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[Insert Logo]
50 Spring Road
Carlisle, Pennsylvania 17013
May 30, 1996
Dear Fellow Stockholder:
I am pleased to inform you that Masland Corporation ("Masland") has entered
into an agreement with Lear Corporation ("Lear"), pursuant to which a
wholly-owned subsidiary of Lear has commenced a tender offer today to purchase
all of the outstanding common stock of Masland for $26 per share in cash. Under
the agreement, the tender offer will be followed by a merger in which any
remaining shares of common stock will be acquired for $26 per share in cash, or
any higher price paid per share pursuant to the tender offer, and Masland will
then become a wholly-owned subsidiary of Lear.
Your Board of Directors believes the Lear offer is fair and in the best
interest of Masland stockholders. The Lear offer to purchase all outstanding
common shares for $26 represents a significant premium over the historical
trading price of the shares.
The Board of Directors has unanimously determined that the tender offer and
the merger are fair to, and in the best interests of, the Masland stockholders,
has unanimously approved the offer and the merger, and recommends that
stockholders accept the offer and tender their shares pursuant to it. In
addition to the benefits of this transaction to our stockholders, for all of the
reasons set forth in the enclosed Schedule 14D-9, we believe that the
combination will greatly benefit the 3,100 Masland associates, and enable
Masland, as a division of Lear, to continue its outstanding performance.
In connection with the transaction, two fellow officers and I have agreed
to tender all of our shares to Lear and have granted a proxy over our shares to
approve the merger.
Enclosed are Lear's Offer to Purchase, Letter of Transmittal, and other
related documents. These documents set forth the terms and conditions of the
tender offer. In determining to approve the merger agreement and the
transactions contemplated by it, your Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9,
which has been filed by the Company with the Securities and Exchange Commission.
Among other things, the Board considered the opinion of Goldman, Sachs & Co. to
the effect that, as of May 23, 1996, the consideration for each share of common
stock to be received by the stockholders pursuant to the tender offer and in the
merger is fair to such stockholders. A copy of Goldman, Sachs' written opinion,
which sets forth the procedures followed, the factors considered and the
assumptions made by Goldman, Sachs is attached to Schedule 14D-9 as Exhibit 11.
The Schedule 14D-9 and Lear's Offer to Purchase describe in more detail the
reasons for the Board's conclusions and contain other important information
regarding the tender offer. The Board urges you to consider this information
carefully.
Masland's Board of Directors, management and associates thank you sincerely
for your loyal support.
On Behalf of the Board of Directors,
Sincerely,
[Paste Up Signature]
William J. Branch,
Chairman of the Board
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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MASLAND CORPORATION
(Name of Subject Company)
MASLAND CORPORATION
(Name of Person(s) Filing Statement)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
574806 10 5
(CUSIP Number of Class of Securities)
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DANIEL R. PERKINS
CHIEF FINANCIAL OFFICER, TREASURER AND SECRETARY
MASLAND CORPORATION
50 SPRING ROAD
CARLISLE, PA 17013
(717) 249-1866
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of the Person(s) Filing Statement)
---------------------
Copy to:
PETER O. CLAUSS, ESQ.
CLARK, LADNER, FORTENBAUGH & YOUNG
ONE COMMERCE SQUARE, 22ND FLOOR
PHILADELPHIA, PA 19103
(215) 241-1876
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Masland Corporation, a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 50 Spring Road, Carlisle, PA 17013. The title of the class of
equity securities to which this Statement relates is the Company's Common Stock,
par value $.01 per share including the associated rights (the "Rights" and
together with the Common Stock, the "Shares") to purchase Series A Junior
Participating Preferred Stock, par value $.01 per share of the Company (or other
securities) issued pursuant to the Rights Agreement, dated as of November 16,
1995, as amended, between the Company and Mellon Securities Trust Company, as
Rights Agent.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer being made by Lear Corporation,
a Delaware corporation ("Lear") and PA Acquisition Corp., a Delaware corporation
that is a wholly-owned subsidiary of Lear ("Buyer"), disclosed in a Tender Offer
Statement on Schedule 14D-1, dated May 30, 1996 (the "Offer to Purchase"), and
the related Letter of Transmittal (which together constitute the "Offer"). The
principal executive offices of Lear and Buyer are located at 21557 Telegraph
Road, Southfield, MI 48034.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 23, 1996 (the "Merger Agreement"), by and among the Company, Lear, and
Buyer. Certain terms of the Merger Agreement are described below in Item
3(b)(2).
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b)(1) Certain contracts, arrangements or understandings between the
Company and certain of its directors and executive officers are described in the
sections entitled "Executive Compensation" (including the Summary Compensation
Tables), "Grant of Stock Options," "Aggregated Option Exercises in Last Fiscal
Year and Fiscal Year-end Option Values Table" (which includes Directors'
Compensation and Plans or Arrangements Relating to Employment Termination or a
Change in Control), "Executive Deferred Compensation Plan" and "Compensation
Committee Interlocks and Insider Participation" in the Company's proxy statement
for its 1995 Annual Meeting of Shareholders (the "1995 Proxy Statement"). Copies
of the above sections of the 1995 Proxy Statement are filed as Exhibit 1 hereto.
Since the mailing of the 1995 Proxy Statement, the employment and change of
control agreements described therein with Dr. Frank J. Preston have been
replaced and superseded by a new employment agreement, and a termination,
consulting and non-compete agreement with William J. Branch was executed, but
the agreements with Dr. Preston and Mr. Branch will only become effective upon
consummation of the Offer pursuant to the Merger Agreement. A change of control
termination agreement has also been executed with another executive officer,
Daniel R. Perkins. Copies of these agreements are filed as Exhibits 2, 3 and 4
hereto and are incorporated herein by reference.
The agreement with Mr. Branch provides for his termination of employment
and consulting fees substantially less than his current compensation provided by
the Company in exchange for a two-year non-compete clause relating to the
current business of the Company. The employment agreement with Dr. Preston will
have an initial term of four years, effective upon consummation of the Offer, is
automatically renewed for one additional year on the second anniversary of that
date, and each anniversary thereafter and provides for compensation and
incentive arrangements commensurate with the current arrangements provided to
him by the Company and contains a limited non-compete clause. In addition, Dr.
Preston's employment agreement provides that, upon consummation of the Merger,
Dr. Preston's options to purchase 90,000 shares of the Common Stock, which will
be converted into options to purchase Lear Common Stock, will become vested and
exercisable. His agreement also provides that, upon termination by him for good
cause, or by the Company without cause, Dr. Preston will receive his full base
salary to the end of the term of the employment agreement. If the employment
agreement is terminated for cause (as defined in the agreement), Dr. Preston is
entitled to receive unpaid salary and benefits, if any, accrued through the
effective date of his termination. The
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agreement with Mr. Perkins provides a severance benefit upon a termination of
employment within the two years following the change of control equal to one
year's base salary and a three-year average of incentive bonuses earned by him,
all payable in a lump sum.
(b)(2) In connection with the Offer, (i) the Company has entered into the
Merger Agreement dated as of May 23, 1996 with Lear and Buyer and (ii) three
executive officers of the Company (William J. Branch, Larry W. Owen and Darrell
F. Sallee) each of whom owns more than 25,000 Shares, have entered into a
Stockholders Agreement, dated as of May 23, 1996 (the "Stockholders Agreement"),
with Lear and the Buyer. Summaries of the Merger Agreement and the Stockholder
Agreement are set forth below. Copies of such agreements are filed herewith as
Exhibits 5 and 6, respectively, and the following summaries are qualified in
their entirety by reference to the text of such agreements, which are
incorporated herein by reference.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is
filed as Exhibit 5 to this Statement. Such summary is qualified in its entirety
by reference to the Merger Agreement and to the more detailed summary contained
in the Schedule 14D-1 filed contemporaneously herewith by Lear and Buyer.
The Offer. The Merger Agreement provides for the terms, conditions and
procedures of the Offer. The obligation of Buyer to accept for payment Shares
tendered pursuant to the Offer is subject to the satisfaction of the conditions
described in Exhibit A to the Merger Agreement and the other conditions
described below. Lear and the Buyer have agreed that no modification to the
Offer may be made, without the Company's prior consent, that changes the form of
consideration to be paid or decreases the price per Share or the number of
Shares sought in the Offer, or that imposes conditions to the Offer in addition
to the Minimum Condition (as defined below), and those conditions described
below and in Exhibit A to the Merger Agreement. In addition, without the
Company's consent, Lear and Buyer have agreed not to amend or waive satisfaction
of the Minimum Condition and may not extend the expiration date of the Offer
(except as required by applicable law and except that Lear may extend the
expiration date of the Offer for up to ten business days after the initial
expiration date or for longer periods in the event that any condition to the
Offer is not satisfied or earlier waived).
Certain Conditions of the Offer. Notwithstanding any other provision of the
Offer, Buyer shall not be required to accept for payment or pay for any Shares,
and may amend or terminate the Offer, if (i) prior to the Expiration Date (a)
less than that number of Shares which, together with the Shares then owned by
Lear and the Buyer, represents at least a majority of the outstanding Shares on
a fully diluted basis, has been validly tendered pursuant to the Offer and not
withdrawn (the "Minimum Condition"), or (b) the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act") shall not
have expired or been terminated, or (c) certain financial institutions which are
parties to a Credit Agreement with Lear dated as of August 17, 1995, as amended
(the "Credit Agreement") shall have failed to have granted Lear a waiver (the
"Credit Agreement Waiver") under the Credit Agreement permitting consummation of
the Offer and the Merger, or (ii) at any time on or after May 30, 1996 and prior
to the acceptance for payment of, or payment for the Shares, any of the
conditions described in Exhibit A to the Merger Agreement shall have occurred.
The Buyer may waive any of these conditions described in Exhibit A, including
the Minimum Condition (but as to the Minimum Condition only with the Company's
consent).
Recommendation. The Board of Directors has (i) unanimously determined that
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, are fair to and in the best interests of the Company
stockholders, (ii) unanimously approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, and (iii)
unanimously resolved to recommend acceptance of the Offer and approval of the
Merger Agreement and the Merger by Company stockholders. This recommendation of
the Board of Directors may be withdrawn or modified by the Board if advised by
counsel that such withdrawal or modification is required by the Board's
fiduciary duties. Although such a withdrawal or modification will not constitute
a breach of the Merger Agreement, it may require payment of the Termination Fee
(as defined below).
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The Merger. The Merger Agreement provides, under the terms and subject to
the conditions thereof, that at the time at which the Company and the Buyer file
evidence of the Merger with the Secretary of State of the State of Delaware and
make all other filings or recordings required by the General Corporation Law of
Delaware ("Delaware Law") in connection with the Merger, Buyer shall be merged
with and into the Company in accordance with Delaware Law. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
the Secretary of State of the State of Delaware or at such later time as is
specified in the Certificate of Merger (the "Effective Time"). As a result of
the Merger, the separate corporate existence of the Buyer will cease and the
Company will be the Surviving Corporation.
At the Effective Time, (i) each issued and outstanding Share held in the
treasury of the Company, or owned by the Company, Buyer, Lear, or any other
subsidiary of Lear, the Buyer or the Company, shall be cancelled, and no payment
shall be made with respect thereto; (ii) each share of common stock of Buyer
then outstanding shall be converted into and become one share of common stock of
the Surviving Corporation; and (iii) each Share outstanding immediately prior to
the Effective Time shall, except as otherwise provided in (i) above (and except
for those shares that have not been voted in favor of the Merger and for which
an appraisal has been demanded in accordance with Delaware Law), be converted
into the right to receive $26.00 or any higher price that may be paid pursuant
to the Offer, in cash, without interest.
The Merger Agreement provides that, at the Effective Time, the Restated
Certificate of Incorporation of Company will be the Certificate of Incorporation
of the Surviving Corporation, except that Articles Seven (c) and (h) thereof
shall have been deleted, Article Seven (d) concerning vacancies on the Board of
Directors shall have been amended and Article Four thereof shall have been
amended to provide changes in the authorized capitalization of the Company.
Agreements of Lear and the Company. The Merger Agreement provides that
effective upon purchase and payment for any Shares by Buyer, Buyer shall be
entitled to designate such number of directors, rounded up to the next whole
number (but in no event more than one less than the total number of directors on
the Board), on the Company's Board of Directors that equals the product of (i)
the total number of directors on the Board of Directors (giving effect to the
election of any additional directors pursuant to this paragraph) and (ii) the
percentage that the number of Shares owned by the Buyer (including Shares
accepted by it for payment) bears to the total number of Shares outstanding, and
the Company shall take all action necessary to cause the Buyer's designees to be
elected or appointed to the Board of Directors, including, without limitation,
increasing the number of directors, and seeking and accepting resignations of
its incumbent directors. However, prior to the Effective Time of the Merger, any
amendment or termination of the Merger Agreement, extension for the performance
or waiver of the obligations or other acts of Lear or the Buyer or waiver of the
Company's rights thereunder, shall require the concurrence of a majority of the
Company directors then in office who were also directors on the date of the
Merger Agreement and who voted to approve the Merger Agreement.
Pursuant to the Merger Agreement, the Company shall cause a meeting of its
stockholders ("Company Stockholder Meeting") to be duly called and held as soon
as reasonably practicable for the purpose of voting on the approval and adoption
of the Merger Agreement and the Merger, unless a vote of stockholders by the
Company is not required by Delaware Law.
The Merger Agreement provides that the Company, if required by applicable
law or if otherwise deemed advisable by Lear, will promptly prepare and file
with the Securities and Exchange Commission ("Commission") under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), a proxy statement
relating to the Company Stockholder Meeting (the "Proxy Statement"). The Company
has agreed, subject to the fiduciary duties of its Board of Directors as advised
by counsel, to solicit the necessary approvals by its stockholders of the Merger
Agreement and the transactions contemplated thereby. Lear has agreed to vote and
to cause each of its Subsidiaries (including, without limitation, the Buyer) to
vote all Shares then owned by Lear (and each of its Subsidiaries) in favor of
adoption of the Merger Agreement.
The Company has agreed that, prior to the Effective Time or until such time
as Lear designees constitute a majority of the Company's Board of Directors, the
Company will not adopt or propose any change in its Certificate of Incorporation
or Bylaws. In addition, the Company has agreed, among other things, that, prior
to
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the Effective Time, the Company will not, and will not permit any of its
subsidiaries (each a "Subsidiary"), except as approved by Lear, to (a) merge or
consolidate with any other Person (other than a Subsidiary) or, except for
acquisitions of inventory, machinery, supplies and similar assets in the
ordinary course of business, acquire a material amount of assets of any other
Person (other than a Subsidiary); (b) sell, lease, license or otherwise dispose
of any material assets or property to any Person (other than a Subsidiary)
except (i) pursuant to contracts or commitments executed as of the date of the
Merger Agreement or (ii) in the ordinary course consistent with past practice;
(c) agree or commit to do any of the foregoing; (d) (i) take or agree or commit
to take any action that would make any representation and warranty of the
Company under the Merger Agreement inaccurate in any material respect at, or as
of any time prior to, the Effective Time or (ii) omit or agree or commit to omit
to take any action necessary to prevent any such representation or warranty from
being inaccurate in any material respect at any such time; or (e) make or change
any tax election, change any annual tax accounting period, adopt or change any
method of tax accounting, file any amended tax return, enter into any closing
agreement, settle any tax claim or assessment, surrender any right to claim a
tax refund, consent to any extension or waiver of the limitation period
applicable to any tax claim or assessment or take or omit to take any other
action, if any such action or omission would have a material effect on the
liabilities of the Company or any Subsidiary.
Pursuant to the Merger Agreement, the Company has agreed that from the date
of the Merger Agreement until the termination thereof, the Company and the
Subsidiaries will not, and their respective officers, directors, employees or
other agents will not, directly or indirectly, (i) take any action to solicit or
initiate any Acquisition Proposal or (ii) subject to the fiduciary duties of the
Board of Directors as advised by counsel, (x) grant any waiver under or agree to
any material amendment of any confidentiality agreement or standstill provision
or agreement to which the Company or any Subsidiary is a party in effect on the
date of the Merger Agreement or (y) engage in negotiations with, or disclose any
non-public information relating to the Company or any Subsidiary or afford
access to the properties, books or records of the Company or any Subsidiary to,
any Person that may be considering making, or has made, an Acquisition Proposal
(as defined below) or (2) agree to endorse an Acquisition Proposal. The Company
has agreed to promptly notify Lear after receipt of any Acquisition Proposal or
any request for non-public information relating to the Company or any Subsidiary
or for access to the properties, books or records of the Company or any
Subsidiary by any Person that may be considering making, or has made, an
Acquisition Proposal and keep Lear reasonably informed of the status and details
of any such Acquisition Proposal or request, unless the Board of Directors,
after consultation with and based upon the advice of independent legal counsel,
determines in good faith that non-disclosure of the identity of the person
making such Acquisition Proposal and of the terms and conditions thereof would
be necessary for such Board of Directors to comply with its fiduciary duties to
its stockholders. However, nothing contained therein shall prohibit the Board of
Directors from furnishing information to, or entering into discussions or
negotiations with, any party that makes an unsolicited, written, bona fide
Acquisition Proposal or, after payment of the Termination Fee (as described
below), endorsing such an Acquisition Proposal, if and only to the extent that
(A) the Board of Directors, after consulting with and based upon the advice of
independent legal counsel, determines in good faith that such action is
necessary for the Board of Directors to comply with its fiduciary duties to its
stockholders under applicable law, and (B) prior to taking such action, the
Company shall have received from such Person an executed Confidentiality
Agreement on terms no less favorable to the Company than the Lear
Confidentiality Agreement (but excluding the standstill provisions thereof).
"Acquisition Proposal", generally means any business combination involving
the Company or its domestic subsidiaries; any sale or transfer of 20% or more of
the aggregate assets of the Company and its Subsidiaries; any tender offer for
20% or more of the outstanding shares of the Company; or any public announcement
of a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing, other than the transactions contemplated by the
Merger Agreement.
Lear, Buyer and the Company have each agreed that for six years after the
Effective Time, Lear will cause the Surviving Corporation to maintain in effect
provisions relating to the rights of indemnification of the present officers and
directors of the Company in respect of acts or omissions occurring prior to the
Effective Time, to the extent provided under the Company's Certificate of
Incorporation in effect on the date of the
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Merger Agreement, subject to any limitation imposed from time to time under
applicable law. In addition, Lear has agreed that for six years after the
Effective Time, Lear will provide, pursuant to a policy maintained by it, or
will cause the Surviving Corporation to use its best efforts to provide,
officers' and directors' liability insurance in respect of acts or omissions
occurring prior to the Effective Time covering each such Person currently
covered by the Company's officers' and directors' liability insurance policy on
terms with respect to coverage and amount no less favorable than those of such
policy in effect on the date of the Merger Agreement. Lear will not be obligated
to cause the Surviving Corporation to pay premiums per annum in excess of 300%
of the amount the Company paid in its last full fiscal year, but in such case
Lear will purchase as much coverage as possible for such amount.
Representations and Warranties. The Merger Agreement contains customary
representations and warranties of the parties thereto, including representations
by the Company as to the absence of certain changes or events concerning its
business, compliance with law, litigation, employee benefit plans, taxes,
environmental compliance and other matters, most of which are qualified as only
those which would result in a material adverse change to the Company. Lear and
the Buyer have also made certain representations and warranties, including with
respect to (i) due incorporation, existence, good standing, corporate power and
authority or qualifications of Lear and the Buyer; (ii) the authorization,
execution, and delivery of the Merger Agreement and the consummation of
transactions contemplated thereby, and the validity and enforceability thereof
and (iii) assuming that the Creditor Agreement Amendment Condition is satisfied,
Lear has or will have, prior to the expiration of the Offer, sufficient funds
available to purchase all of the Shares outstanding on a fully diluted basis
pursuant to the Offer and the Merger Agreement and to pay all related fees and
expenses.
Conditions to Certain Obligations. The obligations of the Company, Lear and
Buyer to consummate the Merger are subject to the satisfaction of the following
conditions: (i) if required by Delaware Law, the adoption by the stockholders of
the Company of the Merger Agreement in accordance with such law; (ii) any
applicable waiting period under the HSR Act relating to the Merger shall have
expired or terminated and any approvals under any applicable foreign antitrust
laws shall have been granted; (iii) no provision of any applicable law or
regulation and no judgment, ruling, injunction, order or decree shall prohibit
the consummation of the Merger; (iv) all actions by or in respect of or filings
with any governmental body, agency, official, or authority required to permit
the consummation of the Merger shall have been obtained; and (v) the purchase by
Lear or Buyer of all of the Shares validly tendered and not withdrawn pursuant
to the Offer (however, this condition (vi) will be deemed satisfied if the Offer
shall have been terminated without the purchase of such Shares pursuant to the
Offer and all of the conditions to the Offer set forth in Exhibit A were
satisfied upon the expiration of the Offer).
Stock Options. Each Stock Option and Warrant to acquire Common Stock (a
"Company Stock Option") issued under the Company's 1991 Stock Purchase and
Option Plan, whether or not then exercisable and whether or not then vested, at
the election of the option holder, shall be either cancelled or assumed and
converted by Lear. If cancelled, each holder will receive a cash amount equal to
the number of shares subject to the Company Stock Option times the excess, if
any, of the $26.00 per share over the exercise price per share under the Company
Stock Option. If assumed, each Option shall be amended to be exercisable into
Lear Common Stock (a "Substitute Option") in such a manner that the excess
aggregate value of each Option following the substitution and assumption shall
be the same as the excess aggregate value of such outstanding Option before the
substitution and assumption. The Substitute Option shall not confer any
additional rights upon the Optionee and shall be subject to substantially all of
the other terms and conditions of the original Option except in the case of an
Optionee whose employment is terminated, other than for cause, within one year
following the Effective Time of the Merger, for whom the exercise period of the
vested Substitute Option will be extended to a period of two years. All Options
issued under the Company's Non-Employee Directors Stock Option Plan will be
cancelled in the manner provided above. All Options issued under the Company's
1993 Stock Option Incentive Plan shall be assumed and converted into Substitute
Options in the manner provided above.
Termination. The Merger Agreement may be terminated, and the Merger may be
abandoned, at any time prior to the Effective Time, notwithstanding any approval
of the Merger Agreement by the stockholders of the Company, for any of the
following reasons among others, (i) by the mutual written consent of the
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Company and Lear; (ii) by either the Company or Lear, if (A) the Offer expires
or is terminated or withdrawn pursuant to its terms, or (B) the Merger has not
been consummated by October 31, 1996; (C) if Lear or Buyer (in the case of
termination by the Company), or the Company (in the case of termination by Lear
or Buyer) shall have breached in any material respect any of its obligations
under the Merger Agreement or (in the case of termination by the Company) the
Offer; (D) if any judgment, ruling, injunction, order or decree preventing
consummation of the Merger is entered and such judgment, ruling, injunction,
order or decree shall become final and nonappealable; (iii) by the Company if
the Board of Directors of the Company has withdrawn its recommendations as
permitted by the Merger Agreement; or (iv) by Lear if the Board of Directors of
the Company has withdrawn or modified (in a manner adverse to Lear) its approval
or recommendation of the Offer or the Merger, or shall have recommended or
accepted any Acquisition Proposal, or has failed within ten business days
following a request from Lear to reaffirm its approval or recommendation of the
Offer or the Merger, or if any entity other than Lear or Buyer shall have become
the beneficial owner of more than 20% of the outstanding shares of the Company.
However, with respect to a termination under (iv), if the Board of Directors
withdrew or modified its approval or recommendation or failed to reaffirm such
approval or recommendation upon the advice of independent legal counsel and
determined in good faith that such was necessary for the Board of Directors to
comply with its fiduciary duties to stockholders, then the termination may be no
earlier than the later of (i) the close of business immediately preceding the
then scheduled termination date of the Offer or (ii) ten days following such
modification or withdrawal, and shall then only be terminated if the Board of
Directors has failed to reinstate its affirmative recommendation or approval of
the Offer or the Merger within such period of time. If the Merger Agreement is
terminated, the Merger Agreement will become void and of no effect with no
liability on the part of the Company, Lear or the Buyer other than obligations
of Lear under certain provisions of the Merger Agreement with respect to the
treatment of confidential non-public information concerning the Company and its
Subsidiaries, and obligations of the Company under certain provisions of the
Merger Agreement to pay certain fees to Lear (as described below).
Fees and Expenses. The Company has agreed in the Merger Agreement that if
an Acquisition Proposal is received prior to termination of the Merger
Agreement, (other than though a termination described above under subsections
(iii) and (iv)) and the Company shall have entered into an agreement with
respect to, approved, recommended, or taken any affirmative action to
facilitate, an Acquisition proposal or any transaction constituting an
Acquisition Proposal is consummated at any time during the nine months after
such termination of the Merger Agreement, the Company will pay to Lear a fee
equal to $10,000,000 in cash (the "Termination Fee"). An Acquisition Proposal
shall have the same meaning as described above. The Termination Fee shall also
be payable to Lear if, among other events, the Board of Directors of the Company
has withdrawn or modified, in a manner adverse to Lear, its approval or
recommendation of the Offer or the Merger in such a manner that it shall
constitute an event whereby the Company may terminate the Merger Agreement as
described under subsection (iii) above in the preceding paragraph or whereby
Lear may terminate the Merger Agreement, as described under subsection (iv)
above in the preceding paragraph.
Except as described in the preceding paragraph, the Merger Agreement
provides that the Company, Lear and Buyer shall each bear all expenses incurred
by it in connection with the Merger Agreement, the Stockholders Agreement and
the transactions contemplated thereby.
Amendments and Waivers. Any provision of the Merger Agreement may be
amended or waived prior to the Effective Time if, and only if, such amendment or
waiver is in writing and signed, and (i) in the case of an amendment, by the
Company, Lear and the Buyer or (ii) in the case of a waiver, by the party
against whom the waiver is to be effective. After the approval of the Merger
Agreement by the stockholders of the Company, no such amendment shall alter or
change (i) the amount or kind of consideration to be received in exchange for
any shares of capital stock of the Company, (ii) any other terms or conditions
of the Merger Agreement if such alteration or change would adversely affect the
holders of the shares of capital stock of the Company, or (iii) any term of the
Certificate of Incorporation of the Company without the further approval of such
stockholders.
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THE STOCKHOLDERS AGREEMENT
The following is a brief summary of the Stockholders Agreement. A copy of
the Stockholders Agreement is filed as Exhibit 6 hereto. This summary is
qualified in its entirety by reference to the Stockholders Agreement, and by the
more detailed summary contained in the Schedule 14D-1 filed by Lear and the
Buyer.
The Stockholder Tender. Pursuant to the Stockholders Agreement, each of the
three Stockholders (each a "Stockholder") has agreed to tender to Buyer at the
Buyer's request all of the Shares referred to in the agreement and any
additional Shares acquired by the Stockholder (whether by purchase or otherwise)
after the date of the Stockholders Agreement (the "Stockholder Shares") at the
purchase price paid per share by Buyer pursuant to the Offer.
Expiration of the Stockholder Tender. The Stockholder Tender will expire
upon the termination of the Merger Agreement. Once the Merger Agreement is
terminated, or if the Offer is terminated without the purchase of Shares
thereunder, or if the Minimum Condition is not satisfied (other than by waiver)
upon termination of the Offer, all Shares tendered by the Stockholders under the
Offer pursuant to the Stockholders Agreement will be returned within two
business days to such Stockholders.
Grant of Proxy. Under the Stockholders Agreement, each Stockholder has
granted a proxy appointing Lear as the Stockholder's attorney-in-fact and proxy,
with full power of substitution, for and in the Stockholder's name, to vote,
express consent or dissent, or otherwise to utilize such voting power in such
manner and upon such matters relating to the Merger and the Offer (and not to
business operational matters) as Lear or its proxy or substitute shall, in
Lear's sole discretion, deem proper with respect to the Stockholder Shares. The
Proxy, among other things, also appoints Lear to vote against certain actions,
transactions or changes involving the Company which are intended or could
reasonably be expected to impede, interfere with, delay, postpone, discourage or
adversely affect the Merger and the transactions contemplated by the
Stockholders Agreement and the Merger Agreement. The Proxy will be revoked upon
termination of the Stockholders Agreement in accordance with its terms.
THE AMENDMENT TO THE RIGHTS AGREEMENT
Amendment to the Rights Agreement. The Rights Agreement dated November 16,
1995, between the Company and Mellon Securities Trust Company, as Rights Agent
(the "Rights Agreement"), provides for one Right for each outstanding share of
Common Stock. On May 23, 1996, the Company amended the Rights Agreement,
pursuant to the terms of the Rights Agreement and the authority granted by the
Company's Board of Directors at its special meeting held earlier that day, so
that (i) the Rights Agreement shall not be applicable to the purchase of the
Shares pursuant to the Offer or the Merger or the consummation of the other
transactions contemplated by the Merger Agreement and (ii) none of Lear, the
Buyer or any of their subsidiaries will be deemed to be an "Acquiring Person"
(as defined in the Rights Agreement) by reason of the transactions contemplated
in the Merger Agreement, including, but not limited to, the Stockholders
Agreement. If the Rights Agreement had not been so amended and if the Offer, the
Merger Agreement or the Stockholders Agreement, or any of the other transactions
contemplated under the Merger Agreement, had resulted in Lear or the Buyer being
deemed an "Acquiring Person" (as defined in the Rights Agreement), a
distribution to the Company's stockholders (other than Lear and the Buyer) of
Rights certificates separate from the Common Stock might have been effected
pursuant to the Rights Agreement. The Rights Agreement, as amended, continues in
full force and effect. A copy of the Amendment to the Rights Agreement is filed
herewith as Exhibit 7, and the preceding summary is qualified in its entirety by
reference to the text of such Amendment, which is incorporated herein by
reference.
INFORMATION STATEMENT
Certain information pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 thereunder is required to be contained in an Information Statement as it
relates to the right of Buyer to designate a certain number of directors to the
Company's Board of Directors under the Merger Agreement. Such Information
Statement will be provided in accordance with Exchange Act and such Rule.
7
<PAGE> 10
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
For the past several years, management and the Company's Board of Directors
have been cognizant of the significant consolidation that has been occurring
within the automotive supplier industry. The Company is and has been aware that
those larger entities that emerge from the consolidations may acquire
substantial competitive advantages and cost savings through vertical
integration, improved access to capital, greater resources to engineer and
market their products, and the ability to spread costs of new products and
research and development over a wider product and customer base.
In 1993, as a result of an internal review of strategic alternatives to
enhance stockholder value and respond to developments in the Company's industry,
and to develop one or more of the strategic alternatives, the Company retained
Goldman, Sachs & Co. ("Goldman Sachs") as one of its financial advisors, and
authorized Goldman Sachs to conduct a survey (the "Survey") to ascertain and
evaluate the level and nature of the interest of a number of parties that might
have an interest in acquiring the Company. As a result of the Survey, Goldman
Sachs contacted 24 parties, including Lear, concerning a possible acquisition of
the Company. Of the parties contacted by Goldman Sachs, only one visited the
Company's headquarters and met with the Company's management. None of the
parties contacted was interested in acquiring the Company for a price at or
above the then indicated potential registration filing range for the Company's
initial public offering of $15 to $17 per share. In October 1993, the Company's
public offering was concluded at a price of $17 per share.
During the summer of 1995, the Company entered into an agreement with
another party (the "Other Party") whereby each agreed, among other things, not
to acquire the other, solicit any stockholder of the other, or seek, alone or in
concert with others, control over the management or policies of the other (the
"Other Party Standstill Agreement"). Subsequently, in late 1995, the Company and
the Other Party entered into discussions concerning possible business ventures
or transactions that might be of strategic interest to both parties. These
discussions primarily concerned a minority investment in the Company by the
Other Party. Pursuant to those discussions, the companies entered into a
confidentiality agreement dated January 17, 1996 (the "Other Party
Confidentiality Agreement") wherein each of them agreed that they would exchange
proprietary information which would be maintained in confidence and which
reaffirmed the Other Party Standstill Agreement. Under the protection of the
Other Party Standstill Agreement and the Other Party Confidentiality Agreement,
these discussions evolved into negotiations concerning a possible transaction,
in which Goldman Sachs and the Other Party's investment and financial advisor
(the "Other Financial Advisor") participated.
In mid-December 1995, William J. Branch, Chairman of the Company, received
a telephone call from Kenneth L. Way, Chairman of Lear, suggesting that they
meet to discuss a contribution by the Company to an automotive industry group.
At their first meeting in Harrisburg, Pennsylvania on January 18, 1996, Mr. Way
expressed a preliminary interest in finding a way for the companies to work
together and invited Mr. Branch to visit Lear's headquarters and Research &
Development Center in Southfield, Michigan. Several weeks later, in
mid-February, Mr. Way called to express a preliminary interest in acquiring the
Company. On March 1, 1996, Mr. Branch visited Lear's headquarters wherein Mr.
