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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section
14(d)(1) of the Securities Exchange Act of 1934
ReSound Corporation
(Name of Subject Company)
GN Great Nordic Ltd.
GN Acquisition Corporation
(Bidders)
Common Stock, Par Value $0.01 per Share
(Title of Class of Securities)
-----------------------
761194109
(Cusip Number)
Jorn Kildegaard
c/o John A. Bick, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4350
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications on Behalf of Bidders)
Copies to:
John A. Bick, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4350
CALCULATION OF FILING FEE
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Transaction valuation* Amount of filing fee**
- ----------------------------------- ----------------------------------
$167,417,352 $33,484
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* Estimated solely for the purpose of determining the registration fee.
Based upon $8.00 cash per share for 20,927,169 shares.
** The amount of the filing fee, calculated in accordance with Rule 0-11 under
the Securities Exchange Act of 1934, as amended, equals 1/50 of one percent
of the aggregate of the cash offered by the bidder.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing Party:Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
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<PAGE>
CUSIP No. 761194109
- -------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
GN Acquisition Corporation
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- -------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
0
- -------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
- -------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
<PAGE>
CUSIP No. 761194109
- -------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
GN Great Nordic Ltd.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Denmark
- -------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
0
- -------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
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10 TYPE OF REPORTING PERSON
HC, CO
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<PAGE>
Item l. Security and Subject Company
(a) The name of the subject company is ReSound Corporation, a California
corporation (the "Company"), and the address of its principal executive offices
is 220 Saginaw Drive, Seaport Centre, Redwood City, California 94063.
(b) This Statement relates to the offer by GN Acquisition Corporation, a
California corporation ("Purchaser") and an indirect wholly-owned subsidiary of
GN Great Nordic Ltd., a Danish corporation ("Parent"), to purchase all
outstanding shares of common stock, par value $0.01 per share (including the
associated preferred share purchase rights, the "Shares"), of the Company at
$8.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase (the "Offer to Purchase") and in
the related Letter of Transmittal, copies of which are attached hereto as
Exhibits (a)(l) and (a)(2), respectively (which are herein collectively
referred to as the "Offer"). The information set forth in the introduction to
the Offer to Purchase (the "Introduction") is incorporated herein by reference.
(c) The information set forth in Section 6 "Price Range of Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d), (g) This Statement is filed by Purchaser and Parent. The
information set forth in the Introduction, Section 8 "Certain Information
Concerning the Purchaser and Parent" and Schedule I of the Offer to Purchase is
incorporated herein by reference.
(e)-(f) Neither Parent, Purchaser, nor, to the best knowledge of Purchaser
or Parent, any of the persons listed in Schedule I of the Offer to 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
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject
Company.
(a)-(b) The information set forth in the Introduction and Section l0
"Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company" of the Offer to Purchase is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(b) The information set forth in Section 9 "Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a)-(e) The information set forth in the Introduction and Section 11
"Purpose of the Offer" of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in Section 12 "Effect of the Offer on
the Market for the Shares; Stock Exchange Listing(s); Registration Under the
Exchange Act" of the Offer to Purchase is incorporated herein by reference.
<PAGE>
Item 6. Interest in Securities of the Subject Company.
(a)-(b) The information set forth in the Introduction, Section 10
"Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company" and Schedule I of the Offer to Purchase is incorporated herein by
reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
The information set forth in the Introduction, Section 10 "Background of
the Offer; Past Contacts, Transactions or Negotiations with the Company" and
Schedule I of the Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in Section 17 "Fees and Expenses" of the Offer
to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in Section 8 "Certain Information Concerning
Purchaser and Parent" of the Offer to Purchase is incorporated herein by
reference.
Item 10. Additional Information.
(a) None.
(b)-(c) The information set forth in Section 16 "Certain Legal Matters;
Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 12 "Effect of the Offer on the
Market for the Shares; Stock Exchange Listing(s); Registration under the
Exchange Act" of the Offer to Purchase is incorporated herein by reference.
(e) The information set forth in the Introduction and Section 16 "Certain
Legal Matters; Regulatory Approvals" of the Offer to Purchase is incorporated
herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
Item 11. Material to be Filed as Exhibits.
(a)(l) Offer to Purchase dated May 14, 1999.
(a)(2) Letter of Transmittal (including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9).
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Text of press release issued by Parent dated May 10, 1999.
<PAGE>
(a)(7) Form of summary advertisement dated May 14, 1999.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger dated as of May 10, 1999 among ReSound
Corporation, GN Great Nordic Ltd. and GN Acquisition Corporation.
(c)(2) Stock Option Agreement dated as of May 10, 1999 among ReSound
Corporation, GN Great Nordic Ltd. and GN Acquisition Corporation.
(c)(3) Form of Letter regarding Change of Control Agreement.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: May 14, 1999
GN ACQUISITION CORPORATION
By: /s/ Donald Stevenson
--------------------------------
Name: Donald Stevenson
Title: Secretary
GN GREAT NORDIC LTD.
By: /s/ Jorgen Lindegaard
--------------------------------
Name: Jorgen Lindegaard
Title: President and Chief Executive
Officer
By: /s/ Jorn Kildegaard
--------------------------------
Name: Jorn Kildegaard
Title: Executive Vice President
<PAGE>
EXHIBITS INDEX
Exhibit Title
------- -----
(a)(1) Offer to Purchase dated May 14, 1999.
(a)(2) Letter of Transmittal (including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9).
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Text of press release issued by Parent dated May 10, 1999.
(a)(7) Form of summary advertisement dated May 14, 1999.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger dated as of May 10, 1999 among ReSound
Corporation, GN Great Nordic Ltd. and GN Acquisition Corporation.
(c)(2) Stock Option Agreement dated as of May 10, 1999 among ReSound
Corporation, GN Great Nordic Ltd. and GN Acquisition Corporation.
(c)(3) Form of Letter regarding Change of Control Agreement.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
Exhibit (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights)
of
ReSound Corporation
at
$8.00 Net Per Share
by
GN Acquisition Corporation
an indirect wholly owned subsidiary of
GN Great Nordic Ltd.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 11, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED
AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES OF
COMMON STOCK, PAR VALUE $0.01 PER SHARE (INCLUDING THE ASSOCIATED RIGHTS;
COLLECTIVELY, THE "SHARES") OF RESOUND CORPORATION (THE "COMPANY") WHICH,
TOGETHER WITH THE SHARES THEN OWNED BY GN ACQUISITION CORPORATION ("PURCHASER")
AND GN GREAT NORDIC LTD. ("PARENT") WOULD REPRESENT AT LEAST NINETY PERCENT
(90%) OF THE TOTAL NUMBER OF OUTSTANDING SHARES.
-----------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH
OF THE OFFER, THE MERGER AND THE STOCK OPTION AGREEMENT DESCRIBED HEREIN IS
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, HAS
APPROVED THE OFFER, THE MERGER AND THE STOCK OPTION AGREEMENT AND
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
-----------------------
Any shareholder desiring to tender Shares should either (1) complete and
sign the Letter of Transmittal (or facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and deliver it with the
certificate(s) representing tendered Shares and all other required documents to
the Depositary or tender such Shares pursuant to the procedures for book-entry
transfer set forth in Section 3 or (2) request his or her broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
him or her. A shareholder having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
person if he or she desires to tender such Shares.
Any shareholder who desires to tender Shares and cannot deliver such
Shares and all other required documents to the Depositary by the expiration of
the Offer or who cannot comply with the procedures for book-entry transfer on a
timely basis must tender such Shares pursuant to the guaranteed delivery
procedure set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
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, brokers, dealers,
commercial banks or trust companies.
-----------------------
The Dealer Manager for the Offer is:
GLEACHER & CO. LLC
May 14, 1999
<PAGE>
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TABLE OF CONTENTS
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Page
----
1. Terms of the Offer; Proration; Expiration Date...................... 3
2. Acceptance for Payment and Payment.................................. 5
3. Procedure for Tendering Shares...................................... 6
4. Withdrawal Rights................................................... 8
5. Certain Tax Considerations.......................................... 8
6. Price Range of Shares; Dividends.................................... 9
7. Certain Information Concerning the Company.......................... 9
8. Certain Information Concerning Purchaser and Parent................. 12
9. Source and Amount of Funds.......................................... 16
10. Background of the Offer; Past Contacts, Transactions
or Negotiations with the Company.................................. 16
11. Purpose of the Offer................................................ 27
12. Effect of the Offer on the Market for the Shares;
Stock Exchange Listing(s); Registration under the
Exchange Act...................................................... 28
13. Dividends and Distributions......................................... 29
14. Extension of Tender Period; Termination; Amendment.................. 30
15. Certain Conditions of the Offer..................................... 31
16. Certain Legal Matters; Regulatory Approvals......................... 32
17. Fees and Expenses................................................... 35
18. Miscellaneous....................................................... 35
Schedule I Directors and Executive Officers of Parent and Purchaser
i
<PAGE>
INTRODUCTION
To the Holders of Common Stock of
ReSound Corporation:
GN Acquisition Corporation, a California corporation ("Purchaser") and an
indirect wholly owned subsidiary of GN Great Nordic Ltd., a Danish corporation
("Parent" or "Great Nordic"), hereby offers to purchase all outstanding shares
of Common Stock (the "Common Stock"), par value $0.01 per share of ReSound
Corporation, a California corporation (the "Company" or "ReSound"), and the
associated preferred share purchase rights (the "Rights"; and together with the
Common Stock, the "Shares") issued pursuant to the Preferred Shares Rights
Agreement dated as of July 5, 1994, between the Company and American Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agreement"), at $8.00
per Share (such price, or such higher price per Share as may be paid in the
Offer, being referred to herein as the "Offer Price"), net to the seller in
cash, upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which together constitute
the "Offer"). Tendering shareholders will not be obligated to pay brokerage
fees or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Purchaser will pay all charges and expenses of Gleacher & Co. LLC (the "Dealer
Manager" or "Gleacher & Co."), American Stock Transfer & Trust Company (the
"Depositary") and Georgeson & Company Inc. (the "Information Agent") incurred
in connection with the Offer. See Section 17.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to Expiration Date (as defined in Section 1
below) a number of Shares which, together with the Shares then owned by
Purchaser and Parent, would represent at least ninety percent (90%) of the
total number of outstanding Shares (the "Minimum Condition").
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH OF
THE OFFER, THE MERGER AND THE STOCK OPTION AGREEMENT DESCRIBED HEREIN IS FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, HAS
APPROVED THE OFFER, THE MERGER AND THE STOCK OPTION AGREEMENT AND RECOMMENDS
THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
BANCBOSTON ROBERTSON STEPHENS INC. ("BANCBOSTON ROBERTSON STEPHENS"), FINANCIAL
ADVISOR TO THE COMPANY, HAS DELIVERED TO THE BOARD OF DIRECTORS OF THE COMPANY
ITS WRITTEN OPINION TO THE EFFECT THAT, AS OF MAY 5, 1999 AND BASED UPON AND
SUBJECT TO THE MATTERS SET FORTH THEREIN, THE $8.00 IN CASH TO BE PAID IN THE
OFFER AND THE MERGER WAS FAIR FROM A FINANCIAL POINT OF VIEW TO THE HOLDERS OF
COMMON STOCK. THE FULL TEXT OF THE WRITTEN OPINION OF BANCBOSTON ROBERTSON
STEPHENS CONTAINING THE ASSUMPTIONS MADE, THE MATTERS CONSIDERED AND THE SCOPE
OF THE REVIEW UNDERTAKEN IN RENDERING SUCH OPINION AS WELL AS THE LIMITATIONS
OF SUCH OPINION IS INCLUDED WITH THE COMPANY'S SOLICITATION/RECOMMENDATION
STATEMENT ON SCHEDULE 14D-9, WHICH IS BEING MAILED TO SHAREHOLDERS CONCURRENTLY
HEREWITH. SHAREHOLDERS ARE URGED TO READ THE FULL TEXT OF SUCH OPINION IN
CONJUNCTION WITH THIS OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of May 10, 1999 (the "Merger Agreement") among the Company, Parent and
Purchaser. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer, and in accordance with the
applicable provisions of the California General Corporation Law (the "CGCL"),
Purchaser will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation (the "Surviving Corporation").
Thereupon, each outstanding Share (other than Dissenting Shares (as hereinafter
defined) and Shares owned by Parent or
1
<PAGE>
Purchaser or any of their subsidiaries) will be converted into and represent the
right to receive $8.00 in cash or any higher price that may be paid per Share in
the Offer, without interest. See Section 11.
According to the Company, as of May 4, 1999, there were outstanding
20,927,169 Shares. Accordingly, Purchaser believes that the Minimum Condition
would be satisfied if approximately 18,835,000 Shares are validly tendered
pursuant to the Offer and not withdrawn.
The purpose of the Offer is to acquire for cash as many outstanding Shares
as possible as a first step in acquiring the entire equity interest in the
Company. The Merger Agreement provides that, in the event the Minimum Condition
is not satisfied on any Expiration Date of the Offer, Purchaser may, without
the consent of the Company (i) extend the Offer; (ii) amend the Offer to waive
the Minimum Condition in contemplation of the exercise of the Top-Up Stock
Option (as defined below) (to the extent the Top-Up Stock Option is exercisable
at such time); or (iii) amend the Offer to provide that, in the event (A) the
Minimum Condition is not satisfied at the next scheduled Expiration Date of the
Offer (without giving effect to the exercise of the Top-Up Stock Option) and
(B) the number of Shares tendered pursuant to the Offer and not withdrawn as of
such next scheduled Expiration Date is more than 50% of the then outstanding
Shares, Purchaser will (x) reduce the number of Shares subject to the Offer to
a number of Shares that, when added to the Shares then beneficially owned by
Parent, will equal 49.99% of the Shares then outstanding (the "Revised Minimum
Number"), (y) reduce the Minimum Condition to the Revised Minimum Number and,
(z) if a number of Shares greater than the Revised Minimum Number is tendered
into the Offer and not withdrawn, purchase, on a pro rata basis, the Revised
Minimum Number of Shares. In the event that all conditions to the Offer other
than the Minimum Condition shall have been satisfied and Shares have not been
accepted for payment by Purchaser prior to July 15, 1999 (or, if certain
regulatory approvals have not been obtained, September 15, 1999), the Merger
Agreement requires that, on such date, Purchaser take either the action
contemplated by clause (ii) above or the action contemplated by clause (iii)
above.
If all of the conditions to the Offer are not satisfied or waived on any
scheduled Expiration Date of the Offer, Purchaser will either (i) extend the
Offer from time to time until such conditions are satisfied or waived, provided
that Purchaser will not be required to extend the Offer beyond July 31, 1999
or, if certain regulatory approvals have not been obtained, beyond September
30, 1999) or (ii) exercise the rights set forth in the preceding paragraph.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the shareholders of the Company, if required by the
CGCL. Under the CGCL, if Purchaser acquires, pursuant to the Offer, the Stock
Option Agreement or otherwise, at least 90% of the Shares then outstanding, it
will be able to effect the Merger without a vote of the shareholders. In such
event, Parent, Purchaser and the Company have agreed in the Merger Agreement to
take, subject to the satisfaction or (to the extent permitted under the Merger
Agreement) waiver of the conditions set forth in the Merger Agreement, all
necessary and appropriate action to cause the Merger to be effective as soon as
practicable after the acceptance for payment and purchase of Shares pursuant to
the Offer, without a meeting of shareholders of the Company, in accordance with
Section 1110 of the CGCL. Under the CGCL, the Merger consideration paid to the
shareholders of the Company may not be cash if Purchaser or Parent owns,
directly or indirectly, more than 50% but less than 90% of the then outstanding
Shares, unless either all the shareholders of the Company consent or the
Commissioner of Corporations of the State of California approves, after a
hearing, the terms and conditions of the Merger and the fairness thereof. If
Purchaser does not acquire at least 90% of the Shares then outstanding as of
any scheduled Expiration Date of the Offer, pursuant to the Offer, the Stock
Option Agreement or otherwise, and Purchaser instead amends the Offer to reduce
the number of shares subject to the Offer to the Revised Minimum Number (as
described above), then Purchaser would own upon consummation of the Offer
49.99% of the Shares then outstanding, and would thereafter solicit the
approval of the Merger and the Merger Agreement by a vote of the shareholders
of the Company. Under such circumstances, a significantly longer period of time
will be required to effect the Merger. For a description of the conditions set
forth in the Merger Agreement and the CGCL as it relates to this transaction,
see Sections 10, 11 and 15.
2
<PAGE>
Concurrently with the execution of the Merger Agreement, and as a
condition and inducement to Parent's and Purchaser's entering into the Merger
Agreement, the Company entered into a Stock Option Agreement dated as of May
10, 1999 (the "Stock Option Agreement") with Parent and Purchaser. Pursuant to
the Stock Option Agreement, the Company granted to Purchaser an irrevocable
option (the "Top-Up Stock Option") to purchase that number of Shares (the
"Top-Up Option Shares") equal to the number of Shares that, when added to the
number of Shares owned by Purchaser, Parent and their subsidiaries immediately
following consummation of the Offer, will constitute 90% of the Shares then
outstanding (assuming the issuance of the Top-Up Option Shares) at a purchase
price per Top-Up Option Share equal to the Offer Price, subject to the terms
and conditions set forth in the Stock Option Agreement, including, without
limitation, that the Top-Up Stock Option shall not be exercisable if the number
of Shares that would otherwise be issued thereunder would exceed the number of
authorized Shares available for issuance. If the Top-Up Stock Option is
exercised by Purchaser (resulting in Purchaser owning 90% or more of the Shares
then outstanding), Purchaser will be able to effect a short-form Merger under
the CGCL, subject to the terms and conditions of the Merger Agreement. For a
description of the Stock Option Agreement, see Section 10.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
1. Terms of the Offer; Proration; 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 any such extension or amendment), and
subject to reduction in the number of Shares subject to the Offer to a number
equal to the Revised Minimum Number, Purchaser will accept for payment and pay
for all Shares validly tendered on or prior to the Expiration Date (as defined
below) and not properly withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Friday, June 11,
1999, unless and until Purchaser, in accordance with the terms of the Merger
Agreement, extends the period of time during which the Offer is open, in which
event the term "Expiration Date" will mean the latest time and date at which
the Offer, as so extended by Purchaser, will expire.
The Offer is subject to certain conditions set forth in Section 15,
including satisfaction of the Minimum Condition and expiration or termination
of the waiting period applicable to Purchaser's acquisition of Shares pursuant
to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). Purchaser expressly reserves the right to waive any of
the conditions to the Offer and to make any change in the terms or conditions
of the Offer. The Merger Agreement provides, however, that no change or waiver
may be made that, without the prior written consent of the Company, waives the
Minimum Condition, changes the form of consideration to be paid, decreases the
price per Share or the number of Shares sought in the Offer, imposes conditions
to the Offer in addition to those set forth in Section 15, or is otherwise
adverse to the holders of the Shares.
The Merger Agreement provides that, notwithstanding the foregoing, without
the consent of the Company, Purchaser will have the right to extend the Offer
(i) from time to time if, at the scheduled or extended Expiration Date of the
Offer, any of the conditions to the Offer shall not have been satisfied or
waived, until such conditions are satisfied or waived or (ii) for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "Commission") or the staff thereof applicable to
the Offer or any period required by applicable law. If all of the conditions to
the Offer are not satisfied or waived on any scheduled Expiration Date of the
Offer, Purchaser will either (i) extend the Offer from time to time until such
conditions are satisfied or waived, provided that Purchaser will not be
required to extend the Offer beyond July 31, 1999 (or, if certain regulatory
approvals have not been obtained, beyond September 30, 1999) or (ii) exercise
the rights set forth in the next paragraph.
In the event the Minimum Condition is not satisfied on any Expiration Date
of the Offer, Purchaser may, without the consent of the Company (i) extend the
Offer pursuant to the above paragraph; (ii) amend the Offer to
3
<PAGE>
waive the Minimum Condition in contemplation of the exercise of the Top-Up
Stock Option (to the extent the Top- Up Stock Option is exercisable at such
time); or (iii) amend the Offer to provide that, in the event (A) the Minimum
Condition is not satisfied at the next scheduled Expiration Date (without
giving effect to the exercise of the Top-Up Stock Option) and (B) the number of
Shares tendered pursuant to the Offer and not withdrawn as of such next
scheduled Expiration Date is more than 50% of the then outstanding Shares,
Purchaser will (x) reduce the number of Shares subject to the Offer to a number
of Shares that, when added to the Shares then beneficially owned by Parent,
will equal the Revised Minimum Number, (y) reduce the Minimum Condition to the
Revised Minimum Number and, (z) if a number of Shares greater than the Revised
Minimum Number is tendered into the Offer and not withdrawn, purchase, on a pro
rata basis, the Revised Minimum Number of Shares. In the event that all
conditions to the Offer other than the Minimum Condition shall have been
satisfied and Shares have not been accepted for payment by Purchaser prior to
July 15, 1999 (or, if certain regulatory approvals have not been obtained,
September 15, 1999), the Merger Agreement requires that, on such date,
Purchaser take either the action contemplated by clause (ii) above or the
action contemplated by clause (iii) above.
In addition to Purchaser's rights to extend and amend the Offer subject to
the provisions of the Merger Agreement, Purchaser (i) will not be required to
accept for payment or, subject to any applicable rules and regulations of the
Commission, pay for, and may delay the acceptance for payment of, or payment
for, any tendered Shares, and (ii) may terminate the Offer to amend the Offer
as to any Shares not then paid for, if any of the conditions specified in
Section 15 exists. Purchaser acknowledges that (a) Rule 14e-1(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires
Purchaser to pay the consideration offered or return the Shares tendered
promptly after the termination or withdrawal of the Offer and (b) Purchaser may
not delay acceptance for payment of, or payment for (except as provided in
clause (i) of the first sentence of this paragraph), any Shares upon the
occurrences of any of the conditions specified in Section 15 without extending
the period of time during which the Offer is open.
Purchaser is required to give oral or written notice of any extension,
delay, termination or amendment of the Offer to the Depositary. Any such
extension, delay, termination or amendment will also 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) and 14d-6(d) under the Exchange Act,
which require that material changes be promptly disseminated to shareholders 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 to the Dow Jones News Service.
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
14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to increase or decrease the number of Shares
being sought or to increase or decrease the Offer Price (which would require
the Company's consent), such increase or decrease in the number of Shares being
sought or such increase or decrease in the Offer Price will be applicable to
all shareholders whose Shares are accepted for payment pursuant to the Offer.
If at the time notice of any such increase or decrease in the number of Shares
being sought or such increase or decrease in the Offer Price 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. For purposes of the Offer, a "business day" means any day,
other than a Saturday, Sunday or a federal holiday, and consists of the time
period from 12:01 a.m. through midnight, New York City time.
Under no circumstances will interest on the Offer Price for the Shares be
paid, regardless of any extension of the Offer or delay in making such payment.
During any extension of the Offer, all Shares previously tendered and
4
<PAGE>
not withdrawn will remain tendered pursuant to the Offer, subject to the rights
of a tendering shareholder to withdraw his Shares. See Section 4.
If proration is required as a result of any reduction in the number of
Shares subject to the Offer to a number equal to the Revised Minimum Number,
then, because of the difficulty of determining precisely the number of Shares
validly tendered and not withdrawn, Purchaser would not expect to announce the
final results of proration until approximately seven National Association of
Securities Dealers National Market System (the "NASDAQ National Market System")
trading days after the Expiration Date. Preliminary results of proration will
be announced by press release as promptly as practicable after the Expiration
Date. Holders of Shares may obtain such preliminary information from the
Depositary and may also be able to obtain such preliminary information from
their brokers. Purchaser will not pay for any Shares accepted for payment
pursuant to the Offer until the final proration factor is known.
The Company has provided Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
banks and similar persons whose names, or the names of whose nominees, appear
on the shareholder 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.
2. Acceptance for Payment and Payment. 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), and subject to
reduction in the number of Shares subject to the Offer to a number equal to the
Revised Minimum Number, Purchaser will accept for payment, and will pay for,
all Shares validly tendered on or prior to the Expiration Date and not properly
withdrawn as soon as Purchaser is legally permitted to do so under applicable
law. The obligation of Purchaser to consummate the Offer and to accept for
payment, and to pay for, all Shares validly tendered and not properly withdrawn
will be subject to the satisfaction of the Minimum Condition and the
satisfaction or waiver of the other conditions to the Offer set forth in
Section 15. Subject to applicable rules and regulations of the Commission and
to the terms and conditions of the Merger Agreement, Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any regulatory approvals specified in Section 16 or in order
to comply in whole or in part with any other applicable law.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment tendered Shares when, as and if Purchaser gives oral or written notice
to the Depositary of its acceptance of the tenders of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price with the Depositary, which will act as agent for the
tendering shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering shareholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of certificates for such Shares (or of a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in Section 3)), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other required documents. For a description of the procedure
for tendering Shares pursuant to the Offer, see Section 3. Accordingly, payment
may be made to tendering shareholders at different times if delivery of the
Shares and other required documents occur at different times. Under no
circumstances will interest be paid by Purchaser on the consideration paid for
Shares pursuant to the Offer, regardless of any delay in making such payment.
If Purchaser increases the consideration to be paid for Shares pursuant to
the Offer, Purchaser will pay such increased consideration for all Shares
purchased pursuant to 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 Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
5
<PAGE>
relieve Purchaser of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for such unpurchased or untendered Shares will be returned (or, in
the case of Shares tendered by book-entry transfer, such Shares will be
credited to an account maintained at the Book-Entry Transfer Facility), without
expense to the tendering shareholder, as promptly as practicable following the
expiration or termination of the Offer.
3. Procedure for Tendering Shares. To tender Shares pursuant to the Offer,
either (a) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) 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) certificates
for the Shares to be tendered must be received by the Depositary at one of such
addresses or (ii) such Shares must be delivered pursuant to the procedures for
book-entry transfer described below (and a confirmation of such delivery
received by the Depositary including an Agent's Message (as defined below) if
the tendering shareholder has not delivered a Letter of Transmittal), in each
case by the Expiration Date, or (b) the guaranteed delivery procedure described
below must be complied with. The term "Agent's Message" means a message,
transmitted by the Book-Entry Transfer Facility (as hereinafter defined) to and
received by the Depositary and forming a part of a book-entry confirmation
which states that such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Shares which are the subject of such book-entry confirmation that
such participant has received and agrees to be bound by the terms of the Letter
of Transmittal and that the Company may enforce such agreement against such
participant.
Book Entry Delivery. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two days after the date of this
Offer to Purchase, and any financial institution that is a participant in the
system of the Book-Entry Transfer Facility may make delivery of Shares by
causing such Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the procedures of such Book-Entry
Transfer Facility. However, although delivery of Shares may be effected through
book-entry transfer, the Letter of Transmittal (or 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 by the Expiration Date, or the guaranteed delivery
procedure described below must be complied with. Delivery of the Letter of
Transmittal and any other required documents to the Book-Entry Transfer
Facility does not constitute delivery to the Depositary.
Signature Guarantees. Except as otherwise provided below, all signatures
on a Letter of Transmittal must be guaranteed by a financial institution
(including most banks, savings and loan associations and brokerage houses)
which is a member of a recognized Medallion Program approved by The Securities
Transfer Association Inc., including the Securities Transfer Agents Medallion
Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York
Stock Exchange, Inc. Medallion Signature Program (MSP) (an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed (a)
if the Letter of Transmittal is signed by the registered holder of the Shares
tendered therewith and such holder has not completed the box entitled "Special
Payment Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of an Eligible Institution. See Instructions 1 and 5
of the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and cannot deliver such Shares and all other required documents to
the Depositary by the Expiration Date, or such shareholder cannot complete the
procedure for delivery by book-entry transfer on a timely basis, such Shares
may nevertheless be tendered if all of the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
6
<PAGE>
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by Purchaser is received by
the Depositary (as provided below) by the Expiration Date; and
(iii) the certificates for such Shares (or a confirmation of a
book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Transfer Facility), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantee or an Agent's Message and any other documents required
by the Letter of Transmittal, are received by the Depositary within three
NASDAQ National Market System trading days after the date of execution of
the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice.
The method of delivery of Shares and all other required documents,
including through the Book-Entry Transfer Facility, is at the option and risk
of the tendering shareholder and the delivery will be deemed made only when
actually received by the Depositary. If certificates for Shares are sent by
mail, registered mail with return receipt requested, properly insured, is
recommended.
Under the federal income tax laws, the Depositary will be required to
withhold 31% of the amount of any payments made to certain shareholders
pursuant to the Offer. In order to avoid such backup withholding, each
tendering shareholder must provide the Depositary with such shareholder's
correct taxpayer identification number and certify that such shareholder is not
subject to such backup withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. If a shareholder is a non-resident alien
or foreign entity not subject to back- up withholding, the shareholder must
give the Depositary a completed Form W-8 Certificate of Foreign Status prior to
receipt of any payment.
By executing a Letter of Transmittal, a tendering shareholder irrevocably
appoints designees of Purchaser as such shareholder's proxies in the manner set
forth in the Letter of Transmittal to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted for
payment by Purchaser (and any and all other Shares or other securities issued
or issuable in respect of such Shares on or after May 10, 1999). All such
proxies shall be irrevocable and coupled with an interest in the tendered
Shares. Such appointment is effective only upon the acceptance for payment of
such Shares by Purchaser. Upon such acceptance for payment, all prior proxies
and consents granted by such shareholder with respect to such Shares and other
securities will, without further action, be revoked, and no subsequent proxies
may be given nor subsequent written consents executed by such shareholder (and,
if given or executed, will not be deemed to be effective). Such designees of
Purchaser will be empowered to exercise all voting and other rights of such
shareholder as they, in their sole discretion, may deem proper at any annual,
special or adjourned meeting of the Company's shareholders, by written consent
or otherwise. Purchaser reserves the right to require that, in order for Shares
to be validly tendered, immediately upon Purchaser's acceptance for payment of
such Shares, Purchaser is able to exercise full voting rights with respect to
such Shares and other securities (including voting at any meeting of
shareholders then scheduled or acting by written consent without a meeting).
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the Offer, as well as
the tendering shareholder's representation and warranty that (a) such
shareholder owns the Shares being tendered within the meaning of Rule 14e-4
promulgated under the Exchange Act, (b) the tender of such Shares complies with
Rule 14e-4, and (c) such shareholder has the full power and authority to tender
and assign the Shares tendered, as specified in the Letter of Transmittal.
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering shareholder and
Purchaser upon the terms and subject to the conditions of the Offer.
7
<PAGE>
All questions as to the form of documents and the validity, 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. Purchaser reserves the absolute right to reject any
or all tenders of Shares determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to
waive any defect or irregularity in any tender of Shares. None of Purchaser,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defect or irregularity in
tenders or incur any liability for failure to give any such notification.
4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date. Thereafter, such tenders
are irrevocable, except that they may be withdrawn after July 12, 1999 unless
theretofore accepted for payment as provided in this Offer to Purchase. If
Purchaser extends the period of time during which the Offer is open, is delayed
in accepting for payment or paying for Shares or is unable to accept for
payment or pay for Shares pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer, the Depositary may, on behalf
of Purchaser, retain all Shares tendered, and such Shares may not be withdrawn
except as otherwise provided in this Section 4.
To be effective, a written, telegraphic, telex 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 and must
specify the name of the person who tendered the Shares to be withdrawn and the
number of Shares to be withdrawn and the name of the registered holder of
Shares, if different from that of the person who tendered such Shares. If the
Shares to be withdrawn have been delivered to the Depositary, a signed notice
of withdrawal with (except in the case of Shares tendered by an Eligible
Institution) signatures guaranteed by an Eligible Institution must be submitted
prior to the release of such Shares. In addition, such notice must specify, in
the case of Shares tendered by delivery of certificates, the name of the
registered holder (if different from that of the tendering shareholder) and the
serial numbers shown on the particular certificates evidencing the Shares to be
withdrawn or, in the case of Shares tendered by book-entry transfer, the name
and number of the account at one of the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. Withdrawals may not be rescinded, and
Shares withdrawn will thereafter be deemed not validly tendered for purposes of
the Offer. However, withdrawn Shares may be retendered by again following one
of the procedures described in Section 3 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, which determination shall be final and binding. None of Purchaser,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defect or irregularity in
any notice of withdrawal or incur any liability for failure to give any such
notification.
5. Certain Tax Considerations. Sales of Shares by shareholders of the
Company pursuant to the Offer will be taxable transactions for federal income
tax purposes and may also be taxable transactions under applicable state and
local and other tax laws.
