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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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GREENFIELD INDUSTRIES, INC.
(Name of Subject Company)
GREENFIELD INDUSTRIES, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
395058 10 0
(CUSIP Number of Class of Securities)
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PAUL W. JONES
GREENFIELD INDUSTRIES, INC.
2743 PERIMETER PARKWAY
BUILDING 100, SUITE 100
AUGUSTA, GEORGIA 30909
(706) 863-7708
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of the person(s) filing statement)
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With a Copy to:
MATTHEW G. MALONEY, ESQ.
DICKSTEIN SHAPIRO MORIN & OSHINSKY LLP
2101 L STREET, N.W.
WASHINGTON, DC 20037
(202) 785-9700
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Greenfield Industries, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 2743 Perimeter Parkway, Building 100, Suite 100, Augusta, Georgia
30909. The title of the class of equity securities to which this Statement
relates is the common stock, par value $0.01 per share, including the associated
preferred stock purchase rights (the "Rights") issued pursuant to the Restated
Rights Agreement, dated as of February 6, 1996, as amended October 10, 1997 (the
"Rights Agreement"), between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer made by Kennametal Acquisition
Corp. (the "Purchaser"), a Delaware corporation and a direct wholly-owned
subsidiary of Kennametal Inc., a Pennsylvania corporation ("Parent"), disclosed
in a Tender Offer Statement on Schedule 14D-1, dated October 17, 1997 (the
"Schedule 14D-1"), to purchase all of the outstanding Shares at a price of
$38.00 per share, net to the seller in cash, without interest thereon, less any
required withholding taxes, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated October 17, 1997 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer").
Capitalized terms used herein and not otherwise defined have the meanings
ascribed to them in the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 10, 1997 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company. The Merger Agreement provides, among other things,
for the making of the Offer by Purchaser and further provides that, as soon as
practicable after the completion of the Offer and the satisfaction or waiver of
the conditions set forth in the Merger Agreement, the Purchaser will be merged
with and into the Company (the "Merger"), and the Company will continue as the
surviving corporation (the "Surviving Corporation") of the Merger.
The Schedule 14D-1 states that the address of the principal executive
offices of Parent and Purchaser is State Route 981 South, P.O. Box 231, Latrobe,
Pennsylvania 15650.
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) The provisions of the Merger Agreement relating to the election and
designation of directors to the Board of Directors of the Company (the "Board")
are subject to Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), which requires the Company to mail to its stockholders an
Information Statement (the "Information Statement") containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. Reference is made to the information contained under the captions
"Executive Compensation," "Stock Options," "Stock Bonus Plan and Incentive
Plan," "Employment Agreements, Termination of Employment and Change in Control
Arrangements" and "Compensation of Directors" in the accompanying Information
Statement. The Information Statement is attached as Annex I hereto and is
incorporated herein by reference. Except as described herein or incorporated
herein by reference, to the knowledge of the Company as of the date hereof,
there are no material contracts, agreements, arrangements or understandings or
any actual or potential conflicts of interest between the Company or its
affiliates and (i) its executive officers, directors or affiliates or (ii)
Parent, Purchaser and their executive officers, directors or affiliates.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified by reference to the full text of the Merger
Agreement, which is incorporated by reference and a copy of which has been filed
as Exhibit 1 to this Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9"). Capitalized terms used and not defined herein have the
respective meanings assigned to them in the Merger Agreement.
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The Offer. The Merger Agreement provides that Purchaser will commence the
Offer no later than five business days after the date of the initial public
announcement of the Merger. Purchaser has agreed to accept for payment Shares
which have been validly tendered and not withdrawn pursuant to the Offer at the
earliest time following the Expiration Date (at which time all conditions to the
Offer (the "Offer Conditions") will have been satisfied or waived by the
Purchaser). The obligation of Purchaser to accept for payment, purchase and pay
for Shares is subject only to such Offer Conditions and the Minimum Condition
(any of which may be waived in whole or in part by the Purchaser except for the
Minimum Condition), without the prior written consent of the Company. Pursuant
to the Merger Agreement, Purchaser reserved the right, subject to compliance
with the Exchange Act, to modify the terms and conditions of the Offer,
provided, however, that without the written consent of the Company, Purchaser
may not (i) decrease the Per Share Amount (as herein defined) payable in the
Offer, (ii) change the form of consideration to be paid in the Offer, (iii)
reduce the maximum number of Shares to be purchased in the Offer or the Minimum
Condition, (iv) impose conditions to the Offer in addition to the Offer
Conditions or which modify the Offer Conditions in a manner adverse to the
holders of the Shares, or (v) amend any other term of the Offer in a manner
adverse to the holders of Shares provided, however, that nothing contained in
the Merger Agreement prohibits Purchaser from waiving satisfaction of any
condition of the Offer other than the Minimum Condition. Purchaser may, without
the consent of the Company, (i) extend the Offer on one or more occasions for up
to ten business days for each such extension beyond the then scheduled
expiration date of the Offer (the initial scheduled expiration date being 20
business days following the commencement of the Offer), if at the scheduled
expiration date of the Offer any of the conditions to Purchaser's obligation to
accept for payment and pay for the Shares shall not be satisfied or waived,
until such time as such conditions are satisfied or waived and, at the Company's
request and subject to Purchaser's right to terminate the Merger Agreement as
provided therein, Purchaser will extend the Offer for additional periods, unless
the only conditions not satisfied or waived on the scheduled expiration date are
one or more of the Minimum Condition and certain of the Offer Conditions,
provided that (A) if the only condition not satisfied is the Minimum Condition,
the satisfaction or waiver of all other conditions will have been publicly
disclosed at least five business days before termination of the Offer and (B) if
certain conditions have not been satisfied and the failure to so satisfy can be
remedied, the Offer will not be terminated unless the failure is not remedied
within 30 calendar days after Purchaser has furnished the Company written notice
of such failure, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Commission or the staff thereof
applicable to the Offer and (iii) extend the Offer for an aggregate period of
not more than five business days beyond the latest expiration date permitted
under clause (i) or (ii) above if a sufficient number of Shares have not been
tendered so that the Merger could be effected without a meeting of the Company's
Stockholders in accordance with Section 253 of the DGCL.
Board Representation. The Merger Agreement provides that, promptly upon
Purchaser's acquisition of a majority of the outstanding Shares pursuant to the
Offer, either (i) a majority of the members of the Board will resign, and the
remaining members of the Board will fill such vacancies with persons designated
by the Purchaser or (ii) the size of the Board will be expanded and the
vacancies will be filled with persons designated by the Purchaser such that
Purchaser's designees will constitute a majority of the members of the Board. In
either case, at all times thereafter through the Effective Time a majority of
the members of the Board will be persons designated by the Purchaser.
The Company's obligation to appoint designees to the Board will be subject
to Section 14(f) of the Exchange Act ("Section 14(f)") and Rule 14f-1 ("Rule
14f-1") promulgated thereunder and the Company has agreed to take all actions
required by Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under the Merger Agreement and will include in its Schedule 14D-9 such
information with respect to the Company and its officers and directors as
Section 14(f) and Rule 14f-1 require to fulfill such obligations. Parent and
Purchaser have agreed to supply information to the Company and will be solely
responsible for any information with respect to either of them and their
respective nominees, officers, directors and affiliates as required by Section
14(f) and Rule 14f-1.
Following election of Purchaser's designees to the Board prior to the
Effective Time, any amendment of the Merger Agreement, the amended and restated
certificate of incorporation or by-laws of the Company, any termination of the
Merger Agreement by the Company, any extension by the Company of the time for
performance of any of the obligations or other acts of Parent or Purchaser under
the Merger Agreement, or any
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waiver of any of the Company's rights thereunder, will require the approval of a
majority of the directors of the Company then in office who are directors as of
the date of the Merger Agreement or persons designated by such directors who
were neither designated by Purchaser nor employees of the Company ("Continuing
Directors"). Prior to the Effective Time, the Company and Purchaser agree to use
all reasonable efforts to ensure that the Board at all times includes at least
three Continuing Directors. At the Effective Time, the directors of the
Purchaser on such date will be the directors of the Surviving Corporation.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof and in accordance with DGCL, at the Effective Time,
the Purchaser will be merged with and into the Company, the separate corporate
existence of Purchaser will cease and the Company will be the surviving
corporation (the "Surviving Corporation").
Consideration to be Paid in the Merger. The Merger Agreement provides
that, at the Effective Time, by virtue of the Merger and without any action on
the part of the Stockholders or the holders of any shares of capital stock of
Purchaser, (i) each Share (excluding Shares owned by the Company's direct or
indirect wholly-owned Subsidiaries or Company Common Stock held in treasury or
by Parent Companies, and the Dissenting Stockholders) will be canceled and
converted into the right to receive the Merger Consideration, without interest
thereon, less any required withholding of taxes, upon the surrender of the
certificate formerly representing the Share, (ii) each Share issued and
outstanding and owned by any of the Parent Companies or any of the Company's
direct or indirect wholly-owned Subsidiaries or authorized but unissued shares
of Company Common Stock held in the treasury of the Company immediately prior to
the Effective Time of the Merger will cease to be outstanding, be canceled and
retired without payment of any consideration therefor and cease to exist and
(iii) each share of common stock of Purchaser that is issued and outstanding
immediately prior to the Effective Time will be converted into one validly
issued, fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
Dissenting Shares. To the extent required by the DGCL, Shares that are
issued and outstanding immediately prior to the Effective Time and that are held
by Stockholders who dissent from the Merger and require appraisal of such Shares
in accordance with Section 262 of the DGCL (or any successor provision thereof)
("Dissenting Shares"), will not be converted into the right to receive the
Merger Consideration. The Dissenting Shares, however, will become entitled to
receive such consideration as may be determined to be due such Dissenting
Stockholder under the DGCL; provided however, that if any Dissenting Stockholder
subsequently withdraws his or her demand for appraisal or fails to establish or
perfect or otherwise loses such holder's appraisal rights as provided by
applicable law, then such Dissenting Stockholder will forfeit the right to
appraisal of such Shares and such Shares will thereupon be deemed to have been
converted, as of the Effective Time, into the right to receive the Merger
Consideration, without interest. The Company has agreed to promptly notify
Parent and Purchaser of any written demands or withdrawals of demands for
appraisal and any other related instruments received by the Company, as well as
the opportunity to direct all negotiations and proceedings with respect to any
such demands for appraisal. The Company has agreed that it will not, except with
the prior written consent of Parent, voluntarily make any payment with respect
to any demands for appraisal or settle, offer or otherwise negotiate to settle
any demand.
Company Stock Options. The Merger Agreement provides that each warrant to
purchase shares of the Company's common stock and each option granted to a
Company employee, consultant or director pursuant to the Company's Amended and
Restated Employee Stock Option Plan, as amended, the Amended and Restated 1993
Directors Non-Qualified Stock Option Plan or the Amended and Restated 1995
Directors Non-Qualified Stock Option Plan (each such warrant and option
hereinafter is referred to as an "Option"), that is outstanding immediately
prior to the Effective Time, whether or not then exercisable or vested, with
respect to which, as of the Effective Time, the Per Share Amount exceeds the
exercise price per share will, effective as of immediately prior to the
Effective Time, be canceled in exchange for a single lump sum cash payment equal
to the product of (i) the number of shares of the Company's common stock subject
to the Option and (ii) the excess of $38.00 per Share (such amount, or any
greater amount per Share paid pursuant to the Offer, the "Per Share Amount")
over the exercise price of such Option. In addition, each Option that is
outstanding immediately prior to the Effective Time, whether or not then
exercisable or vested, will, effective as of the Effective Time, with respect to
which, as of the Effective Time, the Per Share Amount does not exceed the
exercise price per share, will, effective as of
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immediately prior to the Effective Time, be canceled and no payments will be
made with respect thereto. The Merger Agreement also provides that, immediately
prior to the Effective Time, each share of the Company's common stock previously
issued in the form of restricted stock issued pursuant to the Company's Amended
and Restated 1995 Restricted Stock Bonus Plan will fully vest and all
restrictions thereon will be removed, and each share of the Company's common
stock previously issued in the form of awards of Time-Lapse Restricted Stock,
Performance-Contingent Restricted Stock and Performance Shares pursuant to the
Company's Amended and Restated 1995 Equity Incentive Plan and which, as of
immediately prior to the Effective Time, have been earned in accordance with the
provisions of such plan, will fully vest, and all restrictions thereon will be
removed with any unearned awards under such plan to be canceled except for the
issuance of 1,600 shares, which the Board may, in its discretion, determine to
vest.
6% Convertible Preferred Securities. Parent and Purchaser shall assume the
Company's obligations with respect to the 6% Convertible Preferred Securities,
including without limitation, complying with the applicable provisions of (i)
the Indenture, dated as of April 1, 1996, between the Company and the Bank of
New York, as trustee, with respect to the Company's 6% Convertible Junior
Subordinated Deferrable Interest Debentures Due 2016, (ii) the Amended and
Restated Declaration of Trust of Greenfield Capital Trust, dated as of April 1,
1996, and (iii) the Preferred Securities Guarantee Agreement between the Company
and the Bank of New York dated as of April 24, 1996.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
by the Company and its Subsidiaries with respect to (i) corporate organization,
good standing and corporate power, (ii) capitalization, (iii) corporate
authority to enter into the Merger Agreement (iv) consents and approvals, (v)
accuracy of Commission reports and financial statements, (vi) absence of certain
changes or events, (vii) litigation and liabilities, (viii) accuracy of
information supplied by the Company for the Offer Documents, Schedule 14D-9, the
Rule 14f-1 Information Statement and the Proxy Statement, and other documents
and any amendments or supplements thereto, (ix) ERISA matters, (x) brokers' and
finders' fees and expenses, (xi) obtaining the opinions of financial advisors as
to the fairness of the cash consideration to be received by the Stockholders
pursuant to the Offer from a financial point of view, (xii) compliance with laws
and permits, (xiii) takeover statutes, (xiv) amendments to the Rights Agreement,
(xv) contracts and (xvi) changes in equity interest.
Parent and Purchaser have also made certain representations and warranties
with respect to (i) corporate organization, good standing and corporate power,
(ii) corporate authority to enter into the Merger Agreement, (iii) consents and
approvals, (iv) brokers' and finders' fees and expenses and (v) financing.
No representations and warranties made by the Company, Parent or Purchaser
will survive beyond the earlier of (i) termination of the Merger Agreement or,
(ii) the Effective Time, in the case of the representations and warranties of
Parent or Purchaser or the purchase of Shares by Purchaser pursuant to the
Offer, in the case of representations or warranties of the Company. The
Confidentiality Agreement (as defined below) will survive any termination of the
Merger Agreement and the provisions of such agreement will apply to all
information and material delivered by any party thereunder.
Conduct of Business Pending the Merger. The Company has agreed that during
the period from October 10, 1997 (the date of the Merger Agreement) to the
Effective Time, the Company will, and will cause each of its Subsidiaries to,
conduct its operations according to its ordinary and usual course of business
consistent with past practice and use all commercially reasonable efforts to
preserve intact its current business organization, keep available the services
of its current employees and preserve its relationships with customers,
suppliers and others having significant dealings with it. Except as otherwise
permitted in the Merger Agreement, the Company has further agreed that prior to
the Effective Time, neither the Company, nor any of its Subsidiaries will,
without the prior written consent of Parent, (i) (except for shares to be issued
or delivered pursuant to the Company's Stock Plans for options outstanding on
the date of the Merger Agreement) issue, deliver, sell, dispose of, pledge or
otherwise encumber, or authorize or propose the issuance, sale, disposition or
pledge or other encumbrance of, (A) any additional securities (including the
Shares) or rights convertible into, exchangeable for, or evidencing the right to
subscribe for any shares of capital stock, or any rights, warrants, options,
calls, commitments or any other agreements of any character to purchase or
acquire any shares of capital stock or securities or rights convertible
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into, or evidencing the right to subscribe for, any shares of capital stock or
any other securities in respect of, in lieu of, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock, or (B) any other
securities in respect of, in lieu of, or in substitution for, Shares outstanding
on the date of the Merger Agreement, (ii) redeem, purchase, or otherwise
acquire, any shares of outstanding capital stock, including the Shares, or any
rights, warrants or options to acquire any such Shares or other securities
(except for Shares of restricted stock forfeitable under the terms of any of the
Stock Plans), (iii) split, combine, subdivide, or reclassify any Shares or
declare, set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any capital stock, including
the Shares, or otherwise make any payments to Stockholders in their capacity as
such (other than the declaration and payment of any regular quarterly cash
dividend on the Shares and except for dividends by a wholly-owned Subsidiary),
(iv) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger), (v) adopt any
amendments to its certificate or articles of incorporation or bylaws or alter by
merger, liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of any Subsidiary of the Company, (vi) make any
acquisition by means of merger, consolidation or otherwise, or disposition
(other than acquisitions or dispositions of assets in the ordinary course of
business consistent with past practice), of assets or securities, or mortgage or
otherwise encumber or subject to lien any of its assets or properties, other
than in the ordinary course of business consistent with past practice, (vii)
other than in the ordinary course of business consistent with past practice,
incur any indebtedness for borrowed money or sell any debt securities or
guarantee any such indebtedness or make any loans, advances or capital
contributions to, or investments in, any other person, other than to the Company
or any wholly-owned subsidiary of the Company or, except as set forth in the
Merger Agreement, make any further commitments for capital expenditures in
excess of $500,000 individually, or $3,000,000 in the aggregate, (viii) grant
any material increases in the compensation of any of its directors, officers or
key employees, except in the ordinary course of business and in accordance with
past practice, (ix) pay or agree to pay any pension, retirement allowance or
other employee benefit not contemplated or required by any existing benefit,
severance, termination, pension or employment plans, agreements or arrangements
as in effect on the date of the Merger Agreement to any past or present officer
or director of the Company, (x) enter into any new or materially amend any
existing employment, severance or termination agreements with any director or
officer of the Company, (xi) except in the ordinary course of business
consistent with past practice, or as may be required to comply with applicable
law, become obligated under any new pension plan, welfare plan, multiemployer
plan, employee benefit plan, severance plan, benefit arrangement, or similar
plan or arrangement, which was not in existence on the date of the Merger
Agreement, or amend any such plan or arrangement if such amendment would have
the effect of materially enhancing any benefits thereunder, (xii) settle or
compromise any material claims or litigation or, except in the ordinary course
of business, modify, amend or terminate, any material contracts or waive,
release or assign any material rights or claims, (xiii) make any material
change, other than in the ordinary course of business consistent with past
practice or as required by applicable law, regulation or, change in generally
accepted accounting principles, in accounting policies or procedures applied by
the Company (including tax accounting policies and procedures), (xiv) except as
required by applicable law or regulation, make any tax election or permit any
insurance policy naming it as beneficiary or a loss payable payee to be
cancelled or terminated, (xv) amend or alter the Rights Agreement in a manner
adverse to Parent's, Purchaser's or the Company's ability to commence or
consummate the transactions contemplated by the Merger Agreement, or (xvi)
authorize or enter into a contract or other agreement to do any of the
foregoing.
No Solicitation. The Merger Agreement provides that the Company, its
affiliates and their respective officers, directors, employees, representatives
and agents will immediately cease any existing discussions or negotiations, if
any, with any parties conducted with respect to any Takeover Proposal (as
hereafter defined). Prior to the consummation of the Offer, the Company, its
Subsidiaries, directors, employees, representatives and agents may, directly or
indirectly, furnish information and access, in each case only in response to a
Third Party Proposal made after the date of the Merger Agreement which was not
initiated, solicited or encouraged by the Company or any of its affiliates or
their respective officers, directors, employees, representatives or agents
(pursuant to appropriate confidentiality agreements the benefit of the terms of
which, if more favorable than the confidentiality agreement with Parent, will be
extended to Parent), and may participate in discussions and negotiate with such
entity or group concerning any Takeover Proposal if a majority of the Company's
Board
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determines, in its good faith judgment, based on the opinion of independent
legal counsel to the Company, that failing to take such action would constitute
a breach of the Board's fiduciary obligations to the Stockholders under
applicable law. The Company will promptly notify Parent if any such proposal or
offer, or any inquiry or contact with any person with respect thereto, is made
and will, in any such notice to Parent, indicate in reasonable detail the
identity of the offeror and the terms and conditions of any proposal or offer,
or any such inquiry or contact. The Company must keep Parent promptly advised of
all developments which could reasonably be expected to culminate in the Board
withdrawing, modifying or amending its recommendation of the Offer, the Merger
and other transactions contemplated thereby. Except as set forth in the Merger
Agreement, neither the Company or any of its affiliates, nor any of its or their
respective officers, directors, employees, representatives or agents, will,
directly or indirectly, encourage, solicit, participate in or initiate
negotiations with, or provide any information to, any corporation, partnership,
person, or other entity or group (other than Parent and Purchaser, any affiliate
or associate of Parent and Purchaser, or any designees of Parent or Purchaser)
concerning any Takeover Proposal. The Merger Agreement provides that nothing
contained therein shall prevent the Company or the Board from taking and
disclosing to the Stockholders a position contemplated by Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Stockholders with respect to any Third Party Proposal if (i) in the good faith
judgment of the Board, following receipt of advice from outside counsel, such
disclosure is required by reason of the Board's fiduciary duties to the
Stockholders under applicable law, and (ii) the Company will have provided
Parent and Purchaser with as much advance notice of its position and proposed
disclosure as is possible under the circumstances; provided, however, that
neither the Company nor its Board nor any committee thereof will, except as
provided in the Merger Agreement, withdraw or modify or propose to withdraw or
modify, its position with respect to the Offer, the Merger or the Merger
Agreement or approve or recommend, or propose to approve or recommend, any
Takeover Proposal. For purposes of the Merger Agreement, a "Third Party
Proposal" means an unsolicited, bona-fide proposal from a third party which
proposal was not solicited by or on behalf of the Company in violation of the
Merger Agreement and which, the Board determines in good faith and upon the
advice of a financial advisor of nationally recognized reputation, has the
capacity and is reasonably likely to consummate a Superior Proposal. For
purposes of the Merger Agreement, a "Takeover Proposal" means any tender or
exchange offer, proposal for a merger, consolidation or other business
combination involving the Company or any Significant Subsidiary of the Company,
or any proposal or offer to acquire in any manner a substantial equity interest
in or a substantial portion of the assets of the Company or its Significant
Subsidiaries (other than as contemplated by the Merger Agreement).
Conditions to the Offer. Pursuant to the Merger Agreement, Purchaser is
not obligated to accept for payment any Shares until the expiration of all
applicable waiting periods under the HSR Act and satisfaction of the Minimum
Condition. In addition, Purchaser is not required to accept for payment or pay
for, or may delay the acceptance for payment of or payment for, any Shares
tendered pursuant to the Offer or may, subject to the terms of the Merger
Agreement, terminate or amend the Offer if, on or after October 10, 1997, and at
or before the time of payment for any such Shares, any of the following events
occurs (or become known to Parent) and remains in effect: (a) there has occurred
and is continuing as of the then scheduled expiration date of the Offer (i) any
general suspension of trading in, or limitation on prices for, securities on the
New York Stock Exchange or the Nasdaq National Market, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or any limitation by federal or state authorities on the extension
of credit by lending institutions, or a disruption of or material adverse change
in either the syndication market for credit facilities or the financial, banking
or capital markets, (iii) a commencement or escalation of a war, armed
hostilities or other international or national calamity directly involving the
United States, (iv) any material limitation (whether or not mandatory) by any
governmental or regulatory authority, agency or commission, domestic or foreign
("Governmental Entity"), on the extension of credit by banks or other lending
institutions in the United States, (v) or in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; (b)(i) the Company has breached or failed to perform in
any material respect any of its obligations, covenants or agreements under the
Merger Agreement, (ii) any representation or warranty of the Company set forth
in the Merger Agreement which is qualified by materiality is not true and
correct as of the date of the Merger Agreement and as of the then scheduled
expiration date of the Offer as though made on and as of the then scheduled
expiration date of the Offer or (iii) any representation or warranty of the
Company set forth in the Merger Agreement which is not qualified by materiality
is not true and correct in all material respects, as of
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the date of the Merger Agreement and as of the then scheduled expiration date of
the Offer as though made on and as of the then scheduled expiration date of the
Offer, except in the case of clause (ii) and (iii) above for representations and
warranties which by their terms speak only as of another date, which
representations and warranties, if qualified by materiality, will not have been
true and correct as of such other date; (c) any court or Governmental Entity
will have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order which is in
effect and which (i) restricts (other than restrictions which in the aggregate
do not have a Material Adverse Effect on Parent, Purchaser or the Company or
which do not materially restrict the ability of Parent and Purchaser to
consummate the Offer and the Merger as originally contemplated by Parent and
Purchaser), prevents or prohibits consummation of the Offer or the Merger (ii)
prohibits or limits (other than limits which in the aggregate do not have a
Material Adverse Effect on Parent, Purchaser or the Company or which do not
materially limit the ability of Parent to own and operate all of the business
and assets of Parent and the Company after the consummation of the transactions
contemplated by the Offer and the Merger Agreement), the ownership or operation
by the Company, Parent or any of their subsidiaries of all or any material
portion of the business or assets of the Company and its subsidiaries taken as a
whole, or as a result of the Offer or the Merger compels the Company, Parent or
any of their subsidiaries to dispose of or hold separate all or any material
portion of their respective business or assets, (iii) imposes limitations (other
than limits which in the aggregate do not have a Material Adverse Effect on
Parent, Purchaser or the Company or which do not materially limit the ability of
Parent to own and operate all of the business and assets of Parent and the
Company after the consummation of the transactions contemplated by the Offer and
the Merger Agreement) on the ability of Parent or any subsidiary of Parent to
exercise effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to the
Offer or otherwise on all matters properly presented to the Stockholders
including, without limitation, the approval and adoption of the Merger Agreement
and the transactions contemplated thereby, (iv) requires divestiture by Parent
or any affiliate of Parent of any Shares or (v) otherwise materially adversely
affects the financial condition, business or results of operations of the
Company and its subsidiaries taken as a whole; (d) all consents, registrations,
approvals, permits, authorizations, notices, reports or other filings required
to be obtained or made by the Company, Parent or Purchaser with or from any
governmental entity in connection with the execution and delivery of the Merger
Agreement, the Offer and the consummation of the transactions contemplated by
the Merger Agreement will not have been made or obtained as of the then
scheduled expiration date of the Offer (other than the failure to receive any
consent, registration, approval, permit or authorization or to make any notice,
report or filing that, in the aggregate, is not reasonably likely to have a
Material Adverse Effect on Parent, Purchaser or the Company, or would not
prevent the consummation of the Offer or the Merger); (e) any change or
development in the financial condition, properties, business, results of
operations or prospects of the Company and its Subsidiaries that, individually
or in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect; (f) the Board (or a special committee thereof) withdraws or amends, or
modifies in a manner adverse to Parent and Purchaser its recommendation of the
Offer or the Merger, or endorses, approves or recommends any Superior Proposal;
or (g) the Merger Agreement has been terminated by the Company, Parent or
Purchaser in accordance with its terms or such parties have reached an agreement
or understanding in writing providing for termination or amendment of the Offer
or delay in payment for the Shares. A "Material Adverse Effect" shall mean any
adverse change(s) in the financial condition, properties, business, results of
operations or prospects of the Company or any of its subsidiaries or Parent or
any of its subsidiaries, as the case may be, which individually or in the
aggregate is or are material to the Company and its subsidiaries, taken as a
whole, or Parent and its subsidiaries, taken as a whole, as the case may be,
other than (i) any change or effect arising out of general economic conditions
or (ii) any change or effect which the Company or Parent, as the case may be,
has disclosed in writing, prior to the date of the Merger Agreement, to Parent
or the Company, as the case may be, has occurred or is likely to occur.
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Parent and Purchaser, and may be asserted by Parent or Purchaser
or may be waived by Parent or Purchaser, in whole or in part, at any time and
from time to time in its sole discretion. The failure by Parent or Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
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circumstances and each such right shall be deemed an ongoing right and may be
asserted at any time and from time to time.
Conditions to the Merger. The Merger Agreement provides that the
obligation of each party to effect the Merger is subject to the satisfaction at
or prior to the Effective Time of the following conditions: (a) to the extent
required by applicable law, the Company Stockholder Approval will have been
obtained in accordance with applicable law and the Company's amended and
restated certificate of incorporation; provided that Parent and Purchaser will
vote all of their Shares in favor of the Merger; (b) no statute, rule,
regulation, executive order, decree, ruling or injunction or other order issued
by any court, governmental or regulatory agency of competent jurisdiction
directing that the transactions contemplated by the Merger Agreement not be
consummated; provided, however, that prior to invoking this condition each party
will use its best efforts to have any such decree, ruling, injunction or order
vacated; (c) all governmental consents, orders and approvals legally required
for the consummation of the Merger and the transactions contemplated thereby
have been obtained and be in effect at the Effective Time (unless the failure to
obtain any such consent would not reasonably be expected to have a Material
Adverse Effect on Parent and its Subsidiaries, as a whole (assuming the Merger
had taken place)), and the waiting periods under the HSR Act will have expired
or have been terminated; and (d) Purchaser has purchased all Shares tendered
pursuant to the Offer.
Termination. The Merger Agreement may be terminated and the Offer and
Merger may be abandoned at any time prior to the Effective Time by the mutual
written consent of Parent and the Company. In addition, the Merger Agreement may
be terminated as follows:
(1) by Parent or the Company if (i) any governmental or regulatory
agency located or having jurisdiction within the United States or any
country or economic region in which either the Company or Parent, directly
or indirectly, has material assets or operations will have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, the Shares pursuant to the Offer or Merger and such order,
decree or ruling or other action will have become final and nonappealable;
provided, that Parent will, if necessary to prevent the taking of such
action or the enaction, enforcement, promulgation, amendment, issuance or
application of any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction, offer to accept an order to divest such of
the Company's or Parent's assets and businesses as may be necessary to
forestall such injunction or order and to hold separate such assets and
business pending such divestiture, but only if the amount of such
businesses and assets is not material to the assets or profitability of
Parent and its subsidiaries taken as a whole, or (ii) due to an occurrence
or circumstance which would result in a failure to satisfy any of the Offer
Conditions, Purchaser fails to pay for the Shares pursuant to the Offer on
or before the Outside Date, unless such failure results from or is caused
by the failure of the party seeking to terminate the Merger Agreement to
perform in any material respect any of its respective covenants or
agreements in the Merger Agreement. As defined in the Merger Agreement, an
"Outside Date" means the later of (not to exeed 180 days) (A) 90 days from
the date of the Merger Agreement, or (B) the date on which either the
applicable HSR Act waiting period expires or been terminated or the final
terms of a consent decree between Parent and the Antitrust Division of the
Department of Justice (the "Antitrust Division") (the "Consenting Parties")
with respect to the Offer and Merger has been agreed to by the Consenting
Parties, or an order of a federal district court finding that the Merger
does not violate the federal antitrust laws will have been issued or the
Antitrust Division will have otherwise authorized Parent to acquire Shares
pursuant to the Offer.
(2) at any time prior to the Effective Time, by action of the Board:
(a) if (i) the Company, based on the advice of outside legal counsel to the
Company that such action is necessary in order for the Board to comply with
its fiduciary duties under applicable law, subject to complying with the
terms of the Merger Agreement, enters into a binding written agreement
concerning a transaction that constitutes a Superior Proposal (as hereafter
defined) if prior thereto, the Company notifies Parent in writing that it
intends to enter into such an agreement and (ii) Parent does not make,
within two business days of receipt of the Company's written notification
of its intention to enter into a binding agreement for a Superior Proposal,
an offer to enter into an amendment to the Merger Agreement such that the
Board determines, in good faith after consultation with its financial
advisors, that the Merger Agreement as so amended is at least as favorable,
from a financial point of view, to the Stockholders as the Superior
Proposal. The Company further agreed
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(A) that it will not enter into a binding agreement with respect to clause
(i) in the preceding sentence until at least the third business day after
it has provided the notice to Parent required thereby and (B) to notify
Parent promptly of its intention to enter into a written agreement referred
to in its notification will change at any time after giving such
notification. For purposes of the Merger Agreement, the term "Superior
Proposal" means a Third Party Proposal to acquire all of the outstanding
Shares pursuant to a tender offer or a merger, or to purchase all or
substantially all of the assets of the Company, on terms which a majority
of the members of the Board determines in its good faith reasonable
judgment (based on the advice of its financial and legal advisors) to be
more favorable to the Company and its Stockholders than the transactions
contemplated by the Merger Agreement; (b) if (i) Purchaser has (x) failed
to commence the Offer within five business days following the date of the
initial public announcement of the Offer, (y) failed to pay for the Shares
pursuant to the Offer as provided in the Merger Agreement or (z) terminated
the Offer without purchasing Shares pursuant to the Offer, or (ii) there
has been a material breach by Parent or Purchaser of any representation,
warranty, covenant or agreement contained in the Merger Agreement which is
not curable or, if curable, is not cured within 30 calendar days after
written notice of such breach is given by the Company to the breaching
party.
(3) at any time prior to the Effective Time, by action of the Board of
Directors of Parent if (i) the Board of Directors of the Company has
withdrawn or adversely modified its approval or recommendation of the
Merger Agreement or failed to reconfirm its recommendation of the Merger
Agreement within five business days after a written request by Parent to do
so, (ii) there has been a breach by the Company of any representation,
warranty, covenant, or agreement contained in the Merger Agreement that is
not curable or, if curable, is not cured within 30 calendar days after
written notice of such breach is given by Parent to the party committing
such breach, or (iii) on a scheduled expiration date all conditions to
Purchaser's obligation to accept for payment and pay for the Shares
pursuant to the offer will have been satisfied or waived other than the
Minimum Condition, and Purchaser terminates the Offer without purchasing
Shares pursuant to the Offer (provided that the satisfaction or waiver of
all other conditions will have been publicly disclosed at least five
business days prior to termination of the Offer), or (iv) Purchaser has
otherwise terminated the Offer in accordance with the terms of the Merger
Agreement without purchasing Shares pursuant to the Offer.
Fees and Expenses. The Merger Agreement provides that, except as described
below, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated by the Merger Agreement will be paid by the
party incurring the expenses. Pursuant to the Merger Agreement, in the event
that the Merger Agreement is terminated and the Merger is abandoned, the Merger
Agreement and the obligations thereunder will become void (except for those
obligations relating to termination, fees and expenses and confidentiality),
with no liability on the part of any party to the Merger Agreement or such
party's directors, officers, employees, agents, legal and financial advisors or
other representatives. In the event that the Merger Agreement is terminated by
the Company in the circumstances described in clause (2)(a) of the preceding
section entitled, "Termination," or by the Parent in the circumstances described
in clause (3)(i) of such section, the Company shall promptly, but in no event
later than two days after the date of such termination or event, pay Parent a
termination fee of $30 million. In addition, in the event that prior to the
termination of the Merger Agreement any person or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) makes a Third Party Proposal and within
six months following the date of such Third Party Proposal, such person or group
acquires, directly or indirectly, the Company, a substantial portion of its
assets or more than 50% of the Company's then outstanding common stock for a per
share consideration (or equivalent thereof) having a value greater than the Per
Share Amount to be paid under the Merger Agreement, then the Company will
promptly pay, within one day of such event, a termination fee of $30 million.
Parent has agreed to pay the Company all of the Company's out-of-pocket
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby, including fees of its printer, consultants, attorneys,
accountants and financial and other advisors, not to exceed $5 million if the
Merger Agreement is terminated by Parent pursuant to clause (3)(iii) or by the
Company pursuant to clause (2)(b) of the preceding section entitled,
"Termination." Such expenses are payable promptly and in any event no later than
two business days after the date such termination or event shall have occurred.
The Company has agreed to pay Parent all of
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Parent's or Purchaser's out-of-pocket expenses incurred in connection with the
Merger Agreement and the transactions contemplated thereby, including the fees
and expenses of its printer, consultants, attorneys, accountants, financial
advisors and other advisors, not to exceed $5 million, if the Merger Agreement
is terminated by Parent or Purchaser pursuant to clause (3)(ii) of the preceding
section entitled, "Termination." Such expenses are payable promptly and in any
event no later than two business days after the date such events shall have
occurred.
Indemnification. The Merger Agreement provides that the certificate of
incorporation and bylaws of the Surviving Corporation will contain the
provisions with respect to indemnification set forth in the amended and restated
certificate of incorporation and bylaws of the Company on the date of the Merger
Agreement, which provisions will not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors, officers, employees or agents of the Company
with respect to actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by the Merger
Agreement), unless such modification is required by law; provided, however, that
in the event that any claims are asserted or made within a six-year period, all
rights to indemnification in respect of any such claims will continue until
disposition of such claims.
The Merger Agreement further provides that for a period of not less than
six years Parent will cause to be maintained in effect for the Company's present
or former directors or officers or other employees covered by the Company's
insurance policies prior to the Effective Time (the "Indemnified Parties"), the
current policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by the Company and the Company's subsidiaries
with respect to matters occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated in the Merger Agreement),
provided that Parent may substitute therefor policies of substantially the same
coverage containing terms and conditions that are no less advantageous to the
Indemnified Parties and provided further that such substitution does not result
in gaps in coverage with respect to matters occurring prior to the Effective
Time. The Merger Agreement provides that the indemnification provisions are for
the benefit of the Indemnified Parties and is binding on all successors and
assigns of Parent, Purchaser, the Company and the Surviving Corporation.
Consents, Approvals, Filings. The Merger Agreement provides that subject
to the terms of the Merger Agreement, each of the parties thereto will use their
respective best efforts, and will cooperate with each other to obtain as
promptly as practicable all governmental and third party authorizations,
approvals, consents or waivers, including, without limitation, approvals with
respect to the HSR Act, required in order to consummate the transactions
contemplated by the Merger Agreement, the Offer and the Merger.
Employee Benefit Matters. The Merger Agreement provides that, for a period
of one year following the Effective Time, Parent will provide employee benefit
plans and programs for the benefit of the employees of the Company and its
Subsidiaries (other than those employees covered by collective bargaining
agreements) that are in the aggregate no less favorable than the employee
benefit plans and programs offered to such employees immediately prior to the
Closing (excluding plans or programs which provide for the issuance of Shares or
options on Shares). In addition, the Merger Agreement provides that employees
covered by collective bargaining agreements will be provided with such benefits
as will be required under the terms of any applicable collective bargaining
agreement.
Parent has also agreed to cause the Surviving Corporation to honor and
perform (without modification) the written employment agreements, severance
agreements and other agreements of the Company, as in effect as of the date of
the Merger Agreement. Parent agreed that, after the Effective Time, the
Surviving Corporation or its subsidiaries will pay all amounts provided under
all contracts and agreements of the Company and its subsidiaries and all benefit
obligations of the Company and its subsidiaries, including, without limitation,
the change in control agreements entered into between the Company and its
subsidiaries and their officers (the "Change in Control Agreements") (or honor
the provisions of the Change in Control Agreements in the case where no payment
by the Surviving Corporation or its subsidiaries is required) conditioned on a
change in control of the Company in accordance with the terms of such Change in
Control Agreements.
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Amendment. Subject to the applicable provisions of the DGCL and certain
other provisions of the Merger Agreement, at any time prior to the Effective
Time, the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained in the Merger
Agreement or in any document, certificate or writing delivered pursuant thereto,
or (iii) waive compliance by the other party with any of the conditions or
agreements contained in the Merger Agreement. Any agreement to amend or waive
the Merger Agreement on the part of any party must be set forth in writing and
signed on behalf of such party. The failure of either party to assert any of its
rights under the Merger Agreement shall not act as a waiver of such rights.
ARRANGEMENTS WITH DIRECTORS, OFFICERS AND EMPLOYEES
Certain members of the Company's management and the Board may be deemed to
have interests in the transactions contemplated by the Merger Agreement that are
in addition to their interests as stockholders of the Company generally. The
Board was aware of these interests and considered them, among other matters, in
approving the Merger Agreement and the transactions contemplated thereby. In
considering the recommendation of the Board in respect of the Merger Agreement
and the transactions contemplated thereby, the stockholders of the Company
should be aware of these interests which may present actual or potential
conflicts of interest.
The Company has entered into severance benefit agreements (the "Severance
Agreements") with each of the executive officers and 12 additional officers of
the Company. The Severance Agreements provide for the payment of certain
severance and other benefits upon certain qualifying terminations of the
employment of such officers within two years of a Change in Control (as defined
therein). The benefits payable under these Severance Agreements generally
provide for a full base salary for a term of one year, a bonus equal to 50% of
the average of the bonus awarded to such officer in each of the prior three
years pursuant to the Company's Executive Incentive Plan and the continuation of
certain other benefits for a period of one year. In addition, the Severance
Agreements provide for the immediate vesting of any outstanding options granted
to such officers under the Amended and Restated Employee Stock Option Plan, as
amended (the "Employee Plan").
The Company maintains the Employee Plan which provides for the grant of up
to 2,000,000 Shares to selected key employees of the Company. On October 10,
1997, the Board approved an amendment to the Employee Plan to provide for
accelerated vesting of stock options granted pursuant to such plan and the
cancellation of stock options granted pursuant to such plan in consideration of
a cash payment or alternative grant under such plan or a similar plan equal in
value to the fair value of the canceled grant upon a Change in Control (as
defined therein). A copy of the Employee Plan, as amended, is filed as Exhibit 7
to this Schedule 14D-9.
The Company has agreed in the Merger Agreement that each option granted to
a Company employee pursuant to the Company's Employee Plan to acquire Shares
that is outstanding immediately prior to the Effective Time, whether or not then
vested or exercisable, with respect to which, as of the Effective Time, the Per
Share Amount exceeds the exercise price per share shall, effective immediately
prior to the Effective Time, be canceled in exchange for a single lump sum cash
payment equal to the product of (1) the number of Shares subject to such option
and (2) the excess of the Per Share Amount over the exercise price per share of
such option (subject to any applicable withholding taxes).
The Company also maintains the Amended and Restated 1995 Restricted Stock
Bonus Plan, as amended (the "Stock Bonus Plan"), which allows certain key
employees to elect to receive up to 50% of their annual cash incentive
compensation in restricted stock. In addition, the Company maintains the Amended
and Restated 1995 Equity Incentive Plan (the "Incentive Plan") which provides
for the grant of awards of performance- and retention-based stock incentives for
the chief executive officer and three additional executive officers. On October
10, 1997, the Board approved an amendment to the Stock Bonus Plan and the
amendment and restatement of the Incentive Plan to change the definition of
Change in Control to include the beneficial ownership of more than 50% of the
then outstanding voting stock of the Company, whether or not through a
transaction arranged by, or consummated with, the prior approval of the Board.
