<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
THE RIVAL COMPANY
(NAME OF SUBJECT COMPANY [ISSUER])
MORIARTY ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
HOLMES PRODUCTS CORP.
(BIDDER)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
768020109
(CUSIP NUMBER OF CLASS OF SECURITIES)
JORDAN A. KAHN
PRESIDENT
HOLMES PRODUCTS CORP.
233 FORTUNE BOULEVARD
MILFORD, MA 01757
(508) 634-8050
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF BIDDER)
------------------------
WITH A COPY TO:
DONALD H. SIEGEL, P.C.
MICHAEL L. ANDRESINO, ESQ.
POSTERNAK, BLANKSTEIN & LUND, L.L.P.
100 CHARLES RIVER PLAZA
BOSTON, MASSACHUSETTS 02114
(617) 973-6100
CALCULATION OF FILING FEE
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Transaction Valuation: $139,899,898* Amount of Filing Fee: $27,980**
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</TABLE>
* For purposes of calculation of the filing fee only. This amount assumes the
purchase of (i) 9,294,227 outstanding shares of Common Stock, par value $0.01
per share (the "Shares") of Issuer and (ii) 880,311 Shares issuable pursuant
to outstanding stock options, in each case at a purchase price of $13.75 per
Share, net to the seller in cash, without interest thereon.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50(th) of one
percent of the Transaction Valuation.
[ ] 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.
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Amount Previously Paid: Not applicable Filing Party: Not applicable
Form or Registration No.: Not applicable Date Filed: Not applicable
</TABLE>
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14D-1
CUSIP No. 768020109
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1. Name of Reporting Persons S.S. or I.R.S. Identification No.
of Above Persons: MORIARTY ACQUISITION CORP.*
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2. Check the Appropriate Box if a Member of a Group: (a) [X]
(b) [ ]
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3. SEC Use Only
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4. Sources of Funds BK, AF, OO
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5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f) [ ]
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6. Citizenship or Place of Organization DELAWARE
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
NONE
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8. Check if the Aggregate Amount in Row 7 Excludes Certain
Shares [ ]
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9. Percent of Class Represented by Amount in Row 7 0%
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10. Type of Reporting Person CO
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</TABLE>
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* I.R.S. Identification No. applied for.
2
<PAGE> 3
14D-1
CUSIP No. 768020109
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1. Name of Reporting Persons S.S. or I.R.S. Identification No.
of Above Persons: HOLMES PRODUCTS CORP. (I.R.S.
IDENTIFICATION NO. 04-2768914)
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2. Check the Appropriate Box if a Member of a Group: (a) [X]
(b) [ ]
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3. SEC Use Only
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4. Sources of Funds BK, AF, OO
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5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f) [ ]
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6. Citizenship or Place of Organization MASSACHUSETTS
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
NONE
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8. Check if the Aggregate Amount in Row 7 Excludes Certain
Shares [ ]
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9. Percent of Class Represented by Amount in Row 7 0%
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10. Type of Reporting Person CO
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</TABLE>
3
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This Tender Offer Statement on Schedule 14D-1 (the "Statement"), relates to
the offer by Moriarty Acquisition Corp. ("Purchaser"), a Delaware corporation
and a wholly-owned subsidiary of Holmes Products Corp., a Massachusetts
corporation ("Parent"), to purchase all of the outstanding shares of Common
Stock, par value $0.01 per share (the "Shares"), of The Rival Company, a
Delaware corporation (the "Company"), at a purchase price of $13.75 per Share,
net to the seller in cash, without interest thereon.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is The Rival Company. The address of
the Company's principal executive offices is 800 E. 101st Terrace, Kansas City,
Missouri 64131.
(b) The information set forth in the "Introduction" of the Offer to
Purchase annexed hereto as Exhibit (a)(1) (the "Offer to Purchase") is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares") of the
Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d);(g) This Statement is being filed by Purchaser and Parent. The
information set forth in Section 9 ("Certain Information Concerning Purchaser
and Parent") of the Offer to Purchase and Schedule I thereto is incorporated
herein by reference.
(e) and (f) During the last five years, neither Purchaser nor Parent, nor,
to the best knowledge of Purchaser and Parent, any persons controlling Purchaser
or Parent, or any of the persons listed on Schedule I to the Offer to Purchase,
(i) has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which any such
person was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction, Section 9 ("Certain
Information Concerning Purchaser and Parent"), Section 11 ("Background of the
Offer") and Section 12 ("Purpose of the Offer and the Merger; The Merger
Agreement; Other Agreements; Plans for the Company; Other Matters") 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 10 ("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, Section 11
("Background of the Offer") and Section 12 ("Purpose of the Offer and the
Merger; The Merger Agreement; Other Agreements; Plans for the Company; Other
Matters") of the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Nasdaq Quotation and Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.
4
<PAGE> 5
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in Section 9 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
(b) The information set forth in Section 9 ("Certain Information Concerning
Purchaser and Parent") 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 and Section 9 ("Certain
Information Concerning Purchaser and Parent"), Section 11 ("Background of the
Offer") and Section 12 ("Purpose of the Offer and the Merger; The Merger
Agreement; Other Agreements; Plans for the Company; Other Matters") of the Offer
to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
In addition, Parent is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and accordingly, files financial
and other information with the Securities and Exchange Commission (the
"Commission"). Such information may be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates, and at the following regional offices of the
Commission: Seven World Trade Center, Suite 3300, New York, New York 10048; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
The Commission also maintains an Internet web site at http://www.sec.gov where
such information is available. The following financial statements filed by
Parent with the Commission are hereby incorporated by reference:
(1) Parent's audited Consolidated Financial Statements and notes thereto
beginning on page F-1 of Amendment No. 2 to Parent's Registration
Statement on Form S-4 (File No. 33-44473), filed with the Commission on
March 23, 1998; and
(2) Parent's unaudited Consolidated Financial Statements and notes thereto
set forth at Part I, Item 1 of Parent's Quarterly Reports on Form 10-Q
filed with the Commission for the periods ended March 31, 1998, June
30, 1998 and September 30, 1998.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a stockholder of the Company whether to sell, tender or hold
Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in the Introduction and Section 15
("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Nasdaq Quotation and Exchange Act Registration") and
Section 15 ("Certain Legal Matters; Regulatory Approvals") of the Offer to
Purchase is incorporated herein by reference.
5
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(e) The information set forth in Section 15 ("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, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Offer to Purchase, dated December 23, 1998.
(2) Letter of Transmittal.
(3) Notice of Guaranteed Delivery.
(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
other Nominees.
(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees.
(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(7) Summary Advertisement as published on December 23, 1998.
(8) Text of Press Release issued by Parent and the Company dated
December 17, 1998.
(9) Text of Press Release issued by Parent dated December 23, 1998.
(b) Not applicable (to be filed by amendment).
(c) (1) Agreement and Plan of Merger, dated December 17, 1998, by and among
the Company, Parent and Purchaser.
(2) Tender and Voting Agreement, dated December 17, 1998, by and among
Parent, Purchaser and the directors and certain executive officers
of the Company.
(3) Confidentiality Agreement, dated October 1, 1998, by and between
Parent and BancAmerica Securities, Inc. on behalf of the Company.
(d) Not applicable.
(e) Not applicable.
(f) None.
6
<PAGE> 7
SIGNATURES
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.
HOLMES PRODUCTS CORP.
By: /s/ IRA B. MORGENSTERN
------------------------------------
Ira B. Morgenstern
Senior Vice President -- Finance
MORIARTY ACQUISITION CORP.
By: /s/ IRA B. MORGENSTERN
------------------------------------
Ira B. Morgenstern
Treasurer
Dated: December 23, 1998
7
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
<S> <C>
(a)(1) Offer to Purchase, dated December 23, 1998.
(a)(2) Letter of Transmittal.
(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) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
(a)(7) Summary Advertisement as published on December 23, 1998.
(a)(8) Text of Press Release issued by Parent and the Company dated
December 17, 1998.
(a)(9) Text of Press Release issued by Parent dated December 23,
1998.
(c)(1) Agreement and Plan of Merger, dated as of December 17, 1998,
by and among the Company, Parent and Purchaser.
(c)(2) Tender and Voting Agreement, dated as of December 17, 1998,
by and among Parent, Purchaser and the directors and certain
executive officers of the Company.
(c)(3) Confidentiality Agreement, dated as of October 1, 1998, by
and between Parent and BancAmerica Securities, Inc. on
behalf the Company.
</TABLE>
8
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
THE RIVAL COMPANY
AT
$13.75 NET PER SHARE
BY
MORIARTY ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
HOLMES PRODUCTS CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JANUARY 25, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER BY AND
AMONG THE RIVAL COMPANY (THE "COMPANY"), HOLMES PRODUCTS CORP. ("PARENT") AND
MORIARTY ACQUISITION CORP. ("PURCHASER"). THE BOARD OF DIRECTORS OF THE COMPANY
(WITH ONE DIRECTOR ABSENT) HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER
REFERRED TO HEREIN AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS
THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS
DEFINED HEREIN).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER THAT NUMBER
OF SHARES, WHICH, TOGETHER WITH ANY SHARES THEN OWNED BY PARENT OR PURCHASER,
REPRESENTS AT LEAST 70% OF THE SHARES THEN OUTSTANDING, (2) PARENT AND PURCHASER
HAVING RECEIVED THE CASH PROCEEDS OF FINANCING TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT AND (3) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE
OFFER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER ALSO IS SUBJECT TO CERTAIN
OTHER CONDITIONS WHICH ARE SET FORTH IN SECTION 14.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions set forth in the Letter
of Transmittal and (A) mail or deliver it, together with the certificate(s)
representing tendered Shares and any other required documents to the Depositary
(as defined herein) or (B) tender such Shares pursuant to the procedures for
book-entry transfer set forth in Section 3, or (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such stockholder desires to tender such Shares.
A stockholder who desires to tender Shares, and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer described in this Offer to Purchase
on a timely basis, may tender such Shares by following the procedures for
guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at the address 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 or other tender offer materials may be
obtained from the Information Agent. Stockholders may also contact their
brokers, dealers, commercial banks and trust companies for assistance concerning
the Offer.
------------------------
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
The Information Agent for the Offer is:
MORROW & CO., INC.
December 23, 1998
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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INTRODUCTION................................................ 1
THE TENDER OFFER............................................ 3
1. Terms of the Offer................................... 3
2. Acceptance for Payment and Payment for Shares........ 4
3. Procedures for Tendering Shares...................... 6
4. Withdrawal Rights.................................... 8
5. Certain United States Federal Income Tax
Consequences........................................... 9
6. Price Range of Shares; Dividends..................... 10
7. Effect of the Offer on the Market for the Shares;
Nasdaq Quotation and Exchange Act Registration....... 10
8. Certain Information Concerning the Company........... 11
9. Certain Information Concerning Purchaser and
Parent................................................. 14
10. Source and Amount of Funds........................... 16
11. Background of the Offer.............................. 19
12. Purpose of the Offer and the Merger; The Merger
Agreement; Other Agreements; Plans for the Company;
Other Matters........................................ 20
13. Dividends and Distributions.......................... 32
14. Certain Conditions of the Offer...................... 32
15. Certain Legal Matters; Regulatory Approvals.......... 34
16. Fees and Expenses.................................... 36
17. Miscellaneous........................................ 36
SCHEDULE I--Information Relating to Directors and Executive
Officers of Parent and Purchaser.......................... I-1
</TABLE>
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TO THE HOLDERS OF SHARES OF COMMON STOCK OF
THE RIVAL COMPANY:
INTRODUCTION
Moriarty Acquisition Corp. ("Purchaser"), a Delaware corporation and a
wholly-owned subsidiary of Holmes Products Corp., a Massachusetts corporation
("Parent"), hereby offers to purchase all outstanding shares (the "Shares") of
common stock, par value $0.01 per share (the "Common Stock"), of The Rival
Company, a Delaware corporation (the "Company"), at a purchase price of $13.75
per Share, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer").
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") (WITH ONE DIRECTOR
ABSENT) HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER (AS DEFINED BELOW) AND
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE
FACTORS CONSIDERED BY THE BOARD OF DIRECTORS OF THE COMPANY IN ARRIVING AT ITS
DECISION TO APPROVE THE OFFER AND THE MERGER AND TO RECOMMEND THAT STOCKHOLDERS
OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES ARE DESCRIBED IN THE
COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE
14D-9") WHICH IS BEING MAILED TO STOCKHOLDERS OF THE COMPANY HEREWITH.
The Company's financial advisor, NationsBanc Montgomery Securities LLC (the
"Financial Advisor"), has delivered to the Company its opinion dated December
14, 1998 that the consideration to be received by holders of Shares (other than
Parent and Purchaser, and other than holders of dissenting shares, if any)
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view. The full text of the opinion is set forth as an Annex to the
Schedule 14D-9 and should, together with the related sections of the Schedule
14D-9, be read carefully and in its entirety in connection with the Offer. The
Financial Advisor's opinion is directed to the Board of Directors of the Company
and does not constitute a recommendation to any stockholder of the Company as to
how such stockholder should respond to the Offer. The Financial Advisor's
opinion addresses only the financial fairness of the consideration to be
received by the holders of Shares pursuant to the Offer and the Merger and does
not address any other aspect of the Offer or the Merger.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 17, 1998 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that, following the
satisfaction or waiver of certain conditions, a merger (the "Merger") will be
effected under the terms of which Purchaser will be merged with and into the
Company, with the Company surviving the Merger (the "Surviving Corporation").
The Surviving Corporation will be a wholly-owned subsidiary of Parent. In the
Merger, each outstanding Share (other than Shares held by stockholders who
properly demand their appraisal rights under Delaware law, Shares held in the
Company's treasury and Shares owned by Parent or Purchaser) will be converted
into the right to receive the Offer Price in cash, without interest (the "Merger
Consideration"). See Section 12.
The Merger Agreement provides that the Offer is conditioned upon, among
other things, (1) satisfaction of the Minimum Condition, as defined below, (2)
Parent and Purchaser having received the cash proceeds of the Financing, as
defined below, in an amount sufficient to consummate the transactions
contemplated by the Merger Agreement and (3) the expiration of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and receipt of any required regulatory consents and
approvals. See Sections 1 and 14, which set forth the conditions of the Offer,
and Section 15, which discusses certain legal matters and regulatory consents
and approvals.
The consummation of the Merger is subject to the satisfaction or waiver of
a number of conditions, including, if required, the approval of the Merger by
the requisite vote or consent of the Stockholders. Under the Delaware General
Corporation Law (the "DGCL"), the stockholder vote necessary to approve the
Merger will be the affirmative vote of at least a majority of the outstanding
Shares, including Shares held by
1
<PAGE> 4
Purchaser and its affiliates. If Purchaser purchases at least a majority of the
outstanding Shares in the Offer, Purchaser will be able to effect the Merger
without the affirmative vote of any other stockholders. If Purchaser acquires at
least 90% of the outstanding Shares pursuant to the Offer or otherwise,
Purchaser will be able to effect the Merger pursuant to the "short-form" merger
provisions of Section 253 of the DGCL, without prior notice to, or any action
by, any other Stockholder. In that event, Purchaser intends to effect the Merger
as promptly as practicable following the purchase of Shares in the Offer. See
Section 12.
In connection with the execution of the Merger Agreement, Parent and
Purchaser entered into a Tender and Voting Agreement, dated as of December 17,
1998 (the "Tender and Voting Agreement"), with all of the directors and certain
executive officers of the Company (the "Tendering Stockholders"). The Tendering
Stockholders beneficially own an aggregate of 1,049,769 Shares (which Shares
represent approximately 11.3% of the Shares currently outstanding). Pursuant to
the Tender and Voting Agreement, the Tendering Stockholders have agreed to
validly tender pursuant to the Offer and not withdraw all Shares which are
beneficially owned by them prior to the Expiration Date.
The Merger Agreement and the Tender and Voting Agreement are more fully
described in Section 12.
The Minimum Condition. Consummation of the Offer is conditioned upon,
among other things, there being validly tendered and not withdrawn prior to the
expiration of the Offer that number of Shares, which represents at least 70% of
the number of Shares then outstanding (the "Minimum Condition").
The Company has represented that on December 17, 1998 it had issued and
outstanding 9,294,227 Shares and outstanding stock options to purchase an
aggregate of 378,611 Shares at exercise prices at or below the Offer Price and
that are vested or that will vest as a result of the transactions contemplated
by the Merger Agreement.
Based on the foregoing, assuming no change in the number of outstanding
shares other than the potential exercise of the options referred to above, the
Minimum Condition will be satisfied if at least 6,770,987 Shares (including the
1,049,769 Shares subject to the Tender and Voting Agreement) are validly
tendered and not withdrawn prior to the Expiration Date. The actual number of
Shares required to be tendered to satisfy the Minimum Condition will depend upon
the actual number of Shares outstanding on the date Purchaser accepts Shares for
payment pursuant to the Offer.
The Financing Condition. Purchaser's obligation to purchase Shares
pursuant to the Offer is conditioned upon, among other things, Parent and
Purchaser having received the cash proceeds of the Financing in an amount
sufficient to consummate the transactions contemplated by the Merger Agreement
(the "Financing Condition").
As described in Section 10, Parent and Purchaser intend to obtain all funds
needed for the Offer and the Merger through (1) the issuance of $50 million of
equity securities of Parent, (2) the incurrence of approximately $250 million of
indebtedness under a new credit facility, and (3) the issuance of $30 million in
principal amount of Parent's 9 7/8% Senior Subordinated Notes due 2007 (as
further described in Section 10, the "Financing").
Certain other conditions to consummation of the Offer are described in
Section 14. Purchaser expressly reserves the right, in its sole discretion, to
waive any one or more of the conditions to the Offer. See Section 14.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. However, any tendering stockholder or other payee who fails to complete
and sign the Substitute Form W-9 included in the Letter of Transmittal may be
subject to a required backup federal income tax withholding of 31% of the gross
proceeds payable to such stockholder or other payee pursuant to the Offer. See
Section 3. Purchaser will pay all fees and expenses of Donaldson, Lufkin &
Jenrette Securities Corporation, which is acting as the Dealer Manager for the
Offer ("DLJ" or the "Dealer Manager"), Morrow & Co., Inc., which is acting as
Information Agent (the "Information Agent"), and Harris Trust Company of New
York, which is acting as Depositary (the "Depositary"), incurred in connection
with the Offer. See Section 16.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
<PAGE> 5
THE TENDER OFFER
1. TERMS OF THE OFFER.
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 extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not withdrawn in accordance with
Section 4. The term "Expiration Date" means 12:00 midnight, New York City time,
on Monday, January 25, 1999, unless and until Purchaser shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition, the Financing Condition and certain other customary
conditions described herein (the "Offer Conditions"). See Section 14. If any or
all of such conditions are not satisfied prior to the Expiration Date, Purchaser
expressly reserves the right, in its sole discretion, at any time and from time
to time, to (1) decline to purchase any of the Shares tendered and terminate the
Offer, subject to the terms of the Merger Agreement, (2) waive any of the
conditions to the Offer (including the Minimum Condition, provided that no such
waiver of the Minimum Condition shall decrease the Minimum Condition to less
than a majority of the outstanding shares), to the extent permitted by
applicable law and the provisions of the Merger Agreement and, subject to
complying with the applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), purchase all Shares validly tendered,
(3) subject to the terms of the Merger Agreement, extend the Offer and, subject
to the right of stockholders to withdraw Shares until the Expiration Date,
retain the Shares which will have been tendered during the period or periods for
which the Offer is extended or (4) subject to the terms of the Merger Agreement,
amend the Offer.
Purchaser has agreed in the Merger Agreement that it will not, without the
prior written consent of the Company (1) decrease the price per Share payable in
the Offer, (2) decrease the maximum number of Shares to be purchased in the
Offer, (3) impose terms and conditions to the Offer in addition to those set
forth in Section 14, (4) change the terms and conditions to the Offer in any
respect adverse to the Company, (5) except as provided in the next sentence,
extend the Offer, (6) change the form of consideration payable in the Offer or
(7) amend any other term or condition of the Offer in a manner adverse to the
holders of the Shares. Notwithstanding the foregoing, pursuant to the Merger
Agreement, Purchaser may, without the consent of the Company, (1) extend the
Offer, at any time up to March 15, 1999, for one or more periods of not more
than ten business days each, if any of the Offer Conditions shall not be
satisfied or waived, until such time as such conditions are satisfied or waived,
(2) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof applicable to
the Offer, or (3) if all of the Offer Conditions are satisfied or waived and the
number of Shares tendered is at least equal to 70%, but less than 90%, of the
then-outstanding number of Shares, further extend the Offer for an aggregate
period of not more than ten business days beyond the then-scheduled Expiration
Date. So long as this Agreement is in effect, the Offer has been commenced and
the Offer Conditions have not been satisfied or waived, Purchaser shall cause
the Offer not to expire.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right, in its sole discretion, at any time or from time to time, and
regardless of whether or not any of the events set forth in Section 14 hereof
shall have occurred or shall have been determined by Purchaser to have occurred
(1) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving oral
or written notice of such extension to the Depositary and (2) except as
indicated above, to amend the Offer in any respect by giving oral or written
notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST
BE PAID ON THE PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE TENDERED SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The rights reserved by Purchaser as set forth above are in addition to
Purchaser's rights to terminate the Offer described in Section 14. Any
extension, amendment or termination will be followed as promptly as
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practicable by public announcement thereof, the 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 (as defined below) after the previously scheduled Expiration Date
in accordance with the public announcement requirements of Rule l4e-1(d) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Subject to
applicable law (including, without limitation, Rules 14d-4(c) and 14d-6(d) under
the Exchange Act, which require that material changes in the information
published, sent or given in connection with the Offer be promptly disseminated
to stockholders in a manner reasonably designed to inform stockholders of such
changes) and without limiting the manner in which Purchaser may choose to make
any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Jones News Service.
If Purchaser extends the Offer (whether before or after its acceptance for
payment of Shares), is delayed in its payment for Shares or is unable to pay for
Shares pursuant to the Offer for any reason, then, without prejudice to
Purchaser's rights under the Offer, the Depositary may retain tendered Shares on
behalf of Purchaser, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to withdrawal rights as described in Section
4. However, the ability of Purchaser to delay the payment for Shares which
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials (including any
public announcement as set forth above) and extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and l4e-1 under the Exchange Act. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in percentage of securities sought, will
depend upon the facts and circumstances, including the relative materiality of
the changes in the terms or information. With respect to a change in price or a
change in the percentage of securities sought, a minimum period of ten business
days is generally required to allow for adequate dissemination to stockholders
and investor response. If, prior to the Expiration Date, Purchaser should decide
to increase the price per Share being offered in the Offer, such increase will
be applicable to all stockholders whose Shares are accepted for payment pursuant
to the Offer and, if at the time notice of any such increase 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. The
Merger Agreement provides that, without the Company's prior written consent,
Purchaser will not decrease the price or number of Shares sought in the Offer.
As used in this Offer to Purchase, the term "business day" has the meaning set
forth in Rule l4d-1 under the Exchange Act.
The Company has provided Purchaser with its list of stockholders 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 and, if
required, other relevant materials will be mailed to record holders of Shares
and will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will purchase, by accepting for payment, and will pay
for, all Shares validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) promptly after the Expiration Date.
Subject to the terms of the Merger Agreement, any determination concerning the
satisfaction of such terms and conditions shall be within
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<PAGE> 7
the sole discretion of Purchaser and such determination shall be final and
binding on all tendering stockholders. See Sections 1 and 14.
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole or
in part with any applicable law, including, without limitation, the HSR Act. Any
such delays will be effected in compliance with Rule 14e-1(c) under the Exchange
Act (relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer). In all
cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (i)
certificates for (or a timely Book-Entry Confirmation (as defined in Section 3)
with respect to) such Shares, (ii) a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message (as defined in Section 3), and (c) any other documents required by the
Letter of Transmittal. THE PER SHARE CONSIDERATION PAID TO ANY STOCKHOLDER
PURSUANT TO THE OFFER WILL BE THE HIGHEST PER SHARE CONSIDERATION PAID TO ANY
OTHER STOCKHOLDER PURSUANT TO THE OFFER.
A Notification and Report Form with respect to the Offer has been filed on
behalf of Parent under the HSR Act. The waiting period under the HSR Act with
respect to the Offer will expire at 11:59 p.m., New York City time, on the
fifteenth calendar day after the date Parent's form is filed, unless early
termination of the waiting period is granted. Before such time, however, the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") or the United States Federal Trade Commission (the "FTC") may extend
the waiting period by requesting additional information or documentary material
from Parent. If such request is made, such waiting period will expire at 11:59
p.m., New York City time, on the tenth calendar day after substantial compliance
by Parent with such request. See Section 15 hereof for additional information
concerning the HSR Act and applicability of the antitrust laws to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered to Purchaser and not
withdrawn if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment. Payment for
Shares accepted pursuant to the Offer will be made by deposit of the aggregate
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to such tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE TENDERED
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If, for any reason whatsoever, Purchaser is delayed in its acceptance for
payment of or payment for any Shares tendered pursuant to the Offer, or
Purchaser is unable to accept for payment or pay for Shares tendered pursuant to
the Offer, then, without prejudice to Purchaser's rights under the Offer (but
subject to compliance with Rule 14e-1(c) under the Exchange Act, which requires
that a tender offeror pay the consideration offered or return the tendered
securities promptly after termination or withdrawal of the tender offer), the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares and
such Shares may not be withdrawn except to the extent that under the Offer
tendering stockholders are entitled to exercise and duly exercise withdrawal
rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer,
certificates for any such Shares will be returned, without expense to the
tendering stockholder (or, in the case of Shares tendered by book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility (as defined in
Section 3) pursuant to the procedure set forth in Section 3, such Shares will be
credited to an account maintained at such Book-Entry Transfer Facility), as
promptly as is practicable after the expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole at any time or
in part from time to time, to one or more of its affiliates or the affiliates of
Parent the right to purchase all or any portion of the Shares tendered pursuant
to the Offer, subject to the conditions to such assignment set forth in the
Merger Agreement. Any such transfer or assignment will not relieve Parent or
Purchaser of their obligations under the Offer and will in
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<PAGE> 8
no way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (i) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, must be received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date and either the certificates for tendered Shares must be received by the
Depositary at one of its addresses or such Shares must be delivered pursuant to
the procedure for book-entry transfer described below (and a Book-Entry
Confirmation must be received by the Depositary), in each case, prior to the
Expiration Date, or (ii) the tendering stockholder must comply with the
guaranteed delivery procedures described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (the "Book-Entry Transfer Facilities") for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in any of the Book-Entry Transfer Facilities'
systems may make book-entry transfer of Shares by causing a Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account at a Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures for transfer. However, although delivery of Shares may be effected
through book-entry transfer at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other required documents, must, in any
case, be transmitted to and received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date, or the tendering stockholder must comply with the guaranteed delivery
procedures described below. The confirmation of a book-entry transfer of Shares
into the Depositary's account at a Book-Entry Transfer Facility as described
above is referred to herein as a "Book-Entry Confirmation." DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility 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 that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of the Book Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other
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cases, all signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the Letter of Transmittal or if payment is to be made, or
certificates for Shares not accepted for payment or not tendered are to be
returned to a person other than the registered holder of the certificates
surrendered, then the tendered certificates must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the names of the
registered holders appear on the certificates, with the signatures on the
certificates or stock powers guaranteed as described above. See Instructions 1
and 5 of the Letter of Transmittal.
If the certificates for Shares are forwarded separately to the Depositary,
a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) all tendered Shares, in proper form for transfer together with a Letter
of Transmittal (or facsimile thereof), properly completed and duly
executed, together with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message) and any other required
documents are received by the Depositary within three trading days after
the date of execution of such Notice of Guaranteed Delivery. A "trading
day" is any day on which the Nasdaq National Market (the "Nasdaq National
Market") operated by the National Association of Securities Dealers, Inc.
(the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by telegram, facsimile transmission or mail, to the Depositary and must include
a guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provisions hereof, payment for Shares accepted
for payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to such Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE BY PURCHASER FOR THE
TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's attorneys-in-fact and proxies, in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by Purchaser (and any and all non-cash
dividends, distributions, rights or other securities issued or issuable in
respect of such Shares on or after the date of this Offer to Purchase). All such
proxies shall be considered
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coupled with an interest in the tendered Shares. Such appointment will be
effective if, when and only to the extent that Purchaser accepts such Shares for
payment pursuant to the Offer as provided herein. Upon such acceptance for
payment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares and other securities or rights will,
without further action, be revoked, and no subsequent powers of attorney,
proxies, consents or revocations may be given by such stockholder (and, if
given, will not be deemed effective). The designees of Purchaser will thereby,
with respect to the Shares and other securities or rights for which the
appointment is effective, be empowered to exercise all voting and other rights
with respect to such Shares or other securities or rights, including, without
limitation, in respect of any annual, special, adjourned or postponed meeting of
the Company's stockholders, actions by written consent in lieu of any such
meeting or otherwise, as they in their sole discretion deem proper. Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares and other securities or rights, including voting at any
meeting of stockholders then scheduled.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser, in its sole discretion, and its determination
will be final and binding on all parties. Purchaser reserves the absolute right
to reject any or all tenders of Shares determined by it not to be in proper form
or if the acceptance for payment of, or payment for, such Shares may, in the
opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right, in its sole discretion, subject to the provisions of the Merger
Agreement, to waive any of the conditions of the Offer or any defect or
irregularity in any tender with respect to Shares of any particular stockholder,
whether or not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made until
all defects and irregularities have been cured or waived. None of Parent,
Purchaser, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in tenders
or will incur any liability for failure to give any such notification.
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalty of perjury that such number is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Shares pursuant to the Offer should complete and sign
the Substitute Form W-9 included as part of the Letter of Transmittal to provide
the information and certification necessary to avoid backup withholding (unless
an applicable exemption exists and is proved in a manner satisfactory to
Purchaser and the Depositary). Certain stockholders (including, among others,
all corporations and certain foreign individuals and entities) are not subject
to backup withholding. Noncorporate foreign stockholders should complete and
sign the main signature line on the Letter of Transmittal and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See the Letter of Transmittal.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date and, in any event, unless theretofore accepted for payment and
paid for by Purchaser pursuant to the Offer, may also be withdrawn at any time
after February 19, 1999 pursuant to the provisions of the Exchange Act.
For a withdrawal 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 having tendered the Shares to
be withdrawn, the
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number of Shares to be withdrawn and the name of the registered holder, if
different from that of the person who tendered such Shares. If certificates for
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then prior to the physical release of such certificates, the serial
numbers shown on such certificates must also be submitted to the Depositary,
and, unless such Shares have been tendered by an Eligible Institution, the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with such withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not to be validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by 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
notices of withdrawal will be determined by Purchaser, in its sole discretion,
and its determination will be final and binding. None of Parent, Purchaser, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. The tax
consequences of such receipt may vary depending upon, among other things, the
particular circumstances of the stockholder.
In general, a stockholder who receives cash for Shares pursuant to the
Offer or the Merger will recognize gain or loss for federal income tax purposes
equal to the difference between the amount of cash received in exchange for the
Shares sold and such stockholder's adjusted tax basis in such Shares. Provided
that the Shares constitute capital assets in the hands of the stockholder, such
gain or loss will be capital gain or loss, and any capital gain will currently
be subject to a maximum tax rate of 20% if the stockholder is an individual and
has held the Shares for more than one year at the time of sale. Gain or loss
will be calculated separately for each block of Shares (i.e., Shares acquired at
the same time and price) exchanged pursuant to the Offer or the Merger.
A STOCKHOLDER (OTHER THAN CERTAIN EXEMPT STOCKHOLDERS) WHO TENDERS SHARES
MAY BE SUBJECT TO 31% BACKUP WITHHOLDING UNLESS THE STOCKHOLDER PROVIDES HIS OR
HER TIN AND CERTIFIES UNDER PENALTY OF PERJURY THAT SUCH NUMBER IS CORRECT AND
THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING. A STOCKHOLDER WHO
DOES NOT FURNISH HIS OR HER CORRECT TIN MAY BE SUBJECT TO A PENALTY IMPOSED BY
THE INTERNAL REVENUE SERVICE. EACH STOCKHOLDER SHOULD COMPLETE AND SIGN THE
SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL SO AS TO
PROVIDE THE INFORMATION AND CERTIFICATION NECESSARY TO AVOID BACKUP WITHHOLDING.
If backup withholding applies, the payor is required to withhold 31% from
payments. This is not an additional tax; the amount of the backup withholding
can be credited against the tax liability of the person subject to the backup
withholding. If backup withholding results in an overpayment of tax, a refund
can be obtained upon filing an income tax return.
THE DISCUSSION OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES SET FORTH
ABOVE IS FOR GENERAL INFORMATION ONLY AND IS BASED ON EXISTING LAW AS OF THE
DATE OF THIS OFFER TO PURCHASE. THIS DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN
TYPES OF STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO
THE EXERCISE OF STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO ARE
NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND FOREIGN ENTITIES, OR ENTITIES
THAT ARE OTHERWISE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE") (SUCH AS INSURANCE COMPANIES, TAX-EXEMPT
ENTITIES, DEALERS IN SECU-
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<PAGE> 12
RITIES AND REGULATED INVESTMENT COMPANIES). STOCKHOLDERS OF THE COMPANY
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER (INCLUDING THE APPLICABILITY
AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS, AND POSSIBLE
CHANGES IN SUCH TAX LAWS, WHICH MAY HAVE RETROACTIVE EFFECT).
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are traded in the over-the-counter market and prices are quoted
on the Nasdaq National Market under the symbol "RIVL." The following table sets
forth, for the periods indicated, the high and low sales price per Share as
reported by the Nasdaq National Market and as reported in published financial
sources.
<TABLE>
<CAPTION>
SALES PRICE
----------------
HIGH LOW
<S> <C> <C>
Fiscal 1997:
First Quarter ended September 30, 1996.................... $23.25 $17.75
Second Quarter ended December 31, 1996.................... 24.88 21.25
Third Quarter ended March 31, 1997........................ 24.31 21.00
Fourth Quarter ended June 30, 1997........................ 21.88 13.50
Fiscal 1998:
First Quarter ended September 30, 1997.................... $20.38 $14.13
Second Quarter ended December 31, 1997.................... 16.50 12.75
Third Quarter ended March 31, 1998........................ 17.25 13.00
Fourth Quarter ended June 30, 1998........................ 18.00 13.00
Fiscal 1999:
First Quarter ended September 30, 1998.................... $14.13 $ 8.00
Second Quarter through December 16, 1998.................. 13.63 6.63
</TABLE>
On November 24, 1998, the next-to-last full trading day before the
Company's announcement that it had retained the Financial Advisor to assist it
in evaluating an acquisition proposal, the last reported sales price of the
Shares on the Nasdaq National Market was $7.38 per Share. On December 16, 1998,
the last full trading day before the public announcement of the execution of the
Merger Agreement, the last reported sales price of the Shares on the Nasdaq
National Market was $11.19 per Share. On December 22, 1998, the last full
trading day before commencement of the Offer, the last reported sales price of
the Shares on the Nasdaq National Market was $13.19 per Share. STOCKHOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company paid aggregate cash dividends of $0.24 per Share in fiscal 1997
and $0.26 per Share in fiscal 1998. On each of September 15, 1998, and December
15, 1998, the Company paid quarterly cash dividends of $0.07 per Share. The
Merger Agreement prohibits the payment of additional cash dividends by the
Company without Parent's prior written consent. Parent does not currently intend
to permit the payment of dividends on the Shares prior to the Merger.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ QUOTATION AND
EXCHANGE ACT REGISTRATION.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and could reduce the number of
holders of Shares, which could adversely affect the liquidity and market value
of the remaining Shares held by the public.
Nasdaq Quotation. The Shares are currently included in the Nasdaq National
Market. Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NASD for continued inclusion
in the Nasdaq National Market (the top tier of The Nasdaq Stock Market), which
requires that an issuer have at least 200,000 publicly held shares, held by at
least 400 stockholders or
10
<PAGE> 13
300 stockholders of round lots, with a market value of at least $1,000,000. If
these standards are not met, the Shares might nevertheless continue to be
included in The Nasdaq Stock Market with quotations published in the Nasdaq's
"additional list" or in one of the "local lists," but if the number of holders
of the Shares were to fall below 300, or if the number of publicly held Shares
were to fall below 100,000 or there were not at least two registered and active
market-makers for the Shares, the NASD's rules provide that the Shares would no
longer be "qualified" for reporting in The Nasdaq Stock Market and The Nasdaq
Stock Market would cease to provide any quotations. Shares held directly or
indirectly by directors, officers or beneficial owners of more than 10% of the
Shares are not considered as being publicly held for this purpose. According to
the Company's transfer agent, as of December 17, 1998, there were approximately
170 holders of record of Shares and 9,294,227 Shares were outstanding. If, as a
result of the purchase of Shares pursuant to the Offer, the Shares no longer
meet the requirements of the NASD for inclusion in the Nasdaq National Market or
in any other tier of The Nasdaq Stock Market and the Shares are no longer
included in the Nasdaq National Market or in any other tier of The Nasdaq Stock
Market, as the case may be, the market for the Shares could be adversely
affected.
In the event that the Shares no longer meet the requirements of the NASD
for quotation through any tier of The Nasdaq Stock Market, it is possible that
the Shares would continue to trade in the over-the-counter market and that price
quotations would be reported by other sources. The extent of the public market
for the Shares and the availability of such quotations would however, depend
upon such factors as the number of holders of Shares remaining at such time, the
interests in maintaining a market in Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act, as
described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange, quoted on an automated
inter-dealer quotation system or held by 300 or more holders of record.
Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its stockholders and to the Commission and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy statement in connection with stockholders' meetings pursuant
to Section 14(a) of the Exchange Act and the related requirement of furnishing
an annual report to stockholders, and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going-private" transactions. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144 or
Rule 144A promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), may be impaired or eliminated. Purchaser intends to seek to
cause the Company to apply for termination of registration of the Shares under
the Exchange Act as soon after consummation of the Offer as the requirements for
such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be reported on The Nasdaq Stock Market and the
registration of the Shares under the Exchange Act will be terminated following
consummation of the Merger.
