<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
HASKEL INTERNATIONAL, INC.
(NAME OF SUBJECT COMPANY)
HI MERGER SUBSIDIARY INC.
HI HOLDINGS INC.
(BIDDERS)
CLASS A COMMON STOCK, NO PAR VALUE PER SHARE
CLASS B COMMON STOCK, NO PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
418106100
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
ERIC M. RUTTENBERG
HI MERGER SUBSIDIARY INC.
C/O TINICUM INCORPORATED
800 THIRD AVENUE, 40TH FLOOR
NEW YORK, NEW YORK 10022
(212) 446-9300
------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
JOSHUA N. KORFF, ESQ.
KIRKLAND & ELLIS
CITICORP CENTER
153 EAST 53RD STREET
NEW YORK, NY 10022
(212) 446-4800
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CALCULATION OF FILING FEE
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Transaction Valuation*: $65,956,067 Amount of Filing Fee: $13,192
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* For purposes of calculating the fee only. This amount assumes the purchase of
all outstanding 4,772,205 shares of Class A common stock, no par value per
share, and all outstanding 40,000 shares of Class B common stock, no par
value per share (collectively, "Shares"), of the subject company at a price
per Share of $12.90 in cash, plus the net payment to holders of in-the-money
options of the subject company. Such number of Shares represents all the
shares of capital stock of the subject company outstanding as of March 10,
1999, as represented by the subject company in the Agreement and Plan of
Merger, dated as of March 15, 1999. The amount of the filing fee, calculated
in accordance with Section 14(g)(3) and Rule 0-11(d) under the Securities
Exchange Act of 1934, as amended, equals 1/50th of one percent of the
aggregate of the cash offered by the bidders.
[ ]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: Not Applicable Filing Party: Not Applicable
Form or Registration
No.: Not Applicable Date Filed: Not Applicable
</TABLE>
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<PAGE> 2
SCHEDULE 14D-1 AND 13D
CUSIP NO. 418106100 PAGE 2
<TABLE>
<S> <C> <C>
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1. Name of Reporting Persons
HI MERGER SUBSIDIARY INC.
S.S. or I.R.S. Identification Nos. of Above Persons
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2. Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
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3. SEC Use Only
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4. Source of Funds WC
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5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f) [ ]
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6. Citizenship or Place of Organization CALIFORNIA
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,521,477*
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8. Check if the Aggregate Amount in Row 7 Excludes Certain
Shares [ ]
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9. Percent of Class Represented by Amount in Row 7 31.9%*
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10. Type of Reporting Person CO
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</TABLE>
* On March 15, 1999, HI Holdings Inc. and HI Merger Subsidiary Inc. entered into
a Shareholder Agreement (as amended as of March 18, 1999, the "Shareholder
Agreement") with certain shareholders of the subject company (the "Option
Shareholders") covering 1,521,477 Shares of Class A common stock (the "Option
Shares") collectively owned by the Option Shareholders (representing
approximately 31.9% of the outstanding Shares of Class A common stock).
Pursuant to the Shareholder Agreement, each of the Option Shareholders has
granted to HI Merger Subsidiary Inc. an irrevocable option to purchase such
Option Shareholder's Option Shares for $12.90 per Option Share in cash, as
well as an irrevocable proxy to vote such Option Shares. The Shareholder
Agreement is described more fully in Section 12 of the Offer to Purchase
attached hereto as Exhibit(a)(1).
<PAGE> 3
SCHEDULE 14D-1 AND 13D
CUSIP NO. 418106100 PAGE 3
<TABLE>
<S> <C> <C>
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1. Name of Reporting Persons
HI HOLDINGS INC.
S.S. or I.R.S. Identification Nos. of Above Persons
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2. Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
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3. SEC Use Only
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4. Source of Funds WC
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5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f) [ ]
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6. Citizenship or Place of Organization DELAWARE
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,521,477*
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8. Check if the Aggregate Amount in Row 7 Excludes Certain
Shares [ ]
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9. Percent of Class Represented by Amount in Row 7 31.9%*
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10. Type of Reporting Person CO
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</TABLE>
* On March 15, 1999, HI Holdings Inc. and HI Merger Subsidiary Inc. entered into
a Shareholder Agreement (as amended as of March 18, 1999, the "Shareholder
Agreement") with certain shareholders of the subject company (the "Option
Shareholders") covering 1,521,477 Shares of Class A common stock (the "Option
Shares") collectively owned by the Option Shareholders (representing
approximately 31.9% of the outstanding Shares of Class A common stock).
Pursuant to the Shareholder Agreement, each of the Option Shareholders has
granted to HI Merger Subsidiary Inc. an irrevocable option to purchase such
Option Shareholder's Option Shares for $12.90 per Option Share in cash, as
well as an irrevocable proxy to vote such Option Shares. The Shareholder
Agreement is described more fully in Section 12 of the Offer to Purchase
attached hereto as Exhibit(a)(1).
<PAGE> 4
SCHEDULE 14D-1/SCHEDULE 13D
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D with respect to the beneficial ownership of Shares resulting
from the Shareholder Agreement, a copy of which is attached as Exhibit (c)(2)
hereto. The item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Haskel International, Inc., a
California corporation (the "Company"). The address of the Company's principal
executive offices is 100 East Graham Place, Burbank, California 91502.
