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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 02549
----------------
FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 25, 1997
DEFLECTA-SHIELD CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-23238 42-1411117
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1800 North 9th Street, Indianola, Iowa 60016
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(Address of principal executive offices) (Zip Code)
(515) 961-6100
-----------------------------
Registrant's Telephone Number
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Item 5. Other Events
On November 25, 1997, Deflecta-Shield Corporation, a Delaware corporation
(the "Company") announced that it had entered into an Agreement and Plan of
Merger dated as of November 25, 1997 with Lund International Holdings, Inc.
("Parent") and Zephyros Acquisition Corporation (the "Purchaser"), (the
"Merger Agreement"). Under the Merger Agreement, the Purchaser will commence
a tender offer no later than November 28, 1997, for all of the outstanding
common stock of the Company at $16.00 per share, net to the seller in cash.
The tender offer will be followed by a merger of Purchaser into the
Company, with the Company as the surviving entity. Holders of shares not
purchased in the tender will receive cash equal to $16.00 per share.
Concurrent with the execution of the Merger Agreement, two stockholders of
the Company entered into Stockholder Agreements with Parent, pursuant to which
each such stockholder agreed, subject to certain conditions, to tender pursuant
to the tender offer, in the aggregate, approximately 1,909,374 shares,
constituting approximately 39.78% of the outstanding shares of the Company.
Such agreements will terminate upon the termination of the Merger Agreements.
The Merger Agreement restricts the Company from actively soliciting any
other offers while, consistent with the fiduciary duties of the Company's
Board of Directors, providing that the Company may respond to certain
unsolicited offers or indications of interest. The Merger Agreement also
provides for appropriate break-up fees for Parent under certain circumstances,
including the termination of the Merger Agreement by the Company to accept a
Superior Proposal (as defined in the Merger Agreement).
On November 26, 1997, the Company issued a press release with respect to
the Merger Agreement and the transactions contemplated thereby.
The Merger Agreement, the Stockholder Agreements, and press release are
attached as Exhibits 1, 2, 3 and 4 hereto, and are incorporated herein by
reference.
Item 7. Exhibits
1. Agreement and Plan of Merger dated as of November 25, 1997 among
Deflecta-Shield Corporation, Lund International Holdings, Inc. and
Zephyros Acquisition Corporation.
2. Stockholder Agreement dated as of November 25, 1997 between Lund
International Holdings, Inc. and Mark C. Mamolen.
3. Stockholder Agreement dated as of November 25, 1997 between Lund
International Holdings, Inc. and Charles S. Meyer.
4. Press release issued by Deflecta-Shield Corporation, Lund
International Holdings, Inc. and Zephyros Acquisition Corporation
on November 26, 1997.
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Deflecta-Shield Corporation
Dated: November 26, 1997 By: /s/ Russell E. Stubbings
--------------------------------------
Name: Russell E. Stubbings
Title: President and Chief Executive
Officer
3
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EXHIBIT INDEX
Exhibit No. Description Page No.
1. Agreement and Plan of Merger dated as
of November 25, 1997 among Deflecta-Shield
Corporation, Lund International
Holdings, Inc. and Zephyros Acquisition
Corporation.
2. Stockholder Agreement dated as of
November 25, 1997 between Lund International
Holdings, Inc. and Mark C. Mamolen.
3. Stockholder Agreement dated as of
November 25, 1997 between Lund International
Holdings, Inc. and Charles S. Meyer.
4. Press release issued by Deflecta-Shield
Corporation, Lund International Holdings, Inc.
and Zephyros Acquisition Corporation on
November 25, 1997.
4
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Exhibit 99.1
=============================================================
AGREEMENT AND PLAN OF MERGER
AMONG
LUND INTERNATIONAL HOLDINGS, INC.,
ZEPHYROS ACQUISITION CORPORATION
AND
DEFLECTA-SHIELD CORPORATION
DATED AS OF NOVEMBER 25, 1997
=============================================================
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AGREEMENT AND PLAN OF MERGER
----------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I THE OFFER..................................................... 2
SECTION 1.1 The Offer................................................ 2
SECTION 1.2 Action by the Company.................................... 4
SECTION 1.3 Directors................................................ 5
SECTION 1.4 The Merger............................................... 6
SECTION 1.5 Effective Time........................................... 7
SECTION 1.6 Closing.................................................. 7
SECTION 1.7 Directors and Officers of the Surviving Corporation...... 7
SECTION 1.8 Effect of the Merger..................................... 7
SECTION 1.9 Subsequent Actions....................................... 7
SECTION 1.10 Certificate of Incorporation; By-Laws.................... 8
SECTION 1.11 Stockholders' Meeting.................................... 8
SECTION 1.12 Merger Without Meeting of Stockholders................... 9
ARTICLE II CONVERSION OF SECURITIES...................................... 9
SECTION 2.1 Conversion of Securities................................. 9
SECTION 2.2 Dissenting Shares........................................ 10
SECTION 2.3 Surrender of Shares; Stock Transfer Books................ 10
SECTION 2.4 Stock Plans.............................................. 12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 13
SECTION 3.1 Organization and Qualification........................... 13
SECTION 3.2 Capitalization........................................... 13
SECTION 3.3 Subsidiaries............................................. 14
SECTION 3.4 Authorization............................................ 15
SECTION 3.5 SEC Documents............................................ 15
SECTION 3.6 No Conflicts............................................. 16
SECTION 3.7 Financial Statements..................................... 16
SECTION 3.8 No Undisclosed Liabilities............................... 17
SECTION 3.9 Absence of Certain Changes or Events..................... 17
SECTION 3.10 Tax Matters.............................................. 17
SECTION 3.11 Litigation............................................... 19
SECTION 3.12 ERISA Compliance......................................... 19
SECTION 3.13 Environmental Matters.................................... 21
SECTION 3.14 Real Property and Leased Property........................ 21
SECTION 3.15 Change of Control Payments; Takeover Restrictions........ 22
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Page
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SECTION 3.16 Intellectual Property.................................... 22
SECTION 3.17 Contracts................................................ 23
SECTION 3.18 Compliance with Laws..................................... 23
SECTION 3.19 Insurance Coverage....................................... 23
SECTION 3.20 Personnel; Labor Relations............................... 24
SECTION 3.21 Customers................................................ 24
SECTION 3.22 Brokers and Finders...................................... 25
SECTION 3.23 Opinion of Financial Advisor............................. 25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER........ 25
SECTION 4.1 Organization and Power................................... 25
SECTION 4.2 Authorization............................................ 26
SECTION 4.3 No Conflicts............................................. 26
SECTION 4.4 Consents and Approvals................................... 26
SECTION 4.5 Financing of the Offer and the Merger.................... 26
SECTION 4.6 No Obligation to Make a Hart-Scott-Rodino Filing......... 26
SECTION 4.7 Finder's Fees............................................ 27
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER........................ 27
SECTION 5.1 Interim Operations of the Company........................ 27
SECTION 5.2 Takeover Proposals....................................... 30
SECTION 5.3 No Solicitation.......................................... 31
ARTICLE VI ADDITIONAL AGREEMENTS......................................... 32
SECTION 6.1 Proxy Statement.......................................... 32
SECTION 6.2 Meeting of Stockholders of the Company................... 32
SECTION 6.3 Additional Agreements.................................... 33
SECTION 6.4 Notification of Certain Matters.......................... 33
SECTION 6.5 Access; Confidentiality.................................. 33
SECTION 6.6 Publicity................................................ 34
SECTION 6.7 Directors' and Officers' Insurance and Indemnification... 35
SECTION 6.8 Employee Benefits........................................ 37
SECTION 6.9 Purchaser Compliance..................................... 38
SECTION 6.10 Best Efforts............................................. 38
ARTICLE VII CONDITIONS.................................................... 39
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Merger................................................... 39
ARTICLE VIII TERMINATION................................................... 39
SECTION 8.1 Termination.............................................. 39
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Page
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SECTION 8.2 Effect of Termination.................................... 41
ARTICLE IX GENERAL PROVISIONS............................................ 42
SECTION 9.1 Amendment................................................ 42
SECTION 9.2 Waiver................................................... 42
SECTION 9.3 Non-Survival of Representations and Warranties........... 42
SECTION 9.4 Notices.................................................. 43
SECTION 9.5 Headings................................................. 43
SECTION 9.6 Exhibits, Schedules and Annexes.......................... 44
SECTION 9.7 Counterparts............................................. 44
SECTION 9.8 Governing Law............................................ 44
SECTION 9.9 Pronouns................................................. 44
SECTION 9.10 Time Periods............................................. 44
SECTION 9.11 No Strict Construction................................... 44
SECTION 9.12 Entire Agreement......................................... 44
SECTION 9.13 Severability............................................. 45
SECTION 9.14 Successors and Assigns................................... 45
SECTION 9.15 Fees and Expenses........................................ 45
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ANNEX I
Conditions of the Offer............................................... A-1
ANNEX II
Form of Stockholder Agreement...........................................B-1
EXHIBITS
Exhibit 6.6 - Form of Press Release
Exhibit 8.2 - Wire Transfer Instructions
INDEX OF DEFINED TERMS
----------------------
TERM LOCATION
- ---- --------
Affidavit of Loss.........................................................2.3(e)
Agreement...............................................................Preamble
Appointment Date............................................................ 5.1
Benefit Plan.............................................................3.12(a)
Board of Directors......................................................Recitals
Certificates..............................................................2.3(b)
Closing......................................................................1.6
Closing Date.................................................................1.6
Code.....................................................................3.12(a)
Common Stock..............................................................3.2(a)
Company.................................................................Preamble
Company Agreements...........................................................3.6
Company Letter.......................................................Article III
Confidentiality Agreement.................................................6.5(a)
D&O Insurance.............................................................6.7(c)
Delaware Law............................................................Recitals
Dissenting Shares.........................................................2.2(a)
Effective Time...............................................................1.5
Encumbrances.............................................................3.14(a)
ERISA....................................................................3.12(a)
ERISA Affiliate..........................................................3.12(a)
Exchange Agent............................................................2.3(a)
Exchange Act..............................................................1.1(a)
Expense Reimbursement Amount..............................................8.2(c)
Financial Statements.........................................................3.7
GAAP......................................................................3.2(b)
Governmental Entity..........................................................3.6
HSR Act......................................................................4.6
Indemnified Person(s).....................................................6.7(a)
Independent Directors.....................................................1.3(c)
Intellectual Property.......................................................3.16
Leased Property..........................................................3.14(b)
Material Adverse Effect...................................................3.1(b)
Merger.......................................................................1.4
Merger Consideration......................................................2.l(a)
Minimum Condition.........................................................1.1(a)
1997 Premium..............................................................6.7(c)
1996 Fiscal Year............................................................3.21
Notice of Superior Proposal...............................................5.3(b)
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Offer...................................................................Recitals
Offer Documents...........................................................1.l(b)
Offer Price.............................................................Recitals
Offer to Purchase.........................................................1.1(a)
Options......................................................................2.4
Other Intellectual Property.................................................3.16
Parent..................................................................Preamble
Permitted Encumbrance....................................................3.14(a)
Person....................................................................2.3(d)
Preferred Stock...........................................................3.2(a)
Purchaser...............................................................Preamble
Proxy Statement......................................................1.11(a)(ii)
Real Property............................................................3.14(a)
Registered Intellectual Property............................................3.16
Schedule 14D-1............................................................1.1(b)
Schedule 14D-9............................................................1.2(b)
SEC.......................................................................1.l(b)
SEC Documents.............................................................3.5(a)
Securities Act............................................................3.5(a)
Shares..................................................................Recitals
Special Meeting.......................................................1.11(a)(i)
Stock Plans..................................................................2.4
Stockholder Agreements..................................................Recitals
Subsidiary...................................................................3.3
Superior Proposal.........................................................5.3(b)
Surviving Corporation........................................................1.4
Takeover Proposal............................................................5.2
Tax...................................................................3.10(f)(i)
Taxable...............................................................3.10(f)(i)
Taxes.................................................................3.10(f)(i)
Tax Return...........................................................3.10(f)(ii)
Termination Fee...........................................................8.2(c)
U.S. Court..................................................................3.11
WARN Act....................................................................3.20
Wasserstein.................................................................3.23
Trailmaster Options..........................................................2.4
vi
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of November 25, 1997,
among Lund International Holdings, Inc., a Delaware corporation ("Parent"),
Zephyros Acquisition Corporation., a Delaware corporation and a wholly-owned
subsidiary of Parent (the "Purchaser"), and Deflecta-Shield Corporation, a
Delaware corporation (the "Company").
RECITALS:
WHEREAS, the Board of Directors of each of Parent, the Purchaser and the
Company has approved, and deems it advisable and in the best interests of its
respective stockholders to consummate, the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that the Purchaser will
make a cash tender offer (the "Offer") to acquire all shares (the "Shares") of
the issued and outstanding common stock, $.01 par value, of the Company for
$16.00 per Share, net to the seller in cash (such price, or any such higher
price per Share as may be paid in the Offer, being referred to herein as the
"Offer Price"); and
WHEREAS, also in furtherance of such acquisition, the Boards of Directors
of the Company, Parent and the Purchaser have each approved the Merger (as
defined hereinafter) following the Offer in accordance with the General
Corporation Law of the State of Delaware (the "Delaware Law") and upon the terms
and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
has determined that the consideration to be paid for each Share in the Offer and
the Merger is fair to the holders of such Shares and has resolved to recommend
that the holders of such Shares accept the Offer and approve this Agreement and
each of the transactions contemplated hereby upon the terms and subject to the
conditions set forth herein; and
WHEREAS, as a condition and inducement to Parent's and the Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
Mark C. Mamolen and Charles S. Meyer (the "Stockholders"), who in the aggregate
beneficially own 1,909,374 Shares, concurrently herewith are entering into
Stockholder Agreements (the "Stockholder Agreements"), dated as of the date
hereof, with Parent, in the form attached hereto as Annex II, pursuant to which
the Stockholders have agreed, among other things, to tender the Shares held by
them in the Offer, upon the terms and subject to the conditions set forth
therein; and
WHEREAS, the Company, Parent and the Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and Merger.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 hereof and none of the events set forth in Annex I
shall have occurred and be continuing, the Purchaser shall, and Parent shall
cause the Purchaser to, (i) not later than 9:00 a.m. New York City time on the
first business day after the execution of this Agreement, publicly announce the
execution of this Agreement and the intention to commence the Offer pursuant to
the terms hereof, (ii) as promptly as practicable (but in no event later than
five (5) business days after the public announcement of the execution of this
Agreement), commence (within the meaning of Rule 14d-2(a) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), the Offer at the Offer
Price, and (iii) subject only to there being validly tendered and not withdrawn
prior to the expiration of the Offer that number of Shares which represents at
least a majority of the Shares then outstanding on a fully diluted basis (after
giving effect to the conversion, exchange or exercise of all outstanding options
and other rights and securities convertible into or exchangeable for Shares)
(the "Minimum Condition") and to the other conditions set forth in Annex I
hereto, consummate the Offer promptly in accordance with its terms. The
obligations of the Purchaser to accept for payment and to pay for any Shares
validly tendered on or prior to the expiration of the Offer and not withdrawn
shall be subject only to the Minimum Condition and the other conditions set
forth in Annex I hereto. The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") containing only the terms set forth in this
Agreement, the Minimum Condition and the other conditions set forth in Annex I
hereto. Without the prior written consent of the Company, which may be given or
withheld in its sole and absolute discretion, neither Parent nor the Purchaser
shall (i) amend or waive the Minimum Condition; (ii) decrease the Offer Price;
(iii) decrease the number of Shares sought; (iv) amend the Offer in any way
other than to increase the Offer Price, including by means of adding any
conditions to the Offer; (v) change the form of consideration payable in the
Offer; or (vi) extend the expiration of the Offer (except as specifically
provided in this Section 1.1); PROVIDED, HOWEVER, that, subject to Section 8.1,
if on the initial scheduled expiration date of the Offer, which shall be twenty
(20) business days after the date the Offer is commenced, all conditions to the
Offer shall not have been satisfied or waived at such time, the Purchaser may
extend the expiration date of the Offer for a period of thirty (30) business
days; and PROVIDED, FURTHER, that if at any scheduled expiration date of the
Offer, the condition set forth in paragraph (d) of Annex I hereto shall not have
been satisfied but all of the other conditions set forth on Annex I hereto shall
then have been satisfied, then, at the request of the
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Company (which shall subsequently be confirmed in writing), the Purchaser shall,
and Parent shall cause the Purchaser to, extend the Offer from time to time,
subject to the right of the Purchaser and Parent to terminate this Agreement
pursuant to Section 8.1 hereto. The Purchaser shall, and Parent shall cause the
Purchaser to, subject only to the prior satisfaction or waiver of the conditions
of the Offer, accept for payment and pay for Shares validly tendered as soon as
it is legally permitted to do so under applicable law; PROVIDED, HOWEVER, that
if, immediately prior to the initial expiration date of the Offer in accordance
with the foregoing, the Shares tendered and not withdrawn pursuant to the Offer
equal less than 90% of the then outstanding Shares, but not less than 70% of
such Shares, the Purchaser may extend the Offer on one or more occasions for an
aggregate period not to exceed ten (10) business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer;
PROVIDED, FURTHER, that if the Purchaser extends the Offer pursuant to the
foregoing proviso, all conditions set forth on Annex I hereto shall be
irrevocably waived and deemed satisfied in full. Notwithstanding anything to
the contrary contained in this Section 1.1(a), the Purchaser may not extend the
Offer, without the prior written consent of the Company which may be given or
withheld in its sole and absolute discretion, if the failure of any condition
resulted directly or proximately from a state of facts or action or inaction
which constitutes a breach of a representation, warranty or covenant of Parent
or the Purchaser.
(b) As soon as practicable on the date the Offer is commenced, Parent and
the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 shall include,
as exhibits, and incorporate by reference, the Offer to Purchase and a form of
letter of transmittal and summary advertisement (which documents, together with
any amendments and supplements thereto, and any other SEC schedule or form which
is filed in connection with the Offer and related transactions, are referred to
collectively herein as the "Offer Documents"). The Offer Documents shall comply
in all material respects with the provisions of applicable federal securities
laws and, on the date filed with the SEC and on the date first published, mailed
or given to the Company's stockholders and at all times thereafter, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or the Purchaser
with respect to information furnished by the Company to Parent or the Purchaser,
in writing, expressly for inclusion in the Offer Documents. The information
supplied by the Company to Parent or the Purchaser, in writing, expressly for
inclusion in the Offer Documents and by Parent or the Purchaser to the Company,
in writing, expressly for inclusion in the Schedule 14D-9 (as hereinafter
defined) shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Parent and the Purchaser agree promptly to correct the
Offer Documents if and to the extent that they shall have become false or
misleading in any material respect (and the Company, with respect to written
information supplied by it specifically for use
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in the Offer Documents, promptly shall notify Parent and the Purchaser of any
required corrections of such information and cooperate with the Parent and the
Purchaser with respect to correcting such information) and to supplement the
information contained in the Offer Documents to include any information that
shall become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading in any material
respect. Parent and the Purchaser further agree to take all steps necessary to
cause the Offer Documents 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. The Company and its outside legal counsel
shall be given a reasonable opportunity to review and comment on the Offer
Documents before such documents are filed with the SEC. In addition, the
Purchaser agrees to provide the Company and its outside legal counsel, in
writing, with any comments, whether written or oral, that the Purchaser or its
outside legal counsel may receive from time to time from the SEC or its staff
with respect to the Offer Documents promptly after the receipt of such comments
or other communications.
SECTION 1.2 ACTION BY THE COMPANY.
(a) The Company hereby approves of and consents to the making of the Offer
and represents that the Board of Directors, at a meeting duly called and held on
November 25, 1997, at which a majority of the Directors was present, has
unanimously (i) determined that this Agreement and the transactions contemplated
hereby, including the Merger and the Offer, are fair to, and in the best
interests of, the Company and the holders of the Shares, (ii) duly authorized
and approved this Agreement and approved the Merger and the other transactions
contemplated hereby (including but not limited to the Offer), and (iii) resolved
to recommend that the stockholders of the Company accept the Offer, tender their
Shares pursuant to the Offer and, to the extent required by applicable law,
authorize and approve this Agreement and the transactions contemplated hereby,
including the Merger. Subject to the terms of this Agreement, the Company
hereby consents to the inclusion in the Offer Documents prepared in connection
with the Offer of the recommendation of the Board of Directors of the Company
described in the preceding sentence.