In general, a shareholder will recognize gain or loss equal to the
difference between the tax basis of his or her Shares and the amount of cash
received in exchange therefor. Such gain or loss will be capital gain or loss
if the Shares are capital assets in the hands of the shareholder and will be
long-term gain or loss if the holding period for the Shares is more than one
year as of the date of the sale of such Shares.
The foregoing discussion may not apply to shareholders who acquired their
Shares pursuant to the exercise of stock options or other compensation
arrangements with the Company or who are not citizens or residents of the
United States or who are otherwise subject to special tax treatment under the
Internal Revenue Code of 1986, as amended.
8
<PAGE>
The federal income tax discussion set forth above is included for general
information only and is based upon present law. Due to the individual nature of
tax consequences, shareholders are urged to consult their tax advisors as to
the specific tax consequences to them of the Offer, including the effects of
applicable state, local or other tax laws.
6. Price Range of Shares; Dividends. The Shares are listed and traded on
the NASDAQ National Market System under the symbol RSND. The following table
sets forth for the periods indicated the high and low closing sales prices per
Share on the NASDAQ National Market System, as reported in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, as amended (the
"Company 10-K") with respect to the years 1997 and 1998, and thereafter as
reported in published financial sources:
High Low
-------- ---------
1997
First Quarter ended March 31, 1997.......... $ 8 3/8 $ 5 7/8
Second Quarter ended June 30, 1997.......... 7 3/4 3 3/4
Third Quarter ended September 30, 1997...... 6 4 3/8
Fourth Quarter ended December 31, 1997...... 6 15/16 5 1/8
1998
First Quarter ended March 28, 1998.......... 6 5/8 4 3/4
Second Quarter ended June 27, 1998.......... 7 5
Third Quarter ended September 26, 1998...... 6 9/16 4
Fourth Quarter ended December 31, 1998...... 6 3 1/2
1999
First Quarter ended March 27, 1999.......... 4 31/32 2 7/8
On May 13, 1999, the last full day of trading prior to the commencement of
the Offer, the reported closing sales price per Share on the NASDAQ National
Market System was $7 5/8. On May 6, 1999, the last full day of trading prior to
the public announcement of the transactions contemplated by the Merger
Agreement, the reported closing sales price per Share on the NASDAQ National
Market System was $6 3/8.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. Certain Information Concerning the Company. The Company is a California
corporation with its principal executive offices located at 220 Saginaw Drive,
Seaport Centre, Redwood City, California, 94063.
According to the Company 10-K, the Company is a hearing health care and
human communication company that designs, develops, manufactures and sells
technologically advanced hearing and communications devices.
The following selected consolidated financial data relating to the Company
and its subsidiaries has been taken or derived from the audited financial
statements contained in the Company 10-K and the unaudited financial statements
contained in the Company's quarterly report on Form 10-Q for its fiscal quarter
ended March 27, 1999 (the "Company 10-Q"). More comprehensive financial
information is included in such 10-K and 10-Q and the other documents filed by
the Company with the Commission, and the financial data set forth below is
qualified in its entirety by reference to such reports and other documents
including the financial statements contained therein. Such reports and other
documents may be examined and copies may be obtained from the offices of the
Commission in the manner set forth below.
9
<PAGE>
RESOUND CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
Three Months Ended Year Ended December 31,
----------------------- --------------------------------------
March 27, March 28,
1999 1998 1998 1997 1996(3)
--------- --------- -------- -------- ----------
(In thousands, except per Share data)
(unaudited)
<S> <C> <C> <C> <C> <C>
Consolidated Statements of Operations
Data
Net sales.......................... $ 34,230 $ 31,143 $123,442 $130,463 $125,646
Cost of sales...................... 16,271 14,457 60,370(1) 62,592(2) 57,241
--------- --------- -------- -------- --------
Gross profit.................... 17,959 16,686 63,072 67,871 68,405
Operating expenses:
Research and development........ 3,388 3,975 16,360(1) 16,883(2) 14,898
Selling, general and
administrative................ 12,158 12,148 58,388(1) 54,189(2) 50,899
Restructuring and other charges. -- -- 12,138(1) 12,561(2) --
--------- --------- -------- -------- --------
Total operating expenses...... 15,546 16,123 86,886 83,633 65,797
--------- --------- -------- -------- --------
Income (loss) from operations...... 2,413 563 (23,814) (15,762) 2,608
Interest expense, net.............. (234) (256) (958) (1,222) (1,819)
Other income (expense), net........ (412) 848 3,407 (578) (359)
--------- --------- -------- -------- --------
Income (loss) before income taxes.. 1,767 1,155 (21,365) (17,562) 430
Provision for income taxes......... 163 181 560 876 1,397
--------- --------- -------- -------- --------
Net income (loss).................. $ 1,604 $ 974 $(21,925) $(18,676)(2) $ (967)
========= ========= ======== ======== ========
Net income (loss) applicable to
common shareholders............. $ 1,604 $ 974 $(21,925) $(18,676) $ (1,192
========= ========= ======== ======== ========
Basic and diluted net income (loss)
per common share (4)............ $ 0.08 $ 0.05 $ (1.07) $ (0.96) $ (0.07)
========= ========= ======== ======== ========
Shares used in basic net income
(loss) per common share
calculation (4)................. 20,746 20,259 20,460 19,518 17,591
========= ========= ======== ======== ========
Shares used in diluted net income
(loss) per common share
calculation (4)................. 20,918 20,744 20,460 19,518 17,591
========= ========= ======== ======== ========
</TABLE>
<TABLE>
As of March 27, As of December 31,
--------------- ---------------------
1999 1998 1997
--------------- --------- ---------
(in thousands)
(unaudited)
<S> <C> <C> <C>
Consolidated Balance Sheet Data
Working capital....................................... $ 2,352 $ 10,334 $ 19,883
Total assets.......................................... 74,701 69,762 89,775
Long-term liabilities, net of current portion......... 5,519 15,831 18,512
Accumulated deficit................................... (78,199) (79,803) (57,878)
Shareholders' equity.................................. 21,033 20,694 37,019
</TABLE>
- ---------
(1) Includes special charges of $17.6 million as follows: costs of sales -
$1.8 million; research and development - $0.5 million; selling, general
and administrative - $3.2 million; restructuring and other charges - $12.1
million (of which $8.1 million is the result of a write-down of goodwill).
10
<PAGE>
(2) Includes special charges of $18 million as follows: cost of sales - $3.1
million; research and development - $0.1 million; selling, general and
administrative - $2.2 million; restructuring and other charges - $12.6
million (of which $10.3 million is the result of a write-down of
goodwill).
(3) Includes the operating results of Sonar Hearing Health Corporation,
subsequent to the purchase of certain assets of the hearing health
business activity of 3M in June 1996. See Note 2 of Notes to Consolidated
Financial Statements in the Company 10-K.
(4) Amounts for all periods have been restated to reflect the requirements of
SFAS No. 128. See Note 1 of Notes to Consolidated Financial Statements in
the Company 10-K.
The information concerning the Company contained herein has been taken
from or is based upon reports and other documents on file with the Commission
or otherwise publicly available. Although Purchaser does not have any
knowledge that would indicate that any statements contained herein based upon
such reports and documents are untrue, Purchaser does not take any
responsibility for the accuracy or completeness of the information contained
in such reports and other documents or for any failure by the Company to
disclose events that may have occurred and may affect the significance or
accuracy of any such information but that are unknown to Purchaser.
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company. Such reports, proxy
statements and other information may be inspected at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and should also be available for inspection and
copying at the regional offices of the Commission in New York (Seven World
Trade Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp
Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661). Such
material may also be obtained from the Commission's web site at
http://www.sec.gov. Copies of such material should be obtainable by mail, upon
payment of the Commission's customary charges, by writing to the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
material should also be available for inspection at the offices of Nasdaq
National Market operations, 1735 K Street, N.W., Washington D.C. 20006.
In the course of the discussions between representatives of Parent and
Company (see Section 10) certain projections of future operating performance
were furnished to Parent's representatives. These projections were not prepared
with a view to public disclosure or compliance with published guidelines of the
Commission or the guidelines established by the American Institute of Certified
Public Accountants regarding projections, and are included in this Offer to
Purchase only because they were provided to Parent. Neither Parent, Purchaser
nor the Company, nor either of their financial advisors nor the Dealer Manager
assumes any responsibility for the accuracy of these projections. While
presented with numerical specificity, these projections are based upon a
variety of assumptions relating to the businesses of the Company which may not
be realized and are subject to significant uncertainties and contingencies,
many of which are beyond the control of the Company. There can be no assurance
that the projections will be realized, and actual results may vary materially
from those shown.
Set forth below is a summary of the projections. The projections should be
read together with the financial statements of the Company referred to herein.
11
<PAGE>
RESOUND CORPORATION
PROJECTED FINANCIAL INFORMATION
Year Ended December 31,
--------------------------
1999 2000 2001
------ ------ ------
(In millions, except per Share amounts)
Revenue..................................... 141.7 161.5 177.3
Operating Income............................ 9.1 17.5 23.3
Net Income.................................. 6.8 14.2 19.4
Diluted EPS................................. 0.32 0.63 0.81
8. Certain Information Concerning Purchaser and Parent. Purchaser is a
newly incorporated California corporation and an indirect wholly owned
subsidiary of Parent organized to acquire the Company. Purchaser is owned
directly by GN US Holdings Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent. The principal executive offices of Purchaser are located
at c/o GN Netcom Inc., 77 Northeastern Boulevard, Nashua, New Hampshire, 03062.
Purchaser has not conducted any business other than in connection with the
Offer since its organization on May 5, 1999. Until immediately prior to the
time Purchaser purchases 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. Because Purchaser is a newly formed
corporation and has minimal assets and capitalization, no meaningful financial
information regarding Purchaser is available.
Parent is a Danish corporation. It is a diversified enterprise principally
engaged in international telecommunications activities. The principal executive
offices of Parent are located at Kongens Nytorv 26, DK - 1016 Copenhagen K,
Denmark. The name, business address, principal occupation or employment, five
year employment history and citizenship of each director and executive officer
of Parent and Purchaser and certain other information are set forth on Schedule
I hereto.
Neither Parent nor Purchaser is subject to the informational requirements
of the Exchange Act and in accordance therewith does not file periodic reports,
proxy statements or other information with the Commission relating to its
business, financial condition or other matters. The common shares of the Parent
trade on the Copenhagen Stock Exchange and The London Stock Exchange.
The following selected financial data relating to Parent has been taken or
derived from the financial statements contained in the English translation of
Parent's Annual Report and Accounts to Shareholders for the year ended December
31, 1998 (the "Annual Report"). More comprehensive financial information
(including the notes to the Parent's financial statements) is included in such
Annual Report, and the financial data set forth is qualified in its entirety by
reference to such Annual Report and other documents including the financial
statements and related notes contained in the Annual Report. These documents
may be obtained from Parent at the address listed above.
12
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GN GREAT NORDIC LTD.
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
Year Ended December 31,
---------------------------------------------
1996 1997 1998 1998(1)
--------- --------- --------- ---------
(In DKK or $ Millions, except per Share amounts)
<S> <C> <C> <C> <C>
Income Statement Data:
Net turnover............................ DKK 2,722 DKK 3,543 DKK 4,050 $ 604
Gross profit............................ 1,279 1,705 1,985 296
Profit before taxation.................. 211 261 352 53
Group net profit for the year........... 142 195 260 39
GN Great Nordic's share................. 141 193 255 38
Earnings per share...................... 4.81 6.07 6.85 1.02
Dividend per share...................... 12% 12% 12% 12%
</TABLE>
- ---------
(1) Dollar amounts have been converted from Danish kroner ("DKK") using an
exchange rate of DKK 1.00=USD 0.1492, which was the average exchange rate
for the financial year 1998.
Year Ended December 31,
-----------------------------
1997 1998 1998(1)
-------- -------- -------
(In DKK or $ Millions, except
per Share amounts)
Balance Sheet Data:
Working capital............. DKK 540 DKK 428 $ 67
Total assets................ 5,073 5,476 857
Long-term debt.............. 941 804 126
Shareholder's equity........ 1,909 1,945 305
- ---------
(1) Dollar amounts have been converted from Danish kroner ("DKK") using an
exchange rate of DKK 1.00=USD 0.1566, which was the prevailing exchange
rate on December 31, 1998.
The data contained in the selected consolidated income statement data and
balance sheet data presented above was prepared in accordance with the Danish
Accounting Law of 1981 and the regulations drawn up by the Copenhagen Stock
Exchange governing the accounts of listed companies. The consolidated financial
statements of Parent are prepared and presented in accordance with Great Nordic
accounting practices ("GN AP"). GN AP varies in certain significant respects
from generally accepted accounting principles in the United States ("US GAAP").
Certain significant differences between GN AP and US GAAP are summarized below.
It has not been practicable for management to quantify the effects of these
differences. In addition, financial disclosures as well as other significant
accounting differences may exist which are not described below.
Pro Rata Consolidation
Under GN AP, projects and companies established as joint ventures are
consolidated according to the pro rata method, whereby items in the venture's
profit and loss account and balance sheet are included pro rata in the
consolidated accounts of Great Nordic.
Under US GAAP, pro rata consolidation is not allowed. Joint ventures are
accounted for according to the equity method, whereby a consolidated group's
share of profit from and equity in a joint venture is included in one line in
the profit and loss account and balance sheet, respectively. The two methods
lead, however, to the same net profit and the same equity for the group.
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<PAGE>
Acquisitions
Under GN AP, the difference between the purchase price and the value of
net assets of the acquired entity is classified as goodwill and is written off
directly against equity reserves. Intangible assets as well as in-process
research and development activities are recognized as part of goodwill. A
provision for restructuring costs may include costs of restructuring the
existing business.
Under US GAAP, goodwill is calculated as the difference between the
purchase price and the fair value of net assets acquired including in-process
research and development activities. Goodwill is recognized as an asset, which
is amortized over its useful life, not exceeding 40 years. Amortization is
recognized as an expense. The value of in-process research and development
activities is recognized as an expense immediately after the acquisition.
Intangible assets are recognized as separate assets in the balance sheet. A
provision for restructuring costs may only include certain specific types of
costs relating solely to the acquired business.
Intangible Assets Other Than Goodwill
Under GN AP, intangible assets acquired in a business combination that is
an acquisition are recognized as part of goodwill, as described above.
Intangibles that are acquired as separate assets are recognized as an expense.
Research and development costs are recognized as expenses, when incurred,
including the costs of developing software for sale.
Under US GAAP, intangible assets acquired as separate assets are
recognized as assets, which are amortized over their useful lives, not
exceeding 40 years. Amortization is recognized as an expense. Research and
development costs are recognized as expenses, when incurred, except for the
development of software, which is recognized as an asset and amortized.
Start-up Costs
Under GN AP certain start-up costs relating to the establishment and
development of the Sonofon business are recognized as assets. These costs
include:
- Operating losses in the period where the Sonofon system was only
partially operating (until June 30, 1994) have been capitalized. These
losses are amortized over 12.5 years, commencing on July 1, 1994.
- Costs relating to developing, promoting and advertising Sonofon as a
full-service telecommunications company will be capitalized over the
period 1997 -- 1999. The costs are being amortized from the time they
are incurred, with all costs being fully expensed by the end of 2001.
- Direct costs relating to the acquisition of customers (i.e.
subscription subsidies, per customer advertising remuneration to
retailers etc.) are amortized over 12 months from the date of
subscription.
Under US GAAP, the costs noted above would all be recognized as expenses
when incurred, except for costs relating to development of software for new
services.
Treasury Stock
Under GN AP, treasury stock is recognized as an asset and is valued at its
market value on the Copenhagen Stock Exchange.
Under US GAAP, the cost of treasury stock would be shown as a reduction of
shareholders' equity.
14
<PAGE>
Property
GN AP allows property to be revalued under certain circumstances.
Depreciation is calculated on the revalued basis.
Under US GAAP, property cannot be revalued.
Deferred Tax
Under GN AP, deferred tax assets (net assets) are not recognized as assets
in the balance sheet.
Under US GAAP, deferred tax assets are recognized as assets if it is
likely that the tax assets will be realized.
Investments in Securities
Under GN AP, investments in listed shares are valued at market value.
Investments in unlisted shares are valued at estimated fair value. Unrealized
gains on shares are transferred directly to a revaluation reserve under equity.
Under US GAAP unrealized gains and losses on shares classified as trading
securities are included in earnings. Unrealized gains and losses on shares
classified as available for sale securities are excluded from the profit and
loss account and reported in other comprehensive income in the statement of
changes in shareholders' equity.
Depreciation on Telecom Systems
Telecom systems in eastern European countries are depreciated on a
straight line basis. To compensate for uncertainties regarding future revenue
and local taxation of revenue from the systems, significant amounts have been
accrued as reserves under GN AP.
Under US GAAP, depreciation of a telecom system in any year should reflect
the revenue stream from such system in that year relative to the entire cost
and revenue stream over the life of the system.
Derivatives/Hedge Accounting
Under GN AP, gains or losses on derivatives used for hedging are taken
into income when the transaction hedged is itself realized. Exchange rate gains
or losses on loans or deposits that hedge the investment in foreign
subsidiaries are placed directly in equity reserves, as are exchange rate gains
or losses on consolidation. Other derivatives are carried at market value on
the balance sheet.
Certain derivatives now being accounted for as hedges under GN AP may not
meet the requirements under US GAAP to be considered as hedging. Derivatives
failing to meet with US GAAP's definition of hedging would be valued at market
value on the balance sheet and the adjustments charged to the profit and loss
account.
Dividends
Under GN AP dividends for a certain year are recognized as debt and are
deducted from the equity in the annual accounts for the same year.
Under US GAAP dividends are recognized as debt in the year when they are
declared.
15
<PAGE>
Capitalization of Borrowing Costs
Under GN AP, borrowing costs related to long term construction of cable
systems are capitalized as cost basis.
Under US GAAP, borrowing costs are only capitalized when related to the
construction of property, plant and equipment to be used by the company.
9. Source and Amount of Funds. The total amount of funds required by
Purchaser to purchase Shares pursuant to the Offer and to pay related fees and
expenses is estimated to be approximately $171 million. Purchaser will fund
such amount through an indirect capital contribution from Parent. Parent will
obtain such funds from general corporate funds.
10. Background of the Offer; Past Contacts, Transactions or Negotiations
with the Company. As part of its strategy, Great Nordic continually maintains a
variety of contacts with companies or businesses that are potential candidates
for strategic collaborations or strategic combinations. Great Nordic and
ReSound have had numerous business contacts for several years. In the fall of
1996, Danavox and ReSound, along with AudioLogic Inc., established AudioLogic
Hearings Systems, L.P., a joint venture formed to develop the fully, software
based digital signal processing platform that forms the basis for Danavox's and
ReSound's new digital hearing devices. In November 1997, Danavox and ReSound
entered into a non-disclosure agreement for the exchange of confidential
information regarding certain strategic arrangements. This led to discussions
between management representatives of each of the parties during the
winter/spring of 1998 regarding various possible alternative transactions,
including a possible joint venture between ReSound and Danavox or a combination
of Danavox with ReSound. In June 1998, the parties agreed not to pursue further
discussions.
In October 1998, Jorn Kildegaard, Executive Vice President of Great
Nordic, and Jesper Mailind, President and Chief Executive Officer of GN
Danavox, met with Russell D. Hays, the Chief Executive Officer of ReSound, and
Laureen DeBuono, the Chief Financial Officer of ReSound, to restart discussions
regarding these strategic alternatives.
During discussions that continued through December 1998, Great Nordic
proposed a transaction whereby Great Nordic would contribute Danavox and cash
to ReSound in exchange for a controlling interest in ReSound. On December 7,
1998, the ReSound Board met to consider this proposed transaction, but took no
action.
On January 25, 1999, Great Nordic sent a letter to the Board of Directors
of ReSound asking it to consider three alternative transactions: an acquisition
by Great Nordic of all outstanding shares of ReSound; a contribution of Danavox
and cash to ReSound where Great Nordic would receive a 51% ownership interest
in ReSound; and a contribution of Danavox to ReSound where Great Nordic would
receive minority ownership interest in ReSound but with the option to acquire
additional shares for cash to eventually obtain a majority ownership position.
No price was specified with respect to the acquisition of ReSound by Great
Nordic. The ReSound Board of Directors met to consider the Great Nordic letter,
but took no action.
Following further discussions in February 1999, on February 24, 1999,
Great Nordic sent a letter to the Board of Directors of ReSound indicating that
Great Nordic was prepared to negotiate an acquisition of all outstanding shares
of the Company at a cash price of $6.50 per share. Great Nordic indicated that
its willingness to enter into a definitive agreement was conditioned on access
to the Company's books and records and execution of an agreement granting Great
Nordic exclusivity in any negotiations regarding an acquisition of the Company.
The ReSound Board of Directors met to consider the Great Nordic letter, but
took no action. In discussions between representatives of each of Gleacher &
Co., the financial advisor to Great Nordic, and BancBoston Robertson Stephens,
the financial advisor to ReSound, BancBoston Robertson Stephens indicated that
a price of $6.50 per share was insufficient and provided further information to
Great Nordic regarding ReSound's operating results and projections.
16
<PAGE>
As a result of this additional information and further discussions, on
March 24, 1999, Great Nordic sent a letter to the Board of Directors of ReSound
indicating that Great Nordic was prepared to purchase all outstanding shares of
ReSound at a price of $7.50 per share in cash in a two-step acquisition after a
period of exclusive negotiations with the Board of Directors of ReSound and
completion of legal and business due diligence. In response to inquiries from
BancBoston Robertson Stephens and Gleacher & Co. regarding post-acquisition
strategy, Great Nordic also indicated that its post-acquisition strategy
included: having Redwood City become the global headquarters of the combined
operations of ReSound and Danavox; maintaining "ReSound" as the leading brand
name; and expanding ReSound's factory in Cork, Ireland. The ReSound Board of
Directors met to consider the Great Nordic letter and authorized senior
management of ReSound and BancBoston Robertson Stephens to seek a higher price
from Great Nordic. On April 1, 1999, representatives of Gleacher & Co. and
BancBoston Robertson Stephens met in New York City to discuss the Great Nordic
proposal. BancBoston Robertson Stephens indicated that a higher price would be
necessary in order to obtain an exclusivity agreement and also stated that, in
exchange for the exclusivity agreement, ReSound would require Great Nordic to
enter into a customary "standstill" arrangement with respect to the Company.
After discussions with representatives of Great Nordic, representatives of
Gleacher & Co. told representatives of BancBoston Robertson Stephens that Great
Nordic was prepared to increase its offer to $7.65 per share in cash. Following
this meeting, legal counsel for each of Great Nordic and ReSound negotiated a
standstill agreement and an exclusivity agreement, which agreements were signed
on April 2 and April 12, respectively.
On April 14, 1999 representatives of Great Nordic and ReSound met in the
offices of Davis Polk & Wardwell in New York City to commence business and
legal due diligence and to discuss principal terms of a definitive merger
agreement. The parties also discussed the roles of current members of ReSound's
senior management following the consummation of a transaction. Following these
meetings, counsel for Great Nordic delivered to counsel for ReSound a first
draft of a definitive Merger Agreement and a form of letter for several members
of senior management of ReSound regarding their change of control agreements.
Advisors for ReSound objected to several provisions of the draft Merger
Agreement, including the proposed $8.75 million break-up fee, terms of the
tender offer, conditions to the tender offer, terms restricting ReSound's
ability to accept a superior offer and the ability of the parties to terminate
the Merger Agreement. Over several days of discussions, Great Nordic's advisors
agreed to reduce the break-up fee to $7 million and eliminate or revise other
terms and conditions in the Merger Agreement.
On April 22, 1999 the Board of Directors of ReSound met to consider the
terms and conditions of Great Nordic's offer as negotiated by its advisors and
senior management. At this meeting, the Board debated the merits of going
forward with the Great Nordic transaction and established a special committee
of certain of the independent directors of ReSound, consisting of Messrs.
Downey, Kleiner, Perkins and Schlein, to consider Great Nordic's offer and
certain other strategic alternatives, including continuing to operate ReSound
as an independent company. The Special Committee directed Dr. Rodney Perkins,
Chairman of the Board of ReSound, to meet with representatives of Great Nordic
to continue discussions regarding Great Nordic's offer and other alternative
transactions, including transactions in which Great Nordic would acquire a
minority or majority ownership interest in ReSound.
Dr. Perkins flew to Copenhagen, Denmark and, on April 26 met with J0rgen
Lindegaard, the Chief Executive Officer of Great Nordic, and Mr. Kildegaard at
the offices of Great Nordic. At this meeting the parties discussed the previous
negotiations, the advantages to each of the parties of the proposed business
combination and the merits of the alternative transactions described above.
Following this meeting, on April 27 Great Nordic sent a letter to Dr. Perkins
and the Board of Directors of ReSound stating that it remained committed to
proceeding with the proposed purchased of ReSound in a $7.65 per share cash
offer to all shareholders. Great Nordic also indicated that it believed that a
100% acquisition of ReSound was superior to an acquisition that left ReSound as
a public company and that Great Nordic could not implement all the strategies
necessary to combine and improve its hearing aid business if ReSound remained a
public company.
17
<PAGE>
On April 30, 1999, Dr. Perkins sent a letter to Great Nordic stating that
the ReSound Board was continuing to discuss the Great Nordic offer and other
strategic alternatives, including continuing to operate ReSound as an
independent company, and invited Messrs. Lindegaard and Kildegaard to meet with
the Board of Directors of ReSound or its special committee. After further
correspondence, Great Nordic agreed to meet with representatives of ReSound on
May 5 in California. On May 3, the ReSound Board of Directors met to consider
the Great Nordic offer and approved the transaction subject to reaching final
agreement with Great Nordic on price. The ReSound Board of Directors delegated
to Michael P. Downey and Philip Schlein, Directors of ReSound and members of
ReSound's special committee, authority to negotiate the final price with Great
Nordic. On May 5, Mr. Kildegaard and Poul Erik Tofte, the Chief Financial
Officer of Great Nordic, met with Michael P. Downey and Philip Schlein at the
offices of the Venture Law Group in Menlo Park, California. Messrs. Downey and
Schlein asked Great Nordic to increase its offer price to $8.00. Mr. Kildegaard
indicated that he did not have authority to increase Great Nordic's offer to
$8.00, but that he and Mr. Lindegaard were prepared to recommend that the Board
of Directors of Great Nordic, at its meeting scheduled for May 10, 1999,
approve the proposed offer for ReSound at $8.00 per share in cash. Mr.
Kildegaard indicated that any approval would be conditioned on completion of
legal and business due diligence and review by Great Nordic and its advisors of
ReSound's disclosure schedules to the Merger Agreement. From May 5 through May
9, representatives of ReSound and Great Nordic prepared and reviewed the
disclosure schedules and completed the pre-signing due diligence process.
On May 7, 1999 ReSound publicly announced that it was in discussions with
a third party regarding a possible business combination at a cash price of
$8.00 per share. On May 10, 1999, the Board of Directors of Great Nordic met
and approved the Merger Agreement and the acquisition of all outstanding shares
of ReSound at a cash price of $8.00 per share. Thereupon, representatives of
ReSound and Great Nordic executed the Merger Agreement and the Stock Option
Agreement.
The Merger Agreement
The following is a summary of certain provisions of the Merger Agreement,
a copy of which is filed as an exhibit to the Tender Offer Statement on
Schedule 14D-1 filed by Parent and Purchaser pursuant to Rule 14d-3 of the
General Rules and Regulations under the Exchange Act with the Commission in
connection with the Offer (together with any amendments, supplements,
schedules, annexes and exhibits thereto, the "Schedule 14D-1"). Such summary is
qualified in its entirety by reference to the Merger Agreement.
The Offer. The Merger Agreement provides for the making of the Offer by
Purchaser. The obligation of Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer is subject to the satisfaction of the Minimum
Condition and certain other conditions that are described in Section 15.
Purchaser has agreed that, without the prior written consent of the Company, no
change in the Offer may be made which waives the Minimum Condition, changes the
form of consideration to be paid, decreases the price per Share or the number
of Shares sought in the Offer, imposes conditions to the Offer in addition to
those described in Section 15, or is otherwise adverse to the holders of the
Shares.
The Merger Agreement provides that, notwithstanding the foregoing, without
the consent of the Company, Purchaser will have the right to extend the Offer
(i) from time to time if, at the scheduled or extended Expiration Date of the
Offer, any of the conditions to the Offer shall not have been satisfied or
waived, until such conditions are satisfied or waived or (ii) for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer or any period required by
applicable law. If all of the conditions to the Offer are not satisfied or
waived on any scheduled Expiration Date of the Offer, Purchaser will either (i)
extend the Offer from time to time until such conditions are satisfied or
waived, provided that Purchaser will not be required to extend the Offer beyond
July 31, 1999 or, if certain regulatory approvals have not been obtained,
beyond September 30, 1999) or (ii) exercise the rights set forth in the next
paragraph.
In the event the Minimum Condition is not satisfied on any scheduled
Expiration Date of the Offer, Purchaser may, without the consent of the Company
(i) extend the Offer pursuant to the above paragraph; (ii) amend the Offer
18
<PAGE>
to waive the Minimum Condition in contemplation of the exercise of the Top-Up
Stock Option (to the extent the Top-Up Stock Option is exercisable at such
time); or (iii) amend the Offer to provide that, in the event (A) the Minimum
Condition is not satisfied at the next scheduled Expiration Date (without
giving effect to the exercise of the Top-Up Stock Option) and (B) the number of
Shares tendered pursuant to the Offer and not withdrawn as of such next
scheduled Expiration Date is more than 50% of the then outstanding Shares,
Purchaser will (x) reduce the number of Shares subject to the Offer to a number
of Shares that, when added to the Shares then beneficially owned by Parent,
will equal the Revised Minimum Number, (y) reduce the Minimum Condition to the
Revised Minimum Number and, (z) if a number of Shares greater than the Revised
Minimum Number is tendered into the Offer and not withdrawn, purchase, on a pro
rata basis, the Revised Minimum Number of Shares. In the event that all
conditions to the Offer other than the Minimum Condition shall have been
satisfied and Shares have not been accepted for payment by Purchaser prior to
July 15, 1999 (or, if certain regulatory approvals have not been obtained,
September 15, 1999), the Merger Agreement requires that, on such date,
Purchaser take either the action contemplated by clause (ii) above or the
action contemplated by clause (iii) above. If Purchaser purchases a number of
Shares equal to the Revised Minimum Number, then without the prior written
consent of Purchaser, at any time prior to the termination of the Merger
Agreement, the Company may not take any action whatsoever (including, without
limitation, the redemption of any Shares) which would have the effect of
increasing the percentage of Shares owned by Purchaser in excess of the Revised
Minimum Number.
Company Action. The Merger Agreement states that the Board of Directors
has (i) unanimously determined that the Merger Agreement, the Stock Option
Agreement and the transactions contemplated thereby, including the Offer and
the Merger, are fair to and in the best interests of the Company's
shareholders, (ii) unanimously approved and adopted the Merger Agreement, the
Stock Option Agreement and the transactions contemplated thereby, including the
Offer and the Merger, in accordance with the requirements of the CGCL and (iii)
unanimously resolved to recommend acceptance of the Offer and approval and
adoption of the Merger Agreement and the Merger by the Company's shareholders.
This recommendation of the Board of Directors may be withdrawn, modified or
amended only to the extent the Board shall have determined in good faith, on
the basis of advice of its outside counsel, that, consistent with its fiduciary
duties under applicable law, it must take such action.
Directors. The Merger Agreement provides that effective upon purchase
pursuant to the Offer of a number of Shares that satisfies the Minimum
Condition or the Revised Minimum Number, Parent may designate the number of
directors, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Board of Directors (giving effect to the election of any additional directors
pursuant to this paragraph) and (ii) the percentage that the number of Shares
beneficially owned by Purchaser bears to the total number of Shares outstanding
(provided that if Purchaser has acquired the Revised Minimum Number of Shares
in the Offer, such number of directors shall be rounded up to the next whole
number plus one to give Parent at least a majority of the members of the Board
of Directors), and the Company shall take all action necessary to cause
Parent's designees to be elected or appointed to the Board of Directors,
including, without limitation, increasing the number of directors, and seeking
and accepting resignations of its incumbent directors. At such time, the
Company will also use its best efforts to cause individual directors designated
by Parent to constitute the number of members, rounded up to the next whole
number, on (x) each committee of the Board other than any committee of the
Board established to take action under the Merger Agreement or the Stock Option
Agreement, and (y) each board of directors of each subsidiary of the Company
(and each committee thereof) that represents the same percentage as such
individuals represent on the Board of Directors of the Company. Notwithstanding
the foregoing, the Company has agreed to use its reasonable best efforts to
ensure that at least one member of the Board of Directors as of the date of the
Merger Agreement who is not an employee of the Company (the "Continuing
Director") shall remain a member of the Board of Directors until the Effective
Time.