(b) This Statement relates to the offer by HI Merger Subsidiary Inc., a
California corporation (the "Purchaser"), to purchase all the outstanding shares
of common stock, no par value per share (the "Shares") of the Company at a
purchase price of $12.90 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated March 22, 1999 (the "Offer to Purchase") and the related Letter
of Transmittal (which, together with any supplements or amendments, collectively
constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2)
hereto, respectively. The information set forth in the Offer to Purchase under
"Introduction" is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 6 ("Price
Range of Shares; Dividends") is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by the Purchaser and HI Holdings
Inc. ("Parent"), a Delaware corporation (collectively, the "Reporting Persons").
The Purchaser is a wholly-owned subsidiary of Parent. The information set forth
in the Offer to Purchase under "Introduction," in Section 9 ("Certain
Information Concerning the Purchaser and Parent") and in Schedule I to the Offer
to Purchase is incorporated herein by reference.
(e)-(f) During the last five years, neither of the Reporting Persons nor,
to the best of their knowledge, any of the persons listed in Schedule I to the
Offer to Purchase (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining further violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase in Section 11
("Background of the Offer; Contacts with the Company") and in Section 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; Shareholder Agreement") is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in the Offer to Purchase in Section 10
("Source and Amount of Funds") is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Offer to Purchase in Section 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; Shareholder Agreement") is incorporated herein by reference.
(f)-(g) The information set forth in the Offer to Purchase in Section 7
("Effect of the Offer on the Market for the Shares; Exchange Act Registration;
Margin Regulations") is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase in Section 9
("Certain Information Concerning the Purchaser and Parent"), Section 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; Shareholder Agreement") and in Schedule I to the Offer to Purchase is
incorporated herein by reference.
4
<PAGE> 5
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under "Introduction," in
Section 9 ("Certain Information Concerning the Purchaser and Parent"), Section
11 ("Background of the Offer; Contacts with the Company") and Section 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; Shareholder Agreement") is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase in Section 16 ("Fees and
Expenses") is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in the Offer to Purchase in Section 9 ("Certain
Information Concerning the Purchaser and Parent") is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information contained in the Offer to Purchase in Section 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; Shareholder Agreement") is incorporated herein by reference.
(b)-(c) The information set forth in the Offer to Purchase in Section 15
("Certain Legal Matters; Regulatory Approvals") is incorporated herein by
reference.
(d) The information set forth in the Offer to Purchase in Section 7
("Effect of the Offer on the Market for the Shares; Exchange Act Registration;
Margin Regulations") is incorporated herein by reference.
(e) The information set forth in the Offer to Purchase in Section 15
("Certain Legal Matters; Regulatory Approvals") is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase, the related Letter
of Transmittal, the Agreement and Plan of Merger, dated as of March 15, 1999, by
and among the Purchaser, Parent and the Company and the Shareholder Agreement,
dated as of March 15, 1999, by and among the Purchaser, Parent and certain
shareholders of the Company, copies of which are filed as Exhibits (a)(1),
(a)(2), (c)(1) and (c)(2) hereto, respectively, is incorporated herein by
reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated March 22, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of letter, dated March 22, 1999, to brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(5) Form of letter to be used by brokers, dealers, commercial banks,
trust companies and nominees to their clients.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Text of press release issued by the Company on March 15, 1999.
(a)(8) Form of Summary Advertisement, dated March 22, 1999.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger, dated as of March 15, 1999, by and
among the Company, the Purchaser and Parent.
(c)(2) Shareholder Agreement, dated as of March 15, 1999, by and among
certain stockholders of the Company, the Purchaser and Parent, as
amended as of March 18, 1999.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
5
<PAGE> 6
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
HI MERGER SUBSIDIARY INC.
By: /s/ SETH M. HENDON
----------------------------------------
Name: Seth M. Hendon
Title: Vice President
HI HOLDINGS INC.
By: /s/ SETH M. HENDON
----------------------------------------
Name: Seth M. Hendon
Title: Vice President
Dated: March 22, 1999
6
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
(a)(1) Offer to Purchase, dated March 22, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of letter, dated March 22, 1999, to brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(5) Form of letter to be used by brokers, dealers, commercial
banks, trust companies and nominees to their clients.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Press release issued by the Company on March 15, 1999.
(a)(8) Form of Summary Advertisement, dated March 22, 1999.
(c)(1) Agreement and Plan of Merger, dated as of March 15, 1999, by
and among the Company, the Purchaser and Parent.
(c)(2) Shareholder Agreement, dated as of March 15, 1999, by and
among certain stockholders of the Company, the Purchaser and
Parent, as amended as of March 18, 1999.
</TABLE>
<PAGE> 1
Exhibit (a) (1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HASKEL INTERNATIONAL, INC. [LOGO]
AT
$12.90 PER SHARE
BY
HI MERGER SUBSIDIARY INC.