(b) As soon as practicable on the date the Offer is commenced, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any and all amendments or supplements thereto and including
the exhibits thereto, the "Schedule 14D-9"). The Schedule 14D-9 shall comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published, mailed or
given to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information furnished by
Parent or the Purchaser, in writing, expressly for inclusion in the Schedule
14D-9. The Company shall mail, or cause to be mailed, such Schedule 14D-9 to
the stockholders of the Company at the same time the Offer Documents are first
mailed to the
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stockholders of the Company. The Schedule 14D-9 and the Offer Documents shall
contain the recommendations of the Board of Directors described in Section
1.2(a) hereof, subject to the terms of this Agreement. The Company agrees
promptly to correct the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect (and each of Parent and the
Purchaser, with respect to written information supplied by it specifically for
use in the Schedule 14D-9, promptly shall notify the Company of any required
corrections of such information and cooperate with the Company with respect to
correcting such information) and to supplement the information contained in the
Schedule 14D-9 to include any information that shall become necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading in any material respect. 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 to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws. The Purchaser
and its outside legal counsel shall be given the opportunity to review and
comment on the Schedule 14D-9 before it is filed with the SEC. In addition, the
Company agrees to provide the Purchaser and its outside legal counsel, in
writing, with any comments, whether written or oral, that the Company or its
outside legal counsel may receive from time to time from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments
or other communications.
(c) In connection with the Offer, the Company shall promptly furnish or
cause to be furnished to the Purchaser mailing labels containing the names and
addresses of all record holders of Shares and security position listings of
Shares held in stock depositories, each as of a recent date, and shall promptly
furnish the Purchaser with such additional information (including, but not
limited to, updated lists of stockholders and their addresses, mailing labels
and security position listing) and related assistance as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares.
SECTION 1.3 DIRECTORS.
(a) Promptly upon the purchase of Shares by the Purchaser pursuant to the
Offer which when added to any other Shares beneficially owned by Parent, the
Purchaser and their affiliates, represent at least a majority of the Shares on a
fully diluted basis, and from time to time thereafter as Shares are acquired by
the Purchaser, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
is equal to the product of the total number of directors on such Board of
Directors (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the number of Shares beneficially
owned by the Purchaser or any affiliate of the Purchaser bears to the total
number of Shares then outstanding. In furtherance thereof, the Company promptly
shall increase the size of the Board of Directors or use its best efforts to
secure the resignations of such number of its incumbent directors as is
necessary to enable Parent's designees to be elected to the Board of Directors
in accordance with the terms of this Section 1.3, and the Board of Directors
shall take all actions available to the Company to cause Parent's designees to
be so elected as provided herein. Parent and the Purchaser agree not to
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seek any greater representation on the Board of Directors of the Company prior
to the Effective Time (as defined in Section 1.5 hereof).
(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 14f-1 promulgated thereunder. The Company promptly shall take all
actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under Section 1.3(a)
hereof, and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if the Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required to be disclosed under Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under Section 1.3(a) hereof. Parent or the
Purchaser shall timely supply the Company, and be solely responsible for, the
information with respect to either of them and their nominees, officers,
directors and affiliates required to be disclosed by such Section 14(f) and Rule
14f-1.
(c) In the event that Parent's designees are elected to the Board of
Directors, subject to the other terms of this Agreement, until the Effective
Time, the Board of Directors shall have at least two (2) directors who are
directors on the date hereof and who are neither officers of the Company nor a
designee, stockholder, affiliate or associate (within the meaning of the federal
securities laws) of Parent (one or more of such directors, the "Independent
Directors"); PROVIDED, HOWEVER, that if the number of Independent Directors
shall be reduced below two (2) because of death, disability or resignation, the
remaining Independent Director shall be entitled to designate a person to fill
such vacancy, which person shall be deemed an Independent Director for purposes
of this Agreement. Notwithstanding anything in this Agreement to the contrary,
in the event that Parent's designees are elected to the Company's Board of
Directors after the acceptance for payment of Shares pursuant to the Offer and
prior to the Effective Time (as hereinafter defined), the affirmative vote of a
majority of the Independent Directors shall be required to (i) amend or
terminate this Agreement on behalf of the Company, (ii) amend the Amended and
Restated Certificate of Incorporation or By-Laws of the Company, (iii) waive any
condition to the obligations of the Company hereunder or exercise or waive any
of the Company's rights, benefits or remedies hereunder or grant any consents or
authorize or enter into any agreements of the Company hereunder, (iv) extend the
time for performance of the Purchaser's or Parent's obligations or other acts
hereunder, (v) approve any other action by the Company which would adversely
affect the rights of the stockholders of the Company hereunder or contemplated
hereby, or (vi) take any other action by the Company under or in connection with
this Agreement required to be taken by the Board of Directors (it being
understood that if no Independent Directors are members of the Board of
Directors, no such action will be taken).
SECTION 1.4 THE MERGER. Upon the terms and subject to the conditions of
this Agreement and in accordance with the Delaware Law, at the Effective Time,
the Purchaser shall be merged with and into the Company (the "Merger"), the
separate corporate existence of the Purchaser shall cease, and the Company shall
continue as the surviving corporation. The
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Company as the surviving corporation after the Merger is sometimes referred to
hereinafter as the "Surviving Corporation."
SECTION 1.5 EFFECTIVE TIME. Subject to the provisions of this
Agreement, the parties hereto shall cause a certificate of merger to be executed
and filed on the Closing Date (as defined in Section 1.6 hereof) (or on such
other date as Parent and the Company may agree) with the Secretary of State of
Delaware in such form as required by, and executed in accordance with, the
relevant provisions of the Delaware Law. The Merger shall become effective on
the date on which the certificate of merger is duly filed with the Secretary of
State of the State of Delaware or such time as is agreed upon by the parties and
specified in the certificate of merger, and such time is hereinafter referred to
as the "Effective Time."
SECTION 1.6 CLOSING. Unless this Agreement shall have been terminated
pursuant to Section 8.1 hereof and subject to the satisfaction or waiver of all
conditions set forth in Article VII hereof, the closing of the Merger (the
"Closing") shall take place at 10:00 a.m. on a date (the "Closing Date") to be
specified by the parties hereto, which shall be no later than the second
business day after satisfaction or waiver of all of the conditions set forth in
Article VII hereof provided that all such conditions continue to be so satisfied
or waived on such second business day, and if not so satisfied or waived, the
Closing shall be automatically extended from time to time until the first
subsequent business day on which all such conditions are again so satisfied or
waived, subject, however, to Article VIII hereof, at the offices of Reid &
Priest LLP, 40 West 57th Street, New York, New York, unless another date or
place is agreed to in writing by the parties hereto.
SECTION 1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of the Purchaser immediately before the Effective Time shall be the
initial directors of the Surviving Corporation, and the officers of the Company
immediately before the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and the By-laws of the
Surviving Corporation. If, at the Effective Time, a vacancy shall exist on the
board of directors or in any office of the Surviving Corporation, such vacancy
may thereafter be filled in the manner provided by the Delaware Law.
SECTION 1.8 EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of the Company and the Purchaser shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company and the Purchaser shall become
the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.9 SUBSEQUENT ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments,
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assurances or any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in the Surviving Corporation its
right, title or interest in, to or under any of the rights, properties or assets
of either of the Company or the Purchaser acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of either the Company or the Purchaser, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of each of such corporations or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
SECTION 1.10 CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) Unless otherwise determined by the Company before the Effective Time,
at the Effective Time the Certificate of Incorporation of the Company, as in
effect immediately before the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by the Delaware Law and such Certificate of Incorporation.
(b) The By-Laws of the Company, as in effect immediately before the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by the Delaware Law, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.11 STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") as promptly as practicable
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon the approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and use its best
efforts, subject to the terms of this Agreement, to obtain and furnish the
information required to be included by the SEC in the Proxy Statement (as
hereinafter defined) and, after consultation with Parent, to respond
promptly to any comments made by the SEC with respect to the preliminary
proxy or information statement and cause a definitive proxy or information
statement, including any amendment or supplement thereto (the "Proxy
Statement"), to be mailed to its stockholders, provided that no amendment
or supplement to the Proxy Statement will be made by the Company without
consultation with Parent
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and its outside legal counsel, and to obtain the necessary approvals of the
Merger and this Agreement by its stockholders; and
(iii) subject to the terms of this Agreement and fiduciary
obligations under applicable laws as advised by outside legal counsel,
include in the Proxy Statement the recommendation of the Board of Directors
that stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then owned
by it, the Purchaser or any of its other subsidiaries and affiliates in favor of
the approval of the Merger and the approval and adoption of this Agreement.
SECTION 1.12 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
Section 1.11 hereof, in the event that Parent, the Purchaser and any other
subsidiaries of Parent shall acquire in the aggregate at least 90% of the then
outstanding Shares, pursuant to the Offer or otherwise, the parties hereto shall
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the Delaware Law.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of the Parent, the Purchaser,
the Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately before the Effective
Time (other than any Shares to be canceled pursuant to Section 2.1(b) hereof and
any Dissenting Shares (as defined in Section 2.2(a) hereof, if any)), without
any action on the part of the holder thereof, shall be converted into and
represent the right to receive the Offer Price in cash payable to the holder
thereof, without interest (the "Merger Consideration"), payable to the holder
thereof upon surrender of the certificate representing such Share or an
Affidavit of Loss in the manner provided in Section 2.3 hereof. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate or provision of an Affidavit of
Loss in accordance with Section 2.3 hereof, without interest.
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(b) Each Share held in the treasury of the Company and each Share owned by
Parent, the Purchaser or any direct or indirect wholly-owned subsidiary of
Parent or the Purchaser immediately before the Effective Time shall be canceled
and extinguished and no payment or other consideration shall be made with
respect thereto.
(c) Each share of common stock, par value $.01 per share, of the Purchaser
issued and outstanding immediately before the Effective Time shall thereafter
represent one validly issued, fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
SECTION 2.2 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary, any
Shares held by a holder who has demanded and perfected his demand for appraisal
of his Shares in accordance with the Delaware Law and as of the Effective Time
has neither effectively withdrawn nor lost his right to such appraisal
("Dissenting Shares") shall not be converted into or represent a right to
receive cash pursuant to Section 2.1 hereof, but the holder thereof shall be
entitled to only such rights as are granted by the Delaware Law.
(b) Notwithstanding the provisions of Section 2.2(a) hereof, if any holder
of Shares who demands appraisal of his Shares under the Delaware Law shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to appraisal, then as of the Effective Time or the occurrence of such event,
whichever occurs later, such holder's Shares shall automatically be converted
into and represent only the right to receive the Merger Consideration as
provided in Section 2.1(a) hereof, without interest thereon, upon surrender of
the certificate or certificates representing such Shares or provision of an
Affidavit of Loss pursuant to Section 2.3 hereof.
(c) The Company shall give the Purchaser (i) prompt notice of any written
demands for appraisal, withdrawals of such demands, and any other instruments
served pursuant to Section 262 of the Delaware Law and received by the Company,
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the Delaware Law. The Company shall not
voluntarily make any payment with respect to any such demands for appraisal and
shall not, except with the prior written consent of the Purchaser, settle or
offer to settle any such demands.
SECTION 2.3 SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Before the Effective Time, the Purchaser shall designate a bank or
trust company reasonably acceptable to the Company to act as paying agent for
the Company and agent for holders of Shares in connection with the Merger (the
"Exchange Agent") to receive and pay the funds necessary to make the payments
contemplated by Section 2.l(a) hereof. At the Effective Time, the Purchaser
shall deposit, or cause to be deposited, in trust with the Exchange Agent for
the benefit of holders of Shares the aggregate cash consideration to which such
holders shall
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be entitled at the Effective Time pursuant to Section 2.1(a) hereof. The funds
held by the Exchange Agent pursuant to this Section 2.3 shall not be used for
any purpose other than the payment of the Merger Consideration pursuant hereto.
(b) Each holder of a certificate or certificates representing any Shares
canceled upon the Merger, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") whose Shares were converted
pursuant to Section 2.1(a) hereof may thereafter surrender such Certificate or
Certificates to the Exchange Agent, as agent for such holder, to effect the
surrender of such Certificate or Certificates on such holder's behalf for a
period ending six (6) months after the Effective Time. The Purchaser agrees
that promptly after the Effective Time it shall cause the distribution to
holders of record of Shares as of the Effective Time of materials to facilitate
such surrender pursuant to Section 2.3(c) hereof. Upon the surrender of
Certificates, the Purchaser shall cause the Exchange Agent to pay the holder of
such Certificates in exchange therefor cash in an amount equal to the Merger
Consideration multiplied by the number of Shares represented by such
Certificates. Until so surrendered, each Certificate (other than Certificates
representing Dissenting Shares and Certificates representing Shares held by the
Purchaser or in the treasury of the Company) shall represent solely the right to
receive the aggregate Merger Consideration relating thereto.
(c) Promptly after the Effective Time, the Exchange Agent shall send to
each record holder, as of the Effective Time, of a Certificate or Certificates
theretofore evidencing Shares, other than Certificates formerly representing
Shares to be canceled pursuant to Section 2.1 (b) hereof, a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions advising such holder of the
procedure for surrendering to the Exchange Agent such Certificates for exchange
into the Merger Consideration. Upon the surrender of a Certificate to the
Exchange Agent together with and in accordance with such transmittal form duly
executed and any other documents reasonably required by such instructions, the
holder thereof shall be entitled to receive promptly in exchange therefor the
Merger Consideration payable in respect of each Share formerly represented
thereby and such Certificate shall forthwith be canceled. Upon such surrender,
the Exchange Agent promptly will pay the Merger Consideration.
(d) If payment of the Merger Consideration is to be made to an individual,
general partnership, limited partnership, corporation, limited liability company
or any other legal entity (each a "Person"), other than the Person in whose name
a surrendered Certificate or instrument is registered, it shall be a condition
to such payment that the Certificate or instrument so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that the
Person requesting such payment in a name other than that of the registered
holder of the Certificate or instrument surrendered shall pay to the Exchange
Agent any transfer or other taxes payable by reason of the foregoing or
establish to the satisfaction of the Purchaser or the Exchange Agent that such
taxes either have been paid or are not applicable.
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(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed ("Affidavit of Loss") and the
delivery of an indemnity bond in form and substance and with surety reasonably
satisfactory to the Surviving Corporation, the Surviving Corporation will pay or
cause to be paid in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
with this Article II.
(f) At the Effective Time, the stock transfer books of the Company shall
be closed and there shall not be any further registration of transfers of Shares
or any shares of capital stock thereafter on the records of the Company. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for cash as provided in this
Article II. No interest shall accrue or be paid on any cash payable upon the
surrender of a Certificate or Certificates which immediately before the
Effective Time represented outstanding Shares.
(g) Promptly following the date which is six (6) months after the
Effective Time, the Surviving Corporation shall be entitled to require the
Exchange Agent to deliver to it any cash (including any interest received with
respect thereto), Certificates and other documents in its possession relating to
the transactions contemplated hereby, which had been made available to the
Exchange Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to Parent and to the Surviving
Corporation (subject to abandoned property, escheat or similar laws) only as
general creditors thereof with respect to the Merger Consideration payable upon
due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) The Merger Consideration paid in the Merger shall be net to the holder
of Shares in cash, subject to reduction only for any applicable federal back-up
withholding or, as set forth in Section 2.3(d), stock transfer taxes payable by
such holder.
SECTION 2.4 STOCK PLANS. At or immediately prior to the Effective Time,
each then outstanding option to purchase Shares (the "Options") granted under
the Company's 1993 Stock Option Plan, the 1996 Stock Option Plan and any other
stock-based incentive plan or arrangement of the Company (collectively, the
"Stock Plans") whether or not then exercisable or vested, shall be canceled and
the Company shall purchase options to purchase 100,000 Shares issued in
connection with the acquisition by the Company of Trailmaster Products, Inc.
(the "Trailmaster Options") upon delivery by the holders thereof of certificates
or other instruments, documents or agreements representing or evidencing the
Trailmaster Options or reasonable representations or indemnities of such holders
reasonably acceptable to the Company with respect thereto in connection with
such purchase. In consideration of such cancellation and purchase, the holders
of such Options and Trailmaster Options shall receive for each Share subject to
such Option or Trailmaster Option an amount (subject to any applicable
withholding
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tax) in cash equal to the product of (A) the excess, if any, of the Offer Price
over the per Share exercise price of such Option or Trailmaster Option and (B)
the number of Shares subject to such Option or Trailmaster Option.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as set
forth in this Article III, except to the extent provided in that certain letter
delivered by the Company to Parent and the Purchaser (the "Company Letter") and
subject to Section 9.6 herein:
SECTION 3.1 ORGANIZATION AND QUALIFICATION.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has all
requisite corporate power and authority to carry on its business as it is now
being conducted and to own, lease and operate its assets.
(b) The Company is duly qualified or licensed to do business as a foreign
corporation in good standing in every jurisdiction where the character of its
properties, owned or leased, or the nature of its activities make such
qualification necessary, except where the failure to be so qualified would not
have, individually or in the aggregate, a "Material Adverse Effect." As used in
this Agreement, "Material Adverse Effect" means any material adverse change in
or effect on the business, operations, properties (including intangible
properties), financial condition, results of operations or assets and
liabilities of the Company and its Subsidiaries taken as a whole.
(c) The Company has heretofore delivered to Parent complete and correct
copies of the Company's Certificate of Incorporation, as amended, and By-Laws,
as amended, each as in effect on the date hereof.
SECTION 3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 20,000,000
shares of common stock, par value $.01 per share (the "Common Stock"), and
2,500,000 shares of preferred stock ("Preferred Stock"). As of the date hereof,
(i) 4,800,000 Shares are issued and outstanding, (ii) no Shares are issued and
held in the treasury of the Company, (iii) a total of 450,000 Shares are
reserved under the Company's Stock Plans in respect of outstanding and future
awards, of which (A) 139,000 Shares are reserved for issuance pursuant to
outstanding Options and 61,000 Shares are reserved for issuance pursuant to
future awards under the Company's 1996 Stock Option Plan, and (B) 234,000 Shares
are reserved for issuance pursuant
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to outstanding Options and 16,000 Shares are reserved for issuance pursuant to
future awards under the Company's 1993 Stock Option Plan, and (iv) a total of
100,000 Shares are reserved for issuance under the Trailmaster Options. Section
3.2(a) of the Company Letter discloses the number of Shares subject to each
outstanding Option and the exercise price thereof. All the outstanding shares
of the Company's capital stock are, and all Shares which may be issued pursuant
to the exercise of outstanding Options will be, when issued in accordance with
the terms thereof, duly authorized, validly issued, fully paid and
non-assessable. Except as disclosed in this Section 3.2(a) or as set forth in
Section 3.2(a) of the Company Letter, (i) there are no shares of capital stock
of the Company authorized, issued or outstanding, (ii) there are no existing
options, warrants, calls, preemptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of the Company obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or other equity interest in the Company or
securities convertible or exchangeable for such shares or equity interests or
obligating the Company or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment, and (iii) except as disclosed in Section 3.2(a) of
the Company Letter, there are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any Shares, or the capital stock of the Company or of any Subsidiary of the
Company. Except as disclosed in Section 3.2(a) of the Company Letter, there are
no voting trusts or other agreements to which the Company or any of its
Subsidiaries is a party with respect to the voting of the capital stock of the
Company.
