event that a Special Meeting is called with respect to
the Merger or related matters, Parent and Acquisition Sub hereby agree to vote
all shares of capital stock of the Company that they or any affiliate acquire in
the Offer or otherwise are entitled to vote at any such Special Meeting or any
adjournment or postponement thereof in favor of the approval of the Merger and
the adoption of the Agreement and other related agreements (or any amended
version thereof) and any actions related thereto.
2.6 Conversion of Securities.
At the Effective Time, by virtue of the Merger and without
any action on the part of Acquisition Sub, the Company or the holders of any
Shares:
(a) Each issued and outstanding Share held by the
Company as a treasury Share or held by any direct or indirect Company Subsidiary
and each issued and outstanding Share owned by Parent, Acquisition Sub or any
other direct or indirect Subsidiary of Parent (a "Parent Subsidiary")
immediately prior to the Effective Time, shall be canceled and retired and cease
to exist without any conversion thereof and no payment or distribution shall be
made with respect thereto;
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(b) Each Share issued and outstanding immediately prior to the
Effective Time, other than (i) those Shares referred to in Section 2.6(a) and
(ii) Dissenting Shares (as hereinafter defined), shall be canceled and shall be
converted automatically into and represent the right to receive the kind and
amount of consideration (without interest) equal to the kind and amount of
consideration paid per Share pursuant to the Offer (the "Merger Consideration"),
payable (without interest) to the holder of such Share upon surrender, in the
manner provided in Section 3.1 hereof, of the Certificate (as hereinafter
defined) that formerly evidenced such Share. All of the Certificates evidencing
Shares, by virtue of the Merger and without any action on the part of the
stockholders of the Company or the Company, shall be deemed to be no longer
outstanding, shall not be transferable on the books of the Surviving
Corporation, and shall represent solely the right to receive the amount set
forth in this Section 2.6(b); and
(c) Each share of common stock, no par value per share, of
Acquisition Sub issued and outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation, a
certificate for which shall be issued to the stockholder of Acquisition Sub upon
surrender to the Surviving Corporation of such stockholder's certificate
formerly representing such shares of Acquisition Sub.
2.7 Taking of Necessary Action; Further Action.
Each of Parent, Acquisition Sub and the Company shall use
its best efforts to take all such action as may be necessary or appropriate in
order to effectuate the Merger under the MBCL as promptly as practicable
following the purchase of shares pursuant to the Offer. If at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of both of the Company and Acquisition Sub, the officers of such
corporations are fully authorized in the name of their corporation or otherwise
to take, and shall take, all such lawful and necessary action. Acquisition Sub
agrees, and Parent agrees to cause Acquisition Sub, to vote all of the Shares
owned beneficially or of record by it or any of its affiliates or associates as
of the record date for the Special Meeting in favor of the Merger at the Special
Meeting.
ARTICLE III
PAYMENT FOR SHARES; DISSENTING SHARES
3.1 Payment for Shares of Company Common Stock.
(a) Prior to the Effective Time, Parent shall designate a bank
or trust company to act as agent for the holders of the Shares in connection
with the Merger (the "Paying Agent") for purposes of effecting the exchange of
certificates for the Merger Consideration which, prior to the Effective Time,
represented Shares entitled to receive the Merger Consideration pursuant to
Section 2.6(b) hereof.
(b) Immediately prior to the Effective Time, Parent or
Acquisition Sub shall deposit in trust with the Paying Agent cash in an
aggregate amount equal to the product of (i) the number of Shares issued and
outstanding immediately prior to the Effective Time (other than Shares owned by,
or issuable upon conversion of other securities to, the Company, Parent,
Acquisition Sub or any direct or indirect Parent Subsidiary or Company
Subsidiary and Shares known immediately prior to the Effective Time to be
Dissenting Shares) (as hereinafter defined)
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and (ii) the Merger Consideration (such aggregate amount being hereinafter
referred to as the "Payment Fund"). The Paying Agent shall, pursuant to
irrevocable instructions, make the payments referred to in Section 2.6(b) hereof
out of the Payment Fund.
(c) Promptly after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each person who was a record
holder of an outstanding certificate or certificates which immediately prior to
the Effective Time represented Shares (the "Certificates"), whose Shares were
converted pursuant to Section 2.6(b) into the right to receive the Merger
Consideration, a letter of transmittal (which shall specify that delivery shall
be effected and risk of loss and title to Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent and the Company may reasonably
specify) and instructions for its use in surrendering Certificates in exchange
for payment of the Merger Consideration. Upon the surrender to the Paying Agent
of such a Certificate, together with such duly executed letter of transmittal
and any other required documents, the holder thereof shall be paid, without
interest thereon, the Merger Consideration to which such holder is entitled
hereunder, and such Certificate shall forthwith be canceled. Until so
surrendered, each such Certificate shall, after the Effective Time, represent
solely the right to receive the Merger Consideration into which the Shares such
Certificate theretofore represented shall have been converted pursuant to
Section 2.6(b), and the holder thereof shall not be entitled to be paid any cash
to which such holder otherwise would be entitled. In case any payment pursuant
to this Section 3.1 is to be made to a holder other than the registered holder
of a surrendered Certificate, it shall be a condition of such payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such exchange shall pay to the
Paying Agent any transfer or other taxes required by reason of the payment of
such cash to a person other than the registered holder of the Certificate
surrendered, or that such person shall establish to the satisfaction of the
Paying Agent that such tax has been paid or is not applicable.
(d) Promptly following the date which is six months after the
Effective Time, the Paying Agent shall return to the Surviving Corporation all
cash, certificates and other instruments in its possession that constitute any
portion of the Payment Fund (including, without limitation, all interest and
other income received by the Paying Agent in respect of all funds made available
to it), and the Paying Agent's duties shall terminate. Thereafter, each holder
of a Certificate shall be entitled to look to the Surviving Corporation (subject
to applicable abandoned property, escheat and similar laws) only as a general
creditor thereof with respect to any Merger Consideration, without interest,
that may be payable upon due surrender of the Certificate or Certificates held
by them. Notwithstanding the foregoing, neither the Paying Agent nor any party
hereto shall be liable to a holder of Certificates that prior to the Effective
Time evidenced Shares for any Merger Consideration delivered pursuant hereto to
a public official pursuant to applicable abandoned property, escheat or other
similar laws.
(e) At the Effective Time, the Company Common Stock transfer
books shall be closed and no transfer of Shares shall be made thereafter. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent, they shall be canceled and exchanged for the
Merger Consideration as provided in Section 2.6(b), subject to applicable law in
the case of Dissenting Shares.
(f) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or the Surviving Corporation, upon the posting by such
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person of a bond in such amount as Parent or the Surviving Corporation may
reasonably direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Paying Agent will issue in exchange for
such lost, stolen or destroyed Certificate, the cash representing the Merger
Consideration deliverable in respect thereof pursuant to this Agreement.
3.2 Appraisal Rights.
(a) Notwithstanding anything in this Agreement to the
contrary, any Shares ("Dissenting Shares") which are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders of
the Company who have timely filed with the Company, before the taking of the
vote of the stockholders of the Company to approve this Agreement, written
objections to such approval stating their intention to demand payment for such
Shares, and who have not voted such Shares in favor of the adoption of this
Agreement will not be converted as described in Section 2.6 hereof, but will
thereafter constitute only the right to receive payment of the fair value of
such Shares in accordance with the applicable provisions of the MBCL (the
"Appraisal Rights Provisions"); provided, however, that all Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under the Appraisal
Rights Provisions shall thereupon be deemed to have been canceled and retired
and to have been converted, as of the Effective Time, into the right to receive
the Merger Consideration, without interest, in the manner provided in Section
2.6 hereof. Persons who have perfected statutory rights with respect to
Dissenting Shares as aforesaid will not be paid by the Surviving Corporation as
provided in this Agreement and will have only such rights as are provided by the
Appraisal Rights Provisions with respect to such Dissenting Shares.
Notwithstanding anything in this Agreement to the contrary, if Parent or
Acquisition Sub abandons or is finally enjoined or prevented from carrying out,
or the stockholders rescind their adoption of, this Agreement, the right of each
holder of Dissenting Shares to receive the fair value of such Dissenting Shares
in accordance with the Appraisal Rights Provisions will terminate, effective as
of the time of such abandonment, injunction, prevention or rescission.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other instruments served pursuant to the MBCL and received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the MBCL. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle any such demands.
(c) Each dissenting stockholder who becomes entitled under the
MBCL to payment for Dissenting Shares shall receive payment therefor after the
Effective Time from the Surviving Corporation (but only after the amount thereof
shall have been agreed upon or finally determined pursuant to the MBCL) and such
Dissenting Shares shall be canceled.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION SUB
Except as set forth in the disclosure schedules delivered at
or prior to the execution hereof to the Company which shall refer to the
relevant sections of this Agreement (the "Parent Disclosure Schedule"), Parent
and Acquisition Sub jointly and severally hereby represent and warrant to the
Company as follows:
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4.1 Existence; Good Standing; Authority; Compliance With Law.
(a) Parent is a corporation duly organized, validly existing
and in good standing under the laws of the Province of Quebec. Acquisition Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Massachusetts. Except as set forth in Section 4.1 of the
Parent Disclosure Schedule, each of Parent and Acquisition Sub is duly licensed
or qualified to do business as a foreign corporation and is in good standing
under the laws of any other state of the United States in which the character of
the properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
licensed or qualified would not have a Parent Material Adverse Effect (as
defined below). For purposes of this Agreement, a "Parent Material Adverse
Effect" shall mean a material adverse effect on the current business, results of
operations or financial condition of Parent and its Subsidiaries taken as a
whole. Each of Parent and Acquisition Sub has all requisite corporate power and
authority to own, operate, lease and encumber its properties and carry on its
business as now conducted.
(b) Neither Parent nor Acquisition Sub is in violation of any
order of any court, governmental authority or arbitration board or tribunal, or
any law, ordinance, governmental rule or regulation to which Parent or
Acquisition Sub or any of their respective properties or assets is subject,
where such violation would have a Parent Material Adverse Effect. Parent and
Acquisition Sub have obtained all licenses, permits and other authorizations and
have taken all actions required by applicable law or governmental regulations in
connection with their businesses as now conducted, where the failure to obtain
any such license, permit or authorization or to take any such action would have
a Parent Material Adverse Effect.
(c) Copies of the Articles or Certificate of Incorporation and
bylaws (and in each such case, all amendments thereto) of each of the Parent and
Acquisition Sub are in Section 4.1 of the Parent Disclosure Schedule.
4.2 Authorization; Validity of Agreement; Necessary Action.
Each of Parent and Acquisition Sub has full corporate power
and authority to execute and deliver this Agreement and to consummate the
Transactions. The execution, delivery and performance by Parent and Acquisition
Sub of this Agreement and the consummation of the Transactions have been duly
authorized by the Board of Directors of Parent (the "Parent Board") and the
Board of Directors of Acquisition Sub (the "Acquisition Sub Board") and by
Parent as the sole stockholder of Acquisition Sub, and except as set forth in
Section 4.2 of the Parent Disclosure Schedule, no other corporate action on the
part of Parent and Acquisition Sub is necessary to authorize the execution and
delivery by Parent and Acquisition Sub of this Agreement and the consummation of
the Transactions. This Agreement has been duly executed and delivered by Parent
and Acquisition Sub and, assuming due and valid authorization, execution and
delivery hereof by the Company, is a valid and binding obligation of each of
Parent and Acquisition Sub, as the case may be, enforceable against each of them
in accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
4.3 Consents and Approvals; No Violations.
Except as set forth in Section 4.3 of the Parent Disclosure
Schedule and except for filings, permits, authorizations, consents and approvals
as may be required under, and other applicable requirements of, the Exchange
Act, the HSR Act, state securities or state "Blue Sky"
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laws and the MGL, none of the execution, delivery or performance of this
Agreement by Parent or Acquisition Sub, the consummation by Parent or
Acquisition Sub of the Transactions or compliance by Parent or Acquisition Sub
with any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the respective articles of organization or bylaws of Parent
or Acquisition Sub, (ii) require any filing with, or permit, authorization,
consent or approval of, any state or federal government or governmental
authority or by any United States or state court of competent jurisdiction (a
"Governmental Entity"), (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the
material terms, conditions or provisions of any material note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent or Acquisition Sub is a party or by which either of them or any
of their respective properties or assets may be bound, or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, Acquisition Sub or any of their properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults
which would not, individually or in the aggregate, have a Parent Material
Adverse Effect.
4.4 Required Financing.
Parent and Acquisition Sub have financing commitments in
place which, if funded in accordance with their terms, will provide sufficient
funds to purchase and pay for the Shares pursuant to the Offer and the Merger in
accordance with the terms of this Agreement, to consummate the Transactions and
to repay all amounts of the Company's outstanding indebtedness for borrowed
money. Neither Parent nor Acquisition Sub has any reason to believe that any
condition to such financing commitments cannot or will not be waived or
satisfied prior to the Initial Expiration Date. Parent has provided to the
Company a true, complete and correct copy of the financing commitment letter
(the "Financing Letter"), and all amendments thereto, executed by the lender
(the "Lender"). Parent will provide to the Company any amendments to the
Financing Letter as promptly as possible (but in any event within twenty-four
(24) hours).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered at
or prior to the execution hereof to Parent and Acquisition Sub, which shall
refer to the relevant sections of this Agreement (the "Company Disclosure
Schedule"), the Company represents and warrants to Parent and Acquisition Sub as
follows:
5.1 Existence; Good Standing; Authority; Compliance With Law.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts. Except as set forth in Section 5.1 of the Company Disclosure
Schedule, the Company is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other jurisdiction in
which the character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary, except where
the failure to be so licensed or qualified would not have a Company Material
Adverse Effect (as defined below). For purposes of this Agreement, a "Company
Material Adverse Effect" shall mean a material
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adverse effect on the business, assets, results of operations or financial
condition of the Company and the Company Subsidiaries taken as a whole. The
Company has all requisite corporate power and authority to own, operate, lease
and encumber its properties and carry on its business as now conducted.