Way and Mr. Vandenberghe, Lear's CFO, reiterated their preliminary interest in
the Company and gave Mr. Branch a tour of Lear's facility. In order to move
forward, the Company and Lear entered into a confidentiality and standstill
agreement (the "Lear Confidentiality Agreement") pursuant to which Lear was
furnished confidential proprietary and non-public information concerning the
Company and filed as Exhibit 8. The terms of the Lear Confidentiality Agreement
were substantially identical to the terms of the Other Party Confidentiality
Agreement and the Other Party Standstill Agreement. On March 21, 1996, Mr.
Branch and Dr. Preston met with Mr. Way and Mr. Stebbins, Lear's Treasurer. At
the meeting they discussed the consolidation of the automotive industry and
possible opportunities for the Company and Lear in the event of a combination of
the two companies. Several days after the meeting, Mr. Way called Mr. Branch to
reiterate Lear's desire to acquire the Company and indicated a willingness to
offer $20 to $22 per Share in cash. On the following day, Mr. Branch called Mr.
Way to state that the Lear Proposal was inadequate, but that the meetings could
continue if Lear wished to learn more about the Company and had flexibility
regarding price and other considerations.
8
<PAGE> 11
In March 1996, during a meeting of the Board of Directors, one of the
Company's directors mentioned that a director of a competitor of the Company
(the "Competitor") wanted to discuss a possible merger of their businesses.
Telephone calls were exchanged between the director of the Competitor and Mr.
Branch, followed by a dinner meeting in New York in which Dr. Preston and the
CEO of the Competitor also participated. At this meeting, they discussed the
possibility of a merger, and the industry's likely reception of such a
combination. Following a report of the meeting, the Board of Directors decided
to terminate discussions, primarily because it believed that any acquisition
proposal by the Competitor could be incompatible with the expectations of the
Company's major customers and could engender significant Hart-Scott-Rodino
clearance problems.
On April 4, 1996, Dr. Preston and Mr. Perkins, the Company's CFO, met with
five Lear executives in Novi, Michigan, to discuss business forecasts and
potential synergies that might accrue from a merger. On Wednesday, April 17,
1996, Mr. Way called Mr. Branch with a revised preliminary proposal of $22 to
$24 per Share. On Thursday, April 18, 1996, Mr. Branch called Mr. Way to say
that his proposal was still inadequate, but that Masland would work with its
advisors over the coming weekend to define the structure of a potential
transaction that might be acceptable to Masland's Board. On Thursday and Friday,
April 18 and 19, 1996, Mr. Branch spoke with each director individually to
apprise him of the progress with Lear and to solicit advice. By midday on
Friday, April 19, 1996, there was a clear consensus that the discussions and
negotiations with Lear should continue. The price remained the primary
unresolved issue until early May, 1996, when Lear indicated it was prepared to
consider paying, initially $25.00 per Share, and after further discussion with
the Company, $25.50 per Share, subject to mutual agreement on other terms and
satisfactory completion of a due diligence review of the Company (the "Lear
Proposal").
Lear indicated that in order to move forward it needed an Agreement to
Negotiate Exclusively (the "No Solicitation Agreement") and this was entered
into between the Company and Lear on May 2, 1996. Under the terms of the No
Solicitation Agreement, the Company agreed to negotiate exclusively with Lear
with respect to an acquisition transaction and to not knowingly encourage,
invite, initiate or solicit inquiries from any other party with respect to an
acquisition transaction until the earlier of the execution between the Company
and Lear of a Merger Agreement or May 24, 1996 (the date on which the No
Solicitation Agreement expired). However, nothing in the No Solicitation
Agreement prohibited the Board of Directors of the Company from furnishing
information to, or entering into discussions or negotiations with, any other
party making an unsolicited proposal for an acquisition transaction provided
that (i) the Board of Directors, after consultation with and based upon advice
of independent legal counsel, determined in good faith that such action was
necessary for the Board of Directors to comply with its fiduciary duties to
stockholders under applicable law and (ii) prior to taking any such action, the
Company received from such other party an executed confidentiality and
standstill agreement on terms no less favorable to the Company than the Lear
Confidentiality Agreement. It was further provided in the No Solicitation
Agreement that, in the event of any such unsolicited proposal for an acquisition
transaction, the Company would promptly notify Lear of such communication, the
identity of the person proposing such an acquisition transaction and the terms
and conditions thereof, unless disclosure of such identity, terms and conditions
would violate the terms of any confidentiality agreement existing on that date
by which the Company was bound.
During May 1996, the Other Party informed the Company that it was prepared
to continue discussions with the Company. However, because of the existence of
the No Solicitation Agreement, the Company advised the Other Party that it was
unable to hold such discussions and previously scheduled meetings were postponed
or cancelled. On May 14, 1996, the Other Party indicated to the Company that it
was prepared to immediately commence negotiation of a transaction in which all
of the Company's shareholders would be offered a package of cash and equity
securities of which the cash component alone would represent a significant
premium over the price at which the Shares had recently traded. The Company
advised the Other Party that it was not in a position to enter into such
negotiations. Pursuant to the provisions of the No Solicitation Agreement, the
Company informed Lear on May 15, 1996, that it had received what it believed was
a competing offer but did not disclose the identity of the Other Party or the
terms of its preliminary indication of interest because of the Other Party
Confidentiality Agreement. Subsequently, following advice of independent
counsel, the Company referred the Other Party to Goldman Sachs and instructed
Goldman
9
<PAGE> 12
Sachs to seek clarification of the proposal, but not to enter into negotiations
concerning the proposal. Promptly thereafter, the Other Party communicated
further details of its proposal to Goldman Sachs through the Other Financial
Advisor. Later on May 15, the Other Party, through the Other Financial Advisor,
advised Goldman Sachs that in the proposed transaction the stockholders of the
Company would receive a significant amount of cash for each of their Shares plus
an interest in the common equity of the combined operations of the Company and
certain operations of the Other Party (the "Recapitalization Proposal"). Goldman
Sachs was also advised that the Other Party would need to be joined by other
outside financial equity investors. The Other Financial Advisor indicated that
the Other Party was engaged in discussions with third parties concerning
financing for the proposed transaction.
Because the Recapitalization Proposal had not yet been fully discussed with
the Other Party or certain of their representatives, and because there remained
aspects of the Recapitalization Proposal which were less than certain, the Board
of Directors reached a good-faith determination at a special telephonic meeting
on May 18, 1996, that it would be prudent to obtain more complete information
regarding the Recapitalization Proposal and to authorize discussions towards
that end, including whether or not the Recapitalization Proposal represented the
Other Party's final and best offer, and instructed Goldman Sachs to proceed with
discussions with the Other Party. Goldman Sachs then contacted the Other
Financial Advisor and advised it that the Other Party should submit its best and
final offer, and should particularly focus on overall value, cash and certainty.
On May 22, 1996, the Other Financial Advisor reaffirmed that the
Recapitalization Proposal reflected the best value and highest amount of cash it
was prepared to make. Other Financial Advisor further advised Goldman Sachs that
the Other Party believed it could have bank financing commitments, equity
subscriptions and a highly confident letter regarding subordinated debt
financing within the next two to three weeks. The Other Financial Advisor also
informed Goldman Sachs of the price it believed the outside equity investors
would pay in cash for the equivalent equity interest in the combined entity to
be received in respect of each outstanding Share.
Early on May 23, 1996, the Board of Directors of the Company convened at a
special meeting in Boston, and reviewed with their advisors, including
representatives of Goldman Sachs who were present at the meeting, the
alternatives available to them. Partly because the Recapitalization Proposal was
a combination of cash and equity, partly because of concerns with the valuation
attributed to the equity portion of the Recapitalization Proposal, and partly
because the Board of Directors believed the Other Party might require a
significantly longer time to obtain adequate financing for the Recapitalization
Proposal, the Board of Directors determined that the Lear Proposal was superior.
The Board of Directors, however, directed Mr. Branch to contact Mr. Way in
advance of the meeting of the Lear Board of Directors in New York in an attempt
to negotiate an increase in the all-cash per share price in the Lear Proposal.
By the end of the day, Lear increased its all-cash offer to $26 per share. After
receiving communication of this increase, the Board of Directors of the Company
unanimously approved the Lear Proposal.
At the special meeting on May 23, 1996, the Board of Directors of the
Company unanimously (a) adopted a resolution intended to provide that the
limitations of Section 203 of the Delaware Law would not apply to the Lear
Proposal, (b) adopted an amendment to the Company's Rights Agreement, dated as
of November 16, 1995, with Mellon Securities Trust Company, as Rights Agent, to
provide that the Offer and the Merger would not trigger the events described in
that Rights Agreement, (c) approved and authorized the Offer and the Merger
Agreement, and acknowledged the execution by three stockholders of the Company
of the Stockholders Agreement, (d) determined that the aggregate consideration
to be received by the Company's stockholders pursuant to the Offer and the
Merger Agreement is fair to those stockholders and in their best interests, (e)
authorized the issuance of a joint press release, and (f) authorized the taking
of any other necessary actions, including the filing of this Schedule 14D-9. A
joint press release announcing the Offer and related transactions and the
Company's letter to its stockholders are filed as Exhibits 9 and 10,
respectively.
The Board of Directors of the Company has unanimously (i) determined that
the Offer and the Merger are fair to and in the best interests of the Company
stockholders, and (ii) approved the Offer and the Merger, and recommends that
the stockholders accept the Offer and tender their Shares pursuant to the Offer.
10
<PAGE> 13
The reasons for the Board of Directors' determinations and recommendations
were based upon many factors, including the following:
(i) The Board believed, after considering presentations by Goldman
Sachs and other information, that values comparable to the total
acquisition price to be paid by Lear would be difficult to achieve under
current market conditions through possible alternatives to a sale of the
Company, including leveraged strategic alliances with another party or
parties or a continuation of the Company as an autonomous, publicly-owned
entity or a corporate restructuring, such as the Recapitalization Proposal.
(ii) The total acquisition price to be paid by Lear compared to
trading multiples of comparable companies and to recent comparable
acquisition multiples, and the fact that such price is higher than the
highest price at which the Shares have traded.
(iii) The Board's belief that Lear's proposal was superior to the
Recapitalization Proposal in that, among other things, it had a
substantially higher cash value, had significantly less financing risk,
could be effected substantially faster, and did not involve uncertainty
with respect to a stub equity interest, including liquidity and valuation
uncertainties.
(iv) The price of $26.00 per Share to be paid pursuant to the Offer
and in the Merger represents a premium of approximately 6% over $24.50, the
closing price of the Shares on the NASDAQ National Market on the last
trading day before the Company's public announcement on May 24, 1996 (prior
to the opening of trading), that it had executed the Merger Agreement. The
price of $26.00 per Share to be paid pursuant to the Offer and in the
Merger represents premiums of approximately 36% and 60%, respectively, over
the weighted average price of the Shares on the NASDAQ National Market
during the three months and one year preceding the public announcement on
May 24, 1996.
(v) The Board received the oral opinion of Goldman Sachs, which was
subsequently confirmed by its written opinion in the form of Exhibit 11
hereto, that as of May 23, 1996 the price to be received by the
stockholders pursuant to the transactions contemplated by the Offer and the
Merger Agreement is fair to such stockholders. A copy of Goldman Sachs'
written opinion, which sets forth the procedures followed, the factors
considered and the assumptions made by Goldman Sachs, is attached to this
Statement and filed as Exhibit 11, and the Company's stockholders are urged
to read that opinion in its entirety.
(vi) The Merger Agreement permits the Board (A) in response to
unsolicited inquiries or proposals, if required by its fiduciary duties
based on the advice of legal counsel, to furnish information to, and
participate in discussions and negotiations with, third parties relating to
an Acquisition Proposal involving the Company, and (B) to withdraw its
recommendation and terminate the Merger Agreement if required by its
fiduciary duties based upon the advice of legal counsel.
(vii) Neither the Company nor any stockholder has granted any option
to Lear to purchase any Shares other than the agreement of three officers
to tender pursuant to the Stockholder Agreement which represents in the
aggregate approximately 1.7% of the Company's total issued and outstanding
Shares; in certain instances where the Board of Directors may find it
necessary to withdraw their recommendations of the Offer and the Merger,
the effect may be to extend the tender period pursuant to the Offer; the
amount of the Termination Fee, and the fact that a termination of the
Merger Agreement or entering into another Acquisition Proposal does not
require the payment of Lear's expenses in connection with the Offer.
(viii) The Offer, the Merger and the purchase of Shares are not
subject to any financing contingency other than the Credit Agreement
Waiver; in the Merger Agreement Lear has undertaken to use its best efforts
to obtain such waiver; and Lear has represented to the Company that it
believes it will receive such waiver, as a result of which it will have all
funds necessary to complete the Offer, the Merger, and the acquisition of
Shares pursuant to the Offer and the Merger Agreement.
(ix) Lear and the Company negotiated the Merger Agreement on an
arms-length basis; and
11
<PAGE> 14
(x) Lear is a substantial Fortune 500 Company believed to be the
world's largest independent supplier of automotive interior systems and one
of the largest independent automotive suppliers in North America and the
world, which should offer the best opportunity for growth and security for
the Company's associates and insure continued excellence in servicing its
customers.
In making the determinations described above, the Board also considered the
following:
(a) The timing of the transactions and the premiums currently being
obtained for corporations engaged in similar businesses;
(b) Information with respect to the business, properties, management,
financial condition, results of operations, and prospects of the Company,
as well as the likelihood of achieving those prospects, and the going
concern value of the Company (as reflected in part by the Company's
historical and projected operating results);
(c) The likelihood that the proposed acquisition will be consummated
(although the acquisition remains subject to the conditions to the Offer
and the Merger), including the experience, reputation, and financial
condition of Lear and the risks to the Company if the acquisition is not
consummated;
(d) The financial aspects of the Merger Agreement, including the
proposed terms, timing, and structure for the acquisition and the nature,
adequacy, and fairness of the consideration offered;
(e) General economic conditions, particularly in the automotive supply
business, which is very cyclical and may now be approaching the end of the
current upward cycle, and the business, marketing, and competitive
consequences of the proposed acquisition to the Company, including its
effects on corporate constituencies;
(f) The impact of the proposed acquisition on the Company's
stockholders and on the general, intermediate and long-term prospects,
interests, and objectives of the Company;
(g) The legal, social, economic, and other effects of the proposed
acquisition on the Company's customers, employees, and suppliers and on the
communities in which the Company operates;
(h) Presentations to the Board by Goldman Sachs, which included its
valuation analyses of the Company;
(i) The terms and conditions of the Merger Agreement, including the
absence of any financing contingency other than the waiver of Lear's
lenders under its $1.475 billion credit facility;
(j) The Board's view, after consultation with Goldman Sachs, regarding
the likelihood of other viable buyers on terms as favorable as those in the
Offer and the Merger; and
(k) The trading history of the Shares, as well as similar information
for other comparable companies.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to its letter agreement dated April 25, 1996 with the Company,
Goldman Sachs is entitled to a transaction fee of approximately 0.875% of the
aggregate consideration (as defined in the letter agreement) paid in connection
with the Offer and the Merger (including amounts paid to holders of options,
warrants and convertible securities, plus the principal amount of all
indebtedness for borrowed money) (less any amounts previously paid by the
Company in connection with the Company's retention of Goldman Sachs), which
shall become payable upon the purchase of 50% or more of the Shares. The Company
has also agreed to reimburse Goldman Sachs for certain out-of-pocket expenses,
including fees of its counsel. In addition, the Company has agreed to indemnify
and hold harmless Goldman Sachs and its affiliates and their respective
directors, officers, employees and controlling persons against certain
liabilities and expenses, including liabilities under the federal securities
laws, arising out of or in connection with its engagement.
12
<PAGE> 15
Goldman Sachs has from time to time provided financial advisory services
for the Company and has received fees for the rendering of these services,
including having acted as managing underwriter of the initial public offering of
Shares in October 1993.
Neither the Company nor any person acting on its behalf currently intends
to employ, retain or compensate any person to make solicitations or
recommendations to security holders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for the receipt of stock option grants, no transactions in the
Common Stock of the Company have been effected in the past 60 days by the
Company or any affiliate or subsidiary of the Company, or, to the best knowledge
of the Company, any executive officer or director of the Company.
(b) To the best knowledge of the Company, it has no reason to believe that
any of the Company's executive officers, directors, affiliates and subsidiaries
do not intend to tender their Shares pursuant to the Offer, except to the extent
that the tender of such Shares would subject such persons to liability under the
provisions of Section 16(b) of the Securities Exchange Act of 1934. Reference is
also made to the Stockholders Agreement referred to in Item 3(b)(2).
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) The Company is not engaged in any negotiation in response to the Offer
that relates to or would result in (i) an extraordinary transaction, such as a
merger or reorganization, involving the Company or any of its subsidiaries, (ii)
a purchase, sale or transfer of a material amount of assets by the Company or
any of its subsidiaries, (iii) a tender offer or other acquisition of securities
by or of the Company, or (iv) any material change in the present capitalization
of the Company. The Company is precluded from continuing its prior dividend
policy under the terms of the Merger Agreement, except for the regular quarterly
dividend of $.05 per share declared at the Board of Director's Meeting on May 9,
1996, and payable on June 7, 1996 to holders of record on May 24, 1996.
(b) Except as set forth in Item 3(b) and Item 4 herein, there are no
transactions, board resolutions, agreements in principle or signed contracts in
response to the Offer that relate to or would result in one or more of the
matters referred to in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
13
<PAGE> 16
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
<TABLE>
<S> <C> <C>
Exhibit 1 -- Pages 6-10 of the Company's Proxy Statement, dated October 10, 1995, for
its 1995 Annual Meeting of Stockholders.
Exhibit 2 -- Employment Agreement, dated May 29, 1996, between Lear, the Company and Dr.
Frank J. Preston.
Exhibit 3 -- Agreement, dated May 29, 1996, between the Company and Daniel R. Perkins.
Exhibit 4 -- Termination, Consulting and Noncompete Agreement, dated May 29, 1996,
between Lear, the Company and William J. Branch.
Exhibit 5 -- Agreement and Plan of Merger, dated as of May 23, 1996, between Lear
Corporation, PA Acquisition Corp., and Masland Corporation.
Exhibit 6 -- Stockholders Agreement, dated as of May 23, 1996, between Lear Corporation,
PA Acquisition Corp., William J. Branch, Larry W. Owen and Darrell F.
Sallee.
Exhibit 7 -- Amendment, dated May 23, 1996, to the Rights Agreement between the Company
and Mellon Securities Trust Company, as Rights Agent, dated as of November
16, 1995.
Exhibit 8 -- Confidentiality and Standstill Agreement, dated March 14, 1996, between and
among the Company, and its subsidiaries, and Lear Corporation, and the
subsidiaries.
Exhibit 9 -- Press Release issued on May 24, 1996.
Exhibit 10* -- Letter to Stockholders of the Company, dated May 30, 1996.
Exhibit 11* -- Letter from Goldman, Sachs & Co., dated May 23, 1996.
</TABLE>
- ---------------
* Included in the materials sent to Company shareholders.
14
<PAGE> 17
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
MASLAND CORPORATION
By: /s/ DANIEL R. PERKINS
--------------------------------------
Daniel R. Perkins
Chief Financial Officer,
Treasurer and Secretary
May 30, 1996
15
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGES
- -------------- ---------------------------------------------------------------- ------------
<S> <C> <C> <C>
Exhibit 99.1 -- Pages 6-10 of the Company's Proxy Statement, dated October 10,
1995, for its 1995 Annual Meeting of Stockholders.
Exhibit 99.2 -- Employment Agreement, dated May 29, 1996, between Lear, the
Company and Dr. Frank J. Preston.
Exhibit 99.3 -- Agreement, dated May 29, 1996, between the Company and Daniel R.
Perkins.
Exhibit 99.4 -- Termination, Consulting and Noncompete Agreement, dated May 29,
1996, between Lear, the Company and William J. Branch.
Exhibit 99.5 -- Agreement and Plan of Merger, dated as of May 23, 1996, between
Lear Corporation, PA Acquisition Corp., and Masland Corporation.
Exhibit 99.6 -- Stockholders Agreement, dated as of May 23, 1996, between Lear
Corporation, PA Acquisition Corp., William J. Branch, Larry W.
Owen and Darrell F. Sallee.
Exhibit 99.7 -- Amendment, dated May 23, 1996, to the Rights Agreement between
the Company and Mellon Securities Trust Company, as Rights
Agent, dated as of November 16, 1995.
Exhibit 99.8 -- Confidentiality and Standstill Agreement, dated March 14, 1996,
between and among the Company, and its subsidiaries, and Lear
Corporation, and the subsidiaries.
Exhibit 99.9 -- Press Release issued on May 24, 1996.
Exhibit 99.10* -- Letter to Stockholders of the Company, dated May 30, 1996.
Exhibit 99.11* -- Letter from Goldman, Sachs & Co., dated May 23, 1996.
</TABLE>
- ---------------
* Included in the materials sent to Company shareholders.
<PAGE> 1
EXHIBIT 1
EXECUTIVE COMPENSATION
The following table discloses, for the fiscal years 1993 through 1995,
individual compensation information relating to Mr. Branch and the four other
most highly compensated executive officers (collectively, the "Named
Executives").(1)
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- -------------------- -------
RESTRICTED ALL OTHER
STOCK NUMBER LTIP COMPEN-
NAME AND OTHER ANNUAL AWARD(S) OF PAYOUTS SATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(2) ($)(3) OPTIONS ($) ($)(4)
- ----------------------------- ---- --------- -------- ------------------ ---------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. Branch.............. 1995 218,333 133,840 15,396 0 0 0 0
Chairman and Chief 1994 205,000 246,000 1,093,512(5) 0 0 0 0
Executive Officer 1993 183,833 222,000 16,423 5,078 108,675 0 0
Frank J. Preston............... 1995 105,000 63,000 0 0 90,000 0 34,746
President and Chief
Operating Officer(1)
Daniel R. Perkins.............. 1995 120,000 52,680 10,270 0 0 0 0
Chief Financial Officer, 1994 116,000 98,600 9,282 0 0 0 0
Treasurer and Secretary 1993 110,000 93,500 7,723 1,729 68,543 0 42,486
Larry W. Owen.................. 1995 126,000 55,310 10,028 0 0 0 0
Vice President and 1994 122,000 103,700 10,289 0 0 0 0
General Manager-Fabrics 1993 115,000 97,800 9,157 3,808 70,000 0 0
Darrell F. Sallee.............. 1995 135,000 59,270 9,877 0 0 0 0
Vice President of the 1994 130,000 110,500 8,838 0 0 0 0
Corporation and President 1993 122,500 103,700 6,207 1,903 60,631 0 0
of Amtex
</TABLE>
- --------------------------
(1) Dr. Preston was an executive officer of the Corporation on June 30, 1995
but was employed only for the second half of fiscal 1995.
(2) Includes amounts with respect to compensation realized upon the exercise of
stock options and perquisites, which include company cars, life insurance
premiums, tax preparation, 401(k) plan matching contributions and defined
pension plan contributions. For fiscal 1993 the amount exceeding 25% of the
total perquisites to each such Named Executive is: Mr. Branch, 401(k) plan
matching contributions $5,515 and defined pension plan contributions
$5,515; Mr. Perkins, defined pension plan contributions $3,300; Mr. Owen,
defined pension plan contributions $3,450; and Mr. Sallee, company car
$1,790 and defined pension plan contributions $3,675. For fiscal 1994 the
amount exceeding 25% of the total perquisites to each such Named Executive
is: Mr. Branch, 401(k) plan matching contributions $6,150 and defined
pension plan contributions $6,150; Mr. Perkins, company car $2,862 and
defined pension plan contributions $3,480; Mr. Owen, company car $3,016 and
defined pension plan contributions $3,660; and Mr. Sallee, company car
$2,782 and defined pension plan contributions $3,900. For fiscal 1995 the
amount exceeding 25% of the total prerequisites to each such Named
Executive is: Mr. Branch, company car $4,069, defined pension plan
contributions $4,500 and 401(k) plan matching contributions $4,500; Mr.
Perkins, company car $4,064 and defined pension plan contributions $3,624;
Mr. Owen, company car $3,264 and defined pension plan contributions $3,780;
and Mr. Sallee, company car $2,497 and defined pension plan contributions
$4,050.
(3) For fiscal 1993, amounts shown represent the dollar value of restricted
stock purchased by each of the Named Executives, net of the consideration
paid for such restricted stock. Such Named Executive purchased shares of
Class P Common Stock on August 31, 1992 at $29.10 per share. The fair
market value of the Class P Common Stock on such date was $30.93 per share.
The amount shown is the difference between these amounts. All other
purchases of Class P Common Stock, Common Stock and warrants by the Named
Executives have been at fair market value. At the initial public offering
price of $17.00 per share, the number and value of the restricted stock
holdings as of the end of fiscal 1993 for each of the Named
6
<PAGE> 2
Executives was Mr. Branch, 176,571 shares, $3,001,707; Mr. Perkins, 10,611
shares, $180,387; Mr. Owen 132,411 shares, $2,250,987; and Mr. Sallee,
66,204 shares, $1,125,468.
Based upon the closing price of the Corporation's Common Stock on June 30,
1995 as reported on the NASDAQ National Market System, which was 12-7/8
per share, the number and value of the restricted stock holdings for each
of the Named Executives on that date was for Mr. Branch, 62,256 shares,
$801,546; for Mr. Perkins, 10,611 shares, $136,617; for Mr. Owen, 132,411
shares, $1,704,792; and for Mr. Sallee, 36,204 shares, $466,126.
(4) Represents amounts paid by the Corporation for relocation expenses during
fiscal 1993 and fiscal 1995.
(5) Includes $1,075,935 realized in fiscal 1994 by Mr. Branch in connection
with the exercise of certain options. Such compensation is deductible by
the Corporation and not subject to section 162(m) of the Code. See
"Compensation Committee Report--Tax Deductibility of Executive
Compensation".
GRANT OF STOCK OPTIONS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------- VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES OF
OPTIONS/SARS EXERCISE STOCK PRICE APPRECIATION
GRANTED TO OR BASE FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($)(1) 10% ($)(1)
---- ------------ ------------ -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
William J. Branch . . . . . . . 0 0 0 0 0 0
Frank J. Preston . . . . . . . 60,000(2) 13.0% $15.00 1/3/2005 $566,005 $1,434,368
30,000(2) 6.5% $13.25 5/11/2005 $249,986 $ 633,513
Daniel R. Perkins . . . . . . . 0 0 0 0 0 0
Larry W. Owen . . . . . . . . . 0 0 0 0 0 0
Darrell F. Sallee . . . . . . . 0 0 0 0 0 0
</TABLE>
- -------
(1) It should be noted that these values will only be realized if the value of
the Common Stock appreciates at a compound rate of either 5% per year or
10% per year over the 10-year option term. The purpose of providing this
information is to indicate the total potential stockholder gain over the
term of the options comparable to the potential gain shown for the
options.
(2) Exercisable over five years at a rate of 20% per year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES TABLE
The following table shows information regarding the exercise of stock
options during fiscal 1995, by the Named Executives and the number and value of
any unexercised stock options held by them as of June 30, 1995:
AGGREGATED OPTION EXERCISES IN 1995 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES TABLE
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED ON REALIZED FY-END (#) FY-END ($)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ------------ -------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
William J. Branch . . . . . . 0 0 198,675/0 $851,940/$0
Frank J. Preston . . . . . . 0 0 0/90,000 $0/$0
Daniel R. Perkins . . . . . . 0 0 79,521/14,022 $638,293/$76,720
Larry W. Owen . . . . . . . 0 0 105,978/14,022 $701,748/$76,720
Darrel F. Sallee . . . . . . 0 0 96,609/14,022 $589,508/$76,720
</TABLE>
- --------
(1) The value of the options is calculated based upon the average market price
of the Corporation's Common Stock as of June 30, 1995 as reported on the
NASDAQ National Market System, which was $12.75 per share.
7
<PAGE> 3
DIRECTORS' COMPENSATION
Directors who are not salaried officers or employees of the Corporation
are paid an annual stipend of $14,000 payable quarterly plus a fee of $500 for
each board meeting attended and $300 for each committee meeting attended.
Outside directors serving as chairmen of committees receive an additional
annual stipend of $1,000. Also, travel and lodging expenses are reimbursed. No
director who is a salaried officer employee of the Corporation receives any
compensation in addition to his regular salary for attendance at meetings of the
Board or any of its committees. Outside directors may elect to defer a portion
or all of their compensation under the Corporation's Deferred Compensation Plan
for Non-Employee Directors. The Corporation's obligation to pay the sums
deferred is unsecured. Deferral elections, after the initial election, will be
made annually prior to the beginning of each calendar year. Deferrals can be
made into a Stock Account or into an Interest Account. The Stock Account
accumulates phantom shares of Common Stock which represent a notional equity
interest in the Corporation. The Interest Account accumulates interest on the
deferrals. Distributions of the deferred sums are payable to the participant,
only in cash, upon retirement, termination of service or death. Payment is made
in annual installments over a ten year period, unless the Compensation
Committee determines otherwise, and interest continues to accrue on unpaid
amounts. In addition, in the event of a "change in control" of the Corporation,
as such term is defined in the Plan, the account value for each electing
director is payable in cash in a lump sum within 15 days following such event.
The Plan was first effective as of May 11, 1995. The Corporation has been
advised that under current federal tax law, an electing director will not be
taxed on the amount of compensation deferred until it is paid to such director
pursuant to the Plan. Three directors have elected to defer compensation.
The outside directors also participate in the Corporation's
Non-Employee Directors' Stock Option Plan (the "Directors' Plan"). The
Directors' Plan provides for the automatic grant of non-qualified stock options
("NQOs") to non-employee directors of the Corporation commencing upon their
election as directors and thereafter annually following the Annual Meeting of
Stockholders until the total shares available thereunder is exhausted. A total
of 100,000 shares of Common Stock have been reserved for issuance under the
Directors' Plan. Upon commencing service on the Board, each director is awarded
a number of options determined by a formula whereby $42,000 is divided by the
fair market value of the Common Stock on the applicable valuation date. A
total of 12,284 options have been granted under the Directors' Plan. The number
of NQOs granted annually to each eligible director will be determined by a
formula whereby $14,000 is divided by the fair market value of a share of
Common Stock on the first Friday following the Corporation's Annual Meeting of
Stockholders (the "Valuation Date"). The Corporation anticipates that the next
Valuation Date will be Friday, November 10, 1995. In order to avoid forfeiture,
a non-employee director must exercise his/her options under the Directors' Plan
within six months following date of retirement, death or termination by reason
of disability.
PLANS OR ARRANGEMENTS RELATING TO EMPLOYMENT TERMINATION OR A CHANGE IN CONTROL
Except for Dr. Preston, neither Mr. Branch nor the other present
executive officers of the Corporation have employment agreements with the
Corporation or any of its affiliates. Except for Dr. Preston, none of them has
any agreement entitling him to termination or severance payments upon a change
in control of the Corporation nor a change in the Named Executive's
responsibilities following a change of control. However, each of Messrs.
Branch, Perkins, Owen and Sallee are parties to one or more Management Stock
Purchase Agreements with the Corporation pursuant to which each of them has
purchased shares of Common Stock in the Corporation; and each of them is the
grantee of certain stock options from the Corporation under one or more Stock
Option Agreements. These agreements contained certain provisions relating to
the repurchase of the stock purchased under such agreements or relating to
payments to be made upon exercise of options granted thereunder, which lapsed as
of the IPO. The Stock Option Agreements and warrants issued pursuant to the
1991 Plan also included certain transfer restrictions. At their meeting of
April 22, 1994, the Board of Directors agreed to waive such transfer
restrictions, the provisions relating to the repurchase option in favor of the
Corporation and the put option in favor of the option or warrant holder. All of
these stock options vested in full as of the IPO, except options granted on
June 14, 1993 which continue to vest at a rate of 20% per year.
Dr. Preston is a party to a letter agreement of employment which
provides, among other things, that if his employment were terminated other than
for cause prior to January 3, 1998, the Corporation will pay a severance
8
<PAGE> 4
benefit to him of three times his base salary in effect at the date of
termination. In addition, the Corporation has entered into a Change of Control
Agreement with Dr. Preston which provides severance benefits to him in the
event his employment is terminated within a specified period following a
"change in control" of the Corporation, as such term is defined in the
Agreement. To qualify for such severance payment his date of termination must
be on or before January 3, 2000 and such date of termination must be within
twelve months following the change in control. His severance benefits include
the lump sum payment of an amount equal to 4.5 times his highest annual base
salary in effect on any date with the period beginning with the effective date
of the Agreement and ending on his date of termination. No termination or
modification of the Agreement may be made by the Corporation without the
concurrence of Dr. Preston. There are no limitations on the total payments to be
made to Dr. Preston upon his termination resulting from a Change in Control to
prevent such payments from constituting excess "parachute payments" (as that
term is defined in the Code). He will also receive additional payments under
the Agreement to reimburse him for any increased taxes, penalties and interest
resulting from severance payments under the Agreement by reason of such
payments being treated as excess parachute payments (including payments to
reimburse him for increased taxes). Under the terms of the Agreement, Dr.