(b) As of September 30, 1997, other than as set forth in Section 3.2(b) of
the Company Letter, there is no outstanding Indebtedness (as hereinafter
defined) of the Company or any of its Subsidiaries. The Company heretofore has
made available to Parent, true and complete copies of all material agreements,
instruments and documents (including exhibits and schedules thereto) with
respect to such Indebtedness. For purposes of this Agreement, "Indebtedness"
shall mean (i) all indebtedness for borrowed money, (ii) any other indebtedness
which is evidenced by a note, bond or debenture, (iii) all obligations under
capitalized leases under United States generally accepted accounting principles
("GAAP") consistently applied with the Company's financial statements, and (iv)
all guarantees of the foregoing obligations, except as between the Company and
each of its Subsidiaries.
SECTION 3.3 SUBSIDIARIES. Each Subsidiary (as hereinafter defined) of
the Company is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has the corporate power to carry
on its business as it is now being conducted. Each Subsidiary is duly qualified
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not have, individually or in the aggregate, a Material Adverse Effect.
All of the outstanding shares of capital stock of each Subsidiary are validly
issued, fully paid and nonassessable and owned directly or indirectly by the
Company free and clear of all liens, claims or encumbrances and were not
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issued in violation of any preemptive right. There are no existing options,
calls or commitments of any character relating to the issued or unissued capital
stock of any Subsidiary, or any securities convertible into, or exchangeable or
exercisable for, or otherwise evidencing the right to acquire, any shares of
capital stock of any Subsidiary. No Subsidiary of the Company has been
organized under the laws of any jurisdiction outside of the United States of
America. For purposes of this Agreement, the term "Subsidiary" shall mean any
corporation or other entity a majority of whose outstanding voting stock or
ownership interests ordinarily entitled to vote for the election of a majority
of the Board of Directors or other governing body is owned by the Company or one
or more other Subsidiaries.
SECTION 3.4 AUTHORIZATION.
(a) The Company has all requisite corporate power to execute and deliver
this Agreement and all other documents and instruments to be executed and
delivered by it in connection herewith and, subject to the adoption of this
Agreement by the stockholders of the Company, if required, to consummate the
transactions contemplated hereby. The execution, delivery and performance by
the Company of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly and validly authorized by its Board of
Directors and no other corporate action on the part of the Company is necessary
to authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby, except that the
consummation of the Merger may require approval of the Company's stockholders as
contemplated by Section 1.10 hereof. This Agreement constitutes a valid and
legally binding agreement of the Company enforceable in accordance with its
terms, except to the extent that enforcement thereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws, now or hereafter in effect, relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(b) The Company opted out of Section 203 of the Delaware Law effective
October 28, 1993. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is the only vote of the holders of any class
or series of the Company's capital stock which is necessary to approve this
Agreement and the other transactions contemplated hereby, including the Merger,
subject to the applicability of Section 253 of the Delaware Law and Section 1.11
hereof.
SECTION 3.5 SEC DOCUMENTS.
(a) The Company has filed with the SEC, and heretofore has made available
to Parent, true and complete copies of all reports, schedules, forms, statements
and other documents required to be so filed by it from January 1, 1995 through
the date hereof under the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act"), including (i) the annual reports on Form 10-K for all
fiscal years ended during such period, (ii) the quarterly reports on Form 10-Q
required for all fiscal quarters during such period, and (iii) its proxy or
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information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held during such period (the "SEC
Documents").
(b) As of its respective date, or if amended, as of the date of the last
such amendment, each SEC Document, including, without limitation, any financial
statements or schedules included therein (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (b) except as
disclosed in Section 3.5(b) of the Company Letter, complied in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations promulgated by
the SEC thereunder. None of the Company's Subsidiaries has any class of
securities registered under the Exchange Act.
SECTION 3.6 NO CONFLICTS. Except as disclosed in Section 3.6 of the
Company Letter and for filings, permits, authorizations, consents and approvals
as may be required under, and other applicable requirements of, the Exchange
Act, the execution, delivery or performance of this Agreement by the Company,
the consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation, the By-Laws or similar organizational documents of the Company or
any of its Subsidiaries, (ii) require on the part of the Company any filing
with, or permit, authorization, consent or approval of, any court,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity"), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to (x) any right of termination, amendment, cancellation
or acceleration or to receive any other or additional payments or (y) loss of
any benefit) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets is bound (the
"Company Agreements"), or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, except in the case of clauses (ii), (iii)
and (iv) for any matter otherwise covered by such clauses which would not have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 3.7 FINANCIAL STATEMENTS. The consolidated financial statements
included in the SEC Documents (the "Financial Statements") fairly present, in
all material respects, the consolidated financial position and the consolidated
results of operations and cash flows (and changes in financial position, if any)
of the Company and its consolidated Subsidiaries as of the times and for the
periods referred to therein, subject, in the case of unaudited, interim
financial statements, to the lack of footnotes and normal year-end adjustments
and to any other adjustments or exceptions described therein, all in accordance
with GAAP applied on a consistent basis throughout the periods involved (except
as may be indicated therein or in the notes thereto).
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SECTION 3.8 NO UNDISCLOSED LIABILITIES. Since September 30, 1997, there
have not been incurred any liabilities by the Company or its Subsidiaries of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, which would be required by GAAP, applied on a basis consistent
with the Financial Statements, to be disclosed in the consolidated balance sheet
of the Company and its Subsidiaries and the notes thereto, other than: (i)
liabilities disclosed in the Company's SEC Documents or in Section 3.8 of the
Company Letter; (ii) liabilities incurred in the ordinary course of business
consistent with past practice, which would not have, individually or in the
aggregate, a Material Adverse Effect; (iii) liabilities under or in connection
with this Agreement; (iv) liabilities or obligations that otherwise are
disclosed pursuant to any other representation or warranty herein or which are
not required to be disclosed pursuant to any other representation or warranty
herein; or (v) any other liability which would not have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except to the extent
disclosed in Section 3.9 of the Company Letter or in the SEC Documents filed
prior to the date hereof, or as contemplated by this Agreement, since September
30, 1997 the Company and its Subsidiaries have not suffered a Material Adverse
Effect or conducted their businesses in any material respect other than in the
ordinary course consistent with past practices, except for such changes which
have not had, and are not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect. From September 30, 1997 through the date
of this Agreement, there has not occurred any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the equity interests of the Company.
SECTION 3.10 TAX MATTERS.
(a) Each of the Company and its Subsidiaries has properly completed and
timely filed all Tax Returns (as defined below) that are required to be filed by
or with respect to the Company and its consolidated Subsidiaries, except in each
case where the failure to properly complete or file any such Tax Return would
not have, individually or in the aggregate, a Material Adverse Effect. The
Company has afforded Parent the opportunity to examine correct and complete
copies of all material federal and state income Tax Returns, examination
reports, ruling requests and statements of deficiencies assessed against or
agreed to by the Company or any of its consolidated Subsidiaries.
(b) Each of the Company and its Subsidiaries have timely paid all Taxes
(as defined below) reflected on such Tax Returns as due and payable (except for
Taxes that are being contested in good faith by appropriate proceedings) and
except in each case where the failure to so pay such amounts would not have,
individually or in the aggregate, a Material Adverse Effect or for which
reserves, which are adequate under GAAP, have been established.
(c) Each of the Company and its Subsidiaries has complied with all
applicable laws, rules and regulations relating to the withholding of Taxes and
has timely withheld and paid to
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the proper governmental authorities all amounts required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor or stockholder, except where any such failure would not
have, individually or in the aggregate, a Material Adverse Effect.
(d) Except as disclosed in Section 3.10(d) of the Company Letter, to the
knowledge of the Company, (i) no audits or other administrative or court
proceedings are presently pending with regard to any Taxes for which the Company
or any of its Subsidiaries could be liable, (ii) no dispute or claim concerning
any Taxes for which the Company or any of its Subsidiaries could be liable has
been claimed or raised by any Tax Authority in writing, and (iii) no claim has
been made in writing by any authority in a jurisdiction where the Company and
its Subsidiaries do not file Tax Returns that the Company or any such Subsidiary
is, or may be, subject to taxation by that jurisdiction, in each case of clauses
(i) through (iii), which is likely to be determined adversely to the Company and
its Subsidiaries and which, if so adversely determined, individually or in the
aggregate with other such matters so adversely determined, would have,
individually or in the aggregate, a Material Adverse Effect.
(e) No claim has been asserted in writing that the Company or any of its
Subsidiaries is liable for any Taxes (i) of the Company or its Subsidiaries or
(ii) with respect to any group of entities other than the Company and its
Subsidiaries (by law, contract or otherwise), in each case, which claim is
likely to be determined adversely to the Company and its Subsidiaries and which,
if so adversely determined, after giving effect to rights and remedies of the
Company and its Subsidiaries under any agreement in force pursuant to which such
liability is the obligation of any third party or pursuant to which any third
party is obligated to provide indemnity with respect thereto, would have,
individually or in the aggregate, a Material Adverse Effect.
(f) For purposes of this Agreement:
(i) "Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") means (x) any net income, gross income, gross receipts,
sales, use, ad valorem, transfer, transfer gains, franchise, profits,
license, withholding, payroll, employment, social security (or
similar), unemployment, disability, excise, severance, stamp, rent,
recording, registration, occupation, premium, real or personal
property, intangibles, environmental (including taxes under Section
59A of the Code (as hereinafter defined)) or windfall profits tax,
alternative or add-on minimum tax, capital stock, customs duty or
other tax, fee, duty, levy, impost, assessment or charge of any kind
whatsoever (including but not limited to taxes assessed to real
property and water and sewer rents relating thereto), together with
any interest and any fine, penalty, addition to tax or additional
amount or deductions imposed by any governmental body (domestic or
foreign) (a "Tax Authority") responsible for the imposition of any
such tax, whether disputed or not, including any liability arising
under any tax sharing agreement, with respect to the Company or any of
its Subsidiaries; (y) any liability for the
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payment of any amount of the type described in the immediately
preceding clause (x) as a result of the Company or any of its
Subsidiaries being a member of an affiliated or combined group with
any other corporation at any time on or prior to the Closing Date; and
(z) any liability of the Company or any of its Subsidiaries for the
payment of any amounts of the type described in the immediately
preceding clause (x) as a result of a contractual obligation to
indemnify any other person.
(ii) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
SECTION 3.11 LITIGATION. Except as set forth in the SEC Documents or as
disclosed in Section 3.11 of the Company Letter, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened in writing
against the Company or any of its Subsidiaries, including but not limited to any
suit or action involving a products liability claim, at law or in equity or
before any United States federal or state court of competent jurisdiction (a
"U.S. Court") which is likely to be determined adversely to the Company and its
Subsidiaries and which, if so adversely determined, individually or in the
aggregate with other such suits, actions or proceedings so adversely determined,
would have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.12 ERISA COMPLIANCE.
(a) The Company has delivered to Parent correct and complete copies of all
"employee benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and all other material bonus,
deferred compensation, pension, profit-sharing, retirement, medical, life,
disability income, severance, stock purchase, stock option, incentive or other
employee benefit plans (other than any employment or personnel policy, practice
or procedure) currently maintained, or contributed to, or required to be
maintained or contributed to, by the Company or any of its Subsidiaries or any
other Person that, together with the Company, is treated as a single employer
under Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended (the "Code"), (each an "ERISA Affiliate") for the benefit of any current
or former employees, officers or directors of the Company or any ERISA Affiliate
(individually, a "Benefit Plan").
(b) Each Benefit Plan has been established and administered in accordance
with its terms except where the failure to do so would not have, individually or
in the aggregate, a Material Adverse Effect. The Company, each ERISA Affiliate
and each Benefit Plan are in compliance in all material respects with applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations,
except for any noncompliance that would not have, individually or in the
aggregate, a Material Adverse Effect.
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(c) (i) All Benefit Plans intended to be qualified under Section 401(a) of
the Code have been the subject of determination letters from the Internal
Revenue Service to the effect that such Benefit Plans are qualified and exempt
from federal income Taxes under Section 401(a) and 501(a), respectively, of the
Code, and (ii) to the best knowledge of the Company nothing has occurred,
whether by action or failure to act, that could reasonably be expected to cause
the loss of such qualification, except where such loss would not have,
individually or in the aggregate, a Material Adverse Effect. Except as
disclosed in Section 3.12(c) of the Company Letter, no such Benefit Plan
intended to be qualified under Section 401(a) of the Code has been amended since
the date of its most recent determination letter or application therefor in any
respect that would have, individually or in the aggregate, a Material Adverse
Effect. All reports, returns and similar documents with respect to Benefit
Plans required to be filed with any governmental agency or distributed to any
Benefit Plan participant have been fully and timely filed and distributed except
for any failure to file that would not have, individually or in the aggregate, a
Material Adverse Effect.
(d) To the best knowledge of the Company, no event has occurred and no
condition exists that would subject the Company, either directly or by reason of
its affiliation with an ERISA Affiliate, to any Tax, fine, lien, penalty or
other liability imposed by ERISA, the Code or other applicable laws, rules and
regulations in connection with a Benefit Plan that would have, individually or
in the aggregate, a Material Adverse Effect.
(e) Neither the Company nor any ERISA Affiliate maintains, contributes to,
or at any time maintained, contributed to or was obligated to contribute to, any
Benefit Plan which is subject to Title IV of ERISA or Section 412 of the Code,
or which is a multiemployer plan (within the meaning of Section 3(37) or Section
4001(a)(3) of ERISA), except where such maintenance of or contribution to any
such Benefit Plan would not have, individually or in the aggregate, a Material
Adverse Effect.
(f) None of the Company, any ERISA Affiliate, any employee of the Company
or of any ERISA Affiliate, or any other person or persons, has engaged in a
non-exempt "prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) or in any other breach of fiduciary
responsibility that could subject the Company or any ERISA Affiliate, or any
employee of the Company or of any ERISA Affiliate, to a direct or indirect Tax,
penalty or liability under ERISA, the Code or other applicable law which would
have, individually or in the aggregate, a Material Adverse Effect. Neither any
of the Benefit Plans nor any of their related trusts or other funding
arrangements has been terminated which would have, individually or in the
aggregate, a Material Adverse Effect.
(g) With respect to any Benefit Plan that is an employee welfare benefit
plan, no such Benefit Plan is funded (or has during the past six (6) years been
funded) through a voluntary employees' beneficiary association (within the
meaning of Section 501(c)(9) of the Code) or through a "welfare benefit fund,"
as such term is defined in Section 419(e) of the Code, except where such funding
would not have, individually or in the aggregate, a Material Adverse Effect.
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(h) To the knowledge of executive officers of the Company, no
representations or communications in writing with respect to participation,
eligibility for benefits, vesting, benefit accrual coverage or other material
terms of any of the Benefit Plans, which representations or communications would
create additional legal liability of the Company and would have, individually or
in the aggregate, a Material Adverse Effect, have been made prior to the date
hereof to any employee, beneficiary or other Person other than those which are
in accordance with the terms and provisions of each such Benefit Plan as in
effect immediately prior to the date hereof.
SECTION 3.13 ENVIRONMENTAL MATTERS. The Company and its Subsidiaries
are, and at all times in the past have been, in compliance with all applicable
legal requirements, laws, rules, orders, regulations, licenses and permits
related to environmental, natural resource, health or safety matters, including
but not limited to those promulgated, adopted or enforced by the United States
Environmental Protections Agency and by similar agencies in states in which the
Company or its Subsidiaries conduct their business, except where non-compliance
would not have, individually or in the aggregate, a Material Adverse Effect. To
the knowledge of the Company, neither the Company nor any of its Subsidiaries is
a party to any suit, action or proceeding now pending before any U.S. Court or
United States federal, state or local administrative body or threatened in
writing by any Person which is likely to be determined adversely to the Company
and its Subsidiaries and which, if so adversely determined, individually or in
the aggregate with other such suits, actions or proceedings so adversely
determined, would have, individually or in the aggregate, a Material Adverse
Effect, (i) for alleged noncompliance with any environmental law, rule,
regulation, license or permit or (ii) relating to the discharge or release into
the environment of any hazardous substance, pollutant, or waste at or on a site
presently or formerly owned, leased, operated or used for off-site treatment or
disposal by the Company or any Subsidiary.
SECTION 3.14 REAL PROPERTY AND LEASED PROPERTY.
(a) Section 3.14(a) of the Company Letter sets forth a complete list of
all real property owned by the Company or any of its Subsidiaries (the "Real
Property"). Except as set forth in Section 3.14(a) of the Company Letter, the
Company or one of its Subsidiaries has good and valid title to the Real
Property, free and clear of all liens, claims, restrictions and encumbrances
("Encumbrances"), other than Permitted Encumbrances (as hereinafter defined),
except in all cases where the failure to have such title would not have a
Material Adverse Effect. As used in this Agreement, the term "Permitted
Encumbrances" means (i) those Encumbrances set forth in Section 3.14(a) of the
Company Letter, (ii) Encumbrances, including, without limitation, by easements,
granted in favor of any governmental entity or utility company for the customary
provision of utilities and services to the Real Property or any improvements
thereon, (iii) Encumbrances for water and sewage charges and current taxes not
yet due and payable or being contested in good faith, (iv) mechanics',
carriers', workers', repairers', materialmen's, warehousemen's and other similar
Encumbrances arising or incurred in the ordinary course of business,
(v) Encumbrances arising or resulting from any action taken by Parent or the
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Purchaser, or (vi) such other Encumbrances as would not have, individually or in
the aggregate, a Material Adverse Effect.
(b) Set forth in Section 3.14(b) of the Company Letter is a correct and
complete list of all leases under which the Company or any Subsidiary is a
lessee ("Leased Property"). The Company and each of its Subsidiaries enjoys
peaceful and undisturbed possession under all such leases, all of such leases
are valid and none of them is in default under any such lease, except for any
matters otherwise covered by this sentence which do not have, individually or in
the aggregate, a Material Adverse Effect.
(c) The Company and its Subsidiaries have obtained all appropriate
licenses, permits, easements and rights of way required to use and operate the
Real Property in the manner in which the Real Property and Leased Property
currently is being used and operated, except for such licenses, permits,
easements or rights of way the failure of which to have obtained would not have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 3.15 CHANGE OF CONTROL PAYMENTS; TAKEOVER RESTRICTIONS.
(a) Except as disclosed in Section 3.15(a) of the Company Letter or as
required by law, neither the Company nor its Subsidiaries has any plans or
agreements to which they are parties, or by which they or their properties are
bound, pursuant to which payments, including with respect to the acceleration of
benefits, will be required upon (i) or as a result of a "change of control" of
the Company or (ii) the termination or closing of any of the Company's
operations or facilities.
(b) To the best knowledge of the Company, no state takeover statute or
similar statute or regulation of any state or other jurisdiction applies to this
Agreement or any of the transactions contemplated hereby, including the Merger.
No provision of the Certificate of Incorporation or By-laws of the Company or
any Subsidiary would, directly or indirectly, restrict or impair the ability of
the Purchaser or its affiliates to vote, or otherwise to exercise the rights of
a stockholder with respect to, securities of the Company or any Subsidiary that
may be acquired or controlled by the Purchaser or its affiliates pursuant to
this Agreement or permit any stockholder to acquire securities of the Company on
a basis not available to the Purchaser in the event that the Purchaser were to
acquire securities of the Company.
SECTION 3.16 INTELLECTUAL PROPERTY. The Company and each Subsidiary has
exclusive ownership of and title to each issued patent, pending patent
application, registered trademark, registered trade name, registered service
mark and registered copyright owned or used in and material to the business of
the Company and its Subsidiaries taken as a whole (collectively, the "Registered
Intellectual Property"), and to the knowledge of the Company, the Company and
each Subsidiary has exclusive ownership of and rights to use each material
patent application, unregistered trademark, trademark application, unregistered
trade name, unregistered service mark, unregistered copyright and other trade
secret or other proprietary intellectual
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property (the "Other Intellectual Property" and collectively with the Registered
Intellectual Property, the "Intellectual Property") owned by or used in and
material to the business of the Company and its Subsidiaries taken as a whole,
and, to the Company's knowledge, the current use by the Company and each
Subsidiary of such Intellectual Property does not infringe upon the rights of
any other Person, except for any matters otherwise covered by this sentence
which do not, individually or in the aggregate, have a Material Adverse Effect.