(b) Each of the Company Subsidiaries listed in Section 5.1 of
the Company Disclosure Schedule (the "Company Subsidiaries") is a corporation,
partnership or limited liability company (or similar entity or association in
the case of those Company Subsidiaries organized and existing other than under
the laws of a state of the United States) duly incorporated or organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate or other power and authority to
own its properties and to carry on its business as it is now being conducted,
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not have a Company
Material Adverse Effect. The Company has no other subsidiaries other than the
Company Subsidiaries.
(c) Neither the Company nor any of the Company Subsidiaries is
in violation of any order of any court, governmental authority or arbitration
board or tribunal, or any law, ordinance, governmental rule or regulation to
which the Company or any Company Subsidiary or any of their respective
properties or assets is subject, where such violation, alone or together with
all other violations would have a Company Material Adverse Effect. The Company
and the Company Subsidiaries have obtained all licenses, permits and other
authorizations and have taken all actions required by applicable law or
governmental regulations in connection with their businesses as now conducted,
where the failure to obtain any such license, permit or authorization or to take
any such action, alone or together with all other failures, would have a Company
Material Adverse Effect.
(d) Copies of the Articles of Organization and Bylaws and the
other charter documents, bylaws, organizational documents and partnership,
limited liability company and joint venture agreements (and in each such case,
all amendments thereto) of the Company and each of the Company Subsidiaries are
in Section 5.1 of the Company Disclosure Schedule.
5.2 Authorization, Validity and Effect of Agreements.
The Company has the requisite power and authority to enter
into the Transactions and to execute and deliver this Agreement. The Company
Board has approved this Agreement and the Transactions. In connection with the
foregoing, the Company Board has taken such actions and votes as are necessary
on its part to render the provisions of Chapter 110F of the MGL and all other
applicable takeover statutes inapplicable to this Agreement and the
Transactions. Subject only to the approval of this Agreement by the holders of
the Company Common Stock, if required, the execution by the Company of this
Agreement and consummation of the Transactions have been duly authorized by all
requisite corporate action on the part of the Company. This Agreement, assuming
due and valid authorization, execution and delivery thereof by Parent and
Acquisition Sub, constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights and general principles of equity.
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5.3 Capitalization.
The authorized capital stock of the Company consists of
15,000,000 shares of Company Common Stock and 100,000 shares of preferred stock,
$1.00 par value per share, of the Company (the "Company Preferred Stock"). As of
the date of this Agreement, (i) 8,572,215 shares of Company Common Stock were
issued and outstanding, (ii) 2,900,000 shares of Company Common Stock have been
authorized and reserved for issuance pursuant to the Company's stock option
plans listed in Section 5.3 of the Company Disclosure Schedule (the "Company
Stock Option Plans"), subject to adjustment on the terms set forth in the
Company Stock Option Plans, (iii) 2,640,232 Options were outstanding under the
Company Stock Option Plans, and (iv) no shares of Company Common Stock and no
shares of Company Preferred Stock were held in the treasury of the Company. As
of the date of this Agreement, the Company had no shares of Company Common Stock
reserved for issuance other than as described above. All such issued and
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. The Company has
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter. Except for the Options (all of which have been issued under the Company
Stock Option Plans), as of the date of this Agreement there are not any existing
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments which obligate the Company to issue, transfer
or sell any shares of capital stock of the Company. Section 5.3 of the Company
Disclosure Schedule sets forth a full list of the Options, including the name of
the person to whom such Options have been granted, the number of shares subject
to each Option, the per share exercise price for each Option, and the vesting
schedule for each Option. As of the Acceptance Date, pursuant to the Company
Stock Option Plans, the Options will be fully vested and immediately
exercisable. Except as set forth in Section 5.3 of the Company Disclosure
Schedule, there are no agreements or understandings to which the Company or any
Company Subsidiary is a party with respect to the voting of any shares of
capital stock of the Company or which restrict the transfer of any such shares,
nor does the Company have knowledge of any third party agreements or
understandings with respect to the voting of any such shares or which restrict
the transfer of any such shares. Except as set forth in Section 5.3 of the
Company Disclosure Schedule, there are no outstanding contractual obligations of
the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock, partnership interests or any other securities of
the Company or any Company Subsidiary. Except as set forth in Section 5.3 of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary is
under any obligation, contingent or otherwise, by reason of any agreement to
register the offer and sale or resale of any of their securities under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act").
5.4 Subsidiaries.
Except as set forth in Section 5.4 of the Company Disclosure
Schedule, the Company owns directly or indirectly each of the outstanding shares
of capital stock or other equity interest of each of the Company Subsidiaries.
Each of the outstanding shares of capital stock of each of the Company
Subsidiaries having corporate form is duly authorized, validly issued, fully
paid and nonassessable. Except as set forth in Section 5.4 of the Company
Disclosure Schedule, each of the outstanding shares of capital stock or other
equity interest of each of the Company Subsidiaries is owned, directly or
indirectly, by the Company free and clear of all liens, pledges, security
interests, claims or other encumbrances. The following
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information for each Company Subsidiary as of the date of this Agreement is set
forth in Section 5.4 of the Company Disclosure Schedule: (i) its name and
jurisdiction of incorporation or organization; (ii) its authorized capital
stock, share capital or other equity interest, to the extent applicable; and
(iii) the name of each stockholder or equity interest holder and the number of
issued and outstanding shares of capital stock, share capital or other equity
interest held by it.
5.5 Other Interests.
Except as set forth in Section 5.5 of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary owns directly or
indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, limited liability company, joint venture, business,
trust or other entity (other than investments in short-term investment
securities).
5.6 No Violation; Consents.
Except as set forth in Section 5.6 of the Company Disclosure
Schedule, neither the execution and delivery by the Company of this Agreement
nor consummation by the Company of the Transactions in accordance with the terms
hereof, will conflict with or result in a breach of any provisions of the
Articles of Organization or the Bylaws. Except as set forth in Section 5.6 of
the Company Disclosure Schedule, the execution and delivery by the Company of
this Agreement and consummation by the Company of the Transactions in accordance
with the terms hereof will not violate, or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties of the Company or the
Company Subsidiaries under, or result in being declared void, voidable or
without further binding effect, any of the terms, conditions or provisions of
(i) any note, bond, mortgage, indenture or deed of trust or (ii) any license,
franchise, permit, lease, contract, agreement or other instrument, commitment or
obligation to which the Company or any of the Company Subsidiaries is a party,
or by which the Company or any of the Company Subsidiaries or any of their
properties is bound, except as otherwise would not, individually or in the
aggregate, have a Company Material Adverse Effect. Other than the filings
provided for in Article II of this Agreement, the HSR Act, the Exchange Act or
applicable state securities and "Blue Sky" laws (collectively, the "Regulatory
Filings"), the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company and consummation of the
Transactions does not, require any consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority, except where the failure to obtain any such consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority would not, individually or in the aggregate, have a
Company Material Adverse Effect.
5.7 Commission Documents.
The Company has filed all required forms, reports and
documents with the Commission since December 31, 1997 (collectively, the
"Company SEC Reports"), all of which were prepared in accordance with the
applicable requirements of the Exchange Act, the Securities Act and the rules
and regulations promulgated thereunder (the "Securities Laws"). All required
Company SEC Reports have been filed with the Commission and constitute all
forms, reports and documents required to be filed by the Company under the
Securities Laws since December 31, 1997. As of their respective dates, the
Company SEC Reports (i) complied as to
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form in all material respects with the applicable requirements of the Securities
Laws and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets of the Company
included in or incorporated by reference into the Company SEC Reports (including
the related notes and schedules) fairly presents the consolidated financial
position of the Company and the Company Subsidiaries as of its date and each of
the consolidated statements of income, retained earnings and cash flows of the
Company included in or incorporated by reference into the Company SEC Reports
(including any related notes and schedules) fairly presents the results of
operations, retained earnings or cash flows, as the case may be, of the Company
and the Company Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit adjustments which would
not be material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein and except, in the case of the unaudited
statements, as permitted by Form 10-Q pursuant to Section 13 or 15(d) of the
Exchange Act. No Company Subsidiary is required to file any form, report or
document with the Commission.
5.8 Litigation.
Except as set forth in Section 5.8 of the Company Disclosure
Schedule, there is no litigation, suit, action or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the Company
Subsidiaries, as to which there is a reasonable likelihood of an adverse
determination and which, if adversely determined, individually or in the
aggregate with all such other litigation, suits, actions or proceedings, would
(i) have a Company Material Adverse Effect, (ii) materially and adversely affect
the Company's ability to perform its obligations under this Agreement or (iii)
prevent the consummation of any of the Transactions.
5.9 Absence of Certain Changes.
Except as disclosed in the Company SEC Reports filed with
the Commission between December 31, 1999 and the date of this Agreement, and
except as set forth in Section 5.9 of the Company Disclosure Schedule, the
Company and the Company Subsidiaries have conducted their businesses only in the
ordinary course of business and there has not been: (i) as of the date hereof,
any declaration, setting aside or payment of any dividend or other distribution
with respect to any shares of capital stock of the Company; (ii) any material
commitment, contractual obligation (including, without limitation, any
management or franchise agreement, any lease (capital or otherwise) or any
letter of intent), borrowing, liability, guaranty, capital expenditure or
transaction (each, a "Commitment") entered into by the Company or any of the
Company Subsidiaries outside the ordinary course of business except for
Commitments for expenses of attorneys, accountants and investment bankers
incurred in connection with the Transactions; or (iii) any material change in
the Company's accounting principles, practices or methods.
5.10 Taxes.
(a) Except as set forth in Section 5.10 of the Company
Disclosure Schedule, each of the Company and the Company Subsidiaries (i) has
timely filed all Tax Returns (as defined below) which the Company was required
to file (after giving effect to any filing extension granted by a Governmental
Entity) and (ii) has paid all Taxes (as defined below) shown on such Tax Returns
as required to be paid by it, except, in each case, where the failure to
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file such Tax Returns or pay such Taxes would not, individually or in the
aggregate, have a Company Material Adverse Effect. Except as set forth in
Section 5.10 of the Company Disclosure Schedule, the most recent audited
financial statements contained in the Company's Annual Report on Form 10-K for
the fiscal year ended January 1, 2000 reflect, to the knowledge of the Company,
an adequate reserve for all Taxes payable by the Company and the Company
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements in accordance with GAAP, whether or not shown as being
due on any returns. To the knowledge of the Company, and except as set forth in
Section 5.10 of the Company Disclosure Schedule, no deficiencies for any Taxes
have been proposed, asserted or assessed against the Company or any of the
Company Subsidiaries as of the date of this Agreement, and no requests for
waivers of the time to assess any such Taxes are pending.
(b) For purposes of this Agreement, "Taxes" means any and all
taxes, fees, levies, duties tariffs, imposts and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or taxing
authority, including, without limitation: taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
worker's compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added or gains taxes; license, registration and documentation fees; and
customers; duties, tariffs and similar charges.
(c) For purposes of this Agreement, "Tax Returns" means all
reports, returns, declarations, statements or other information required to be
supplied to a taxing authority in connection with Taxes.
5.11 Properties.
(a) Section 5.11 of the Company Disclosure Schedule lists all
real property leased or subleased to or by the Company or any of the Company
Subsidiaries and lists the term of such lease, any extension and expansion
options, and the rent payable thereunder. The Company has delivered to Parent or
Acquisition Sub complete and accurate copies of the leases and subleases (as
amended to date) listed in Section 5.11 of the Company Disclosure Schedule. With
respect to each lease and sublease listed in Section 5.11 of the Company
Disclosure Schedule except as would not, individually or in the aggregate, have
a Company Material Adverse Effect:
(i) the lease or sublease is legal, valid, binding,
enforceable obligation of the Company or Company Subsidiary, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity;
(ii) neither the Company nor any Company Subsidiary,
or to the knowledge of the Company any other party, is in material
breach or violation of, or default under, any such lease or sublease,
and, to the knowledge of the Company, no event has occurred, is pending
or, is threatened, which, after the giving of notice, with lapse of
time, would constitute a material breach or default by the Company or a
Company Subsidiary, or to the knowledge of the Company, any other party
under such lease or sublease;
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(iii) neither the Company nor any Company Subsidiary
has assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the leasehold or subleasehold; and
(iv) the Company is not aware of any Encumbrances (as
defined below), easement, covenant or other restriction applicable to
the real property subject to such lease, except for recorded easements,
covenants and other restrictions which do not, individually or in the
aggregate, materially impair the current uses or the occupancy by the
Company of the property subject thereto.