Margin Regulations. 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 the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for purposes of the margin regulations of the Federal
Reserve Board, and therefore could no longer be used as collateral for loans
made by brokers. In any event, the Shares will cease to be "margin securities"
if registration of the Shares under the Exchange Act is terminated.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including financial information, has been taken from or is based upon
publicly available documents and records on file
11
<PAGE> 14
with the Commission and other public sources. Neither Parent nor Purchaser
assumes any responsibility for the accuracy or completeness of the information
concerning the Company contained in such documents and records or for any
failure by the Company to disclose events which may have occurred or may affect
the significance or accuracy of any such information but which are unknown to
Parent or Purchaser.
The Company is a Delaware corporation with its principal executive offices
located at 800 E. 101st Terrace, Kansas City, Missouri, 64131. The following
description of the Company's business is summarized from the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1998 (the "Company's 1998
10-K").
The Company is a leading designer, manufacturer and marketer of a variety
of products including small kitchen and personal care appliances such as
Crock-Pot(R) slow cookers, can openers and massagers; products for the home
environment including space heaters, air purifiers, showerheads, utility pumps,
humidifiers and fans; and building supply and industrial products such as
household ventilation, door chimes, ceiling fans and industrial fans.
The Company distributes the Rival(R), Rival Select(R), Simer(R),
Pollenex(R), Patton(R), Bionaire(R), and White Mountain(R) product lines to
substantially all major retail outlets in the U.S. and Canada, including such
mass merchants as Kmart, Target and Wal-Mart; hardware/home centers such as Ace
Hardware, Home Depot and Home Quarters; department stores, catalog showrooms and
warehouse clubs. The Company also sells Patton commercial fans and building
supply and home products to industrial and electrical dealers and distributors.
The Company has focused its resources to provide its customers with superior
service, product innovation and marketing support. To accomplish this, the
Company has developed automated ordering, shipping, invoicing and data storage
and retrieval systems that are linked to the retailers "point-of-sale" systems.
These automated systems are supported by close coordination between the traffic,
warehousing, sales support and finance departments of the retailer and the
Company.
The Company manufactures at least 60% of the products it sells. Its
manufacturing facilities (all of which are located in the U.S.) produce electric
motors, molded plastic components, screw machine parts, stampings and stoneware.
The Company believes that the ability to manufacture the majority of its
products in North America is one of the Company's fundamental strengths.
Manufacturing capability gives the Company flexibility, bargaining power with
third party vendors, quality control, and quick response time.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company excerpted or
derived from the (i) audited financial information of the Company contained in
the Company's 1998 10-K and (ii) the Company's Quarterly Report on Form 10-Q for
the period ended September 30, 1998. More comprehensive financial information is
included in the Company's 1998 10-K and other documents filed with the
Commission, and the following information is qualified in its entirety by
reference to the Company's 1998 10-K and other documents, including the
financial information and related notes contained therein. The Company's 1998
10-K and such other documents may be inspected and copies may be obtained from
the offices of the Commission or the Nasdaq National Market in the manner set
forth on the following page under "Available Information."
12
<PAGE> 15
THE RIVAL COMPANY
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------ -------------------
1996 1997 1998 1997 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................. $313,864 $376,465 $376,919 $96,697 $80,052
Cost of sales............................. 230,207 278,455 281,043 71,119 62,410(2)
-------- -------- -------- ------- -------
Gross profit.............................. 83,657 98,010 95,876 25,578 17,642
Selling, general and administrative
expenses................................ 50,561 63,809 63,251 16,254 15,108
Restructuring expenses.................... -- 3,000 -- -- 4,887(2)
Amortization of goodwill and other
intangible assets....................... 2,432 3,069 2,894 779 685
-------- -------- -------- ------- -------
Operating income (loss)................... 30,664 28,132 29,731 8,545 (3,038)
Interest expense.......................... 7,117 10,081 10,099 2,587 2,484
Other expenses............................ 295 21 3,875 3 345
-------- -------- -------- ------- -------
Earnings (loss) before income taxes....... 23,252 18,030 15,757 5,955 (5,867)
Income tax expense........................ 9,013 7,345 6,550 2,229 (2,033)
-------- -------- -------- ------- -------
Net earnings (loss)....................... $ 14,239 $ 10,685 $ 9,207 $ 3,726 $(3,834)
======== ======== ======== ======= =======
Net earnings (loss) per share (Basic)..... $ 1.46 $ 1.10 $ 0.98 $ 0.39 $ (0.41)
-------- -------- -------- ------- -------
Net earnings (loss) per share (Diluted)... $ 1.43 $ 1.08 $ 0.96 $ 0.39 $ (0.41)
-------- -------- -------- ------- -------
Weighted average common shares
outstanding............................. 9,725 9,684 9,422 9,449 9,348
-------- -------- -------- ------- -------
Weighted average common and common
equivalent shares outstanding(1)........ 9,950 9,895 9,582 9,663 9,348
-------- -------- -------- ------- -------
Earnings excluding litigation and
restructuring charges(2)................ $ 14,239 $ 12,755 $ 12,186 $ 3,726 $ 914
-------- -------- -------- ------- -------
Dividends per share....................... $ 0.20 $ 0.24 $ 0.26 $ 0.06 $ 0.07
-------- -------- -------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30, AT SEPTEMBER 30,
-------------------------------- --------------------
1996 1997 1998 1997 1998
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................... $ 91,396 $ 84,819 $ 89,607 $ 88,537 $ 86,407
Total assets........................ 288,251 298,605 292,114 322,956 299,928
Long-term debt (less current
portion).......................... 88,000 84,000 78,000 84,000 78,000
Stockholders' equity................ 106,148 110,390 116,615 113,525 110,791
</TABLE>
- ------------------------------
(1) Stock options are included as common stock equivalents.
(2) Excludes certain litigation in fiscal 1998, a restructuring loss in fiscal
1997 relative to the Company's Montreal, Quebec manufacturing, distribution
and administrative functions and a restructuring loss in the first quarter
of fiscal 1999 relative to the closing of three locations in North Carolina
and Indiana. The pre-tax restructuring loss of $7,720,000 for the first
quarter of fiscal 1999 consisted of a charge of $2,833,000 to cost of sales
and $4,887,000 in selling, general and administrative expenses.
Available Information. The Company is subject to the informational and
reporting requirements of the Exchange Act and is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the
13
<PAGE> 16
Company's securities, any material interests of such persons in transactions
with the Company and other matters is required to be disclosed in proxy
statements distributed to the Company's stockholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
also should be available for inspection and copying at prescribed rates at the
following regional offices of the Commission: Seven World Trade Center, Suite
3300, New York, New York 10048; and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a site on the world wide web at http://www.sec.gov that contains
reports, proxy statements and other information regarding companies that file
electronically with the Commission. Reports, proxy statements and other
information concerning the Company should also be available for inspection at
the offices of the Nasdaq National Market, 1735 K Street, N.W., Washington, D.C.
20006.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
Purchaser. Purchaser is a newly incorporated Delaware corporation
organized in connection with the Offer and the Merger and has not carried on any
activities other than in connection with the Offer and the Merger. Purchaser is
a wholly-owned subsidiary of Parent. Until immediately prior to the time that
Purchaser will purchase Shares pursuant to the Offer, it is not expected that
Purchaser will have any significant assets or engage in activities other than
those incidental to its formation and capitalization and the transactions
contemplated by the Offer and the Merger. Due to the fact that Purchaser is
newly formed and has minimal assets and capitalization, no meaningful financial
information regarding Purchaser is available.
Parent. Holmes Products Corp. (referred to herein as "Parent") is a
leading developer, manufacturer and marketer of quality branded home comfort
products, including fans, heaters, humidifiers and air purifiers. In addition,
Parent markets and distributes dehumidifiers and a variety of decorative and
home office lighting products, as well as various replacement filters and
accessories for its products.
Parent's products are sold to consumers through major retail channels,
including mass merchants, do-it-yourself home centers, warehouse clubs, hardware
stores and national drugstore chains. Representative customers include Wal-Mart,
Kmart, Target, Home Depot, Costco, BJ's Wholesale Club, TruServ (formerly True
Value and ServiStar) and Walgreens. Parent believes that the strength and
breadth of its retail account base provide a competitive advantage with respect
to shelf space, penetration of the consumer market and brand recognition.
Parent's focus on product innovation to meet consumer needs, as well as its
focus on customer service, has contributed to its success in the home comfort
market.
Parent was founded in 1982 by its current Chief Executive Officer, Jordan
A. Kahn, an innovator in the home comfort market with over 30 years of industry
experience. Parent opened its first manufacturing facility in China in 1989, and
currently operates two facilities in China where it manufactures its products
and electric motors for use in its products. Parent also produces electric
motors for manufacturers of other electric products. Parent's vertically
integrated manufacturing facilities provide Parent with control over the
production process and product quality. These facilities also enhance
operational flexibility and allow Parent to respond quickly to changes in
consumer demand and to specialized production needs. Parent maintains offices in
Hong Kong and Taiwan that are responsible for sourcing raw materials, processing
orders and shipping Parent's products. Parent coordinates product development,
marketing, sales and distribution from its Milford, Massachusetts headquarters.
Parent markets and distributes products primarily under the Holmes(R) brand
name.
Parent is a Massachusetts corporation. The common stock of Parent is
privately held by affiliates of Berkshire Partners LLC ("Berkshire"), management
and other employees of Parent, and certain other investors. The executive
offices of Purchaser and Parent are located at 233 Fortune Boulevard, Milford,
Massachusetts, 01757.
Set forth below is (i) certain selected consolidated financial information
with respect to Parent as of and for the years ended December 31, 1995, 1996 and
1997 which has been derived from audited consolidated financial statements of
Parent and (ii) certain unaudited consolidated financial information as of and
for the nine months ended September 30, 1997 and 1998 which has been derived
from unaudited consolidated
14
<PAGE> 17
financial statements of Parent. Results for the nine months ended September 30,
1998 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1998. More comprehensive financial information is
included in the historical consolidated financial statements of Parent included
in Parent's Registration Statement on Form S-4 (Commission File No. 33-44473)
and in Parent's quarterly reports on Form 10-Q filed with the Commission by
Parent. Such filings may be examined and copies may be obtained at the places
and in the manner set forth under "Available Information" in Section 8. The
following summary is qualified in its entirety by reference to such other
documents, including the financial information and related notes contained
therein.
HOLMES PRODUCTS CORP. SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------- --------------------
1995 1996 1997(1) 1997 1998
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales........................... $178,132 $194,331 $192,153 $136,767 $157,602
Cost of goods sold.................. 141,226 145,915 136,740 102,442 110,523
-------- -------- -------- -------- --------
Gross Profit...................... 36,906 48,416 55,413 34,325 47,079
Selling, general and administrative
expenses.......................... 22,500 27,308 36,530(2) 21,432 26,514
Product development expenses........ 3,154 5,520 5,463 3,637 4,738
-------- -------- -------- -------- --------
Operating profit.................. 11,252 15,588 13,420 9,256 15,827
Interest expense, net............... 5,219 6,491 7,096 4,724 10,369
Other (income) expense, net......... (337) (319) 56 42 (268)
-------- -------- -------- -------- --------
Income before income taxes and
minority interest.............. 6,370 9,416 6,268 4,490 5,726
Income tax expense.................. 2,614 2,787 2,196 292 873
Minority interest in net income of
majority-owned subsidiaries(3).... 518 408 225 220 --
-------- -------- -------- -------- --------
Net income........................ $ 3,238 $ 6,221 $ 3,847 $ 3,978 $ 4,853
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT SEPTEMBER 30,
-------------------------------- --------------------
1995 1996 1997 1997 1998
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........... $ 3,368 $ 4,462 $ 5,141 $ 8,149 $ 5,738
Working capital (deficit)(4)........ (6,770) (2,883) 78,318 850 74,941
Total assets........................ 118,524 128,286 135,165 135,310 139,194
Long-term debt...................... 217 737 134,294 890 124,820
Stockholders' equity (deficit)...... 11,487 17,708 (24,991) 21,686 (19,457)
</TABLE>
- ------------------------------
(1) In November, 1997, Parent and Berkshire consummated a leveraged
recapitalization of Parent in which affiliates of Berkshire, certain members
of Parent's senior management and certain other investors made an equity
investment in Parent. Parent used the equity proceeds, proceeds of a $105
million offering of Senior Subordinated Notes due 2007, borrowings under a
$100 million senior credit facility and available cash to redeem a portion
of the common stock held by Parent's prior majority owner, to repay certain
outstanding indebtedness and to pay fees and expenses of the
recapitalization transaction.
(2) Includes approximately $6 million of incremental incentive compensation
expense which was paid to certain executives in conjunction with the
November, 1997 recapitalization of Parent.
(3) In May and June, 1997, Parent repurchased the 30% minority interest held by
certain stockholders in one of Parent's subsidiaries for a total of
$900,000.
(4) Parent's working capital deficit prior to the November, 1997
recapitalization reflected the inclusion of trade financing to fund the
working capital needs of the business under Parent's prior ownership.
15
<PAGE> 18
The name, citizenship, business address, present principal occupation or
employment and five-year employment history for each of the directors and
executive officers of Purchaser and Parent are set forth in Schedule I hereto.
None of Parent, Purchaser or, to the best knowledge of Parent or Purchaser,
any of the persons listed in Schedule I hereto or any associate or majority
owned subsidiary of Parent, Purchaser or any of the persons so listed,
beneficially owns or has the right to acquire, directly or indirectly, any
Shares, and none of Parent or Purchaser or, to the best knowledge of Parent or
Purchaser, any of the other persons or entities referred to above, or any of the
respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, none of Parent or Purchaser
or, to the best knowledge of Parent or Purchaser, any of the persons listed in
Schedule I hereto has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
without limitation, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss, or the giving or withholding of proxies. Except as set
forth in this Offer to Purchase, none of Parent or Purchaser or, to the best
knowledge of Parent or Purchaser, any of the persons listed in Schedule I
hereto, has had any transactions with the Company or any of its executive
officers, directors or affiliates that would require reporting under the rules
of the Commission.
Except as set forth in this Offer to Purchase, since the commencement of
the Company's third full fiscal year prior to the date hereof, there have been
no contacts, negotiations or transactions between Parent or Purchaser, or their
respective subsidiaries, or, to the best knowledge of Parent or Purchaser, any
of the persons listed in Schedule I hereto, on the one hand, and the Company or
its executive officers, directors or affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors or a sale or other transfer of a material
amount of assets.
10. SOURCE AND AMOUNT OF FUNDS.
Parent and Purchaser will require approximately $129 million to purchase
all the outstanding Shares pursuant to the Offer, and to make cash payments to
the holders of each outstanding unexercised stock option which is exercisable at
a price less than or equal to $13.75 per Share. In addition, Purchaser will
require approximately $200 million in additional funds to (i) repay the
outstanding indebtedness of the Company of approximately $156 million, (ii) to
refinance certain existing indebtedness of Parent, and (iii) to pay fees and
expenses related to the Offer and the Merger. The total amount of financing
required is approximately $330 million. Funding will be provided through (1) the
issuance of $50 million of common stock of Parent to two investment funds
affiliated with Berkshire Partners LLC ("Berkshire"), members of management and
certain other co-investors, (2) the incurrence of approximately $250 million of
indebtedness under a new credit facility to be provided by BankBoston, N.A.
("BankBoston"), as lender and as agent for a syndicate of other lenders, and (3)
the issuance of an additional $30 million in principal amount of Parent's 9 7/8%
Senior Subordinated Notes due 2007, to be issued in a private placement pursuant
to Rule 144A ("Rule 144A") promulgated under the Securities Act. The exact
amount of bank indebtedness to be incurred will depend on the outstanding cash
and loan balances of Parent, Purchaser and the Company at the time of the
consummation of the Offer.
PARENT COMMON STOCK ISSUANCE
Pursuant to a financing commitment letter dated December 10, 1998,
Berkshire Fund IV, Limited Partnership, the principal stockholder of Parent, and
Berkshire Fund V, Limited Partnership (together, the "Berkshire Funds"), which
are private equity investment funds sponsored by Berkshire, have agreed to
purchase up to $50 million of shares of common stock of Parent in a private
placement (the "Private Placement"). It is anticipated that certain of the other
existing shareholders of Parent, as well as certain members of Parent's
management, will participate with the Berkshire Funds in such investment. The
principal conditions to the Private Placement are funding of the bank and note
financings described below and
16
<PAGE> 19
consummation of the Offer and/or the Merger in accordance with the terms and
provisions of the Merger Agreement.
BANK FINANCING
Pursuant to a commitment letter (the "Bank Commitment"), dated December 8,
1998, from BankBoston and BancBoston Robertson Stephens Inc., as arranger
("BRS"), BankBoston has agreed to provide Parent, Purchaser, the Company and
their subsidiaries (collectively, the "Borrowers") up to $325 million of senior
bank credit facilities, subject to the terms and conditions set forth in the
Bank Commitment. The senior bank credit facilities will be comprised of a
tranche A term loan of $50 million and a tranche B term loan of $75 million
(collectively, the "Term Loan Facility") and a revolving credit facility of up
to $200 million (the "Revolving Credit Facility" and, together with the Term
Loan Facility, the "Credit Facilities"). The Credit Facilities will be secured
by substantially all of the assets of the Borrowers, and a pledge of stock of
the subsidiaries of Parent, including all Shares of the Company acquired in the
Offer and the Merger.
Conditions. The Bank Commitment is subject to usual and customary
conditions to initial funding, including funding of the Private Placement and
the Note Financing described below, tender (without withdrawal) pursuant to the
Offer of at least 70% of the outstanding Shares and consummation of the Offer,
no material adverse change in the assets, business or financial condition of
Parent or its subsidiaries, or the assets and business of the Company or the
ability of Parent or its subsidiaries to perform their respective obligations
described in the Bank Commitment, and satisfactory evidence of solvency. The
Bank Commitment is also conditioned on the ratio of the Borrowers' total funded
debt to combined trailing four quarters EBITDA (earnings before interest, taxes,
depreciation and amortization) at closing, after giving effect to borrowings at
closing, not exceeding 5.75:1. This condition would be satisfied based upon the
combined EBITDA of the Borrowers for the four quarters ended September 30, 1998.
In addition, the funding of the Bank Commitment is subject to there being no
material adverse litigation (other than existing litigation), no material
adverse changes in governmental regulation or policy affecting BankBoston, BRS,
Parent or its subsidiaries (including the Company) and no material adverse
change or material disruption in the syndication, financial or capital markets.
Maturity; Amortization. The tranche A term loans will have a final
maturity date of six years after the date of the initial funding under the
Credit Facilities (the "Closing Date"), and will be amortized in quarterly
installments in specified increments over the term. The tranche B term loans
will have a final maturity date of eight years after the Closing Date with
quarterly amortization in specified increments over the term. The Revolving
Credit Facility will have a final maturity date of six years after the Closing
Date. Repayment of the Term Loans will be provided out of the cash flow of the
Borrowers or proceeds of further debt or equity financings, and the Revolving
Credit Facility will either be extended at maturity, or refinanced through
further debt or equity financings, although Parent has no commitments for any
such extension or refinancings at the present time.
Interest. The Revolving Credit Facility and the tranche A term loan will
bear interest, at Parent's option, at the Alternate Base Rate (as defined below)
or a LIBOR rate, plus specified margins based on the ratio of Borrowers' Total
Debt to EBITDA (each as defined therein). The Alternate Base Rate will be the
greater of BankBoston's base rate as announced from time to time and the federal
funds effective rate plus 0.50%. The applicable margins will initially be set at
the Alternate Base Rate plus 1.25% or the LIBOR rate plus 3.00%. Interest on the
tranche B term loan will bear interest, at Parent's option, at the Alternate
Base Rate plus 1.75% or LIBOR plus 3.50%.
Modification of Terms. The Bank Commitment is not contingent on
syndication to other lenders; however, BankBoston or BRS may, after consultation
with Parent, propose additional or different terms to the Credit Facilities, so
long as the aggregate amount of the Credit Facilities is not reduced, and the
interest rate and fees applicable to the Credit Facilities are not increased by
more than 100 basis points.
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Additional Terms and Conditions. The Credit Facilities will provide for
customary additional terms and conditions, including: (1) restrictions on the
Borrowers' activity with respect to capital expenditures, liens, negative
pledges, additional indebtedness, contingent liabilities, investments,
dividends, distributions and management fees, affiliate transactions, mergers,
acquisitions, joint ventures, asset sales and sale leasebacks; (2) restrictions
on the Borrowers' ability to voluntarily prepay indebtedness other than under
the Credit Facilities; (3) ERISA and environmental covenants; (4) satisfactory
insurance requirements; and (5) customary events of default, including without
limitation, a cross default to other indebtedness and a change of control
default.
The Credit Facilities will also require Parent to maintain certain
customary financial ratios, measured on a consolidated basis, including without
limitation minimum interest coverage ratios and maximum ratios of total debt to
EBITDA.
NOTE FINANCING
Parent issued $105 million principal amount of Senior Subordinated Notes
due 2007 pursuant to a private placement in November, 1997, which notes were
subsequently exchanged for notes (the "Existing Notes") registered pursuant to
an effective registration statement filed under the Securities Act. Pursuant to
a Commitment Letter dated December 17, 1998 (the "Note Purchase Commitment"),
BRS and Lehman Brothers Inc. ("Lehman") (and together, the "Note Purchasers")
committed to place or purchase, pursuant to a private placement under Rule 144A,
an additional $30 million of principal amount of a series of notes substantially
similar to the Existing Notes (the "New Notes").
Conditions. The obligation of the Note Purchasers to place or purchase the
Senior Notes is subject to usual and customary terms and conditions, including
no material adverse change since the date of Parent's or the Company's most
recent financial statements filed with the Commission in the business or
financial condition of Parent or the Company and its subsidiaries, taken as a
whole; the satisfaction of the Note Purchasers with any material changes to the
terms and conditions of the Offer and Merger and the Private Placement
subsequent to December 17, 1998, including without limitation, satisfaction with
the pro forma capitalization and results of operations of Parent; the absence of
any material adverse litigation; there being no material adverse change in
governmental regulation or policy affecting the purchase or placement of the New
Notes; and there being no material adverse change or material disruption in the
syndication, financial or capital markets that could materially adversely impair
the remarketing or sale of the New Notes.
Terms of New Notes. The principal of the New Notes shall be due and
payable in full on November 15, 2007. The stated interest rate of the New Notes
will be 9 7/8% per annum. However, the effective interest rate on the New Notes
is expected to be higher, and will depend on the pricing option selected by
Parent and market conditions existing at the time. Interest on the New Notes
will be payable semi-annually on May 15 and November 15 while the New Notes are
outstanding. The New Notes will not be redeemable prior to November 15, 2002,
except that up to 35% of the New Notes may be redeemed, at a premium equal to
the interest rate on the New Notes, with the proceeds of the issuance of equity
securities of Parent. Thereafter, the New Notes may be redeemed at Parent's
option, in whole or in part, at any time and from time to time, at a premium to
the principal amount which shall decline to zero on the ninth anniversary of the
date of issuance. The New Notes will be senior subordinated obligations of
Parent ranking pari passu in right of payment with all other senior subordinated
indebtedness of Parent, including without limitation, the Existing Notes. Upon
the occurrence of a "Change of Control," Parent would be required to offer to
purchase the New Notes at 101% of face amount plus accrued interest to the
purchase date. Parent has no current arrangements for the repayment of the New
Notes on their maturity in 2007.
The indenture governing the New Notes will be materially consistent with
the terms and conditions of the indenture governing the Existing Notes, and will
contain certain covenants typical for securities of this type, including
covenants limiting the ability of Parent and its subsidiaries to incur
additional indebtedness, make certain restricted payments, effect certain sales
of assets, effect mergers and consolidations, engage in transactions with
affiliates, restrict the ability of subsidiaries to make certain distributions
on their capital stock and engage in certain other transactions, or grant liens
or security interests on their assets.
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Although the New Notes will initially be issued in an offering under Rule
144A, Parent will be obligated to either register the New Notes or exchange the
New Notes for registered notes with equivalent terms.
The New Notes will be guaranteed by all of Parent's domestic subsidiaries,
including the Company. The New Notes will be unsecured.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO PURCHASE ANY OF THE PARENT'S COMMON STOCK TO BE
ISSUED IN THE PRIVATE PLACEMENT OR ANY OF THE NEW NOTES.
11. BACKGROUND OF THE OFFER.
In late 1997, Jordan A. Kahn, President and Chief Executive Officer of
Parent, telephoned Thomas K. Manning, Chairman and Chief Executive Officer of
the Company, to arrange a meeting regarding a possible business combination
transaction between their two companies. Messrs. Kahn and Manning met on
December 15, 1997 and discussed the potential benefits of a combination of the
two companies.
In January, 1998, Mr. Manning and William L. Yager, President and Chief
Operating Officer of the Company, met with Mr. Kahn and with Richard K. Lubin
and Randy Peeler, Managing Director and Vice President, respectively, of
Berkshire, which holds a majority equity interest in Parent. During the course
of this meeting, they discussed the outlines of a possible combination in which
the surviving company would be a public company. In March, 1998, these
individuals met with Todd Goodwin, a Director of the Company, to further discuss
this matter. No share price was proposed at these meetings. Mr. Manning
subsequently informed Mr. Kahn that the Company's Board of Directors was not
inclined to pursue such a transaction at that time.
No further discussions were held between Parent and the Company for a
period of approximately five months. During this time, Parent considered a
number of other acquisition opportunities, none of which were pursued.
In August, 1998, representatives of Parent and the Company resumed
discussions, this time concerning Parent's interest in a possible leveraged
acquisition of the Company for cash. At this time, DLJ began serving as Parent's
financial advisor to assist it in evaluating and structuring a potential
transaction with the Company. On August 31, 1998, Messrs. Manning and Yager met
in Kansas City with representatives of Parent, Berkshire and DLJ to discuss a
cash acquisition of the Company by Parent.
On September 1, 1998, Parent sent a letter to the Company proposing a
tender offer and second-step merger pursuant to which stockholders of the
Company would receive $17.00 for each Share tendered by them. Parent's proposal
was based upon publicly available information, before due diligence, as well as
Parent's expectations regarding the Company's level of indebtedness and the
sources of financing then available. At this time, the Share price had declined
from above $13.00 in early August, 1998 to a closing price of $10.00 as of
August 31, 1998.
In mid-September, 1998, Mr. Manning informed Mr. Kahn that he had discussed
with the Company's Board of Directors the proposed transaction with Parent and
that the Board of Directors had authorized the engagement of the Financial
Advisor to analyze the transaction on behalf of the Company.
On October 1, 1998, a meeting was held in Boston among representatives of
Parent, Berkshire, the Company and their respective financial advisors. At this
meeting, Parent executed a letter agreement with the Financial Advisor, on
behalf of the Company, with respect to the nondisclosure of confidential
information provided to Parent and its representatives (the "Confidentiality
Agreement"). Parent also agreed, among other things, not to engage in a takeover
attempt not supported by the Company's Board of Directors.
During this period, the closing market price of the Shares continued to
decline, from $10.875 on September 15, 1998, to $8.00 on October 1, 1998, and to
$7.625 on October 15, 1998, the date the Company released its financial results
for the first quarter of fiscal 1999, reporting lower sales and earnings than in
the comparable quarter of fiscal 1998.
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During the week of October 12, 1998, representatives of Parent and members
of Parent's legal and accounting firms visited the offices of the Company's
legal and accounting firms in order to begin a due diligence review of the
Company. On October 30, 1998, an initial draft of an Agreement and Plan of
Merger was distributed to the Company and its representatives.
Parent and Berkshire continued their due diligence review and discussions
with prospective financing sources throughout November, 1998. At a meeting with
the Financial Advisor on November 19, 1998, DLJ indicated that Parent would not
be inclined to proceed with a transaction at a price greater than $13.00 per
Share. On Tuesday, November 24, 1998, the Company's Board of Directors responded
with a counter-proposal of $15.00 per Share.
On Friday, November 27, 1998, in response to rumors in the financial
marketplace regarding a possible acquisition of the Company, the Company
publicly announced that it had engaged the Financial Advisor to assist it in
evaluating an acquisition proposal it had received. On this date, Parent
proposed to the Company a price of $14.00 per Share, subject to completion of
due diligence matters. Over the Thanksgiving weekend, the Company informed
Parent that based upon discussions with certain members of the Company's Board
of Directors, the Board might be agreeable to a transaction at $14.00 per Share,
subject to the negotiation of a satisfactory merger agreement and Parent's
obtaining satisfactory written financing commitments.
On December 1 and 2, 1998, Ira Morgenstern, Parent's Senior Vice
President--Finance, met in Boston with Messrs. Yager and W. Mark Meierhoffer,
the Company's Chief Financial Officer, along with their respective financial and
legal advisors and representatives of Berkshire, to begin negotiating the terms
of a definitive merger agreement. At the same time, Parent and Berkshire were
negotiating with prospective financing sources regarding the terms and
conditions of the commitments for the Financing. Mr. Kahn also met again with
Mr. Manning.
During the week of December 7, 1998, the parties continued to negotiate the
terms of the proposed merger agreement while Parent completed its due diligence
review. On Sunday, December 13, 1998, Parent proposed a revised price of $13.25
per Share, based in part on the results of its due diligence and the Company's
performance.
The Company's Board of Directors met on Monday and Tuesday, December 14 and
15, 1998, to consider Parent's revised proposal. On Tuesday afternoon, the
Financial Advisor informed DLJ that the Board of Directors had voted to approve
the proposed transaction at a price of $13.75 per Share, subject to the
completion of a satisfactory merger agreement, and that the Board would not
consider any lower price. Later that day, the Company's counsel proposed
revisions to the merger agreement that would be acceptable to the Company's
Board of Directors.
Over the next 36 hours, the parties negotiated the final terms of the
Merger Agreement and the Tender and Voting Agreement. On Thursday, December 17,
1998, the Merger Agreement and the Tender and Voting Agreement were finalized
and executed by the respective parties thereto, Parent accepted and executed the
commitments for the Financing, and Parent and the Company issued a joint press
release announcing the transaction.
On December 23, 1998, Purchaser commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; THE MERGER AGREEMENT; OTHER
AGREEMENTS; PLANS FOR THE COMPANY; OTHER MATTERS.
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer and the Merger is for Parent to acquire control
of, and the entire equity interest in, the Company. The Offer, as the first step
in the acquisition of the Company, is intended to facilitate Purchaser's
acquisition of all the outstanding Shares and to increase the likelihood that
the Merger will be completed promptly.
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THE MERGER AGREEMENT
The Merger. The Merger Agreement provides that, following consummation of
the Offer and following the satisfaction or waiver of the conditions described
below under "Conditions to the Merger," and in accordance with Delaware law,
that Purchaser will be merged with and into the Company with the Company
surviving the Merger. Upon consummation of the Merger, each outstanding Share
(other than Shares held by stockholders who properly demand their appraisal
rights under Delaware law, Shares held in the Company's treasury and Shares
owned by Parent or Purchaser) will be converted into the right to receive the
cash price per Share paid pursuant to the Offer, without interest thereon.
Vote Required to Approve Merger. Under the DGCL, the approval of the Board
of Directors of the Company and the affirmative vote of the holders of a
majority of the outstanding Shares are required to adopt and approve the Merger
Agreement and the transactions contemplated thereby. The Company has represented
in the Merger Agreement that the Board of Directors of the Company (with one
director absent) has unanimously approved the Merger Agreement, the Offer and
the Merger and the other transactions contemplated thereby as required under the
DGCL. Therefore, unless the Merger is consummated pursuant to the "short-form"
merger provisions under the DGCL described below under "Short-Form Merger" (in
which case no further corporate action by the stockholders of the Company will
be required to complete the Merger), the only remaining required corporate
action of the Company will be the approval of the Merger Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of a
majority of the outstanding Shares. In the event that Parent and Purchaser
acquire in the aggregate at least a majority of the outstanding Shares, the vote
of no other stockholder of the Company will be required to approve the Merger
and the Merger Agreement.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of stock of another
corporation, the corporation holding such stock may merge such other corporation
into itself, or merge itself into such other corporation, without any action or
vote on the part of the stockholders by vote of its directors (a "short-form
merger"). In the event that Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the outstanding Shares, then, at the election of
Parent, a short-form merger may be effected without any approval of the
stockholders of the Company by a vote of the Board of Directors of Purchaser,
subject to compliance with the provisions of Section 253 of the DGCL. Even if
Purchaser does not own 90% of the outstanding Shares following consummation of
the Offer, Purchaser may seek to purchase additional shares in the open market
or otherwise in order to reach the 90% threshold and employ a short-form merger.
The per Share consideration paid for any Shares so acquired may be greater or
less than that paid in the Offer. Accordingly, if as a result of the Offer or
otherwise, Purchaser acquires at least 90% of the outstanding Shares, Purchaser
may, and intends to, effect the Merger without approval of any other stockholder
of the Company.
Stockholders' Meeting. Pursuant to the Merger Agreement, following the
expiration of the Offer (or at such earlier time as the parties shall mutually
agree), the Company will promptly take all action necessary in accordance with
applicable law and its Restated Certificate of Incorporation and By-Laws to duly
call, give notice of, and convene a meeting of its stockholders (the
"Stockholders' Meeting") to consider and vote upon the adoption and approval of
the Merger Agreement and the Merger and all actions contemplated thereby which
require approval and adoption by the Company's stockholders, unless the Merger
may be effected as a "short-form merger" as described above under "Short-Form
Merger," or pursuant to written consents in lieu of a meeting.
The Merger Agreement provides that under certain circumstances, if more
than 50% of the then-outstanding Shares shall have been validly tendered in the
Offer and not withdrawn, upon the written request of either Parent or the
Company following the expiration of the Offer without the purchase of any Shares
thereunder, the parties shall nevertheless proceed to call and convene the
Stockholders' Meeting and undertake in an expeditious manner the efforts
required to consummate the Merger.
The Merger Agreement provides that the Company will, if required by
applicable law to consummate the Merger, prepare and file with the Commission a
preliminary proxy or information statement (the "Proxy Statement") and will use
its commercially reasonable best efforts to respond to the comments of the
Commission concerning the Proxy Statement and to cause the Proxy Statement to be
mailed to the
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Company's stockholders, in each case as soon as reasonably practicable. The
Company will use its best efforts to cause to be included as an exhibit to the
Proxy Statement, the fairness opinion of the Financial Advisor. Parent has
agreed to cause all of the shares of capital stock of the Company held by Parent
and/or Purchaser to be voted, either in person or by proxy, in favor of the
adoption and approval of the Merger Agreement and the Merger at the
Stockholders' Meeting.
Conditions to the Merger. The Merger Agreement provides that the
respective obligations of Parent, Purchaser and the Company to effect the Merger
are subject to the satisfaction or waiver on or prior to the closing date of the
Merger (the "Closing Date") of the following conditions, any and all of which
may be waived, in whole or in part, jointly by Parent and the Company: (i) the
Merger shall have been adopted and approved by the requisite vote of the holders
of the outstanding Shares, if required under the DGCL, (ii) all filings required
to be made prior to the time at which the Merger becomes effective (the
"Effective Time") with, and all consents, approvals, permits and authorizations
required to be obtained prior to the Effective Time from, any governmental
agency, board, commission, department or regulatory authority (each, a
"Governmental Entity"), under the HSR Act which, either individually or in the
aggregate, if not made or obtained would have a Company Material Adverse Effect
(as defined below) or would prevent consummation of the Merger, shall have been
made or obtained (as the case may be) and (iii) no temporary restraining order,
judgment, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that the
parties invoking this condition shall use their best efforts to have any such
order or injunction vacated.
For purposes of this description of the Merger Agreement, "Company Material
Adverse Effect" means (1) having a material adverse effect upon the business,
assets, properties, condition (financial or otherwise), or results of operations
of the Company and its subsidiaries taken as a whole, or (2) preventing the
Company from consummating the transactions contemplated by the Merger Agreement.
The obligations of Parent and Purchaser to effect the Merger are further
subject to the satisfaction, or waiver by Parent on or prior to the Closing
Date, of the following conditions: (1) the representations and warranties of the
Company contained in the Merger Agreement that are qualified by materiality
shall be true and correct, and the representations and warranties of the Company
that are not so qualified shall be true and correct in all material respects,
individually and in the aggregate, as of the Closing Date as though made on and
as of the Closing Date, except (A) for changes permitted or contemplated by the
Merger Agreement, and (B) in the case of any breach of such representations and
warranties, where such breach or breaches would not, individually or in the
aggregate, have a Company Material Adverse Effect, (2) the Company shall have
performed in all material respects all obligations and complied in all material
respects with all agreements and covenants of the Company required to be
performed or complied with by it under the Merger Agreement, except, in the case
of any breach of any such obligation, agreement or covenant, where such breach
or breaches would not, individually or in the aggregate, have a Company Material
Adverse Effect, (3) the Company shall have furnished Parent with such
certificates and other documents to evidence the fulfillment of the conditions
set forth in this paragraph as Parent may reasonably request, (4) the Financing
Condition shall have been satisfied, (5) all filings required to be made by the
Company or its subsidiaries prior to the Effective Time with, and all consents,
approvals, permits and authorizations required to be obtained by the Company or
its subsidiaries prior to the Effective Time from, any Governmental Entities,
which either individually or in the aggregate, if not made or obtained would
have a Company Material Adverse Effect on or after the Effective Time or would
prevent consummation of the Merger, shall have been made or obtained (as the
case may be), (6) between the date of the Merger Agreement and the Effective
Time, there shall not have been a material adverse change in the business,
assets, properties, condition (financial or otherwise), or results of operations
of the Company and its subsidiaries taken as a whole and (7) the percentage of
shares dissenting from the Merger in accordance with the DGCL shall not be
greater than 10% of the aggregate number of Shares outstanding immediately prior
to the Effective Time.