The Merger. The Merger Agreement provides that, following the purchase of
Shares pursuant to the Offer, the approval of the Merger Agreement by the
shareholders of the Company (if required by the CGCL) and the satisfaction or
waiver of the other conditions to the Merger, Purchaser will be merged with and
into the Company, in accordance with the CGCL, whereupon the separate existence
of Purchaser shall cease and the Company shall be the surviving corporation
(the "Surviving Corporation"). At the election of Parent, the Merger may be
structured so
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<PAGE>
that the Company shall be merged with and into Purchaser with the result that
Purchaser shall be the Surviving Corporation. The Merger shall become effective
at such time as an Agreement of Merger among the Company, Purchaser and Parent
(together with the required officers' certificates, the "California Merger
Agreement") is filed with the California Secretary of State, or at such later
time as is specified in the California Merger Agreement (the "Effective Time").
As a result of the Merger, all of the rights, privileges, powers and franchises
of the Company and Purchaser shall vest in the Surviving Corporation, and all
restrictions, disabilities, liabilities and obligations of the Company and
Purchaser shall become the restrictions, disabilities, liabilities and
obligations of the Surviving Corporation, all as provided under the CGCL.
Conversion of Shares. The Merger Agreement provides that at the Effective
Time, (i) each Share outstanding immediately prior to the Effective Time shall,
except as otherwise provided in clause (ii) below and except for Shares held by
any holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares in accordance with
Chapter 13 of the CGCL ("Dissenting Shares"), be converted into the right to
receive $8.00 in cash or any higher price per Share that may be paid pursuant
to the Offer, without interest (the "Merger Consideration"); (ii) each issued
and outstanding Share held by Parent or any of its subsidiaries shall be
canceled, and no payment shall be made with respect thereto; and (iii) each
share of common stock of Purchaser then outstanding shall be converted into and
become one share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the Shares so converted and shall constitute
the only outstanding shares of capital stock of the Surviving Corporation.
Stock Options. The Merger Agreement provides that at or immediately prior
to the Effective Time, each outstanding stock option issued by the Company to
purchase Shares, whether or not vested or exercisable, will be canceled, and
the Company will pay each holder of any such option at or promptly after the
Effective Time for each such option surrendered an amount in cash determined by
multiplying (i) the excess, if any, of $8.00 per Share over the applicable
exercise price of such option by (ii) the number of Shares such holder could
have purchased (assuming full vesting of all options) had such holder exercised
such option in full immediately prior to the Effective Time. Immediately prior
to the Effective Time, each outstanding employee stock option to purchase
Shares that is intended to qualify as an incentive stock option under Section
422 of the Code and that is not then vested and exercisable shall become vested
and exercisable, and the holder thereof shall be given the opportunity to
exercise such option prior to the cancellation thereof pursuant to the
preceding sentence.
Prior to the Effective Time, the Company will take all actions (including,
if appropriate, amending the terms of any option plan or arrangement or
obtaining optionee consents) that are necessary to give effect to the
transactions contemplated by the immediately preceding paragraph.
Employee Stock Purchase Plan. The Merger Agreement provides that after the
date of thereof, no new offering period shall commence under the Company's 1992
Employee Stock Purchase Plan (the "ESPP"). As of the Effective Time, the ESPP
shall be terminated. The Company will pay each participant in any current
offering period under such Plan in cash at the Effective Time, in cancellation
of all rights under such Plan, an amount determined by multiplying (i) the
Merger Consideration per Share by (ii) the number of Shares such participant
could have purchased under the ESPP based on his or her account balance under
such Plan immediately prior to the Effective Time (treating, for such purpose,
the option price per Share as equal to 85% of the fair market value of a Share
on the offering date with respect to such offering period) (such payment to be
net of applicable withholding taxes); provided that with respect to any
fractional shares, the foregoing shall not apply and the balance of each
account attributable to such fractional shares shall be returned to the
participant in cash.
Prior to the Effective Time, the Company will take all actions (including,
if appropriate, amending the terms of the ESPP or obtaining participant
consents) that are necessary to give effect to the transactions contemplated by
the immediately preceding paragraph.
Surviving Corporation. The Merger Agreement provides that the articles of
incorporation and bylaws of Purchaser at the Effective Time will be the
articles of incorporation and bylaws, respectively, of the Surviving
20
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Corporation until amended in accordance with applicable law, except that the
name of the Surviving Corporation shall be GN ReSound Corporation. The Merger
Agreement also provides that the directors of Purchaser at the Effective Time
will be the directors of the Surviving Corporation and the officers of the
Company at the Effective Time will be the officers of the Surviving
Corporation. In addition, from and after the Effective Time, Russell D. Hays
will be a director of the Surviving Corporation for so long as he serves as
Chief Executive Officer of the Surviving Corporation.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties, including
representations by the Company with respect to its corporate existence and
power, corporate authorizations, governmental authorizations,
non-contravention, capitalization, subsidiaries, Commission filings, absence of
certain changes, no undisclosed material liabilities, litigation, material
contracts, taxes, employee benefits, compliance with laws and court orders,
finders' fees, environmental matters and anti- takeover statutes. Certain
representations and warranties in the Merger Agreement contain exceptions for
matters that would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the party making such representations
and warranties. The Merger Agreement provides that "Material Adverse Effect"
means, with respect to any person, a material adverse effect on the condition
(financial or otherwise), business, assets or results of operations of such
person and its subsidiaries, taken as a whole; provided, however, that in
determining whether there has been a Material Adverse Effect with respect to
any person, any adverse effect attributable to or resulting from the following
shall be disregarded: (i) changes in general economic conditions or changes
affecting the industry generally in which such person operates, (ii) the direct
effect of the public announcement or pendency of the transactions contemplated
by the Merger Agreement on current or prospective customers of the person, and
(iii) shareholder class action litigation arising out of the Merger Agreement
or the transactions contemplated thereby. Without limiting the generality of
the foregoing, for purposes of the Merger Agreement, a claim against the
Company or liability of the Company (singly or in the aggregate with other
claims or liabilities) for $10,000,000 or more, which claim or liability has a
reasonable likelihood of success on the merits or reasonable probability of
fruition, will be deemed to be materially adverse to the Company.
Additionally, the Company has represented that it has taken all action
necessary to render the Rights issued pursuant to the terms of the Rights
Agreement inapplicable to the Merger Agreement, the Stock Option Agreement, the
Offer, the Merger and any other transaction contemplated thereby.
Interim Agreements of Parent, Purchaser and the Company. Pursuant to the
Merger Agreement, the Company has agreed that, during the period from the date
of the Merger Agreement to the Effective Time, the Company and its subsidiaries
will conduct their business in the ordinary course consistent with past
practice and will use their reasonable best efforts to preserve intact their
business organizations and relationships with third parties and to keep
available the services of their present officers and employees. Pursuant to the
Merger Agreement, without limiting the generality of the foregoing, prior to
the Effective Time, neither the Company nor any of its subsidiaries will: (a)
adopt or propose any change in the Company's articles of incorporation or
bylaws; (b) merge or consolidate with any other person or acquire a material
amount of stock or assets of any other person; (c) except for the Viennatone
sale (as defined below), sell, lease, license or otherwise dispose of any
material subsidiary or material amount of assets, securities or property except
(i) pursuant to existing contracts or commitments and (ii) in the ordinary
course consistent with past practice; (d) (i) take any action that would make
any representation and warranty of the Company under the Merger Agreement
inaccurate in any material respect at, or as of any time prior to, the
Effective Time or (ii) omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect at any
such time; (e) (i) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or employee benefit plan, agreement, trust, plan, fund
or other arrangement for the benefit and welfare of any director, officer or
employee (except that the Company shall be permitted to include, in the proxy
statement for its 1999 annual shareholder meeting, a proposal to amend the
Company's 1997 Stock Plan to increase the number of Shares authorized for
issuance thereunder), (ii) increase in any manner the compensation or fringe
benefits of any director, officer or employee (except for (x) increases in
accordance with the Company's normal officers and employees focal review
previously disclosed to Parent or (y) other normal increases in the ordinary
course of business that are
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consistent with past practice and that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company), or (iii)
pay any benefit not required by any currently existing plan or arrangement
(including, without limitation, grant stock options or stock appreciation
rights or remove existing restrictions in any benefit plans or agreements); and
(f) agree or commit to do any of the foregoing.
Other Agreements of Parent, Purchaser and the Company. In the Merger
Agreement, the Company has agreed that the Company, its subsidiaries and their
respective officers, directors, employees, investment bankers, attorneys,
accountants, consultants or other agents or advisors shall not directly or
indirectly, (i) take any action to solicit, initiate, facilitate or encourage
the submission of any Acquisition Proposal (as defined below); (ii) engage in
discussions or negotiations with, or disclose any nonpublic information
relating to the Company or any subsidiary or afford access to the properties,
books or records of the Company or any subsidiary to, any Person who the
Company has reason to believe may be considering making, or has made, an
Acquisition Proposal; or (iii) grant any waiver or release under any standstill
or similar agreement with respect to any class of equity securities of the
Company. The Company will notify Parent promptly (but in no event later than 24
hours) after receipt by the Company (or any of its advisors) of any Acquisition
Proposal, any indication that any Person is considering making an Acquisition
Proposal or any request for nonpublic information relating to the Company or
any subsidiary or for access to the properties, books or records of the Company
or any subsidiary by any person who the Company has reason to believe may be
considering making, or has made, an Acquisition Proposal and will keep Parent
fully informed of any material changes in the status and details of any such
Acquisition Proposal, indication or request. For purposes of the Merger
Agreement, "Acquisition Proposal" means an inquiry, offer or proposal regarding
any of the following involving the Company or any of its subsidiaries: (w) any
merger, consolidation, share exchange, recapitalization, business combination
or other similar transaction, (x) any sale, lease, exchange, transfer or other
disposition of all or substantially all the assets of the Company and its
subsidiaries, taken as a whole, in a single transaction or series of related
transactions, (y) any tender offer or exchange offer for 25 percent or more of
the outstanding Shares or the filing of a registration statement under the 1933
Act in connection therewith, or (z) any public announcement of a proposal, plan
or intention to do any of the foregoing or any agreement to engage in any of
the foregoing; provided that an "Acquisition Proposal" shall not be deemed to
include the continuing process to sell the Company's Viennatone manufacturing
and export business (the "Viennatone Sale").
Notwithstanding the foregoing, the Company may negotiate or otherwise
engage in substantive discussions with, and furnish nonpublic information to,
any person who delivers an Acquisition Proposal if (i) the Company has complied
with the preceding paragraph, including, without limitation, the requirement
that it notify Parent promptly after its receipt of any Acquisition Proposal,
(ii) the Board of Directors of the Company determines in good faith by a
majority vote, on the basis of advice from its outside legal counsel, that,
consistent with its fiduciary duties under applicable law, it must take such
action, (iii) such person executes a confidentiality agreement with terms no
less favorable to the Company than those contained in the Non-Disclosure
Agreement described below, and (iv) the Company shall have delivered to Parent
two business days' prior written notice advising Parent that it intends to take
such action.
Between the date of the Merger Agreement and the Effective Time and
subject to applicable law and the Non- Disclosure Agreement described below,
the Company will (i) give Parent, its counsel, financial advisors, auditors and
other authorized representatives full access to the offices, properties, books
and records of the Company and its subsidiaries; (ii) furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such persons may
reasonably request; and (iii) instruct the employees, counsel, financial
advisors, auditors and other authorized representatives of the Company and its
subsidiaries to cooperate with Parent in its investigation of the Company and
its subsidiaries.
Pursuant to the Merger Agreement, the Company has agreed to cause a
meeting of its shareholders (the "Company Shareholder Meeting") to be duly
called and held as soon as reasonably practicable after consummation of the
Offer for the purpose of voting on the approval and adoption of the Merger
Agreement and the Merger, unless the CGCL does not require a vote of
shareholders of the Company for consummation of the Merger. The Merger
Agreement provides that the Company will (i) promptly prepare and file with the
Commission, will use its
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best efforts to have cleared by the Commission and will thereafter mail to its
shareholders as promptly as practicable the proxy or information statement of
the Company in connection with the Merger and all other proxy materials for
such meeting, (ii) use its best efforts to obtain the necessary approvals by
its shareholders of the Merger Agreement and the transactions contemplated
thereby and (iii) otherwise comply with all legal requirements applicable to
such meeting. The Company has agreed, subject to the fiduciary duties of its
Board of Directors, as advised by outside counsel, to recommend approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the Company's shareholders.
For six years after the Effective Time, the Surviving Corporation will
indemnify and hold harmless the present and former officers and directors of
the Company in respect of acts or omissions occurring at or prior to the
Effective Time to the fullest extent permitted by the CGCL or any other
applicable laws or provided under the Company's articles of incorporation and
bylaws in effect on the date of the Merger Agreement; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law. For six years after the Effective Time, the Surviving
Corporation will provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering
each such person currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date of the Merger
Agreement.
The Merger Agreement provides that the Company and Parent will use their
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by the Merger
Agreement.
Conditions to the Merger. The obligations of each of Parent, Purchaser and
the Company to consummate the Merger are subject to the satisfaction of certain
conditions, including: (a) if required by the CGCL, the Merger Agreement shall
have been approved and adopted by the shareholders of the Company; (b) any
applicable waiting period under the HSR Act relating to the Merger shall have
expired or been terminated; (c) no provision of any applicable law or
regulation of the United States (or any U.S. state) or the European Union (or
any member country of the E.U.) and no judgment, injunction, order or decree
shall prohibit the consummation of the Merger; and (d) Purchaser shall have
purchased Shares pursuant to the Offer.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, (notwithstanding any
approval of the Merger Agreement by the shareholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if (i) the Offer has not been
consummated on or before July 31, 1999; provided that the right to terminate
the Merger Agreement pursuant to this clause shall not be available to any
party whose breach of any provision of the Merger Agreement results in the
failure of the Offer to be consummated by such time. If a request for
additional information is received from a governmental entity pursuant to the
HSR Act, or applicable non-United States laws regulating competition,
antitrust, investment or exchange controls, such date will be extended to the
90th day following acknowledgment by such governmental entity that Parent and
the Company have complied with such request, but in no event will such date be
extended to a date later than September 30, 1999; or (ii) there shall be any
law or regulation that makes acceptance for payment of, and payment for, the
Shares pursuant to the Offer or consummation of the Merger illegal or otherwise
prohibited or any judgment, injunction, order or decree of any court or
governmental body having competent jurisdiction enjoining Purchaser from
accepting for payment of, and paying for, the Shares pursuant to the Offer or
Company or Parent from consummating the Merger and such judgment, injunction,
order or decree shall have become final and nonappealable;
(c) by Parent, if, prior to the acceptance for payment of the Shares under
the Offer, (i) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or any of its affiliates, shall have
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acquired beneficial ownership of more than 25% of the Shares, through the
acquisition of stock, the formation of a group or otherwise, or shall have been
granted any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of such Shares; (ii) any person or group shall have
entered into a definitive agreement or an agreement in principle with the
Company, regarding an Acquisition Proposal; or (iii) (A) the Board of Directors
of the Company shall have withdrawn, or modified in a manner adverse to Parent,
its approval or recommendation of the Merger Agreement, the Offer or the
Merger, or shall have recommended, or publicly announced its intention to enter
into, an agreement or an agreement in principle with respect to an Acquisition
Proposal (or shall have resolved to do any of the foregoing), or (B) the
Company shall have materially breached certain of its obligations under the
Merger Agreement; or
(d) by the Company, if prior to the purchase of any Shares pursuant to the
Offer, and subject to compliance with certain provisions of the Merger
Agreement, the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to Parent its approval or recommendation of the
Merger Agreement or the Merger and shall have recommended a Superior Proposal.
For purposes of the Merger Agreement, "Superior Proposal" means any bona fide,
unsolicited written Acquisition Proposal for all outstanding Shares on terms
that the Board of Directors of the Company determines in good faith by a
majority vote is materially more favorable and provides materially greater
value to all the Company's shareholders than as provided under the Merger
Agreement, and such decision is made on the basis of the written advice of a
financial advisor of nationally recognized reputation and takes into account
all the terms and conditions of the Acquisition Proposal, including any
break-up fees, expense reimbursement provisions and conditions to closing.
Termination Fee. Pursuant to the Merger Agreement, the Company will pay to
Parent a fee of $7,000,000, plus the actual, documented and reasonable
out-of-pocket expenses of Parent (not to exceed $500,000) incurred in
connection with the negotiation of the Merger Agreement and the consummation of
the transactions contemplated thereby, including the arrangement and obtaining
of the financing for such transactions, if the Merger Agreement is terminated
(x) pursuant to clause (c) or (d) of the preceding paragraph, or (y) pursuant
to clause (b)(i) of the preceding paragraph and prior to the time of such
termination an Acquisition Proposal shall have been publicly announced and not
withdrawn and, within nine months of the date of termination, the Company
enters into an agreement or letter of intent concerning a transaction that
would constitute an Acquisition Proposal and such transaction is subsequently
consummated.
The fee payable (i) pursuant to clause (x) of the preceding paragraph
shall be paid by the Company immediately upon the termination of the Merger
Agreement, and (ii) pursuant to clause (y) of the preceding paragraph shall be
paid by the Company on the date on which the transaction referred to in such
clause shall be consummated.
The Merger Agreement provides that the Company will promptly pay to
Parent, but in no event later than two business days after termination of the
Merger Agreement, in immediately available funds an amount equal to Parent's
reasonable expenses (not to exceed $500,000) incurred in connection with the
Merger Agreement and the transactions contemplated thereby, including the
arrangement and obtaining of the financing for such transactions, if (x) the
Merger Agreement shall have been terminated pursuant to clause (b)(i) of the
first paragraph above, (y) any representation or warranty made by the Company
in the Merger Agreement shall not have been true and correct in any material
respect as of the date thereof, and (z) the condition in Section 15 relating to
representations and warranties shall not have been satisfied.
Pursuant to the Merger Agreement, Parent will promptly pay the Company in
immediately available funds an amount equal to the Company's reasonable
expenses (not to exceed $500,000) incurred in connection with the Merger
Agreement and the transactions contemplated thereby if the Merger Agreement is
terminated by the Company and any representation or warranty made by Parent or
Purchaser in the Merger Agreement shall not have been true and correct in any
material respect as of the date thereof.
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If any party (a "Responsible Party") fails promptly to pay any amount due
as described in the preceding paragraphs, the Responsible Party shall also pay
any costs and expenses incurred by such other party in connection with a legal
action to enforce the Merger Agreement that results in a judgment against the
Responsible Party for such amount.
In the event of the termination of the Merger Agreement, the Merger
Agreement will become void and have no effect, without any liability on the
part of any party thereto other than certain provisions of the Merger Agreement
relating to public announcements, termination, termination expenses of the
parties, governing law and waiver of jury trials; provided that a party will
not be relieved from liability for willful (i) failure to fulfill a condition,
(ii) failure to perform a covenant or (iii) any material breach of the Merger
Agreement.
Expenses. Except as discussed above, the Merger Agreement provides that
all costs and expenses incurred in connection with the transactions
contemplated by the Merger Agreement shall be paid by the party incurring such
costs and expenses.
Amendments; No Waivers. Any provision of the Merger Agreement may be
amended or waived prior to the Effective Time if, and only if, such amendment
or waiver is in writing and signed, in the case of an amendment, by the
Company, Parent and Purchaser or in the case of a waiver, by the party against
whom the waiver is to be effective; provided that after the adoption of the
Merger Agreement by the shareholders of the Company, no such amendment or
waiver shall, without the further approval of such shareholders, reduce the
amount or change the kind of consideration to be received in exchange for the
Shares.
Stock Option Agreement
Under the Stock Option Agreement, the Company granted to Purchaser an
irrevocable Top-Up Stock Option to purchase that number of Top-Up Option Shares
equal to the number of Shares that, when added to the number of Shares owned by
Purchaser, Parent and their subsidiaries immediately following consummation of
the Offer, will constitute 90% of the Shares then outstanding (assuming the
issuance of the Top-Up Option Shares) at a purchase price per Top-Up Option
Share equal to the Offer Price. However, the Top-Up Stock Option will not be
exercisable if the number of Shares subject thereto exceeds the number of
authorized Shares available for issuance.
Subject to the terms and conditions of the Stock Option Agreement, the
Top-Up Stock Option may be exercised by Purchaser, at its election, in whole,
but not in part, at any one time after the occurrence of a Top-Up Exercise
Event (as defined below) and prior to the Top-Up Termination Date (as defined
below). A "Top-Up Exercise Event" will occur for purposes of the Stock Option
Agreement upon the Purchaser's acceptance for payment pursuant to the Offer of
Shares constituting more than 50% but less than 90% of the Shares then
outstanding on a fully diluted basis. Except as provided in the last sentence
of this paragraph, the "Top-Up Termination Date" will occur for purposes of the
Stock Option Agreement upon the earliest to occur of: (i) the Effective Time;
(ii) the date which is 20 business days after the occurrence of a Top-Up
Exercise Event; (iii) the termination of the Merger Agreement; and (iv) the
date on which Purchaser waives the Minimum Condition and accepts for payment
the Revised Minimum Number of Shares. Nevertheless, even if the Top-Up
Termination Date has occurred, Purchaser will be entitled to purchase the
Top-Up Option Shares if it has exercised the Top-Up Stock Option in accordance
with the terms of the Stock Option Agreement prior to such occurrence.
The obligation of the Company to deliver Top-Up Option Shares upon the
exercise of the Top-Up Stock Option is subject to the following conditions: (a)
any applicable waiting period under the HSR Act relating to the issuance of the
Top-Up Option Shares will have expired or been terminated; and (b) no provision
of any applicable law or regulation and no judgment, injunction, order or
decree shall prohibit the exercise of the Top-Up Stock Option or the delivery
of the Top-Up Option Shares in respect of any such exercise.
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Employment Matters
Purchaser has agreed that Russell D. Hays, who currently serves as the
President and Chief Executive Officer of the Company, will continue in such
positions at the Surviving Corporation for a period of seven months after the
Effective Time at his base salary in effect at the Effective Time. At the end
of such period, Mr. Hays shall receive a retention bonus of $250,000 and
payment of all severance and benefits pursuant to his existing change of
control agreement (and may, under certain circumstances, enter into a
consulting/non-compete agreement with the Surviving Corporation).
Purchaser has executed a letter agreement with each of Laureen DeBuono, Ed
Lopez, Robert Luttrell, Christopher Pascoe and David Thrower regarding his or
her existing change of control agreement for the purpose of clarifying that
consummation of the Merger shall be deemed to be "good reason" under the change
of control agreement, and if such person terminates his or her employment with
the Company for any reason after the Effective Time and within 24 months after
the completion of the Offer, such person shall be thus entitled to all
resulting benefits under the change of control agreement (and may, under
certain circumstances, enter into a consulting/non-compete agreement with the
Surviving Corporation). Such letter agreement takes effect at the Effective
Time.
The Rights Agreement
On July 5, 1994, the Company adopted the Rights Agreement and distributed
a dividend of one right to purchase one one-thousandth of a share of Series A
participating preferred stock for each outstanding share of Common Stock of the
Company. The Rights become exercisable in certain limited circumstances
involving a potential business combination transaction of the Company and are
initially exercisable at a price of $50 per share. Following certain other
events after the Rights have become exercisable, each Right entitles its holder
to purchase for $50 an amount of Common Stock of the Company, or in certain
circumstances, securities of the acquirer, having a then current market value
of twice the exercise price of the Right. The Rights are redeemable at the
Company's option at $0.01 per Right before they become exercisable. Until a
Right is exercised, the holder of a Right, as such, has no rights as a
shareholder of the Company. The Rights expire on July 5, 2004.
Pursuant to the Rights Agreement, if a tender offer occurs at a time when
Continuing Directors (as defined below) are in office and a majority of the
Continuing Directors then in office has determined that the offer is both
adequate and otherwise in the best interests of the Company and its
shareholders, the Rights contained therein will not be exercisable as a result
of such offer. "Continuing Director" means a member of the Board of Directors
of the Company who is not an affiliate, associate, representative or nominee of
an Acquiring Person (as defined below) who was either (i) a member of the Board
of Directors of the Company prior to the date of adoption of the plan or (ii)
subsequently became a director for the Company and whose election or nomination
for election was approved or recommended by a vote of a majority of the
Continuing Directors then members of the Board. An "Acquiring Person" is a
person or group of affiliated or associated persons who, without prior approval
of the company become the beneficial owners of 30% or more of the outstanding
shares of Common Stock of the Company. Because the offer has been approved by
the Company, consummation of the Offer by Purchaser will not result in any
Rights becoming exercisable.
Non-Disclosure Agreement
On November 1, 1997, the Company entered into the Non-Disclosure Agreement
with GN Danavox, a wholly- owned subsidiary of Parent. Subject to certain
exceptions, each party has agreed therein that it will retain any confidential
information received from the other party in confidence for a period of two
years from the date of receipt of such information (or until such time as the
information no longer qualifies as confidential information) and not disclose
to any third party confidential information of the other party, except as
authorized by such other party, and will use confidential information for no
purpose other than determining whether to enter into a business relationship
with the other party.
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Standstill Agreement
On April 2, 1999, the Company and Parent entered into the Standstill
Agreement pursuant to which Parent agreed that, for a period of two (2) years
from the date thereof, neither it nor any of its affiliates, without the prior
written consent of the Company or its Board of Directors will acquire, or offer
to acquire, Shares or any other interest in the Company or take certain other
actions.
Exclusivity Agreement
On April 12, 1999, the Company and Parent entered into the Exclusivity
Agreement whereby the Company, subject to certain exceptions, agreed to
negotiate exclusively with Parent with respect to a possible acquisition of the
Company until May 3, 1999.
11. Purpose of the Offer. The purpose of the Offer is to acquire for cash
as many outstanding Shares as possible as a first step in acquiring the entire
equity interest in the Company. Purchaser currently intends, as soon as
practicable after consummation of the Offer, to consummate the Merger.
The Board of Directors of the Company has unanimously recommended that all
holders of Shares tender such Shares pursuant to the Offer. The Board of
Directors has unanimously approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, which approval
Purchaser believes satisfies the relevant requirements of the CGCL.
Shareholder Approval. Under the CGCL, the approval of the Company Board
and the affirmative vote of the holders of a majority of the outstanding Shares
are required to approve and adopt the Merger Agreement and the transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement and the Stock Option
Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval and
adoption of the Merger by the shareholders of the Company in accordance with
the CGCL. In addition, the Company has represented that the affirmative vote of
the holders of a majority of the outstanding Shares is the only vote of the
holders of any of the Company's capital stock necessary in connection with the
consummation of the Merger. Therefore, unless the Merger is consummated in
accordance with the short-form merger provisions under the CGCL described below
(in which case no action by the shareholders of the Company will be required to
consummate the Merger), the only remaining corporate action of the Company will
be the approval and adoption of the Merger Agreement and the transactions
contemplated thereby by the affirmative vote of the holders of a majority of
the Shares. The Merger Agreement provides that Parent will vote all Shares
beneficially owned by it in favor of the adoption of the Merger Agreement at
the Company shareholder's meeting. In the event that the Minimum Condition is
satisfied, Purchaser will have sufficient voting power to cause the approval of
the Merger Agreement and the transactions contemplated thereby without the
affirmative vote of any other shareholder of the Company.
Short-Form Merger. Section 1110 of the CGCL provides that, if a parent
corporation owns at least 90% of the outstanding shares of each class of a
subsidiary corporation, the merger of the parent corporation into the
subsidiary corporation may be effected by having the board of directors of the
parent corporation approve and adopt a resolution or plan of merger and by
making the appropriate filings with the California Secretary of State, without
any action or vote on the part of the shareholders of the subsidiary
corporation. Under the CGCL, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the outstanding Shares, Purchaser will be able to
effect the Merger without a vote of the shareholders of the Company. In such
event, Parent, Purchaser and the Company have agreed in the Merger Agreement to
take, subject to the satisfaction or (to the extent permitted under the Merger
Agreement) waiver of the conditions set forth in the Merger Agreement, all
necessary and appropriate action to cause the Merger to be effective as soon as
practicable after the acceptance for payment and purchase of Shares pursuant to
the Offer without a meeting of shareholders of the Company.
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Under the CGCL, the Merger consideration paid to the Company's
shareholders may not be cash if Purchaser or Parent owns, directly or
indirectly, more than 50% but less than 90% of the then outstanding Shares
unless either all the shareholders consent or the Commissioner of Corporations
of the State of California approves, after a hearing, the terms and conditions
of the Merger and the fairness thereof. If such shareholder consent or
Commissioner of Corporations approval is not obtained, the CGCL requires that
the consideration received in the Merger consist only of non-redeemable common
stock of Parent. The purpose of the Offer is to obtain 90% or more of the
Shares and thus to enable Parent and Purchaser to acquire all the equity of the
Company for consideration consisting solely of cash.
Dissenters Rights. Holders of Shares do not have dissenters rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
at the Effective Time, by complying with the provisions of Chapter 13 of the
CGCL, may have certain rights to dissent and to require the Company to purchase
their Shares for cash at "fair market value." In general, holders of Shares
will be entitled to exercise dissenters rights under the CGCL only if the
holders of five percent or more of the outstanding Shares properly file demands
for payment or if the Shares held by such holders are subject to any
restriction on transfer imposed by the Company or by any law or regulation
("Restricted Shares"). Accordingly, if any holder of Restricted Shares or the
holders of five percent or more of the Shares properly file demands for
payment, all other holders who fully comply with all other applicable
provisions of Chapter 13 of the CGCL will be entitled to require the Company to
purchase their Shares for cash at their fair market value if the Merger is
consummated. In addition, if immediately prior to the Effective Time, the
Shares are not listed on a national securities exchange or on the list of
over-the-counter margin stocks issued by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), holders of Shares may exercise
dissenters rights as to any or all of their Shares entitled to such rights.
If the statutory procedures under the CGCL relating to dissenters rights
are complied with, such rights could lead to a judicial determination of the
fair market value of the Shares. The "fair market value" would be determined as
of the day before the first announcement of the terms of the Merger, excluding
any appreciation or depreciation as a result of the Merger. The value so
determined could be more or less than the Offer Price.
The foregoing summary of the rights of dissenting shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise any available dissenters rights and is
qualified in its entirety by reference to the CGCL. The preservation and
exercise of dissenters rights require strict adherence to the applicable
provisions of the CGCL.
In connection with its consideration of the Offer, Purchaser has made a
preliminary review, and will continue to review, on the basis of available
information, various possible business strategies that it might consider in the
event that it acquires control of the Company. Such strategies are expected to
include, among other things, the integration of certain assets or lines of
business of the Company with those of Parent. If Purchaser acquires Shares
pursuant to the Offer and depending upon the number of Shares so acquired,
Purchaser intends to conduct a detailed review of the Company and its assets,
businesses, operations, properties, policies (including dividend policies),
corporate structure, capitalization and the responsibilities and qualifications
of the Company's management and personnel and consider what, if any, changes
Purchaser deems desirable in light of the circumstances which then exist.
Except as described above or elsewhere in this Offer to Purchase,
Purchaser has no present plans or proposals that would relate to or result in
an extraordinary corporate transaction involving the Company or any of its
subsidiaries (such as a merger, reorganization, liquidation, relocation of any
operations or sale or other transfer of a material amount of assets), any
change in the Company's Board of Directors or management, any material change
in the Company's capitalization or dividend policy or any other material change
in the Company's corporate structure or business.