(b) Except as set forth in Section 5.11 of the Company
Disclosure Schedule, the Company and the Company Subsidiaries own good title,
free and clear of all liens which secure the payment of money mortgages or deeds
of trust, monetary, charges which are liens, security interests or other
encumbrances on title which secure the payment of money (collectively,
"Encumbrances"), to all property and assets necessary to conduct the business of
the Company as presently conducted, except for (A) Encumbrances reflected in the
Company's balance sheet at January 1, 2000 as reflected in the Company SEC
Reports, (B) Encumbrances or imperfections of title which are not, individually
or in the aggregate, material in character, amount or extent and which do not
materially detract from the value or materially interfere with the present or
presently contemplated use of the assets subject thereto or affected thereby,
and (C) Encumbrances for current Taxes not yet due and payable. All of the
machinery, equipment and other tangible personal property and assets owned or
used by the Company and the Company Subsidiaries are, to the Company's
knowledge, in good condition and repair, except for ordinary wear and tear, to
the extent necessary to permit the Company and the Company Subsidiaries to
conduct their business as they are presently being conducted.
5.12 Intellectual Property.
To the knowledge of the Company, the Company or the Company
Subsidiaries are the owner of, or a licensee under a valid license for, all
items of intangible property which are material to the business of the Company
and the Company Subsidiaries as currently conducted, taken as a whole,
including, without limitation, trade names, unregistered trademarks and service
marks, brand names, software, patents and copyrights. As of the date of this
Agreement, except as disclosed in the Company SEC Reports or Section 5.12 of the
Company Disclosure Schedule, there are no claims pending or, to the Company's
knowledge, threatened, that the Company or any Company Subsidiary is in
violation of any such intellectual property right of any third party which,
individually or in the aggregate, would have a Company Material Adverse Effect,
and, to the Company's knowledge, no third party is in violation of any
intellectual property rights of the Company or any Company Subsidiary which,
individually or in the aggregate, would have a Company Material Adverse Effect.
5.13 Environmental Matters.
The Company and the Company Subsidiaries are in compliance
with all Environmental Laws (as defined below), except for any noncompliance
that, either singly or in the aggregate, would not have a Company Material
Adverse Effect. As used in this Agreement, "Environmental Laws" shall mean all
federal, state and local laws, rules, regulations, ordinances and orders that
purport to regulate the release of hazardous substances into the environment, or
impose requirements relating to environmental protection. As used in this
Agreement, "Hazardous Materials" means any "hazardous waste" as defined in
either the United States Resource Conservation and Recovery Act or regulations
adopted pursuant to said act, any
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"hazardous substances" or "pollutant" or "contaminant" as defined in the United
States Comprehensive Environmental Response, Compensation and Liability Act and,
to the extent not included in the foregoing, any medical waste, oil or fractions
thereof. Except as set forth in Section 5.13 of the Company Disclosure Schedule,
there is no administrative or judicial enforcement proceeding pending, or to the
knowledge of the Company threatened, against the Company or any Company
Subsidiary under any Environmental Law. Except as set forth in Section 5.13 of
the Company Disclosure Schedule, neither the Company nor any Company Subsidiary
or, to the knowledge of the Company, any legal predecessor of the Company or any
Company Subsidiary, has received any written notice that it is potentially
responsible under any Environmental Law for costs of response or for damages to
natural resources, as those terms are defined under the Environmental Laws, at
any location and neither the Company nor any Company Subsidiary has transported
or disposed of, or allowed or arranged for any third party to transport or
dispose of, any waste containing Hazardous Materials at any location included on
the National Priorities List, as defined under the Comprehensive Environmental
Response, Compensation, and Liability Act, or any location proposed for
inclusion on that list or at any location on any analogous state list. Except as
set forth in Section 5.13 of the Company Disclosure Schedule, (i) the Company
has no knowledge of any release on the real property owned or leased by the
Company or any Company Subsidiary or predecessor entity of Hazardous Materials
in a manner that could result in an order to perform a response action or in
material liability under the Environmental Laws, and (ii) to the Company's
knowledge, there is no hazardous waste treatment, storage or disposal facility,
underground storage tank, landfill, surface impoundment, underground injection
well, friable asbestos or PCB's, as those terms are defined under the
Environmental Laws, located at any of the real property owned or leased by the
Company or any Company Subsidiary or predecessor entity or facilities utilized
by the Company or the Company Subsidiaries.
5.14 Employee Benefit Plans.
(a) Section 5.14 of the Company Disclosure Schedule sets forth
a list of every Company Benefit Plan (as hereinafter defined) that is maintained
by the Company or an Affiliate (as hereinafter defined) on the date hereof.
(b) Each Company Benefit Plan which has been intended to
qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), has received a favorable determination or approval letter from the
Internal Revenue Service ("IRS") regarding its qualification under such section
and neither the Company nor any Affiliate knows that any such Company Benefit
Plan has been maintained in a manner that would preclude qualified status.
(c) With respect to any Company Benefit Plan, there has been
no (i) "prohibited transaction," as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Code Section
4975, for which an exemption is not available or (ii) material failure to comply
with any provision of ERISA, other applicable law, or any agreement, which, in
either case, would subject the Company or any Affiliate to liability (including,
without limitation, through any obligation of indemnification or contribution)
for any damages, penalties, or taxes, or any other material loss or expense that
would have a Company Material Adverse Effect. No litigation or governmental
administrative proceeding (or investigation) or other proceeding (other than
those relating to routine claims for benefits) is pending or, to the Company's
knowledge, threatened with respect to any such Company Benefit Plan.
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(d) Neither the Company nor any Affiliate has incurred any
liability under Title IV of ERISA which has not been paid in full as of the date
of this Agreement. There has been no "accumulated funding deficiency" (whether
or not waived) with respect to any employee pension benefit plan ever maintained
by the Company or any Affiliate and subject to Code Section 412 or ERISA Section
302. With respect to any Company Benefit Plan maintained by the Company or any
Affiliate and subject to Title IV of ERISA, there has been no (other than as a
result of the transactions contemplated by this Agreement) (i) "reportable
event," within the meaning of ERISA Section 4043 or the regulations thereunder,
for which the notice requirement is not waived by the regulations thereunder,
and (ii) event or condition which presents a material risk of a plan termination
or any other event that may cause the Company or any Affiliate to incur
liability or have a lien imposed on its assets under Title IV of ERISA. Except
as set forth in Section 5.14 of the Company Disclosure Schedule, neither the
Company nor any Affiliate has ever maintained a Multiemployer Plan (as
hereinafter defined).
(e) With respect to each Company Benefit Plan, complete and
correct copies of the following documents (if applicable to such Company Benefit
Plan) have previously been made available to Parent: (i) all documents embodying
or governing such Company Benefit Plan, and any funding medium for such Company
Benefit Plan (including, without limitation, trust agreements) as they may have
been amended to the date hereof; (ii) the most recent IRS determination or
approval letter with respect to such Company Benefit Plan under Code Section
401(a), and any applications for determination or approval subsequently filed
with the IRS; (iii) the most recently filed IRS Form 5500, with all applicable
schedules and accountants' opinions attached thereto; and (iv) the current
summary plan description for such Company Benefit Plan (or other descriptions of
such Company Benefit Plan provided to employees) and all modifications thereto.
(f) For purposes of this Section:
(i) "Company Benefit Plan" means (A) all employee
benefit plans within the meaning of ERISA Section 3(3)
maintained by the Company or any Affiliate, and (B) all stock
option plans and stock purchase plans.
(ii) An entity "maintains" a Company Benefit Plan if
such entity sponsors, contributes to, or provides benefits
under or through such Company Benefit Plan, or has any
obligation (by agreement or under applicable law) to
contribute to or provide benefits under or through such
Company Benefit Plan, or if such Company Benefit Plan provides
benefits to or otherwise covers employees of such entity (or
their spouses, dependents, or beneficiaries);
(iii) An entity is an "Affiliate" of the Company for
purposes of this Section 5.14 if it would have ever been
considered a single employer with the Company under ERISA
Section 4001(b) or part of the same "controlled group" as the
Company for purposes of ERISA Section 302(d)(8)(C); and
(iv) "Multiemployer Plan" means an employee pension
or welfare benefit plan to which more than one unaffiliated
employer contributes and which is maintained pursuant to one
or more collective bargaining agreements.
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5.15 Labor Matters.
Except as set forth in Section 5.15 of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization. There
is no unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the Company
Subsidiaries relating to their business, except for any such proceeding which
would not have a Company Material Adverse Effect. To the Company's knowledge
there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of the Company or any of the Company Subsidiaries.
5.16 No Brokers.
Neither the Company nor any of the Company Subsidiaries has
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of such entity or Parent or Acquisition Sub
to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or
consummation of the Transactions, except that the Company has retained Goldman,
Sachs & Co. ("Goldman Sachs") as its financial advisor in connection with the
Transactions. Other than the foregoing arrangements, the Company is not aware of
any claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or consummation of the Transactions.
5.17 Opinion of Financial Advisor.
The Company has received the opinion of Goldman Sachs to the
effect that, as of the date hereof, the Offer Price and the Merger Consideration
are fair to the holders of the Company Common Stock from a financial point of
view.
5.18 Material Contracts.
Except as set forth on Schedule 5.18 of the Company
Disclosure Schedule, the Company SEC Documents list all Material Contracts (as
defined below) of the Company, and except as set forth on Schedule 5.18 of the
Company Disclosure Schedule or in the Company SEC Documents, to the knowledge of
the Company, each Material Contract is valid, binding and enforceable and in
full force and effect; except where such failure to be valid, binding and
enforceable and in full force and effect would not, individually or in the
aggregate, have a Company Material Adverse Effect, and there are no defaults
thereunder, except those defaults that would not, individually or in the
aggregate, have a Company Material Adverse Effect. For purposes of this
Agreement, "Material Contracts" shall mean (i) all contracts, agreements or
understandings with customers of the Company and Company Subsidiaries in the
last fiscal year where each customers' contracts, agreements or understandings
in the aggregate account for more than 10% of the Company's annual revenues;
(ii) all acquisition, merger, asset purchase or sale agreements entered into by
the Company in the last two fiscal years with a transaction value in excess of
10% of the Company's annual revenues; and (iii) any other agreements within the
meaning set forth in Item 601(b)(10) of Regulation S-K of Title 17, Part 229 of
the Code of Federal Regulations.
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5.19 Definition of the Company's Knowledge.
As used in this Agreement, the phrase "to the knowledge of
the Company" or any similar phrase means the actual (and not the constructive or
imputed) knowledge, after due inquiry, of those individuals identified in
Section 5.19 of the Company Disclosure Schedule.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 Conduct of Business by the Company.
During the period from the date of this Agreement to the
Effective Time, except as otherwise contemplated by this Agreement, the Company
shall and shall cause each of the Company Subsidiaries to carry on their
respective businesses in the usual, regular and ordinary course, consistent with
past practice, and use their best efforts to preserve intact their present
business organizations, keep available the services of their present advisors,
managers, officers and employees and preserve their relationships with
customers, suppliers, licensors and others having business dealings with them
and continue existing contracts as in effect on the date hereof (for the term
provided in such contracts). Without limiting the generality of the foregoing,
neither the Company nor any of the Company Subsidiaries will (except as
expressly permitted by this Agreement or to the extent that Parent shall
otherwise consent in writing):
(a) split, combine or reclassify any shares of capital stock
of the Company or declare, set aside or pay any dividend or other distribution
(whether in cash, stock, or property or any combination thereof) in respect of
any shares of capital stock of the Company, except for dividends paid by any
Company Subsidiary to the Company or any Company Subsidiary that is, directly or
indirectly, wholly owned by the Company;
(b) authorize for issuance, issue or sell or agree or commit
to issue or sell (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any other securities or equity equivalents (including, without
limitation, stock appreciation rights) (other than the issuance of Shares upon
the exercise of Options and Warrants outstanding on the date of this Agreement
in accordance with their present terms);
(c) acquire, sell, lease, encumber, transfer or dispose of any
assets outside the ordinary course of business which are material to the Company
or any of the Company Subsidiaries (whether by asset acquisition, stock
acquisition or otherwise), except pursuant to obligations in effect on the date
hereof or as set forth in Section 6.1 of the Company Disclosure Schedule;
(d) except up to $10,000,000 pursuant to credit facilities in
existence on the date hereof, incur any amount of indebtedness for borrowed
money, guarantee any indebtedness, issue or sell debt securities, make any
loans, advances or capital contributions, mortgage, pledge or otherwise encumber
any material assets, create or suffer any material lien thereupon other than in
the ordinary course of business, except, in each case, pursuant to credit
facilities in existence on the date hereof;
(e) except pursuant to any mandatory payments under any credit
facilities in existence on the date hereof, pay, discharge or satisfy any
claims, liabilities or obligations
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(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
any payment, discharge or satisfaction (i) in the ordinary course of business
consistent with past practice, or (ii) in connection with the Transactions;
(f) change any of the accounting principles or practices used
by it (except as required by generally accepted accounting principles, in which
case written notice shall be provided to Parent and Acquisition Sub prior to any
such change);
(g) except as required by law, (i) enter into, adopt, amend or
terminate any Company Benefit Plan, (ii) enter into, adopt, amend or terminate
any agreement, arrangement, plan or policy between the Company or any of the
Company Subsidiaries and one or more of their directors or officers, or (iii)
except for normal increases in the ordinary course of business consistent with
past practice, increase in any manner the compensation or fringe benefits of any
non-executive officer or employee or pay any benefit not required by any Company
Benefit Plan or arrangement as in effect as of the date hereof;
(h) adopt any amendments to the Articles of Organization or
the Bylaws except as expressly provided by the terms of this Agreement;
(i) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or reorganization (other
than plans of complete or partial liquidation or dissolution of inactive Company
Subsidiaries);
(j) settle or compromise any litigation (whether or not
commenced prior to the date of this Agreement) other than settlements or
compromises for litigation where the amount paid (after giving effect to
insurance proceeds actually received) in settlement or compromise does not
exceed $100,000;
(k) amend any term of any outstanding security of the Company
or any Company Subsidiary;
(l) other than in the ordinary course of business, neither the
Company nor any Company Subsidiary shall modify or amend any Material Contract
to which the Company or any Company Subsidiary is a party or waive, release or
assign any material rights or claims under any such Material Contract;
(m) authorize, commit to or make any equipment purchases or
capital expenditures other than in the ordinary course of business and
consistent with past practice; or
(n) enter into an agreement to take any of the foregoing
actions.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 HSR and Other Filings.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement and to cooperate with each other
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in connection with the foregoing, including the taking of such actions as are
necessary to obtain any necessary consents, approvals, orders, exemptions and
authorizations by or from any public or private third party, including, without
limitation, any that are required to be obtained under any federal, state or
local law or regulation or any contract, agreement or instrument to which the
Company or any Company Subsidiary is a party or by which any of their respective
properties or assets are bound, to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the Transactions,
to cause to be lifted or rescinded any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
Transactions, and to effect all necessary registrations and submissions of
information requested by governmental authorities. For purposes of the foregoing
sentence, the obligations of Parent and the Company to use their "best efforts"
to obtain waivers, consents and approvals to loan agreements, leases and other
contracts shall not include any obligation to agree to an adverse modification
of the terms of such documents or to prepay or incur additional obligations to
such other parties. If, at any time after the Effective Time, any further action
is necessary or desirable to carry out the purpose of this Agreement, the proper
officers and directors of Parent and the Company shall take all such necessary
action.