Preston also would be entitled to supplemental benefits, such as rights to
exercise stock options, continued medical insurance for specified periods after
termination and the payment of all reasonable fees and related expenses
incurred by him as a result of the termination of his employment or in
obtaining or enforcing any right or benefit provided by the Agreement. Had
there been a "change in control" as of the end of the Corporation's 1995 fiscal
year, the approximate severance payment under the Agreement for Dr. Preston in
the event of his termination would have been $945,000.
Dr. Preston is also the beneficiary of a Supplemental Employment
Retirement Pension Agreement (the "SERP") which is an unfunded, non-qualified
plan designed to restore retirement benefits to him lost under the pension plan
with his predecessor employer by reason of his change of employment to the
Corporation, which lost retirement pension benefits would not be adequately
offset by retirement benefits provided under the Corporation's retirement plans
in which he will become a participant after meeting minimum waiting periods for
eligibility. The SERP is administered by the Compensation Committee. The SERP
is a phantom stock plan under which quarterly credits are made to Dr. Preston's
ledger account representing 500 units per quarter, each unit representing the
equivalent of a share of Common Stock of the Corporation. The credits will
continue so long as he remains in the active employment of the Corporation and
prior to his attainment of age 65. Additional credits are made to his ledger
account equal to any dividends payable on the Corporation's Common Stock. If
his employment is terminated other than by death or retirement then all units
credited to his ledger account will be deferred until the earlier to occur of
attainment of age 65 or death, and thereafter such credits shall be payable in
cash in the same manner as provided in the case of his retirement or death. At
retirement or death he has the right to elect a lump sum payment in cash equal
to the then fair market value of a share of Common Stock of the Corporation
multiplied by the number of units standing to his credit in the ledger account,
payable within 30 days, or quarterly installment payments over a 10 year
period, valued in a similar fashion and payable only in cash. In the event of a
"change in control" of the Corporation, as defined in the SERP, the fair market
value of the Common Stock equivalents of the units credited to his ledger
account shall be payable to him in a lump sum cash payment within 15 days
following the "change in control". If a Change in Control were to have occurred
at the end of the Corporation's 1995 fiscal year, Dr. Preston would have had an
estimated entitlement to a lump sum cash payment under the SERP of
approximately $13,000.
EXECUTIVE DEFERRED COMPENSATION PLAN
The Corporation has established an Executive Deferred Compensation Plan
(the "EDC Plan") first effective February 9, 1995, which is an unfunded,
non-qualified deferred compensation arrangement for a select group of
management and highly compensated employees of the Corporation and certain of
its subsidiaries, and which is administered by a Board appointed committee
consisting of the Chief Executive Officer, the Chief Operating Officer, the
Chief Financial Officer and the Vice President of Human Resources.
The EDC Plan permits an eligible employee to defer the receipt of a
specified portion of his or her compensation until the date of retirement,
disability, death, termination of employment or for a specified deferral
9
<PAGE> 5
period. The Corporation's obligation to pay the sums deferred, including
interest accrued on the amount of the deferrals, is unfunded and unsecured.
Upon a "change of control" of the Corporation, as defined in the EDC Plan, the
participants shall be entitled to their accrued deferrals, including interest
on such deferrals, payable in a cash lump sum payment. All deferred amounts,
including deferred interest, are payable on the deferral payment date in a lump
sum cash payment unless the participant has requested that the committee permit
that payment to be in installments or further deferred until expiration of a
specified period of time of not less than three years following the initially
specified payment date. The interest rate used for all purposes under the EDC
Plan is the prime rate of Chemical Bank, agent under the Corporation's loan
facility. Deferral elections may be made periodically by the participants. The
EDC Plan may be terminated by the Corporation upon notice to the participants,
but only as to future deferrals. The Corporation has been advised that under
current federal tax law a participant will not be taxed on the amount of
compensation deferred until it is paid to the participant pursuant to the EDC
Plan, and further advised that if deferrals are of incentive bonus compensation
such is "performance based" compensation and accordingly neither the deferrals
attributable to such performance based compensation nor the interest accruals
thereon will be subject to the annual $1 million limitation on deductible
compensation paid or accrued with respect to the Chief Executive Officer and
the next four most highly compensated executive officers. However, there are no
limitations on the total payments to be made to an executive upon a Change of
Control under the EDC Plan to prevent such payments from constituting excess
"parachute payments" as such term is defined in the Code. Had there been a
Change in Control as of the end of the Corporation's 1995 fiscal year, the
approximate benefits under the EDC Plan for the named executive officers would
have been as follows: Dr. Preston--$14,177.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1994, but prior to the IPO, compensation decisions were
made for executive officers and employees, other than Mr. Branch, by the
Executive Committee which consisted of Messrs. Branch, Edgerley and a third
non-employee director who no longer serves on the Board. None of the then
members of the Executive Committee participated in the determination of their
respective compensation, if any. See "Compensation Committee Report".
Lanty L. Smith, Chairman of the Compensation Committee and a director
of the Corporation, is the Chairman of the Board of Directors, Chief Executive
Officer and largest shareholder of Precision Fabrics Group, Inc. ("Precision"),
in which the Corporation invested $15 million on September 26, 1995 in exchange
for approximately 29% of the issued and outstanding stock of Precision. Dr.
Frank J. Preston, a director, President and Chief Operating Officer of the
Corporation, was elected a director of Precision on September 26, 1995.
On September 26, 1995 the Corporation consummated a transaction
described in a Securities Purchase Agreement dated as of September 22, 1995,
pursuant to which the Corporation made the cash investment for the Precision
stock. In addition, Precision granted the Corporation an option to acquire the
remaining Precision shares in a tax free merger exchange for up to 4,100,000
shares of common stock of the Corporation. Precision also solicited and
received irrevocable proxies assuring the Corporation of the ability to
consummate the Merger with Precision should the Corporation so elect on or
before May 31, 1996, and provided that such Merger would be consummated on or
before October 1, 1996. There can be no assurance that the Corporation will in
fact elect to proceed with the subsequent Merger pursuant to that option. The
investment made by the Corporation was funded partly from working capital and
partly from borrowings under its outstanding loan facilities. The transaction
was unanimously approved by the Corporation's Board of Directors except that
Mr. Smith did not participate in the decision-making process nor in the vote.
The Board of Directors had the benefit of an independent appraisal and fairness
opinion prior to voting on the transaction. Dr. Preston was not a director of
Precision prior to his recent election nor at the time the Corporation's Board
of Directors approved the transaction.
Immediately before the transaction Mr. Smith and trusts for the benefit
of members of his immediate family owned approximately 27% of the total issued
and outstanding shares of Precision, and this beneficial ownership percentage
was reduced to approximately 19% following the transaction. However, the net
tangible book value of the shares held by Precision's shareholders prior to the
transaction was increased as a consequence of the transaction.
10
<PAGE> 1
EXHIBIT 99.6(c)
Date: May 29, 1996
Dr. Frank J. Preston
50 Spring Road
Carlisle, PA 17013
Dear Frank:
Masland Corporation (the "Company") considers it essential to its best
interest and the best interests of its stockholders to foster the continuous
employment of key management personnel.
The Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management, including
yourself, to their assigned duties. In order to induce you to remain in the
employ of the Company, and in consideration of your agreement to the
termination of any existing employment contract you may have with the Company
or any predecessor; the Company agrees that you shall receive, upon the terms
and conditions set forth herein, the compensation and benefits set forth in
this letter agreement ("Agreement") during the Term hereof.
1. Term of Agreement. This Agreement shall commence as of the date of
the consummation the Offer (as defined in that certain Agreement and Plan of
Merger dated May 23, 1996 (the "Merger Agreement") (the "Effective Date") by and
among Lear Corporation ("Lear"), PA Acquisition Corp. and the Company) and,
unless earlier terminated as provided herein, shall continue in effect until the
fourth anniversary of such date (the "Term"); provided, that this Agreement
shall be of no force or effect unless and until the Offer is consummated. The
Term may be extended pursuant to paragraph 12, hereafter.
2. Terms of Employment. During the Term, you agree to be a full-time
employee of the Company serving in the position of Corporate Senior Vice
President of Lear and President of the Masland Division and to devote
substantially all of your working time and attention to the business and affairs
of the Company and, to the extent necessary to discharge the responsibilities
associated with your position as Corporate Senior Vice President of Lear and
President of the Masland Division, to use your best efforts to perform
faithfully and efficiently such responsibilities. In addition, you agree to
serve in such other capacities or offices to which you may be assigned,
appointed or elected from time to time by the Board or the Board of Directors of
Lear. Nothing herein shall prohibit you from devoting your time to civic and
community activities, serving as a member of the Board of Directors of other
corporations who do not compete with the Company (provided that you have
received prior written approval from the Company's Chairman) or
<PAGE> 2
managing personal investments, as long as the foregoing do not interfere with
the performance of your duties hereunder.
3. Compensation.
(i) As compensation for your services, under this Agreement, you
shall be entitled to receive an initial base salary of $275,000 per
annum, to be paid in accordance with existing payroll practices for
executives of the Company. Increases in your base salary, if any,
shall be determined by the Compensation Committee of Lear. In
addition, you shall be eligible to receive an annual incentive
compensation bonus ("Bonus") to be determined from time to time by the
Compensation Committee of the Board of Directors of Lear.
(ii) In addition to compensation provided for in Subsection (i) of
this Section 3, the Company agrees (A) to provide the same or
comparable benefits with respect to any compensation or benefit plan
in which you participate as of the Effective Date which is material to
your total compensation (including, without limitation, the Supplement
Employee Retirement Pension Agreement dated March 30, 1995 with Frank
J. Preston), unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan; and (B) to maintain your ability to participate therein (or in
such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the opportunities provided and the level
of your participation relative to other participants, than exists on
the Effective Date.
(iii) The Company shall reimburse you for all reasonable travel,
entertainment and other business expenses incurred by you in the
performance of your responsibilities under this Agreement promptly
upon receipt of written substantiation of such expenses. You shall
also be paid all additional amounts necessary to discharge all federal
and state tax liabilities incurred by you that are attributable to all
deemed compensation arising as a consequence of your personal use of
property owned or leased by the Company, excepting only your personal
use of any Company aircraft, including federal and state taxes
assessed against such additional compensation.
(iv) You shall be entitled to perquisites available to all other
executives of the Company and shall be entitled to 4 weeks of vacation
per year.
(v) Upon consummation of the Merger, the options to purchase 60,000
shares of Common Stock, $.01 par value per share, of the Company
("Company Common Stock") granted to you on January 3, 1995 and 30,000
shares of Company Common Stock granted to you on May 11, 1995, in each
case under the 1993 Stock Option
2
<PAGE> 3
Incentive Plan of the Company, shall (i) become options to purchase
Common Stock, $.01 par value per share, of Lear pursuant to Section
6.07 of the Merger Agreement and (ii) shall all become vested and
exercisable upon consummation of the Merger.
4. Termination of Employment. Your employment may be terminated by
either the Company or you by giving a Notice of Termination, as defined in
Subsection (iv) of this Section 4. If your employment should terminate during
the Term, your entitlement to benefits shall be determined in accordance with
Section 5 hereof.
(i) Disability. If, as a result of your incapacity due to physical
or mental illness, you are unable to perform your duties hereunder for
more than six consecutive months or six months aggregate during any
twelve month period, your employment may be terminated for
"Disability".
(ii) Cause. Termination of your employment for "Cause" shall mean
termination upon (A) the willful and continued failure by you to
substantially perform your duties with the Company (other than any
such failure resulting from your Disability), (B) the engaging by you
in conduct which is significantly injurious to the Company, monetarily
or otherwise, (C) your conviction of a felony, (D) your abuse of
illegal drugs or other controlled substances or your habitual
intoxication, or (E) the breach of any of your material obligations
hereunder including without limitation any breach of Section 9 or 10
hereof. For purposes of this Subsection, no act or failure to act, on
your part shall be deemed "willful" unless knowingly done, or omitted
to be done, by you not in good faith and without reasonable belief
that your action or omission was in the best interest of the Company.
(iii) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean the occurrence, without your express written consent, of
any of the following circumstances unless such circumstances are fully
corrected prior to the Date of Termination specified in the Notice of
Termination, as such terms are defined in Subsections (v) and (iv) of
this Section 4, respectively, given in respect thereof:
(A) The permanent assignment to you of any duties inconsistent
with your status as an executive officer of the Company, your
physical relocation on a permanent basis to an area outside of
the metropolitan Detroit area, a substantial adverse alteration
in the nature or status of your responsibilities from those in
effect immediately prior to such assignment of duties, your
removal from any office specified in Section 2 hereof;
3
<PAGE> 4
(B) Any reduction by the Company in your base salary as in
effect from time to time, except for across-the-board salary
reductions similarly affecting all executive officers of the
Company;
(C) The failure by the Company to pay or provide to you within
seven (7) days of receipt by the Company of your written demand
any amounts of base salary or Bonus or any benefits which are
due, owing and payable to you pursuant to the terms hereof,
except pursuant to an across-the-board compensation deferral
similarly affecting all executive officers, or to pay to you any
portion of an installment of deferred compensation due under any
deferred compensation program of the Company;
(D) Except in the case of across-the-board reductions,
deferrals or eliminations similarly affecting all executive
officers of the Company, the failure by the Company to (i)
continue in effect any compensation plan in which you participate
which is material to your total compensation, including but not
limited to the Company's plans currently in effect or hereafter
adopted, and any plans adopted in substitution therefore, or (ii)
continue to provide you with benefits substantially similar, in
aggregate, to the Company's life insurance, medical, dental,
health, accident or disability plans in which you are
participating at the date of this Agreement; or
(E) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 7 hereof.
Your continued employment with the Company shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
(iv) Notice of Termination. Any termination of your employment by
the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 8
hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination
provision in this agreement relied upon, if any, and shall set forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so
indicated.
(v) Date of Termination, Etc. "Date of Termination" shall mean (A)
if your employment is terminated for Disability pursuant to Subsection
(i) of this Section 4, thirty (30) days after Notice of Termination is
given (provided that you shall not
4
<PAGE> 5
have returned to the full-time performance of your duties during such
thirty (30) day period), (B) if your employment is terminated by
reason of your death, the date of your death, (C) if by you for Good
Reason or by either party for any other reason (other than Disability,
death, or your voluntary resignation without Good Reason), the date
specified in the Notice of Termination (which, in the case of a
termination by you for Good Reason, shall not be less than thirty (30)
nor more than sixty (60) days from the date such Notice of Termination
is given), and (D) if your employment is terminated by your voluntary
resignation without Good Reason (as defined in Subsection (iii) of
this Section 4), the Date of Termination shall be forty-five (45) days
from the date such Notice of Termination is given or such other date
as may be identified by the Company. Unless the Company instructs you
not to do so, you shall continue to perform services as provided in
this Agreement through the Date of Termination.
5. Compensation Upon Termination or During Disability. Upon termination
of your employment with the Company during the Term, you shall be entitled to
the following compensation and benefits:
(i) If your employment is terminated for Disability, you shall
receive until the end of the Term all compensation payable to you
under the Company's disability and medical plans and programs, as in
effect on the Date of Termination plus an additional payment from the
Company (if necessary) such that the aggregate amount received by you
in the nature of salary continuation from all sources equals your base
salary at the rate in effect on the Date of Termination. After the
end of the Term, your benefits shall be determined under the Company's
retirement, insurance and other compensation programs then in effect
in accordance with the terms of such programs, provided that such
terms shall not be less advantageous to you than the terms of such
programs in effect as of the Effective Date.
(ii) If your employment shall be terminated (A) by the Company for
Cause, or (B) by you other than for Good Reason, the Company shall pay
you your full base salary through the Date of Termination, at the rate
in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation or benefit
plans of the Company at the time such payments are due, and the
Company shall have no further obligations to you under this Agreement.
Provided, however, that if your employment is terminated by your
voluntary resignation without Good Reason, you shall be compensated
per this Paragraph only to the extent that you actively performed your
assigned responsibilities through the Date of Termination.
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(iii) If your employment shall be terminated by reason of your death,
the Company shall pay your estate or designated beneficiary (as
designated by you by written notice to the Company, which designation
shall remain in effect for the remainder of the Term and any
extensions thereof until revoked or a new beneficiary is designated,
in either case by written notice to the Company) your full base salary
through the Date of Termination and for a period of 12 whole calendar
months thereafter plus, if the Date of Termination shall not occur on
the first day of a calendar month, the balance of the month in which
the Date of Termination occurs, at the rate in effect at the time of
your death, plus any Bonus earned, prorated for the portion of the
Bonus measurement period occurring prior to the date of your death,
plus all other amounts to which you are entitled under any
compensation or benefit plans of the Company at the date of your
death, and the Company shall have no further obligation to you, your
beneficiaries or your estate under this Agreement.
(iv) If your employment shall be terminated (a) by the Company other
than for Cause or Disability or (b) by you for Good Reason, then you
shall be entitled to the benefits provided below:
(A) The Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given (or, if greater, at the rate in effect 30
days prior to the time Notice of Termination is given), plus all
other amounts to which you are entitled under any compensation or
benefit plans of the Company, including without limitation, any
Bonus measurement period occurring prior to the Date of
Termination, at the time such payments are due, except as
otherwise provided below;
(B) in lieu of any further salary payment to you for periods
subsequent to the Date of Termination, the Company shall pay to
you your full base salary at the rate in effect immediately prior
to the time Notice of Termination is given (or, if greater, at
the rate in effect 30 days prior to the time Notice of
Termination is given), payable periodically in accordance with
past payroll practices, until the end of the Term;
(C) in lieu of any further Bonus payments to you for periods
subsequent to the Date of Termination, the Company shall pay to
you a Bonus payable in each March following the Date of
Termination in respect of the previous plan fiscal year equal to
the quotient obtained by aggregating the Bonuses received by you
in respect of the two plan fiscal years ending prior to the Date
of Termination (the "Bonus Period") and dividing such sum by two.
Such Bonus shall be paid in respect of each plan fiscal year or
portion thereof ending after
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<PAGE> 7
the Date of Termination until the end of the Term, and shall be
prorated for partial years, if any, including without limitation
the portion of the calendar year occurring after the Date of
Termination and the final plan fiscal year in respect of which
any such March Bonus is payable pursuant to this Section
5(iv)(C). Provided, however, that the amount of bonus to be paid
pursuant to this Paragraph shall not be greater than the amount
of bonus that would have been paid in accordance with Bonus
Plans, existing from time to time, had your employment not been
terminated;
(D) until the end of the Term, you will continue to participate
in all other compensation and benefit plans (including
perquisites) in which you were participating immediately prior to
the time Notice of Termination is given, or comparable plans
substituted therefor; provided, however, that if you are
ineligible, (e.g., by operation of law or the terms of the
applicable plan to continue to participate in any such plan) the
Company will provide you with a comparable level of compensation
or benefits;
(E) the Company shall also pay to you all reasonable legal fees
and expenses incurred by you in contesting or disputing any such
termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement if such termination is
determined by arbitration to have been for Good Reason or other
than Cause or Disability; and
(F) if you should die after the Date of Termination and prior
to the end of the period of payment provided for in paragraphs
(B), (C), and (D) hereof, the Company shall pay your estate or
your designated beneficiary any amounts that are or become
payable pursuant to any of such paragraphs until the end of the
Term.
(v) In addition to all other amounts payable to you under this
Section 5, you shall be entitled to receive all benefits payable to
you pursuant to the terms of any plan or agreement of the Company
relating to retirement benefits.
6. Travel. You shall be required to travel to the extent necessary for
the performance of your responsibilities under this Agreement.
7. Successors; Binding Agreement. The Company will, by Agreement in form
and substance satisfactory to you, require any successor (whether direct or
indirect, by purchase merger, consolidation or otherwise) to all or
substantially all the business and/or assets of the Company, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken
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<PAGE> 8
place. Failure of the Company to obtain such assumption and agreement prior to
the effectiveness of any such succession shall entitle you to compensation from
the Company in the same amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as herein before defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
8. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the
Secretary of the Company (or, if you are the Secretary at the time such notice
is to be given, to the Chairman of the Company's Board of Directors), or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
9. Noncompetition.
(i) Until the Date of Termination, you agree not to enter into
competitive endeavors and not to undertake any commercial activity
which is contrary to the best interests of Lear, the Company or their
respective affiliates, including becoming an employee, owner (except
for passive investments of not more than one percent of the
outstanding shares of, or any other equity interest in, any company or
entity listed or traded on a national securities exchange or in an
over-the-counter securities market), officer, consultant, agent or
director of any firm or person which either directly or indirectly
competes with a line or lines of business of Lear or the Company.
Notwithstanding any provision of this Agreement to the contrary, you
agree that your breach of the provisions of this Section 9(i) shall
permit the Company to terminate your employment for Cause.
(ii) If you are terminated for Cause or if you resign, until the
later of (A) one year after the Date of Termination and (B) the
conclusion of any period that you continue to be paid your salary
(including any other payments in lieu of salary) pursuant to Section 5
hereof and for one year thereafter, or you are terminated other than
for Cause, until the later of (A) the Date of Termination and (B) the
conclusion any period that you continue to be paid your salary
(including any other payment in lieu of salary) pursuant to Section 5
hereof, you agree not to become an employee, owner (except for passive
investments of not more than one percent of the
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<PAGE> 9
outstanding shares of, or any other equity interest in, any company or
entity listed or traded on a national securities exchange or in an
over-the-counter securities market), consultant, officer, agent or
director of any firm or person which directly or indirectly competes
with a line or lines of business of Lear or the Company. During the
period of payment provided in Section 5 hereof, you will be available,
consistent with other responsibilities that you may then have, to
answer questions and provide advice to the Company. Notwithstanding
anything in this Agreement to the contrary, you agree that, from and
after any breach by you of the provisions of this Section 9(ii), the
Company shall cease to have any obligations to make payments to you
under this Agreement.
(iii) If you are terminated for Cause or if you resign, until the
later of (A) one year after the Date of Termination and (B) the
conclusion of any period that you continue to be paid your salary
(including any other payments in lieu of salary) pursuant to Section 5
hereof and for one year thereafter, or if you are terminated other
than for Cause, until the later of (A) the Date of Termination and (B)
the conclusion of any period that you continue to be paid your salary
(including any other payment in lieu of salary) pursuant to Section 5
hereof, you shall not directly or indirectly, either on your own
account or with or for anyone else, (X) solicit or attempt to solicit
any of Lear or the Company's customers (Y) solicit or attempt to
solicit for any business endeavor any employee of Lear or the Company
or (Z) otherwise divert or attempt to divert from Lear or the Company
any business whatsoever or interfere with any business relationship
between Lear or the Company and any other person.
(iv) You acknowledge and agree that damages for breach of the
covenant not to compete in this Section 9 will be difficult to
determine and will not afford a full and adequate remedy, and
therefore agree that the Company, in addition to seeking actual
damages pursuant to Section 11 hereof, may seek specific enforcement
of the covenant not to compete in any court of competent jurisdiction,
including, without limitation, by the issuance of a temporary or
permanent injunction, without the necessity of a bond. You and the
Company agree that the provisions of this covenant not to compete are
reasonable. However, should any court or arbitrator determine that
any provision of this covenant not to compete is unreasonable, either
in period of time, geographical area, or otherwise, the parties agree
that this covenant not to compete should be interpreted and enforced
to the maximum extent which such court or arbitrator deems reasonable.
10. Confidentiality.
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<PAGE> 10
(i) You shall not knowingly use, disclose or reveal to any
unauthorized person, during or after the Term, any trade secret or
other confidential information relating to the Company or any of its
affiliates, or any of their respective businesses or principals, such
as, without limitation, dealers' or distributor's lists, information
regarding personnel and manufacturing processes, marketing and sales
plans, and all other such information; and you confirm that such
information is the exclusive property of the Company and its
affiliates. Upon termination of your employment, you agree to return
to the Company on demand of the Company all memoranda, books, papers,
letters and other data, and all copies thereof or therefrom, in any
way relating to the business of the Company and its affiliates,
whether made by you or otherwise in your possession.
(ii) Any ideas, processes, characters, productions, schemes, titles,
names, formats, adaptations, plots, slogans, catchwords, incidents,
treatment, and dialogue which you may conceive, create, organize,
prepare or produce during the period of your employment and which
ideas, processes, etc. relate to any of the businesses of the Company,
shall be owned by the Company and its affiliates whether or not you
should in fact execute an assignment thereof or other instrument or
document which may be reasonably necessary to protect and secure such
rights to the Company.
(iii) Notwithstanding anything in this Agreement to the contrary, you
agree that from and after any breach by you of the provisions of this
Section 10 during any period of payment provided in Section 5 hereof,
the Company shall cease to have any obligations to make payments to
you under this Agreement.
11. Arbitration.
(i) Except as contemplated by Section 9 and Section 11 (iii) hereof,
any dispute or controversy arising under or in connection with this
Agreement that cannot be mutually resolved by the parties to this
Agreement and their respective advisors and representatives shall be
settled exclusively by arbitration in Southfield, Michigan before one
arbitrator of exemplary qualifications and stature, who shall be
selected jointly by an individual to be designated by the Company and
an individual to be selected by you, or if such two individuals cannot
agree on the selection of the arbitrator, who shall be selected
pursuant to the procedures of the American Arbitration Association.
(ii) The parties agree to use their best efforts to cause (a) the two
individuals set forth in the preceding Section 11 (i), or, if
applicable, the American Arbitration Association, to appoint the
arbitrator within 30 days of the date that a party hereto notifies the
other party that a dispute or controversy exists that necessitates the
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<PAGE> 11
appointment of an arbitrator, and (b) any arbitration hearing to be
held within 30 days of the date of selection of the arbitrator, and,
as a condition to his or her selection, such arbitrator must consent
to be available for a hearing at such time.
(iii) Judgment may be entered on the arbitrator's award in any court
having jurisdiction, provided that you shall be entitled to seek
specific performance of your right to be paid and to participate in
benefit programs during the pendency of any dispute or controversy
arising under or in connection with this Agreement. The Company and
you hereby agree that the arbitrator shall be empowered to enter an
equitable decree mandating specific performance of the terms of this
Agreement.
(iv) If you prevail in full or in substantial part, the Company shall
bear all expenses of the arbitrator incurred in any arbitration
hereunder. The Company agrees to pay your reasonable and documented
legal fees and expenses in connection with any arbitration hereunder
if you prevail in full or in substantial part.
12. Extension of Term. The Term of this Agreement shall be automatically
extended for a period of one year on each anniversary of the Effective Date of
this Agreement; said automatic extension commencing on the second anniversary of
the Effective Date. There shall be no renewal of the Term after the Date of
Termination.
13. Modifications. No provision of this Agreement may be modified,
amended, waived or discharged unless such modification, amendment, waiver or
discharge is agreed to in writing and signed by both you and such officer of the
Company as may be specifically designated by the Board.
14. No Implied Waivers. Failure of either party at any time to require
performance by the other party of any provision hereof shall in no way affect
the full right to require such performance at any time thereafter. Waiver by
either party of a breach of any obligation hereunder shall not constitute a
waiver of any succeeding breach of the same obligation. Failure of either party
to exercise any of its rights provided herein shall not constitute a waiver of
such right.
15. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Michigan.
16. Payments Net of Taxes. Any payments provided for herein which are
subject to Federal, State or local tax or other withholding requirements, shall
have such amounts withheld prior to payment.
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17. Survival of Obligations. The obligations of the Company under
Section 5(iii) and your obligations under Sections 9 and 10 hereof shall survive
the expiration of the Term of this Agreement.
18. Capacity of Parties. The parties hereto warrant that they have the
capacity and authority to execute this Agreement.
19. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of the Agreement, which shall remain in full force and effect.
20. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Entire Agreement. This Agreement and any attachments hereto, contain
the entire agreement by the parties with respect to the matters covered herein
and supersedes any prior agreement (including without limitation any prior
employment agreement), condition, practice, custom, usage and obligation with
respect to such matters insofar as any such prior agreement, condition,
practice, custom, usage or obligation might have given rise to any enforceable
right. No agreements, understandings or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
MASLAND CORPORATION
BY: /s/ W. Branch
---------------------------
Agreed to this 29th day of May, 1996
BY: /s/ Frank J. Preston
--------------------
Dr. Frank J. Preston
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EXHIBIT 3
AGREEMENT
THIS AGREEMENT made this 29th day of May, 1996 (the "Agreement") by and
between Daniel R. Perkins (the "Executive") and MASLAND CORPORATION, a Delaware
corporation (the "Corporation").
BACKGROUND
The Board of Directors of the Corporation (the "Board") considers the
establishment and maintenance of a sound and vital management to be essential
to protecting and enhancing the best interests of the Corporation and its
shareholders. In this connection, the Corporation recognizes that, as is the
case with many publicly held corporations, the possibility of a change in
control may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Corporation, its subsidiary
companies and its shareholders. The Corporation further recognizes that its
own financial position tends to exacerbate the uncertainty among management
that a change of control might create. Accordingly, the Board has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of certain members of the management of the
Corporation and its subsidiary companies, including the Executive, to their
assigned duties without distraction in the face of the potentially disturbing
circumstances arising from the possibility of a change in control of the
Corporation.
In order to induce the Executive to remain in the employ of Masland
Industries, Inc., a subsidiary company of the Corporation ("Masland"), the
Corporation wishes to provide the Executive with certain severance benefits in
the event his employment with Masland terminates subsequent to a change in
control of the Corporation under the circumstances described herein.
NOW THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
1. TERM. The term of this Agreement commences as of the date and year
first above written and shall continue until July 31, 1997. The prior sentence
notwithstanding, commencing on August 1, 1996 and each August 1 thereafter the
term of this Agreement shall automatically be extended for one additional year
beyond the then existing term. This Agreement shall terminate (except as set
forth in the next sentence) if (a) the Corporation gives the Executive notice
that it wishes to terminate this Agreement in which case the Agreement shall
terminate as of the date set forth in such notice or (b) the Executive's
employment with Masland is terminated for
<PAGE> 2
any reason (other than a transfer to the Corporation), including transfer to
another subsidiary company of the Corporation, in which case this Agreement
shall terminate on the last day of the Executive's employment with Masland;
provided, however, if the Executive is transferred to another subsidiary
company of the Corporation, the Corporation may waive the termination of this
Agreement by a written amendment to this Agreement, executed by both the
Corporation and the Executive, which shall refer to this clause and shall be
limited to the Executive's transfer to the subsidiary company of the
Corporation named in the amendment, unless another amendment is executed upon
the Executive's transfer to another subsidiary company of the Corporation. The
Corporation may not give such notice and this Agreement shall not automatically
terminate in the event the Executive's employment with Masland terminates for
any reason (other than a transfer to the Corporation), including transfer to
another subsidiary company of the Corporation, (x) at any time while the
Corporation has knowledge that any third person has taken steps or announced an
intention to take steps reasonably calculated to effect a "change in control"
(as hereinafter defined) of the Corporation, unless and until such third party
has, in the reasonable opinion of the Corporation, abandoned its efforts or
intention to effect a change in control of the Corporation or (y) within
twenty-four months after the date a change in control occurs. It is understood
that Masland may terminate the Executive's employment at any time, subject to
providing, if required to do so in accordance with the terms hereof, the
severance benefits hereinafter specified.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there
shall have been a change in control of the Corporation and the Executive's
employment by Masland shall thereafter have been terminated by Masland or by the
Executive under the circumstances described in paragraph 3(iii) hereof. For
purposes of this Agreement and subject to the last sentence of this paragraph, a
"change in control" shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A, as in effect on the date hereof, promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); provided that, without limitation,
such a change in control shall be deemed to have occurred if (a) any "Person"
(as such term is used in Section 13(d) and Section 14(d) of the Exchange Act),
except for any employee benefit plan of the Corporation or any subsidiary
company of the Corporation, or any entity holding voting securities of the
Corporation for or pursuant to the terms of any such plan (a "Benefit Plan" or
the "Benefit Plans") is or becomes the beneficial owner, directly or indirectly,
of securities of the Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities; (b) there occurs a
contested proxy solicitation of the
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<PAGE> 3
Corporation's shareholders that results in the contesting party obtaining the
ability to vote securities representing 30% or more of the combined voting power
of the Corporation's then outstanding securities; (c) there occurs a sale,
exchange, transfer or other disposition of substantially all of the assets of
the Corporation to another entity, except to an entity controlled directly or
indirectly by the Corporation, or a merger, consolidation or other
reorganization of the Corporation in which the Corporation is not the surviving
entity, or a plan of liquidation or dissolution of the Corporation other than
pursuant to bankruptcy or insolvency laws is adopted; or (d) during any period
of two consecutive years, individuals who at the beginning of such period
constituted the Board cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by the Corporation's
shareholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period. Notwithstanding the foregoing, a "change in control" shall not be
deemed to have occurred for purposes of this Agreement (i) in the event of a
sale, exchange, transfer or other disposition of substantially all of the assets
of the Corporation to, or a merger, consolidation or other reorganization
involving the Corporation and, the Executive, alone or with other officers of
the Corporation, or any entity in which the Executive (alone or with other
officers) has, directly or indirectly, at least a 5% equity or ownership
interest or (ii) in a transaction otherwise commonly referred to as a
"management leveraged buy-out."