Copies of the Stock Bonus Plan and the Incentive Plan, as amended, and as
amended and restated, respectively, are filed as Exhibits 8 and 9, respectively
to this Schedule 14D-9.
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The Company has agreed in the Merger Agreement that immediately prior to
the Effective Time, each Share previously issued in the form of awards of
Time-Lapse Restricted Stock, Performance-Contingent Restricted Stock and
Performance Shares pursuant to the Company's Incentive Plan and which, as of
immediately prior to the Effective Time, have been earned in accordance with the
provisions of such plan, shall fully vest and all restrictions thereon shall be
removed. Except for the issuance of 1,600 Shares representing unearned awards of
Performance-Contingent Restricted Stock to Mr. Ajita Rajendra, which the
Incentive Plan Committee has, in its discretion, determined to vest and issue
upon a Change in Control of the Company (as defined in the Incentive Plan), all
unearned awards under such plan shall be canceled and no payments shall be made
with respect thereto. In addition, the Company has agreed in the Merger
Agreement that immediately prior to the Effective Time, each Share previously
issued in the form of restricted stock pursuant to the Company's Stock Bonus
Plan shall fully vest and all restrictions thereon shall be removed.
The Company also maintains the Amended and Restated 1993 Directors
Non-Qualified Stock Option Plan, as amended (the "1993 Directors Plan"), and the
Amended and Restated 1995 Directors Non-Qualified Stock Option Plan (the "1995
Directors Plan"), which provide for the grant of up to 100,000 and 125,000
Shares, respectively, to non-employee directors of the Company. On October 10,
1997, the Board approved the amendment of the 1993 Directors Plan to provide for
accelerated vesting of stock options granted pursuant to such plan and the
cancellation of stock options granted pursuant to such plan in consideration of
a cash payment or alternative grant under such plan or a similar plan equal in
value to the fair value of the canceled grant upon a Change in Control (as
defined therein). A copy of the 1993 Directors Plan, as amended, is attached
hereto as Exhibit 10. On October 10, 1997, the Board approved the amendment and
restatement of the 1995 Directors Plan to change the definition of Change in
Control to include the beneficial ownership of more than 50% of the then
outstanding voting stock of the Company, whether or not through a transaction
arranged by, or consummated with, the prior approval of the Board and to provide
for the cancellation of stock options granted pursuant to such plan in
consideration of a cash payment or alternative grant under such plan or a
similar plan equal in value to the fair value of the canceled grant upon a
Change in Control (as defined therein). A copy of the 1995 Directors Plan, as
amended and restated, is filed as Exhibit 11 to this Schedule 14D-9.
The Company has agreed in the Merger Agreement that each option granted to
a Company director pursuant to the Company's 1993 Directors Plan or 1995
Directors Plan to acquire Shares that is outstanding immediately prior to the
Effective Time, whether or not then vested or exercisable, with respect to
which, as of the Effective Time, the Per Share Amount exceeds the exercise price
per share shall, effective as of immediately prior to the Effective Time, be
canceled in exchange for a single lump sum cash payment equal to the product of
(1) the number of Shares subject to such option and (2) the excess of the Per
Share Amount over the exercise price per share of such option (subject to any
applicable withholding taxes).
CONFIDENTIALITY AGREEMENT
On August 13, 1997, the Company and Parent signed a confidentiality and
standstill agreement (the "Confidentiality Agreement") providing that, subject
to the terms of the agreement, each company will keep confidential certain
nonpublic information furnished by the other. In addition, under the terms of
the Confidentiality Agreement, and subject to certain limitations, Parent agreed
that, without the prior written consent of the Company, (1) for a period of
three years, neither it nor its affiliates or representatives will solicit to
employ any of the current officers or key employees of the Company with whom
Parent has had contact with or who were specifically identified to Parent during
the course of its investigation of the Company and (2) for a period of two
years, neither it nor its affiliates or representatives will (a) effect or seek,
offer or propose (whether publicly or otherwise) to effect, or cause or
participate in or in any way assist any other person to effect or seek, offer or
propose (whether publicly or otherwise) to effect or participate in (i) any
acquisition of any securities (or beneficial ownership thereof) or assets of the
Company or any of its subsidiaries; (ii) any tender or exchange offer, merger or
other business combination involving the Company or any of its subsidiaries;
(iii) any recapitalization restructuring, liquidation, dissolution or other
extraordinary transaction with respect to the Company or any of its
subsidiaries; or (iv) any "solicitation" of "proxies" (as such terms are used in
the proxy rules of the Securities and Exchange Commission (the"SEC")) or
consents to vote any voting securities of the Company; (b) form, join or in any
way participate in a "group" (as defined under the Exchange Act);
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(c) otherwise act, alone or in concert with others, to seek to control or
influence the management, Board or policies of the Company; (d) take any action
which might force the Company to make a public announcement regarding any of the
types of matters set forth in (a) above; or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing. The
Confidentiality Agreement is filed herewith as Exhibit 2 to this Schedule 14D-9
and is incorporated herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD HAS (I) UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AT THE OFFER PRICE AND
THE MERGER, (II), DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, AND (III)
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER, AND TENDER THEIR SHARES TO
PURCHASER AND APPROVE AND ADOPT THE MERGER AGREEMENT AND MERGER, IF REQUIRED.
A joint press release announcing the Merger Agreement and related
transactions and a letter to the stockholders of the Company communicating the
Board's recommendation are filed herewith as Exhibits 3 and 4 to this Schedule
14D-9, respectively, and are incorporated herein by reference.
(b) BACKGROUND; REASONS FOR THE RECOMMENDATION
At the May 5, 1997 meeting of the Board, Paul W. Jones, President and Chief
Executive Officer of the Company, reported to the Board that he had received
unsolicited inquiries in March and April 1997 from several parties (including
Parent) which expressed an interest in entering into discussions with the
Company with respect to possible strategic alliances or partnerships with
respect to the supply of products and/or a possible business combination. The
Board determined at that time that it was not interested in pursuing a sale of
the Company, but nevertheless authorized management to respond to inquiries
received and to consider any proposals made by such parties. Thereafter, in May
and June 1997, various members of management of the Company met with
representatives of several companies who had expressed an interest in discussing
a possible business combination with the Company. On June 17, 1997, Mr. Jones
met with Robert L. McGeehan, President and Chief Executive Officer of Parent,
who confirmed to Mr. Jones that Parent had a very serious interest in exploring
a possible acquisition of the Company.
Mr. McGeehan telephoned Mr. Jones on July 7, 1997 to reiterate Parent's
interest in a possible acquisition of the Company, to discuss possible synergies
that might be available as a result of a combination of Parent and the Company
and to schedule a meeting to discuss in more detail the possible benefits to
both parties of a combination of Parent and the Company.
Prior to July 23, 1997, representatives of Parent proposed to enter into a
confidentiality agreement with the Company. On July 23, 1997, William R. Newlin,
Chairman of the Board of Parent, and Mr. McGeehan, met with Mr. Jones to discuss
further the potential synergies, in particular, with respect to sales and
distribution activities, that might be available as a result of a combination of
Parent and the Company. The parties also discussed the benefits of their
combined product offerings in the global market.
Following the meeting on July 23, 1997, counsel to the Company prepared and
forwarded to Parent a proposed confidentiality and standstill agreement. In
addition, during July and August 1997, the Company entered into confidentiality
and standstill agreements with two other parties who had expressed an interest
in pursuing discussions with the Company concerning a possible business
combination.
On August 11 and 12, 1997, the Company's Board held its regular quarterly
meeting. Among other matters, the Board received updates from management, as
part of the Company's strategic planning process, concerning the Company's near-
and long-term prospects. The Board also received updates from management
concerning the discussions that had occurred with Parent and others since May
and determined that, while it would not be advisable to pursue a sale of the
Company, it would be in the Company's, and stockholders', best interests to
consider seriously any proposal from a responsible party that was preemptive.
Accordingly, Mr. Jones was instructed to notify the parties that had expressed
an interest in the Company that the Board would entertain a
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preemptive bid and that if such parties were interested in doing so, they should
express such interest in early September. In addition, on August 13, 1997,
counsel to the Company contacted counsel to Parent and negotiated a
confidentiality and standstill agreement between the Company and Parent which
was then executed on such date.
During the remainder of August 1997, the Company provided Parent and others
with confidential information concerning the Company and received certain
confidential information from Parent and the other parties.
In early September 1997, representatives of one party who had been provided
with confidential information telephoned Mr. Jones and indicated that, while
such party remained interested in a possible acquisition of the Company, it was
not prepared to make a preemptive bid. A representative of another party with a
strategic interest in the Company met with Mr. Jones and indicated that, subject
to further due diligence, such company was interested in pursuing a tax-free
merger with the Company in which the Company's stockholders would receive the
other party's common stock having a value of $37 per share, provided that such
merger would be accounted for as a "pooling of interests."
On September 8, 1997, Messrs. Newlin and McGeehan met with Mr. Jones and
advised Mr. Jones that, subject to the completion of additional due diligence,
Parent was interested in acquiring the Company for $37 per share in cash.
On the afternoon of September 8, 1997 and the morning of September 9, 1997,
the Executive Committee of the Board met to discuss the responses of each party,
the indications of interest received and whether to recommend to the Company's
Board that the Company should pursue any further discussions. The Executive
Committee then determined that a meeting of the Board should be convened
promptly, that the Board should then be fully informed on the developments and
that further action should be referred to the Board. The Executive Committee
also determined to recommend to the Board the engagement of Credit Suisse First
Boston Corporation ("CSFB") and NationsBanc Capital Markets, Inc.
("NationsBanc") as the Company's financial advisors.
On September 11, 1997, a telephonic meeting of the Company's Board was
convened at which all but two members of the Board were present. At such
meeting, management reviewed with the Board the developments since the last
meeting of the Board.
On September 14, 1997, Parent confirmed to the Company in writing that it
desired to acquire the Company and provided a term sheet and draft merger
agreement setting forth the proposed terms of such a transaction.
A meeting of the Company's Board was held on September 15, 1997. At such
meeting, the Board formally considered the retention of CSFB and NationsBanc as
financial advisors, effective as of September 9, 1997, and received a report
from management concerning the Company's prospects and a preliminary valuation
analysis from representatives of CSFB and NationsBanc. The Board determined that
it would be in the best interests of the Company and its stockholders to
continue to engage in further discussions with Parent and the other party to
clarify their proposals and to determine if they were serious and worth
pursuing. The Board also reviewed with CSFB a list of other parties which might
be interested in an acquisition of the Company. After reviewing such list, the
Board determined not to contact a number of possible strategic acquirors because
of advice it received that antitrust and/or competitive considerations were such
that such contacts would not be in the Company's best interests. However, CSFB
was authorized to contact four other entities to ascertain if they had an
interest in engaging in discussions with the Company. The Board also determined
to appoint a Special Committee consisting of Donald E. Nickelson, Chairman,
Peter S. Finley and Dennis W. Sheehan to finalize the terms of the engagement of
CSFB and NationsBanc and to negotiate on behalf of the Board with the interested
parties.
On September 16 and 17, 1997, counsel to the Company provided Parent and
the other interested party with drafts of a proposed merger agreement for their
review and comment. Between September 17 and October 9, 1997, counsel to the
Company negotiated with counsel for Parent and counsel for the other party the
terms of a proposed merger agreement and substantially finalized such terms with
counsel to Parent on October 9, 1997.
15
<PAGE> 16
On September 19, 1997, Mr. Jones and a representative of CSFB met with
Messrs. Newlin and McGeehan to discuss Parent's level of interest in acquiring
the Company and to evaluate Parent's further due diligence requirements.
Following such meeting, the Company and CSFB established a detailed due
diligence schedule whereby Parent would be provided with access to Company
documents, personnel and facilities in order to determine whether the parties
were willing to proceed. Similar arrangements were made with the other party.
On September 23, 1997 and October 2, 1997, the Special Committee met with
the Company's legal and financial advisors to obtain updated information
concerning the progress of discussions. At the September 23 meeting, CSFB
advised the Special Committee that none of the four parties contacted expressed
an interest in pursuing a possible transaction. At the October 2 meeting, the
Special Committee determined to contact one additional party with a possible
strategic interest in the Company. Such party subsequently advised CSFB that it
was not interested in considering an acquisition of the Company at a significant
premium to the prevailing market price for the Company's Shares.
Representatives of Parent and the other party thereafter conducted their
due diligence investigations during the two week period commencing September 22,
1997, including meetings on September 29 and 30, 1997, at which management of
the Company provided management of Parent with detailed information concerning
the Company, its business units and its near- and long-term prospects.
Representatives of the other party were provided similar information in meetings
on October 6 and 7, 1997.
Following completion of both parties' due diligence efforts,
representatives of CSFB advised Parent and the other party to submit detailed
bids by the close of business on October 8, 1997. Parent responded by indicating
that it was prepared to acquire the Company at a price of $36 per share in cash.
The other party indicated that it was still interested in an acquisition of the
Company, but did not specify a firm price. The Board of Directors of the Company
then met by conference telephone on the evening of October 8, 1997 and
authorized representatives of CSFB to negotiate with Parent in an effort to
increase the cash consideration offered by Parent. On the morning of October 9,
Parent responded by increasing its offer to $38 per share in cash.
On October 10, 1997, the Board met to consider the terms of the Merger
Agreement and the transactions contemplated thereby. At such meeting, the Board
reviewed the discussions between the Company, Parent and other parties and
considered the proposed transaction with Parent. In particular, the Board
received presentations from its legal and financial advisors concerning the
transaction process and reviewed the terms and conditions of the Merger
Agreement. CSFB delivered its written opinion to the Board, that based upon and
subject to the matters set forth therein and as of the date thereof, the cash
consideration to be received by stockholders of the Company in the Offer and the
Merger was fair to stockholders of the Company from a financial point of view.
After considering such presentations, the Board unanimously approved the
proposed Merger Agreement and all transactions contemplated thereby. WITH
RESPECT TO THE OFFER, THE BOARD UNANIMOUSLY RECOMMENDED THAT STOCKHOLDERS ACCEPT
THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT TO THE OFFER.
On the evening of October 10, 1997, Parent, Purchaser and the Company
executed the Merger Agreement and on October 12, 1997, Parent and the Company
issued a joint press release. A copy of the joint press release of the Company
and Parent announcing the execution of the Merger Agreement is filed as Exhibit
3 to this Schedule 14D-9 and is incorporated herein by reference thereto. A copy
of a letter to stockholders of the Company, which accompanies this Schedule
14D-9, is filed as Exhibit 4 to this Schedule 14D-9 and is incorporated herein
by reference.
In reaching its conclusion and recommendation described above, the Board
considered the following factors:
1. the business, results of operations and future prospects of the
Company;
2. the terms of the Merger Agreement and the conditions of the Offer;
3. the opinion of CSFB to the effect that, as of the date of its
opinion and based upon and subject to certain matters stated therein, the
consideration to be received by the Company's stockholders pursuant to the
Offer and the Merger, was fair to such holders from a financial point of
view. The full text of CSFB's written opinion, which sets forth the
assumptions made, matters considered and limitations on the review
undertaken by CSFB is attached as Annex II hereto and filed as Exhibit 5 to
this Schedule 14D-9 and is
16
<PAGE> 17
incorporated herein by reference. STOCKHOLDERS ARE URGED TO READ THE
OPINION OF CSFB CAREFULLY IN ITS ENTIRETY;
4. the fact that the Offer is not subject to a financing, due
diligence or pooling-of-interests condition;
5. the fact that the Merger Agreement, which prohibits the Company,
its affiliates, and their respective officers, directors, employees,
representatives and agents from initiating, soliciting or encouraging any
potential Takeover Proposal, does permit the Company prior to consummation
of the Offer (conditioned upon the execution of confidentiality agreements)
to furnish non-public information and to allow access by and participation
in discussions and negotiations with any third party that has submitted a
bona fide and unsolicited acquisition proposal to the Company, provided
that the Board, upon advice of counsel, determines its failure to do so
would constitute a breach of its fiduciary duties;
6. the fact that the Company may terminate the Merger Agreement if the
Board determines, upon advice of its financial and legal advisors, that a
Takeover Proposal received by the Company is a Superior Proposal. In such
event and under certain other limited circumstances, the provisions of the
Merger Agreement require the Company to pay Parent a termination fee of $30
million and reimburse Parent and Purchaser for out-of-pocket expenses in an
amount up to $5 million as described above under "The Merger Agreement";
7. the results of the process undertaken to identify and consider
proposals from third parties;
8. historical market prices with respect to the Shares, particularly
the fact that the transaction will enable stockholders to realize a
significant premium over the prices at which the Shares traded prior to
public announcement of the Offer; and
9. the regulatory approvals required to consummate the Offer and
Merger, and the prospects for receiving all such approvals.
The Board did not assign relative weights to the factors or determine that
any factor was of particular importance. Rather, the Board viewed its position
and recommendations as being based on the totality of the information presented
to and considered by it. Individual directors may have given different weight to
different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
CSFB and NationsBanc have been retained by the Company to act as the
Company's financial advisors with respect to the Offer and the Merger. Pursuant
to an engagement letter with CSFB, the Company has agreed to pay CSFB for its
services a transaction fee equal to 0.9% of the aggregate consideration (as
defined in the engagement letter), including debt obligations assumed or retired
by Parent or Purchaser, payable upon consummation of the Merger. CSFB has agreed
to compensate NationsBanc for its services out of such transaction fee. The
Company has also agreed to reimburse CSFB for its out-of-pocket expenses,
including the fees and expenses of its counsel and other financial advisors (if
approved by the Board), and to indemnify CSFB and certain related parties
against certain liabilities, including liabilities under the federal securities
laws. In the ordinary course of business, CSFB, NationsBanc and their affiliates
may actively trade the debt and equity securities of the Company and Parent for
their own account and for the accounts of customers and, accordingly, may at any
time hold a long or short position in such securities.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to the Company's stockholders with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best knowledge of the Company, no transactions in the Shares
have been effected during the past 60 days by the Company or any executive
officer, director, affiliate or subsidiary of the Company.
17
<PAGE> 18
(b) To the best knowledge of the Company, all of its executive officers,
directors, affiliates and subsidiaries presently intend to tender to the
Purchaser, pursuant to the Offer, any Shares which are held of record or are
beneficially owned by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a) Except as set forth in Item 3(b) or Item 4 hereof, the Company is not
engaged in any other 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 subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described above or in Item 3(b), there are currently 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 Item 7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(A) RIGHTS AGREEMENT
Each Right issued pursuant to the Rights Agreement initially entitles the
registered holder thereof to purchase one one-hundredth of a share of Series A
Preferred Stock, par value $0.01 per share (the "Preferred Shares"), of the
Company at a price of $150 per one one-hundredth of a Preferred Share, subject
to adjustment. On the earlier of (i) the tenth day following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Shares or (ii) the tenth business
day (or such later date as may be determined by action of the Company's Board of
Directors prior to the time any person becomes an Acquiring Person) following
the commencement of a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more of
such outstanding Shares (the earlier of such date being the "Distribution
Date"), the Rights become exercisable and trade separately from the common stock
of the Company. After the Distribution Date, each holder of a Right (other than
the Acquiring Person) will thereafter have the right to acquire Shares having a
market value of two times the exercise price of the Right; or, in certain
circumstances, the right to acquire shares of the Acquiring Person's capital
stock. The Rights may be redeemed at a price of $0.01 per Right at any time
prior to a person becoming an Acquiring Person. For a complete description of
the Rights Agreement, see the Company's Form 8-A, dated February 7, 1996, the
Company's Current Report on Form 8-K, dated as of February 6, 1996, and the
Rights Agreement filed as an exhibit to the Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, each as filed with the SEC and incorporated
herein by reference.
The Company has entered into an amendment to the Rights Agreement to make
it inapplicable to the Offer, the Merger and the other transactions contemplated
by the Merger Agreement. A copy of such amendment to the Rights Agreement is
filed as Exhibit 6 to this Schedule 14D-9 and incorporated herein by reference.
(B) DELAWARE GENERAL CORPORATION LAW
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of the Delaware General Corporation Law. Section 203 would prevent an
"Interested Stockholder" (generally defined as a person beneficially owning 15%
or more of a corporation's voting stock) from engaging in a "Business
Combination" (as defined in Section 203) with a Delaware corporation for three
years following the date such person became an Interested Stockholder unless:
(i) before such person became an Interested Stockholder, the board of directors
of the corporation approved the transaction in which the Interested Stockholder
became an Interested Stockholder or approved the Business Combination, (ii) upon
consummation of the transaction which resulted in the Interested Stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding for purposes of determining the number of
shares of outstanding stock held by directors who are also officers and by
employee
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<PAGE> 19
stock ownership plans that do not allow plan participants to determine
confidentially whether to tender shares), or (iii) following the transaction in
which such person became an Interested Stockholder, the Business Combination is
(x) approved by the board of directors of the corporation and (y) authorized at
a meeting of stockholders by the affirmative vote of the holders of at least
66 2/3% of the outstanding voting stock of the corporation not owned by the
Interested Stockholder. In accordance with the provisions of the Company's
Amended and Restated Certificate of Incorporation and Section 203, the Board of
Directors of the Company has approved the Merger Agreement and the Purchaser's
acquisition of Shares pursuant to the Offer and the Merger and the transactions
contemplated thereby and, therefore, the restrictions of Section 203 are
inapplicable to the Offer, the Merger and the related transactions.
(C) ANTITRUST
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the rules that have been promulgated thereunder by the
Federal Trade Commission (the "FTC"), certain acquisition transactions may not
be consummated unless certain information has been furnished to the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
and the FTC and certain waiting period requirements have been satisfied. The
acquisition of Shares by the Purchaser pursuant to the Offer is subject to such
requirements. Pursuant to the requirements of the HSR Act, Parent and the
Company filed their respective required Notification and Report Forms (the
"Forms") with the Antitrust Division and the FTC on October 15, 1997 and October
16, 1997, respectively. The statutory waiting period applicable to the purchase
of Shares pursuant to the Offer is scheduled to expire at 11:59 P.M., New York
City time, on the fifteenth day after Parent has filed its Form, unless early
termination of the waiting period is granted or Parent and the Company receive a
request for additional information or documentary material prior thereto.
Pursuant to the HSR Act, Parent has requested early termination of the
applicable waiting period. However, prior to such date, the Antitrust Division
or the FTC may extend the waiting period by requesting additional information or
documentary material relevant to the acquisition. If such a request is made, the
waiting period will be extended until 11:59 P.M., New York City time, on the
tenth day after substantial compliance by Parent with such request. Thereafter,
such waiting periods can be extended only by court order. There can be no
assurance that the waiting period will be terminated early. The Antitrust
Division and the FTC frequently scrutinize the legality under the antitrust laws
of transactions. At any time before or after the consummation of any such
transaction, the Antitrust Division or the FTC could, notwithstanding
termination of the waiting period, take such action under the antitrust laws as
either deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of Shares pursuant to the Offer or seeking divestiture of
the Shares so acquired or divestiture of substantial assets of the Parent or the
Company. Private parties may also bring legal actions under the antitrust laws.
There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made, or if such a challenge is made, what the result will be.
(D) PURCHASER'S DESIGNATION OF PERSONS TO BE ELECTED TO THE COMPANY'S BOARD OF
DIRECTORS
The Information Statement attached hereto as Annex I is being furnished in
connection with the possible designation by the Purchaser, pursuant to the
Merger Agreement, of certain persons to be appointed to the Board other than at
a meeting of the Company's stockholders.
19
<PAGE> 20
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------
<S> <C>
Exhibit 1 -- Agreement and Plan of Merger, dated as of October 10, 1997, by and
among Kennametal Inc., Kennametal Acquisition Corp. (formerly known
as Palmer Acquisition Corp.) and Greenfield Industries, Inc.
Exhibit 2 -- Confidentiality Agreement dated August 13, 1997, between Greenfield
Industries, Inc. and Kennametal Inc.
Exhibit 3 -- Joint Press Release issued by Kennametal Inc. and Greenfield
Industries, Inc. on October 12, 1997.
Exhibit 4 -- Letter to Stockholders, dated October 17, 1997.*
Exhibit 5 -- Opinion of CSFB, dated October 10, 1997.*
Exhibit 6 -- Amendment No. 1 to Restated Rights Agreement, dated October 10, 1997,
between Greenfield Industries, Inc. and First Chicago Trust Company
of New York.
Exhibit 7 -- Amended and Restated Employee Stock Option Plan, as amended.
Exhibit 8 -- Amended and Restated 1995 Restricted Stock Bonus Plan, as amended.
Exhibit 9 -- Amended and Restated 1995 Equity Incentive Plan.
Exhibit 10 -- Amended and Restated 1993 Directors Non-Qualified Stock Option Plan,
as amended.
Exhibit 11 -- Amended and Restated 1995 Directors Non-Qualified Stock Option Plan.
</TABLE>
- ---------------
* Included in copies of the Schedule 14D-9 mailed to stockholders.
20
<PAGE> 21
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
GREENFIELD INDUSTRIES, INC.
By: /s/ PAUL W. JONES
----------------------------------
Name: Paul W. Jones
Title: President and Chief
Executive Officer
Date: October 17, 1997
21
<PAGE> 22
ANNEX I
GREENFIELD INDUSTRIES, INC.
2743 PERIMETER PARKWAY, BUILDING 100, SUITE 100
AUGUSTA, GEORGIA 30909
INFORMATION STATEMENT PURSUANT
TO SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND
RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about October 17, 1997 as
part of the Company's Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9"). You are receiving this Information Statement in
connection with the possible election of persons designated by Purchaser to a
majority of seats on the Board of Directors of the Company (the "Board"). The
Merger Agreement requires the Company, upon the purchase by the Purchaser of a
majority of the outstanding shares of common stock, par value $0.01 per share of
the Company, including the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Restated Rights Agreement, dated as of February
6, 1996, as amended October 10, 1997 (the "Rights Agreement"), between the
Company and First Chicago Trust Company of New York, as Rights Agent, (the
"Shares"), pursuant to the Offer, promptly to cause the Purchaser's designees to
be elected to the Board under the circumstances described therein. See "Rights
to Designate Directors; Purchaser's Designees."
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used and not otherwise
defined herein shall have the meaning set forth in the Schedule 14D-9.
Pursuant to the Merger Agreement, Purchaser commenced the Offer on Friday,
October 17, 1997. The Offer is scheduled to expire at 12:00 midnight on Friday,
November 14, 1997, New York City time, unless the Offer is extended. The
consummation of the Offer and the Merger pursuant to the terms of the Merger
Agreement would result in a change in control of the Company.
The information contained in this Information Statement concerning Parent
and Purchaser has been furnished to the Company by Parent and Purchaser, and the
Company assumes no responsibility for the accuracy or completeness of such
information.
BOARD OF DIRECTORS
GENERAL
Common stock, par value $0.01 per share, is the only class of voting stock
of the Company outstanding. As of October 10, 1997, there were outstanding and
entitled to vote 16,445,312 Shares, each of which is entitled to one vote. No
cumulative voting rights exist under the Company's Amended and Restated
Certificate of Incorporation. For information regarding the ownership of Shares
by holders of more than five percent of the outstanding Shares and by the
management of the Company, see "Security Ownership of Certain Beneficial Owners
and Management."
The Board is comprised of a single class of directors. The directors are
elected at the Annual Meeting of the stockholders of the Company and each
director elected holds office until his or her successor is elected and
qualified. The Board currently consists of eight members. There are no family
relationships among any directors or executive officers of the Company.
I-1
<PAGE> 23
RIGHTS TO DESIGNATE DIRECTORS; PURCHASER'S DESIGNEES
The Merger Agreement provides that, promptly (but in any event within one
business day) upon the purchase by the Purchaser of a majority of the
outstanding Shares pursuant to the Offer, either (a) a majority of the members
of the Board shall resign and the remaining members of the Board shall fill all
of the positions so vacated with persons designated by the Purchaser or (b) the
size of the Board shall be expanded and the vacant seats filled with persons
designated by the Purchaser so that Purchaser's designees shall constitute a
majority of the members of the Board. In either case, at all times thereafter
through the Effective Time, a majority of the members of the Board shall be
persons designated by Purchaser.
The Company's obligation to appoint designees to the Board shall be subject
to Section 14(f) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to such Section and Rule in order to
fulfill its obligations under the Merger Agreement and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations.
PURCHASER'S DESIGNEES
Pursuant to the terms of the Merger Agreement, it is expected that
Purchaser's designees will take office as directors of the Company upon
Purchaser's payment for such number of Shares as represents at least a majority
of the outstanding Shares (on a fully diluted basis) in the Offer.
Purchaser has advised the Company that its designees will be the persons
described in the following table and has provided the information below
regarding such individuals.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
- ---------------------------------------------- --- ------------------------------------------------
<S> <C> <C>
Richard C. Hendricks.......................... 58 Vice President and Director of Corporate
Business Development of Parent
H. Patrick Mahanes, Jr. ...................... 54 Vice President and Chief Operating Officer of
Parent
Robert L. McGeehan............................ 60 President and Chief Executive Officer of Parent
William R. Newlin............................. 56 Managing Director of Buchanan Ingersoll
Professional Corporation (attorneys at law) and
Chairman of the Board of Parent
Richard J. Orwig.............................. 56 Vice President and Chief Financial and
Administrative Officer of Parent
</TABLE>
Mr. Hendricks has been a Vice President of Parent since 1982 and its
Director of Corporate Business Development since 1992. He served as General
Manager of the Mining Metallurgical Division of Parent from 1990 to 1992.
Mr. Mahanes has been a Vice President of Parent since 1987 and its Director
of Operations from 1991 to 1995.
Mr. McGeehan has been the President of Parent since 1989 and its Chief
Executive Officer since 1991. He served as Director of Parent's Metalworking
Systems Division from 1988 to 1989, and as Parent's General Manager of Machining
Systems Division from 1985 to 1988. Mr. McGeehan currently serves as a director
of Parent and JLK Direct Distribution Inc.
Mr. Newlin is the Managing Director of Buchanan Ingersoll Professional
Corporation (attorneys at law). He has served as Chairman of the Board of the
Parent since 1996 and as a director of Parent since 1982. He serves as a
Managing General Partner of CEO Venture Funds (private venture capital funds)
and as a director of Black Box Corporation, National City Bank of Pennsylvania,
Parker/Hunter Incorporated, the Pittsburgh High Technology Council and CME
Information Services, Inc.
I-2
<PAGE> 24
Mr. Orwig has been a Vice President of Parent since 1987 and its Chief
Financial and Administrative Officer since 1994. He served as Director of
Administration of Parent from 1991 to 1994.
The business address of each of Purchaser's designees is c/o Parent, State
Route 981 South, P.O.Box 231, Latrobe, Pennsylvania 15650. Purchaser has advised
the Company that each of the persons listed in the table above has consented to
act as a director, and that none of such persons has during the last five years
been convicted in a criminal proceeding or was party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was, or is, subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violation of such laws. Parent and
Purchaser have also advised the Company that none of the persons listed in the
table above is a director of, or holds any position with, the Company, and that
none of such persons beneficially owns any equity securities, or rights to
acquire any equity securities, of the Company or has been involved in any
transactions with the Company or any of its directors, executive officers or
affiliates which are required to be disclosed pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC"). The election
of Purchaser's designees will be accomplished at a meeting or by written consent
of the Board.
BOARD OF DIRECTORS OF THE COMPANY
Listed below are the names, ages and principal occupations of all directors
of the Company.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ----------------------- --- ----------------------------------------- --------------
<S> <C> <C> <C>
John W. Burge, Jr...... 65 Principal of John W. Burge & Assoc., February 1995
Pensacola, Florida
Peter S. Finley........ 42 Senior Managing Director of Harbour Group April 1986
Industries, Inc., St. Louis, Missouri
Paul W. Jones.......... 49 President and Chief Executive Officer of May 1993
the Company, Augusta, Georgia
Robert E. Lefton....... 66 President and Chief Executive Officer of August 1993
Psychological Associates, Inc., St.
Louis, Missouri
Donald E. Nickelson.... 64 Chairman of the Board of the Company, August 1993
Augusta, Georgia; private investor
Robert W. Pratt, Jr.... 66 Strategic Management Consultant, Rye, New February 1995
York
Julian M. Seeherman.... 67 Management Consultant, St. Louis, August 1993
Missouri
Dennis W. Sheehan...... 63 Chairman of the Board, President and August 1993
Chief Executive Officer of AXIA,
Incorporated, Lombard, Illinois
</TABLE>
Except as set forth below, each of the directors has been engaged in his
principal occupation described above during the past five years.
Mr. Burge has been a Principal of John W. Burge & Assoc., a management
consulting firm, since 1980 and was an advisory director of Emerson Electric
Co., in St. Louis, Missouri, from 1980 to 1993. Prior to that time, he held the
positions of President and General Manager of the Electronics and Space Division
and Group Vice President, Government and Defense at Emerson Electric Co.
Mr. Finley has been Senior Managing Director since 1997 and Senior Vice
President -- Corporate Development of Harbour Group Industries, Inc., a company
which provides corporate development services to its affiliates, from 1990 to
1997. From 1985 to 1990, he served as Vice President of Harbour Group
Industries, Inc. In addition, Mr. Finley holds various officer positions with
operating companies owned by affiliates of Harbour Group Industries, Inc. He
presently serves as a director of Omniquip International, Inc.
Mr. Jones has been the President of the Company since 1989 and its Chief
Executive Officer since 1993. From 1988 to 1989, he served as General
Manager -- Manufacturing for General Electric Transportation
I-3
<PAGE> 25
Systems. Prior to that time, Mr. Jones was the General Manager of General
Electric Drives, Motor and Generator Operations. Mr. Jones received a Bachelor
of Science degree in Engineering from the University of Evansville. He presently
serves as a director of Omniquip International, Inc.
Dr. Lefton has served as President and Chief Executive Officer of
Psychological Associates, Inc., an international consulting, training and
development firm headquartered in St. Louis, Missouri, since 1958. He presently
serves as a director of Stifel Financial Corp., Wave Technology, Inc. and Allied
Healthcare Products, Inc.
Mr. Nickelson, a private investor, has served as Chairman of the Board of
the Company since 1993. From 1988 to 1990, he served as President of PaineWebber
Group, Inc., an investment banking and brokerage firm. Mr. Nickelson has served
as Vice Chairman of Harbour Group Industries, Inc. since 1990. Mr. Nickelson
currently serves as a trustee of Mainstay Mutual Funds, as a director of
Corporate Property Associates #10 and Carey Institutional Properties, two real
estate investment trusts located in New York, New York, Allied Healthcare
Products, Inc., DT Industries, Inc. and Sugen, Inc., and as a director and
Chairman of the Board of Omniquip International, Inc.
Dr. Pratt has been a consultant in marketing and strategic management since
1992. Also since 1992, he has been Marketing Executive-in-Residence and an
Adjunct Professor of Business at Columbia University's Graduate School of
Business. From 1988 to 1992, he served as Executive Vice President of Avon
Products, Inc., where he was responsible for business development and planning.
Prior to joining Avon in 1983, Dr. Pratt held planning and marketing positions
with R. J. Reynolds Industries, Heublein, Inc. and General Electric Company. He
is a member of the Board of Advisors of The Michael Allen Company, consultants
in strategic growth management.
Mr. Seeherman has been a consultant specializing in strategic management
since February 1996. Prior to such time, Mr. Seeherman served as the Chairman of
the Board of Venture Stores, Inc., a retail chain of mass merchandising stores,
from 1990 to 1996, as its Chief Executive Officer from 1990 to 1995 and as its
President and Chief Executive Officer from 1982 to 1990.
Mr. Sheehan has been Chairman of the Board, President and Chief Executive
Officer of AXIA Incorporated, a privately-owned manufacturer of various
commercial and industrial products, since 1984. Mr. Sheehan is a director of the
Chamber of Commerce of the United States of America, The National Chamber
Litigation Center, National Council on Crime and Delinquency, CST, Inc. (a paper
processor located in Wheeling, Illinois), Bradington-Young, Inc. (a furniture
manufacturer located in Hickory, North Carolina) and a director and Chairman of
the Board of Allied Healthcare Products, Inc.
BOARD MEETINGS -- COMMITTEES OF THE BOARD
The Board of Directors of the Company met six times during the fiscal year
ended December 31, 1996. The Board presently maintains an Executive Committee, a
Compensation and Options Committee, a Nominating Committee and an Audit
Committee.
The Executive Committee presently consists of Messrs. Burge, Jones,
Nickelson and Pratt. The Executive Committee exercises all powers of the Board
of Directors of the Company, to the extent permitted by law, between meetings of
the Board. The Executive Committee met six times during the year ended December
31, 1996.
The Compensation and Options Committee presently consists of Messrs.
Lefton, Nickelson and Sheehan and reviews and approves the Company's executive
compensation policy, makes recommendations concerning the Company's employee
benefit policies and administers the Company's incentive compensation bonus and
stock option plans in effect from time to time, unless otherwise specified in
such plan. The Compensation and Options Committee met five times during the year
ended December 31, 1996.
The Nominating Committee presently consists of Messrs. Burge, Lefton,
Nickelson and Sheehan and recommends nominees for election to the Board of
Directors of the Company. The Nominating Committee held one meeting during the
year ended December 31, 1996.
I-4
<PAGE> 26
The Audit Committee presently consists of Messrs. Burge, Finley, Pratt,
Seeherman and Sheehan and recommends engagement of the Company's independent
auditors and is primarily responsible for approving the services performed by
the Company's independent auditors and for reviewing and evaluating the
Company's accounting principles and its systems of internal accounting controls.
The Audit Committee held four meetings during the year ended December 31, 1996.
During the fiscal year ended December 31, 1996, no director attended fewer
than 75% of the aggregate of (i) the total number of meetings of the Board (held
during the period for which he has been a director) and (ii) the total number of
meetings held by all committees of the Board on which he served (during the
periods that he served).
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
HOLDERS OF MORE THAN FIVE PERCENT BENEFICIAL OWNERSHIP
The following table sets forth information regarding all persons known to
the Company to be the beneficial owners of more than five percent of the Shares
as of October 10, 1997.
<TABLE>
<CAPTION>
SHARES OWNED PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY(1) OUTSTANDING SHARES
- -------------------------------------------------------------- ------------ ------------------
<S> <C> <C>
Morgan Stanley Asset Management............................... 1,472,351 9.0%
25 Cabot Square, 10th Floor
London, England E14 4QA
Reich & Tang.................................................. 1,305,400 7.9
600 5th Avenue
New York, NY 10020
Jurika & Voyles Inc. ......................................... 1,299,475 7.9
1999 Harrison Street, Suite 700
Oakland, CA 94612
Franklin Resources............................................ 864,500 5.3
51 JFK Parkway
Short Hills, NJ 07078
Prudential Mutual Fund Investment Management.................. 852,650 5.2
751 Broad Street
Newark, NJ 07101-1084
</TABLE>
- ---------------
(1) Information obtained from the Schedule 13F filed by such company with the
SEC for the quarter ending June 30, 1997.
I-5
<PAGE> 27
BENEFICIAL OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Shares as of October 10, 1997 by each director of the Company, by
each of the executive officers named in the Summary Compensation Table and by
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES OWNED PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OUTSTANDING SHARES
------------------------------------------------------ ------------ ------------------
<S> <C> <C>
Paul W. Jones(1)...................................... 184,382 1.1%
Gary L. Weller(2)..................................... 54,844 *
Peter K. Hunt(3)...................................... 30,685 *
Henry G. Libby(4)..................................... 12,741 *
Roger B. Farley(5).................................... 15,572 *
John W. Burge, Jr.(6)................................. 4,500 *
Peter S. Finley(7).................................... 53,800 *
Robert E. Lefton(8)................................... 8,800 *
Donald E. Nickelson(9)................................ 15,250 *
Robert W. Pratt, Jr.(10).............................. 4,500 *
Julian M. Seeherman(11)............................... 10,000 *
Dennis W. Sheehan(12)................................. 15,500 *
All directors and executive officers as a group (14
persons)............................................ 427,631 2.6%
========== ==============
</TABLE>
- ---------------
* Less than 1.0%.
(1) Represents 134,382 Shares owned by Mr. Jones and 50,000 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Company's Amended and Restated Employee Stock Option
Plan, as amended (the "Employee Plan"). Excludes an aggregate of 165,500
shares subject to the terms of the Company's several employee benefit plans
which are not currently exercisable or which have not been earned. Also
excludes 1,100 Shares owned by his spouse, as to which Mr. Jones disclaims
beneficial ownership.
(2) Represents 32,344 Shares owned by Mr. Weller and 22,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Employee Plan. Excludes an aggregate of 83,900 shares
subject to the terms of the Company's several employee benefit plans which
are not currently exercisable or which have not been earned.
(3) Represents 16,185 Shares owned by Mr. Hunt and 14,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Employee Plan. Excludes an aggregate of 72,150 shares
subject to the terms of the Company's several employee benefit plans which
are not currently exercisable or which have not been earned. Also excludes
350 Shares owned by his daughter, as to which Mr. Hunt disclaims beneficial
ownership.
(4) Excludes an aggregate of 25,000 shares subject to the terms of the
Company's Employee Plan which are not currently exercisable.
(5) Represents 4,322 Shares owned by Mr. Farley and 11,250 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Employee Plan. Excludes an aggregate of 39,250 shares
subject to the terms of the Company's Employee Plan which are not currently
exercisable.
(6) Represents 1,000 Shares owned by Mr. Burge and 3,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the Amended and Restated 1993 Directors Non-Qualified Stock Option Plan,
as amended (the "1993 Directors Plan") and the Amended and Restated 1995
Directors Non-Qualified Stock Option Plan (the "1995 Directors Plan" and,
together with the 1993 Directors Plan, the "Directors Plans"). Excludes
9,000 shares issuable pursuant to options granted under the Directors Plans
which are not currently exercisable.
I-6
<PAGE> 28
(7) Represents 45,300 Shares owned by Mr. Finley and 8,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 3,500 shares issuable
pursuant to options granted under the Directors Plans which are not
currently exercisable.
(8) Represents 300 Shares owned by Dr. Lefton and 8,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 3,500 shares issuable
pursuant to options granted under the Directors Plans which are not
currently exercisable.
(9) Represents 3,000 Shares owned by Mr. Nickelson and 12,250 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 4,750 shares issuable
pursuant to options granted under the Directors Plans which are not
currently exercisable.
(10) Represents 1,000 Shares owned by Dr. Pratt and 3,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 8,500 shares issuable
pursuant to options granted under the Directors Plans which are not
currently exercisable.
(11) Represents 1,000 Shares owned by Mr. Seeherman and 9,000 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 4,000 shares issuable
pursuant to options granted under the Directors Plans which are not
currently exercisable.
(12) Represents 6,500 Shares owned by Mr. Sheehan and 9,000 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 4,000 shares issuable
pursuant to options granted under the Directors Plans which are not
currently exercisable.