A WHOLLY OWNED SUBSIDIARY
OF
HI HOLDINGS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK CITY
TIME, ON APRIL 19, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER (AS DEFINED HEREIN) IS CONDITIONED UPON, AMONG OTHER THINGS, (I)
THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE
OFFER SUCH NUMBER OF SHARES OF CLASS A COMMON STOCK, NO PAR VALUE PER SHARE (THE
"CLASS A COMMON STOCK") AND CLASS B COMMON STOCK, NO PAR VALUE PER SHARE (THE
"CLASS B COMMON STOCK") (TOGETHER, THE "SHARES"), OF HASKEL INTERNATIONAL, INC.
(THE "COMPANY") WHICH, TOGETHER WITH THE SHARES THEN OWNED DIRECTLY OR
INDIRECTLY BY HI MERGER SUBSIDIARY INC. (THE "PURCHASER"), WOULD CONSTITUTE NOT
LESS THAN 90% OF THE SHARES THEN OUTSTANDING (THE "MINIMUM CONDITION") AND (II)
THE SATISFACTION OF THE OTHER CONDITIONS DESCRIBED IN "CERTAIN CONDITIONS OF THE
OFFER". THE OFFER IS NOT SUBJECT TO ANY FINANCING CONTINGENCY.
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY, BY THE UNANIMOUS VOTE OF ALL
DIRECTORS PRESENT (WITH R. MALCOLM GREAVES AND TERRENCE A. NOONAN ABSENT DURING
THE VOTE), (A) HAS DETERMINED THAT THE MERGER AGREEMENT (AS DEFINED HEREIN) AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS
DEFINED HEREIN), ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND THE
SHAREHOLDERS OF THE COMPANY, (B) HAS APPROVED AND ADOPTED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
AND (C) RECOMMENDS ACCEPTANCE OF THE OFFER BY SHAREHOLDERS OF THE COMPANY.
------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should either (a) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions set forth therein, have
such shareholder's signature thereon guaranteed if required by Instruction 1
thereto, mail or deliver the Letter of Transmittal (or such facsimile thereof)
and any other required documents to American Stock Transfer & Trust Company, who
is acting as depositary in connection with the Offer ("the Depositary"), and
either deliver the Share Certificates (as defined herein) to the Depositary
along with the Letter of Transmittal (or a facsimile thereof) or deliver such
Shares pursuant to the procedures for book-entry transfer set forth in
"Procedures for Tendering Shares" or (b) request such shareholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such shareholder. A shareholder having Shares registered in the
name of a broker, dealer, commercial bank, trust company or other nominee, must
contact such broker, dealer, commercial bank, trust company or other nominee if
such shareholder desires to tender such Shares.
Any shareholder who desires to tender Shares and whose Share Certificates
are not immediately available, or who cannot comply with the procedures for
book-entry transfer described in this Offer to Purchase on a timely basis, may
tender such Shares by following the procedures for guaranteed delivery set forth
in "Procedures for Tendering Shares".
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or other related materials may be
directed to the Information Agent at its address and telephone number set forth
on the back cover of this Offer to Purchase. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
------------------------
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
March 22, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Introduction..................................................... 3
The Tender Offer................................................. 5
1. Terms of the Offer; Expiration Date......................... 5
2. Acceptance for Payment and Payment for Shares............... 6
3. Procedures for Tendering Shares............................. 7
4. Withdrawal Rights........................................... 9
5. Certain United States Federal Income Tax Consequences....... 10
6. Price Range of Shares; Dividends............................ 10
7. Effect of the Offer on the Market for the Shares; Exchange 11
Act Registration; Margin Regulations........................
8. Certain Information Concerning the Company.................. 12
9. Certain Information Concerning the Purchaser and Parent..... 14
10. Source and Amount of Funds.................................. 15
11. Background of the Offer; Contacts with the Company.......... 15
12. Purpose of the Offer and the Merger; Plans for the Company;
the Merger Agreement; Shareholder Agreement................. 16
13. Dividends and Distributions................................. 30
14. Certain Conditions of the Offer............................. 30
15. Certain Legal Matters; Regulatory Approvals................. 31
16. Fees and Expenses........................................... 33
17. Miscellaneous............................................... 33
Schedule I -- Directors and Executive Officers of Parent and
Purchaser...................................................... 35
Annex A -- Text of Chapter 13 of the California General
Corporation Law................................................ A-1
</TABLE>
2
<PAGE> 3
To the Holders of Shares of Common Stock of Haskel International, Inc.:
INTRODUCTION
HI Merger Subsidiary Inc., a California corporation ("Purchaser"), a wholly
owned Subsidiary of HI Holdings Inc., a Delaware corporation ("Parent"), hereby
offers to purchase all outstanding shares of Class A common stock, no par value
per share (the "Class A Common Stock"), and Class B common stock, no par value
per share (the "Class B Common Stock") (together, the "Shares"), of Haskel
International, Inc., a California corporation (the "Company"), at a price of
$12.90 per Share, net to the seller in cash, without interest (the "Offer
Price"), upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which together constitute the
"Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions, or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses of
American Stock Transfer & Trust Company, who is acting as depositary in
connection with the Offer (the "Depositary"), and Georgeson & Company Inc. who
is serving as information agent in connection with the Offer (the "Information
Agent"), incurred in connection with the Offer. See "Fees and Expenses".