(b) Without limiting the generality of the foregoing, as
promptly as practicable, Parent and the Company each shall properly prepare and
file any other filings required under federal or state law relating to the
Merger and the other Transactions (including filings, if any, required under the
HSR Act) (collectively, "Other Filings"). Each of Parent and the Company shall
promptly notify the other of the receipt of any comments on, or any request for
amendments or supplements to, any Other Filings by any Governmental Entity or
official, and each of Parent and the Company shall supply the other with copies
of all correspondence between it and each of its Subsidiaries and
representatives, on the one hand, and any other appropriate governmental
official, on the other hand, with respect to any Other Filings. Parent and
Acquisition Sub hereby covenant and agree to use their respective best efforts
to secure termination of any waiting periods under the HSR Act and obtain the
approval of the Federal Trade Commission (the "FTC") or any other Governmental
Entity for the transactions contemplated hereby, including, without limitation,
(i) defending through litigation on the merits any antitrust, trade regulation
or competition claim asserted in any court by any Governmental Entity,
including, but not limited to, defending against any request for, or seeking to
have vacated or terminated, any decree, order or judgment that would restrain,
prevent or delay consummation of the Merger, and (ii) divesting such plants,
assets or businesses of Parent or the Company or any of their respective
Subsidiaries (including entering into ancillary agreements relating to any such
divestiture of such assets or businesses) as may be required in order to avoid
the filing of a lawsuit by any Governmental Entity seeking to enjoin the Merger,
or the entry of, or to effect the dissolution of, any injunction, temporary
restraining order, or other order in any suit or proceeding, which would
otherwise have the effect of preventing or delaying the consummation of the
Merger. At the request of Parent, the Company shall agree to divest, hold
separate or otherwise take or commit to take any action that limits its freedom
of action with respect to, or its ability to retain, any of the businesses,
product lines or assets of the Company or any of the Company Subsidiaries,
provided that any such action shall be conditioned upon the consummation of the
Merger. The Company and Parent shall keep the other apprised of the status of
matters relating to the completion of the transactions contemplated hereby and
work cooperatively in connection with obtaining any consents from Governmental
Entity, including, without limitation: (i) promptly notifying the other of, and
if in writing, furnishing the other with copies of (or, in the case of material
oral communications, advise the other orally of) any
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communications from or with any Governmental Entity with respect to the Merger
or any of the other transactions contemplated by this Agreement, (ii) permitting
the other party to review and discuss in advance, and considering in good faith
the views of one another in connection with, any proposed written (or any
material proposed oral) communication with any Governmental Entity, (iii) not
participating in any meeting with any Governmental Entity unless it consults
with the other party in advance and to the extent permitted by such Governmental
Entity gives the other party the opportunity to attend and participate thereat,
(iv) furnishing the other party with copies of all correspondence, filings and
communications (and memoranda setting forth the substance thereof) between it
and any Governmental Entity with respect to this Agreement and the Merger, and
(v) furnishing the other party with such necessary information and reasonable
assistance as such other party may reasonably request in connection with its
preparation of necessary filings or submissions of information to any
Governmental Entity. The Company and Parent may, as each deems advisable and
necessary, reasonably designate any competitively sensitive material provided to
the other under this Section as "outside counsel only." Such materials and the
information contained therein shall be given only to the outside legal counsel
of the recipient and will not be disclosed by such outside counsel to employees,
officers, or directors of the recipient unless express permission is obtained in
advance from the source of the materials (the Company or Parent, as the case may
be) or its legal counsel.
7.2 Fees and Expenses.
Subject to Section 9.2(b) hereof, whether or not the Merger is
consummated, all fees, costs and expenses incurred in connection with this
Agreement and the Transactions shall be paid by the party incurring such fees,
costs or expenses.
7.3 No Solicitations.
(a) The Company represents and warrants that it has terminated
any discussions or negotiations relating to, or that may be reasonably expected
to lead to, any Acquisition Proposal (as hereinafter defined) and will promptly
request the return of all confidential information regarding the Company
provided to any third party prior to the date of this Agreement pursuant to the
terms of any confidentiality agreements. Except as permitted by this Agreement,
the Company shall not, and shall not authorize or permit any Company Subsidiary
or any of their respective officers, directors or employees or any investment
banker, financial advisor, attorney, accountant or other representative retained
by it to, directly or indirectly, (i) solicit, initiate or encourage (including
by way of furnishing non-public information), or take any other action to
facilitate, any inquiries or the making of any proposal that constitutes an
Acquisition Proposal, or (ii) participate in any discussions or negotiations
regarding an Acquisition Proposal. Notwithstanding anything to the contrary in
this Agreement, if the Company receives an Acquisition Proposal that was
unsolicited or that did not otherwise result from a breach of this Section
7.3(a), and the Company Board determines in good faith (after consulting with
its outside legal counsel and its financial advisor) that such Acquisition
Proposal is reasonably likely to lead to a Superior Proposal (as defined below),
the Company (x) may furnish non-public information with respect to the Company
and the Company Subsidiaries to the person who made such Acquisition Proposal (a
"Third Party") and (y) may participate in negotiations regarding such
Acquisition Proposal. Notwithstanding anything to the contrary in this
Agreement, the Company will notify Parent after receipt of any Acquisition
Proposal, but shall not be required to disclose to Parent or Acquisition Sub the
identity of the Third Party making any such Acquisition Proposal and shall have
no duty to notify or update Parent or Acquisition Sub on the status of
discussions or negotiations (including the status of such Acquisition Proposal
or any amendments or proposed amendments thereto) between the Company and such
Third Party.
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(b) The Board of Directors of the Company shall not withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent or
Acquisition Sub, its approval or recommendation of this Agreement or the Offer
or the Merger unless the Board of Directors of the Company shall have received
an Acquisition Proposal reasonably likely to lead to a Superior Proposal and
shall have determined in good faith, after consulting with its outside legal
counsel and its financial advisor, that this Agreement or the Offer or the
Merger is no longer in the best interests of the Company's stockholders and that
such withdrawal or modification is required to satisfy its fiduciary duties to
the Company's stockholders under applicable law.
(c) Nothing contained in this Section 7.3 shall prohibit the
Company from at any time taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act or
making any disclosure required by Rule 14a-9 promulgated under the Exchange Act.
(d) As used in this Agreement, the term "Acquisition Proposal"
shall mean any proposed or actual (i) merger, consolidation or similar
transaction involving the Company, (ii) sale, lease or other disposition,
directly or indirectly, by merger, consolidation, share exchange or otherwise,
of any assets of the Company or the Company Subsidiaries representing 15% or
more of the consolidated assets of the Company and the Company Subsidiaries,
(iii) issue, sale or other disposition by the Company of (including by way of
merger, consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into, such
securities) representing 15% or more of the votes associated with the
outstanding securities of the Company, (iv) tender offer or exchange offer in
which any person shall acquire beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act), or the right to acquire beneficial
ownership, or any "group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or has the right to acquire beneficial
ownership of, 15% or more of the outstanding shares of Company Common Stock, (v)
recapitalization, restructuring, liquidation, dissolution, or other similar type
of transaction with respect to the Company or (vi) transaction which is similar
in form, substance or purpose to any of the foregoing transactions; provided,
however, that the term "Acquisition Proposal" shall not include the Merger and
the other Transactions.
(e) As used in this Agreement, the term "Superior Proposal"
shall mean an Acquisition Proposal that the Board of Directors determines in
good faith, after consulting with its outside legal counsel and its financial
advisor, would, if consummated, result in a transaction that is more favorable
to the stockholders of the Company than the Transactions.
7.4 Officers' and Directors' Indemnification.
(a) In the event of any threatened or actual claim, action,
suit, demand, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
demand, proceeding or investigation in which any person who is now, or has been
at any time prior to the date hereof, or who becomes prior to the Effective
Time, a director, officer, employee, fiduciary or agent of the Company or any of
the Company Subsidiaries (the "Indemnified Parties") is, or is threatened to be,
made a party based in whole or in part on, or arising in whole or in part out
of, or pertaining to (i) the fact that he is or was a director, officer,
employee, fiduciary or agent of the Company or any of the Company Subsidiaries,
or is or was serving at the request of the Company or any of the Company
Subsidiaries as a director, officer, employee, fiduciary or agent of another
corporation,
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partnership, joint venture, trust or other enterprise, or (ii) the negotiation,
execution or performance of this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their reasonable
best efforts to defend against and respond thereto. It is understood and agreed
that the Company shall indemnify and hold harmless, and after the Effective Time
the Surviving Corporation and Parent shall indemnify and hold harmless, as and
to the full extent permitted by applicable law, each Indemnified Party against
any losses, claims, damages, liabilities, costs, expenses (including attorneys'
fees and expenses), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit, demand,
proceeding or investigation, and in the event of any such threatened or actual
claim, action, suit, demand, proceeding or investigation (whether asserted or
arising before or after the Effective Time), (A) the Company, and the Surviving
Corporation and Parent after the Effective Time, shall promptly pay expenses in
advance of the final disposition of any claim, suit, proceeding or investigation
to each Indemnified Party to the full extent permitted by law, subject to the
provision by such Indemnified Party of an undertaking to reimburse the amounts
so advanced in the event of a final non-appealable determination by a court of
competent jurisdiction that such Indemnified Party is not entitled to such
amounts, (B) the Indemnified Parties may retain one counsel satisfactory to
them, and the Company, and the Surviving Corporation and Parent after the
Effective Time, shall pay all reasonable fees and expenses of such counsel for
the Indemnified Parties within 30 days after statements therefor are received,
and (C) the Company, the Surviving Corporation and Parent will use their
respective reasonable best efforts to assist in the vigorous defense of any such
matter; provided that none of the Company, the Surviving Corporation or Parent
shall be liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld); and provided further that
the Surviving Corporation and Parent shall have no obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and non-appealable,
that indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law. Any Indemnified Party wishing to claim
indemnification under this Section 7.4, upon learning of any such claim, action,
suit, demand, proceeding or investigation, shall notify the Company and, after
the Effective Time, the Surviving Corporation and Parent, thereof; provided that
the failure to so notify shall not affect the obligations of the Company, the
Surviving Corporation and Parent except to the extent such failure to notify
materially prejudices such party.
(b) Parent and Acquisition Sub agree that all rights to
indemnification existing in favor of, and all limitations on the personal
liability of, the directors, officers, employees and agents of the Company and
the Company Subsidiaries provided for in the Articles of Organization or Bylaws
as in effect as of the date hereof with respect to matters occurring prior to
the Effective Time, and including the Offer and the Merger, shall continue in
full force and effect for a period of not less then six years from the Effective
Time; provided, however, that all rights to indemnification in respect of any
claims (each a "Claim") asserted or made within such period shall continue until
the disposition of such Claim. Prior to the Effective Time, the Company shall
purchase an extended reporting period endorsement under the Company's existing
directors' and officers' liability insurance coverage for the Company's
directors and officers in a form acceptable to the Company which shall provide
such directors and officers with coverage for six years following the Effective
Time of not less than the existing coverage under, and have other terms not
materially less favorable on the whole to, the insured persons than the
directors' and officers' liability insurance coverage presently maintained by
the Company.
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(c) This Section 7.4 is intended for the irrevocable benefit
of, and to grant third party rights to, the Indemnified Parties and shall be
binding on all successors and assigns of Parent, the Company and the Surviving
Corporation. Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Section 7.4.
(d) In the event that Parent or the Surviving Corporation or
any of its successors or assigns (i) consolidates with or merges into any other
person or entity and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person or entity, then,
and in each such case, proper provision shall be made so that the successors and
assigns of Parent and the Surviving Corporation, as the case may be, assume the
obligations set forth in this Section 7.4.