The amounts shown above do not include the vesting of options or other
rights upon a change in control of the Company as a result of the purchase by
the Purchaser of a majority of the outstanding Shares of the Company pursuant to
the Offer.
EXECUTIVE OFFICERS
The following table provides certain information regarding the executive
officers of the Company who are appointed by and serve at the pleasure of the
Board.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ------------------------------ --- ------------------------------------------------
<S> <C> <C>
Paul W. Jones................. 49 President and Chief Executive Officer(1)
Gary L. Weller................ 37 Executive Vice President and Chief Financial
Officer; Secretary(2)
Peter K. Hunt................. 51 Senior Vice President -- Business Development(3)
Henry G. Libby................ 57 Senior Vice President -- Consumer Products
Group(4)
Roger B. Farley............... 53 Senior Vice President -- Human Resources(5)
Ajita G. Rajendra............. 45 Senior Vice President -- Industrial Products
Group(6)
Mark R. Richards.............. 37 Vice President -- Electronics Products Group(7)
</TABLE>
- ---------------
(1) See information under "Board of Directors of the Company."
(2) Mr. Weller has been the Executive Vice President since August 1997 and
Senior Vice President, Chief Financial Officer and Secretary of the Company
since May 1993. From 1991 to 1993, he served as the Company's Director of
Operations in Greenfield, Massachusetts and from 1988 to 1991 he was the
Corporate Controller of the Company. Prior thereto, Mr. Weller, a Certified
Public Accountant, served as an audit manager with Price Waterhouse. He
received a Bachelor of Science degree in Business Administration from
Central Missouri State University.
(3) Mr. Hunt has been the Senior Vice President -- Business Development of the
Company since August 1997. From October 1995 to August 1997, he was Senior
Vice President -- Industrial Products Group. From 1993 to 1995, he served as
the Company's Vice President -- Manufacturing in Augusta, Georgia. Prior to
joining the Company, from 1988 to 1993, he served as Vice
President -- Operations of A.B. Dick Company in Chicago, Illinois, a
manufacturer of printing and reprographics equipment and a wholly-owned
subsidiary of
I-7
<PAGE> 29
GEC Plc UK. Mr. Hunt, a Chartered Engineer, received a Bachelor of
Technology degree, with honors, in Industrial Engineering and Management
from Loughborough University in the United Kingdom.
(4) Mr. Libby has been the Senior Vice President -- Consumer Products Group of
the Company since January 1996. From 1994 to 1996, Mr. Libby served as Vice
President of Rule Industries, Inc., a manufacturer of cutting tools and
marine products which was acquired by the Company in January 1996, and as
President of Rule Manufacturing, Inc., a subsidiary of Rule Industries, Inc.
From 1990 to 1994, he served as President and Chief Executive Officer of The
Disston Company, a manufacturer of cutting tools and power tool accessories,
the assets of which were acquired by Rule Industries, Inc., in 1994.
(5) Mr. Farley has been the Senior Vice President -- Human Resources since
August 1997 and Vice President -- Human Resources of the Company since June
1994. From 1981 to 1994, Mr. Farley served as Manager -- Human Resources for
General Electric Industrial Systems and Services. He received a Bachelor of
Science degree in Business Administration from Eastern Kentucky University.
(6) Mr. Rajendra has served as the Senior Vice President -- Industrial Products
Group of the Company since August 1997. From July 1996 to August 1997, he
served as Vice President -- Electronics Products Group. Prior to joining the
Company, he worked in various capacities at Corning, Inc. for 18 years. He
served as Director, Retail Operations and Development of Corning Inc. from
1994 to 1996, as Business Director, Corning-Cookware from 1993 to 1994 and
as President, Revereware Corporation from 1991 to 1993 (a Corning
subsidiary). He received a Bachelor of Science degree in Chemical
Engineering from Indian Institute of Technology and a Masters of Business
Administration from Carnegie -- Mellon University.
(7) Mr. Richards has served as the Vice President -- Electronics Products Group
of the Company since August 1997. From July 1995 to August 1997, he served
as Vice President -- Business Development of the Company. From 1992 to 1995,
he served as Associate Director of Corporate Strategic Marketing and
Planning for Searle & Co., a pharmaceutical manufacturer which is a
wholly-owned subsidiary of Monsanto Company. From 1989 to 1992, he served as
a Senior Associate at Coopers & Lybrand in the financial services group. Mr.
Richards received a Bachelor of Science degree from Michigan State
University and a Masters of Management degree from the Kellogg School of
Management at Northwestern University.
I-8
<PAGE> 30
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the years ended December 31, 1994, 1995 and
1996 to the chief executive officer and to the Company's four most highly
compensated executive officers whose total salary and bonus exceeded $100,000
during the year ended December 31, 1996 (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION --------------------------------------
-------------------------------- RESTRICTED
OTHER STOCK RESTRICTED STOCK AWARDS
ANNUAL OPTION STOCK AWARDS (EQUITY ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS (BONUS PLAN) PLAN) COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) (SHARES) ($)(4)(6) ($)(5)(6) ($)
- ---------------------- ---- -------- -------- ------------ -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul W. Jones 1996 $424,622 $150,000 $ 20,244(7) -- $202,491 $169,875 $ 1,176(8)
President and Chief 1995 395,333 225,000 21,910(7) -- 303,750 305,000 11,170(8)
Executive Officer 1994 330,953 320,000 17,196(7) 25,000 -- -- 1,212(8)
Gary L. Weller 1996 199,159 80,000 5,331(7) -- 23,985 60,400 530(8)
Executive Vice 1995 185,767 120,000 5,331(7) -- 53,985 244,000 447(8)
President and Chief 1994 134,888 120,000 4,989(7) 15,000 -- -- 286(8)
Financial Officer;
Secretary
Peter K. Hunt 1996 210,295 49,000 -- -- 25,191 60,400 1,094(8)
Senior Vice 1995 180,950 87,500 -- -- 50,600 244,000 664(8)
President -- Business 1994 152,666 70,000 -- 14,000 -- -- 63,482(10)
Development(9)
Henry G. Libby 1996 393,687 50,000 -- 10,000 67,497 -- 384(8)
Senior Vice
President -- Consumer
Products Group(11)
Roger B. Farley 1996 154,692 33,000 -- 10,000 29,698 -- 2,602(8)
Senior Vice 1995 149,721 48,000 -- 6,000 43,188 -- 75,841(13)
President -- Human 1994 67,000 83,000 14) -- 19,500 -- -- 62,060(15)
Resources(12)
</TABLE>
- ---------------
(1) Includes amounts deferred under the 401(k) feature of the Company's
Retirement Income Savings Plan.
(2) Reflects bonus payments earned during the fiscal year, all or a portion of
which may have been paid in a subsequent fiscal year. Excludes a portion of
the bonus payments earned during the years ended December 31, 1995 and 1996
which the Named Executive Officers elected to receive in restricted Shares
pursuant to the Company's Amended and Restated 1995 Restricted Stock Bonus
Plan, as amended (the "Stock Bonus Plan").
(3) Excludes certain personal benefits, the total value of which was less than
10% of the total annual salary and bonus for each of the executives.
(4) Represents the value of restricted Shares, as of the bonus award date,
which each of the Named Executed Officers has elected to receive in lieu of
a portion of their 1996 and 1995 bonuses pursuant to the terms of the
Company's Stock Bonus Plan. For 1995, Messrs. Jones, Weller, Hunt and
Farley were awarded 9,959, 1,770, 1,659 and 1,416 restricted Shares,
respectively, which vest ratably over a five-year period from the date of
grant. For 1996, Messrs. Jones, Libby and Farley were awarded 8,223, 2,741
and 1,206 restricted Shares, respectively, which vest ratably over a
five-year period from the date of grant, and Messrs. Weller and Hunt were
awarded 974 and 1,023 restricted Shares, respectively, which vest ratably
over a three-year period from the date of grant.
(5) Represents the value as of the date restricted Shares were earned pursuant
to the terms of the Company's Amended and Restated 1995 Equity Incentive
Plan (the "Incentive Plan").
I-9
<PAGE> 31
(6) As of December 31, 1996, the number and value of the aggregate restricted
Shares earned and beneficially held by the Named Executive Officers
pursuant to the Company's Stock Bonus Plan and Incentive Plan were as
follows: Mr. Jones, 24,459 Shares with a value of $749,057; Mr. Weller,
11,370 Shares with a value of $348,206; Mr. Hunt, 11,259 Shares with a
value of $344,807; and Mr. Farley, 1,416 Shares with a value of $43,365.
The executive officers retain dividend and voting rights to the restricted
Shares.
(7) The amount shown represents a bonus paid to reimburse the interest cost on
a promissory note used to purchase certain Shares. See "Certain
Transactions -- Agreements with Directors and Executive Officers."
(8) Reflects premiums paid on a term life insurance policy.
(9) Reflects compensation received by Mr. Hunt in his capacity as Senior Vice
President -- Industrial Products Group since October 1995 and as Vice
President -- Manufacturing from August 1993 to September 1995.
(10) Reflects premiums paid on a term life insurance policy of $641 and amounts
paid for relocation expenses totaling $62,841.
(11) Mr. Libby joined the Company as the Senior Vice President -- Consumer
Products Group in January 1996.
(12) Mr. Farley joined the Company as the Vice President -- Human Resources in
June 1994.
(13) Reflects premiums paid on a term life insurance policy of $791 and amounts
paid for relocation expenses totaling $75,050.
(14) Includes $35,000 paid to Mr. Farley as a signing bonus when he joined the
Company in June 1994.
(15) Reflects premiums paid on a term life insurance policy of $192 and amounts
paid for relocation expenses totaling $61,868.
STOCK OPTIONS
The following table sets forth information concerning options granted
during the fiscal year ended December 31, 1996 under the Company's stock option
plans to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
-------------------------------------------------- VALUE AT ASSUMED
PERCENTAGE ANNUAL RATE OF
OF TOTAL STOCK
NUMBER OF OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO FOR
UNDERLYING EMPLOYEES IN PER SHARE OPTION TERM
OPTIONS FISCAL EXERCISE EXPIRATION ------------------
NAME GRANTED 1996(1)(2) PRICE DATE 5% 10%
- ---------------------------------- ---------- ------------ --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Paul W. Jones..................... -- --% $ -- -- $ -- $ --
Gary L. Weller.................... -- -- -- -- -- --
Peter K. Hunt..................... -- -- -- -- -- --
Henry G. Libby.................... 5,000 2.0 30.00 1/12/06 94,334 239,061
5,000 2.0 26.50 11/12/06 83,329 211,171
Roger B. Farley................... 2,000 0.8 30.00 1/12/06 37,734 95,625
4,000 1.6 30.50 8/14/06 76,725 194,437
4,000 1.6 26.50 11/12/06 66,663 168,937
</TABLE>
- ---------------
(1) Options to purchase a total of 245,900 shares were granted under the
Employee Plan in 1996, the purpose of which is to provide a financial
incentive to key employees who are in a position to make significant
contributions to the Company.
(2) Represents options granted pursuant to the Employee Plan with an exercise
price equal to the market price on the date of grant. Options become
exercisable with respect to one-fourth of the shares covered thereby on each
anniversary of the date of grant, commencing on the second anniversary of
such date.
I-10
<PAGE> 32
The following table sets forth information concerning option exercises and
the value of unexercised options held by the Named Executive Officers as of
December 31, 1996.
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED,
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul W. Jones.......... -- $ -- 31,250 43,750 $ 407,813 $ 492,188
Gary L. Weller......... -- -- 13,750 21,250 171,563 222,188
Peter K. Hunt.......... 3,750 77,812 7,250 18,000 78,344 180,188
Roger B. Farley........ -- -- 4,875 30,625 49,250 171,250
Henry G. Libby......... -- -- -- 10,000 -- 23,750
</TABLE>
On October 10, 1997, the Board of Directors of the Company approved an
amendment to the Employee Plan to provide for accelerated vesting of stock
options granted pursuant to such plan and the cancellation of stock options
granted pursuant to such plan in consideration of a cash payment or alternative
grant under such plan or a similar plan equal in value to the fair value of the
canceled grant upon a Change in Control (as defined therein). A copy of the
Employee Plan, as amended, is attached as Exhibit 7 to the Schedule 14D-9.
The Company has agreed in the Merger Agreement that each option granted to
a Company employee pursuant to the Company's Employee Plan to acquire Shares
that is outstanding immediately prior to the Effective Time, whether or not then
vested or exercisable, with respect to which, as of the Effective Time, $38.00
per share (such amount, or any greater amount per share paid pursuant to the
Offer, the "Per Share Amount") exceeds the exercise price per share shall,
effective immediately prior to the Effective Time, be canceled in exchange for a
single lump sum cash payment equal to the product of (1) the number of Shares
subject to such option and (2) the excess of the Per Share Amount over the
exercise price per share of such option (subject to any applicable withholding
taxes).
STOCK BONUS PLAN AND INCENTIVE PLAN
On October 10, 1997, the Board of Directors of the Company approved an
amendment to the Stock Bonus Plan and the amendment and restatement of the
Incentive Plan to change the definition of Change in Control to include the
beneficial ownership of more than 50% of the then outstanding voting stock of
the Company, whether or not through a transaction arranged by, or consummated
with, the prior approval of the Board of Directors of the Company. Copies of the
Stock Bonus Plan and the Incentive Plan, as amended, and as amended and
restated, respectively, are attached as Exhibits 8 and 9, respectively, to the
Schedule 14D-9.
The Company has agreed in the Merger Agreement that immediately prior to
the Effective Time, each Share previously issued in the form of awards of
Time-Lapse Restricted Stock, Performance-Contingent Restricted Stock and
Performance Shares pursuant to the Company's Incentive Plan and which, as of
immediately prior to the Effective Time, have been earned in accordance with the
provisions of such plan, shall fully vest and all restrictions thereon shall be
removed. Except for the issuance of 1,600 Shares representing unearned awards of
Performance-Contingent Restricted Stock to Mr. Rajendra, which the Incentive
Plan Committee has, in its discretion, determined to issue and vest upon a
Change in Control of the Company (as defined in the Incentive Plan), all
unearned awards under such plan shall be canceled and no payments shall be made
with respect thereto. In addition, the Company has agreed in the Merger
Agreement that immediately prior to the Effective Time, each Share previously
issued in the form of restricted stock pursuant to the Company's Stock Bonus
Plan shall fully vest and all restrictions thereon shall be removed.
I-11
<PAGE> 33
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Henry G. Libby, Senior Vice President -- Consumer Products Group of the
Company, is employed by the Company pursuant to an Employment and Noncompetition
Agreement dated January 12, 1996, which expires in 2001. Under the terms of the
agreement, Mr. Libby is entitled to receive a base salary of $400,000 per annum
and a minimum annual bonus of $100,000. The agreement also provides for certain
severance benefits in the event of termination of employment other than for
cause and obligates Mr. Libby to comply with certain confidentiality and
noncompetition provisions.
The Company has entered into severance benefit agreements (the "Severance
Agreements") with each of the executive officers and twelve additional officers
of the Company. The Severance Agreements provide for the payment of certain
severance and other benefits upon certain qualifying terminations of the
employment of such officers within two years of a Change in Control (as defined
therein). The benefits payable under these Severance Agreements generally
provide for a full base salary for a term of one year, a bonus equal to 50% of
the average of the bonus awarded to such officer in each of the prior three
years pursuant to the Company's Executive Incentive Plan and the continuation of
certain other benefits for a period of one year. In addition, the Severance
Agreements provide for the immediate vesting of any outstanding options granted
to such officers under the Employee Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. James C. Janning, a former director of the Company who retired from the
Board of Directors of the Company on May 6, 1997, upon the expiration of his
then current term, was appointed as a member of the Compensation and Options
Committee upon its formation in August 1993. Mr. Janning previously served as
Secretary-Treasurer of the Company and held offices with certain of the
Company's subsidiaries until May 1993. Mr. Janning was not compensated for these
officer positions. Mr. Janning was indebted to the Company during the fiscal
year ended December 31, 1996, as evidenced by certain promissory notes, in an
amount in excess of $60,000 and received a bonus in the amount of the interest
cost of such notes plus all federal and state income taxes applicable to such
payments. See "Certain Transactions -- Agreements with Directors and Executive
Officers." In addition, Mr. Janning served as an executive officer of Harbour
Group Ltd., which together with its affiliate, provided certain services to the
Company during the fiscal year ended December 31, 1996. See "Certain
Transactions -- Related Party Transactions".
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is entitled to receive
an annual fee of $15,000 for his services as a director and additional fees of
$1,000 for attendance at each meeting of the full Board of Directors and $750
for attendance at each meeting of committees of the Board of Directors.
Directors are also entitled to reimbursement for their expenses incurred in
attending meetings.
1993 Directors Plan. The Company maintains the 1993 Directors Plan which
provides for the granting of non-qualified stock options to the Company's
directors who are not employees of the Company, for up to 100,000 Shares
(subject to adjustment in the event of a reorganization, merger, consolidation,
stock split, dividend payable in Shares, split-up, combination or other exchange
of Shares).
The 1993 Directors Plan is administered by the Board of Directors. Options
granted under the 1993 Directors Plan may not be exercised for a period of two
years from the date of grant and thereafter become exercisable on a cumulative
basis in 25% increments beginning on the second anniversary of the date of grant
and concluding on the fifth anniversary thereof. All options granted under the
1993 Directors Plan expire ten years from the date of grant.
Options granted under the 1993 Directors Plan are nontransferable, and the
exercise price must be equal to the Fair Market Value (as defined therein) of
the Shares on the date of grant. Upon exercise, the exercise price must be paid
in full in cash or such other consideration as the Board may permit.
The 1993 Directors Plan by its express terms provides for the grant of
options thereunder to each eligible director serving on the date of the
Company's initial public offering with respect to 10,000 shares, and an
additional option to the Chairman of the Board of Directors with respect to
5,000 shares, in each case at the initial
I-12
<PAGE> 34
public offering price. In addition, the 1993 Directors Plan provides for the
grant of options to each person first becoming an eligible director subsequent
to the date of the Company's initial public offering with respect to 10,000
shares and the grant of an additional option to each person first becoming
Chairman of the Board subsequent to such date with respect to 5,000 shares. In
connection with the adoption of the 1995 Directors Plan, the 1993 Directors Plan
was terminated in May 1996.
On October 10, 1997, the Board of Directors of the Company approved the
amendment of the 1993 Directors Plan to provide for accelerated vesting of stock
options granted pursuant to such plan and the cancellation of stock options
granted pursuant to such plan in consideration of a cash payment or alternative
grant under such plan or a similar plan equal in value to the fair value of the
canceled grant upon a Change in Control (as defined therein). A copy of the 1993
Directors Plan, as amended, is attached as Exhibit 10 to the Schedule 14D-9.
The Company has agreed in the Merger Agreement that each option granted to
a Company director pursuant to the Company's 1993 Directors Plan to acquire
Shares that is outstanding immediately prior to the Effective Time, whether or
not then vested or exercisable, with respect to which, as of the Effective Time,
the Per Share Amount exceeds the exercise price per share shall, effective as of
immediately prior to the Effective Time, be canceled in exchange for a single
lump sum cash payment equal to the product of (1) the number of Shares subject
to such option and (2) the excess of the Per Share Amount over the exercise
price per share of such option (subject to any applicable withholding taxes).
The 1995 Directors Plan. The 1995 Directors Plan provides for the granting
of non-qualified stock options to purchase up to 125,000 Shares (subject to
adjustment in the event of a reorganization, merger, consolidation, stock split,
dividend payable in Shares, split-up, combination or other exchange of Shares)
to the members of the Board of Directors who are not employees of the Company or
any of its subsidiaries.
Pursuant to the express terms of the 1995 Directors Plan, options to
purchase 10,000 Shares are granted to each eligible director on the date such
person is first elected to the Board of Directors of the Company. An option to
purchase an additional 5,000 Shares is granted to each eligible director on the
date such person is first elected to serve as Chairman of the Board of the
Company. These options may not be exercised for a period of two years from the
date of grant and thereafter become exercisable on a cumulative basis in 25%
increments beginning on the second anniversary of the date of grant and
concluding on the fifth anniversary of the date of grant.
In addition, the 1995 Directors Plan provides that options to purchase
1,000 Shares are granted to each eligible director on the date such person is
re-elected to the Board of Directors by the vote of the stockholders, at the
annual or other meeting at which directors are elected, and that options to
purchase 500 Shares are granted to each eligible director on the date such
person is elected or re-elected to serve as Chairman of a standing committee
maintained by the Board of Directors from time to time. If a director is elected
to serve a term of more than one year, in addition to the option described in
the preceding sentence, such director shall, during such term, be granted an
option with respect to 1,000 Shares on each anniversary of the date of
reelection except in the year in which the term expires. All options described
in this paragraph may not be exercised for a period of one year from the date of
grant and thereafter are exercisable in full.
Other options may be granted under the 1995 Directors Plan from time to
time pursuant to terms determined by the Board of Directors of the Company. All
options granted under the 1995 Directors Plan are nontransferable and subject to
certain limitations upon the removal or resignation of the director, as set
forth in the 1995 Directors Plan, and expire ten years from the date of grant.
No payments or contributions are required to be made by the directors other than
in connection with the exercise of options. The 1995 Directors Plan will
terminate on the tenth anniversary of its effective date, which is the date of
approval by the stockholders, and no further options may be granted after such
date.
The purchase price for Shares to be purchased upon the exercise of options
is equal to the last reported sales price per Share on the Nasdaq National
Market on the date of grant (or the last reported sales price on such other
exchange or market on which the Shares are traded from time to time). As of
October 10, 1997, such price was $32 3/16. Upon exercise of an option, the
purchase price therefor shall be payable in full to the Company in cash or in
kind or a combination thereof, by delivery of Shares having a Fair Market Value
(as defined in the 1995
I-13
<PAGE> 35
Directors Plan), or surrender of currently exercisable options having a value on
the date of exercise, equal to the portion of the exercise price so paid, as
determined by the Board of Directors.
As adopted, the 1995 Directors Plan was intended to provide formula awards
in accordance with certain then-applicable exemptive rules of the SEC and is
administered by the Board of Directors of the Company, which may delegate
administration thereof to a committee of the Board. The Board may, in its
discretion, terminate or suspend the 1995 Directors Plan at any time. The Board
may also amend or revise the 1995 Directors Plan, or the terms of any option
granted under such plan, without stockholder approval, provided that such
amendment or revision does not, except as otherwise permitted, increase the
number of Shares reserved for issuance under the plan, change the purchase price
established or expand the category of individuals eligible to participate in
such plan. No amendment, suspension or termination will alter or impair any
rights or obligations under any option previously granted without the consent of
the grantee.
On October 10, 1997, the Board of Directors of the Company approved the
amendment and restatement of the 1995 Directors Plan to change the definition of
Change in Control to include the beneficial ownership of more than 50% of the
then outstanding voting stock of the Company, whether or not through a
transaction arranged by, or consummated with, the prior approval of the Board of
Directors of the Company and to provide for the cancellation of stock options
granted pursuant to such plan in consideration of a cash payment or alternative
grant under such plan or a similar plan equal in value to the fair value of the
canceled grant upon a Change in Control (as defined therein). A copy of the 1995
Directors Plan, as amended and restated, is attached as Exhibit 11 to the
Schedule 14D-9.
The Company has agreed in the Merger Agreement that each option granted to
a Company director pursuant to the Company's 1995 Directors Plan to acquire
Shares that is outstanding immediately prior to the Effective Time, whether or
not then vested or exercisable, with respect to which, as of the Effective Time,
the Per Share Amount exceeds the exercise price per share shall, effective as of
immediately prior to the Effective Time, be canceled in exchange for a single
lump sum cash payment equal to the product of (1) the number of Shares subject
to such option and (2) the excess of the Per Share Amount over the exercise
price per share of such option (subject to any applicable withholding taxes).
Set forth below is information with respect to options outstanding under
the Directors Plans as of December 31, 1996.
<TABLE>
<CAPTION>
NUMBER EXERCISE PRICE
NAME DATE OF GRANT OF SHARES PER SHARE
------------------------------------------------- ------------- --------- --------------
<S> <C> <C> <C>
John W. Burge, Jr................................ 2/28/95 10,000 $25.75
5/01/96 1,000 37.00
Peter S. Finley.................................. 7/29/93 10,000 15.50
5/01/96 1,000 37.00
James C. Janning................................. 7/29/93 10,000 15.50
5/01/96 1,500 37.00
Robert E. Lefton................................. 8/10/93 10,000 16.00
5/01/96 1,000 37.00
Donald E. Nickelson.............................. 8/10/93 15,000 16.00
5/01/96 1,000 37.00
Robert W. Pratt, Jr.............................. 2/28/95 10,000 25.75
5/01/96 1,000 37.00
Julian M. Seeherman.............................. 8/10/93 10,000 16.00
5/01/96 1,500 37.00
Dennis W. Sheehan................................ 8/10/93 10,000 16.00
5/01/96 1,500 37.00
---------
Total.................................. 94,500
=======
</TABLE>
I-14
<PAGE> 36
CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
On January 26, 1994, the Company entered into an Operations Consulting and
Advisory Services Agreement (the "HGL Services Agreement") with Harbour Group
Ltd. ("HGL"), pursuant to which HGL provides management consulting services to
the Company for a one-year term, which term will automatically renew from year
to year until terminated by the Company or HGL upon 30 days' notice. Certain of
the Company's directors serve as executive officers or directors of HGL or its
affiliates. Specifically, Mr. Nickelson serves as a director of HGL. In
addition, Mr. Finley serves as an executive officer of an affiliate of HGL.
Under the HGL Services Agreement, the Company compensates HGL for management
consulting services at HGL's approximate costs incurred in performing such
services. The HGL Services Agreement was amended and restated on March 20, 1996
to provide that management consulting services performed thereunder be
compensated pursuant to a set fee schedule. The Company also entered into a
Corporate Development Consulting and Advisory Services Agreement (the "HGI
Services Agreement") with Harbour Group Industries, Inc. ("HGI") on January 26,
1994 pursuant to which HGI provides corporate development services to the
Company for a one-year term, which term will automatically renew from year to
year until terminated by the Company or HGI upon 30 days' notice. Two of the
Company's directors, Messrs. Finley and Nickelson, serve as executive officers
of HGI. Under the HGI Services Agreement, the Company compensates HGI for
corporate development services by paying an annual fee equal to the greater of
$100,000 or HGI's approximate costs incurred in performing such services, plus a
transaction fee equal to an amount which ranges from 2.5% of the first $1
million of the purchase price to 0.5% of the portion of the purchase price in
excess of $4 million for each completed acquisition or disposition by the
Company in which HGI performs services during the term of the HGI Services
Agreement, subject to a minimum fee per transaction of $125,000. On March 20,
1996, the HGI Services Agreement was amended and restated to eliminate the
minimum annual fee and to provide that corporate development services performed
thereunder be compensated pursuant to a set fee schedule. In addition, under the
amended and restated HGI Services Agreement, the Company may receive fees for
the performance of corporate development services for HGI.
The terms of the HGL Services Agreement were determined by HGL and the
Company to preserve the historical arrangement between the Company and HGL
whereby HGL provided the Company with management consulting and advisory
services at approximate cost prior to the Company's initial public offering in
1993. The terms of the HGI Services Agreement were determined in part to
reimburse HGI for the estimated approximate annual cost of HGI personnel engaged
in performing services for the Company thereunder and in part with reference to
customary formulas utilized by financial advisors for providing acquisition
and/or divestiture-related services. The Company believes that the rates agreed
to by the Company and HGI under such HGI Services Agreement is less than the
rate customarily charged by other financial advisory service providers. The
terms of each of these arrangements and the method of establishing the fees
payable thereunder have been reviewed and approved by the Company's Audit
Committee, whose membership consists of a majority of directors who are neither
employees of the Company nor affiliates of HGL or HGI. Fees totaling
approximately $53,000 and $580,000 were paid by the Company to HGL and HGI,
respectively, during the year ended December 31, 1996.
The Company believes that each of the related party transactions described
herein was on terms no less favorable to the Company than could have been
obtained from unaffiliated third parties. The HGL Services Agreement and the HGI
Services Agreement were terminated by the Company effective as of June 13, 1997.
AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
In connection with the acquisition of Rule Industries, Inc. ("Rule"), the
Company loaned Henry G. Libby, an officer of Rule and Senior Vice
President -- Consumer Products Group of the Company since the Rule acquisition,
approximately $291,000 in 1995 for the payment of withholding taxes incurred by
Mr. Libby in connection with the exercise of options to purchase an aggregate of
100,000 shares of Rule common stock. The loan bore interest at 8% and was paid
in full on April 4, 1996. The Company also paid in 1996 approximately $222,000
in obligations of The Disston Company ("Disston"), an entity wholly-owned by Mr.
Libby. In connection with the acquisition of Rule, the Company assumed certain
obligations of Rule to Disston for the payment of expenses associated with the
conduct of an arbitration proceeding as well as certain expenses related
I-15
<PAGE> 37
to maintenance of a facility owned by Disston. Disston was dissolved in 1996 and
the Company has no further obligations to Disston pursuant to undertakings made
in connection with the acquisition of Rule.
Various members of management of the Company and its subsidiaries acquired
common stock of the Company and its predecessors at prices determined by the
Boards of Directors of such companies, and the purchase price therefor was paid
partly in cash and partly by delivery of promissory notes payable to the Company
secured by the purchased shares. Such notes have a ten-year maturity, bear
interest at fixed rates of interest from 6.39% to 10% per annum and are payable
interest only annually, with one principal payment at maturity. In connection
with such promissory notes, the companies agreed to pay annual bonuses to such
stockholders in amounts equal to the annual interest payments on the notes plus
all federal and state income taxes applicable to such payments. Each such
stockholder entered into separate agreements with the companies and Harbour
Group Investments, L.P., formerly a controlling stockholder of the Company (the
"Stockholder Agreements"), providing for, among other things, restrictions on
transfer of such shares, registration rights with respect to such shares, the
mandatory repurchase of such shares upon termination of the holder's employment
at a price based on a predetermined formula and a right of first refusal for the
companies in the event of a bona fide offer from a third party. In connection
with the consolidation of certain cutting tool companies owned by Harbour Group
Investments, L.P. into the Company, the Company amended the Stockholder
Agreements to eliminate substantially all of their provisions except those
relating to noncompetition and confidentiality. The Company also amended each of
the promissory notes issued in connection with purchases of common stock of the
cutting tool companies to permit partial prepayments.
At December 31, 1996, the following executive officer and directors had
promissory notes in excess of $60,000 outstanding to the Company, each of which
were issued in connection with the acquisition of Shares by such executive
officer or director. Set forth below is certain information with respect to such
promissory notes.
<TABLE>
<CAPTION>
BALANCE
HIGHEST OUTSTANDING
BALANCE AT INTEREST DUE
STOCKHOLDER POSITION OUTSTANDING 12/31/96 RATE DATE
- ------------------------- ------------------------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
Paul W. Jones............ President and Chief
Executive Officer; $82,270 $82,270 8.1% 12/31/99
Director 66,263 66,263 6.5 4/26/03
James C. Janning......... Director 10,736 10,736 10.0 5/31/98
26,374 26,374 6.5 4/26/03
20,608 20,608 10.0 5/31/98
15,920 15,920 9.4 4/15/99
7,920 7,920 10.0 5/31/98
19,354 19,354 9.4 4/15/99
</TABLE>
Subsequent to the end of the 1996 fiscal year, Mr. Janning repaid all
amounts due under the foregoing promissory notes.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of a registered
class of the Company's equity securities to file with the SEC initial reports of
ownership and reports of changes in ownership of Shares and other equity
securities of the Company. Executive officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms which they file.
To the Company's knowledge, based solely on review of information furnished
to the Company, reports filed through the Company and representations that no
other reports were required, all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than ten percent beneficial owners
were complied with during the year ended December 31, 1996, except that Peter K.
Hunt, an executive officer of the Company, failed to timely file one Form 4
relating to the acquisition of 100 Shares by his daughter.
I-16
<PAGE> 38
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
KENNAMETAL INC.,
PALMER ACQUISITION CORP.
AND
GREENFIELD INDUSTRIES, INC.
<PAGE> 39
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I
THE OFFER
1.1 The Offer...................................................................... 1
1.2 Company Action................................................................. 2
ARTICLE II
THE MERGER; EFFECTIVE TIME; CLOSING
2.1 The Merger..................................................................... 3
2.2 Effective Time................................................................. 3
2.3 Closing........................................................................ 3
ARTICLE III
SURVIVING CORPORATION
3.1 Articles of Incorporation...................................................... 4
3.2 By-Laws........................................................................ 4
3.3 Directors...................................................................... 4
3.4 Officers....................................................................... 4
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGER
4.1 Share Consideration for the Merger; Conversion or Cancellation of Shares in the
Merger......................................................................... 4
4.2 Stockholder Approval........................................................... 4
4.3 Payment for Shares in the Merger............................................... 5
4.4 No Further Ownership Rights in Company Common Stock............................ 6
4.5 Stock Options and Other Plans.................................................. 6
4.6 Convertible Preferred Securities............................................... 7
4.7 Dissenting Stockholders........................................................ 7
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Corporate Organization and Qualification....................................... 7
5.2 Capitalization................................................................. 7
5.3 Authority Relative to This Agreement........................................... 8
5.4 Consents and Approvals; No Violation........................................... 8
5.5 SEC Reports; Financial Statements.............................................. 9
5.6 Absence of Certain Changes or Events........................................... 9
5.7 Litigation and Liabilities..................................................... 9
5.8 Information Supplied........................................................... 10
5.9 ERISA Matters.................................................................. 10
5.10 Brokers and Finders............................................................ 11
5.11 Opinions of Financial Advisors................................................. 11
5.12 Compliance with Laws; Permits.................................................. 11
5.13 Takeover Statutes.............................................................. 11
5.14 Rights Plan.................................................................... 12
5.15 Contracts...................................................................... 12
5.16 Changes in Equity Interests.................................................... 12
</TABLE>
i
<PAGE> 40
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
6.1 Corporate Organization and Qualification....................................... 12
6.2 Authority Relative to This Agreement........................................... 12
6.3 Consents and Approvals: No Violation........................................... 12
6.4 Brokers and Finders............................................................ 13
6.5 Financing...................................................................... 13
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1 Conduct of Business of the Company............................................. 13
7.2 No Solicitation of Transactions................................................ 14
7.3 Approvals and Consents; Cooperation............................................ 15
7.4 Further Assurances............................................................. 15
7.5 Access to Information.......................................................... 16
7.6 Publicity...................................................................... 16
7.7 Indemnification of Directors and Officers...................................... 16
7.8 Employees...................................................................... 17
7.9 Notification of Certain Matters................................................ 17
7.10 Company Board.................................................................. 17
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 Conditions to Each Party's Obligations to Effect the Merger.................... 18
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.1 Termination by Mutual Consent.................................................. 18
9.2 Termination by Either Parent or the Company.................................... 18
9.3 Termination by the Company..................................................... 19
9.4 Termination by Parent.......................................................... 19
9.5 Effect of Termination and Abandonment.......................................... 20
9.6 Extension; Waiver.............................................................. 20
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 Payment of Expenses............................................................ 20
10.2 Survival of Representations and Warranties; Survival of Confidentiality........ 20
10.3 Modification or Amendment...................................................... 21
10.4 Waiver of Conditions........................................................... 21
10.5 Counterparts................................................................... 21
10.6 Governing Law.................................................................. 21
10.7 Notices........................................................................ 21
10.8 Entire Agreement; Assignment................................................... 22
10.9 Parties in Interest............................................................ 22
10.10 Certain Definitions............................................................ 22
10.11 Specific Performance........................................................... 23
10.12 Obligation of Parent........................................................... 23
10.13 Validity....................................................................... 23
10.14 Captions....................................................................... 23
ANNEX A
Annex A........................................................................ A-1
</TABLE>
ii
<PAGE> 41
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of October 10,
1997, by and among Kennametal Inc., a Pennsylvania corporation ("Parent"),
Palmer Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent ("Purchaser"), and Greenfield Industries, Inc., a Delaware corporation
(the "Company").
RECITALS
WHEREAS, the Board of Directors of the Company, has, subject to the
conditions of this Agreement, unanimously determined that each of the Offer and
the Merger (each as defined below) is in the best interests of the stockholders
of the Company and approved and adopted this Agreement and the transactions
contemplated hereby; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser shall make a
tender offer (the "Offer") to acquire all of the outstanding shares of Common
Stock, par value $0.01 per share (the "Company Common Stock"), of the Company,
together with the associated Rights (as defined in Section 10.10) (the
"Shares"), at a price of $38 per Share (such amount, or any greater amount per
share paid pursuant to the Offer, being hereinafter referred to as the "Per
Share Amount"), net to the seller in cash, without interest thereon, in
accordance with the terms and subject to the conditions of this Agreement; and
WHEREAS, Parent, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, Parent,
Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
1.1 THE OFFER.
(a) Subject to the terms and conditions of this Agreement, Purchaser shall
commence, within the meaning of Rule 14d-2 of the Securities Exchange Act of
1934, as amended, the Offer as promptly as practicable, but in no event later
than the fifth business day after the date of initial public announcement of
this Agreement. Purchaser shall accept for payment Shares which have been
validly tendered and not withdrawn pursuant to the Offer at the earliest time
following expiration of the Offer that all conditions to the Offer, as set forth
on Annex A (the "Offer Conditions"), shall have been satisfied or waived by
Purchaser. The obligation of Purchaser to accept for payment, purchase and pay
for Shares tendered pursuant to the Offer shall be subject only to such Offer
Conditions and to the further condition that a number of Shares representing not
less than a majority of the Shares then outstanding on a fully diluted basis
shall have been validly tendered and not withdrawn prior to the final expiration
date of the Offer (the "Minimum Condition") (any of which may be waived in whole
or in part by the Purchaser in its sole discretion, provided that, without the
express written consent of the Company, Purchaser may not waive the Minimum
Condition). Purchaser expressly reserves the right, subject to compliance with
the Exchange Act, to modify the terms of the Offer, except that, unless
previously approved by the Company in writing, no change in the Offer may be
made (i) which decreases the Per Share Amount payable in the Offer, (ii) which
changes the form of consideration to be paid in the Offer, (iii) which reduces
the maximum number of Shares to be purchased in the Offer or the Minimum
Condition, (iv) which imposes conditions to the Offer in addition to the Offer
Conditions or which modifies the Offer Conditions in a manner adverse to the
holders of Shares or (v) which amends any other term of the Offer in a manner
adverse to the holders of the Shares, provided, however, that nothing contained
herein shall prohibit Purchaser, in its sole discretion without the consent of
the Company, from waiving satisfaction of any condition of this Offer other than
the Minimum Condition. Notwithstanding the foregoing, Purchaser may, without the
consent of the Company, (i) extend the Offer on one or more occasions for up to
ten business days for each such extension beyond the then scheduled expiration
date (the initial scheduled expiration date being 20 business days following
commencement of the
<PAGE> 42
Offer), if at the then scheduled expiration date of the Offer any of the
conditions to Purchaser's obligation to accept for payment and pay for the
Shares shall not be satisfied or waived, until such time as such conditions are
satisfied or waived (and, at the request of the Company, Purchaser shall,
subject to Purchaser's right to terminate this Agreement pursuant to Article IX,
extend the Offer for additional periods, unless the only conditions not
satisfied or earlier waived on the then scheduled expiration date are one or
more of the Minimum Condition and the conditions set forth in paragraph (b) of
the Offer Conditions , provided that (x) if the only condition not satisfied is
the Minimum Condition, the satisfaction or waiver of all other conditions shall
have been publicly disclosed at least five business days before termination of
the Offer and (y) if paragraph (b) of the Offer Conditions has not been
satisfied and the failure to so satisfy can be remedied, the Offer shall not be
terminated unless the failure is not remedied within 30 calendar days after
Purchaser has furnished the Company written notice of such failure) and (ii)
extend the Offer for any period required by any rule, regulation, interpretation
or position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer and (iii) extend the Offer for an aggregate
period of not more than 5 business days beyond the latest expiration date that
would otherwise be permitted under clause (i) or (ii) of this sentence if there
shall not have been tendered sufficient Shares so that the Merger could be
effected without a meeting of the Company's stockholders in accordance with
Section 253 of the Delaware General Corporation Law (the "DGCL"). Subject to the
terms and conditions of the Offer and this Agreement, Purchaser shall pay for
all Shares validly tendered and not withdrawn pursuant to the Offer that
Purchaser becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) As soon as practicable on the date of commencement of the Offer, Parent
or Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1
with respect to the Offer (together with any supplement or amendments thereto,
the "Offer Documents"). The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws except that no
representation or warranty is made by Parent or Purchaser with respect to
information supplied by or on behalf of the Company or any of its stockholders
for inclusion or incorporation in the Offer Documents. Parent or Purchaser and
the Company each agree promptly to correct any information provided by them for
use in the Offer Documents if and to the extent that it shall have become false
or misleading in any material respect and Purchaser further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. To the extent
practicable, the Company and its counsel shall be given an opportunity to review
and comment upon the Offer Documents and any amendments thereto prior to the
filing thereof with the SEC. The Company shall cooperate with Parent and
Purchaser in responding to any comments received from the SEC with respect to
the Offer Documents and amending the Offer Documents in response to such
comments.
1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and represents
that its Board of Directors, including all of the disinterested directors, at a
meeting duly called and held, has, subject to the terms and conditions set forth
herein, (i) unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, (ii) determined that
the terms of the Offer and the Merger are fair to, and in the best interests of,
the Company and its stockholders and, (iii) resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares thereunder to
Purchaser pursuant to the Offer and approve and adopt this Agreement and the
Merger; provided, that such recommendation may be withdrawn, modified or amended
if the Company reasonably determines in good faith, based on the advice of
outside legal counsel to the Company, that such action is necessary in order for
the Board of Directors of the Company to comply with its fiduciary duties under
applicable law. The Company hereby consents to the inclusion in the Offer
Documents of the recommendations of the Board of Directors described in this
Section 1.2(a).
(b) The Company hereby agrees to file with the SEC as soon as practicable
on the date of commencement of the Offer a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") containing the recommendation described in Section 1.2(a). The
Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws, except that no representation is made by the
Company with respect to information supplied by Parent or
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Purchaser in writing for inclusion in the Schedule 14D-9. The Company, Parent
and Purchaser each agree promptly to correct any information provided by them
for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to the holders of Shares, in each case as and to
the extent required by applicable federal securities laws. Notwithstanding
anything to the contrary in this Agreement, the Board of Directors may withdraw,
modify or amend its recommendation if the Company reasonably determines in good
faith, based on the advice of outside legal counsel to the Company, that such
action is necessary in order for the Board of Directors of the Company to comply
with its fiduciary duties under applicable law. To the extent practicable,
Parent and its counsel shall be given an opportunity to review and comment upon
the Schedule 14D-9 and any amendments thereto prior to the filing thereof with
the SEC.