Clause 2(a) above to the contrary notwithstanding, a change in control of
the Corporation shall not be deemed to have occurred if a Person becomes the
beneficial owner, directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the Corporation's then
outstanding securities solely as the result of an acquisition by the Corporation
or a subsidiary company of the Corporation of voting securities of the
Corporation which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the combined voting power of the Corporation's then outstanding securities;
provided, however, that if a Person becomes the beneficial owner of 20% or more
of the combined voting power of the Corporation's then outstanding securities by
reason of share purchases by the Corporation or a subsidiary company of the
Corporation and shall, after such share purchases by the Corporation or a
subsidiary company of the Corporation, become the beneficial owner, directly or
indirectly, of any additional voting securities of the Corporation, then a
change in control of the Corporation shall be deemed to have occurred with
respect to such Person under clause 2(a) above. Notwithstanding the foregoing,
in no event shall a
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change in control of the Corporation be deemed to occur under clause 2(a) above
with respect to the Benefit Plans.
Clauses 2(a) and 2(b) to the contrary notwithstanding, the Board may, by
resolution adopted by at least two-thirds of the directors who were in office
at the date a change in control occurred, declare that a change in control
described in clauses 2(a) or 2(b) has become ineffective for purposes of this
Agreement if all of the following conditions then exist: (i) the declaration
is made prior to the death, disability or termination of employment of the
Executive and within 120 days of the change in control; and (ii) no Person,
except for the Benefit Plans, either is the beneficial owner, directly or
indirectly, of securities of the Corporation representing 10% or more of the
combined voting power of the Corporation's outstanding securities or has the
ability or power to vote securities representing 10% or more of the combined
voting power of the Corporation's then outstanding securities. If such a
declaration shall be properly made, no benefits shall be payable hereunder as a
result of such prior but now ineffective change in control, but benefits shall
remain payable and this Agreement shall remain enforceable as a result of any
other change in control unless it is similarly declared to be ineffective.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. The Executive shall be
entitled to the severance benefits provided in Section 4 hereof if his
employment is terminated within the twenty-four (24) month period following a
change in control of the Corporation (even if such twenty-four (24) month
period shall extend beyond the term of this Agreement or any extension thereof)
unless his termination is (i) because of his death or Retirement, (ii) by
Masland for Cause or Disability or (iii) by the Executive other than for Good
Reason.
(i) Disability; Retirement.
(A) If, as a result of the Executive's incapacity due to
physical or mental illness, he shall have been absent from his duties with
Masland on a full-time basis for 13 consecutive weeks, and within 30 days after
written notice of termination is given he shall not have returned to the
full-time performance of his duties, the Corporation may terminate this
Agreement for "Disability."
(B) Termination by Masland of the Executive's employment based
on "Retirement" shall mean termination in accordance with Masland's normal
retirement policy generally applicable to its salaried employees or in
accordance with any retirement arrangement established with the Executive's
consent with respect to the Executive.
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(ii) Cause. Masland may terminate the Executive's employment for Cause.
For the purpose of this Agreement, Masland shall have "Cause" to terminate the
Executive's employment hereunder upon (A) the willful and continued refusal by
the Executive substantially to perform his duties with Masland (other than any
such refusal resulting from his incapacity due to physical or mental illness),
after a demand for substantial performance is delivered to the Executive by
Masland's Board of Directors which specifically identifies the manner in which
Masland's Board of Directors believes that the Executive has refused
substantially to perform his duties or (B) the willful engaging by the Executive
in gross misconduct materially and demonstrably injurious to Masland or the
Corporation. For purposes of this paragraph, no act or failure to act on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of Masland or the Corporation.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire members of Masland's Board of Directors,
at a meeting of Masland's Board of Directors called and held for that purpose
(after reasonable notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before Masland's Board of Directors),
finding that in the good faith opinion of Masland's Board of Directors the
Executive was guilty of conduct set forth above in clauses (A) or (B) of the
second sentence of this paragraph and specifying the particulars thereof in
detail.
(iii) Good Reason. The Executive shall be entitled to terminate his
employment, and receive benefits hereunder, for Good Reason at any time within
twenty-four (24) months of the date of a change in control of the Corporation.
For purposes of this Agreement, "Good Reason" shall mean, unless the Executive
shall have consented in writing thereto, any of the following:
(A) a reduction in the Executive's title, duties,
responsibilities or status, as compared to such title, duties, responsibilities
or status immediately prior to the change in control or as the same may be
increased after the change in control;
(B) the assignment to the Executive of duties inconsistent with
the Executive's office on the date of the change in control or as the same may
be increased after the change in control;
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(C) a reduction by Masland in the Executive's base salary as in
effect immediately prior to the change in control or as the same may be
increased after the change in control;
(D) a requirement that the Executive relocate anywhere not
mutually acceptable to the Executive and Masland or the imposition on the
Executive of business travel obligations substantially greater than his business
travel obligations during the year prior to the change in control;
(E) the relocation of the Corporation's principal executive
offices to a location outside the greater Plymouth, Michigan area;
(F) the failure by Masland or the Corporation to continue in
effect any material fringe benefit or compensation plan, retirement plan, life
insurance plan, health and accident plan or disability plan in which the
Executive is participating at the time of a change in control of the Corporation
(or plans providing the Executive with substantially similar benefits), the
taking of any action by Masland or the Corporation which would adversely affect
the Executive's participation in or materially reduce his benefits under any of
such plans or deprive him of any material fringe benefit enjoyed by him at the
time of the change in control, or the failure by Masland to provide him with the
number of paid vacation days to which he is then entitled under (1) Masland's
normal vacation policy in effect immediately prior to the change in control or
(2) any agreement regarding vacation entitlement which the Executive had with
Masland immediately prior to the change in control, whichever is greater;
(G) the adoption or pursuit by Masland or the Corporation or its
management of one or more policies or practices which, in the sole opinion of
the Executive, are contrary to the ethics, traditions, policies or practices of
Masland or the Corporation as in effect immediately prior to the change in
control; or
(H) any breach of this Agreement of any nature whatsoever on the
part of Masland or the Corporation.
(iv) Notice of Termination. Any termination by Masland pursuant
to paragraph 3(i) or 3(ii) hereof, or otherwise, or by the Executive pursuant to
paragraph 3(iii) hereof, which, in any case, occurs within twenty-four (24)
months after a change in control of the Corporation, shall be communicated by
written Notice of Termination (as hereinafter defined) to the other party
hereto; provided that, in the case of a termination for Cause, there shall also
have been delivered to the Executive the resolution required
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<PAGE> 7
to be delivered pursuant to paragraph 3(ii) hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.
(v) Date of Termination. "Date of Termination" shall mean (A) if
this Agreement is terminated for Disability, 30 days after Notice of Termination
is given (provided that the Executive shall not have returned to the performance
of his duties on a full-time basis during such 30-day period), (B) if the
Executive's employment is terminated pursuant to paragraph 3(ii) above, the date
specified in the Notice of Termination, and (C) if the Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given, or, if Masland terminates the Executive's employment without giving a
Notice of Termination, the date on which such termination is effective.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(i) During any period that the Executive fails to perform his duties
as a result of incapacity due to physical or mental illness, he shall continue
to receive his full base salary at the rate then in effect until his employment
is terminated pursuant to paragraph 3(i) hereof. Thereafter, his benefits, if
any, shall be determined in accordance with whatever disability income insurance
plan or plans Masland may then have in effect; provided, however, if at the time
Disability of the Executive is established the disability benefits then
available are less advantageous to the Executive than the Disability benefits
which were available upon the change in control, then his termination of
employment shall be deemed to have occurred as a voluntary termination for Good
Reason under paragraph 3(iii) hereof and not by reason of his disability, and
the benefits payable to the Executive under paragraph 4(iii) hereof shall apply
in lieu of this paragraph 4(i).
(ii) If the Executive's employment shall be terminated for Cause,
Masland or the Corporation shall pay him his full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is given
and Masland and the Corporation shall have no further obligations to the
Executive under this Agreement.
(iii) If Masland shall terminate the Executive's employment other than
pursuant to paragraph 3(i) or 3(ii) hereof within twenty-four (24) months after
a change in control of the Corporation, or if the Executive shall terminate his
employment for
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<PAGE> 8
Good Reason pursuant to paragraph 3(iii) hereof within twenty-four (24) months
after a change in control, then:
(A) The Corporation or Masland shall pay to the Executive, no
later than 30 days following the Date of Termination, the Executive's accrued
but unpaid base salary through the Date of Termination plus compensation for
current and carried-over unused vacation and compensation days in accordance
with Masland's personnel policy.
(B) In lieu of any further payments of salary to the Executive
after the Date of Termination, the Corporation or Masland shall pay to the
Executive, not later than thirty (30) days following the Date of Termination and
notwithstanding any dispute between the Executive and Masland or the Corporation
as to the payment to the Executive of any other amounts under this Agreement or
otherwise, a lump sum severance payment (the "Severance Payment") equal to the
sum of (1) the Executive's current annual base salary and (2) the average of the
Executive's bonus compensation from the Corporation and/or Masland for the three
taxable years ending prior to the date on which a change in control of the
Corporation occurred.
(C) In addition to the foregoing amounts payable under paragraph
4(iii)(A) and (B) above, the Executive will be entitled to the following:
(1) any stock option rights held by the Executive which were not
fully exercisable on the Date of Termination shall immediately become fully
exercisable by the Executive; and
(2) the Corporation (or Masland) shall maintain in full force and
effect, for the Executive's continued benefit, until the earlier of (I) 18
months after the Date of Termination or (II) the Executive's eligibility
for similar coverage with another employer, all life, medical and dental
insurance programs in which the Executive was entitled to participate
immediately prior to the Date of Termination provided that his continued
participation is possible under the general terms and provisions of such
programs; provided that, in the event the Executive's participation in any
such program is barred, the Corporation (or Masland) shall arrange to
provide the Executive with benefits substantially similar to those which he
was entitled to receive under such programs.
(iv) The Executive's right to receive payments under this Agreement shall
not decrease the amount of, or otherwise adversely affect, any other benefits
payable to the Executive under any plan,
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<PAGE> 9
agreement or arrangement relating to employee benefits provided by the
Corporation (or Masland).
(v) The Executive shall not be required to mitigate the amount of
any payment provided for in this paragraph 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
paragraph 4 be reduced by any compensation earned by the Executive as the result
of employment by another employer or by reason of the Executive's receipt of or
right to receive any retirement or other benefits after the date of termination
of employment or otherwise, except as provided in paragraph 4(iii)(C)(2) above.
(vi) The Corporation shall, immediately upon and at all times
following the occurrence of a change in control of the Corporation and until the
Executive has been paid all amounts due him under this Agreement, provide
security for payment of the amounts set forth in this Agreement in a form that
will cause such amounts to be includible in the Executive's gross income only
for the taxable year or years in which such amounts are paid to the Executive
under the terms of this Agreement. The form of security may include a funded
irrevocable grantor trust established so as to satisfy any published Internal
Revenue Service guidelines; provided, however, that the foregoing requirement
for security shall not apply to any particular change in control after the Board
has adopted a resolution as contemplated by the third paragraph under paragraph
2 above.
(vii) Notwithstanding any provision of this Agreement to the contrary,
the Executive's employment shall not be involuntarily terminated for a minimum
period of six (6) months following a change in control of the Corporation,
except for "Cause" as provided in paragraph 3(ii) above.
5. FEES AND EXPENSES. The Corporation (or Masland) shall pay all
reasonable legal fees and related expenses (including the costs of experts,
evidence and counsel and other such expenses included in connection with any
litigation or appeal) incurred by the Executive as a result of (i) his
termination of employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment) or (ii)
his seeking to obtain or enforce any right or benefit provided by this Agreement
or by any other plan or arrangement maintained by Masland (or the Corporation)
under which he is or may be entitled to receive benefits. The Corporation
further agrees to pay prejudgment interest on any money judgment against the
Corporation obtained by the Executive in any arbitration or litigation against
it to enforce such rights calculated at the prime interest rate of Mellon Bank,
N.A., or its successor, in effect from time to time
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<PAGE> 10
from the date it is determined that payment(s) to him should have been made
under this Agreement.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation, by agreement
in form and substance satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Corporation would be required to perform it if no succession had taken
place. Failure of the Corporation to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation in the same amount and on the same
terms as he would be entitled hereunder if he terminated his employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Corporation" shall mean the
Corporation as defined above and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
paragraph 6 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. As used herein, "Masland" shall mean
Masland as defined above and any successor to its business and/or assets.
(ii) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to his devisee, legatee or
other designee or, if there be no such designee, to his estate.
7. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed in the
case of the Executive, to
Daniel R. Perkins
1004 Drayer Court
Carlisle, PA 17013
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and in the case of the Corporation, to its principal executive offices, provided
that all notices to the Corporation shall be directed to the attention of its
Chief Executive Officer with copies to the Secretary of the Corporation and to
the Board, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
8. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and a duly authorized officer of the
Corporation. In interpreting this Agreement, the term "Corporation" shall be
substituted for the term "Masland" if the Executive is employed by the
Corporation and not Masland, at the applicable time, unless the context
indicates otherwise. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement shall
not be assigned in whole or in part without the prior written consent of the
non-assigning party; provided, however, this sentence shall not be construed to
relieve Corporation or any successor (whether direct or indirect) from liability
hereunder as provided in paragraph 6. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws
(but not the law of conflicts of laws) of the Commonwealth of Pennsylvania.
9. VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
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10. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be determined by binding
arbitration applying the laws of the Commonwealth of Pennsylvania as set forth
in paragraph 8 above. Any arbitration pursuant to this Agreement shall be
conducted in Harrisburg, Pennsylvania before the American Arbitration
Association in accordance with its arbitration rules. The arbitration shall be
final and binding upon all the parties (so long as the award was not procured by
corruption, fraud or undue means) and the arbitrator's award shall not be
required to include factual findings or legal reasoning. Nothing in this
paragraph 10 will prevent either party from resorting to judicial proceedings if
interim injunctive relief under the laws of the Commonwealth of Pennsylvania
from a court is necessary to prevent serious and irreparable injury to one of
the parties.
11. COUNTERPARTS. This Agreement may be executed via facsimile
transmission signature and in counterparts, each of which shall be deemed to be
an original but all of which together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
EXECUTIVE
Witness: /s/ Susan Whitesel /s/ Daniel R. Perkins (SEAL)
------------------------- -------------------------------
Susan Whitesel Daniel R. Perkins
MASLAND CORPORATION
Attest: /s/ Julia A. Stout By: /s/ William J. Branch
------------------------------ -------------------------------
Julia A. Stout William J. Branch
Assistant Secretary Chairman of the Board
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EXHIBIT 99.5(c)
TERMINATION, CONSULTING AND
NONCOMPETE AGREEMENT
AGREEMENT dated May 29, 1996, among LEAR CORPORATION, a Delaware
corporation ("Purchaser"), MASLAND CORPORATION, a Delaware corporation
("Company"), and the other party signatory hereto (the "Covenantor").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Purchaser, PA ACQUISITION CORP., a
Delaware Corporation and a wholly-owned subsidiary of Purchaser (the "Sub") and
the Company are entering into an Agreement and Plan of Merger (as such agreement
may hereafter be amended from time to time, the "Merger Agreement"; capitalized
terms used and not defined herein have the respective meanings ascribed to them
in the Merger Agreement), pursuant to which Sub will be merged with and into the
Company (the "Merger");
WHEREAS, the Covenantor is conversant with the affairs, operations,
customers and confidential and proprietary information of the Company;
WHEREAS, the Company wishes to terminate the employment of the
Covenantor as of the Effective Date (as defined herein) and engage the
Covenantor as an independent consultant in accordance with the terms this
Agreement;
WHEREAS, Purchaser and the Company each wishes to assure itself of the
protection of the goodwill and proprietary interests of the Company's and
Purchaser's business by having the Covenantor enter into this Agreement on the
date hereof; and
WHEREAS, the Covenantor acknowledges that as an inducement and a
condition to entering into the Merger Agreement, Purchaser has required that the
Covenantor agree, and the Covenantor has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Affiliate" shall mean (i) a corporation, partnership or
other business entity which, directly or indirectly, is controlled by, controls,
or is under common control with the Covenantor and (ii) in the case of an
individual, (x) any trust or other estate in which the Covenantor has a
substantial beneficial
<PAGE> 2
interest or as to which the Covenantor serves as trustee or in a similar
fiduciary capacity or (y) the Covenantor's spouse. "Control" means and
includes, but is not necessarily limited to the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such corporation, partnership, joint venture or other business
entity.
(b) "Business Conducted by the Company" shall mean the business
conducted by the Company or any Subsidiary of the Company with respect to
products currently produced by the Company or any Subsidiary on or prior to the
date hereof.
(c) "Consulting Period" shall mean the period commencing on the
date on which the Offer is consummated pursuant to the terms of the Merger
Agreement (the "Effective Date") and ending on the second anniversary of such
date, or such shorter period in accordance with the provisions of Section 9
hereof.
(d) "Noncompete Period" shall mean the Consulting Period;
provided that if the Consulting Period is terminated for cause as defined in
clauses (i) or (iii) of the last sentence of Section 9 hereof, Non-Compete
Period shall mean the period commencing on the Effective Date and ending on the
second anniversary of such date.
2. Termination of Employment and Consulting Services.
(a) The Covenantor's employment with the Company shall terminate
effective as of the Effective Date.
(b) During the Consulting Period, the Covenantor shall perform
consulting services related to the Business Conducted by the Company and shall
perform such projects and functions that may be assigned from time to time by
Purchaser's Chief Executive Officer and/or the Company's Board of Directors. The
Company shall not assign consulting services to Covenantor that are inconsistent
with duties assigned to senior officers of the Company. In the performance of
consulting services hereunder, the Covenantor shall be an independent contractor
and not an employee of the Company, notwithstanding any title that may be
assigned to the Covenantor. The Covenantor agrees to carry out his consulting
duties to the best of his ability and in a timely and complete manner, and at
all times to act in the best interests of the Company and Purchaser. As an
independent contractor, the Covenantor will not be eligible to receive nor
participate in any benefit plan provided to employees of the Company or
Purchaser, including but not limited to any health, life, long term disability,
retirement, incentive savings, supplemental deferred compensation, flexible
benefits or supplemented executive salaried benefit plan, except that during the
Consulting Period, the Company shall continue to provide the Covenantor with
health and medical benefits on terms no less
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<PAGE> 3
favorable than those currently provided to him by the Company. In the
performance of consulting services hereunder, the Covenantor shall not be
required to work more than 20 days per year. Nothing herein shall prohibit the
Covenantor from devoting his time to civic and community activities, serving as
a member of the Board of Directors of other corporations who do not compete with
the Company or managing personal investments, as long as the foregoing do not
interfere with the performance of the Covenantor's duties hereunder.
3. Compensation.
(a) Fee. As consideration for the execution, delivery and
performance of this Agreement by the Covenantor, during the Consulting Period
the Company shall pay the Covenantor $175,000 per annum. Because the Covenantor
shall be an independent contractor and not an employee of the Company or
Purchaser, there shall be no withholdings or deductions from these payments.
The Covenantor will be responsible for payment of any and all personal income
taxes due in connection with payments made pursuant to this Agreement.
(b) Reimbursement of Certain Expenses. During the Consulting
Period, the Company shall reimburse the Covenantor for reasonable and necessary
business expenses, in accordance with its policies and upon presentation of
appropriate documentation.
4. Covenant Not to Compete. Except as approved by Purchaser in
writing, the Covenantor agrees that during the Noncompete Period, neither the
Covenantor, nor any Affiliate of the Covenantor shall, without the prior written
consent of Purchaser, participate, own, control, manage or engage in, directly
or indirectly, whether as an owner, partner, shareholder (except that the
Covenantor or such Affiliate may hold equity securities representing not more
than five percent (5%) of the equity securities of any publicly-held enterprise
provided that neither the Covenantor nor such Affiliate renders advice or
assistance to such enterprise), employee, officer, director, independent
contractor, consultant, advisor or in any other capacity calling for the making
of investments or the rendition of services, advice, or acts of management,
operation or control, any business which is competitive with the Business
Conducted by the Company within the geographic area in which the Company,
Purchaser or any of their respective subsidiaries conducted business during the
last three (3) years prior to the date hereof.
5. No Diversion of Business Opportunities and Prospects. The
Covenantor agrees that during the Noncompete Period, neither the Covenantor, nor
any Affiliate of the Covenantor, shall, without the written consent of
Purchaser, directly or indirectly, seek to divert from continuing to do business
with or entering into business with the Company, Purchaser
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<PAGE> 4
or any of their respective subsidiaries, any supplier, customer or other person
or entity which to the Covenantor's knowledge has a business relationship with
Purchaser, the Company or any of their respective subsidiaries or with which the
Company or any of its Subsidiaries was actively planning or pursuing a business
relationship before the date in which the Offer is consummated pursuant to the
terms of the Merger Agreement.
6. Non-Solicitation-Customers or Prospective Customers. The
Covenantor agrees that during the Noncompete Period, neither the Covenantor, nor
any Affiliate of the Covenantor shall, without the prior written consent of
Purchaser, directly or indirectly solicit, in connection with any business which
is competitive with the Business Conducted by the Company, any customers with
whom the Company, Purchaser or any of their respective subsidiaries did business
at, or within three (3) years prior to, the date in which the Offer is
consummated pursuant to the terms of the Merger Agreement or any entity known by
the Covenantor to be a prospective customer at the date on which the Offer is
consummated pursuant to the terms of the Merger Agreement. A "prospective
customer" is a company, person or other entity with which the Company or any of
its Subsidiaries has had actual contact or for which the Company has begun
formulating a market strategy.
7. Non-Solicitation -- Employees. The Covenantor agrees that during
the Noncompete Period, the Covenantor shall not, without the prior written
consent of Purchaser, directly or indirectly solicit any employee of the Company
to leave such employment or join or become affiliated with any business which is
competitive with the Business Conducted by the Company in any area in which the
Company, Purchaser or any of their respective Subsidiaries does business.
8. Confidentiality. The Covenantor acknowledges that the Covenantor
has had access to confidential information (including, but not limited to,
current and prospective confidential product information, know-how, inventions,
trade secrets, customer lists, supplier lists, business plans, processes and
technology) concerning the business, products, customers, plans, finances,
suppliers, and assets of the Company and its Subsidiaries and which is not
generally known outside the Company (the "Confidential Information"). The
Covenantor agrees that the Covenantor shall not, without the prior written
authorization of Purchaser, directly or indirectly use, divulge, furnish or make
accessible to any person any Confidential Information, but instead shall keep
all Confidential Information strictly and absolutely confidential, except (1) as
required by law, in which event the Covenantor shall give notice of such
disclosure to Purchaser as promptly as practicable so as to enable Purchaser to
seek a protective order from a court of competent jurisdiction with respect
thereto and (ii) for information which become public other than as a result of a
violation of this Agreement.
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<PAGE> 5
9. Termination of Consulting Period. The Consulting Period shall
terminate with respect to the Covenantor prior to the second anniversary of the
date on which the Offer is consummated upon termination by the Company with
respect to the Covenantor for "cause." For purposes of this Agreement, "cause"
means (i) fraud, misappropriation or other intentional or material damage to the
Company's, Purchaser's or any of their respective subsidiaries' property,
goodwill or business, (ii) commission by the Covenantor of a felony, or (iii)
material breach of this Agreement after the Company provides notice of such
breach and gives the Covenantor at least (20) days to cure breach.
10. Representations and Warranties. The Covenantor hereby represents
and warrants to Purchaser as follows:
(a) Power; Binding Agreement. The Covenantor has the legal capacity,
power and authority to enter into and perform all of the Covenantor's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Covenantor will not violate any other agreement to which
the Covenantor 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 the Covenantor and constitutes a valid and
binding agreement of the Covenantor, enforceable against the Covenantor in
accordance with its terms.
(b) No Conflicts. (i) No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by the Covenantor and the
consummation by the Covenantor of the transactions contemplated hereby and (ii)
none of the execution and delivery of this Agreement by the Covenantor, the
consummation by the Covenantor of the transactions contemplated hereby or
compliance by the Covenantor with any of the provisions hereof shall result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, modification or acceleration) under any of the terms, conditions
or provisions of any agreement to which the Covenantor is a party or by which
the Covenantor may be bound or affected.
(c) Reliance by Purchaser. The Covenantor understands and
acknowledges that Purchaser is entering into, and causing Sub to enter into, the
Merger Agreement in reliance upon the Covenantor's execution and delivery of
this Agreement.
11. Specific Performance. The Covenantor acknowledges that the
Covenantor's compliance with this Agreement is necessary to preserve and protect
the proprietary rights, Confidential Information and the goodwill of the
Business Conducted by the Company as a going concern and that any failure by the
Covenantor to comply with the provisions of this Agreement will result in
5
<PAGE> 6
irreparable and continuing injury to the Business Conducted by the Company for
which there will be no adequate remedy at law. Therefore the Covenantor agrees
that in the event of any such breach Purchaser and Sub shall be entitled to the
remedy of specific performance of the covenants and agreements contained herein
and injunctive and other equitable relief in addition to any other remedy to
which it may be entitled, at law or in equity.
12. Miscellaneous.
(a) Entire Agreement. This Agreement, the Stockholders Agreement, the
Merger Agreement and the agreements contemplated thereby constitute the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
(b) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Purchaser may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Purchaser, but no
such assignment shall relieve Purchaser of its obligations hereunder if such
assignee does not perform such obligations.
(c) Amendments; Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the Covenantor,
Purchaser and the Company.
(d) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or 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:
If to Covenantor: William J. Branch
4 Truffle Glen Road
Mechanicsburg, PA 17055
717/692-6648 (telephone)
If to Purchaser: Lear Corporation
21557 Telegraph Road
Southfield, MI 48034
810/746-1500 (telephone)
810/746-1677 (telecopier)
Attention: Joseph F. McCarthy, Esq.
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copy to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
312/558-5600 (telephone)
312/558-5700 (telecopier)
Attention: John L. MacCarthy, Esq.
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.
(e) 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. Without limiting the foregoing, in the event that any
provision hereof is held by any court of competent jurisdiction to be
unenforceable because it is too extensive in scope or time or territory, such
provision shall be deemed to be and shall be amended without any prior act by
the parties hereto to conform to the scope and period of time and geographical
area which would permit it to be enforced.
(f) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(g) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(h) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Pennsylvania, without giving effect to
the principles of conflicts of law thereof.
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(i) 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.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
(k) Effectiveness. This Agreement shall be of no force or effect
unless and until the Offer is consumated.
8
<PAGE> 9
IN WITNESS WHEREOF, Purchaser, Company and the Covenantor have caused
this Agreement to be duly executed as of the day and year first above written.
LEAR CORPORATION
By: /s/ J.H. Vandenberghe
---------------------------
Name: J.H. Vandenberghe
Title: Executive Vice President
and Chief Financial
Officer
MASLAND CORPORATION
By: /s/ Daniel R. Perkins
---------------------------
Name: Daniel R. Perkins
Title: CFO & Treasurer
/s/ W. Branch
------------------------------
William J. Branch
9
<PAGE> 1
EXHIBIT 99.1(c)
AGREEMENT AND PLAN OF MERGER DATED MAY 23, 1996
BY AND AMONG LEAR CORPORATION;
PA ACQUISITION CORP. AND
MASLAND CORPORATION
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
THE OFFER
1.01 THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 COMPANY ACTION . . . . . . . . . . . . . . . . . . . . . . 3
1.03 DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
THE MERGER
2.01 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.02 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 CONVERSION OF SHARES. . . . . . . . . . . . . . . . . . . . 6
2.04 DISSENTING SHARES . . . . . . . . . . . . . . . . . . . . . 7
2.05 PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.06 NO FURTHER RIGHTS . . . . . . . . . . . . . . . . . . . . . 9
2.07 CLOSING OF COMPANY TRANSFER BOOKS . . . . . . . . . . . . . 9
2.08 CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS
AND OFFICERS. . . . . . . . . . . . . . . . . . . . . 9
2.09 WITHHOLDING RIGHTS. . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND SUB. . . . . . . . . . . . . . . . . . . . . . . . 11
3.02 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . 12
ARTICLE IV
COVENANTS
4.01 PROXY STATEMENT . . . . . . . . . . . . . . . . . . . . . . 29
4.02 MEETING OF STOCKHOLDERS OF THE COMPANY. . . . . . . . . . . 29
4.03 MERGER WITHOUT MEETING OF STOCKHOLDERS. . . . . . . . . . . 30
4.04 INTERIM OPERATIONS. . . . . . . . . . . . . . . . . . . . . 30
4.05 APPRAISAL RIGHTS. . . . . . . . . . . . . . . . . . . . . . 33
4.06 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . 33
4.07 NO SOLICITATION . . . . . . . . . . . . . . . . . . . . . . 34
4.08 CERTAIN LITIGATION. . . . . . . . . . . . . . . . . . . . . 35
i
<PAGE> 3
4.09 NOTICES OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . 35
4.10 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . 36
4.11 CREDIT AGREEMENT WAIVER . . . . . . . . . . . . . . . . . . 37
ARTICLE V
CONDITIONS
5.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY . . . . . . . . 37
5.02 CONDITIONS TO THE OBLIGATIONS OF PURCHASER
AND SUB . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI
MISCELLANEOUS
6.01 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 38
6.02 LIABILITIES IN EVENT OF TERMINATION . . . . . . . . . . . . 40
6.03 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . 40
6.04 WAIVER AND AMENDMENT. . . . . . . . . . . . . . . . . . . . 41
6.05 OFFICERS' AND DIRECTORS' LIABILITY INSURANCE;
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . 41
6.06 EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . 41
6.07 STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . 42
6.08 REPRESENTATIONS, WARRANTIES AND AGREEMENTS. . . . . . . . . 43
6.09 PUBLIC STATEMENTS . . . . . . . . . . . . . . . . . . . . . 43
6.10 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . 43
6.11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.12 GOVERNING LAW; CONSENT TO JURISDICTION. . . . . . . . . . . 45
6.13 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . 45
6.14 INTEGRATION . . . . . . . . . . . . . . . . . . . . . . . . 46
6.15 COUNTERPARTS; EFFECTIVENESS . . . . . . . . . . . . . . . . 46
6.16 HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.17 NO THIRD-PARTY BENEFICIARIES. . . . . . . . . . . . . . . . 46
EXHIBIT A
SCHEDULE I
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated May 23, 1996 (this "Agreement") by and
among LEAR CORPORATION, a Delaware corporation ("Purchaser"), PA ACQUISITION
CORP., a Delaware corporation and a wholly-owned subsidiary of Purchaser
("Sub") and MASLAND CORPORATION, a Delaware corporation (the "Company") (Sub
and the Company being hereinafter collectively referred to as the "Constituent
Corporations").
W I T N E S S E T H
WHEREAS, the Board of Directors of Purchaser and the Board of Directors of
the Company have approved the acquisition of the Company by Purchaser, by means
of the merger of Sub with and into the Company, upon the terms and conditions
set forth in this Agreement;
WHEREAS, to effectuate such acquisition, Purchaser proposes to make or to
cause Sub or another direct or indirect wholly-owned subsidiary of Purchaser to
make a tender offer for any and all Shares of Common Stock of the Company, $.01
par value, which are issued and outstanding (the "Shares") (including the
associated rights (the "Rights") to purchase Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company (or other securities)
issued pursuant to the Rights Agreement dated as of November 16, 1995, as
amended (the "Rights Agreement"), between the Company and Mellon Securities
Trust Company, as Rights Agent) on the terms set forth in the Offer to Purchase
(as hereinafter defined), and the Board of Directors of the Company has
approved such tender offer and recommended that it be accepted by the
stockholders of the Company;
WHEREAS, Purchaser and Sub are unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, certain beneficial and record holders of the
Shares identified on Schedule I hereto enter into agreements (collectively, the
"Stockholders Agreement") providing for certain matters with respect to their
Shares, including the tender of their Shares and certain other
<PAGE> 5
actions relating to the Offer (as defined in Section 1.01) and the other
transactions contemplated by this Agreement, and in order to induce Purchaser
and Sub to enter into this Agreement, such stockholders have agreed to enter
into the Stockholders Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, Purchaser, Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
1.01 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Section 6.01 and that nothing shall have occurred
which would result in a failure to satisfy any of the conditions set forth in
Exhibit A hereto, Purchaser or Sub shall as promptly as practicable, and in no
event later than one business day after the date hereof, publicly announce the
execution and delivery of this Agreement, and within five business days after
such public announcement commence (within the meaning of Rule 14d-2(a) of the
Securities Exchange Act of 1934, as amended, (including the rules and
regulations promulgated thereunder, the "Exchange Act")), a tender offer for
all outstanding Shares (including the associated Rights) at a price of $26.00
per Share net to the Seller in cash (the "Offer") and, subject to the
satisfaction of the conditions set forth in such Exhibit A, shall use its best
efforts to consummate the Offer on the terms set forth herein.