12. Effect of the Offer on the Market for the Shares; Stock Exchange
Listing(s); Registration under the Exchange Act. The purchase of Shares
pursuant to the Offer will reduce the number of Shares that might
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otherwise trade publicly and may reduce the number of holders of Shares, which
could adversely affect the liquidity and market value of the remaining Shares
held by shareholders other than Purchaser. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for, or marketability
of, the Shares or whether such reduction would cause future market prices to be
greater or less than the Offer price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued inclusion in the NASDAQ
National Market System. If, as a result of the purchase of Shares pursuant to
the Offer, the Shares no longer meet the criteria for continuing inclusion in
the NASDAQ National Market System, the market for the Shares could be adversely
affected. As of May 4, 1999, there were approximately 20,927,169 Shares
outstanding and approximately 463 holders of record of such Shares. According
to NASDAQ's published guidelines, the Shares would not meet the criteria for
continued inclusion in the NASDAQ's National Market System if, among other
things, the number of publicly-held Shares were less than 200,000, the
aggregate market value of the publicly-held Shares were less than $2,000,000 or
there were less than two market makers for the Shares. If these standards were
not met, quotations might continue to be published in the over-the-counter
"additional list" or one of the "local lists" unless, as set forth in NASDAQ's
published guidelines, the number of publicly-held Shares (excluding Shares held
by officers, directors and beneficial owners of more than 10% of the Shares)
were less than 100,000, there were fewer than 300 holders in total, or there
were not at least one market maker for the Shares. If the Shares are no longer
eligible for NASDAQ quotation, quotations might still be available from other
sources.
The Shares are currently "margin securities" under the regulations 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 Shares. Depending upon factors similar to those
described above regarding listing and market quotations, the Shares might no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as
collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the
Commission if the Shares are neither listed on a national securities exchange
nor held by 300 or more holders of record. Termination of the registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Shares and to the
Commission and would make certain of the provisions of the Exchange Act, such
as the short-swing profit recovery provisions of Section 16(b), the requirement
of furnishing a proxy statement pursuant to Section 14(a) in connection with a
shareholder's meeting and the related requirement of an annual report to
shareholders and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions, no longer applicable to the Shares.
Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933
(the "Securities Act"). If registration of the Shares under the Exchange Act
were terminated, the Shares would no longer be "margin securities" or eligible
for listing or NASDAQ reporting. Purchaser intends to seek to cause the Company
to terminate registration of the Shares under the Exchange Act as soon after
consummation of the Offer as the requirements for termination of registration
of the Shares are met.
13. Dividends and Distributions. If on or after May 10, 1999, the Company
should split, combine or otherwise change the Shares or its capitalization,
acquire or otherwise cause a reduction in the number of outstanding Shares or
issue or sell any additional Shares (other than Shares issued pursuant to and
in accordance with the terms in effect on May 10, 1999 of employee stock
options and convertible notes outstanding prior to such date), shares of any
other class or series of capital stock, other voting securities or any
securities convertible into, or options, rights, or warrants, conditional or
otherwise, to acquire, any of the foregoing, then, without prejudice to
Purchaser's rights under Section 15, Purchaser may, in its sole discretion,
make such adjustments in the purchase price and other terms of the Offer as it
deems appropriate including the number or type of securities to be purchased.
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If, on or after May 10, 1999, the Company should declare or pay any
dividend on the Shares or any distribution with respect to the Shares
(including the issuance of additional Shares or other securities or rights to
purchase of any securities) that is payable or distributable to shareholders of
record on a date prior to the transfer to the name of Purchaser or its nominee
or transferee on the Company's stock transfer records of the Shares purchased
pursuant to the Offer, then, without prejudice to Purchaser's rights under
Section 15, (i) the purchase price per Share payable by Purchaser pursuant to
the Offer will be reduced to the extent of any such cash dividend or
distribution and (ii) the whole of any such non-cash dividend or distribution
to be received by the tendering shareholders will (a) be received and held by
the tendering shareholders for the account of Purchaser and will be required to
be promptly remitted and transferred by each tendering shareholder to the
Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer, or (b) at the direction of Purchaser, be exercised
for the benefit of Purchaser, in which case the proceeds of such exercise will
promptly be remitted to Purchaser. Pending such remittance and subject to
applicable law, Purchaser will be entitled to all rights and privileges as
owner of any such non-cash dividend or distribution or proceeds thereof and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by Purchaser in its sole discretion.
14. Extension of Tender Period; Termination; Amendment. Purchaser reserves
the right, at any time or from time to time, in its sole discretion and
regardless of whether or not any of the conditions specified in Section 15
shall have been satisfied, (i) to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension or (ii) to
amend the Offer in any respect by making a public announcement of such
amendment. Except as required by the Merger Agreement, there can be no
assurance that Purchaser will exercise its right to extend or amend the Offer.
If Purchaser decreases the percentage of Shares being sought or increases
or decreases the consideration to be paid for Shares pursuant to the Offer
(which would require the Company's consent) and the Offer is scheduled to
expire at any time before the expiration of a period of 10 business days from,
and including, the date that notice of such increase or decrease is first
published, sent or given in the manner specified below, the Offer will be
extended until the expiration of such period of 10 business days. If Purchaser
makes a material change in the terms of the Offer (other than a change in price
or percentage of securities sought) or in the information concerning the Offer,
or waives a material condition of the Offer, Purchaser will extend the Offer,
if required by applicable law, for a period sufficient to allow shareholders to
consider the amended terms of the Offer. In a published release, the Commission
has stated that in its view an offer must remain open for a minimum period of
time following a material change in the terms of such offer and that the waiver
of a condition such as the Minimum Condition is a material change in the terms
of an offer. The release states that an offer should remain open for a minimum
of five business days from the date the material change is first published,
sent or given to security holders, and that if material changes are made with
respect to information that approaches the significance of price and share
levels, a minimum of 10 business days may be required to allow adequate
dissemination and investor response. The term "business day" shall mean any day
other than Saturday, Sunday or a federal holiday and shall consist of the time
period from 12:01 A.M. through 12:00 Midnight, New York City time.
Purchaser also reserves the right, in its sole discretion, in the event
any of the conditions specified in Section 15 shall not have been satisfied and
so long as Shares have not theretofore been accepted for payment, to delay
(except as otherwise required by applicable law) acceptance for payment of or
payment for Shares or to terminate the Offer and not accept for payment or pay
for Shares.
If Purchaser extends the period of time during which the Offer is open, is
delayed in accepting for payment or paying for Shares or is unable to accept
for payment or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to Purchaser's rights under the Offer, the Depositary may, on
behalf of Purchaser, retain all Shares tendered, and such Shares may not be
withdrawn except as otherwise provided in Section 4. The reservation by
Purchaser of the right to delay acceptance for payment of or payment for Shares
is subject to applicable law, which requires that Purchaser pay the
consideration offered or return the Shares deposited by or on behalf of
shareholders promptly after the termination or withdrawal of the Offer.
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Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which Purchaser may choose to make any public announcement, Purchaser
will have no obligation (except as otherwise required by applicable law) to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. In the case of an
extension of the Offer, Purchaser will make a public announcement of such
extension no later than 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date.
15. Certain Conditions of the Offer. Notwithstanding any other provision
of the Offer, Purchaser shall not be required to accept for payment or pay for
any Shares, and may terminate the Offer as provided in Section 14, if (i) the
Minimum Condition has not been satisfied or waived (pursuant to the Merger
Agreement) by the Expiration Date, (ii) the applicable waiting period under the
HSR Act shall not have expired or been terminated by the Expiration Date or
(iii) at any time on or after May 10, 1999 and prior to the Expiration Date,
any of the following conditions exist:
(a) there shall be instituted or pending any action or proceeding by
any government or governmental authority or agency, domestic or foreign,
or by any other person, before any court or governmental authority or
agency, domestic or foreign, which would reasonably be expected to
(1) prohibit the acquisition by Parent or Purchaser of any
Shares under the Offer or pursuant to the Stock Option Agreement, to
restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions
contemplated by the Merger Agreement or the Stock Option Agreement or
to require the Company, Parent or Purchaser to pay any damages that
are material in relation to the Company taken as a whole or otherwise
is likely to have a Material Adverse Effect (as defined in the Merger
Agreement) on the Company or Parent,
(2) impose material limitations on the ability of Purchaser, or
to render Purchaser unable to accept for payment, pay for or purchase
some or all of the Shares pursuant to the Offer and the Merger,
(3) restrain or prohibit Parent's ownership or operation (or
that of its respective subsidiaries or affiliates) of all or any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or of Parent and its subsidiaries,
taken as a whole, or compel Parent or any of its subsidiaries or
affiliates to dispose of or hold separate all or any material portion
of the business or assets of the Company and its subsidiaries, taken
as a whole, or of Parent and its subsidiaries, taken as a whole,
(4) impose material limitations on the ability of Parent,
Purchaser or any of Parent's other subsidiaries or affiliates
effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired
or owned by Parent, Purchaser or any of Parent's other subsidiaries
or affiliates on all matters properly presented to the Company's
shareholders, or
(5) require divestiture by Parent, Purchaser or any of Parent's
other subsidiaries or affiliates of any Shares; or
(b) there shall have been any statute, rule, regulation, injunction,
order or decree proposed, enacted, enforced, promulgated, issued or deemed
applicable to the Offer or the Merger, by any court, government or
governmental authority or agency, domestic or foreign, other than the
application of the waiting period provisions of the HSR Act to the Offer
or the Merger, that would reasonably be expected, directly or indirectly,
to result in any of the consequences referred to in clauses (1) through
(5) of paragraph (a) above; or
(c) there shall have been any event, occurrence, development or state
of circumstances or facts that has had or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect (as
defined in the Merger Agreement) on the Company; or
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(d) any person shall have entered into a definitive agreement or an
agreement in principle with the Company, regarding an Acquisition
Proposal; or
(e) the Board of Directors of the Company shall have withdrawn, or
modified in a manner adverse to Parent, its approval or recommendation of
the Merger Agreement, the Offer or the Merger, or shall have recommended
or publicly announced its intention to enter into, a definitive agreement
or an agreement in principle with respect to an Acquisition Proposal (or
shall have resolved to do any of the foregoing); or
(f) the Company shall have breached or failed to perform in all
material respects any of its obligations under the Merger Agreement, or
any of the representations and warranties of the Company contained in the
Merger Agreement shall not be true when made or as of the scheduled
expiration of the Offer as if made at and as of such time, except for such
inaccuracies which, when taken together (in each case without regard to
any qualifications as to materiality or Material Adverse Effect (as
defined in the Merger Agreement) contained in the applicable
representations and warranties) would not reasonably be expected to have a
Material Adverse Effect (as defined in the Merger Agreement) on the
Company; or
(g) the Merger Agreement shall have been terminated in accordance
with its terms;
which, in the reasonable judgment of Parent, in any such case, and regardless
of the circumstances (including any action or omission by Parent) giving rise
to any such condition, makes it inadvisable to proceed with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may, subject to the terms of the Merger Agreement, be waived by Parent and
Purchaser in whole or in part at any time and from time to time in their
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and 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 prior to the Effective Time.
Any determination by Purchaser concerning the events described in this
Section will be final and binding upon all parties.
16. Certain Legal Matters; Regulatory Approvals.
General. Purchaser is not aware of any material pending legal proceeding
relating to the Offer. Based on its examination of publicly available
information filed by the Company with the Commission and other publicly
available information concerning the Company, Purchaser is not aware of any
governmental license or regulatory permit that appears to be material to the
Company's business that might be adversely affected by Purchaser's acquisition
of Shares as contemplated herein or, except as set forth below, of any approval
or other action by any government or governmental administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by Purchaser as contemplated herein. Should
any such approval or other action be required, Purchaser currently contemplates
that such approval or other action will be sought. Except as described under
"Antitrust", there is, however, no current intent to delay the purchase of
Shares tendered pursuant to the Offer pending the outcome of any such matter.
There can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
if such approvals were not obtained or such other actions were not taken
adverse consequences might not result to the Company's business or certain
parts of the Company's business might not have to be disposed of, any of which
could cause Purchaser to elect to terminate the Offer without the purchase of
Shares thereunder. Purchaser's obligation under the Offer to accept for payment
and pay for Shares is subject to certain conditions. See Section 15.
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State Takeover Statutes; Section 1203 of the CGCL. The Company is
incorporated under the laws of the State of California. Section 1203 of the
CGCL provides that if a tender offer is made to some or all of a corporation's
shareholders by an "interested party," an affirmative opinion in writing as to
the fairness of the consideration to the shareholders of such corporation is
required to be delivered to the shareholders at the time that the tender offer
is first made in writing to the shareholders. However, if the tender offer is
commenced by publication and tender offer materials are subsequently mailed or
otherwise distributed to the shareholders, the opinion may be omitted in the
publication if the opinion is included in the materials distributed to the
shareholders. For purposes of Section 1203, the term "interested party"
includes, among other things, a person who is a party to the transaction and
(A) directly or indirectly controls the corporation that is the subject of the
tender offer or proposal, (B) is, or is directly or indirectly controlled by,
an officer or director of the subject corporation or (C) is an entity in which
a material financial interest is held by any director or executive officer of
the subject corporation. While none of the Company, Parent or Purchaser
believes that the Offer constitutes a transaction that falls within the
provisions of Section 1203, an independent financial advisor, BancBoston
Robertson Stephens, has been retained by the Company to provide a fairness
opinion with respect to the Offer.
Under the CGCL, the Merger consideration paid to the shareholders of the
Company may not be cash if Purchaser or Parent owns directly or indirectly more
than 50% but less than 90% of the then outstanding Shares, unless either all
the shareholders of the Company consent or the Commissioner of Corporations of
the State of California approves, after a hearing, the terms and conditions of
the Merger and the fairness thereof.
The Merger Agreement provides that, in the event the Minimum Condition is
not satisfied on any scheduled Expiration Date of the Offer, Purchaser may,
without the consent of the Company (i) extend the Offer; (ii) amend the Offer
to waive the Minimum Condition in contemplation of the exercise of the Top-Up
Stock Option (to the extent the Top-Up Stock Option is exercisable at such
time); or (iii) amend the Offer to provide that, in the event (A) the Minimum
Condition is not satisfied at the next scheduled Expiration Date of the Offer
(without giving effect to the exercise of the Top-Up Stock Option) and (B) the
number of Shares tendered pursuant to the Offer and not withdrawn as of such
next scheduled Expiration Date is more than 50% of the then outstanding Shares,
Purchaser will (x) reduce the number of Shares subject to the Offer to a number
of Shares that, when added to the Shares then beneficially owned by Parent,
will equal the Revised Minimum Number, (y) reduce the Minimum Condition to the
Revised Minimum Number and, (z) if a number of Shares greater than the Revised
Minimum Number is tendered into the Offer and not withdrawn, purchase, on a pro
rata basis, the Revised Minimum Number of Shares. In the event that Purchaser
acquires the Revised Minimum Number of Shares, it would have the ability to
ensure approval of the Merger by the shareholders of the Company with the
approval of a de minimus number of remaining outstanding Shares. In the event
that all conditions to the Offer other than the Minimum Condition shall have
been satisfied and Shares have not been accepted for payment by Purchaser prior
to July 15, 1999 (or, if certain regulatory approvals have not been obtained,
September 15, 1999), the Merger Agreement requires that, on such date,
Purchaser take either the action contemplated by clause (ii) above or the
action contemplated by clause (iii) above.
A number of states have adopted laws which purport, to varying degrees, to
apply to attempts to acquire corporations that are incorporated in, or which
have substantial assets, shareholders, principal executive offices or principal
places of business or whose business operations otherwise have substantial
economic effects in, such states. The Company, directly or through
subsidiaries, conducts business in a number of states throughout the United
States, some of which have enacted such laws. Except as described herein,
Purchaser does not know whether any of these laws will, by their terms, apply
to the Offer or any merger or other business combination between Purchaser or
any of its affiliates and the Company and has not complied with any such laws.
To the extent that certain provisions of these laws purport to apply to the
Offer or any such merger or other business combination, Purchaser believes that
there are reasonable bases for contesting such laws.
In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Statute
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987 in CTS Corp. v.
Dynamics Corp. of
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America, the Supreme Court held that the State of Indiana could, as a matter of
corporate law, constitutionally disqualify a potential acquiror from voting
shares of a target corporation without the prior approval of the remaining
shareholders where, among other things, the corporation is incorporated in, and
has a substantial number of shareholders in, the state. Subsequently, in TLX
Acquisition Corp. v. Telex Corp., a Federal District Court in Oklahoma ruled
that the Oklahoma statutes were unconstitutional insofar as they apply to
corporations incorporated outside Oklahoma in that they would subject such
corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v.
McReynolds, a Federal District Court in Tennessee ruled that four Tennessee
takeover statutes were unconstitutional as applied to corporations incorporated
outside Tennessee. This decision was affirmed by the United States Court of
Appeals for the Sixth Circuit. In December 1988, a Federal District Court in
Florida held in Grand Metropolitan PLC v. Butterworth, that the provisions of
the Florida Affiliated Transactions Act and the Florida Control Share
Acquisition Act were unconstitutional as applied to corporations incorporated
outside of Florida.
If any government official or third party should seek to apply any state
takeover law to the Offer or any merger or other business combination between
Purchaser or any of its affiliates and the Company, Purchaser will take such
action as then appears desirable, which action may include challenging the
applicability or validity of such statute in appropriate court proceedings. In
the event it is asserted that one or more state takeover statutes is applicable
to the Offer or any such merger or other business combination and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or any such merger or other business combination,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities or holders of Shares, and
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer or
any such merger or other business combination. In such case, Purchaser may not
be obligated to accept for payment or pay for any tendered Shares. See Section
15.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The purchase of Shares pursuant to the Offer is subject to such
requirements.
Pursuant to the requirements of the HSR Act, Purchaser expects to file a
Notification and Report Form with respect to the Offer with the Antitrust
Division and the FTC on or about May 14, 1999. As a result, the waiting period
applicable to the purchase of Shares pursuant to the Offer is expected to
expire at 11:59 P.M., New York City time, on or about Saturday, May 29, 1999.
However, prior to such time, the Antitrust Division or the FTC may extend the
waiting period by requesting additional information or documentary material
relevant to the Offer from Purchaser. If such a request is made, the waiting
period will be extended until 11:59 P.M., New York City time, on the tenth day
after substantial compliance by Purchaser with such request. Thereafter, such
waiting period can be extended only by court order.
A request is being made pursuant to the HSR Act for early termination of
the waiting period applicable to the Offer. There can be no assurance, however,
that the applicable 15-day HSR Act waiting period will be terminated early.
Shares will not be accepted for payment or paid for pursuant to the Offer until
the expiration or earlier termination of the applicable waiting period under
the HSR Act. See Section 15. Any extension of the waiting period will not give
rise to any withdrawal rights not otherwise provided for by applicable law. See
Section 4. Subject to Section 4, any extension of the waiting period will not
give rise to any withdrawal rights not otherwise provided for by applicable
law. If Purchaser's acquisition of Shares is delayed pursuant to a request by
the Antitrust Division or the FTC for additional information or documentary
material pursuant to the HSR Act, the Offer must be extended, as necessary,
through September 30, 1999 and thereafter may, but need not, be extended.
The Antitrust Division and the FTC frequently scrutinize the legality
under the antitrust laws of transactions such as the acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the consummation
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of any such transactions, the Antitrust Division or the FTC 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 divestiture of the Shares so acquired or divestiture of
substantial assets of Purchaser or the Company. Private parties (including
individual states) may also bring legal actions under the antitrust laws.
Purchaser does not believe that the consummation of the Offer will result in a
violation of any applicable antitrust laws. However, 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 will be. See Section 15 for certain
conditions to the Offer, including conditions with respect to litigation and
certain governmental actions and Section 10 for certain termination rights in
connection with antitrust suits.
Foreign Laws. There is a possibility that filings may have to be made with
foreign governmental or regulatory authorities under their pre-merger
notification or similar statutes. The filing requirements of various nations
are being analyzed by the parties and, where necessary, such filings will be
made.
17. Fees and Expenses. Gleacher & Co. is acting as financial advisor to
Purchaser and is acting as Dealer Manager in connection with the Offer. Parent
has agreed upon the closing of any acquisition of the Company to pay Gleacher &
Co. as compensation for its services as financial advisor and as Dealer Manager
in connection with the Offer a fee of $1.8 million. Parent has also agreed to
reimburse Gleacher & Co. for certain reasonable out-of-pocket expenses incurred
in connection with the Offer (including the reasonable fees and disbursements
of outside counsel) and to indemnify Gleacher & Co. against certain
liabilities, including certain liabilities under the federal securities laws.
Purchaser has retained Georgeson & Company Inc. to act as the Information
Agent and American Stock Transfer & Trust Company to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interviews and may request
brokers, dealers and other nominee shareholders to forward materials relating
to the Offer to beneficial owners. The Information Agent and the Depositary
each will receive reasonable and customary compensation for their respective
services, will be reimbursed for certain out-of-pocket expenses and will be
indemnified against certain liabilities in connection therewith, including
certain liabilities under the federal securities laws.
Purchaser will not pay any fees or commissions to any broker or dealer or
any other person (other than the Dealer Manager, the Information Agent and the
Depository) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by Purchaser for reasonable and necessary costs and expenses incurred by them
in forwarding materials to their customers.
18. Miscellaneous. The Offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of Shares in any jurisdiction in which
the making of the Offer or acceptance thereof would not be in compliance with
the laws of such jurisdiction. However, Purchaser may, in its discretion, take
such action as it may deem necessary to make the Offer in any such jurisdiction
and extend the Offer to holders of Shares in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER 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.
Purchaser has filed the Schedule 14D-1 with the Commission, furnishing
certain additional information with respect to the Offer. The Schedule 14D-1
may be examined and copies may be obtained from the offices of the Commission
in the manner set forth in Section 7 of this Offer to Purchase (except that
such information will not be available at the regional offices of the
Commission).
GN ACQUISITION CORPORATION
May 14, 1999
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
1. Directors and Executive Officers of Parent. The name, business address,
present principal occupation or employment and five-year employment history of
each director and executive officer of Parent and certain other information are
set forth below. Unless otherwise indicated below, the address of each director
and officer is c/o GN Great Nordic, Kongens Nytorv 26, DK-1016 Copenhagen K,
Denmark. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to employment with Parent. All directors and officers
listed below are Danish citizens, except for Cato F. Sverdrup who is a
Norwegian citizen. Directors are identified by an asterisk next to their names.
<TABLE>
Present Principal Occupation or Employment and
Name and Business Address Five-Year Employment History
- ---------------------------------------------- -----------------------------------------------------------
<S> <C>
*Elvar Vinum (Chairman) Executive Vice President of Danisco A/S 1989-98. Member of
born 1936 the Board of Kapital Holding A/S, BG Bank A/S, Investerings-
foreningen BG Invest, dk-invest management A/S,
Sankt Jakobs Gade 9, 2 tv. Topdanmark A/S, NCC Rasmussen & Schiodt A/S. Member
2100 Copenhagen 0 of the Board of GN Great Nordic Ltd. since 1998.
Denmark
*Mogens Hugo Jorgensen (Deputy Chairman) President and Chief Executive Officer of C.W. Obel A/S since
born 1943 1991. Member of the Board of A/S Motortramp, A/S Ph0nix
Contractors, Skandinavisk Holding A/S, Unidanmark A/S.
Vestergade 2 Member of the Board of GN Great Nordic Ltd. since 1994.
1456 Copenhagen K
Denmark
*Finn Junge-Jensen Dean of the Copenhagen Business School since 1987.
born 1944 Member of the Board of Forskerbyen Symbion A/S, PLS
Consult A/S and Munksgaard A/S. Member of the Board of
Handelshojskolen GN Great Nordic Ltd. since 1990.
Struensegade 7-9
2200 Copenhagen N
Denmark
*Preben Schou President and Chief Executive Officer of NESA A/S and I/S
born 1936 Sjaellandske Kraftvaerker 1984-1998. Chairman of the Board
of ELKRAFT-Consult A/S, I/S Sjaellandske Kraftvaerker,
Poppel Alle 12 B ELKRAFT 1984-1998, Brodrene Hartmann A/S, Siemens A/S.
2840 Holte Member of the Board of GN Great Nordic Ltd. since 1992.
Denmark
1
<PAGE>
Present Principal Occupation or Employment and
Name and Business Address Five-Year Employment History
- ---------------------------------------------- -----------------------------------------------------------
*Cato F. Sverdrup President of Atlantic Marine Holding Company. Member of
born 1935 the Board of MAN B&W Diesel A/S, Rasmussen & Schiodt
Holding A/S 1985-1995. Member of the Board of GN Great
Atlantic Marine Holding Company Nordic Ltd. since 1989, (Deputy Chairman 1994-1998).
Main Gate Dunlap Drive
Mobile, Alabama 36652
USA
*Peter Alexander Foss President and Chief Executive Officer of Foss A/S. Member
born 1956 of the Board of Foss Electric A/S. Deputy Chairman of A/S
Foss & Co. Member of the Board of Carl Bro. Member of the
Slangerupgade 69 Board of GN Great Nordic Ltd. since 1999.
3400 Hillerod
Denmark
*Erik Boye Jensen Technical Manager for GN Great Northern Telegraph
born 1940 Company since 1992. Senior Manager for GN Great Northern
Telegraph Company from 1984 to 1992. Staff-elected
GN Great Northern Telegraph Company Member of the Board of GN Great Nordic Ltd. since 1989.
Kongens Nytorv 26 Re-elected in 1994 for further period of office.
1016 Copenhagen K
Denmark
*Lars Jesper Pontoppidan Toolmaker for GN Danavox since 1977. Staff-elected
born 1949 Member of the Board of GN Great Nordic Ltd. since 1994.
Markaervej 2A
2630 Taastrup
Denmark
*Lars Thomassen Head of Treasury and Investor Relations of GN Great Nordic
born 1964 Ltd. since 1994. Staff-elected Member of the Board of GN
Great Nordic Ltd. since 1998.
Jorgen Lindegaard President & CEO of GN Great Nordic Ltd. since 1997.
born 1948 Director of Tele Danmark A/S 1995-1996. Executive Vice
President of GN Great Nordic Ltd. 1996-1997. Member of the
Board of Kansas Workwear A/S, FinansieringsInstituttet for
Industri og Handvaerk A/S and Superfos a/s.
Jorn Kildegaard Executive Vice President of GN Great Nordic Ltd. since 1993.
born 1955 Member of the Board of Glunz & Jensen A/S, Trykko Pack
A/S and Danish Venture Finance A/S.
</TABLE>
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<PAGE>
2. Directors and Executive Officers of Purchaser. The name, business
address, present principal occupation or employment and five-year employment
history of each director and executive officer of Purchaser and certain other
information are set forth below. Unless otherwise indicated below, the address
of each director and officer is c/o GN Great Nordic, Kongens Nytorv 26, DK-1016
Copenhagen K, Denmark. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to employment with Purchaser. All
directors and officers listed below are American citizens, except for Jorgen
Lindegaard and Jorn Kildegaard, who are Danish citizens. Directors are
identified by an asterisk next to their names.
<TABLE>
Present Principal Occupation or Employment and
Name and Business Address Five-Year Employment History
- ---------------------------------------------- -----------------------------------------------------------
<S> <C>
Jorgen Lindegaard Vice President of Purchaser since the company was founded.
born 1948 President & CEO of GN Great Nordic Ltd. since 1997.
Director of Tele Danmark A/S 1995-1996. Executive Vice
President of GN Great Nordic Ltd. 1996-1997. Member of
the Board of Kansas Workwear A/S, FinansieringsInstituttet
for Industri og Handvaerk A/S and Superfos a/s.
*Jorn Kildegaard Vice President of Purchaser since the company was founded.
born 1955 Executive Vice President of GN Great Nordic Ltd. since
1993. Member of the Board of Glunz & Jensen A/S, Trykko
Pack A/S and Danish Venture Finance A/S.
*P. Michael Fairweather President of Purchaser since the company was founded.
born 1955 President and Chief Executive Officer of GN Netcom Inc.
since October 1996. President of Unex Corporation from
GN Netcom Inc. 1992 until October 1996, at which time the company was
77 Northeastern Boulevard acquired by GN Netcom Inc.
Nashua, New Hampshire 03062
*Donald K. Stevenson Secretary and Chief Financial Officer of Purchaser since the
born 1960 company was founded. Chief Financial Officer and Board
Member of GN Nettest (New York) Inc. since 1997.
GN Nettest Inc. Treasurer and Board Member of GN Investments Inc. Vice
109 N. Genesee Street President of Finance of GN Nettest (Boston), Inc. Vice
Utica, New York 13502 President of Finance of Rome Cable Corp. from 1994-1997.
</TABLE>
ADDITIONAL INFORMATION ON THE DESIGNATION OF REPRESENTATIVES TO THE BOARD OF
DIRECTORS OF THE COMPANY
Prior to the consummation of the Merger, Purchaser may designate some of
the people listed on Schedule I to the Board of Directors of the Company. The
Merger Agreement provides that upon the purchase by Purchaser pursuant to the
Offer of Shares that satisfies the Minimum Condition or the Revised Minimum
Number, Parent shall be entitled to designate directors on the Company's Board
of Directors as described in Section 10 under "Merger Agreement--Directors".
None of the executive officers or directors of GN Great Nordic Ltd. or any
of its subsidiaries, including Purchaser, currently is a director of, or holds
any position with, the Company. Except for the transactions contemplated by the
Merger Agreement, none of Parent or Purchaser and, to the best knowledge of
Purchaser and Parent, none of their directors or executive officers, as the
case may be, or any of their associates beneficially owns any equity
securities, or rights to acquire any equity securities, of the Company or has
been involved in any transactions with the Company or any of its directors,
executive officers or affiliates which are required to be disclosed pursuant to
the rules and regulations of the Commission, including Rule 14f-1 of the
Exchange Act.
3
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates for Shares and any other required documents should
be sent to the Depositary at one of the addresses set forth below:
The Depositary for the Offer is:
American Stock Transfer & Trust Company
By Mail: By Facsimile By Hand/
40 Wall Street Transmission: Overnight Delivery:
46th Floor (Eligible Institutions 40 Wall Street
New York, New York 10005 Only) 46th Floor
(Attention: Reorganization (718) 234-5001 New York, New York 10005
Department) (Attention: Reorganization
Department)
Confirm by Telephone:
(718) 921-8200
For Information Call:
(718) 921-8200
Questions or requests for assistance or additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth below. Shareholders may also contact their broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
GLEACHER & CO. LLC
660 Madison Avenue
New York, New York 10021
(212) 418-4209 (call collect)
Exhibit (a)(2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
(Including the Associated Rights)
of
ReSound Corporation
Pursuant to the Offer to Purchase
dated May 14, 1999
of
GN Acquisition Corporation
an indirect, wholly owned subsidiary of
GN Great Nordic Ltd.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, JUNE 11, 1999, UNLESS THE OFFER IS EXTENDED.
To: AMERICAN STOCK TRANSFER & TRUST COMPANY, Depositary
By Mail: By Facsimile By Hand/
40 Wall Street Transmission: Overnight Delivery:
46th Floor (Eligible Institutions 40 Wall Street
New York, New York 10005 Only) 46th Floor
(Attention: Reorganization (718) 234-5001 New York, New York 10005
Department) (Attention: Reorganization
Department)
Confirm by Telephone:
(718) 921-8200
For Information Call:
(718) 921-8200
Delivery of this instrument to an address other than as set forth above or
transmission of instructions to a facsimile number other than the ones listed
above will not constitute a valid delivery.
This Letter of Transmittal is to be used if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if delivery of Shares (as defined below) is to be made
by book-entry transfer to the Depositary's account at The Depository Trust
Company (hereinafter referred to as the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase.
Shareholders who cannot deliver their Shares and all other documents
required hereby to the Depositary by the Expiration Date (as defined in the
Offer to Purchase) must tender their Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
<PAGE>
DESCRIPTION OF SHARES TENDERED
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) Shares Tendered
(Please fill in, if blank) (Attach additional list if necessary)
- -----------------------------------------------------------------------------------------------------------------
Total Number of Shares Number of
Certificate Represented by Shares
Number(s)* Certificate(s)* Tendered**
-------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Total Shares
- -----------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to
the Depositary are being tendered. See Instruction 4.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
[ ] CHECK HERE IF TENDERED 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 No.________________________________at The Depository Trust Company
Transaction Code No.______________________________________________________
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Stockholder(s)_______________________________________
Date of Execution of Notice of Guaranteed Delivery________________________
Name of Institution which Guaranteed Delivery_____________________________
If delivery is by book-entry transfer:
Name of Tendering Institution________________________________________
Account No.________________________________at The Depository Trust Company
Transaction Code No.______________________________________________________
-----------------------
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Gentlemen:
The undersigned hereby tenders to GN Acquisition Corporation, a California
corporation ("Purchaser") and an indirect wholly-owned subsidiary of GN Great
Nordic Ltd., the above-described shares of Common Stock, par value $0.01 per
share (including the associated preferred share purchase rights, the "Shares"),
of ReSound Corporation, a California corporation (the "Company"), pursuant to
Purchaser's offer to purchase all outstanding Shares of Common Stock at a price
of $8.00 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated May 14, 1999, receipt
of which is hereby acknowledged, and in this Letter of Transmittal (which
together constitute 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 Shares tendered pursuant to the Offer.