The obligations of the Company to effect the Merger are further subject to
the satisfaction, or waiver by the Company, on or prior to the Closing Date, of
the following conditions: (1) the representations and warranties of Parent and
Purchaser contained in the Merger Agreement that are qualified by materiality
shall
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be true and correct, and the representations and warranties of Parent and
Purchaser that are not so qualified shall be true and correct in all material
respects, individually and in the aggregate, as of the Closing Date as though
made on and as of the Closing Date, except (A) for changes permitted or
contemplated by the Merger Agreement, and (B) in the case of any breach of such
representations and warranties, where such breach or breaches would not,
individually or in the aggregate, materially and adversely affect the
consummation of the Merger, (2) Parent and Purchaser shall have performed in all
material respects all obligations and complied in all material respects with all
agreements and covenants required to be performed or complied with by them under
the Merger Agreement, except, in the case of any breach of any such obligation,
agreement or covenant, where such breach or breaches would not, individually or
in the aggregate, materially adversely affect the consummation of the Merger,
(3) Parent shall have furnished the Company with such certificates and other
documents to evidence the fulfillment of the conditions set forth in this
paragraph as the Company may reasonably request and (4) all filings required to
be made by Parent or its subsidiaries prior to the Effective Time with, and all
consents, approvals, permits and authorizations required to be obtained by
Parent or its subsidiaries prior to the Effective Time from, any Governmental
Entities, which, either individually or in the aggregate, if not made or
obtained would prevent consummation of the Merger, shall have been made or
obtained (as the case may be).
The conditions set forth in the preceding two paragraphs shall cease to be
conditions to the obligations of any of the parties to the Merger Agreement if
Purchaser shall have accepted for payment and paid for Shares validly tendered
pursuant to the Offer. Additionally, no party to the Merger Agreement may rely
on the failure of any condition set forth therein to be satisfied if such
failure was caused by such party's failure to use commercially reasonable
efforts to consummate the transactions contemplated by the Merger Agreement.
Other Offers. Pursuant to the Merger Agreement, the Company has agreed not
to, nor to authorize or permit any of its representatives to, directly or
indirectly, (1) solicit, initiate or knowingly encourage any Third Party (as
defined below) with respect to the submission of any Acquisition Proposal (as
defined below) or (2) participate in any discussions or negotiations regarding,
or furnish to any Third Party any non-public information with respect to, or
take any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal; provided, however, that the foregoing shall not prohibit the Board of
Directors of the Company (or, if applicable, a duly appointed committee thereof
(the "Special Committee")) from: (i) furnishing information to, or entering into
discussions or negotiations with, any Third Party in connection with an
unsolicited bona fide Acquisition Proposal by such Third Party if, and to the
extent that, the Board of Directors of the Company (or the Special Committee),
after consultation with independent legal counsel (who may be the Company's
regularly engaged independent counsel), determines in good faith that such
action is necessary for the Board of Directors of the Company to comply with its
fiduciary obligations under applicable law; (ii) withdrawing or modifying its
recommendation of the Merger Agreement, the Offer, the Merger and the other
transactions contemplated by the Merger Agreement following receipt of a bona
fide unsolicited Acquisition Proposal if the Board of Directors of the Company
(or the Special Committee), after consultation with independent legal counsel
(who may be the Company's regularly engaged independent counsel), determines in
good faith that such action is necessary for the Board of Directors of the
Company to comply with its fiduciary obligations under applicable law; or (iii)
making to the Company's stockholders any recommendation and related filing with
the Commission as required by Rule 14e-2 and 14d-9 under the Exchange Act, with
respect to any tender offer, or taking any other equally required action
(including, without limitation, the making of public disclosures as may be
necessary or advisable under applicable securities laws); and provided further,
that, in the event of an exercise of the Company's or its Board of Directors'
(or the Special Committee's) rights under clause (i), (ii) or (iii) above,
notwithstanding anything contained in the Merger Agreement to the contrary, such
action shall not constitute a breach of the Merger Agreement by the Company.
The Company has agreed to provide immediate written notice to Parent of the
receipt of any oral or written inquiry or proposal from a Third Party with
respect to a merger, consolidation, share exchange, tender offer or similar
transaction involving the Company, or any purchase or other acquisition of all
or substantially all of the assets or equity interests of the Company, other
than the transactions contemplated by the Merger Agreement (an "Acquisition
Transaction") and of the Company's intention to furnish information to, or enter
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into discussions or negotiations with, such person or entity, along with a copy
of any such written inquiry or proposal and copies of any information furnished
to such Third Party, to the extent not previously provided to Parent.
For purposes of this description of the Merger Agreement, (i) "Acquisition
Proposal" means any written proposal with respect to an Acquisition Transaction
that the Board of Directors of the Company (or the Special Committee), after
consultation with and receipt of advice from the Financial Advisor or another
nationally recognized investment banking firm, determines in good faith in the
exercise of its fiduciary obligations under applicable law to be more favorable
than the transactions contemplated by the Merger Agreement; and (ii) "Third
Party" means any corporation, partnership, person or other entity or "group" (as
defined in Section 13(d)(3) of the Exchange Act) other than Parent, Purchaser or
any affiliates of Parent or Purchaser and their respective directors, officers,
employees, representatives and agents.
Termination of the Merger Agreement. The Merger Agreement may be
terminated and abandoned at any time prior to the Effective Time, whether before
or after approval of the Merger by the stockholders of the Company: (a) by
mutual written consent of Parent and the Company prior to the purchase of Shares
pursuant to the Offer; or (b)(A) by either Parent or the Company if: (i) the
Offer shall not have been commenced within the time period specified in the
Merger Agreement, unless the failure to have commenced the Offer is as a result
of any judgment, injunction, order, decree or other legal restraint or
prohibition enjoining or otherwise restraining the commencement of the Offer,
and provided notice of termination under this provision has been given prior to
the actual commencement of the Offer (even if such commencement occurs later
than the time period specified in the Merger Agreement), or (ii) the Offer shall
have terminated or expired or been withdrawn in accordance with its terms
without the Purchaser having purchased any Shares pursuant to the Offer, or
(iii) any time after March 15, 1999 (or such later date to which the Offer shall
have been extended pursuant to the Merger Agreement) the Offer has not been
consummated; but only to the extent that the parties shall not then be required
to proceed under the conditions described in the second paragraph under
"Stockholders' Meeting" above and provided that the failure to commence or
consummate the Offer, as the case may be, is not attributable to the failure of
the terminating party to fulfill its obligations pursuant to the Merger
Agreement; or (B) by the Company prior to the purchase of Shares pursuant to the
Offer, if any change to the Offer is made by Purchaser in contravention of
certain provisions of the Merger Agreement; or (c) by either Parent or the
Company if: (i) upon a vote at the Stockholders' Meeting, or any adjournment
thereof, the adoption and approval of the Merger Agreement and the Merger by the
stockholders of the Company required by Delaware law, the Company's Restated
Certificate of Incorporation or By-Laws or the terms of the Merger Agreement
shall not have been obtained; or (ii) the Merger shall not have been consummated
on or before June 15, 1999, provided that the failure to consummate the Merger
is not attributable to the failure of the terminating party to fulfill its
obligations pursuant to the Merger Agreement; or (iii) there shall be any law or
regulation that makes consummation of the Offer or the Merger illegal or
otherwise prohibited, or if any judgment, injunction, order or decree enjoining
or otherwise restraining Purchaser from purchasing Shares pursuant to the Offer
or Parent, Purchaser or the Company from consummating the Merger is entered and
such judgment, injunction, order or decree shall become final and
non-appealable; provided that neither Parent nor the Company may terminate the
Merger Agreement pursuant to clauses (i) or (ii) above if the Shares are
purchased pursuant to the Offer; or (d) by the Company prior to the purchase of
Shares pursuant to the Offer, immediately after payment to Purchaser of the
termination fee described in the following subsection, if the Board of Directors
shall have withdrawn or modified in a manner adverse to Parent or Purchaser its
approval or recommendation of the Offer, the Merger Agreement or the Merger in
order to permit the Company to execute an Acquisition Proposal providing for the
acquisition of the Company by a Third Party as determined by the Board of
Directors in good faith after consultation with independent legal counsel (who
may be the Company's regularly engaged independent counsel) that such action is
required for the Board of Directors of the Company to comply with its fiduciary
obligations to stockholders under applicable law; or (e) by Parent prior to the
purchase of Shares pursuant to the Offer, if the Board of Directors of the
Company shall have approved an Acquisition Proposal or withdrawn or modified
(including by amendment of the Company's Schedule 14D-9), in a manner adverse to
Parent or Purchaser, the Board of Director's recommendation of the Offer, the
Merger Agreement or the Merger and the other transactions contemplated by the
Merger Agreement; or (f) by Parent prior to the purchase of
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Shares pursuant to the Offer, if any of the conditions set forth in the first
and third full paragraphs under "Conditions to the Merger" shall have become
incapable of fulfillment, and shall not have been waived by Parent, or if the
Company shall breach in any respect any of its representations, warranties or
obligations under the Merger Agreement and such breach shall have a Company
Material Adverse Effect, and the Company shall not have provided reasonable
assurance that such breach will be cured in all material respects on or before
the Closing Date; or (g) by the Company prior to the purchase of Shares pursuant
to the Offer, if any of the conditions set forth in the first and fourth full
paragraphs under "Conditions to the Merger" shall have become incapable of
fulfillment, and shall not have been waived by the Company, or if Parent or
Purchaser shall breach in any respect any of their respective representations,
warranties or obligations under the Merger Agreement and such breach shall have
a material adverse effect on the consummation of the transactions contemplated
by the Merger Agreement, and Parent or Purchaser, as the case may be, shall not
have provided reasonable assurance that such breach will be cured in all
material respects on or before the Closing Date; provided, however, that the
party seeking termination pursuant to clause (f) or (g) above is not in material
breach of any of its material representations, warranties, covenants or
agreements contained in the Merger Agreement.
Termination Fee. Pursuant to the Merger Agreement, if the Merger Agreement
is terminated pursuant to either of clauses (d) or (e) of the preceding
paragraph, then the Company shall (provided that neither Parent nor Purchaser is
then in material breach of its obligations under the Merger Agreement) promptly
pay to Parent the sum of $4,500,000 in cash (the "Termination Amount"). The
Merger Agreement further provides that if (1) less than 50% of the outstanding
Shares are validly tendered in the Offer and not withdrawn and the Merger
Agreement is terminated at a time when Parent and Purchaser (and the parties
issuing the commitments for the Financing) would otherwise be prepared to
proceed to consummate the Offer, and (2) the Company consummates an Acquisition
Transaction with a Third Party within one year after termination of the Merger
Agreement at a value or price per Share which is greater than the price per
Share provided by the Merger Agreement, then the Company shall pay to Parent the
Termination Amount.
Conduct of the Company's Business Until the Effective Time. Pursuant to
and except as contemplated by the Merger Agreement, during the period from the
date of the Merger Agreement to the Effective Time, the Company shall operate,
and shall cause each subsidiary to operate, its business in the ordinary course
of business in a manner consistent with past practices. Without limiting the
generality of the foregoing, during the period from the date of the Merger
Agreement to the Effective Time, except as expressly contemplated by the Merger
Agreement, and except for actions requested by a majority of those directors of
the Company designated by Parent following consummation of the Offer pursuant to
the Merger Agreement, the Company and its subsidiaries shall not, without the
prior written consent of Parent:
(i)(x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of
the Company's outstanding capital stock, except for a cash dividend of $.07
per Share paid on December 15, 1998, (y) split, combine or reclassify any
of its outstanding capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of, or in substitution for shares
of its outstanding capital stock, or (z) purchase, redeem or otherwise
acquire any shares of outstanding capital stock or any rights, warrants or
options to acquire any such shares;
(ii) issue, sell, grant, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities, except for the
issuance of Shares upon exercise of Company Stock Options (as defined
below) outstanding prior to the date of the Merger Agreement and disclosed
therein, or take any action that would make the Company's representations
and warranties set forth in the Merger Agreement not true and correct in
all material respects;
(iii) amend its Restated Certificate of Incorporation or By-Laws or
the comparable charter or organizational documents of any of its
subsidiaries;
(iv) acquire any business or any corporation, partnership, joint
venture, association or other business organization or division thereof (or
any interest therein), or form any subsidiaries;
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(v) sell or otherwise dispose of any of its assets, except in the
ordinary course of business, other than (x) obsolete or immaterial
equipment or tooling, and (y) in connection with certain restructuring
transactions previously disclosed to Parent (the "Restructuring");
(vi) make any capital expenditures, enter into leases or agreements
for new locations, close any locations (other than in connection with the
Restructuring), or make other commitments with respect thereto, except
capital expenditures, leases, agreements or commitments (x) previously
disclosed to Parent, or (y) not exceeding $100,000 in the aggregate as the
Company may, in its discretion, deem appropriate;
(vii) (x) incur any indebtedness for borrowed money or guaranty any
such indebtedness of another person, other than (A) borrowings in the
ordinary course under existing lines of credit, (B) indebtedness owing to,
or guaranties of indebtedness owing to, the Company or (C) in connection
with the Financing, or (y) make any loans or advances to any other person,
other than routine advances to employees;
(viii) except as previously disclosed to Parent, grant or agree to
grant to any employee any increase in wages or bonus, severance, profit
sharing, retirement, deferred compensation, insurance or other compensation
or benefits, or establish any new compensation or benefit plans or
arrangements, or amend or agree to amend any existing benefit plans of the
Company, except (x) as may be required under existing agreements, and (y)
customary increases in the ordinary course of business consistent with
prior practice (not including, however, any new or additional benefit plan
of the Company unless previously disclosed to Parent);
(ix) merge, amalgamate or consolidate with any other person or entity
in any transaction, sell all or substantially all of its business or
assets, or acquire all or substantially all of the business or assets of
any other person or entity;
(x) except as previously disclosed to Parent, enter into or amend any
employment, consulting (except for consulting agreements for development
services for new products involving payments by the Company or any
subsidiary of less than $500,000 in the aggregate, prior to March 31, 1999,
and less than $500,000 in the aggregate for the period from April 1, 1999
to June 30, 1999), severance or similar agreement with any person or amend
the Company's engagement letter with the Financial Advisor;
(xi) change its accounting policies in any material respect, except as
required by generally accepted accounting principles;
(xii) except as previously disclosed to Parent, enter into any
material contract, agreement or commitment not otherwise permitted in the
Merger Agreement, including, without limitation, any contract, agreement or
commitment involving expenditures by the Company or any of its subsidiaries
in excess of $50,000 or which is not terminable by the Company upon giving
30 days or less prior written notice, except in the ordinary course of
business consistent with prior practice;
(xiii) settle or compromise any pending or threatened suit, action or
claim, except for products liability cases being defended in the ordinary
course of business, if such settlement or compromise involves the payment
of more than $100,000 by the Company or any of its subsidiaries or would
impose any material obligations on, or (other than releasing the Company's
or any subsidiary's claim for relief in such proceeding and the Company's
or any subsidiary's right to a trial of such claim) waive or affect any
material right or interest of, the Company, any subsidiary, Parent or
Purchaser; or
(xiv) commit or agree to take any of the foregoing actions.
The Company shall not, and shall cause its subsidiaries not to, take any
action that would, or that could reasonably be expected to, result in (i) any of
the representations and warranties of the Company set forth in the Merger
Agreement that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions of the Offer set forth in
Section 14 or of the Merger set forth above under "Conditions to the Merger" not
being satisfied.
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The Company's Board of Directors. Effective upon the purchase of and
payment for Shares by Purchaser pursuant to the Offer such that Purchaser shall
own at least a majority of the Shares and from time to time thereafter, Parent
shall be entitled to designate up to such 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
any increase in the number of directors in accordance with the Merger Agreement)
multiplied by (ii) the percentage that the number of Shares owned by Parent and
Purchaser bears to the total number of Shares outstanding on an undiluted basis,
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/or securing the resignations
of such number of incumbent directors as is necessary to enable Parent's
designees to be elected to the Board of Directors and to cause Parent's
designees to be so elected. At such times, the Company will use its best efforts
to cause individuals designated by Parent to constitute the same percentage as
such individuals represent on the Board of Directors of (x) each committee of
the Board of Directors, (y) each board of directors of each subsidiary of the
Company and (z) each committee of each such board. Notwithstanding the
foregoing, until the Effective Time, the Company, shall use its best efforts to
ensure that not less than two persons who are directors on the date of the
Merger Agreement shall remain as members of the Board of Directors (the
"Continuing Directors") until the Effective Time, and Parent and Purchaser shall
take no action (other than removal for cause) to prevent such Continuing
Directors from so serving. In the event there is only one Continuing Director,
such Continuing Director shall have the right to designate a person, who is
reasonably acceptable to Parent, to become a Continuing Director.
The Company's obligations to appoint designees to the Board of Directors
shall be subject to Section 14(f) of the Exchange Act and Rule 14-1 promulgated
thereunder. The Company, with Parent's cooperation, shall promptly take all
actions required pursuant to Section 14(f) and Rule 14f in order to fulfill its
obligations in accordance with the Merger Agreement, including mailing to the
stockholders as part of the Schedule 14D-9 the information required by such
Section 14(f), as is necessary to enable Parent's designees to be elected to the
Board of Directors. Parent will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f. For
purposes of the Merger Agreement, "affiliate" means, as to any person, any other
person that would be deemed to be an "affiliate" of such person as that term is
defined in Rule 12b-2 under the Exchange Act.
Following the election or appointment of Parent's designees in accordance
with the Merger Agreement and prior to the Effective Time, so long as there
shall be at least one Continuing Director, any amendment of the Merger
Agreement, any termination of the Merger Agreement by the Company, any extension
by the Company of the time for the performance of any of the obligations or
other acts of Parent or Purchaser, any consent of the Company contemplated by
the Merger Agreement, any extension of the Effective Time provided in the
Certificate of Merger filed under the DGCL, any waiver of any of the Company's
rights thereunder, any amendment to the Company's Restated Certificate of
Incorporation or By-laws or any action taken by the Company that materially
adversely affects the interests of the stockholders of the Company (other than
Purchaser) with respect to the transactions contemplated by the Merger
Agreement, will require the concurrence of at least one of the Continuing
Directors.
Stock Options. Pursuant to the Merger Agreement, as of the Effective Time,
each outstanding, unexercised stock option to purchase Shares (a "Company Stock
Option") issued under the Company's 1986 Stock Option Plan (the "1986 Plan") and
the 1994 Stock Option Plan (the "1994 Plan"), (collectively, the "Company Stock
Option Plans") shall terminate and be canceled and each holder of a Company
Stock Option shall be entitled to receive, in consideration therefor, a cash
payment from the Company (which payment shall be tendered to such holder on the
Closing Date, or such earlier date after the consummation of the Offer and not
later than five business days after the option holder shall have tendered the
option to the Company and consented to its cancellation in exchange for payment)
equal to the product of (a) the excess, if any, of (x) the per Share price paid
in the Offer or the Merger over (y) the per Share exercise price of such Company
Stock Option, times (b) the number of Shares then subject to such Company Stock
Option. Such cash payment shall be net of any required withholding taxes. Not
later than the second business day following
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the execution and delivery of the Merger Agreement, the Company shall cause the
committee administering each Company Stock Option Plan (the "Option Committee")
to provide to each holder of a Company Stock Option written notice regarding the
termination of such Company Stock Option as contemplated by the Company Stock
Option Plans. As of the Effective Time, each outstanding Company Stock Option
and each of the Company Stock Option Plans shall terminate and be of no further
force or effect, and the Company shall take such action as shall be necessary to
ensure, to Parent's reasonable satisfaction, that no holder of a Company Stock
Option or participant in any other employee benefit plan or program of the
Company will have any right to acquire any interest in the Surviving Corporation
under the Company Stock Option Plans or any other such plan or program.
Indemnification. Pursuant to the Merger Agreement, the Certificate of
Incorporation and By-Laws of the Company or the Surviving Corporation, as the
case may be, shall not be amended, repealed or otherwise modified for a period
of from the date hereof until six years after the Effective Time in any manner
that would adversely affect the rights thereunder of individuals who as of the
date hereof are or were directors, officers, employees, fiduciaries or agents of
the Company and its subsidiaries or otherwise entitled to indemnification,
advancement of expenses or exculpation from liability under the Company's
Restated Certificate of Incorporation, By-laws or indemnification agreements
(the "Indemnified Parties"). The Company shall, to the fullest extent permitted
under Delaware law and regardless of whether the Merger becomes effective,
indemnify, defend and hold harmless, and after the Effective Time, Parent shall,
and shall cause the Surviving Corporation to, to the fullest extent permitted
under Delaware law, indemnify, defend and hold harmless, each Indemnified Party
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any threatened, pending or completed claim, action, suit,
proceeding or investigation, including without limitation liabilities arising
out of this transaction, to the extent that it was based on the fact that such
Indemnified Party is or was a director, officer, employee, fiduciary or agent of
the Company or its subsidiaries and arising out of actions or omissions or
alleged actions or omissions occurring at or prior to the Effective Time, and in
the event of any such claim, action, suit proceeding, or investigation (whether
arising before or after the Effective Time), (i) Parent, the Company or the
Surviving Corporation, as applicable, shall advance expenses to such Indemnified
Parties in advance of the final disposition thereof upon receipt of the
undertaking specified in Section 145 of the DGCL, including payment of the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to Parent, promptly as statements
therefor are received and (ii) Parent, the Company and the Surviving Corporation
will cooperate in the defense of any such matter; provided, however, that
neither Parent, the Company nor the Surviving Corporation shall be liable for
any settlement effected without its written consent (which consent shall not be
unreasonably withheld); and further, provided, that neither Parent, the Company
nor the Surviving Corporation shall be obliged pursuant to the Merger Agreement
to pay the fees and disbursements of more than one counsel for all Indemnified
Parties in any single action except to the extent that, in the written opinion
of counsel for the Indemnified Parties, two or more of such Indemnified Parties
have conflicting interests in the outcome of such action. Any determination
required to be made with respect to whether an Indemnified Party's conduct
complies with the standards set forth under Delaware law, the Certificate of
Incorporation or By-Laws shall be made by independent counsel mutually
acceptable to Parent and the Indemnified Party.
In addition, at or prior to the Effective Time, Parent, the Company or the
Surviving Corporation shall obtain a fully-paid officers' and directors'
liability insurance policy covering the Indemnified Parties who are currently
covered by the Company's officers' and directors' liability insurance policy for
a term of six years on terms not materially less favorable than those in effect
on the date of the Merger Agreement in terms of coverage and amounts.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the Company (which will not survive
the Effective Time or, if earlier, the date of the purchase of Shares pursuant
to the Offer) relating to, among other things, (i) the Company's and its
subsidiaries' due organization, power, standing and similar corporate matters;
(ii) the Company's and its subsidiaries' capital structure; (iii) authorization,
execution, delivery and enforceability of the Merger Agreement and related
matters; (iv) governmental and other authorizations required in connection with
the
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transactions contemplated by the Merger Agreement; (v) documents filed by the
Company with the Commission and the accuracy of information contained therein;
(vi) preparation of financial statements in accordance with generally accepted
accounting principles applied on a consistent basis; (vii) absence of certain
changes or events or of undisclosed liabilities; (viii) compliance with
applicable laws; (ix) litigation pending or threatened against the Company or
any of its subsidiaries; (x) tax and employee benefit plan matters; (xi)
insurance; (xii) intellectual property matters; (xiii) material contracts; (xiv)
environmental matters; (xv) labor relations; (xvi) accuracy of information
supplied by the Company for use in documents relating to the Offer and the
Merger; and (xvii) brokers' and financial advisors' fees.
Additional Agreements. The Merger Agreement provides that, subject to the
conditions and other agreements set forth in the Merger Agreement, each of
Parent, Purchaser and the Company will use commercially reasonable efforts to
take, or cause to be taken (including, without limitation, by such parties'
respective representatives), all actions and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Offer, the Merger, the Financing and the other
transactions contemplated by the Merger Agreement. Following the purchase by
Purchaser of Shares pursuant to the Offer, neither Parent nor Purchaser will
take any action as a stockholder of the Company that would cause the Company to
breach any of the Company's obligations contained in the Merger Agreement. Each
of the Company, Parent and Purchaser has agreed in the Merger Agreement to make
as promptly as practicable following the date of the Merger Agreement all
filings and notifications required to be made with, and seek all consents,
approvals, permits and authorizations required to be obtained from, any third
parties or Governmental Entities in connection with the Merger Agreement,
including any filing necessary under the HSR Act.
Amendments. The Merger Agreement provides that, subject to the applicable
provisions of the DGCL, at any time prior to the Effective Time, Parent,
Purchaser and the Company may modify or amend the Merger Agreement, by written
agreement executed and delivered by duly authorized officers of the respective
parties; provided, however, that after approval of the Merger by the
stockholders of the Company, no amendment shall be made which reduces the
consideration payable in the Merger or adversely affects the rights of the
Company's stockholders thereunder without the approval of such stockholders. The
Merger Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
Extension; Waiver. At any time prior to the Effective Time, Parent,
Purchaser and the Company may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties of the other parties contained in the
Merger Agreement or in any document delivered pursuant to the Merger Agreement
or (c) subject to certain provisions of the Merger Agreement, waive compliance
with any of the agreements or conditions of the other parties contained in the
Merger Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to the Merger Agreement to assert
any of its rights under the Merger Agreement or otherwise shall not constitute a
waiver of such rights.
The foregoing summary of certain provisions of the Merger Agreement is
qualified in its entirety by reference to the Merger Agreement, which is
incorporated herein by reference, and a copy of which has been filed as an
exhibit to the Schedule 14D-1. The Merger Agreement may be examined and copies
may be obtained at the places and in the manner set forth under "Available
Information" in Section 8.
OTHER AGREEMENTS
Tender and Voting Agreement. Pursuant to the Tender and Voting Agreement,
all of the directors and certain executive officers of the Company (the
"Tendering Stockholders") agreed: (i) to tender pursuant to the Offer all of the
Owned Shares (as defined below) (which definition includes all Shares acquired
by the Tendering Stockholders after December 17, 1998), no later than three
business days prior to the initial expiration of the Offer; (ii) to vote the
Owned Shares in favor of the adoption of the Merger Agreement and the approval
of the Merger, and against any action or agreement that would result in a breach
in any material respect of any covenant, representation or warranty or any other
obligation or agreement of the Company
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under the Merger Agreement, or that would impede, interfere with, delay,
postpone or attempt to discourage the Merger; (iii) to appoint Parent as the
Tendering Stockholders' proxy to vote the Owned Shares in connection with the
Merger Agreement and the Merger; (iv) not to enter into any contract or
understanding to convey any interest in or to the Owned Shares, or grant any
proxy with respect to the Owned Shares, or deposit the Owned Shares into any
voting trust, or subject the Owned Shares to any voting agreement, except that a
Tendering Stockholder may transfer any or all of the Owned Shares owned by him
to a "Permitted Transferee" (as defined in the Tender and Voting Agreement), if
such Permitted Transferee agrees to be bound by the terms of the Tender and
Voting Agreement; and (v) not to solicit or initiate any Acquisition Proposal or
other offer from any person or, except in such solicitor's capacity as a
director or officer of the Company to the extent permitted by the Merger
Agreement (as described above under "The Merger Agreement--Other Offers"),
engage in discussions or negotiations relating thereto (all of which shall
collectively be referred to herein as "Tendering Stockholders' Restrictions").
On December 17, 1998, the Tendering Stockholders beneficially owned an
aggregate of 1,049,769 Shares (the "Owned Shares"), constituting approximately
11.3% of the Shares then outstanding.
The Tender and Voting Agreement, and the Tendering Stockholders'
obligations thereunder, terminate upon the earlier of (i) the consummation of
the Merger, (ii) the termination of the Offer without any Shares having been
purchased pursuant thereto, or (iii) the termination of the Merger Agreement in
accordance with its terms, including as such terms may be amended or extended.
The obligations of any Tendering Stockholder under the Tender and Voting
Agreement may be terminated by such Stockholder if (i) Parent or Purchaser shall
have failed to comply with any of its obligations under Article I of the Merger
Agreement or (ii) Parent or Purchaser shall have violated any provisions of the
Tender and Voting Agreement.
The Tender and Voting Agreement contains representations and warranties of
Parent and Purchaser relating to, among other things, (i) Parent's and
Purchaser's due organization, power, standing and similar corporation matters
and (ii) authorization, execution, delivery and enforceability of the Merger
Agreement and related matters. The Tender and Voting Agreement also contains
representations and warranties of each Tendering Stockholder regarding his
unencumbered title to the Owned Shares and his authority and capacity to enter
into and be bound by, and perform in accordance with, the terms of the Tender
and Voting Agreement.
The foregoing summary of certain provisions of the Tender and Voting
Agreement is qualified in its entirety by reference to the Tender and Voting
Agreement, which is incorporated herein by reference, and a copy of which has
been filed as an exhibit to the Schedule 14D-1. The Tender and Voting Agreement
may be examined and copies may be obtained at the places and in the manner set
forth under "Available Information" in Section 8.
Confidentiality Agreement. In connection with negotiations relating to the
Merger (see Section 11 hereof), and as a condition to the Company providing any
non-public information to Parent, the Financial Advisor, on behalf of the
Company, and Parent entered into the Confidentiality Agreement, which provides
generally that Parent and its representatives, will keep confidential any
non-public information furnished to them by the Company. The Confidentiality
Agreement provides that for the period ending one year from the date of the
Confidentiality Agreement, neither Parent nor the Company will, without the
written consent of the other, solicit the employment of any person who is a
senior executive officer of the other and with whom the soliciting party had
contacts in conjunction with the Merger and related transactions, nor will
either party engage in any negotiations or discussions with any such officers
that would result in their employment by the other party, other than pursuant to
a general solicitation not specifically directed at such officers. The
Confidentiality Agreement further provides that for a period of twelve months
from the date of the Confidentiality Agreement, neither Parent nor its
affiliates will, directly or indirectly, acting alone or in concert with others,
unless specifically requested in writing or otherwise consented to in advance by
the Board of Directors of the Company: (i) acquire or agree, offer, seek or
propose to acquire (or request permission to do so), ownership of any of the
assets or businesses of the Company or any securities issued by the Company, or
any rights or options to acquire such ownership (including from a third party),
or make any public announcement (or request permission to make any such
announcement) with respect to any of the foregoing,
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or (ii) seek or propose to influence or control the management or the policies
of the Company or to obtain representation on the Company's Board of Directors,
or solicit, or participate in the solicitation of, any proxies or consents with
respect to any securities of the Company, or make any public announcement with
respect to any of the foregoing or request permission to do any of the
foregoing, or (iii) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing.
The foregoing summary of certain provisions of the Confidentiality
Agreement is qualified in its entirety by reference to the Confidentiality
Agreement, which is incorporated herein by reference, and a copy of which has
been filed as an exhibit to the Schedule 14D-1. The Confidentiality Agreement
may be examined and copies may be obtained at the places and in the manner set
forth under "Available Information" in Section 8.
PLANS FOR THE COMPANY
Parent is conducting a detailed review of the Company and its assets,
corporate and administrative structure, capitalization, operations, properties,
policies, management and personnel and reserves the right to make such changes
therein as it deems necessary or desirable, consistent with reasonable operating
practices. Such changes could include, among other things, changes in the
Company's business, corporate and administrative structure, marketing
strategies, capitalization or management.
The Merger Agreement provides that Parent or Purchaser shall utilize a
portion of the net proceeds of the Financing, together with available cash of
the Company, to (or to enable the Company to) repay or otherwise discharge in
full the Company's existing indebtedness.
Except as indicated in this Offer to Purchase, neither Purchaser nor Parent
has any present plans or has made any proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation or sale or transfer of assets, involving the Company or any of its
subsidiaries, or any material changes in the Company's capitalization, corporate
and administrative structure or business or composition of its management or
personnel.
OTHER MATTERS
Appraisal Rights. No appraisal rights are available in connection with the
Offer. If the Merger is consummated, however, stockholders of the Company who
have not tendered their Shares will have certain rights under the DGCL to
dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. Stockholders who perfect such rights by complying with
the procedures set forth in Section 262 of the DGCL ("Section 262") will have
the fair value of their Shares (exclusive of any element of value arising from
the accomplishment or expectation of the Merger) determined by the Delaware
Court of Chancery and will be entitled to receive a cash payment equal to such
fair value from the Surviving Corporation. In addition, such dissenting
stockholders would be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Shares. In determining the fair value of the Shares, the
court is required to take into account all relevant factors. Accordingly, such
determination could be based upon considerations other than, or in addition to,
the market value of the Shares, including, among other things, asset values and
earning capacity. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated
that "proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in an appraisal proceeding. The Weinberger court also noted that
under Section 262, fair value is to be determined "exclusive of any element of
value arising from the accomplishment or expectation of the merger." In Cede &
Co. v. Technicolor, Inc., however, the Delaware Supreme Court stated that, in
the context of a two-step cash merger, "to the extent that value has been added
following a change in majority control before cash-out, it is still value
attributable to the going concern," to be included in the appraisal process. As
a consequence of the foregoing, the fair value determined in any appraisal
proceeding could be the same as or more or less than $13.75 per Share.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any stockholder and the demand
for appraisal of, and payment in cash for the fair value of, the Shares. Parent
intends, however, to cause the Surviving Corporation to argue in any appraisal
proceeding that,
31
<PAGE> 34
for purposes of such proceeding, the fair value of each Share is less than the
price paid in the Merger. In this regard, stockholders should be aware that
opinions of investment banking firms as to the fairness from a financial point
of view (including the Financial Advisor's opinion described herein) are not
necessarily opinions as to "fair value" under Section 262.
Several decisions by Delaware courts have held that, in certain
circumstances, a controlling stockholder of a company involved in a merger has a
fiduciary duty to other stockholders that requires that the merger be "entirely
fair" to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and in Rabkin v. Philip A. Hunt Chemical Corp. that although the
remedy ordinarily available to minority stockholders in a cash-out merger that
is found to be not fair to the minority stockholders is the right to appraisal
described above, monetary damages, injunctive relief or such other relief as the
court may fashion may be available if a merger is found to be the product of
procedural unfairness, including fraud, misrepresentation or other misconduct.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY DISSENTERS' RIGHTS AVAILABLE
UNDER THE DGCL.
THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
Going-Private Transactions. The Merger would have to comply with any
applicable federal law operative at the time of its consummation. The Commission
has adopted Rule 13e-3 under the Exchange Act which is applicable to certain
"going private" transactions. Purchaser does not believe that Rule 13e-3 will be
applicable to the Merger unless, among other things, the Merger is consummated
more than one year after the termination of the Offer. If applicable, Rule 13e-3
would require, among other things, that certain financial information concerning
the Company and certain information relating to the fairness of the Merger and
the consideration offered to minority stockholders in such transaction be filed
with the Commission and distributed to minority stockholders before the
consummation of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that, without the prior written consent of
Parent and except as otherwise expressly provided in the Merger Agreement, the
Company will not, and will not permit any of its subsidiaries to, (i) (x)
declare, set aside or pay any dividends on, or make any other distributions
(whether in cash, stock or property) in respect of, any of the Company's
outstanding capital stock, except for a cash dividend of $0.07 per Share paid on
December 15, 1998, (y) split, combine or reclassify any of its outstanding
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its outstanding capital
stock, or (z) purchase, redeem or otherwise acquire any shares of outstanding
capital stock or any rights, warrants or options to acquire any such shares; or
(ii) issue, sell, grant, pledge or otherwise encumber any shares of its capital
stock, any other voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting securities or
convertible securities, except for the issuance of Shares upon exercise of
Company Stock Options outstanding prior to the date of the Merger Agreement and
disclosed therein. Parent does not currently intend to permit the payment of
dividends on the Shares prior to the Merger.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer or the Merger Agreement,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule l4e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), to pay for
any Shares, and may terminate and withdraw the Offer, if (i) the Minimum
Condition has not been satisfied, (ii) the Financing Condition has not been
satisfied, (iii) the applicable waiting period under the HSR Act shall not have
expired or been
32
<PAGE> 35
terminated or (iv) at any time on or after the date of the Merger Agreement and
prior to the acceptance for payment of or payment for Shares, any of the
following conditions shall occur and be continuing:
(a) there shall be instituted or pending any action, suit,
investigation, litigation or proceeding before any domestic court,
government or Governmental Entity or arbitrator, other than by Parent or
Purchaser, a stockholder of Parent or Purchaser or any person affiliated
with Parent or Purchaser that, in the reasonable judgment of Parent,
materially adversely affects, or is reasonably likely to materially
adversely affect, the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, the Financing, or the
consummation of the transactions contemplated by the Merger Agreement,
provided that, in any such case, Parent shall have used its commercially
reasonable efforts to defeat or have vacated any such action or proceeding
against Parent or Purchaser and shall have failed to do so; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, interpretation, judgment, order or decree enacted, enforced,
promulgated, issued or deemed applicable to Parent or any of its
subsidiaries or to the Company or any of its subsidiaries or the Offer or
the Merger, by any court, government or Governmental Entity, other than the
application of the waiting period provision of the HSR Act to the Offer or
the Merger, that, in the reasonable judgment of Parent, is likely, directly
or indirectly, to result in any of the consequences referred to in
paragraph (a) above; or
(c) any change, event, occurrence or circumstance shall have occurred
that, in the reasonable judgment of Parent, would have a Company Material
Adverse Effect; or
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices, for, securities on the New York Stock
Exchange, which suspension or limitation shall continue for at least three
consecutive trading days (excluding suspensions or limitations resulting
solely from physical damage or interference with such exchange not related
to market conditions), (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
which would reasonably be expected to have a material adverse impact on the
capital markets of the United States, or (iv) in the case of any of the
foregoing existing on the date of the Merger Agreement, a material
acceleration, escalation or worsening thereof, or
(e) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger
Agreement, or (i) any of the representations and warranties of the Company
set forth in the Merger Agreement that are qualified as to materiality
shall not be true and correct, or (ii) any of the representations and
warranties of the Company set forth in the Merger Agreement that are not so
qualified shall not be true and correct in any material respect,
individually or in the aggregate, in each case when made and as of the
expiration of the Offer; except for changes permitted or contemplated by
the Merger Agreement and except for such breaches of representations,
warranties, covenants or agreements as would not have, individually or in
the aggregate, a Company Material Adverse Effect or materially adversely
affect the Financing or the consummation of the transactions contemplated
by the Merger Agreement; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms; or
(g) any Third Party acquires beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of 25% or more of the outstanding Shares,
unless such Shares have been validly tendered and not withdrawn; or
(h) a tender offer or exchange offer for more than 25% of the Shares
shall have been made or publicly proposed by a Third Party;
(i) the Board of Directors of the Company withdraws or modifies in a
manner adverse to Purchaser or Parent its approval or recommendation of the
Offer, the Merger Agreement or the Merger or recommends or approves an
Acquisition Proposal by a Third Party; or
(j) any filing required to be made by the Company or its subsidiaries
with, or any consent, approval, permit or authorization required to be
obtained by the Company or its subsidiaries from, any
33
<PAGE> 36
Governmental Entity which, either individually or in the aggregate, if not
made or obtained would have a Company Material Adverse Effect at the time
of or after the consummation of the Offer or would prevent the consummation
of the Offer shall not have been made or obtained (as the case may be);
which, in the reasonable judgment of Parent, in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent or Purchaser regardless of the circumstances
giving rise to such condition or may be waived by Parent or Purchaser in whole
or in part at any time and from time to time in its sole discretion. The failure
by Parent or Purchaser or any Affiliate of 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.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
General. Except as described in this Section 15, based on a review of
publicly available filings made by the Company with the Commission and other
publicly available information concerning the Company, neither Purchaser nor
Parent is aware of any license or regulatory permit that appears to be material
to the business of the Company and its subsidiaries, taken as a whole, that
might be adversely affected by Purchaser's acquisition of Shares (and the
indirect acquisition of the stock of the Company's subsidiaries) as contemplated
herein or of any approval or other action by a domestic or foreign governmental,
administrative or, regulatory agency or authority that would be required for the
acquisition and ownership of the Shares (and the indirect acquisition of the
stock of the Company's subsidiaries) by Purchaser as contemplated herein. Should
any such approval or other action be required, Purchaser and Parent presently
contemplate that such approval or other action will be sought, except as
described below under "State Takeover Laws." While, except as otherwise
described in this Offer to Purchase, Purchaser does not presently intend to
delay the acceptance for payment of or payment for 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 failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of or other substantial conditions complied with in the
event that certain parts of the Company's business might not have to be disposed
of or other substantial conditions complied with in the event that such
approvals were not obtained or such other actions were not taken or in order to
obtain any such approval or other action. If certain types of adverse action are
taken with respect to the matters discussed below, Purchaser could decline to
accept for payment or pay for any Shares tendered. See Section 14 for certain
conditions to the Offer, including conditions with respect to governmental
actions.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock
34
<PAGE> 37
of the corporation) unless, among other things, the corporation's board of
directors has given its prior approval of either the business combination or the
transaction that resulted in the stockholder becoming an "interested
stockholder." The Company has represented in the Merger Agreement that it
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, and has taken all necessary steps to render
Section 203 of the DGCL inapplicable to the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger.