(b) As soon as practicable on the date the Offer is commenced,
Purchaser and Sub shall file with the Securities and Exchange Commission (the
"Commission") a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer (the "Schedule 14D-1") which shall include as an exhibit and incorporate
by reference an offer to purchase (the "Offer to Purchase") (or portions
thereof) and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements or amendments
thereto, are referred to collectively herein as the "Offer Documents"). The
Company and its counsel shall be given the opportunity to review the Offer
Documents and any amendments thereto prior to the filing thereof with the
Commission. Each of Purchaser, Sub and the Company represents and warrants
that the written information supplied and to be supplied for inclusion by
Purchaser, Sub and the Company, respectively, in the Schedule 14D-1 and the
Offer Documents shall, on the date the Schedule 14D-1 is filed with the
Commission, and on the date the Offer Documents are first published, sent or
given to holders of Shares, as the case
2
<PAGE> 6
may be, not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, and each of Purchaser, Sub and the Company agrees
promptly to correct any such information provided by them which shall have
become false or misleading in any material respect and take all steps necessary
to cause such Schedule 14D-1 as so corrected to be filed with the Commission
and such Offer Documents as so corrected to be disseminated to holders of
Shares, in each case as and to the extent required by applicable law.
Purchaser and Sub agree that the Schedule 14D-1 shall comply as to form in all
material respects with the provisions of applicable law.
(c) Without the prior written consent of the Company, the Purchaser
shall not (i) decrease the price per Share or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought, (iii) amend or
waive satisfaction of the Minimum Condition (as defined in Exhibit A), (iv)
impose additional conditions to the Offer or amend any other term of the Offer
in any manner adverse to the holders of Shares, or (v) extend the expiration
date of the Offer (except as required by law and except that Sub may extend the
expiration date of the Offer for up to ten (10) business days after the initial
expiration date or for longer periods in the event that at the expiration date
of the Offer the conditions to the Offer described in Exhibit A hereto shall
not have been satisfied or earlier waived); provided, however, that, except as
set forth above, Sub may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the Commission. Upon the terms
and subject to the conditions of the Offer, the Purchaser will accept for
payment and purchase, as soon as permitted under the terms of the Offer, all
Shares validly tendered and not withdrawn prior to the expiration of the Offer
(it being understood that the Offer shall expire as soon as is permissible
under the Exchange Act and the Rules and Regulations of the New York Stock
Exchange Inc. subject to the provisions of this Subsection (c) and Section 6.01
below).
1.02 Company Action. (a) The Company hereby consents to the Offer and
represents that (i) the Board of Directors of the Company (the "Board") at a
meeting duly called and held (x) has unanimously approved this Agreement and
the transactions contemplated hereby, including the Offer and the Merger (as
such term is defined in Section 2.01), (y) has resolved to recommend acceptance
of the Offer and approval of this Agreement and the Merger by the Company's
stockholders and (z) by the unanimous vote
3
<PAGE> 7
of the Board, determined that each of this Agreement, the Offer and the Merger
are fair to and in the best interests of the stockholders of the Company, and
(ii) Goldman Sachs & Co. ("Goldman Sachs") has delivered to the Board its
opinion that the per Share (including the associated Rights) consideration to
be received by the Company's stockholders pursuant to the Offer and the Merger
is fair to such stockholders. The Company hereby consents to the inclusion in
the Offer Documents of the recommendations of the Board referred to in this
Section 1.02 (a). On the date the Offer is commenced, the Company shall file
with the Commission and mail to the holders of Shares a Solicitation/
Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which shall
reflect such recommendations and actions of the Board. The Company and with
respect only to information that they have supplied for inclusion in the
Schedule 14D-9, Purchaser and Sub, represent and warrant that the Schedule
14D-9 and any amendments or supplements thereto shall not, at the time filed
with the Commission and on the date such Schedule or any amendment or
supplement thereto is first mailed to the holders of Shares, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The Company
agrees promptly to correct any information in the Schedule 14D-9 which shall
have become false or misleading in any material respect and take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the
Commission and disseminated to holders of Shares, as and to the extent required
by applicable law. The Company agrees that the Schedule 14D-9 shall comply as
to form in all material respects with all provisions of applicable law.
Purchaser, Sub and their counsel shall be given the opportunity to review the
Schedule 14D-9 and any amendments thereto prior to the filing thereof with the
Commission.
(b) The Company shall promptly furnish Purchaser with a list of the
record holders of Shares and mailing labels containing the names and addresses
of all record holders of Shares and lists of securities positions of Shares
held in stock depositories, each as of the latest practicable date, and shall
promptly furnish Purchaser with such additional information, including updated
lists of stockholders of the Company, mailing labels and lists of securities
positions, and assistance as Purchaser or its agents may reasonably request in
connection with the Offer.
1.03 Directors. (a) Promptly upon the purchase by Sub of Shares pursuant
to the Offer, and from time to time thereafter, Purchaser or Sub shall be
entitled to designate such number of directors, rounded up to the next whole
number (but in no event more than one less than the total number of directors
on the Board)
4
<PAGE> 8
as will give Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board equal to the product of (x) the
number of directors on the Board (giving effect to any increase in the number
of directors pursuant to this Section 1.03) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"), and the Company shall,
upon request by Purchaser, promptly satisfy the Board Percentage by (i)
increasing the size of the Board or (ii) using its best efforts to secure the
resignations of such number of directors as is necessary to enable Purchaser's
designees to be elected to the Board and shall cause Purchaser's designees
promptly to be so elected. At the request of Purchaser, the Company shall take,
at the Company's expense, all lawful action necessary to effect any such
election. In addition, the Company shall mail to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder with the Schedule 14D-9. Purchaser will supply to the
Company in writing and will be solely responsible for any information with
respect to it and its designees, officers, directors and affiliates required by
Section 14(f) of the Exchange Act and Rule 14f-1.
(b) Following the election or appointment of Purchaser's designees
pursuant to this Section 1.03 and prior to the Effective Time of the Merger,
any amendment or termination of this Agreement, extension for the performance
or waiver of the obligations or other acts of Purchaser or Sub or waiver of the
Company's rights hereunder, shall require the concurrence of a majority of
directors of the Company then in office who are directors on the date hereof
and who voted to approve this Agreement.
ARTICLE II
THE MERGER
2.01 The Merger. (a) Subject to the terms and conditions hereof, at the
Effective Time (as such term is defined in Section 2.01(b)), Sub will be merged
with and into the Company (the "Merger") in accordance with the General
Corporation Law of Delaware (the "Delaware Law"), the separate existence of Sub
shall cease and the Company shall continue as the surviving corporation in the
Merger (the "Surviving Corporation") under the name "MASLAND CORPORATION"
(b) At the Closing (as hereinafter defined) the parties hereto shall
cause the Merger to be consummated by filing with the Secretary of State of
Delaware the appropriate certificate of merger (the "Certificate of Merger")
duly executed by the Company
5
<PAGE> 9
in accordance with the requirements of the Delaware Law and with this
Agreement. The date and time of filing of the Certificate of Merger with the
Secretary of State of Delaware is referred to herein as the "Effective Time."
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers, immunities and franchises, and be
subject to all of the restrictions, disabilities and duties of each of the
Constituent Corporations; and all property, real, personal and mixed, and all
debts due on whatever account, including subscriptions to shares, and all other
choses in action, and all and every other interests, of or belonging to or due
to each of the Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and the title to any real estate, or any interest therein, vested in any
of the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger; all in accordance with Section 259 of the Delaware Law.
(d) Notwithstanding anything to the contrary herein, the parties to
this Agreement may, by mutual consent prior to the Effective Time, elect,
instead of merging Sub into the Company as hereinabove provided, to merge the
Company into Sub. In such event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect the foregoing change.
2.02 Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Winston & Strawn, 35 West Wacker Drive, Chicago, IL
60601, at 10:00 A.M., local time, on the later of (x) the day of the Special
Meeting provided for in Section 4.02, if such Special Meeting is required to be
held or (y) the first business day after the day on which the last of the
conditions set forth in Article V is fulfilled or waived (subject to applicable
law) or (ii) at such other time and place and on such other date as Purchaser
and the Company shall agree (the "Closing Date").
2.03 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of the holders of any securities of the
Constituent Corporations:
(a) each Share (including the associated Rights) then issued and
outstanding, other than Dissenting Shares (as such term is defined in Section
2.04) and Shares to be cancelled pursuant to Section 2.03(b), shall be
converted into and represent the right to receive $26.00 net in cash, without
any interest thereon, or an amount in cash, without interest, having a value
equal to such greater amount per Share (including the associated Rights) as may
be paid (in cash or other property or a combination thereof) by
6
<PAGE> 10
Purchaser for any Shares (including the associated Rights) validly tendered and
not withdrawn pursuant to the Offer (the "Merger Consideration"); in the event
the price per Share (including the associated Rights) paid by Purchaser in the
Offer is paid in whole or in part in property other than cash, such price shall
be deemed to be equal to the sum of (i) the amount of cash, if any, paid for
each Share (including the associated Rights) plus (ii) the fair value of such
property, as agreed to by the Company and the Purchaser, or, if they are unable
to agree, as determined by a nationally recognized investment banking firm,
selected by the Company and approved by the Purchaser, which approval shall not
be unreasonably withheld, and the fees of which shall be shared equally by the
Company and the Purchaser;
(b) each Share (including the associated Rights) then held, directly
or indirectly, by Purchaser, Sub or any subsidiary of Purchaser, Sub or the
Company or held in the Company's treasury shall be cancelled and retired
without payment of any consideration therefor; and
(c) each Share of common stock, par value $.01 per share, of Sub ("Sub
Common Stock") 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, $.01 par value, of the Surviving
Corporation ("Surviving Corporation Common Stock"). After the Effective Time,
Purchaser shall be the holder of all outstanding shares of Surviving
Corporation Common Stock.
2.04 Dissenting Shares. Notwithstanding any other provision of this
Agreement to the contrary, Shares (including the associated Rights) held by
each stockholder who has not voted such Shares in favor of the Merger and with
respect to which the holder thereof has properly exercised the right to dissent
and demanded the fair value thereof in accordance with Section 262 of the
Delaware Law ("Dissenting Shares") shall not be converted into and represent
the right to receive the Merger Consideration; provided, however, that if any
such stockholder ceases to be entitled to an appraisal of his Shares pursuant
to Section 262 of the Delaware Law, then such holder's Dissenting Shares shall
cease to be Dissenting Shares and shall, subject to the terms of this
Agreement, be converted into and represent the right to receive the Merger
Consideration.
2.05 Payment. (a) Pursuant to an agreement (the "Disbursing Agent
Agreement") to be entered into on or before the Closing Date between Purchaser
and a disbursing agent (the "Disbursing Agent") which shall be a commercial
bank with capital of at least $1,000,000,000, Purchaser or the Surviving
Corporation shall
7
<PAGE> 11
deposit with the Disbursing Agent, in trust for the benefit of the Company's
stockholders, at the Closing, the cash (in immediately available funds) to
which holders of Shares shall be entitled pursuant to Section 2.03(a). The
Disbursing Agent may invest portions of the cash deposited with it in such
manner as Purchaser or the Surviving Corporation, as the case may be, directs,
provided that all such investments be in obligations of or guaranteed by the
United States of America, in commercial paper obligations receiving the highest
rating from either Moody's Investors Service, Inc. or Standard & Poor's
Corporation, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $1,000,000,000
the securities of which, or the securities of the holding company of which, are
rated in the highest category by a nationally recognized credit agency
(collectively, "Permitted Investments") or in money market funds which are
invested solely in Permitted Investments; provided, further, that the
maturities of Permitted Investments shall be such as to permit the Disbursing
Agent to make prompt payment of the Merger Consideration to former stockholders
of the Company entitled thereto. Any net profit resulting from, or interest or
income produced by, Permitted Investments shall be payable to the Surviving
Corporation. Purchaser shall replace any monies lost through any investment
made at its direction pursuant to this Section 2.05(a) prior to the Effective
Time, and the Surviving Corporation shall replace any monies lost through any
investment made at its direction pursuant to this Section 2.05(a) after the
Effective Time. Any funds remaining with the Disbursing Agent one year after
the Effective Time shall be released and repaid by the Disbursing Agent to the
Surviving Corporation, after which time persons entitled thereto may look,
subject to applicable escheat and other similar laws, only to the Surviving
Corporation for payment thereof.
(b) As soon as practicable after the Effective Time, the Disbursing
Agent shall send a notice and a transmittal form to each holder of certificates
formerly evidencing Shares (other than certificates formerly representing
Shares to be cancelled pursuant to Section 2.03(b) and certificates
representing Dissenting Shares) advising such holder of the effectiveness of
the Merger and the procedure for surrendering to the Disbursing Agent (who may
appoint forwarding agents with the approval of Purchaser) such certificates for
exchange into the Merger Consideration. Each holder of certificates
theretofore evidencing Shares, upon proper surrender thereof to the Disbursing
Agent together with and in accordance with such transmittal form, shall be
entitled to receive in exchange therefor the Merger Consideration deliverable
in respect of the Shares theretofore evidenced by the certificates so
surrendered. Upon such proper surrender, the Disbursing Agent shall promptly
deliver the Merger Consideration. Until properly
8
<PAGE> 12
surrendered, certificates formerly evidencing Shares (other than Dissenting
Shares) shall be deemed for all purposes to evidence only the right to receive
the Merger Consideration. Notwithstanding the foregoing, neither the Disbursing
Agent nor any party hereto shall be liable to a holder of certificates
theretofore representing Shares for any amount which may be required to be paid
to a public official pursuant to an applicable abandoned property, escheat or
similar law.
(c) If the Merger Consideration (or any portion thereof) is to be
delivered to a person other than the person in whose name the certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of such Merger Consideration that the certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise
in proper form for transfer, that such transfer otherwise be proper and that
the person requesting such transfer pay to the Disbursing Agent any transfer or
other taxes payable by reason of the foregoing or establish to the satisfaction
of the Disbursing Agent that such taxes have been paid or are not required to
be paid.
(d) In the event any certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed, the Surviving Corporation
will issue in exchange for such lost, stolen or destroyed certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
with this Article II. When authorizing such issue of the Merger Consideration
in exchange therefor, the Board of Directors of the Surviving Corporation may,
in its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate to give the Surviving
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Surviving Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
2.06 No Further Rights. From and after the Effective Time, holders of
certificates theretofore evidencing Shares shall cease to have any rights as
stockholders of the Company, except as provided herein or by law.
2.07 Closing of Company Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of Shares shall
thereafter be made.
2.08 Certificate of Incorporation By-Laws: Directors and Officers. The
Restated Certificate of Incorporation and By-Laws of the Company in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and By-Laws of the Surviving
9
<PAGE> 13
Corporation until thereafter amended as provided therein and under the Delaware
Law, except that (i) Article Seven (c) and (h) of the Restated Certificate of
Incorporation shall be deleted; (ii) Article Four of the Restated Certificate
of Incorporation shall be amended to read in its entirety as follows:
"ARTICLE FOUR
The total number of shares of stock that the corporation is
authorized to issue is One Hundred (100) shares of common stock,
having a par value of $.01 per share";
and (iii) Article Seven (d) of the Restated Certificate of Incorporation shall
be amended to read in its entirety as follows:
"(d) Vacancies and newly erected directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until their successors
are duly elected and qualified, or until their earlier resignation or removal."
The directors of Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation and the officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, in each case until their successors are duly elected and
qualified. The Company will use its best efforts to obtain the resignations of
its directors at the Effective Time.
2.09 Withholding Rights. Purchaser shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares such amounts as Purchaser is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Purchaser, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which such deduction and
withholding was made by Purchaser.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Resentation and Warranties of Purchaser and Sub. Purchaser and Sub
hereby jointly and severally represent and warrant to the Company as follows:
(a) Organization. Each of Purchaser and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Authorization and Validity of Agreements. Each of Purchaser and
Sub has all requisite corporate power and authority to enter into this
Agreement and to perform its respective obligations hereunder. The execution,
delivery and performance by each of Purchaser and Sub of this Agreement, and
the consummation by it of the transactions contemplated hereby, have been duly
authorized by its Board of Directors, and by Purchaser, as the sole stockholder
of Sub. No other corporate action on the part of Purchaser or Sub is necessary
to authorize the execution, delivery or performance by Purchaser and Sub of
this Agreement and the consummation by Purchaser and Sub of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Purchaser and Sub and is the legal, valid and binding obligation of Purchaser
and Sub, enforceable against each of them in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(c) No Approvals or Notices Required; No Conflict with Instruments to
which Purchaser or Sub is a Party. Neither the execution and delivery of this
Agreement by Purchaser and Sub nor the performance by Purchaser and Sub of
their respective obligations hereunder nor the consummation of the transactions
contemplated hereunder will: (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Purchaser or Sub; (ii) assuming satisfaction of the
requirements set forth in clause (iii) below, conflict with or violate any
provision of law applicable to Purchaser or Sub; or (iii) except for (1)
requirements of the Exchange Act, (2) requirements, if any, arising out of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (3) applicable requirements, if any, of any non-United States
competition, antitrust or investment laws (including, without limitation,
Council Regulation (EEC) 4064/89, the Investment Canada Act, the Competition
Act (Canada), the Fair
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Trading Act 1973 (UK), and any rules or regulations promulgated by the
Secretary of State for Trade and Industry (U.K.), collectively, "Foreign
Antitrust Laws") and (4) the delivery of the Certificate of Merger in
accordance with the Delaware Law, require any order, consent, material
authorization or permit or approval of, or filing with or notice to any
governmental, administrative or regulatory commission, agency, authority or
other public body, domestic or foreign (each a "Governmental Entity") under any
provision of law applicable to Purchaser or Sub; or (iv) other than the Credit
Agreement Waiver (as defined in Exhibit A attached hereto), require any
consent, approval or notice under, or violate, be in conflict with or result in
any breach of or constitute a default under, or permit the termination of any
provision of or loss of any material benefit under, or result in the
acceleration of the maturity or performance of any obligation of or result in
the creation or imposition of any lien or other encumbrance upon any
properties, assets or businesses of Purchaser or Sub under any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit, authorization,
license, contract, instrument or other agreement or commitment, or any order,
judgment or decree to which Purchaser or Sub is a party or by which it or any
of its assets or properties is bound or encumbered, which in any of the
foregoing cases in this clause (iv) would, individually or in the aggregate,
have a material adverse effect on the condition (financial or otherwise),
results of operations, business, assets or liabilities of Purchaser and its
subsidiaries taken as a whole.
(d) Financing. Assuming that the Credit Agreement Waiver Condition
(as defined in Exhibit A attached hereto) is satisfied, Purchaser has or will
have, prior to the expiration of the Offer, sufficient funds available to
purchase all of the Shares outstanding and to pay all related fees and expenses
on a fully diluted basis pursuant to the Offer and this Agreement.
3.02 Representations and Warranties of the Company. The Company hereby
represents and warrants to Purchaser and Sub as follows:
(a) Organization. Each of the Company and the Subsidiaries (as such
term is defined in Section 3.02(c)) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such
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qualification necessary, except where the failure to be so duly qualified or
licensed would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), results of operations,
business, assets or liabilities of the Company and the Subsidiaries taken as a
whole (a "Company Material Adverse Effect").
(b) Capitalization. The authorized capital stock of the Company
consists of 60,000,000 shares, of which 50,000,000 shares are Common Stock,
having a par value of $.01 per share (the "Common Stock"), and 10,000,000
shares are Preferred Stock, having a par value of $.01 per share (the
"Preferred Stock"). As of the date hereof, 13,590,393 Shares of Common Stock
and no shares of Preferred Stock were issued and outstanding and no Shares were
held in the Company's treasury. All outstanding Shares have been duly
authorized and validly issued and are fully paid and nonassessable and have no
preemptive rights. There are 1,883,204 Shares reserved for issuance upon
exercise of the stock options and warrants to acquire Common Stock
(collectively, the "Company Stock Options") issued pursuant to the Company's
1991 Stock Purchase and Option Plan, 1993 Stock Option Incentive Plan and the
Non-Employee Director Stock Option Plan (the "Stock Option Plans") of which
Company Stock Options to acquire (1) 1,883,204 Shares have been granted, (2)
1,196,030 Shares are fully vested and exercisable on the date hereof and (3)
108,174 Shares will become fully vested and exercisable upon consummation of
the Offer. Except as disclosed in the preceding sentence and as set forth in
the Rights Agreement, the Company does not have outstanding any subscriptions,
options, warrants, rights, convertible securities or other agreements or
commitments of any character relating to the issued or unissued capital stock
or other securities of the Company obligating the Company to issue any
securities. All Shares subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the Company Stock Options, will be duly
authorized, validly issued, fully paid and nonassessable. There are no
outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of Common Stock or any
capital stock of any Subsidiary or make any material investment (in the form of
a loan, capital contribution or otherwise) in any Subsidiary.
(c) Subsidiaries. The only corporation, partnership, joint venture or
other entity in which the Company, directly or indirectly, has an equity or
other interest of 50% or greater or otherwise controls (the "Subsidiaries") are
those named in Exhibit 21.1 to the Company's Annual Report on Form 10-K dated
September 26, 1995 for the fiscal year ended June 30, 1995 (the "1995 10-K"),
as filed with the Commission and heretofore delivered to Purchaser. Except as
otherwise disclosed in Schedule 3.02(c), the Company is,
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directly or indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of the Subsidiaries, there are no
irrevocable proxies with respect to such shares, and no equity securities of
any of the Subsidiaries are or may become required to be issued for any reason
including, without limitation, by reason of any options, warrants, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any Subsidiary, and there are no contracts,
understandings or arrangements by which any Subsidiary is bound to issue
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. All of such shares so owned by the Company or any
of the Subsidiaries have been duly authorized and validly issued and are fully
paid and nonassessable and are owned by it free and clear of any claim, lien,
encumbrance or agreement with respect thereto.
(d) Authorization and Validity of Agreements. The Company has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder (subject to obtaining any necessary approval
of its stockholders with respect to the Merger). The execution, delivery and
performance by the Company of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by the Board (by a
vote of at least two-thirds of the directors) and no other corporate action on
the part of the Company is necessary to authorize the execution and delivery by
the Company of this Agreement and the consummation by it of the transactions
contemplated hereby (other than obtaining any necessary approval of its
stockholders with respect to the Merger). This Agreement has been duly
executed and delivered by the Company and is the legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(e) No Approvals or Notices Required; No Conflict with Instruments to
which the Company is Party. Neither the execution and delivery of this
Agreement by the Company nor the performance by the Company of its obligations
hereunder nor the consummation of the transactions contemplated hereunder will
(i) conflict with or violate the Certificate of Incorporation or By-Laws of the
Company or any of its Subsidiaries; (ii) assuming satisfaction of the
requirements set forth in clause (iii) below, conflict with or violate any
provision of law applicable to the Company or its Subsidiaries or by which any
property or asset of the Company or
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<PAGE> 18
any of its Subsidiaries is bound or affected; (iii) except for (1) requirements
of the Exchange Act, (2) requirements, if any, arising out of the HSR Act, (3)
applicable requirements, if any, of Foreign Antitrust Laws and (4) the delivery
of the Certificate of Merger in accordance with the Delaware Law, require any
order, consent, material authorization or permit, or approval of, or filing
with or notice to any Governmental Entity under any provision of law applicable
to the Company or any of the Subsidiaries; (iv) except as disclosed on Schedule
3.02(e) hereto, require any consent, approval or notice under, or violate, be
in conflict with or result in any breach of or constitute a default under, or
permit or cause the termination of any provision of or loss of any material
benefit under, or result in the acceleration of the maturity or performance of
any obligation of or result in the creation or imposition of any lien or other
encumbrance upon any properties, assets or businesses of the Company or any of
the Subsidiaries under any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument or other
agreement or commitment, or any order, judgment or decree to which the Company
or any of the Subsidiaries is a party or by which it or any of the Subsidiaries
or any of their respective assets or properties is bound or encumbered, which
in any of the foregoing cases in this clause (iv) would have, either
individually or in the aggregate, a Company Material Adverse Effect. The Board
of Directors of the Company, at a meeting duly called and held, has taken all
actions necessary under the Delaware Law, including approving the transactions
contemplated by this Agreement and the Stockholders Agreement, to ensure that
the restrictions on "business combinations" set forth in Section 203 of the
Delaware Law do not, and will not, apply to Purchaser, Sub, affiliates or
associates of Purchaser or Sub or the transactions contemplated by this
Agreement or the Stockholders Agreement. The affirmative vote of the holders
of a majority of the Shares is the only vote of the holders of any class or
series of the Common Stock necessary to approve the Merger. The Board has
taken all necessary actions under the Rights Agreement to amend the Rights
Agreement so that the Rights Agreement shall not be applicable to the purchase
of the Shares pursuant to the Offer or the Merger or the consummation of the
transactions contemplated hereby, and so that none of the execution or delivery
of this Agreement, the purchase of Shares pursuant to the Offer or the Merger
or the consummation of the transactions contemplated by this Agreement or the
Stockholders Agreement will cause the Distribution Date (as defined in the
Rights Agreement) to occur, the Rights to become exercisable or Purchaser or
Sub or any affiliate or associate of Purchaser or Sub to become an Acquiring
Person (as defined in the Rights Agreement). Except as so amended in
accordance with the previous sentence, the Rights Agreement is otherwise in
full force and effect. On the date hereof, the Company has delivered to
Purchaser a certificate of the Company,
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signed by an executive officer of the Company and dated on the date of
execution thereof, to evidence satisfaction by the Company of all of the
conditions set forth in the four preceding sentences.
(f) Legal Proceedings. Except as set forth in the 1995 10-K, there is
no suit, action, proceeding or investigation pending or, to the best knowledge
of the Company, threatened, against or involving the Company or any of its
Subsidiaries, or any of their respective properties or rights, which (i) if
adversely determined, would have, either individually or in the aggregate, a
Company Material Adverse Effect or (ii) seeks to, or is reasonably likely to,
delay or prevent the consummation of the Offer, the Merger or any other
transaction contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any court, arbitrator or Governmental Entity
outstanding against the Company or any of the Subsidiaries having any such
effect. Neither the Company nor any of the Subsidiaries nor any property or
asset of the Company or of any of the Subsidiaries is subject to, or in
violation of, any term of any judgment, decree, injunction or order outstanding
against it which would have, either individually or in the aggregate, a Company
Material Adverse Effect.
(g) Commission Filings. The Company has heretofore delivered to
Purchaser true and complete copies of all reports, registration statements,
proxy statements and other filings (including all notes, exhibits and schedules
thereto and documents incorporated by reference therein) filed by the Company
with the Commission since August 31, 1993 (such reports, registration
statements and other filings, together with any amendments thereto, are
sometimes collectively referred to as the "Commission Filings"). The
Commission Filings and any forms, reports and other documents filed by the
Company with the Commission after the date of this Agreement (1) were or will
be prepared in all material respects in accordance with the requirements of the
Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder, the "Securities Act") and the Exchange Act, as the case
may be, and (2), at the time they were or will be filed with the Commission,
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. No Subsidiary is required to file any form, report or other
document with the Commission. Each of the audited consolidated financial
statements and unaudited interim financial statements (including any related
notes or schedules) included in the Commission Filings was prepared in
accordance with generally accepted accounting principles applied on a
consistent basis exceptas may be indicated therein or in the notes or schedules
thereto, and fairly presents the financial position of the Company and its
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consolidated subsidiaries as at the dates thereof and the results of their
operations, cash flows, changes in financial position and changes in
stockholders' equity for the periods then ended, subject, in the case of the
unaudited interim financial statements to normal year end audit adjustments and
except that such unaudited interim financial statements do not include all of
the notes required by generally accepted accounting principles to be included
therein. Since March 31, 1996, neither the Company nor any of the Subsidiaries
has incurred any liability or obligation material to the Company and the
Subsidiaries taken as a whole, except as disclosed in Schedule 3.02(g) hereto
or as disclosed in the Commission Filings.
(h) Conduct of Business in the Ordinary Course; Absence of Certain
Changes and Events. Since June 30, 1995, the Company and the Subsidiaries have
conducted their businesses only in the ordinary and usual course, and, except
as disclosed in Schedule 3.02(h) hereto or in the Commission Filings or as
specifically contemplated by this Agreement, there has not been: (i) any
Company Material Adverse Effect; (ii) any declaration, setting aside or payment
of any dividend (whether in cash, stock or property) with respect to the
capital stock of the Company (except regular quarterly cash dividends of $.05
per Share prior to the date hereof) or any redemption, purchase or other
acquisition by the Company of any of its securities; (iii) any entry into any
agreement or understanding between the Company or the Subsidiaries and any of
their respective executive officers or key employees providing for employment
of any such officer or key employee or any general or material increase in the
compensation (including without limitation deferred compensation), severance or
termination benefits payable or to become payable by the Company or the
Subsidiaries to any of their respective officers or key employees, or any
increase in any bonus, insurance, pension or other employee benefit plan,
payment or arrangement (including without limitation the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards) made to, for or with any such officer or key employee; (iv) any labor
dispute, which is or may be material to the Company and the Subsidiaries taken
as a whole; (v) other than in the ordinary course of business, any entry into,
or material modification of, any material commitment, agreement, or license or
transaction (including, without limitation, any borrowing or capital
expenditure or sale of assets); (vi) any change in any significant accounting
methods, principles or practices of the Company; (vii) any damage, destruction
or loss (whether or not covered by insurance) with respect to any property or
asset of the Company or any Subsidiary having or which could reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, (viii) any revaluation by the Company of any material asset (including,
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without limitation, any writing down of the value of inventory or writing off
of notes or accounts receivable), other than in the ordinary course of business
consistent with past practice, or (ix) any failure by the Company to revalue
any material asset in accordance with generally accepted accounting principles
consistent with past practice.
(i) Compliance. Neither the Company nor any Subsidiary is in conflict
with, or in default or violation of (a) any law, rule, regulation, order,
judgment or decree applicable to the Company or any Subsidiary or by which any
property or asset of the Company or any Subsidiary is bound or affected, or (b)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any property
or asset of the Company or any Subsidiary is bound or affected, except for any
such conflicts, defaults or violations that would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(j) Certificate of Incorporation and By-Laws. The Company has
heretofore made available to Purchaser a complete and correct copy of the
Certificate of Incorporation and the By-Laws, each as amended to date, of the
Company and each Subsidiary. Such Certificates of Incorporation and By-Laws
are in full force and effect. Neither the Company nor any Subsidiary is in
violation of any provision of its Certificate of Incorporation or By-Laws.
(k) Employee Benefit Plans/ERISA.
(i) Except as disclosed on Schedule 3.02(k) hereto, no
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") which (a) is
maintained for, or to which contributions have been made on behalf of,
employees ("Employees") of the Company of any current or former corporation,
person or trade or business which is a member of a group which is under common
control with the Company, or together with the Company, is treated as a single
employer, within the meaning of Sections 4 14(b)-(o) of the Code or Sections
4001(a) and (b) of ERISA (an "ERISA Affiliate") or (b) has at any time within
the preceding three (3) years (or six (6) years for the purposes of Section
4069 of ERISA) been maintained for, or to which contributions have been made on
behalf of, employees of the Company or any ERISA Affiliate (an "Employee
Benefit Plan"), exists or has ever existed.
(ii) Except as disclosed on schedule 3.02(k) hereto, none of
the Employee Benefit Plans is or was a
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"multiemployer plan" as defined in Section 4001(a)(3) of ERISA. Neither the
Company nor any ERISA Affiliate is a participating employer in any Employee
Benefit Plan in which more than one employer makes contributions as described
in Sections 4063 and 4064 of ERISA.
(iii) Except as disclosed on Schedule 3.02(k) hereto, neither
the Company nor any ERISA Affiliate has any contingent liability with respect to
any post-retirement benefit under any Employee Benefit Plan which is a welfare
benefit plan as defined in Section 3(1) of ERISA (a "Welfare Plan"), other than
liability for health plan continuation coverage described in Part 6 of Title I
of ERISA.
(iv) Except as disclosed on Schedule 3.02(k) hereto, none of
the Employee Benefit Plans is a severance plan, arrangement or program, and
none of the Employee Benefit Plans provides for compensation or benefits after
a termination of employment with the Company or any ERISA Affiliate for any
reason. Except as set forth on Schedule 3.02(k) hereto, the consummation of the
transactions contemplated by this Agreement will not directly (or indirectly
upon a termination of employment): (i) entitle any Employee to severance pay,
unemployment compensation or any other payment or (ii) accelerate the timing of
any payment or the vesting of any rights or increase the amount of any
compensation due any Employee.
(v) The Company has given to the Purchaser true and complete
copies of all the following: each Employee Benefit Plan and related trust
agreement (including all amendments to such Employee Benefit Plan or trust)
which the Company or any ERISA Affiliate maintains or is committed to
contribute to as of the date hereof and the most recent summary plan
description, actuarial report, determination letter issued by the Internal
Revenue Service and Form 5500 filed in respect of each such Employee Benefit
Plan for the past three (3) years.