(c) The Company shall cooperate in the dissemination of the Offer Documents
to the stockholders of the Company. Without limiting the foregoing, in
connection with the Offer, the Company will promptly furnish Purchaser with
mailing labels, security position listings and any available listing or computer
files containing the names and addresses of the record holders of the Shares as
of a recent date and of those persons becoming record holders subsequent to such
date and shall furnish Purchaser with such additional information and assistance
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) as Purchaser or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of applicable law, and except for such steps
as are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Merger, Purchaser and its affiliates, associates,
agents and advisors shall use the information contained in any such labels,
listings and files only in connection with the Offer and the Merger, and, if
this Agreement shall be terminated, will upon request of the Company, deliver,
and will use its best efforts to cause its agents promptly to deliver, to the
Company all copies of such information then in their possession.
ARTICLE II
THE MERGER; EFFECTIVE TIME; CLOSING
2.1 THE MERGER. Subject to the terms and conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 2.2), the Company and Purchaser shall
consummate a merger (the "Merger") in which (a) Purchaser shall be merged with
and into the Company and the separate corporate existence of Purchaser shall
thereupon cease, (b) the Company shall be the surviving corporation in the
Merger and shall continue to be governed by the laws of the State of Delaware,
and (c) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. The corporation surviving the Merger is sometimes hereinafter referred
to as the "Surviving Corporation." The Merger shall have the effects set forth
in Section 259 of the DGCL.
2.2 EFFECTIVE TIME. Parent, Purchaser and the Company will cause an
appropriate Certificate of Merger (the "Certificate of Merger") to be executed
and filed on the date of the Closing (as defined in Section 2.3) (or on such
other date as Purchaser and the Company may agree) as provided in the DGCL. The
Merger shall become effective upon the latest to occur of (i) the date on which
the Certificate of Merger is filed with the Secretary of State of the State of
Delaware or (ii) such later date as is agreed upon by the parties and specified
in the Certificate of Merger, and the time of such effectiveness is hereinafter
referred to as the "Effective Time."
2.3 CLOSING. The closing of the Merger (the "Closing") shall take place (a)
at the offices of Buchanan Ingersoll Professional Corporation, One Oxford
Centre, 301 Grant Street, Pittsburgh, PA 15219, at 10:00 a.m., local time, on
the first business day following the date on which the last of the conditions
set forth in Article VIII hereof shall be fulfilled or waived in accordance with
this Agreement or (b) at such other place, time and date as Parent and the
Company may agree.
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ARTICLE III
SURVIVING CORPORATION
3.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation (the
"Certificate of Incorporation") of Purchaser, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation, except that the name of the Surviving Corporation shall be
Greenfield Industries, Inc.
3.2 BY-LAWS. The By-Laws of Purchaser, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving Corporation.
3.3 DIRECTORS. The directors of Purchaser at the Effective Time shall, from
and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
3.4 OFFICERS. The officers of the Company and such other persons as
designated by Parent immediately prior to the Effective Time shall, from and
after the Effective Time, be the officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGER
4.1 SHARE CONSIDERATION FOR THE MERGER; CONVERSION OR CANCELLATION OF SHARES
IN THE MERGER. At the Effective Time, by virtue of the Merger and without any
action on the part of the holders of any Shares or capital stock of Purchaser:
(a) Company Common Stock. Each Share (other than (i) Shares owned by
Parent, Purchaser or any direct or indirect wholly-owned Subsidiary of Parent
(collectively, "Parent Companies") or any of the Company's direct or indirect
wholly-owned Subsidiaries or Company Common Stock held in the treasury of the
Company and (ii) Shares held by Dissenting Stockholders (as defined in Section
4.7 hereof) shall, by virtue of the Merger and without any action on the part of
Purchaser, the Company or the holder thereof, be canceled and extinguished and
converted into the right to receive, pursuant to Section 4.3, the price actually
paid in the Offer in cash (the "Merger Consideration"), payable to the holder
thereof, without interest thereon, less any required withholding of taxes, upon
the surrender of the certificate formerly representing such Share.
(b) Parent and Company Owned Shares. Each Share issued and outstanding and
owned by any of the Parent Companies or any of the Company's direct or indirect
wholly-owned Subsidiaries or authorized but unissued shares of Company Common
Stock held in the treasury of the Company immediately prior to the Effective
Time shall cease to be outstanding, be canceled and retired without payment of
any consideration therefor and cease to exist.
(c) Capital Stock of Purchaser. Each issued and outstanding share of common
stock of Purchaser that is issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
4.2 STOCKHOLDER APPROVAL.
(a) Promptly after the consummation of the Offer, if required by the DGCL
in order to consummate the Merger, the Company, acting through its Board of
Directors, shall, in accordance with applicable law and the Company's
Certificate of Incorporation and By-laws duly call, give notice of and convene a
meeting of the holders of the Company Common Stock (the "Special Stockholders
Meeting") to be held at the earliest practicable date for the purpose of voting
upon this Agreement and the Merger and the Company agrees that this Agreement
and the Merger shall be submitted at such meeting. The Company shall use its
reasonable best efforts to solicit from its stockholders proxies and, subject
always to the fiduciary obligations of the Company's directors
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under applicable law, shall take all other action necessary and advisable, to
secure the vote of stockholders required by applicable law to obtain the
approval for this Agreement and the Merger. Subject always to the fiduciary
obligations of the Company's directors under applicable law following receipt of
written advice of counsel, the Company agrees that it will include in the Proxy
Statement the recommendation of its Board of Directors that holders of the
Company Common Stock approve and adopt this Agreement and approve the Merger.
Parent and Purchaser will cause all shares of the Company Common Stock owned by
them and their subsidiaries to be voted in favor of the approval and adoption of
this Agreement and the Merger.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the outstanding Company Common Stock, the Company
agrees, at the request of Purchaser, subject to Article VIII, to take all
necessary and appropriate action to cause the Merger to become effective as soon
as reasonably practicable after such acquisition, without a meeting of the
Company's stockholders, in accordance with Section 253 of the DGCL.
(c) If the approval of this Agreement by the holders of the Shares (the
"Company Stockholder Approval") is required by law, the Company will, at
Parent's request, as soon as practicable following the expiration of the Offer,
prepare and file a preliminary Proxy Statement with the SEC and will use its
best efforts to respond to any comments of the SEC or its staff and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. The Company will notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for additional information
and will supply Parent with copies of all correspondence between the Company or
any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Proxy Statement or the Merger. If at any time
prior to the Special Stockholders Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company will promptly prepare and mail to its stockholders such an amendment or
supplement. The Company will not mail any Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects, unless required by law,
rule, regulation or the SEC staff, in the opinion of outside counsel; provided,
that Parent shall identify its objections and fully cooperate with the Company
to create a mutually satisfactory Proxy Statement. In connection with such
preliminary proxy statement, Proxy Statement and any amendment or supplement
thereto, Parent and Purchaser shall promptly provide all information reasonably
requested by the Company.
4.3 PAYMENT FOR SHARES IN THE MERGER. The manner of making payment for Shares
in the Merger shall be as follows:
(a) At the Effective Time, Parent shall make available to ChaseMellon
Shareholder Services, LLC (the "Exchange Agent"), or such other exchange agent
selected by Parent and reasonably acceptable to the Company, for the benefit of
the holders of Shares, the funds necessary to make the payments contemplated by
Section 4.1 (the "Exchange Fund") (it being understood that any and all interest
earned on the Exchange Fund made available to the Exchange Agent pursuant to
this Agreement shall be turned over to Parent). The Exchange Fund shall not be
used for any other purpose.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record (other than holders of
certificates representing Shares referred to in Section 4.1(b)) of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") (i) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent and shall be in a form and have such other provisions as
Parent shall reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates for payment therefor. Upon surrender of
Certificates for cancellation to the Exchange Agent, together with such letter
of transmittal duly executed and any other required documents, the holder of
such Certificates shall be entitled to receive for each of the Shares
represented by such Certificates the Merger Consideration, without any interest
thereon, less any required withholding of taxes, and the Certificates so
surrendered shall forthwith be canceled. Until so surrendered, such Certificates
shall represent solely the right to receive the Merger Consideration with
respect to each of the Shares represented thereby. If payment is to be made to a
person other than the person in whose name a Certificate so surrendered is
registered,
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it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the Certificate surrendered, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 4.3(b), each
Certificate (other than Certificates representing Shares referred to in Section
4.1(b)) shall represent for all purposes only the right to receive, for each
Share represented thereby, the Merger Consideration.
(c) Any portion of the Exchange Fund made available to the Exchange Agent
which remains unclaimed by the former stockholders of the Company six (6) months
after the Effective Time shall be delivered to Parent, upon demand, and any
former stockholders of the Company shall thereafter look only to Parent for
payment of their claim for the Merger Consideration for the Shares, without any
interest thereon. None of Parent, Purchaser, the Company or the Exchange Agent
shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to seven (7) years
after the Effective Time (or immediately prior to such earlier date on which any
payment pursuant to this Article IV would otherwise escheat to or become the
property of any governmental entity), the cash payment in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Parent, free and clear of all claims or interests of any person
previously entitled thereto.
4.4 NO FURTHER OWNERSHIP RIGHTS IN SHARES. All cash paid upon the surrender
of Certificates in accordance with the terms of this Article IV shall be deemed
to have been paid in full satisfaction of all rights pertaining to the Shares
formerly represented by such Certificates. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason except notation
thereon that a stockholder has elected to exercise his right to appraisal
pursuant to the DGCL they shall be canceled and exchanged as provided in this
Article IV.
4.5 STOCK OPTIONS AND OTHER PLANS.
(a) Each warrant to acquire shares of Company Common Stock, and each option
granted to a Company employee, consultant or director pursuant to the Company's
Amended and Restated Employee Stock Option Plan, as amended, the Amended and
Restated 1993 Directors Non-Qualified Stock Option Plan or the 1995 Directors
Non-Qualified Stock Option Plan to acquire shares of Company Common Stock (each
such warrant and option hereinafter is referred to as an "Option") that is
outstanding immediately prior to the Effective Time, whether or not then vested
or exercisable, with respect to which, as of the Effective Time, the Per Share
Amount exceeds the exercise price per share shall, effective as of immediately
prior to the Effective Time, be canceled in exchange for a single lump sum cash
payment equal to the product of (1) the number of shares of Company Common Stock
subject to such Option and (2) the excess of the Per Share Amount over the
exercise price per share of such Option (subject to any applicable withholding
taxes).
(b) Each Option that is outstanding immediately prior to the Effective
Time, whether or not then vested or exercisable, shall, effective as of the
Effective Time, with respect to which, as of the Effective Time, the Per Share
Amount does not exceed the exercise price per share shall, effective as of
immediately prior to the Effective Time, be canceled and no payments shall be
made with respect thereto.
(c) Immediately prior to the Effective Time, each share of Company Common
Stock previously issued in the form of restricted stock pursuant to the
Company's Amended and Restated 1995 Restricted Stock Bonus Plan shall fully vest
and all restrictions thereon shall be removed.
(d) Immediately prior to the Effective Time, each share of Company Common
Stock previously issued in the form of awards of Time-Lapse Restricted Stock,
Performance-Contingent Restricted Stock and Performance Shares pursuant to the
Company's 1995 Equity Incentive Plan and which, as of immediately prior to the
Effective Time, have been earned in accordance with the provisions of such plan,
shall fully vest and all restrictions thereon shall be removed. Except for the
issuance of up to 1,600 Shares which the Board of Directors of the Company
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may in its discretion determine to vest, whether or not earned, all unearned
awards under such plan shall be canceled and no payments shall be made with
respect thereto.
(e) For purposes of this Agreement, the Company's Warrant Agreements,
Amended and Restated Employee Stock Option Plan, as amended, the Amended and
Restated 1993 Directors Non-Qualified Stock Option Plan, the 1995 Directors
Non-Qualified Stock Option Plan, the Amended and Restated 1995 Restricted Stock
Bonus Plan and the 1995 Equity Incentive Plan are referred to collectively
herein as the "Stock Plans".
4.6 CONVERTIBLE PREFERRED SECURITIES. The Company, Parent and Purchaser shall
take, or cause to be taken, all actions necessary to comply with and to cause
Parent and/or Purchaser to assume the Company's obligations with respect to the
6% Convertible Preferred Securities, Term Income Deferrable Equity Securities
(TIDES)(SM), including without limitation, complying with the applicable
provisions of (i) the Indenture, dated as of April 1, 1996, between the Company
and the Bank of New York, as trustee, with respect to the Company's 6%
Convertible Junior Subordinated Deferrable Interest Debentures Due 2016, (ii)
the Amended and Restated Declaration of Trust of Greenfield Capital Trust, dated
as of April 1, 1996, and (iii) the Preferred Securities Guarantee Agreement
among the Company and the Bank of New York dated as of April 24, 1996.
4.7 DISSENTING STOCKHOLDERS. Notwithstanding anything in this Agreement to
the contrary, but only to the extent required by the DGCL, Shares that are
issued and outstanding immediately prior to the Effective Time and are held by
holders of Shares who comply with all the provisions of the DGCL concerning the
right of holders of Shares to dissent from the Merger and require appraisal of
their Shares ("Dissenting Stockholders") shall not be converted into the right
to receive the Merger Consideration but shall become the right to receive such
consideration as may be determined to be due such Dissenting Stockholder
pursuant to the laws of the State of Delaware; provided, however, that (i) if
any Dissenting Stockholder shall subsequently withdraw his or her demand for
appraisal or fail to establish or perfect or otherwise lose his or her appraisal
rights as provided by applicable law, then such Dissenting Stockholder or
Stockholders, as the case may be, shall forfeit the right to appraisal of such
Shares and such Shares shall thereupon be deemed to have been converted into the
right to receive, as of the Effective Time, the Merger Consideration, without
interest. The Company shall give Parent and Purchaser (A) prompt notice of any
written demands for appraisal of Shares, withdrawals of demands for appraisal
and any other related instruments received by the Company, and (B) the
opportunity to direct all negotiations and proceedings with respect to any such
demands for appraisal. The Company will not, except with the prior written
consent of Parent, voluntarily make any payment with respect to any demands for
appraisal or settle, offer or otherwise negotiate to settle any demand.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser that:
5.1 CORPORATE ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries (as defined in Section 10.10) is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and is qualified and in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification, except where
failure to so qualify or be in good standing is not reasonably likely to have a
Material Adverse Effect (as defined in Section 10.10). Each of the Company and
its Subsidiaries has all requisite power and authority (corporate or otherwise)
to own, operate and lease its properties and to carry on its business as it is
now being conducted. The Company has heretofore made available to Parent
complete and correct copies of its and its Subsidiaries' (as defined in Section
10.10) Certificate or Articles of Incorporation and By-Laws or other
organizational documents as in effect on the date hereof. Schedule 5.1 contains
a correct and complete list of each jurisdiction where the Company and each of
its Significant Subsidiaries is organized and qualified to do business.
5.2 CAPITALIZATION. The authorized capital stock of the Company consists of
(i) 100,000,000 shares of Company Common Stock of which, as of September 30,
1997, 16,445,757 Shares were issued and outstanding and (ii) 1,500,000 shares of
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), none of
which is issued or outstanding. Except as set forth on Schedule 5.2, all of the
outstanding shares of capital stock of the
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Company have been duly authorized and validly issued and are fully paid and
nonassessable, with no personal liability attaching to the ownership thereof. As
of September 30, 1997, (i) 2,763,000 shares of Company Common Stock were
reserved for issuance pursuant to the Stock Plans, and (ii) 500,000 shares of
Preferred Stock were reserved for issuance in connection with the Rights. Except
as set forth on Schedule 5.2, all outstanding shares of capital stock of the
Company's Subsidiaries are owned by the Company or a direct or indirect
wholly-owned subsidiary of the Company, free and clear of all liens, charges,
encumbrances, claims and options of any nature. Schedule 5.2 sets forth the
number of Options and shares of restricted stock outstanding and, in the case of
the options, the exercise price thereof. Except as set forth above and on
Schedule 5.2, there are not any outstanding or authorized options, warrants,
calls, rights (including preemptive rights), commitments or any other agreements
of any character which the Company or any of its Subsidiaries is a party to, or
may be bound by, requiring it to issue, transfer, sell, purchase, redeem or
acquire any shares of capital stock or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock of the Company or any of its Subsidiaries. Except as set forth on
Schedule 5.2, the Company does not have outstanding any bonds, debentures, notes
or other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter.
5.3 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) The Company has the requisite corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder to
consummate the transactions contemplated hereby. This Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than, with respect to the Merger, the approval of this Agreement by the
holders of a majority of the Shares , which are the only votes of the holders of
any class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated hereby.) The Company's Board of
Directors, at a meeting duly called and held, has unanimously by vote of all
directors present determined that this Agreement and the transactions
contemplated hereby (including the Offer and the Merger) are in the best
interests of the Company and its stockholders. This Agreement has been duly and
validly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding agreement of each of Parent and Purchaser,
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
(b) The Board of Directors of the Company has duly and validly approved and
taken all corporate action required to be taken by the Board of Directors for
the consummation of the transactions (including the Offer, the acquisition of
Shares pursuant to the Offer and the Merger) contemplated herein in accordance
with the terms hereof, including but not limited to, all actions required to (i)
render the provisions of Section 203 of the DGCL restricting business
combinations with "interested stockholders" inapplicable to such transactions
and (ii) amend the Rights Agreement to provide that certificates with respect to
the Rights will not be distributed and the Rights will not become exercisable as
a result of any of the execution of this Agreement, the commencement or
consummation of the Offer or the consummation of the Merger.
5.4 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and delivery
of this Agreement nor the consummation by the Company of the transactions
contemplated hereby will (a) conflict with or result in any breach of any
provision of the respective Certificates or Articles of Incorporation or By-Laws
of the Company or any of its Significant Subsidiaries; (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (i) in connection with the
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (ii) pursuant to the applicable requirements
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"), (iii) the filing of the
Certificate of Merger pursuant to the DGCL and appropriate documents with the
relevant authorities of other states in which the Company or any of its
subsidiaries is authorized to do business, (iv) as may be required by any
applicable state securities or "blue sky" laws or state takeover laws, (v) such
filings, consents, approvals, orders, registrations and declarations as may be
required under the laws of any foreign country in which the Company or any of
its subsidiaries conducts any business or owns any assets, or (vi) where the
failure to obtain such consent, approval, authorization or permit, or
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to make such filing or notification, would not be reasonably likely to, in the
aggregate, have a Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement; (c) except as set forth in Schedule 5.4(c),
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or lien or other charge or encumbrance) under any
of the terms, conditions or provisions of any note, license, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries or any
of their assets may be bound, except for such violations, breaches and defaults
(or rights of termination, cancellation or acceleration or lien or other charge
or encumbrance) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not be reasonably likely to have a Material
Adverse Effect or prevent, materially delay or materially impair the ability of
the Company to consummate the transactions contemplated by this Agreement; or
(d) assuming the consents, approvals, authorizations or permits and filings or
notifications referred to in this Section 5.4 are duly and timely obtained or
made and, with respect to the Merger, the approval of this Agreement by the
Company's stockholders has been obtained, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of its
Subsidiaries or to any of their respective assets, except for violations which
would not in the aggregate be reasonably likely to have a Material Adverse
Effect or prevent, materially delay or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement.
5.5 SEC REPORTS; FINANCIAL STATEMENTS.
(a) Since January 1, 1996, the Company has filed with the SEC all reports,
forms, schedules and other documents required to be filed by it. The Form 10-K
of the Company for the fiscal year ended December 31, 1996, the Form 10-Q of the
Company for the quarter ended March 31, 1997, the Form 10-Q of the Company for
the quarter ended June 30, 1997, and the Proxy Statement of the Company for the
1997 annual stockholders meeting (collectively, the "Company SEC Reports") did
not contain, and any quarterly or other reports filed after the date hereof will
not contain, as of their respective dates, any untrue statement of a material
fact required to be stated therein or any omission to state a fact necessary to
make any statement of fact contained therein not misleading in any material
respect.
(b) The Company's consolidated statements of operations for the three
fiscal years ended December 31, 1996 and the six months ended June 30, 1997 and
the Company's consolidated balance sheets as of December 31, 1996 and June 30,
1997 (including the related notes thereto), all of which have been heretofore
furnished to Parent, present fairly the consolidated financial position of the
Company and its Subsidiaries and the consolidated results of their operations as
of, and for the periods ended on, the dates specified, in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered except as specifically referred to in such
financial statements (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments).
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the Company
SEC Reports, as set forth on Schedule 5.6 or as contemplated by this Agreement,
since December 31, 1996 the business of the Company has been carried on only in
the ordinary and usual course, and there has not been any change in the
financial condition, properties, business or results of operations of the
Company and its Subsidiaries or any development or combination of developments
of which the Company has knowledge that, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect.
5.7 LITIGATION AND LIABILITIES. Except as set forth on Schedule 5.7 or as
disclosed in the Company SEC Reports, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the best knowledge of the Company, threatened against the Company
or any of its Subsidiaries or (ii) obligations or liabilities, whether or not
accrued, contingent or otherwise and whether or not required to be disclosed in
the Company SEC Reports, or any other facts or circumstances of which the
Company has knowledge that could result in any claims against, or obligations or
liabilities of, the Company or any of its Subsidiaries, except, in the case of
clauses (i) or (ii), for those that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect or prevent or materially
burden or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement. Additionally, there is no judgment,
decree, injunction, rule or order of any court, governmental department,
commission, board, bureau,
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agency, instrumentality or arbitrator outstanding against the Company or the
Subsidiaries having or which is likely to have a Material Adverse Effect.
5.8 INFORMATION SUPPLIED. None of the information supplied by the Company in
writing for inclusion or incorporation by reference in the Offer Documents or
provided by the Company in the Schedule 14D-9 as filed by the Company pursuant
to Rule 14f-1 under the Exchange Act or contained in the Proxy Statement will,
at the respective times that the Offer Documents, the Schedule 14D-9, the Rule
14f-1 Information Statement or the Proxy Statement or any amendments or
supplements thereto are filed with the SEC and are first published or sent or
given to holders of Shares, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
5.9 ERISA MATTERS.
(a) Except as set forth on Schedule 5.9(a), the Company and each Subsidiary
do not, and at any time during the preceding five-year period, did not:
(i) maintain, sponsor, contribute to or have any liability with
respect to any Plans (as defined herein) intended to be qualified under
Section 401(a) of the Code (as defined in Section 10.10);
(ii) maintain, sponsor, contribute to or have any liability with
respect to any Plan that is a defined benefit pension plan or that is
subject to the funding requirements of Section 412 of the Code and Section
302 of ERISA (as defined in Section 10.10), whether or not such Plan has
been terminated, and there has been no complete or partial termination of
any Plan which could result in any material liability to the Company or any
Subsidiary;
(iii) have any obligation to make any deferred compensation payments
or any commitment, whether formal or informal, to create any additional
employee benefit plans, or to modify any existing plan except as may be
required to conform to changes in applicable law;
(iv) contribute to nor have any obligation to contribute to any
multiemployer pension or welfare plan within the meaning of Section 3(37)
of ERISA or with respect to any employee benefit plan of the type described
in Sections 4063 and 4064 of ERISA or in Section 413(c) of the Code (and
regulations promulgated thereunder);
(v) maintain, sponsor, contribute to or have any liability with
respect to any Plan which provides health, life insurance, accident or
other "welfare-type" benefits to current or future retirees, current or
future former employees, current or future former independent contractors,
or the spouses, dependents or beneficiaries thereof, other than in
accordance with Section 4980B of the Code, Sections 601 et. seq. of ERISA,
and/or other applicable continuation coverage law;
(vi) have any Plan which obligates the Company or any of its
Subsidiaries to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change in control", as such term is
defined in Section 280G of the Code;
(vii) have any unfunded liabilities and all required or recommended
(in accordance with historical practices) payments, premiums,
contributions, reimbursements or accruals for all periods ending prior to
or as of the Effective Date shall have been made or properly accrued;
(viii) engage in any transaction with respect to the Plans which could
subject the Company, any of its Subsidiaries, or any trustee or
administrator of the Plans to any tax or penalty (civil or otherwise)
imposed by ERISA, the Code or other applicable law, except those that would
not be likely to have a Material Adverse Effect;
(ix) engage in any prohibited transaction within the meaning of
Section 4975 of the Code or Section 406 of ERISA with respect to any Plan.
(b) Except as set forth on Schedule 5.9(b), the Company and each Subsidiary
is not, and at any time during the preceding five-year period, was not a party
to any actions, investigations, suits or claims with respect to the
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Plans (other than routine claims for benefits) or any fiduciary or other person
dealing with such Plans, except in each such case where the outcome of which
would not be likely to have a Material Adverse Effect. No such actions,
investigations, suits or claims are pending or, to the knowledge of the Company,
threatened and the Company has no knowledge of any facts which could give rise
to or be expected to give rise to any such actions, investigations, suits or
claims, except in each such case where the outcome of which would not be likely
to have a Material Adverse Effect;
(c) For purposes of this Agreement, the term "Plans" shall mean: (i)
employee benefit plans as defined in Section 3(3) of ERISA, whether or not
funded and whether or not terminated, (ii) employment agreements, and (iii)
personnel policies or fringe benefit plans, policies, programs and arrangements,
whether or not subject to ERISA, whether or not funded, whether or not
terminated, and whether or not covering employees residing in the United States,
including without limitation, stock bonus, stock options, stock appreciation
right, stock purchase, "phantom stock," deferred compensation, pension, profit
sharing, savings, severance, bonus, vacation, incentive, travel, and health,
disability and welfare plans. Schedule 5.9 sets forth a true and complete list
of all Plans (as defined below) maintained or sponsored by the Company or any of
its Subsidiaries, contributed to by the Company or any Subsidiary, to which the
Company or any of its Subsidiaries is obligated to contribute or with respect to
which the Company or any of its Subsidiaries has any liability or potential
liability, whether direct or indirect, including all Plans contributed to,
maintained or sponsored by any member of the controlled group of companies,
within the meaning of Sections 414(b) and 414(c) of the Code, of which the
Company and/or any of its Subsidiaries, is or ever was a member (to the extent
that the Company or any of its Subsidiaries has any liability or potential
liability with respect to such Plans). Each Plan and all related trusts,
insurance contracts and funds have been maintained, funded, and administered in
compliance in all material respects with all applicable laws and regulations,
including but not limited to ERISA and the Code except for such violations that
would not be likely to have a Material Adverse Effect.
5.10 BROKERS AND FINDERS. Except for the fees and expenses payable to Credit
Suisse First Boston Corporation and NationsBanc Capital Markets, Inc. (whose
fees and expenses will be paid by the Company in accordance with the Company's
agreement with Credit Suisse First Boston Corporation), a true and complete copy
of which has been furnished to Parent, the Company has not employed any
investment banker, broker, finder, consultant or intermediary in connection with
the transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
5.11 OPINIONS OF FINANCIAL ADVISORS. The Company has received the opinion of
Credit Suisse First Boston Corporation, dated October 10, 1997, a copy of which
has been provided to Parent and Purchaser, to the effect that, as of such date,
the cash consideration to be received by the stockholders of the Company
pursuant to the Offer and the Merger is fair to such stockholders from a
financial point of view.
5.12 COMPLIANCE WITH LAWS; PERMITS. Except as set forth in the Company SEC
Reports and as set forth on Schedule 5.12, the Company and its Subsidiaries (i)
hold all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities (as defined in Annex A) for the lawful conduct of their
respective businesses except where the failure to hold such permits, licenses,
variances, exemptions, orders and approvals would not have a Material Adverse
Effect, and (ii) are in compliance with all applicable laws, statutes,
ordinances, rules, regulations, judgments, orders, injunctions, decrees,
arbitration awards, agency requirements, licenses and permits of any
Governmental Entity except for violations or possible violations that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect. Except as set forth on Schedule 5.12, no investigation or review
by any Governmental Entity with respect to the Company or its Subsidiaries is
pending or, to the knowledge of the Company, threatened, nor has any
Governmental Entity indicated an intention to conduct the same, other than, in
each case, those the outcome of which, as far as reasonably can be foreseen,
will not have a Material Adverse Effect.
5.13 TAKEOVER STATUTES. The Board of Directors of the Company has approved
the Offer, the Merger and this Agreement and such approval is sufficient to
render inapplicable to the Offer, the Merger, this Agreement and the other
transactions contemplated by this Agreement, the provisions of Section 203 of
the DGCL.
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5.14 RIGHTS PLAN. The Company has amended the Rights Agreement to provide,
among other things, that the Parent and the Purchaser shall not be deemed an
Acquiring Person (as defined in the Rights Agreement) and that the Rights will
not separate from the Shares as a result of entering into this Agreement,
commencing or consummating the Offer or consummating the Merger pursuant to the
terms of this Agreement.
5.15 CONTRACTS. Except as filed as an exhibit to the Company SEC Reports or
as set forth on Schedule 5.15, there are no contracts, agreements or other
instruments or obligations that involves the performance of services or delivery
of goods or materials by or to the Company or any Subsidiary of an amount in
excess of $1,000,000.
5.16 CHANGES IN EQUITY INTEREST. Except as set forth on Schedule 5.16, since
June 30, 1997, the Company has not made any changes in the equity interest in
the Company Common Stock or the Company Preferred Stock (collectively, the
Company Stock) including, without limitation, (i) distributions to stockholders
other than the payment of regular quarterly cash dividends, (ii) issuances of
Company Stock other than issuances of Company Common Stock and associated Rights
pursuant to the exercise of vested options under the Stock Plans, (iii)
exchanges or retirements of Company Stock, (iv) grants of options with respect
to Company Stock under the Stock Plans or (v) adoption of any new stock option
plans for Company employees.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser represent and warrant jointly and severally to
the Company that:
6.1 CORPORATE ORGANIZATION AND QUALIFICATION. Each of the Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation and is qualified
and in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification, except where the failure to so qualify or be in such good
standing would not have a Material Adverse Effect.
6.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the Parent and Purchaser
has the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This Agreement
and the consummation by Parent and Purchaser of the transactions contemplated
hereby have been duly and validly authorized by the respective Boards of
Directors of Parent and Purchaser, and no other corporate proceedings on the
part of Parent and Purchaser are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Purchaser and, assuming
this Agreement constitutes the valid and binding agreement of the Company,
constitutes valid and binding agreements of each of Parent and Purchaser,
enforceable against each of them in accordance with its terms.
6.3 CONSENTS AND APPROVALS: NO VIOLATION. Neither the execution and delivery
of this Agreement by Parent or Purchaser nor the consummation by Parent and
Purchaser of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the Articles of Incorporation or the
By-Laws, respectively, of Parent or Purchaser; (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (i) in connection with the
applicable requirements of the HSR Act, (ii) pursuant to the applicable
requirements of the Exchange Act, (iii) the filing of the Certificate of Merger
pursuant to the DGCL and appropriate documents with the relevant authorities of
other states in which Parent is authorized to do business, (iv) as may be
required by any applicable state securities or "blue sky" laws or state takeover
laws, (v) such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Merger or the transactions contemplated by
this Agreement or (vi) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not in
the aggregate have a Material Adverse Effect; (c) except as set forth in
Schedule 6.3(c), result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or lien or other charge or
encumbrance) under any of the terms, conditions or provisions of any note,
license, agreement or other instrument or obligation to which Parent or any of
its Significant Subsidiaries may be bound, except for such violations, breaches
and defaults (or rights of termination,
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cancellation or acceleration or lien or other charge or encumbrance) as to which
requisite waivers or consents have been obtained or which, in the aggregate,
would not have a Material Adverse Effect; or (d) assuming the consents,
approvals, authorizations or permits and filings or notifications referred to in
this Section 6.3 are duly and timely obtained or made, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or any of
its subsidiaries or to any of their respective assets, except for violations
which would not in the aggregate have a Material Adverse Effect.
6.4 BROKERS AND FINDERS. Except for the fees and expenses payable to Merrill
Lynch & Co., Inc. (whose fees and expenses will be paid by Parent or Purchaser
in accordance with the Parent's agreement with such firm), Parent and Purchaser
have not employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or the transactions
contemplated hereby.
6.5 FINANCING. Either Parent or Purchaser will have at the time required
sufficient funds available to purchase all of the Shares outstanding on a fully
diluted basis and to pay all fees and expenses payable by Parent or Purchaser
related to the transactions contemplated by this Agreement.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1 CONDUCT OF BUSINESS OF THE COMPANY.
(a) The Company agrees that during the period from the date of this
Agreement to the Effective Time (unless the other parties shall otherwise agree
in writing and except as otherwise contemplated by this Agreement), the Company
will, and will cause each of its Subsidiaries to, conduct its operations
according to its ordinary and usual course of business consistent with past
practice and use all commercially reasonable efforts to preserve intact its
current business organization, keep available the service of its current
employees and preserve its relationship with customers, suppliers and others
having significant dealings with it. Without limiting the generality of the
foregoing, and except as otherwise permitted in this Agreement or set forth on
Schedule 7.1, prior to the Effective Time, neither the Company nor any of its
Subsidiaries will, without the prior written consent of Parent:
(i) except for shares to be issued or delivered pursuant to the
Company's Stock Plans for options outstanding on the date of this
Agreement, issue, deliver, sell, dispose of, pledge or otherwise encumber,
or authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of capital stock of any class
(including the Shares), or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of
capital stock, or any rights, warrants, options, calls, commitments or any
other agreements of any character to purchase or acquire any shares of
capital stock or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of capital stock,
or (B) any other securities in respect of, in lieu of, or in substitution
for, Shares outstanding on the date hereof;
(ii) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding capital stock,
including the Shares, or any rights, warrants or options to acquire any
such Shares or other Securities (except for shares of restricted stock
forfeitable under the terms of any of the Stock Plans);
(iii) split, combine, subdivide or reclassify any Shares or declare,
set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any capital stock,
including the Shares or otherwise make any payments to stockholders in
their capacity as such, other than the declaration and payment of any
regular quarterly cash dividend on the Shares and except for dividends by a
wholly-owned Subsidiary of the Company;
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(iv) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the
Merger);
(v) adopt any amendments to its Articles or Certificate of
Incorporation or By-Laws or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of any Subsidiary of the Company;
(vi) make any acquisition, by means of merger, consolidation or
otherwise, or disposition (other than acquisitions or disposition of assets
in the ordinary course of business, consistent with past practice), of
assets or securities, or mortgage or otherwise encumber or subject to lien
any of its properties assets or other than in the ordinary course of
business, consistent with past practice;
(vii) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or sell any debt
securities or guarantee any such indebtedness or make any loans, advances
or capital contributions to, or investments in, any other person, other
than to the Company or any wholly-owned subsidiary of the Company, or,
except as set forth on Schedule 7.1(a)(vii), make any further commitments
for capital expenditures in excess of $500,000 individually, or $3,000,000
in the aggregate;
(viii) grant any material increases in the compensation of any of its
directors, officers or key employees, except in the ordinary course of
business and in accordance with past practice;
(ix) pay or agree to pay any pension, retirement allowance or other
employee benefit not required or contemplated by any of the existing
benefit, severance, termination, pension or employment plans, agreements or
arrangements as in effect on the date hereof to any director or officer of
the Company, whether past or present;
(x) enter into any new or materially amend any existing employment or
severance or termination agreement with any such director or officer;
(xi) except in the ordinary course of business consistent with past
practice or as may be required to comply with applicable law, become
obligated under any new pension plan, welfare plan, multiemployer plan,
employee benefit plan, severance plan, benefit arrangement, or similar plan
or arrangement, which was not in existence on the date hereof, or amend any
such plan or arrangement in existence on the date hereof if such amendment
would have the effect of materially enhancing any benefits thereunder;
(xii) settle or compromise any material claims or litigation or,
except in the ordinary and usual course of business, modify, amend or
terminate any of its material contracts or waive, release or assign any
material rights or claims;
(xiii) make any material change, other than in the ordinary course of
business and consistent with past practice or as required by applicable
law, regulation or change in generally accepted accounting principles, in
accounting policies or procedures applied by the Company (including tax
accounting policies and procedures);
(xiv) except as otherwise required by applicable law or regulation,
make any tax election or permit any insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated, except in
the ordinary course of business;
(xv) take any action to amend or alter the Rights Agreement in any
manner adverse to Parent's, Purchaser's or the Company's ability to
commence or consummate the transactions contemplated by this Agreement
pursuant to the terms hereof; or
(xvi) authorize, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
7.2 NO SOLICITATION OF TRANSACTIONS.
(a) The Company, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore
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with respect to any Takeover Proposal (as hereinafter defined). Prior to the
consummation of the Offer, the Company, its Subsidiaries, directors, employees,
representatives and agents may, directly or indirectly, furnish information and
access, in each case only in response to a Third Party Proposal (as hereinafter
defined) made after the date of this Agreement which was not initiated,
solicited or encouraged by the Company or any of its affiliates or any of its or
their respective officers, directors, employees, representatives or agents
(pursuant to appropriate confidentiality agreements the benefit of the terms of
which, if more favorable than the confidentiality agreement in place with the
Parent, shall be extended to the Parent), and may participate in discussions and
negotiate with such entity or group concerning any Takeover Proposal if a
majority of the Board of Directors of the Company determines, in its good faith
judgment, based on the opinion of independent outside legal counsel to the
Company, that failing to take such action would constitute a breach of such
Board's fiduciary obligations to the Company's stockholders under applicable
law. The Company shall promptly notify Parent if any proposal or offer, or any
inquiry or contact with any person with respect thereto, is made and shall, in
any such notice to Parent, indicate in reasonable detail the identity of the
offeror and the terms and conditions of any proposal or offer, or any such
inquiry or contact. The Company shall keep Parent promptly advised of all
developments which could reasonably be expected to culminate in the Board of
Directors withdrawing, modifying or amending its recommendation of the Offer,
the Merger and other transactions contemplated by this Agreement. Except as set
forth in this Section 7.2, neither the Company or any of its affiliates, nor any
of its or their respective officers, directors, employees, representatives or
agents, shall, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent and
Purchaser, any affiliate or associate of Parent and Purchaser, or any designees
of Parent or Purchaser) concerning any Takeover Proposal.
(b) Nothing in this Section 7.2 shall prevent the Company or the Board of
Directors of the Company from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or from making such disclosure to the Company's
stockholders in each case with respect to any Third Party Proposal, if (i) in
the good faith judgment of the Board of Directors of the Company, following
receipt of advice from outside counsel, such disclosure is required by reason of
the Board of Directors' fiduciary duties to the Company's stockholders under
applicable law and (ii) the Company shall have provided Parent and Purchaser
with as much advance notice of its position and proposed disclosure as is
possible under the circumstances; provided, however, that neither the Company
nor its Board of Directors nor any committee thereof shall, except as permitted
by this Section 7.2, withdraw or modify or propose to withdraw or modify, its
position with respect to the Offer, the Merger or this Agreement or approve or
recommend, or propose to approve or recommend, any Takeover Proposal.
For purposes of this Agreement, a "Third Party Proposal" shall mean a bona
fide proposal from a third party, which proposal was not solicited by or on
behalf of the Company in violation of this Section 7.2 and which the Board of
Directors of the Company determines in good faith and upon the advice of a
financial advisor of nationally recognized reputation has the capacity and is
reasonably likely to consummate a Superior Proposal (as defined in Section
9.3(a)). As used in this Agreement, "Takeover Proposal" shall mean any tender or
exchange offer, proposal for a merger, consolidation or other business
combination involving the Company or any Significant Subsidiary of the Company
or any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the assets of, the Company or its Significant
Subsidiaries other than transactions contemplated by this Agreement.
7.3 APPROVALS AND CONSENTS; COOPERATION. Subject to the other provisions of
this Agreement, the parties hereto shall use their respective best efforts, and
cooperate with each other, to obtain as promptly as practicable all governmental
and third party authorizations, approvals, consents or waivers, including,
without limitation, pursuant to the HSR Act, required in order to consummate the
transactions contemplated by this Agreement, including, without limitation, the
Offer and the Merger.
7.4 FURTHER ASSURANCES. Subject to the other provisions of this Agreement,
each of the parties hereto agrees to use its best efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, the Offer and the Merger, which efforts shall include, without
limitation, using their best efforts to prevent any preliminary or permanent
injunction or other
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order by a court of competent jurisdiction or governmental entity relating to
consummating the transactions contemplated by this Agreement, including, without
limitation, under the antitrust laws, and, if issued, to appeal any such
injunction or order through the appellate court or body for the relevant
jurisdiction; provided, however, that Parent shall, if necessary to prevent the
taking of such action, or the enaction, enforcement, promulgation, amendment,
issuance or application of any such statute, rule, regulation, legislation,
interpretation, judgment, order or injunction, offer to accept an order to
divest such of the Company's or Parent's assets and businesses as may be
necessary to forestall such injunction or order and to hold separate such assets
and business pending such divestiture, but only if the amount of such assets and
business is not material to the assets and profitability of Parent and its
subsidiaries taken as a whole. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the parties hereto shall take or cause to be taken all such necessary
action, including, without limitation, the execution and delivery of such
further instruments and documents as may be reasonably requested by the other
party for such purposes or otherwise to consummate and make effective the
transactions contemplated hereby.
7.5 ACCESS TO INFORMATION. Upon reasonable notice, the Company shall (and
shall cause each of its subsidiaries to) afford to officers, employees, counsel,
accountants and other authorized representatives of Parent ("Representatives"),
in order to evaluate the transactions contemplated by this Agreement, reasonable
access, during normal business hours (to the extent feasible without undue
interference with or disruption to the operation of the Company or any of its
subsidiaries) throughout the period prior to the Effective Time, to its
properties, books and records and, during such period, shall (and shall cause
each of its subsidiaries to) furnish promptly to such Representatives all
information concerning its business, properties and personnel as may reasonably
be requested. Parent agrees that it will not, and will cause its Representatives
not to, use any information obtained pursuant to this Section 7.5 for any
purpose unrelated to the consummation of the transactions contemplated by this
Agreement. The Confidentiality Agreement, dated August 13, 1997 (the
"Confidentiality Agreement"), by and between the Company and Parent shall apply
with respect to information furnished by the Company, its subsidiaries and the
Company's officers, employees, counsel, accountants and other authorized
representatives hereunder.
7.6 PUBLICITY. The parties will consult with each other and will mutually
agree upon any press releases or public announcements pertaining to the Offer or
the Merger and shall not issue any such press releases or make any such public
announcements prior to such consultation and agreement, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange, in which case the party proposing to
issue such press release or make such public announcement shall use its
reasonable efforts to consult in good faith with the other party before issuing
any such press releases or making any such public announcements.