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD"), BY THE
UNANIMOUS VOTE OF ALL DIRECTORS PRESENT (WITH R. MALCOLM GREAVES AND TERRENCE A.
NOONAN ABSENT DURING THE VOTE), (A) HAS DETERMINED THAT THE MERGER AGREEMENT (AS
DEFINED HEREIN) AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER (AS DEFINED HEREIN), ARE FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY AND THE SHAREHOLDERS OF THE COMPANY, (B) HAS APPROVED AND ADOPTED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER, AND (C) RECOMMENDS ACCEPTANCE OF THE OFFER BY SHAREHOLDERS OF
THE COMPANY.
The Company's financial advisor, Schroders & Co. Inc. ("Schroder"), has
delivered to the Company Board a written opinion, dated March 14, 1999, to the
effect that, as of such date and based upon and subject to certain matters
stated in such opinion, the $12.90 per Share cash consideration to be received
by the holders of Shares in the Offer and the Merger was fair from a financial
point of view to such holders. A copy of the opinion of Schroder is contained in
the Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company
with the United States Securities and Exchange Commission (the "Commission") in
connection with the Offer (together with any exhibits, annexes, amendments or
supplements thereto, the "Schedule 14D-9"), which is being mailed to Company
shareholders herewith and should be read carefully in its entirety. The opinion
of Schroder is directed to the Company Board and relates only to the fairness of
the cash consideration to be received in the Offer and the Merger by holders of
Shares from a financial point of view, does not address any other aspect of the
Offer or the Merger or related transactions, and is not intended to constitute,
and does not constitute, a recommendation to any shareholder as to whether such
shareholder should tender Shares in the Offer or how such shareholder should
vote if a vote is held on the Merger.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES WHICH, TOGETHER WITH THE SHARES THEN OWNED DIRECTLY OR INDIRECTLY BY
PURCHASER, WOULD CONSTITUTE NOT LESS THAN 90% OF EACH CLASS OF THE SHARES THEN
OUTSTANDING (THE "MINIMUM CONDITION") AND (II) THE SATISFACTION OR WAIVER OF THE
OTHER CONDITIONS DESCRIBED IN "CERTAIN CONDITIONS OF THE OFFER". THE OFFER IS
NOT SUBJECT TO ANY FINANCING CONDITION.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of March 15, 1999 (the "Merger Agreement") among Parent, Purchaser, and the
Company. The Merger Agreement provides, among other things, for the making of
the Offer and further provides that, following the purchase of Shares pursuant
to the Offer, upon the terms and subject to the conditions set forth in the
Merger Agreement, and in accordance with the California General Corporation Law
("California Law"), Purchaser will be merged with and into the Company (the
"Merger"). Following consummation of the Merger, the separate corporate
existence of Purchaser will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation") and will become a
3
<PAGE> 4
wholly-owned subsidiary of Parent. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by the Company or by any subsidiary of
the Company and each Share that is owned by Parent, Purchaser or any other
subsidiary of Parent, and other than Shares held by shareholders who have
demanded and perfected, and have not withdrawn or otherwise lost, appraisal
rights, if any, under California Law) will be canceled and converted
automatically into the right to receive $12.90 in cash, or any higher price that
may be paid per Share in the Offer, without interest (the "Merger
Consideration"). The Merger Agreement is more fully described in "Purpose of the
Offer and the Merger; Plans for the Company; The Merger Agreement; Shareholder
Agreement". The consummation of the Merger is subject to the satisfaction or
waiver of certain conditions, including the approval of the Merger Agreement by
the requisite vote, if any, of the shareholders of the Company.
The Company has advised Purchaser that as of the close of business on March
10, 1999, 4,772,205 Shares of Class A Common Stock were issued and outstanding,
40,000 Shares of Class B Common Stock were issued and outstanding and 834,640
Shares were reserved for issuance pursuant to outstanding stock options
("Existing Stock Options"). As of the close of business on March 10, 1999,
neither Parent nor Purchaser owned any Shares. As a result, Parent believes that
the Minimum Condition would be satisfied if Purchaser acquired 4,294,985 Shares
of Class A Common Stock and 36,000 Shares of Class B Common Stock (assuming no
Existing Stock Options were exercised prior to the consummation of the Offer).
As described below in Section 12 (in the subsection titled "Shareholder
Agreement") shareholders owning 1,521,477 Shares of Class A Common Stock and all
40,000 Shares of Class B Common Stock have agreed to tender such Shares.
Under California Law, if Purchaser acquires, pursuant to the Offer, at
least 90% of each class of the Shares then outstanding, Purchaser will be able
to approve the Merger Agreement and the transactions contemplated thereby,
including the Merger, without a vote of the Company's shareholders. In such
event, Parent, Purchaser and the Company have agreed to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of the Company's
shareholders. In that event, the Minimum Condition would be satisfied and,
following the purchase of Shares in the Offer, Purchaser would be able to effect
a short-form merger under California Law, subject to the terms and conditions of
the Merger Agreement. Purchaser currently intends to effect a short-form merger
if it is able to do so.