(vi) Each Employee Benefit Plan complies, in both form and
operation in all material respects, with its terms, ERISA and the Code,
including, without limitation, Code Section 4980B, and no condition exists or
event has occurred with respect to any such plan which would result in the
incurrence by the Company or any ERISA Affiliate of any material liability,
fine or penalty. Neither the Company nor any ERISA Affiliate has incurred any
liability to the Pension Benefit Guaranty Corporation ("PBGC") which remains
outstanding other than the payment of premiums, and there are no premiums which
have become due which are unpaid. Neither the Company nor any ERISA Affiliate
has engaged in any
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transaction which could subject it to any material liability under Section
4069 or Section 4212(c) of ERISA. Each Employee Benefit Plan, related trust
agreement, arrangement and commitment of each of the Company and any ERISA
Affiliate is legally valid and binding in full force and effect. Each Employee
Benefit Plan that is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter for "TRA" (as defined in Rev.
Proc. 93-39) from the IRS or has filed for such a determination letter within
the remedial amendment period, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code. To the knowledge of
the Company, nothing has occurred or is expected to occur that would adversely
affect the qualified status of the Employee Benefit Plan or any related trust
subsequent to the issuance of such determination letter. To the knowledge of
the Company, no Employee Benefit Plan is being audited or investigated by any
government agency or subject to any pending or threatened claim or suit (other
than for ordinary claims for benefits).
(vii) Each employee pension benefit plan that is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is maintained either (a) by the Company or any ERISA Affiliate
for employees of the Company or such ERISA Affiliate or (b) pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and, with respect to either (a) or (b), the
Company or any ERISA Affiliate is then making or accruing an obligation to make
contributions or has within the preceding three (3) plan years made
contributions ("Pension Plan") currently meets the minimum funding standard of
Section 302 of ERISA and Section 412 of the Code (without regard to any funding
waiver). Except as disclosed on Schedule 3.02(k) hereto, all contributions or
payments due and owing as required by Section 302 of ERISA, Section 412 of the
Code or the terms of any Pension Plan have been made by the due date for such
contributions or payments. Except as disclosed on Schedule 3.02(k) hereto, with
respect to each Pension Plan, the market value of assets (exclusive of any
contribution due to the Pension Plan) equals or exceeds the present value of
benefit liabilities as of the latest actuarial valuation date for such plan
(but not prior to 12 months prior to the date hereof), determined on the basis
of a shutdown of the company in accordance with actuarial assumptions used by
the PBGC in single-employer plan terminations and since its last valuation
date, there have been no amendments to such plan that materially increased the
present value of accrued benefits nor any other material adverse changes in the
funding status of such plan. Neither the Company nor any ERISA Affiliate is
required to provide security to a Pension Plan pursuant to Section 307 of ERISA
or Section 401(a)(29) of the Code.
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(viii) Neither the Company nor any ERISA Affiliate nor any
fiduciary of any Employee Benefit Plan has engaged in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code that will have a Company
Material Adverse Effect.
(ix) No Termination Event has occurred or is reasonably
expected to occur. A "Termination Event" means any of the following:
(1) a "Reportable Event" by the Company or any ERISA Affiliate
described in Section 4043 of ERISA and the regulations issued thereunder;
or
(2) the withdrawal of the Company or any ERISA Affiliate from
a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4068(f) of ERISA; or
(3) the distress termination of a Pension Plan, the filing of
a notice of intent to terminate a Pension Plan as a distress termination
or the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or
(4) the institution of proceedings to terminate a Pension
Plan by the PBGC; or
(5) any other event or condition which would constitute
grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; or
(6) the imposition of a lien pursuant to Section 412 of the
Code or Section 302 of ERISA.
(x) Except as disclosed on Schedule 3.02(k) hereto, there are
no agreements which will provide payments to any Company officer, employee,
shareholder or highly compensated individual which will be "parachute payments"
under Section 280G of the Code that are nondeductible to the payor of such
benefits and which will be subject to the tax under Section 4999 of the Code
for which any payor would have a material withholding liability.
(xi) Except as disclosed on Schedule 3.02(k) hereto, the
Stock Option Plans are the only plans, program or arrangement sponsored or
maintained by the Company or any ERISA Affiliate which provides stock options,
or any other form of compensation or benefits to Employees, based upon the
equity of the Company ("Equity-Based Compensation"). Other than as disclosed on
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Schedule 3.02(k) hereto, there are no existing grants of Equity-Based
Compensation held by Employees.
(xii) Except as disclosed on Schedule 3.02(k) hereto, none of
the options granted pursuant to the Stock Option Plans are "incentive stock
options" as defined under Section 422 of the Code.
(xiii) With respect to any Employee Benefit Plan which
provides for medical or health benefits for Employees (such plan or plans, the
"Medical Plans"), such plan or plans satisfy the nondiscrimination requirements
of Code Section 105(h).
(l) Labor Matters. Except as disclosed on Schedule 3.02(l) hereof,
(i) there are no controversies pending or, to the best knowledge of the
Company, threatened between the Company or any Subsidiary and any of their
respective employees, which controversies have or are reasonably likely to have
a Company Material Adverse Effect; (ii) except as set forth in Schedule 3.02(1)
hereto, neither the Company nor any Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any Subsidiary, nor, to the best knowledge of the
Company, are there nor have there been during the five (5) years prior to the
date hereof, any activities or proceedings of any labor union to organize any
such employees; (iii) neither the Company nor any Subsidiary has breached or
otherwise failed to comply with any provision of any such agreement or contract
and there are no grievances outstanding against the Company or any Subsidiary
under any such agreement or contract which breach, failure or grievance has or
is reasonably likely to have a Company Material Adverse Effect; (iv) there are
no unfair labor practice charges or complaints pending against the Company or
any Subsidiary before the National Labor Relations Board or any current union
representation questions involving employees of the Company or any Subsidiary
which charges, complaints or questions have or are reasonably likely to have a
Company Material Adverse Effect; and (v) there is no strike, slowdown, work
stoppage or lockout, or, to the best knowledge of the Company, threat of any
such action, by or with respect to any employees of the Company or any
Subsidiary.
(m) Tangible Property: Real Property and Leases.
(1) The Company and each Subsidiary have sufficient title to all
their tangible properties and assets to conduct their respective businesses as
currently conducted or as contemplated to be conducted, with only such
exceptions as, individually or in the aggregate, would not have a Company
Material Adverse Effect.
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(2) Each parcel of real property owned or leased by the Company or
any Subsidiary (i) is owned or leased free and clear of all mortgages, pledges,
liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind
(collectively, "Liens"), other than (A) Liens for current taxes and assessments
not yet past due, (B) workmen's, repairmen's, warehousemen's and carriers'
Liens arising in the ordinary course of business of the Company or such
Subsidiary consistent with past practice, and (C) all matters of record, Liens
and other imperfections of title and encumbrances which, individually or in the
aggregate, would not have a Company Material Adverse Effect (collectively,
"Permitted Liens"), and (ii) no material portion of which is either subject to
any governmental decree or order to be sold or is being condemned, expropriated
or otherwise taken by any public authority with or without payment of
compensation therefor, nor, to the best knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.
(3) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring annual rental payments in excess of $100,000 during the period of the
lease and all amendments and modifications thereto are in full force and effect
and have not been otherwise modified or amended, the Company is in possession
of such leased real property, and there exists no default under any such lease
by the Company or any Subsidiary, nor any event which with notice or lapse of
time or both would constitute a default thereunder by the Company or any
Subsidiary, except as, individually or in the aggregate, would not have a
Company Material Adverse Effect.
(n) Trademarks, Patents and Copyrights. The Company and the
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, trademarks, trade names, trade dress, copyrights, servicemarks, trade
secrets, applications for trademarks and for servicemarks, mask works, know-how
and other proprietary rights and information used or held for use in connection
with the business of the Company and the Subsidiaries as conducted since June
30, 1995, as currently conducted or as contemplated to be conducted and the
Company is unaware of any assertion or claim challenging the validity of any of
the foregoing, which, individually or in the aggregate, is reasonably likely to
have a Company Material Adverse Effect. The conduct of the business of the
Company and the Subsidiaries as conducted since June 30, 1995, as currently
conducted and as contemplated to be conducted did not, does not and will not
infringe in any way with any patent, license, trademark, trade dress, trade
name, service mark, mask work or copyright of any third party that,
individually or in the aggregate, is reasonably likely to have a Company
Material Adverse Effect. There are no infringements of any proprietary rights
owned by or licensed by or to the Company or any Subsidiary which, individually
or in the aggregate, is reasonably likely to have a Company
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Material Adverse Effect. Neither the Company nor any Subsidiary has licensed or
otherwise authorized the use by any third party of any proprietary information
on terms or in a manner which, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect.
(o) Taxes. (a) The Company and the Subsidiaries (i) have filed or
caused to be filed with the appropriate taxing authorities on a timely basis
all federal Tax Returns (as hereinafter defined), all required state income Tax
Returns and all other Tax Returns which are required to have been filed, and
such Tax Returns are true, correct and complete in all material respects, and
(ii) have paid on a timely basis or have made adequate provision on their
balance sheet for all Taxes (as hereinafter defined) related to such Tax
Returns and the periods covered thereby. Except as disclosed on Schedule
3.02(o) hereto, there are no material liens for Taxes upon the assets of the
Company and the Subsidiaries, except liens for Taxes not yet due. Except as
disclosed on Schedule 3.02(o) hereto, neither the Company nor any Subsidiary
has received a notice of any pending audits, actions, proceedings,
investigations or claims with respect to any Taxes payable by or asserted
against the Company and the Subsidiaries, which if resolved adversely would be
material. Except as disclosed on Schedule 3.02(o) hereto, neither the Company
nor any Subsidiary is or has been a member of any affiliated, consolidated,
combined or unitary group for Tax purposes in any jurisdiction. Except as
disclosed on Schedule 3.02(o) hereto, no claim has ever been made by a
jurisdiction where the Company or any of the Subsidiaries does not pay Taxes or
file Tax Returns that such entity may be subject to material Taxes in such
jurisdiction for any period beginning after December 31, 1989. Except as
disclosed on Schedule 3.02(o) hereto, the taxable years or periods for the
assessment of federal income tax of the Company and the Subsidiaries (including
assessments relating to consolidated federal income tax returns, if any, that
include the Company or any of the Subsidiaries) are closed either by agreement
with the Internal Revenue Service or by operation of the applicable statute of
limitations for all taxable periods through 1993. Except as set forth in
Schedule 3.02(o) hereto, the taxable years or periods hereto, the taxable years
or periods for the assessment of state and local income tax of the Company and
the Subsidiaries (including assessments relating to consolidated, combined or
unitary Tax Returns, if any, that include the Company or any Subsidiary) are
closed either by agreement with the appropriate taxing authority or by
application of the applicable statute of limitations for all periods through
1993. Except as disclosed on Schedule 3.02(o) hereto, the Company and the
Subsidiaries are not and have not been
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subject to any material tax in any jurisdiction outside the United States of
America. Except as disclosed on Schedule 3.02(o) hereto, no agreements
relating to allocation or sharing of Taxes exists among the Company and the
Subsidiaries or among the Company and any of its stockholders. Except as
disclosed on Schedule 3.02(o) hereto, there are no outstanding waivers or
comparable consents or extensions given by the Company or the Subsidiaries
regarding the application of the statute of limitations with resect to any
Taxes or Tax Returns. Except as disclosed on Schedule 3.02(o) hereto, neither
the Company nor any Subsidiary has filed a consent pursuant to Section 341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a Section 341(f) asset (as such term is defined in Section
341(f)(4) of the Code). Except as disclosed on Schedule 3.02(o) hereto, there
is no contract, agreement, plan or arrangement that individually or
collectively could give rise to the payment by the Company or the Subsidiaries
of any amount that would not be deductible by reason of Section 280G of the
Code. Except as disclosed on Schedule 3.02(o) hereto, neither the Company nor
any Subsidiary has any outstanding Corporate Acquisition Indebtedness as such
term is used in Code Section 279(b).
(b) For purposes of this Agreement, (i) the term "Taxes" shall mean
all taxes, charges, fees, levies or other like assessments, including without
limitation, all net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, estimated, severance, stamp, occupation, capital stock,
property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest, penalties or additional amounts
attributable to Taxes imposed by any governmental authority, and (ii) the term
"Tax Returns" shall mean all returns (including information returns),
declarations, reports, estimates and statements regarding Taxes required to be
filed under the United States federal, state or local laws or any foreign laws.
(p) Environmental Matters. (i) For purposes of this Agreement, the
following terms shall have the following meanings: (I) "Hazardous Substances"
means (A) all substances, wastes, pollutants, contaminants and materials
regulated, or defined or designated as hazardous, extremely or imminently
hazardous, dangerous, or toxic under federal or state statutes and implementing
regulations, including, without limitation: the Comprehensive Environmental
Response, Compensation and Liability Act, the Federal Insecticide, Fungicide
and Rodenticide Act, the Atomic Energy Act, the Resource Conservation and
Recovery Act, the Clean Air Act and the Hazardous Materials Transportation Act;
(B)
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any asbestos or asbestos-containing material, petroleum and petroleum products,
including crude oil and any fractions thereof, natural gas, natural gas
liquids, synthetic gas, polychlorinated biphenyls, radioactive substances, urea
formaldehyde or radon; or (C) any substance with respect to which a federal,
state or local agency requires environmental investigator monitoring, reporting
or remediation; and (II) "Environmental Law" means any applicable statute,
code, enactment, ordinance, rule, regulation, permit, consent, authorization,
judgment, order, common law rule (including without limitation the common law
respecting nuisance and tortious liability) or other requirement having the
force and effect of law, whether local, state, territorial or national, at any
time in force or effect relating to: (A) emissions, discharges, spills,
releases or threatened releases of Hazardous Substances or materials containing
Hazardous Substances into ambient air, surface water, ground water, water
courses, publicly or privately owned treatment works, drains, sewer systems,
wetlands, septic systems or onto land; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; (C) the regulation of storage tanks;
or (D) otherwise relating to pollution or the protection of human health,
safety or the environment.
(ii) In each case when the failure to comply with this Section
3.02(p)(ii) would result in a Company Material Adverse Effect, (I) neither the
Company nor any Subsidiary has violated or is in violation of any Environmental
Law; (II) the Company and each Subsidiary has all permits, licenses and other
authorizations required under any Environmental Law and the Company and each
Subsidiary has always been and is in compliance with their requirements; (III)
no Hazardous Substances have been used, stored, manufactured, treated or
processed on or transported to or from, the property owned or leased by the
Company or any Subsidiary except as necessary to conduct the business of the
Company and the Subsidiaries, and in compliance with all Environmental Laws;
(IV) there has been no disposal, release or threatened release of Hazardous
Substances from or to the property owned or leased by the Company or any
Subsidiary; (V) none of the properties owned or leased by the Company or any
Subsidiary (including, without limitation, soils and surface and ground waters)
are contaminated with any Hazardous Substance; (VI) neither the Company nor any
Subsidiary is liable for any off-site contamination and neither the Company nor
any Subsidiary has transported or arranged for the transportation of any
Hazardous Substances to any location that is listed or proposed for listing on
the National Priorities List or on the CERCLIS or any analogous state list; and
(VII) neither the Company nor any Subsidiary has received nor reasonably
expects to receive any notice, letter, citation, order, warning, complaint,
inquiry, claim or demand alleging or asserting a violation of or
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potential responsibility under any Environmental Law or a release or threatened
release of any Hazardous Substances at, from or onto the properties. As to
leased properties for the time period prior to occupancy or use by the Company
or any Subsidiary, Subparagraphs (III), (IV) and (V) herein are to the
knowledge of the Company and its Subsidiaries.
(iii) Subject to the same qualification that a failure to comply
would result in a Company Material Adverse Effect, with respect to each of the
former operations or properties owned or operated by the Company or any of the
Subsidiaries each of the representations and warranties set forth in Section
3.02(p)(ii) is true and correct as to or concerning activities of the Company
or any Subsidiary during the period of such ownership or operation.
(q) Material Contracts. Each contract or agreement to which the Company or
any of the Subsidiaries is a party that is material to the Company or any
Subsidiary (a "Material Contract"), including, but not limited to, any
contracts or agreements (i) involving payments to or from the Company or any
Subsidiary in excess of $500,000, (ii) with the Government of the United States
of America or any department or instrumentality thereof or (iii) containing a
provision purporting to limit the ability of the Company to compete in any line
of business, with any person, in any geographic area or during any time, is in
full force and effect and is enforceable against the parties thereto in
accordance with its terms and no condition or state of facts exists that, with
notice or the passage of time, or both, could constitute a material default by
the Company or any Subsidiary or, to the best knowledge of the Company, any
third party under such Material Contracts. The Company or each applicable
Subsidiary has duly complied in all material respects with the provision of
each Material Contract to which it is a party.
(r) Absence of Undisclosed Liabilities. Neither the Company nor any
Subsidiary has any liabilities or obligations of any kind, whether absolute,
accrued, asserted or unasserted, contingent or otherwise, which would have been
required to be recorded on a balance sheet prepared as of April 30, 1996, or as
disclosed in the notes thereto, in accordance with generally accepted
accounting principles consistently applied, except for liabilities, obligations
or contingencies (a) which are accrued or reserved against in the audited
consolidated balance sheet of the Company as of June 30, 1995 contained in the
1995 10-K or reflected in the notes thereto, (b) which were disclosed in the
Commission Filings filed with the Commission after the 1995 1O-K, (c) which
arise under this Agreement or the Stockholders Agreement or the transactions
contemplated hereby or are otherwise expressly
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disclosed in this Agreement or any Schedule hereto, or (d) which, individually
or in the aggregate, are not reasonably likely to have a Company Material
Adverse Effect.
(s) Insurance. There is no default by the Company or any Subsidiary with
respect to any provision contained in any insurance policy maintained by the
Company or any Subsidiary, and there has not been any failure to give any
notice or present any claim under any such policy in a timely fashion or in the
manner or detail required by the policy, except for defaults or failures which,
individually or in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect.
(t) Opinion of Financial Advisor. The Company has received the written
opinion of Goldman Sachs to the effect that the consideration to be received by
the stockholders of the Company pursuant to the Offer and the Merger is fair to
such stockholders, a copy of which opinion has been delivered to Purchaser and
will be included in the Schedule 14D-9 and the Proxy Statement.
(u) Affiliate Transactions. Except for employment relationships with
executive officers and except as set forth on Schedule 3.02(u) hereto, neither
the Company nor any Subsidiary is a party to any transaction (including,
without limitation, the purchase or sale of any property or service) with, or
involving the making of any payment or transfer to, any Affiliate (as defined
below) other than the Company or a Subsidiary. Except for employment
relationships with executive officers and except as set forth on Schedule
3.02(u) hereto, all of such transactions shall be terminated and be of no
further legal force or effect, and neither the Company nor any Subsidiary shall
have any obligation or liability thereunder, from and after the Effective Time.
"Affiliate" of any person means any other person directly or indirectly
controlling, controlled by or under common control with such person. A person
shall be deemed to control another person if the controlling person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled person,
whether through ownership of stock, by contract or otherwise.
(v) Use of Name. The Company has the legal right to use the name "Masland"
and each derivative thereof in each jurisdiction where the Company and each
Subsidiary conduct business. The use of such name by the Company and/or any
Subsidiary does not conflict with or infringe on the rights of any other
person, and the Company
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is not aware of any claim or written notice from any person to such effect.
ARTICLE IV
COVENANTS
4.01 Proxy Statement. As promptly as practicable after expiration of the
Offer, the Company shall, if required by applicable law or otherwise deemed
advisable by Purchaser, file with the Commission under the Exchange Act, and
shall use all reasonable efforts to have cleared by the Commission, and as
promptly as practicable after expiration of the Offer shall mail to its
stockholders, a proxy statement or information statement, as appropriate (the
"Proxy Statement"), with respect to the Special Meeting (as such term is
defined in Section 4.02). Each of Purchaser, Sub and the Company represents
that the written information supplied or to be supplied for inclusion by
Purchaser, Sub or the Company, respectively, in the Proxy Statement will, at
the times when the definitive Proxy Statement is filed with the Commission and
when it is first mailed to stockholders of the Company, not contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and each of
Purchaser, Sub and the Company agrees promptly to correct any such information
provided by them which shall have become false or misleading in any material
respect and take all steps necessary to cause the Proxy Statement as so
corrected to be filed with the Commission and mailed to stockholders of the
Company as and to the extent required by applicable law. The Company agrees
that the Proxy Statement shall comply as to form in all material respects with
the provisions of applicable law. The Proxy Statement shall contain the
recommendation of the Board in favor of this Agreement and the Merger;
provided, however that nothing in this sentence shall require the Board to act,
or refrain from acting, in any manner which, in the opinion of independent
legal counsel for the Company (who may be the Company's regularly engaged
independent legal counsel), would conflict with the proper discharge of their
fiduciary duties to stockholders under applicable law.
4.02 Meeting of Stockhoiders of the Company. Promptly after expiration of
the Offer, the Company shall take all action necessary, in accordance with the
Delaware Law and its Certificate of Incorporation and By-Laws, to convene a
meeting of its Stockholders (the "Special Meeting") as promptly as practicable
to consider and vote on this Agreement and the Merger. The Company shall, to
the extent the Proxy Statement has been filed with, and
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cleared by, the Commission, solicit from stockholders of the Company proxies in
favor of the approval and adoption of this Agreement and the Merger and to take
all other action necessary or, in the reasonable judgment of Purchaser, helpful
to secure a vote of Stockholders in favor of this Agreement and the Merger;
provided, however, that nothing in this sentence shall require the Board to act,
or refrain from acting, in any manner which, in the opinion of independent legal
counsel for the Company (who may be the Company's regularly engaged independent
legal counsel), would conflict with the proper discharge of their fiduciary
duties to stockholders under applicable law. At the Special Meeting, Purchaser
shall vote, or cause to be voted, all of the Shares then owned by Purchaser (or
any subsidiary of Purchaser) in favor of this Agreement and the Merger.
4.03 Merger Without Meeting of Stockholders. The foregoing to the
contrary notwithstanding, in the event that Purchaser and Sub or any other
wholly-owned subsidiary of Purchaser shall acquire in the aggregate at least
90% of the outstanding Shares, the parties hereto agree, at the request of
Purchaser, to take all necessary and appropriate action to cause a merger of
the Company and Sub to become effective without a meeting of Stockholders of
the Company, in accordance with Section 253 of the Delaware Law.
4.04 Interim Operations. During the period from the date of this
Agreement to the earlier of the Effective Time or until Purchaser's designees
constitute a majority of the members of Company's Board under Section 1.03(a),
except as specifically contemplated by this Agreement or otherwise as consented
to or approved in writing by Purchaser:
(a) the business of the Company and each of the Subsidiaries shall be
conducted only in, and the Company and each of its Subsidiaries shall not take
any action except in, the ordinary and usual course of business and consistent
with past practice;
(b) neither the Company nor any of the Subsidiaries shall make or
propose any change or amendment in its charter or By-Laws or the Rights
Agreement;
(c) neither the Company nor any of the Subsidiaries shall (i) issue
or sell, or authorize the issuance or sale of, any shares of its capital stock
or any of its other securities or issue any securities convertible into or
exchangeable for, or options, warrants to purchase, scrip, rights to subscribe
for, calls or commitments of any character whatsoever relating to, or enter
into any contract, understanding or arrangement with respect to the issuance
of, any shares of its capital stock or any of its other
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securities, or enter into any arrangement or contract with respect to the
purchase or voting of shares of its capital stock or adjust, split, combine or
reclassify any of its securities, or make any other changes in its capital
structure; provided that the Company may issue shares of its Common Stock
pursuant to the terms of vested and currently exercisable Company Stock Options
upon the exercise of such Common Stock Options or (ii) except as contemplated
by Section 6.07, amend, waive or otherwise modify any of the terms of any Stock
Option Plan or Company Stock Option;
(d) the Company shall not declare, pay or make any dividend or other
distribution or payment with respect to, or purchase, redeem or otherwise
acquire any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as stockholders, except for the regular
quarterly dividend of $.05 per share declared on May 9, 1996;
(e) the Company shall, and shall cause the Subsidiaries to, use all
reasonable efforts to preserve intact the business organization of the Company
and each of the Subsidiaries, to keep available the services of its and their
present officers and key employees, and to preserve the good will of those
having business relationships with it and the Subsidiaries;
(f) neither the Company nor any of the Subsidiaries shall take any
action with respect to the grant of any severance or termination pay (otherwise
than pursuant to written plans of the Company or any of the Subsidiaries in
effect on the date hereof) or with respect to any increase of benefits payable
under its written plans providing for severance or termination pay in effect on
the date hereof;
(g) neither the Company nor any of the Subsidiaries shall (except for
salary increases or other employee benefit arrangements in the ordinary course
of business consistent with past practice that do not result in a material
increase in benefits or compensation expense to the Company or any Subsidiary
or pursuant to collective bargaining agreements as presently in effect) adopt
or amend any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, plan, fund or other arrangement for the benefit or welfare of
any Employee or increase in any manner the compensation or fringe benefits of
any Employee or pay or grant any benefit not required by any existing plan or
arrangement;
(h) except with respect to transactions between and among the
Company and any of the Subsidiaries or the endorsement of negotiable
instruments in the ordinary course of its business,
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neither the Company nor any of the Subsidiaries shall incur or assume any
indebtedness for money borrowed (other than borrowings in the ordinary course
of business) or guarantee any such indebtedness (other than any guaranty of
Subsidiary indebtedness in the ordinary course of business) or the obligations
of any person;
(i) the Company shall not and shall not permit any Subsidiary to pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted, unasserted, contingent or otherwise), other than payment,
discharge or satisfaction in the ordinary course of business and consistent
with past practices, pursuant to existing contractual arrangements or as
required by law;
(j) except in the ordinary course of business consistent with past
practice or in the case of obsolete or redundant assets, or those requiring
replacement, the Company shall not and shall not permit any Subsidiary to sell,
lease or otherwise dispose of any of its assets;
(k) the Company shall not and shall not permit any Subsidiary to
acquire (for cash, shares of stock or other consideration) (including, without
limitation, by merger, consolidation, or acquisition of stock or assets) any
corporation, partnership, other business organization or any division thereof
or the assets thereof or any other assets;
(l) the Company shall not and shall not permit any Subsidiary to
take any action, other than reasonable actions in the ordinary course of
business and consistent with past practice, with respect to accounting policies
or procedures;
(m) the Company shall not and shall not permit any Subsidiary to
authorize, recommend, propose or announce an intention to adopt a plan of
complete or partial liquidation or dissolution of the Company or any of its
Subsidiaries:
(n) the Company shall not and shall not permit any Subsidiary to
make any material tax elections or settle or compromise any material income tax
liability;
(o) other than in the ordinary course of business and consistent
with past practice, the Company shall not and shall not permit any Subsidiary
to waive any material rights or make any payment, direct or indirect, of any
material liability of the Company or any of the Subsidiaries before the same
comes due in accordance with its terms;
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(p) the Company shall not and shall not permit any Subsidiary to
fail to maintain its existing material insurance coverage in effect or, in the
event any such coverage shall be terminated or lapse, to the extent available
at reasonable cost, procure substantially similar substitute insurance policies
which in all material respects are in at least such amounts and against such
risks as are currently covered by such policies;
(q) the Company shall not and shall not permit any Subsidiary to
enter into any new collective bargaining agreement or any successor collective
bargaining agreement; and
(r) the Company shall not and shall not permit any Subsidiary to
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing.
4.05 Appraisal Rights. The Company shall give Purchaser prompt notice of
any demands received by the Company for appraisal of Shares, and Purchaser
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not settle or compromise any claim
for appraisal rights prior to the Effective Time without the prior written
consent of Purchaser.
4.06 Additional Agreements. (a) Upon reasonable notice the Company shall,
and shall cause each of the Subsidiaries to, afford Purchaser and Sub and their
respective officers, employees and authorized representatives reasonable access
during normal business hours throughout the period prior to the Effective Time
to all of its properties, books, contracts, commitments, records, tax records
and accountants' working papers. During such period, the Company shall, and
shall cause each of the Subsidiaries to, furnish promptly to Purchaser (i) a
copy of each report, schedule and other document filed or received by it
pursuant to the requirements of federal or state securities laws and (ii) all
such other information concerning its business, properties and personnel as
Purchaser may reasonably request and which is customarily prepared by the
Company or is in the Company's possession, provided that no investigation
pursuant to this Section shall affect or be deemed to modify any
representations or warranties made in this Agreement or the conditions to the
obligations of Purchaser and Sub to accept Shares pursuant to the Offer or the
parties hereto to consummate the Merger under this Agreement.
(b) Subject to the terms and conditions herein provided, each of the
parties hereto agrees, subject to its legal obligations, to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective the
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transactions contemplated by this Agreement, including using all reasonable
efforts to (i) obtain all necessary waivers, consents and approvals and effect
all necessary registrations and filings, including, but not limited to, (a)
filings under the HSR Act, including responses to requests for additional
information, and (b) submissions of information requested by any Governmental
Entity and (ii) rectify any event or circumstance which would impede
consummation of the transactions contemplated hereby.
No Solicitation (a) From and after the date hereof until the termination of
this Agreement the Company shall not, and shall cause each of its Subsidiaries
and its and their respective officers, directors, employees, representatives,
agents and affiliates (including, without limitation, any investment banker,
attorney or accountant retained by the Company or any of its Subsidiaries) not
to, (i) directly or indirectly, invite, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information or assistance), any
inquiries with respect to or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or (ii) enter into or maintain or continue discussions or negotiations with any
person or entity in furtherance of such inquiries or to obtain an Acquisition
Proposal or (iii) agree to endorse any Acquisition Proposal. Notwithstanding the
foregoing, nothing contained herein shall prohibit the Board from furnishing
information to, or entering into discussions or negotiations with, any person or
entity that makes an unsolicited written, bona fide Acquisition Proposal or,
after payment of the Termination Fee as described in Section 6.03, endorsing
such an Acquisition Proposal, if and only to the extent that, (A) the Board,
after consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent legal counsel),
determines in good faith that such action is necessary for the Board to comply
with its fiduciary duties to its stockholders under applicable law, and (B)
prior to taking such action, the Company receives from such person or entity an
executed confidentiality agreement on terms no less favorable to the Company
than the Confidentiality Agreement (excluding the standstill provisions
thereof). For purposes of the Agreement, "Acquisition Proposal" shall mean any
of the following (other than the transactions between the Company and Purchaser
and Sub contemplated by this Agreement): (i) any merger, consolidation, share
exchange, recapitalization, business combination, or other similar transaction
involving the Company or its Subsidiaries (other than business combinations or
similar transactions involving only foreign Subsidiaries); (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20% or more of the
assets of the Company and its Subsidiaries, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or
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exchange offer for 20% or more of the outstanding shares of capital stock of the
Company or the filing of a registration statement under the Securities Act in
connection therewith or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. The Company represents that neither it, its Subsidiaries nor, to its
knowledge, any of its stockholders is a party to or bound by any agreement with
respect to an Acquisition Proposal. In the event that the Company receives or
becomes aware of any Acquisition Proposal, the Company will promptly notify
Purchaser in writing of such communication, of the identity of the person or
entity making such Acquisition Proposal and of the terms and conditions of such
Acquisition Proposal; provided, however, that the Company shall not be required
to disclose the identity of the person or entity making the Acquisition Proposal
or the terms and conditions of such Acquisition Proposal if the Board, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel) determines in
good faith that nondisclosure would be necessary for the Board to comply with
its fiduciary duties to its stockholders under applicable law.
4.08 Certain Litigation. The Company agrees that it will not settle any
litigation commenced after the date hereof against the Company or any of its
directors by any stockholder of the Company relating to the Offer, the Merger or
this Agreement, without the prior written consent of Purchaser. In addition, the
Company will not voluntarily cooperate with any third party which may hereafter
seek to restrain or prohibit or otherwise oppose the Offer or the Merger and
will cooperate with Purchaser and Sub to resist any such effort to restrain or
prohibit or otherwise oppose the Offer or the Merger, unless the Board
determines in good faith, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent counsel) that failing so to cooperate with such third party or
cooperating with Purchaser or Sub, as the case may be, would constitute a breach
of the Board's fiduciary duties to stockholders under applicable law.
4.09 Notice of Certain Events. Each party shall promptly notify the other
parties of:
(i) Any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
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(ii) Any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement; and
(iii) Any actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge threatened against, relating to or involving
or otherwise affecting any party hereto which relates to the consummation of
the transactions contemplated by this Agreement.