7.7 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) The Articles of Incorporation and By-Laws of the Surviving Corporation
shall contain the provisions with respect to indemnification set forth in the
Certificate of Incorporation and By-Laws of the Company on the date of this
Agreement, which provisions shall not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors, officers, employees or agents of the Company
in respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law; provided, that in the
event any claim or claims are asserted or made within such six-year period, all
rights to indemnification in respect of any such claim or claims shall continue
until disposition of any and all such claims.
(b) Parent shall cause to be maintained in effect for the Indemnified
Parties (as defined below) for not less than six years the current policies of
directors' and officers' liability insurance and fiduciary liability insurance
maintained by the Company and the Company's subsidiaries with respect to matters
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement); provided, that Parent may
substitute therefor policies of substantially the same coverage containing terms
and conditions which are no less advantageous to the Company's present or former
directors or officers or other employees covered by
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such insurance policies prior to the Effective Time (the "Indemnified Parties")
and provided further that said substitution does not result in any gaps in
coverage with respect to matters occurring prior to the Effective Time.
(c) This Section 7.7 is intended to benefit the Indemnified Parties and
shall be binding on all successors and assigns of Parent, Purchaser, the Company
and the Surviving Corporation.
7.8 EMPLOYEES.
(a) Except as set forth on Schedule 7.8(a), for a period of one year
following the Effective Time, Parent agrees to provide employee benefit plans
and programs for the benefit of employees of the Company and its Subsidiaries
(other than those employees covered by collective bargaining agreements) that
are in the aggregate no less favorable than the employee benefit plans and
programs offered to such employees immediately prior to Closing (excluding plans
or programs which provide for issuance of Shares or options on Shares).
Employees covered by collective bargaining agreements shall be provided with
such benefits as shall be required under the terms of any applicable collective
bargaining agreement.
(b) Parent hereby unconditionally agrees to cause the Surviving Corporation
to honor and perform (without modification) the written employment agreements,
severance agreements and other agreements listed on Schedule 7.8(b), all as in
effect on the date of this Agreement. Parent agrees for itself and its
subsidiaries that after the Effective Time the Surviving Corporation or its
subsidiaries will pay all amounts provided under all contracts and agreements of
the Company and its subsidiaries and all benefit obligations of the Company and
its subsidiaries, including, without limitation, the change in control
agreements entered into between the Company and its subsidiaries and their
officers (the "Change in Control Agreements") (or honor the provisions of the
Change in Control Agreements in the case where no payment by the Surviving
Corporation or its subsidiaries is required) conditioned on a change in control
of the Company, in accordance with the terms of such Change in Control
Agreements.
7.9 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice to
Parent and Purchaser, and Parent and Purchaser shall give prompt notice to the
Company, of (i) the occurrence, or nonoccurrence, of any event the occurrence,
or non-occurrence, of which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect and (ii) any failure of the Company, Parent
or Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder. Each of
the Company, Parent and Purchaser shall give prompt notice to the other parties
of any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
7.10 COMPANY BOARD.
(a) Promptly (but in any event within one business day) upon the purchase
by the Purchaser of a majority of the outstanding Shares pursuant to the Offer,
either (a) a majority of the members of the Board of Directors of the Company
shall resign and the remaining members of the Board of Directors of the Company
shall fill all of the Board positions so vacated with persons designated by the
Purchaser or (b) the size of the Board of Directors of the Company shall be
expanded and the vacant seats filled with persons designated by the Purchaser so
that the Purchaser's designees shall constitute a majority of the members of the
Board of Directors of the Company. In either case, at all times thereafter
through the Effective Time a majority of the members of the Board of Directors
of the Company shall be persons designated by the Purchaser.
(b) The Company's obligation to appoint designees to the Board of Directors
of the Company shall be subject to Section 14(f) of the Exchange Act and Rule
14e-1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to such Section and Rule in order to fulfill its obligations
under this Section 7.10 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14e-1 to fulfill such obligations. Parent or Purchaser
shall supply to the Company and be solely responsible for any information with
respect to either of them and their nominees, officers, directors and affiliates
required by such Section 14(f) and Rule 14e-1.
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(c) Following the election of designees of Purchaser pursuant to this
Section 7.10, prior to the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or By-laws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser or
waiver of any of the Company's rights hereunder shall require the concurrence of
a majority of the directors of the Company then in office who are directors as
of the date hereof or persons designated by such directors and who were neither
designated by Purchaser nor employees of the Company ("Continuing Directors").
Prior to the Effective Time, the Company and Purchaser shall use all reasonable
efforts to ensure that the Company's Board of Directors at all times includes at
least three Continuing Directors.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. To the extent required by applicable law, the
Company Stockholder Approval shall have been duly obtained in accordance with
applicable law and the Certificate of Incorporation of the Company; provided
that Parent and Purchaser shall vote all of their Shares in favor of the Merger.
(b) Injunction. There shall not be in effect any statute, rule,
regulation, executive order, decree, ruling or injunction or other order of a
court or governmental or regulatory agency of competent jurisdiction directing
that the transactions contemplated herein not be consummated; provided, however,
that prior to invoking this condition each party shall use its best efforts to
have any such decree, ruling, injunction or order vacated.
(c) Governmental Filings and Consents. All governmental consents, orders
and approvals legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and be in effect at
the Effective Time, except where the failure to obtain any such consent would
not reasonably be expected to have a Material Adverse Effect on Parent and its
Subsidiaries, considered as whole (assuming the Merger had taken place), and the
waiting periods under the HSR Act shall have expired or been terminated.
(d) The Offer. Purchaser shall have purchased all Shares tendered pursuant
to the Offer.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and the
Offer and the Merger may be abandoned at any time prior to the Effective Time,
by the mutual written consent of Parent and the Company.
9.2 TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement may be
terminated and the Offer and Merger may be abandoned by Parent or the Company if
(i) any governmental or regulatory agency located or having jurisdiction within
the United States or any country or economic region in which either the Company
or Parent, directly or indirectly, has material assets or operations shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance for payment of,
or payment for, shares of Common Stock pursuant to the Offer or the Merger and
such order, decree or ruling or other action shall have become final and
nonappealable; provided, that Parent shall, if necessary to prevent the taking
of such action, or the enaction, enforcement, promulgation, amendment, issuance
or application of any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction, offer to accept an order to divest such of the
Company's or Parent's assets and businesses as may be necessary to forestall
such injunction or order and to hold separate such assets and business pending
such divestiture, but only if the amount of such assets and businesses is not
material to the assets or profitability of Parent and its subsidiaries taken as
a whole; or (ii) due to an occurrence or circumstance which would result in a
failure to satisfy any of the Offer Conditions, Purchaser shall have failed to
pay for Shares pursuant to the Offer on or prior to the Outside Date, unless
such failure has been caused by or results from the failure of the party seeking
to terminate this Agreement to perform in any
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material respect any of its respective covenants or agreements contained in this
Agreement. As used herein, the term "Outside Date" shall mean the latest (not to
exceed 180 days) of (A) 90 days following the date hereof, or (B) the date on
which either the applicable waiting period under the HSR Act shall have expired
or been terminated or the final terms of a consent decree between Parent and the
Antitrust Division of the Department of Justice (the "Antitrust Division") (the
"Consenting Parties"), with respect to the Offer and the Merger have been agreed
to by the Consenting Parties, or an order of a Federal District Court adjudging
that the Merger does not violate the Federal antitrust laws shall have been
issued or the Antitrust Division shall have otherwise authorized the Parent to
acquire Shares pursuant to the Offer.
9.3 TERMINATION BY THE COMPANY. This Agreement may be terminated and the
Offer and the Merger may be abandoned at any time prior to the Effective Time,
by action of the Board of Directors of the Company:
(a) if (i) the Company, based on the advice of outside legal counsel
to the Company that such action is necessary in order for the Board of
Directors of the Company to comply with its fiduciary duties under
applicable law, subject to complying with the terms of this Agreement,
enters into a binding written agreement concerning a transaction that
constitutes a Superior Proposal if, prior thereto, the Company notifies
Parent in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement to such notice and
(ii) Parent does not make, within two business days of receipt of the
Company's written notification of its intention to enter into a binding
agreement for a Superior Proposal, an offer to enter into an amendment to
this Agreement such that the Board of Directors of the Company determines,
in good faith after consultation with its financial advisors, that this
Agreement as so amended is at least as favorable, from a financial point of
view, to the stockholders of the Company as the Superior Proposal. The
Company agrees (A) that it will not enter into a binding agreement referred
to in clause (i) above until at least the third business day after it has
provided the notice to Parent required thereby and (B) to notify Parent
promptly if its intention to enter into a written agreement referred to in
its notification shall change at any time after giving such notification.
For purposes of this Agreement, the term "Superior Proposal" shall
mean a Third Party Proposal to acquire all of the outstanding Shares of the
Company pursuant to a tender offer or a merger, or to purchase all or
substantially all of the assets of the Company, on terms which a majority
of the members of the Board of Directors of the Company determines in its
good faith reasonable judgment (based on the advice of its financial and
legal advisors) to be more favorable to the Company and its stockholders
than the transactions contemplated hereby.
(b) if (i) Purchaser shall have (x) failed to commence the Offer
within five business days following the date of the initial public
announcement of the Offer, (y) failed to pay for any Shares pursuant to the
Offer to the extent required by Section 1.1(a) or (z) terminated the Offer
without purchasing Shares pursuant to the Offer, or (ii) there has been a
material breach by Parent or Purchaser of any representation, warranty,
covenant or agreement contained in this Agreement that is not curable or,
if curable, is not cured within 30 calendar days after written notice of
such breach is given by the Company to the party committing such breach.
9.4 TERMINATION BY PARENT. This Agreement may be terminated and the Offer and
Merger may be abandoned at any time prior to the Effective Time by action of the
Board of Directors of Parent if (i) the Board of Directors of the Company shall
have withdrawn or adversely modified its approval or recommendation of this
Agreement or failed to reconfirm its recommendation of this Agreement within
five business days after a written request by Parent to do so, (ii) there has
been a breach by the Company of any representation, warranty, covenant or
agreement contained in this Agreement that is qualified as to materiality or
there has been a material breach of any other representation, warranty, covenant
or agreement contained in this Agreement, in any case that is not curable or, if
curable, is not cured within 30 calendar days after written notice of such
breach is given by Parent to the party committing such breach, or (iii) on a
scheduled expiration date all conditions to Purchaser's obligation to accept for
payment and pay for Shares pursuant to the Offer shall have been satisfied or
waived other than the Minimum Condition and Purchaser terminates the Offer
without purchasing Shares pursuant to the Offer, provided that the satisfaction
or waiver of all other conditions shall have been publicly disclosed at least
five business days before termination of the Offer, or (iv) Purchaser shall have
otherwise terminated the Offer in
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accordance with the terms of this Agreement, including Annex A, without
purchasing shares pursuant to the Offer.
9.5 EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article IX, this Agreement (other than, with respect
to the parties hereto, the obligations pursuant to this Section 9.5 and Sections
10.1 and 10.2) shall become void and of no effect with no liability on the part
of any party hereto (or of any of its directors, officers, employees, agents,
legal and financial advisors or other representatives).
(b) In the event that (i) this Agreement is terminated by the Company
pursuant to Section 9.3(a) or (ii) this Agreement is terminated by Parent
pursuant to Section 9.4(i), then the Company shall promptly, but in no event
later than two days after the date of such termination or event, pay Parent a
termination fee of $30,000,000.
(c) In the event that, prior to the termination of this Agreement, any
person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
shall have made a Third Party Proposal and within six (6) months following the
date such Third Party Proposal is made, such person or group (other than Parent
or any of its affiliates) shall have acquired, directly or indirectly, the
Company, a substantial portion of its assets or more than 50% of the shares of
Company Common Stock then outstanding, for a per share consideration (or
equivalent thereof), in any such case, having a value greater than the price per
share of Company Common Stock to have been paid pursuant to this Agreement, then
the Company shall promptly, but in no event later than one day after the date of
such event, pay the Parent a termination fee of $30,000,000.
(d) In the event that (i) this Agreement is terminated by Parent pursuant
to section 9.4(iii) or (ii) this Agreement is terminated by the Company pursuant
to Section 9.3(b), then Parent shall promptly, but in no event later than two
days after the date of such termination or event, pay the Company all
out-of-pocket expenses incurred by the Company in connection with this Agreement
and the transactions contemplated hereby, including the fees of its printer,
consultants, attorneys, accountants, financial advisors and other advisors, not
to exceed $5,000,000.
(e) In the event that this Agreement is terminated by the Parent or
Purchaser pursuant to Section 9.4(ii), the Company shall promptly, but in no
event later than two days after the date of such termination or event, pay the
Parent all out-of-pocket expenses incurred by the Parent or Purchaser in
connection with this Agreement and the transactions contemplated hereby,
including the fees and expenses of their printer, consultants, attorneys,
accountants, financial advisors and other advisors, not to exceed $5,000,000.
9.6 EXTENSION; WAIVER. Subject to the applicable provisions of the DGCL and
the provisions of this Agreement, including Section 7.10, at any time prior to
the Effective Time, each of Parent, Purchaser and the Company may (i) extend the
time for the performance of any of the obligations or other acts of the other
party, (ii) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance by the other party with any
of the agreements or conditions contained herein. Any agreement on the part of
either party hereto to any such extension or waiver shall be valid only if set
forth in any instrument in writing signed on behalf of such party. The failure
of either party hereto to assert any of its rights hereunder shall not
constitute a waiver of such rights.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 PAYMENT OF EXPENSES. Whether or not the Offer and the Merger shall be
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby.
10.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SURVIVAL OF CONFIDENTIALITY.
The representations and warranties made herein shall not survive beyond the
earlier of (i) termination of this Agreement or (ii) the Effective Time, in the
case of the representations and warranties of Parent or Purchaser or the
purchase of Shares
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by Purchaser pursuant to the Offer, in the case of the representations and
warranties of the Company. This Section 10.2 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time or the Purchase of Shares by Purchaser pursuant to the
Offer. The Confidentiality Agreement shall survive any termination of this
Agreement and the provisions of such Confidentiality Agreement shall apply to
all information and material delivered by any party hereunder.
10.3 MODIFICATION OR AMENDMENT. Subject to the applicable provisions of the
DGCL and the provisions of this Agreement, including Section 7.10, at any time
prior to the Effective Time, the parties hereto may modify or amend this
Agreement by written agreement executed and delivered by duly authorized
officers of the respective parties.
10.4 WAIVER OF CONDITIONS. Subject to the applicable provisions of the DGCL
and the provisions of this Agreement, including Section 7.10, the conditions to
each of the parties' obligations to consummate the Merger are for the sole
benefit of such party and may be waived by such party in whole or in part.
10.5 COUNTERPARTS. For the convenience of the parties hereto, this Agreement
may be executed in any number of counterparts, each such counterpart being
deemed to be an original instrument, and all such counterparts shall together
constitute the same agreement.
10.6 GOVERNING LAW.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.
(b) Each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (iii) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in any
court other than a Federal or state court sitting in the State of Delaware.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.6.
10.7 NOTICES. Any notice, request, instruction or other document to be given
hereunder by any party to the other parties shall be in writing and delivered
personally or sent by overnight courier with confirmation of next day delivery
or by facsimile transmission (with a confirming copy sent by overnight courier),
as follows:
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(a) If to the Company, to
Greenfield Industries, Inc.
2743 Perimeter Parkway
Building 100, Suite 100
Augusta, GA 30909
Attn: Paul W. Jones
(706) 863-7708 (telephone)
(706) 650-4122 (facsimile)
with a copy to:
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, DC 20037
Attn: Matthew G. Maloney, Esq.
(202) 785-9700 (telephone)
(202) 887-0689 (facsimile)
(b) If to Parent, to
Kennametal Inc.
Route 981 at Westmoreland
County Airport
P.O. Box 231
Latrobe, PA 15650
Attn: David T. Cofer
(412) 539-5206 (telephone)
(412) 539-3839 (facsimile)
with a copy to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219
Attn: Lewis U. Davis, Jr., Esq.
(412) 562-8953 (telephone)
(412) 562-1041 (facsimile)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
10.8 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the Confidentiality
Agreement (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof, and (b) shall not be assigned by operation
of law or otherwise.
10.9 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right to
receive the consideration payable in the Merger pursuant to Article IV hereof is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement;
provided, however, that the provisions of Section 7.7 shall inure to the benefit
of and be enforceable by the Indemnified Parties and the provisions of Section
7.8(b) shall inure to the benefit of and be enforceable by the officers and
directors of the Company.
10.10 CERTAIN DEFINITIONS. As used herein:
(a) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
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(c) "Rights" shall mean any preferred stock purchase rights issued
pursuant to the Restated Rights Agreement, dated as of February 6, 1996, by
and between the Company and First Chicago Trust Company of New York, as
Rights Agent (the "Rights Agreement"), that are issued and outstanding
immediately prior to the Effective Time
(d) "Significant Subsidiary" shall have the meaning ascribed to it
under Rule 1-02 of Regulation S-X of the SEC.
(e) "Subsidiary" shall mean, when used with reference to any entity,
any other entity of which either (i) a majority of the outstanding voting
securities of which are owned directly or indirectly by such entity, or
(ii) an amount of voting securities or other voting ownership is sufficient
to elect at least a majority of its board directors or other governing
body.
(f) "Material Adverse Effect" shall mean any adverse change or changes
in the financial condition, properties, business, results of operations or
prospects of the Company or any of its subsidiaries or Parent or any of its
subsidiaries, as the case may be, which individually or in the aggregate is
or are material to the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, as the case may be, other
than (i) any change or effect arising out of general economic conditions or
(ii) any change or effect which the Company or Parent, as the case may be,
has disclosed in writing, prior to the date hereof, to Parent or the
Company, as the case may be, has occurred or is likely to occur.
10.11 SPECIFIC PERFORMANCE.
(a) The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
(b) It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
10.12 OBLIGATION OF PARENT. Whenever this Agreement requires Purchaser to
take any action, such requirement shall be deemed to include an undertaking on
the part of Parent to take such action and or guarantee of the performance
thereof.
10.13 VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
10.14 CAPTIONS. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
KENNAMETAL INC.
By: /s/ ROBERT L. MCGEEHAN
------------------------------------
Name: Robert L. McGeehan
Title: President
PALMER ACQUISITION CORP.
By: /s/ ROBERT L. MCGEEHAN
------------------------------------
Name: Robert L. McGeehan
Title: President
GREENFIELD INDUSTRIES, INC.
By: /s/ PAUL W. JONES
------------------------------------
Name: Paul W. Jones
Title: President and Chief
Executive Officer
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ANNEX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer and provided that
Purchaser shall not be obligated to accept for payment any Shares until (i)
expiration of all applicable waiting periods under the HSR Act and (ii) the
Minimum Condition shall have been satisfied, Purchaser shall not be required to
accept for payment or pay for, or may delay the acceptance for payment of or
payment for, any Shares tendered pursuant to the Offer, or may, subject to the
terms of the Agreement, terminate or amend the Offer if on or after October 10,
1997, and at or before the time of payment for any of such Shares, any of the
following events shall occur (or become known to Parent) and remain in effect:
(a) there shall have occurred and be continuing as of the then
scheduled expiration date of the Offer (i) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange or the Nasdaq National Market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or any limitation by federal or state authorities on the extension
of credit by lending institutions, or a disruption of or material adverse
change in either the syndication market for credit facilities or the
financial, banking or capital markets, (iii) a commencement or escalation
of a war, armed hostilities or other international or national calamity
directly involving the United States, (iv) any material limitation (whether
or not mandatory) by any governmental or regulatory authority, agency or
commission, domestic or foreign ("Governmental Entity"), on the extension
of credit by banks or other lending institutions in the United States, (v)
or in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(b) (i) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Agreement, (ii) any representation or warranty of the Company set forth in
the Agreement which is qualified by materiality shall not have been true
and correct as of the date of the Agreement and as of the then scheduled
expiration date of the Offer as though made on and as of the then scheduled
expiration date of the Offer or (iii) any representation or warranty of the
Company set forth in the Agreement which is not qualified by materiality
shall not have been true and correct in all material respects as of the
date of this Agreement and as of the then scheduled expiration date of the
Offer as though made on and as of the then scheduled expiration date of the
Offer, except in the case of clauses (ii) and (iii) of this paragraph (b)
for representations and warranties which by their terms speak only as of
another date, which representations and warranties, if qualified by
materiality, shall not have been true and correct as of such date and, if
not qualified, shall not have been true and correct in all material
respects as of such other date;
(c) any court or Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order which is in effect and which (i)
restricts (other than restrictions which in the aggregate do not have a
Material Adverse Effect on Parent, Purchaser or the Company or which do not
materially restrict the ability of Parent and Purchaser to consummate the
Offer and the Merger as originally contemplated by Parent and Purchaser),
prevents or prohibits consummation of the Offer or the Merger, (ii)
prohibits or limits (other than limits which in the aggregate do not have a
Material Adverse Effect on Parent, Purchaser or the Company or which do not
materially limit the ability of Parent to own and operate all of the
business and assets of Parent and the Company after the consummation of the
transactions contemplated by the Offer and the Agreement) the ownership or
operation by the Company, Parent or any of their subsidiaries of all or any
material portion of the business or assets of the Company and its
subsidiaries taken as a whole, or as a result of the Offer or the Merger
compels the Company, Parent or any of their subsidiaries to dispose of or
hold separate all or any material portion of their respective business or
assets, (iii) imposes limitations (other than limits which in the aggregate
do not have a Material Adverse Effect on Parent, Purchaser or the Company
or which do not materially limit the ability of Parent to own and operate
all of the business and assets of Parent and the Company after the
consummation of the transactions contemplated by the Offer and the
Agreement) on the ability of Parent or any subsidiary of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer or
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otherwise on all matters properly presented to the Company's stockholders
including, without limitation, the approval and adoption of the Agreement
and the transactions contemplated thereby, (iv) requires divestiture by
Parent or any affiliate of Parent of any Shares or (v) otherwise materially
adversely affects the financial condition, business or results of
operations of the Company and its subsidiaries taken as a whole;
(d) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Parent or Purchaser with or from any governmental entity in
connection with the execution and delivery of the Agreement, the Offer and
the consummation of the transactions contemplated by the Agreement shall
not have been made or obtained as of the then scheduled expiration date of
the Offer (other than the failure to receive any consent, registration,
approval, permit or authorization or to make any notice, report or other
filing that, in the aggregate, is not reasonably likely to have a Material
Adverse Effect on Parent, Purchaser or the Company, or would not prevent
the consummation of the Offer or the Merger);
(e) any change or development in the financial condition, properties,
business, results of operations or prospects of the Company and its
Subsidiaries that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect;
(f) the Board of Directors of the Company (or a special committee
thereof) shall have withdrawn or amended, or modified in a manner adverse
to Parent and Purchaser its recommendation of the Offer or the Merger, or
shall have endorsed, approved or recommended any Superior Proposal; or
(g) the Agreement shall have been terminated by the Company or Parent
or Purchaser in accordance with its terms or Parent or Purchaser shall have
reached an agreement or understanding in writing with the Company providing
for termination or amendment of the Offer or delay in payment for the
Shares;
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Parent and Purchaser and may be asserted by Parent or Purchaser
or may be waived by Parent or Purchaser, in whole or in part at any time and
from time to time in its sole discretion. The failure by Parent or Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right, the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
A-2
<PAGE> 67
EXHIBIT 2
[GREENFIELD INDUSTRIES LOGO] CORPORATE OFFICES
P.O. Box 2587
Augusta, GA 30903-2587
Telephone: 706-863-7708
Fax: 706-650-4122
August 13, 1997
Mr. Robert L. McGeehan
President and Chief Executive Officer
Kennametal Inc.
P.O. Box 231
Latrobe, PA 15650
Dear Mr. McGeehan:
In connection with your consideration of a possible negotiated
transaction with Greenfield Industries, Inc. and/or its subsidiaries,
affiliates or divisions (collectively, with such subsidiaries, affiliates and
divisions, the "Company"), the Company is prepared to make available to you
certain information concerning the business, financial condition, operations,
assets and liabilities of the Company. As a condition of such information
being furnished to you and your directors, officers, employees, agents or
advisors (including, without limitation, attorneys, accountants, consultants,
bankers and financial advisors) (collectively, "Representatives"), you agree to
treat any information concerning the Company (whether prepared by the Company,
its advisors or otherwise and irrespective of the form of communication) which
is furnished to you or to your Representatives now or in the future by or on
behalf of the Company (herein collectively referred to as the "Evaluation
Material") in accordance with the provisions of this letter agreement, and to
take or abstain from taking certain other actions hereinafter set forth.
The term "Evaluation Material" also shall be deemed to include all
notes, analyses, compilations, studies, interpretations or other documents
prepared by you or your Representatives which contain, reflect or are based
upon, in whole or in part, the information furnished to you or your
Representatives pursuant hereto. The term "Evaluation Material" does not
include information which (i) is or becomes generally available to the public
other than as a result of a disclosure by you or your Representatives in
violation of this agreement; (ii) was within your possession prior to its being
furnished to you by or on behalf of the Company pursuant hereto, provided that
the source of such information was not known by you to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or any other party with respect to
such information; (iii) becomes available to you on a non-confidential basis
from a source other than the Company or any of its Representatives, provided
that such source is not, to your knowledge, bound by a confidentiality agreement
with or other contractual, legal or fiduciary obligation of confidentiality to
the Company or any other party with respect to such information; or (iv)
information that was or is developed by you independently from the information
disclosed by the Company or any of its Representatives.
<PAGE> 68
Kennametal Inc.
August 13, 1997
Page 2
You hereby agree that you and your Representatives shall use the
Evaluation Material solely for the purpose of evaluating a possible negotiated
transaction between the Company and you, that the Evaluation Material will be
kept confidential and that you and your Representatives will not disclose any
of the Evaluation Material in any manner whatsoever, provided, however, that
(i) you may make any disclosure of such information to which the Company gives
its prior written consent; and (ii) any of such information may be disclosed to
your Representatives who need to know such information for the sole purpose of
evaluating a possible negotiated transaction with the Company, who agree to
keep such information confidential and who are provided with a copy of this
letter agreement and agree to be bound by the terms hereof to the same extent
as if they were parties hereto. In any event, you shall be responsible for any
breach of this letter agreement by any of your Representatives and you agree,
at your sole expense, to take all reasonable measures (including but not
limited to court proceedings) to restrain your Representatives from prohibited
or unauthorized disclosure or use of the Evaluation Material.
In addition, you agree that, without the prior written consent of the
Company, you and your Representatives will not disclose to any other person the
fact that the Evaluation Material has been made available to you, that
discussions or negotiations are taking place concerning a possible transaction
involving the Company or any of the terms, conditions or other facts with
respect thereto (including the status thereof), provided that you may make such
disclosure if your General Counsel determines, and advises the Company of such
in writing prior thereto, that such disclosure must be made by you in order
that you not commit a violation of law or stock exchange rules and regulations.
Without limiting the generality of the foregoing, you further agree that,
without the prior written consent of the Company, you will not, directly or
indirectly, enter into any agreement, arrangement or understanding, or any
discussions which might lead to such agreement, arrangement or understanding,
with any person regarding a possible transaction involving the Company. The
term "person" as used in this letter agreement shall be broadly interpreted to
include the media and any corporation, partnership, group, individual or other
entity.
In the event that you or any of your Representatives are requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any of the Evaluation Material, you shall provide
the Company with prompt written notice of any such request or requirement so
that the Company may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this letter agreement. If, in the
absence of a protective order or other
<PAGE> 69
Kennametal Inc.
August 13, 1997
Page 3
remedy or the receipt of a waiver by the Company, you or any of your
Representatives are nonetheless, in the opinion of your General Counsel,
legally compelled to disclose Evaluation Material to any tribunal or else stand
liable for contempt or suffer other censure of penalty, you or your
Representatives may, without liability hereunder, disclose to such tribunal
only that portion of the Evaluation Material which such counsel advises you is
legally required to be disclosed, provided that you exercise your reasonable
best efforts to preserve the confidentiality of the Evaluation Material,
including, without limitation, by cooperating with the Company to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Evaluation Material by such tribunal.
If you decide that you do not wish to proceed with a transaction with
the Company, you will promptly inform the Company of that decision. In that
case, or at any time upon the request of the Company for any reason, you will
promptly deliver to the Company all Evaluation Material (and all copies
thereof) furnished to you or your Representatives by or on behalf of the
Company pursuant hereto. In the event of such a decision or request, all other
Evaluation Material prepared by you or your Representatives shall be destroyed
and no copy thereof shall be retained. Notwithstanding the return or
destruction of the Evaluation Material, you and your Representatives will
continue to be bound by your obligations of confidentiality and other
obligations hereunder for a period of five years after the date this letter is
signed by you.
You understand and acknowledge that neither the Company nor any of its
Representatives (including the Company's directors, officers, employees, or
agents) make any representation or warranty, express or implied, as to the
accuracy or completeness of the Evaluation Material. You agree that neither
the Company nor any of its Representatives (including any of the Company's
directors, officers, employees, or agents) shall have any liability to you or
to any of your Representatives relating to or resulting from the use of the
Evaluation Material or any errors therein or omissions therefrom. Only those
representations or warranties which are made in a final definitive agreement
regarding any transactions contemplated hereby, when, as and if executed, and
subject to such limitations and restrictions as may be specified therein, will
have any legal effect.
In consideration of the Evaluation Material being furnished to you,
you hereby agree that, for a period of three years from the date hereof,
neither you nor any of your affiliates will solicit to employ any of the
current officers or key employees of the Company with whom you have had contact
or who were specifically identified to you during the period of your
investigation of the Company,
<PAGE> 70
Kennametal, Inc.
August 13, 1997
Page 4
so long as they are employed by the Company, without obtaining the prior
written consent of the Company.
You agree that, for a period of two years from the date of this
letter agreement, unless such shall have been specifically agreed to in writing
by the Company, neither you nor any of your affiliates (as such term is defined
under the Securities Exchange Act of 1934, as amended (the "1934 Act")) or
Representatives will in any manner, directly or indirectly, (a) effect or
seek, offer or propose (whether publicly or otherwise) to effect, or cause or
participate in or in any way assist any other person to effect or seek, offer or
propose (whether publicly or otherwise) to effect or participate in, (i) any
acquisition of any securities (or beneficial ownership thereof) or assets of the
Company or any of its subsidiaries; (ii) any tender or exchange offer, merger or
other business combination involving the Company or any of its subsidiaries;
(iii) any recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction with respect to the Company or any of its
subsidiaries; or (iv) any "solicitation" of "proxies" (as such terms are used in
the proxy rules of the Securities and Exchange Commission) or consents to vote
any voting securities of the Company; (b) form, join or in any way participate
in a "group" (as defined under the 1934 Act); (c) otherwise act, alone or in
concert with others, to seek to control or influence the management, Board of
Directors or policies of the Company; (d) take any action which might force the
Company to make a public announcement regarding any of the types of matters set
forth in (a) above; or (e) enter into any discussions or arrangements with any
third party with respect to any of the foregoing.
Notwithstanding anything to the contrary herein, you may take any of
the actions set forth in (a) - (e) above without regard to the foregoing
restrictions if any of the following events shall occur: (a) a tender or
exchange offer is made by any person or 13D Group (as hereinafter defined) to
acquire stock representing a majority of the total voting power of all such
securities outstanding; or (b) it is publicly disclosed or you otherwise learn
that stock representing a majority of the combined securities then outstanding
are proposed (in a public announcement or filing) to be acquired by a person or
13D Group. As used herein the term "13D Group" shall mean any group of persons
formed for the purpose of acquiring, holding, voting or disposing of stock
which would be required under section 13(d) of the 1934 Act and the rules and
regulations thereunder (as now in effect and based on present interpretations
thereof) to file a statement on Schedule 13D with the Securities and Exchange
Commission as a "person" within the meaning of Section 13(d)(3) of the 1934 Act
if such group beneficially owned stock representing more than 5% of the total
combined voting power of all stock then outstanding.
<PAGE> 71
Kennametal Inc.
August 13, 1997
Page 5
You understand and agree that no contract or agreement providing for
any transaction involving the Company shall be deemed to exist between you and
the Company unless and until a final definitive agreement has been executed and
delivered, and you hereby waive, in advance, any claims (including, without
limitation, breach of contract) in connection with any transaction involving
the Company unless and until you and the Company shall have entered into a
final definitive agreement. You also agree that unless and until a final
definitive agreement regarding a transaction between the Company and you has
been executed and delivered, neither the Company nor you will be under any
legal obligation of any kind whatsoever with respect to such a transaction by
virtue of this letter agreement except for the matters specifically agreed to
herein. You further acknowledge and agree that the Company reserves the right,
in its sole discretion, to reject any and all proposals made by you or any of
your Representatives with regard to a transaction between the Company and you,
and to terminate discussions and negotiations with you at any time. You
further understand that (i) the Company and its Representatives shall be free
to conduct any process for any transaction involving the Company, if and as
they in their sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive
agreement without prior notice to you or any other person); (ii) any procedures
relating to such process or transaction may be changed at any time without
notice to you or any other person; and (iii) you shall not have any claims
whatsoever against the Company, its Representatives or any of their respective
directors, officers, stockholders, owners, affiliates or agents arising out of
or relating to any transaction involving the Company (other than those as
against the parties to a definitive agreement with you in accordance with the
terms thereof) nor, unless a definitive agreement is entered into with you,
against any third party with whom a transaction is entered into. Neither this
paragraph nor any other provision in this letter agreement can be waived or
amended except by written consent of the Company, which consent shall
specifically refer to this paragraph (or such provision) and explicitly make
such waiver or amendment.
It is understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
future exercise thereof or the exercise of any other right, power or privilege
hereunder.
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach of this letter agreement by you or any of your
Representatives and that the Company shall be entitled to equitable relief,
including injunction and specific performance, as a remedy for any such breach.
Such remedies shall not be deemed to be the exclusive remedies for a breach by
you of this
<PAGE> 72
Kennametal Inc.
August 13, 1997
Page 6
letter agreement but shall be in addition to all other remedies available at
law or equity to the Company. In the event of litigation relating to this
letter agreement, if a court of competent jurisdiction determines that you or
any of your Representatives have breached this letter agreement, then you shall
be liable and pay to the Company the reasonable legal fees incurred by the
Company in connection with such litigation, including any appeal therefrom.
During consideration of a possible transaction, you may provide to the
Company and/or its officers, directors, employees, Agents, or consultants
(collectively Greenfield) certain non-public, confidential information
concerning Kennametal, Inc. If that occurs, Greenfield agrees that the receipt
and use of such information by Greenfield will be subject to all of the
confidentiality obligations of this letter agreement in the same manner as they
are applicable to receipt and use of the Evaluation Material by you.
This letter agreement is for the benefit of the Company and its
directors, officers, stockholders, owners, affiliates, and agents, and shall be
governed by and construed in accordance with the laws of the State of New York
without regard to such jurisdiction's conflicts of laws principles.
Please confirm your agreement with the foregoing by signing and
returning one copy of this letter to the undersigned, whereupon this letter
agreement shall become a binding agreement between you and the Company.
Very truly yours,
GREENFIELD INDUSTRIES,
By: /s/ GARY L. WELLER
-----------------------------
Name: Gary L. Weller
Executive Vice President &
Chief Financial Officer
KENNAMETAL INC.
Accepted and agreed as of the date first written above:
By: /s/ ROBERT L. MCGEEHAN
-----------------------------------------
Name: Robert L. McGeehan
President and Chief Executive Officer
KENNAMETAL INC.
<PAGE> 73
EXHIBIT 3
<TABLE>
<S> <C> <C>
Contacts: FOR KENNAMETAL FOR GREENFIELD
Frank P. Simpkins (Investors) Gary L. Weller
412-539-4617 706-650-4218
Charles T. Glazer (Media)
412-539-4618
</TABLE>
FOR IMMEDIATE RELEASE
Kennametal Inc. to Acquire Greenfield Industries, Inc. in Transaction Valued at
Approximately $1 Billion
Acquisition to Enhance Kennametal's Position as a Manufacturer
and Distributor of Consumable Tools and Other Related Products to
Customers in Metalworking and Other Industries Worldwide
All-Cash Tender Offer for Greenfield's Common Stock at $38.00 Per
Share to Commence on or Prior to October 20, 1997
LATROBE, PENNSYLVANIA and AUGUSTA, GEORGIA, October 12, 1997--Kennametal
Inc. (NYSE: KMT) and Greenfield Industries, Inc. (NASDAQ: GFII) today jointly
announced the signing of a definitive merger agreement under which Kennametal
will acquire Greenfield in a transaction valued at approximately $1 billion.
Under the terms of the agreement, which has been approved by the Boards of
Directors of both companies, Kennametal will commence an all-cash tender offer
on or prior to October 20, 1997 to acquire all of Greenfield's common stock for
$38.00 per share, representing a premium of 18 percent over Greenfield's closing
price of $32 3/16 on Friday, October 10, 1997. As of September 30, 1997,
Greenfield had approximately 16.4 million shares outstanding. Under the terms of
the agreement, Kennametal also will assume Greenfield's outstanding debt and
convertible preferred securities, which have a current combined value of
approximately $320 million.
"The acquisition will significantly enhance Kennametal's competitive
position as a global leader in the metalworking consumable tooling industry by
forming an alliance of the two companies' complementary manufacturing
capabilities, product lines and sales channels," said Robert L. McGeehan,
president and chief executive officer of Kennametal. "Moreover, the transaction
serves as an important step in our long-term strategy to provide the market with
the most complete offering of products and services to meet customers'
metalworking needs. Greenfield will bring to Kennametal valuable new products
with strong brand-name recognition, and will provide access to markets and
customers not currently reached by Kennametal."
Paul W. Jones, president and chief executive officer of Greenfield,
commented, "Joining forces with Kennametal is a unique and exciting opportunity
for all Greenfield shareholders, customers and employees. The strengths of both
organizations in our respective markets will position Kennametal to be the
leading provider of high-quality cutting tools to our customers on a worldwide
basis. Kennametal, which is the North American leader and has excellent market
positions in Europe and Asia Pacific, will be strengthened by Greenfield's broad
product offering and reputation for service. Furthermore, Kennametal has
world-class materials science and other technical capabilities that will be
utilized by many of Greenfield's operations, allowing them to expand into and
serve markets and customers in ways not possible before."
In the course of conducting extensive due diligence, Kennametal was
provided with Greenfield's internal financial projections for 1997 and 1998.
These projections anticipate sales of approximately $577 million for 1997 and
approximately $636 million for 1998. Greenfield's fully diluted earnings per
share, before any possible restructuring charges, are expected to be in a range
of $1.56 to $1.78 for 1997. These projections, as well as Greenfield's
expectation that its earnings will improve significantly in 1998, were taken
into consideration in determining Kennametal's offer.
<PAGE> 74
"We greatly value Greenfield's management, brands and products and believe
the true fundamentals of their business have been obscured by
slower-than-expected improvements in certain operations," said Mr. McGeehan. "We
look forward to working in combination with Greenfield's management to help us
fulfill our strategic vision for the combined enterprises."
Greenfield will continue to operate under its current name as a subsidiary
of Kennametal. Mr. Jones will continue in his capacity as president and CEO of
Greenfield and will report to Mr. McGeehan.
Mr. McGeehan added, "We will continue to strive to be the customer's first
choice for metalworking tools, supplies and technical support through our
direct-sales organization and JLK operation, which serves customers through
catalogs, showrooms and integrated supply programs. We view Greenfield's
products and distributor network as excellent additions to these existing
efforts."
Kennametal said it will finance the acquisition initially through its new
revolving credit agreement. Completion of the acquisition, which is subject to
customary regulatory approvals in the United States and certain other countries,
is expected to occur by year-end.
Merrill Lynch & Co. served as the financial advisor to Kennametal. Credit
Suisse First Boston and NationsBanc Capital Markets, Inc. served as financial
advisors to Greenfield.
Greenfield Industries, Inc. is a leading worldwide manufacturer of
consumable cutting tools and related products used in a variety of industrial,
electronics, energy and construction, engineered and consumer markets.
Greenfield also manufactures and sells various products for the marine industry.
The company, which has 5,100 employees, had sales of $520 million in 1996.
Kennametal Inc. markets, manufactures and distributes a broad range of
tools and industrial supplies and accessories for the metalworking, mining and
highway construction industries. With more than 7,500 employees worldwide and
sales of approximately $1.2 billion for the year ended June 30, 1997, Kennametal
is one of the world's leading producers and suppliers of cutting tools and
wear-resistant parts made of cemented carbides and other hard materials.
This Press Release contains certain "forward-looking statements," as
defined in Section 21E of the Securities Exchange Act of 1934, concerning
Kennametal's and Greenfield's operations and performance, including, in
particular, Greenfield's future results of operations. These statements are
based upon a number of assumptions and estimates which are inherently subject to
significant uncertainties and contingencies which are not controllable and
actual results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to vary
include general economic and market conditions in North America and Europe and
to a lesser extent Asia Pacific, conditions in stock and debt markets,
successful integration of Kennametal and Greenfield and restructurings.
KENNAMETAL INC. FACT SHEET
Kennametal Inc. is a marketer, manufacturer and distributor of a broad
range of tools and industrial supplies for the metalworking, mining and highway
construction industries. Kennametal is one of the world's leading producers of
cutting tools and wear-resistant parts made of cemented carbides and other hard
materials.
- METALWORKING. Kennametal is a world leader in the metalworking market,
with a No. 1 market position in North America and a No. 2 market position
in Europe. Using its proprietary carbide technology, the company produces
metalcutting inserts and other tools used by manufacturers in a wide
range of industries, including automotive, aerospace, construction and
farm machinery, factory equipment, fabricated parts, engines, turbines,
and oil and gas equipment. A key element of Kennametal's multi-channel
distribution strategy is its direct sales organization including 350
sales engineers who are adept at solving customers' machining problems.
In addition to its industry leading positions in North America and
Europe, Kennametal has a growing position in Asia Pacific, the world's
fastest-growing and potentially largest metal-working market. The
<PAGE> 75
company has invested in a new $20 million state-of-the-art facility in
Shanghai, China, and has an extensive sales force in the region.
- INDUSTRIAL SUPPLY. Kennametal's industrial supply business is the
fastest-growing area of the company. With a focus on metalworking,
industrial supply provides customers with complete one-stop shopping for
their metalworking and machining needs, by combining Kennametal's
products with products and supplies not manufactured by Kennametal. The
products are distributed through the company's JLK Direct Distribution
Inc. (JLK) subsidiary, which was recently formed to better focus the
company's efforts in capitalizing on opportunities in industrial supply.