The Merger Agreement provides that, promptly following the purchase of and
payment for Shares by Purchaser pursuant to the Offer, Purchaser shall be
entitled to designate up to such number of directors, rounded up to the next
whole number, on the Company Board as will give Purchaser representation on the
Company Board equal to the product of the number of directors on the Company
Board (giving effect to any increase in the number of directors pursuant to the
Merger Agreement) and the percentage that the number of Shares so purchased by
Purchaser bears to the total number of Shares then outstanding (on a fully
diluted basis). In the Merger Agreement, the Company has agreed to use its
reasonable best efforts to cause Purchaser's designees to be so elected to the
Company Board. The Company has agreed to use its reasonable best efforts to
cause persons designated by Purchaser to constitute the same percentage as is on
the Company Board of (i) each committee of the Company Board (other than any
committee of the Company Board established to take action under this Agreement),
(ii) each Board of Directors of each subsidiary of the Company and (iii) each
committee of each such Board.
Except as otherwise set forth herein, the information concerning the
Company contained in this Offer to Purchase and in the attached Schedules and
Annexes, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Neither Purchaser nor Parent
assumes any responsibility (i) for the accuracy or completeness of the
information concerning the Company furnished by the Company or contained in such
documents and records or for any failure by the Company to disclose events which
may have occurred or may affect the significance or accuracy of any such
information but which are unknown to Purchaser nor Parent or (ii) for
information furnished by Schroder.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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<PAGE> 5
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date (as defined herein) and not withdrawn, as
described under "Withdrawal Rights". The term "Expiration Date" means 12:00
Midnight, New York City time, on April 19, 1999, unless and until Purchaser, in
its reasonable judgment (but subject to the terms and conditions of the Merger
Agreement), shall have extended the period during which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by Purchaser, shall expire. The Offer is subject
to the Minimum Condition and to certain other conditions. See "Certain
Conditions of the Offer".
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend for any reason the period of time during which the Offer is
open, including the failure of any of the conditions specified in "Certain
Conditions of the Offer" to be satisfied, by giving oral or written notice of
such extension to the Depositary. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the rights of a tendering shareholder to withdraw his Shares. See "Withdrawal
Rights".
Subject to the applicable regulations of the Commission, Purchaser also
expressly reserves the right, in its sole discretion (but subject to the terms
and conditions of the Merger Agreement), at any time and from time to time, (a)
to delay acceptance for payment of, or, regardless of whether such Shares were
theretofore accepted for payment, payment for, any Shares in order to comply
with any applicable laws, (b) to terminate the Offer and not accept for payment
any Shares upon the failure of any of the conditions specified in "Certain
Conditions of the Offer" to be satisfied and (c) to waive any condition or
otherwise amend the Offer in any respect, by giving oral or written notice of
such delay, termination, waiver or amendment to the Depositary and by making a
public announcement thereof.
If Purchaser extends the Offer, if Purchaser (whether before or after its
acceptance for payment of the Shares) is delayed in its acceptance for payment
of or payment for any Shares validly tendered and not withdrawn in the Offer or
if Purchaser is unable to accept for payment or pay for such Shares pursuant to
the Offer for any reason, then, without prejudice to Purchaser's rights under
the Offer, the Depositary may retain tendered Shares on behalf of Purchaser, and
such Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in "Withdrawal Rights". Purchaser
acknowledges that (a) Rule 14e-1(c) under the Exchange Act of 1934, as amended
(the "Exchange Act") requires Purchaser to pay the consideration offered or to
return the Shares tendered promptly after the termination or withdrawal of the
Offer and (b) Purchaser may not delay acceptance for payment of, or payment for
(except as provided in clause (a) above), any Shares upon the occurrence of any
of the conditions specified in "Certain Conditions of the Offer" without
extending the period of time during which the Offer is open.
The Merger Agreement provides that Purchaser shall not, without the prior
written consent of the Company, make any change in the terms or conditions of
the Offer which would change the form of consideration to be paid, decrease the
Offer Price or the maximum number of Shares sought in the Offer, or impose
additional or broadened conditions to the Offer other than those set forth in
the Merger Agreement (it being agreed that a waiver by Purchaser of any
condition, in its discretion, shall not be deemed to be adverse to the holders
of Shares). The Merger Agreement provides that if on any scheduled expiration
date of the Offer all conditions to the Offer shall not have been satisfied or
waived, the Offer may be extended by Purchaser from time to time without the
consent of the Company (i) if at the scheduled expiration date of the Offer any
of the conditions to the Offer shall not have been satisfied or waived, until
such time as such conditions are satisfied or waived, (ii) for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer or (iii) for any other reason for
not more than ten days beyond the latest expiration date applicable under the
preceding clauses (i) or (ii) if on such expiration date there shall not have
been tendered that number of Shares which, together with Shares then owned
directly or
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<PAGE> 6
indirectly by Purchaser, would equal at least 90% of the outstanding Shares of
each class. Purchaser has also agreed in the Merger Agreement to extend the time
of the Offer to no later than June 11, 1999 if the conditions to the Offer are
not satisfied at the expiration date thereof but are reasonably capable of being
satisfied by May 28, 1999.