To the knowledge of the Company, no other Person is infringing upon the rights
of the Company or any Subsidiary in any such Intellectual Property, except for
any such infringements, that would not be reasonably expected, individually or
in the aggregate, to have a Material Adverse Effect.
SECTION 3.17 CONTRACTS. Except as disclosed in Section 3.17 of the
Company Letter or filed as exhibits to the SEC Documents, there are not any
Company Agreements that are material to the business, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole. To
the knowledge of the Company, (x) each of the Company Agreements is valid,
binding and enforceable and in full force and effect, except where failure to be
valid, binding and enforceable and in full force and effect would not have,
individually or in the aggregate, a Material Adverse Effect, and (y) there are
no defaults (nor does there exist any condition which upon the passage of time
or the giving of notice would cause such a default) under the Company
Agreements, except those defaults that would not have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 3.18 COMPLIANCE WITH LAWS. Except for laws, rules and
regulations relating to tax matters, ERISA compliance, environmental matters and
intellectual property (which are exclusively provided for in Sections 3.10,
3.12, 3.13 and 3.16 hereof), the operations of the business of the Company and
its Subsidiaries as currently conducted are not in violation of, nor is the
Company or any of its Subsidiaries in default under, or violation of, any
federal, state, local or foreign law, statute or regulation or any order,
judgment or decree of any federal, state, local or foreign governmental
authority, regulatory or administrative agency, commission, court or tribunal to
which the Company or any of its Subsidiaries are bound, except for such
violations or defaults as have not had and could not reasonably be expected to
have a Material Adverse Effect. The Company and its Subsidiaries have been duly
granted all authorizations necessary for the conduct of its business as
currently conducted, except those, the failure of which to obtain would not
have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.19 INSURANCE COVERAGE. The Company and each of its
Subsidiaries have policies of insurance and bonds of the type reasonably
appropriate for the conduct of the business or ownership and operation of the
assets of the Company and its Subsidiaries. There is no claim pending under any
of such policies or bonds as to which coverage has been denied or disputed in
writing by the underwriters of such policies or bonds and which denial or
dispute is likely to be adversely determined to the Company and its
Subsidiaries, and which if so adversely determined, in whole or in part, would
have, individually or in the aggregate, a Material Adverse Effect. All premiums
due and payable under all such policies and bonds have been paid and the Company
and its Subsidiaries are otherwise in compliance with the terms of
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such policies and bonds, except where failure to pay such premiums or to comply
with such terms would have, individually or in the aggregate, any Material
Adverse Effect. The Company has no knowledge of any threatened termination of,
or material premium increase with respect to, any of such policies that would
have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.20 PERSONNEL; LABOR RELATIONS. Except as disclosed in Section
3.20 of the Company Letter, (i) neither the Company nor any Subsidiary is the
subject of any action, arbitration, governmental or other examination or
investigation, hearing, administrative or other proceeding asserting that the
Company or any Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or comparable state law) or seeking
to compel the Company or any Subsidiary to bargain with any labor organization
as to wages or conditions of employment which is likely to be adversely
determined, which if so adversely determined, individually or in the aggregate
with other such proceedings so adversely determined, would have, individually or
in the aggregate, a Material Adverse Effect, (ii) neither the Company nor any
Subsidiary is party to any collective bargaining agreement, (iii) there is not
any strike or other labor dispute involving the Company or any Subsidiary,
pending or, to the Company's knowledge, threatened, or any activity involving
any of their respective employees seeking to certify a collective bargaining
unit or engaging in any other labor organizing activity, in each case that would
have, individually or in the aggregate, a Material Adverse Effect, and (iv)
since January 1, 1995, neither the Company nor any Subsidiary has effected (A) a
plant closing affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the Company or any
Subsidiary or (B) a mass layoff affecting any site of employment or facility or
operating unit within any site of employment or facility of the Company or any
Subsidiary, nor has the Company or any Subsidiary engaged in layoffs or
employment terminations sufficient in number to trigger application of the
Worker Adjustment and Retraining Notification Act (the "WARN Act") or of any
state or local law equivalent to the WARN Act, except where any of the foregoing
would not have, individually or in the aggregate, a Material Adverse Effect.
For the purposes of this Section 3.20, "plant closing," "mass layoff," "site of
employment," "operating unit" and "employment loss" shall have the meanings
ascribed to such terms in the WARN Act or the implementing regulations thereof,
or any state or local law equivalent to the WARN Act.
SECTION 3.21 CUSTOMERS. Since September 30, 1997 (but with respect to
the Belmor Heavy Duty Truck Division, since January 1, 1997) and prior to
November 25, 1997, except as disclosed in the SEC Documents, no customer of the
Company or any of its Subsidiaries that accounted for revenues thereof of
$1,500,000 or more during the fiscal year ended December 31, 1996 (the "1996
Fiscal Year") has (i) cancelled in writing its relationship with the Company and
its Subsidiaries or (ii) as of November 25, 1997, to the Company's knowledge,
indicated in writing its intention to so cancel its relationship, including as a
result of any transaction that would result in a "change of control" of the
Company, or to decrease the dollar amount of its purchases from the Company or
its Subsidiaries during the fiscal year ending December 31, 1997 or 1998 by more
than 50% from the dollar amount so purchased during the 1996 Fiscal
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Year. For purposes of this Section 3.21 only, the Company's knowledge shall
mean those facts that are actually known as of November 25, 1997 by any of the
following persons: Keith P. Boulac, James Chick, Ronald C. Fox, James T.
Jurinak, Richard D. Minehart, Jr., Russell Stubbings, James Covone, David L.
Hochstetler, Tony Bednarik and John A. Daniels. As used in this Agreement, the
term "Material Adverse Effect" shall not include the termination or modification
of the relationship of the Company or any of its Subsidiaries after November 25,
1997 with any customer.
SECTION 3.22 BROKERS AND FINDERS. Except for fees and expenses described
in Section 3.16 of the Company Letter, no broker, finder or investment banker is
entitled to any brokerage fees, commissions or finders' fees in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of the Company.
SECTION 3.23 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Wasserstein, Perella & Co., Inc. ("Wasserstein"), dated the date
hereof, to the effect that, as of such date, the consideration to be received in
the Offer and the Merger by the Company's stockholders is fair to the Company's
stockholders from a financial point of view, a copy of which opinion has been
delivered to Parent and the Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and the Purchaser, jointly and severally, hereby represent and
warrant to the Company as follows:
SECTION 4.1 ORGANIZATION AND POWER.
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Parent has all requisite
corporate power to enter into this Agreement, and all other documents and
instruments to be executed and delivered by it in connection herewith, and to
carry out its obligations hereunder and thereunder, and to own, operate and
lease its properties and to carry out its business as it is now being conducted.
(b) The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Purchaser has all
requisite corporate power to enter into this Agreement, and all other documents
and instruments to be executed and delivered by it in connection herewith, and
to carry out its obligations hereunder and thereunder. The Purchaser is a
wholly-owned subsidiary of Parent, has been organized solely for the purpose of
consummating the Merger and the Offer, has conducted no business or operations
of any nature and has incurred no obligations or liabilities other than those
created by or in connection with this Agreement.
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SECTION 4.2 AUTHORIZATION. The execution and delivery of this Agreement
and all other documents and instruments to be executed and delivered by them in
connection herewith, and the due consummation by Parent and Purchaser of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Parent and the Purchaser. This
Agreement constitutes (and each document and instrument contemplated by this
Agreement, when executed and delivered in accordance with the provisions hereof,
will constitute) a valid and legally binding agreement of each of Parent and the
Purchaser and enforceable against them in accordance with its terms.
SECTION 4.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement by Parent and the Purchaser and the consummation of the
transactions contemplated hereby or in connection herewith, including, without
limitation, the financing thereof, will not constitute a conflict with, breach
or violation of or default (or an event which with notice or lapse of time or
both would become a default) under (i) Parent's Certificate of Incorporation or
By-Laws, as amended to date; (ii) the Purchaser's Certificate of Incorporation
or By-laws, as amended to date; (iii) any material agreement, instrument,
license, franchise or permit to which Parent or the Purchaser is subject or by
which Parent or the Purchaser is bound; (iv) any statute, administrative
regulation, order, writ, injunction, decree or arbitration award to which Parent
or the Purchaser is subject or by which Parent or the Purchaser is bound; or (v)
any statutory or decisional law (or any duty or obligation thereunder, derived
therefrom or related thereto), rule or regulation to which Parent, the
Purchaser, their respective officers, directors or affiliates is subject or to
which such Person is bound.
SECTION 4.4 CONSENTS AND APPROVALS. Except for filings, approvals or
consents required by (i) the Secretary of State of the State of Delaware; (ii)
the Exchange Act; and (iii) such other statutes, rules or regulations which may
require registrations, authorizations, consents or approvals relating to matters
that, in the aggregate, are not material to the Purchaser or Parent, neither
Parent nor the Purchaser is required to submit any notice, report, registration,
declaration or other filing with or obtain any consent, approval or
authorization from any governmental authority or third party in connection with
the execution and delivery by Parent or the Purchaser of this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 4.5 FINANCING OF THE OFFER AND THE MERGER. In order to finance
the transactions contemplated by this Agreement, Parent and the Purchaser have
(i) entered into a binding agreement with respect to equity financing in an
amount equal to $30,000,000 and (ii) obtained a binding commitment letter from
Heller Financial, Inc. for additional debt financing. Parent and the Purchaser
have provided to the Company copies of each of such agreements and commitments,
none of which has been amended.
SECTION 4.6 NO OBLIGATION TO MAKE A HART-SCOTT-RODINO FILING. Neither
Parent nor the Purchaser is a "person which has total assets or annual net sales
of $100,000,000 or more" for purposes of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended
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(the "HSR Act"), and no Person "controls" or will "control" (including by virtue
of any debt or equity financing provided in connection with the Offer, the
Merger or any other transaction contemplated hereby), prior to the consummation
of the Merger, the Parent or Purchaser (other than Parent, in the case of
Purchaser) as that term is defined in Section 801.1(a)(3) of the regulations
promulgated under the HSR Act.
SECTION 4.7 FINDER'S FEES. No broker, finder, investment banker or
other Person or entity, other than Piper Jaffray & Co., whose compensation
arrangement is set forth in the letter agreement between such firm and Parent, a
copy of which has been delivered by Parent to the Company in connection
herewith, is entitled, in connection with the transactions contemplated hereby,
to any broker's commission, finder's fee, investment banker's fee or similar
payment from Parent, the Purchaser or the Company based upon arrangements made
by or on behalf of Parent or the Purchaser.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants
and agrees that, prior to the acceptance for payment of Shares or, if the
Company fails to comply with the obligations under Section 1.3 hereof, the time
the designees of Parent have been elected to, and shall constitute a majority
of, the Board of Directors of the Company pursuant to Section 1.3 hereof (such
applicable date being the "Appointment Date"), without the prior written
approval of Parent and except as otherwise contemplated or permitted by this
Agreement:
(a) the business of the Company and its Subsidiaries shall be conducted
only in the ordinary and usual course and each of the Company and its
Subsidiaries shall, subject to the other restrictions contained in this
Agreement, use its best efforts to preserve its business organization intact and
maintain its existing relations with customers, suppliers, employees, creditors
and business associates;
(b) the Company shall not, directly or indirectly, (i) except upon
exercise of Options or other rights to purchase Shares outstanding on the date
hereof, issue, sell, transfer or pledge or agree to sell, transfer or pledge any
treasury stock of the Company or any capital stock of any of its Subsidiaries
beneficially owned by it; (ii) amend its or any of its Subsidiaries' Certificate
of Incorporation or By-laws or similar organizational documents; or (iii) split,
combine or reclassify the outstanding Shares or any outstanding capital stock of
any of the Subsidiaries of the Company;
(c) other than the payment of dividends or other distributions by
Subsidiaries to the Company or to other Subsidiaries, neither the Company nor
any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or
other distribution payable in cash, stock or property,
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with respect to its capital stock; (ii) issue, sell, pledge, dispose of or
encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire (or stock appreciation rights with respect to), capital stock of any
class of the Company or its Subsidiaries, other than Shares reserved for
issuance on the date hereof pursuant to the exercise of Options or Trailmaster
Options outstanding on the date hereof; (iii) transfer, lease, license, sell,
mortgage, pledge, dispose of, or encumber any assets, other than in the ordinary
and usual course of business and consistent with past practice; or (iv) redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(d) neither the Company nor any of its Subsidiaries shall make any change
in the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants, or to Persons providing management
services, enter into or amend any employment, severance, consulting, termination
or other employment-related agreement, arrangement or Benefit Plan or make any
loans to any of its officers, directors, employees, affiliates, agents or
consultants or make any change in its existing borrowing or lending arrangements
for or on behalf of any of such Persons pursuant to a Benefit Plan or otherwise,
in each case except for changes, agreements, amendments or loans made in the
ordinary course of business consistent with past practice;
(e) except (i) pursuant to Benefit Plans, agreements or arrangements
existing at the date hereof, or as disclosed in Section 3.15(a) of the Company
Letter or made in the ordinary course of business consistent with past practice,
(ii) as required by any law, rule or regulation of any Governmental Entity,
(iii) as disclosed in Section 5.1(e) of the Company Letter, (iv) accruals
required by GAAP and (v) pursuant to Section 2.4 hereof, neither the Company nor
any of its Subsidiaries shall pay or make, or amend or agree to amend any
Benefit Plan, agreement or arrangement existing at the date hereof to provide
for any accrual or arrangement for payment of any pension, retirement allowance
or other employee benefit pursuant to any existing Benefit Plan, agreement or
arrangement to any officer, director, employee or affiliate or pay or agree to
pay or make any accrual or arrangement for payment to any officers, directors,
employees or affiliates of the Company of any amount relating to unused vacation
days, adopt or pay, grant, issue, accelerate, or accrue salary or other payments
or benefits pursuant to any pension, profit-sharing, bonus, extra compensation,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right or other stock-based incentive, group insurance, severance
pay, retirement or other employee benefit plan, agreement or arrangement, or any
employment or consulting agreement with or for the benefit of any director,
officer, employee, agent or consultant, whether past or present;
(f) the Company shall not modify, amend or terminate any of the material
Company Agreements or waive, release or assign any material rights or claims,
except in each case in the ordinary course of business;
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(g) neither the Company nor any of its Subsidiaries shall cancel or
terminate any material insurance policy naming it as a beneficiary or a loss
payable payee without notice to Parent;
(h) neither the Company nor any of its Subsidiaries shall (i) incur or
assume any long-term debt or any short-term indebtedness, in each case, for
borrowed money except in the ordinary course of business under lines of credit
in existence on the date hereof; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
any material obligations of any other Person (other than, with respect to (x)
the Company, any Subsidiary or (y) any Subsidiary, the Company or any other
Subsidiary) except in the ordinary course of business or make any loans,
advances or capital contributions to, or investments in, any other Person,
(other than, with respect to (x) the Company, any Subsidiary or (y) any
Subsidiary, the Company or any other Subsidiary), except for any such matter
undertaken in the ordinary course of business consistent with past practice; or
(iii) make any commitments for, or make or authorize any, capital expenditures
other than in amounts less than $50,000 individually and $500,000 in the
aggregate other than as disclosed in Section 5.1(h) of the Company Letter or the
SEC Documents;
(i) neither the Company nor any of its Subsidiaries shall (i) change any
of the accounting methods used by it unless required by GAAP or (ii) except as
required by applicable law, make any Tax election or change any Tax election
already made, adopt any Tax accounting method, change any Tax accounting method
unless required by applicable law, enter into any closing agreement, settle any
Tax claim or assessment or consent to any Tax claim or assessment or any waiver
of the statute of limitations for any such claim or assessment;
(j) neither the Company nor any of its Subsidiaries shall pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction of any such claims, liabilities or obligations, in the ordinary
course of business or any such payment, discharge or satisfaction that the
Company or any of its Subsidiaries is required to make by any law, rule or
regulation of any Governmental Entity or by any contractual obligation not
prohibited by this Section 5.1;
(k) neither the Company nor any of its Subsidiaries shall 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);
(l) neither the Company nor any of its Subsidiaries shall knowingly take,
or agree to commit to take, any action that would result in any of the
conditions to the Offer set forth in Annex I not being satisfied, or that would
give rise to a right of termination of this Agreement for Parent or Purchaser
pursuant to Section 8.1 hereof;
(m) the Company shall not enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or to authorize any of the foregoing;
and
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(n) except to the extent disclosed in Section 5.1(n) of the Company
Letter, neither the Company nor any of its Subsidiaries shall (i) effect a plant
closing or mass layoff affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of the
Company or any Subsidiary without the prior written consent of Parent or (ii)
terminate more than forty-nine (49) employees within a site of employment or
facility of the Company or any Subsidiary or operating unit within a site of
employment or facility or operating unit of the Company or any Subsidiary
without providing prior written notice to Parent. For the purposes of this
Section 5.1(n), "plant closing," "operating unit," and "employment loss" shall
have the meanings ascribed to such terms in Section 3.20 of this Agreement.
SECTION 5.2 Takeover Proposals. The Company agrees that it will
immediately cease and cause to be terminated any existing discussions or
negotiations, if any, with any Person conducted heretofore with respect to any
possibility or consideration of making a Takeover Proposal (as hereinafter
defined). The Company shall notify Parent promptly in writing if any proposals
are received by, any information is requested from, or any negotiations or
discussions are sought to be initiated or continued with the Company, its
Subsidiaries or any of their officers, directors, employees, investment bankers,
attorneys, accountants or other agents, in each case in connection with any
Takeover Proposal including, in connection with such notice, a reasonable
summary of the terms and conditions of any proposals or offers and the identity
of the Person making such proposal or offer, unless such notice would violate
the terms of any confidentiality or similar agreement binding on the Company
existing at the date hereof or, in addition, with respect to the identity of
such Person, except to the extent that the Board of Directors is advised by
outside legal counsel that identifying such Person may be inconsistent with its
fiduciary duties; PROVIDED, HOWEVER, that such notice shall only be required to
be given with respect to any of the foregoing directed to an officer or an
employee of the Company or any of its Subsidiaries following such time as an
executive officer or director of the Company shall have actual knowledge
thereof. Except to the extent that the following may be inconsistent with the
fiduciary duties of the Board of Directors of the Company or violate, or subject
the Board of Directors of the Company or the Company to liability under,
applicable law, in each case as advised by outside legal counsel, the Company
agrees that it shall keep Parent informed promptly of any developments in the
status and terms of any Takeover Proposal, unless such notice would violate the
terms of any confidentiality or similar agreement binding on the Company
existing at the date hereof. As used in this Agreement, "Takeover Proposal"
shall mean any tender or exchange offer involving more than 35% of the Shares,
any proposal for a merger, consolidation or other business combination involving
the Company, any proposal or offer to acquire in any manner more than 35% of the
Shares or a substantial portion of the business or assets of the Company (other
than (i) immaterial or insubstantial assets, (ii) inventory in the ordinary
course of business, (iii) assets held for sale or (iv) other assets sold or to
be sold in the ordinary course of business), or any proposal or offer with
respect to any recapitalization or restructuring with respect to the Company.
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SECTION 5.3 NO SOLICITATION.
(a) The Company will not, nor will it authorize or permit its officers,
directors, investment bankers, attorneys, accountants, employees and other
agents to, directly or indirectly: (i) initiate or solicit any offer or
proposal which constitutes any Takeover Proposal; (ii) in the event of an
unsolicited Takeover Proposal for the Company, engage in negotiations or
discussions with, or provide any information to, any Person (other than Parent,
any of its affiliates or representatives and except for information which has
been previously publicly disseminated by the Company) relating to or in
connection with any Takeover Proposal; or (iii) enter into any agreement with
respect to any Takeover Proposal; PROVIDED, HOWEVER, that nothing contained in
this Section 5.3(a) or any other provision of this Agreement shall prohibit the
Company or the Company's Board of Directors or any of its or their
representatives from (i) taking and disclosing to the Company's stockholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act or (ii) making such
disclosure to the Company's stockholders as the Board of Directors may determine
in good faith is required under applicable law after advice from outside legal
counsel.