Upon the terms and subject to the terms and conditions of the Offer and
effective upon acceptance for payment of and payment for the Shares tendered
herewith, the undersigned hereby sells, assigns and transfers to or upon the
order of Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby (and any and all other Shares or other securities
issued or issuable in respect thereof on or after May 10, 1999) and appoints
the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and all such other Shares or
securities), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares (and all such other Shares or securities), or
transfer ownership of such Shares (and all such other Shares or securities) on
the account books maintained by the Book-Entry Transfer Facility, together, in
any such case, with all accompanying evidences of transfer and authenticity, to
or upon the order of Purchaser, (b) present such Shares (and all such other
Shares or securities) for transfer on the books of the Company and (c) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and all such other Shares or securities), all in accordance with the
terms of the Offer.
The undersigned hereby irrevocably appoints J0rn Kildegaard, Poul Erik
Tofte and Jens Ole Legart and each of them, the attorneys and proxies of the
undersigned, each with full power of substitution, to exercise all voting and
other rights of the undersigned in such manner as each such attorney and proxy
or his substitute shall in his sole discretion deem proper, with respect to all
of the Shares tendered hereby which have been accepted for payment by Purchaser
prior to the time of any vote or other action (and any and all other Shares or
other securities issued or issuable in respect thereof on or after May 10,
1999), at any meeting of shareholders of the Company (whether annual or special
and whether or not an adjourned meeting), by written consent or otherwise. This
proxy is irrevocable and is granted in consideration of, and is effective upon,
the acceptance for payment of such Shares by Purchaser in accordance with the
terms of the Offer. Such acceptance for payment shall revoke any other proxy or
written consent granted by the undersigned at any time with respect to such
Shares (and all such other Shares or securities), and no subsequent proxies
will be given or written consents will be executed by the undersigned (and if
given or executed, will not be deemed to be effective).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other Shares or other securities issued or
issuable in respect thereof on or after May 10, 1999) and that 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 undersigned will,
upon request, execute and deliver any additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby (and all such other
Shares or securities).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
3
<PAGE>
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and
Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions", please
issue the check for the purchase price of any Shares purchased, and return any
Shares not tendered or not purchased, in the name(s) of the undersigned (and,
in the case of Shares tendered by book-entry transfer, by credit to the account
at the Book-Entry Transfer Facility designated above). Similarly, unless
otherwise indicated under "Special Delivery Instructions", please mail the
check for the purchase price of any Shares purchased and any certificates for
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Payment Instructions" and
"Special Delivery Instructions" are completed, please issue the check for the
purchase price of any Shares purchased and return any Shares not tendered or
not purchased in the name(s) of, and mail said check and any certificates to,
the person(s) so indicated. 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 of the Shares so tendered.
4
<PAGE>
- --------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 6, 7 and 8)
To be completed ONLY if the check for the purchase
price of Shares purchased (less the amount of any
federal income and backup withholding tax required to
be withheld) or certificates for Shares not tendered or
not purchased are to be issued in the name of someone
other than the undersigned.
Mail [ ] check
[ ] certificate(s) to:
Name
------------------------------------------------
(Please Print)
Address
------------------------------------------------
- --------------------------------------------------------
(Zip Code)
- --------------------------------------------------------
(Taxpayer Identification No.)
- --------------------------------------------------------
- --------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 6 and 8)
To be completed ONLY if the check for the purchase
price of Shares purchased (less the amount of any
federal income and backup withholding tax required to
be withheld) or certificates for Shares not tendered or
not purchased are to be mailed to someone other than
the undersigned or to the undersigned at an address
other than that shown below the undersigned's
signature(s).
Mail [ ] check
[ ] certificate(s) to:
Name
------------------------------------------------
(Please Print)
Address
------------------------------------------------
- --------------------------------------------------------
(Zip Code)
- --------------------------------------------------------
(Taxpayer Identification No.)
- --------------------------------------------------------
5
<PAGE>
- -------------------------------------------------------------------------------
SIGN HERE
(Please complete Substitute Form W-9 below)
___________________________________________________
___________________________________________________
Signature(s) of Owners
Dated______________________________, 199___________
Name(s)____________________________________________
___________________________________________________
(Please Print)
Capacity (full title)______________________________
Address____________________________________________
(Include Zip Code)
Area Code and
Telephone Number ___________________________________________
(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 certificates
and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, agent, officer
of a corporation or other person acting in a fiduciary or
representative capacity, please set forth full title and see
Instruction 5.)
Guarantee of Signatures(s)
(If required; see Instructions 1 and 5)
Name of Firm ________________________________________________
Authorized Signature_________________________________________
Dated_____________________________, 199______________________
- -------------------------------------------------------------------------------
6
<PAGE>
<TABLE>
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Payer: American Stock Transfer & Trust Company
SUBSTITUTE
FORM W-9 Part I Taxpayer Identification No.-- For All Accounts Part II For Payees Exempt
.................................................................. From Backup With-
holding (see
enclosed Guidelines)
<S> <C> <C> <C>
Department of the Treasury Enter your taxpayer identification
Internal Revenue Service number in the appropriate box. For ______________________
most individuals and sole proprietors, ______________________
this is your Social Security Number. Social Security Number
For other entities, it is your Employer
Identification Number. If you do not
have a number, see "How to Obtain a OR
TIN" in the enclosed Guidelines
Payer's Request for Note: If the account is in more than ______________________
Taxpayer Identification No. one name, see the chart on page 2 of ______________________
the enclosed Guidelines to determine Employee Identification
what number to enter. Number
- -----------------------------------------------------------------------------------------------------------------------------------
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 either (a) 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 (b) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer identification number within (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a number;
(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, or (b) I have not been notified
by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and
(3) Any information provided on this form is true, correct and complete.
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 and you have not received a notice from the IRS advising you that backup
withholding has terminated.
- -----------------------------------------------------------------------------------------------------------------------------------
SIGNATURE___________________________________________________ DATE__________________________________________________________, 199__
- -----------------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
</TABLE>
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is
a member of a recognized Medallion Program approved by The Securities Transfer
Associations, Inc. (an "Eligible Institution"). Signatures on this Letter of
Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed
by the registered holder(s) of the 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 herewith and such holder(s) have not completed the instruction
entitled "Special Payment Instructions" on this Letter of Transmittal or (b) if
such Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of
Transmittal is to be used either if certificates are to be forwarded herewith
or, unless an Agent's Message is utilized, if delivery of Shares is to be made
by book-entry transfer pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, as well as
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof 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 at one of its addresses set forth on the front page of this Letter
of Transmittal by the Expiration Date. Shareholders who cannot deliver their
Shares and all other required documents to the Depositary by the Expiration
Date must tender their Shares pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a)
such tender must be made by or through an Eligible Institution, (b) a properly
completed and duly executed Notice of Guaranteed Delivery substantially in the
form provided by Purchaser must be received by the Depositary by the Expiration
Date and (c) the certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, as well as
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof or, in the case of a book-entry delivery, an Agent's Message) and any
other documents required by this Letter of Transmittal, must be received by the
Depositary within three National Association of Securities Dealers Market
System trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in Section 3 of the Offer to Purchase.
The method of delivery of Shares and all other required documents is at
the option and risk of the tendering shareholder. If certificates for Shares
are sent by mail, registered mail with return receipt requested, properly
insured, is recommended.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal
(or facsimile thereof), the tendering shareholder waives any right to receive
any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by
book-entry transfer). If fewer than all the Shares represented by any
certificate delivered to the Depositary are to be tendered, fill in the number
of Shares which are to be tendered in the box entitled "Number of Shares
Tendered". In such case, a new certificate for the remainder of the Shares
represented by the old certificate will be sent to the person(s) signing this
Letter of Transmittal, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as promptly as practicable following the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
8
<PAGE>
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby is held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered or not purchased are to be returned, in the name of any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the
certificates for such Shares. Signature(s) on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any 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 the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. Purchaser will pay any 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 is to be made to, or
Shares not tendered or not purchased are to be returned in the name of, any
person other than the registered holder(s), or if a transfer tax is imposed for
any reason other than the sale or transfer of Shares to Purchaser pursuant to
the Offer, then the amount of any stock transfer taxes (whether imposed on the
registered holder(s), such other person or otherwise) will be deducted from the
purchase price unless satisfactory evidence of the payment of such taxes, or
exemption therefrom, is submitted herewith.
7. Special Payment and Delivery Instructions. If the check for the
purchase price of any Shares purchased is to be issued, or any Shares not
tendered or not purchased are to be returned, in the name of a person other
than the person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Shareholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account at the Book-Entry
Transfer Facility as such shareholder may designate under "Special Payment
Instructions". If no such instructions are given, any such Shares not purchased
will be returned by crediting the account at the Book-Entry Transfer Facility
designated above.
8. Substitute Form W-9. Under the federal income tax laws, the Depositary
will be required to withhold 31% of the amount of any payments made to certain
shareholders pursuant to the Offer. In order to avoid such backup withholding,
each tendering shareholder, and, if applicable, each other payee, must provide
the Depositary with such shareholder's or payee's correct taxpayer
identification number and certify that such shareholder or payee is not subject
to such backup withholding by completing the Substitute Form W-9 set forth
above. In general, if a shareholder or payee is an individual, the taxpayer
identification number is the Social Security number of such individual. If the
Depositary is not provided with the correct taxpayer identification number, the
shareholder or payee may be subject to a $50 penalty imposed by the Internal
Revenue Service. Certain shareholders or payees (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements.
9
<PAGE>
In order to satisfy the Depositary that a foreign individual qualifies as an
exempt recipient, such shareholder or payee must submit a statement, signed
under penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. For further information
concerning backup withholding and instructions for completing the Substitute
Form W-9 (including how to obtain a taxpayer identification number if you do
not have one and how to complete the Substitute Form W-9 if Shares are held in
more than one name), consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Shares to be deemed invalidly tendered, but may require the Depositary to
withhold 31% of the amount of any payments made pursuant to the Offer. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained provided that the required information is furnished to
the Internal Revenue Service. NOTE: FAILURE TO COMPLETE AND RETURN THE
SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS
MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
9. Requests for Assistance or Additional Copies. Requests for assistance
or additional copies of the Offer to Purchase and this Letter of Transmittal
may be obtained from the Information Agent or the Dealer Manager at their
respective addresses or telephone numbers set forth below.
- -------------------------------------------------------------------------------
(DO NOT WRITE IN SPACES BELOW)
- -------------------------------------------------------------------------------
Date Received_____________ Accepted By_______________ Checked By_______________
- -------------------------------------------------------------------------------
Shares Shares Shares Check Amount of Shares Certificate Block
Surrendered Tendered Accepted No. Check Returned No. No.
- ----------- -------- -------- ----- --------- -------- ----------- -----
Gr_______
Net______
- -------------------------------------------------------------------------------
Delivery Prepared By_____________ Checked By________________ Date______________
- -------------------------------------------------------------------------------
10
<PAGE>
The Information Agent is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager is:
GLEACHER & CO. LLC
660 Madison Avenue
New York, New York 10021
(212) 418-4209 (call collect)
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
- ------------------------------- -------------------------
For this type of account: Give the TAXPAYER
IDENTIFICATION
number of--
- ------------------------------- -------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, the first
individual on the
account(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
a designated ward, minor, person(3)
or incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- ------------------------------- -------------------------
<PAGE>
- ------------------------------- -------------------------
For this type of account: Give the TAXPAYER
IDENTIFICATION
number of--
- ------------------------------- -------------------------
9. A valid trust, estate, or The legal entity (Do not
pension trust 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 The partnership
in 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 The public entity
Department of
Agriculture in the name of
a public entity (such as a
State or local government,
school district, or prison)
that receives agricultural
program payments
- ---------
(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 your individual name. You may also enter your business name. You
may use either your Social Security Number or Employer Identification
Number.
(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>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you do not have a taxpayer identification number or you do
not 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 or Website
of the Social Security Administration or the Internal Revenue
Service and apply for a number.
Payees Exempt from Backup Withholding
The following is a list of payees exempt from backup
withholding and for which no information reporting is
required. For interest and dividends, all listed payees are
exempt except those identified in item (9). For broker
transactions, payees listed in items (1) through (13) and a
person registered under the Investment Advisors Act of 1940
who regularly acts as a broker are exempt. Payments subject
to reporting under Sections 6041 and 6041A of the Internal
Revenue Code (the "Code") are generally exempt from
backup withholding only if made to payees described in items
(1) through (7), except a corporation that provides medical
and health care services or bills and collects payments for
such services is not exempt from backup withholding or
information reporting. Only payees described in items (2)
through (6) are exempt from backup withholding for barter
exchange transactions, patronage dividends, and payments by
certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a)
of the Code, an IRA, or a custodial account under
Section 403(b)(7) of the Code if the account satisfies
the requirements of Section 401(f)(2).
(3) The United States or any of its agencies or
instrumentalities.
(4) A state, the District of Columbia, a possession of the
United States, or any of their political subdivisions or
instrumentalities.
(5) A foreign government or any of its political
subdivisions, agencies or instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to
register in the United States, the District of Columbia or
a possession of the United States.
(9) A futures commission merchant registered with the
Commodity Futures Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all items during the tax year
under the Investment Company Act of 1940.
(12) A common trust fund operated by a bank under Section
584(a) of the Code.
(13) A financial institution.
(14) A middleman known in the investment community as a
nominee or who is listed in the most recent publication
of the American Society of Corporation Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under Section 664 of the Code
or described in Section 4947 of the Code.
Payments of dividends and patronage dividends not generally
subject to backup withholding include the following:
o Payments to nonresident aliens subject to withholding
under U.C. Section 1441.
o Payments to partnerships not engaged in a trade or
business in the U.S. and which have at least one
nonresident partner.
o Payments of patronage dividends where the amount
received is not paid in money.
o Payments made by certain foreign organizations.
Payments of interest not generally subject to backup
withholding include the following:
o 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.
o Payments of tax-exempt interest (including exempt-
interest dividends under U.C. Section 852).
o Payments described in U.C. Section 6049(b)(5) to
nonresident aliens.
o Payments on tax-free covenant bonds under U.C.
Section 1451.
o Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to
avoid possible erroneous backup withholding. FILE THIS
FORM WITH THE PAYER.
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 U.C. Sections 6041, 6041A(a), 6045, and
6050A.
Privacy Act Notice.--Section 6109 of the Code requires most
recipients of dividend, interest, or other payments to give
taxpayer identification numbers to payers who must report the
payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers
whether or not recipients are required to file a tax return.
Payers must generally withhold 31% of taxable interest,
dividend, 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.
FOR ADDITIONAL INFORMATION CONTACT YOUR
TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
NOTICE OF GUARANTEED DELIVERY
This form, or a form substantially equivalent to this form, must be used
to accept the Offer (as defined below) if the shares of Common Stock of ReSound
Corporation and all other documents required by the Letter of Transmittal
cannot be delivered to the Depositary by the expiration of the Offer. Such form
may be delivered by hand or facsimile transmission, telex or mail to the
Depositary. See Section 3 of the Offer to Purchase.
To: American Stock Transfer & Trust Company, as Depositary
By Mail: By Facsimile By Hand/
40 Wall Street Transmission: Overnight Delivery:
46th Floor (Eligible Institutions 40 Wall Street
New York, New York 10005 Only) 46th Floor
(Attention: Reorganization (718) 234-5001 New York, New York 10005
Department) (Attention: Reorganization
Department)
Confirm by Telephone:
(718) 921-8200
For Information Call:
(718) 921-8200
Gentlemen:
The undersigned hereby tenders to GN Acquisition Company, a California
corporation ("Purchaser") and an indirect wholly-owned subsidiary of GN Great
Nordic Ltd., upon the terms and subject to the conditions set forth in the
Offer to Purchase dated May 14, 1999 and the related Letter of Transmittal
(which together constitute the "Offer"), receipt of which is hereby
acknowledged, _______ shares of Common Stock, par value $0.01 per share
(including the associated preferred share purchase rights, the "Shares"), of
ReSound Corporation, a California corporation, pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase.
Certificate Nos. (if available) SIGN HERE
_____________________________________ _______________________________________
Signature(s)
_____________________________________ _______________________________________
(Address)
If shares will be tendered by
book-entry transfer: _______________________________________
(Name(s)) (Please Print)
Name of Tendering Institution
_____________________________________ _______________________________________
(Zip Code)
Account No._________________________ at _______________________________________
The Depository Trust Company (Area Code and Telephone No.)
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
a commercial bank or trust company having an office or correspondent in the
United States, guarantees (a) that the above named person(s) "own(s)" the
Shares tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, (b) that such tender of Shares complies with Rule 14e-4
and (c) to deliver to the Depositary the Shares tendered hereby, together with
a properly completed and duly executed Letter(s) of Transmittal (or
facsimile(s) thereof) or an Agent's Message (as defined in the Offer to
Purchase) in the case of a book-entry delivery and any other required
documents, all within three National Association of Securities Dealers National
Market System trading days of the date hereof.
--------------------------------------------------
(Name of Firm)
--------------------------------------------------
(Authorized Signature)
--------------------------------------------------
(Name)
--------------------------------------------------
(Address)
--------------------------------------------------
(Zip Code)
--------------------------------------------------
(Area Code and Telephone No.)
Dated:__________________, 1999.
Exhibit (a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights)
of
ReSound Corporation
at
$8.00 Net Per Share
by
GN Acquisition Corporation
an indirect wholly owned subsidiary of
GN Great Nordic Ltd.
May 14, 1999
To Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees:
We have been appointed by GN Acquisition Corporation, a California
corporation ("Purchaser") and an indirect wholly-owned subsidiary of GN Great
Nordic Ltd. to act as Dealer Manager in connection with its offer to purchase
all outstanding shares of Common Stock, par value $0.01 per share, (including
the associated preferred share purchase rights, the "Shares"), of ReSound
Corporation, a California corporation (the "Company"), at $8.00 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 14, 1999 and the related Letter of
Transmittal (which together constitute 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 14, 1999;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to
Purchase);
4. A form of 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; and
5. Return envelope addressed to American Stock Transfer & Trust Company,
the Depositary.
<PAGE>
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 11, 1999, UNLESS THE OFFER IS EXTENDED.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Dealer Manager, the Information Agent or the
Depositary as described in the Offer to Purchase) for soliciting tenders of
Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse
brokers, dealers, commercial banks and trust companies for reasonable and
necessary costs and expenses incurred by them in forwarding materials to their
customers. Purchaser will pay all stock transfer taxes applicable to its
purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
In order to accept the Offer a duly executed and properly completed Letter
of Transmittal and any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry delivery of
Shares, and any other required documents, should be sent to the Depositary by
12:00 midnight, New York City time, on Friday, June 11, 1999.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers set
forth on the back cover of the Offer to Purchase.
Very truly yours,
Gleacher & Co. LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF GN ACQUISITION CORPORATION, GN GREAT NORDIC LTD., THE DEALER
MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
2
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights)
of
ReSound Corporation
at
$8.00 Net Per Share
by
GN Acquisition Corporation
an indirect wholly owned subsidiary of
GN Great Nordic Ltd.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated May 14,
1999 and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the offer by GN Acquisition Corporation, a
California corporation ("Purchaser") and an indirect wholly-owned subsidiary of
GN Great Nordic Ltd. ("Parent"), to purchase for cash all outstanding shares of
Common Stock, par value $0.01 per share (including the associated preferred
share purchase rights, the "Shares"), of ReSound Corporation, a California
corporation (the "Company"). We are 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 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 us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the Letter of Transmittal.
Your attention is invited to the following:
1. The tender price is $8.00 per Share, net to you in cash.
2. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Friday, June 11, 1999, unless the Offer is extended.
3. The Board of Directors of the Company has unanimously determined that
each of the Offer, the Merger and the Stock Option Agreement (each as
defined in the Offer) is fair to, and in the best interests of, the
Company and its shareholders, has approved the Offer, the Merger and
the Stock Option Agreement and recommends that the Company's
shareholders accept the offer and tender their Shares pursuant to the
Offer.
<PAGE>
4. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date (as
defined in the Offer) a number of Shares which, together with the
Shares then owned by Purchaser and Parent, would represent at least
ninety percent (90%) of the total number of outstanding Shares (as
defined in the Offer).
5. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any or all of your Shares, please so
instruct us by completing, executing, detaching and returning to us the
instruction form on the detachable part hereof. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Shares, all
such Shares will be tendered unless otherwise specified on the detachable part
hereof. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf by the expiration of the Offer.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction.
Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by American Stock Transfer & Trust Company (the
"Depositary") of (a) Share Certificates and, if applicable, Rights Certificates
or timely confirmation of the book-entry transfer of such Shares and, if
applicable, Rights into the account maintained by the Depositary at The
Depository Trust Company (the "Book-Entry Transfer Facility"), pursuant to the
procedures set forth in Section 3 of the Offer to Purchase, (b) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees or an Agent's Message (as defined in the
Offer to Purchase), in connection with a book-entry delivery, and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may not
be made to all tendering shareholders at the same time depending upon when
certificates for or confirmations of book-entry transfer of such Shares (or
Rights, if available) into the Depositary's account at the Book-Entry Transfer
Facility are actually received by the Depositary.
2
<PAGE>
Instructions with Respect to
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights)
of
ReSound Corporation
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated May 14, 1999, and the related Letter of Transmittal, in
connection with the offer by GN Acquisition Corporation to purchase all
outstanding shares of Common Stock, par value $0.01 per share (including the
associated preferred share purchase rights, the "Shares"), of ReSound
Corporation.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
Number of Shares to be Tendered: SIGN HERE
______________________________Shares* __________________________________________
Signature(s)
Dated_________________________, 199_ __________________________________________
__________________________________________
__________________________________________
Please print name(s) and address(es) here
- ---------
*Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
Exhibit (a)(6)
10 May 1999
GN Great Nordic to acquire ReSound Corporation
GN Great Nordic will make a tender offer to acquire all outstanding shares of
the US company ReSound Corporation at a cash price of USD 8 per share (closing
price on Friday 7 May 1999 USD 6.5625), corresponding to a total price of
approx. USD 180 million (approx. DKK 1,250 million). ReSound is a leading
manufacturer of hearing aids with production facilities in the USA and Europe,
and sales companies in 14 countries in North America, Europe and Asia.
Today, GN Great Nordic has signed a Merger Agreement with ReSound Corporation.
The intention is to combine ReSound Corporation with GN Danavox, and the
surviving company will be named GN ReSound and will become one of the largest
manufacturers of hearing aids and audiological measuring equipment in the
world with a strong presence in all major markets and a turnover of about DKK
1.5 billion.
GN Great Nordic's offer to ReSound Corporation shareholders follows a due
diligence investigation of the company and negotiations with the company's
Board and Management. The Board of Directors of ReSound has recommended that
their shareholders accept the GN Great Nordic offer. The tender offer to
ReSound shareholders will be effective until approximately mid-June 1999,
unless the offer period is extended. The offer is made on the condition that
GN Great Nordic acquires at least 90% of the shares and that the U.S.
antitrust authorities approve the acquisition.
The acquisition of ReSound Corporation will be GN Great Nordic's largest
acquisition ever. The acquisition is part of GN Great Nordic's goal that Group
companies take leading positions and achieve the highest profit margins in
their respective sectors. An acquisition of ReSound Corporation will be a
considerable step forward in achieving these goals and also strengthen GN
Danavox in North America, which is ReSound's core market. It will also be
possible to integrate the companies' technology, as GN Danavox and ReSound
since 1996 have been partners in a strategic alliance on the development of a
second generation digital hearing aid platform.
<PAGE>
ReSound Corporation was founded in 1984 and obtained a NASDAQ listing in New
York in 1993. Company Head Office is in Redwood City (California), with
subsidiaries and sales offices in Canada, Germany, Austria, France,
Switzerland, the UK, Sweden, the Netherlands, Ireland, Australia, New Zealand,
Japan and Hong Kong. The company has approximately 1,000 employees.
In 1998, ReSound Corporation reported turnover of USD 123.4 million (approx.
DKK 827 million). The past two years, earnings have been affected by sizeable
restructuring costs and significant product development costs, however,
ReSound Corporation has implemented and is in the process of completing the
restructuring and the company's accounts for the first quarter of 1999 show
turnover of USD 34.2 million and profit of USD 1.6 million. At the end of the
first quarter 1999, ReSound's equity was USD 20.8 million.
GN Great Nordic estimates that ReSound Corporation has significant growth
potential and that considerable synergies will be realized both within
production and sales. It has been decided that the merged company's head
offices will be located in Redwood City (California). Following a transition
period, Jesper Mailind, GN Danavox' President & CEO, will take over the
position as President & CEO in GN ReSound from Russell D. Hays, ReSound's
President & CEO.
The Board of Directors of GN Great Nordic has for some time evaluated when to
change into presenting the Annual Accounts according to IAS (International
Accounting Standards). It has now been decided that the 1999 Annual Accounts
will be presented according to IAS.
For further details, please contact:
Jorgen Lindegaard Jorn Kildegaard
President & CEO Executive Vice President
GN Great Nordic GN Great Nordic
Tel: (+45) 72 111 888 Tel: (+45) 72 111 820
Exhibit (a)(7)
This announcement is not an offer to purchase or a solicitation of an offer to
sell Shares. The Offer is made solely by the Offer to Purchase dated May 14,
1999 and the related Letter of Transmittal and is not being made to, nor will
tenders be accepted from or on behalf of, holders of Shares in any jurisdiction
in which the making of the Offer or acceptance thereof would not be in
compliance with the laws of such jurisdiction. In those jurisdictions where the
applicable laws require that the Offer be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of Purchaser by the Dealer
Manager or 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
(Including the Associated Rights)
of
ReSound Corporation
at
$8.00 Net per Share
by
GN Acquisition Corporation
an indirect wholly-owned subsidiary of
GN GREAT NORDIC LTD.
GN Acquisition Corporation, a California corporation ("Purchaser") and an
indirect wholly-owned subsidiary of GN Great Nordic Ltd., a Danish corporation
("Parent"), is offering to purchase all outstanding shares of Common Stock, par
value $0.01 per share (including the associated preferred share purchase
rights, the "Shares"), of ReSound Corporation, a California corporation (the
"Company"), at $8.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated May 14, 1999
(the "Offer to Purchase") and in the related Letter of Transmittal (which
together constitute the "Offer").
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 11, 1999,
UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
The purpose of the Offer is to acquire for cash as many outstanding Shares as
possible as a first step in acquiring the entire equity interest in the
Company.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED
AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO
PURCHASE) A NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES THEN OWNED BY
PURCHASER AND PARENT, WOULD REPRESENT AT LEAST NINETY PERCENT (90%) OF THE
TOTAL NUMBER OF OUTSTANDING SHARES (THE "MINIMUM CONDITION").
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH OF
THE OFFER, THE MERGER AND THE STOCK OPTION AGREEMENT (EACH AS DEFINED BELOW) IS
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, HAS
APPROVED THE OFFER, THE MERGER AND THE STOCK OPTION AGREEMENT AND RECOMMENDS
THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as of
May 10, 1999 (the "Merger Agreement") among the Company, Parent and Purchaser.
The Merger Agreement provides, among other things, that as soon as practicable
after the consummation of the Offer, and in accordance with the applicable
provisions of the California General Corporation Law, Purchaser will be merged
with and into the Company (the "Merger"), with the Company continuing as the
surviving corporation (the "Surviving Corporation"). Thereupon, each
outstanding Share (other than Dissenting Shares (as defined in the Offer to
Purchase) and Shares owned by Parent or Purchaser or any of their subsidiaries)
will be converted into and represent the right to receive $8.00 in cash or any
higher price that may be paid per Share in the Offer, without interest.
<PAGE>
The Offer is subject to certain conditions set forth in the Offer to Purchase,
including satisfaction of the Minimum Condition and expiration or termination
of the waiting period applicable to Purchaser's acquisition of Shares pursuant
to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act").
The Merger Agreement provides that, in the event the Minimum Condition is not
satisfied on any Expiration Date, Purchaser may, without the consent of the
Company, (i) extend the Offer; (ii) amend the Offer to waive the Minimum
Condition in contemplation of the exercise of the Top-Up Stock Option (as
defined below) (to the extent the Top-Up Stock Option is exercisable at such
time); or (iii) amend the Offer to provide that, in the event (A) the Minimum
Condition is not satisfied at the next scheduled Expiration Date of the Offer
(without giving effect to the exercise of the Top-Up Stock Option) and (B) the
number of Shares tendered pursuant to the Offer and not withdrawn as of such
next scheduled Expiration Date is more than 50% of the then outstanding Shares,
Purchaser will (x) reduce the number of Shares subject to the Offer to a number
of Shares that, when added to the Shares then beneficially owned by Parent,
will equal 49.99% of the Shares then outstanding (the "Revised Minimum
Number"), (y) reduce the Minimum Condition to the Revised Minimum Number and,
(z) if a number of Shares greater than the Revised Minimum Number is tendered
into the Offer and not withdrawn, purchase, on a pro rata basis, the Revised
Minimum Number of Shares. In the event that all conditions to the Offer other
than the Minimum Condition shall have been satisfied and Shares have not been
accepted for payment by Purchaser prior to July 15, 1999 (or, if certain
regulatory approvals have not been obtained, September 15, 1999), on such date,
Purchaser shall take either the action contemplated by clause (ii) above or the
action contemplated by clause (iii) above.
Concurrently with the execution of the Merger Agreement, and as a condition and
inducement to Parent's and Purchaser's entering into the Merger Agreement, the
Company entered into a Stock Option Agreement dated as of May 10, 1999 (the
"Stock Option Agreement") with Parent and Purchaser. Pursuant to the Stock
Option Agreement, the Company granted to Purchaser an irrevocable option (the
"Top-Up Stock Option") to purchase that number of Shares (the "Top-Up Option
Shares") equal to the number of Shares that, when added to the number of Shares
owned by Purchaser, Parent and their subsidiaries immediately following
consummation of the Offer, will constitute 90% of the Shares then outstanding
(assuming the issuance of the Top-Up Option Shares) at a purchase price per
Top-Up Option Share equal to the Offer price, subject to the terms and
conditions set forth in the Stock Option Agreement, including, without
limitation, that the Top-Up Stock Option shall not be exercisable if the number
of Shares that would otherwise be issued thereunder would exceed the number of
authorized Shares available for issuance.
Purchaser reserves the right, at any time or from time to time, to extend the
period of time during which the Offer is open by giving oral or written notice
of such extension to the Depositary. Any such extension will be followed as
promptly as practicable by public announcement thereof.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment tendered Shares when, as and if Purchaser gives oral or written notice
to the Depositary of its acceptance of the tenders of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of certificates for 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)), a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other required documents.
If proration is required as a result of any reduction in the number of Shares
subject to the Offer to a number equal to the Revised Minimum Number, then,
because of the difficulty of determining precisely the number of Shares validly
tendered and not withdrawn, Purchaser would not expect to announce the final
results of proration until approximately seven National Association of
Securities Dealers National Market System trading days after the Expiration
Date. Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of Shares may obtain
such preliminary information from the Depositary and may also be able to obtain
such preliminary information from their brokers. Purchaser will not pay for any
Shares accepted for payment pursuant to the Offer until the final proration
factor is known.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date. Thereafter, such tenders are irrevocable, except that
they may be withdrawn after July 12, 1999 unless theretofore accepted for
payment as provided in the Offer to Purchase. To be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth in the
Offer to Purchase and must specify the name of the person who tendered the
Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares
to be withdrawn have been delivered to the Depositary, a signed notice of
withdrawal with (except in the case of Shares tendered by an Eligible
Institution (as defined in the Offer to Purchase)) signatures guaranteed by an
Eligible Institution must be submitted prior to the release of such Shares. In
addition, such notice must specify, in the case of Shares tendered by delivery
of certificates, the name of the registered holder (if different from
<PAGE>
that of the tendering stockholder) and the serial numbers shown on the
particular certificates evidencing the Shares to be withdrawn or, in the case
of Shares tendered by book-entry transfer, the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6
of the General Rules and Regulations under the Securities Exchange Act of 1934
is contained in the Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's shareholder lists and
security position listings 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 and will be furnished to brokers,
banks and similar persons whose names, or the names of whose nominees, appear
on the shareholder 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 Letter of Transmittal contain important information
which should be read before any decision is made with respect to the Offer.