- MINING AND HIGHWAY CONSTRUCTION. Kennametal is the world leader in
mining and highway construction tools. Kennametal leads the way with
advanced technology and expert application advice in both traditional
markets, such as North America and Europe, and in emerging economies,
such as China, South America and Eastern Europe.
<TABLE>
<S> <C>
Corporate Name: Kennametal Inc. (NYSE: KMT)
Chairman: William R. Newlin
President and CEO: Robert L. McGeehan
Annual Sales Revenues: $1.2 billion in fiscal 1997
Number of Employees: 7,500 worldwide
Corporate Headquarters: Latrobe, Pennsylvania
Corporate Milestones: IPO of JLK Direct Distribution Inc. - 1997
$34 million World Headquarters - 1997
Acquisition of Hertel, Furth, Germany - 1993
$30 million corporate research center - 1991
</TABLE>
GREENFIELD INDUSTRIES, INC. FACT SHEET
Greenfield Industries is a leading manufacturer of consumable cutting tools
and related products, sold under some of the best-known brand names in the
metalworking industry. Its operations fall into six key areas:
- INDUSTRIAL PRODUCTS. The Industrial Products Group, the company's
largest segment representing approximately 55 percent of sales, produces
a wide range of cutting tool products made of high-speed steel and
tungsten carbide, for customers in a variety of industries. The company
is the leading manufacturer of industrial drill bits, taps and dies and
fixed limit gages in North America. Its brand names include Greenfield
Tap & Die, Cleveland Twist Drill, Putnam, Chicago-Latrobe, Vermont Tap &
Die, Eclipse, Metcut, Threads, Inc. and Metal Removal, among others.
- ENERGY & CONSTRUCTION PRODUCTS. Greenfield's Energy and Construction
Products Group manufactures products used in oil and gas drilling, mining
and highway resurfacing. The company is the largest independent supplier
of oil field compacts in the United States.
- ELECTRONICS PRODUCTS. The Electronics Products Group manufactures
carbide drills, endmills and routers used to make printed circuit boards
for the electronics industry, and is the world's leading manufacturer of
circuit board drills.
- ENGINEERED PRODUCTS. The Engineered Products Group manufactures
"made-to-order" tungsten-carbide parts for demanding wear applications,
such as plastics processing, tool and die manufacturing, and petroleum
flow control.
- CONSUMER PRODUCTS. Greenfield's Consumer Products Group manufactures
cutting tools, drill bits, saw blades and other tools for builders,
contractors, mechanics and "do-it-yourselfers," and has been the
exclusive supplier of Craftsman drill bits to Sears since 1930.
<PAGE> 76
- MARINE PRODUCTS. The Marine Products Group manufactures a variety of
marine products such as Rule bilge pumps, Danforth anchors and compasses.
<TABLE>
<S> <C>
Corporate Name: Greenfield Industries, Inc. (Nasdaq: GFII)
President and CEO: Paul W. Jones
Annual Sales Revenues: $520 million in 1996
Number of Employees: 5,100 worldwide
Corporate Headquarters: Augusta, Georgia
Corporate Milestones: IPO of Greenfield Industries - 1993
Secondary Offering - 1994
Acquisition of Cleveland Twist Drill - 1994
Acquisition of Rule Industries - 1996
</TABLE>
<PAGE> 77
EXHIBIT 4
GREENFIELD Corporate Offices
INDUSTRIES P.O. Box 2587
Augusta, GA 30903-2587
Telephons: 706-863-7708
Fax: 706-650-4122
October 17, 1997
Dear Stockholder:
We are pleased to report that on October 10, 1997, Greenfield Industries,
Inc. entered into an Agreement and Plan of Merger with Kennametal Inc. and one
of its subsidiaries, Kennametal Acquisition Corp., that provides for the
acquisition of Greenfield at a price of $38.00 per share in cash. Under the
terms of the proposed transaction, Kennametal Acquisition Corp. has today
commenced a tender offer for all of the outstanding shares of Greenfield Common
Stock at $38.00 per share. Following the completion of the tender offer, and any
approvals required by law, Kennametal Acquisition Corp. will be merged with
Greenfield and all shares not purchased in the tender offer (other than those
owned by Kennametal or by holders who have perfected appraisal rights) will be
converted into the right to receive $38.00 per share in cash in the merger.
YOUR BOARD OF DIRECTORS HAS (i) UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AT THE OFFER
PRICE AND THE MERGER, (ii) DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, AND
(iii) RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES TO
KENNAMETAL ACQUISITION CORP. AND APPROVE AND ADOPT THE MERGER AGREEMENT AND
MERGER, IF REQUIRED.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors. Among other things, these factors include
the opinion of Credit Suisse First Boston Corporation, financial advisor to
Greenfield, that, as of the date of the opinion, the consideration to be
received by the stockholders pursuant to the offer and the merger is fair to
such stockholders from a financial point of view.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is
Kennametal Inc.'s Offer to Purchase and related materials, including a Letter of
Transmittal for use in tendering shares. We urge you to read the enclosed
materials carefully. The management and directors of Greenfield thank you for
the support you have given the Company.
On behalf of the Board of Directors,
Sincerely,
/s/ DONALD E. NICKELSON
-----------------------------
Donald E. Nickelson
Chairman of the Board
/s/ PAUL W. JONES
-----------------------------
Paul W. Jones
President and Chief Executive
Officer
<PAGE> 78
EXHIBIT 5
CREDIT FIRST CREDIT SUISSE FIRST BOSTON CORPORATION
SUISSE BOSTON
227 West Monroe Street
Chicago, IL 60606-5018
Telephone 312-750-3000
October 10, 1997
Board of Directors
Greenfield Industries, Inc.
2743 Perimeter Parkway
Augusta, GA 30909
Dear Sirs:
You have asked us to advise you with respect to the fairness to the
stockholders of Greenfield Industries, Inc. (the "Company") from a financial
point of view of the consideration to be received by such stockholders pursuant
to the terms of the Agreement and Plan of Merger, dated as of October 10, 1997
(the "Merger Agreement"), among the Company, Kennametal Inc. (the "Acquiror")
and Palmer Acquisition Corp. (the "Sub"). The Merger Agreement provides for the
commencement by the Sub of a tender offer (the "Offer") for all of the
outstanding shares of the common stock of the Company, par value $0.01 per
share, together with associated rights (together, the "Shares"), at a price of
$38.00 per Share, net to the seller in cash, followed by a merger (the "Merger")
of the Company with the Sub pursuant to which the Company will become a wholly
owned subsidiary of the Acquiror and each outstanding Share (other than Shares
owned by the Acquiror, the Sub or any direct or indirect wholly owned
subsidiaries of the Acquiror, or any of the Company's direct or indirect wholly
owned subsidiaries or Shares held in the treasury of the Company) will be
converted into the right to receive $38.00 in cash.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company as well as the Merger
Agreement. We have also reviewed certain other information, including financial
forecasts, provided to us by the Company and have met with the Company's
management to discuss the business and prospects of the Company.
We have also considered certain financial and stock market data of the
Company, and we have compared that data with similar data for other publicly
held companies in businesses similar to those of the Company and we have
considered the financial terms of certain other business combinations and other
transactions which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's management as to the future financial performance of the Company. In
addition, we have not been requested to make nor have we made an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of the Company, nor have we been furnished with any such evaluations or
appraisals. Our opinion is necessarily based upon financial, economic, market
and other conditions as they exist and can be evaluated on the date hereof. In
connection with our engagement, we approached third parties to solicit
indications of interest in a possible acquisition of the Company and held
preliminary discussions with certain of these parties prior to the date hereof.
<PAGE> 79
We have acted as financial advisor to the Company and to the Board of
Directors (including the Special Committee thereof) in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon the consummation of the Merger.
In the past, we have performed certain investment banking services for the
Company and have received customary fees for such services.
In the ordinary course of our business, we and our affiliates may actively
trade the debt and equity securities of both the Company and the Acquiror for
our and such affiliates' own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Company and
the Board of Directors (including the Special Committee thereof) in connection
with its consideration of the Offer and the Merger and does not constitute a
recommendation to any stockholder whether or not such stockholder should tender
shares pursuant to the Offer and is not to be quoted or referred to, in whole or
in part, in any registration statement, prospectus or proxy statement, or in any
other document used in connection with the offering or sale of securities, nor
shall this letter be used for any other purposes, without our prior written
consent.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be received by the stockholders of the Company
in the Offer and Merger is fair to such stockholders from a financial point of
view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ TODD E. WARNOCK
------------------------------------
Todd E. Warnock
Managing Director
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<PAGE> 80
EXHIBIT 6
AMENDMENT NO. 1 TO RESTATED RIGHTS AGREEMENT
AMENDMENT made and entered into as of the 10th day of October,
1997, by and between Greenfield Industries, Inc. (the "Company") and First
Chicago Trust Company of New York (the "Rights Agent"), under the Restated
Rights Agreement dated as of February 6, 1996, by and between the Company and
the Rights Agent (the "Agreement").
WHEREAS, the Company and the Rights Agent have heretofore
executed and entered into the Agreement; and
WHEREAS, pursuant to Section 27 of the Agreement, the Company may
from time to time prior to the Distribution Date (as defined therein)
supplement or amend the Rights Agreement in accordance with the provisions of
Section 27 thereof; and
WHEREAS, it is proposed that the Company enter into an Agreement
and Plan of Merger (the "Merger Agreement"), among the Company, Kennametal Inc.
("Parent") and Palmer Acquisition Corp., a wholly-owned subsidiary of Parent
("Purchaser"); and
WHEREAS, the Board of Directors of the Company has determined
that the transactions contemplated by the Merger Agreement are fair to and in
the best interests of the Company and its stockholders; and
WHEREAS, the Board of Directors has determined that it is in the
best interests of the Company and its stockholders to amend the Agreement to
exempt the Merger Agreement and the transactions contemplated thereby from the
application of the Agreement.
NOW THEREFORE, the Company and the Rights Agent hereby amend the
Agreement as follows:
A. Section 1(e) is hereby amended by adding the following at
the end of such Section:
Notwithstanding the foregoing, for purposes of this Agreement,
neither Kennametal Inc. ("Parent") nor Palmer Acquisition Corp.,
a wholly-owned subsidiary of Parent (the "Permitted Purchasers")
shall be deemed to be the Beneficial Owner of or to "beneficially
own" any shares of Common Stock of the Company if and so long as
(i) that certain Agreement and Plan of Merger, dated as of
October 10, 1997, among the Company and the Permitted Purchasers,
as it may be amended, supplemented or restated (the "Merger
Agreement") has
<PAGE> 81
been fully executed, is in effect and has not been terminated by
any party thereto and (ii) no Permitted Purchaser has acquired
any shares of Common Stock other than pursuant to the terms of
the Merger Agreement.
B. The Agreement is hereby further amended to add a new Section
34 to the Agreement which shall read in its entirety as follows:
Section 34. Nothing in this Agreement shall be construed to
create or cause a Distribution Date or Stock Acquisition Date or
to constitute a Triggering Event or give any holder of Rights or
any other Person any legal or equitable rights, remedy or claim
under the Agreement, and neither the Parent nor the Purchaser
shall be deemed an Acquiring Person, solely as a result of or in
connection with the execution of the Merger Agreement or the
commencement or consummation of the transactions contemplated by
the Merger Agreement.
C. This Amendment shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made and performed entirely within such state.
D. This Amendment may be executed in any number of counterparts,
each of which shall for all purposes be deemed an original, and all of which
together shall constitute but one and the same instrument.
E. Except as expressly set forth herein, this Amendment shall not
by implication or otherwise alter, modify, amend or in any way affect any of
the terms, conditions, obligations, covenants or agreements contained in the
Rights Agreement, all of which are ratified and affirmed in all respects and
shall continue in full force and affect.
F. All action necessary to make this Amendment a valid agreement,
enforceable according to its terms, have been done and performed, and the
execution and delivery of this Amendment by the Company and the Rights Agent
have been in all respects duly authorized by the Company and the Rights Agent.
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<PAGE> 82
IN WITNESS WHEREOF, the parties have caused this Amendment to be
duly executed as of the date first above written.
Attest: GREENFIELD INDUSTRIES, INC.
By: /s/ GARY L. WELLER By: /s/ PAUL W. JONES
----------------------------- ----------------------------
Name: Gary L. Weller Name: Paul W. Jones
Title: Secretary Title: President and
Chief Executive Officer
Attest: FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By: /s/ KATHLEEN WHELPLY By: /s/ CHARLES D. KERYC
----------------------------- ----------------------------
Name: Kathleen Whelply Name: Charles D. Keryc
Title: Assistant Vice President Title: Vice President
3
<PAGE> 83
EXHIBIT 7
AMENDED AND RESTATED
GREENFIELD INDUSTRIES, INC.
EMPLOYEE STOCK OPTION PLAN
ARTICLE I
INTRODUCTION
1. Adoption and Purpose.
a. Greenfield Industries, Inc., a Delaware corporation (the "Company"),
hereby adopts this Greenfield Industries, Inc. Employee Stock Option Plan (the
"Plan"), dated July 1, 1993 and reserves from the authorized but unissued shares
of its Common Stock, par value $0.01 per share (the "Common Stock"), a total of
2,000,000 shares (the number of such shares being subject to adjustment as
provided in Article III hereof) for issuance pursuant to the Plan, all on the
terms set forth in the Plan.
b. The purpose of the Plan is to provide selected key employees of the
Company, key employees of any subsidiary corporation or parent corporation of
the Company now existing or hereafter formed or acquired, upon whose efforts the
Company is dependent for the successful conduct of its business, an opportunity
to obtain a proprietary interest in the Company, to increase such proprietary
interest, or to benefit from the appreciation in the value of the Common Stock.
The Plan will provide a means for such selected key employees to purchase shares
of Common Stock pursuant to non-qualified stock options (the "Non-Qualified
Options") and for such key employees to purchase shares of common stock pursuant
to incentive stock options (the "Incentive Options," and, together with the
Non-Qualified Options, the "Options"). Incentive Options are intended to qualify
as options described in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), but the Company makes no warranty as to the qualification
of any Option as an Incentive Option.
c. As used in the Plan, the terms "subsidiary corporation" and "parent
corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 424(f) and 424(e) of the Code.
d. Shares issued pursuant to the Plan shall be fully paid and
nonassessable.
2. Administration.
a. The Plan shall be administered by the Board of Directors (the
"Board") or such committee thereof as may be appointed from time to time by the
Board of Directors. Any such committee shall consist of two or more individuals
who shall be
<PAGE> 84
members of the Board and shall be comprised solely of directors who are
"Non-Employee Directors" within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any reference
to the Board of Directors contained herein shall mean and include any such duly
authorized committee thereof.
b. Subject to the terms and conditions of the Plan, the Board shall
have full and complete discretionary authority: (i) to construe and interpret
the Plan; (ii) to define the terms used herein; (iii) to prescribe, amend and
rescind rules and regulations relating to the Plan; (iv) subject to the
conditions set forth in the Plan, to determine the individuals, if any, to whom
Options shall be granted (the "Optionees"), the time or times at which Options
shall be granted, the period or periods of exercisability of each Option, the
number of shares to be subject to each Option, and the Option price; and (v) to
make all other determinations necessary or advisable for the administration of
the Plan. All determinations and interpretations made by the Board shall be
binding and conclusive on all Optionees and on their legal representatives and
beneficiaries.
c. In making any determination as to the individuals to whom Options
shall be granted under the Plan and as to the number of shares of Common Stock
to be covered by such Options, the Board shall take into account the duties of
the respective individuals, their length of service, their amount of earnings,
their present and potential contributions to the success of the Company, and
such other factors as the Board shall deem relevant in connection with
accomplishing the purposes of the Plan; provided, however, that no participant
shall be granted Incentive Options in any calendar year to purchase shares of
stock in the Company or in any subsidiary corporation or parent corporation of
the Company in excess of the maximum allotment described in Section 5 of Article
II of the Plan.
d. No member or former member of the Board shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted hereunder.
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<PAGE> 85
ARTICLE II
STOCK OPTIONS
1. Eligibility; Participation; Special Limitations.
a. Key employees of the Company, or of any subsidiary corporation or
parent corporation of the Company, including directors who are employees, except
as otherwise provided in the Plan, shall be eligible to receive Non-Qualified
and Incentive Options under the Plan. The Board may determine by resolution that
certain employees or classes of employees are not eligible to receive Options
under the Plan. An individual who has been granted an Option may, if otherwise
eligible, be granted additional Options if the Board shall so determine,
provided, however, the number of Incentive Options which may be granted to an
individual shall not exceed the maximum allotment described in the Plan.
b. At the time a Non-Qualified Option is granted, there shall be a
written non-qualified stock option agreement (the "Non-Qualified Stock Option
Agreement") between the participant and the Company setting forth the terms and
exercise periods with respect to the Non-Qualified Options
granted.
c. At the time an Incentive Option is granted, there shall be a written
incentive stock option agreement (the "Incentive Stock Option Agreement")
between the participant and the Company setting forth the terms and exercise
periods with respect to the Incentive Options granted.
d. Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board or the shareholders of the Company, and no action taken by
the Board, shall entitle a person to receive or have a right to receive any
Option unless and until the Optionee has executed and delivered to the Company a
Non-Qualified Stock Option Agreement or an Incentive Stock Option Agreement with
respect to such option.
2. Option Price.
a. The initial per share option price of any Non-Qualified Option shall
be established by the Board, provided that the option price shall not be less
than the fair market value of the Common Stock on the date of grant.
b. The per share exercise price of any Incentive Option shall not be
less than the fair market value of the Common Stock on the date of grant;
provided, however, that, in the case of a participant who owns more than ten
percent (10%) of the total combined voting power of all classes of stock in the
Company, or to the extent applicable, any subsidiary corporation or parent
corporation of the Company at the time an Incentive
3
<PAGE> 86
Option is granted to the participant (a "10% Shareholder"), the initial per
share option price shall not be less than one hundred ten percent (110%) of the
fair market value of the Common Stock on the date of grant.
c. For the purposes of this Section, the fair market value of a share
of Common Stock on any date shall be equal to the closing sale price of a share
of the Common Stock as published by a national securities exchange on which the
shares of the Common Stock are traded on such date or, if there is no sale of
the Common Stock on such date, the average of the bid and asked prices on such
exchange at the close of trading on such date or, if shares of Common Stock are
not listed on a national securities exchange on such date but are authorized for
quotation in the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") National Market System ("NMS"), the last transaction price per
share as reported by NASDAQ NMS on such date or, if shares of Common Stock are
not authorized for quotation in NASDAQ NMS on such date, the average of the bid
and asked prices in the over the counter market or, if the Common Stock is not
listed on a national securities exchange, quoted in NASDAQ NMS or quoted in the
over the counter market, the fair market value of a share of the Common Stock on
such date as shall be determined in good faith by the Board. In rendering its
determination of the Common Stock's fair market value, the Board shall comply
with Section 422(b)(4) of the Code and the applicable regulations promulgated
thereunder.
d. For purposes of the Plan, the determination of the Board of the fair
market value of a share shall be conclusive.
3. Term During Which Options May Be Granted.
No Option may be granted after the date on which Options granted to all
Optionees shall equal 2,000,000 shares of Common Stock (the number of such
shares being subject to adjustment as provided in Article III hereof). If an
Option shall expire or terminate without having been exercised in full, any
shares of Common Stock covered by that Option which are not purchased may be
added to the shares otherwise available for Options to be granted pursuant to
the Plan. Notwithstanding any other provision of this Plan to the contrary, any
Option granted pursuant to this Plan must be granted within ten (10) years from
the earlier of the date the Plan is adopted by the Board or the date of
shareholder approval described in Section 4 of Article IV.
4. Term During Which Options May be Exercised.
Participants shall be granted Options for such term as the Board shall
determine. The term of any Option which is an Incentive Option shall not exceed
ten (10) years from the date of the granting thereof; provided, however, in the
case of a participant who is a 10% Shareholder at the time an Incentive Option
is granted to the participant, the term
4
<PAGE> 87
with respect to such Incentive Option shall not be in excess of five (5) years
from the granting thereof.
5. Maximum Allotment of Incentive Options.
The aggregate fair market value of the shares of Common Stock
(determined on the date of grant) for which a participant may be granted
Incentive Options which are exercisable for the first time in any particular
calendar year (whether under the terms of the Plan or any other stock option
plan of the Company, its parent corporation or any subsidiary corporation) shall
not exceed $100,000. To the extent any Option which is intended to be an
Incentive Option is granted to any participant fails to satisfy the requirements
of this Section, the Incentive Option shall be treated as a Non-Qualified
Option. This Section shall be applied by taking Options into account in the
order in which they are granted.
6. Exercise of Options.
a. A participant may exercise each Option granted to the participant in
such installments as the Board shall determine at the time of the grant thereof.
b. Except as otherwise set forth in the Plan or the applicable
Non-Qualified Stock Option Agreement or Incentive Stock Option Agreement, an
Option may be exercised in whole or in part at any time or from time to time.
c. An option may be exercised only by a written notice of intent to
exercise such Option with respect to a specified number of shares of the Common
Stock and payment to the Company of the amount of the Option price for the
number of shares of the Common Stock so specified: provided, however, that, if
the Board shall in its sole discretion so determine at the time of the grant or
exercise of any Option, all or any portion of such payment may be made in kind
by the delivery of shares of the Common Stock having a fair market value, on the
date of delivery (as determined in the manner set forth in Section 2(c) of this
Article), equal to the portion of the Option price so paid. Options granted
pursuant to the Plan shall be exercised by the Optionee as to all or part of the
shares covered thereby by giving written notice of the exercise thereof to the
corporate secretary of the Company at the principal business office of the
Company, specifying the number of shares to be purchased and accompanied by
payment of the full purchase price therefor: (i) in cash or by certified or
official bank check, (ii) if the Board in its sole discretion determines under
this Section 6(c) of Article II of the Plan, in shares of Common Stock, valued
as of the date of exercise, of the same class as those to be granted by the
exercise of the Option, or (iii) if the Board in its sole discretion determines,
in a combination of the methods described in (i) and (ii) above. The Company
will deliver the shares being purchased within five business days of receipt of
notice, payment and any
5
<PAGE> 88
other items required under this Plan or the applicable Non-Qualified Stock
Option Agreement or Incentive Stock Option Agreement to exercise Options by an
Optionee.
d. An Option may, in the discretion of the Board, include a reload
stock option right which shall entitle the Optionee, upon (i) the exercise of
such original Option prior to the Optionee's termination of employment and (ii)
payment of the appropriate exercise price in shares of Common Stock that have
been owned by such Optionee for at least six months prior to the date of
exercise, to receive a new option (the "Reload Option") to purchase, at the fair
market value on the date of the exercise of the original Option, the number of
shares of Common Stock equal to the number of whole shares delivered by the
Optionee in payment of the exercise price of the original Option. Such Reload
Option shall be subject to the same terms and conditions, including expiration
date, and shall be exercisable at the same time or times as the original Option
with respect to which it is granted, except that in no event shall such Reload
Option be exercisable within six months of its date of grant.
e. To the extent that an Option is not exercised within the period of
exercisability specified in the applicable Non-Qualified Stock Option Agreement
or Incentive Stock Option Agreement, it shall expire as to the then
unexercised part.
f. In no event shall an Option granted pursuant to this Plan be
exercised for a fraction of a share.
7. Transferability.
An Option granted pursuant to the Plan shall not be assignable or
transferable by the Optionee, either voluntarily or by operation of law, other
than by will or by the laws of descent and distribution. Each Option granted to
the Optionee may be exercised only by the Optionee, and after the death of
Optionee, only by the person or persons to whom the rights under such Option
pass by the laws of descent and distribution, all in accordance with this Plan.
8. Termination of Employment.
a. Upon termination of employment of any participant with the Company
and all subsidiary corporations and parent corporations of the Company, any
Option previously granted to the participant, unless otherwise specified by the
Board, shall, to the extent not previously exercised, terminate and become null
and void provided that:
(i) if any participant shall die while in the employ of
such corporation or during either the three (3) month or one (1)
year period, whichever is applicable, specified in clause (ii)
below and at a
6
<PAGE> 89
time when such participant was entitled to exercise an Option as
herein provided, the legal representative of such participant,
or such person who acquired such Option by bequest or
inheritance or by reason of the death of the participant, may,
not later than one (1) year from the date of death, exercise
such Option with respect to the number of shares as to which
such option was exercisable on the date of death, to the extent
the Option has not been exercised with respect to all such
shares;
(ii) if the employment of any participant to whom such
Option shall have been granted shall terminate by reason of the
participant's retirement (at such age or upon such conditions as
shall be specified by the Board), disability (as described in
Section 22(e)(3) of the Code) or dismissal by the employer other
than for cause (as defined below), and such participant is
entitled to exercise such Option on the date of death,
retirement, disability or dismissal, such participant shall have
the right to exercise such Option so granted, to the extent the
Option has not been exercised, in respect of any or all of such
number of shares to which such Option has not been exercised at
any time up to and including (A) three (3) months after the date
of such termination of employment in the case of termination by
reason of retirement or dismissal other than for cause and (B)
one (1) year after the date of termination of employment in the
case of termination by reason of disability.
b. If an employee voluntarily terminates his or her employment, or is
discharged for cause, any Option granted hereunder shall, unless otherwise
specified by the Board, immediately terminate with respect to any unexercised
portion thereof. For the purposes of the plan, the term "for cause" shall mean
(i) with respect to an employee who is a party to a written agreement with, or
alternatively, participates in a compensation or benefit plan of the Company or
a subsidiary corporation or parent corporation of the Company, which agreement
or plan contains a definition of "for cause" or "cause" (or words of like
import) for purposes of termination of employment thereunder by the Company or
such subsidiary corporation or parent corporation of the Company, "for cause" or
"cause" as defined in the most recent of such agreements or plans, or (ii) in
all other cases, as determined by the Board in its sole discretion, the term
"for cause" shall mean: (A) the willful commission by an employee of a criminal
or other act that causes or is likely to cause substantial economic damage to
the Company or a subsidiary corporation or parent corporation of the Company or
substantial injury to the business reputation of the Company or a subsidiary
corporation or parent corporation of the Company; (B) the commission by an
employee of an act of fraud in the performance of such employee's duties on
behalf of the Company or a subsidiary corporation or parent corporation of the
Company; or (C) the continuing willful failure of an employee to perform the
duties of such employee to the Company or a subsidiary corporation or parent
corporation of the
7
<PAGE> 90
Company (other than such failure resulting from the employee's incapacity due to
physical or mental illness) after written notice thereof (specifying the
particulars thereof in reasonable detail) and a reasonable opportunity to be
heard and cure such failure are given to the employee by the Board. For purposes
of the Plan, no act, or failure to act, on the employee's part shall be
considered "willful" unless done or omitted to be done by the employee not in
good faith without reasonable belief that the employee's action or omission was
in the best interest of the Company or a subsidiary corporation or parent
corporation of the Company.
c. For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an "employee" of such corporation for purposes
of Section 422 of the Code. If an individual is on military, sick leave or other
bona fide leave of absence such individual shall be considered an "employee" for
purposes of the exercise of an option and shall be entitled to exercise such
Option during such leave if the period of such leave does not exceed 90 days,
or, if longer, so long as the individual's right to reemployment with the
Company (or a related corporation) is guaranteed either by statute or by
contract. If the period of leave exceeds ninety (90) days, the employment
relationship shall be deemed to have terminated on the ninety-first (91st) day
of such leave, unless the individual's right to reemployment is guaranteed by
statute or contract.
d. A termination of employment shall not be deemed to occur by reason
of (i) the transfer of an employee from employment by the Company to employment
by a subsidiary corporation or a parent corporation of the Company or (ii) the
transfer of an employee from employment by a subsidiary corporation or a parent
corporation of the Company to employment by the Company or by another subsidiary
corporation or parent corporation of the Company.
e. Notwithstanding anything contained in this Plan to the contrary, no
person shall be entitled to exercise any Option after the period of
exercisability of such Option as specified in the applicable Non-Qualified Stock
Option Agreement or Incentive Stock Option Agreement.
f. The Board may in its discretion extend the period during which a
Non-Qualified Option may be exercised to such period, not to exceed three years
following the termination of a participant's employment or service with the
Company or subsidiary corporation or parent corporation of the Company, as the
Committee may determine in its discretion to be appropriate in any particular
instance.
8
<PAGE> 91
9. Change in Control.
a. In the event of a Change in Control (as hereinafter defined) of the
Company all Options granted pursuant to this Plan shall vest in full and all
restrictions shall be removed, as of the first date that the Change in Control
has been deemed to have occurred, and shall remain as such for the remaining
life of the Option as provided herein and within the provisions of the related
Option Agreement.
b. For purposes of Section 9(a) above, a Change in Control of the
Company shall be deemed to have occurred if any of the following events occur on
or after the Effective Date:
(i) any corporation, person, other entity or group becomes
the "beneficial owner" (as defined in Rule 13d-3 under the 1934
Act) of more than fifty percent (50%) of the then outstanding
voting stock of the Company;
(ii) the stockholders of the Company approve a definitive
agreement to merge or consolidate with or into another
corporation in a transaction in which neither the Company nor
any of its subsidiaries or affiliates will be the surviving
corporation, or to sell or otherwise dispose of all or
substantially all of the Company's assets to any person or group
other than the Company or any of its subsidiaries or affiliates,
other than a merger or a sale which will result in the voting
securities of the Company outstanding prior to the merger or
sale continuing to represent at least fifty percent (50%) of the
combined voting power of the voting securities of the
corporation surviving the merger or purchasing the assets; or
(iii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the
Board of Directors of the Company (and any new director whose
election by the Board of Directors of the Company or whose
nomination for election by the Company's stockholders was
approved by a vote of at least two thirds (2/3) of the directors
then still in office who either were directors at the beginning
of such period of whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the Company's Board of Directors.
(iv) "Person" shall have the meaning given in Section 3(a)
(9) of the 1934 Act, as modified and used in Sections 13(d) and
14(d) thereof; however, a person shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities
9
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under an employee benefit plan of the Company or any of its
subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv)
a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
c. In the event of a Change of Control, any grant of options may be
canceled in consideration of a cash payment or alternative grant under this or a
similar plan made to the holder of such canceled grant equal in market value to
the fair value of the canceled grant.
10. Change of Position; Disclaimer of Rights.
Except as otherwise provided in a Non-Qualified Stock Option Agreement
or Incentive Stock Option Agreement, any change of an Optionee's duties or
positions with the Company or with any subsidiary corporation or parent
corporation of the Company shall not affect the Optionee's right to exercise
Options granted pursuant to the Plan; provided, however, that no provision in
the Plan or any Option shall be construed to confer upon the Optionee any right
to be employed by the Company or any subsidiary corporation or parent
corporation of the Company, or to interfere in any way with the right and
authority of the Company or any subsidiary corporation or parent corporation of
the Company either to increase or decrease the compensation of the Optionee, at
any time, or to terminate any relationship or employment between the Optionee
and the Company or any subsidiary corporation or parent corporation of the
Company.
11. Compliance with Law.
Any person exercising an Option shall make such representations and
agreements and furnish such information as the Board may in its discretion deem
necessary or desirable to assure compliance by the Company, on terms acceptable
to the Company, with the provisions of the Securities Act of 1933, as amended
(the "Securities Act"), and any other applicable legal requirements.
12. Issuance of Certificates; Legends.
a. Upon any exercise of an Option which may be granted hereunder and
payment of the Option's purchase price, a certificate for the shares of Common
Stock as to which the Option has been exercised shall be issued by the Company
in the name of the person exercising the Option and shall be delivered to or
upon the order of such person or persons. The Company may endorse such legend or
legends upon the certificates for shares
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issued upon exercise of an Option granted hereunder and may issue such "stop
transfer" instructions to its transfer agent in respect of such shares as, in
its discretion, it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act, (ii) implement the provisions of the Plan and any agreement
between the Company and the Optionee with respect to such shares, or (iii)
permit the Company to determine the occurrence of a disqualifying disposition,
as described in Section 421(b) of the Code, of shares transferred upon exercise
of an Incentive Option granted under the Plan.
b. The Company shall pay all issue or transfer taxes with respect to
the issuance or transfer of shares of Common Stock, as well as all fees and
expenses necessarily incurred by the Company in connection with such issuance or
transfer.
c. The Company, in its discretion, may postpone the issuance and
delivery of shares of Common Stock upon any exercise of an Option until
completion of a securities exchange listing or registration or other
qualification of such shares under any state or federal law, rule or regulation
as the Company may consider appropriate.
13. Listing of Shares and Related Matters.
If at any time the Board shall determine in its discretion that the
listing, registration or qualification of the shares of Common Stock covered by
the Plan upon any national securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the sale or
purchase of shares under the Plan, no Option may be exercised in whole or in
part unless and until such listing, registration, qualification, consent or
approval shall have been effected or obtained, or otherwise provided for, free
of any conditions not acceptable to the Board.
ARTICLE III
STOCK ADJUSTMENTS
1. The provisions of this Article shall be applicable to any
Non-Qualified Option or Incentive Option awarded to any individual pursuant to
Article II. Any adjustment of an Incentive Stock Option under this Article shall
be made in such manner as not to constitute a "modification" within the meaning
of Section 424(h)(3) of the Code.
2. In the event that at any time after the effective date of the
Plan the outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the Board shall make an
appropriate and equitable adjustment in the
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number and kind of shares as to which all outstanding Options granted pursuant
to the Plan, or portions thereof then unexercised, shall be exercisable, to the
end that after such event the shares subject to the Plan and each Optionee's
proportionate interest shall be maintained as before the occurrence of such
event. Any such adjustment made by the Board shall be final and binding upon all
Optionees, the Company, and all other interested persons.
3. Adjustments under this Article III shall be made by the Board,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding, and conclusive. No fractional shares of Common
Stock or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share.
ARTICLE IV
MISCELLANEOUS
1. Amendment and Termination of Plan.
a. The Board may, in its discretion, at any time suspend or terminate
the Plan. The Board may also at any time amend or revise the terms of the Plan
or any Option granted under the Plan.
b. No amendment, suspension, or termination of the Plan shall, subject
to Article III hereof, alter or impair any rights or obligations under any
Option granted under the Plan without the consent of the Optionee.
2. Fees and Expenses.
Except as otherwise provided in this Plan, the Company will pay any and
all fees and expenses necessarily incurred by the Company in connection with the
administration of the Plan.
3. Withholding for Taxes.
Any issuance of Common Stock pursuant to the exercise of an Option
under the Plan shall not be made until appropriate arrangements satisfactory to
the Board have been made for the payment of any tax amounts (federal, state,
local or other) that may be required to be withheld or paid by the Company (or
any subsidiary or parent thereof) with respect to such Optionee. Such
arrangements may, at the discretion of the Board, include
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allowing the Optionee to tender to the Company shares of Common Stock owned by
the Optionee, which have an aggregate fair market value per share as of the date
of such withholding that is not greater than the sum of all tax amounts to be
withheld with respect thereto, together with payment of any remaining portion of
such tax amounts in cash or by check payable and acceptable to the Board.
Notwithstanding the foregoing, if on the date of an event giving rise
to a tax withholding obligation on the part of the Company the Optionee is an
officer or individual subject to Rule 16b-3, such tax withholding shall be
automatically effectuated by the Company withholding the necessary number of
shares of Common Stock (at the highest applicable marginal tax rate for
individuals) from such Option exercise.
4. Adoption and Effectiveness of Plan.
The Plan shall be adopted by resolution of the Company's Board on July
1, 1993, and shall be effective as of such date or a subsequent date set forth
in such resolution, subject to approval by the holders of a majority of the
outstanding shares of Common Stock of the Company within one (1) year of such
adoption. Prior to such shareholder approval, Options may be granted under the
Plan, but any such Option by its terms shall not be exercisable prior to such
approval. If the Plan is not approved by the shareholders of the Company, the
Plan shall terminate, and all Options granted under the Plan shall terminate and
become null and void.
5. No Obligation to Exercise Option.
The granting of an Option shall impose no obligation on the Optionee to
exercise such Option.
6. Number; Gender.
Whenever used herein, nouns in the singular shall include the plural,
and the masculine pronoun shall include the feminine gender.
7. Partial Invalidity.
The invalidity of any provision contained in the Plan or any
Non-Qualified Stock Option Agreement, Incentive Stock Option Agreement or any
other documents or instrument evidencing the granting of an Option shall not be
deemed to affect the validity of any other provision contained in the Plan or
the applicable
document.
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8. Governing Law.
The Plan and any related documents or instruments shall be governed and
construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused the Plan to be duly executed
by its authorized officers as of the 1st day of July, 1993, as amended and
restated on November 12, 1996, as amended on February 18, 1997 and as further
amended on October 10, 1997.
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EXHIBIT 8
GREENFIELD INDUSTRIES, INC.
AMENDED AND RESTATED
1995 RESTRICTED STOCK BONUS PLAN
SECTION 1
PURPOSE AND DURATION
1.1 Adoption and Purpose of the Plan. Greenfield Industries, Inc. (the
"Company") hereby adopts this 1995 Restricted Stock Bonus Plan (the
"Plan"). The Plan is intended to motivate and retain certain key Employees
(as hereinafter defined) of the Company by enabling them to acquire shares
of the Company's common stock, $.01 par value per share (the "Shares" or
singularly, a "Share") under the terms and conditions of and in accordance
with this Plan, thereby furthering the growth and financial success of the
Company by aligning the interests of such Employees with the interests of
the Company's stockholders.
1.2 Effective Date. The effective date (the "Effective Date") of the Plan shall
be the date of approval by the Company's stockholders. If such approval is
not obtained on or before December 31, 1996, the Plan shall terminate on
such date and all Awards (as hereinafter defined) of Shares made prior to
such date shall be rescinded and the portion of the Incentive Bonus (as
hereinafter defined) elected to be received in Shares shall be paid in full
to the Employee without interest. In addition, prior to stockholder
approval, no Shares issued pursuant to the Plan shall be considered issued
or outstanding.
SECTION 2
DEFINITIONS
2.1 Definitions. The following words and phrases shall have the following
meanings unless a different meaning is plainly required by the context:
(a) "1934 Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the 1934 Act or regulation
thereunder shall include such section or regulation, any valid
regulation
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promulgated under such section, and any comparable provision of
any future legislation or regulation amending, supplementing or
superseding such section or regulation.
(b) "Act" means the Securities Act of 1933, as amended. Reference to
a specific Section of the Act or regulation thereunder shall
include such section or regulation, any valid regulation
promulgated under such section, and any comparable provision of
any future legislation or regulation amending, supplementing or
superseding such section or regulation.
(c) "Affiliate" means any corporation or other entity (including, but
not limited to, partnerships and joint ventures) controlling,
controlled by or under common control with, the Company.
(d) "Award" means a grant of Shares under Section 4.2 of this Plan.
(e) "Award Agreement" means the written agreement setting forth the
terms and provisions applicable to each Award granted under this
Plan.
(f) "Board" or "Board of Directors" means the Board of Directors of
the Company.
(g) A "Change in Control" of the Company shall be deemed to have
occurred if any of the following events occur on or after the
Effective Date:
(i) any corporation, Person, other entity or group becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934
Act) of more than fifty percent (50%) of the then outstanding
voting stock of the Company;
(ii) the stockholders of the Company approve a definitive agreement
to merge or consolidate with or into another corporation in a
transaction in which neither the Company nor any of its
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subsidiaries or Affiliates will be the surviving corporation,
or to sell or otherwise dispose of all or substantially all of
the Company's assets to any person or group other than the
Company or any of its subsidiaries or Affiliates, other than a
merger or a sale which will result in the voting securities of
the Company outstanding prior to the merger or sale continuing
to represent at least fifty percent (50%) of the combined
voting power of the voting securities of the corporation
surviving the merger or sale; or
(iii) during any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the Board of
Directors of the Company (and any new Director whose election
by the Board of Directors of the Company or whose nomination
for election by the Company's stockholders was approved by a
vote of at least two thirds (2/3) of the Directors then still
in office who either were Directors at the beginning of such
period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the Company's Board of Directors.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code or regulation
thereunder shall include such section or regulation, any valid
regulation promulgated under such section, and any comparable
provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
(i) [reserved]
(j) "Company" means Greenfield Industries, Inc., a Delaware
corporation, and any successor thereto.
(k) "Deferred Bonus" means the amount, measured in dollars on the
Grant Date, that the Participant has elected to defer.
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(l) "Director" means any individual who is a member of the Board of
Directors of the Company.
(m) "Disability" means a permanent and total disability within the
meaning of Code Section 22(e)(3).
(n) "Effective Date" shall have the meaning assigned to such term in
Section 1.2.
(o) "Election" shall have the meaning assigned to such term in
Section 6.1.
(p) "Eligible Employee" shall have the meaning assigned to such term
in Section 4.1.
(q) "Employee" means any employee of the Company, whether such
employee is so employed at the time this Plan is adopted or
becomes so employed subsequent to the adoption of this Plan.
(r) "Fair Market Value" means, if the Shares are listed on a national
securities exchange, the closing sales price of a Share as
published on a national securities exchange on which the Shares
are traded on such date or, if there is no sale of the Shares on
such date, the average of the bid and asked prices on such
exchange at the close of trading on such date or, if Shares are
not listed on a national securities exchange but are authorized
for quotation in the National Association of Securities Dealers
Automated Quotation System National Market (the "Nasdaq National
Market"), the last transaction price per share as reported by the
Nasdaq National Market on such date or, if there is no sale of
the Shares on such date, the average of the bid and asked prices
as reported by the Nasdaq National Market on such date or, if
Shares are not authorized for quotation on the Nasdaq National
Market on such date, the average of the bid and asked prices as
reported in the over the counter market or, if the Shares are not
listed on a national securities exchange, quoted on the Nasdaq
National Market or quoted in the over the counter market, the
Fair Market Value of a Share on such date as shall be
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determined by the majority vote of the Board of Directors. In
rendering its determination of the Shares' Fair Market Value, the
Board of Directors shall comply with Section 422(b)(4) of the
Code and the applicable regulations promulgated thereunder. For
purposes of the Plan, the Board of Directors' determination of
the Fair Market Value of a Share shall be conclusive.
(s) "Fiscal Year" means the fiscal year of the Company.
(t) "Grant Date" means the date that an Incentive Bonus is granted to
an Employee.
(u) "Incentive Bonus" means a bonus paid to an Employee under the
incentive compensation plan as adopted and operated by the Board
of Directors and/or the Compensation and Options Committee, and
as such program may be amended from time to time, or such other
program utilized by the Board of Directors and/or the
Compensation and Options Committee from time to time to grant
annual bonuses to the officers of the Company which program is
designated by the Board and/or the Compensation and Options
Committee as the substitute for the incentive compensation plan
for purposes of this Plan.