Any extension, delay, termination, material waiver or material amendment
will be followed as promptly as practicable by public announcement thereof, such
announcement, in the case of an extension to be made no later than 9:00 a.m.,
New York City time, on the next business day (as defined herein) after the
previously scheduled Expiration Date. Subject to applicable law (including Rules
14d-4(c) and 14d-6(d) under the Exchange Act, which require that material
changes be promptly disseminated to shareholders in a manner reasonably designed
to inform them of such changes) and without limiting the manner in which
Purchaser may choose to make any public announcement, Purchaser shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service.
If (subject to the terms and conditions of the Merger Agreement) Purchaser
makes a material change in the terms of the Offer or the information concerning
the Offer, or if Purchaser waives a material condition of the Offer, Purchaser
will extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and
14e-1 under the Exchange Act. The minimum period during which the Offer must
remain open following material changes in the terms of the Offer or information
concerning the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the changed terms or information. In the Commission's
view, an offer should generally remain open for a minimum of five business days
from the date a material change is first published, sent or given to
shareholders. With respect to a change in price or a change in percentage of
securities sought (other than an increase in the number of Shares sought not in
excess of 2% of the outstanding Shares), a minimum 10 business day period is
required to allow for adequate dissemination to shareholders and investor
response. As used in this Offer to Purchase, "business day" has the meaning set
forth in Rule 14d-1 under the Exchange Act. Accordingly, if, prior to the
Expiration Date, Purchaser decreases the number of Shares being sought, or
increases or decreases the consideration offered pursuant to the Offer, and if
the Offer is scheduled to expire at any time earlier than the period ending on
the 10th business day from the date that notice of such increase or decrease is
first published, sent or given to holders of Shares, the Offer will be extended
at least until the expiration of such 10 business day period.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to increase the Offer Price, such increase in the
Offer Price will be applicable to all shareholders whose Shares are accepted for
payment pursuant to the Offer, whether or not such Shares were tendered prior to
the date of such increase, and, if at the time notice of such increase in the
Offer Price is first published, sent or given to holders of such Shares, the
Offer is scheduled to expire at any time earlier than the period ending on the
10th business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended at least until the
expiration of such 10 business day period.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
shareholder list, and will be furnished, for subsequent transmittal to
beneficial owners of Shares, to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will purchase, by accepting for payment, and will pay
for, any and all Shares which are validly tendered prior to the Expiration Date
(and not properly withdrawn in accordance with "Withdrawal Rights") promptly
after the later to occur of (a) the
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<PAGE> 7
Expiration Date and (b) subject to compliance with Rule 14e-1(c) under the
Exchange Act, the satisfaction or waiver of the conditions set forth in "Certain
Conditions of the Offer". Purchaser expressly reserves the right, in its
discretion, to delay acceptance for payment of, or, subject to applicable rules
of the Commission, payment for, Shares in order to comply, in whole or in part,
with any applicable law.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (a) the Share Certificates
or timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of
such Shares, if such procedure is available, into the Depositary's account at a
"Book-Entry Transfer Facility" pursuant to the procedures set forth in
"Procedures for Tendering Shares", (b) the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, or, in the case of a book-entry
transfer, an Agent's Message (as defined herein) and (c) any other documents
required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment. Payment for
Shares accepted pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for tendering
shareholders for the purpose of receiving payments from Purchaser and
transmitting payments to such tendering shareholders. Under no circumstances
will interest on the purchase price for Shares be paid by Purchaser, regardless
of any delay in making such payment. Upon the deposit of funds with the
Depositary for the purpose of making payments to tendering shareholders,
Purchaser's obligation to make such payment shall be satisfied and tendering
shareholders must thereafter look solely to the Depositary for payment of
amounts owed to them by reason of the acceptance for payment of Shares pursuant
to the Offer. Purchaser will pay any stock transfer taxes incident to the
transfer to it of validly tendered Shares, except as otherwise provided in
Instruction 6 of the Letter of Transmittal, as well as any charges and expenses
of the Depositary and the Information Agent.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
shareholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in "Procedures for Tendering Shares", such Shares will be credited to
an account maintained at such Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