(b) Notwithstanding the foregoing, prior to the acceptance for payment of
Shares pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any Person pursuant to a customary
confidentiality agreement (provided that if any such confidentiality agreement
contains terms or provisions more favorable to such Person than the terms or
provisions with respect to Parent and Purchaser pursuant to the Confidentiality
Agreement (as hereinafter defined), then any confidentiality terms of this
Agreement and of the Confidentiality Agreement shall be deemed amended (without
further action of the parties thereto) to conform to such terms and provisions
and may discuss and negotiate and participate in discussions and negotiations
with such Person concerning a Takeover Proposal if (x) such entity or group has
made an inquiry or proposal unsolicited after the date hereof relating to any
such transaction and the Board of Directors determines in good faith, after
receiving advice from Wasserstein or another nationally recognized investment
banking firm, that to do so could lead to a Superior Proposal (as hereinafter
defined) or (y) in the good faith judgment of the Board of Directors, after
receiving advice from outside legal counsel to the Company, the failure to
provide such information or to engage in such discussions or negotiations would
be inconsistent with the fiduciary obligations of the Board of Directors to the
Company's stockholders or otherwise be inconsistent with applicable law. A
"Superior Proposal" shall be any Takeover Proposal which the Board of Directors
determines, in good faith after consultation with its financial advisor, is on
terms more favorable to the stockholders of the Company than the Offer and the
Merger pursuant to this Agreement. In making its determination whether a
Takeover Proposal constitutes a Superior Proposal pursuant to the preceding
sentence, the Board of Directors shall take into account (x) the extent to which
financing for such Takeover Proposal is required and, to the extent required,
whether firm written commitments with respect to such financing have been
provided to the Company and, based upon the advice of Wasserstein or any other
financial adviser selected by the Company, the extent to which the third party
making such
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Takeover Proposal is financially capable of obtaining such required financing
and (y) whether such Takeover Proposal has a reasonable prospect of being
consummated prior to June 30, 1998. The Company shall promptly, and in any
event within one (1) business day following any determination by the Board of
Directors that a Takeover Proposal (or any amendment thereto) is a Superior
Proposal, notify Parent in writing ("Notice of Superior Proposal") of such
determination of the same, which notice shall include the identity of the bidder
and a reasonable summary of the terms and conditions of the Superior Proposal
or, if a Superior Proposal is amended, the terms and conditions as so amended.
If Parent does not, within five (5) business days after Parent's receipt of a
Notice of Superior Proposal or of any such notice with respect to any amended
proposal (or, if earlier, prior to two business days before the expiration of
the Offer), make an irrevocable written offer or enter into a definitive written
agreement amending this Agreement to provide for a transaction which the Board
of Directors has determined in its good faith judgment (based on the advice of
Wasserstein or another nationally recognized investment banking firm) to be more
favorable to the Company's stockholders than the Superior Proposal, the Company,
by action of its Board of Directors, may terminate this Agreement pursuant to
clause (ii) of Section 8.1(f) and enter into an agreement with respect to a
Superior Proposal.
(c) Except as set forth in Sections 5.3(a) or (b), and except as may be
inconsistent with the fiduciary duties of the Board of Directors or any
applicable law (including, without limitation, the Exchange Act and the rules
promulgated thereunder), neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or the Purchaser, the approval or
recommendation by the Board of Directors or any such committee of the Offer,
this Agreement or the Merger, (ii) approve or recommend, or propose to approve
or recommend, any Takeover Proposal or (iii) enter into any agreement with
respect to any Takeover Proposal.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 PROXY STATEMENT. As promptly as practicable after the
consummation of the Offer and if required by the Exchange Act, the Company shall
prepare and file with the SEC, and shall use all reasonable efforts to have
cleared by the SEC, and promptly thereafter shall mail to stockholders of the
Company, the Proxy Statement.
SECTION 6.2 MEETING OF STOCKHOLDERS OF THE COMPANY. Subject to Section
5.3 hereof, at the Special Meeting, if any, the Company shall use its best
efforts to solicit from stockholders of the Company proxies in favor of the
Merger and shall take all other action necessary or, in the reasonable opinion
of the Purchaser, advisable to secure any vote or consent of stockholders
required by Delaware Law to effect the Merger. The Purchaser agrees that it
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shall vote, or cause to be voted, in favor of the Merger all Shares directly or
indirectly beneficially owned by it.
SECTION 6.3 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
hereof, the Company, Parent and Purchaser each shall take all reasonable actions
necessary to comply in all material respects with all applicable laws and legal
requirements to achieve the satisfaction of the Minimum Condition and all
conditions set forth in Annex I attached hereto and Article VII hereof, and to
consummate and make effective the Merger and the other transactions contemplated
hereby. Each of the parties hereto agrees to take all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) in a
timely manner those third party consents mutually agreed to be desirable in
connection with the transactions contemplated by this Agreement. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement in accordance with its terms, the
proper officers and directors of the Company, Parent and the Purchaser shall use
all reasonable efforts to take, or cause to be taken, all such necessary
actions.
SECTION 6.4 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to the Purchaser and the Purchaser shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence of any event whose occurrence,
or non-occurrence would be likely to cause either (A) any representation or
warranty made by the Company contained in this Agreement which is qualified as
to Material Adverse Effect to be untrue or inaccurate at any time from the date
hereof to the Effective Time, (B) any other representation or warranty made by
the Company contained in this Agreement to be untrue or inaccurate at any time
from the date hereof to the Effective Time (other than such untruth or
inaccuracy which would not, individually or in the aggregate, have a Material
Adverse Effect), or (C) any condition set forth in Annex I to be unsatisfied at
any time from the date hereof to the date the Purchaser purchases Shares
pursuant to the Offer and (ii) any failure of the Company, the Purchaser, or
Parent, as the case may be, to comply with or satisfy in any material respect
any material covenant, condition or agreement to be complied with or satisfied
by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
this Section 6.4 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice or the right of such party to
terminate this Agreement.
SECTION 6.5 ACCESS; CONFIDENTIALITY.
(a) Subject to any restrictions under applicable law, the Company shall
continue to give (and shall cause each of its Subsidiaries to give) the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, reasonable access for reasonable purposes in light of
the transactions contemplated by this Agreement, during normal business hours
during the period prior to the Appointment Date to all its properties, books,
contracts, commitments and records and, during such period, the Company shall
(and shall cause each of its Subsidiaries to) furnish promptly to the Parent (a)
a copy of each report, schedule, registration statement and other document
publicly filed or received by it during such period pursuant to the requirements
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of federal securities laws and (b) all other information concerning its
business, properties and personnel as Parent may reasonably request; PROVIDED,
HOWEVER, that the Company shall not be required to waive any legal privilege by
virtue of this Section 6.5. Parent and the Purchaser expressly agree that from
the date hereof until the Appointment Date, without the prior written consent of
the Company, they shall not undertake any further environmental studies or tests
with respect to the Company, its business or properties requiring sampling of
soil, surface or ground water or air or other types of intrusive testing.
Unless otherwise required by law and until the Appointment Date, Parent and the
Purchaser shall hold any such information which is non-public and information
provided pursuant to Section 1.2(c) in confidence and shall not use such
information in accordance with, and shall otherwise abide by, the provisions of
the Confidentiality Agreement, dated October 31, 1997 entered into between
Parent, Harvest Partners, Inc. and the Company (the "Confidentiality
Agreement"). No investigation pursuant to this Section 6.5(a) shall affect any
representation or warranty made by the Company hereunder.
(b) Prior to the Closing, the Company and its accountants, counsel, agents
and other representatives shall cooperate with the Purchaser by providing
information about the Company which is necessary for the Purchaser and its
accountants, agents, counsel and other representatives to prepare the Disclosure
Documents. Notwithstanding the penultimate sentence of Section 6.5(a), the
Purchaser may disclose, or cause its representatives to disclose, and at the
request of the Purchaser, the Company shall and shall cause its Subsidiaries to,
disclose information concerning the Company and its Subsidiaries, and their
respective businesses, assets and properties, and the transactions contemplated
by this Agreement to prospective financing sources in connection therewith,
provided that such financing sources agree to hold such information in
confidence in accordance with, and shall otherwise abide by, the provisions of
the Confidentiality Agreement.
SECTION 6.6 PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release in the form attached
hereto as Exhibit 6.6. Thereafter, so long as this Agreement is in effect and
subject to the other provisions of this Agreement, neither the Company, Parent
nor any of their respective affiliates shall issue or cause the publication of
any press release or other announcement with respect to the Merger, this
Agreement or the other transactions contemplated hereby without the prior
consent of the other party, except after receiving the advice of outside legal
counsel, and after informing all the parties hereto, that such release or
announcement is required by law or by any listing agreement with a national
securities exchange or trading market. If so advised, Parent and Company shall
consult with each other before issuing, and provide each other the opportunity
to comment upon, any such press release or other public statements with respect
to such transactions.
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SECTION 6.7 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, in which
any of the present or former officers, directors, employees and agents (the
"Indemnified Person(s)") of the Company or any of its Subsidiaries is, or is
threatened to be, made a party by reason of the fact that he or she is or was,
at or prior to the Effective Time, a director, officer, employee or agent of the
Company or any of its Subsidiaries or is or was, prior to the Effective Time,
serving as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise at the request of the
Company or any of its Subsidiaries, whether such claim arises before or after
the Effective Time, Parent and the Surviving Corporation shall each indemnify
and hold harmless, as and to the fullest extent permitted by applicable law,
each such Indemnified Person(s) against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such claim, action, suit, proceeding or investigation (including, without
limitation, any of the foregoing arising out of or related to this Agreement
and/or any of the transactions contemplated hereby). Any Indemnified Person(s)
wishing to claim indemnification hereunder, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the Parent and
the Surviving Corporation thereof (but the failure so to notify the Parent and
the Surviving Corporation shall not relieve Parent or the Surviving Corporation
from any liability which they may have under this Section 6.7 except to the
extent such failure materially prejudices the Parent or the Surviving
Corporation). The right to indemnification hereunder includes the right to
receive reimbursement of reasonable expenses incurred in connection therewith,
upon (i) written request by the Indemnified Person(s) accompanied by a copy of
bills, invoices or other documentation of such expenses and (ii) receipt of an
undertaking by the Indemnified Person(s) to repay any such amounts if it shall
ultimately be determined that such Person is not entitled to be indemnified as
provided herein.
(b) Until the Effective Time the Company shall keep in effect Articles
Tenth and Eleventh of its Certificate of Incorporation and Section 6.7 of its
By-Laws, and thereafter for a period of six (6) years the Surviving Corporation
shall keep in effect in its Certificate of Incorporation provisions which
provides for indemnification and exculpation of the Indemnified Person(s) to the
extent provided by Articles Tenth and Eleventh of the Company's Certificate of
Incorporation on the date hereof.
(c) Parent or the Surviving Corporation shall maintain the Company's and
its Subsidiaries' existing officers' and directors' liability insurance ("D&O
Insurance") for a period of six (6) years after the Effective Time; PROVIDED,
HOWEVER, that the Parent may substitute therefor policies of substantially
equivalent coverage and amounts containing terms no less favorable to such
former directors or officers (but without creating any gaps in coverage);
PROVIDED, FURTHER, that in no event shall Parent or the Surviving Corporation be
required to pay aggregate premiums for insurance under this Section 6.7(c) in
excess of 200% of the aggregate premium paid by the Company in 1997 (the "1997
Premium"), which true and correct amount
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is set forth in Section 6.7(c) of the Company Letter; and PROVIDED, FURTHER,
that if Parent or the Surviving Corporation is unable to obtain the amount of
insurance required by this Section 6.7(c) for such aggregate premium, Parent or
the Surviving Corporation shall obtain as much insurance as can be obtained for
an annual premium not in excess of 200% of the 1997 Premium.
(d) In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Parent
and the Surviving Corporation shall have the right to assume the defense thereof
and Parent and the Surviving Corporation shall not be liable to any such
Indemnified Person(s) for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Person(s) in connection with
the defense thereof, (ii) Parent and the Surviving Corporation shall vigorously
prosecute the defense of any such matter, (iii) the Indemnified Person(s) will
cooperate in all respects as reasonably requested by the Parent and Surviving
Corporation in the defense of any such matter, (iv) the Parent and Surviving
Corporation shall not be liable for any settlement effected without its prior
consent (which consent shall not be unreasonably withheld) and (v) Parent and
the Surviving Corporation shall not settle any claim the defense of which has
been assumed by Parent and the Surviving Corporation pursuant to this Section
6.7(d) without the prior written consent of the Indemnified Person(s) (which
consent shall not be unreasonably withheld); PROVIDED, HOWEVER, if Parent or the
Surviving Corporation does not assume the defense of any claim, action, suit,
proceeding or investigation pursuant to this Section 6.7(d) within a reasonable
period of time from the receipt of notice of such claim, the Indemnified Persons
as a group with respect to the same claim shall be entitled to retain only one
(1) law firm to represent them with respect to any such matter unless there is,
under applicable standards of professional conduct, a conflict of interest on
any significant issue between the positions of any two or more Indemnified
Person(s), or any similar impediment to the joint representation of multiple
Indemnified Person(s) by a single law firm; PROVIDED, FURTHER, that the Parent
and Surviving Corporation shall have no obligation hereunder to any Indemnified
Person(s) when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and non-appealable,
that indemnification of such Indemnified Person(s) in the manner contemplated
hereby is prohibited by applicable law.
(e) Parent, the Purchaser, the Company and the Surviving Corporation
expressly acknowledge the provisions of Article Tenth and Eleventh of the
Company's Certificate of Incorporation and Section 6.7 of the Company's By-Laws,
as in effect on the date hereof, and hereby agree, from and after the Expiration
Date, to honor in accordance with their terms all such obligations and further
acknowledge that said obligations (along with the indemnification and like
obligations in the Certificate of Incorporation and By-Laws of the Surviving
Corporation) constitute, to the extent set forth therein, a contract between the
Company or the Surviving Corporation, as the case may be, on the one hand, and
the Persons entitled to the benefits thereof (in accordance therewith), on the
other hand, creating binding obligations on the part of the Company and binding
rights on the part of any Person entitled to the benefit thereof (in accordance
therewith).
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(f) If Parent or the Surviving Corporation or any of their respective
successors or assigns shall transfer all or substantially all of its properties
and assets to any individual, corporation or other entity, then and in each such
case, proper provisions shall be made so that the successors and assigns thereof
shall assume the obligations set forth in this Section 6.7; PROVIDED, HOWEVER,
no such assignment or assumption shall relieve Parent or the Surviving
Corporation (or any successor or assign) of its obligations set forth in (or
imposed pursuant to) this Section 6.7.
(g) This Section 6.7 is intended for the benefit of, and shall be
enforceable by the Indemnified Person(s), their heirs and personal
representatives and shall be binding upon Parent, the Company and the Surviving
Corporation and their respective successors and assigns. The Surviving
Corporation shall reimburse an Indemnified Person(s) for its reasonable expenses
in enforcing its rights under this Section 6.7, including reasonable attorneys'
fees, unless a court of competent jurisdiction shall determine, and such
determination shall have become final and non-appealable, that indemnification
of such Indemnified Person in the manner contemplated hereby is prohibited by
applicable law.
SECTION 6.8 EMPLOYEE BENEFITS. On and after the Effective Time,
directors, officers and employees of the Company and its Subsidiaries shall be
provided employee benefits, plans and programs which are no less favorable in
the aggregate than those generally available to similarly situated directors,
officers and employees of Parent and its significant subsidiaries. For purposes
of eligibility to participate and vesting, waiting periods, pre-existing
conditions, limitations and all other purposes (but not benefit accrual
attributable to the period before the Effective Time) in all benefits provided
to directors, officers and employees, the directors, officers and employees of
the Company and its Subsidiaries will be credited with their years of service
with the Company and its Subsidiaries and prior employers to the extent service
with the Company and its Subsidiaries and prior employers is taken into account
under plans of the Company and its Subsidiaries. Nothing in this Section 6.8
shall be construed as restricting the ability of Parent and the Surviving
Corporation and its Subsidiaries to establish such types and levels of
compensation and benefits or to modify or terminate such compensation or
benefits as they determine to be appropriate from time to time. Parent and the
Surviving Corporation jointly and severally agree that the Surviving Corporation
shall (i) credit directors, officers and employees of the Company and its
Subsidiaries with any amounts paid by such persons toward applicable deductible
amounts and copayment and deductible maximums for the calendar year under the
medical and dental plans of the Company and its Subsidiaries prior to the
transition to any new medical or dental program toward satisfaction of the
applicable deductible amounts and copayment and deductible maximums under any
such new medical or dental program that covers such directors, officers and
employees; (ii) cause all benefits of directors, officers and employees under
Benefit Plans vested and accrued, prior to the Effective Time to be provided to
such directors, officers and employees in accordance with the terms of such
Benefit Plans as in effect on the date hereof and (iii) become the "Employer"
under the Deflecta-Shield Corporation Employee Profit Sharing and 401(k) Plan.
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SECTION 6.9 PURCHASER COMPLIANCE. Parent shall cause the Purchaser to
timely perform and comply with all of its obligations under or related to this
Agreement, including, without limitation, all obligations in or with respect to
the Offer. Notwithstanding anything to the contrary contained in this Agreement,
the stockholders of the Company are each third party beneficiaries of this
Section 6.9 and may seek relief for breach hereof individually and in their own
name.
SECTION 6.10 BEST EFFORTS.
(a) Prior to the Closing, upon the terms and subject to the terms,
provisions and conditions of this Agreement, the Purchaser and the Company (but
in the case of the Company, not inconsistent with the fiduciary obligations of
the Board of Directors of the Company as advised by outside legal counsel to the
Company) agree to use their respective reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable.
(b) Prior to the Closing, each party shall promptly consult with the other
parties hereto with respect to, provide any necessary information with respect
to, and provide the other (or its counsel) copies of, all filings made by such
party with any governmental authority or any other information supplied by such
party to a Governmental Entity in connection with this Agreement and the
transactions contemplated by this Agreement. Each party hereto shall promptly
inform the other of any communication from any Governmental Entity regarding any
of the transactions contemplated by this Agreement. If any party hereto or
affiliate thereof receives a request for information or documentary material
from any such Government Entity with respect to the transactions contemplated by
this Agreement, then such party shall endeavor in good faith to make, or cause
to be made, as soon as reasonably practicable and after consultation with the
other party, an appropriate response in compliance with such request. To the
extent that transfers of permits are required as a result of execution of this
Agreement or consummation of the transactions contemplated hereby, the Company
will reasonably cooperate with Purchaser to effect such transfers.
(c) No party shall wilfully perform any act which if performed, or
wilfully omit to perform any act which if omitted to be performed, would prevent
or excuse the consummation of the Offer and/or the Merger.