Based on information supplied by the Company and the Company's
representations in the Merger Agreement, Purchaser does not believe that any
state takeover statutes apply to the Offer or the Merger. Neither Purchaser nor
Parent has currently complied with any state takeover statute or regulation.
Purchaser and Parent reserve the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer or the Merger and
nothing in this Offer to Purchase or any action taken in connection with the
Offer or the Merger is intended to be a waiver of that right. If it is asserted
that any state takeover statute is applicable to the Offer or the Merger and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or the Merger, Purchaser might be required to file certain
information with, or to receive approvals from, the relevant state authorities,
and Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in consummating the Offer or the Merger. In
such case, Purchaser may not be obligated to accept for payment or pay for any
Shares tendered pursuant to the Offer. See Section 14.
Antitrust Compliance. Under the HSR Act and the rules that have been
promulgated thereunder by the FTC, certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division and the FTC and certain waiting period requirements have been
satisfied.
A Notification and Report Form with respect to the Offer has been filed on
behalf of Parent under the HSR Act. The waiting period under the HSR Act with
respect to the Offer will expire at 11:59 p.m., New York City time, on the
fifteenth calendar day after the date Parent's form is filed, unless early
termination of the waiting period is granted. Before such time, however, the
Antitrust Division or the FTC may extend the waiting period by requesting
additional information or documentary material from Parent. If such request is
made, such waiting period will expire at 11:59 p.m., New York City time, on the
tenth calendar day after substantial compliance by Parent with such request.
Thereafter, the waiting period may be extended only by court order or with
Purchaser's consent. The waiting period will not be affected either by the
failure of the Company (as opposed to Parent and Purchaser) to file a
Notification and Report form or to comply with any request for additional
information or materials issued by the FTC or the Antitrust Division.
The Merger would not require an additional filing under the HSR Act if
Purchaser owns 50% or more of the Shares outstanding at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, the Company or
their respective subsidiaries. Private parties, as well as state governments,
may also bring legal action under the antitrust laws under certain
circumstances. Based upon an examination of information available to Purchaser
relating to the businesses in which Parent, the Company and their respective
subsidiaries are engaged, Parent and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, of the results thereof. See Section 14 for certain conditions
to the Offer, including conditions with respect to litigation and certain
governmental actions.
35
<PAGE> 38
16. FEES AND EXPENSES.
Parent has engaged DLJ as the Dealer Manager in connection with the Offer
and as exclusive financial advisor to Parent in connection with the proposed
acquisition of the Company. Pursuant to the terms of DLJ's engagement, Parent
will pay DLJ a fee of (i) $190,000 payable upon the commencement of the Offer,
and (ii) $1.9 million, less the amount paid pursuant to clause (i), payable if
Parent or any of its affiliates consummates the acquisition of at least 90% of
the outstanding Shares, a merger or consolidation with the Company, an
acquisition of certain assets of the Company or any other business combination
with the Company (collectively, a "Transaction"). In the event that a
Transaction is not consummated and Parent receives a termination fee in
connection therewith, Parent shall pay to DLJ 25% of any such termination fee,
less Parent's expenses incurred in connection with the Transaction and less fees
previously paid, up to a maximum of $1.9 million. Parent will also reimburse DLJ
for reasonable out-of-pocket expenses related to DLJ's engagement, whether or
not the Offer or any other Transaction is consummated, including reasonable
legal fees and expenses within limits, and DLJ and certain related parties will
be indemnified against certain liabilities, including liabilities under the
federal securities laws, arising out of DLJ's engagement. In the ordinary course
of business, DLJ and its affiliates may actively trade or hold Shares for their
own account or for the account of customers and, accordingly, may at any time
hold a long or short position in Shares.
Purchaser has retained Morrow & Co., Inc. to act as the Information Agent
and Harris Trust Company of New York to act as Depositary in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
facsimile, telegraph and personal interviews and may request brokers, dealers
and other nominees of stockholders to forward materials relating to the Offer to
beneficial owners of Shares. The Depositary has not been retained to make
solicitations or recommendations in its role as the Depositary. The Information
Agent and the Depositary each will receive reasonable and customary compensation
for their services, be reimbursed for certain reasonable out-of-pocket expenses
and be indemnified against certain liabilities and expenses in connection
therewith.
Neither Purchaser nor Parent will pay any fees or commissions to any broker
or dealer or other person for soliciting tenders of Shares pursuant to the Offer
(other than the Dealer Manager, the Depositary and the Information Agent as
described in this Offer to Purchase). Brokers, dealers, commercial banks and
trust companies will, upon request, be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding offering materials
to their customers.
17. 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 the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither Purchaser nor Parent is aware of any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. To the extent Purchaser or Parent becomes
aware of any state law that would limit the class of offerees in the Offer,
Purchaser will amend the Offer and, depending on the timing of such amendment,
if any, will extend the Offer to provide adequate dissemination of such
information to holders of Shares prior to the expiration of the Offer. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers which are
licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER TO TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
36
<PAGE> 39
Parent and Purchaser have filed with the Commission the Schedule 14D-1,
together with exhibits, pursuant to Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to the Offer and may file
amendment thereto. In addition, the Company has filed the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, together with the exhibits
setting forth its recommendation with respect to the Offer and reasons for such
recommendation and furnishing such additional related information. Such
Schedules and any amendments thereto, including exhibits, may be inspected at,
and copies may be obtained from, the same places and in the same manner as set
forth in Section 8 (except that such material will not be available at the
regional offices of the Commission).
MORIARTY ACQUISITION CORP.
December 23, 1998
37
<PAGE> 40
SCHEDULE I
INFORMATION RELATING TO DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, current business address, citizenship and the present principal
occupation or employment and material occupations, positions, offices or
employment for the past five years of each director and executive officer of
Parent. Unless otherwise indicated (i) the business address is 233 Fortune
Boulevard, Milford, Massachusetts 01757 and (ii) each of the persons listed
below is a United States citizen.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITIONS
<S> <C> <C>
Jordan A. Kahn............................ 56 President, Chief Executive Officer and
Director
Stanley Rosenzweig........................ 34 Chief Operating Officer and Director
Ira B. Morgenstern........................ 45 Senior Vice President--Finance
Gregory F. White.......................... 34 Executive Vice President, Sales and
Marketing and Director
(Tommy) Woon Fai Liu...................... 46 Managing Director of Holmes' Far East
operations
David Dusseault........................... 44 Chief Financial Officer
Richard K. Lubin.......................... 52 Director
Randy Peeler.............................. 34 Director
</TABLE>
JORDAN A. KAHN, founder of Parent, has served as President and Chief
Executive Officer and a director since its organization in 1982. Since 1968, Mr.
Kahn has also been President of Jordan Kahn Co., Inc., a manufacturer's
representative representing small electric personal appliance manufacturers,
including Parent, to retailers across the Northeast.
STANLEY ROSENZWEIG has served Parent since 1991, initially as Vice
President--Operations, and since 1993 as Chief Operating Officer and a director.
From 1987 to 1988, Mr. Rosenzweig served as a management consultant with Bain &
Company, and from 1988 to 1989 as a sales manager with Jolson Corporation, a
Canadian appliance company.
IRA B. MORGENSTERN joined Parent as Senior Vice President -- Finance in
August, 1998 from Diageo, PLC, a combination of the food and beverage businesses
of Grand Metropolitan PLC and Guinness PLC, where he spent over six years in a
number of financial management positions in the U.S. and London, including Vice
President of Strategic Marketing Finance in the U.S. drinks division. Prior to
Diageo, Mr. Morgenstern served as Vice President of Ditri Associates, Inc., a
leveraged acquisition firm, consultant for Touche Ross, and internal auditor
with Atlantic Richfield.
GREGORY F. WHITE has served as Executive Vice President, Sales and
Marketing since 1995, and from 1993 to 1995 as Vice President--Marketing. He
became a director in 1997. He served as Account Supervisor at Ammirati & Puris,
an advertising agency, from 1992 to 1993 and as Account Manager at the
advertising agency D'Arcy, Masius, Benton & Bowles from 1991 to 1992.
(TOMMY) WOON FAI LIU is Managing Director of the Parent's Far East
operations. From 1993 to 1996, Mr. Liu, a Hong Kong national, served as Chief
Financial Officer and Executive Director of Asco General Supplies Far East
Limited, a subsidiary of Parent's former majority owner, the Pentland Group plc,
as well as Executive Director of Holmes Products (Far East) Limited since 1994.
From 1989 to 1993, Mr. Liu was Finance Director for Johnson & Johnson Hong Kong.
DAVID DUSSEAULT has served as Chief Financial Officer of Parent since 1992
and from 1988 to 1992 as Comptroller of Parent. From 1981 to 1987, Mr. Dusseault
served as Comptroller at Leach and Garner Refining.
I-1
<PAGE> 41
RICHARD K. LUBIN is a Managing Director of Berkshire Partners, which he
co-founded in 1986, and has been a director of many of the firm's manufacturing,
retailing and transportation investments, including, among others, InteSys
Technologies, Inc. and English Welsh & Scottish Railway, Ltd. In addition, Mr.
Lubin is Treasurer of the Dana-Farber Cancer Institute and a Trustee of Beth
Israel Deaconess Medical Center. He became a director of Parent in 1997.
RANDY PEELER is a Vice President of Berkshire Partners, where he has been
employed since 1996. From 1994 to 1996, he was responsible for new business
ventures at Health Advances, a healthcare industry consulting firm. From 1993 to
1994, he served as Chief of Staff to the Assistant Secretary for Economic Policy
at the U.S. Department of the Treasury. Prior to that, he was a consultant with
Cannon Associates. He became a director of Parent in 1997, and also serves as a
director of Miami Cruise Services, Inc., Charrette Corporation and Weigh-Tronix,
Inc.
2. DIRECTOR AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name and position with Purchaser of the director and each executive
officer of Purchaser. For additional information regarding such persons, see
paragraph 1 above.
<TABLE>
<CAPTION>
POSITIONS
NAME WITH PURCHASER
<S> <C>
Jordan A. Kahn.............................................. President and Director
Stanley Rosenzweig.......................................... Vice President
Ira B. Morgenstern.......................................... Treasurer
</TABLE>
I-2
<PAGE> 42
The Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, together with certificates for the Shares and any other required
documents should be sent by each stockholder of the Company or such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
the Depositary as follows:
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand and Overnight Courier:
Harris Trust Company of New York Harris Trust Company of New York
Wall Street Station 88 Pine Street
P.O. Box 1023 19th Floor
New York, NY 10268-1023 New York, NY 10005
</TABLE>
By Facsimile:
(212) 701-7636
(For Eligible Institutions Only)
For Information and Confirmation
by Telephone:
(212) 701-7624
Questions and requests for assistance may be directed to the Information Agent
or the Dealer Manager as set forth below. Additional copies of the Offer to
Purchase, the Letter of Transmittal and all other tender offer materials may be
obtained from the Information Agent and will be furnished promptly at
Purchaser's expense. Stockholders may also contact their brokers, dealers,
commercial banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, New York 10022
Toll Free (800) 566-9061
Call Collect (212) 754-8000
Banks and Brokerage Firms Please Call:
(800) 662-5200
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
75 State Street
Boston, Massachusetts 02109
(877) 842-3456 (toll free)
(617) 342-8104
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
THE RIVAL COMPANY
PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 23, 1998
BY
MORIARTY ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
HOLMES PRODUCTS CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JANUARY 25, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Courier:
Harris Trust Company of New York Harris Trust Company of New York
Wall Street Station 88 Pine Street
P.O. Box 1023 19th Floor
New York, NY 10268-1023 New York, NY 10005
</TABLE>
By Facsimile:
(212) 701-7636
(For Eligible Institutions Only)
For Information and Confirmation
by Telephone:
(212) 701-7624
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
EXACTLY AS NAME(S) APPEAR(S) ON STOCK CERTIFICATE(S) SHARE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
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------------------------------------------------------
------------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by stockholders tendering by book-entry transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares being delivered to the Depositary are being
tendered. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 3 of the Offer to Purchase dated December 23, 1998 (the
"Offer to Purchase")) is utilized, if delivery of Shares is to be made by
book-entry transfer to the account maintained by Harris Trust Company of New
York (the "Depositary") at The Depository Trust Company or Philadelphia
Depository Trust Company (each, a "Book-Entry Transfer Facility" and,
collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures
set forth in Section 3 of the Offer to Purchase. Stockholders whose certificates
for Shares are not immediately available or who cannot deliver confirmation of a
book-entry transfer of their Shares into the Depositary's account at a
Book-Entry Transfer Facility ("Book-Entry Confirmation") and all other documents
required hereby to the Depositary on or prior to the Expiration Date (as defined
in the Offer to Purchase), must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
Check box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
Transaction Code Number:
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY (AS DEFINED IN THE OFFER TO PURCHASE) PREVIOUSLY SENT TO
THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
Window Ticket Number (if available):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
If delivered by book-entry transfer, check box of applicable Book-Entry
Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
Transaction Code Number:
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
Ladies and Gentlemen:
The undersigned hereby tenders to Moriarty Acquisition Corp., a Delaware
corporation ("Purchaser") and wholly-owned subsidiary of Holmes Products Corp.,
a Massachusetts corporation ("Parent"), the above described shares of common
stock, par value $0.01 per share (the "Shares"), of The Rival Company, a
Delaware corporation (the "Company") at a purchase price of $13.75 per Share,
net to the seller in cash, without interest thereon (the "Offer Price"), upon
the terms and subject to the conditions set forth in the Offer to Purchase and
in this Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), receipt of which is
hereby acknowledged.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), 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 or rights issued or issuable in respect
thereof on or after December 17, 1998) and irrevocably constitutes and appoints
the Depositary the true and lawful agent and attorney-in-fact of the
undersigned, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full extent
of the undersigned's rights with respect to such Shares (and any other Shares or
securities or rights) to (a) deliver certificates for such Shares (and any such
other Shares or securities or rights), or transfer ownership of such Shares (and
any such other Shares or securities or rights) on the account books maintained
by a Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
Purchaser upon receipt by the Depositary, as the undersigned's agent, of the
purchase price (adjusted, if appropriate, as provided in the Offer to Purchase),
(b) present such Shares (and any such other Shares or securities or rights) 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 any other such
Shares or securities or rights), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Jordan A. Kahn and Ira B.
Morgenstern, and each of them, and any other designee(s) of Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to the full extent of such stockholder's rights with respect to
tendered Shares (and any and all other non-cash dividends, distributions, rights
and other securities issued or issuable in respect thereof on or after December
17, 1998), to vote at any annual, special, adjourned or postponed meeting of the
Company's stockholders or otherwise in such manner as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute in his sole discretion deems proper
with respect to, and to otherwise act as each such attorney-in-fact and proxy or
his substitute shall in his sole discretion deem proper with respect to, the
Shares tendered hereby that have been accepted for payment by Purchaser prior to
the time any such action is taken, and with respect to which the undersigned is
entitled to vote. This power of attorney and proxy is coupled with an interest
in the Shares tendered hereby, is irrevocable and is granted in consideration
of, and is effective when, if and to the extent that Purchaser accepts such
Shares for payment pursuant to the Offer. Such acceptance for payment shall
revoke, without further action, all prior powers of attorney, proxies and
consents granted by the undersigned at any time with respect to such Shares (and
any such other Shares or other securities or rights), and no subsequent powers
of attorney, proxies, consents or revocations may be given (and, if given, will
be not be deemed effective) with respect thereto by the undersigned. The
undersigned acknowledges that in order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, Purchaser or
Purchaser's designee must be able to exercise full voting, consent and other
rights which inure to a record and beneficial holder with respect to such Shares
and other securities or rights.
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 or rights
issued or issuable in respect thereof on or after December 17, 1998), and that,
when the same are accepted for payment by Purchaser, Purchaser will acquire
good, marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and the same will not be subject to any
adverse claim. The undersigned, upon request, will execute and deliver any
signature guarantee or additional documents deemed by the Depositary or
Purchaser to be necessary or
3
<PAGE> 4
desirable to complete or confirm the sale, assignment and transfer of the Shares
tendered hereby (and any and all such other Shares or other securities or
rights).
All authority conferred or agreed pursuant to this Letter of Transmittal
shall be binding upon the successors, assigns, heirs, executors, administrators
and legal representatives of the undersigned and shall not be affected by, and
shall survive, the death or incapacity of the undersigned. Except as stated in
the Offer to Purchase, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature. In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) in the name
of, and deliver such check and/or return such certificates (and accompanying
documents, as appropriate) to the person or persons so indicated. Unless
otherwise indicated herein under "Special Payment Instructions," please credit
any Shares tendered herewith by book-entry transfer that are not accepted for
payment by crediting the account at the Book Entry Transfer Facility designated
above. The undersigned recognizes that Purchaser has no obligation pursuant to
the "Special Payment Instructions" to transfer any Shares from the name of the
registered holder thereof if Purchaser does not accept for payment any of the
Shares so tendered.
4
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are
to be issued in the name of someone other than the undersigned or if
Shares delivered by book-entry transfer which are not purchased are to be
returned by credit to an account maintained at a Book-Entry Transfer
Facility other than that designated above.
Issue [ ] check and/or [ ] certificates to:
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
[ ] Credit unpurchased Shares delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below:
Check appropriate box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
------------------------------------------------------------
(ACCOUNT NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are
to be mailed or delivered to someone other than the undersigned or to the
undersigned at an address other than that indicated above.
Mail or deliver [ ] check and/or
[ ] certificates to:
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
------------------------------------------------------------
5
<PAGE> 6
IMPORTANT
STOCKHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
X
-------------------------------------------------------------------
X
-------------------------------------------------------------------
(SIGNATURE(S) OF OWNER(S))
Dated:
-------------------------------------------------, 199
----------------
(Must be signed by the registered holder(s) exactly as name(s)
appear(s) on certificate(s) for the Shares 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 trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following
information. See Instruction 5.)
Name(s):
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
---------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
Address(es):
---------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-----------------------------------------
Tax Identification or Social Security No.:
---------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature(s):
------------------------------------------------
Name and Title:
------------------------------------------------------
(PLEASE PRINT)
Name of Firm:
--------------------------------------------------------
Address:
-------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
---------------------------------------
Dated:---------------------, 199-------------
<TABLE>
<S> <C>
SIGN SIGN
HERE HERE HERE
[ARROW] ARROW] [ARROW]
[ARROW] ARROW] [ARROW]
</TABLE>
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Instruction includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless each such registered holder has completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on this Letter of Transmittal or (ii) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a participant
in the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by an Eligible Institution. Also see
Instruction 5.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be completed by stockholders either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined herein) is
utilized, if delivery of Shares is to be made pursuant to the procedures for
delivery by book-entry transfer set forth in Section 3 of the Offer to Purchase.
For a stockholder validly to tender Shares pursuant to the Offer, either (a) a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents, must
be received by the Depositary at one of its addresses set forth herein prior to
the Expiration Date and either the certificates for tendered Shares must be
received by the Depositary at one of such addresses or Shares must be delivered
pursuant to the procedures described herein (and a Book-Entry Confirmation must
be received by the Depositary), in each case, prior to the Expiration Date, or
(b) the tendering stockholder must comply with the guaranteed delivery
procedures described below and in Section 3 of the Offer to Purchase. If a
stockholder's certificates for such Shares are not immediately available or time
will not permit all required documents to reach the Depositary prior to the
Expiration Date, or the procedure for book-entry transfer cannot be completed on
a timely basis, such stockholder's Shares may nevertheless be tendered by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. Pursuant to such procedures, (i) such tender must be made by
or through an Eligible Institution, (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by Purchaser,
must be received by the Depositary prior to the Expiration Date and (iii) in the
case of a guarantee of Shares, the certificates for (or a Book-Entry
Confirmation with respect to) all tendered Shares, in proper form for transfer,
together with a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, together with any required signature guarantee(s) or, in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary within three trading days after
the date of execution of such Notice of Guaranteed Delivery. A "trading day" is
any day on which the Nasdaq National Market operated by the National Association
of Securities Dealers, Inc. is open for business. If certificates for such
Shares are forwarded separately to the Depositary, a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, must accompany each such delivery. The term
"Agent's Message" means a message, transmitted by a Book-Entry Transfer Facility
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 that such participant has received and agrees to
be bound by the terms of this Letter of Transmittal and that Purchaser may
enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
7
<PAGE> 8
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
signed schedule attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by any certificate
submitted are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Description of Shares to be Tendered." In such
case, new certificate(s) for the remainder of the Shares that were evidenced by
the old certificate(s) will be sent to the registered holder, unless otherwise
provided in the appropriate box on this Letter of Transmittal, as soon as
practicable after the Expiration Date. All Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly to the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
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 or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsement of certificates or separate
stock powers is required unless payment or certificates for Shares not tendered
or purchased are to be issued to a person other than the registered owner(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution as defined in Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the 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 on the certificates. Signatures on
such certificates or stock powers must be guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made, or if
certificates for Shares not tendered or purchased are to be registered in the
name of any person other than the registered holder, or if tendered certificates
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder or such person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check and/or
certificates for unpurchased Shares are to be issued in the name of a person
other than the signer of this Letter of Transmittal or if a check is to be sent
and/or such certificates are to be returned to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
Stockholders tendering Shares by book-entry transfer may request that Shares not
purchased be credited to such account maintained at a Book-Entry Transfer
Facility as such stockholder may designate hereon. If no such instructions are
given, such Shares not purchased will be returned by crediting the account at
the Book-Entry Transfer Facility designated above.
8. Requests for Assistance or Additional Copies. Requests for assistance
may be directed to the Information Agent (as defined in the Offer to Purchase)
at its address set forth below. Additional copies of the Offer to Purchase, this
Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification
8
<PAGE> 9
Number on Substitute Form W-9 may be obtained from the Information Agent at the
address set forth below or from your broker, dealer, commercial bank or trust
company.
9. Waiver of Conditions. Purchaser expressly reserves the right, in its
sole discretion, at any time and from time to time, to waive any of the
conditions to the Offer, including the Minimum Condition (as defined in the
Offer to Purchase), provided that no such waiver of the Minimum Condition shall
decrease the Minimum Condition to less than a majority of the Shares outstanding
on a fully diluted basis), to the extent permitted by applicable laws and the
provisions of the Merger Agreement (as defined in the Offer to Purchase), in the
case of any Shares tendered.
10. Substitute Form W-9. Subject to the availability of an exemption,
each tendering stockholder is required to provide the Depositary with a correct
Taxpayer Identification Number ("TIN") on the Substitute Form W-9, which is
provided under "Important Tax Information" below, and to certify under penalties
of perjury that such number is correct and that such stockholder is not subject
to backup withholding. If a tendering stockholder has been notified by the
Internal Revenue Service that such stockholder is subject to backup withholding,
such stockholder must cross out item (2) of the Certification box of the
Substitute Form W-9, unless such stockholder has since been notified by the
Internal Revenue Service that such stockholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to 31% federal income tax withholding with
respect to any payments received pursuant to the Offer. If the tendering
stockholder has not been issued a TIN and has applied for one or intends to
apply for one in the near future, such stockholder should write "Applied For" in
the space provided for the TIN in Part 1 of the Substitute Form W-9, check the
box in Part 3 of the Substitute Form W-9 and sign and date the Substitute Form
W-9. Such a stockholder must also complete the Certificate of Awaiting Taxpayer
Identification Number, which is provided below. Notwithstanding that "Applied
For" is written in Part 1 and the Certificate of Awaiting Taxpayer
Identification Number is completed, the Depositary will withhold 31% on all
payments of the purchase price to such stockholder until a TIN is provided to
the Depositary. However, such withheld amount will be refunded to such
stockholder if a certified TIN is provided to the Depositary within 60 days.
11. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES,
OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER
REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY AT ONE OF ITS ADDRESSES
SET FORTH HEREIN PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR
TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED
PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
9
<PAGE> 10
IMPORTANT TAX INFORMATION
Under United States federal income tax law, unless an exemption applies (as
described below), a stockholder whose tendered Shares are accepted for payment
is required by law to provide the Depositary with such stockholder's correct TIN
on Substitute Form W-9 below. If such stockholder is an individual, the TIN is
generally such stockholder's social security number. If the Depositary is not
provided with the correct TIN, the stockholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made to
such stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding of 31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to these backup withholding
and reporting requirements. Noncorporate foreign stockholders should sign and
complete the main signature form and a Form W-8, Certificate of Foreign Status,
a copy of which may be obtained from the Depositary, in order to avoid backup
withholding. Exempt stockholders, other than noncorporate foreign stockholders,
should furnish their TIN, write "Exempt" on the face of the Substitute Form W-9
below, and sign, date and return the Substitute Form W-9 to the Depositary. See
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If backup withholding applies with respect to a stockholder, the Depositary
is required to withhold 31% of any payments made to such stockholder. Backup
withholding is not an additional tax. Rather, the tax liability of persons
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 from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (a) that the TIN provided on the Substitute
Form W-9 is correct and (b) that such stockholder is not subject to backup
withholding because (i) such stockholder is exempt from backup withholding, (ii)
such stockholder has not been notified by the Internal Revenue Service that such
stockholder is subject to backup withholding as a result of a failure to report
all interest or dividends or (iii) such stockholder has been notified by the
Internal Revenue Service that such stockholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares tendered hereby. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9 for additional guidance
on which number to report. If the tendering stockholder has not been issued a
TIN and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part 1 of the Substitute Form W-9, check the box in Part 3 of the
Substitute Form W-9 and sign and date the Substitute Form W-9. Such a
stockholder must also complete the Certificate of Awaiting Taxpayer
Identification Number, which is provided below. Notwithstanding that "Applied
For" is written in Part 1 and the Certificate of Awaiting Taxpayer
Identification Number is completed, the Depositary will withhold 31% of all
payments of the purchase price to such stockholder until a TIN is provided to
the Depositary. However, such withheld amount will be refunded to such
stockholder if a certified TIN is provided to the Depositary within 60 days.
10
<PAGE> 11
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
- ----------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT -------------------------------
FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW Social security number
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE or
PAYER'S REQUEST FOR -------------------------------
TAXPAYER IDENTIFICATION Employer identification
NUMBER (TIN) number
-----------------------------------------------------------------------------------------
PART 2 -- CERTIFICATION -- Under penalties of PART 3 -- Awaiting TIN [ ]
perjury, I certify that:
(1) The number shown on this form is my correct
taxpayer identification number (or I am waiting
for a number to be issued to me); and
(2) I am not subject to backup withholding because
(a) I am exempt from backup withholding, or (b)
I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of failure to report all
interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
-----------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if you have
been notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you are subject to backup withholding you receive another
notification from the IRS stating that you are no longer subject to backup withholding,
do not cross out item (2).
- ---------------------------------------------------------------------------------------------------------------------------
SIGNATURE
- ----------------------------------------------------------------------- DATE, -------------------------------------- 199--
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY CASH 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.
11
<PAGE> 12
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (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 such an application in the near future. I understand
that if I do not provide a taxpayer identification number to the Depositary, 31%
of all reportable payments made to me will be withheld, but that such withheld
amount shall be refunded to me if I provide the Depositary with my taxpayer
identification number within 60 days.
Signature Date , 199
--------------------------------- ----------------- ------
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent as set forth below:
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, New York 10022
Toll Free (800) 566-9061
Call Collect (212) 754-8000
Banks and Brokerage Firms Please Call:
(800) 662-5200
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
75 State Street
Boston, Massachusetts 02109
(877) 842-3456 (toll free)
(617) 342-8104
12
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
THE RIVAL COMPANY
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to tender Shares (as defined below) pursuant to the Offer
(as defined below) if (i) certificates for shares of common stock, par value
$0.01 per share (the "Shares"), of The Rival Company, a Delaware corporation
(the "Company"), are not immediately available; (ii) time will not permit all
required documents to reach Harris Trust Company of New York, as Depositary (the
"Depositary"), prior to the Expiration Date (as defined in the Offer to
Purchase, dated December 23, 1998 (the "Offer to Purchase")); or (iii) the
procedure for delivery by book-entry transfer cannot be completed on a timely
basis. This Notice of Guaranteed Delivery may be delivered by hand or
transmitted by telegram, facsimile transmission or mail to the Depositary. See
Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Courier:
Harris Trust Company of New York Harris Trust Company of New York
Wall Street Station 88 Pine Street
P.O. Box 1023 19th Floor
New York, NY 10268-1023 New York, NY 10005
</TABLE>
By Facsimile:
(212) 701-7636
(For Eligible Institutions Only)
For Information and Confirmation
by Telephone:
(212) 701-7624
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL
NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Moriarty Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Holmes Products Corp., a
Massachusetts corporation, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal (which
together with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Shares
indicated below pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
Number of Shares:-------------------------------------------------------------
Name(s) of Record Holder(s):--------------------------------------------------
- -------------------------------------------------------------------------------
Please Type or Print
Address(es):------------------------------------------------------------------
- -------------------------------------------------------------------------------
Zip Code
Area Code and Tel. No.:-------------------------------------------------------
Certificate No(s).(if available):---------------------------------------------
- -------------------------------------------------------------------------------
Signature(s):------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Dated:---------------------------------, 199--
If Shares will be tendered by book-entry transfer, check one box and provide
account number
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:----------------------------------------------------------------
GUARANTEE
(Not To Be Used For Signature Guarantee)
The undersigned, a firm which is a participant in the Security Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Guarantee Program or the Stock Exchange Medallion Program (each, an "Eligible
Institution"), hereby (a) represents that the tender of Shares effected hereby
complied with Rule 14e-4 under the Securities Exchange Act of 1934, as
amended, and (b) guarantees delivery to the Depositary, at one of its
addresses set forth above, of certificates representing the Shares tendered
hereby in proper form for transfer, or confirmation of book-entry transfer of
such Shares into the Depositary's accounts at The Depository Trust Company or
Philadelphia Depository Trust Company, in each case with delivery of a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, or in the case of a
book-entry transfer, an Agent's Message, and any other required documents,
within three Nasdaq National Market trading days after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and the
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm:-----------------------------------------------------------------
Authorized Signature:---------------------------------------------------------
Name (Type or Print):---------------------------------------------------------
Title:------------------------------------------------------------------------
Address:----------------------------------------------------------------------
- -------------------------------------------------------------------------------
Zip Code
Area Code and Tel. No.:-------------------------------------------------------
Dated:----------------------, 199--
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
FOR SHARES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
THE RIVAL COMPANY
AT
$13.75 NET PER SHARE
BY
MORIARTY ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
HOLMES PRODUCTS CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JANUARY 25, 1999, UNLESS THE OFFER IS EXTENDED.
December 23, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been engaged by Moriarty Acquisition Corp., a Delaware corporation
("Purchaser") and a wholly-owned subsidiary of Holmes Products Corp., a
Massachusetts corporation ("Parent"), to act as the Information Agent in
connection with Purchaser's offer to purchase all outstanding shares of common
stock, par value $0.01 per share (the "Shares"), of The Rival Company, a
Delaware corporation (the "Company"), or such lesser number of Shares which,
together with any Shares then beneficially owned by Parent or Purchaser,
represents at least 70% of the number of Shares outstanding on the Expiration
Date (as defined in the Offer to Purchase, dated December 23, 1998 (the "Offer
to Purchase")). Purchaser is tendering for all outstanding Shares at a purchase
price of $13.75 per Share, net to the seller in cash, without interest thereon
(the "Offer Price"), upon the terms and subject to the conditions set forth in
the Offer to Purchase and in the Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively 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, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. The Offer to Purchase;
2. A letter from the Chairman and Chief Executive Officer of the
Company and the Solicitation/Recommendation Statement on Schedule 14D-9 of
the Company;
3. The Letter of Transmittal to be used by holders of Shares for your
use in tendering Shares pursuant to the Offer and for the information of
your clients (facsimile copies of the Letter of Transmittal may be used to
tender Shares);
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;
5. A Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or if time will not
permit all required documents to reach the Depositary by the Expiration
Date or if the procedure for book-entry transfer cannot be completed on a
timely basis;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
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 WHICH, TOGETHER WITH THE SHARES THEN BENEFICIALLY OWNED BY PARENT OR
PURCHASER, REPRESENTS AT LEAST 70% OF ALL OUTSTANDING SHARES (DETERMINED ON A
FULLY DILUTED BASIS ON THE EXPIRATION DATE). THE OFFER IS ALSO SUBJECT TO OTHER
TERMS AND CONDITIONS CONTAINED IN THE OFFER TO PURCHASE. SEE SECTION 14 OF THE
OFFER TO PURCHASE.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for all Shares which
are validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by the Depositary of certificates for such
Shares, or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company or Philadelphia Depository
Trust Company, pursuant to the procedures described in Section 3 of the Offer to
<PAGE> 2
Purchase, a Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, together with any required signature guarantees, or, in the case
of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase), and any other required documents.
Neither Purchaser nor Parent will pay any fees or commissions to any broker
or dealer or other person for soliciting tenders of Shares pursuant to the Offer
(other than the Dealer Manager, the Depositary and the Information Agent as
described in the Offer to Purchase). Purchaser will, however, upon request,
reimburse brokers, dealers, commercial banks and trust companies for customary
mailing and handling expenses incurred by you in forwarding the enclosed
materials to your clients.
Purchaser will pay or cause to be paid all stock transfer taxes payable on
the transfer of Shares to it, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JANUARY 25, 1999, UNLESS THE OFFER IS
EXTENDED.
In order to take advantage of the Offer, a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, and any other required documents, should be sent
to the Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and the
Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedures specified under Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
the undersigned at our address and telephone number set forth below, or to the
Dealer Manager at the address and telephone number set forth on the back cover
page of the Offer to Purchase. Additional copies of the enclosed materials may
be obtained from the undersigned or from brokers, dealers, commercial banks or
trust companies.
Very truly yours,
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, New York 10022
Toll Free (800) 566-9061
Call Collect (212) 754-8000
Banks and Brokerage Firms Please Call:
(800) 662-5200
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF PARENT, PURCHASER, THE DEPOSITARY OR THE
INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, 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 AND THE
STATEMENTS CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
THE RIVAL COMPANY
AT
$13.75 NET PER SHARE
BY
MORIARTY ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
HOLMES PRODUCTS CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JANUARY 25, 1999, UNLESS THE OFFER IS EXTENDED.
December 23, 1998
To Our Clients:
Enclosed for your consideration is the Offer to Purchase, dated December
23, 1998 (the "Offer to Purchase"), and the Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to an offer by Moriarty Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly-owned subsidiary of Holmes Products
Corp., a Massachusetts corporation ("Parent"), to purchase all outstanding
shares of common stock, par value $0.01 per share (the "Shares"), of The Rival
Company, a Delaware corporation (the "Company"), or such lesser number of Shares
which, together with any Shares then beneficially owned by Parent or Purchaser,
represent at least 70% of the number of Shares outstanding on the Expiration
Date (as defined in the Offer to Purchase). Purchaser is tendering for all
outstanding Shares at a purchase price of $13.75 per Share, net to the seller in
cash, without interest thereon (the "Offer Price"), upon the terms and subject
to the conditions set forth in the Offer to Purchase.