3. PROCEDURES FOR TENDERING SHARES.
VALID TENDER OF SHARES. In order for Shares to be validly tendered
pursuant to the Offer, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message (in the case of any book-entry transfer) and
any other required documents, must be received by the Depositary at its address
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date, and either (a) the Share Certificates evidencing tendered Shares must be
received by the Depositary at such address or Shares must be tendered pursuant
to the procedure for book-entry transfer described below and a Book-Entry
Confirmation must be received by the Depositary, in each case, prior to the
Expiration Date, or (b) the tendering shareholder must comply with the
guaranteed delivery procedures described below. No alternative, conditional or
contingent tenders will be accepted.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED
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<PAGE> 8
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
in connection with a book-entry delivery of Shares, and any other required
documents must, in any case, be transmitted to and received by the Depositary at
its address set forth on the back cover of this Offer to Purchase prior to the
Expiration Date or the tendering shareholder must comply with the guaranteed
delivery procedures described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
SIGNATURE GUARANTEE. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the Securities
Transfer Agent's Medallion Program (each, an "Eligible Institution"), unless the
Shares tendered thereby are tendered (a) by a registered holder of Shares who
has not completed either the box entitled "Special Delivery Instructions" or the
box entitled "Special Payment Instructions" on the Letter of Transmittal or (b)
for the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Share
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Share Certificate must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all the
following conditions are satisfied:
(a) the tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser herewith, is received by the
Depositary as provided below prior to the Expiration Date; and
(c) in the case of a guaranteed delivery of Shares, the Share Certificates
for all tendered Shares, in proper form for transfer, or a Book-Entry
Confirmation, together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required signature
guarantee (or, in the case of a book-entry transfer, an Agent's Message) and any
other documents required by such Letter of Transmittal, are received by the
Depositary within three Nasdaq Stock Market trading days after the date of
execution of the Notice of Guaranteed Delivery.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will, in all cases, be made only after timely receipt by
the Depositary of (a) the Share Certificates evidencing such Shares, or a
Book-Entry Confirmation of the delivery of such Shares, if available, (b) a
properly completed
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<PAGE> 9
and duly executed Letter of Transmittal (or manually signed facsimile thereof)
or, in the case of a book-entry transfer, an Agent's Message and (c) any other
documents required by the Letter of Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by Purchaser, in its sole discretion, whose determination will be
final and binding on all parties, and which discretion may be delegated to the
Depositary or other persons. In addition, Purchaser's or Purchaser's designees',
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding. None of
Parent, Purchaser, the Company, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification. Purchaser reserves the absolute right to reject any or all
tenders of any Shares determined by it not to be in proper form or if the
acceptance for payment of, or payment for, such Shares may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right, in
its sole discretion, to waive any of the conditions of the Offer or any defect
or irregularity in any tender with respect to Shares of any particular
shareholder, whether or not similar defects or irregularities are waived in the
case of other shareholders. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal, as set forth
above, a tendering shareholder irrevocably appoints designees of Purchaser as
such shareholder's proxies, each with full power of substitution, to the full
extent of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by Purchaser (and any and all noncash
dividends, distributions, rights, other Shares, or other securities issued or
issuable in respect of such Shares on or after March 15, 1999). All such proxies
shall be considered coupled with an interest in the tendered Shares. This
appointment will be effective if, when and only to the extent that Purchaser
accepts such Shares for payment pursuant to the Offer. Upon such acceptance for
payment, all prior proxies given by such shareholder with respect to such Shares
and other securities will, without further action, be revoked, and no subsequent
proxies may be given. The designees of Purchaser will, with respect to the
Shares and other securities for which the appointment is effective, be empowered
to exercise all voting and other rights of such shareholder as they, in their
sole discretion, may deem proper at any annual, special, adjourned or postponed
meeting of the Company's shareholders, by written consent or otherwise, and
Purchaser reserves the right to require that, in order for Shares or other
securities to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser must be able to exercise full
voting rights with respect to such Shares.
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering shareholder and
Purchaser upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date, and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer, may
also be withdrawn at any time after the Expiration Date. If Purchaser extends
the Offer, is delayed in its acceptance for payment of Shares or is unable to
accept Shares for payment pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that tendering shareholders are
entitled to withdrawal rights as described in the paragraph below. Any such
delay will be by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at its address set forth on the back cover page of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn, and
the name of the registered holder of such Shares if different from that of the
person who tendered such Shares. If Share Certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical
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<PAGE> 10
release of such Share Certificates, the serial numbers shown on such Share
Certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution, unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in "Procedures for Tendering Shares", any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in "Procedures for Accepting the Offer and Tendering
Shares".
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes. In general,
a shareholder will recognize gain or loss for United States federal income tax
purposes equal to the difference between the amount of cash received in exchange
for the Shares sold and such shareholder's adjusted tax basis in such Shares.
Such gain or loss will be capital gain or loss if the Shares constitute capital
assets in the hands of the shareholder. Pursuant to recently enacted
legislation, in the case of an individual holder of Shares, any such capital
gain generally will be subject to a maximum United States federal income tax
rate of 20% if the holder's holding period in such shares was more than one year
at the Effective Time or at the time of consummation of the Offer. Any such
capital loss will be subject to certain limitations on deductibility for United
States federal income tax purposes.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
SHAREHOLDERS, SUCH AS FINANCIAL INSTITUTIONS, BROKER-DEALERS, SHAREHOLDERS WHO
ACQUIRED SHARES PURSUANT TO THE EXERCISE OF OPTIONS OR OTHERWISE AS
COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES, FOREIGN CORPORATIONS AND PERSONS WHO RECEIVED PAYMENTS IN RESPECT OF
OPTIONS OR WARRANTS TO ACQUIRE SHARES.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. SHAREHOLDERS ARE
URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND
EFFECT OF THE UNITED STATES ALTERNATIVE MINIMUM TAX, STATE AND LOCAL, AND
FOREIGN TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Company's Shares that are classified as Class A Common Stock are listed
and principally traded on The Nasdaq Stock Market, Inc.'s National Market (the
"Nasdaq National Market") under the symbol "HSKL". The following table sets
forth, for the quarters indicated, the high and low sales prices per Share on
the Nasdaq National Market. The Company's Shares that are classified as Class B
Common Stock are not publicly traded.