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ARTICLE VII
CONDITIONS
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction on or prior to the Closing Date of each of the following
conditions, any and all of which may be waived in whole or in part by the
Company, Parent or the Purchaser, as the case may be, to the extent permitted by
applicable law:
(a) The Merger and this Agreement shall have been approved and adopted by
the requisite vote of the holders of the Shares, if required by the Delaware
Law;
(b) No statute, rule or regulation shall have been enacted or promulgated
by any governmental authority which prohibits the consummation of the Merger;
and there shall be no order or injunction of a court of competent jurisdiction
in effect which prohibits consummation of the Merger; PROVIDED, HOWEVER, that
each of the parties hereto shall have used reasonable efforts to prevent the
entry of any such order or injunction and to appeal as promptly as possible any
such order or injunction that may be entered; and
(c) The Purchaser shall have made the Offer and shall have accepted for
payment the Shares tendered pursuant to the Offer; provided, that this condition
shall be deemed to have been satisfied with respect to the obligation of Parent
and the Purchaser to effect the Merger if the Purchaser fails to announce and
make the Offer or accept for payment Shares tendered pursuant to the Offer in
violation of the terms of the Offer or of this Agreement.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time before the
Effective Time, whether before or after stockholder approval:
(a) By mutual written consent of the Parent and the Company, in each case
acting through its board of directors; or
(b) (i) By Parent if the Offer shall have expired or been terminated in
accordance with its terms without any Shares being purchased thereunder by the
Purchaser, but only as a result of the occurrence of any of the events set forth
in Annex I that shall not have resulted directly or proximately from a state of
facts or action or inaction which constitutes a breach of a representation,
warranty or covenant by the Purchaser or Parent; or
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(ii) By the Company if any of the events specified in paragraph (a) of
Annex I occurs prior to Purchaser's acceptance for payment of the Shares in the
Offer; or
(c) By either Parent or the Company if a U.S. Court shall have issued an
order, decree or ruling (which order, decree or ruling the parties hereto shall
use their best efforts to vacate), in each case permanently restraining,
enjoining or otherwise prohibiting the Offer and/or the Merger and such order,
decree, ruling or other action shall have become final and nonappealable and
shall not have resulted directly or proximately from a state of facts or action
or inaction which constitutes a breach of a representation, warranty or covenant
by the Purchaser or Parent; or
(d) By Parent if, without any material breach by Parent or the Purchaser
of its representations, warranties or obligations under this Agreement or the
Offer, the purchase of Shares pursuant to the Offer shall not have occurred on
or before June 30, 1998; or
(e) By the Company if, without any material breach by the Company of its
representations, warranties or obligations under this Agreement, the purchase of
Shares pursuant to the Offer shall not have occurred on or before June 30, 1998;
or
(f) By the Company (i) if Parent or the Purchaser shall have breached in
any material respect any material covenant or other agreement contained in this
Agreement or if any representation or warranty of Parent or the Purchaser made
in this Agreement shall fail to be true and correct as if made at such time in
any material respect, in each case which breach or which failure to be true and
correct cannot be or has not been cured within ten (10) business days of the
receipt of written notice thereof; or (ii) to allow the Company to enter into an
agreement in accordance with Section 5.3(b) hereof with respect to a Superior
Proposal; or
(g) By Parent, if prior to the time Purchaser is required to accept Shares
for payment in the Offer, (i) the Company shall have breached in any material
respect any material covenant or other agreement contained in this Agreement or
(ii) any representation or warranty of the Company made in this Agreement which
is qualified as to Material Adverse Effect shall not be true and correct when
made or as if made at such time or (iii) any other representation or warranty of
the Company made in this Agreement shall not be true and correct when made or as
if made at such time, which failure to be true and correct would have a Material
Adverse Effect, in each case which breach or which failure to be true and
correct cannot be or has not been cured within ten (10) business days of the
receipt of written notice thereof; or
(h) By Parent, at any time prior to the time Purchaser is required to
accept Shares for payment in the Offer, (i) if the Board of Directors of the
Company shall have withdrawn or materially modified in a manner adverse to the
Purchaser its approval or recommendation of the Offer, the Merger or this
Agreement or (ii) the Company shall have entered into, or shall have publicly
announced its intention to enter into, a definitive written agreement or written
agreement in principle providing for a Takeover Proposal.
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SECTION 8.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement as provided in Section
8.1 hereof, written notice thereof shall forthwith be given to the other party
or parties specifying the provision hereof pursuant to which such termination is
made;
(b) In the event of termination of this Agreement by either the Company,
on one hand, or Parent and Purchaser on the other hand, as provided in Section
8.1, except as provided in Sections 8.2 (d) and (e), this Agreement shall
forthwith become null and void and there shall be no liability on the part of
Parent, the Purchaser or the Company, except (i) as set forth in Section 8.2(c)
hereof and (ii) nothing herein shall relieve Parent or Purchaser from liability
for any breach of this Agreement, other than an immaterial breach, and nothing
herein shall relieve the Company from liability for any willful and material
breach of this Agreement. Without implication that the contrary would otherwise
be true and notwithstanding anything to the contrary contained in this Section
8.2 or elsewhere in this Agreement, Section 6.9 shall survive any termination of
this Agreement.
(c) If (i) Parent shall have terminated this Agreement pursuant to Section
8.1(g) then the Company shall pay to Parent an amount, not in excess of
$1,000,000, equal to the Purchaser's actual and reasonably documented
out-of-pocket expenses (including without limitation, fees payable to all banks,
investment banking firms and other financial institutions and their respective
counsel, and all fees of counsel, accountants, financial printers, experts and
consultants to Parent, but specifically excluding any fees payable to Harvest
Partners, Inc. (the "Expense Reimbursement Amount")) incurred by Parent and
Purchaser in connection with the Offer, the Merger, this Agreement and the
consummation of the transactions contemplated hereby. If (i) Parent shall have
terminated this Agreement pursuant to Section 8.1(h) or (ii) the Company shall
have terminated this Agreement pursuant to Section 8.1(f)(ii), then the Company
shall pay to Parent a termination fee (the "Termination Fee") of $2,300,000.
The Termination Fee and the Expense Reimbursement Fee shall be payable not later
than one business day after the date of termination by wire transfer in
accordance with the instructions set forth in Exhibit 8.2(c) attached hereto or
to such other account as Parent may designate in writing to the Company. Upon
payment of the fees required to be paid pursuant to this Section 8.2(c), the
Company shall have no further obligation to Parent or the Purchaser, under this
Agreement or otherwise; PROVIDED, FURTHER, that if the Company fails to pay
promptly the amounts required pursuant to this Section 8.2(c) and in order to
obtain such payment Parent or the Purchaser commences a suit which results in a
final nonappealable judgment against the Company for such amounts, the Company
shall pay to Parent or the Purchaser (i) the costs and expenses (including
attorneys' fees) incurred by Parent or the Purchaser in connection with such
suit and (ii) interest on all such amounts required to be paid at the rate
announced by Citibank N.A. as its "reference rate" in effect on the date such
amounts were required to be paid;
(d) Each party, if so requested by the other party, will return promptly
every document furnished to it by or on behalf of the other party in connection
with the transactions
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contemplated hereby, whether so obtained before or after the execution of this
Agreement, and any copies thereof (except for copies of documents publicly
available) which may have been made, and will use reasonable efforts to cause
its representatives and any representatives of financial institutions and
investors and others to whom such documents were furnished promptly to return
such documents and any copies thereof any of them may have made; and
(e) The obligations of Parent and Purchaser under Section 6.5 shall
continue indefinitely notwithstanding any termination of this Agreement. This
Section 8.2 shall survive any termination of this Agreement and the
Confidentiality Agreement will remain in full force and effect in the event of
such termination.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time before or after approval hereof by the stockholders of the Company,
but, after such approval, no amendment shall be made which reduces the amount or
changes the form of consideration to be paid in the Offer or in any way
adversely affects the rights of holders of the Shares without the further
approval of such holders. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of each of the parties hereto.
SECTION 9.2 WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken by their respective Boards of Directors, may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties of the other parties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
satisfaction of any of the conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
SECTION 9.3 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Sections
6.5, 6.7, 6.8 and 6.9 and this Article IX, and, without limitation by the
specific enumeration of the foregoing, each and every other agreement contained
in this Agreement or any certificate or other document delivered pursuant to
this Agreement and which contemplates performance after the Effective Time,
shall survive the Merger. None of the representations, warranties and
agreements (other than those agreements referred to in the previous sentence of
this Section 9.3) contained in this Agreement or in any exhibit, disclosure
schedule, certificate or other instrument delivered pursuant to this Agreement
shall survive the earliest to occur of the Expiration Date, the Effective Time
and the termination of this Agreement.
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SECTION 9.4 NOTICES. Any notice, request, instruction or other document
to be given hereunder by any party to the others shall be deemed given if in
writing and delivered personally or sent by overnight courier (providing proof
of delivery), postage prepaid or by facsimile (which is confirmed).
if to Parent or the Purchaser:
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, Minnesota 55303
Facsimile: (612) 576-4297
with a copy to:
Leonard Gubar, Esq.
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Facsimile: (212) 603-2001
if to the Company:
Deflecta-Shield Corporation
1275 Sherman Drive
Longmont, Colorado 80502
Facsimile: (303) 776-4723
with a copy to:
John E. Lowe, Esq.
Peter Lieberman, Esq.
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606-7482
Facsimile: (312) 715-4800
or to such other address as may have been designated in a prior notice. Notices
shall be deemed to have been given when received.
SECTION 9.5 HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
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SECTION 9.6 EXHIBITS, SCHEDULES AND ANNEXES. The Exhibits, Schedules
and Annexes referred to in this Agreement shall be deemed to be an integral part
of this Agreement as if fully rewritten herein. To the extent applicable, a
disclosure set forth on any one such document will serve as a disclosure for
purposes of all other such documents. Without limitation of the foregoing, any
disclosure set forth in any section of the Company Letter shall serve as
disclosure for purposes of all other applicable sections of the Company Letter
and the related representations and warranties if it is reasonably evident that
such disclosure also is applicable to such other sections of the Company Letter
and the related representations and warranties. For purposes of this Agreement,
including Annex I hereto, in addition to any other meaning attributed to it at
law, the word "proximately" includes any event which is a substantial factor in
causing the occurrence of another event.
SECTION 9.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
SECTION 9.8 GOVERNING LAW. This Agreement, including all matters of
construction, validity and performance, shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, as applied to
contracts made, executed and to be fully performed in such state by citizens of
such state, without regard to conflict of laws principles.
SECTION 9.9 PRONOUNS. The use of a particular pronoun herein shall not
be restrictive as to gender or number but shall be interpreted in all cases as
the context may require.
SECTION 9.10 TIME PERIODS. Unless otherwise provided herein, any action
required hereunder to be taken within a certain number of days shall be taken
within that number of calendar days; PROVIDED, HOWEVER, that if the last day for
taking such action falls on a weekend or a holiday, the period during which such
action may be taken shall be automatically extended to the next business day.
SECTION 9.11 NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against either
party.
SECTION 9.12 ENTIRE AGREEMENT. This Agreement and the agreements and
documents referred to in this Agreement or delivered hereunder are the exclusive
statement of the agreement between the parties concerning the subject matter
hereof. All negotiations and prior agreements between the parties (other than
those incorporated herein, including the Confidentiality Agreement) are merged
into this Agreement, and there are no representations, warranties, covenants,
understandings, or agreements, oral or otherwise, in relation thereto among the
parties other than those incorporated herein and to be delivered hereunder.
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SECTION 9.13 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
SECTION 9.14 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto except that Purchaser may
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase shares pursuant to the Offer, but any such
transfer or assignment will not relieve Parent or the Company of its obligations
under the Offer or prejudice the rights of tendering stockholders to receive
payment for shares of the Company validly tendered and accepted for payment
pursuant to the Offer. Except for Sections 6.7, 6.8 and 6.9, and except as
otherwise provided in this Agreement, nothing in this Agreement is intended or
shall be construed to confer on any Person other than the parties hereto any
rights or benefits hereunder.
SECTION 9.15 FEES AND EXPENSES. Except as otherwise set forth in this
Agreement, each party hereto shall bear all fees and expenses incurred by such
party in connection with, relating to or arising out of the execution, delivery
and performance of this Agreement and the consummation of the Offer and the
Merger.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By:
------------------------------
Name:
Title:
ZEPHYROS ACQUISITION CORPORATION
By:
------------------------------
Name:
Title:
DEFLECTA-SHIELD CORPORATION
By:
------------------------------
Name:
Title:
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ANNEX I
TO
AGREEMENT AND PLAN OF MERGER
CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer,
the Purchaser shall not be required to accept for payment any Shares tendered
pursuant to the Offer, and, subject to the terms of this Agreement, may
terminate the Offer if (i) by the expiration date of the Offer, the Minimum
Condition shall not have been satisfied or (ii) at any time on or after the date
of this Agreement, and prior to the time for acceptance for payment for any such
Shares, any of the following events shall occur and remain in effect other than
as a result directly or proximately from a state of facts or action or inaction
which constitutes a breach of a representation, warranty or covenant of the
Purchaser or Parent;
(a) there shall be instituted or pending any suit, action or proceeding by
a Governmental Entity seeking to (i) make illegal or otherwise directly restrain
or prohibit the making of the Offer, the acquisition of any Shares by the
Purchaser pursuant to the Offer or the consummation of the Merger, (ii) restrain
or prohibit Parent's or the Purchaser's ownership or operation (or that of their
respective subsidiaries or affiliates) of all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or,
following consummation of the Offer or the Merger and as a result thereof, of
Parent and its subsidiaries, taken as a whole, or to compel Parent or any of its
subsidiaries or affiliates to dispose of or hold separate all or any material
portion of the business or assets of the Company and its Subsidiaries, taken as
a whole, or, following consummation of the Offer or the Merger and as a result
thereof, of Parent and its subsidiaries, taken as a whole, (iii) impose material
limitations on the ability of Parent or any of its subsidiaries or affiliates
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares to be acquired pursuant to the
Offer on all matters properly presented to the Company's stockholders, or (iv)
require divestiture by Parent or any of its subsidiaries or affiliates of any
Shares to be acquired pursuant to the Offer.
(b) there shall be any statute, rule, regulation, injunction, order or
decree issued, promulgated, enacted, entered or enforced that results in any of
the consequences referred to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred (and the adverse effect of such occurrence
shall be continuing for more than three business days) (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange or on the NASDAQ National Stock Market (excluding any
trading halt triggered solely as a result of a specified decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States or any limitation by United States
federal or state authorities on the extension of credit by banks or other
financial institutions, (iii) a commencement of a war directly involving the
armed forces of the United States, a material
A-1
<PAGE>
commitment of the armed forces of the United States, or other international or
national calamity directly involving the armed forces of the United States if,
as a result of such war directly involving the armed forces of the United
States, commitment of armed forces or calamity, banks generally stop lending
funds for middle market acquisition transactions, but specifically other than in
connection with increases in interest rates, or (iv) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(d) the Company shall have (i) breached in any material respect any
material covenant or other agreement contained in this Agreement, (ii) any
representation or warranty of the Company made in this Agreement which is
qualified as to Material Adverse Effect shall fail to be true and correct at any
time prior to expiration of the Offer as if made at such time, or (iii) any
other representation or warranty of the Company made in this Agreement shall
fail to be true and correct at any time prior to expiration of the Offer as if
made at such time, which failure to be true and correct would have a Material
Adverse Effect, in each case which breach or which failure to be true and
correct cannot be or has not been cured within ten (10) business days of the
receipt of written notice thereof;
(e) this Agreement shall have been terminated in accordance with its
terms;
(f) the Board of Directors of the Company shall have withdrawn or
materially modified in a manner adverse to Parent or the Purchaser its approval
or recommendation of the Offer, the Merger or this Agreement; or
(g) the Company shall have entered into, or shall have publicly announced
its intention to enter into, a definitive written agreement or agreement in
principle providing for a Takeover Proposal.
The foregoing conditions are for the sole benefit of the Parent and
Purchaser other than the Minimum Condition and other than the termination of the
Agreement in accordance with its terms and, other than the Minimum Condition and
such termination, may be waived by the Purchaser, in whole or in part. The
failure by the Purchaser, at any time, to exercise any of the foregoing rights
shall not be deemed a waiver of any such rights; 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 which may be asserted at any time or from time to time.
Terms used in this Annex I but not defined herein shall have the meanings
ascribed to such terms in the Agreement to which this Annex I is a part.
A-2
<PAGE>
Exhibit 99.2
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of November 25,
1997, by and among Lund International Holdings, Inc., a Delaware corporation
("Parent"), and Mark C. Mamolen (hereinafter referred to as "Stockholder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently herewith, Parent, Zephyros Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent
("Purchaser"), and Deflecta-Shield Corporation, a Delaware corporation (the
"Company"), will enter into an Agreement and Plan of Merger of even date
herewith (the "Merger Agreement"; capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement), pursuant to which
(and subject to the terms and conditions specified therein) Purchaser will make
a cash tender offer (as defined in the Merger Agreement, the "Offer") for all
outstanding shares of Common Stock, par value $.01 per share, of the Company
("Company Common Stock") and, following consummation of the Offer, Purchaser
will be merged with and into the Company, with the Company continuing as the
surviving corporation and as a wholly-owned subsidiary of Parent (the "Merger"),
whereby each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger will be converted into the right to
receive the Merger Consideration, other than (i) shares of Company Common Stock
owned, directly or indirectly, by the Company or any subsidiary of the Company
or by Parent, Purchaser or any other affiliate of Parent and (ii) Dissenting
Shares; and
WHEREAS, Stockholder is a stockholder of the Company and, as a
condition to Parent and Purchaser entering into the Merger Agreement, Parent
requires that Stockholder enter into, and Stockholder has agreed to enter into,
this Agreement with Parent.
NOW, THEREFORE, in consideration of the representations and warranties
and covenants set forth herein and in the Merger Agreement, Parent and
Stockholder, intending to be legally bound hereby each agree as follows:
1. Representations and Warranties of the Stockholder. Stockholder
hereby represents and warrants to Parent as follows:
1.1 Validity of Agreement. Stockholder has the legal capacity to
enter into and perform all of Stockholder's obligations under this Agreement.
This Agreement has been duly executed and delivered by Stockholder and
constitutes a valid and binding obligation of Stockholder enforceable against
Stockholder in accordance with its terms,
<PAGE>
except that (a) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought and (c) no representation is made with respect to the
enforceability, validity or binding effect of the third sentence of Section 4.1
under applicable provisions of the Exchange Act. If Stockholder is married, and
his Stockholder Shares (as hereinafter defined) constitute community property,
this Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, Stockholder's spouse, enforceable
against such person in accordance with its terms (subject to the exceptions set
forth in the immediately preceding sentence).
1.2 Consents and Approvals; No Violations. The execution, delivery
and performance of this Agreement by Stockholder shall not (a) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which Stockholder is a party or by which
Stockholder or any of his properties or assets is bound or affected or (b)
violate any order, writ, injunction, decree or judgment, specifically applicable
by its terms to Stockholder or any of his properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, or notice to, any state, federal or foreign public body or authority is
required by or with respect to Stockholder in connection with the execution and
delivery of this Agreement by Stockholder or the consummation by Stockholder of
any of the transactions contemplated by this Agreement, except for filings
pursuant to the Exchange Act and except as may be required by the Merger.
Without implication that the following consent is required by that certain
Voting Agreement, dated January 27, 1994, by and between Stockholder and
Charles S. Meyer (the "Co-Stockholder"), Stockholder hereby (i) consents, if
such consent is required by the Voting Agreement, to Co-Stockholder entering
into and performing a stockholder agreement with Parent, of even date herewith
(the "Co-Stockholder Agreement"), substantially identical to this Agreement and
(ii) acknowledges and agrees that this Agreement and the Co-Stockholder
Agreement supersede the Voting Agreement with respect to the matters set forth
herein and in the Co-Stockholder Agreement. The parties hereto acknowledge
that Co-Stockholder is a third party beneficiary of the foregoing.
1.3 Ownership of Shares. (a) Stockholder is the record and/or
beneficial owner of that number of shares of Company Common Stock set forth
opposite Stockholder's name on Annex 1 attached hereto (such shares hereinafter
referred to as the "Existing Shares," and together with any shares of Company
Common Stock acquired of record or beneficially by Stockholder in any capacity
after the date hereof and prior to the termination hereof, whether upon exercise
of options, conversion of convertible securities, purchase, exchange or
otherwise, referred to as the "Stockholder Shares"). Notwithstanding the
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foregoing, neither the Existing Shares nor the Stockholder Shares include any
shares of Company Common Stock owned of record by Co-Stockholder.
(b) Except for shares of Company Common Stock owned by the
Co-Stockholder subject to the Voting Agreement, on the date hereof, the
Existing Shares constitute all of the outstanding shares of Company Common
Stock owned of record and/or beneficially by Stockholder.
(c) Except as provided by the Voting Agreement, Stockholder has
sole power of disposition with respect to all of the Existing Shares owned
by him and sole voting power with respect to the matters set forth in
Section 3.1 hereof and sole power to demand dissenter's or appraisal
rights, in each case with respect to all of the Existing Shares owned by
him with no restrictions on such rights, subject to any restrictions
imposed by applicable federal securities laws, Delaware law and the terms
of this Agreement.