(v) "Participant" means an Eligible Employee who has an outstanding
Award.
(w) "Period of Restriction" means the period during which Shares are
subject to transfer and additional restrictions and, therefore,
are subject to a substantial risk of forfeiture.
(x) "Person" shall have the meaning given in Section 3(a)(9) of the
1934 Act, as modified and used in Sections 13(d) and 14(d)
thereof; provided, however, a person shall not include (1) the
Company or any of its subsidiaries, (2) a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (3) an underwriter
temporarily holding securities pursuant to an offering
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of such securities, or (4) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company.
(y) "Retirement" means, in the case of an Employee, a Termination of
Service by reason of the Employee's retirement at or after age
sixty-five (65).
(z) "Section 16 Person" means a person who, with respect to the
Shares, is subject to Section 16 of the 1934 Act.
(aa) "Share" or "Shares" shall have the meaning assigned to such term
in Section 1.1.
(ab) "Termination of Service" means a cessation of the
employee-employer relationship between an Employee and the
Company for any reason, including, but not limited to, a
cessation by resignation, discharge, death, Disability or
Retirement, but excluding any such cessation where there is a
simultaneous reemployment by the Company.
SECTION 3
ADMINISTRATION
3.1 The Board of Directors. This Plan shall be administered by the Board of
Directors or such committee as may be designated by the Board from time to
time. Any such committee shall consist of not less than two (2) Directors.
The members of the committee shall be appointed from time to time by, and
shall serve at the pleasure of, the Board of Directors. The committee shall
be comprised solely of Directors who are "Non-Employee Directors" within
the meaning of Rule 16b-3 of the 1934 Act. Any reference to the Board of
Directors contained herein shall mean and include any such duly authorized
committee thereof.
3.2 Authority of the Board. It shall be the duty of the Board to administer
this Plan in accordance with its provisions. The Board shall have all
powers and discretion necessary or
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appropriate to administer this Plan and to control its operation,
including, but not limited to, the power to (a) determine who shall be
deemed to be an Eligible Employee under the Plan (b) prescribe the terms
and conditions of Awards, (c) interpret this Plan, (d) adopt rules for the
administration, interpretation and application of this Plan as are
consistent therewith, (e) interpret, amend or revoke any such rules and
(f) prescribe the form, which shall be consistent with this Plan, of the
instruments evidencing any Awards of Shares hereunder. Any action taken by
the Board in the interpretation or administration of the Plan shall, as
between the Company and the Participants, be final and conclusive.
3.3 Delegation by the Board. The Board, in its sole discretion and on such
terms and conditions as it may provide, may delegate all or any part of its
authority and powers under this Plan to one or more Directors or officers
of the Company; provided, however, that the Board may not delegate its
authority and powers (a) with respect to Section 16 Persons, or (b) in any
way which would jeopardize this Plan's qualification under Rule 16b-3 of
the 1934 Act.
3.4 Decisions Binding. All determinations and decisions made by the Board and
any delegate of the Board pursuant to Section 3.3 shall be final,
conclusive, and binding on all persons, and shall be given the maximum
deference permitted by law.
SECTION 4
ELIGIBILITY AND ELECTION TO PARTICIPATE
4.1 Eligible Employees. The Employees eligible to participate in this Plan
shall include all Employees who (i) are designated by the Board and/or the
Compensation and Options Committee as eligible to receive an Incentive
Bonus and to participate in this Plan and (ii) have made a timely Election
(as hereinafter defined) to participate in the Plan (the "Eligible
Employees").
4.2 Election by Eligible Employee to Participate.
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(a) Each Eligible Employee will receive annual notification that he
or she may elect (the "Election") to defer up to fifty percent
(50%) of his or her Incentive Bonus and receive in lieu thereof
Shares of the Company in an amount determined pursuant to
paragraph 4.2(c) or 4.2(d) hereof, in either case valued at the
Fair Market Value of such Shares on the Grant Date.
(b) The Election shall be made pursuant to the terms of Section 6.3
hereof. All Shares received pursuant to the Plan (an "Award")
shall be subject to a Period of Restriction of either three (3)
or five (5) years, at the election of the Participant.
(c) In consideration of the foregoing of cash compensation, if the
Participant elects a three (3) year Period of Restriction, he or
she will receive Shares (the "Three Year Restricted Shares")
having a Fair Market Value on the Grant Date equal to one hundred
twenty (120%) percent of the amount of the Deferred Bonus.
(d) In consideration of the foregoing of cash compensation, if the
Participant elects a five (5) year Period of Restriction, he or
she will receive Shares (the "Five Year Restricted Shares")
having a Fair Market Value on the Grant Date equal to one hundred
thirty-five (135%) percent of the Deferred Bonus.
SECTION 5
SHARES SUBJECT TO THE PLAN
5.1 Number of Shares. Subject to adjustment as provided in Section 5.3, an
aggregate of 250,000 Shares will be authorized and reserved for issuance
under this Plan. The Shares granted under this Plan may be either
authorized and unissued Shares or previously issued Shares reacquired by
the Company and held in treasury, or any combination thereof.
5.2 Restrictions on Shares. Shares issued to Participants pursuant to this Plan
shall be subject to the terms,
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conditions and restrictions specified in Section 6 hereof and to such other
terms, conditions and restrictions as the Board in its discretion may
provide.
5.3 Lapsed Awards. If an Award is canceled, terminates, expires or lapses for
any reason, any Shares subject to such Award thereafter shall be available
for the grant of an Award under the Plan. Subject to the provisions of
Section 8.2 hereof, the Plan shall remain in effect until all Awards now or
hereafter subject to the Plan shall have vested or lapsed.
5.4 Adjustments in Awards and Authorized Shares. In the event that a dividend
shall be declared payable in Shares, the number of Shares reserved for
issuance pursuant to this Plan but not yet subject to grant shall be
adjusted by adding to each such Share the number of Shares which would be
distributable in respect thereof if such Shares had been outstanding on the
record date for the issuance of such stock dividend. In the event that the
outstanding Shares shall be converted into or exchanged for a different
number of Shares or other securities of the Company or of another
corporation, whether through stock split, recapitalization, split-up,
merger, consolidation, reorganization, combination or other issuance or
exchange of shares, then there shall be substituted for each Share granted
pursuant to this Plan and for each Share reserved for issuance pursuant to
the Plan but not yet subject to grant, the number and kind of Shares or
other securities which each Share shall have been so converted into or for
which each Share shall have been so exchanged, in such manner as the Board
shall determine to be advisable or appropriate to prevent the dilution or
diminution of such Shares.
SECTION 6
TERMS AND CONDITIONS OF AWARDS
6.1 Award Agreement. Shares granted pursuant to the Plan shall be evidenced by
an Award Agreement, substantially in the form set forth on Exhibit A
hereto, that shall specify the number of Shares received and such other
terms and conditions as the Board shall determine. Unless the Board, in
its sole discretion, determines otherwise, Shares shall
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be held by the Company as escrow agent until the end of the applicable
Period of Restriction.
6.2 Period of Restriction.
(a) The Period of Restriction with respect to Three Year Restricted
Shares will be (i) one year from the Grant Date for one-third of
the Three Year Restricted Shares, (ii) two years from the Grant
Date for one-third of the Three Year Restricted Shares and
(iii) three years from the Grant Date for the remaining one-third
of the Three Year Restricted Shares.
(b) The Period of Restriction with respect to Five Year Restricted
Shares will be (i) one year from the Grant Date for one-fifth of
the Five Year Restricted Shares, (ii) two years from the Grant
Date for one-fifth of the Five Year Restricted Shares, (iii)
three years from the Grant Date for one-fifth of the Five Year
Restricted Shares, (iv) four years from the Grant Date for
one-fifth of the Five Year Restricted Shares, and (v) five years
from the Grant Date for the remaining one-fifth of the Five Year
Restricted Shares.
6.3 Timing and Irrevocability of Election. The Election for each Fiscal Year
must be made annually (1) no later than the date determined by the Board,
which date shall be prior to the commencement of the Fiscal Year for which
the Incentive Bonus will be granted, or (2) within thirty (30) days of the
commencement of an Employee's eligibility to participate in the Plan;
provided, however, that Elections for the Incentive Bonus for the Company's
Fiscal Year ended December 31, 1995 must be made no later than December 31,
1995. All Elections hereunder shall be irrevocable.
6.4 Transferability. Except as provided in this Section 6, Shares may not be
sold, transferred, gifted, bequeathed, pledged, assigned, or otherwise
alienated or hypothecated, voluntarily or involuntarily, until the end of
the applicable Period of Restriction; provided, however, that in no event
may the restrictions on Shares issued to a Section 16 Person lapse prior to
six (6) months following the Grant Date (or such shorter period as may be
permissible while maintaining compliance with Rule 16b-3 of the 1934 Act).
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6.5 Legend on Certificates. The Board, in its sole discretion, may legend the
certificates representing Shares to give appropriate notice of such
restrictions. For example, the Board may determine that some or all
certificates representing Shares shall bear the following legend:
"THE SALE OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE GREENFIELD
INDUSTRIES, INC. 1995 RESTRICTED STOCK BONUS PLAN. A COPY OF THIS PLAN MAY
BE OBTAINED FROM THE SECRETARY OF GREENFIELD INDUSTRIES, INC."
6.6 Removal of Restrictions. The Board, in its sole discretion, may accelerate
the time at which any restrictions shall lapse and remove any restrictions;
provided, however, that the Period of Restriction on Shares granted to a
Section 16 Person may not lapse until at least six (6) months after the
Grant Date (or such shorter period as may be permissible while maintaining
compliance with Rule 16b-3 of the 1934 Act). After the termination of the
applicable Period of Restriction, the Participant shall be entitled to have
any legend under Section 6.5 removed from his or her Share certificate, and
the Shares shall be freely transferable by the Participant.
6.7 Voting Rights. Commencing with the Effective Date, Participants holding
Shares issued hereunder may, during the Period of Restriction, exercise
full voting rights with respect to those Shares.
6.8 Dividends and Other Distributions. Commencing with the Effective Date,
Participants holding Shares shall, during the Period of Restriction, be
entitled to receive all dividends and other distributions paid with respect
to such Shares. If any such dividends or distributions are paid in Shares,
the Shares received in such dividend or distribution shall be subject to
all of the same restrictions, including, but not limited to, restrictions
on transferability and forfeitability as the Shares with respect to which
they were paid.
With respect to Shares issued to a Section 16 Person, any dividend or
distribution that constitutes a "derivative security" or an "equity
security" under Section 16 of the
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1934 Act shall be subject to a Period of Restriction equal to the longer of
(a) the remaining Period of Restriction on the Shares with respect to which
the dividend or distribution is paid, or (b) six (6) months (or such
shorter period as may be permissible while maintaining compliance with Rule
16b-3 of the 1934 Act).
6.9 Cancellation of Shares.
(a) On the date of the Participant's Termination of Service for
cause, as determined by the Board of Directors, all Shares held
by such Participant for which the Period of Restriction has not
lapsed shall revert to the Company and thereafter shall be
available for issuance under this Plan.
(b) In the event of a Participant's Termination of Service by reason
of Retirement, resignation or termination not for cause, all
Shares held by such Participant for which the Period of
Restriction has not lapsed shall revert to the Company and
thereafter shall be available for issuance under the Plan;
provided, however, that the Board may, in its sole discretion,
cause all or a portion of the Shares held by a Participant for
which the Period of Restriction has not lapsed to immediately
vest in full and remove all restrictions.
(c) In the event of a Participant's Termination of Service by reason
of death or Disability, all Shares held by such Participant for
which the Period of Restriction has not lapsed shall immediately
vest in full and all restrictions shall be removed.
6.10 Change in Control. In the event of a Change in Control prior to a
Participant's Termination of Service, the Board may, in its sole
discretion, cause all or a portion of the Shares held by a Participant for
which the Period of Restriction has not lapsed to immediately vest in full
and remove all restrictions; provided, however that the Period of
Restriction on Shares granted to a Section 16 Person may not lapse until at
least six (6) months after the Grant Date (or such shorter period as may be
permissible while maintaining compliance with Rule 16b-3 of the 1934 Act).
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6.11 No Fractional Shares. The Company will not be obligated to deliver
fractional Shares but may round the number of Shares to be delivered down
to the next whole number.
SECTION 7
MISCELLANEOUS
7.1 No Effect on Employment or Service. Nothing in this Plan shall interfere
with or limit in any way the right of the Company to terminate any
Participant's employment or service at any time, with or without cause. For
purposes of this Plan, transfer of employment of a Participant between the
Company and any of its Affiliates (or between Affiliates) shall not be
deemed a Termination of Service.
7.2 Participation. No Employee shall have the right to be selected to
participate in this Plan, or, having been so selected, to be selected to
participate in the future.
7.3 Successors. All obligations of the Company under this Plan, with respect to
Shares issued hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise, of all or
substantially all of the business or assets of the Company.
7.4 Beneficiary Designations. If permitted by the Board, a Participant under
this Plan may name a beneficiary or beneficiaries to whom any Shares, shall
be distributed in the event of the Participant's death. Each such
designation shall revoke all prior designations by the Participant and
shall be effective only if given in a form and manner acceptable to the
Board. In the absence of any such designation, any Shares subject to a
Period of Restriction at the Participant's death shall be distributed to
the Participant's estate.
SECTION 8
AMENDMENT, TERMINATION AND DURATION
8.1 Amendment, Suspension or Termination. The Board, in its sole discretion,
may amend or terminate this Plan, or any part thereof, at any time and for
any reason; provided, however, that if and to the extent required to
maintain this Plan's qualification under Rule 16b-3 of the 1934 Act, any
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such amendment shall be subject to stockholder approval. The amendment,
suspension or termination of this Plan shall not, without the consent of
the Participant, alter or impair any rights or obligations under any Shares
theretofore granted to such Participant. No grants of Shares may be made
during any period of suspension or after termination of this Plan.
8.2 Duration of this Plan. This Plan shall become effective on the Effective
Date and, subject to Section 8.1, shall remain in effect for a period of
ten (10) years.
SECTION 9
TAX WITHHOLDING
9.1 Withholding Requirements. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy federal, state and local taxes (including the
Participant's FICA obligation) required to be withheld with respect to an
Award of Shares or any dividends or other distributions payable with
respect thereto.
9.2 Withholding Arrangements. Subject to the requirements of Rule 16b-3 of the
1934 Act, the Board, in its sole discretion and pursuant to such procedures
as it may specify from time to time, may permit a Participant to satisfy
such tax withholding obligation, in whole or in part, by (a) electing to
have the Company withhold otherwise deliverable Shares, or (b) delivering
to the Company Shares then owned by the Participant having a Fair Market
Value equal to the amount required to be withheld. The amount of the
withholding requirement shall be deemed to include any amount that the
Board agrees may be withheld at the time any such election is made, not to
exceed the minimum required amount of withholding applicable to the
Participant with respect to the Shares on the date that the amount of tax
to be withheld is determined. The Fair Market Value of the Shares to be
withheld or delivered shall be determined as of the date that the taxes are
required to be withheld.
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SECTION 10
LEGAL CONSTRUCTION
10.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural
shall include the singular, and the singular shall include the plural.
10.2 Severability. In the event any provision of this Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of this Plan, and this Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
10.3 Requirements of Law. The issuance of Shares under this Plan shall be
subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as
may be required from time to time.
10.4 Securities Law Compliance. With respect to Section 16 Persons, grants under
this Plan are intended to comply with all applicable conditions of Rule
16b-3 of the 1934 Act. To the extent any provision of this Plan or action
by the Board fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable or appropriate by the Board in
its sole discretion.
10.5 Legend on Certificates. In the event that at any time Shares issued
pursuant to the Plan shall not have been registered under the Act, at the
time of issuance such Shares shall be subject to stop transfer instructions
and shall be inscribed with the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
SOLD OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH
SHARES IS EFFECTIVE UNDER THE ACT OR (II) THE TRANSACTION IS EXEMPT FROM
REGISTRATION UNDER THE ACT AND, IF GREENFIELD INDUSTRIES, INC.
("GREENFIELD") REQUESTS, AN OPINION SATISFACTORY TO GREENFIELD TO SUCH
EFFECT HAS BEEN RENDERED BY COUNSEL."
Shares will not be transferred unless such transfer has been registered
under the Act and any applicable securities laws
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<PAGE> 112
of other jurisdictions, or an exemption from registration is available and
evidence of such registration or exemption from registration reasonably
satisfactory to the Company is furnished to the Company.
10.6 Governing Law. This Plan and any related documents or instruments shall be
construed in accordance with and governed by the laws of the State of
Delaware.
10.7 Captions. Captions are provided herein for convenience of reference only,
and shall not serve as a basis for interpretation or construction of this
Plan.
10.8 Reservation of Shares. The Company during the term of the Plan, will at all
times reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the
Company to obtain the necessary approvals from any regulatory body having
jurisdiction or approval deemed necessary by the Company's counsel to the
lawful issuance and sale of any Shares under the Plan shall relieve the
Company of any liability in respect of the nonissuance or sale of such
Shares as to which such requisite authority shall not have been obtained.
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<PAGE> 113
IN WITNESS WHEREOF, the Company has caused the Plan to be duly executed by
its authorized officers as of this 8th day of 8th day of December 1995, as
amended and restated on November 12, 1996 and as further amended on
October 10, 1997.
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<PAGE> 114
EXHIBIT 9
GREENFIELD INDUSTRIES, INC.
AMENDED AND RESTATED
1995 EQUITY INCENTIVE PLAN
SECTION 1
PURPOSE AND DURATION
1.1 Adoption and Purpose of this Plan. Greenfield Industries, Inc. (the
"Company") hereby adopts this 1995 Equity Incentive Plan dated November
21, 1995 (the "Plan"). The Plan is intended to attract, motivate and
retain certain key Employees (as hereinafter defined) of the Company and
its Affiliates (as hereinafter defined) through the grant of Time-Lapse
Restricted Stock, Performance-Contingent Restricted Stock and Performance
Shares (each as hereinafter defined). The Plan is also designed to
further the growth and financial success of the Company and its
Affiliates by aligning the interests of the Participants (as hereinafter
defined), through the ownership of Shares of the Company's common stock,
$0.01 par value per share (the "Shares" or singularly, a "Share"), with
the interests of the Company's stockholders.
1.2 Effective Date. The effective date (the "Effective Date") of the Plan
shall be the date of approval by the Company's stockholders. If such
approval is not obtained on or before December 31, 1996, the Plan shall
be terminated on such date and all Awards (as hereinafter defined)
granted prior to such date shall be void and of no force and effect. In
addition, prior to stockholder approval, no Shares granted pursuant to
the Plan shall be considered issued or outstanding.
SECTION 2
DEFINITIONS
2.1 Definitions. The following words and phrases shall have the following
meanings unless a different meaning is plainly required by the context:
<PAGE> 115
(a) "1934 Act" means the Securities Exchange Act of 1934, as
amended. Reference to a specific section of the 1934 Act or
regulation thereunder shall include such section or
regulation, any valid regulation promulgated under such
section, and any comparable provision of any future
legislation or regulation amending, supplementing or
superseding such section or regulation.
(b) "Act" means the Securities Act of 1933, as amended. Reference
to a specific section of the Act or regulation thereunder
shall include such section or regulation, any valid regulation
promulgated under such section, and any comparable provision
of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
(c) "Affiliate" means any corporation or any other entity
(including, but not limited to, partnerships and joint
ventures) controlling, controlled by or under common control
with the Company.
(d) "Award" means, individually or collectively, a grant under
this Plan of Time-Lapse Restricted Stock,
Performance-Contingent Restricted Stock or Performance Shares.
(e) "Award Agreement" means the written agreement setting forth
the terms and provisions applicable to each Award granted
under this Plan.
(f) "Base Earnings Per Share" shall have the meaning assigned to
such term in Section 7.3.
(g) "Base Price" shall have the meaning assigned to such term in
Section 6.3.
(h) "Board" or "Board of Directors" means the Board of Directors
of the Company.
(i) "Change in Control" shall have the meaning assigned to such
term in Section 11.2.
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<PAGE> 116
(j) "Code" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code or regulation
thereunder shall include such section or regulation, any valid
regulation promulgated under such section, and any comparable
provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
(k) "Committee" means the Compensation and Options Committee or
such other committee appointed by the Board (pursuant to
Section 3.1) to administer the Plan.
(l) "Company" means Greenfield Industries, Inc., a Delaware
corporation, and any successor thereto. With respect to the
definitions of the Performance Goals, the Committee in its
sole discretion may determine that "Company" means Greenfield
Industries, Inc. and its consolidated subsidiaries.
(m) "Director" means any individual who is a member of the Board
of Directors of the Company.
(n) "Disability" means a permanent and total disability within the
meaning of Code Section 22(e)(3).
(o) "Earned Date" shall have the meaning assigned to such term in
Section 6.3.
(p) "Earned Performance-Contingent Restricted Stock" shall have
the meaning assigned to such term in Section 6.3.
(q) "Earned Performance Shares" shall have the meaning assigned to
such term in Section 7.3.
(r) "Earnings Per Share" means as to any Fiscal Year, the
Company's Net Income, divided by a weighted average number of
Shares outstanding and dilutive equivalent Shares deemed
outstanding.
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<PAGE> 117
(s) "Employee" means any employee of the Company or of any
Affiliate, whether such employee is so employed at the time
this Plan is adopted or becomes so employed subsequent to the
adoption of this Plan.
(t) "Fair Market Value" means, if the Shares are listed on a
national securities exchange, the closing sales price of a
Share as reported by such national securities exchange on
which the Shares are traded on such date or, if there is no
sale of the Shares on such date, the average of the bid and
asked prices on such exchange at the close of trading on such
date or, if Shares are not listed on a national securities
exchange but are authorized for quotation in the National
Association of Securities Dealers Automated Quotation System
National Market (the "Nasdaq National Market"), the last
transaction price per Share as reported by the Nasdaq National
Market on such date or, if there is no sale of the Shares on
such date, the average of the bid and asked prices as reported
by the Nasdaq National Market on such date or, if Shares are
not authorized for quotation on the Nasdaq National Market on
such date, the average of the bid and asked prices as reported
in the over the counter market or, if the Shares are not
listed on a national securities exchange, quoted on the Nasdaq
National Market or quoted in the over the counter market, the
fair market value of a Share on such date as shall be
determined by the majority vote of the Board of Directors. For
purposes of the Plan, the Board of Directors' determination of
the Fair Market Value of a Share shall be conclusive.
(u) "Fiscal Year" means the fiscal year of the Company.
(v) "Grant Date" means, with respect to an Award, the date that
the Award was granted.
(w) "Net Income" means the net income of the Company as determined
in accordance with generally accepted accounting principles,
consistently applied.
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<PAGE> 118
(x) "Participant" means an Employee who has an outstanding Award.
(y) "Performance Goals" means the goal(s) (or combined goal(s))
determined by the Committee to be applicable to a Participant
with respect to an Award. As determined by the Committee, the
Performance Goals applicable to an Award may provide for a
targeted level or levels of achievement using one or more of
the following measures: (i) Earnings Per Share and (ii)
increases in Share price over the Base Price.
(z) "Performance-Contingent Restricted Stock" means an Award
granted to a Participant pursuant to Section 6.
(aa) "Performance Period" means the period of time during which
Performance Goals must be met as determined herein.
(bb) "Performance Share" means an Award granted to a Participant
pursuant to Section 7.
(cc) "Period of Restriction" means the period during which Shares
are subject to transfer and additional restrictions and,
therefore, are subject to a substantial risk of forfeiture.
(dd) "Section 16 Person" means a person who, with respect to the
Shares, is subject to Section 16 of the 1934 Act.
(ee) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken
chain then owns stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(ff) "Target Performance Shares" shall have the meaning assigned to
such term in Section 7.3.
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<PAGE> 119
(gg) "Termination of Service" means a cessation of the
Employee-employer relationship between an Employee and the
Company or an Affiliate for any reason, including, but not
limited to, a cessation by resignation, discharge, death,
Disability, retirement or the disaffiliation of an Affiliate,
but excluding any such cessation where there is a simultaneous
reemployment by the Company or an Affiliate.
(hh) "Time-Lapse Restricted Stock" means an Award granted to a
Participant pursuant to Section 5.
SECTION 3
ADMINISTRATION
3.1 The Committee. This Plan shall be administered by the Committee or such
other committee as may be designated by the Board from time to time. The
Committee shall consist of not less than two (2) Directors. The members
of the Committee shall be appointed from time to time by, and shall serve
at the pleasure of, the Board of Directors. The Committee shall be
comprised solely of Directors who both are (a) "disinterested persons"
under Rule 16b-3 of the 1934 Act, and (b) "outside directors" under
Section 162(m) of the Code.
3.2 Authority of the Committee. It shall be the duty of the Committee to
administer this Plan in accordance with its provisions. The Committee
shall have all powers and discretion necessary or appropriate to
administer this Plan and to control its operation, including, but not
limited to, the power to (a) determine which Employees shall be granted
Awards under the Plan, (b) prescribe the terms and conditions of the
Awards, (c) interpret this Plan and the Awards, (d) adopt rules for the
administration, interpretation and application of this Plan as are
consistent therewith, and (e) interpret, amend or revoke any such rules.
Any action taken by the Committee in the interpretation or administration
of the Plan shall, as between the Company and the Participants, be final
and conclusive.
3.3 Delegation by the Committee. The Committee, in its sole discretion and on
such terms and conditions as it may
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<PAGE> 120
provide, may delegate all or any part of its authority and powers under
this Plan to one or more Directors or officers of the Company; provided,
however, that the Committee may not delegate its authority and powers (a)
with respect to Section 16 Persons, or (b) in any way which would
jeopardize this Plan's qualification under Section 162(m) of the Code or
Rule 16b-3 of the 1934 Act.
3.4 Decisions Binding. All determinations and decisions made by the
Committee, the Board and any delegate of the Committee pursuant to
Section 3.3 shall be final, conclusive, and binding on all persons, and
shall be given the maximum deference permitted by law.
SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the
total number of Shares available for grant under this Plan shall not
exceed 273,000, and the maximum number of Shares available for grant
under this Plan to any Participant shall be 125,000. Shares granted under
this Plan may be either authorized and unissued Shares or previously
issued shares reacquired by the Company and held in treasury, or any
combination thereof.
4.2 Lapsed Awards. If an Award is cancelled, terminates, expires or lapses
for any reason, any Shares subject to such Award thereafter shall be
available for the grant of an Award under the Plan. Subject to the
provisions of Section 9.2 hereof, the Plan shall remain in effect until
all Awards now or hereafter subject to the Plan shall have vested or been
cancelled, terminated, expired or lapsed.
4.3 Adjustments in Awards and Authorized Shares. In the event that a dividend
shall be declared payable in Shares, the number of Shares then subject to
any outstanding Award under the Plan and the number of Shares reserved
for grant of Awards pursuant to this Plan but not yet subject to Award
shall be adjusted by adding to each such Share the number of Shares which
would be distributable in respect thereof if such Shares had been
outstanding on the record date for the
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<PAGE> 121
issuance of such stock dividend. In the event that the outstanding Shares
shall be converted into or exchanged for a different number of Shares or
other securities of the Company or of another corporation, whether
through stock split, recapitalization, split-up, merger, consolidation,
reorganization, combination or other issuance or exchange of shares, then
there shall be substituted for each Share subject to any outstanding
Award under this Plan and for each Share reserved for the grant of Awards
pursuant to the Plan but not yet subject to Award, the number and kind of
Shares or other securities which each Share shall have been so converted
into or for which each Share shall have been so exchanged, in such manner
as the Committee shall determine to be advisable or appropriate to
prevent the dilution or diminution of such Awards. In the case of any
substitution or adjustment as provided in this Section 4, the Performance
Goals of any Share subject to an outstanding Award shall be adjusted pro
rata so that the Performance Goals, as adjusted, represent the
achievement of the Plan's original targets set forth in Sections 6 and 7
hereof. Notwithstanding the preceding, the number of Shares subject to
any Award shall always be a whole number.
SECTION 5
TIME-LAPSE RESTRICTED STOCK
5.1 Grant of Time-Lapse Restricted Stock. Subject to the terms and provisions
of this Plan, the Committee, at any time and from time to time, may grant
Shares of Time-Lapse Restricted Stock to Employees in such amounts as the
Committee, in its sole discretion, shall determine.
5.2 Time-Lapse Restricted Stock Agreement. Each Award of Time- Lapse
Restricted Stock shall be evidenced by an Award Agreement that shall
specify the number of Shares granted and such other terms and conditions
as the Committee shall determine. Unless the Committee, in its sole
discretion, determines otherwise, Shares of Time-Lapse Restricted Stock
shall be held by the Company as escrow agent until the end of the
applicable Period of Restriction. The Period of Restriction with respect
to Time-Lapse Restricted Stock will be (a) four (4) years from the Grant
Date for one-third (1/3)
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<PAGE> 122
of the Time-Lapse Restricted Stock, (b) five (5) years from the Grant
Date for an additional one-third (1/3) of the Time- Lapse Restricted
Stock, and (c) six (6) years from the Grant Date for the remaining
one-third (1/3) of the Time-Lapse Restricted Stock.
5.3 Transferability. Except as provided in this Section 5, Shares of
Time-Lapse Restricted Stock may not be sold, transferred, gifted,
bequeathed, pledged, assigned, or otherwise alienated or hypothecated,
voluntarily or involuntarily, until the end of the applicable Period of
Restriction; provided, however, that in no event may the restrictions on
Time-Lapse Restricted Stock granted to a Section 16 Person lapse prior to
six (6) months following the Grant Date (or such shorter period as may be
permissible while maintaining compliance with Rule 16b-3 of the 1934
Act).
5.4 Legend on Certificates. The Committee, in its sole discretion, may legend
the certificates representing Time- Lapse Restricted Stock to give
appropriate notice of such restrictions. For example, the Committee may
determine that some or all certificates representing Shares of Time-Lapse
Restricted Stock shall bear the following legend:
"THE SALE OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
GREENFIELD INDUSTRIES, INC. 1995 EQUITY INCENTIVE PLAN AND IN AN AWARD
AGREEMENT. A COPY OF THIS PLAN AND SUCH AGREEMENT MAY BE OBTAINED FROM
THE SECRETARY OF GREENFIELD INDUSTRIES, INC."
5.5 Removal of Restrictions. Except as otherwise provided in this Section 5,
Shares of Time-Lapse Restricted Stock covered by each Time-Lapse
Restricted Stock grant made under this Plan shall be released from escrow
as soon as practicable after the end of the applicable Period of
Restriction. The Committee, in its sole discretion, may accelerate the
time at which any restrictions shall lapse and remove any restrictions;
provided, however, that the Period of Restriction on Shares granted to a
Section 16 Person may not lapse until at least six (6) months after the
Grant Date (or
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<PAGE> 123
such shorter period as may be permissible while maintaining compliance
with Rule 16b-3 of the 1934 Act). After the termination of the applicable
Period of Restriction, the Participant shall be entitled to have any
legend under Section 5.4 removed from his or her Share certificate, and
the Shares shall be freely transferable by the Participant.
5.6 Voting Rights. Commencing with the Effective Date, Participants holding
Shares of Time-Lapse Restricted Stock granted hereunder may, during the
Period of Restriction, exercise full voting rights with respect to those
Shares unless otherwise provided in the applicable Award Agreement.
5.7 Dividends and Other Distributions. Commencing with the Effective Date,
Participants holding Shares of Time-Lapse Restricted Stock shall, during
the Period of Restriction, be entitled to receive all dividends and other
distributions paid with respect to such Shares unless otherwise provided
in the applicable Award Agreement. If any such dividends or distributions
are paid in Shares, the Shares received in such dividend or distribution
shall be subject to all of the same restrictions, including, but not
limited to, restrictions on transferability and forfeitability as the
Shares of Time-Lapse Restricted Stock with respect to which they were
paid.
With respect to Time-Lapse Restricted Stock granted to a Section 16
Person, any dividend or distribution that constitutes a "derivative
security" or an "equity security" under Section 16 of the 1934 Act shall
be subject to a Period of Restriction equal to the longer of (a) the
remaining Period of Restriction on the Shares of Time-Lapse Restricted
Stock with respect to which the dividend or distribution is paid, or (b)
six (6) months (or such shorter period as may be permissible while
maintaining compliance with Rule 16b-3 of the 1934 Act).
5.8 Cancellation of Time-Lapse Restricted Stock. On the date of the
Participant's Termination of Service (other than by death or Disability),
the Time-Lapse Restricted Stock for which the Period of Restriction has
not lapsed shall revert to the Company and thereafter shall be available
for grant under this Plan. In the event of a Participant's Termination of
Service by reason of death or Disability, or in the event of
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<PAGE> 124
a Change in Control (as hereinafter defined) prior to a Participant's
Termination of Service, all Time-Lapse Restricted Stock shall immediately
vest in full.
SECTION 6
PERFORMANCE-CONTINGENT RESTRICTED STOCK
6.1 Grant of Performance-Contingent Restricted Stock. Subject to the terms
and provisions of this Plan, the Committee, at any time and from time to
time, may grant Shares of Performance-Contingent Restricted Stock to
Employees in such amounts as the Committee, in its sole discretion, shall
determine.
6.2 Value of Performance-Contingent Restricted Stock. Each Share of
Performance-Contingent Restricted Stock shall have an initial value equal
to the Fair Market Value of a Share on the Grant Date.
6.3 Performance Goals and Other Terms. The Performance Period for
Performance-Contingent Restricted Stock is five (5) years. The
Performance Goals for the Performance-Contingent Restricted Stock are
measured by cumulative twenty percent (20%) increases in Share price over
the Fair Market Value on the date of grant (the "Base Price") during the
Performance Period. The increase in Share price will be deemed to have
been attained for purposes of meeting a Performance Goal when the Fair
Market Value of the Shares equals or exceeds the required level for
twenty (20) consecutive trading days (the "Earned Date"). Shares so
earned are hereinafter referred to as the "Earned Performance-Contingent
Restricted Stock". In order for the full allocation of
Performance-Contingent Restricted Stock to be earned, the Share price
must increase one hundred forty-eight percent (148%) from the Base Price
in the Performance Period. The increments for earning portions of the
Performance-Contingent Restricted Stock for each cumulative twenty
percent (20%) increase over the Base Price are as follows:
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<PAGE> 125
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE INCREASE PERFORMANCE-CONTINGENT
IN SHARE PRICE FROM RESTRICTED
BASE PRICE STOCK AWARD EARNED
-------------------- ----------------------
<S> <C> <C>
20.0% 10%
44.0 25
72.8 45
107.4 70
148.8 100
</TABLE>
6.4 Performance-Contingent Restricted Stock Agreement. Each Award of
Performance-Contingent Restricted Stock shall be evidenced by an Award
Agreement that shall specify the number of Shares granted and such other
terms and conditions as the Committee shall determine. Unless the
Committee, in its sole discretion, determines otherwise, Shares of Earned
Performance-Contingent Restricted Stock shall be held by the Company as
escrow agent until the end of the applicable Period of Restriction.
6.5 Earning of Performance-Contingent Restricted Stock.
Performance-Contingent Restricted Stock will be earned based on increases
in the Base Price as specified in Section 6.3.
6.6 Form and Timing of Payment of Performance-Contingent Restricted Stock.
Payment of Earned Performance-Contingent Restricted Stock shall be made
as soon as practicable after the Earned Date, subject to the Period of
Restriction. The Period of Restriction with respect to Earned
Performance-Contingent Restricted Stock will be the later of (a) five
(5) years from the Grant Date or (b) three (3) years from the Earned
Date.
6.7 Cancellation of Performance-Contingent Restricted Stock. On the earlier
of the termination date of the Performance Period or the Participant's
Termination of Service, all unearned Performance-Contingent Restricted
Stock shall be forfeited to the Company, and thereafter shall be
available for grant under this Plan. In the event of a Participant's
Termination of Service (other than by death or Disability) prior to the
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<PAGE> 126
end of the Period of Restriction, all Earned Performance-Contingent
Restricted Stock shall be forfeited to the Company, and thereafter shall
be available for grant under this Plan. In the event of a Participant's
Termination of Service by reason of death or Disability prior to the end
of the Period of Restriction, or in the event of a Change in Control (as
hereinafter defined) prior to a Participant's Termination of Service, all
Earned Performance-Contingent Restricted Stock shall vest in full
immediately. In addition, in the event of a Change in Control (as
hereinafter defined) prior to a Participant's Termination of Service, the
Committee may, in its sole discretion, cause all unearned
Performance-Contingent Restricted Stock to vest in full immediately.
6.8 Transferability. Except as provided in this Section 6, Shares of
Performance-Contingent Restricted Stock may not be sold, transferred,
gifted, bequeathed, pledged, assigned, or otherwise alienated or
hypothecated, voluntarily or involuntarily, until the end of the
applicable Period of Restriction; provided, however, that in no event may
the restrictions on Performance-Contingent Restricted Stock granted to a
Section 16 Person lapse prior to six (6) months following the Grant Date
(or such shorter period as may be permissible while maintaining
compliance with Rule 16b-3 of the 1934 Act).
6.9 Legend on Certificates. The Committee, in its sole discretion, may legend
the certificates representing Earned Performance-Contingent Restricted
Stock to give appropriate notice of such restrictions. For example, the
Committee may determine that some or all certificates representing Shares
of Earned Performance-Contingent Restricted Stock shall bear the
following legend:
"THE SALE OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
GREENFIELD INDUSTRIES, INC. 1995 EQUITY INCENTIVE PLAN AND IN AN AWARD
AGREEMENT. A COPY OF THIS PLAN AND SUCH AGREEMENT MAY BE OBTAINED FROM
THE SECRETARY OF GREENFIELD INDUSTRIES, INC."
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<PAGE> 127
6.10 Removal of Restrictions. Except as otherwise provided in this Section 6,
Shares of Earned Performance-Contingent Restricted Stock covered by each
Performance-Contingent Restricted Stock grant made under this Plan shall
be released from escrow as soon as practicable after the end of the
applicable Period of Restriction. The Committee, in its sole discretion,
may shorten or remove the Period of Restriction with respect to Earned
Performance-Contingent Restricted Stock; provided, however, that the
Period of Restriction on Shares granted to a Section 16 Person may not
lapse until at least six (6) months after the Grant Date (or such shorter
period as may be permissible while maintaining compliance with Rule 16b-3
of the 1934 Act). After the termination of the applicable Period of
Restriction, the Participant shall be entitled to have any legend under
Section 6.9 removed from his or her Share certificate, and the Shares
shall be freely transferable by the Participant.
6.11 Voting Rights. Commencing on the Earned Date (but in no event prior to
the Effective Date), Participants holding Shares of Earned
Performance-Contingent Restricted Stock granted hereunder may, during the
Period of Restriction, exercise full voting rights with respect to those
Shares, unless otherwise provided in the applicable Award Agreement.
6.12 Dividends and Other Distributions. Commencing on the Earned Date (but in
no event prior to the Effective Date), Participants holding Shares of
Earned Performance-Contingent Restricted Stock shall, during the Period
of Restriction, be entitled to receive all dividends and other
distributions paid with respect to such Shares unless otherwise provided
in the applicable Award Agreement. If any such dividends or distributions
are paid in Shares, the Shares received in such dividend or distribution
shall be subject to all of the same restrictions, including, but not
limited to, restrictions on transferability and forfeitability as the
Shares of Earned Performance-Contingent Restricted Stock with respect to
which they were paid.
With respect to Performance-Contingent Restricted Stock granted to a
Section 16 Person, any dividend or distribution that constitutes a
"derivative security" or an "equity security" under Section 16 of the
1934 Act shall be subject
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to a Period of Restriction equal to the longer of (a) the remaining
Period of Restriction on the Shares of Performance-Contingent Restricted
Stock with respect to which the dividend or distribution is paid, or (b)
six (6) months (or such shorter period as may be permissible while
maintaining compliance with Rule 16b-3 of the 1934 Act).
SECTION 7
PERFORMANCE SHARES
7.1 Grant of Performance Shares. Subject to the terms and provisions of this
Plan, the Committee, at any time and from time to time, may grant
Performance Shares to Employees in such amounts as the Committee, in its
sole discretion, shall determine.
7.2 Value of Performance Shares. Each Performance Share shall have an initial
value equal to the Fair Market Value of a Share on the Grant Date.
7.3 Performance Goals and Other Terms.
(a) The Performance Goal for Performance Shares shall be measured
by fifteen percent (15%) cumulative annual increases in
Earnings Per Share over the Base Earnings Per Share (as
hereinafter defined) during the Performance Period.
(b) Calculation of the number of Performance Shares earned is
based on the target number of Performance Shares, which target
shall be set forth in the Award Agreement (the "Target
Performance Shares").
(c) The Performance Period for Performance Shares shall consist of
the four (4) consecutive Fiscal Years of the Company following
the Fiscal Year in which the Base Earnings Per Share is
calculated. The measurement of actual performance against the
Performance Goal shall be made at the end of the Performance
Period.
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(d) The calculation of the Performance Goal shall be as follows:
(i) Calculate Base Earnings Per Share;
(ii) With Base Earnings Per Share as the starting
point, calculate Earnings Per Share for each of
the four (4) Fiscal Years in the Performance
Period that would be achieved if Earnings Per
Share increased fifteen percent (15%) per year,
then add the sum of such calculations for the four
(4) Fiscal Years in the Performance Period.
(iii) The sum reached pursuant to the formula in
subsection (ii) above shall be the Performance
Goal.
(iv) For example, if Base Earnings Per Share is $1.00,
the Performance Goal would equal $5.74. The
respective Earnings Per Share components of the
Performance Goal for years one, two, three and
four, respectively, of the Performance Period
would be $1.15, $1.32, $1.52 and $1.75.
(e) Participants may earn the Target Performance Shares or a
percentage thereof, based on the percentage of the Performance
Goal attained during the Performance Period, as follows:
(i) If less than seventy-five percent (75%) of the
Performance Goal is attained during the
Performance Period, no Performance Shares are
earned.
(ii) If at least seventy-five percent (75%) but less
than one hundred percent (100%) of the
Performance Goal is attained, the Participant
will earn (1) fifty percent (50%) of the Target
Performance Shares, plus (2) two percent (2%) of
the Target Performance Shares for each one
percent (1%) increase in the attainment of the
Performance Goal above seventy-five percent
(75%).
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(iii) If the Performance Goal is exactly attained, the
Participant will earn one hundred percent (100%)
of the Target Performance Shares.
(iv) If the Performance Goal is exceeded, the percent
of Target Performance Shares earned will be
calculated using straight-line interpolation.
For example, if one hundred ten percent (110%)
of the Performance Goal is achieved, the
Participant will earn one hundred ten percent
(110%) of the Target Performance Shares;
provided, however, that the maximum number of
Target Performance Shares that may be earned is
two hundred percent (200%) of the Target
Performance Shares.