Requests for copies of the Offer to Purchase and the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent or the Dealer Manager as set forth below, and copies will be furnished
promptly at Purchaser's expense. Purchaser will not pay any fees or commissions
to any broker or dealer or other person (other than the Information Agent, the
Depositary and the Dealer Manager) for soliciting tenders of Shares pursuant to
the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
-------------------------.
Wall Street Plaza
New York, New York 10005
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
GLEACHER & CO. LLC
660 Madison Avenue
New York, New York 10021
(212) 418-4209
(call collect)
May 14, 1999
EXHIBIT (c)(1)
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of
May 10, 1999
among
RESOUND CORPORATION,
GN GREAT NORDIC LTD.
and
GN ACQUISITION CORPORATION
<PAGE>
TABLE OF CONTENTS
--------------
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions....................................................1
ARTICLE 2
THE OFFER
SECTION 2.01. The Offer......................................................5
SECTION 2.02. Company Action.................................................7
SECTION 2.03. Directors......................................................8
ARTICLE 3
THE MERGER
SECTION 3.01. The Merger....................................................10
SECTION 3.02. Conversion of Shares..........................................10
SECTION 3.03. Surrender and Payment.........................................11
SECTION 3.04. Dissenting Shares.............................................12
SECTION 3.05. Stock Options.................................................12
SECTION 3.06. Employee Stock Purchase Plan..................................13
SECTION 3.07. Adjustments...................................................13
SECTION 3.08. Withholding Rights............................................14
SECTION 3.09. Lost Certificates.............................................14
ARTICLE 4
THE SURVIVING CORPORATION
SECTION 4.01. Articles of Incorporation.....................................14
SECTION 4.02. Bylaws........................................................14
SECTION 4.03. Directors and Officers........................................14
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 5.01. Corporate Existence and Power.................................15
SECTION 5.02. Corporate Authorization.......................................15
SECTION 5.03. Governmental Authorization....................................15
SECTION 5.04. Non-contravention.............................................16
i
<PAGE>
PAGE
----
SECTION 5.05. Capitalization................................................16
SECTION 5.06. Subsidiaries..................................................17
SECTION 5.07. SEC Filings...................................................18
SECTION 5.08. Financial Statements..........................................19
SECTION 5.09. Disclosure Documents..........................................19
SECTION 5.10. Absence of Certain Changes....................................20
SECTION 5.11. No Undisclosed Material Liabilities...........................22
SECTION 5.12. Compliance with Laws and Court Orders.........................22
SECTION 5.13. Litigation....................................................22
SECTION 5.14. Material Contracts............................................23
SECTION 5.15. Finders' Fees.................................................23
SECTION 5.16. Taxes.........................................................24
SECTION 5.17. Employee Benefit Plans........................................26
SECTION 5.18. Environmental Matters.........................................28
SECTION 5.19. Antitakeover Statutes and Rights Agreement....................29
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 6.01. Corporate Existence and Power.................................29
SECTION 6.02. Corporate Authorization.......................................30
SECTION 6.03. Governmental Authorization....................................30
SECTION 6.04. Non-contravention.............................................30
SECTION 6.05. Disclosure Documents..........................................31
SECTION 6.06. Finders' Fees.................................................31
SECTION 6.07. Financing.....................................................31
ARTICLE 7
COVENANTS OF THE COMPANY
SECTION 7.01. Conduct of the Company........................................32
SECTION 7.02. Shareholder Meeting; Proxy Material...........................33
SECTION 7.03. Access to Information.........................................33
SECTION 7.04. No Solicitation; Other Offers.................................34
SECTION 7.05. Notices of Certain Events.....................................36
SECTION 7.06. Certificate of the Company....................................36
ii
<PAGE>
PAGE
----
ARTICLE 8
COVENANTS OF PARENT
SECTION 8.01. Obligations of Merger Subsidiary..............................36
SECTION 8.02. Voting of Shares..............................................36
SECTION 8.03. Director and Officer Liability................................36
SECTION 8.04. Employee Matters..............................................37
SECTION 8.05. Other Matters.................................................38
ARTICLE 9
COVENANTS OF PARENT AND THE COMPANY
SECTION 9.01. Reasonable Best Efforts.......................................38
SECTION 9.02. Certain Filings...............................................39
SECTION 9.03. Public Announcements..........................................39
SECTION 9.04. Further Assurances............................................39
SECTION 9.05. Merger Without Meeting of Shareholders........................40
ARTICLE 10
CONDITIONS TO THE MERGER
SECTION 10.01. Conditions to Obligations of Each Party......................40
ARTICLE 11
TERMINATION
SECTION 11.01. Termination..................................................40
SECTION 11.02. Effect of Termination........................................42
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Notices......................................................42
SECTION 12.02. Survival of Representations and Warranties...................43
SECTION 12.03. Amendments; No Waivers.......................................44
SECTION 12.04. Expenses.....................................................44
SECTION 12.05. Successors and Assigns.......................................45
SECTION 12.06. Governing Law................................................45
SECTION 12.07. WAIVER OF JURY TRIAL.........................................46
SECTION 12.08. Counterparts; Effectiveness; Benefit.........................46
SECTION 12.09. Entire Agreement.............................................46
iii
<PAGE>
PAGE
----
SECTION 12.10. Captions.....................................................46
SECTION 12.11. Severability.................................................46
SECTION 12.12. Specific Performance.........................................46
SECTION 12.13. Interpretation...............................................47
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 10, 1999 among ReSound
Corporation, a California corporation (the "Company"), GN Great Nordic Ltd., a
Danish corporation ("Parent"), and GN Acquisition Corporation, a California
corporation and an indirect, wholly-owned subsidiary of Parent ("Merger
Subsidiary").
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"Acquisition Proposal" means an inquiry, offer or proposal regarding
any of the following involving the Company or any of its Subsidiaries: (w) any
merger, consolidation, share exchange, recapitalization, business combination
or other similar transaction, (x) any sale, lease, exchange, transfer or other
disposition of all or substantially all the assets of the Company and its
Subsidiaries, taken as a whole, in a single transaction or series of related
transactions, (y) any tender offer or exchange offer for 25 percent or more of
the outstanding Shares or the filing of a registration statement under the
1933 Act in connection therewith, or (z) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing; provided that an "Acquisition Proposal" shall
not be deemed to include the continuing process to sell the Company's
Viennatone manufacturing and export business (the "Viennatone Sale").
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with such Person. As used in this definition, the term "control" (including
the terms "controlling," "controlled by" and "under common control with")
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"California Law" means the General Corporation Law of the State of
California.
<PAGE>
"California Merger Agreement" means the Agreement of Merger among the
Company, Merger Subsidiary and Parent, together with the related officers'
certificates required by Section 1103 of California Law.
"Closing Date" means the date on which the Effective Time occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Balance Sheet" means the consolidated balance sheet of the
Company as of December 31, 1998 and the footnotes thereto set forth in the
Company 10-K.
"Company Balance Sheet Date" means December 31, 1998.
"Company 10-K" means the Company's annual report on Form 10-K, as
amended, for the fiscal year ended December 31, 1998.
"Environmental Laws" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any governmental authority or
other third party, relating to human health and safety, the environment or to
pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials.
"Environmental Permits" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of the Company or any Subsidiary as
currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of
the Code.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"knowledge" of any Person that is not an individual means the
knowledge of such Person's executive officers (which, in the case of the
Company, shall include the knowledge of Messrs. Hays, Giroux, Lopez, Luttrell,
Nolan, Pascoe, Pavlovic, Thrower and Ms. DeBuono) after reasonable inquiry.
2
<PAGE>
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For purposes of this Agreement,
a Person shall be deemed to own subject to a Lien any property or asset that
it has acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention
agreement relating to such property or asset.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the condition (financial or otherwise), business,
assets or results of operations of such Person and its Subsidiaries, taken as
a whole; provided, however, that in determining whether there has been a
Material Adverse Effect with respect to any Person, any adverse effect
attributable to or resulting from the following shall be disregarded: (i)
changes in general economic conditions or changes affecting the industry
generally in which such Person operates, (ii) the direct effect of the public
announcement or pendency of the transactions contemplated hereby on current or
prospective customers of the Person, and (iii) shareholder class action
litigation arising out of this Agreement or the transactions contemplated
hereby. Without limiting the generality of the foregoing, for purposes of this
Agreement, a claim against the Company or liability of the Company (singly or
in the aggregate with other claims or liabilities) for $10,000,000 or more,
which claim or liability has a reasonable likelihood of success on the merits
or reasonable probability of fruition, will be deemed to be materially adverse
to the Company.
"1933 Act" means the Securities Act of 1933.
"1934 Act" means the Securities Exchange Act of 1934.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Revised Minimum Number" shall mean that number of Shares that when
added to the Shares then beneficially owned by Parent would equal 49.99% of
the Shares then outstanding.
"SEC" means the Securities and Exchange Commission.
"Shares" means the shares of common stock, $0.01 par value, of the
Company.
3
<PAGE>
"Stock Option Agreement" means the Stock Option Agreement dated as of
the date hereof among the Company, Parent and Merger Subsidiary pursuant to
which the Company has granted to Merger Subsidiary an option to purchase
Shares.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect
a majority of the board of directors or other persons performing similar
functions are at any time directly or indirectly owned by such Person.
"Top-Up Stock Option" has the meaning set forth in the Stock Option
Agreement.
"Transactions" means the transactions contemplated by this Agreement
and the Stock Option Agreement, including the Offer and the Merger.
Any reference in this Agreement to a statute shall be to such
statute, as amended from time to time, and to the rules and regulations
promulgated thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
- ---- -------
Antitrust Law............................................. 9.01
Certificates.............................................. 3.03
Company Disclosure Documents.............................. 5.09
Company Employees......................................... 8.04
Company Material Contract................................. 5.14
Company Proxy Statement................................... 5.09
Company SEC Documents..................................... 5.07
Company Securities........................................ 5.05
Company Subsidiary Securities............................. 5.06
Company Shareholder Meeting............................... 7.02
Confidentiality Agreement................................. 7.03
Continuing Directors...................................... 2.03
Convertible Notes......................................... 5.05
DOJ....................................................... 9.01
Effective Time............................................ 3.01
Employee Plans............................................ 5.17
ESPP...................................................... 3.06
Exchange Agent............................................ 3.03
FTC....................................................... 9.01
4
<PAGE>
Term Section
- ---- -------
GAAP...................................................... 5.08
Indemnified Person........................................ 8.03
Merger.................................................... 3.01
Merger Consideration...................................... 3.02
Minimum Condition......................................... 2.01
Offer ................................................. 2.01
Offer Documents........................................... 2.01
Options................................................... 5.05
Pre-Closing Tax Period.................................... 5.16
Responsible Party......................................... 12.04
Returns................................................... 5.16
Schedule 14D-1............................................ 2.01
Schedule 14D-9............................................ 2.02
Superior Proposal......................................... 7.04
Surviving Corporation..................................... 3.01
Tax....................................................... 5.16
Tax Asset................................................. 5.16
Taxing Authority.......................................... 5.16
Warrants.................................................. 5.05
ARTICLE 2
THE OFFER
SECTION 2.01. The Offer. (a) Provided that nothing shall have
occurred that would result in a failure to satisfy any of the conditions set
forth in Annex I hereto, as promptly as practicable after the date hereof, but
in no event later than five business days following the public announcement of
this Agreement, Merger Subsidiary shall commence an offer (the "Offer") to
purchase any and all of the outstanding Shares at a price of $8.00 per Share,
net to the seller in cash. Subject to Section 2.01(c), the Offer shall be
subject to the condition that there shall be validly tendered in accordance
with the terms of the Offer, prior to the expiration date of the Offer and not
withdrawn, a number of Shares that, together with the Shares then owned by
Parent and Merger Subsidiary, represents at least 90% of the Shares
outstanding (the "Minimum Condition") and to the other conditions set forth in
Annex I hereto. Merger Subsidiary expressly reserves the right to waive any of
the conditions to the Offer and to make any change in the terms or conditions
of the Offer, provided that, subject to Section 2.01(c), no change or waiver
may be made that, without the prior written consent of the Company, waives the
Minimum Condition, changes the form of consideration to be paid,
5
<PAGE>
decreases the price per Share or the number of Shares sought in the Offer,
imposes conditions to the Offer in addition to those set forth in Annex I, or
is otherwise adverse to the holders of the Shares. Notwithstanding the
foregoing, without the consent of the Company, Merger Subsidiary shall have
the right to extend the Offer (i) from time to time if, at the scheduled or
extended expiration date of the Offer, any of the conditions to the Offer
shall not have been satisfied or waived, until such conditions are satisfied
or waived or (ii) for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer or any period required by applicable law. If all of the conditions to
the Offer are not satisfied or waived on any scheduled expiration date of the
Offer, Merger Subsidiary shall either (i) extend the Offer from time to time
until such conditions are satisfied or waived, provided that Merger Subsidiary
shall not be required to extend the Offer beyond July 31, 1999 (or, if the
second sentence of Section 11.01(b)(i) applies, beyond September 30, 1999) or
(ii) exercise its rights under 2.01(c). Subject to the foregoing and to the
terms and conditions of the Offer, Merger Subsidiary shall, and Parent shall
cause it to, accept for payment and pay for, as promptly as practicable after
the expiration of the Offer, all Shares properly tendered and not withdrawn
pursuant to the Offer that Merger Subsidiary is obligated to purchase. The
Offer shall have an initial scheduled expiration date 20 business days
following commencement thereof.
(b) As soon as practicable on the date of commencement of the Offer,
Merger Subsidiary shall file with the SEC a Tender Offer Statement on Schedule
14D-1 (the "Schedule 14D-1") with respect to the Offer, which will contain the
offer to purchase and form of the related letter of transmittal and summary
advertisement (such Schedule 14D-1 and such documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"). Parent and the Company each agrees
promptly to correct 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. Merger Subsidiary agrees to take all
steps necessary to cause the Schedule 14D-1 as so corrected to be filed with
the SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given an
opportunity to review and comment on the Offer Documents prior to their being
filed with the SEC or disseminated to the holders of Shares.
(c) In the event the Minimum Condition is not satisfied on any
scheduled expiration date of the Offer, Merger Subsidiary may, without the
consent of the Company:
(i) extend the Offer pursuant to Section 2.01(a);
6
<PAGE>
(ii) amend the Offer to waive the Minimum Condition in contemplation
of the exercise the Top-Up Stock Option (to the extent the Top-Up Stock
Option is exercisable at such time); or
(iii) amend the Offer to provide that, in the event (x) the Minimum
Condition is not satisfied at the next scheduled expiration date of the
Offer (without giving effect to the exercise of the Top-Up Stock Option)
and (y) the number of Shares tendered pursuant to the Offer and not
withdrawn as of such next scheduled expiration date is more than 50% of
the then outstanding Shares, Merger Subsidiary shall:
(A) reduce the Minimum Condition to the Revised
Minimum Number,
(B) reduce the number of Shares subject to the Offer to
a number of Shares that when added to the Shares then owned
by Merger Subsidiary will equal the Revised Minimum Number,
and
(C) if a number of Shares greater than the Revised
Minimum Number is tendered into the Offer and not withdrawn,
purchase, on a pro rata basis, the Revised Minimum Number of
Shares.
Notwithstanding any other provision of this Agreement, in the event that
Merger Subsidiary purchases a number of Shares equal to the Revised
Minimum Number, then without the prior written consent of Merger
Subsidiary, at any time prior to the termination of this Agreement, the
Company shall take no action whatsoever (including, without limitation,
the redemption of any Shares) which would have the effect of increasing
the percentage ownership of Shares by Merger Subsidiary in excess of the
Revised Minimum Number.
(d) In the event that all conditions to the Offer other than the
Minimum Condition shall have been satisfied and Shares have not been accepted
for payment by Merger Subsidiary prior to July 15, 1999 (or, if the second
sentence of Section 11.01(b)(i) applies, September 15, 1999), then on such
date Parent shall be required to take either the action contemplated by
Section 2.01(c)(ii) above or the action contemplated by Section 2.01(c)(iii)
above.
SECTION 2.02. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held has (i) unanimously determined that this Agreement, the Stock Option
Agreement
7
<PAGE>
and the Transactions, including the Offer and the Merger, are fair to and in
the best interests of the Company's shareholders, (ii) unanimously approved
and adopted this Agreement, the Stock Option Agreement and the Transactions,
including the Offer and the Merger, in accordance with the requirements of the
California Law and (iii) unanimously resolved to recommend acceptance of the
Offer and approval and adoption of this Agreement and the Merger by its
shareholders, provided that, subject to Section 7.04(c), the Board of
Directors of the Company may withdraw, modify or amend such recommendation
only to the extent the Board of Directors shall have determined in good faith,
on the basis of advice of its outside legal counsel, that, consistent with its
fiduciary duties under applicable law, it must take such action. The Company
further represents that BancBoston Robertson Stephens has delivered to the
Company's Board of Directors its written opinion that the consideration to be
paid in the Offer and the Merger is fair to the holders of Shares from a
financial point of view. The Company has been advised that all of its
directors and executive officers who own Shares intend either to tender their
Shares pursuant to the Offer and, if applicable, to vote in favor of the
Merger. The Company will cause its transfer agent to promptly furnish Parent
with a list of the Company's shareholders, mailing labels and any available
listing or computer file containing the names and addresses of all record
holders of Shares and lists of securities positions of Shares held in stock
depositories and to provide to Parent such additional information (including,
without limitation, updated lists of shareholders, mailing labels and lists of
securities positions) and such other assistance as Parent may reasonably
request in communicating to record and beneficial owners of Shares in
connection with the Offer.
(b) As soon as practicable on the day that the Offer is commenced,
the Company shall file with the SEC and disseminate to holders of Shares, in
each case as and to the extent required by applicable federal securities laws,
a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that shall reflect
the recommendations of the Company's Board of Directors referred to above. The
Company and Parent each agree promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect. The Company agrees to take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and
to the extent required by applicable federal securities laws. Parent and its
counsel shall be given an opportunity to review and comment on the Schedule
14D-9 prior to its being filed with the SEC.
SECTION 2.03. Directors. (a) Effective upon the purchase pursuant
to the Offer of a number of Shares that satisfies the Minimum Condition or the
Revised
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Minimum Number, Parent shall be entitled to designate the number of directors,
rounded up to the next whole number, on the Company's Board of Directors that
equals the product of (i) the total number of directors on the Company's Board
of Directors (giving effect to the election of any additional directors
pursuant to this Section) and (ii) the percentage that the number of Shares
beneficially owned by Parent bears to the total number of Shares outstanding
(provided that if Merger Subsidiary has acquired the Revised Minimum Number of
Shares in the Offer, such number of directors shall be rounded up to the next
whole number plus one to give Parent at least a majority of the members of the
Board of Directors), and the Company shall take all action necessary to cause
Parent's designees to be elected or appointed to the Company's Board of
Directors, including, without limitation, increasing the number of directors,
and seeking and accepting resignations of incumbent directors. At such time,
the Company will also use its best efforts to cause individual directors
designated by Parent to constitute the number of members, rounded up to the
next whole number, on (i) each committee of the Board other than any committee
of the Board established to take action under this Agreement or the Stock
Option Agreement and (ii) each board of directors of each Subsidiary of the
Company (and each committee thereof) that represents the same percentage as
such individuals represent on the Board of Directors of the Company.
Notwithstanding the foregoing, the Company shall use its reasonable best
efforts to ensure that at least one member of the Board of Directors as of the
date hereof who is not an employee of the Company (the "Continuing Director")
shall remain a member of the Board of Directors until the Effective Time.
(b) The Company's obligations to appoint Parent's designees to the
Board of Directors shall be subject to Section 14(f) of the 1934 Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all actions, and
shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors, as Section 14(f) and Rule 14f-1
require in order to fulfill its obligations under this Section. Parent shall
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 Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees
pursuant to Section 2.03(a) and until the Effective Time, the approval of the
Continuing Director shall be required to authorize (and such authorization
shall constitute the authorization of the Board of Directors and no other
action on the part of the Company, including any action by any other director
of the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Board of Directors, any amendment of the articles of incorporation or
bylaws of the Company, any
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extension of time for performance of any obligation or action hereunder by
Parent or Merger Subsidiary and any waiver of compliance with any of the
agreements or conditions contained herein for the benefit of the Company.
ARTICLE 3
THE MERGER
SECTION 3.01. The Merger. (a) At the Effective Time, Merger
Subsidiary shall be merged (the "Merger") with and into the Company in
accordance with California Law, whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving corporation
(the "Surviving Corporation"). At its election, Parent may substitute any of
its direct or indirect wholly-owned subsidiaries for Merger Subsidiary as a
constituent corporation in the Merger. In such an event, the parties agree to
execute an appropriate amendment to this Agreement in order to reflect such
substitution. At its election, Parent may structure the Merger so that the
Company shall be merged with and into Merger Subsidiary with the result that
Merger Subsidiary shall be the Surviving Corporation.
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Merger Subsidiary will file the California Merger Agreement with the
California Secretary of State and make all other filings or recordings
required by California Law in connection with the Merger. The Merger shall
become effective at such time (the "Effective Time") as the California Merger
Agreement is duly filed with the California Secretary of State or at such
later time as is specified in the California Merger Agreement.
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, powers, privileges and franchises and be subject
to all of the obligations, liabilities, restrictions and disabilities of the
Company and Merger Subsidiary, all as provided under California Law.
SECTION 3.02. Conversion of Shares. At the Effective Time:
(a) except as otherwise provided in Section 3.02(b) or Section 3.04,
each Share outstanding immediately prior to the Effective Time shall be
converted into the right to receive $8.00 in cash or any higher price paid for
each Share in the Offer, without interest (the "Merger Consideration");
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(b) each Share owned by Parent or any of its Subsidiaries immediately
prior to the Effective Time shall be canceled, and no payment shall be made
with respect thereto; and
(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights,
powers and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
SECTION 3.03. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint an agent (the "Exchange Agent") for the purpose of
exchanging certificates representing Shares (the "Certificates") for the
Merger Consideration. Parent will make available to the Exchange Agent, as
needed, the Merger Consideration to be paid in respect of the Shares. Promptly
after the Effective Time, Parent will send, or will cause the Exchange Agent
to send, to each holder of Shares at the Effective Time a letter of
transmittal and instructions (which shall specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates to the Exchange Agent) for use in such exchange.
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration will be entitled to receive, upon surrender
to the Exchange Agent of a Certificate, together with a properly completed
letter of transmittal, the Merger Consideration payable for each Share
represented by such Certificate. Until so surrendered, each such Certificate
shall represent after the Effective Time for all purposes only the right to
receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name the surrendered Certificate is
registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such Certificate or establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and exchanged
for the Merger Consideration provided for, and in accordance with the
procedures set forth, in this Article.
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(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.03(a) (and any interest or other income
earned thereon) that remains unclaimed by the holders of Shares twelve months
after the Effective Time shall be returned to Parent, upon demand, and any
such holder who has not exchanged them for the Merger Consideration in
accordance with this Section prior to that time shall thereafter look only to
the Surviving Corporation for payment of the Merger Consideration in respect
of such Shares without any interest thereon. Notwithstanding the foregoing,
the Surviving Corporation shall not be liable to any holder of Shares for any
amount paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by holders of Shares
two years after the Effective Time (or such earlier date immediately prior to
such time when the amounts would otherwise escheat to or become property of
any governmental authority) shall become, to the extent permitted by
applicable law, the property of Parent and the Surviving Corporation free and
clear of any claims or interest of any Person previously entitled thereto.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.03(a) to pay for Shares for which
appraisal rights have been perfected shall be returned to Parent, upon demand.
SECTION 3.04. Dissenting Shares. Notwithstanding Section 3.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who
has not voted in favor of the Merger or consented thereto in writing and who
has demanded appraisal for such Shares in accordance with California Law (if
California Law provides for appraisal rights for such Shares in the Merger)
shall not be converted into a right to receive the Merger Consideration,
unless such holder fails to perfect, withdraws or otherwise loses its right to
appraisal. If, after the Effective Time, such holder fails to perfect,
withdraws or loses its right to appraisal, such Shares shall be treated as if
they had been converted as of the Effective Time into a right to receive the
Merger Consideration. The Company shall give Parent prompt notice of any
demands received by the Company for appraisal of Shares, and Parent shall have
the right to participate in all negotiations and proceedings with respect to
such demands. Except with the prior written consent of Parent, the Company
shall not make any payment with respect to, or settle or offer to settle, any
such demands.
SECTION 3.05. Stock Options. (a) At or immediately prior to the
Effective Time, each outstanding stock option issued by the Company to
purchase Shares, whether or not vested or exercisable, shall be canceled, and
the Company shall pay each holder of any such option at or promptly after the
Effective Time for each such option surrendered an amount in cash determined
by multiplying (i) the
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excess, if any, of $8.00 per Share over the applicable exercise price of such
option by (ii) the number of Shares such holder could have purchased (assuming
full vesting of all options) had such holder exercised such option in full
immediately prior to the Effective Time. Immediately prior to the Effective
Time, each outstanding employee stock option to purchase Shares that is
intended to qualify as an incentive stock option under Section 422 of the Code
and that is not then vested and exercisable shall become vested and
exercisable, and the holder thereof shall be given the opportunity to exercise
such option prior to the cancellation thereof pursuant to the preceding
sentence.
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of any option plan or
arrangement or obtaining optionee consents) that are necessary to give effect
to the transactions contemplated by Section 3.05(a).
SECTION 3.06. Employee Stock Purchase Plan. (a) After the date
hereof, no new offering period shall commence under the Company's 1992
Employee Stock Purchase Plan (the "ESPP"). As of the Effective Time, the ESPP
shall be terminated. The Company shall pay each participant in any current
offering period under such Plan in cash at the Effective Time, in cancellation
of all rights under such Plan, an amount determined by multiplying (i) the
Merger Consideration per Share by (ii) the number of Shares such participant
could have purchased under the ESPP based on his or her account balance under
such Plan immediately prior to the Effective Time (treating, for such purpose,
the option price per Share as equal to 85% of the fair market value of a Share
on the offering date with respect to such offering period) (such payment to be
net of applicable withholding taxes); provided that with respect to any
fractional shares, the foregoing shall not apply and the balance of each
account attributable to such fractional shares shall be returned to the
participant in cash.
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the ESPP or obtaining
participant consents) that are necessary to give effect to the transactions
contemplated by Section 3.06(a).
SECTION 3.07. Adjustments. If, during the period between the date of
this Agreement and the Effective Time, any change in the outstanding Shares
shall occur, including by reason of any reclassification, recapitalization,
stock split or combination, exchange or readjustment of Shares, or stock
dividend thereon with a record date during such period, the cash payable
pursuant to the Offer, the Merger Consideration and any other amounts payable
pursuant to this Agreement shall be appropriately adjusted.
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SECTION 3.08. Withholding Rights. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the consideration
otherwise payable to any Person pursuant to this Article such amounts as it is
required to deduct and withhold with respect to the making of such payment
under any provision of federal, state, local or foreign tax law. If the
Surviving Corporation or Parent, as the case may be, so withholds amounts,
such amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which the Surviving
Corporation or Parent, as the case may be, made such deduction and
withholding.
SECTION 3.09. Lost Certificates. If 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 the Surviving Corporation, the posting by such Person of a bond,
in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will pay, in exchange for such lost, stolen or
destroyed Certificate, the Merger Consideration to be paid in respect of the
Shares represented by such Certificate, as contemplated by this Article.
ARTICLE 4
THE SURVIVING CORPORATION
SECTION 4.01. Articles of Incorporation. The articles of
incorporation of Merger Subsidiary in effect at the Effective Time shall be
the articles of incorporation of the Surviving Corporation until amended in
accordance with applicable law, provided that, at the Effective Time, Article
First of such articles of incorporation shall be amended to read as follows:
"The name of the corporation is GN ReSound Corporation."
SECTION 4.02. Bylaws. The bylaws of Merger Subsidiary in effect at
the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law.
SECTION 4.03. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the directors of Merger Subsidiary at the
Effective Time shall be the directors of the Surviving Corporation and (ii)
the officers of the Company at the Effective Time shall be the officers of the
Surviving Corporation. In addition, from and after the Effective Time, Russell
D. Hays shall be a director of
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the Surviving Corporation for so long as he serves as Chief Executive Officer of
the Surviving Corporation.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that:
SECTION 5.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of California and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company. The Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so qualified
would not have, individually or in the aggregate, a Material Adverse Effect on
the Company. The Company has heretofore delivered to Parent true and complete
copies of the articles of incorporation and bylaws of the Company as currently
in effect.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the Stock Option Agreement,
and the consummation by the Company of the Transactions, are within the
Company's corporate powers and, except for the affirmative vote of the holders
of a majority of the outstanding Shares in connection with the consummation of
the Merger (if required by law), have been duly authorized by all necessary
corporate action on the part of the Company. The affirmative vote of the
holders of a majority of the outstanding Shares (if required by law) is the
only vote of the holders of any of the Company's capital stock necessary in
connection with the consummation of the Merger. Each of this Agreement and the
Stock Option Agreement constitutes a valid and binding agreement of the
Company.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the Stock Option Agreement,
and the consummation by the Company of the Transactions, require no action by
or in respect of, or filing with, any governmental body, agency, official or
authority, domestic or foreign, other than (i) the filing of the California
Merger Agreement with respect to the Merger with the California Secretary of
State and
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appropriate documents with the relevant authorities of other states in which
the Company is qualified to do business, (ii) compliance with any applicable
requirements of the HSR Act, (iii) compliance with any applicable requirements
of the 1933 Act, the 1934 Act and any other applicable securities or takeover
laws, whether state or foreign, and (iv) any actions or filings the absence of
which would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or materially to impair
the ability of the Company to consummate the Transactions.
SECTION 5.04. Non-contravention. The execution, delivery and
performance by the Company of this Agreement and the Stock Option Agreement,
and the consummation by the Company of the Transactions, do not and will not
(i) contravene, conflict with, or result in any violation or breach of any
provision of the articles of incorporation or bylaws of the Company, (ii)
assuming compliance with the matters referred to in Section 5.03, contravene,
conflict with, or result in a violation or breach of any provision of any
applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order or decree, (iii) require any consent or other action by any Person
under, constitute a default, or an event that, with or without notice or lapse
of time or both, would become a default, under, or cause or permit the
termination, cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which the Company or any of its
Subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its Subsidiaries or any license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of the Company
and its Subsidiaries or (iv) result in the creation or imposition of any Lien
on any asset of the Company or any of its Subsidiaries, except for such
contraventions, conflicts and violations referred to in clause (ii) and for
such failures to obtain any such consent or other action, defaults,
terminations, cancellations, accelerations, changes, losses or Liens referred
to in clauses (iii) and (iv) that would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
materially to impair the ability of the Company to consummate the
Transactions.
SECTION 5.05. Capitalization. (a) The authorized capital stock of the
Company consists of 50,000,000 Shares and 2,000,000 shares of preferred stock,
par value $0.01 per share. As of May 4, 1999, there were outstanding
20,927,169 Shares, stock options issued by the Company (the "Options") to
purchase an aggregate of 3,982,328 Shares (of which Options to purchase an
aggregate of 2,053,210 Shares were exercisable), warrants (the "Warrants") to
purchase an aggregate of 232,516 Shares (all of which Warrants were
exercisable), and promissory notes (the "Convertible Notes") convertible into
1,000,000 Shares. All outstanding shares of capital stock of the Company have
been, and all shares
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that may be issued pursuant to the 1992 Director's Stock Option Plan, 1988
Stock Option Plan, 1997 Stock Plan, 1998 New Executive Stock Option Plan, and
the 1992 Employee Stock Purchase Plan, the Warrants or the Convertible Notes
will be, when issued in accordance with the respective terms thereof, duly
authorized and validly issued and will be fully paid and nonassessable.
Schedule 5.05(a) identifies (i) the holders of each of the Options, Warrants
and Convertible Notes, (ii) the number of Options vested, and the number of
Warrants exercisable, for each holder, (iii) the option plan under which each
Option was issued, (iv) the number of Options, Warrants or Convertible Notes
held by such holder and (v) the exercise price of each of the Options and
Warrants and the conversion price of each of the Convertible Notes.