If a stockholder desires to tender Shares pursuant to the Offer and the
certificate(s) for such stockholder's Shares are not immediately available or
time will not permit all required documents to reach the Depositary prior to the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, such Shares may nevertheless be tendered according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
See Instruction 2 of the Letter of Transmittal. Delivery of documents to a
Book-Entry Transfer Facility (as defined in the Offer to Purchase) in accordance
with the Book-Entry Transfer Facility's procedures does not constitute delivery
to the Depositary. 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.
Accordingly, we request instructions as to whether you wish to tender any
or all of such Shares held by us for your account, pursuant to the term and
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $13.75 per Share, net to you in cash without
interest.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, January 25, 1999, unless the Offer is extended.
2
<PAGE> 2
3. The Board of Directors of the Company (with one director absent),
by unanimous vote of all of the directors, has approved the Merger
Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby and determined that each of the Offer and the Merger
(as defined in the Offer to Purchase), is fair to, and in the best interest
of, the stockholders of the Company.
4. The Offer is being made for all outstanding Shares.
5. 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 which, together with any Shares then beneficially owned by
Parent or Purchaser, represent at least 70% of the number of Shares
outstanding on the Expiration Date.
6. Stockholders who tender Shares will not be obligated to pay
brokerage commissions, solicitation fees or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by Purchaser pursuant to 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 the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither Purchaser nor Parent is aware of any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. To the extent Purchaser or Parent becomes
aware of any state law that would limit the class of offerees in the Offer,
Purchaser may amend the Offer and, depending on the timing of such amendment, if
any, may extend the Offer to provide adequate dissemination of such information
to holders of Shares prior to the expiration of the Offer. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers which are licensed under
the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please complete,
sign and return to us the form set forth below. An envelope to return your
instructions to us is enclosed. Your instructions to us should be forwarded in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the instruction form set
forth below.
------------------------
INSTRUCTIONS WITH RESPECT TO THE OFFER
TO PURCHASE FOR CASH ALL OUTSTANDING
SHARES OF COMMON STOCK OF THE RIVAL COMPANY
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase, dated December 23, 1998, and the Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), relating to the offer by Moriarty Acquisition Corp., a Delaware
corporation ("Purchaser") and a wholly-owned subsidiary of Holmes Products
Corp., a Massachusetts corporation, to purchase all outstanding shares of common
stock, par value $0.01 per share (the "Shares"), of The Rival Company, a
Delaware corporation (the "Company").
3
<PAGE> 3
This will instruct you to tender to Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
<TABLE>
<CAPTION>
<S> <C> <C>
Dated: ------------------------------, 199 SIGN HERE
---
-------------------------------------------
Number of Shares to be
Tendered*:
------------------------------------------- x
Account Number: -------------------------------------------
------------------------------------ x
-------------------------------------------
Signature(s)
-------------------------------------------
-------------------------------------------
Please Print Name(s) Here
-------------------------------------------
-------------------------------------------
Address(es)
-------------------------------------------
-------------------------------------------
Area Code and Telephone Number(s)
-------------------------------------------
-------------------------------------------
Tax Identification or Social Security No(s)
* Unless otherwise indicated, it will be assumed that all of your Shares held by us for
your account are to be tendered.
</TABLE>
4
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. 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.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate, or pension Legal entity (Do
trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a Social Security number, that
person's number must be furnished.
(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) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your Social Security number or
Employer identification number (if you have one).
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number (for business and all other
entities), at the local office to the Social Security Administration or the
Internal Revenue Service (the "IRS") and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan, or
a custodial account under section 403(b)(7) of the Code, if the account
satisfies the requirements of section 401(f)(2) of the Code.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the Code.
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
- A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
- Section 401(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- Payments described in section 6049(b)(5) of the Code to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt Payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A of the Code and the Treasury regulations promulgated thereunder.
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 tax returns. 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 payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to a 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.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT
YOUR TAX CONSULTANT OR THE IRS.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase,
dated December 23, 1998, and the related Letter of Transmittal. The Offer
is not being made to (nor will tenders be accepted from or on behalf
of) holders of Shares residing in jurisdictions in which the making
of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. In any jurisdiction where
the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by Donaldson, Lufkin & Jenrette Securities
Corporation or one or more registered brokers or dealers
which are licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
THE RIVAL COMPANY
AT
$13.75 NET PER SHARE
BY
MORIARTY ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
HOLMES PRODUCTS CORP.
Moriarty Acquisition Corp., a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of Holmes Products Corp., a Massachusetts corporation
("Parent"), is offering to purchase all outstanding shares of Common Stock, par
value $0.01 per share (the "Shares"), of The Rival Company, a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated December 23, 1998 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"), at a
purchase price of $13.75 per Share, net to the seller in cash, without interest
thereon.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, JANUARY 25, 1999, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES, WHICH, TOGETHER WITH ANY SHARES THEN BENEFICIALLY OWNED BY PARENT OR
PURCHASER, REPRESENTS AT LEAST 70% OF THE NUMBER OF SHARES OUTSTANDING ON THE
EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE)), (ii) PARENT AND
PURCHASER HAVING OBTAINED FINANCING TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
BY THE MERGER AGREEMENT AND (iii) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE
OFFER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER ALSO IS SUBJECT TO CERTAIN
OTHER CONDITIONS WHICH ARE SET FORTH IN SECTION 14 OF THE OFFER TO PURCHASE.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 17, 1998 (the "Merger Agreement"), by and among the Company,
Purchaser and Parent, which provides for the making of the Offer and, following
consummation of the Offer and the satisfaction or waiver of certain conditions,
the merger of Purchaser with and into the Company (the "Merger"), with the
Company surviving the merger as a wholly-owned subsidiary of Parent. At the
effective time of the Merger, each outstanding Share (other than Shares held by
stockholders who properly demand their appraisal rights under Delaware law,
Shares held in the Company's treasury and Shares owned by Parent or Purchaser)
will be converted into the right to receive in cash, without interest, the cash
price per Share paid pursuant to the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY (WITH ONE DIRECTOR ABSENT) HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and thereby purchase, at the
Offer price, all Shares validly tendered prior to the Expiration Date and not
properly withdrawn.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn if, as, and when Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of Purchaser's acceptance of
such Shares for payment. Payment for Shares purchased pursuant to the Offer will
be made by the deposit of the aggregate purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving such payment from Purchaser and transmitting such payment to
tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE
PRICE OF THE SHARES BE PAID BY PURCHASER FOR THE TENDERED SHARES, REGARDLESS OF
ANY DELAY IN MAKING SUCH PAYMENT. In all cases, payment for Shares tendered and
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation (as defined in Section 3 of the Offer to Purchase) with respect to)
such Shares, (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a
<PAGE> 3
book-entry transfer, an Agent's Message (as defined in Section 3 of the Offer to
Purchase), and (iii) any other documents required by the Letter of Transmittal.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Monday, January 25, 1999, unless and until Purchaser, in its sole discretion,
shall have extended the period of time during which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by Purchaser, shall expire. Subject to the terms of
the Merger Agreement, Purchaser expressly reserves the right, in its sole
discretion, at any time or from time to time, and regardless of whether or not
any of the events set forth in Section 14 of the Offer to Purchase shall have
occurred or shall have been determined by Purchaser to have occurred (i) to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary and (ii) except as indicated
in the Offer to Purchase, to amend the Offer in any respect by giving oral or
written notice of such amendment to the Depositary. Any such extension will be
followed by a public announcement thereof no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Tenders of Shares made pursuant to the offer are irrevocable, provided
that Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment and paid for by
Purchaser pursuant to the Offer, may be withdrawn at any time after February 19,
1999. For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of the addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder, if different from that of the person who tendered such Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the serial numbers shown on such certificates must also be
submitted to the Depositary as aforesaid, and, unless such Shares have been
tendered by an Eligible Institution (as defined in Section 3 of the Offer to
Purchase), the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
appropriate Book-Entry Transfer Facility (as defined in Section 3 of the Offer
to Purchase) to be credited with such withdrawn Shares and must otherwise comply
with such Book-Entry Transfer Facility's procedures. All questions as to the
form and validity (including time of receipt) of notices of withdrawal will be
determined by Purchaser in its sole discretion, and its determination will be
final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with its list of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase
<PAGE> 4
and the related Letter of Transmittal and, if required, other relevant
materials, will be mailed to record holders of Shares and furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the Company's stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH STOCKHOLDERS ARE URGED TO READ BEFORE MAKING ANY DECISION WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager as set forth below. Additional copies of the Offer
to Purchase, the Letter of Transmittal and all other tender offer materials may
be obtained from the Information Agent and will be furnished promptly at
Purchaser's expense. Neither Purchaser nor Parent will pay any fees or
commissions to any broker or dealer or other person for soliciting tenders of
Shares pursuant to the Offer (other than the Dealer Manager, the Depositary and
the Information Agent as described in the Offer to Purchase).
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, New York 10022
Toll Free (800) 566-9061
Call Collect (212) 754-8000
Banks and Brokerage Firms Please Call:
(800) 662-5200
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
75 State Street
Boston, Massachusetts 02109
(877) 842-3456
(toll free)
(617) 342-8104
December 23, 1998
<PAGE> 1
FOR IMMEDIATE RELEASE
December 17, 1998
Investor Contact: Media Contacts:
Holmes Products Corp. Holmes Products Corp.
Ira Morgenstern Fred Adair
Senior Vice President - Finance Senior Vice President of Human Resources
508/634-8050 508/634-8050
or
The Rival Company
William L. Yager
President and Chief Operating Officer
W. Mark Meierhoffer
Senior Vice President
Finance and Administration
816/943-4100
HOLMES PRODUCTS CORP. ANNOUNCES AGREEMENT TO ACQUIRE
THE RIVAL COMPANY FOR $13.75 PER SHARE
Milford, Massachusetts and Kansas City, Missouri - Dec. 17, 1998 --Holmes
Products Corp. ("Holmes"), a leading maker of consumer comfort products, and The
Rival Company ("Rival")(NASDAQ:RIVL), a leading maker of small kitchen
appliances and home environment products, today announced a definitive merger
agreement under which Holmes will acquire Rival for approximately $127.8 million
plus the assumption of debt.
Under the terms of the merger agreement, unanimously approved by Rival's
Board of Directors, Holmes, through its subsidiary, Moriarty Acquisition Corp.,
will commence a cash tender offer to purchase all outstanding shares of Rival
common stock for $13.75 per share. The transaction is subject to customary
closing conditions, including the valid tender of at least 70% of Rival's
outstanding shares, and is expected to be completed during the first quarter of
1999. Any shares not purchased in the tender will be acquired for the same price
in cash in a second-step merger.
Debt and equity commitments have been received by Holmes to fund the
tender offer and the merger, to refinance certain existing indebtedness of Rival
and Holmes and to pay fees and expenses related to the transaction.
The directors and certain officers of Rival have agreed to tender all of
the Rival shares (approximately 11.3% of the outstanding shares) beneficially
owned by them in the offer.
<PAGE> 2
"The merger of Holmes and Rival is unquestionably a win-win situation for
both companies, our shareholders, our retail partners and consumers," said
Jordan A. Kahn, president and chief executive officer of Holmes. "Rival is a
respected company with strong brands in the kitchen appliance and home comfort
markets, along with product distribution and geographic expansion capabilities
that complement Holmes' established strengths."
The acquisition of The Rival Company will allow Holmes to expand its
product line to include such well-known brands as Bionaire(R), Patton(R) and
Pollenex(R), as well as gain entry into the small kitchen appliance market
through the established Rival(R) brands, including Crock-Pot(R) slow cookers. In
addition, Holmes' international operations will be strengthened by Rival's more
extensive global network. Holmes' strong captive offshore manufacturing will
complement Rival's domestic manufacturing capability. Domestic distribution
capabilities will be significantly expanded as Holmes' east and west coast
distribution centers gain new territorial footholds through Rival's modern
distribution centers in the midwest.
"As we look to the future, Rival's Board of Directors believes this merger
agreement is in the best interests of all of our stockholders. It's no secret
that these are challenging times globally, and we are very pleased to unite with
Holmes on a fair and equitable basis for our shareholders," said Thomas K.
Manning, Rival's chairman and chief executive officer. "Holmes is known for
innovation, integrity and commitment to consumers' health and comfort - values
that we at Rival also embrace. Combining forces will help us continue to deliver
superior products and service for our customers, with a quality work environment
for associates."
The acquisition will be financed, in part, by an additional equity
investment by Berkshire Partners LLC ("Berkshire"), Holmes' majority shareholder
following the November 1997 recapitalization of Holmes by Berkshire and
management. "Our investment in Holmes to support the Rival acquisition is
consistent with our strategy of investing in and supporting companies with
attractive growth prospects and partnering with talented management teams," said
Richard K. Lubin, Managing Director of Berkshire Partners. "We are excited about
the prospect of combining the strengths of Holmes and Rival and their respective
managements."
Donaldson, Lufkin & Jenrette has acted as Holmes' financial advisor in
connection with the transaction, and is acting as dealer manager for the tender
offer.
Holmes Products Corp. is a leader in the development of home comfort
products, including fans, heaters, humidifiers, and air purifiers. In addition,
Holmes markets and distributes a variety of home and office lighting products.
Holmes' net sales for the year ended December 31, 1997 were $192.2 million, and
for the nine months ended September 30, 1998 were $157.6 million. Holmes is
headquartered in Milford, Massachusetts, and has offices in Toronto, Taiwan and
Hong Kong. More information on Holmes may be obtained from the Company's website
at http://www.holmesproducts.com.
<PAGE> 3
The Rival Company is a leading manufacturer of a variety of products
including small kitchen and personal care appliances, such as Crock-Pot(R) slow
cookers, can openers and massagers. The company markets products under the brand
names Rival(R), Rival Select(R), Simer(R), Bionaire(R), Patton(R), Pollenex(R)
and White Mountain(R). Rival's net sales for its fiscal year ended June 30,
1998, were $376.9 million.
Some of the statements in this press release may be considered
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking information is inherently subject
to risks and uncertainties, which include, but are not limited to, the
successful and timely completion of this transaction, the effective integration
of Rival into Holmes and the overall economic, market, and industry conditions,
as well as the risks described from time to time in reports filed by Holmes and
Rival with the Securities and Exchange Commission, including their most recently
filed Form 10-K and Form 10-Q reports. Should any such risks or uncertainties
materialize, or underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those anticipated.
# # #
<PAGE> 1
HOLMES PRODUCTS CORP. 233 FORTUNE BOULEVARD
MILFORD, MA 01757
(508) 634-8050
CONTACT: IRA B. MORGENSTERN
SENIOR VICE PRESIDENT
- FINANCE
FOR IMMEDIATE RELEASE
HOLMES PRODUCTS CORP. COMMENCES TENDER OFFER FOR
ALL OUTSTANDING SHARES OF THE RIVAL COMPANY
Milford, MA, December 23, 1998 --- Holmes Products Corp. ("Holmes")
announced today that it has commenced, through its wholly owned subsidiary,
Moriarty Acquisition Corp., a tender offer for all outstanding shares of common
stock of The Rival Company (NASDAQ:RIVL) ("Rival") at $13.75 per share, net to
the seller in cash, without interest thereon. The Board of Directors of Rival
(with one director absent) has unanimously approved the offer and recommended
that Rival stockholders tender their shares pursuant to the offer.
The offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Monday, January 25, 1999, unless the offer is extended.
The tender offer is being made pursuant to the terms of a previously
announced Merger Agreement among Holmes, Moriarty Acquisition Corp. and Rival.
In the merger to occur following consummation of the tender offer, each share of
Rival's common stock which is outstanding and not purchased pursuant to the
tender offer will be converted into the right to receive $13.75 in cash.
The tender offer is subject to customary closing conditions, including the
valid tender of at least 70% of Rival's outstanding shares.
Debt and equity commitments have been received by Holmes to fund the tender
offer and the merger, to refinance certain existing indebtedness of Rival and
Holmes and to pay fees and expenses related to the transaction.
The directors and certain executive officers of Rival have agreed to tender
all of the Rival shares (approximately 11.3% of the outstanding shares)
beneficially owned by them in the offer.
The tender offer is being made only pursuant to the terms and conditions
set forth in the tender offer documents which are being filed with the
Securities and Exchange Commission
<PAGE> 2
today and will be mailed to Rival's stockholders as soon as practicable.
Holmes is a leading developer, manufacturer and marketer of quality branded
home comfort products, including fans, heaters, humidifiers and air purifiers.
In addition, Holmes markets and distributes dehumidifiers and a variety of
decorative and home office lighting products, as well as various replacement
filters and accessories for its products. Holmes' net sales for the year ended
December 31, 1997 were $192.2 million, and for the nine months ended September
30, 1998 were $157.6 million.
Rival is a leading designer, manufacturer and marketer of a variety of
products including small kitchen and personal care appliances such as
Crock-Pot(R) slow cookers, can openers and massagers; products for the home
environment including space heaters, air purifiers, showerheads, utility pumps,
humidifiers and fans; and building supply and industrial products such as
household ventilation, door chimes, ceiling fans and industrial fans. Rival's
net sales for its fiscal year ended June 30, 1998 were $376.9 million.
Some of the statements in this press release may be considered
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking information is inherently subject
to risks and uncertainties, which include, but are not limited to, the
successful and timely completion of this transaction, the effective integration
of Rival into Holmes and the overall economic, market, and industry conditions,
as well as the risks described from time to time in reports filed by Holmes and
Rival with the Securities and Exchange Commission, including their most recently
filed Form 10-K and Form 10-Q reports. Should any such risks or uncertainties
materialize, or underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those anticipated.
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 17, 1998
among
THE RIVAL COMPANY,
HOLMES PRODUCTS CORP.
and
MORIARTY ACQUISITION CORP.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. THE OFFER....................................................... 1
SECTION 1.1. THE OFFER................................................. 1
SECTION 1.2. COMPANY ACTION............................................ 3
SECTION 1.3. DIRECTORS................................................. 5
ARTICLE II. THE MERGER..................................................... 6
SECTION 2.1. THE MERGER................................................ 6
SECTION 2.2. CLOSING................................................... 6
SECTION 2.3. EFFECTIVE TIME............................................ 6
SECTION 2.4. EFFECTS OF THE MERGER..................................... 6
SECTION 2.5. CERTIFICATE OF INCORPORATION; BY-LAWS..................... 7
SECTION 2.6. DIRECTORS................................................. 7
SECTION 2.7. OFFICERS.................................................. 7
SECTION 2.8. FURTHER ASSURANCES........................................ 7
ARTICLE III................................................................. 8
EFFECT OF THE MERGER ON THE SECURITIES OF THE CONSTITUENT CORPORATIONS.... 8
SECTION 3.1. EFFECT ON CAPITAL STOCK................................... 8
SECTION 3.2. STOCK OPTIONS............................................. 9
SECTION 3.3. EXCHANGE OF CERTIFICATES.................................. 9
ARTICLE IV. REPRESENTATIONS AND WARRANTIES................................. 11
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 11
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.......... 26
ARTICLE V................................................................... 28
COVENANTS RELATING TO CONDUCT OF BUSINESS................................. 28
SECTION 5.1. CONDUCT OF BUSINESS OF THE COMPANY........................ 28
SECTION 5.2. OTHER ACTIONS............................................. 30
ARTICLE VI. ADDITIONAL AGREEMENTS.......................................... 30
SECTION 6.1. MEETING OF STOCKHOLDERS................................... 30
SECTION 6.2. PROXYSTATEMENT............................................ 31
SECTION 6.3. ACCESS TO INFORMATION; CONFIDENTIALITY.................... 32
SECTION 6.4. COMMERCIALLY REASONABLE EFFORTS........................... 32
SECTION 6.5. FINANCING................................................. 33
SECTION 6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE....... 33
SECTION 6.7. PUBLIC ANNOUNCEMENTS...................................... 34
SECTION 6.8. ACQUISITION PROPOSALS..................................... 34
SECTION 6.9. STOCKHOLDER LITIGATION.................................... 35
SECTION 6.10. COMPANY ACTION RELATING TO BENEFIT PLANS................. 35
SECTION 6.11. CONSENTS AND APPROVALS................................... 36
SECTION 6.12. REPAYMENT OF INDEBTEDNESS................................ 36
SECTION 6.12. GUARANTY OF SUB'S OBLIGATIONS............................ 36
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VII. CONDITIONS PRECEDENT.......................................... 36
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER 36
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB............... 37
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY.................. 38
SECTION 7.4. EXCEPTION.................................................. 38
SECTION 7.5 FRUSTRATION OF CONDITIONS.................................. 38
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER............................ 39
SECTION 8.1. TERMINATION............................................... 39
SECTION 8.2. EFFECT OF TERMINATION..................................... 40
SECTION 8.3. AMENDMENT................................................. 41
SECTION 8.4. EXTENSION; WAIVER......................................... 42
ARTICLE IX. GENERAL PROVISIONS............................................. 42
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES............. 42
SECTION 9.2. FEES AND EXPENSES......................................... 42
SECTION 9.3. DEFINITIONS............................................... 42
SECTION 9.4. NOTICES................................................... 42
SECTION 9.5. INTERPRETATION............................................ 43
SECTION 9.6. COUNTERPARTS.............................................. 43
SECTION 9.7. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES............... 43
SECTION 9.8. GOVERNING LAW............................................. 44
SECTION 9.9. ASSIGNMENT................................................ 44
SECTION 9.10. ENFORCEMENT............................................... 44
SECTION 9.11. SEVERABILITY.............................................. 44
ANNEX I...................................................................... 1
DISCLOSURE SCHEDULES......................................................... 4
</TABLE>
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 17, 1998
among
THE RIVAL COMPANY,
A DELAWARE CORPORATION (THE "COMPANY"),
HOLMES PRODUCTS CORP.,
A MASSACHUSETTS CORPORATION ("PARENT"),
and
MORIARTY ACQUISITION CORP.,
A DELAWARE CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF
PARENT ("SUB")
WITNESSETH:
WHEREAS, the Board of Directors of the Company has determined that this
Agreement and the transactions contemplated hereby including the Offer and the
Merger (each as defined herein) are fair to and in the best interest of the
Company and its stockholders;
WHEREAS, the Board of Directors of each of Parent and Sub has determined
that the transactions contemplated by this Agreement (including the Offer and
the Merger) are in the best interests of Parent and Sub and their respective
stockholders; and
WHEREAS, the Boards of Directors of the Company, Parent and Sub, have each
approved and adopted this Agreement and approved the Offer and the Merger and
the other transactions contemplated hereby and agreed to recommend, in the case
of the Company, acceptance of the Offer by its stockholders.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER.
(a) PURCHASE PRICE AND CONDITIONS. Provided that nothing shall have
occurred that would result in a failure to satisfy any of the conditions set
forth in Annex I hereto which is not waived by Parent, Parent shall or shall
cause Sub to, as promptly as practicable following the date hereof, but in no
event later than five business days after the initial public announcement of the
Offer, commence (within the meaning of Rule 14d-2 under the Securities
<PAGE> 5
Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (as
amended from time to time in accordance with this Agreement, the "Offer") to
purchase all of the issued and outstanding shares of common stock, par value
$0.01 per share, of the Company (the "Shares" or "Common Stock"), at a price of
not less than $13.75 per Share, net to the seller in cash, subject to reduction
only for any applicable back-up withholding or stock transfer taxes payable by
the seller. For purposes of this Article 1, the party which makes the Offer,
whether Parent or Sub, shall be referred to as the "Offeror." The obligation of
Offeror to accept for payment and to pay for any Shares tendered in the Offer
shall be subject only to (i) 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 which, together with any Shares then
owned by Parent or Sub, represents at least 70% of the Shares then outstanding
(the "Minimum Condition"), (ii) the receipt of cash proceeds of the Financing
(as defined in Section 4.2(d) hereof) in an amount sufficient to consummate the
transactions contemplated hereby pursuant to the terms of the Commitments (as
defined in said Section 4.2(d)) or such other terms as Parent and the Company
shall agree or as are not materially more onerous to Parent than as set forth in
the Commitments (the "Financing Condition") and (iii) the other conditions set
forth in Annex I hereto (together with the Minimum Condition and the Financing
Condition, the "Tender Offer Conditions").
(b) MODIFICATION OF CONDITIONS. Offeror expressly reserves the right in
its sole discretion, subject to the limitations set forth in this Section
1.1(b), to waive any condition to the Offer (including the Minimum Condition,
provided that no waiver of the Minimum Condition shall decrease the Minimum
Condition to less than a majority of the Shares outstanding on a fully-diluted
basis), to increase the price per Share payable in the Offer, to extend the
Offer and to make any other changes in the terms and conditions of the Offer;
provided, however, that unless previously approved by the Company in writing,
Offeror will not (i) decrease the price per Share payable in the Offer, (ii)
decrease the maximum number of Shares to be purchased in the Offer, (iii) impose
terms and conditions to the Offer in addition to those set forth in Annex I
hereto, (iv) change the terms and conditions to the Offer in any respect adverse
to the Company, (v) except as provided in the next sentence, extend the Offer,
(vi) change the form of consideration payable in the Offer or (vii) amend any
other term or condition of the Offer in a manner adverse to the holders of the
Shares. Notwithstanding the foregoing, Offeror may, without the consent of the
Company, (i) extend the Offer (the initial scheduled expiration date being 20
business days following commencement of the Offer), at any time up to March 15,
1999, for one or more periods of not more than ten business days each, if any of
the Tender Offer Conditions shall not be satisfied or waived, (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer, or (iii) if all of the Tender Offer Conditions
are satisfied or waived and the number of Shares tendered is at least equal to
70%, but less than 90%, of the then-outstanding number of Shares, further extend
the Offer for an aggregate period of not more than ten business days beyond the
then-scheduled expiration date. So long as this Agreement is in effect, the
Offer has been commenced and the Tender Offer Conditions have not been satisfied
or waived, the Offeror shall cause the Offer not to expire.
(c) ACCEPTANCE OF SHARES. Subject to the terms and conditions of the Offer
and this Agreement, Offeror shall accept for payment, and pay for, all Shares
validly tendered and not withdrawn pursuant to the Offer that Offeror becomes
obligated to accept for payment, and pay for,
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pursuant to the Offer as soon as practicable after expiration of the Offer,
subject to compliance with Rule 14e-1 (c) under the Exchange Act. Subject to the
terms and conditions of the Offer, Parent and Sub will each use its 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 Offer.
(d) OFFER DOCUMENTS. As soon as practicable on the date of the
commencement of the Offer, Offeror shall file with the SEC a Tender Offer
Statement on 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 (together with any supplements or amendments thereto and including
exhibits thereto, the "Offer Documents"). The Offer Documents will comply in all
material respects with applicable federal securities laws and any other
applicable laws. Parent, Sub and the Company each agree to promptly correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect. Offeror
will take all steps necessary to cause the Offer Documents 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 and any other
applicable laws. The Company and its counsel shall be given an opportunity to
review and comment on the Offer Documents and any amendments thereto prior to
the filing thereof with the SEC; provided that Offeror will attempt to give the
Company and its counsel as much time prior to filing to so review and comment as
Offeror believes is reasonably practicable under the circumstances. Offeror will
provide the Company and its counsel with any comments Offeror and its counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt thereof.
(e) TERMINATION OF OFFER. In the event that the Offer is terminated or
withdrawn by Offeror, Parent and Sub shall cause all tendered Shares to be
returned to the registered holders of the Shares represented by the certificate
or certificates surrendered to the Exchange Agent (as defined in Section 3.3
hereof).
SECTION 1.2. COMPANY ACTION.
(a) APPROVAL BY BOARD OF DIRECTORS. The Company hereby consents to the
Offer and represents that as of the date hereof its Board of Directors (the
"Board of Directors"), at a meeting duly called and held, has (i) unanimously
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger (as defined in Section 2.1 hereof), are fair
to and in the best interest of the Company and its stockholders, (ii)
unanimously approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, which approvals are sufficient to render
entirely inapplicable to the Offer and the Merger or Parent or Sub the
provisions of Section 203 of the Delaware General Corporation Law (the "Delaware
GCL"), assuming neither Parent nor Sub is an "interested stockholder" as defined
therein, (iii) taken such action as is necessary to approve this Agreement, the
purchase of Shares pursuant to the Offer, the Merger and the other transactions
contemplated hereby under the provisions of the Company's Restated Certificate
of Incorporation and By-laws, each as amended to date (as so amended, the
"Restated Certificate of Incorporation" and "By-laws", respectively), and (iv)
subject
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to the terms hereof, resolved to recommend acceptance of the Offer and approval
and adoption of this Agreement and the Merger by its stockholders.
(b) OPINION OF FINANCIAL ADVISOR. NationsBanc Montgomery Securities LLC
(the "Financial Advisor") has delivered to the Board of Directors its written
opinion, as of the date hereof, subject to the qualifications and limitations
stated therein, to the effect that the consideration to be received by the
holders of the Shares (other than Shares owned by Parent and its Affiliates)
pursuant to each of the Offer and the Merger, taken together, is fair to the
holders of Shares from a financial point of view. The Company has been
authorized by the Financial Advisor to permit, subject to prior review and
consent by the Financial Advisor, the inclusion of the fairness opinion (or a
reference thereto) in the Offer Documents and the Schedule 14D-9 (as defined in
paragraph (e) of this Section 1.2) on the terms of the engagement letter between
the Company and the Financial Advisor dated September 24, 1998.
(c) TENDERS BY DIRECTORS AND OFFICERS. Concurrently with the execution
hereof, each of the Company's directors and certain executive officers, as
requested by Parent, have executed and delivered a Tender and Voting Agreement
with Parent and Sub, pursuant to which each of such persons has agreed, subject
to the terms thereof, to the extent of their beneficial ownership of Shares, to
tender their Shares pursuant to the Offer and to vote such Shares in favor of
the Merger.
(d) STOCKHOLDER LIST. The Company will promptly furnish Parent with a list
of its stockholders, mailing labels containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, in each case as of the most recent practicable date, and
will provide to Parent such additional information (including, without
limitation, updated lists of stockholders, mailing labels and lists of
securities positions) and such other assistance as Parent may reasonably request
from time to time in connection with the Offer and the Merger (including but not
limited to communicating the Offer and the Merger to the record and beneficial
holders of Shares). Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent, Offeror and
their agents and advisors shall use the information contained in any such labels
and listings only in connection with the Offer and the Merger and, if this
Agreement shall be terminated pursuant to Article VIII hereof, shall deliver to
the Company all copies and extracts of such information then in their possession
or under their control.
(e) SCHEDULE 14D-9. On or prior to the date that the Offer is commenced,
the Company will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any supplements or amendments thereto and
including exhibits thereto, the "Schedule 14D-9"), which shall contain the
recommendations of the Board of Directors referred to in Section 1.2(a) hereof,
subject to the fiduciary duties of the Board of Directors under applicable law
and to the terms of this Agreement. The Schedule 14D-9 will comply in all
material respects with all applicable federal
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securities laws and any other applicable laws. The Company, Parent and Sub each
agree to promptly 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 will 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 and any other applicable laws. Parent, Sub and their
counsel shall be given an opportunity to review and comment on the Schedule
14D-9 and any amendments thereto prior to the filing thereof with the SEC;
provided that the Company will attempt to give Parent, Sub and their counsel as
much time prior to filing to so review and comment as the Company believes is
reasonably practicable under the circumstances. The Company will provide Parent
and Sub and their counsel with any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments.
SECTION 1.3. DIRECTORS.
(a) APPOINTMENT OF PARENT DESIGNEES. Effective upon the purchase of and
payment for Shares by Offeror pursuant to the Offer such that Offeror shall own
at least a majority of the Shares and from time to time thereafter, Parent shall
be entitled to designate up to such number of directors, rounded up to the next
whole number, on the Board of Directors that equals the product of (i) the total
number of directors on the Board of Directors (giving effect to any increase in
the number of directors pursuant to this Section 1.3) multiplied by (ii) the
percentage that the number of Shares owned by Parent and Sub bears to the total
number of Shares outstanding on an undiluted basis, 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/or securing the resignations of such number of incumbent directors
as is necessary to enable Parent's designees to be elected to the Board of
Directors and to cause Parent's designees to be so elected. At such times, the
Company will use its best efforts to cause individuals designated by Parent to
constitute the same percentage as such individuals represent on the Board of
Directors of (x) each committee of the Board of Directors, (y) each board of
directors of each Subsidiary (as defined below) of the Company and (z) each
committee of each such board. Notwithstanding the foregoing, until the Effective
Time (as defined in Section 2.3 hereof), the Company shall use its best efforts
to ensure that not less than two persons who are directors on the date hereof
shall remain as members of the Board of Directors (the "Continuing Directors")
until the Effective Time, and Parent and Sub shall take no action (other than
removal for cause) to prevent such Continuing Directors from so serving. In the
event there is only one Continuing Director, such Continuing Director shall have
the right to designate a person, who is reasonably acceptable to Offeror, to
become a Continuing Director. For purposes of this Agreement, "Subsidiary" means
any corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or indirectly owned by
the Company or Parent, as applicable.
(b) COMPLIANCE WITH INFORMATION REQUIREMENTS. The Company's obligations to
appoint designees to the Board of Directors shall be subject to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder. The Company, with
Parent's cooperation, shall promptly take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 1.3, including mailing to the stockholders as part of the Schedule 14D-9
the information required by such Section 14(f), as is necessary to enable
Parent's designees to be elected to the Board of Directors. Parent will supply
to the Company in writing and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1. For purposes of this Agreement, "affiliate"
shall
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mean, as to any person, any other person that would be deemed to be an
"affiliate" of such person as that term is defined in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
(c) CONTINUING DIRECTOR APPROVAL. Following the election or appointment of
Parent's designees pursuant to this Section 1.3 and prior to the Effective Time
(as defined in Section 2.3), so long as there shall be at least one Continuing
Director, any amendment of this Agreement, any termination of this Agreement by
the Company, any extension by the Company of the time for the performance of any
of the obligations or other acts of Parent or Sub, any consent of the Company
contemplated hereby, any extension of the Effective Time as contemplated by the
last sentence of Section 2.3, any waiver of any of the Company's rights
hereunder, any amendment to the Company's Restated Certificate of Incorporation
or By-laws or any action taken by the Company that materially adversely affects
the interests of the stockholders of the Company (other than the Offeror) with
respect to the transactions contemplated hereby, will require the concurrence of
at least one of the Continuing Directors.
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware GCL, at the
Effective Time, Sub shall be merged with and into the Company (the "Merger").
Upon the Effective Time, the separate existence of Sub shall cease, and the
Company shall continue as the surviving corporation (sometimes referred to
herein as the "Surviving Corporation").
SECTION 2.2. CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 8. 1, and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger (the "Closing") will take place
at 10:00 a.m., Boston time, not later than the third business day following the
date on which the last to be fulfilled or waived of the conditions set forth in
Article VII shall be fulfilled or waived in accordance with this Agreement (the
"Closing Date"), at the offices of Posternak, Blankstein & Lund, L.L.P., 100
Charles River Plaza, Boston, Massachusetts, unless another date, time or place
is agreed to by the parties hereto.
SECTION 2.3. EFFECTIVE TIME. The parties hereto will file with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
on the Closing Date (or on such other date as Parent and the Company may agree)
a Certificate of Merger or other appropriate documents, executed in accordance
with the relevant provisions of the Delaware GCL, and make all other filings or
recordings required under the Delaware GCL in connection with the Merger. The
Merger shall become effective upon the filing of the Certificate of Merger with
the Delaware Secretary of State, or at such later time as is agreed upon by the
parties hereto and specified in the Certificate of Merger (the "Effective
Time").
SECTION 2.4. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the appropriate provisions of the Delaware GCL. Without limiting the
generality of the foregoing,
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and subject thereto, at the Effective Time, all the assets, properties, rights,
privileges, powers and franchises of the Company and Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Sub shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.5. CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) The Company's Restated Certificate of Incorporation, as in effect at
the Effective Time, shall be, from and after the Effective Time, the Certificate
of Incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(b) The Company's By-laws, as in effect at the Effective Time, shall be,
from and after the Effective Time, the By-laws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
SECTION 2.6. DIRECTORS. The directors of Sub at the Effective Time shall
become, from and after the Effective Time, the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 2.7. OFFICERS. The officers of Sub at the Effective Time,
including such officers of the Company as shall have become duly elected and
qualified officers of Sub, shall become, from and after the Effective Time, the
officers of the Surviving Corporation, until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be.
SECTION 2.8. FURTHER ASSURANCES. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Sub acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger
or otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of either the Company or Sub, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
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ARTICLE III
EFFECT OF THE MERGER ON THE SECURITIES OF THE
CONSTITUENT CORPORATIONS
SECTION 3.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of any holder:
(a) COMMON STOCK OF SUB. Each share of the capital stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and non-assessable share of common stock,
par value $0.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each Share
issued or outstanding immediately prior to the Effective Time that is owned by
the Company or by Parent or Sub shall be canceled automatically and shall cease
to exist, and no cash or other consideration shall be delivered or deliverable
in exchange therefor.
(c) CONVERSION OF COMPANY SHARES. At the Effective Time, each Share other
than (i) Shares to be canceled pursuant to Section 3.1(b) and (ii) Dissenting
Shares (as hereinafter defined) shall be converted into and become the right to
receive, upon surrender of the certificate representing such Shares in
accordance with Section 3.3, the cash price per Share paid by Sub pursuant to
the Offer (the "Merger Consideration").
(d) DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, Shares issued and outstanding immediately prior to the Effective Time
and held by a holder (a "Dissenting Stockholder"), if any, who has the right to
demand, and who properly demands, an appraisal of such Shares in accordance with
the Delaware GCL (including but not limited to Section 262 thereof, or any
successor provision) ("Dissenting Shares") shall not be converted into a right
to receive the Merger Consideration unless such Dissenting Stockholder fails to
perfect or otherwise loses or withdraws such Dissenting Stockholder's right to
such appraisal, if any. Provided the holder of any Dissenting Shares complies
with the provisions of Delaware law, such holder shall have with respect to such
Shares solely the rights provided under the Delaware GCL. If, after the
Effective Time, such Dissenting Stockholder fails to perfect or otherwise loses
or withdraws any such right to appraisal, each such Share of such Dissenting
Stockholder shall be treated as a Share that had been converted as of the
Effective Time into the right to receive the Merger Consideration in accordance
with this Section 3.1. The Company shall give prompt notice to Parent of any
demands received by the Company for appraisal of any Dissenting Shares, and
Parent shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, which consent shall not be unreasonably
withheld, make any payment with respect to, or settle or offer to settle, any
such demands.