(f) As set forth above, the Performance Shares shall be earned at
the end of the Performance Period based on the percentage of
the Performance Goal achieved during the Performance Period.
Shares so earned shall be referred to hereinafter as "Earned
Performance Shares."
(g) For Awards made on or before March 30, 1996, the Base Earnings
Per Share shall be $1.95, which for purposes of the Plan shall
be deemed to be the Company's Earnings Per Share for its
Fiscal Year ended December 31, 1995. For Awards made after
such date, (i) if the Grant Date of the Award is within the
first ninety (90) days of the Company's Fiscal Year, the Base
Earnings Per Share shall be the Company's Earnings Per Share
for the prior Fiscal Year, and (ii) if the Grant Date of the
Award is after the first ninety (90) days of the Company's
Fiscal Year, the Base Earnings Per Share shall be the
Company's Earnings Per Share for such current Fiscal Year.
7.4 Performance Shares Agreement. Each Award of Performance Shares shall be
evidenced by an Award Agreement that shall specify the number of
Performance Shares and such other terms and conditions as the Committee
shall determine. Unless the Committee, in its sole discretion, determines
otherwise, Earned Performance Shares shall be held by the Company as
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escrow agent until the end of the applicable Period of Restriction.
7.5 Earning of Performance Shares. Performance Shares will be earned based on
increases in Earnings Per Share as specified in Section 7.3.
7.6 Form and Timing of Payment of Performance Shares. Payment of Earned
Performance Shares shall be made as soon as practicable after the end of
the applicable Performance Period, subject to the Period of Restriction.
The Period of Restriction with respect to Performance Shares will be (a)
one (1) year after the end of the Performance Period for one-third (1/3)
of the Earned Performance Shares, (b) two (2) years after the end of the
Performance Period for an additional one-third (1/3) of the Earned
Performance Shares and (c) three (3) years after the end of the
Performance Period for the remaining one-third (1/3) of the Earned
Performance Shares.
7.7 Cancellation of Performance Shares. On the earlier of the termination
date of the Performance Period or the Participant's Termination of
Service, all unearned Performance Shares shall be forfeited to the
Company, and thereafter shall be available for grant under this Plan. In
the event of a Participant's Termination of Service (other than by death
or Disability) prior to the end of the Period of Restriction, all Earned
Performance Shares shall be forfeited to the Company, and thereafter
shall be available for grant under this Plan. In the event of a
Participant's Termination of Service by reason of death or Disability
prior to the end of the Period of Restriction, or in the event of a
Change in Control (as hereinafter defined) prior to a Participant's
Termination of Service, all Earned Performance Shares shall vest in full
immediately. In addition, in the event of a Change in Control (as
hereinafter defined) prior to a Participant's Termination of Service, the
Committee may, in its sole discretion, cause all unearned Performance
Shares to vest in full immediately.
7.8 Legend on Certificates. The Committee, in its sole discretion, may legend
the certificates representing Earned Performance Shares to give
appropriate notice of such
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restrictions. For example, the Committee may determine that some or all
certificates representing Earned Performance Shares shall bear the
following legend:
"THE SALE OR OTHER TRANSFER OF THE SHARES OF STOCK
REPRESENTED BY THIS CERTIFICATE, WHETHER VOLUNTARY,
INVOLUNTARY, OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE GREENFIELD
INDUSTRIES, INC. 1995 EQUITY INCENTIVE PLAN AND IN AN
AWARD AGREEMENT. A COPY OF THIS PLAN AND SUCH AGREEMENT
MAY BE OBTAINED FROM THE SECRETARY OF GREENFIELD
INDUSTRIES, INC."
7.9 Removal of Restrictions. Except as otherwise provided in this Section 7,
Earned Performance Shares covered by each Award made under this Plan
shall be released from escrow as soon as practicable after the end of the
applicable Period of Restriction. The Committee, in its sole discretion,
may shorten or remove the Period of Restriction with respect to Earned
Performance Shares; provided, however, that the Period of Restriction on
Shares granted to a Section 16 Person may not lapse until at least six
(6) months after the Grant Date (or such shorter period as may be
permissible while maintaining compliance with Rule 16b-3 of the 1934
Act). After the termination of the applicable Period of Restriction, the
Participant shall be entitled to have any legend under Section 7.8
removed from his or her Share certificate, and the Shares shall be freely
transferable by the Participant.
7.10 Voting Rights. After the end of the Performance Period, Participants
holding Earned Performance Shares granted hereunder may, during the
Period of Restriction, exercise full voting rights with respect to those
Shares, unless otherwise provided in the applicable Award Agreement.
7.11 Dividends and Other Distributions. After the end of the Performance
Period, Participants holding Earned Performance Shares shall, during the
Period of Restriction, be entitled to receive all dividends and other
distributions paid with respect to such Shares unless otherwise provided
in the applicable Award Agreement. If any such dividends or distributions
are paid in Shares, the Shares received in such
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dividend or distribution shall be subject to all of the same
restrictions, including, but not limited to, restrictions on
transferability and forfeitability as the Earned Performance Shares with
respect to which they were paid.
With respect to Performance Shares granted to a Section 16 Person, any
dividend or distribution that constitutes a "derivative security" or an
"equity security" under Section 16 of the 1934 Act shall be subject to a
Period of Restriction equal to the longer of (a) the remaining Period of
Restriction on the Performance Shares with respect to which the dividend
or distribution is paid, or (b) six (6) months (or such shorter period as
may be permissible while maintaining compliance with Rule 16b-3 of the
1934 Act).
7.12 Transferability. Except as provided in this Section 7, Earned Performance
Shares may not be sold, transferred, gifted, bequeathed, pledged,
assigned, or otherwise alienated or hypothecated, voluntarily or
involuntarily, until the end of the applicable Period of Restriction;
provided, however, that in no event may the restrictions on such Earned
Performance Shares granted to a Section 16 Person lapse prior to six (6)
months following the Grant Date (or such shorter period as may be
permissible while maintaining compliance with Rule 16b-3 of the 1934
Act).
SECTION 8
MISCELLANEOUS
8.1 No Effect on Employment or Service. Nothing in this Plan shall interfere
with or limit in any way the right of the Company to terminate any
Participant's employment or service at any time, with or without cause.
For purposes of this Plan, transfer of employment of a Participant
between the Company and any of its Affiliates (or between Affiliates)
shall not be deemed a Termination of Service.
8.2 Participation. No Employee shall have the right to be selected to receive
an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
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8.3 Successors. All obligations of the Company under this Plan, with respect
to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation or otherwise, of all
or substantially all of the business or assets of the Company.
8.4 Beneficiary Designations. If permitted by the Committee, a Participant
under this Plan may name a beneficiary or beneficiaries to whom any Award
under Section 5, and all Awards earned under Sections 6 and 7 shall be
paid in the event of the Participant's death. Each such designation shall
revoke all prior designations by the Participant and shall be effective
only if given in a form and manner acceptable to the Committee. In the
absence of any such designation, any earned Award subject to a Period of
Restriction at the Participant's death shall be distributed to the
Participant's estate.
SECTION 9
AMENDMENT, TERMINATION AND DURATION
9.1 Amendment, Suspension or Termination. The Board, in its sole discretion,
may amend or terminate this Plan, or any part thereof, at any time and
for any reason; provided, however, that if and to the extent required to
maintain this Plan's qualification under Rule 16b-3 of the 1934 Act or
Code Section 162(m), any such amendment shall be subject to stockholder
approval; and provided further that no amendment to the Plan may be
adopted which changes any Performance Goal, or increases the benefits
payable for achievement of a Performance Goal, once established for an
Award. The amendment, suspension or termination of this Plan shall not,
without the consent of the Participant, alter or impair any rights or
obligations under any Award theretofore granted to such Participant. No
Award may be granted during any period of suspension or after termination
of this Plan.
9.2 Duration of this Plan. This Plan shall become effective on the Effective
Date and, subject to Section 9.1, shall remain in effect thereafter.
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SECTION 10
TAX WITHHOLDING
10.1 Withholding Requirements. The Company shall have the power and the right
to deduct or withhold, or require a Participant to remit to the Company,
an amount sufficient to satisfy federal, state and local taxes (including
the Participant's FICA obligation) required to be withheld with respect
to an Award of Shares or any dividends or other distributions payable
with respect thereto.
10.2 Withholding Arrangements. Subject to the requirements of Rule 16b-3 of
the 1934 Act, the Committee, in its sole discretion and pursuant to such
procedures as it may specify from time to time, may permit a Participant
to satisfy such tax withholding obligation, in whole or in part, by (a)
electing to have the Company withhold otherwise deliverable Shares, or
(b) delivering to the Company Shares then owned by the Participant having
a Fair Market Value equal to the amount required to be withheld. The
amount of the withholding requirement shall be deemed to include any
amount that the Committee agrees may be withheld at the time any such
election is made, not to exceed the minimum required amount of
withholding applicable to the Participant with respect to the Award on
the date that the amount of tax to be withheld is determined. The Fair
Market Value of the Shares to be withheld or delivered shall be
determined as of the date that the taxes are required to be withheld.
SECTION 11
CHANGE IN CONTROL
11.1 Change in Control. In the event of a Change in Control (as hereinafter
defined) of the Company prior to a Participant's Termination of Service,
all Awards under Section 5, all Awards earned under Section 6 or 7, and,
in the discretion of the Committee, all unearned Awards under Section 6
or 7, of this Plan shall vest in full and all restrictions shall be
removed, as of the first date that the Change in Control has been deemed
to have occurred.
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11.2 Definition. For purposes of Section 11.1 above, a Change in Control of
the Company shall be deemed to have occurred if any of the following
events occur on or after the Effective Date:
(a) any corporation, person, other entity or group becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934
Act) of more than fifty percent (50%) of the then outstanding
voting stock of the Company;
(b) the stockholders of the Company approve a definitive agreement
to merge or consolidate with or into another corporation in a
transaction in which neither the Company nor any of its
subsidiaries or Affiliates will be the surviving corporation,
or to sell or otherwise dispose of all or substantially all of
the Company's assets to any person or group other than the
Company or any of its subsidiaries or Affiliates, other than a
merger or a sale which will result in the voting securities of
the Company outstanding prior to the merger or sale continuing
to represent at least fifty percent (50%) of the combined
voting power of the voting securities of the corporation
surviving the merger or sale; or
(c) during any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the Board of
Directors of the Company (and any new Director whose election
by the Board of Directors of the Company or whose nomination
for election by the Company's stockholders was approved by a
vote of at least two thirds (2/3) of the Directors then still
in office who either were Directors at the beginning of such
period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the Company's Board of Directors.
(d) "Person" shall have the meaning given in Section 3(a)(9) of
the 1934 Act, as modified and used in Sections 13(d) and 14(d)
thereof; provided, however, a person shall not include (i) the
Company or any of
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its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
SECTION 12
LEGAL CONSTRUCTION
12.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural
shall include the singular, and the singular shall include the plural.
12.2 Severability. In the event any provision of this Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of this Plan, and this Plan shall be construed
and enforced as if the illegal or invalid provision had not been
included.
12.3 Requirements of Law. The grant of Awards and the issuance of Shares under
this Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required from time to time.
12.4 Code Section 162(m) Qualification. In administering this Plan, the
Committee shall follow any procedures determined by it from time to time
to be necessary, advisable or appropriate to ensure qualification of the
Performance-Contingent Restricted Stock and the Performance Shares under
Code Section 162(m), including, without limitation, any written
certification requirement required by Code Section 162(m).
12.5 Securities Law Compliance. With respect to Section 16 Persons, Awards
under this Plan are intended to comply with all applicable conditions of
Rule 16b-3 of the 1934 Act. To
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the extent any provision of this Plan, Award Agreement or action by the
Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable or appropriate by the
Committee in its sole discretion.
12.6 Legend on Certificates. In the event that at any time Shares issued
pursuant to the Plan shall not have been registered under the Act at the
time of issuance, such Shares shall be subject to stop transfer
instructions and shall be inscribed with the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
MAY NOT BE SOLD OR TRANSFERRED UNLESS (I) A REGISTRATION
STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT OR
(II) THE TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE ACT
AND, IF GREENFIELD INDUSTRIES, INC. ("GREENFIELD") REQUESTS,
AN OPINION SATISFACTORY TO GREENFIELD TO SUCH EFFECT HAS BEEN
RENDERED BY COUNSEL."
Shares will not be transferred unless such transafer has been registered
under the Act and any applicable securities laws of other jurisdictions,
or an exemption from registration is available and evidence of such
registration or exemption from registration reasonably satisfactory to
the Company is furnished to the Company.
12.7 Governing Law. This Plan and all Award Agreements and any related
documents or instruments shall be construed in accordance with and
governed by the laws of the State of Delaware.
12.8 Captions. Captions are provided herein for convenience of reference only,
and shall not serve as a basis for interpretation or construction of this
Plan.
12.9 Reservation of Shares. The Company, during the term of the Plan, will at
all times reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the
Company to obtain the necessary approvals from any regulatory body having
jurisdiction or approval deemed necessary by the Company's
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<PAGE> 139
counsel to the lawful issuance and sale of any Shares under the Plan
shall relieve the Company of any liability in respect of the nonissuance
or sale of such Shares as to which such requisite authority shall not
have been obtained.
IN WITNESS WHEREOF, the Company has caused the Plan to be duly executed by its
authorized officers as of the 21st day of November, 1995 and amended and
restated on October 10, 1997.
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EXHIBIT 10
AMENDED AND RESTATED
GREENFIELD INDUSTRIES, INC.
1993 DIRECTORS NON-QUALIFIED STOCK OPTION PLAN
1. Adoption and Purpose of the Plan. Greenfield Industries, Inc. (the
"Company") hereby adopts the 1993 Directors Non-Qualified Stock Option Plan (the
"Plan") dated July 1, 1993, which provides for the granting of non-qualified
stock options ("Options") to purchase shares of the Company's Common Stock, $.01
par value per share (the "Common Stock"), to members of the Board of Directors
who are not employees of the Company ("Grantees"). This Plan will give such
Grantees added financial incentive to further the Company's financial well being
and increase the Company's value to the benefit of the Company's shareholders.
The Company believes that the Plan will enable it to be competitive in
encouraging directors to remain in its service and to attract other qualified
persons to the Company.
The effective date of the Plan shall be the date of approval by the
Company's stockholders. If such approval is not obtained on or before August 31,
1993, the Plan shall be terminated on such date and all Options granted prior to
such date shall be void and of no force and effect. Options may be granted
hereunder at any time and from time to time through the date of termination of
the Plan.
2. Plan Administration. The Plan shall be administered by the Board of
Directors or such committee thereof as may be appointed from time to time by the
Board of Directors. Any such committee will consist of two or more members of
the Board of Directors, and shall be comprised solely of directors who are
"Non-Employee Directors"
<PAGE> 141
within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as
amended (the "1934 Act"). Any reference to the Board of Directors contained
herein shall mean and include any such duly authorized committee thereof.
In administering the Plan, the Board of Directors may adopt rules and
regulations as necessary for carrying out the purposes and intent of the Plan.
Any action taken by a majority of the Board of Directors in the interpretation
or administration of the Plan shall, as between the Company and the Grantees, be
final and conclusive. Members of the Board may vote without appearing in person
at any meeting of the Board. The Board may consult with counsel, who may be
counsel to the Company, and shall not incur any liability for any action taken
in good faith in reliance upon the advice of counsel. Within the limitations of
the Plan, the Eligible Directors (as defined below) to whom Options will be
granted, the exercise price and the number of shares of Common Stock for which
Options will be granted from time to time will be as specified in Section 4
below, except with respect to any other Options granted hereunder, in which case
such matters will be determined by the Board of Directors.
3. Participants. Options may be granted to directors of the Company who
are not employees of the Company or any subsidiary of the Company (an "Eligible
Director"). As used herein, the term "subsidiary" means any present or future
corporation which is or would be a "subsidiary corporation" within the meaning
of Section 424 of the Internal Revenue Code of 1986, as amended.
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4. Initial Grant of Options.
(a) Each Eligible Director on the date the Company's Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"), with respect to the initial public offering of the
Common Stock becomes effective under the Act (the "Effective Date") shall be
granted an Option with respect to 10,000 shares of Common Stock, at an exercise
price per share equal to the initial public offering price per share set forth
in the Registration Statement at the time it becomes effective.
Each person first becoming an Eligible Director subsequent to the
Effective Date by reason of his or her election or appointment to the Board of
Directors subsequent to such date shall be granted an Option with respect to
10,000 shares of Common Stock on the date such person is first elected or
appointed and duly qualified to serve on the Board of Directors (the
"Qualification Date"), at an exercise price per share equal to the last reported
sales price per share of Common Stock on the Qualification Date as reported on
the NASDAQ National Market System.
(b) In the event the Chairman of the Board of Directors on the Effective
Date is an Eligible Director, he or she shall be granted an additional Option
with respect to 5,000 shares of Common Stock, at an exercise price per share
equal to the initial public offering price per share set forth in the
Registration Statement at the time it becomes effective. Each person first
becoming Chairman of the Board of Directors subsequent to the Effective Date by
reason of election or appointment to such position after such date shall be
granted an Option with respect to 5,000 shares of Common Stock on the date such
person is first elected or appointed Chairman, at an exercise price per share
equal to
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the last reported sales price per share of Common Stock on the date of election
or appointment as reported on the NASDAQ National Market System.
5. Number of Shares Subject to the Plan. The total number of shares of
Common Stock which may be issued under Options granted pursuant to the Plan
shall not exceed 100,000 shares. Shares of Common Stock issuable upon exercise
of Options granted under the Plan may be either authorized and unissued shares
or previously issued shares reacquired by the Company and held in treasury. If
any Option granted under the Plan is surrendered before exercise, lapses without
exercise, or, for any other reason, ceases to be exercisable, the shares subject
to such Option shall be available for the grant of Options under the Plan.
Subject to the provisions of Section 12 hereof, the Plan shall remain in effect
until all shares of Common Stock now or hereafter subject to the Plan have been
purchased pursuant to the exercise of Options granted under the Plan; provided
that the Plan shall terminate on the tenth anniversary of the effective date,
and no Option may be granted hereunder after such date.
6. Stock Adjustments. In the event that a dividend shall be declared on
the Common Stock payable in shares of Common Stock, the number of shares of
Common Stock then subject to any outstanding Option under the Plan and the
number of shares of Common Stock reserved for grant of Options pursuant to this
Plan but not yet subject to Option shall be adjusted by adding to each such
share of Common Stock the number of shares of Common Stock which would be
distributable in respect thereof if such shares had been outstanding on the
record date for the issuance of such stock dividend. In the event that the
outstanding shares of Common Stock shall be converted into or exchanged for a
different number of shares or other securities of the Company or of another
corporation, whether through stock split, recapitalization, split-up, merger,
consolidation,
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<PAGE> 144
reorganization, combination or other issuance or exchange of shares, then there
shall be substituted for each share of Common Stock subject to any outstanding
Option under this Plan and for each share of Common Stock reserved for the grant
of Options pursuant to the Plan but not yet subject to Option, the number and
kind of shares or other securities which each outstanding share of Common Stock
shall have been so converted into or for which each share shall have been so
exchanged. In the case of any substitution or adjustment as provided in this
Section 6, the Option price of any share subject to an outstanding Option shall
be adjusted so that there will be no change in the aggregate purchase price
payable upon exercise of any such Option.
7. Option Price. The purchase price for shares of Common Stock to be
purchased upon the exercise of Options shall be the fair market value of such
shares at the date on which the Option is granted, which, in the case of the
Options to be granted in accordance with Section 4 hereof, shall be the initial
public offering price per share set forth in the Registration Statement at the
time it becomes effective or the last reported sales price on the NASDAQ
National Market System on the Qualification Date, and in the case of any other
Options granted hereunder, shall be as determined by the Board of Directors.
8. Exercisability.
(a) Except as otherwise set forth in Section 10 hereof, Options shall
become exercisable with respect to one-fourth of the shares covered thereby on
each anniversary of the date of grant, commencing on the second anniversary of
such date.
(b) No Option may be exercised after the expiration of ten (10) years
from the date of grant of such Option. Options which have become exercisable may
be exercised from time to time, in whole or in part, provided that no partial
exercise will be permitted
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which would result in the issuance of less than fifty (50) shares of Common
Stock. Upon exercise, the purchase price thereunder shall be payable in full in
cash or upon such terms as may be determined by the Board of Directors. An
Option may not be exercised for fractional shares of the Common Stock.
(c) In the event of a Change in Control (as hereinafter defined) of the
Company all Options granted pursuant to this Plan shall vest in full and all
restrictions shall be removed, as of the first date that the Change in Control
has been deemed to have occurred, and shall remain as such for the remaining
life of the Option as provided herein and within the provisions of the related
Option Agreement.
(d) For purposes of Section 8(c) above, a Change in Control of the
Company shall be deemed to have occurred if any of the following events occur on
or after the Effective Date:
(1) any corporation, person, other entity or group becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act) of more than
fifty percent (50%) of the then outstanding voting stock of the Company;
(2) the stockholders of the Company approve a definitive agreement
to merge or consolidate with or into another corporation in a transaction in
which neither the Company nor any of its subsidiaries or affiliates will be the
surviving corporation, or to sell or otherwise dispose of all or substantially
all of the Company's assets to any person or group other than the Company or any
of its subsidiaries or affiliates, other than a merger or a sale which will
result in the voting securities of the Company outstanding prior to the merger
or sale continuing to represent at least fifty percent (50%) of the combined
voting power of the voting securities of the corporation surviving the merger or
purchasing the assets; or
(3) during any period of two (2) consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company
(and any new director whose election by the Board of Directors of the Company or
whose nomination for election by the Company's stockholders was approved by a
vote of at least
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two thirds (2/3) of the directors then still in office who either were directors
at the beginning of such period of whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Company's Board of Directors.
(4) "Person" shall have the meaning given in Section 3(a)(9) of the
1934 Act, as modified and used in Sections 13(d) and 14(d) thereof; however, a
person shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
(e) In the event of a Change in Control, any grant of options may be
canceled in consideration of a cash payment or alternative grant under this or a
similar plan made to the holder of such canceled grant equal in value to the
fair value of the canceled grant.
(f) An Option shall be exercised when written notice of such exercise
has been given to the Company by the Grantee, accompanied by payment of the
purchase price. Until the issuance of the stock certificates evidencing the
shares of Common Stock issuable upon such exercise, no right to vote, receive
dividends or any other rights as a shareholder shall exist with respect to such
shares notwithstanding the prior exercise of the Option. No adjustment will be
made for dividends or other rights for which the record date is prior to the
date the stock certificate is issued except as provided in Section 6.
9. Listing and Registration. The Company, in its discretion, may
postpone the issuance and delivery of shares upon any exercise of an Option
until completion of a securities exchange listing or registration or other
qualification of such shares under any
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state or federal law, rule or regulation as the Company may consider
appropriate. The Company may also require any person exercising an Option to
make such representations and furnish such information as it may consider
appropriate or necessary in connection with the issuance of the shares of Common
Stock subject to such Option.
10. Form of Options and Conditions of Exercise. Options shall be
evidenced by stock option agreements in such form, not inconsistent with the
provisions of this Plan, as determined by the Board of Directors from time to
time. Options will not be assignable or transferable by the Grantee other than
by will or the laws of descent and distribution and shall be exercisable during
the lifetime of the Grantee only by the Grantee.
Grantees may be granted more than one Option under the Plan. The
granting of an Option under the Plan shall not affect any unexercised Option
previously granted to the Grantee under the Plan or any unexercised Option
granted to the Grantee under any other plan.
Except as otherwise set forth herein, no Option shall be exercisable
after resignation or removal from the Board of Directors.
Upon the removal of a Grantee for cause (as determined by the Board of
Directors), all Options then held by such Grantee, whether or not exercisable on
such date, shall be forfeited and automatically expire on the date of removal.
Upon the voluntary resignation of a Grantee (or the failure of a Grantee
to be re-elected to the Board), all Options held by such Grantee and exercisable
as of the date of
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resignation shall be exercisable in whole or in part by such Grantee for a
period of 30 days from the date of resignation (or determination of the election
results) but in no event later than ten years from the date of grant, and all
Options held by such Grantee which are not exercisable on such date of
resignation shall be forfeited and automatically expire on such date. A director
on leave of absence may, for purposes of the Plan, be considered a director of
the Company, provided that notwithstanding such leave of absence, in no event
shall an Option be exercised later than ten (10) years from the date of grant.
Upon the death of any Grantee, all Options exercisable by the Grantee on the
date of death may be exercised in whole or part for a period of one year from
the date of such Grantee's death by the person or persons to whom his or her
rights under the Option shall have passed by will or by the laws of descent and
distribution, but in no event later than ten years from the date of grant and
all Options held by such Grantee which are not exercisable on the date of death
shall be forfeited and automatically expire on such date.
11. Reservation of Shares. The Company, during the term of the Plan,
will at all times reserve and keep available the number of shares of Common
Stock as shall be sufficient to satisfy the requirements of the Plan. The
inability of the Company to obtain the necessary approvals from any regulatory
body having jurisdiction or authority deemed necessary by the Company's counsel
to the lawful issuance and sale of any shares of Common Stock under the Plan
shall relieve the Company of any liability in respect of the nonissuance or sale
of such shares as to which such requisite authority shall not have been
obtained.
12. Amendment of the Plan. The Plan may be terminated or amended at any
time by the Board of Directors, provided that (except pursuant to Section 6) any
amendment to increase the total number of shares of Common Stock which may be
issued under Options granted pursuant to the Plan, extend the latest date upon
which Options
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may be granted or shall be exercisable, or change the class of persons eligible
to receive Options must be approved by the stockholders of the Company.
Notwithstanding the foregoing, the provisions of Section 4 hereof, and any other
provision of this Plan applicable to Options granted pursuant to Section 4,
shall not be amended more than once in any six month period, except as may be
required to comply with changes in the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder.
13. No Right to Continued Service. The Plan shall not be construed as
giving a Grantee any right to continued service as a member of the Board of
Directors or to affect or limit in any way the right of the Company and its
stockholders to remove such Grantee.
14. Governing Law. The Plan and any related documents or instruments
shall be governed and construed in accordance with the laws of the State of
Delaware.
IN WITNESS WHEREOF, the Company has caused the Plan to be duly executed
by its authorized officers as of this 1st day of July, 1993, as amended and
restated on November 12, 1996 and as further amended on October 10, 1997.
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EXHIBIT 11
GREENFIELD INDUSTRIES, INC.
AMENDED AND RESTATED
1995 DIRECTORS NON-QUALIFIED STOCK OPTION PLAN
1. Adoption and Purpose of the Plan. Greenfield Industries, Inc. (the
"Company") hereby adopts the 1995 Directors Non-Qualified Stock Option Plan (the
"Plan") dated November 21, 1995, which provides for the granting of
non-qualified stock options ("Options") to purchase shares of the Company's
Common Stock, $.01 par value per share (the "Common Stock"), to those members of
the Board who are not employees of the Company or any subsidiary (as hereinafter
defined) of the Company (the "Eligible Directors"). This Plan will give such
Eligible Directors added financial incentive to further the Company's financial
well being and increase the Company's value to the benefit of the stockholders.
The Company believes that the Plan will enable it to be competitive in
encouraging directors to remain in its service and to attract other qualified
persons to the Company.
The effective date (the "Effective Date") of the Plan shall be the date
of approval by the Company's stockholders. If such approval is not obtained on
or before December 31, 1996, the
<PAGE> 151
Plan shall be terminated on such date and all Options granted prior to such date
shall be void and of no force and effect. Options may be granted hereunder at
any time and from time to time through the date of termination of the Plan.
2. Plan Administration. The Plan is intended to be and shall be
construed as providing Eligible Directors with formula awards within the meaning
of Rule 16b-3(c)(2)(ii) of the General Rules and Regulations promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
as such rule may be amended from time to time. Subject to the foregoing, the
Plan shall be administered by the Board of Directors, or any committee thereof,
from time to time appointed by the Board of Directors and any reference to the
Board of Directors contained herein shall mean and include any such duly
authorized committee thereof.
In administering the Plan, the Board of Directors may adopt rules and
regulations as necessary for carrying out the purposes and intent of the Plan.
Any action taken by a majority of the Board of Directors in the interpretation
or administration of the Plan shall, as between the Company and the Eligible
Directors, be final and conclusive. Within the limitations of
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the Plan, the Eligible Directors to whom Options will be granted, the exercise
price and the number of shares of Common Stock for which Options will be granted
from time to time will be as specified in Section 4 below.
3. Participants. Options may be granted to any Eligible Director,
defined as any director of the Company who is not an employee of the Company or
any subsidiary of the Company. As used herein, the term "subsidiary" means any
present or future corporation which is or would be a "subsidiary corporation"
within the meaning of Section 424 of the Internal Revenue Code of 1986, as
amended (the "Code").
4. Grant of Options.
(a) Each person first becoming an Eligible Director by reason of his
or her election or appointment to the Board of Directors subsequent to the
Effective Date shall be granted an Option with respect to 10,000 shares of
Common Stock on the date such person is first elected or appointed and duly
qualified to serve on the Board of Directors, at an exercise price per share
equal to the Fair Market Value (as hereinafter defined) on the date of election
or appointment.
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(b) In addition to any grant under Part (a) of Section 4 hereof,
provided that such person is an Eligible Director, each person first becoming
Chairman of the Board of Directors subsequent to the Effective Date by reason of
election or appointment to such position shall be granted an Option with respect
to 5,000 shares of Common Stock on the date such person is first elected or
appointed Chairman at an exercise price per share equal to the Fair Market Value
(as hereinafter defined) on the date of election or appointment.
(c) Each Eligible Director who is re-elected to the Board of
Directors by the vote of the stockholders at the annual meeting of the
stockholders of the Company, or other meeting of the stockholders or written
consent in lieu thereof at which directors are elected, shall be granted an
Option with respect to 1,000 shares of Common Stock on the date such person is
re-elected to serve on the Board of Directors, at an exercise price per share
equal to the Fair Market Value (as hereinafter defined) on the date of
re-election. If an Eligible Director is elected to serve a term (the "Term") of
more than one year, such Eligible Director, in addition to the Option described
in the preceding sentence, shall, during the Term, be granted an Option (the
"Annual Option") with respect to 1,000 shares of Common
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<PAGE> 154
Stock on each anniversary of the date of re-election on which the Eligible
Director is serving as a director; provided, however, that no such Annual Option
shall be granted in the year in which the Term expires. The Annual Option shall
be granted with an exercise price per share equal to the Fair Market Value (as
hereinafter defined) on the date of grant.
(d) Each Eligible Director elected to serve as the Chairman of the
Executive, Compensation and Options, Audit or Nominating Committees of the Board
of Directors or any other standing committees which are from time to time
maintained by the Board of Directors (collectively, the "Committees") shall be
granted an Option with respect to 500 shares of Common Stock on the date such
person is elected or re-elected as the Chairman of any such Committee, at an
exercise price per share equal to the Fair Market Value (as hereinafter defined)
on the date of election or re-election.
5. Number of Shares Subject to the Plan. The total number of shares
of Common Stock which may be issued under Options granted pursuant to the Plan
shall not exceed 125,000 shares. Shares of Common Stock issuable upon exercise
of Options granted under the Plan may be either authorized and unissued
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<PAGE> 155
shares or previously issued shares reacquired by the Company and held in
treasury. If any Option granted under the Plan is surrendered before exercise,
lapses without exercise, or, for any other reason ceases to be exercisable, the
shares subject to such Option shall be available for the grant of Options under
the Plan.
Subject to the provisions of Section 12 hereof, the Plan shall remain in
effect until all shares of Common Stock now or hereafter subject to the Plan
have been purchased pursuant to the exercise of Options granted under the Plan;
provided that the Plan shall terminate on the tenth anniversary of the Effective
Date, and no Option may be granted hereunder after such date.
6. Stock Adjustments. In the event that a dividend shall be declared on
the Common Stock payable in shares of Common Stock, the number of shares of
Common Stock then subject to any outstanding Option under the Plan and the
number of shares of Common Stock reserved for grant of Options pursuant to this
Plan but not yet subject to Option shall be adjusted by adding to each such
share of Common Stock the number of shares of Common Stock which would be
distributable in respect thereof if such shares had been outstanding on the
record date for the issuance of such
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<PAGE> 156
stock dividend. Subject to the provisions of Section 8(c) hereof, in the event
that the outstanding shares of Common Stock shall be converted into or exchanged
for a different number of shares or other securities of the Company or of
another corporation, whether through stock split, recapitalization, split-up,
merger, consolidation, reorganization, combination or other issuance or exchange
of shares, then there shall be substituted for each share of Common Stock
subject to any outstanding Option under this Plan and for each share of Common
Stock reserved for the grant of Options pursuant to the Plan but not yet subject
to Option, the number and kind of shares or other securities which each
outstanding share of Common Stock shall have been so converted into or for which
each share shall have been so exchanged. In the case of any substitution or
adjustment as provided in this Section 6, the Option price of any share subject
to an outstanding Option shall be adjusted so that there will be no change in
the aggregate purchase price payable upon exercise of any such Option.
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<PAGE> 157
7. Option Price. The purchase price for shares of Common Stock to be
purchased upon the exercise of Options shall be the fair market value (the "Fair
Market Value") of such shares at the date on which the Option is granted, which,
in the case of the Options to be granted in accordance with Section 4 hereof,
shall be equal to the closing sales price of a share of the Common Stock as
published on a national securities exchange on which the shares of the Common
Stock are traded on such date or, if there is no sale of the Common Stock on
such date, the average of the bid and asked prices on such exchange at the close
of trading on such date or, if shares of Common Stock are not listed on a
national securities exchange but are authorized for quotation in the National
Association of Securities Dealers Automated Quotation System National Market
(the "Nasdaq National Market"), the last transaction price per share as reported
by the Nasdaq National Market on such date or, if there is no sale of the Common
Stock on such date, the average of the bid and asked prices as reported by the
Nasdaq National Market on such date or, if shares of Common Stock are not
authorized for quotation on the Nasdaq National Market on such date, the average
of the bid and asked prices as reported in the over the counter market or, if
the Common Stock is not listed on a national securities exchange,
8
<PAGE> 158
quoted on the Nasdaq National Market or quoted in the over the counter market,
the Fair Market Value of a share of the Common Stock on such date as shall be
determined by the majority vote of the Board of Directors. In rendering its
determination of the Common Stock's Fair Market Value, the Board of Directors
shall comply with Section 422(b)(4) of the Code and the applicable regulations
promulgated thereunder. For purposes of the Plan, the Board of Directors'
determination of the Fair Market Value of a share shall be conclusive.
8. Exercisability. (a) Except as otherwise set forth in Section 10
hereof, Options granted pursuant to Parts (a) and (b) of Section 4 hereof shall
become exercisable with respect to one-fourth of the shares covered thereby on
each anniversary of the date of grant, commencing on the second anniversary of
such date. Except as otherwise set forth in Section 10 hereof, Options granted
pursuant to Parts (c) and (d) of Section 4 hereof shall become exercisable with
respect to all of the shares covered thereby on the first anniversary of the
date of grant.
(b) No Option may be exercised after the expiration of ten (10) years
from the date of grant of such Option. Options which have become exercisable may
be exercised from time to time,
9
<PAGE> 159
in whole or in part, provided that no partial exercise will be permitted which
would result in the issuance of less than fifty (50) shares of Common Stock.
Upon exercise, the purchase price thereunder shall be payable in full in cash or
in kind, or part in cash and part in kind, by delivery of shares of Common Stock
having a Fair Market Value, or surrender of currently exercisable Options having
a value (determined by subtracting the exercise price from the Fair Market Value
of Common Stock and multiplying such amount by the number of Options
surrendered) on the date of exercise, equal to the portion of the exercise price
so paid, as may be determined by the Board of Directors. An Option may not be
exercised for fractional shares of Common Stock and any fractional shares
resulting from payment in kind shall be canceled.
(c) In the event of a Change in Control (as hereinafter defined) of
the Company all Options granted pursuant to this Plan shall vest in full and all
restrictions shall be removed, as of the first date that the Change in Control
has been deemed to have occurred, and shall remain as such for the remaining
life of the Option as provided herein and within the provisions of the related
Option Agreement.
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<PAGE> 160
(d) For purposes of Section 8(c) above, a Change in Control of the
Company shall be deemed to have occurred if any of the following events occur on
or after the Effective Date:
(1) any corporation, person, other entity or group becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934
Act) of more than fifty percent (50%) of the then
outstanding voting stock of the Company;
(2) the stockholders of the Company approve a definitive
agreement to merge or consolidate with or into another
corporation in a transaction in which neither the Company
nor any of its subsidiaries or affiliates will be the
surviving corporation, or to sell or otherwise dispose of
all or substantially all of the Company's assets to any
person or group other than the Company or any of its
subsidiaries or affiliates, other than a merger or a sale
which will result in the voting securities of the Company
outstanding prior to the merger or sale continuing to
represent at least fifty percent (50%) of the combined
voting power of the voting securities of the corporation
surviving the merger or purchasing the assets; or
(3) during any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the Board of
Directors of the Company (and any new director whose
election by the Board of Directors of the Company or whose
nomination for election by the Company's stockholders was
approved by a vote of at least two thirds (2/3) of the
directors then still in office who either were directors at
the beginning of such period of whose election or
nomination for election was previously so approved) cease
for any reason to constitute a majority of the Company's
Board of Directors.
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<PAGE> 161
(4) "Person" shall have the meaning given in Section 3(a)(9) of
the 1934 Act, as modified and used in Sections 13(d) and
14(d) thereof; however, a person shall not include (i)the
Company or any of its subsidiaries, (ii)a trustee or other
fiduciary holding securities under an employee benefit plan
of the Company or any of its subsidiaries, (iii)an
underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv)a corporation owned,
directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of
stock of the Company.
(e) In the event of a Change in Control, any grant of options may
be canceled in consideration of a cash payment or alternative grant under this
or a similar plan made to the holder of such canceled grant equal in value to
the fair value of the canceled grant.
(f) An Option shall be exercised when written notice of such
exercise has been given to the Company by the Eligible Director, accompanied by
payment of the purchase price. Until the issuance of the stock certificates
evidencing the shares of Common Stock issuable upon such exercise, no right to
vote, receive dividends or any other rights as a stockholder shall exist with
respect to such shares notwithstanding the prior exercise of the Option. No
adjustment will be made for dividends or other rights for which the record date
is prior to the date
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<PAGE> 162
the stock certificate is issued except as provided in Section 6 hereof.
9. Listing and Registration. The Company, in its discretion, may
postpone the issuance and delivery of shares upon any exercise of an Option
until completion of a securities exchange listing or registration or other
qualification of such shares under any state or federal law, rule or regulation
as the Company may consider appropriate. The Company may also require any person
exercising an Option to make such representations and furnish such information
as it may consider appropriate or necessary in connection with the issuance of
the shares of Common Stock subject to such Option.
10. Form of Options and Conditions of Exercise. Options shall be
evidenced by stock option agreements in the form attached hereto as Exhibit A or
such other form, not inconsistent with the provisions of this Plan, as
determined by the Committee or the Board of Directors from time to time. Options
will not be assignable or transferable by the Eligible Director other than by
will or the laws of descent and distribution and shall be exercisable during the
lifetime of the Eligible Director only by the Eligible Director.
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<PAGE> 163
Eligible Directors may be granted more than one Option under the Plan.
The granting of an Option under the Plan shall not affect any unexercised Option
previously granted to the Eligible Director under the Plan or any unexercised
Option granted to the Eligible Director under any other plan.
Except as otherwise set forth herein, no Option shall be exercisable
after resignation or removal from the Board of Directors.
Upon the removal of an Eligible Director for cause (as determined by the
majority vote of the Board of Directors), all Options then held by such Eligible
Director, whether or not exercisable on such date, shall be forfeited and
automatically expire on the date of removal.
Upon the voluntary resignation of an Eligible Director or the failure of
an Eligible Director to be re-elected to the Board, all Options held by such
Eligible Director and exercisable as of the date of resignation or determination
of the election results shall be exercisable in whole or in part by such
Eligible Director for a period of thirty (30) days from the date of resignation
or determination of the election results, but in no event later than ten (10)
years from the date of grant, and all
14
<PAGE> 164
Options held by such Eligible Director which are not exercisable on such date of
resignation or determination of the election results shall be forfeited and
automatically expire on such date. A director on leave of absence may, for
purposes of the Plan, be considered a director of the Company, provided that
notwithstanding such leave of absence, in no event shall an Option be exercised
later than ten (10) years from the date of grant. Upon the death of any Eligible
Director, all Options exercisable by the Eligible Director on the date of death
may be exercised in whole or part for a period of one (1) year from the date of
such Eligible Director's death by the person or persons to whom his or her
rights under the Option shall have passed by will or by the laws of descent and
distribution, but in no event later than ten (10) years from the date of grant,
and all Options held by such Eligible Director which are not exercisable on the
date of death shall be forfeited and automatically expire on such date.
11. Reservation of Shares. The Company, during the term of the Plan,
will at all times reserve and keep available the number of shares of Common
Stock as shall be sufficient to satisfy the requirements of the Plan. The
inability of the Company to obtain the necessary approvals from any regulatory
15
<PAGE> 165
body having jurisdiction or authority deemed necessary by the Company's counsel
to the lawful issuance and sale of any shares of Common Stock under the Plan
shall relieve the Company of any liability in respect of the nonissuance or sale
of such shares as to which such requisite authority shall not have been
obtained.
12. Amendment of the Plan. The Plan may be terminated or amended at
any time by the Board of Directors, provided that (except pursuant to Section 6)
any amendment to increase the total number of shares of Common Stock which may
be issued under Options granted pursuant to the Plan, extend the latest date
upon which Options may be granted or shall be exercisable, or change the class
of persons eligible to receive Options must be approved by the stockholders of
the Company. Notwithstanding the foregoing, the provisions of Section 4 hereof,
and any other provision of this Plan applicable to Options granted pursuant to
Section 4, shall not be amended more than once in any six month period, except
as may be required to comply with changes in the Code and the rules and
regulations thereunder.
13. No Right to Continued Service. The Plan shall not be construed as
giving an Eligible Director any right to continued service as a member of the
Board of Directors or to affect or
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<PAGE> 166
limit in any way the right of the Company and its stockholders to remove such
Eligible Director.
14. Governing Law. The Plan and any related documents or instruments
shall be governed and construed in accordance with the laws of the State of
Delaware.
IN WITNESS WHEREOF, the Company has caused the Plan to be duly executed
by its authorized officers this 21st day of November, 1995 and amended and
restated on October 10, 1997.
17