7.5 Access to Information; Confidentiality.
From the date hereof until the Effective Time, the Company
shall, and shall cause each of the Company Subsidiaries and each of the
Company's and Company Subsidiaries' officers, employees and agents to, afford to
Parent and to the officers, employees and agents of Parent complete access at
all reasonable times to such officers, employees, agents, properties, books,
records and contracts, and shall furnish to Parent such financial, operating and
other data and information as Parent may reasonably request. Prior to the
Effective Time, Parent and Acquisition Sub shall hold in confidence all such
information on the terms and subject to the conditions contained in that certain
confidentiality agreement between Parent and the Company dated February 17, 2000
(the "Confidentiality Agreement"). The Company hereby waives the provisions of
the Confidentiality Agreement as and to the extent necessary to permit the
making and consummation of the Transactions. At the Effective Time, such
Confidentiality Agreement shall terminate.
7.6 Financial and Other Statements.
Notwithstanding anything contained in Section 7.5, during
the term of this Agreement, the Company shall also provide to Parent the
following documents and information:
(a) As soon as reasonably available, but in no event more than
45 days after the end of each fiscal quarter ending after the date of this
Agreement, the Company will deliver to Parent its Quarterly Report on Form 10-Q
as filed under the Exchange Act. As soon as reasonably available, but in no
event more than 90 days after the end of each fiscal year ending after the date
of this Agreement, the Company will deliver to Parent its Annual Report on Form
10-K, as filed under the Exchange Act. The Company will also deliver to Parent,
contemporaneously with its being filed with the Commission, a copy of each
Current Report on Form 8-K.
(b) As soon as practicable, the Company will furnish to Parent
copies of all such financial statements and reports as it or any Company
Subsidiary shall send to its stockholders, the Commission or any other
regulatory authority, to the extent any such reports furnished to any such
regulatory authority are not confidential and except as legally prohibited
thereby.
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7.7 Public Announcements.
The Company and Parent shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or any of the Transactions (including any "pre-commencement
communications" permitted by Rule 14d-2(b) of the Exchange Act) and shall not
issue any such press release or make any such public statement without the prior
consent of the other party, which consent shall not be unreasonably withheld;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may be required
by law or the applicable rules of any stock exchange if it has used its best
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner. In this regard, the parties shall
make a joint public announcement of the Offer and the Transactions contemplated
thereby no later than (i) the close of trading on the Nasdaq National Market on
the day this Agreement is signed, if such signing occurs during a business day
or (ii) the opening of trading on the Nasdaq National Market on the business day
following the date on which this Agreement is signed, if such signing does not
occur during a business day. The parties agree that such joint public
announcement shall be filed with the Commission by Parent and Acquisition Sub on
Schedule TO in accordance with Rule 14d-2(b) of the Exchange Act.
7.8 Employee Benefit Arrangements.
(a) After the Closing, Parent shall cause Acquisition Sub or
the Company to honor all obligations under (i) the existing terms of the
employment and severance agreements to which the Company or any Company
Subsidiary is presently a party, except as may otherwise be agreed to by the
parties thereto, and (ii) the Company's and any Company Subsidiary's general
severance policy. Following the Effective Time, the Company's employees will be
permitted to participate in the employee benefit plans of Parent as in effect on
the date thereof on terms substantially similar to those provided to employees
of Parent. Until such time as the Parent causes employees of the Company to
participate in the employee benefit plans of the Parent, employees of the
Company will continue to participate in the Company Benefit Plans (other than
stock option or stock purchase plans) on substantially similar terms to those
currently in effect.
(b) If any employee of the Company or any of the Company
Subsidiaries becomes a participant in any employee benefit plan, practice or
policy of Parent, any of its affiliates or the Surviving Corporation, such
employee shall be given credit under such plan for all service prior to the
Effective Time with the Company and the Company Subsidiaries and prior to the
time such employee becomes such a participant, for purposes of eligibility
(including, without limitation, waiting periods) and vesting, and such employees
will be given credit for such service for purposes of any vacation policy. In
addition, if any employees of the Company or any of the Company Subsidiaries
employed as of the Closing Date become covered by a medical plan of Parent, any
of its affiliates or the Surviving Corporation, such medical plan shall not
impose any exclusion on coverage for preexisting medical conditions with respect
to these employees.
7.9 Required Financing.
Each of Parent and Acquisition Sub hereby agrees to use its
best efforts to arrange the financing in respect of the Transactions and to
satisfy the conditions set forth in the Financing Letter. Parent and Acquisition
Sub shall keep the Company informed of the status of their financing
arrangements for the Transactions, including providing notification to the
Company as promptly as possible (but in any event within twenty-four (24) hours)
(i) that the Lender may be unable to provide the financing as contemplated by
the
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Financing Letter, or (ii) concerning the inability of Parent or Acquisition Sub
to satisfy any of the conditions set forth in the Financing Letters. Parent
shall provide written notice to the Company within twenty-four (24) hours if the
Lender has given notice to Parent or Acquisition Sub that such Lender will be
unable to provide the financing contemplated by the Financing Letter.
7.10 Further Assurances.
At and after the Effective Time, the officers and directors
of the Surviving Corporation will be authorized to execute and deliver, in the
name and on behalf of the Company or Acquisition Sub, any deed, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of the
Company or Acquisition Sub, any other actions and things to vest, perfect or
confirm on record or otherwise in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or assets of
the Company acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger. The Company agrees to use its best
efforts to have Mark Owens, BT Capital Partners, Inc., Bear Stearns & Co., Inc.
and, to the extent he exercises stock options prior to the Initial Expiration
Date, Richard E. Wenz enter into the Tender Agreement as soon as possible after
the date hereof.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 Conditions to the Obligations of Each Party to Effect
the Merger.
The respective obligations of each party to effect the
Merger shall be subject to the fulfillment or waiver, where permissible, at or
prior to the Closing Date, of each of the following conditions:
(a) Stockholder Approval. If required by applicable law, this
Agreement and the Transactions, including the Merger, shall have been approved
and adopted by the affirmative vote of the stockholders of the Company to the
extent required by the MBCL and the Articles of Organization.
(b) Hart-Scott-Rodino Act. Any waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(c) Other Regulatory Approvals. All necessary approvals,
authorizations and consents of any governmental or regulatory entity required to
consummate the Merger shall have been obtained and remain in full force and
effect, and all waiting periods relating to such approvals, authorizations and
consents shall have expired or been terminated, except where such failure would
not have a Company Material Adverse Effect or a Parent Material Adverse Effect,
as the case may be, or would not affect adversely the ability of the Company or
Acquisition Sub, as the case may be, to consummate the Merger.
(d) No Injunctions, Orders or Restraints; Illegality. No
statute, order, decree, ruling or permanent injunction (an "Injunction") shall
have been enacted, entered, promulgated or enforced by any Governmental Entity
which prohibits the consummation of the Merger on the terms contemplated by this
Agreement; provided that the party seeking to rely upon this condition has fully
complied with and performed its obligations pursuant to Section 7.1 hereof.
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(e) Required Consents. All consents relating to any Material
Contracts set forth on Schedule 8.1(e) that are necessary as a result of the
consummation of the transactions contemplated by this Agreement shall have been
received.
(f) Purchase of Shares in Offer. Parent, Acquisition Sub or
their affiliates shall have purchased Shares pursuant to the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination.
This Agreement may be terminated at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
(a) by the mutual written consent of Parent or Acquisition Sub
and the Company.
(b) by either of the Company or Parent or Acquisition Sub:
(i) if any Governmental Entity shall have enacted,
entered, promulgated or enforced a final and nonappealable Injunction
(which Injunction the parties hereto shall have used their best efforts
to lift), which prohibits the consummation of the Merger on the terms
contemplated by this Agreement (provided that the party seeking to rely
upon this condition has fully complied with and performed its
obligations pursuant to Section 7.1 hereof), or permanently enjoins the
acceptance for payment of, or payment for, Shares pursuant to the Offer
or the Merger;
(ii) if, without any material breach by the
terminating party of its obligations under this Agreement, Parent or Acquisition
Sub shall not have purchased Shares pursuant to the Offer on or prior to the
Expiration Date; provided, however, that neither Parent, Acquisition Sub nor the
Company shall terminate this Agreement prior to August 31, 2000 if Shares shall
not have been purchased by Acquisition Sub by reason of any applicable waiting
period (and any extension thereof) under the HSR Act in respect of the Offer not
having expired or been terminated or the pendency of a non-final Injunction, and
Parent, Acquisition Sub and the Company shall use their best efforts to cause
such condition to be satisfied (including, without limitation, by complying with
the requirements of the FTC or other comparable Governmental Entity to divest of
assets or otherwise in connection with the consummation of the Transactions or
in settlement of any action brought by it) or have any such Injunction stayed or
reversed; or
(iii) by either the Company or Parent if, at the
Special Meeting (including any adjournment or postponement thereof)
called pursuant to Section 2.5 hereto the requisite vote of the
shareholders of the Company for the Merger shall not have been
obtained.
(c) by the Company:
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(i) if Parent or Acquisition Sub shall have failed to
commence the Offer on or prior to the tenth business day following the
date of the initial public announcement of the Offer;
(ii) if the Company Board of Directors shall have (A)
withdrawn, or modified or changed in a manner adverse to Parent its
approval or recommendation of this Agreement or the Offer, or resolved
to do any of the foregoing, and (B) determined in good faith, after
consultation with its outside legal counsel and its financial advisor,
that an Acquisition Proposal is a Superior Proposal;
(iii) if Parent or Acquisition Sub shall have
breached in any material respect any of their respective
representations, warranties, covenants or other agreements contained in
this Agreement, which breach cannot be or has not been cured within 30
days after the giving of written notice to Parent or Acquisition Sub
except, in any case, for such breaches which would not affect adversely
Parent's or Acquisition Sub's ability to consummate the Offer or the
Merger; provided, however, that no cure period shall be applicable
under any circumstances to the matters set forth in Section 9.1(c)(i);
or
(iv) if the Minimum Condition shall not have been
satisfied, in which case neither Parent, Acquisition Sub nor any of
their affiliates shall be permitted to accept for payment or pay for
any Shares unless and until the Company shall have provided Parent with
written notice stating that the Company is not exercising its right to
terminate this Agreement pursuant to this Section 9.1(c)(iv).
(d) by Parent or Acquisition Sub if:
(i) the Company shall have breached any
representation, warranty, covenant or other agreement contained in this
Agreement which breach (A) would give rise to the failure of a
condition set forth in paragraph (b), (c) or (e) of Annex A hereto, and
(B) cannot be or has not been cured within 30 days after the giving of
written notice to the Company; or
(ii) if the Company Board of Directors shall have
withdrawn, modified or changed in a manner adverse to Parent its
approval or recommendation of this Agreement or the Offer or shall have
executed an agreement in principle or definitive agreement relating to
an Acquisition Proposal with a person or entity other than Parent or
its affiliates or resolved to do any of the foregoing.
9.2 Effect of Termination.
(a) In the event of the termination of this Agreement pursuant
to Section 9.1 hereof, this Agreement shall forthwith become null and void and
have no effect, without any liability on the part of any party hereto or its
affiliates, trustees, directors, officers or stockholders and all rights and
obligations of any party hereto shall cease except for the agreements contained
in Sections 7.2 and 7.5, this Section 9.2 and Article X; provided, however, that
nothing contained in this Section 9.2 shall relieve any party from liability for
any fraud or willful breach of this Agreement.
(b) If the Company terminates this Agreement pursuant to
Section 9.1(c)(ii) or Parent or Acquisition Sub terminates this Agreement
pursuant to Section 9.1(d)(ii) hereof, then the Company shall as soon as
possible thereafter pay to Parent an amount in cash equal to 4% of
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<PAGE> 36
the sum of (i) the product of (x) the Offer Price and (y) the total number of
issued and outstanding Shares, and (ii) the amount to be paid for Options
pursuant to Section 1.4 hereof (the "Liquidated Amount").
(c) Any payment required by this Section 9.2 shall be payable
by the Company to Parent by wire transfer of immediately available funds to an
account designated by Parent.
(d) Notwithstanding anything to the contrary in this
Agreement, Parent and Acquisition Sub hereto expressly acknowledge and agree
that, with respect to any termination of this Agreement pursuant to Section
9.1(c)(ii) hereof, the payment of the Liquidated Amount shall constitute
liquidated damages with respect to any claim for damages or any other claim
which Parent or Acquisition Sub would otherwise be entitled to assert against
the Company or any of the Company Subsidiaries or any of their respective
assets, or against any of their respective directors, officers, employees,
partners, managers, members or shareholders, with respect to this Agreement and
the Transactions and shall constitute the sole and exclusive remedy available to
Parent and Acquisition Sub. The parties hereto expressly acknowledge and agree
that, in light of the difficulty of accurately determining actual damages with
respect to the foregoing upon any termination of this Agreement pursuant to
Section 9.1(c)(ii) hereof, the rights to payment under Section 9.2(b): (i)
constitute a reasonable estimate of the damages that will be suffered by reason
of any such proposed or actual termination of this Agreement pursuant to Section
9.1(c)(ii) hereof and (ii) shall be in full and complete satisfaction of any and
all damages arising as a result of the foregoing. Except for nonpayment of the
amounts set forth in Section 9.2(b), Parent and Acquisition Sub hereby agree
that, upon any termination of this Agreement pursuant to Section 9.1(c)(ii)
hereof, in no event shall Parent or Acquisition Sub be entitled to seek or to
obtain any recovery or judgment against the Company or any of the Company
Subsidiaries or any of their respective assets, or against any of their
respective directors, officers, employees, partners, managers, members or
shareholders, and in no event shall Parent or Acquisition Sub be entitled to
seek or obtain any other damages of any kind, including, without limitation,
consequential, indirect or punitive damages.