(d) Except as provided by the Voting Agreement, Stockholder will
have sole power of disposition with respect to shares of Company Common
Stock other than Existing Shares, if any, which become beneficially owned
by Stockholder and will have sole voting power with respect to the matters
set forth in Section 3.1 hereof and sole power to demand dissenter's or
appraisal rights, in each case with respect to all such shares, if any,
which become beneficially owned by Stockholder with no restrictions on such
rights, subject to any restrictions imposed by applicable federal
securities laws and the terms of this Agreement.
1.4 No Encumbrances. The Existing Shares and the certificates
representing such shares are now, and the Stockholder Shares and the
certificates representing such shares at all times during the term hereof will
be, held by Stockholder, free and clear of all claims, liens, charges, security
interests, proxies, voting trusts or agreements, understandings or arrangements
and any other encumbrances of any kind or nature whatsoever, except as otherwise
provided in this Agreement and except as set forth in the Voting Agreement.
Certificates representing the Existing Shares contain legends reflecting the
Voting Agreement and the restrictions on transfer of Existing Shares under the
Securities Act.
1.5 Brokers and Intermediaries. No broker, investment banker,
financial adviser or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Stockholder. It is agreed and acknowledged that the Company has retained
Wasserstein, Perrella & Co. in connection with the Offer and the Merger and the
transactions contemplated by the Merger Agreement.
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1.6 Reliance. Stockholder understands and acknowledges that Parent
and Purchaser are entering into the Merger Agreement in reliance upon
Stockholder's execution and delivery of this Agreement with Parent.
2. Representations and Warranties of Parent. Parent hereby
represents and warrants to Stockholder as follows:
2.1 Organization; Authorization; Validity of Agreement. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and no other corporate proceedings on the
part of Parent are necessary to authorize this Agreement or any of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and constitutes a valid and binding obligation of Parent
enforceable against Parent in accordance with its terms, except that (a) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and (b)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
2.2 Consents and Approvals; No Violations. The execution, delivery
and performance of this Agreement by Parent shall not (a) conflict with or
result in any breach of the certificate of incorporation or by-laws of Parent,
(b) result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent is a party or by which
Parent or any of its properties or assets is bound or affected or (c) violate
any order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to Parent or any of Parent's properties or assets. Except as
provided in the Merger Agreement, no consent, approval, order or authorization
of, or registration, declaration or filing with, or notice to, any state,
federal or foreign public body or authority is required by or with respect to
Parent in connection with the execution and delivery of this Agreement by Parent
or the consummation by Parent of any of the transactions contemplated by this
Agreement.
2.3 Broker and Intermediaries. No broker, finder, investment banker
or other Person or entity, other than Piper Jaffray & Co., is entitled in
connection with the transactions contemplated by the Merger Agreement to any
broker's commission, finder's fee, investment banker's fee or similar payment in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of Parent or Purchaser.
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2.4 Reliance. Parent understands and acknowledges that Stockholder
is entering into this Agreement in reliance upon Parent's execution and delivery
of this Agreement with Stockholder and upon Parent's and Purchaser's execution
of the Merger Agreement.
3. Agreement to Vote. Stockholder, solely in his capacity as a
stockholder and not as a director, officer or employee of the Company, hereby
agrees that, until the Termination Date (as defined in Section 9), at any
meeting of the stockholders of the Company, however called at which the
following matters are considered for a vote, Stockholder shall vote (or cause to
be voted) the Stockholder Shares (a) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance hereof and thereof; (b)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or this Agreement; and (c) except as specifically
requested or agreed to in writing by Parent in advance, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company; (ii) a sale,
lease or transfer of a material amount of assets of the Company or
reorganization, recapitalization, dissolution or liquidation of the Company; and
(iii)(A) any change in the majority of the board of directors of the Company;
(B) any change in the present capitalization of the Company or any amendment of
the Company's Certificate of Incorporation or By-Laws; (C) any other material
change in the Company's corporate structure or business; or (D) any other action
which is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone, discourage or adversely affect the Offer, the Merger or the
transactions contemplated by the Merger Agreement or this Agreement.
Stockholder shall not enter into any agreement with or grant any proxy to any
person or entity prior to the Termination Date to vote or give instructions in
any manner inconsistent with clauses (i), (ii) or (iii) of the preceding
sentence. The foregoing shall not limit or prohibit Stockholder from entering
into any agreement simultaneously with or after termination of this Agreement.
4. Certain Covenants of the Stockholder. Except in accordance with
the terms of this Agreement, Stockholder hereby agrees as follows:
4.1 Tender of Stockholder Shares. Stockholder agrees to tender and
sell to Purchaser all of the Stockholder Shares pursuant to and in accordance
with the terms of the Offer. Stockholder agrees that he shall deliver to the
depositary for the Offer, no later than the fifth Business Day (as defined
below) following the commencement of the Offer pursuant to Section 1.1 of the
Merger Agreement, a letter of transmittal together with any and all certificates
representing the Stockholder Shares owned by him (or such documentation as
required by the terms of the Offer with respect to lost stock certificates).
Notwithstanding
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any term of the Offer to the contrary, Stockholder agrees not to withdraw any
Stockholder Shares tendered into the Offer pursuant to this Section 4.1 during
the term of this Agreement. Stockholder hereby acknowledges and agrees that
Purchaser's obligation to accept for payment the Stockholder Shares in the Offer
is subject to the terms and conditions of the Offer. Stockholder hereby permits
Parent and Purchaser to publish and disclose in the Offer Documents (including,
without limitation, all documents and schedules filed with the SEC), the
identity of the Stockholder (subject, however, to the prior approval of
Stockholder which approval shall not be unreasonably withheld or delayed) and
the nature of his commitments, arrangements and understandings under this
Agreement. Notwithstanding anything in this Agreement to the contrary, the
foregoing shall not restrict a Stockholder from taking actions in his capacity
as a director, officer or employee of the Company to the extent and in the
circumstances permitted by the Merger Agreement or as required by applicable law
or by his fiduciary duty as a director, officer or employee of the Company. For
purposes of this Agreement, "Business Day" shall mean a day on which banks are
not required or authorized to be closed in the City of New York.
4.2 No Solicitation. Prior to the Termination Date, Stockholder
shall not (directly or indirectly through advisors, agents or other
intermediaries), (a) solicit or initiate inquiries, proposals or offers from any
Person (other than Parent or any of its affiliates) relating to any Takeover
Proposal or (b) in connection with any of the foregoing, enter into or
participate in any discussions (knowingly) or negotiations or furnish to any
other Person any information with respect to the business, properties or assets
of the Company or any of its Subsidiaries; provided, however, that the foregoing
shall not restrict Stockholder as a director, officer or employee of the Company
from taking actions in any such capacity to the extent and in the circumstances
permitted by the Merger Agreement or as required by applicable law or his
fiduciary duties as such director, officer or employee. If Stockholder receives
any inquiry or proposal, in his capacity as a Stockholder and with respect to
the Stockholder Shares, then Stockholder promptly shall inform Parent of the
terms and conditions, if any, of such inquiry or proposal and the identity of
the person making it. Stockholder immediately will cease and cause his
advisors, agents and other intermediaries to cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing.
4.3 Restriction on Transfer, Proxies and Non-Interference;
Restriction on Withdrawal. Prior to the Termination Date, Stockholder shall not
directly or indirectly: (a) except pursuant to the terms of the Offer and the
Merger Agreement, and to Parent pursuant to this Agreement, offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
enforce or permit the execution of the provisions of any redemption agreement
with the Company or enter into any contract, option or other binding agreement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, or other disposition of, or exercise any
discretionary powers to distribute, any or all of the Stockholder Shares owned
by him or any interest therein; (b) except as contemplated hereby, grant any
proxies or powers of attorney with respect to any
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Stockholder Shares, deposit any Stockholder Shares into a voting trust or enter
into a voting agreement with respect to any Stockholder Shares; or (c) take any
action that would make any representation or warranty of Stockholder contained
herein untrue or incorrect in any material respect or have the effect of
preventing or disabling Stockholder from performing its obligations under this
Agreement. Anything to the contrary in this Agreement notwithstanding,
Stockholder may sell, dispose of and/or transfer all or any portion of the
Stockholder Shares for tax, securities or estate planning purposes, for
charitable donation purposes or to any Section 501(c)(3) organization as long as
the purchaser or transferee of such Stockholder Shares under this subsection
agrees to be bound by the provisions of and becomes a party to this Agreement.
4.4 Waiver of Appraisal and Dissenter's Rights. Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that
Stockholder may have.
5. Third Party Business Combination.
If (a) the Merger Agreement is terminated in accordance with Section
8.1(f)(ii) or Section 8.1(h) of the Merger Agreement, (b) within three months
after the Merger Agreement is terminated, a contract or agreement relating to a
Third Party Business Combination, as defined below, is entered into and (c)
Stockholder receives, within twelve months after the Merger Agreement is
terminated, from any Person (other than Parent, Purchaser or any of their
affiliates) any cash or non-cash consideration in an amount per share greater
than $16.00 (the "Third Party Consideration") in respect of any sale or
disposition of all or any portion of the Stockholder Shares in connection with
and as part of a Third Party Business Combination, then Stockholder within two
(2) Business Days of receipt thereof shall pay to Parent or its designee an
aggregate amount equal to fifty percent (50%) of (A) the excess of the Third
Party Consideration over $16.00 multiplied by (B) the number of Stockholder
Shares with respect to which such Third Party Consideration was received;
provided that, (x) if the consideration received by Stockholder shall be
securities listed on a national securities exchange or traded on the NASDAQ
National Market ("NASDAQ"), the per share value of such consideration shall be
equal to the closing price per share listed on such national securities exchange
or NASDAQ National Market on the date such transaction is consummated, (y) if
the consideration received by Stockholder shall be in a form other than such
listed securities, the per share value shall be determined as of the date such
transaction is consummated in good faith by Parent or its designee and the
Stockholder or his designee or if the Parent and its designee and Stockholder
and his designee cannot reach agreement, by a nationally recognized investment
banking firm reasonably acceptable to the parties and (z) Stockholder will pay
Parent or its designee in kind and on a pro rata basis (i.e., if the Third Party
Consideration includes cash, listed securities and/or other consideration,
Parent or its designee will receive its pro rata portion of each such item).
The term "Third Party Business Combination" means the occurrence of any of the
following events: (i) the Company or any Subsidiaries whose assets constitute
all or substantially all of
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the business or assets of the Company is acquired by merger or otherwise by any
person or group, other than Parent or any affiliate thereof (a "Third Party");
(ii) the sale to a Third Party of all or substantially all of the business or
assets of the Company and its Subsidiaries, taken as a whole; and (iii) the
Company, or Stockholder and Co-Stockholder enter into a merger or other
agreement with a Third Party which contemplates, in a single transaction or
series of related transactions, the acquisition of all or substantially all of
the Stockholder Shares and the Shares owned by the Co-Stockholder.
6. Further Assurances. From time to time, at any other party's
reasonable request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further action
as may be necessary to consummate and make effective the transactions
contemplated by this Agreement.
7. Certain Events. Stockholder agrees, to the extent permitted by
applicable law, that this Agreement and the obligations hereunder shall attach
to all Stockholder Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of such Stockholder Shares shall pass,
whether by operation of law or otherwise.
8. Stop Transfer. Except in connection with transfers permitted
under Section 4.3, Stockholder agrees with, and covenants to Parent that it
shall not request that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of the
Stockholder Shares.
9. Termination. All obligations of Stockholder under this
Agreement, except for the obligations under Section 5 above (which obligations
will only survive for the period set forth therein), shall terminate upon the
first to occur of (a) the acceptance for payment of Stockholder Shares in the
Offer, (b) the Effective Time of the Merger and (c) the time the Merger
Agreement is terminated in accordance with its terms (such earlier time being
the "Termination Date").
10. Miscellaneous.
10.1 Entire Agreement; Assignment. This Agreement (a) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (b)
shall not be assigned by operation of law or otherwise without the prior written
consent of the other parties, provided that Parent may assign, in its sole
discretion, its rights and obligations hereunder to any affiliate of Parent, but
no such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
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10.2 Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
10.3 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
(a) if to Parent, to
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, Minnesota 55303
Telephone: (612) 576-4200
Telecopy: (612) 576-4297
Attention: William J. McMahon
with a copy to
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Telephone: (212) 603-2000
Telecopy: (212) 603-2001
Attention: Leonard Gubar, Esq.
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(b) if to the Stockholder, to
Mark C. Mamolen
155 W. Burton Place
Unit #2
Chicago, IL 60610
Telephone: (312) 337-4141
Telecopy: (312) 337-4116
Attention:
with a copy to:
Barack Ferrazzano Kirschbaum
Perlman & Nagelberg
333 West Wacker Drive
Suite 2700
Chicago, Illinois 60606
Telephone: (312) 984-3100
Telecopy: (312) 984-3150
Attention: David Selmer, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
10.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
10.5 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
10.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
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10.7 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
10.8 Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
10.9 Definitions. For purposes of this Agreement:
(a) "beneficially own" or "beneficial ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act). Except as otherwise
referred to herein, without duplicative counting of the same securities by the
same holder, securities beneficially owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" as described in Section 13(d)(3) of the Exchange Act.
(b) "Person" shall mean an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity.
(c) In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Stockholder Shares" shall be deemed to refer to and include the Stockholder
Shares as well as all such stock dividends and distributions and any shares into
which or for which any or all of the Stockholder Shares may be changed or
exchanged.
10.10 Stockholder Capacity. Notwithstanding anything in this
Agreement to the contrary, if and to the extent that Stockholder is or becomes
during the term hereof a director, officer or employee of the Company,
Stockholder makes no agreement or understanding herein in his or her capacity as
such director, officer or employee, and the agreements set forth herein shall in
no way restrict any director, officer or employee of the Company in the exercise
of his or her fiduciary duties as such director, officer or employee of the
Company. Stockholder has executed this Agreement solely in his capacity as the
record and/or beneficial holder of Stockholder Shares. To the extent that the
Company or its directors, officers, or agents are permitted to engage in
discussions or negotiations with
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respect to any Takeover Proposal (or any inquiry or proposal with respect
thereto) pursuant to the Merger Agreement, Stockholder, in his capacity as such,
also shall be entitled, notwithstanding anything to the contrary contained in
this Agreement, to participate in such discussions and negotiations, including
without limitation, with respect to Existing Shares and the Stockholder Shares
and the related matters subject to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By:
------------------------------
Name:
Title:
---------------------------------
Mark C. Mamolen
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Exhibit 99.3
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of November 25,
1997, by and among Lund International Holdings, Inc., a Delaware corporation
("Parent"), and Charles S. Meyer (hereinafter referred to as "Stockholder").
W I T N E S S E T H:
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WHEREAS, concurrently herewith, Parent, Zephyros Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent
("Purchaser"), and Deflecta-Shield Corporation, a Delaware corporation (the
"Company"), will enter into an Agreement and Plan of Merger of even date
herewith (the "Merger Agreement"; capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement), pursuant to which
(and subject to the terms and conditions specified therein) Purchaser will make
a cash tender offer (as defined in the Merger Agreement, the "Offer") for all
outstanding shares of Common Stock, par value $.01 per share, of the Company
("Company Common Stock") and, following consummation of the Offer, Purchaser
will be merged with and into the Company, with the Company continuing as the
surviving corporation and as a wholly-owned subsidiary of Parent (the "Merger"),
whereby each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger will be converted into the right to
receive the Merger Consideration, other than (i) shares of Company Common Stock
owned, directly or indirectly, by the Company or any subsidiary of the Company
or by Parent, Purchaser or any other affiliate of Parent and (ii) Dissenting
Shares; and
WHEREAS, Stockholder is a stockholder of the Company and, as a
condition to Parent and Purchaser entering into the Merger Agreement, Parent
requires that Stockholder enter into, and Stockholder has agreed to enter into,
this Agreement with Parent.
NOW, THEREFORE, in consideration of the representations and warranties
and covenants set forth herein and in the Merger Agreement, Parent and
Stockholder, intending to be legally bound hereby each agree as follows:
1. Representations and Warranties of the Stockholder. Stockholder
hereby represents and warrants to Parent as follows:
1.1 Validity of Agreement. Stockholder has the legal capacity to
enter into and perform all of Stockholder's obligations under this Agreement.
This Agreement has been duly executed and delivered by Stockholder and
constitutes a valid and binding obligation of Stockholder enforceable against
Stockholder in accordance with its terms,
<PAGE>
except that (a) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought and (c) no representation is made with respect to the
enforceability, validity or binding effect of the third sentence of Section 4.1
under applicable provisions of the Exchange Act. If Stockholder is married, and
his Stockholder Shares (as hereinafter defined) constitute community property,
this Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, Stockholder's spouse, enforceable
against such person in accordance with its terms (subject to the exceptions set
forth in the immediately preceding sentence).
1.2 Consents and Approvals; No Violations. The execution, delivery
and performance of this Agreement by Stockholder shall not (a) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which Stockholder is a party or by which
Stockholder or any of his properties or assets is bound or affected or (b)
violate any order, writ, injunction, decree or judgment, specifically applicable
by its terms to Stockholder or any of his properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, or notice to, any state, federal or foreign public body or authority is
required by or with respect to Stockholder in connection with the execution and
delivery of this Agreement by Stockholder or the consummation by Stockholder of
any of the transactions contemplated by this Agreement, except for filings
pursuant to the Exchange Act and except as may be required by the Merger.
Without implication that the following consent is required by that certain
Voting Agreement, dated January 27, 1994, by and between Stockholder and
Mark C. Mamolen (the "Co-Stockholder"), Stockholder hereby (i) consents, if
such consent is required by the Voting Agreement, to Co-Stockholder entering
into and performing a stockholder agreement with Parent, of even date herewith
(the "Co-Stockholder Agreement"), substantially identical to this Agreement and
(ii) acknowledges and agrees that this Agreement and the Co-Stockholder
Agreement supersede the Voting Agreement with respect to the matters set forth
herein and in the Co-Stockholder Agreement. The parties hereto acknowledge
that Co-Stockholder is a third party beneficiary of the foregoing.
1.3 Ownership of Shares. (a) Stockholder is the record and/or
beneficial owner of that number of shares of Company Common Stock set forth
opposite Stockholder's name on Annex 1 attached hereto (such shares hereinafter
referred to as the "Existing Shares," and together with any shares of Company
Common Stock acquired of record or beneficially by Stockholder in any capacity
after the date hereof and prior to the termination hereof, whether upon exercise
of options, conversion of convertible securities, purchase, exchange or
otherwise, referred to as the "Stockholder Shares"). Notwithstanding the
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foregoing, neither the Existing Shares nor the Stockholder Shares include any
shares of Company Common Stock owned of record by Co-Stockholder.
(b) Except for shares of Company Common Stock owned by the
Co-Stockholder subject to the Voting Agreement, on the date hereof, the
Existing Shares constitute all of the outstanding shares of Company Common
Stock owned of record and/or beneficially by Stockholder.
(c) Except as provided by the Voting Agreement, Stockholder has
sole power of disposition with respect to all of the Existing Shares owned
by him and sole voting power with respect to the matters set forth in
Section 3.1 hereof and sole power to demand dissenter's or appraisal
rights, in each case with respect to all of the Existing Shares owned by
him with no restrictions on such rights, subject to any restrictions
imposed by applicable federal securities laws, Delaware law and the terms
of this Agreement.
(d) Except as provided by the Voting Agreement, Stockholder will
have sole power of disposition with respect to shares of Company Common
Stock other than Existing Shares, if any, which become beneficially owned
by Stockholder and will have sole voting power with respect to the matters
set forth in Section 3.1 hereof and sole power to demand dissenter's or
appraisal rights, in each case with respect to all such shares, if any,
which become beneficially owned by Stockholder with no restrictions on such
rights, subject to any restrictions imposed by applicable federal
securities laws and the terms of this Agreement.
1.4 No Encumbrances. The Existing Shares and the certificates
representing such shares are now, and the Stockholder Shares and the
certificates representing such shares at all times during the term hereof will
be, held by Stockholder, free and clear of all claims, liens, charges, security
interests, proxies, voting trusts or agreements, understandings or arrangements
and any other encumbrances of any kind or nature whatsoever, except as otherwise
provided in this Agreement and except as set forth in the Voting Agreement.