4.10 Confidentiality. (a) In addition to, and not in limitation of, that
certain Confidentiality and Standstill Agreement between Purchaser and the
Company dated as of March 14, 1996 (the "Confidentiality Agreement"), prior to
the consummation of the Offer and after any termination of this Agreement,
Purchaser and Sub will hold, and will use its best efforts to cause its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning the Company and the Subsidiaries furnished
to Purchaser and Sub in connection with the transactions contemplated by this
Agreement, including, without limitation, the stockholder lists furnished by the
Company pursuant to Section 1.02(b), except to the extent that such information
can be shown to have been (i) previously known on a non-confidential basis by
Purchaser or Sub, (ii) in the public domain through no fault of purchaser or Sub
or (iii) later lawfully acquired by Purchaser or Sub from sources other than the
Company; provided that Purchaser and Sub may disclose such information to its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents in connection with the transactions contemplated by this Agreement so
long as such persons are informed by purchaser and Sub of the confidential
nature of such information and are directed by Purchaser and Sub to treat such
information confidentially. Purchaser's and Sub's obligation to hold any such
information in confidence shall be satisfied if it exercises the same degree of
care with respect to such information as it would take to preserve the
confidentiality of its own similar information. If this Agreement is terminated
pursuant to Section 6.01 and Purchaser thereafter ceases to pursue the
acquisition of the Company, Purchaser and Sub will, and will use its best
efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to destroy or deliver to the Company, upon
request, all documents and other materials, and all copies thereof, obtained by
Purchaser and Sub or on its behalf from the Company in connection with this
Agreement that are subject to such confidence.
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(b) The Confidentiality Agreement shall terminate and be of no further
force or effect upon consummation of the Offer.
(c) From and after the time an Acquisition Proposal, as defined in
Section 4.07, is made to the Company, Purchaser and Sub shall not be prohibited
by the Confidentiality Agreement from taking any or all of the actions described
in the "standstill" provisions of the Confidentiality Agreement, in which case
the Confidentiality Agreement shall be deemed to be modified to the extent
required to permit Purchaser and Sub to engage in any and all such actions.
4.11 Credit Agreement Waiver. Purchaser will use its best efforts to
obtain from its lenders the Credit Agreement Waiver.
ARTICLE V
CONDITIONS
5.01 Conditions to the Obligations of Each Party. The obligations of each
party hereto to consummate the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions:
(a) Approval of Stockholders. The approval of the stockholders of the
Company referred to in Section 4.02 shall have been obtained, if required by
applicable law.
(b) HSR and Other Antitrust. Any applicable waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have expired
or been terminated and any approvals under any applicable Foreign Antitrust Laws
shall have been granted.
(c) Litigation, etc.. No preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction in the
United States or by a Governmental Entity nor any statute, rule, regulation or
executive order promulgated or enacted by any Governmental Entity shall be in
effect, which would prevent the consummation of the Merger.
5.02 Conditions to the Obligations of Purchaser and Sub. The obligations
of Purchaser and Sub to consummate the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the further condition that
Purchaser or any affiliate thereof shall have purchased all of the Shares
validly tendered and not withdrawn pursuant to the Offer; provided, that this
condition shall be deemed to be satisfied if the Offer shall have terminated
without
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the purchase of such Shares thereunder and all of the conditions to the Offer
set forth in Exhibit A hereto were satisfied upon the expiration of the Offer.
ARTICLE VI
MISCELLANEOUS
6.01 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether or not it has been approved by the stockholders
of the Company:
(a) by the mutual written consent of the respective Boards of
Directors of the Company and Purchaser;
(b) by Purchaser or the Company, if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares being
purchased thereunder; provided however, that Purchaser may not terminate this
Agreement pursuant to this Section 6.01(b) if Purchaser's termination of, or
failure to accept for payment or pay for any Shares tendered pursuant to, the
Offer does not follow the failure of one or more of the conditions set forth in
Exhibit A hereto to be satisfied or is otherwise in violation of the terms of
the Offer or this Agreement;
(c)(i) by Purchaser prior to the purchase of and payment for any
Shares pursuant to the Offer if there has been a material breach of any
representation or warranty set forth in this Agreement on the part of the
Company and (ii) by the Company prior to the purchase of and payment for any
Shares pursuant to the Offer if there has been a material breach of any
representation or warranty set forth in this Agreement on the part of Purchaser
or Sub;
(d)(i) by Purchaser if there has been a material breach of any
covenant or agreement set forth in this Agreement on the part of the
Company, which is incapable of being, or is not, cured (other than by mere
disclosure of the breach) within five days after written notice from the
Purchaser to the Company, and (ii) by the Company if there has been a material
breach of any covenant or agreement set forth in this Agreement on the part of
the Purchaser or Sub, which is incapable of being, or is not, cured (other than
by mere disclosure of the breach) within five days after written notice from
the Company to Purchaser of such breach;
(e) by either Purchaser or the Company if the Merger has not been
consummated on or before October 31, 1996, which date may
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be extended by the mutual written consent of the Board of Directors of the
Company and the Board of Directors of Purchaser;
(f) (i) by the Company if the Offer has not been commenced within the
period of time required under the Exchange Act following the date hereof and
(ii) by the Purchaser if the Company has failed to mail the Schedule 14D-9 to
its stockholders on or prior to the date on which the Offer has been commenced
or failed to include in such Schedule 14D-9 when first mailed to stockholders
the approval and recommendations of the Board of the Offer and the Merger
required by Section 1.02(a) to be included in the Schedule 14D-9;
(g) by the Company or Purchaser if any permanent injunction or final
nonappealable order, decree or ruling issued by a court of competent
jurisdiction within the United States or Governmental Entity is in effect which
would prevent the consummation of the Merger;
(h) by the Company, if the Board modifies, in a manner adverse to
Purchaser, or withdraws its approval or recommendation of, the Offer or the
Merger referred to in Section 1.02(a) hereof, so long as the Board, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), determines
in good faith that such action is necessary for the Board to comply with its
fiduciary duties to stockholders under applicable law; or
(i) by Purchaser if (i) the Board modifies, in a manner adverse to
Purchaser, or withdraws its approval or recommendation of, the Offer or the
Merger referred to in Section 1.02(a) hereof, (ii) the Board shall have
recommended or accepted any Acquisition Proposal; (iii) the Board shall have
resolved to do any of the acts referred to in (i) or (ii); (iv) Purchaser shall
request that the Board reaffirm its approval or recommendation of the Offer or
the Merger and the Board shall fail to do so within ten business days after
such request; or (v) any corporation, partnership, person, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act) other than Purchaser
or Sub or any of their respective subsidiaries shall have become the beneficial
owner of more than 20% of the outstanding shares other than for purposes of
arbitrage, but provided that such termination under (i) and (iv) (or under
(iii) as it relates to (i) only) above relates to actions of the Board which,
after consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent legal counsel), it has
determined in good faith are necessary for the Board to comply with its
fiduciary duties to stockholders under applicable law, in which case the
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effectiveness of such termination may not be prior to the later of (x) the
close of business immediately preceding the then scheduled termination date of
the Offer or (y) ten days following such modification or withdrawal, and then
only if the Board has not reinstated its affirmative recommendation or approval
of the Purchaser's Offer or the Merger within such period of time.
6.02 Liabilities in Event of Termination. In the event of any termination
of this Agreement pursuant to Section 6.01, the Company, Purchaser and Sub
shall have no obligation or liability to each other except as provided
in Sections 4.10 and 6.03, and except that nothing herein will release any
party from liability for any willful breach of this Agreement.
6.03 Fees and Expenses. (a) If (i) an Acquisition Proposal (as defined
in Section 4.07) is made prior to the termination of this Agreement
(other than a termination pursuant to Section 6.01(f)(ii), 6.01(h) or 6.01(i)),
and within nine months of such termination the Company shall have entered into
an agreement with respect to, approved, recommended or taken any affirmative
action to facilitate, an Acquisition Proposal, or any transaction constituting
an Acquisition Proposal is consummated, (ii) this Agreement is terminated
pursuant to Section 6.01(f)(ii) and an Acquisition Proposal exists, or (iii)
this Agreement is terminated pursuant to Section 6.01(h) or 6.01(i), then the
Company shall pay to Purchaser a fee equal to $10,000,000 in cash (the
"Termination Fee"). The Termination Fee shall be payable (x) in the case of
entering into an agreement with respect to an Acquisition Proposal or the
consummation of a transaction constituting an Acquisition Proposal as described
in clause (i) of this Section 6.03(a), upon the signing of a definitive
agreement relating to such Acquisition Proposal or, if no such agreement is
executed, then at the closing (and as a condition to the closing) of such
transaction constituting an Acquisition Proposal, (y) upon the occurrence of
any other event described in clause (i) of this Section 6.03(a) and (z) within
one business day of the termination of this Agreement upon any termination of
this Agreement under Sections 6.01(f)(ii), 6.01(h) or 6.01(i). The Company
acknowledges that the agreements contained in this Section 6.03 are an integral
part of the transactions contemplated by this Agreement.
(b) Except as specifically provided in Section 6.03(a), each party
shall bear all expenses incurred by it in connection with this Agreement and
the transactions contemplated hereby, including those incident to the
negotiation and preparation of this Agreement and to its performance of and
compliance with all agreements and conditions contained herein to be performed
or complied with by it.
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(c) Except for the Company's fee engagement letter with Goldman Sachs
dated April 25, 1996, or as previously disclosed by a party to this Agreement
in writing to the other parties hereto, no broker, finder or investment banker
is entitled to a brokerage, finder's or other fee or commission in connection
with the Offer or the Merger or the transactions contemplated by this
Agreement. Such fees or other commissions payable by the Company and its
Subsidiaries shall not exceed the amount previously disclosed to Purchaser.
6.04 Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party which is, or whose stockholders are, entitled
to the benefits thereof. This Agreement may not be amended or supplemented at
any time, except by an instrument in writing signed on behalf of each party
hereto; provided, that after this Agreement has been approved by the
stockholders of the Company no such amendment shall reduce the amount or change
the form of consideration to be paid to the stockholders of the Company in the
Merger or alter or change any of the terms or conditions of this Agreement if
such alteration or change would adversely affect the stockholders of the
Company.
6.05 Officers' and Directors' Liability Insurance; Indemnification. (a)
After the Effective Time, or such earlier date as Purchaser acquires
control of the Company, Purchaser shall cause the Surviving Corporation to (i)
maintain the Company's current directors' and officers' insurance and
indemnification policy or an equivalent policy, subject to terms and conditions
no less advantageous, for all directors and officers of the Company on the date
hereof, for six years after the Effective Time to cover acts and omissions of
directors and officers of the Company occurring at or prior to the Effective
Time; provided that Purchaser shall not be required to pay an annual premium
for such insurance in excess of 300% of the last annual premium paid by the
Company prior to the date hereof, but in such case Purchaser shall purchase as
much coverage as possible for such amount and (ii) maintain in effect for six
years after the Effective Time provisions no less favorable to the indemnified
parties than those contained in the Certificate of Incorporation of the Company
on the date hereof (which shall be contained in the Certificate of
Incorporation of the Surviving Corporation) relating to the rights to
indemnification of officers and directors with respect to indemnification for
acts and omissions occurring at or prior to the Effective Time.
(b) This Section 6.05 is intended to benefit the Company, the
Surviving Corporation and each of the directors and officers of the
Company on the date hereof (each of whom shall be entitled to enforce this
Section 6.05 against the Purchaser or the
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Surviving Corporation, as the case may be) and shall be binding on all
successors and assigns of the Purchaser and the Surviving Corporation.
6.06 Employee Benefit Plans. For a period ending no earlier than (i)
with respect to Employee Benefit Plans which are Pension Plans or
Welfare Plans (other than severance plans), the last day of the first plan year
beginning after the Effective Time, (ii) with respect to Employee Benefit Plans
which are cafeteria plans as defined in Section 125 of the Code, the last day
of the plan year during which the Effective Time occurs and (iii) one year from
the date of this Agreement with respect to any other employee benefits,
Purchaser agrees that after the Effective Time it shall cause the Surviving
Corporation to maintain all of the Company's and the Subsidiaries' existing
employee retirement benefit plans and other employee benefit plans or plans
providing benefits generally comparable thereto or provide compensation which
in the aggregate is substantially comparable thereto.
(b) The foregoing shall not constitute any commitment, contract,
understanding or guarantee (express or implied) on the part of the Surviving
Corporation of a post-Effective Time employment relationship of any term or
duration or on any terms other than those the Surviving Corporation may
establish. Employment of any of the Employees by the Surviving Corporation
shall be "at will" and may be terminated by the Surviving Corporation at any
time for any reason (subject to any legally binding agreement, applicable laws
or collective bargaining agreement). No provision of this Agreement shall
create any third-party beneficiary rights in any employee or former employee
(including any beneficiary or dependent thereof) of the Company or any of its
subsidiaries in respect of continued employment or resumed employment.
6.07 Stock Options. (a) At the Effective Time, each Company Stock Option
issued under the 1991 Stock Purchase and Option Plan, whether or not
then exercisable and whether or not then vested, at the election of the
optionee, shall be either cancelled or assumed and converted by Purchaser. If
cancelled, then each holder of a cancelled option shall be entitled to receive,
in consideration for the cancellation of such option, an amount in cash equal
to the product of (x) the number of Shares previously subject to such option
and (y) the excess, if any, of the Merger Consideration over the exercise price
per Share previously subject to such option. If assumed, each option shall be
amended to be exercisable into Purchaser's Common Stock (a "Substitute
Option"); provided, however, that the excess aggregate value of each option
following the substitution and assumption shall be the same as the excess
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<PAGE> 46
aggregate value of such outstanding option before the substitution and
assumption. The number of shares of Purchaser's Common Stock subject to such
Substitute Option and the exercise price thereunder shall be computed in
compliance with the requirements of Section 424(a) of the Code, and, except as
agreed in writing by Purchaser and the Company, such Substitute Option shall
not confer any additional rights upon the optionee and shall be subject to
substantially all of the other terms and conditions of the original option
granted by the Company to which it relates except in the case of an optionee
whose employment with the Company or its successor is terminated, other than
for cause, within one year following the Effective Time, for whom the exercise
period of the vested Substitute Option will be extended to a period of two
years. At the Effective Time, each Company Stock Option issued under the
Non-Employee Directors Stock Option Plan shall be cancelled in the manner
provided above, and each Company Stock Option issued under the 1993 Stock
Option Incentive Plan shall be assumed and converted into a Substitute Option
in the manner provided above.
(b) Prior to the Effective Time, the Company shall obtain any
consents or elections required or deemed necessary and the original Company
Stock Option agreements (i) for cancellation from holders of outstanding
Company Stock Options or (ii) to make any amendments to the terms of the Stock
Option Plans or Company Stock Option Agreements that, in the case of clause (a)
of this Section 6.07, are necessary to give effect to the transactions
contemplated hereby.
6.08 Representations, Warranties and Agreements. No representations and
warranties in this Agreement shall survive the purchase by Purchaser of any
Shares pursuant to the Offer. All representations, warranties and agreements
made by Purchaser or Sub in this Agreement shall be deemed to be made jointly
and severally by Purchaser and Sub. All agreements in this Agreement shall not
survive the Merger, except for the agreements contained in Sections 6.03 and
6.05 of this Agreement.
6.09 Public Statements. The Company, on the one hand, and Purchaser or
Sub, on the other, agree to consult with each other in issuing any press
release or otherwise making any public statement with respect to the
transactions contemplated hereby, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law or any listing agreement with any national securities exchange
(as advised by independent legal counsel (who may be the Company's regularly
engaged independent legal counsel)).
6.10 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties
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hereto and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto, except that Sub
may assign its rights and obligations hereunder to another wholly-owned
subsidiary of Purchaser without the consent of the other parties hereto.
6.11 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by delivery, by
facsimile transmission, or by registered or certified mail, first class postage
prepaid, return receipt requested, to the respective parties as follows:
If to the Company:
MASLAND CORPORATION
50 Spring Road
Carlisle, PA 17013
Attention: William J. Branch, Jr.
Chairman of the Board
Telephone: (717) 258-7214
Facsimile: (717) 258-7576
With a copy to:
Peter O. Clauss, Esquire
Clark, Ladner, Fortenbaugh & Young
One Commerce Square
2005 Market Street, 22nd Floor
Philadelphia, PA 19103
Telephone: (215) 241-1876
Facsimile: (215) 241-1857
If to Purchaser or Sub:
LEAR CORPORATION
21557 Telegraph Road
Southfield, MI 48034
Attention: Joseph F. McCarthy, Esquire
Telephone: (810) 746-1714
Facsimile: (810) 746-1677
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With a copy to:
John L. MacCarthy, Esquire
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601-9703
Telephone: (312) 558-5876
Facsimile: (312) 558-5700
or to such other address as either party may have furnished to the other in
writing in accordance herewith. Any such notice, request, claim, demand or
other communication shall only be effective upon receipt.
6.12 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the substantive law of the State of
Delaware without giving effect to the principles of conflicts of laws thereof.
Each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any state or federal court located in the State of Delaware in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction or venue by motion or other request for leave
from any such court and (c) agrees that it will not bring any action relating to
this Agreement or any of the transactions contemplated by this Agreement in any
court other than a state or federal court sitting in the State of Delaware,
except as otherwise required by applicable law.
6.13 Severability. If any term, provision, covenant or restriction of this
Agreement is held 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 so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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6.14 Integration. This Agreement constitutes the entire Agreement and
understanding among the parties hereto relating to the subject matter hereof and
supersedes any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof, including without limitation (i) the
Confidentiality Agreement, except as provided in Section 4.10, and (ii) the
Agreement to Negotiate Exclusively dated May 2, 1996 between the Company and the
Purchaser.
6.15 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
6.16 Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.
6.17 No Third-Party Beneficiaries. Except for Section 6.05 (which is
intended to and shall confer upon such persons all rights and remedies by
reason of this Agreement as if such person was a party hereto), no provision of
this Agreement is intended to, or shall, confer any third-party beneficiary or
other rights or remedies upon any person other than the parties hereto.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto on the date first above
written.
LEAR CORPORATION
By: /s/ JH Vandenberghe
---------------------------
PA ACQUISITION CORP.
By: /s/ JH Vandenberghe
---------------------------
MASLAND CORPORATION
By: /s/ WJ Branch
---------------------------
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EXHIBIT A
The capitalized terms used in this Exhibit have the meanings set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement, "Purchaser" shall be deemed to refer to PA
ACQUISITION CORP. and "Parent" shall be deemed to refer to LEAR CORPORATION.
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), to pay for any Shares
(including the associated Rights) tendered, and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for any
Shares (including the associated Rights) tendered, and, except as otherwise
provided in the Merger Agreement, may amend or terminate the Offer (whether or
not any Shares (including the associated Rights) have theretofore been accepted
for payment) if, (i) prior to the expiration of the Offer, (A) the condition
that there shall be validly tendered and not withdrawn prior to the expiration
of the Offer a number of Shares which represents at least a majority of the
number of Shares outstanding on a fully diluted basis on the date of purchase
shall not have been satisfied (the "Minimum Condition") ("on a fully-diluted
basis" meaning, as of any date: the number of Shares outstanding, together with
Shares the Company is then required to issue pursuant to obligations
outstanding at that date under employee stock option or other benefit plans or
otherwise (assuming all options and other rights to acquire Shares are fully
vested and exercisable and all Shares issuable at any time have been issued),
including without limitation, pursuant to the Company Stock Options (defined in
Section 3.02(b) of the Merger Agreement)), (B) any applicable waiting period
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer, (C) all material regulatory and related approvals
shall not have been obtained on terms reasonably satisfactory to the Purchaser
or (D) the financial institutions (the "Banks") party to the Credit Agreement
dated as of August 17, 1995, as amended, among Parent, the Banks, Chemical Bank,
as Administrative Agent and the Managing Agents, Co-Agents and Lead Managers
named therein (the "Credit Agreement"), shall not have granted the Parent a
waiver (the "Credit Agreement Waiver") under the Credit Agreement permitting
the consummation of the Offer and the Merger (the "Credit Agreement Waiver
Condition"), or (ii) at any time after the date of the Merger Agreement and
before the time of payment for any such Shares (including the associated
Rights) (whether or not any Shares (including the associated Rights) have
theretofore been accepted for payment), any of the following conditions exists:
<PAGE> 51
(a) the Purchaser and the Company shall have reached a written
agreement that the Purchaser shall amend the Offer to terminate the Offer or
postpone payment for Shares pursuant thereto;
(b) there shall be instituted or pending any action or proceeding by
any Governmental Entity or before any court or Governmental Entity, (1)
challenging the acquisition by Parent or Purchaser of Shares or otherwise
seeking to restrain or prohibit the consummation of the Offer, the Merger or the
transactions contemplated by the Merger Agreement, (2) seeking to materially
restrict or prohibit Parent's or Purchaser's ownership or operation of all or a
material portion of its or the Company's business or assets, or to compel Parent
or Purchaser to dispose of or hold separate all or a material portion of its or
the Company's business or assets, as a result of the Offer or the Merger, which
in either case, in the sole judgment of Parent and Purchaser, might, directly or
indirectly, result in the relief sought being obtained or (3) which might
result, directly or indirectly, in any of the consequences set forth in clauses
(2) through (5) of paragraph (c) below;
(c) there shall have been any statute, rule, executive order, decree,
injunction, regulation or other order (whether temporary, preliminary or
permanent) enacted, promulgated, entered or issued or deemed applicable to the
Offer or the Merger, by any Governmental Entity or court, which, in the sole
judgment of Parent and Purchaser would, directly or indirectly, (1) materially
restrict or prohibit Parent's or Purchaser's ownership or operation of all or a
material portion of its or the Company's business or assets or compel Parent or
Purchaser to dispose of or hold separate all or a material portion of its or the
Company's business or assets as a result of the Offer or the Merger, (2) render
Parent or Purchaser unable to purchase or pay for some or all of the Shares
pursuant to the Offer or to consummate the Merger, or otherwise prevent
consummation of the Offer or the Merger, except for the waiting period
provisions of the HSR Act, (3) make such purchase, payment or consummation
illegal, (4) impose or confirm material limitations on the ability of Parent or
Purchaser effectively to acquire or hold, or to exercise full rights of
ownership of, any Shares purchased by it, including, without limitation, the
right to vote any Shares purchased by it on all matters (including the Merger
and the Merger Agreement) properly presented to the Company's stockholders, or
(5) otherwise materially adversely affect the condition (financial or
otherwise), results of operations, business, assets or liabilities of the
Company and its Subsidiaries taken as a whole (a "Company Material Adverse
Effect");
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<PAGE> 52
(d) there shall have occurred (1) any general suspension of, or
limitation on prices for, or trading in, securities on the New York Stock
Exchange, any national securities exchange or in the over-the-counter market,
(2) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (3) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (4) from the date of this Agreement through the
date of termination or expiration of the Offer, a decline of at least 25% in the
Standard & Poor's 500 Index, or (5) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof;
(e) there shall have occurred a Company Material Adverse Effect, or
the Merger Agreement shall have been terminated in accordance with its terms;
(f) beneficial ownership of 20% or more of the outstanding Shares
shall have been acquired by another person or by a "group" as defined in Section
13(d)(3) of the Exchange Act other than for purposes of arbitrage;
(g) any of the representations and warranties of the Company contained
in the Merger Agreement shall not be true and correct as of the date of
consummation of the Offer as though made on and as of such date, except (i) for
changes specifically permitted by the Merger Agreement, (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, and (iii) with respect to
those representations and warranties which are not qualified by materiality or a
similar qualification, in any case where such failures to be true and correct
would not, individually or in the aggregate, have a Company Material Adverse
Effect; or
(h) the Company shall not have performed or complied in all material
respects with all agreements and covenants required by the Merger Agreement to
be performed or complied with by the Company on or prior to the date of
consummation of the Offer, which, in the sole judgment of Parent and
Purchaser in any such case and regardless of the circumstances (including any
action by Parent or Purchaser) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
or payment for such Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent and Purchaser regardless of the circumstances
giving rise to any such conditions or may be waived by Parent and Purchaser in
whole or in part at any
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<PAGE> 53
time and from time to time in the sole discretion of each of Parent and
Purchaser. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time. Any determination by Parent or Purchaser concerning the
events described herein will be final and binding upon all parties.
4
<PAGE> 1
EXHIBIT 99.2(c)
STOCKHOLDERS AGREEMENT
AGREEMENT dated May 23, 1996, among LEAR CORPORATION, a Delaware
corporation ("Purchaser"), PA ACQUISITION CORP., a Delaware corporation and a
direct wholly-owned subsidiary of Purchaser ("Sub"), and the other parties
signatory hereto (each a "Stockholder", and collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Purchaser, Sub and MASLAND CORPORATION,
a Delaware corporation (the "Company"), are entering into an Agreement and Plan
of Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"; capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement), pursuant to
which Sub will be merged with and into the Company (the "Merger"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Purchaser has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having ownership of record or "beneficial ownership" of
such securities (as determined pursuant to Rule 13d-3 under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by the same
holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute
a "group" as within the meanings of Section 13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean at any time the Common Stock,
$.01 par value, of the Company.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(d) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
<PAGE> 2
2. Tender of Shares.
(a) Each Stockholder hereby agrees to validly tender (and not to
withdraw) pursuant to and in accordance with the terms of the Offer, not later
than the fifth business day after commencement of the Offer pursuant to Section
1.01(a) of the Merger Agreement, (i) all of the shares of Company Common Stock
owned of record or Beneficially Owned by such Stockholder, including, without
limitation, the number of shares of Company Common Stock set forth opposite
such Stockholder's name on Schedule I hereto (the "Existing Shares"), and (ii)
any shares of Company Common Stock acquired by such Stockholder 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 convertible or
exchangeable securities, or by means of purchase, dividend, distribution or
otherwise (each Stockholder shall promptly provide written notice to Purchaser
upon consummation of such acquisition from the date hereof and such Shares
shall together with the Existing Shares be referred to herein as the "Shares").
Each Stockholder hereby acknowledges and agrees that Purchaser's obligation to
accept for payment and pay for Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer. Anything to the contrary herein notwithstanding if (x) the Merger
Agreement is terminated, (y) the Offer is terminated without the purchase of
Shares thereunder or (z) the Minimum Condition is not satisfied (other than by
waiver) upon termination of the Offer, within two business days thereof the
Shares tendered under the Offer pursuant to this Agreement by each Stockholder
shall be returned to such Stockholder.
(b) Through the transfer by each Stockholder of his or its Shares to
Sub in the Offer, Sub shall acquire good, valid and marketable title to the
Shares, free and clear of all claims, liens, charges, encumbrances,
restrictions, security interests, pledges, limitations, conditional sales
agreements, or obligations relative to the sale or transfer thereof, and not
subject to any adverse claim.
(c) Each Stockholder hereby agrees to permit Purchaser, Sub and the
Company to publish and disclose in the documents relating to the Offer and
Merger (including all documents, schedules and proxy statements filed with the
Commission) his or its identity and ownership of Company Common Stock and the
nature of his or its commitments, arrangements and understandings under this
Agreement.
3. Proxy; Provisions Concerning Company Common Stock. Each
Stockholder, by this Agreement, does hereby constitute and appoint Purchaser,
or any nominee of Purchaser, with full power of substitution, as his or its
true and lawful attorney and proxy, for and in his or its name, place and
stead, to vote as his or its
2
<PAGE> 3
proxy at any meeting of the holders of Company Common Stock, however called,
and to sign such Stockholder's name to any written consent of the holders of
Company Common Stock with respect to, the Shares held of record or Beneficially
Owned by such Stockholder, whether issued, heretofore owned or hereafter
acquired, (i) in favor of the Merger, the execution and delivery by the Company
of the Merger Agreement and the approval of the terms thereof and each of the
other actions contemplated by the Merger Agreement and this Agreement and any
actions reasonably required in furtherance thereof and hereof; (ii) against any
action or agreement that would reasonably be expected to result in a breach of
any covenant, representation or warranty or any other obligation or agreement
of the Company under the Merger Agreement or this Agreement; and (iii) against
the following actions or agreements (other than the Merger and the transactions
contemplated by the Merger Agreement): (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries; (B) a sale, lease or transfer
of a material amount of assets of the Company or its Subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its Subsidiaries; (C)(1) any change in a majority of the persons who constitute
the board of directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Certificate of
Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action or agreement which, in
the case of each of the matters referred to in clauses C(1), (2) or (3), is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, discourage, or adversely affect the Merger and the transactions
contemplated by this Agreement and the Merger Agreement. Such Stockholder
further agrees to cause his or its Shares to be voted in accordance with the
foregoing. Such Stockholder acknowledges receipt and review of a copy of the
Merger Agreement.
4. Other Covenants, Representations and Warranties. Each
Stockholder hereby represents and warrants to Purchaser as follows:
(a) Ownership of Shares. Such Stockholder is the record owner of
the number of Shares set forth opposite such Stockholder's name on Schedule I
hereto. On the date hereof, the Existing Shares set forth opposite such
Stockholder's name on Schedule I hereto constitute all of the Shares owned of
record by such Stockholder. The Shares are not subject to any voting trust
agreement or to such Stockholder's knowledge other agreement restricting or
otherwise relating to the voting, dividend rights or disposition of the Shares,
other than this Agreement. Such Stockholder has sole power with respect to the
matters set forth in this Agreement with respect to all of the Existing Shares
set forth opposite such Stockholder's name on Schedule I hereto, with no
limitations,
3
<PAGE> 4
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, 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. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of which
such Stockholder is trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby.
(c) No Conflicts. (i) No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated
hereby other than filings required under the Exchange Act and (ii) none of the
execution and delivery of this Agreement by such Stockholder, the consummation
by such Stockholder of the transactions contemplated hereby or compliance by
such Stockholder with any of the provisions hereof shall result in a violation
or breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
modification or acceleration) under any of the terms, conditions or provisions
of any agreement to which such Stockholder is a party or by which such
Stockholder may be bound or affected.
(d) No Encumbrances. Except as applicable in connection with the
transactions contemplated by Section 2 hereof, such Stockholder's Shares and
the certificates representing such Shares are, and at all times during the term
hereof will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all liens, security interests,
proxies, voting trusts or agreements, or to such Stockholder's knowledge any
other encumbrances whatsoever, except for any such encumbrances or proxies
arising hereunder.
(e) No Finder's Fees. Except as provided in the Merger Agreement,
no broker, investment banker, financial advisor or other person is entitled to
any broker's, finder's, financial adviser's or other similar fee or commission
in connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of such Stockholder.
4
<PAGE> 5
(f) No Solicitation. No Stockholder shall, in his capacity as such,
directly or indirectly, through any agent or representative or otherwise
invite, initiate, solicit or knowingly encourage (including by way of
furnishing information), or respond to, any inquiries or the making of any
proposal by any person or entity (other than Purchaser or any affiliate of
Purchaser) that constitutes or any reasonably be expected to lead to, an
Acquisition Proposal, or otherwise cooperate with, or assist or participate in
or facilitate or encourage any effort or attempt by any person to do or seek
any of the foregoing. If any Stockholder receives or becomes aware of any such
inquiry or proposal or Acquisition Proposal, then such Stockholder will
promptly inform Purchaser in writing of the existence thereof. Each Stockholder
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. However, nothing in this Section 4(f) or this
Agreement shall restrict, limit or prohibit such Stockholder from taking any
actions necessary in his capacity as a Director of the Company to satisfy his
fiduciary duties as a Director under Delaware law.
(g) Restriction on Transfer, Proxies and Non-Interference. Except as
applicable in connection with the transactions contemplated by Section 2
hereof, no Stockholder shall, directly or indirectly: (i) except for transfers
to such Stockholder's family or trusts established for the benefit of members
of such Stockholder's family (provided that in the case of this clause (i) the
transferee of such shares agrees in writing to be bound by the terms hereof in
form satisfactory to Purchaser), offer for sale, sell, transfer, tender,
pledge, encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to or consent to the
offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or
other disposition of, any or all of such Stockholder's Shares or any interest
therein; (ii) except as contemplated by this Agreement, grant any proxies or
powers of attorney, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any 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 such Stockholder's obligations under this Agreement.
(h) Waiver of Appraisal Rights. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that such Stockholder
may have.
(i) Reliance by Purchaser. Such Stockholder understands and
acknowledges that Purchaser is entering into, and causing Sub to enter into,
the Merger Agreement in reliance upon such Stockholder's execution and delivery
of this Agreement.
5
<PAGE> 6
(j) Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as
may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement. Without limiting the foregoing, each Stockholder agrees, upon the
written request of Purchaser, to use his best efforts to cause all certificates
representing such Stockholder's Shares to bear in a conspicuous place the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS
AGREEMENT DATED AS OF MAY 23, 1996, A COPY OF WHICH IS ON FILE AT THE
OFFICES OF THE CORPORATION AND WILL BE FURNISHED BY THE CORPORATION TO
THE HOLDER HEREOF UPON WRITTEN REQUEST. SUCH STOCKHOLDERS AGREEMENT
PROVIDES, AMONG OTHER THINGS, FOR THE GRANTING OF CERTAIN PROXIES TO
VOTE THE SHARES REPRESENTED HEREBY AND FOR CERTAIN RESTRICTIONS ON THE
SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE. BY ACCEPTANCE OF THIS CERTIFICATE, EACH
HOLDER HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF SUCH STOCKHOLDERS
AGREEMENT. THE CORPORATION RESERVES THE RIGHT TO REFUSE TO TRANSFER THE
SHARES REPRESENTED BY THIS CERTIFICATE UNLESS AND UNTIL THE CONDITIONS
TO TRANSFER SET FORTH IN SUCH STOCKHOLDERS AGREEMENT HAVE BEEN
FULFILLED.