9.3 Amendment.
This Agreement may be amended by the parties hereto by an
instrument in writing signed on behalf of each of the parties hereto at any time
before or after any approval hereof by the stockholders of the Company and
Acquisition Sub, but in any event following authorization by the Acquisition Sub
Board and the Company Board; provided, however, that after any such stockholder
approval, no amendment shall be made which by law requires further approval by
stockholders without obtaining such approval.
9.4 Extension; Waiver.
At any time prior to the Closing, the parties hereto may, to
the extent legally allowed, (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
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ARTICLE X
GENERAL PROVISIONS
10.1 Notices.
All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered or sent if delivered personally or sent by cable,
telegram, telecopier or telex or sent by prepaid overnight carrier to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
(a) if to Parent or Acquisition Sub:
Dorel Industries, Inc.
1255 Green Avenue
Suite 300
Westmont, Quebec
Canada H37 2A4
Telecopy No.: (514) 934-9932
with a copy to:
Shearman & Sterling
Commerce Court West
199 Bay Street, Suite 4405
Toronto, Ontario
M5L 1E8
Attn: Bruce Czachor
Telecopy No.: 416-360-2958
(b) if to the Company:
Safety 1st, Inc.
45 Dan Road
Canton, MA 02021
Telecopy No.: (781) 364-3205
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attn: Stuart M. Cable, P.C.
Joseph L. Johnson III, P.C.
Telecopy No.: (617) 523-1231
10.2 Interpretation.
When a reference is made in this Agreement to subsidiaries
of Parent, Acquisition Sub or the Company, the word "Subsidiary" means any
corporation more than 50% of whose outstanding voting securities, or any
partnership, joint venture or other entity more than
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<PAGE> 38
50% of whose total equity interest, is directly or indirectly owned by Parent,
Acquisition Sub or the Company, as the case may be. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
10.3 Non-Survival of Representations, Warranties, Covenants
and Agreements.
Except for Sections 7.2, 7.4 and 7.8, and Article X, none of
the representations, warranties, covenants and agreements contained in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, and thereafter there shall be no liability on the
part of either Parent, Acquisition Sub or the Company or any of their respective
officers, directors or stockholders in respect thereof. Except as expressly set
forth in this Agreement, there are no representations or warranties of any party
hereto, express or implied.
10.4 Miscellaneous.
This Agreement (i) constitutes, together with the
Confidentiality Agreement, Annex A hereto, the Company Disclosure Schedule, the
Parent Disclosure Schedule and the Tender Agreements referred to in the recitals
to this Agreement, the entire agreement and supersedes all of the prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof, (ii) shall be binding upon
and inure to the benefits of the parties hereto and their respective successors
and assigns and is not intended to confer upon any other person (except as set
forth below) any rights or remedies hereunder and (iii) may be executed in two
or more counterparts which together shall constitute a single agreement. Section
7.4 and Section 7.8 are intended to be for the benefit of those persons
described therein and the covenants contained therein may be enforced by such
persons. The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in the Massachusetts Courts (as hereinafter
defined), this being in addition to any other remedy to which they are entitled
at law or in equity.
10.5 Assignment.
Except as expressly permitted by the terms hereof, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto without the prior written consent of
the other parties.
10.6 Severability.
If any provision of this Agreement, or the application
thereof to any person or circumstance is held invalid or unenforceable, the
remainder of this Agreement, and the application of such provision to other
persons or circumstances, shall not be affected thereby, and to such end, the
provisions of this Agreement are agreed to be severable.
10.7 Choice of Law/Consent to Jurisdiction.
All disputes, claims or controversies arising out of this
Agreement, or the negotiation, validity or performance of this Agreement, or the
Transactions shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts without
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<PAGE> 39
regard to its rules of conflict of laws. Each of the Company, Parent and
Acquisition Sub hereby irrevocably and unconditionally consents to submit to the
sole and exclusive jurisdiction of the courts of the Commonwealth of
Massachusetts and of the United States District Court for the District of
Massachusetts (the "Massachusetts Courts") for any litigation arising out of or
relating to this Agreement, or the negotiation, validity or performance of this
Agreement, or the Transactions (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying of
venue of any such litigation in the Massachusetts Courts and agrees not to plead
or claim in any Massachusetts Court that such litigation brought therein has
been brought in any inconvenient forum. Each of the parties hereto agrees, (a)
to the extent such party is not otherwise subject to service of process in the
Commonwealth of Massachusetts, to appoint and maintain an agent in the
Commonwealth of Massachusetts as such party's agent for acceptance of legal
process, and (b) that service of process may also be made on such party by
prepaid certified mail with a proof of mailing receipt validated by the United
States Postal Service constituting evidence of valid service. Service made
pursuant to (a) or (b) above shall have the same legal force and effect as if
served upon such party personally within the Commonwealth of Massachusetts. For
purposes of implementing the parties' agreement to appoint and maintain an agent
for service of process in the Commonwealth of Massachusetts, each such party
does hereby appoint CT Corporation, 101 Federal Street, Suite 300, Boston,
Massachusetts 02110, as such agent.
10.8 No Agreement Until Executed.
Irrespective of negotiations among the parties or the
exchanging of drafts of this Agreement, this Agreement shall not constitute or
be deemed to evidence a contract, agreement, arrangement or understanding among
the parties hereto unless and until (i) the Board of Directors of the Company
has approved, for purposes of Chapter 110F of the MGL and any applicable
provision of the Articles of Organization, the terms of this Agreement, and (ii)
this Agreement is executed by the parties hereto.
[Remainder of page intentionally left blank]
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<PAGE> 40
IN WITNESS WHEREOF, Parent, Acquisition Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
DOREL INDUSTRIES, INC.
By: /s/ Martin Schwartz
---------------------------------
Name: Martin Schwartz
Title: President
By: /s/ Frank Rana
---------------------------------
Name: Frank Rana
Title: Treasurer
DIAMOND ACQUISITION
SUBSIDIARY, INC.
By: /s/ Jeffrey Schwartz
---------------------------------
Name: Jeffrey Schwartz
Title: President
By: /s/ Jeffrey Schwartz
--------------------------------
Name: Jeffrey Schwartz
Title: Treasurer
SAFETY 1ST, INC.
By: /s/ Richard E. Wenz
-------------------------------
Name: Richard E. Wenz
Title: President
By: /s/ Joseph Driscoll
-------------------------------
Name: Joseph Driscoll
Title: Treasurer
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<PAGE> 41
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 "Agreement" shall be
deemed to refer to the attached Agreement together with this Annex A.
Notwithstanding any other provision of the Offer or the
Agreement and subject to Rule 14c-1(c) under the Exchange Act and Section 1.1 of
the Agreement, Acquisition Sub may delay the acceptance for payment of and
payment for any Shares, (A) until any applicable waiting period (and any
extension thereof) under the HSR Act in respect of the Offer shall have expired
or been terminated, or (B) if there shall not have been validly tendered to
Acquisition Sub pursuant to the Offer and not withdrawn immediately prior to the
Expiration Date, at least that number of Shares that, when taken as a whole with
all other Shares owned or acquired by Acquisition Sub (whether pursuant to the
Offer or otherwise), constitutes at least the Minimum Condition, and (C)
terminate or amend the Offer or delay the acceptance for payment of and payment
for Shares tendered if at any time on or after the date of the Agreement, and
prior to the Expiration Date, any of the following conditions exist or shall
occur or remain in effect:
(a) Any Governmental Entity shall have enacted, entered,
promulgated or enforced a final and nonappealable Injunction (which Injunction
the parties hereto shall have used their best efforts to lift), which (i)
prohibits Parent or Acquisition Sub from owning or operating all of the material
portions of the business and assets of the Company and the Company Subsidiaries
taken as a whole or (ii) prohibits the consummation of the Merger on the terms
contemplated by this Agreement (provided that the party seeking to rely upon
this condition has fully complied with and performed its obligations pursuant to
Section 7.1 hereof), or permanently enjoins the acceptance for payment of, or
payment for, Shares pursuant to the Offer or the Merger;
(b) (i) Any of the representations and warranties of the
Company set forth in the Agreement which are qualified by a Company Material
Adverse Effect or words of similar effect shall not have been, or cease to be,
true and correct (except to the extent such representations and warranties
expressly relate to a specific date or as of the date hereof, in which case such
representations and warranties shall not have been true and correct as of such
date); or (ii) any of the representations and warranties of the Company set
forth in the Agreement which are not so qualified shall not have been, or cease
to be, true and correct (except to the extent such representations and
warranties expressly relate to a specific date or as of the date hereof, in
which case such representations and warranties shall not have been true and
correct in all material respects as of such date), except for such inaccuracies
as, individually or in the aggregate, would not have a Company Material Adverse
Effect;
(c) The Company shall not have performed all obligations
required to be performed by it under the Agreement, including, without
limitation, the covenants contained in Article VI or VII thereof, except where
any failure to perform would, individually or in the aggregate, not materially
impair or significantly delay the ability of Acquisition Sub to consummate the
Offer;
(d) The Agreement shall have been terminated in accordance
with its terms;
A-1
<PAGE> 42
(e) Any consent, authorization, order or approval of (or
filing or registration with) any governmental commission, board, other
regulatory body or other third party required to be made or obtained by the
Company or any of the Company Subsidiaries or affiliates in connection with the
execution, delivery and performance of the Agreement shall not have been
obtained or made, except where the failure to have obtained or made any such
consent, authorization, order, approval, filing or registration, would not have
a Company Material Adverse Effect;
(f) The Company shall have executed a definitive agreement or
agreement in principal with any person relating to an Acquisition Proposal with
a person or entity other than Parent or its affiliates;
(g) The Company Board of Directors shall have (A) withdrawn,
or modified or changed in a manner adverse to Parent its approval or
recommendation of this Agreement or the Offer, or resolved to do any of the
foregoing, and (B) determined in good faith, after consultation with its outside
legal counsel and its financial advisor, that an Acquisition Proposal is a
Superior Proposal; or
(h) There shall have occurred, after the date of this
Agreement, any change concerning the Company or the Company Subsidiaries which
has had a material adverse effect on the business, assets, results of operations
or financial condition of the Company and the Company Subsidiaries taken as a
whole ("Material Adverse Change"), provided, however, that any change (i) that
primarily results from this Agreement, the Merger, the Offer and the
transactions contemplated thereby or the announcement thereof, (ii) generally
affecting the industries in which the Company operates, including changes due to
actual or proposed changes in law or regulations, or (iii) related to a general
drop in stock prices in the United States shall be excluded in determining
whether a Material Adverse Change has occurred.
The foregoing conditions (i) may be asserted by Parent or
Acquisition Sub regardless of the circumstances (including any action or
inaction by Parent or any of its affiliates other than a material breach of the
Agreement), and (ii) are for the sole benefit of Parent, Acquisition Sub and
their respective affiliates. The foregoing conditions may be waived by Parent,
in whole or in part, at any time and from time to time, in the sole discretion
of Parent. The foregoing conditions may be considered to be material to the
Offer. The failure by Parent or Acquisition Sub at any time to exercise any of
the foregoing rights will not be deemed a waiver of any right and each right
will be deemed an ongoing right which may be asserted at any time and from time
to time.
Should the Offer be terminated due to the foregoing
provisions, all tendered Shares not theretofore accepted for payment shall
promptly be returned to the tendering stockholders.
A-2
<PAGE> 1
[Safety 1st Logo]
Exhibit (d)(2)
February 17, 2000
Mr. Martin Schwartz
President & Chief Executive Officer
Dorel Industries, Inc.
1255 Green Avenue
Suite 300
Westmont, Quebec
Canada H37 2A4
Dear Martin:
In connection with our mutual consideration of a potential transaction
involving a business combination or a strategic alliance (the Proposed
Transaction) between Safety 1st, Inc., a Massachusetts corporation (Safety 1st),
on the one hand, and Dorel Industries, a Quebec corporation (Dorel Industries),
on the other hand, Dorel Industries has requested certain information concerning
Safety 1st, and Safety 1st, in turn, has requested certain information
concerning Dorel Industries. This information is confidential and proprietary to
the respective parties and not otherwise available. Each party agrees that, in
consideration of, and as a condition to, furnishing such information, it will
abide by the following:
1. Confidentiality Agreement. Each of Safety 1st and Dorel
Industries, as applicable (each, a "Receiving Party"), hereby agrees to treat
all information, whether written or oral, concerning Dorel Industries or Safety
1st, as applicable (each a Disclosing Party), or any of their respective
affiliates, subsidiaries or divisions, which the Disclosing Party or any
directors, officers, employees, partners, agents or representatives
(collectively, the Representatives) of the Disclosing Party furnishes, whether
before or after the date of this agreement, to the Receiving Party or its
Representatives, together with all originals or copies of all reports, analyses,
compilations, data, studies and other materials which contain or otherwise
reflect or are generated from such information (collectively, the Evaluation
Material), confidential and in accordance with the provisions of this agreement.
Notwithstanding the foregoing, the term Evaluation Material shall not for the
purposes of this agreement include any information which (a) at the time of
disclosure or thereafter is generally available to and known by the public other
than as a result of a disclosure by the Receiving Party or its Representatives
or (b) was or becomes available to the Receiving Party on a nonconfidential
basis from a source other than the Disclosing Party or any of its
Representatives, provided that such source is not bound by a confidentiality
agreement with, or other contractual, legal or fiduciary obligation to, the
Disclosing Party. The fact that information included in the Evaluation Material
is or becomes otherwise available to the Receiving Party or its Representatives
under clauses (a) or (b) above shall not relieve the Receiving Party or its
Representatives of the prohibitions or other confidentiality provisions of this
agreement.