(e) CANCELLATION AND RETIREMENT OF COMMON STOCK. As of the Effective Time
all certificates representing Shares, other than certificates representing
Shares to be canceled in accordance with Section 3.1(b) or Dissenting Shares,
issued and outstanding
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immediately prior to the Effective Time, shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration upon
surrender of such certificate in accordance with Section 3.3.
SECTION 3.2. STOCK OPTIONS. As of the Effective Time, each outstanding,
unexercised stock option to purchase Shares (a "Company Stock Option") issued
under the Company's 1986 Stock Option Plan (the "1986 Plan") and the 1994 Stock
Option Plan (the "1994 Plan") (collectively, the "Company Stock Option Plans")
shall terminate and be canceled and each holder of a Company Stock Option shall
be entitled to receive, in consideration therefor, a cash payment from the
Company (which payment shall be tendered to such holder on the Closing Date, or
such earlier date after the consummation of the Offer and not later than five
business days after the option holder shall have tendered the option to the
Company and consented to its cancellation in exchange for payment) equal to the
product of (a) the excess, if any, of (x) the Merger Consideration over (y) the
per Share exercise price of such Company Stock Option, times (b) the number of
Shares then subject to such Company Stock Option. Such cash payment shall be net
of any required withholding taxes. Not later than the second business day
following the execution and delivery of this Agreement, the Company shall cause
the committee administering each Company Stock Option Plan (the "Option
Committee") to provide to each holder of a Company Stock Option written notice
regarding the termination of such Company Stock Option as contemplated by
Section 3.13(a)(i) of the 1986 Plan and Section 3.12(a)(i) of the 1994 Plan,
respectively. As of the Effective Time, each outstanding Company Stock Option
and each of the Company Stock Option Plans shall terminate and be of no further
force or effect, and the Company shall take such action as shall be necessary to
ensure, to Parent's reasonable satisfaction, that no holder of a Company Stock
Option or participant in any other employee benefit plan or program of the
Company will have any right to acquire any interest in the Surviving Corporation
under the Company Stock Option Plans or any other such plan or program.
SECTION 3.3. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Sub (or the Company, as the
Surviving Corporation) shall deposit, or shall cause to be deposited, with or
for the account of a bank, trust company or other agent designated by Sub, which
shall be reasonably satisfactory to the Company (the "Exchange Agent"), for the
benefit of the holders of Shares, cash in an aggregate amount equal to the
product of (x) the number of Shares outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Section 3.1(b) and
Dissenting Shares), times (y) the Merger Consideration (such amount being
hereinafter referred to as the 'Payment Fund"). The Exchange Agent shall invest
the Payment Fund, as directed by the Surviving Corporation, in any of the
following: (i) obligations issued or guaranteed by the United States of America;
(ii) certificates of deposit, time deposits, commercial paper or any other
obligations of any bank or trust company organized or licensed to conduct a
banking business under the laws of the United States or any state thereof and
having total assets of not less than $10.0 billion; (iii) commercial paper with
maturities of not more than ninety days having the highest rating then given by
Moody's Investors Services, Inc. or Standard & Poor's Corporation; (iv)
repurchase obligations for underlying securities of the types described in
clause (i) above; (v) any trust, fund, Money
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Market account or other collective investment vehicle investing principally in
the investments specified in clauses (i) through (iv) above; or (vi) any other
investment reasonably satisfactory to the Company. Earnings on the Payment Fund
shall be for the account of Parent.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
each holder of an outstanding certificate or certificates which prior thereto
represented outstanding Shares shall, upon surrender to the Exchange Agent of
such certificate or certificates and acceptance thereof by the Exchange Agent,
be entitled to the amount of cash which the aggregate number of Shares
previously represented by such certificate or certificates surrendered shall
have been converted into the right to receive pursuant to Section 3.1(c). The
Exchange Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. If the
consideration to be paid in the Merger (or any portion thereof) is to be
delivered to any person other than the person in whose name the certificate
representing Shares surrendered in exchange therefor is registered, it shall be
a condition to such exchange that the certificate so surrendered shall be
properly endorsed with the signature guaranteed or otherwise be in proper form
for transfer and that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other tax required by reason of the payment of
such consideration to a person other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. After the Effective
Time, there shall be no further transfer on the records of the Company or its
transfer agent of certificates representing Shares, and if such certificates are
presented to the Company for transfer, they shall be canceled against delivery
of the Merger Consideration as hereinabove provided. Until surrendered as
contemplated by this Section 3.3(b), each certificate representing Shares shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration, without any interest
thereon, as contemplated by Section 3.1. No interest will be paid or will accrue
on any cash payable as Merger Consideration to any holder of Shares.
(c) LETTER OF TRANSMITTAL. Promptly after the Effective Time, but in any
event within five business days thereafter, the Surviving Corporation shall
cause to be mailed to each record holder of certificates that immediately prior
to the Effective Time represented Shares which have been converted pursuant to
Section 3.1, a form of letter of transmittal and instructions for use in
surrendering such certificates and receiving the consideration to which such
holder shall be entitled therefor pursuant to Section 3.1.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. The Merger Consideration
paid upon the surrender for exchange of certificates representing Shares in
accordance with the terms of this Article III shall be deemed to have been
issued and paid in full satisfaction of all rights pertaining to the Shares
theretofore represented by such certificates, and no holder of Shares shall
thereby have any equity interest in the Surviving Corporation.
(e) TERMINATION OF PAYMENT FUND. Any portion of the Payment Fund which
remains undistributed to the holders of the certificates representing Shares
more than six months after the Effective Time (including, without limitation,
all interest and other income received by the Exchange Agent in respect to all
funds made available to it) shall be delivered to the Surviving
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Corporation, upon demand, and any such holders of Shares who have not
theretofore complied with this Article III shall thereafter look only to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) and only as general creditors thereof for payment of their claim for the
Merger Consideration.
(f) NO LIABILITY. None of Parent, Sub, the Surviving Corporation or the
Exchange Agent shall be liable to any person in respect of any cash, shares,
dividends or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any certificates representing Company Shares shall not have been surrendered
immediately prior to such date on which the Merger Consideration in respect of
such certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.1(d)), any such cash, shares,
dividends or distributions payable in respect of such certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(g) WITHHOLDING RIGHTS. The Surviving Corporation, Parent or Sub shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares, and shall promptly pay over
to the appropriate Governmental Entity, such amounts as the Surviving
Corporation, Parent or Sub is required to deduct and withhold with respect to
the making of such payment under the Code (as defined herein), or any provision
of state, local or foreign tax law, including, without limitation, withholdings
required in connection with payments with respect to Company Stock Options. To
the extent that amounts are so withheld by the Surviving Corporation, Parent or
Sub, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder in respect of which such deduction and
withholding was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in corporate good standing
under the laws of the State of Delaware and has the requisite corporate power
and authority to carry on its business as now being conducted and to own,
operate and lease its properties as now owned, operated and leased. The Company
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not (i) have a material adverse effect
upon the business, assets, properties, condition (financial or otherwise), or
results of operations of the Company and its Subsidiaries taken as a whole, or
(ii) prevent the Company from consummating the transactions contemplated hereby
(a "Material Adverse Effect"). The Company has delivered to Parent complete
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and correct copies of its Restated Certificate of Incorporation and By-laws, as
amended to the date of this Agreement.
(b) SUBSIDIARIES. Section 4.1(b) of the disclosure schedule delivered by
the Company to Parent contemporaneously herewith (the "Disclosure Schedule")
sets forth the name, jurisdiction of incorporation, capitalization and number of
shares of outstanding capital stock of each of the Company's Subsidiaries. All
the issued and outstanding shares of capital stock of each Subsidiary are
validly issued, fully paid and nonassessable and are owned, directly or
indirectly, by the Company, beneficially and of record, free and clear of all
liens, pledges, encumbrances or restrictions of any kind. No Subsidiary has
outstanding any securities convertible into or exchangeable or exercisable for
any shares of its capital stock, there are no outstanding options, warrants or
other rights to purchase or acquire any capital stock of any Subsidiary, there
are no irrevocable proxies with respect to such shares, and there are no
contracts, commitments, understandings, arrangements or restrictions by which
any Subsidiary or the Company is bound to issue additional shares of the capital
stock of a Subsidiary. Except for the Company's Subsidiaries, and as otherwise
disclosed in Section 4.1(b) of the Disclosure Schedule, the Company does not
own, directly or indirectly, any capital stock or other equity securities of any
corporation or have any direct or indirect equity interest in any business. Each
of the Company's Subsidiaries (a) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; (b) has all requisite corporate power and authority to carry on
its business as it is now being conducted and to own, operate and lease its
properties as now owned, operated or leased; and (c) is qualified or licensed to
do business as a foreign corporation and is in good standing in each of the
jurisdictions in which (i) the ownership or leasing of real property or the
conduct of its business requires such qualification or licensing and (ii) the
failure to be so qualified or licensed, either singly or in the aggregate, would
have a Material Adverse Effect. The Company has delivered to Parent complete and
correct copies of the Certificate of Incorporation or other charter documents
and By-laws of each of its Subsidiaries, each as amended to date.
(c) CAPITALIZATION. As of the date hereof, the authorized capital stock of
the Company consists solely of 15,000,000 shares of Common Stock. As of the date
hereof, 9,294,227 Shares are issued and outstanding, 880,311 shares of Common
Stock are reserved for issuance pursuant to outstanding Company Stock Options,
and 513,497 shares of Common Stock are held by the Company in its treasury.
Except as set forth above, no shares of capital stock or other equity securities
of the Company are issued, reserved for issuance or outstanding. All outstanding
shares of capital stock of the Company are, and all shares which may be issued
pursuant to the Company Stock Option Plans will be, when issued, duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights. Section 4.1(c) of the Disclosure Schedule accurately sets
forth the number of Shares issuable upon exercise of each outstanding Company
Stock Option, the vesting schedule thereof, and the applicable exercise price
with respect to each such Company Stock Option. Except as set forth in Section
4.1(c) of the Disclosure Schedule, the Company has no outstanding option,
warrant, subscription or other right, agreement or commitment which either (i)
obligates the Company to issue, sell or transfer, repurchase, redeem or
otherwise acquire or vote any shares of the capital stock of the Company or (ii)
restricts the transfer of Common Stock. Except as set forth in Section 4.1(c) of
the Disclosure Schedule, the Company has no outstanding stock appreciation
rights, phantom stock or stock equivalents.
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<PAGE> 16
(d) AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to the approval of its stockholders, if required, as set forth in
Section 7.1(a) with respect to the consummation of the Merger, to consummate the
Merger and the other transactions contemplated by this Agreement. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to the approval
of its stockholders as set forth in Section 7.1(a). This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that the enforceability hereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated by this Agreement
and compliance with the provisions hereof will not, (i) violate any of the
provisions of the Restated Certificate of Incorporation or By-laws of the
Company, (ii) except as otherwise set forth in Section 4.1(d) of the Disclosure
Schedule and subject to the governmental filings and other matters referred to
in the following sentence, contravene any law, rule or regulation of any state
or of the United States or any political subdivision thereof or therein, or any
order, writ, judgment, injunction, decree, determination or award currently in
effect, or (iii) violate, conflict with or constitute a breach under any
contract, agreement, indenture, mortgage, deed of trust, lease or other
instrument to which the Company or any of its Subsidiaries is a party or by
which any of its assets is bound or subject, which, in the case of clauses (ii)
and (iii) above, singly or in the aggregate, would have a Material Adverse
Effect or prevent consummation of the transactions contemplated hereby. No
consent, approval or authorization of, or declaration or filing with, or notice
to, any governmental agency, board, commission, department or regulatory
authority, domestic or foreign (a "Governmental Entity"), which has not been
received or made, is required by or with respect to the Company or any
Subsidiary in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby, except for (i) compliance with any applicable requirements of the
Exchange Act and the rules and regulations promulgated thereunder, (ii) state
securities or blue sky laws and state takeover, antitrust and compensation law
filings and approvals, (iii) compliance with any applicable requirements of The
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (iv) the filing of the Certificate of Merger with the Delaware Secretary
of State and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, and (v) such other consents,
approvals, authorizations, filings or notices as are set forth in Section 4.1(d)
of the Disclosure Schedule or as to which the failure to so receive or make
would not have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party or subject to, or bound by, any contract, agreement,
indenture, mortgage, deed of trust, lease or other instrument which prevents or
restricts its power and authority or its ability to grant liens upon or
otherwise pledge its assets, to guarantee obligations of third parties or pay
dividends on its capital stock, except as set forth in Section 4.1(d) of the
Disclosure Schedule.
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<PAGE> 17
(e) FINANCIAL STATEMENTS; SEC REPORTS. The Company has previously
furnished Parent and Sub with true and complete copies of (i) its Annual Reports
on Form 10-K for the fiscal years ended June 30, 1996 (the "1996 Annual
Report"), June 30, 1997 (the "1997 Annual Report") and June 30, 1998 (the "1998
Annual Report" and, together with the 1996 Annual Report, the 1997 Annual
Report, and the Form 10-Q as defined below, the "Reports") filed by the Company
with the SEC, (ii) its Quarterly Report on Form 10-Q for the three months ended
September 30, 1998 (the "Form 10-Q") filed by the Company with SEC, (iii) the
unaudited consolidated balance sheets and the unaudited consolidated statements
of operations of the Company and its Subsidiaries as at October 31, 1998,
November 30, 1998 and for the months then ended (the "Monthly Financial
Statements"), (iv) proxy statements relating to all of the Company's meetings of
stockholders (whether annual or special) held or scheduled to be held since June
30, 1996 and (v) each other registration statement, proxy or information
statement or current report on Form 8-K filed since June 30, 1996 by the Company
with the SEC. Since the effective date of its initial public offering in 1992,
the Company has complied in all material respects with its SEC filing
obligations under the Exchange Act and the Securities Act of 1933, as amended
(the "Securities Act"). The financial statements and related schedules and notes
thereto of the Company contained in the Reports (or incorporated therein by
reference) and the Monthly Financial Statements were prepared in accordance with
generally accepted accounting principles (except, in the case of interim
unaudited financial statements, as permitted by the rules and regulations
applicable to Form 10-Q) applied on a consistent basis except as noted therein,
and fairly present in all material respects the consolidated financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended, subject (in the case of interim unaudited financial statements) to normal
year-end audit adjustments, and such financial statements complied as to form as
of their respective dates in all material respects with applicable rules and
regulations of the SEC. Each such registration statement, proxy statement and
Report was prepared in accordance with the requirements of the Securities Act or
the Exchange Act and did not, on the date of effectiveness in the case of such
registration statements, on the date of mailing in the case of such proxy
statements and on the date of filing in the case of such Reports, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as may be disclosed in
the Reports or as otherwise disclosed in Section 4.1(f) of the Disclosure
Schedule, since June 30, 1998 there has not been (i) any declaration, setting
aside or payment of any dividend or other distribution in respect of the capital
stock of the Company or any redemption or other acquisition by the Company of
any of its capital stock, other than cash dividends of $.07 per Share paid or to
be paid to stockholders on or about September 15, 1998 and December 15, 1998;
(ii) any issuance by the Company, or agreement or commitment of the Company to
issue, any shares of its Common Stock or securities convertible into or
exchangeable for shares of its Common Stock, except for stock options and stock
purchase rights set forth in Section 4.1(c) of the Disclosure Schedule; (iii)
any change by the Company in accounting methods, principles or practices, except
as required by generally accepted accounting principles; (iv) any increase in
wage or bonus, severance, profit sharing, retirement, deferred compensation,
change of control, insurance or other compensation or benefits or any new
compensation or benefit plans or arrangements or any amendments to any
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<PAGE> 18
Benefit Plans (as hereinafter defined) existing on June 30, 1998, other than as
required under written agreements or commitments in effect as of June 30, 1998
and other than customary increases or bonus payments made in the ordinary course
of business consistent with prior practice (not including, however, any new or
additional Benefit Plans unless disclosed in Section 4.1(f) of the Disclosure
Schedule); (v) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of the Company or its Subsidiaries which
would have a Material Adverse Effect; (vi) any other event or change which would
have a Material Adverse Effect; or (vii) any agreement or commitment to which
the Company is a party, whether in writing or otherwise, to take any action
described in this subsection 4.1(f). Since June 30, 1998, the Company and its
Subsidiaries have conducted their respective businesses in all material respects
only in the ordinary course, consistent with past custom and practice, except as
contemplated by this Agreement or as described in Schedule 5.1 of the Disclosure
Schedule.
(g) NO UNDISCLOSED LIABILITIES. Except as set forth in the Reports, or as
contemplated by the Restructuring (as defined in Section 5.1), neither the
Company nor any of its Subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise), except liabilities (i) in the aggregate adequately
provided for in the Company's audited balance sheet (including any related notes
thereto) for the fiscal year ended June 30, 1998 included in the 1998 Annual
Report (the "1998 Balance Sheet"), (ii) incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected on the 1998 Balance Sheet, (iii) incurred since June 30, 1998 in the
ordinary course of business consistent with past practice, (iv) incurred in
connection with this Agreement or (v) which would not have a Material Adverse
Effect.
(h) COMPLIANCE WITH LAWS. The business of the Company and each of the
Subsidiaries has been operated at all times in compliance with applicable
statutes, laws, rules, regulations, permits, licenses, orders, injunctions and
judgments (collectively, "Laws"), including, without limitation, applicable Laws
governing or regulating environmental matters, manufacturing, marketing and
distribution of products, product safety (including the regulations of the
Consumer Product Safety Commission, the Canadian Standards Association and
Underwriters' Laboratory), product recalls, wages and hours, plant closings or
reductions of activities at any facility, layoffs or reductions in force,
working conditions and health and safety, except for such violations or failures
to comply that, individually or in the aggregate, would not have a Material
Adverse Effect.
(i) LITIGATION. Except as set forth in Section 4.1(i) of the Disclosure
Schedule or otherwise disclosed in the Reports, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries which, individually or in the aggregate,
would have a Material Adverse Effect, nor is there any judgment, decree,
injunction, ruling or order of any Governmental Entity outstanding against the
Company or any of its Subsidiaries which, individually or in the aggregate,
would have a Material Adverse Effect.
(j) EMPLOYEE BENEFIT MATTERS.
(A) Section 4.1(j) of the Disclosure Schedule sets forth a list of
all material employee welfare benefit plans (as defined in Section 3(l) of
the Employee Retirement
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<PAGE> 19
Income Security Act of 1974, as amended ("ERISA")), employee pension
benefit plans (as defined in Section 3(2) of ERISA), and all other bonus,
stock option, stock purchase, benefit, profit sharing, savings,
retirement, disability, insurance, incentive, deferred compensation and
other similar fringe or employee benefit plans, programs or arrangements
for the benefit of, or relating to, any employee or director of, or
independent contractor or consultant to, the Company or its Subsidiaries
(together, the "Benefit Plans") and any employment, severance or
termination agreement to which the Company or any Subsidiary is a party.
The Company has made available to Parent true and complete copies of all
Benefit Plans, as in effect, together with all amendments thereto which
will become effective at a later date, as well as the latest Internal
Revenue Service ("IRS") determination letters obtained with respect to any
Benefit Plan intended to be qualified under Section 401(a) or 501(a) of
the Internal Revenue Code of 1986, as amended (the "Code"). True and
complete copies of the (i) most recent annual actuarial valuation report,
if any, (ii) last filed Form 5500 together with Schedule A and/or B
thereto, if any, (iii) summary plan description (as defined in ERISA), if
any, and all modifications thereto communicated to employees, (iv) most
recent annual and periodic accounting of related plan assets, if any, and
(v) such other materials with respect to the Employee Plans reasonably
requested by Parent in each case, relating to the Benefit Plans, have been
or will be delivered to Parent and are, or will be, correct in all
material respects.
(B) Except to the extent that any of the following, either alone or
in the aggregate, would not have a Material Adverse Effect, or as set
forth on Schedule 4.1(j) of the Disclosure Schedule: (i) neither the
Company nor, to the Company's knowledge, any of its directors, officers,
employees or agents has, with respect to any Benefit Plan, engaged in or
been a party to any "prohibited transaction", as such term is defined in
Section 4975 of the Code or Section 406 of ERISA, which could result in
the imposition of either a penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Code, in each case
applicable to the Company or any Benefit Plan; (ii) all Benefit Plans are
and have been at all times in compliance in all respects with the
currently applicable requirements prescribed by all statutes, orders, or
governmental rules or regulations currently in effect with respect to such
Benefit Plans, including, but not limited to, ERISA and the Code (except
for such requirements that are not required to be adopted as of the
effective date of the applicable requirement) and, to the knowledge of the
Company, there are no pending or threatened claims, lawsuits or
arbitrations (other than routine claims for benefits), relating to any of
the Benefit Plans, which have been asserted or instituted against the
Company, any Benefit Plan or the assets of any trust for any Benefit Plan,
nor, to the knowledge of the Company, is there any basis for one; (iii)
each Benefit Plan intended to be qualified under Section 401(a) of the
Code, is so qualified, and has heretofore been determined by the IRS to be
so qualified; (iv) neither the Company nor any trade or business which,
together with the Company, is treated as a single employer under Section
414(t) of the Code (an "ERISA Affiliate") has, or at any time has had, an
obligation to contribute to a "defined benefit plan" as defined in Section
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<PAGE> 20
3(35) of ERISA, a pension plan subject to the funding standards of Section
302 of ERISA or Section 412 of the Code, a "multiemployer plan" within the
meaning of Section 3(37) or 4001(a)(13) of ERISA or Section 414(f) of the
Code or a "multiple employer plan" within the meaning of Section 210(a) of
ERISA or Section 413(c) of the Code; (v) with respect to each group health
plan benefiting any current or former employee of the Company, or any
ERISA Affiliate, that is subject to Section 4980B of the Code, the Company
and any ERISA Affiliate, have complied with (A) the continuation coverage
requirements of Section 4980B of the Code and Part 6 of Subtitle B of
Title I of ERISA and (B) the Health Insurance Portability and
Accountability Act of 1996, as amended; (vi) all (A) insurance premiums
required to be paid with respect to, (B) benefits, expenses, and other
amounts due and payable under, and (C) contributions, transfers, or
payments required to be made to, any Benefit Plan prior to the Effective
Time will have been paid, made or accrued on or before the Effective Time;
(vii) with respect to any insurance policy providing funding for benefits
under any Benefit Plan, (A) there is no liability of the Company or any of
its Subsidiaries, in the nature of a retroactive rate adjustment, loss
sharing arrangement, or other actual or contingent liability, nor would
there be any such liability if such insurance policy was terminated on the
date hereof, and (B) no insurance company issuing any such policy is in
receivership, conservatorship, liquidation or similar proceeding and, to
the knowledge of the Company, no such proceedings with respect to any
insurer are imminent; (viii) no Benefit Plan provides benefits, including,
without limitation, death or medical benefits, beyond termination of
service or retirement other than (A) coverage mandated by law, (B) death
or retirement benefits under any qualified Benefit Plan, or (C) deferred
compensation benefits reflected on the books of the Company; (ix) the
execution and performance of this Agreement will not (A) constitute a
stated triggering event under any Benefit Plan that will result in any
payment (whether of severance pay or otherwise) becoming due from the
Company or any of the Company's Subsidiaries to any officer, director,
employee, or former employee (or dependents of such employee), or (B)
accelerate the time of payment or vesting, or increase the amount of
compensation due to any employee, officer or director of the Company; (x)
any amount that could be received (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated
by this Agreement by any employee, officer or director of the Company or
any of its affiliates who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation
arrangement or Benefit Plan currently in effect would not be characterized
as an "excess parachute payment" (as such term is defined in Section
280G(b)(1) of the Code); (xi) the disallowance of a deduction under
Section 162(m) of the Code for employee remuneration will not apply to any
amount paid or payable by the Company or any affiliate of the Company
under any contract, Benefit Plan, program, arrangement or understanding
currently in effect; (xii) neither the Company nor any ERISA Affiliate has
any current or future liability with respect to any "employee benefit
plans" (within the meaning of Section 3(3) of ERISA), other than the
Benefit Plans, previously maintained or contributed to by the Company, any
ERISA Affiliate or any predecessor to either
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<PAGE> 21
thereof, or to which the Company, any ERISA Affiliate, or any such
predecessor previously had an obligation to contribute.
(k) TAXES. Except as disclosed in the Reports or in Section 4.1(k) of the
Disclosure Schedule, each of the Company and the Subsidiaries (i) has timely
filed all federal and, except as would not have a Material Adverse Effect, state
and foreign Tax Returns required to be filed by the Company and each Subsidiary,
respectively, for tax years ended prior to the date of this Agreement and all
such Tax Returns are correct and complete in all material respects, (ii) has
timely paid, withheld or accrued all Taxes due and payable, whether or not
reflected on such Tax Returns, except as would not have a Material Adverse
Effect, (iii) has not entered into any agreement or waiver which would extend
the statute of limitations for filing any Tax Returns that have not yet been
filed, and (iv) has "open" years for federal income Tax Returns only as set
forth in Section 4.1(k) of the Disclosure Schedule. There are no liens for Taxes
on the assets of the Company or the Subsidiaries except for liens for current
Taxes not yet due, and, except as set forth in the Reports or in Section 4.1(k)
of the Disclosure Schedule, there is no pending, nor has the Company or any
Subsidiary received written notice of any threatened, Tax audit, examination,
refund litigation or adjustment in controversy. Neither the Company nor any
Subsidiary is a party to any agreement providing for the allocation or sharing
of Taxes. All Taxes which each of the Company and the Subsidiaries has been
required to collect or withhold have been duly collected or withheld and to the
extent required when due, have been or will be duly and timely paid to the
proper taxing authority, except as would not have a Material Adverse Effect.
Further, (A) no Taxes have been incurred after June 30, 1998 which were not
incurred in the ordinary course of business consistent with prior practice,
except as would not have a Material Adverse Effect, (B) the Company has not
filed a consent to the application of Section 341(f) of the Code, (C) the
Company is not and has not been a United States real property holding company
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(ii) of the Code, (D) no indebtedness of the
Company is "corporate acquisition indebtedness" within the meaning of Section
279(b) of the Code, and (E) within the past three years, the Company has not
been a member of an affiliated group filing consolidated or combined Tax Returns
other than a federal income tax group the common parent of which is the Company.
As used in the foregoing paragraph, (a) "Taxes" shall mean (i) all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, excise, real and personal property, sales, transfer,
use, license, payroll and franchise taxes, imposed by the United States, or any
state, county, local or foreign government or subdivision or agency thereof, and
such term shall include any interest, penalties or additions to tax attributable
to such taxes, charges, fees, levies or other assessments and any obligations
under any agreement or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity and (ii)
all obligations, including joint and several liability pursuant to the law of
any jurisdiction or otherwise, for the payment of any of the types of taxes
referred to in clause (i) of this definition as a result of being a member of an
affiliated, consolidated, combined or unitary group for any taxable period, and
(b) "Tax Returns" shall mean any report, return or other information required to
be supplied to any taxing authority in connection with Taxes.
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<PAGE> 22
(l) BUSINESS COMBINATION STATUTE. The Board of Directors has taken all
action necessary to render Section 203 of the Delaware GCL inapplicable to the
Offer, the Merger, this Agreement, and any of the transactions contemplated
hereby and thereby, assuming neither Parent nor Sub is an "interested
stockholder" as defined in such Section 203.
(m) CONDUCT OF BUSINESS.
(A) The Company and its Subsidiaries hold all licenses, permits,
variances, consents, authorizations, waivers, grants, franchises,
concessions, exemptions, orders, registrations and approvals of any
Governmental Entity or other persons necessary for the ownership, leasing,
operation, occupancy and use of their respective property and assets and
the conduct of their respective businesses as currently conducted
("Permits"), except where the failure to hold such Permits individually
and in the aggregate would not have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has received notice that any Permit
will be terminated or modified or cannot be renewed in the ordinary course
of business, and the Company has no knowledge of any reasonable basis for
any such termination, modification or non-renewal, except for such
terminations, modifications or non-renewals as individually and in the
aggregate would not have a Material Adverse Effect.
(B) The Company has provided to Parent a true and accurate listing
of the Company's and its Subsidiaries' material insurance policies. Each
of such policies is in full force and effect as of the date hereof, and
the Company and its Subsidiaries have no knowledge of any noncompliance
with the terms of such policies or any threatened termination of any of
such policies, except as would not have a Material Adverse Effect. Neither
the Company nor any Subsidiary, as of the date hereof, (i) self-insures
against any occurrence subsequent to December 31, 1993 (except for
self-insurance retentions or deductibles not exceeding $500,000 with
respect to any single occurrence) or (ii) is a participant or shareholder
in any captive or industry insurance program, except as set forth in
Section 4.1(m) of the Disclosure Schedule.
(C) The Company has provided to Parent a report, true and accurate
as of its date, as to the Company's and its Subsidiaries' computer and
system readiness for the Year 2000, including but not limited to, their
ability to conduct and operate their business and to maintain and operate
their books and records, to use and operate their computers and other
systems and software and to process dates and date-related data both
before and after the Year 2000 (collectively, "Year 2000 Compliance"). The
Company and its Subsidiaries have used commercially reasonable efforts to
identify and address their internal and third-party risks on a timely
basis in order to achieve Year 2000 Compliance, except for such
non-compliance as would not have a Material Adverse Effect.
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(n) INTELLECTUAL PROPERTY.
(A) The Company has previously provided to Parent a true and
complete list of all of the Company's and its Subsidiaries' (i) patents,
(ii) trademark and service mark registrations, (iii) material copyright
registrations, and (iv) all material licenses related to the foregoing.
(B) Except as set forth in Section 4.1(n) of the Disclosure
Schedule, the Company and its Subsidiaries own or have the valid right to
use all intellectual property used by them in connection with their
business, including: (i) trademarks and service marks (registered or
unregistered) and trade names, and all goodwill associated therewith; (ii)
patents, patentable inventions, discoveries, improvements, ideas,
know-how, processes and computer programs, software and databases
(including source code); (iii) trade secrets and the right to limit the
use or disclosure thereof; (iv) copyrights in all works, including
software programs and mask works; and (v) domain names (collectively
"Intellectual Property"), except where the failure to own or have the
valid right to use the Intellectual Property would not have a Material
Adverse Effect.
(C) Except as set forth in Section 4.1(n) of the Disclosure Schedule
or as would not have a Material Adverse Effect, all grants, registrations
and applications for Intellectual Property that are used in the conduct of
the business of the Company and its Subsidiaries as currently conducted
(i) are valid, subsisting, in proper form and have been duly maintained,
including the submission of all necessary filings and fees in accordance
with the legal and administrative requirements of the appropriate
jurisdictions and (ii) have not lapsed, expired or been abandoned.
(D) Except as set forth in Section 4.1(n) of the Disclosure
Schedule, to the Company's knowledge, (i) there are no conflicts with or
infringements of any Intellectual Property by any third party, except for
conflicts or infringements which would not have a Material Adverse Effect,
and (ii) the conduct of the business of the Company and its Subsidiaries
as currently conducted does not conflict with or infringe any proprietary
right of any third party, which conflict or infringement would have a
Material Adverse Effect. Except as set forth in Section 4.1(n) of the
Disclosure Schedule, there is no claim, suit, action or proceeding pending
or, to the Company's knowledge, threatened against the Company or any
Subsidiary (i) alleging any such conflict or infringement with any third
party's proprietary rights, or (ii) challenging the ownership, use,
validity or enforceability of the Intellectual Property, except for
claims, suits, actions or proceedings which would not in the aggregate
have a Material Adverse Effect.
(E) Except as set forth in Section 4.1(n) of the Disclosure Schedule
or as would not have a Material Adverse Effect, no former or present
employees, officers or directors of the Company or any Subsidiary hold any
right, title or interest directly or indirectly, in whole or in part, in
or to any Intellectual Property.
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(o) MATERIAL CONTRACTS.
(A) Other than the contracts or agreements of the Company included
as exhibits to the 1998 Annual Report (the "Material Contracts"), and
contracts or agreements between the Company and its wholly owned
Subsidiaries or between wholly owned Subsidiaries of the Company, true and
complete copies of each of the following contracts and agreements to which
the Company or any of its Subsidiaries is a party or by which any of them
is bound (contracts and agreements of the types described below being
"Identified Contracts") has been previously delivered to Parent, in each
case as such Identified Contract is in effect on the date hereof:
(i) each contract or agreement for (A) the purchase of
inventories, goods or other materials by, or for the furnishing of
services to, the Company or any of its Subsidiaries that requires
payments by the Company or any of its Subsidiaries in excess of
$250,000 in the aggregate, or (B) for the sale of inventories, goods
or other materials by the Company or any of its Subsidiaries other
than in the ordinary course of business; that, in the case of both
(A) and (B), has a remaining term of one year or more and is not
terminable by the Company or Subsidiary party thereto, as the case
may be, on notice of six months or less without penalty;
(ii) manufacturer's representative, sales agency and
distribution contracts and agreements that have a term of one year
or more and are not terminable by the Company or Subsidiary party
thereto, as the case may be, on notice of six months or less without
penalty;
(iii) each contract, agreement or instrument (A) governing the
terms of indebtedness, or guarantees of indebtedness, of the Company
or any of its Subsidiaries in excess of $50,000 principal amount in
the aggregate, all of which such indebtedness the Company represents
is unsecured, or (B) governing the terms of capital leases or leases
that would be classified as operating leases under generally
accepted accounting principles but as a loan or financing
arrangement for federal income tax purposes, pursuant to which the
Company or any of its Subsidiaries has financial obligations in
excess of $50,000, or (C) evidencing, governing the terms of or
providing for any letters of credit, documentary acceptances, trade
bills, trust receipt loans, shipside bonds, standby letters of
credit or performance bonds to which the Company or any Subsidiary
is a party, or (D) providing for obligations of the Company and its
Subsidiaries in respect of interest rate swap or similar agreements,
commodity swaps or options or similar agreements or foreign currency
hedge, exchange or similar agreements or any other derivative
instrument (a list of the Identified Contracts included in this
paragraph (iii), together with the outstanding balances thereunder,
is set forth on
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Section 4.1(o) of the Disclosure Schedule, which list shall be
updated by the Company as of each expiration date of the Offer and
as of the Closing Date);
(iv) contracts and agreements entered into since January 1,
1995 providing for the acquisition or disposition of assets
(including the capital stock of any entity) having a value in excess
of $1,000,000 other than sales or purchases of inventories in the
ordinary course of business and sales of obsolete equipment;
(v) joint venture agreements, partnership agreements and other
similar contracts and agreements involving a sharing of profits and
expenses; and
(vi) contracts and agreements providing for future payments
that are conditioned, in whole or in part, on a change in control of
the Company or any of its Subsidiaries.
(B) Each contract or agreement to which the Company or any of its
Subsidiaries is a party or by which any of them is bound is in full force
and effect, and neither the Company nor any of its Subsidiaries, nor, to
the actual knowledge of the Company, any other person, is in breach of, or
default under, any such contract or agreement, and no event has occurred
that with notice or passage of time or both would constitute such a breach
or default thereunder by the Company or any of its Subsidiaries, or, to
the actual knowledge of the Company, any other person, except for such
failures to be in full force and effect and such breaches and defaults as
individually and in the aggregate would not have a Material Adverse
Effect.
(p) ENVIRONMENTAL MATTERS.
(A) Except as disclosed in the Reports, as disclosed in Section
4.1(p) of the Disclosure Schedule, or as would not have a Material Adverse
Effect, and except for those noncompliance matters that have been and are
resolved, the Company and its Subsidiaries are and have been in compliance
with all applicable Environmental Laws (as hereinafter defined).
(B) Except as disclosed in the Reports, as disclosed in Section
4.1(p) of the Disclosure Schedule, or as would not have a Material Adverse
Effect, (i) there has been no Release and/or Threat of Release (each, as
hereinafter defined) of any Hazardous Substance (as hereinafter defined),
and there is no Hazardous Substance present, on, in, under, above,
migrating to and/or about any of the properties or assets owned, leased or
operated by the Company or its Subsidiaries, and (ii) the Company and its
Subsidiaries have not caused or allowed, nor contracted with any party
for, the generation, use, transportation, treatment, storage or disposal
of any Hazardous Substance; except, in the case of clauses (i) and (ii),
for such quantities of Hazardous Substances as are stored, used
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and disposed of in the ordinary course of business in compliance with all
Environmental Laws.
(C) Except as disclosed in the Reports or as disclosed in Section
4.1(p) of the Disclosure Schedule, there are no Environmental Claims (as
hereinafter defined) pending or threatened against the Company or any of
its Subsidiaries that individually or in the aggregate would have a
Material Adverse Effect nor, to the Company's knowledge, does any basis
for such an Environmental Claim exist.
(D) The Company has disclosed and, where requested, made available
to Parent all material information, including such studies, analyses and
test results, and litigation and/or administrative case files, in the
possession, custody or control of or otherwise known and available to the
Company or any of its Subsidiaries relating to Hazardous Substances, the
Release and/or Threat of Release of Hazardous Substances, and/or the
environmental conditions on, in, under, above, migrating to and/or about
any of the properties or assets owned, leased, or operated by any of the
Company and its Subsidiaries or any predecessor in interest thereto at the
present time or in the past.