Certificates representing the Existing Shares contain legends reflecting the
Voting Agreement and the restrictions on transfer of Existing Shares under the
Securities Act.
1.5 Brokers and Intermediaries. No broker, investment banker,
financial adviser or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Stockholder. It is agreed and acknowledged that the Company has retained
Wasserstein, Perrella & Co. in connection with the Offer and the Merger and the
transactions contemplated by the Merger Agreement.
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1.6 Reliance. Stockholder understands and acknowledges that Parent
and Purchaser are entering into the Merger Agreement in reliance upon
Stockholder's execution and delivery of this Agreement with Parent.
2. Representations and Warranties of Parent. Parent hereby
represents and warrants to Stockholder as follows:
2.1 Organization; Authorization; Validity of Agreement. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and no other corporate proceedings on the
part of Parent are necessary to authorize this Agreement or any of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and constitutes a valid and binding obligation of Parent
enforceable against Parent in accordance with its terms, except that (a) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and (b)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
2.2 Consents and Approvals; No Violations. The execution, delivery
and performance of this Agreement by Parent shall not (a) conflict with or
result in any breach of the certificate of incorporation or by-laws of Parent,
(b) result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent is a party or by which
Parent or any of its properties or assets is bound or affected or (c) violate
any order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to Parent or any of Parent's properties or assets. Except as
provided in the Merger Agreement, no consent, approval, order or authorization
of, or registration, declaration or filing with, or notice to, any state,
federal or foreign public body or authority is required by or with respect to
Parent in connection with the execution and delivery of this Agreement by Parent
or the consummation by Parent of any of the transactions contemplated by this
Agreement.
2.3 Broker and Intermediaries. No broker, finder, investment banker
or other Person or entity, other than Piper Jaffray & Co., is entitled in
connection with the transactions contemplated by the Merger Agreement to any
broker's commission, finder's fee, investment banker's fee or similar payment in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of Parent or Purchaser.
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2.4 Reliance. Parent understands and acknowledges that Stockholder
is entering into this Agreement in reliance upon Parent's execution and delivery
of this Agreement with Stockholder and upon Parent's and Purchaser's execution
of the Merger Agreement.
3. Agreement to Vote. Stockholder, solely in his capacity as a
stockholder and not as a director, officer or employee of the Company, hereby
agrees that, until the Termination Date (as defined in Section 9), at any
meeting of the stockholders of the Company, however called at which the
following matters are considered for a vote, Stockholder shall vote (or cause to
be voted) the Stockholder Shares (a) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance hereof and thereof; (b)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or this Agreement; and (c) except as specifically
requested or agreed to in writing by Parent in advance, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company; (ii) a sale,
lease or transfer of a material amount of assets of the Company or
reorganization, recapitalization, dissolution or liquidation of the Company; and
(iii)(A) any change in the majority of the board of directors of the Company;
(B) any change in the present capitalization of the Company or any amendment of
the Company's Certificate of Incorporation or By-Laws; (C) any other material
change in the Company's corporate structure or business; or (D) any other action
which is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone, discourage or adversely affect the Offer, the Merger or the
transactions contemplated by the Merger Agreement or this Agreement.
Stockholder shall not enter into any agreement with or grant any proxy to any
person or entity prior to the Termination Date to vote or give instructions in
any manner inconsistent with clauses (i), (ii) or (iii) of the preceding
sentence. The foregoing shall not limit or prohibit Stockholder from entering
into any agreement simultaneously with or after termination of this Agreement.
4. Certain Covenants of the Stockholder. Except in accordance with
the terms of this Agreement, Stockholder hereby agrees as follows:
4.1 Tender of Stockholder Shares. Stockholder agrees to tender and
sell to Purchaser all of the Stockholder Shares pursuant to and in accordance
with the terms of the Offer. Stockholder agrees that he shall deliver to the
depositary for the Offer, no later than the fifth Business Day (as defined
below) following the commencement of the Offer pursuant to Section 1.1 of the
Merger Agreement, a letter of transmittal together with any and all certificates
representing the Stockholder Shares owned by him (or such documentation as
required by the terms of the Offer with respect to lost stock certificates).
Notwithstanding
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any term of the Offer to the contrary, Stockholder agrees not to withdraw any
Stockholder Shares tendered into the Offer pursuant to this Section 4.1 during
the term of this Agreement. Stockholder hereby acknowledges and agrees that
Purchaser's obligation to accept for payment the Stockholder Shares in the Offer
is subject to the terms and conditions of the Offer. Stockholder hereby permits
Parent and Purchaser to publish and disclose in the Offer Documents (including,
without limitation, all documents and schedules filed with the SEC), the
identity of the Stockholder (subject, however, to the prior approval of
Stockholder which approval shall not be unreasonably withheld or delayed) and
the nature of his commitments, arrangements and understandings under this
Agreement. Notwithstanding anything in this Agreement to the contrary, the
foregoing shall not restrict a Stockholder from taking actions in his capacity
as a director, officer or employee of the Company to the extent and in the
circumstances permitted by the Merger Agreement or as required by applicable law
or by his fiduciary duty as a director, officer or employee of the Company. For
purposes of this Agreement, "Business Day" shall mean a day on which banks are
not required or authorized to be closed in the City of New York.
4.2 No Solicitation. Prior to the Termination Date, Stockholder
shall not (directly or indirectly through advisors, agents or other
intermediaries), (a) solicit or initiate inquiries, proposals or offers from any
Person (other than Parent or any of its affiliates) relating to any Takeover
Proposal or (b) in connection with any of the foregoing, enter into or
participate in any discussions (knowingly) or negotiations or furnish to any
other Person any information with respect to the business, properties or assets
of the Company or any of its Subsidiaries; provided, however, that the foregoing
shall not restrict Stockholder as a director, officer or employee of the Company
from taking actions in any such capacity to the extent and in the circumstances
permitted by the Merger Agreement or as required by applicable law or his
fiduciary duties as such director, officer or employee. If Stockholder receives
any inquiry or proposal, in his capacity as a Stockholder and with respect to
the Stockholder Shares, then Stockholder promptly shall inform Parent of the
terms and conditions, if any, of such inquiry or proposal and the identity of
the person making it. Stockholder immediately will cease and cause his
advisors, agents and other intermediaries to cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing.
4.3 Restriction on Transfer, Proxies and Non-Interference;
Restriction on Withdrawal. Prior to the Termination Date, Stockholder shall not
directly or indirectly: (a) except pursuant to the terms of the Offer and the
Merger Agreement, and to Parent pursuant to this Agreement, offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
enforce or permit the execution of the provisions of any redemption agreement
with the Company or enter into any contract, option or other binding agreement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, or other disposition of, or exercise any
discretionary powers to distribute, any or all of the Stockholder Shares owned
by him or any interest therein; (b) except as contemplated hereby, grant any
proxies or powers of attorney with respect to any
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Stockholder Shares, deposit any Stockholder Shares into a voting trust or enter
into a voting agreement with respect to any Stockholder Shares; or (c) take any
action that would make any representation or warranty of Stockholder contained
herein untrue or incorrect in any material respect or have the effect of
preventing or disabling Stockholder from performing its obligations under this
Agreement. Anything to the contrary in this Agreement notwithstanding,
Stockholder may sell, dispose of and/or transfer all or any portion of the
Stockholder Shares for tax, securities or estate planning purposes, for
charitable donation purposes or to any Section 501(c)(3) organization as long as
the purchaser or transferee of such Stockholder Shares under this subsection
agrees to be bound by the provisions of and becomes a party to this Agreement.
4.4 Waiver of Appraisal and Dissenter's Rights. Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that
Stockholder may have.
5. Third Party Business Combination.
If (a) the Merger Agreement is terminated in accordance with Section
8.1(f)(ii) or Section 8.1(h) of the Merger Agreement, (b) within three months
after the Merger Agreement is terminated, a contract or agreement relating to a
Third Party Business Combination, as defined below, is entered into and (c)
Stockholder receives, within twelve months after the Merger Agreement is
terminated, from any Person (other than Parent, Purchaser or any of their
affiliates) any cash or non-cash consideration in an amount per share greater
than $16.00 (the "Third Party Consideration") in respect of any sale or
disposition of all or any portion of the Stockholder Shares in connection with
and as part of a Third Party Business Combination, then Stockholder within two
(2) Business Days of receipt thereof shall pay to Parent or its designee an
aggregate amount equal to fifty percent (50%) of (A) the excess of the Third
Party Consideration over $16.00 multiplied by (B) the number of Stockholder
Shares with respect to which such Third Party Consideration was received;
provided that, (x) if the consideration received by Stockholder shall be
securities listed on a national securities exchange or traded on the NASDAQ
National Market ("NASDAQ"), the per share value of such consideration shall be
equal to the closing price per share listed on such national securities exchange
or NASDAQ National Market on the date such transaction is consummated, (y) if
the consideration received by Stockholder shall be in a form other than such
listed securities, the per share value shall be determined as of the date such
transaction is consummated in good faith by Parent or its designee and the
Stockholder or his designee or if the Parent and its designee and Stockholder
and his designee cannot reach agreement, by a nationally recognized investment
banking firm reasonably acceptable to the parties and (z) Stockholder will pay
Parent or its designee in kind and on a pro rata basis (i.e., if the Third Party
Consideration includes cash, listed securities and/or other consideration,
Parent or its designee will receive its pro rata portion of each such item).
The term "Third Party Business Combination" means the occurrence of any of the
following events: (i) the Company or any Subsidiaries whose assets constitute
all or substantially all of
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the business or assets of the Company is acquired by merger or otherwise by any
person or group, other than Parent or any affiliate thereof (a "Third Party");
(ii) the sale to a Third Party of all or substantially all of the business or
assets of the Company and its Subsidiaries, taken as a whole; and (iii) the
Company, or Stockholder and Co-Stockholder enter into a merger or other
agreement with a Third Party which contemplates, in a single transaction or
series of related transactions, the acquisition of all or substantially all of
the Stockholder Shares and the Shares owned by the Co-Stockholder.
6. Further Assurances. From time to time, at any other party's
reasonable request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further action
as may be necessary to consummate and make effective the transactions
contemplated by this Agreement.
7. Certain Events. Stockholder agrees, to the extent permitted by
applicable law, that this Agreement and the obligations hereunder shall attach
to all Stockholder Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of such Stockholder Shares shall pass,
whether by operation of law or otherwise.
8. Stop Transfer. Except in connection with transfers permitted
under Section 4.3, Stockholder agrees with, and covenants to Parent that it
shall not request that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of the
Stockholder Shares.
9. Termination. All obligations of Stockholder under this
Agreement, except for the obligations under Section 5 above (which obligations
will only survive for the period set forth therein), shall terminate upon the
first to occur of (a) the acceptance for payment of Stockholder Shares in the
Offer, (b) the Effective Time of the Merger and (c) the time the Merger
Agreement is terminated in accordance with its terms (such earlier time being
the "Termination Date").
10. Miscellaneous.
10.1 Entire Agreement; Assignment. This Agreement (a) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (b)
shall not be assigned by operation of law or otherwise without the prior written
consent of the other parties, provided that Parent may assign, in its sole
discretion, its rights and obligations hereunder to any affiliate of Parent, but
no such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
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10.2 Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
10.3 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
(a) if to Parent, to
Lund International Holdings, Inc.
911 Lund Boulevard
Anoka, Minnesota 55303
Telephone: (612) 576-4200
Telecopy: (612) 576-4297
Attention: William J. McMahon
with a copy to
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Telephone: (212) 603-2000
Telecopy: (212) 603-2001
Attention: Leonard Gubar, Esq.
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(b) if to the Stockholder, to
Charles S. Meyer
Three First National Plaza, #5710
Chicago, IL 60602
Telephone: (312) 236-7041
Telecopy: (312) 236-0720
Attention:
with a copy to:
Barack Ferrazzano Kirschbaum
Perlman & Nagelberg
333 West Wacker Drive
Suite 2700
Chicago, Illinois 60606
Telephone: (312) 984-3100
Telecopy: (312) 984-3150
Attention: David Selmer, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
10.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
10.5 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
10.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
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10.7 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
10.8 Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
10.9 Definitions. For purposes of this Agreement:
(a) "beneficially own" or "beneficial ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act). Except as otherwise
referred to herein, without duplicative counting of the same securities by the
same holder, securities beneficially owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" as described in Section 13(d)(3) of the Exchange Act.
(b) "Person" shall mean an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity.
(c) In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Stockholder Shares" shall be deemed to refer to and include the Stockholder
Shares as well as all such stock dividends and distributions and any shares into
which or for which any or all of the Stockholder Shares may be changed or
exchanged.
10.10 Stockholder Capacity. Notwithstanding anything in this
Agreement to the contrary, if and to the extent that Stockholder is or becomes
during the term hereof a director, officer or employee of the Company,
Stockholder makes no agreement or understanding herein in his or her capacity as
such director, officer or employee, and the agreements set forth herein shall in
no way restrict any director, officer or employee of the Company in the exercise
of his or her fiduciary duties as such director, officer or employee of the
Company. Stockholder has executed this Agreement solely in his capacity as the
record and/or beneficial holder of Stockholder Shares. To the extent that the
Company or its directors, officers, or agents are permitted to engage in
discussions or negotiations with
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respect to any Takeover Proposal (or any inquiry or proposal with respect
thereto) pursuant to the Merger Agreement, Stockholder, in his capacity as such,
also shall be entitled, notwithstanding anything to the contrary contained in
this Agreement, to participate in such discussions and negotiations, including
without limitation, with respect to Existing Shares and the Stockholder Shares
and the related matters subject to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LUND INTERNATIONAL HOLDINGS, INC.
By:
------------------------------
Name:
Title:
---------------------------------
Charles S. Meyer
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EXHIBIT 99.4
<TABLE>
<S> <C> <C>
Contacts: For Lund For Harvest Partners George For Deflecta-Shield Ron Fox
International Holdings Sard/Anton Nicholas Sard 515/961-6100
William J. McMahon/Kathy Verbinnen & Co 212-687-8080
Smith 612/576-4200
</TABLE>
LUND TO ACQUIRE DEFLECTA-SHIELD FOR $16 PER SHARE IN CASH,
CREATING LEADING MAKER OF LIGHT TRUCK APPEARANCE ACCESSORIES
HARVEST PARTNERS TO INCREASE OWNERSHIP OF LUND
ANOKA, MN, and INDIANOLA, IA, November 26, 1997 -- Lund International
Holdings Inc. (NASDAQ: LUND), a leading manufacturer of appearance accessories
for light trucks, and Deflecta-Shield Corporation (NASDAQ: TRUX), a leading
manufacturer of both light truck and heavy truck accessories, today announced
they have signed a definitive merger agreement that will create the preeminent
manufacturer of light truck appearance accessories and a leader across the
entire truck accessories market.
The agreement, approved unanimously by both Boards of Directors, provides
for Lund to acquire Deflecta-Shield for $16 per share in cash. Under the
agreement, Lund will make a tender offer for all 4.8 million Deflecta-Shield
shares and expects to commence the offer promptly. Two principal shareholders,
who in total own approximately 40% of Deflecta-Shield shares, have already
agreed to tender their shares. Any shares not tendered and purchased pursuant to
the tender offer will be cashed out in a subsequent merger at the net cash price
of $16 per share, subject to appraisal rights under applicable Delaware law.
The transaction, expected to close late next month, has a total value of
approximately $90 million including approximately $10 million in assumed debt.
The acquisition is expected to be accretive to Lund's earnings per share in 1998
and increasingly accretive thereafter. Revenues of the combined companies are
expected to be approximately $130 million in 1998.
As part of the transaction, an affiliate of Harvest Partners, a leading New
York private investment firm, will invest as equity approximately $30 million in
Lund to increase its ownership in the Company. Harvest acquired a 38.4% stake in
Lund from founder Allan Lund on September 9, 1997. Lund International also has
committed debt financing of $87 million from Heller Financial Inc. for the
acquisition of Deflecta-Shield and for working capital.
"This acquisition combines Lund's leading position and brand name strength
in accessories for pick-up trucks, sport utility vehicles and minivans with
Deflecta-Shield's complementary strengths and history of strong revenue growth
to create the leader in the truck appearance accessories market," said William
J. McMahon, Chief Executive of Lund International. "We believe this company will
create tremendous breadth and strength across a wide variety of products and
services for our customers. The acquisition should maximize value for our
shareholders by creating synergies while opening up new sales opportunities for
Lund in the heavy truck category and the OEM market. We are excited by the
superb growth prospects of the combined companies."
Russell E. Stubbings, President and Chief Executive Officer of
Deflecta-Shield, said, "Joining a first-class company like Lund International
- --with operations, products and services that complement our own so
well--creates significant benefits for both companies. This strategic
partnership will create tremendous products and services for our customers while
maximizing value for our shareholders. We look forward to working with Lund to
integrate the two companies quickly and effectively."
"The combination of Lund and Deflecta-Shield will create a powerhouse in the
fragmented $1.5 billion light truck accessories market, where no other company
in the markets we serve has annual sales in excess of $100 million," said Ira
Kleinman, a General Partner of Harvest Partners who recently became Chairman of
the Board of Lund International. "Lund is a superb platform for further growth,
and we intend to seek more acquisitions in this consolidating industry."
<PAGE>
The closing of the tender offer will be subject to a majority of the common
stock of Deflecta-Shield on a fully diluted basis being tendered, as well as to
other customary conditions. The merger agreement restricts Deflecta-Shield from
actively soliciting any other offers while, consistent with the fiduciary duties
of the Deflecta-Shield Board of Directors, providing that Deflecta-Shield may
respond to certain unsolicited offers or indications of interest. The agreement
also provides for appropriate break-up fees for Lund under certain
circumstances, including the termination of the merger agreement by
Deflecta-Shield to accept a superior proposal, in which event the shareholder
agreement to tender to Lund also terminates.
Piper Jaffray Companies Inc. is the financial advisor to Lund. Wasserstein
Perella & Co. LLC is the financial advisor to Deflecta-Shield and provided a
fairness opinion to the Company.
Based in Anoka, MN, Lund International Holdings is a leading designer,
manufacturer and marketer of a broad line of fiberglass and plastic appearance
accessories for new and used light trucks, including pick-up trucks, sport
utility vehicles, mini-vans and other vans.
With annual sales of $72 million, Deflecta-Shield manufactures fiberglass,
plastic and aluminum appearance accessories for light trucks and heavy trucks.
Based in Indianola, IA, the company also supplies suspension systems and shock
absorbers for light trucks.
Harvest Partners, Inc. is a private investment firm which focuses on
management buyouts and growth financings of medium-size manufacturing, specialty
services and distribution businesses. Founded in 1981, Harvest is best known for
its expertise in structuring multinational management buyouts and for its
successful platform acquisitions. Harvest currently has in excess of $600
million in capital under management from leading U.S. and multinational
institutions, including Asea Brown Boveri, Volvo, an equity affiliate of
Deutsche Bank, MassMutual, PPM America, and several leading public and private
U.S. pension funds. # # #
Statements in this press release relating to future financial results,
ongoing company operations, the effects of the acquisition, trends and market
analysis, among others, are forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These statements involve risks and
uncertainties which could cause results to differ materially from those
anticipated. Among the factors that could cause anticipated results of the
acquisition to differ materially are the following: inability to obtain expected
efficiencies, or to obtain them in a timely manner; inability to effectively
manage a larger enterprise, to integrate the two companies, or to control costs
associated with such integration; and the representations, warranties and
covenants made in the merger agreement proving to be materially untrue. In
addition, both Lund's business and Deflecta-shield's business and operations
(and anticipated results) including the following: consumer preference changes,
risk of expansion into new distribution channels, delays in designing,
developing, testing or shipping of products, increased competition, general
economic developments and trends, developments and trends in the light truck and
automotive accessory market and increased costs. This is not an exhaustive list
and the Company may supplement this list in future filings or releases or in
connection with the making of forward-looking statements.