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<PAGE> 2
2. Use of Evaluation Material and Confidentiality.
(a) Subject to Paragraph 2(b) below, the Evaluation Material
will be kept confidential by the Receiving Party and its Representatives and
will not, without the prior written consent of the Disclosing Party, be
disclosed, in whole or in part, to any third party by the Receiving Party or any
of its Representatives in any manner whatsoever, and will not be used by the
Receiving Party or any of its Representatives, directly or indirectly, for any
purpose other than in connection with the Receiving Party's evaluation of the
Proposed Transaction. In addition, the Receiving Party hereby agrees to disclose
that the Receiving Party is evaluating the Proposed Transaction and to transmit
Evaluation Material to only those of its Representatives who need to know the
information for the purpose of evaluating the Proposed Transaction and are
informed by the Receiving Party of the confidential nature of the information.
The Receiving Party agrees not to make any such disclosure or transmission
unless the Receiving Party is satisfied that its Representatives will act in
accordance herewith. The Receiving Party agrees that it will be responsible for
any breach of any of the provisions of this agreement by any of its
Representatives and the Receiving Party agrees to take, at its sole expense, all
necessary measures to restrain its Representatives from prohibited or
unauthorized disclosure or use of the Evaluation Material (including, without
limitation, the initiation of court proceedings).
(b) In the event that the Receiving Party or any of its
Representatives are requested or required (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose (a) any Evaluation Material, (b) any information
relating to the opinion, judgment or recommendation based on Evaluation Material
of any such person concerning the Disclosing Party, its affiliates or
subsidiaries, the Receiving Party will promptly notify the Disclosing Party of
such request or requirement so that the Disclosing Party may seek an appropriate
protective order or waive compliance with the provisions of this agreement,
and/or take any other mutually agreed action. If, in the absence of a protective
order or the receipt of a waiver hereunder, the Receiving Party or any of its
Representatives are, in the reasonable written opinion of such persons counsel,
compelled to disclose information, the Receiving Party or such Representative
may disclose that portion of the requested information which such persons
counsel advises such person in writing that such person is compelled to
disclose. In any event, the Receiving Party and its Representatives will furnish
only that portion of the information which is legally required and will exercise
its best efforts to obtain reliable assurance that confidential treatment will
be accorded the information. In addition, neither the Receiving Party nor any of
its Representatives will oppose action by the Disclosing Party to obtain an
appropriate protective order or other reliable assurance that such confidential
treatment will be so accorded and the Receiving Party and its Representatives
shall cooperate with the Disclosing Party to obtain such order or other
assurance.
3. Nondisclosure of Negotiations. Except as otherwise expressly
permitted hereby, without the prior written consent of the Disclosing Party, the
Receiving Party will not, and will direct its Representatives not to, disclose
to any person the fact that any discussions (or any other discussions between or
involving the Receiving Party and the Disclosing Party) with respect to the
matters contemplated hereby are taking, have taken or are proposed to take place
or other facts with respect to such discussions, including the status thereof,
or the fact (if such becomes the case) that
2
<PAGE> 3
any Evaluation Material has been made available to the Receiving Party, nor
otherwise make any public disclosure, whether written or oral, with respect to
this agreement or the actions or transactions contemplated hereby; provided,
however, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may be required by law or
the applicable rules of any stock exchange or Nasdaq if it has used its
reasonable best efforts to consult with the other party prior to issuing such
release or making such public statement and to obtain such party's prior
consent, but has been unable to do so in a timely manner. No request or proposal
to amend, modify or waive any provision of this agreement shall be made or
solicited except in a non-public and confidential manner; provided, however,
that as provided in the second to last paragraph of Paragraph 6, in no event
shall the Receiving Party request, during the three-year period referred to
therein, that the Disclosing Party amend or waive any provision of said
Paragraph 6. The term person as used in this agreement shall be broadly
interpreted to include, without limitation, any corporation, company,
partnership or individual.
4. Access to Employees; No Solicitation. For two years from the date
of this agreement, the Receiving Party agrees not to initiate or maintain
contact (except for those contacts made in the ordinary course of business) with
any officer, director or employee of the Disclosing Party regarding the
business, operations, prospects or finances of the Disclosing Party, except with
the express permission of the Disclosing Party, or as contemplated in this
agreement. Unless otherwise agreed to by Safety 1st in writing, all (a)
communications regarding any possible transaction, (b) requests for additional
information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms, will be
submitted or directed to Richard E. Wenz. Unless otherwise agreed to by Dorel
Industries in writing, all (a) communications regarding any possible
transaction, (b) requests for additional information, (c) requests for facility
tours or management meetings and (d) discussions or questions regarding
procedures, timing and terms, will be submitted or directed to Martin Schwartz.
The Receiving Party agrees that, for a period of two years from the date hereof,
it will not solicit for employment any individual currently serving as a
director, officer or employee of the Disclosing Party, without obtaining the
prior written consent of the Disclosing Party; provided, however, that for
purposes of this agreement. Asolicit for employment shall not include (i) any
general solicitation of employment not specifically directed towards a
particular employee of the Disclosing Party or (ii) any communication directly
in response to a written, telephonic or other contact initiated by a director,
officer or employee.
5. Federal Securities Laws. The Receiving Party hereby acknowledges
that it and its Representatives are (a) aware that the United States securities
laws prohibit any person who has material, non-public information concerning a
company from purchasing or selling securities of such company or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities, and (b) familiar with the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (collectively, the
Exchange Act), and that it and its Representatives will neither use, nor cause
any third party to use, any Evaluation Material in contravention of such
Exchange Act, including, without limitation, Rule 10b-5 thereunder.
6. Standstill. The Receiving Party hereby acknowledges that the
Evaluation Material is being furnished to it in consideration of its agreement
that neither it nor any person or entity directly or indirectly, through one or
more intermediaries, controlling it or controlled by it or under
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common control with it, acting alone or as part of any group, will, for a
period of two years from the date of this agreement, directly or indirectly,
unless specifically requested to do so in writing in advance by the Disclosing
Party:
(a) acquire or agree, offer, seek or propose to acquire, or
cause to be acquired, ownership (including, but not limited to,
beneficial ownership as defined in Rule 13d-1 under the Exchange Act)
of any of the assets or businesses of the Disclosing Party or any of
its subsidiaries or of any securities of the Disclosing Party or any of
its subsidiaries, or any rights or options to acquire any such
ownership (including from a third party), except as approved in writing
by Safety 1st or
(b) make, or in any way participate in, any solicitation of
proxies (as such terms are used in the Exchange Act) to vote or seek to
advise or influence in any manner whatsoever any person or entity with
respect to the voting of any securities of the Disclosing Party or any
of its subsidiaries, or
(c) form, join, or in any way participate in a group (within
the meaning of Section 13d(3) of the Exchange Act) with respect to any
voting securities of the Disclosing Party or any of its subsidiaries,
or
(d) arrange, or in any way participate in, any financing for
the purchase of any voting securities or securities convertible or
exchangeable into or exercisable for any voting securities or assets of
the Disclosing Party or any of its subsidiaries, or
(e) otherwise act, whether alone or in concert with others, to
seek to propose to the Disclosing Party or any of its stockholders any
merger, business combination, restructuring, recapitalization or
similar transaction to or with the Disclosing Party or any of its
subsidiaries or otherwise act, whether alone or in concert with others,
to seek to control, change or influence the management, Board of
Directors or policies of the Disclosing Party, or nominate any person
as a Director of the Disclosing Party who is not nominated by the then
incumbent Directors, or propose any matter to be voted upon by the
stockholders of the Disclosing Party, or
(f) solicit, negotiate with, or provide any information to,
any person with respect to a merger, exchange offer or liquidation of
the Disclosing Party or any of its subsidiaries or any other
acquisition of the Disclosing Party or any of its subsidiaries, any
acquisition or voting securities of or all or any portion of the assets
of the Disclosing Party or any of its subsidiaries, or any other
similar transaction, or
(g) announce an intention to, or enter into any discussion,
negotiations, arrangements or understandings with any third party with
respect to, any of the foregoing, or
(h) disclose any intention, plan or arrangement inconsistent
with the foregoing, or
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(i) advise, assist or encourage any other person in connection
with any of the foregoing.
In addition, the Receiving Party also agrees during such two-year
period not to (i) request the Disclosing Party (or any of its Representatives),
directly or indirectly, to amend or waive any provision of this Paragraph 6
(including this sentence) or (ii) take any action that might require the
Disclosing Party to make a public announcement regarding a possible transaction.
Notwithstanding the immediately preceding paragraph, if (i) Safety
1(st) enters into a binding definitive agreement with any person (other than
Safety 1(st) or any employee benefit plans of Safety 1(st)) and (ii) such
transaction would result in such person beneficially owning more than 50% of the
outstanding equity securities or all or substantially all of the assets of
Safety 1(st), then Dorel Industries shall be permitted to seek or offer to
negotiate with or make proposal to Safety 1(st) to acquire more than 50% of the
outstanding equity securities of Safety 1(st) or all or substantially all of the
assets of Safety 1(st).
7. Return of Evaluation Material. The Receiving Party and its
Representatives will keep a written record of the location of the Evaluation
Material and will, promptly upon the request of the Disclosing Party and, in any
event, if the Receiving Party and the Disclosing Party do not enter into an
agreement with respect to the Proposed Transaction within [90] days of the date
hereof, will return to the Disclosing Party all copies of the Evaluation
Material furnished to the Receiving Party and in its possession or in the
possession of its Representatives, without retaining a copy thereof. The
Receiving Party and its Representatives will destroy any analyses, compilations,
studies or other documents prepared by or for the Receiving Party's, or its
Representatives, internal use which include, utilize or reflect the Evaluation
Material. Such destruction will be confirmed by the Receiving Party upon
request, in writing. Notwithstanding the return or destruction of the Evaluation
Material, the Receiving Party and its Representatives will continue to be bound
by its obligations of confidentiality hereunder.
8. No Definitive Agreement/Freedom to Change Process. The Receiving
Party agrees that unless and until a definite agreement between the Disclosing
Party and the Receiving Party with respect to the Proposed Transaction has been
executed and delivered, neither the Disclosing Party nor the Receiving Party
will be under any legal obligation of any kind whatsoever with respect to any
such transaction by virtue of this or any written or oral expression with
respect to such a transaction by any of the Receiving Party's or the Disclosing
Party's respective Representatives except, in the case of this agreement, for
the matters specifically agreed to herein. Dorel Industries further acknowledges
and agrees that Safety 1st reserves the right, in its sole discretion, to reject
any and all proposals made by Dorel Industries or any of its Representatives
with regard to the Proposed Transaction, and to terminate discussions and
negotiations with Dorel Industries at any time. Dorel Industries further
understands that (a) Safety 1st and its Representatives shall be free to conduct
any process for any transaction involving Safety 1st, as it in its sole
discretion shall determine (including, without limitation, negotiating with any
other interested parties and entering into a definitive agreement without prior
notice to Dorel Industries or any other person), (b) Safety 1st may change any
procedures relating to such process or transaction at any time without notice to
Dorel Industries or any other person, and (c) as a consequence of any actions
taken by Safety 1st pursuant to the foregoing clauses (a) and (b), Dorel
Industries shall have no claims whatsoever against Safety 1st, its
Representatives or any of their respective directors, officers, stockholders,
owners, affiliates or agents arising out of or relating to any such transaction
involving Safety 1st.
9. Accuracy of Evaluation Material. The Receiving Party hereby
acknowledges that although the Disclosing Party has endeavored to include in the
Evaluation Material information known to the Disclosing Party and that it
believes to be relevant to the Receiving Party's evaluation, the Receiving Party
understands that neither the Disclosing Party nor any of its Representatives
makes any representation or warranty as to the accuracy or completeness of the
Evaluation Material.
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The Receiving Party agrees that it shall assume full responsibility for all
conclusions it derives from the Evaluation Material and that neither the
Disclosing Party nor any of its Representatives shall have any liability with
respect to the Evaluation Material or any use thereof. The Receiving Party
further acknowledges that it is not entitled to rely on the accuracy or
completeness of the Evaluation Material.
10. Remedies. The Receiving Party agrees that money damages would not
be a sufficient remedy for any breach of this agreement by the Receiving Party
or any of its Representatives, and that in addition to all other remedies, the
Disclosing Party shall be entitled to specific performance and injunctive or
other equitable relief as a remedy for any such breach, and the Receiving Party
further agrees to waive and to use its best efforts to cause its Representatives
to waive, any requirement for the securing or posting of any bond in connection
with any such remedy. In the event of litigation relating to this agreement, if
a court of competent jurisdiction determines that the Receiving Party or any of
its Representatives has breached this agreement, it shall be liable for and pay
to the Disclosing Party on demand the legal fees and expenses incurred by the
Disclosing Party in connection with such litigation, including any appeal
therefrom.
11. Waiver and Amendment. The Receiving Party understands and agrees
that no failure or delay by the Disclosing Party or any of its Representatives
in exercising any right, power or privilege hereunder will operate as a waiver
thereof, nor will any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege
hereunder. The agreements set forth herein may only be waived or modified by an
agreement in writing signed on behalf of the parties hereto.
12. Successors and Assigns. This agreement shall inure to the benefit
of and by enforceable by the Disclosing Party and its successors.
13. Severability. In case provisions of this agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of the agreement shall not in any way be affected or
impaired thereby.