(E) As used in this Agreement:
(i) the term "Environmental Claim" means any written claim,
demand, suit, action, proceeding, investigation or notice to the
Company or any of its Subsidiaries by any person or entity
including, without limitation, any Governmental Entity, alleging any
liability or potential liability of any name or nature, both in law
and in equity (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs,
natural resource damages, real or personal property damage or
penalties) arising, in part or in whole, out of, based on, or
resulting from the presence, Release and/or Threat of Release, of
any Hazardous Substance at any location, whether or not owned,
leased, operated or used by the Company or its Subsidiaries;
(ii) the term "Environmental Laws" means all Laws relating to
emissions, discharges, Releases or threatened Releases of Hazardous
Substances, and/or otherwise relating to the clean-up, manufacture,
generation, processing, distribution, use, sale, treatment, receipt,
storage, disposal, transport, handling, licensing and/or permitting
of Hazardous Substances, including the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Resource
Conservation and Recovery Act ("RCRA"), and the Occupational Safety
and Health Act;
(iii) the term "Hazardous Substance" means (1) chemicals,
pollutants, contaminants, hazardous wastes, toxic substances, and
oil and petroleum products, (2) any substance that is or contains
friable asbestos, urea formaldehyde foam
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insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon gas or related
materials, (3) any substance that requires removal, remediation,
permitting, licensing and/or government approved plans under any
Environmental Law, or is defined, listed or identified as a
"hazardous waste" or "hazardous substance" thereunder, (4) any
substance that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous; in each case in clauses (1)-(4) above which is regulated
under any Environmental Law, (5) hazardous waste as defined under
RCRA, (6) hazardous substances as defined under CERCLA, and (7)
"pollutants" as defined under the Federal Clean Air Act;
(iv) (a) the term "Release" means any releasing, disposing,
discharging, spilling, leaking, pumping, pouring, escaping,
leaching, dumping, emitting, migration, transporting, placing and
the like, including into or upon, any land, soil, surface water,
ground water or air, or otherwise entering into the environment; and
(b) the term "Threat of Release" means a substantial
likelihood of a Release which requires action to prevent or mitigate
damage to the environment which may result from such Release.
(q) LABOR RELATIONS; EMPLOYEES. Except as set forth in Section 4.1(q) of
the Disclosure Schedule, there are no collective bargaining agreements covering
any of the employees of the Company or any of its Subsidiaries. Except as set
forth in Section 4.1(q) of the Disclosure Schedule or as would not have a
Material Adverse Effect, there are no pending or, to the knowledge of the
Company, threatened (i) employment discrimination charges or complaints against
or involving the Company or any of its Subsidiaries before any Governmental
Entity, (ii) unfair labor practice charges or complaints, disputes or grievances
affecting the Company or any of its Subsidiaries, (iii) union representation
petitions or other organizing activity respecting the employees of the Company
or any of its Subsidiaries, or (iv) strikes, picketing, slow downs, work
stoppages or lockouts or threats thereof affecting the Company or any of its
Subsidiaries. Except as set forth in Section 4.1(q) of the Disclosure Schedule,
to the Company's knowledge, the Company and its Subsidiaries are in compliance
with all applicable Laws respecting employment and employment practices,
including provisions of such Laws relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other Taxes, except
where the failure to so comply would not have a Material Adverse Effect.
(r) DISCLOSURE DOCUMENTS.
(A) Each document required to be filed by the Company with the SEC
in connection with the transactions contemplated by this Agreement (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, will, when
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filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder.
(B) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, at the
time such stockholders vote on adoption of this Agreement and approval of
the Merger and at the Effective Time, the Company Proxy Statement, as
supplemented or amended, if applicable, 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. At the time of
the filing of any Company Disclosure Document other than the Company Proxy
Statement, at the time of any distribution thereof and throughout the
remaining pendency of the Offer, each such Company Disclosure Document
will not contain any untrue statement of a material fact or omit to state
a 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 paragraphs (A) and (B) of
this Section 4.1(r) will not apply to statements or omissions included in
the Company Disclosure Documents or the Company Proxy Statement, if any,
based upon information furnished to the Company in writing by Parent or
Sub specifically for use therein.
(C) The information with respect to the Company or any Company
Subsidiary that the Company furnishes to Parent or Sub in writing
specifically for use in the Offer Documents will not, at the time of the
filing thereof, at the time of any distribution thereof and throughout the
remaining pendency of the Offer, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
(s) FAIRNESS OPINION. The Board of Directors has received from the
Financial Advisor the written opinion referred to in Section 1.2(b) hereof, and
such opinion has not been withdrawn or modified as of the date hereof.
(t) BROKERS. No broker, investment banker, financial advisor or other
person, the fees and expenses of which will be paid by the Company, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement,
other than pursuant to an engagement letter with the Financial Advisor, a copy
of which has been furnished to Parent.
(u) BOARD RECOMMENDATION. The Company's Board of Directors has taken the
actions specified in Section 1.2(a) hereof as of the date hereof.
(v) OPTION AGREEMENTS. Each outstanding option agreement executed in
connection with a Company Stock Option pursuant to the Company Stock Option
Plans is in substantially the form provided to Purchaser as an exhibit to the
1986 Plan or the 1994 Plan, as the case may be.
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SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Parent
and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Parent is a corporation
duly organized, validly existing and in corporate good standing under the laws
of the Commonwealth of Massachusetts. Sub is a corporation duly organized,
validly existing and in corporate good standing under the laws of the State of
Delaware. Each of Parent and Sub has the requisite corporate power and authority
to carry on its business as now being conducted. Each of Parent and Sub is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect on
the business, financial condition or results of operations of Parent and Sub
taken as a whole.
(b) CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of Sub consists of 1,000 shares of common stock, par value $0.01
per share, 1,000 shares of which are presently issued and outstanding, which
constitutes all of the issued and outstanding capital stock of Sub. All of the
issued and outstanding shares of capital stock of Sub are validly issued, fully
paid and non-assessable and are held by Parent.
(c) AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the Merger and the other transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of Parent and Sub. This Agreement has been duly executed and delivered by
and constitutes a valid and binding obligation of each of Parent and Sub,
enforceable against such party in accordance with its terms, except that the
enforceability hereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not (i) violate any of the provisions
of the charter documents or By-laws of Parent or Sub, (ii) subject to the
governmental filings and other matters referred to in the following sentence,
contravene any law, rule or regulation of any state or of the United States or
any political subdivision thereof or therein, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, or (iii) except
for (A) the existing credit agreement dated as of November 26, 1997 among Parent
and certain of its subsidiaries and BankBoston, N.A. and certain other lenders
party thereto (the "Parent Credit Agreement") which is to be refinanced with a
portion of the proceeds of the Financing, and (B) certain filings and notices
required to be made under the Indenture dated as of November 26, 1997 among
Parent, certain of its subsidiaries and State Street Bank and Trust Company as
trustee, violate, conflict with or constitute a breach under any contract,
agreement, indenture, mortgage, deed of trust, lease or other instrument to
which
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Parent or any of its Subsidiaries is a party or by which any of their assets is
bound or subject, which, in the case of clauses (ii) and (iii) above, singly or
in the aggregate, would have a material adverse effect on the business,
financial condition or results of operations of Parent and Sub taken as a whole
or prevent consummation of the transactions contemplated hereby. No consent,
approval or authorization of, or declaration or filing with, or notice to, any
Governmental Entity which has not been received or made is required by or with
respect to Parent or Sub in connection with the execution and delivery of this
Agreement by Parent or Sub or the consummation by Parent or Sub, as the case may
be, of any of the transactions contemplated by this Agreement, except for (i)
compliance with any applicable requirements of the Exchange Act and the rules
and regulations promulgated thereunder, (ii) state securities or blue sky laws
and state takeover, antitrust and competition law filings and approvals, (iii)
compliance with any applicable requirements of the HSR Act, (iv) the filing of
the Certificate of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, and (v) such other consents, approvals,
authorizations, filings or notices as are set forth in Section 4.1(d) of the
Disclosure Schedule or as to which the failure to so receive or make would not
have a material adverse effect on the business, financial condition or results
of operations of Parent and Sub taken as a whole or prevent Parent and Sub from
consummating the transactions contemplated hereby.
(d) FINANCING. Parent and Sub have received and accepted (i) a written
commitment from BankBoston, N.A. (the "Bank") for the provision of a senior
credit facility or facilities (the "Credit Facility") for the transactions
contemplated hereby, in an amount of up to $325 million, (ii) a written
commitment from BancBoston Robertson Stephens Inc. ("BRS") and Lehman Brothers
Inc. ("Lehman") for the issuance of senior subordinated debt securities (the
"Debt Securities") for the transactions contemplated hereby in an amount of at
least $30 million, and (iii) written commitments from stockholders of Parent and
their affiliates to subscribe for an aggregate of $50 million of equity
securities of Parent to finance the transactions contemplated hereby (the
"Equity Infusion"). The aggregate amount of the financing (the "Financing")
contemplated by the commitments from the Bank for the Credit Facility, from BRS
and Lehman for the Debt Securities and from stockholders of Parent and their
affiliates for the Equity Infusion (collectively, the "Commitments"), will be
sufficient to consummate the Offer and the Merger. Parent has provided true and
correct copies of the Commitments to the Company prior to the date hereof, and
will provide copies of any material amendments or modifications thereto. To the
knowledge of Parent and Sub, there exists no condition with respect to Parent or
Sub as of the date of this Agreement that would materially adversely affect the
ability of Parent and Sub to satisfy in all respects the conditions set forth in
the Commitments.
(e) DISCLOSURE DOCUMENTS.
(A) The information with respect to Parent and 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 required to be stated therein or 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, if any, at the time the Company Proxy Statement or any amendment or
supplement
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thereto is first mailed to stockholders of the Company, at the time the
stockholders vote on adoption of this Agreement and at the Effective Time, and
(ii) in the case of any Company Disclosure Document other than the Company Proxy
Statement, at the time of the filing thereof, at the time of any distribution
thereof and throughout the remaining pendency of the Offer.
(B) The Offer Documents will comply in all material respects with
the applicable requirements of the Exchange Act and will not, at the time of the
filing thereof, at the time of any distribution thereof and throughout the
remaining pendency of the Offer contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading; provided, that no representation is made by
Parent or Sub with respect to statements or omissions in the Offer Documents
based upon information furnished to Parent or Sub in writing by the Company
specifically for use therein.
(f) BROKERS. No broker, investment banker, financial advisor or other
person, the fees and expenses of which will be paid by Parent or Sub, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement,
except for fees and expenses payable to Donaldson, Lufkin & Jenrette Securities
Corporation and fees payable to the providers of the Commitments, which fees and
expenses shall remain the sole responsibility of Parent and Sub.
(g) OWNERSHIP OF SHARES. Neither Parent, Sub nor any other subsidiary of
Parent is the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of any Shares.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
PRIOR TO MERGER
SECTION 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by
this Agreement, during the period from the date of this Agreement to the
Effective Time, the Company shall operate, and shall cause each Subsidiary to
operate, its business in the ordinary course of business in a manner consistent
with past practices. Without limiting the generality of the foregoing, during
the period from the date of this Agreement to the Effective Time, except as
expressly contemplated by this Agreement, and except for actions requested by a
majority of those directors of the Company designated by Parent pursuant to
Section 1.3(a), the Company and the Subsidiaries shall not, without the prior
written consent of Parent:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of the
Company's outstanding capital stock, except for a cash dividend of $.07 per
Share payable on December 15, 1998, (y) split, combine or reclassify any of its
outstanding capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
outstanding capital stock, or (z) purchase, redeem or otherwise acquire any
shares of outstanding capital stock or any rights, warrants or options to
acquire any such shares;
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(ii) issue, sell, grant, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, except for the issuance of Shares upon
exercise of Company Stock Options outstanding prior to the date of this
Agreement and disclosed in Section 4.1(c), or take any action that would make
the Company's representations and warranties set forth in Section 4.1(c) not
true and correct in all material respects;
(iii) amend its Restated Certificate of Incorporation or By-laws or the
comparable charter or organizational documents of any of its Subsidiaries;
(iv) acquire any business or any corporation, partnership, joint venture,
association or other business organization or division thereof (or any interest
therein), or form any subsidiaries;
(v) sell or otherwise dispose of any of its assets, except in the ordinary
course of business, other than (x) obsolete or immaterial equipment or tooling,
and (y) in connection with the restructuring described in Section 5.1 of the
Disclosure Schedule (the "Restructuring");
(vi) make any capital expenditures, enter into leases or agreements for
new locations, close any locations (other than in connection with the
Restructuring), or make other commitments with respect thereto, except capital
expenditures, leases, agreements or commitments (x) set forth on Section 5.1 of
the Disclosure Schedule, or (y) not exceeding $100,000 in the aggregate as the
Company may, in its discretion, deem appropriate;
(vii) (x) incur any indebtedness for borrowed money or guaranty any such
indebtedness of another person, other than (A) borrowings in the ordinary course
under existing lines of credit, (B) indebtedness owing to, or guaranties of
indebtedness owing to, the Company or (C) in connection with the Financing, or
(y) make any loans or advances to any other person, other than routine advances
to employees;
(viii) except as disclosed in Section 4.1(f) of the Disclosure Schedule,
grant or agree to grant to any employee any increase in wages or bonus,
severance, profit sharing, retirement, deferred compensation, insurance or other
compensation or benefits, or establish any new compensation or benefit plans or
arrangements, or amend or agree to amend any existing Benefit Plans, except (x)
as may be required under existing agreements, and (y) customary increases in the
ordinary course of business consistent with prior practice (not including,
however, any new or additional Benefit Plan unless disclosed in Section 4.1(f)
of the Disclosure Schedule);
(ix) merge, amalgamate or consolidate with any other person or entity in
any transaction, sell all or substantially all of its business or assets, or
acquire all or substantially all of the business or assets of any other person
or entity;
(x) except as disclosed in Section 4.1(f) or 5.1 of the Disclosure
Schedule, enter into or amend any employment, consulting (except for consulting
agreements for development services for
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new products involving payments by the Company or any Subsidiary of less than
$500,000 in the aggregate, prior to March 31, 1999, and less than $500,000 in
the aggregate for the period from April 1, 1999 to June 30, 1999), severance or
similar agreement with any person or amend the Company's engagement letter with
the Financial Advisor;
(xi) change its accounting policies in any material respect, except as
required by generally accepted accounting principles;
(xii) except as set forth in Section 4.1(f) of the Disclosure Schedule,
enter into any material contract, agreement or commitment not otherwise
permitted under this Section 5.1, including, without limitation, any contract,
agreement or commitment involving expenditures by the Company or any of its
Subsidiaries in excess of $50,000 or which is not terminable by the Company upon
giving 30 days or less prior written notice, except in the ordinary course of
business consistent with prior practice;
(xiii) settle or compromise any pending or threatened suit, action or
claim, except for products liability cases being defended in the ordinary course
of business, if such settlement or compromise involves the payment of more than
$100,000 by the Company or any Subsidiary or would impose any material
obligations on, or (other than releasing the Company's or any Subsidiary's claim
for relief in such proceeding and the Company's or any Subsidiary's right to a
trial of such claim) waive or affect any material right or interest of, the
Company, any Subsidiary, Parent or Sub; or
(xiv) commit or agree to take any of the foregoing actions.
SECTION 5.2. OTHER ACTIONS. The Company shall not, and shall cause its
Subsidiaries not to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the conditions
of the Offer set forth in Annex I or of the Merger set forth in Article VII not
being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. MEETING OF STOCKHOLDERS.
(a) Following the expiration of the Offer (or at such earlier time as the
parties hereto shall mutually agree), unless the Merger is to be effected
pursuant to Section 253 of the Delaware GCL or pursuant to written consents, the
Company will promptly take all action necessary in accordance with applicable
law and its Restated Certificate of Incorporation and By-laws to duly call, give
notice of, and convene a meeting of its stockholders (the "Stockholders'
Meeting") to consider and vote upon the adoption and approval of this Agreement
and the Merger and all actions contemplated hereby which require approval and
adoption by the Company's stockholders; provided,
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however, that the obligations contained herein shall be subject to the
provisions of Section 6.8. Parent shall agree to cause all of the shares of
capital stock of the Company held by Parent and/or Sub to be voted, either in
person or by proxy, in favor of the adoption and approval of this Agreement and
the Merger at the Stockholders' Meeting.
(b) Subject to the earlier termination of this Agreement in accordance
with the provisions of Section 8.1 (other than Section 8.1(b)(A)), if, as of
March 15, 1999, (i) more than 50% of the then-outstanding Shares shall have been
validly tendered in the Offer and not withdrawn, (ii) all of the Tender Offer
Conditions other than the Minimum Condition shall have been satisfied or waived
by Offeror, and (iii) the Minimum Condition shall not have been waived by
Offeror in order to purchase the Shares pursuant to the Offer, then, upon the
written request of Parent or Company given to the other within five days
following the expiration of the Offer, the Company shall promptly proceed to
take the actions specified in Section 6.1(a) above with respect to the
Stockholders Meeting, and the parties hereto shall, subject to the provisions of
Article VII and Section 8.1 hereof (other than Section 8.1(b)(A)), undertake in
an expeditious manner the efforts required by Section 6.4 hereof to consummate
and make effective the Merger.
SECTION 6.2. PROXY STATEMENT.
(a) In connection with the Stockholders' Meeting contemplated hereby, as
promptly as practicable after Offeror first purchases Shares pursuant to the
Offer or if the parties proceed under Section 6.1(b) hereof, and if required by
applicable law, the Company will promptly prepare and file, and Parent will
cooperate with the Company in the preparation and filing of, a preliminary
Company Proxy Statement (the "Preliminary Proxy Statement") with the SEC and
will use its commercially reasonable best efforts to respond to the comments of
the SEC concerning the Preliminary Proxy Statement and to cause the Company
Proxy Statement to be mailed to the Company's stockholders, in each case as soon
as reasonably practicable. The Company shall pay the filing fees for the
Preliminary Proxy Statement. Each party to this Agreement will notify the other
parties promptly of the receipt of the comments of the SEC, if any, and of any
request by the SEC for amendments or supplements to the Preliminary Proxy
Statement or the Company Proxy Statement or for additional information, and will
supply the other parties with copies of all correspondence between such party or
its representatives, on the one hand, and the SEC or members of its staff, on
the other hand, with respect to the Preliminary Proxy Statement, the Company
Proxy Statement or the Merger.
(b) If at any time prior to the Stockholders' Meeting, any event should
occur relating to the Company or any of the Subsidiaries which should be set
forth in an amendment of, or a supplement to, the Company Proxy Statement, the
Company will promptly inform Parent. If at any time prior to the Stockholders'
Meeting, any event should occur relating to Parent or Sub or any of their
respective Associates or Affiliates, or relating to the plans of any such
persons for the Surviving Corporation after the Effective Time of the Merger, or
relating to the Financing, that should be set forth in an amendment of, or a
supplement to, the Company Proxy Statement, the Company, with the cooperation of
Parent, will, upon learning of such event, promptly prepare, file and, if
required, mail such amendment or supplement to the Company's stockholders;
provided that, prior to such filing or
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mailing, the Company shall consult with Parent with respect to such amendment or
supplement and shall afford Parent reasonable opportunity to comment thereon.
(c) Parent will furnish to the Company the information relating to Parent
and Sub, their respective Associates and Affiliates and the plans of such
persons for the Surviving Corporation after the Effective Time of the Merger,
and relating to the Financing, which is required to be set forth in the
Preliminary Proxy Statement or the Company Proxy Statement under the Exchange
Act and the rules and regulations of the SEC thereunder. The Company shall use
its best efforts to cause to be included as an exhibit to the Preliminary Proxy
Statement and the Company Proxy Statement the fairness opinion of the Financial
Advisor referred to in Section 4.1(s).
SECTION 6.3. ACCESS TO INFORMATION; CONFIDENTIALITY. From and after the
date hereof, the Company will provide to Parent, its financing sources and their
respective Representatives (as defined below), reasonable access, upon notice
and during normal business hours, to the Company's facilities, books and records
and shall cause the directors, employees, accountants, attorneys, financial
advisors, lenders and other agents and representatives (collectively,
"Representatives") of the Company to continue to cooperate fully with Parent and
Parent's Representatives in order to enhance such persons' knowledge of the
Company's assets, contracts, liabilities, operations, records and other aspects
of its business (including any environmental investigation of the Company's
facilities) and the efforts of Parent and Sub to secure the Financing as
described in Section 4.2(d). As soon as reasonably practicable after monthly
financial statements of the Company become available to senior officers of the
Company, the Company shall provide Parent with a copy of the same. Parent shall,
and shall cause Parent's Representatives to, keep all information supplied or
made available to Parent hereunder in confidence in accordance with and subject
to the terms of that certain letter agreement between Parent and BancAmerica
Securities, Inc. dated October 1, 1998 (the "Confidentiality Agreement").
SECTION 6.4. COMMERCIALLY REASONABLE EFFORTS.
(a) Upon the terms and subject to the conditions and other agreements set
forth in this Agreement, each of the parties agrees to use commercially
reasonable efforts to take, or cause to be taken (including, without limitation,
by such parties' respective Representatives), all actions, and to do, or cause
to be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Offer, the Merger, the Financing and
the other transactions contemplated by this Agreement, including the
satisfaction of the respective conditions set forth in Annex I and Article VII
hereof. Following the purchase by Offeror of Shares pursuant to the Offer,
neither Parent nor Sub will take any action as a stockholder of the Company that
would cause the Company to breach any of the Company's obligations contained in
this Agreement.
(b) Parent and the Company shall promptly notify each other of (i) the
occurrence or non-occurrence of any fact or event which would be reasonably
likely (A) to cause any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect at any time from the date
hereof to the Effective Time or (B) to cause any covenant, condition or
obligation under this Agreement not to be complied with or satisfied in any
material
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respect, and (ii) any failure of the Company or Parent or Sub, as the case may
be, to comply with or satisfy any covenant, condition or obligation to be
complied with or satisfied by it hereunder in any material respect; provided,
however, that no such notification shall affect the representations or
warranties of any party or the conditions to the obligations of any party
hereunder.
SECTION 6.5. FINANCING. Each of Parent and Sub shall use commercially
reasonable efforts to accept and close the Financing on terms consistent with
the Commitments or such other terms as shall be satisfactory to Parent or as are
not materially more onerous to Parent than as set forth in the Commitments, and
to execute and deliver definitive agreements with respect to the Financing (the
"Definitive Financing Agreements") on or before the Closing Date. Parent and Sub
shall use commercially reasonable efforts to satisfy on or before the Closing
Date all requirements of the Definitive Financing Agreements which are
conditions to closing the transactions constituting the Financing and to drawing
the cash proceeds thereunder. The obligations contained herein are not intended,
nor shall they be construed, to benefit or confer any rights upon any person,
firm or entity other than the Company.
SECTION 6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) The Certificate of Incorporation and By-laws of the Company or the
Surviving Corporation, as the case may be, shall not be amended, repealed or
otherwise modified for a period from the date hereof until six years after the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who as of the date hereof are or were directors, officers,
employees, fiduciaries or agents of the Company and its Subsidiaries or
otherwise entitled to indemnification, advancement of expenses or exculpation
from liability under the Company's Restated Certificate of Incorporation,
By-laws or indemnification agreements (the "Indemnified Parties"). It is
understood and agreed that the Company shall, to the fullest extent permitted
under Delaware law and regardless of whether the Merger becomes effective,
indemnify, defend and hold harmless, and after the Effective Time, Parent shall,
and shall cause the Surviving Corporation to, to the fullest extent permitted
under Delaware law, indemnify, defend and hold harmless, each Indemnified Party
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any threatened, pending or completed claim, action, suit,
proceeding or investigation, including without limitation liabilities arising
out of this transaction, to the extent that it was based on the fact that such
Indemnified Party is or was a director, officer, employee, fiduciary or agent of
the Company or its Subsidiaries and arising out of actions or omissions or
alleged actions or omissions occurring at or prior to the Effective Time, and in
the event of any such claim, action, suit proceeding, or investigation (whether
arising before or after the Effective Time), (i) Parent, the Company or the
Surviving Corporation, as applicable, shall advance expenses to such Indemnified
Parties in advance of the final disposition thereof upon receipt of the
undertaking specified in Section 145 of the Delaware GCL, including payment of
the reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to Parent, promptly as statements
therefor are received and (ii) Parent, the Company and the Surviving Corporation
will cooperate in the defense of any such matter; provided, however, that
neither Parent, the Company
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nor the Surviving Corporation shall be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld);
and further, provided, that neither Parent, the Company nor the Surviving
Corporation shall be obliged pursuant to this Section 6.6 to pay the fees and
disbursements of more than one counsel for all Indemnified Parties in any single
action except to the extent that, in the written opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such action. Any determination required to be made
with respect to whether an Indemnified Party's conduct complies with the
standards set forth under Delaware law, the Certificate of Incorporation or
By-laws, as the case may be, shall be made by independent counsel mutually
acceptable to Parent and the Indemnified Party.
(b) At or prior to the Effective Time, Parent, the Company or the
Surviving Corporation shall obtain a fully-paid officers' and directors'
liability insurance policy covering the Indemnified Parties who are currently
covered by the Company's officers' and directors' liability insurance policy for
a term of six years on terms not materially less favorable than those in effect
on the date hereof in terms of coverage and amounts. This Section 6.6 shall
survive the consummation of the Merger. Notwithstanding Section 9.7 hereof, this
Section 6.6 is intended to be for the benefit of and to grant third party rights
to Indemnified Parties whether or not parties to this Agreement, and each of the
Indemnified Parties shall be entitled to enforce the covenants contained herein.
(c) If 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 all or substantially all of its properties and assets to any
person, then and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 6.6.
SECTION 6.7. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand, and
the Company, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the existence of and transactions
contemplated by this Agreement, and shall not issue any such press release or
make any such public statement without the consent of the other party following
such consultation, except as may be required by applicable law, regulation or
judicial process, and in such case only after reasonable notice to the other
party.
SECTION 6.8. ACQUISITION PROPOSALS. The Company shall not, nor shall it
authorize or permit any of its Representatives to, directly or indirectly, (i)
solicit, initiate or knowingly encourage any Third Party (as hereinafter
defined) with respect to the submission of any Acquisition Proposal (as
hereinafter defined) or (ii) participate in any discussions or negotiations
regarding, or furnish to any Third Party any non-public information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that the foregoing shall not prohibit
the Board of Directors of the Company (or, if applicable, a duly appointed
committee thereof (the "Special Committee")) from: (i) furnishing information
to, or entering into discussions or negotiations with, any Third Party in
connection with an unsolicited bona fide Acquisition
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Proposal by such Third Party if, and to the extent that, the Board of Directors
of the Company (or the Special Committee), after consultation with independent
legal counsel (who may be the Company's regularly engaged independent counsel),
determines in good faith that such action is required for the Board of Directors
of the Company to comply with its fiduciary obligations under applicable law;
(ii) withdrawing or modifying its recommendation referred to in Section 1.2(a)
following receipt of a bona fide unsolicited Acquisition Proposal if the Board
of Directors of the Company (or the Special Committee), after consultation with
independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines in good faith that such action is necessary for
the Board of Directors of the Company to comply with its fiduciary obligations
under applicable law; or (iii) making to the Company's stockholders any
recommendation and related filing with the SEC as required by Rule 14e-2 and
14d-9 under the Exchange Act, with respect to any tender offer, or taking any
other equally required action (including, without limitation, the making of
public disclosures as may be necessary or advisable under applicable securities
laws); and provided further, that, in the event of an exercise of the Company's
or its Board of Director's (or the Special Committee's) rights under clause (i),
(ii) or (iii) above, notwithstanding anything contained in this Agreement to the
contrary, such action shall not constitute a breach of this Agreement by the
Company. The Company shall provide immediate written notice to Parent of the
receipt of any oral or written inquiry or proposal from a Third Party with
respect to a merger, consolidation, share exchange, tender offer or similar
transaction involving the Company, or any purchase or other acquisition of all
or substantially all of the assets or equity interests of the Company, other
than the transactions contemplated by this Agreement (an "Acquisition
Transaction") and of the Company's intention to furnish information to, or enter
into discussions or negotiations with, such person or entity, along with a copy
of any such written inquiry or proposal and copies of any information furnished
to such Third Party, to the extent not previously provided to Parent. For
purposes of this Agreement, (i) "Acquisition Proposal" means any written
proposal with respect to an Acquisition Transaction that the Board of Directors
of the Company (or the Special Committee), after consultation with and receipt
of advice from the Financial Advisor or another nationally recognized investment
banking firm, determines in good faith in the exercise of its fiduciary
obligations under applicable law to be more favorable than the transactions
contemplated by this Agreement; and (ii) "Third Party" means any corporation,
partnership, person or other entity or "group" (as defined in Section 13(d)(3)
of the Exchange Act) other than Parent, Sub or any Affiliates of Parent or Sub
and their respective directors, officers, employees, representatives and agents.
SECTION 6.9. STOCKHOLDER LITIGATION. The Company shall give Parent the
opportunity to participate, at the expense of Parent, in the defense or
settlement of any stockholder litigation against the Company and its
Representatives relating to the transactions contemplated by this Agreement;
provided, however, that no such settlement shall be agreed to without Parent's
consent, which consent shall not be unreasonably withheld.
SECTION 6.10. COMPANY ACTION RELATING TO BENEFIT PLANS. Without Parent's
prior written consent, no action shall be taken by or on behalf of the Company,
any Subsidiary or any trustee or administrative committee with respect to any
Benefit Plan which action would, by itself, constitute cause for any employee of
the Company or a Subsidiary party to any employment, severance or change of
control agreement to claim constructive termination under such agreement.
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SECTION 6.11. CONSENTS AND APPROVALS. As soon as practicable following the
date of this Agreement, the Company and Parent and Sub shall make all filings
and notifications required to be made with and seek all consents, approvals,
permits and authorizations required to be obtained from, any third parties or
Governmental Entities in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, the filing of any required
notification under the HSR Act as promptly as practicable, and any other filing,
consent or approval listed on Section 4.1(d) of the Disclosure Schedule. The
Company shall pay any required filing fees or other expense in connection
therewith; provided that Parent shall pay the required filing fee under the HSR
Act.
SECTION 6.12. REPAYMENT OF INDEBTEDNESS. Parent or Sub shall utilize a
portion of the net proceeds of the Financing, together with available cash of
the Company, to (or to enable the Company to) repay, satisfy or otherwise
discharge, in full, the Company's or its Subsidiaries' indebtedness (including
under any guaranty or surety obligation) to (i) NationsBank, N.A. and the other
banks party to the Credit Agreement dated April 15, 1996, as amended, (ii) Bank
of America Canada pursuant to the revolving credit facility dated September 2,
1998, (iii) Bank of America National Trust and Savings Association pursuant to
the Hong Kong letter of credit facility dated June 2, 1998, and (iv) the
noteholders pursuant to the Note Purchase Agreements dated July 23, 1993 and
April 15, 1996, in each case as existing on the Closing Date (or make such other
arrangements with respect to the foregoing indebtedness as shall be satisfactory
to the lenders thereof).
SECTION 6.13. GUARANTY OF SUB'S OBLIGATIONS. Parent hereby
unconditionally guaranties to the Company the due and punctual performance by
Sub of all of Sub's obligations hereunder.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Merger and this Agreement shall have been
adopted and approved by the requisite vote of the holders of outstanding Shares,
if required by the Delaware GCL.
(b) GOVERNMENTAL CONSENTS. All filings required to be made prior to the
Effective Time with, and all consents, approvals, permits and authorizations
required to be obtained prior to the Effective Time from, any Governmental
Entities under the HSR Act which, either individually or in the aggregate, if
not made or obtained would have a Material Adverse Effect or would prevent
consummation of the Merger, shall have been made or obtained (as the case may
be).
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
judgment, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or
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other legal restraint or prohibition preventing the consummation of the Merger
shall be in effect; provided, however, that the parties invoking this condition
shall use their best efforts to have any such order or injunction vacated.
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The obligations
of Parent and Sub to effect the Merger are further subject to the satisfaction,
or waiver by Parent, on or prior to the Closing Date, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company set forth in Section 4.1 that are qualified by materiality shall be
true and correct, and the representations and warranties of the Company set
forth in Section 4.1 that are not so qualified shall be true and correct in all
material respects, individually and in the aggregate, as of the Closing Date as
though made on and as of the Closing Date, except (i) for changes permitted or
contemplated by this Agreement, and (ii) in the case of any breach of such
representations and warranties, where such breach or breaches would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) COMPANY OBLIGATIONS. The Company shall have performed in all material
respects all obligations and complied in all material respects with all
agreements and covenants of the Company required to be performed or complied
with by it under this Agreement including, without limitation, its obligations
under Articles V and VI hereof, except, in the case of any breach of any such
obligation, agreement or covenant, where such breach or breaches would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) OFFICERS' CERTIFICATE. The Company shall have furnished Parent with
such certificates and other documents to evidence the fulfillment of the
conditions set forth in this Section 7.2 as Parent may reasonably request.
(d) FINANCING. The Financing Condition shall have been satisfied.
(e) GOVERNMENTAL CONSENTS. All filings required to be made by the Company
or its Subsidiaries prior to the Effective Time with, and all consents,
approvals, permits and authorizations required to be obtained by the Company or
its Subsidiaries prior to the Effective Time from, any Governmental Entities,
which, either individually or in the aggregate, if not made or obtained would
have a Material Adverse Effect on or after the Effective Time or would prevent
consummation of the Merger, shall have been made or obtained (as the case may
be).
(f) MATERIAL ADVERSE CHANGE. Between the date of the Agreement and the
Effective Time, there shall not have been a material adverse change in the
business, assets, properties, condition (financial or otherwise), or results of
operations of the Company and its Subsidiaries taken as a whole.
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(g) DISSENTING SHARES. The percentage of Dissenting Shares shall not be
greater than 10% of the aggregate number of Shares outstanding immediately prior
to the Effective Time.
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of
the Company to effect the Merger are further subject to the satisfaction, or
waiver by the Company, on or prior to the Closing Date, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent and Sub set forth in Section 4.2 that are qualified by materiality shall
be true and correct, and the representations and warranties of Parent and Sub
set forth in Section 4.2 that are not so qualified shall be true and correct in
all material respects, individually and in the aggregate, as of the Closing Date
as though made on and as of the Closing Date, except (i) for changes permitted
or contemplated by this Agreement, and (ii) in the case of any breach of such
representations and warranties, where such breach or breaches would not,
individually or in the aggregate, materially and adversely affect the
consummation of the Merger.
(b) PARENT OBLIGATIONS. Parent and Sub shall have performed in all
material respects all obligations and complied in all material respects with all
agreements and covenants required to be performed or complied with by them under
this Agreement including, without limitation, their respective obligations under
Article VI hereof, except, in the case of any breach of any such obligation,
agreement or covenant, where such breach or breaches would not, individually or
in the aggregate, materially adversely affect the consummation of the Merger.
(c) OFFICERS' CERTIFICATE. Parent shall have furnished the Company with
such certificates and other documents to evidence the fulfillment of the
conditions set forth in this Section 7.3 as the Company may reasonably request.
(d) GOVERNMENTAL CONSENTS. All filings required to be made by Parent or
its subsidiaries prior to the Effective Time with, and all consents, approvals,
permits and authorizations required to be obtained by Parent or its subsidiaries
prior to the Effective Time from, any Governmental Entities, which, either
individually or in the aggregate, if not made or obtained would prevent
consummation of the Merger, shall have been made or obtained (as the case may
be).
SECTION 7.4. EXCEPTION. The conditions set forth in Sections 7.2 and 7.3
hereof shall cease to be conditions to the obligations of any of the parties
hereto if Offeror shall have accepted for payment and paid for Shares validly
tendered pursuant to the Offer.
SECTION 7.5. FRUSTRATION OF CONDITIONS. No party hereto may rely on the
failure of any condition set forth in this Article to be satisfied if such
failure was caused by such party's failure to use commercially reasonable
efforts to consummate the transactions contemplated by this Agreement.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION. This Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before or after
approval of the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company prior to the
purchase of Shares pursuant to the Offer; or
(b) (A) by either Parent or the Company, if: (i) the Offer shall not have
been commenced within the time period specified in Section 1.1(a), unless the
failure to have commenced the Offer is as a result of any judgment, injunction,
order, decree or other legal restraint or prohibition enjoining or otherwise
restraining the commencement of the Offer, and provided notice of termination
under this subsection has been given prior to the actual commencement of the
Offer (even if such commencement occurs later than the time period specified in
Section 1.1(a)), or (ii) the Offer shall have terminated or expired or been
withdrawn in accordance with its terms without Offeror having purchased any
Shares pursuant to the Offer, or (iii) at any time after March 15, 1999 (or such
later date to which the Offer shall have been extended pursuant to Section
1.1(b)) the Offer has not been consummated; but only to the extent that the
parties shall not then be required to proceed under Section 6.1(b) and provided
that the failure to commence or consummate the Offer, as the case may be, is not
attributable to the failure of the terminating party to fulfill its obligations
pursuant to this Agreement; or (B) by the Company prior to the purchase of
Shares pursuant to the Offer, if any change to the Offer is made by Offeror in
contravention of the provisions of Section 1.1; or
(c) by either Parent or the Company, if: (i) upon a vote at the
Stockholders Meeting, or any adjournment thereof, the adoption and approval of
this Agreement and the Merger by the stockholders of the Company required by
Delaware law, the Company's Restated Certificate of Incorporation or By-laws or
the terms of this Agreement shall not have been obtained; or (ii) the Merger
shall not have been consummated on or before June 15, 1999, provided that the
failure to consummate the Merger is not attributable to the failure of the
terminating party to fulfill its obligations pursuant to this Agreement; or
(iii) there shall be any law or regulation that makes consummation of the Offer
or the Merger illegal or otherwise prohibited, or if any judgment, injunction,
order or decree enjoining or otherwise restraining Offeror from purchasing
Shares pursuant to the Offer or Parent, Sub or the Company from consummating the
Merger is entered and such judgment, injunction, order or decree shall become
final and non-appealable; provided that neither Parent nor the Company may
terminate this Agreement pursuant to clause (i) or (ii) hereof if the Shares are
purchased pursuant to the Offer; or
(d) by the Company prior to the purchase of Shares pursuant to the Offer,
immediately after payment to Parent of the Termination Amount as defined in
Section 8.2(b), if the Board of Directors shall have withdrawn or modified in a
manner adverse to Parent or Sub its approval or recommendation of the Offer,
this Agreement or the Merger in order to permit the Company to
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execute an Acquisition Proposal providing for the acquisition of the Company by
a Third Party as determined by the Board of Directors in good faith after
consultation with independent legal counsel (who may be the Company's regularly
engaged independent counsel) that such action is required for the Board of
Directors of the Company to comply with its fiduciary obligations to
stockholders under applicable law; or
(e) by Parent prior to the purchase of Shares pursuant to the Offer, if
the Board of Directors of the Company shall have approved an Acquisition
Proposal or withdrawn or modified (including by amendment of the Schedule
14D-9), in a manner adverse to Parent or Sub, the Board of Director's
recommendation pursuant to Section 1.2(a); or
(f) by Parent prior to the purchase of Shares pursuant to the Offer, if
any of the conditions set forth in Sections 7.1 or 7.2 shall have become
incapable of fulfillment, and shall not have been waived by Parent, or if the
Company shall breach in any respect any of its representations, warranties or
obligations hereunder and such breach shall have a Material Adverse Effect, and
the Company shall not have provided reasonable assurance that such breach will
be cured in all material respects on or before the Closing Date; or
(g) by the Company prior to the purchase of Shares pursuant to the Offer,
if any of the conditions set forth in Sections 7.1 or 7.3 shall have become
incapable of fulfillment, and shall not have been waived by the Company, or if
Parent or Sub shall breach in any respect any of their respective
representations, warranties or obligations hereunder and such breach shall have
a material adverse effect on the consummation of the transactions contemplated
by this Agreement, and Parent or Sub, as the case may be, shall not have
provided reasonable assurance that such breach will be cured in all material
respects on or before the Closing Date;
provided, however, that the party seeking termination pursuant to clause
(f) or (g) hereof is not in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.