(b) Except as set forth in this Section 5.05 or in the Stock Option
Agreement and for changes since February 26, 1999 resulting from the exercise
of options issued by the Company outstanding on such date, there are no
outstanding (i) shares of capital stock or voting securities of the Company,
(ii) securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company or (iii) options or other
rights to acquire from the Company or other obligation of the Company to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items
in clauses (i), (ii) and (iii) being referred to collectively as the "Company
Securities"). Except as set forth in Schedule 5.05(b), there are no
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the Company Securities.
(c) The Shares issuable pursuant to the Stock Option Agreement have
been duly authorized and, when issued upon payment of the exercise price
therefor pursuant to the Stock Option Agreement, will be validly issued, fully
paid and non-assessable, and the issuance of such Shares will not be subject
to any preemptive or similar rights.
SECTION 5.06. Subsidiaries. (a) Each Subsidiary of the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company. Each such Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not have, individually or in the aggregate, a Material
Adverse Effect on the Company. All
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Subsidiaries of the Company and their respective jurisdictions of
incorporation are identified in the Company 10-K.
(b) Except as set forth on Schedule 5.06(b), all of the outstanding
capital stock of, or other voting securities or ownership interests in, each
Subsidiary of the Company, is owned by the Company, directly or indirectly,
free and clear of any Lien and free of any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other voting securities or
ownership interests. There are no outstanding (i) securities of the Company or
any of its Subsidiaries convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary of
the Company or (ii) options or other rights to acquire from the Company or any
of its Subsidiaries, or other obligation of the Company or any of its
Subsidiaries to issue, any capital stock or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for
any capital stock or other voting securities or ownership interests in, any
Subsidiary of the Company (the items in clauses (i) and (ii) being referred to
collectively as the "Company Subsidiary Securities"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Subsidiary Securities.
(c) To the Company's knowledge, each partnership, limited liability
company or similar entity in which the Company directly or indirectly owns an
interest entitling it to 10% or more of the voting interests therein, and each
limited partnership, limited liability company or similar entity for which the
Company or a Subsidiary is general partner or manager, as applicable, has been
duly organized and is in good standing under the laws of its jurisdiction of
organization and has all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted and
is duly qualified to do business and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where failure to have such material governmental licenses, authorizations,
consents and approvals or to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. The Company has
previously delivered to Parent a list of all such partnerships, limited
liability companies and similar entities.
SECTION 5.07. SEC Filings. (a) The Company has delivered to Parent
(i) the Company's annual reports on Form 10-K for its fiscal years ended
December 31, 1998, 1997 and 1996, (ii) its proxy or information statements
relating to meetings of, or actions taken without a meeting by, the
shareholders of the Company held since December 31, 1997, and (iii) all of the
other reports, statements, schedules and registration statements filed by the
Company with the
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SEC since December 31, 1998 (the documents referred to in this Section
5.07(a), collectively, the "Company SEC Documents".)
(b) As of the filing date, each Company SEC Document complied as to
form in all material respects with the applicable requirements of the 1933 Act
and the 1934 Act, as the case may be.
(c) As of its filing date (or, if amended or superceded by a filing
prior to the date hereof, on the date of such later filing), each Company SEC
Document filed pursuant to the 1934 Act did not, and each such Company SEC
Document filed subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(d) Each Company SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
SECTION 5.08. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements
of the Company included in the Company SEC Documents fairly present, in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis (except as may be indicated in the notes thereto and except
that the unaudited financial statements do not contain footnotes), the
consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal
year-end adjustments in the case of any unaudited interim financial
statements).
SECTION 5.09. Disclosure Documents. (a) Each document required to be
filed by the Company with the SEC or required to be distributed or otherwise
disseminated to the Company's shareholders in connection with the Transactions
(the "Company Disclosure Documents"), including, without limitation, the
Schedule 14D-9, the proxy or information statement of the Company (the
"Company Proxy Statement"), if any, to be filed with the SEC in connection
with the Merger, and any amendments or supplements thereto, when filed,
distributed or disseminated, as applicable, will comply as to form in all
material respects with the applicable requirements of the 1934 Act.
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(b) (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to shareholders of the Company and at the
time such shareholders vote on adoption of this Agreement, and (ii) any
Company Disclosure Document (other than the Company Proxy Statement), at the
time of the filing of such Company Disclosure Document or any supplement or
amendment thereto and at the time of any distribution or dissemination
thereof, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this Section
5.09(b) will not apply to statements or omissions included in the Company
Disclosure Documents based upon information furnished to the Company in
writing by Parent specifically for use therein.
(c) The information with respect to the Company or any of its
Subsidiaries that the Company furnishes to Parent in writing specifically for
use in the Offer Documents, at the time of the filing thereof, at the time of
any distribution or dissemination thereof and at the time of the consummation
of the Offer, will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 5.10. Absence of Certain Changes. Since the Balance Sheet
Date, the business of the Company and its Subsidiaries has been conducted in
the ordinary course consistent with past practices and, except as disclosed in
Schedule 5.10 and as disclosed in the Company SEC Documents, there has not
been:
(a) any event, occurrence, development or state of circumstances or
facts that has had or would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company,
or any repurchase, redemption or other acquisition by the Company or any of
its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any of its
Subsidiaries;
(c) any amendment of any material term of any outstanding security
of the Company or any of its Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of
its Subsidiaries of any indebtedness for borrowed money other than in the
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ordinary course of business and in amounts and on terms consistent with past
practices;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any material asset other than in the ordinary
course of business consistent with past practices;
(f) any making of any material loan, advance or capital
contributions to or investment in any Person other than loans, advances or
capital contributions to or investments in its wholly-owned Subsidiaries made
in the ordinary course of business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
of its Subsidiaries that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its Subsidiaries relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its Subsidiaries of any contract or
other right, in either case, material to the Company and its Subsidiaries,
taken as a whole, other than transactions and commitments in the ordinary
course of business consistent with past practices and those contemplated by
this Agreement;
(i) any change in any method of accounting, method of tax accounting
or accounting principles or practice by the Company or any of its
Subsidiaries, except for any such change required by reason of a concurrent
change in GAAP or Regulation S-X under the 1934 Act;
(j) except as set forth on Schedule 5.10(j), any (i) grant of any
severance or termination pay to (or amendment to any existing arrangement
with) any director, officer or employee of the Company or any of its
Subsidiaries in excess of $25,000, (ii) increase in benefits payable under any
existing severance or termination pay policies or employment agreements, (iii)
any entering into any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any of its Subsidiaries which provides
for payments in excess of $100,000 to any person, (iv) establishment, adoption
or amendment (except as required by applicable law) of any collective
bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other benefit
plan or arrangement covering any director, officer or employee of the Company
or any of its Subsidiaries, or (v) increase in
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compensation, bonus or other benefits payable to any director, officer or
employee of the Company or any of its Subsidiaries, other than, in the case of
clause (v), in the ordinary course of business consistent with past practice;
or
(k) any material labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of its Subsidiaries,
which employees were not subject to a collective bargaining agreement at the
Balance Sheet Date, or any material lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to such employees.
SECTION 5.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of the Company or any of its Subsidiaries of any
kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or
set of circumstances that would reasonably be expected to result in such a
liability, other than:
(a) liabilities or obligations disclosed and provided for in the
Balance Sheet or in the notes thereto or in the Company SEC Documents filed
prior to the date hereof;
(b) liabilities or obligations that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company; and
(c) liabilities or obligations under this Agreement or the Stock
Option Agreement or incurred in connection with the Transactions.
SECTION 5.12. Compliance with Laws and Court Orders. The Company and
each of its Subsidiaries is in compliance with, and to the knowledge of the
Company is not under investigation with respect to and has not been threatened
to be charged with or given notice of any violation of, any applicable law,
statute, ordinance, rule, regulation, judgment, injunction, order or decree,
except for failures to comply or violations that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
SECTION 5.13. Litigation. Except as set forth in the Company SEC
Documents filed prior to the date hereof, there is no action, suit,
investigation or proceeding pending against, or, to the knowledge of the
Company, threatened against or affecting, the Company, any of its
Subsidiaries, any present or former officer, director or employee of the
Company or any of its Subsidiaries or any other Person for whom the Company or
any of such Subsidiary may be liable or
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any of their respective properties before any court or arbitrator or before or
by any governmental body, agency or official, domestic or foreign, that, if
determined or resolved adversely in accordance with the plaintiff's demands,
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company or that in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the Offer or the Merger or
any other Transaction.
SECTION 5.14. Material Contracts. (a) Each contract listed as an
exhibit to the Company 10-K (each, a "Company Material Contract") is a valid,
binding and enforceable obligation of the Company or its Subsidiary, as the
case may be, and is in full force and effect, except where the failure to be
valid, binding and enforceable and in full force and effect would not
reasonably be expected to have a Material Adverse Effect on the Company. None
of the Company nor any of its Subsidiaries is in default or violation of any
term, condition or provision of (i) its respective articles of incorporation
or by-laws or similar organizational documents or (ii) any Company Material
Contract, except, in the case of clause (ii), for any defaults or violations
that would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(b) Except as set forth in Schedule 5.14(b), neither the Company nor
any of its Subsidiaries is a party to any agreement that expressly limits the
ability of the Company or such Subsidiary to compete in, or conduct, any line
of business or to compete with any Person, in any geographic area or during
any period of time, except to the extent that any such limitation would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(c) Neither the Company nor any of its Subsidiaries is a party to
any written agreement, consent agreement or memorandum of understanding with,
or is a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any supervisory
letter from or has adopted any board resolution at the request of any
government body, agency, official or authority, domestic or foreign, that
restricts, or would reasonably be expected to restrict, the conduct of its
business by the Company or any of its Subsidiaries, or that requires, or would
reasonably be expected to require, adverse actions by the Company or any of
its Subsidiaries, except for such restrictions or requirements that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
SECTION 5.15. Finders' Fees. Except for BancBoston Robertson Stephens
and Alliant Partners, a copy of each of whose engagement agreement has been
provided to Parent, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
the
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Company or any of its Subsidiaries who might be entitled to any fee or
commission from the Company or any of its Affiliates in connection with the
Transactions.
SECTION 5.16. Taxes. (a) Filing and Payment. Except as set forth on
Schedule 5.16(a) (or with respect to items which are not material in the
aggregate), (i) all Tax returns, statements, reports and forms (including
estimated tax or information returns and reports) required to be filed with
any Taxing Authority with respect to any Pre-Closing Tax Period by or on
behalf of the Company or any Subsidiary (collectively, the "Returns") have, to
the extent required to be filed on or before the date hereof (taking into
account extensions), been filed when due in accordance with all applicable
laws; (ii) as of the time of filing, the Returns were true and complete; and
(iii) all Taxes due and payable with respect to the periods covered by the
Returns that have been filed, and all Taxes due to other persons or entities
(for example, under tax allocation or indemnity agreements), have been timely
paid, or withheld and remitted to the appropriate Taxing Authority or such
person or entity, respectively.
(b) Financial Records. Except as set forth on Schedule 5.16(b), (i)
the charges, accruals and reserves for Taxes with respect to the Company and
each of its Subsidiaries for any Pre-Closing Tax Period (including any
Pre-Closing Tax Period for which no Return has yet been filed) reflected on
the books of the Company and its Subsidiaries (excluding any provision for
deferred income taxes reflecting either differences between the treatment of
items for accounting and income tax purposes or carryforwards) are adequate in
all material respects to cover Tax liabilities accruing through the end of the
last period for which the Company and its Subsidiaries ordinarily record items
on their respective books; (ii) since the end of the last period for which the
Company and its Subsidiaries ordinarily record items on their respective
books, neither the Company nor any of its Subsidiaries has engaged in any
transaction, or taken any other action, other than in the ordinary course of
business; and (iii) all information set forth in the Company Balance Sheet
(including notes thereto) relating to Tax matters is true and complete in all
material respects.
(c) Procedure and Compliance. Except as set forth on Schedule
5.16(c), (i) all Returns of the Company and its Subsidiaries through the Tax
year ended December 31, 1986 have been examined and closed or are Returns with
respect to which the applicable period for assessment under applicable law,
after giving effect to extensions or waivers, has expired; (ii) neither the
Company nor any Subsidiary is delinquent in the payment of any Tax or has
requested any extension of time within which to file any Return and has not
yet filed such Return; (iii) neither the Company nor any Subsidiary has
granted any extension or waiver of the statute of limitations period
applicable to any Return, which period (after
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giving effect to such extension or waiver) has not yet expired; (iv) to the
Company's knowledge, there is no claim, audit, action, suit, proceeding, or
investigation now pending or threatened against or with respect to the
Company, any Subsidiary in respect of any Tax or Tax Asset; (v) there are no
requests for rulings or determinations in respect of any Tax or Tax Asset
pending between the Company or any Subsidiary and any Taxing Authority; (vi)
during the five-year period ending on the date hereof, neither the Company nor
any Subsidiary has made or changed any tax election, changed any annual tax
accounting period, or adopted or changed any method of tax accounting (to the
extent that any such action may materially affect the Company or any
Subsidiary), nor has it, to the extent it may affect or relate to the Company
or any Subsidiary, filed any amended Return, entered into any closing
agreement, settled any Tax claim or assessment, or surrendered any right to
claim a Tax refund; (vii) there are no liens or encumbrances for Taxes upon
the assets of the Company or any Subsidiary except liens for current Taxes not
yet due; and (viii) the Company has filed all claims or requests for refunds
of Taxes to which it is entitled.
(d) Taxing Jurisdictions. Schedule 5.16(d) contains a list of all
jurisdictions (whether foreign or domestic) to which any Tax is properly
payable by the Company or any Subsidiary.
(e) Certain Agreements and Arrangements. Except as set forth on
Schedule 5.16(e), (i) none of the Company, any of its Subsidiaries and any of
its Affiliates is party to a lease, other than a lease that is, for federal
income tax purposes, a "true" lease under which the Company, the Subsidiary or
the Affiliate owns or uses the property subject to the lease; (ii) none of the
Company, any of its Subsidiaries and any of its Affiliates is party to a lease
involving a defeasance; (iii) neither the Company nor any Subsidiary has been
a member of an affiliated, consolidated, combined or unitary group other than
one of which the Company was the common parent, or made any election or
participated in any arrangement whereby any Tax liability or any Tax Asset of
the Company or any Subsidiary was determined or taken into account for Tax
purposes with reference to or in conjunction with any Tax liability or any Tax
Asset of any other person; and (iv) the Company is not a party to, or bound
by, any tax indemnity, tax sharing or tax allocation agreement or arrangement.
(f) Definitions. The following terms, as used herein, have the
following meanings:
"Pre-Closing Tax Period" means any Tax period ending on or before the
Closing Date; and, with respect to a Tax period that begins on or before the
Closing Date and ends thereafter, the portion of such Tax period ending on the
Closing Date.
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"Tax" means (i) any tax, governmental fee or other like assessment or
charge of any kind whatsoever (including, but not limited to, withholding on
amounts paid to or by any Person), together with any interest, penalty,
addition to tax or additional amount imposed by any governmental authority (a
"Taxing Authority") responsible for the imposition of any such tax (domestic
or foreign), (ii) in the case of the Company or any Subsidiary, liability for
the payment of any amount of the type described in clause (i) as a result of
being or having been before the Closing Date a member of an affiliated,
consolidated, combined or unitary group, or a party to any agreement or
arrangement, as a result of which liability of the Company or any Subsidiary
to a Taxing Authority is determined or taken into account with reference to
the liability of any other Person, and (iii) liability of the Company or any
Subsidiary for the payment of any amount as a result of being party to any Tax
Sharing Agreement or with respect to the payment of any amount of the type
described in (i) or (ii) as a result of any existing express or implied
obligation (including, but not limited to, an indemnification obligation).
"Tax Asset" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or any other
credit or tax attribute that could be carried forward or back to reduce Taxes
(including without limitation deductions and credits related to alternative
minimum Taxes).
SECTION 5.17. Employee Benefit Plans. (a) Schedule 5.17(a) contains a
correct and complete list identifying each material "employee benefit plan",
as defined in Section 3(3) of ERISA, each employment, severance or similar
contract, plan, arrangement or policy and each other plan or arrangement
(written or oral) providing for compensation, bonuses, profit-sharing, stock
option or other stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance (including any self-insured
arrangements), health or medical benefits, employee assistance program,
disability or sick leave benefits, workers' compensation, supplemental
unemployment benefits, severance benefits or post- employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) which is maintained, administered or contributed to by the Company
or any ERISA Affiliate and covers any employee or former employee of the
Company or any of its Subsidiaries, or with respect to which the Company or
any of its Subsidiaries has any liability. Copies of such plans (and, if
applicable, related trust or funding agreements or insurance policies) and all
amendments thereto and written interpretations thereof have been made
available to Parent together with the most recent annual report (Form 5500
including, if applicable, Schedule B thereto) prepared in connection with any
such plan or trust. Such plans are referred to collectively herein as the
"Employee Plans".
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(b) Neither the Company nor any ERISA Affiliate nor any predecessor
thereof sponsors, maintains or contributes to, or has in the past sponsored,
maintained or contributed to, any Employee Plan subject to Title IV of ERISA,
including a "multiemployer plan," as defined in Section 3(37) of ERISA.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter, or
has pending or has time remaining in which to file, an application for such
determination from the Internal Revenue Service, and the Company is not aware
of any reason why any such determination letter should be revoked. The Company
has made available to Parent copies of the most recent Internal Revenue
Service determination letters with respect to each such Plan. Each Employee
Plan has been maintained in material compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, which are
applicable to such Plan. No material events have occurred with respect to any
Employee Plan that could result in payment or assessment by or against the
Company of any material excise taxes under Sections 4972, 4975, 4976, 4977,
4979, 4980B, 4980D, 4980E or 5000 of the Code.
(d) Except as set forth in Schedule 5.17(d), the consummation of the
transactions contemplated by this Agreement will not (either alone or together
with any other event) entitle any employee or independent contractor of the
Company or any of its Subsidiaries to severance pay or accelerate the time of
payment or vesting or trigger any payment of funding (through a grantor trust
or otherwise) of compensation or benefits under, increase the amount payable
or trigger any other material obligation pursuant to, any Employee Plan. There
is no contract, agreement, plan or arrangement covering any employee or former
employee of the Company or any Affiliate that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Sections 162(m) or 280G of the Code.
(e) Neither the Company nor any of its Subsidiaries has any
liability in respect of post-retirement health, medical or life insurance
benefits for retired, former or current employees of the Company or its
Subsidiaries except as required to avoid excise tax under Section 4980B of the
Code.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its Affiliates
relating to, or change in employee participation or coverage under, an
Employee Plan which would increase materially the expense of maintaining such
Employee Plan above the level of the expense incurred in respect thereof for
the fiscal year ended December 31, 1998.
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(g) Except as disclosed in Schedule 5.17(g), neither the Company nor
any of its Subsidiaries is a party to or subject to, or is currently
negotiating in connection with entering into, any collective bargaining
agreement or other contract or understanding with a labor union or labor
organization.
(h) All contributions and payments accrued under each Employee Plan,
determined in accordance with prior funding and accrual practices, as adjusted
to include proportional accruals for the period ending as of the date hereof,
have been discharged and paid on or prior to the date hereof except to the
extent reflected as a liability on the Company Balance Sheet.
(i) There is no action, suit, investigation, audit or proceeding
pending against or involving or, to the knowledge of the Company, threatened
against or involving, any Employee Plan before any court or arbitrator or any
state, federal or local governmental body, agency or official.
SECTION 5.18. Environmental Matters. (a) Except as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action,
claim, suit, proceeding or review is pending or, to the knowledge of
the Company, is threatened by any governmental entity or other Person
relating to or arising out of any Environmental Law;
(ii) the Company is in compliance with all Environmental Laws and all
Environmental Permits; and
(iii) there are no liabilities of or relating to the Company or any
of its Subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise arising
under or relating to any Environmental Law, and there are no facts,
conditions, situations or set of circumstances that would reasonably
be expected to result in or be the basis for any such liability.
(b) There has been no environmental investigation, study, audit,
test, review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any of its
Subsidiaries or any property or facility now or previously owned or leased by
the Company or
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any of its Subsidiaries that has not been delivered to Parent at least five
days prior to the date hereof.
(c) Neither the Company nor any of its Subsidiaries owns, leases or
operates or has owned, leased or operated any real property, or conducts or
has conducted any operations, in New Jersey or Connecticut.
(d) For purposes of this Section 5.18, the terms "Company" and
"Subsidiaries" shall include any entity that is, in whole or in part, a
predecessor of the Company or any of its Subsidiaries.
SECTION 5.19. Antitakeover Statutes and Rights Agreement. (a) No
"control share acquisition," "fair price," "moratorium" or other antitakeover
laws or regulations enacted under U.S. state or federal laws apply to this
Agreement or the Stock Option Agreement or any of the Transactions.
(b) The Company has taken all action necessary to render the rights
issued pursuant to the terms of the Rights Agreement dated as of July 5, 1994
between the Company and American Stock Transfer & Trust Company inapplicable
to this Agreement, the Stock Option Agreement, the Offer, the
Merger and any other Transaction.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
SECTION 6.01. Corporate Existence and Power. Each of Parent and
Merger Subsidiary is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not have, individually or in the aggregate, a Material
Adverse Effect on Parent. Since the date of its incorporation, Merger
Subsidiary has not engaged in any activities other than in connection with or
as contemplated by this Agreement or the Stock Option Agreement or in
connection with arranging any financing required to consummate the
Transactions.
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SECTION 6.02. Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the Stock
Option Agreement, and the consummation by Parent and Merger Subsidiary of the
Transactions, are within the corporate powers of Parent and Merger Subsidiary
and have been duly authorized by all necessary corporate action. Each of this
Agreement and the Stock Option Agreement constitutes a valid and binding
agreement of each of Parent and Merger Subsidiary.
SECTION 6.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the Stock
Option Agreement, and the consummation by Parent and Merger Subsidiary of the
Transactions, require no action by or in respect of, or filing with, any
governmental body, agency, official or authority, domestic or foreign, other
than (i) the filing of the California Merger Agreement with respect to the
Merger with the California Secretary of State and appropriate documents with
the relevant authorities of other states in which Parent is qualified to do
business, (ii) compliance with any applicable requirements of the HSR Act,
(iii) compliance with any applicable requirements of the 1933 Act, the 1934
Act and any other applicable securities or takeover laws, whether state or
foreign, and (iv) any actions or filings the absence of which would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent or materially to impair the ability of Parent and
Merger Subsidiary to consummate the Transactions.
SECTION 6.04. Non-contravention. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the Stock
Option Agreement, and the consummation by Parent and Merger Subsidiary of the
Transactions, do not and will not (i) contravene, conflict with, or result in
any violation or breach of any provision of the certificate of incorporation
or bylaws of Parent or Merger Subsidiary, (ii) assuming compliance with the
matters referred to in Section 6.03, contravene, conflict with, or result in
any violation or breach of any provision of any applicable law, statute,
ordinance, rule, regulation, judgment, injunction, order or decree, (iii)
require any consent or other action by any Person under, constitute a default,
or an event that, with or without notice or lapse of time or both, would
become a default, under, or cause or permit the termination, cancellation,
acceleration or other change of any right or obligation or the loss of any
benefit to which Parent or Merger Subsidiary is entitled under any provision
of any agreement or other instrument binding upon Parent or Merger Subsidiary
or any license, franchise, permit, certificate, approval or other similar
authorization affecting, or relating in any way to, the assets or business of
Parent or Merger Subsidiary or (iv) result in the creation or imposition of
any Lien on any asset of Parent or Merger Subsidiary, except for such
contraventions, conflicts and violations referred to in clause (ii) and for
such failures to obtain
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consent or other action, defaults, terminations, cancellations, accelerations,
changes, losses or Liens referred to in clauses (iii) and (iv) that would not
be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent or materially to impair the ability of Parent and
Merger Subsidiary to consummate the Transactions.
SECTION 6.05. Disclosure Documents. (a) The information with respect
to Parent and any of its Subsidiaries that Parent furnishes to the Company in
writing specifically for use in any Company Disclosure Document will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading (i) in the case
of the Company Proxy Statement, as supplemented or amended, if applicable, at
the time such Company Proxy Statement or any amendment or supplement thereto
is first mailed to shareholders of the Company and at the time such
shareholders vote on adoption of this Agreement, and (ii) in the case of any
Company Disclosure Document other than the Company Proxy Statement, at the
time of the filing of such Company Disclosure Document or any supplement or
amendment thereto and at the time of any distribution or dissemination
thereof.
(b) The Offer Documents, when filed, distributed or disseminated, as
applicable, will comply as to form in all material respects with the
applicable requirements of the 1934 Act and, at the time of the filing
thereof, at the time of any distribution or dissemination thereof and at the
time of consummation of the Offer, will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading, provided that this representation and warranty will
not apply to statements or omissions included in the Offer Documents based
upon information furnished to Parent or Merger Subsidiary in writing by the
Company specifically for use therein.
SECTION 6.06. Finders' Fees. Except for Gleacher/NatWest, whose fees
will be paid by Parent, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Parent who might be entitled to any fee or commission from the Company or any
of its Affiliates upon consummation of the Transactions.
SECTION 6.07. Financing. Parent has, or will have prior to the
expiration of the Offer, sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to purchase all of the
Shares on a fully-diluted basis (whether in the Offer or the Merger) and to
pay all related fees and expenses pursuant to the Offer.
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ARTICLE 7
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 7.01. Conduct of the Company. Except as expressly permitted
by this Agreement, from the date hereof until the Effective Time, the Company
and its Subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their reasonable best efforts to
preserve intact their business organizations and relationships with third
parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time:
(a) the Company will not adopt or propose any change to its
articles of incorporation or bylaws;
(b) the Company will not, and will not permit any of its
Subsidiaries to, merge or consolidate with any other Person or acquire a
material amount of stock or assets of any other Person;
(c) except for the Viennatone Sale, the Company will not, and will
not permit any of its Subsidiaries to, sell, lease, license or otherwise
dispose of any material subsidiary or material amount of assets, securities or
property except (i) pursuant to existing contracts or commitments and (ii) in
the ordinary course consistent with past practice;
(d) the Company will not, and will not permit any of its
Subsidiaries to, (i) take any action that would make any representation and
warranty of the Company hereunder inaccurate in any material respect at, or as
of any time prior to, the Effective Time or (ii) omit to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any material respect at any such time;
(e) the Company will not, and will not permit any of its
Subsidiaries to
(i) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or employee benefit plan, agreement, trust,
plan, fund or other arrangement for the benefit and welfare of any
director, officer or employee (except that the Company shall be
permitted to include, in the proxy statement for its 1999 annual
shareholder meeting, a
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proposal to amend the Company's 1997 Stock Plan to increase the number
of Shares authorized for issuance thereunder),
(ii) increase in any manner the compensation or fringe benefits
of any director, officer or employee (except for (x) increases in
accordance with the Company's normal officers and employees focal
review previously disclosed to Parent or (y) other normal increases
in the ordinary course of business that are consistent with past
practice and that, in the aggregate, do not result in a material
increase in benefits or compensation expense to the Company), or
(iii) pay any benefit not required by any currently existing plan
or arrangement (including, without limitation, grant stock options or
stock appreciation rights or remove existing restrictions in any
benefit plans or agreements); and
(f) the Company will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
SECTION 7.02. Shareholder Meeting; Proxy Material. The Company shall
cause a meeting of its shareholders (the "Company Shareholder Meeting") to be
duly called and held as soon as reasonably practicable after consummation of
the Offer for the purpose of voting on the approval and adoption of this
Agreement and the Merger, unless California Law does not require a vote of
shareholders of the Company for consummation of the Merger. Subject to their
fiduciary duties as advised by outside counsel to the Company, and subject to
Section 7.04(c), the Board of Directors of the Company shall recommend
approval and adoption of this Agreement and the Merger by the Company's
shareholders. In connection with such meeting, the Company will (i) promptly
prepare and file with the SEC, will use its best efforts to have cleared by
the SEC and will thereafter mail to its shareholders as promptly as
practicable the Company Proxy Statement and all other proxy materials for such
meeting, (ii) use its best efforts to obtain the necessary approvals by its
shareholders of this Agreement and the Transactions and (iii) otherwise comply
with all legal requirements applicable to such meeting.
SECTION 7.03. Access to Information. (a) From the date hereof until
the Effective Time and subject to applicable law and the Non-Disclosure
Agreement dated as of November 1, 1997 between the Company and Parent (the
"Confidentiality Agreement"), the Company shall (i) give Parent, its counsel,
financial advisors, auditors and other authorized representatives full access
to the offices, properties, books and records of the Company and the
Subsidiaries, (ii) furnish to Parent, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating
data and other information as such
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Persons may reasonably request and (iii) instruct the employees, counsel,
financial advisors, auditors and other authorized representatives of the
Company and its Subsidiaries to cooperate with Parent in its investigation of
the Company and its Subsidiaries. Any investigation pursuant to this Section
shall be conducted in such manner as not to interfere unreasonably with the
conduct of the business of the Company and its Subsidiaries. No information or
knowledge obtained by Parent in any investigation pursuant to this Section
shall affect or be deemed to modify any representation or warranty made by the
Company hereunder.
(b) The Company shall not be required to permit any inspection or to
disclose any information, which in the reasonable judgment of the Company,
would result in the disclosure of any trade secrets of third parties or
violate any obligation of the Company with respect to confidentiality if the
Company shall have used reasonable efforts to obtain the consent of such third
party for such inspection or disclosure. All requests for information pursuant
to this Section 7.03 shall be directed to an executive officer of the Company
or such person as may be designated by any such executive officer. Upon
termination of this Agreement, Parent will collect and deliver to the Company
all such documents obtained by it or its representatives then in its
possession and any copies thereof.
SECTION 7.04. No Solicitation; Other Offers. (a) From the date hereof
until the termination hereof, the Company will not, and will cause its
Subsidiaries and the officers, directors, employees, investment bankers,
attorneys, accountants, consultants or other agents or advisors of the Company
and its Subsidiaries not to, directly or indirectly, (i) take any action to
solicit, initiate, facilitate or encourage the submission of any Acquisition
Proposal, (ii) engage in discussions or negotiations with, or disclose any
nonpublic information relating to the Company or any of its Subsidiaries or
afford access to the properties, books or records of the Company or any of its
Subsidiaries to, any Person who the Company has reason to believe may be
considering making, or has made, an Acquisition Proposal, or (iii) grant any
waiver or release under any standstill or similar agreement with respect to
any class of equity securities of the Company. The Company will notify Parent
promptly (but in no event later than 24 hours) after receipt by the Company
(or any of its advisors) of any Acquisition Proposal, any indication that any
Person is considering making an Acquisition Proposal or any request for
nonpublic information relating to the Company or any of its Subsidiaries or
for access to the properties, books or records of the Company or any of its
Subsidiaries by any Person who the Company has reason to believe may be
considering making, or has made, an Acquisition Proposal. The Company shall
provide such notice orally and in writing and shall identify the Person
making, and the terms and conditions of, any such Acquisition Proposal,
indication or request. The Company shall keep Parent fully informed, on a
current basis, of any material changes in the status or details of any such
Acquisition Proposal,
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indication or request. The Company shall, and shall cause its Subsidiaries and
the directors, employees and other agents of the Company and its Subsidiaries
to, cease immediately and cause to be terminated all activities, discussions
and negotiations, if any, with any Persons conducted prior to the date hereof
with respect to any Acquisition Proposal. Nothing contained in this Agreement
shall prevent the Board of Directors of the Company from complying with Rule
14d-9 or Rule 14e-2 under the 1934 Act with respect to any Acquisition
Proposal.
(b) Notwithstanding the foregoing, the Company may negotiate or
otherwise engage in substantive discussions with, and furnish nonpublic
information to, any Person who delivers an Acquisition Proposal if (i) the
Company has complied with the terms of this Section 7.04, including, without
limitation, the requirement in Section 7.04(a) that it notify Parent promptly
after its receipt of any Acquisition Proposal, (ii) the Board of Directors of
the Company determines in good faith by a majority vote, on the basis of
advice from its outside legal counsel, that, consistent with its fiduciary
duties under applicable law, it must take such action, (iii) such Person
executes a confidentiality agreement with terms no less favorable to the
Company than those contained in the Confidentiality Agreement, and (iv) the
Company shall have delivered to Parent two business days' prior written notice
advising Parent that it intends to take such action.