14. Governing Law; Venue. The validity, interpretation, performance
and enforcement of this agreement shall be governed by the laws of the State of
Delaware. The parties hereto hereby irrevocably and unconditionally consent to
the exclusive jurisdiction of the courts of the State of Delaware and the United
States District Court for the District of Delaware for any action, suit or
proceeding arising out of or relating to this agreement or the Proposed
Transaction, and agree not to commence any action, suit or proceeding related
thereto except in such courts. The parties hereto further hereby irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of or relating to this agreement in the courts of the
State of Delaware or the United States District Court for the District of
Delaware, and hereby further irrevocably and unconditionally waive and agree not
to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. Each of the
parties hereto further agrees that service of any process, summons, notice or
document by U.S. registered mail to its address set forth above shall be
effective service of process for any action, suit or proceeding brought against
it in any such court.
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15. Counterparts. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same agreement.
Please acknowledge your agreement to the foregoing by countersigning
this agreement in the place provided below and returning it to the undersigned.
Very truly yours,
SAFETY 1ST, INC.
By: /s/ Richard E. Wenz
----------------------
Name: Richard E. Wenz
Title: President & COO
Accepted and Agreed to,
this 17th day of February, 2000
DOREL INDUSTRIES INC.
By: /s/ Martin Schwartz
----------------------
Name: Martin Schwartz
Title: President and Chief Executive Officer
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Exhibit (d)(3)
EXECUTION COPY
TENDER AGREEMENT
AGREEMENT, dated as of April 22, 2000 among , Dorel Industries, Inc., a
Quebec corporation ("Parent"), Diamond Acquisition Subsidiary, Inc., a
Massachusetts corporation and a wholly-owned subsidiary of Parent (the
"Purchaser"), Safety 1st, a Massachusetts corporation (the "Company"), and the
stockholders of the Company signatory hereto (collectively referred to herein as
the "Stockholders" and each, a "Stockholder").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Purchaser and the Company, have entered into an Agreement and Plan
of Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"), pursuant to which the Purchaser will be merged with and
into the Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company desire that
as soon as practicable after the execution and delivery of the Merger Agreement,
the Purchaser shall commence a cash tender offer (the "Offer") to purchase at a
price of $13.875 per share all outstanding shares of Company Common Stock (as
defined in Section 1 hereof) including all of the Shares (as defined in Section
2 hereof) beneficially owned by Stockholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholders agree, and the Stockholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(b) "Company Common Stock" shall mean at any time the Common Stock, par
value $.01 per share, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.
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2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into the Merger
Agreement, each of the Stockholders hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
seventh business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares
of Company Common Stock set forth opposite such Stockholder's name on Schedule I
hereto (the "Existing Shares", and together with any shares acquired by such
Stockholder in any capacity after the date hereof and prior to the termination
of this Agreement whether upon the exercise of Options or by means of purchase,
dividend, distribution or otherwise, the "Shares"), all of which are
Beneficially Owned by such Stockholder. Each Stockholder hereby acknowledges and
agrees that Parent's and the Purchaser's obligation to accept for payment and
pay for the Shares in the Offer, including the Shares Beneficially Owned by such
Stockholder, is subject to the terms and conditions of the Offer.
(b) Upon acceptance and payment therefor by Purchaser, the transfer by the
Stockholders of the Shares to Purchaser in the Offer shall pass to and
unconditionally vest in the Purchaser good and valid title to the Shares, free
and clear of all Encumbrances.
(c) The Stockholders hereby permit Parent and the Purchaser to publish and
disclose in the Offer Documents and, if approval of the Company's stockholders
is required under applicable law, the Proxy Statement (including all documents
and schedules filed with the SEC), their identity and ownership of the Shares
and the nature of their commitments, arrangements and understandings under this
Agreement.
3. Additional Agreements.
(a) Voting Agreement. Each Stockholder shall, at any meeting of the
holders of Company Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock, vote (or cause to be
voted) the Shares (if any) then held of record or Beneficially Owned by such
Stockholder, (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement and this Agreement and
any actions required in furtherance thereof and hereof; and (ii) against any
Acquisition Proposal and against any action or agreement that would impede,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VIII of the Merger Agreement not being fulfilled.
(b) No Inconsistent Arrangements. Each of the Stockholders hereby
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, it shall not (i) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of such Stockholder's Shares, Options or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Options
or any interest
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therein, (iii) grant any proxy, power-of-attorney or other authorization in or
with respect to such Shares or Options, (iv) deposit such Shares or Options into
a voting trust or enter into a voting agreement or arrangement with respect to
such Shares or Options, or (v) take any other action that would in any way
restrict, limit or interfere with the performance of its obligations hereunder
or the transactions contemplated hereby or by the Merger Agreement.
(c) No Solicitation. Each Stockholder hereby agrees, in the capacity as a
Stockholder or otherwise, that neither such Stockholder nor any of its
Subsidiaries or affiliates shall (and such Stockholder shall use its best
efforts to cause its officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), 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,
any of its affiliates or representatives) concerning any Acquisition Proposal or
take any other action prohibited by Section 7.3 of the Merger Agreement. Each
Stockholder will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal.
(d) Waiver of Appraisal Rights. Each Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that such Stockholder may
have.
4. Representations and Warranties of the Stockholders. Each Stockholder
hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record and Beneficial
Owner of the Shares, as set forth on Schedule I. On the date hereof, the
Existing Shares constitute all of the Shares owned of record or Beneficially
Owned by such Stockholder. Such Stockholder has sole voting power and sole power
to issue instructions with respect to the matters set forth in Sections 2, 3 and
4 hereof, sole power of disposition, sole power of conversion, sole power to
demand appraisal rights and sole power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of the Existing Shares with
no limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) Power; Binding Agreement. Each Stockholder has the legal capacity,
power and authority to enter into and perform all of such Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by such Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting agreement,
proxy arrangement, pledge agreement, shareholders agreement or voting trust.
This Agreement has been duly and validly executed and delivered by such
Stockholder and constitutes a valid and binding agreement of such Stockholder,
enforceable against such Stockholder in accordance with its terms. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which such Stockholder is a trustee whose consent is required for the
execution and delivery of this Agreement or the consummation by such Stockholder
of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act and the Exchange
Act, (i) no filing with, and no permit, authorization, consent or approval of,
any Governmental
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Entity is necessary for the execution of this Agreement by such Stockholder and
the consummation by such Stockholder of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by such Stockholder,
the consummation by such Stockholder of the transactions contemplated hereby or
compliance by such Stockholder with any of the provisions hereof shall (A)
conflict with or result in any breach of any organizational documents applicable
to the Stockholder, (B) result in a violation or breach of, or constitute (with
or without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, loan agreement,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
such Stockholder is a party or by which such Stockholder or any of its
properties or assets may be bound, or (C) violate any order, writ, injunction,
decree, judgment, statute, rule or regulation applicable to such Stockholder or
any of its properties or assets.
(d) No Encumbrances. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Encumbrances, proxies,
voting trusts or agreements, understandings or arrangements or any other rights
whatsoever, except for any such Encumbrances or proxies arising hereunder.
(e) No Finder's Fees. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Stockholder.
5. Representations and Warranties of Parent and the Purchaser. Each of
Parent and the Purchaser hereby represents and warrants to the Stockholders as
follows:
(a) Power; Binding Agreement. Each of Parent and the Purchaser has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement. The execution, delivery and performance of this Agreement
by each of Parent and the Purchaser will not violate any other agreement to
which either of them is a party. This Agreement has been duly and validly
executed and delivered by each of Parent and the Purchaser and constitutes a
valid and binding agreement of each of Parent and the Purchaser, enforceable
against each of Parent and the Purchaser in accordance with its terms.
(b) No Conflicts. Except for filings under the HSR Act, the Exchange Act,
State Securities or State "Blue Sky" laws and the MGL (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution of this Agreement by each of Parent and the
Purchaser and the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by each of Parent and the Purchaser, the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby or compliance
by each of Parent and the Purchaser with any of the provisions hereof shall (A)
conflict with or result in any breach of any organizational documents applicable
to either of Parent or the Purchaser, (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise
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to any third party right of termination, cancellation, material modification or
acceleration) under any material terms, conditions or provisions of any material
note, loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement understanding, agreement or other instrument or obligation of any
kind to which either of Parent or the Purchaser is a party or by which either of
Parent or the Purchaser or any of their properties or assets may be bound, or
(C) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to either of Parent or the Purchaser or any of their
properties or assets.
6. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
7. Stop Transfer. The Stockholders shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Shares, unless such transfer is
made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall refer to and include the Shares as well as all
such stock dividends and distributions and any shares into which or for which
any or all of the Shares may be changed or exchanged.
8. Termination. This Agreement shall terminate upon the earlier to occur
of (i) the Effective Time or (ii) the termination of the Merger Agreement in
accordance with its terms.
9. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations hereunder shall
attach to the Shares and shall be binding upon any person or entity to which
legal or beneficial ownership of such Shares shall pass, whether by operation of
law or otherwise, including, without limitation, a Stockholder's heirs,
guardians, administrators or successors. Notwithstanding any transfer of Shares,
the transferor shall remain liable for the performance of all obligations of the
transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by operation of law
or otherwise without the prior written consent of the other parties, provided
that Parent may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned Subsidiary of Parent, but no
such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
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(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to a Stockholder: to such Stockholder's address set forth on
Schedule I hereto
If to Parent or
Acquisition Sub: 1255 Greene Avenue
Suite 300
Westmont, Quebec H37 2A4
Attention: President
Telephone No.: (514) 934-3034
Telecopy No.: (514) 934-9932
copy to: Shearman & Sterling
Commerce Court West
199 Bay Street, Suites 4405
Toronto, Ontario M5L 1E8
Attention: Bruce Czachor
Telephone No.: (416) 360-8484
Telecopy No.: (416) 360-2958
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore in the event
of any such breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and
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injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity (subject to Section 4(f) hereof).
(h) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative or exclusive, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party (subject to Section 4(f)
hereof).
(i) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) No Third Party Beneficiaries. Subject to the provisions of Section
10(c), this Agreement is not intended to be for the benefit of, and shall not be
enforceable by, any person or entity who or which is not a party hereto.
(k) Choice of Law/Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts without regard to its rules of conflict of laws. Each party hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the Commonwealth of Massachusetts and of the United States of
America located in the Commonwealth of Massachusetts (the "Massachusetts
Courts") for any litigation arising out of or relating to this Agreement and the
Transactions (and agrees not to commence any litigation relating thereto except
in such courts), waives any objection to the laying of venue of any such
litigation in the Massachusetts Courts and agrees not to plead or claim in any
Massachusetts Court that such litigation brought therein has been brought in any
inconvenient forum. Each of the parties hereto agrees, (a) to the extent such
party is not otherwise subject to service of process in the Commonwealth of
Massachusetts, to appoint and maintain an agent in the Commonwealth of
Massachusetts as such party's agent for acceptance of legal process, and (b)
that service of process may also be made on such party by prepaid certified mail
with a proof of mailing receipt validated by the United States Postal Service
constituting evidence of valid service. Service made pursuant to (a) or (b)
above shall have the same legal force and effect as if served upon such party
personally within the Commonwealth of Massachusetts. For purposes of
implementing the parties' agreement to appoint and maintain an agent for service
of process in the Commonwealth of Massachusetts, each party does hereby appoint
CT Corporation, 101 Federal Street, Suite 300, Boston, Massachusetts 02110, as
such agent.
(l) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
7
<PAGE> 8
(m) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
(n) No Agreement Until Executed. Irrespective of negotiations among the
parties or the exchanging of drafts of this Agreement, this Agreement shall not
constitute or be deemed to evidence a contract, agreement, arrangement or
understanding among the parties hereto unless and until (i) the Company Board
has approved, for purposes of Section 110F of the MGL and any applicable
provision of the Articles of Organization, the terms of this Agreement and (ii)
this Agreement is executed by parties hereto.
8
<PAGE> 9
[TENDER AGREEMENT]
[PURCHASER SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed as of the day and year first above written.
DOREL INDUSTRIES, INC.
By: /s/ Martin Schwartz
-------------------------
Name: Martin Schwartz
Title: President
DIAMOND ACQUISITION SUBSIDIARY, INC.
By: /s/ Jeffrey Schwartz
--------------------------
Name: Jeffrey Schwartz
Title: President and Treasurer
s-1
<PAGE> 10
[TENDER AGREEMENT]
[COMPANY SIGNATURE PAGE]
SAFETY 1ST, INC.
By: /s/ Michael Lerner
------------------------
Name: Michael Lerner
Title: CEO
s-2
<PAGE> 11
[TENDER AGREEMENT]
[STOCKHOLDER SIGNATURE PAGE]
STOCKHOLDERS
/s/ Michael Lerner
------------------
Michael Lerner
/s/ Michael Bernstein
---------------------
Michael Bernstein
s-3
<PAGE> 12
Bear, Stearns & Co., Inc.
/s/ John Howard
---------------
John Howard
DB Capital Partners, Inc.
/s/ Joseph Wood
---------------
Joseph Wood
BT Capital Partners, Inc.
/s/ Mark Owens
--------------
Mark Owens
Schedule I
<TABLE>
<CAPTION>
Number of Shares
and Options
Name and Address of Stockholder Beneficially Owned
<S> <C>
Michael Lerner 2,764,000
Michael Bernstein 566,151
BT Capital Partners, Inc. 634,173
Bear, Stearns & Co., Inc. 633,009
Mark Owens 422,000
</TABLE>
s-4