5. Stop Transfer. Each Stockholder agrees with, and covenants to,
Purchaser that such Stockholder shall not request that the Company register
the transfer (book-entry or otherwise) of any certificate or uncertificated
interest representing any of such Stockholder's Shares, unless such transfer is
made in compliance with this Agreement (including the provisions of Section 2
hereof). In the event of a stock dividend or distribution, or any change in the
Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall be deemed to refer to and include the Shares as well as all such
stock dividends and distributions and any shares into which or for which any or
all of the Shares may be changed or exchanged.
6. Termination. Except as otherwise provide herein, the covenants
and agreements contained herein with respect to the Shares shall terminate upon
the termination of the Merger Agreement in accordance with its terms.
7. Confidentiality. The Stockholders recognize that successful
consummation of the transactions contemplated by this Agreement may be
dependent upon confidentiality with respect to the matters referred to herein.
In this connection, pending public disclosure thereof or of the Merger
Agreement, each Stockholder
6
<PAGE> 7
hereby agrees not to disclose or discuss this Agreement with anyone not a party
to this Agreement (other than such Stockholder's counsel and advisors, if any)
without the prior written consent of Purchaser, except for filings required
pursuant to the Exchange Act and the rules and regulations thereunder or as
required by law, in which event such Stockholder shall give notice of such
disclosure to Purchaser as promptly as practicable so as to enable Purchaser to
seek a protective order from a court of competent jurisdiction with respect
thereto.
8. Miscellaneous.
(a) Entire Agreement. This Agreement, the Consulting and Noncompete
Agreement, the Merger Agreement and the agreements contemplated thereby
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Purchaser may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly-owned subsidiary of Purchaser, but no
such assignment shall relieve Purchaser of its obligations hereunder.
(d) Amendments; Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Stockholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided that
Schedule I hereto may be supplemented by Purchaser by adding the name and other
relevant information concerning any stockholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added stockholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail
7
<PAGE> 8
(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:
If to Stockholder: At the addresses set forth on
Schedule I hereto
If to Purchaser: Lear Corporation
21557 Telegraph Road
Southfield, MI 48034
810/746-1500 (telephone)
810/746-1677 (telecopier)
Attention: Joseph F. McCarthy, Esq.
copy to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
312/558-5600 (telephone)
312/558-5700 (telecopier)
Attention: John L. MacCarthy, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto 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.
8
<PAGE> 9
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity
who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) Jurisdiction. Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any state or federal court located in
the State of Delaware in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction or venue by motion or
other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a state or federal court
sitting in the State of Delaware.
(m) 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.
(n) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
9
<PAGE> 10
IN WITNESS WHEREOF, Purchaser, Sub and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
LEAR CORPORATION
By: /s/ James H. Vandenberghe
----------------------------
Name: James H. Vandenberghe
Title:
PA ACQUISITION CORP.
By: /s/ James H. Vandenberghe
----------------------------
Name: James H. Vandenberghe
Title:
/s/ William J. Branch
--------------------------------
William J. Branch
/s/ Larry W. Owen
--------------------------------
Larry W. Owen
/s/ Darrell F. Sallee
--------------------------------
Darrell F. Sallee
10
<PAGE> 11
SCHEDULE I
NAME AND ADDRESS NUMBER OF SHARES*
- ---------------- -----------------
William J. Branch 62,156
c/o Masland Corporation
50 Spring Road
Carlisle, PA 17013
717/249-1866 (telephone)
717/249-7576 (telecopier)
Larry W. Owen 132,411
c/o Masland Corporation
50 Spring Road
Carlisle, PA 17013
717/249-1866 (telephone)
717/249-7576 (telecopier)
Darrell F. Sallee 36,204
c/o Masland Corporation
50 Spring Road
Carlisle, PA 17013
717/249-1866 (telephone)
717/249-7576 (telecopier)
- --------------
* This figure does not include Shares subject to stock options or warrants
which have not been exercised.
11
<PAGE> 1
EXHIBIT _____
AMENDMENT TO RIGHTS AGREEMENT
DATED NOVEMBER 16, 1995
BETWEEN
MASLAND CORPORATION
AND
MELLON SECURITIES TRUST COMPANY,
AS RIGHTS AGENT
Pursuant to Sections 26 and 28(b) of the Rights Agreement, dated
November 16, 1995, between Masland Corporation and Mellon Securities Trust
Company, as Rights Agent ("Rights Agreement"), and in accordance with the
authority granted by the Board of Directors of Masland Corporation (the
"Company") at its special meeting held on May 23, 1996, the Rights Agreement is
hereby amended as follows:
1. The definition of "Acquiring Person" in SECTION 1 of the
Rights Agreement is hereby deleted in its entirety and the
following definition is inserted in its stead:
"Acquiring Person" shall mean any Person who or which, alone
or together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 15% or more of the Common
Shares then outstanding, but shall not include (a) the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any of its Subsidiaries, or any
Person holding Common Shares for or pursuant to the terms of
any such employee benefit plan, (b) Lear Corporation, a
Delaware corporation ("Lear"), or any subsidiary or affiliate
of Lear, and any transaction contemplated under the Agreement
and Plan of Merger, dated May 23, 1996, by and between the
Company, Lear, and PA Acquisition Corp. (the "Agreement"),
including, but not limited to, the purchase of Shares pursuant
to the Offer or Merger and Stockholders Agreement (as said
terms are defined in the Agreement) or (c) any such Person who
has become such a Beneficial Owner solely because (i) of a
change in the aggregate number of Common Shares outstanding
since the last date on which such Person acquired Beneficial
Ownership of any Common Shares or (ii) it acquired such
Beneficial Ownership in the good faith belief that such
acquisition would not (x) cause such Beneficial Ownership to
equal or exceed 15% of the Common Shares then outstanding and
such Person relied in good faith in computing the percentage
of its Beneficial Ownership on publicly filed reports or
documents of the Company which are inaccurate or
<PAGE> 2
out-of-date or (y) otherwise cause a Distribution Date or the
adjustment provided for in Section 11(a) to occur.
Notwithstanding clause (c) of the prior sentence, if any
Person that is not an Acquiring Person due to such clause (c)
does not reduce its percentage of Beneficial Ownership of
Common Shares to less than 15% by the Close of Business on the
fifth Business Day after notice from the Company (the date of
notice being the first day) that such Person's Beneficial
Ownership of Common Shares so equals or exceeds 15%, such
Person shall, at the end of such five Business Day period,
become an Acquiring Person (and such clause (c) shall no
longer apply to such Person). For purposes of this
definition, the determination of whether any Person acted in
"good faith" shall be conclusively determined by the Board of
Directors of the Company, acting by a vote of those directors
of the Company whose approval would be required to redeem the
Rights under Section 24.
2. SECTION 3(b) of the Rights Agreement is hereby deleted in its
entirety and the following SECTION 3(b) is inserted in its
stead:
(b) Until the earlier of (i) such time as the Company learns
that a Person has become an Acquiring Person or (ii) the Close
of Business on such date, if any, as may be designated by the
Board of Directors of the Company following the commencement
of, or first public disclosure of an intent to commence, a
tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any of its Subsidiaries, any Person
holding Common Shares for or pursuant to the terms of any such
employee benefit plan, or Lear Corporation, a Delaware
corporation ("Lear"), or any subsidiary or affiliate of Lear,
and the transactions contemplated under the Agreement and Plan
of Merger, dated May 23, 1996, by and between the Company,
Lear, and PA Acquisition Corp. (the "Agreement"), including,
but not limited to, the purchase of Shares pursuant to the
Offer of Merger and the Stockholders Agreements [as such terms
are defined in the Agreement]) for outstanding Common Shares
if upon consummation of such tender or exchange offer such
Person could be the Beneficial Owner of 15% or more of the
outstanding Common Shares (the Close of Business on the
earlier of such dates being the "Distribution Date"), (x) the
<PAGE> 3
Rights will be evidenced by the certificates for Common Shares
registered in the names of the holders thereof and not by
separate Right Certificates and (y) the Rights, including the
right to receive Right Certificates, will be transferable only
in connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Rights Agent will
send, by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the Distribution Date, at the
address of such holder shown on the records of the Company, a
Right Certificate evidencing one whole Right for each Common
Share (or for the number of Common Shares with which one whole
Right is then associated if the number of Rights per Common
Share held by such record holder has been adjusted in
accordance with the provision in Section 3(a)). If the number
of Rights associated with each Common Share has been adjusted
in accordance with the provision in Section 3(a), at the time
of distribution of the Right Certificates, the Company may
make any necessary and appropriate rounding adjustments so
that Right Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any
fractional Right in accordance with Section 15(a). As of and
after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
3. The Rights Agreement is hereby further amended by the
insertion of the following new Section after SECTION 32:
SECTION 33. Nothing in this Rights Agreement shall be
applicable to, or restrictive of, the Agreement and Plan of
Merger, dated May 23, 1996, by and between the Company, Lear
Corporation ("Lear"), PA Acquisition Corp. ("Purchaser"), a
Delaware corporation and wholly-owned subsidiary of Lear (the
"Agreement"); the purchase of Shares pursuant to the Offer of
Merger contemplated under the Agreement; or the consummation
of the transactions contemplated by said Agreement, including,
but not limited to, the execution of any Stockholders
Agreements (as such terms are defined in the Agreement)
required under the Agreement; nor shall the consummation of
the Merger or any of the transactions contemplated under the
Agreement cause the Distribution Date to occur or the Rights
provided hereunder to become exercisable.
<PAGE> 4
Except as specified above in this Amendment, all other provisions of
the Rights Agreement shall continue in full force and effect, and together with
the amended and supplemental provisions set forth herein, shall constitute the
Rights Agreement, dated as of November 16, 1995, as amended, between Masland
Corporation and Mellon Securities Trust Company, as Rights Agent.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the
Company, has set his hand this 23rd day of May, 1996.
MASLAND CORPORATION
By:___________________________
<PAGE> 1
EXHIBIT 99.3(c)
CONFIDENTIALITY AND STANDSTILL AGREEMENT
This Agreement is dated as of March 14, 1996, between and among Masland
Corporation, a Delaware corporation, and its subsidiaries (collectively,
"Company"), and Lear Seating Corporation, a Delaware corporation, and its
subsidiaries (collectively, "Recipient"). Company and Recipient anticipate that
in connection with a possible transaction between them and/or their
stockholders, Company may share with Recipient certain non-public, confidential
or proprietary information which requires protection upon the terms set forth in
this Agreement. Accordingly, once this Agreement has been executed and returned
by appropriate officers of Recipient to Company the dissemination of the
information contemplated hereby will be facilitated.
References to Company and Recipient in this Agreement shall refer, in each
case, to that company and the entities under its control, severally and not
jointly. As a condition to Recipient being furnished the information
contemplated by this Agreement by Company, Recipient agrees to treat any such
information (whether prepared by Company, its advisors or otherwise, and whether
oral or written) that is furnished to the Recipient or its directors, officers,
partners, employees, agents, advisors, investment bankers and potential
financing sources (collectively, the "Representatives") by or on behalf of
Company (herein collectively referred to as the "Evaluation Material") in
accordance with the provisions of this Agreement, and as a further condition to
being furnished such information, Recipient agrees to take or abstain from
taking certain other actions herein set forth.
The term "Evaluation Material" includes the information described above,
but does not include information that (i) is already Recipient's possession,
provided that such information is not known by Recipient to be subject to
another confidentiality agreement with or other obligation of secrecy to Company
or another person or (ii) is or becomes generally available to the public other
than as a result of a disclosure by Recipient or Recipient's Representatives or
(iii) becomes available to Recipient on a non-confidential basis from a source
other than Company or its advisors, provided that such source is not known by
Recipient to be bound by a confidentiality agreement with or other obligation of
secrecy to Company or another person.
Recipient hereby agrees that the Evaluation Material will be used solely
for the purpose of evaluating a possible transaction between Company and
Recipient, or involving either or both of their stockholders, will not be used
in any way knowingly detrimental to Company, and will be kept strictly
confidential by Recipient and Recipient's Representatives; provided, however,
that (i) any of such information may be disclosed to Recipient's Representatives
who need to know such information for the purpose of evaluating any such
possible transaction (it being understood that (a) under no circumstances shall
Recipient's Representatives include any employees, suppliers or customers of
Company, and (b) Recipient's Representatives shall be informed by Recipient of
the confidential nature of such information and shall agree to keep such
information confidential and to be bound by the confidential provisions of this
Agreement to the same extent as if they were parties hereto) (ii) any such
information may be disclosed if disclosure is, in the reasonable opinion of
Recipient's counsel necessary to comply with applicable statutes, or
regulations, or is otherwise legally compelled (provided Recipient complies with
the provisions of the fourth paragraph following this paragraph) and (iii)
disclosure of such information may be made if Company has given Recipient its
prior written consent. Recipient will be responsible for any breach by
Recipient's Representatives of this Agreement. It is recognized that Company
shall be entitled to directly enforce this Agreement.
Recipient hereby acknowledges that it is aware, and that it will so advise
its Representatives who are informed as to the matters which are the subject of
this Agreement, that the United States securities laws prohibit any person who
has received from an issuer material, non-public information concerning the
matters which are the subject of this Agreement from purchasing or selling
securities of such issuer 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.
In addition, without the prior written consent of Company, Recipient will
not, and will advise its Representatives not to, disclose to any person the fact
that the Evaluation Material has been made available to Recipient or the
Representatives, that discussions or negotiations are taking place concerning a
possible transaction between Company and Recipient or of any of the terms,
conditions or other facts with respect to such possible transaction, including
the status thereof (collectively, the "Status Information") provided,
<PAGE> 2
however that status information may be disclosed if disclosure is, in the
reasonable opinion of Recipient's counsel, necessary to comply with applicable
statutes or regulations, or is otherwise legally compelled (provided Recipient
complies with the provisions of the second paragraph following this paragraph).
For a period of one year from the date hereof, Recipient agrees that
neither it nor any entity under its control will actively solicit for employment
any employees of Company, and for a period of two years from the date hereof any
management employees of Company met during the process of its due diligence or
review and evaluation of the Evaluation Material; provided that the foregoing
shall not be deemed to prohibit general solicitations of employment in the
Recipient's ordinary course of business of persons who are not officers of
Company and the employment of such persons.
In the event that Recipient or its Representatives are requested or become
legally compelled (by oral questions, interrogatories, requests for information
or documents subpoena, civil investigative demand, or similar process, or
pursuant to an applicable statute or regulation) to disclose any Evaluation
Material or Status Information, Recipient agrees to (i) immediately notify
Company of the existence, terms and circumstances surrounding such a request, so
that it may seek an appropriate protective order and/or waive Recipient's
compliance with the provisions of this Agreement (and, if Company seeks such an
order, to provide such cooperation as Company shall reasonably request) and (ii)
if disclosure of such information is required in the reasonable opinion of
Recipient's counsel, exercise Recipient's best efforts to obtain an order or
other reliable assurance that confidential treatment will be accorded to such of
the disclosed information which Company so designates.
Although Company has and will endeavor to include in the Evaluation
Material information which it believes to be relevant for the purpose of
Recipient's investigation, Recipient understands that neither Company nor any of
its representatives or advisors have made or make any representation or warranty
as to the accuracy or completeness of the Evaluation Material. Recipient agrees
that neither Company nor its Representatives or advisors shall have any
liability to Recipient or any of its 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.
Subject to compliance with applicable statutes and regulations, at the
request of Company or in the event that the parties do not proceed with a
possible transaction which is the subject of this letter, each of Recipient and
Recipient's Representatives shall promptly redeliver to Company all written
Evaluation Material and any other written material containing or reflecting any
information in the Evaluation Material (whether prepared by the Company, its
advisors, agents) and will not retain any copies, extracts or other
reproductions thereof. At the request of the Company, all documents, memoranda,
notes and other writings whatsoever prepared by Recipient or Recipient's
Representatives based on any information in the Evaluation Material shall be
destroyed, and such destruction shall be certified in writing to Company by an
authorized officer supervising such destruction.
It is further understood and agreed that no failure or delay by Company or
Recipient 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.
Recipient agrees that it will be liable to Company for the unauthorized use
or disclosure of the Evaluation Material or the Status Information by Recipient
or Recipient's Representatives.
The parties to this Agreement also desire to enter into a mutual
"standstill agreement" as contained in this and the following paragraph, and
Recipient hereby acknowledges that the Evaluation Material is being furnished to
it in specific reliance upon that portion of this Agreement as well as the
confidentiality undertakings. Accordingly, for the period specified below, each
party further agrees not to enter into any discussions, negotiations,
arrangements or understandings with any third person which would be in
derogation of such "standstill agreement". If at any time during the term of
such "standstill agreement" either party is approached by any third person
concerning its or their participation in a transaction involving the assets or
businesses of the other party it will promptly inform the other party of the
nature of such contact and the parties thereto.
<PAGE> 3
For a period of three (3) years from the date of this Agreement, neither
party nor any entities under their control, either alone or in concert with one
another, shall launch, cause any other person to launch, participate in, or
advise or encourage any other Person with respect to, a takeover bid, proxy
contest or solicitation of stockholder consents against the other party nor
accumulate more than a 4% stock ownership or voting interest in such other party
without the prior written consent of such other party's Board of Directors. More
specifically, neither party shall, unless following the prior written consent of
the Board of Directors of the other party:
(a) make, or in any way participate, or permit any other entity under
its control to make or participate, directly or indirectly, in any
"solicitation" of "proxies" to vote or stockholder written consents (as
such terms are used in Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Act") and in the Delaware General Corporation Law,
Section 228, respectively) in the election of directors or in opposition to
the recommendation of the majority of the directors of the other party with
respect to any matter or seek to advise any person or entity with respect
to the voting of any Voting Securities of such other party; or
(b) acquire, offer to acquire or agree to acquire, directly or
indirectly, or permit any other entity under its control (including but not
limited to its parents, subsidiaries, and any pension, profit sharing or
other trusts under the investment management control of such party or any
of them) (but excluding shares issued to any such entity in connection with
(A) a stock split, reverse split or other reclassification affecting
outstanding securities, or (B) a stock dividend or other pro rata
distribution to holders of its outstanding securities), to acquire, offer
to acquire, or agree to acquire, directly or indirectly, by purchase,
tender offer, exchange offer, or otherwise, more than an aggregate 4%
interest in all classes of securities of the other party (whether Voting
Securities or not) or direct or indirect rights or options to acquire any
such securities, or one or more classes of equity securities which would
give it effective control over any other Person, which, prior to the time
such party acquires effective control over such other Person, is publicly
disclosed (by filing with the Securities and Exchange Commission or
otherwise) to be the beneficial owner of more than 4% of any class of
securities of the other party, but provided that if such party or other
entities controlled by it acquires control of such other Person by
inadvertence or without knowledge of such beneficial ownership, such other
party shall have the right, but not the obligation, to purchase all of the
other party's securities owned by such other Person at current fair market
value (and for purposes of this clause all such other party's securities
held by all such entities or Persons shall be aggregated so as not to
exceed the 4% permitted); or
(c) form or join, encourage, advise or permit any other entity under
its control to form, join, actively encourage or advise a partnership,
limited partnership, syndicate or other "group" for the purpose of
acquiring, holding, disposing, or otherwise with respect to any class or
classes of securities of the other party within the meaning of Section
13(d) of the Act; or
(d) initiate, propose, advise or otherwise solicit, or permit any
other entity under its control to initiate, propose, advise or solicit, any
stockholder of the other party regarding any matter relating to the other
party, or induce or attempt to induce any other person to initiate any
stockholder proposal or a tender offer for shares or securities of the
other party, or any change of control of the other party, or for the
purpose of actively soliciting proxies from stockholders or stockholders'
written consents to accomplish any of the foregoing, or for the purpose of
convening a stockholders' meeting of the other party; or
(e) otherwise act, or permit any other entity under its control to
act, alone or in concert with others, to seek to control the management,
Board of Directors or policies of the other party.
For purposes of this Agreement, the following terms shall have the following
definitions. The term "Person" shall mean any individual, partnership,
corporation, trust or other entity. The term "Voting Securities" shall mean
common stock or any other securities entitled to vote generally for the election
of directors, or any security convertible into or exchangeable for or
exercisable for the purchase of common stock or other securities entitled to
vote generally for the election of directors. Any other provision of the
"standstill" provisions of this Agreement to the contrary notwithstanding,
either party may terminate the "standstill"
<PAGE> 4
provisions of this Agreement if (i) the other party fails to perform or observe
any of its covenants and obligations pursuant to this Agreement or (ii) if
either party shall, but only to the extent permitted under the "standstill"
provisions of this Agreement, acquire more than fifty percent (50%) control over
the Voting Securities of the other with the prior written consent of the other's
Board of Directors.
Both parties agree that unless and until a definitive agreement between
them with respect to any transaction referred to in the first paragraph of this
letter has been executed and delivered, neither party 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 any other representatives
or its advisors except for the matters specifically agreed to in this letter.
Each party further agrees that the other party shall have no obligation to
authorize or pursue with it or any other party any transaction referred to in
the first paragraph of this letter and each party understands that the other 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
each party expressly so modifying or waiving such agreements.
The parties hereto acknowledge that money damages are an inadequate remedy
for breach of this Agreement because of the difficulty of ascertaining the
amount of damage that will be suffered by Company in the event that this
Agreement is breached, and agree that they would be irreparably damaged in the
event any of the provisions of this Agreement (and, particularly the
"standstill" provisions hereof) were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, each party agrees that
the other party shall be entitled to such specific remedies upon proper
application to appropriate courts, including specific performance of this
Agreement and injunctive relief against any breach hereof, in addition to any
other remedy to which the other party may be entitled at law or in equity. Each
party hereby expressly consents to the jurisdiction of any court within the
State of Delaware over it without regard to personal service upon it within such
jurisdiction, in addition to any other court of appropriate jurisdiction. If any
term, provision, covenant or restriction of this Agreement is held 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. It is hereby stipulated and declared to be the intention of each
party that it would have executed the remaining terms, provisions, covenants and
restrictions in this Agreement without including any of such which may be
hereafter declared invalid, void or unenforceable by any court of competent
jurisdiction and final recourse.
If and to the extent Company or its Stockholders enter into a
confidentiality or standstill agreement with respect to a possible transaction
in which Company would effectively be acquired and which contains material terms
that are less restrictive than those in this Agreement (for example, as to the
term of any such standstill arrangement), then this Agreement shall be deemed
amended and modified to incorporate such less restrictive terms. This Agreement
shall be binding upon and enure to the benefit of, and be enforceable by, the
successors and assigns of the parties hereto. Each party shall cause entities
under its control to observe and adhere to all of the provisions of this
Agreement to the same extent as if such entities were parties hereto.
All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be validly given, made or served, if in writing and delivered personally, by
telex or telecopier (except for legal process), by recognized courier service or
sent by registered or certified mail, first class postage prepaid, if to:
Company:
Masland Corporation
50 Spring Road, Box 40
Carlisle, PA 17013
Telephone: (717) 249-1866
Telecopy: (717) 254-7576
<PAGE> 5
Recipient:
Lear Seating Corporation
21557 Telegraph Road
Southfield, MI 48086
Attn: Joseph F. McCarthy
Telephone: (810) 746-1714
Telecopy: (810) 746-1677
Or to such other address, telex or telecopier number as either party may, from
time to time, designate in a written notice given in a like manner. Notice given
by telex or telecopier shall be deemed delivered on the day sender receives
telex or telecopier information that such notice was received at the telex or
telecopier number of the addressee. Notice given by mail as set forth above
shall be deemed delivered three (3) days after the date the same as postmarked.
This Agreement shall be governed by, construed and enforced in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed therein, and shall take effect as an instrument under seal.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed and delivered by a properly authorized officer of each, and such officer
affirms by his signature below that this Agreement constitutes a valid and
binding agreement of the corporate party he represents and that he has been duly
authorized by such party to execute and deliver same.
MASLAND CORPORATION
By: /s/ W. BRANCH
------------------------
LEAR SEATING CORPORATION
By: /s/ JH VANDENBERGHE
------------------------
<PAGE> 1
EXHIBIT 99.8(a)
News Release
[LEAR CORPORATION LOGO]
LEAR CORPORATION AND MASLAND CORPORATION
ENTER INTO DEFINITIVE MERGER AGREEMENT
SOUTHFIELD, Mich., May 24 /PRNewswire/ -- Lear Corporation (NYSE: LEA)
and Masland Corporation (Nasdaq: MSLD) announced today that they have entered
into a definitive merger agreement. The agreement calls for Lear, the world's
largest independent supplier of automotive interior systems, to acquire
Masland Corporation, a leading supplier in North America of automotive floor
systems, acoustical products and luggage compartment trim. The
combination will significantly enhance Lear's leadership in providing total
interiors for its customers.
Under the merger agreement, PA Acquisition Corp., a wholly-owned
subsidiary of Lear, will promptly commence a cash tender offer for all of the
outstanding shares of Masland Corporation common stock for $26.00 per share.
Any shares not purchased in the tender offer will be acquired for the
same price in cash in a second-step merger. Masland Corporation has
approximately 14.8 million shares outstanding on a fully diluted basis.
Commenting on the acquisition, Kenneth L. Way, Chairman and CEO of Lear
Corporation stated, "With the addition of Masland Corporation, we will
significantly enhance our position as the leading one-stop supplier to the $39
billion global interior systems market. Masland's culture--which is
characterized by its high quality workforce and technological expertise in floor
and acoustic systems, is an excellent fit with Lear. This acquisition
demonstrates the importance of our strategic acquisition program and clearly
solidifies Lear's position as the premier automotive interior supplier in the
world."
Way continued, "Lear's market leadership, experience and established
relationships with the world's automotive manufacturers should allow us to
expand the penetration of Masland's product lines into new world-wide markets.
The combination of Lear and Masland fits with our strategic focus of delivering
fully integrated interior systems."
William Branch, Chairman of Masland Corporation stated, "After an
extensive evaluation of the current consolidation and globalization of the
automotive industry and review of strategic options available to Masland, we
concluded that a merger with Lear represents a very fair return to our
stockholders and the best opportunity for individual growth and security for
our associates, and we believe will be roundly applauded by our customers."
Frank Preston, President and CEO of Masland Corporation added, "Lear and
Masland each have excellent reputations for delivering high-quality, low-cost
automotive interior systems. Together, we will be the premier automotive
supplier powerhouse--a company of nearly 40,000 employees who are able to
provide world class total interior systems to our customers."
The Boards of Directors of both companies have given approval to the
acquisition. Consummation of the acquisition is contingent upon the tender of
the majority of Masland Corporation outstanding shares, the expiration or
termination of any applicable waiting periods under the federal Hart-Scott-
Rodino Antitrust Improvements Act, the obtaining by Lear of approval from its
bank group to utilize its current $1.475 billion credit facility to fund the
acquisition, and other customary conditions. Lear is also considering other
long-term financing alternatives.
Masland Corporation, through its operating subsidiary Masland
Industries, Inc., is a leading designer and manufacturer of interior systems
and components, including floor and acoustic systems to the North American
automotive industry. Additionally, the company supplies interior and other
automotive products in the United Kingdom through a joint venture. Masland
Corporation had revenues and operating income of approximately $497 million and
$47 million, respectively in 1995. The company's products are manufactured by
over 3,200 employees in 15 facilities located in 4 countries.
A Fortune 500 Company, Lear Corporation is the world's largest
independent supplier of automotive interior systems, with 1995 sales of $4.7
billion. In 1995, Lear was the third largest independent automotive supplier
in North America and the tenth largest in the world. The company's world-class
products are manufactured by more than 35,000 employees in 107 facilities
located in 18 countries.
Information about Lear and its products is available on the Internet at
http://www.lear.com.
-0- 5/24/96
/CONTACT: Analysts: Jonathan Peisner, 810-746-1624, or Media: Leslie
Touma, 810-746-1678, both of Lear; or Daniel Perkins of Masland, 717-258-7244/
/Lear's press releases available through Company News On-Call by fax,
800-758-5804, extension 518304, or http://www.prnewswire.com/(LEA MSLD)
-0-
<PAGE> 1
[Insert Logo]
50 Spring Road
Carlisle, Pennsylvania 17013
May 30, 1996
Dear Fellow Stockholder:
I am pleased to inform you that Masland Corporation ("Masland") has entered
into an agreement with Lear Corporation ("Lear"), pursuant to which a
wholly-owned subsidiary of Lear has commenced a tender offer today to purchase
all of the outstanding common stock of Masland for $26 per share in cash. Under
the agreement, the tender offer will be followed by a merger in which any
remaining shares of common stock will be acquired for $26 per share in cash, or
any higher price paid per share pursuant to the tender offer, and Masland will
then become a wholly-owned subsidiary of Lear.
Your Board of Directors believes the Lear offer is fair and in the best
interest of Masland stockholders. The Lear offer to purchase all outstanding
common shares for $26 represents a significant premium over the historical
trading price of the shares.
The Board of Directors has unanimously determined that the tender offer and
the merger are fair to, and in the best interests of, the Masland stockholders,
has unanimously approved the offer and the merger, and recommends that
stockholders accept the offer and tender their shares pursuant to it. In
addition to the benefits of this transaction to our stockholders, for all of the
reasons set forth in the enclosed Schedule 14D-9, we believe that the
combination will greatly benefit the 3,100 Masland associates, and enable
Masland, as a division of Lear, to continue its outstanding performance.
In connection with the transaction, two fellow officers and I have agreed
to tender all of our shares to Lear and have granted a proxy over our shares to
approve the merger.
Enclosed are Lear's Offer to Purchase, Letter of Transmittal, and other
related documents. These documents set forth the terms and conditions of the
tender offer. In determining to approve the merger agreement and the
transactions contemplated by it, your Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9,
which has been filed by the Company with the Securities and Exchange Commission.
Among other things, the Board considered the opinion of Goldman, Sachs & Co. to
the effect that, as of May 23, 1996, the consideration for each share of common
stock to be received by the stockholders pursuant to the tender offer and in the
merger is fair to such stockholders. A copy of Goldman, Sachs' written opinion,
which sets forth the procedures followed, the factors considered and the
assumptions made by Goldman, Sachs is attached to Schedule 14D-9 as Exhibit 11.
The Schedule 14D-9 and Lear's Offer to Purchase describe in more detail the
reasons for the Board's conclusions and contain other important information
regarding the tender offer. The Board urges you to consider this information
carefully.
Masland's Board of Directors, management and associates thank you sincerely
for your loyal support.
On Behalf of the Board of Directors,
Sincerely,
[Paste Up Signature]
William J. Branch,
Chairman of the Board
<PAGE> 1
- --------------------------------------------------------------------------------
Goldman, Sachs & Co. 85 Broad Street New York, New York 10004
Tel: 212-902-1000
Goldman Sachs Logo
- --------------------------------------------------------------------------------
May 23, 1996
Board of Directors
Masland Corporation
50 Spring Road
P.O. Box 40
Carlisle, PA 17013
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
Masland Corporation (the "Company") of the $26.00 per Share in cash proposed to
be paid in the Tender Offer and the Merger (as defined below) pursuant to the
Agreement and Plan of Merger dated May 23, 1996 among Lear Corporation ("Lear"),
PA Acquisition Corp. ("Sub"), a wholly-owned subsidiary of Lear, and the Company
(the "Agreement"). The Agreement provides for a tender offer for all of the
Shares (the "Tender Offer") pursuant to which Lear or Sub will pay $26.00 per
Share in cash for each Share accepted. The Agreement further provides that
following completion of the Tender Offer, Sub will be merged with and into the
Company (the "Merger") and each outstanding Share (other than Shares already
owned by Lear or Sub) will be converted into the right to receive $26.00 in
cash.
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having provided certain investment banking services to the Company
from time to time, including having acted as managing underwriter of the initial
public offering of common stock of the Company in October 1993 and having acted
as its financial advisor in connection with, and having participated in certain
of the negotiations leading to, the Agreement.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Registration Statement on Form S-1, as amended, of the Company
dated October 21, 1993; Annual Reports to Stockholders and Annual Reports on
Form 10-K of the Company for the two fiscal years ended June 30, 1995; certain
interim reports to stockholders and Quarterly Reports on Form 10-Q; certain
other communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by its management. We
also have held discussions with members of the senior management of the Company
regarding its past and current business operations, financial condition and
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<PAGE> 2
Masland Corporation
May 23, 1996
Page Two
future prospects. In addition, we have reviewed the reported price and trading
activity for the Shares, compared certain financial and stock market information
for the Company with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the automotive components industry specifically
and in other industries generally and performed such other studies and analyses
as we considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. For the purposes of our analysis, and with your
consent, we have taken into account management's view of the risks and
uncertainties associated with the Company achieving management's forecasts in
the amounts and at the times indicated therein. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of the Company
or any of its subsidiaries or affiliates and we have not been furnished with any
such evaluation or appraisal.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the $26.00 in
cash to be received by the holders of Shares in the Tender Offer and the Merger
is fair to such holders.
Very truly yours,
[Goldman, Sachs & Co. Signature]
GOLDMAN, SACHS & CO.
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