(c) The Board of Directors of the Company shall be permitted to
withdraw, or modify in a manner adverse to Parent, its recommendation to its
shareholders referred to in Sections 2.02 and 7.02 hereof, but only if (i) the
Company has complied with the terms of this Section 7.04, including, without
limitation, the requirement in Section 7.04(a) that it notify Parent promptly
after its receipt of any Acquisition Proposal, (ii) a Superior Proposal is
pending at the time the Board of Directors determines to take any such action,
(iii) the Board of Directors determines in good faith by a majority vote, on
the basis of the advice of its outside legal counsel, that, consistent with
its fiduciary duties under applicable law, it must take such action, and (iv)
the Company shall have delivered to Parent two business days' prior written
notice advising Parent that it intends to take such action. For purposes of
this Agreement, "Superior Proposal" means any bona fide, unsolicited written
Acquisition Proposal for all outstanding Shares on terms that the Board of
Directors of the Company determines in good faith by a majority vote is
materially more favorable and provides materially greater value to all the
Company's shareholders than as provided hereunder, and such decision is made
on the basis of the written advice of a financial advisor of nationally
recognized reputation and takes into account all the terms and conditions of
the Acquisition Proposal, including any break-up fees, expense reimbursement
provisions and conditions to closing.
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SECTION 7.05. Notices of Certain Events. The Company shall promptly
notify Parent of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Transactions;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the Transactions; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving
or otherwise affecting the Company or any of its Subsidiaries that, if pending
on the date of this Agreement, would have been required to have been disclosed
pursuant to Section 5.12, 5.13, 5.16 or 5.18, as the case may be, or that
relate to the consummation of the Transactions.
SECTION 7.06. Certificate of the Company. On or prior to the date on
which Merger Subsidiary purchases Shares pursuant to the Offer, the Company
shall deliver to Parent a certification signed by an officer of the Company to
the effect that the Company is not nor has it been within 5 years of such date
a "United States real property holding corporation" as defined in Section 897
of the Code.
ARTICLE 8
COVENANTS OF PARENT
Parent agrees that:
SECTION 8.01. Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and the Stock Option Agreement and to consummate the Merger on
the terms and conditions set forth in this Agreement.
SECTION 8.02. Voting of Shares. Parent agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Shareholder Meeting.
SECTION 8.03. Director and Officer Liability. Parent shall, and shall
cause the Surviving Corporation to, do the following:
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(a) For six years after the Effective Time, the Surviving
Corporation shall indemnify and hold harmless the present and former officers
and directors of the Company (each an "Indemnified Person") in respect of acts
or omissions occurring at or prior to the Effective Time to the fullest extent
permitted by California Law or any other applicable laws or provided under the
Company's articles of incorporation and bylaws in effect on the date hereof,
provided that such indemnification shall be subject to any limitation imposed
from time to time under applicable law.
(b) For six years after the Effective Time, the Surviving
Corporation shall provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering
each such Indemnified Person currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on the date
hereof.
(c) If Parent, the Surviving Corporation or any of its successors or
assigns (i) 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 (ii) transfers or conveys all or substantially all of its
properties and assets to any Person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Parent or the Surviving Corporation, as the case may be, shall
assume the obligations set forth in this Section 8.03.
(d) The rights of each Indemnified Person under this Section 8.03
shall be in addition to any rights such Person may have under the articles of
incorporation or bylaws of the Company or any of its Subsidiaries, or under
California Law or any other applicable laws. These rights shall survive
consummation of the Merger and are intended to benefit, and shall be
enforceable by, each Indemnified Person as an intended third party
beneficiary.
SECTION 8.04. Employee Matters. Following the Closing Date and until
the second anniversary thereof, Parent shall cause employees of the Company
("Company Employees") to be covered under employee benefit plans that are
substantially comparable, in the aggregate, to the employee benefit plans of
the Company under which such Company Employees were covered immediately prior
to the Closing Date and which are disclosed on Schedule 5.17(a); provided,
without limitation, that for this purpose any stock option or other
stock-based benefit plans or arrangements maintained by the Company
immediately prior to the Closing Date shall be disregarded. Parent shall cause
service with the Company to be recognized as service for purposes of all
employee benefit and compensation plans and arrangements applicable to Company
Employees after the Closing Date, to the extent such service was credited
under comparable plans and
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arrangements of the Company prior to the Closing Date; provided, that nothing
herein shall be construed to require service with the Company to be taken into
account for purposes of benefit accrual under any defined benefit retirement
or retiree medical plan.
SECTION 8.05. Other Matters. The parties acknowledge that, after the
Effective Time, it is the current intent of Parent to implement the following:
(i) the Company's offices in Redwood City will be maintained as the global
management headquarters for the combined operations of the Surviving
Corporation and Danavox; (ii) the Surviving Corporation will continue and
retain "ReSound" as the leading brand name for its business; and (iii) the
Company's Irish manufacturing facilities will be expanded.
ARTICLE 9
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 9.01. Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, Company and Parent will use their reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Transactions. In furtherance and not in
limitation of the foregoing, each of Parent and Company agrees to make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby as promptly as
practicable and in any event within ten business days of the date hereof and
to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and to take
all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(b) In connection with the efforts referenced in Section 9.01(a) to
obtain all requisite approvals and authorizations for the Transactions under
the HSR Act or any other Antitrust Law, each of Parent and Company shall use
its reasonable best efforts to (i) cooperate in all respects with each other
in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a
private party, (ii) keep the other party informed in all material respects of
any material communication received by such party from, or given by such party
to, the Federal Trade Commission (the
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"FTC"), the Antitrust Division of the Department of Justice (the "DOJ") or any
other governmental authority and of any material communication received or
given in connection with any proceeding by a private party, in each case
regarding any of the transactions contemplated hereby and (iii) permit the
other party to review any material communication given by it to, and consult
with each other in advance of any meeting or conference with, the FTC, the DOJ
or any such other governmental authority or, in connection with any proceeding
by a private party, with any other Person. For purposes of this Agreement,
"Antitrust Law" means the Sherman Act, as amended, the Clayton Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign, if any, statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade or lessening of
competition through merger or acquisition.
SECTION 9.02. Certain Filings. The Company and Parent shall cooperate
with one another (i) in connection with the preparation of the Company
Disclosure Documents and the Offer Documents, (ii) in determining whether any
action by or in respect of, or filing with, any governmental body, agency,
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the Transactions and (iii) in taking such
actions or making any such filings, furnishing information required in
connection therewith or with the Company Disclosure Documents or the Offer
Documents and seeking timely to obtain any such actions, consents, approvals
or waivers.
SECTION 9.03. Public Announcements. Parent and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the Transactions and, except as
may be required by applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or make any such
public statement prior to such consultation.
SECTION 9.04. 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 Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of the Company or Merger Subsidiary, any
other actions and things to vest, perfect or confirm of 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.
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SECTION 9.05. Merger Without Meeting of Shareholders. If Parent,
Merger Subsidiary or any other Subsidiary of Parent shall acquire at least 90%
of the outstanding Shares pursuant to the Offer or otherwise, the parties
hereto agree, subject to satisfaction or (to the extent permitted hereunder)
waiver of all conditions to the Merger, to take all necessary and appropriate
action to cause the Merger to be effective as soon as practicable after the
acceptance for payment and purchase of Shares pursuant to the Offer without a
meeting of shareholders of the Company in accordance with California Law.
ARTICLE 10
CONDITIONS TO THE MERGER
SECTION 10.01. Conditions to Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) if required by California Law, this Agreement shall have been
approved and adopted by the shareholders of the Company in accordance with
such Law;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation of the United
States (or any U.S. state) or the European Union (or any member country of the
European Union) and no judgment, injunction, order or decree shall prohibit
the consummation of the Merger; and
(d) Merger Subsidiary shall have purchased Shares pursuant to the
Offer.
ARTICLE 11
TERMINATION
SECTION 11.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the shareholders of the
Company):
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(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Offer has not been consummated on or before July 31,
1999, provided that the right to terminate this Agreement pursuant to
this Section 11.01(b)(i) shall not be available to any party whose
breach of any provision of this Agreement results in the failure of
the Offer to be consummated by such time. If a request for additional
information is received from a governmental entity pursuant to the
HSR Act, or applicable non-United States laws regulating competition,
antitrust, investment or exchange controls, such date will be
extended to the 90th day following acknowledgment by such
governmental entity that Parent and the Company have complied with
such request, but in no event will such date be extended to a date
later than September 30, 1999; or
(ii) there shall be any law or regulation that makes acceptance
for payment of, and payment for, the Shares pursuant to the Offer or
consummation of the Merger illegal or otherwise prohibited or any
judgment, injunction, order or decree of any court or governmental
body having competent jurisdiction enjoining Merger Subsidiary from
accepting for payment of, and paying for, the Shares pursuant to the
Offer or Company or Parent from consummating the Merger and such
judgment, injunction, order or decree shall have become final and
nonappealable;
(c) by Parent, if, prior to the acceptance for payment of the Shares
under the Offer,
(i) any Person or "group" (as defined in Section 13(d)(3) of the
1934 Act), other than Parent or any of its Affiliates, shall have
acquired beneficial ownership of more than 25% of the Shares, through
the acquisition of stock, the formation of a group or otherwise, or
shall have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of such Shares;
(ii) any person or group shall have entered into a definitive
agreement or an agreement in principle with the Company, regarding an
Acquisition Proposal; or
(iii) (A) the Board of Directors of the Company shall have
withdrawn, or modified in a manner adverse to Parent, its approval or
recommendation of this Agreement, the Offer or the Merger, or shall
have recommended, or publicly announced its intention to enter into,
an
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agreement or an agreement in principle with respect to an Acquisition
Proposal (or shall have resolved to do any of the foregoing), or (B)
the Company shall have materially breached any of its obligations
under Section 7.04;
(d) by the Company, if prior to the purchase of any Shares pursuant
to the Offer, and subject to compliance with Section 7.04(c), the Board of
Directors of the Company shall have withdrawn or modified in a manner adverse
to Parent its approval or recommendation of this Agreement or the Merger and
shall have recommended a Superior Proposal.
The party desiring to terminate this Agreement pursuant to this Section 11.01
(other than pursuant to Section 11.01(a)) shall give notice of such
termination to the other party.
SECTION 11.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 11.01, this Agreement shall become void and of no effect
with no liability on the part of any party (or any shareholder, director,
officer, employee, agent, consultant or representative of such party) to the
other party hereto, provided that, if such termination shall result from the
willful (i) failure of either party to fulfill a condition to the performance
of the obligations of the other party, (ii) failure of either party to perform
a covenant hereof or (iii) material breach by either party hereto of any
representation or warranty or agreement contained herein, such party shall be
fully liable for any and all liabilities and damages incurred or suffered by
the other party as a result of such failure or breach. The provisions of
Sections 9.03, 11.02, 12.04, 12.06 and 12.07 shall survive any termination
hereof pursuant to Section 11.01.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given,
if to Parent or Merger Subsidiary, to:
GN Great Nordic
Kongens Nytorv 26
P.O. Box 2167
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DK-1016 Copenhagen K
Denmark
Attention: General Counsel
Fax: 45-72-111-829
with a copy to:
John Bick
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
if to the Company, to:
ReSound Corporation
220 Saginaw Drive
Seaport Centre
Redwood City, California 94063
Fax: (650) 367-7870
Attention: General Counsel
with a copy to:
Venture Law Group
2800 Sand Hill Road
Menlo Park, California 94025
Fax: (650) 233-8386
Attention: Elias Blawie
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been
received until the next succeeding business day in the place of receipt.
SECTION 12.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
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certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
set forth in Sections 8.03 (only after the Effective Time), 9.03, 11.02,
12.04, 12.06 and 12.07.
SECTION 12.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by
each party against whom the waiver is to be effective, provided that, after
the adoption of this Agreement by the shareholders of the Company and without
their further approval, no such amendment or waiver shall reduce the amount or
change the kind of consideration to be received in exchange for the Shares.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 12.04. Expenses. (a) Except as otherwise provided in this
Section, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Parent a fee in immediately available
funds equal to $7,000,000, plus the actual, documented and reasonable
out-of-pocket expenses of Parent (not to exceed $500,000) incurred in
connection with the negotiation of this Agreement and the consummation of the
transactions contemplated hereby, including the arrangement and obtaining of
the financing for such transactions, if this Agreement shall be terminated (i)
pursuant to Section 11.01(c) or Section 11.01(d), or (ii) pursuant to Section
11.01(b)(i) and prior to the time of such termination an Acquisition Proposal
shall have been publicly announced and not withdrawn and, within nine months
of the date of termination, the Company enters into an agreement or letter of
intent concerning a transaction that would constitute an Acquisition Proposal
and such transaction is subsequently consummated.
(c) The fee and expenses reimbursement payment payable (i) pursuant
to subsection (b)(i) above shall be paid by the Company immediately upon the
termination of this Agreement, and (ii) pursuant to subsection (b)(ii) above
shall be paid by the Company on the date on which the transaction referred to
in such subsection shall be consummated.
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(d) The Company agrees to pay Parent in immediately available funds
an amount equal to Parent's reasonable expenses (not to exceed $500,000)
incurred in connection with this Agreement and the transactions contemplated
hereby, including the arrangement and obtaining of the financing for such
transactions, if (x) this Agreement shall have been terminated pursuant to
clauses (i) of Section 11.01(b), (y) any representation or warranty made by
the Company in this Agreement shall not have been true and correct in any
material respect as of the date hereof, and (z) the condition in (f) of Annex
I relating to representations and warranties shall not have been satisfied.
Such payment shall be made promptly, and in no event later than two business
days, after such termination.
(e) Parent agrees to pay the Company in immediately available funds
an amount equal to the Company's reasonable expenses (not to exceed $500,000)
incurred in connection with this Agreement and the transactions contemplated
hereby if this Agreement is terminated by the Company and any representation
or warranty made by Parent or Merger Subsidiary in this Agreement shall not
have been true and correct in any material respect as of the date hereof. Such
payment shall be made promptly.
(f) If any party (a "Responsible Party") fails promptly to pay any
amount due to another party pursuant to this Section 12.04, the Responsible
Party shall also pay any costs and expenses incurred by such other party in
connection with a legal action to enforce this Agreement that results in a
judgment against the Responsible Party for such amount.
SECTION 12.05. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of each other party hereto, except that
Parent or Merger Subsidiary may 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 a
portion of the Shares pursuant to the Offer, but no such transfer or
assignment will relieve Parent or Merger Subsidiary of its obligations under
the Offer or prejudice the rights of tendering shareholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
SECTION 12.06. Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of California, without
regard to the conflicts of law rules of such state.
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SECTION 12.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 12.08. Counterparts; Effectiveness; Benefit. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the
other parties hereto. Except as provided in Section 8.03, no provision of this
Agreement is intended to confer any rights, benefits, remedies, obligations,
or liabilities hereunder upon any Person other than the parties hereto and
their respective successors and assigns.
SECTION 12.09. Entire Agreement. This Agreement, the Stock Option
Agreement and the Confidentiality Agreement constitute the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter of this Agreement.
SECTION 12.10. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 12.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such a determination, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
SECTION 12.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in
equity.
46
<PAGE>
SECTION 12.13. Interpretation. Each party to this Agreement and its
legal counsel have reviewed and revised this Agreement. The rule of
construction that ambiguities are to be resolved against the drafting party or
in favor of the party receiving a particular benefit under an agreement may
not be employed in the interpretation of this Agreement or any amendment to
this Agreement.
47
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
RESOUND CORPORATION
By: /s/ Russell D. Hays
--------------------------------
Name: Russell D. Hays
Title: President and Chief
Executive Officer
GN GREAT NORDIC LTD.
By: /s/ Jorgen Lindegaard
--------------------------------
Name: Jorgen Lindegaard
Title: President and Chief
Executive Officer
By: /s/ Jorn Kildegaard
--------------------------------
Name: Jorn Kildegaard
Title: Executive Vice President
GN ACQUISITION CORPORATION
By: /s/ Jorgen Lindegaard
--------------------------------
Name: Jorgen Lindegaard
Title: Vice President
By: /s/ Jorn Kildegaard
--------------------------------
Name: Jorn Kildegaard
Title: Vice President
48
<PAGE>
ANNEX I
Notwithstanding any other provision of the Offer, Parent and Merger Subsidiary
shall not be required to accept for payment or pay for any Shares, and may
terminate the Offer, if
(i) the Minimum Condition (as defined in the Merger Agreement) has
not been satisfied or waived (pursuant to the Merger Agreement, including
Section 2.01(c)) by the scheduled expiration date,
(ii) the applicable waiting period under the HSR Act shall not have
expired or been terminated by the expiration date of the Offer,
(iii) at any time on or after May 10, 1999 and prior to the
expiration date of the Offer, any of the following conditions exist:
(a) there shall be instituted or pending any action or proceeding
by any government or governmental authority or agency, domestic or
foreign, or by any other Person, before any court or governmental
authority or agency, domestic or foreign, which would reasonably be
expected to
(1) prohibit the acquisition by Parent or Merger
Subsidiary of any Shares under the Offer or pursuant to the
Stock Option Agreement, to restrain or prohibit the making
or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by
this Agreement or the Stock Option Agreement or to require
the Company, Parent or Merger Subsidiary to pay any damages
that are material in relation to the Company taken as a
whole or otherwise is likely to have a Material Adverse
Effect on the Company or Parent,
(2) impose material limitations on the ability of
Merger Subsidiary, or to render Merger Subsidiary unable to
accept for payment, pay for or purchase some or all of the
Shares pursuant to the Offer and the Merger,
(3) restrain or prohibit Parent's ownership or
operation (or that of its respective Subsidiaries or
Affiliates) of all or any material portion of the business
or assets of the Company and its Subsidiaries, taken as a
whole, or of Parent and its Subsidiaries, taken as a whole,
or compel Parent or any of its Subsidiaries or
<PAGE>
Affiliates to dispose of or hold separate all or any
material portion of the business or assets of the Company
and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole,
(4) impose material limitations on the ability of
Parent, Merger Subsidiary or any of Parent's other
Subsidiaries or Affiliates effectively to exercise full
rights of ownership of the Shares, including, without
limitation, the right to vote any Shares acquired or owned
by Parent, Merger Subsidiary or any of Parent's other
Subsidiaries or Affiliates on all matters properly presented
to the Company's shareholders, or
(5) require divestiture by Parent, Merger Subsidiary or
any of Parent's other Subsidiaries or Affiliates of any
Shares; or
(b) there shall have been any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated,
issued or deemed applicable to the Offer or the Merger, by any court,
government or governmental authority or agency, domestic or foreign,
other than the application of the waiting period provisions of the
HSR Act to the Offer or the Merger, that would reasonably be
expected, directly or indirectly, to result in any of the
consequences referred to in clauses (1) through (5) of paragraph (a)
above; or
(c) there shall have been any event, occurrence, development or
state of circumstances or facts that has had or would reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company; or
(d) any Person shall have entered into a definitive agreement or an
agreement in principle with the Company, regarding an Acquisition
Proposal; or
(e) the Board of Directors of the Company shall have withdrawn, or
modified in a manner adverse to Parent, its approval or
recommendation of the Merger Agreement, the Offer or the Merger, or
shall have recommended or publicly announced its intention to enter
into, a definitive agreement or an agreement in principle with
respect to an Acquisition Proposal (or shall have resolved to do any
of the foregoing); or
(f) the Company shall have breached or failed to perform in all
material respects any of obligations under the Merger Agreement, or
any of the representations and warranties of the Company contained in
the
2
<PAGE>
Merger Agreement shall not be true when made or as of the scheduled
expiration of the Offer as if made at and as of such time, except for
such inaccuracies which, when taken together (in each case without
regard to any qualifications as to materiality or Material Adverse
Effect contained in the applicable representations and warranties)
would not reasonably be expected to have a Material Adverse Effect on
the Company; or
(g) the Merger Agreement shall have been terminated in accordance
with its terms;
which, in the reasonable judgment of Parent in any such case, and regardless
of the circumstances (including any action or omission by Parent) giving rise
to any such condition, makes it inadvisable to proceed with such acceptance
for payment or payment.
The foregoing conditions are for the sole benefit of Parent and
Merger Subsidiary and may, subject to the terms of the Merger Agreement, be
waived by Parent and Merger Subsidiary in whole or in part at any time and
from time to time in their discretion. The failure by Parent or Merger
Subsidiary at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect
to particular facts and 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
prior to the Effective Time.
3
EXHIBIT (c)(2)
CONFORMED COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of May 10, 1999 (this "Agreement")
among ReSound Corporation, a California corporation (the "Company"), GN Great
Nordic Ltd., a Danish corporation ("Parent"), and GN Acquisition Corporation,
a California corporation and an indirect wholly owned subsidiary of Parent
("Merger Subsidiary").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, the parties hereto are entering into an Agreement and Plan of
Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement") which provides, upon the terms and subject to the
conditions set forth therein, for (i) the commencement by Merger Subsidiary of
an offer (the "Offer") to purchase any and all of the outstanding shares of
the Company's common stock, par value $0.01 per share (the "Shares"), at a
price of $8.00 per Share (or any higher price paid for each Share in the
Offer, the "Offer Price"), and (ii) the subsequent merger of Merger Subsidiary
with and into the Company (the "Merger"), whereby each Share then outstanding
(other than Shares owned by Parent or any of its Subsidiaries or held by the
Company and other than dissenting Shares) will be converted into the right to
receive the Offer Price;
WHEREAS, as a condition to the willingness of Parent and Merger
Subsidiary to enter into the Merger Agreement, Parent and Merger Subsidiary
have required that the Company agree, and in order to induce Parent and Merger
Subsidiary to enter into the Merger Agreement, the Company has agreed, to
grant to Merger Subsidiary certain options to purchase Shares upon the terms
and subject to the conditions of this Agreement; and
WHEREAS, capitalized terms used but not defined in this Agreement
shall have the meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>
ARTICLE 1
THE TOP-UP OPTION
SECTION 1.01. Grant of Top-Up Stock Option. Subject to the terms and
conditions set forth herein, the Company hereby grants to Merger Subsidiary an
irrevocable option (the "Top-Up Stock Option") to purchase that number of
Shares (the "Top-Up Option Shares") equal to the number of Shares that, when
added to the number of Shares owned by Merger Subsidiary, Parent and their
Subsidiaries immediately following consummation of the Offer, shall constitute
90% of the Shares then outstanding (assuming the issuance of the Top-Up Option
Shares) at a purchase price per Top-Up Option Share equal to the Offer Price;
provided, however, that the Top-Up Stock Option shall not be exercisable if
the number of Shares subject thereto exceeds the number of authorized Shares
available for issuance. The Company agrees to provide Parent and Merger
Subsidiary with information regarding the number of Shares available for
issuance on an ongoing basis.
SECTION 1.02. Exercise of Top-Up Stock Option. (a) Merger Subsidiary
may, at its election, exercise the Top-Up Stock Option in whole, but not in
part, at any one time after the occurrence of a Top-Up Exercise Event (as
defined below) and prior to the Top-Up Termination Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this
Agreement upon the Purchaser's acceptance for payment pursuant to the Offer of
Shares constituting more than 50% but less than 90% of the Shares then
outstanding on a fully diluted basis.
(c) Except as provided in the last sentence of this Section 1.02(c),
the "Top-Up Termination Date" shall occur for purposes of this Agreement upon
the earliest to occur of: (i) the Effective Time; (ii) the date which is 20
business days after the occurrence of a Top-Up Exercise Event; (iii) the
termination of the Merger Agreement; and (iv) the date on which Merger
Subsidiary waives the Minimum Condition and accepts for payment the Revised
Minimum Number of Shares.
Notwithstanding the occurrence of the Top-Up Termination Date, Merger
Subsidiary shall be entitled to purchase the Top-Up Option Shares if it has
exercised the Top-Up Stock Option in accordance with the terms hereof prior to
such occurrence, and the occurrence of the Top-Up Termination Date shall not
affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such date.
2
<PAGE>
(d) In the event Merger Subsidiary wishes to exercise the Top-Up
Stock Option, Merger Subsidiary shall send to the Company a written notice (a
"Top-Up Exercise Notice," the date of which notice is referred to herein as
the "Top-Up Notice Date") specifying the denominations of the certificate or
certificates evidencing the Top-Up Option Shares which Merger Subsidiary
wishes to receive, the place for the closing of the purchase and sale pursuant
to the Top-Up Stock Option (the "Top-Up Closing") and a date not earlier than
one day nor later than ten business days from the Top-Up Notice Date for the
Top-Up Closing; provided, however, that (i) the Top-Up Closing shall occur
concurrently with the consummation of the Offer, (ii) if the Top-Up Closing
cannot be consummated by reason of any applicable laws or orders, the period
of time that otherwise would run pursuant to this sentence shall run instead
from the date on which such restriction on consummation has expired or been
terminated, and (iii) without limiting the foregoing, if prior notification to
or approval of any governmental entity is required in connection with such
purchase, Merger Subsidiary and the Company shall promptly file the required
notice or application for approval and shall cooperate in the expeditious
filing of such notice or application, and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which,
as the case may be, (A) any required notification period has expired or been
terminated or (B) any required approval has been obtained, and in either
event, any requisite waiting period has expired or been terminated. The
Company shall, promptly after receipt of the Top-Up Exercise Notice, deliver a
written notice to Merger Subsidiary confirming the number of Top-Up Option
Shares and the aggregate purchase price therefor.
ARTICLE 2
CLOSING
SECTION 2.01. Conditions to Closing. The obligation of the Company to
deliver Top-Up Option Shares upon the exercise of the Top-Up Stock Option is
subject to the following conditions:
(a) any applicable waiting period under the HSR Act relating to the
issuance of the Top-Up Option Shares hereunder shall have expired or been
terminated; and
(b) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the exercise of the
Top-Up Stock Option or the delivery of the Top-Up Option Shares in respect of
any such exercise.
3
<PAGE>
SECTION 2.02. Closing. (a) At the Top-Up Closing (i) the Company
shall deliver to Merger Subsidiary a certificate or certificates evidencing
the applicable number of Top-Up Option Shares (in the denominations designated
by Merger Subsidiary in the Top-Up Exercise Notice) and (ii) Merger Subsidiary
shall purchase each Top-Up Option Share from the Company at the Offer Price.
Payment by Merger Subsidiary of the purchase price for the Top-Up Option
Shares may be made, at the option of Merger Subsidiary, by delivery of (i)
cash by wire transfer or (ii) a promissory note, in form and substance
reasonably satisfactory to the Company and in a principal face amount equal to
the aggregate amount of the purchase price, which promissory note shall bear
interest at a rate equal to 5% per annum and shall be payable in full with
accrued interest five business days following written demand given by the
Company to Merger Subsidiary or Parent at any time following the Effective
Time.
(b) The Company shall pay all expenses, and any and all federal,
state and local taxes and other charges, that may be payable in connection
with the preparation, issuance and delivery of stock certificates under this
Section 2.02.
(c) Certificates evidencing Top-Up Option Shares delivered hereunder
may include legends legally required including the legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED
OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
It is understood and agreed that the foregoing legend shall be
removed by delivery of substitute certificate(s) without such legend upon the
sale of the Top-Up Option Shares pursuant to a registered public offering or
Rule 144 under the Securities Act, or any other sale as a result of which such
legend is no longer required.
ARTICLE 3
ADDITIONAL AGREEMENTS
SECTION 3.01. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, Parent, Merger Subsidiary and the Company will
use their reasonable best efforts to take, or cause to be taken, all actions
and to do,
4
<PAGE>
or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement.
SECTION 3.02. Further Assurances. The Company shall perform such
further acts and execute such further documents and instruments as may
reasonably be required to vest in Merger Subsidiary and Parent the power to
carry out the provisions of this Agreement. If Merger Subsidiary shall
exercise the Top-Up Stock Option granted hereunder in accordance with the
terms of this Agreement, the Company shall, without additional consideration,
execute and deliver all such further documents and instruments and take all
such further action as Merger Subsidiary or Parent may reasonably request to
carry out the transactions contemplated by this Agreement.
ARTICLE 4
MISCELLANEOUS
SECTION 4.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given as specified in Section 12.01 of the Merger Agreement.
SECTION 4.02. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed, in the case of an amendment, by each party to
this Agreement or, in the case of a waiver, by each party against whom the
waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 4.03. Expenses. Except as otherwise provided herein or in
Section 12.04 of the Merger Agreement, all costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
SECTION 4.04. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their
5
<PAGE>
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Merger Subsidiary
may 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 a portion of the Top-Up Option
Shares pursuant to this Agreement, but no such transfer or assignment will
relieve Merger Subsidiary of its obligations under this Agreement.
SECTION 4.05. Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of California, without
regard to the conflicts of law rules of such state.
SECTION 4.06. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 4.07. Counterparts; Effectiveness; Benefit. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the
other parties hereto. No provision of this Agreement is intended to confer any
rights, benefits, remedies, obligations, or liabilities hereunder upon any
Person other than the parties hereto and their respective successors and
assigns.
SECTION 4.08. Entire Agreement. This Agreement, the Merger Agreement
and the Confidentiality Agreement constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and supersede all
prior agreements and understandings, both oral and written, between the
parties with respect to the subject matter of this Agreement.
SECTION 4.09. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 4.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner
6
<PAGE>
materially adverse to any party. Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
SECTION 4.11. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in
equity.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
RESOUND CORPORATION
By: /s/ Russell D. Hays
--------------------------------
Name: Russell D. Hays
Title: President and Chief
Executive Officer
GN GREAT NORDIC LTD.
By: /s/ Jorgen Lindegaard
--------------------------------
Name: Jorgen Lindegaard
Title: President and Chief
Executive Officer
By: /s/ Jorn Kildegaard
--------------------------------
Name: Jorn Kildegaard
Title: Executive Vice President
GN ACQUISITION CORPORATION
By: /s/ Jorgen Lindegaard
--------------------------------
Name: Jorgen Lindegaard
Title: Vice President
By: /s/ Jorn Kildegaard
--------------------------------
Name: Jorn Kildegaard
Title: Vice President
8
Exhibit (c)(3)
[Form of Letter Regarding Change of Control Agreement]
May 10, 1999
[Name]
ReSound Corporation
220 Saginaw Drive
Seaport Centre
Redwood City, CA 94063
Re: Change of Control Agreement
Dear [Name]:
This confirms our agreement regarding your change of control agreement
with ReSound Corporation (the "Company") dated ______________ (the "Change of
Control Agreement"). Unless otherwise defined herein, capitalized terms shall
have the respective meanings ascribed thereto in the Change of Control
Agreement.
The Change of Control Agreement provides for certain benefits upon
termination of your employment after a Change of Control by the Company without
Cause or by you for Good Reason. The Company, GN Great Nordic Ltd. ("GN"), and
GN Acquisition Corporation have entered into an Agreement and Plan of Merger,
dated as of May 10, 1999 (the "Merger Agreement"), which provides that the
Merger Subsidiary will merge (the "Merger") with and into the Company upon
completion of the tender offer contemplated thereby. Upon consummation of the
Merger, the Company will be a wholly-owned subsidiary of GN. The completion of
the tender offer will constitute a Change of Control under the Change of
Control Agreement.
As a result of the change in the nature of your responsibilities and
position that will result from the Merger, your Change of Control Agreement is
amended, as of the Effective Time of the Merger, to provide that in the event
you terminate your employment for any reason at any time after the consummation
of the Merger and within twenty-four months following the completion of the
tender offer contemplated by the Merger Agreement, (i) such termination shall
be deemed to be for "Good Reason", as defined in your Change of Control
Agreement, and (ii) you will be entitled to all benefits arising under the
Change of
<PAGE>
Control Agreement applicable to a termination for Good Reason following a
Change in Control.
The foregoing amendment to your Change of Control Agreement shall become
effective only if the Merger is consummated.
In addition, if Section 5 of your Change of Control Agreement results in
payment to you of less than the full amount of your benefits (as otherwise
stated under that Agreement), then GN will offer to enter into a
consulting/noncompete agreement guaranteeing you the opportunity to earn, in
consideration of services rendered, at least the amount of the benefits
foregone under Section 5 of your Change of Control Agreement.
Please confirm your agreement to the foregoing by signing and returning to
me the enclosed copy of this letter.
By its execution of a copy of this letter, GN consents to the amendments
to be made by this agreement to your Change of Control Agreement upon
consummation of the Merger.
Very truly yours,
GN ACQUISITION CORPORATION
By:
--------------------------------
Name:
Title:
CONFIRMED AND AGREED
- -----------------------------------
[Name]
2
<PAGE>
CONSENTED AND AGREED
GN GREAT NORDIC LTD.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
3