SECTION 8.2. EFFECT OF TERMINATION.
(a) AGREEMENT VOID. In the event of the termination and abandonment of
this Agreement pursuant to Section 8.1 hereof, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
hereto or its affiliates, directors, officers or stockholders and all rights and
obligations of any party hereto shall cease, except for agreements contained in
Sections 6.6, 8.2 and 9.2; provided, however, that (i) nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of this
Agreement nor relieve the Company from any liability under this Article VIII,
and (ii) the Confidentiality Agreement shall remain in full force and effect in
accordance with its terms.
(b) TERMINATION AMOUNT. If this Agreement is terminated pursuant to either
of Sections 8.1(d) or 8.1(e), then the Company shall (provided that neither
Parent nor Sub is then in material breach of its obligations under this
Agreement) promptly (but not later than the second
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business day following such termination) pay to Parent the sum of $4.5 million
in cash (the "Termination Amount").
(c) ACQUISITION PROPOSAL FOLLOWING TERMINATION. If (i) as of the
expiration or other termination of the Offer in accordance with its terms, the
number of Shares then validly tendered in the Offer and not withdrawn shall be
equal to or less than 50% of the then outstanding number of Shares, and this
Agreement is terminated, (ii) all Tender Offer Conditions are satisfied at the
time of the expiration or termination of the Offer (except (x) any condition
that requires tender of 50% or more of the Shares, (y) in the case of the
Financing Condition, the parties issuing the Commitments would be then prepared
to provide the financing thereunder (if the required number of Shares were
tendered), and (z) condition (e) set forth on Annex I, provided Parent or Sub
have not terminated the Agreement for any breach of the Agreement which
constitutes a violation of said condition (e)), and (iii) at any time prior to
or within one year after termination of this Agreement, the Company enters into
an agreement relating to an Acquisition Proposal at a value (if the
consideration is other than a cash payment) or at a price per Share to
stockholders which is greater (after giving effect to any stock dividends, stock
splits, recapitalizations and similar events affecting the Shares) than the per
share price set forth in this Agreement, with a person other than Parent or Sub
or their Affiliates and Associates, which agreement is Consummated within such
one year period, then, upon the Consummation thereof, the Company shall pay to
Parent the Termination Amount. At no time prior to or within one year after
termination of this Agreement shall the Company enter into any agreement
relating to any such Acquisition Proposal which is to be Consummated within such
one year period with a person other than Parent or Sub or their Affiliates and
Associates unless such agreement provides that such person shall, upon the
execution of such agreement, pay any Termination Amount due Parent under this
Section 8.2 which at that time remains unpaid. For purposes hereof, an
Acquisition Proposal shall be "Consummated" on the first date after the
execution thereof that the other party thereto acquires any Shares or assets of
the Company or its Subsidiaries, whether by purchase, exchange, merger,
consolidation or otherwise.
(d) REASONABLE INDUCEMENT. The parties acknowledge and agree that the
provisions for payment of the Termination Amount are included herein in order to
reasonably induce Parent to enter into this Agreement and to reimburse Parent
for incurring the costs and expenses related to entering into this Agreement,
obtaining the Commitments and the Financing, and consummating the transactions
contemplated by this Agreement.
(e) COSTS OF ENFORCEMENT. Notwithstanding anything to the contrary set
forth in this Agreement, in the event Parent and/or Sub files suit to seek all
or a portion of the Termination Amount, the prevailing party in any such suit
shall be entitled, in addition to any other relief to which it may be entitled,
to payment by the non-prevailing party of all expenses, including reasonable
attorneys' fees and expenses, which it incurs in enforcing its rights under this
Section 8.2.
SECTION 8.3. AMENDMENT. Subject to the applicable provisions of the
Delaware GCL, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties; provided, however, that
after approval of the Merger by the stockholders of the Company, no amendment
shall be made which reduces the consideration payable in the Merger or adversely
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affects the rights of the Company's stockholders hereunder without the approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
SECTION 8.4. EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to Section 8.2, waive compliance with any of the agreements or conditions of the
other parties contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties set forth in this Agreement shall survive the
Effective Time or, if earlier, the date of the purchase of Shares pursuant to
the Offer. This Section 9.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after such time or date,
including, without limitation, Section 6.6.
SECTION 9.2. FEES AND EXPENSES. Except as provided otherwise in this
Agreement, including, without limitation, in Sections 6.2, 6.11 and 8.2, whether
or not the Merger shall be consummated, each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 9.3. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act; and
(b) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
SECTION 9.4. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given when delivered personally or sent by overnight courier (providing proof of
delivery) or telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to: Holmes Products Corp.
233 Fortune Boulevard
Milford, MA 01757
42
<PAGE> 46
Attn: Jordan A. Kahn, President
Telecopy No.: (508) 634-8734
with copies to: Berkshire Partners LLC
One Boston Place
Boston, MA 02108
Attn: Richard K. Lubin, Managing Director
Telecopy No.: (617) 227-6105
- and -
Posternak, Blankstein & Lund, L.L.P.
100 Charles River Plaza
Boston, MA 02114
Attn: Donald H. Siegel, P.C.
Telecopy No.: (617) 367-2315
(b) if to the Company, to: The Rival Company 800
East 101st Terrace Kansas City, MO 64131
Attn: Board of Directors Telecopy No.:
816-943-4107
with a copy to: Morrison & Hecker LLP
Two Crown Center
2420 Pershing Road
Kansas City, MO 64108
Attn: Kent Whittaker, Esq.
Telecopy No.: (816) 421-2896
SECTION 9.5. INTERPRETATION. When a reference is made in this Agreement to
a Section or Schedule, such reference shall be to a Section of, or a Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
SECTION 9.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.7. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement
and the other agreements referred to herein, including without limitation the
Confidentiality Agreement, constitute the entire agreement, and supersede all
prior agreements and
43
<PAGE> 47
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement. This Agreement is not intended to confer upon
any person, other than the parties hereto and the third party beneficiaries
referred to in the following sentence, any rights or remedies. The parties
hereto expressly intend the provisions of Section 6.6 to confer a benefit upon
and be enforceable by, as third party beneficiaries of this Agreement, the third
persons referred to in, or intended to be benefited by, such provisions.
SECTION 9.8. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.9. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any such assignment that is not
consented to shall be null and void, except that Parent may assign this
Agreement (i) to any wholly owned subsidiary of Parent or (ii) together with all
of the outstanding capital stock of Sub, to an entity organized under the
corporate or limited liability laws of jurisdiction of one of the United States
of America, the ownership interests of which entity are substantially identical
to the ownership interests of Parent immediately prior to such assignment and
which entity specifically and expressly assumes by written agreement the
obligations of Parent under this Agreement; in either case so long as such
assignment shall not adversely affect the ability of Parent and Sub to secure
the Financing described in Section 4.2(d) and without Parent being released from
liability hereunder and such transfer or assignment will not relieve Parent or
Sub of their obligations under the Offer or prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 9.10. ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
(without requirement to post a bond) the terms and provisions of this Agreement,
this being in addition to any other remedy to which they are entitled at law or
in equity.
SECTION 9.11. SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
[Remainder of Page Intentionally Left Blank.]
44
<PAGE> 48
IN WITNESS WHEREOF, the Company, Parent and Sub have caused this Agreement
to be executed as an agreement under seal by their respective officers thereunto
duly authorized, all as of the date first written above.
THE RIVAL COMPANY
By: /s/ THOMAS K. MANNING
--------------------------------------
Name: Thomas K. Manning
Title: Chairman/Chief Executive Officer
HOLMES PRODUCTS CORP.
By: /s/ JORDAN A. KAHN
---------------------------------------
Name: Jordan A. Kahn
Title: President and Chief Executive
Officer
MORIARTY ACQUISITION CORP.
By: /s/ JORDAN A. KAHN
---------------------------------------
Name: Jordan A. Kahn
Title: President
45
<PAGE> 49
ANNEX I
The capitalized terms used in this Annex have the meanings set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement.
Notwithstanding any other provision of the Offer or the Merger Agreement,
Offeror shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1 (c) under the
Exchange Act (relating to Offeror's obligation to pay for or return tendered
Shares after the termination or withdrawal of the Offer), to pay for any Shares,
and may terminate and withdraw the Offer, if (i) the Minimum Condition has not
been satisfied, (ii) the applicable waiting period under the HSR Act shall not
have expired or been terminated, (iii) the Financing Condition has not been
satisfied, or (iv) at any time on or after the date of the Merger Agreement and
prior to the acceptance for payment of or payment for Shares, any of the
following conditions shall occur and be continuing:
(a) there shall be instituted or pending any action, suit, investigation,
litigation or proceeding before any domestic court, government or Governmental
Entity or arbitrator, other than by Parent or Sub, a stockholder of Parent or
Sub or any person affiliated with Parent or Sub that, in the reasonable judgment
of Parent, materially adversely affects, or is reasonably likely to materially
adversely affect, the Company and its Subsidiaries, taken as a whole, or Parent
and its subsidiaries, taken as a whole, the Financing, or the consummation of
the transactions contemplated by the Merger Agreement, provided that, in any
such case, Parent shall have used commercially reasonable efforts to defeat or
have vacated any such action or proceeding against Parent or Sub and shall have
failed to do so; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, interpretation, judgment, order or decree enacted, enforced,
promulgated, issued or deemed applicable to Parent or any of its Subsidiaries or
to the Company or any of its Subsidiaries or the Offer or the Merger, by any
court, government or Governmental Entity, other than the application of the
waiting period provision of the HSR Act to the Offer or the Merger that, in the
reasonable judgment of Parent, is likely, directly or indirectly, to result in
any of the consequences referred to in paragraph (a) above; or
(c) any change, event, occurrence or circumstance shall have occurred
that, in the reasonable judgment of Parent, would have a Material Adverse
Effect; or
(d) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange, which
suspension or limitation shall continue for at least three consecutive trading
days (excluding suspensions or limitations resulting solely from physical damage
or interference with such exchange not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (iii) a commencement of a war or armed hostilities
or other national or international calamity directly or indirectly involving the
United States which would reasonably be expected to
<PAGE> 50
have a material adverse impact on the capital markets of the United States, or
(iv) in the case of any of the foregoing existing on the date of the Merger
Agreement, a material acceleration, escalation or worsening thereof; or
(e) the Company shall have breached or failed to perform in any material
respect any of its covenants or agreements under the Merger Agreement, or (i)
any of the representations and warranties of the Company set forth in the Merger
Agreement that are qualified as to materiality shall not be true and correct, or
(ii) any of the representations and warranties of the Company set forth in the
Merger Agreement that are not so qualified shall not be true and correct in any
material respect, individually or in the aggregate, in each case when made and
as of the expiration of the Offer; except for changes permitted or contemplated
by the Merger Agreement and except for such breaches of representations,
warranties, covenants or agreements as would not have, individually or in the
aggregate, a Material Adverse Effect or materially adversely affect the
Financing or the consummation of the transactions contemplated by the Merger
Agreement; or
(f) the Merger Agreement shall have been terminated in accordance with its
terms; or
(g) any Third Party acquires beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of 25% or more of the outstanding Shares, unless
such Shares have been validly tendered and not withdrawn; or
(h) a tender offer or exchange offer for more than 25% of the Shares shall
have been made or publicly proposed by a Third Party; or
(i) the Board of Directors of the Company withdraws or modifies in a
manner adverse to Sub or Parent its approval or recommendation of the Offer, the
Merger Agreement or the Merger or recommends or approves an Acquisition Proposal
by a Third Party; or
(j) any filing required to be made by the Company or its Subsidiaries
with, or any consent, approval, permit or authorization required to be obtained
by the Company or its Subsidiaries from, any Governmental Entity which, either
individually or in the aggregate, if not made or obtained would have a Material
Adverse Effect at the time of or after the consummation of the Offer or would
prevent the consummation of the Offer shall not have been made or obtained (as
the case may be);
which, in the reasonable judgment of Parent, in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and Sub and may be
asserted by Parent or Sub regardless of the circumstances giving rise to such
condition or may be waived by Parent or Sub in whole or in part at any time and
from time to time in its sole discretion. The failure by Parent or Sub or any
Affiliate of Parent or Sub 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
<PAGE> 51
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.
<PAGE> 1
TENDER AND VOTING AGREEMENT
TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of December 17,
1998, by and among Holmes Products Corp., a Massachusetts corporation
("Parent"), Moriarty Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and the individuals set forth on
Exhibit A hereto (the "Stockholders," or individually, a "Stockholder"), each of
whom holds shares of The Rival Company, a Delaware corporation (the "Company").
WHEREAS, concurrently herewith, Parent, Sub and the Company, are entering
into an Agreement and Plan of Merger of even date herewith (the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement), pursuant to which Sub agrees to
make a tender offer (the "Offer") for all outstanding shares of Common Stock,
par value $.01 per share (the "Shares"), of the Company at $13.75 per share, net
to the seller in cash (the "Offer Price"), to be followed by the merger of Sub
with the Company (the "Merger"), with the corporation surviving the Merger
becoming a wholly-owned subsidiary of Parent;
WHEREAS, as of the date hereof, the Stockholders beneficially own the
Shares set forth on Exhibit A hereto (the "Owned Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have required that the Stockholders agree, and the
Stockholders have agreed (i) to tender pursuant to the Offer all of the Owned
Shares (which term shall include any Shares acquired by them after the date
hereof), (ii) to vote the Owned Shares in favor of the adoption of the Merger
Agreement and the approval of the Merger, (iii) to appoint Parent as the
Stockholders' proxy to vote the Owned Shares in connection with the Merger
Agreement and the Merger and (iv) with respect to other matters put to
stockholders of the Company for a vote, to vote the Owned Shares, in each case,
in accordance with the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Agreement to Tender and Vote.
1.1 Tender. Each of the Stockholders hereby agrees to validly tender (or
cause the record owner to tender), and not to withdraw, pursuant to and in
accordance with the terms of the Offer, not later than three (3) business days
prior to the initial expiration of the Offer, the Owned Shares beneficially
owned by him on the date hereof and any additional Shares acquired by such
Stockholder in any capacity after the date hereof and prior to the termination
of this Agreement (whether upon the exercise of options, warrants or rights, the
conversion or exchange of
<PAGE> 2
convertible or exchangeable securities, or by means of purchase, dividend,
distribution, gift, bequest, inheritance or as a successor in interest in any
capacity or otherwise) beneficially owned by such Stockholder, which additional
Shares shall constitute Owned Shares for all purposes of this Agreement. Parent
and Sub agree to accept and pay for the Owned Shares in the Offer, subject to
the terms and conditions of the Offer. The parties agree that the Stockholders
will, for all Owned Shares tendered by the Stockholders in the Offer and
accepted for payment and paid for by Sub, receive the same per share
consideration paid to other shareholders who have tendered Shares into the
Offer. The transfer by the Stockholders of the Owned Shares to Sub in the Offer
shall, upon payment therefor, pass to and unconditionally vest in Sub good and
valid title to the Owned Shares, free and clear of all claims, liens,
restrictions, security interests, pledges, limitations and encumbrances
whatsoever.
1.2 Voting. Each Stockholder hereby agrees that, during the time this
Agreement is in effect, at any meeting of the shareholders of the Company,
however called, or any other opportunity to vote, he shall (a) vote all of the
Owned Shares as are beneficially owned by him on the record date for determining
stockholders of record entitled to vote at such meeting in favor of the adoption
of the Merger Agreement and approval of the Merger; (b) vote such Owned Shares
against any action or agreement that would result in a breach in any material
respect of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement; and (c) vote such Owned
Shares against any action or agreement (other than the Merger Agreement or the
transactions contemplated thereby) that would impede, interfere with, delay,
postpone or attempt to discourage the Merger, including, but not limited to: (i)
any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company; or (ii) a sale or transfer of
a material amount of assets of the Company or any of its subsidiaries or a
reorganization, recapitalization or liquidation of the Company or any of its
subsidiaries. Each Stockholder shall forward to Parent any proxy cards that such
Stockholders receive with respect to the Merger Agreement duly executed by such
Stockholder.
1.3 Irrevocable Proxy. Each Stockholder (without any further action on
such Stockholder's part) shall be deemed to have hereby irrevocably appointed
Parent as the attorney and proxy of such Stockholder, with full power of
substitution, to vote, and otherwise act (by written consent or otherwise) with
respect to all Owned Shares that such Stockholder is entitled to vote at any
meeting of stockholders of the Company (whether annual or special and whether or
not an adjourned or postponed meeting) or consent in lieu of any such meeting or
otherwise, to vote such Shares as set forth in Section 1.2 above. THIS PROXY AND
POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST. Each Stockholder
hereby revokes, effective upon the execution and delivery of the Merger
Agreement by the parties thereto, all other proxies and powers of attorney with
respect to the Owned Shares that he may have heretofore appointed or granted,
and no subsequent proxy or power of attorney (except in furtherance of such
Stockholder's obligations under Section 1.2 hereof) shall be given or written
consent executed (and if given or executed, shall not be effective) by such
Stockholder with respect thereto so long as the Stockholder's obligations under
this Section remain in effect.
2
<PAGE> 3
The proxy granted hereunder shall automatically be revoked and of no further
force and effect upon termination of this Agreement.
2. Termination of Agreement. (a) This Agreement and the Stockholders'
obligations hereunder shall terminate on the earlier of (i) the consummation of
the Merger, (ii) the termination of the Offer pursuant to the terms of the
Merger Agreement without any Shares having been purchased pursuant thereto, or
(iii) the termination of the Merger Agreement in accordance with its terms,
including as such terms may be amended or extended by the parties thereto.
(b) The obligations of any Stockholder hereunder may be
terminated by such Stockholder if (i) Purchaser or Sub shall have failed to
comply with any of its obligations under Article I of the Merger Agreement or
(ii) Purchaser or Sub shall have violated any provisions of this Agreement.
3. Representations and Warranties.
3.1 Representations and Warranties of Parent and Sub. Parent and Sub
hereby represent and warrant to Stockholder as follows:
(a) Organization; Due Authorization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of Commonwealth
of Massachusetts. Parent has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of
Parent, and no other corporate proceedings on the part of Parent are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Parent and constitutes a valid and binding agreement of Parent, enforceable
against Parent in accordance with its terms, except to the extent (i) such
enforcement may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights and (ii) the remedy of specific enforcement and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) Organization; Due Authorization. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Sub has full corporate power and authority to execute and deliver this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Sub, and no other corporate proceedings on the part of
Sub are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Sub and constitutes a valid and binding agreement of Sub,
enforceable against Sub in accordance with its terms, except to the extent (i)
such enforcement may be limited by applicable
3
<PAGE> 4
bankruptcy, insolvency or similar laws affecting creditors' rights and (ii) the
remedy of specific enforcement and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
3.2 Representations and Warranties of The Stockholders. Each Stockholder
hereby severally represents and warrants to Parent and Sub as follows:
(a) Title. Such Stockholder has good and valid title (which may include
holding in nominee or "street" name) to the number of Owned Shares set opposite
his name on Exhibit A, free and clear of any lien, charge, encumbrance or claim
of whatever nature.
(b) Ownership of Shares. On the date hereof, the Stockholder beneficially
owns the number of Shares set opposite his name on Exhibit A, all of which are
held of record by him (except as otherwise set forth on Exhibit A). Such
Stockholder has sole voting power and sole power of disposition with respect to
the number Owned Shares set opposite his name on Exhibit A, with no
restrictions, subject to applicable federal securities laws, on his rights of
disposition pertaining thereto; provided that, if any of the Owned Shares are
held jointly, such Stockholder agrees to cause each joint owner of such Owned
Shares to comply with the provisions of this Agreement.
(c) Power; Binding Agreement. Such Stockholder has the legal capacity,
power and authority to enter into and perform all of his obligations under this
Agreement. The execution, delivery and performance of this Agreement by such
Stockholder will not violate any other agreement to which such Stockholder is a
party including, without limitation, any voting agreement, stockholders
agreement or voting trust. This Agreement has been duly and validly executed and
delivered by such Stockholder and constitutes a valid and binding agreement of
such Stockholder, enforceable against such Stockholder in accordance with its
terms, except to the extent (i) such enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights and (ii) the
remedy of specific enforcement and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(d) No Conflicts. The execution, delivery and performance of this
Agreement by such Stockholder will not constitute a breach, violation or default
(or any event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any lien or encumbrance upon any of the properties or
assets of the Stockholder under, any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument to which such Stockholder
is a party or by which his respective properties or assets are bound.
4. Certain Covenants of the Stockholders. Each Stockholder hereby
covenants and agrees while this Agreement is in effect, as follows:
4
<PAGE> 5
4.1 Restriction on Transfer, Proxies and Non-Interference. Not to (i)
sell, transfer, pledge, encumber, assign or otherwise dispose of, or enter into
any contract, option or other arrangement or understanding with respect to the
sale, transfer, pledge, encumbrance, assignment or other disposition of, any of
his Owned Shares, (ii) grant any proxies, deposit any shares of capital stock of
the Company into a voting trust or enter into a voting agreement with respect to
any such Shares or (iii) take any action that would make any representation or
warranty of such Stockholder contained herein untrue or incorrect or have the
effect of preventing or disabling such Stockholder from performing his
obligations under this Agreement; provided, however, that such Stockholder shall
be permitted to transfer any of the Owned Shares to any member of the immediate
family of such Stockholder or any trust, limited partnership or other entity the
beneficial ownership of which is held by the Stockholder or such family members
(each, a "Permitted Transferee"), so long as such Permitted Transferee agrees in
writing, in form and substance satisfactory to Parent and Sub, to be bound by
the terms hereof to the same extent as such Stockholder is bound and provided
further, however, that no such transfer shall relieve such Stockholder of his
obligations hereunder if such Permitted Transferee does not perform such
obligations;
4.2 Additional Shares. To promptly notify Parent and Sub of the number of
additional Shares acquired by such Stockholder, if any, after the date hereof,
which additional Shares shall be deemed Owned Shares for all purposes of this
Agreement; and
4.3 No Solicitation of Transactions. Subject to the provisions of Section
6.8 of the Merger Agreement relating to actions by such Stockholder in his
capacity as a director or officer of the Company, not to directly or indirectly,
solicit, initiate or participate, or offer to participate with any person or
entity in any Acquisition Proposal or offer from any person or entity, or engage
in discussions or negotiations relating thereto (including by way of furnishing
information). While this Agreement is in effect, such Stockholder shall promptly
advise Purchaser of his receipt of any Acquisition Proposal (and provide the
details thereof) or if any inquiries are received by, any information or
documents are requested from, or any negotiations or discussions are sought to
be instituted or continued with, such Stockholder or any of his affiliates.
5. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be necessary or
desirable to consummate and make effective the transactions contemplated by
Section 1 of this Agreement.
6. Miscellaneous.
6.1 Entire Agreement, Assignment. This Agreement (i) constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the
5
<PAGE> 6
subject matter hereof and (ii) shall not be assigned by operation of law or
otherwise, provided that Parent or Sub may assign its rights and obligations
hereunder to any direct or indirect wholly-owned subsidiary of Parent, but no
such assignment shall relieve Parent or Sub of its obligations hereunder if such
assignee does not perform such obligations. The obligations of the Stockholders
under this Agreement are several, and not joint.
6.2 Notice. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
To the Stockholders:
c/o The Rival Company
800 East 101st Terrace
Attn: Board of Directors
Kansas City, Missouri 64131
copy to:
Morrison & Hecker LLP
2420 Pershing Road
Fourth Floor
Kansas City, Missouri 64108-2537
Attention: Kent E. Whittaker, Esq.
To Parent or Sub:
Holmes Products Corp.
233 Fortune Boulevard
Milford, Massachusetts 01757
Attention: Ira Morgenstern
copies to:
Berkshire Partners
One Boston Place
Boston, Massachusetts 02108-4401
Attention: Richard K. Lubin
6
<PAGE> 7
and
Posternak, Blankstein & Lund, L.L.P.
100 Charles River Plaza
Boston, Massachusetts 02114
Attention: Donald H. Siegel, P.C.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
6.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
6.4 Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereby agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
6.5 Counterparts. This Agreement may be executed in one or more
counterparts, whether original signatures or facsimile copies, which together
shall form one complete Agreement.
6.6 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
6.7 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal on the date and year first above written.
7
<PAGE> 8
PARENT:
HOLMES PRODUCTS CORP.
By: /s/ Stan Rosenzweig
---------------------------------
Its: Chief Operating Officer
-------------------------------
SUB:
MORIARTY ACQUISITION CORP.
By: /s/ Stan Rosenzweig
---------------------------------
Its: Vice President
-------------------------------
8
<PAGE> 9
STOCKHOLDERS:
/s/ Thomas K. Manning
-------------------------------------
Name: Thomas K. Manning
/s/ William L. Yager
-------------------------------------
Name: William L. Yager
/s/W. Mark Meieroffer
-------------------------------------
Name: W. Mark Meierhoffer
/s/ Darrel M. Sanders
-------------------------------------
Name: Darrel M. Sanders
/s/ Stanley D. Biggs
-------------------------------------
Name: Stanley D. Biggs
/s/ Jack J. Culberg
-------------------------------------
Name: Jack J. Culberg
/s/ Todd Goodwin
-------------------------------------
Name: Todd Goodwin
/s/ John E. Grimm, III
-------------------------------------
Name: John E. Grimm, III
/s/ Lanny R. Julian
-------------------------------------
Name: Lanny R. Julian
/s/ Noel Thomas Patton
-------------------------------------
Name: Noel Thomas Patton
/s/ Beatrice B. Smith
-------------------------------------
Name: Beatrice B. Smith
9
<PAGE> 10
EXHIBIT A
<TABLE>
<CAPTION>
Name, Title and Address No. of Owned Shares
----------------------- -------------------
<S> <C>
Thomas K. Manning 69,563
Chairman, Chief Executive Officer, Director
William. L. Yager 6,000
President, Chief Operating Officer, Director
W. Mark Meierhoffer 2,000
Senior Vice President -
Finance & Administration, CFO
Darrel M. Sanders 26,054
Senior Vice President - Operations, Director
Stanley D. Biggs 2,314
Vice President, Treasurer, Corporate Secretary
Jack J. Culberg 34,900
Director
Todd Goodwin 54,238
Director
John E. Grimm, III 2,300
Director
Lanny R. Julian 1,200
Director
Noel Thomas Patton 850,000
Director
Beatrice B. Smith 1,200
Director
</TABLE>
10
<PAGE> 1
BA PARTNERS
- - DIVISION OF BANCAMERICA SECURITIES, INC.
- - BANKAMERICA COMPANY
OCTOBER 1, 1998
STRICTLY CONFIDENTIAL
Mr. Jerry Kahn
President and Chief Executive Officer
Holmes Products Corp.
233 Fortune Boulevard
Milford, MA 0175 7
Dear Mr. Kahn:
You have requested information from The Rival Company and its affiliates
(collectively the "Company") in connection with your consideration of a possible
transaction between the Company or its shareholders and you. As a condition to
your being furnished such information, you agree to treat any information
(whether prepared by the Company, its advisors or otherwise, and whether oral or
written) that is furnished to you or your representatives (which term shall
include your directors, officers, partners, employees, agents, advisors,
accountants, attorneys and potential financing sources) by or on behalf of the
Company (herein collectively referred to as the "Evaluation Material') in
accordance with the provisions of this letter and to take or abstain from taking
certain other actions herein set forth. The term "Evaluation Material" does not
include information that (i) is already lawfully in your possession, provided
that such information is not known by you to be subject to another
confidentiality agreement with or other obligation of secrecy to the Company or
another party, or (ii) is or becomes generally available to the public other
then as a result of a disclosure by you, your representatives or anyone acting
on your or their behalf, or (iii) is or becomes available to you on a
non-confidential basis from a source other than the Company or its advisors,
provided that such source is not known by you to be bound by a Confidentiality
agreement with or other obligation of secrecy to the Company or another party,
or (iv) is independently developed by you or your representatives without
violating any provision hereof.
You hereby agree that the Evaluation Material will be used solely for the
purpose of evaluating a possible transaction between the Company or its
shareholders and you (the "Transaction"), and will be kept confidential by you
and your representatives. You further agree the Evaluation Material will not be
provided, disclosed or otherwise made
<PAGE> 2
Holmes Products Corp.
October 1, 1998
Page 2
directly or indirectly available to any person or entity other than those
individuals who need to know such information for the purpose of evaluating or
financing any such possible Transaction and who agree to keep such information
confidential and to be bound by this agreement to the same extent as if they
were parties hereto and subject to all of your obligations hereunder. You will
be responsible for any breach of this agreement by your representatives.
You hereby acknowledge that you are aware, and that you will advise your
representatives who are informed as to the matters which are the subject of this
letter, that the United States securities laws may prohibit any person who has
received material, non-public information concerning the matters which are the
subject of this letter from purchasing or selling securities of such issue or
from communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.
Notwithstanding any provision of this letter agreement to the contrary, in the
event you or your representatives are requested or required in a judicial
administrative or governmental proceeding, or required by statute or pursuant to
any rule or regulation promulgated by the Securities and Exchange Commission
(the "Rules and Regulations") to disclose any Evaluation Material or the
existence, content or status of negotiations relating to the Transaction, you
agree to provide the Company with prompt notice of such circumstance and all
related proceedings and information so that the Company may seek an appropriate
protective order, take other action deemed advisable by the Company or waive
your compliance with the confidentiality provisions of this letter agreement.
If, as a result of any such request or requirement you or your representatives
are, in the written opinion of your outside counsel ("Counsel"), compelled to
disclose Evaluation Material or the existence, content or status of negotiations
relating to the Transaction you may disclose that portion of the Evaluation
Material which your Counsel advises in writing that you or your representatives
are legally compelled to disclose without liability hereunder, provided that you
comply with the notice provisions of this paragraph and apply for confidential
treatment of such portions of the Evaluation Material as may be permitted under
the Rules and Regulations.
You agree that you will not, and will cause your representatives not to,
disclose to any person either the fact that discussions or negotiations are
taking place concerning a possible transaction between the Company or its
shareholders and you or any of the terms, conditions or other facts with respect
to any such possible transaction, including the status thereof, except that
disclosure of such information may be made to the extent required by applicable
law and the Rules and Regulations; provided that prior to any such disclosure,
you shall first give the Company a reasonable opportunity to review the proposed
disclosure and to comment thereon.
<PAGE> 3
Holmes Products Corp.
October 1, 1998
Page 3
Until the earlier of (i) the consummation of a transaction between the Company
and you, or (ii) one year from the date of this letter, you agree not to
initiate or maintain contact (except for contact in the ordinary course of
business) with any officer, director or employee of the Company for the purposes
of obtaining information regarding the Company's operations, assets, prospects
or finances, except with the express written permission of the Company. Each
party also hereby agrees that, for the period ending one year from the date of
this letter, such party will not, without the other party's written consent,
directly or indirectly, solicit the employment of any person who is a senior
executive officer of the other party, and with whom such soliciting party had
contacts in conjunction with the Transaction, other than pursuant to a general
solicitation not specifically directed at such officers.
You hereby acknowledge that the Evaluation Material is being furnished to you in
consideration of your agreement that for a period of twelve months from the date
hereof you and your affiliates (as defined in Rule 12b-2 under the Exchange Act)
will not (and you and they will not assist, provide or arrange financing to or
for others or encourage others to), directly or indirectly, acting alone or in
concert with others, unless specifically requested in writing or otherwise
consented to in advance by the Board of Directors of the Company:
(i) acquire or agree, offer, seek or propose to acquire (or request permission
to do so), ownership (including, but not limited to, beneficial ownership
as defined in Rule l3d-3 under the Exchange Act) of any of the assets or
busin6sses of the Company or any securities issued by the Company, or any
rights or options to acquire such ownership (including from a third
party), or make any public announcement (or request permission to make any
such announcement) with respect to any of the foregoing, or
(ii) seek or propose to influence or control the management or the policies of
the Company or to obtain representation on the Company's Board of
Directors, or solicit. or participate in the solicitation of, any proxies
or consents with respect to any securities of the Company, or make any
public announcement with respect to any of the foregoing or request
permission to do any of the foregoing, or
(iii) enter into any discussions, negotiations, arrangements or understandings
with any third party with respect to any of the foregoing.
Notwithstanding the foregoing however, (i) you shall be permitted at all times
to make (A) any proposals to the Company regarding transactions in the ordinary
course of business between the parties and (B) any confidential proposals to the
Company concerning the Transaction, or any other transaction, including but
limited to, any
<PAGE> 4
Holmes Products Corp.
October 1, 1998
Page 4
acquisition of any of the assets or business of the Company or any of its
securities or rights or options to acquire such ownership, and (ii) in the event
that the Company enters into or announces a definitive agreement relating to a
business combination transaction with an unaffiliated third party, you shall be
permitted to make or propose an unsolicited competing proposal.
Although the Company has endeavored to include in the Evaluation Material
information which it believes to be relevant for the purpose of your
investigation, you understand that neither the Company nor any of its
representatives or advisors have made or makes herein any representation or
warranty as to the accuracy or completeness of the Evaluation Material, You
agree that neither the Company nor its representatives or advisors shall have
any liability hereunder to you or any of your representatives resulting from the
use or contents of the Evaluation Material or from any action taken or any
inaction occurring in reliance on the Evaluation Material.
At the request of the Company in the event that you do not proceed with a
Transaction which is the subject of this letter, you and your representatives
shall promptly redeliver to the Company all written Evaluation Material and will
not retain any copies, extracts or other reproductions in whole or in part of
such written material. At the request of the Company in the event that you do
not proceed with a transaction which is the subject of this letter, all
documents, memoranda, notes and other writings whatsoever prepared by you or
your representatives based on the Evaluation Material shall be destroyed, and
such destruction shall be certified in writing to the Company by an authorized
officer supervising such destruction. The term "writing" shall include data in
computer format.
It is further understood and agreed that no failure or delay by the Company 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 right., power or privilege
hereunder.
You agree that unless and until a definitive agreement between the Company and
you with respect to any Transaction has been executed and delivered, neither the
Company nor you will be under any legal obligation of any kind whatsoever with
respect to such a Transaction by virtue of this or any written or oral
expression with respect to such a Transaction by any of its directors, officers,
employees, agents or my other representatives or its advisors except for the
matters specifically agreed to in this letter. You further agree that the
Company shall have no obligation to authorize or pursue with you or any other
party any Transaction and you understand that the Company has not, as of the
date hereof, authorized any such Transaction. The agreements set forth in this
letter may be modified or waived only by a separate writing by the Company and
you expressly so modifying or waiving such agreements.
<PAGE> 5
Holmes Products Corp.
October 1, 1998
Page 5
The parties hereto agree and acknowledge that they are engaged in similar lines
of business, and neither this agreement, the furnishing of the Evaluation
Material, nor any investigation by you shall be deemed to restrict you in any
way, except as herein specifically set forth, from developing, manufacturing,
marketing or selling products that are similar to or competitive with those of
the Company, or communicating with, contracting with or otherwise dealing with
the Company's suppliers, customers or distributors in the ordinary course of
your business as it may be conducted from time to time.
The parties hereto acknowledge that money damages are an inadequate remedy for
breach of this letter agreement because of the difficulty of ascertaining the,
amount of damage that will be suffered by a party in the event that this
agreement is breached. Therefore, you, on behalf of yourself and your
representatives, and we, on behalf of the Company, acknowledge and agree that in
the event of any breach of this Agreement by you or your representatives on the
one hand, or the Company on the other, and without prejudice to any rights and
remedies otherwise available to such non-breaching party, such non-breaching
party shall be entitled (i) to equitable relief by way of injunction and (ii) to
compel specific performance without the need of proof of actual damages. We each
further agree to waive, and to cause our representatives to waive, any
requirement for the securing or posting of any bond in connection with such
remedies. If any term, provision, covenant or restriction of this letter
agreement is hold by a court of competent jurisdiction 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.
This letter shall be governed by, and construed in accordance with, the laws of
the State of Delaware, without regard to principles of conflicts of laws,
Sincerely,
BancAmerica Securities, Inc. on behalf of
THE RIVAL COMPANY
By: /s/ Michael E. Levy
-------------------------------
Title: Vice President
-----------------------------
Agreed and accepted this 1st day of October, 1998.
Holmes Products Corp.
By: /s/ Jordan A. Kahn
------------------------------
Title: President
--------------------------