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<TABLE>
<CAPTION>
DATE HIGH LOW
- ---- ---- ---
<S> <C> <C>
FISCAL 1997:
First Quarter............................................... $ 8 7/8 $ 6 3/4
Second Quarter.............................................. 8 5/8 7 1/2
Third Quarter............................................... 9 3/4 7 1/2
Fourth Quarter.............................................. 10 1/2 8 7/8
FISCAL 1998:
First Quarter............................................... 14 1/4 9 1/2
Second Quarter.............................................. 16 1/2 11 3/8
Third Quarter............................................... 12 1/4 9 13/16
Fourth Quarter.............................................. 12 1/4 9 3/4
FISCAL 1999:
First Quarter............................................... 10 9/16 7
Second Quarter.............................................. 12 3/8 6 1/2
Third Quarter............................................... 11 7/16 8 1/8
Fourth Quarter (through March 18, 1999)..................... 12 1/2 8 5/16
</TABLE>
On March 12, 1999, the last trading day prior to the public announcement of
the signing of the Merger Agreement, the closing price per Share as reported on
the Nasdaq National Market was $9 1/16. The Company has paid regular cash
dividends on the Shares, but has agreed pursuant to the Merger Agreement that it
will not declare or pay any further dividends. See "Purpose of the Offer and the
Merger; Plans for the Company; the Merger Agreement; Shareholder Agreement".
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT REGISTRATION;
MARGIN REGULATIONS.
POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES. The purchase
of Shares pursuant to the Offer will reduce the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public. The purchase of Shares
pursuant to the Offer can also be expected to reduce the number of holders of
Shares. Purchaser cannot predict whether the reduction in the number of Shares
that might otherwise trade publicly would have an adverse or beneficial effect
on the market price for or marketability of the Shares or whether it would cause
future market prices to be greater or less than the Offer Price therefor.
STOCK QUOTATION. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the National
Association of Securities Dealers, Inc. (the "NASD") for continued inclusion in
the Nasdaq National Market, which require that an issuer have at least 750,000
publicly held shares, held by at least 400 stockholders of round lots, with a
market value of at least $5,000,000, and have net tangible assets of at least
$4,000,000. If these standards are not met, the Shares might nevertheless
continue to be included in The Nasdaq Stock Market, with quotations published in
the NASD Automatic Quotation System ("Nasdaq") "additional list" or in one of
the "local lists". However, if the number of holders of the Shares were to fall
below 300, or if the number of publicly held Shares were to fall below 500,000
or there were not at least two registered and active market makers for the
Shares, the NASD's rules provide that the Shares would no longer be "qualified"
for The Nasdaq Stock Market reporting, and The Nasdaq Stock Market would cease
to provide any quotations. Shares held directly or indirectly by directors,
officers or beneficial owners of more than 10% of the Shares are not considered
as being publicly held for this purpose. If, as a result of the purchase of
Shares pursuant to the Offer or otherwise, the Shares no longer meet the
requirements of the NASD for continued inclusion in the Nasdaq National Market
or in any other tier of The Nasdaq Stock Market and the Shares are no longer
included in the Nasdaq National Market or in any other tier of The Nasdaq Stock
Market, as the case may be, the market for Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for continued inclusion in any tier of The Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-
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<PAGE> 12
counter market and that price quotations would be reported by other sources. The
extent of the public market for the Shares and the availability of such
quotations would, however, depend upon the number of holders of Shares remaining
at such time, the interests in maintaining a market in Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act, as described below, and other factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for de-registration under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders of the Shares. The termination of registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Shares and to the
Commission, and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement in connection with meetings of
shareholders meetings pursuant to Section 14(a) of the Exchange Act, and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Shares. In addition,
"affiliates" of the Company and persons holding "restricted securities" of the
Company may be deprived of the ability to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "Securities Act").
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be eligible for reporting on The Nasdaq National Market.
MARGIN REGULATIONS. The Shares may currently be "margin securities" under
the regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which would have the effect, among other things, of
allowing brokers to extend credit on the collateral of such Shares for the
purpose of buying, carrying or trading in securities ("Purpose Loans").
Depending upon factors, such as the number of record holders of the Shares and
the number and market value of publicly held Shares, following the purchase of
Shares pursuant to the Offer, the Shares might no longer constitute "margin
securities" for purposes of the Federal Reserve Board's margin regulations and,
therefore, could no longer be used as collateral for Purpose Loans made by
brokers. In addition, and in any event, if registration of the Shares under the
Exchange Act were terminated, the Shares would no longer constitute "margin
securities".
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth herein, the information concerning the
Company contained in this Offer to Purchase, including financial information,
has been furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Neither Purchaser nor Parent assumes any responsibility for the
accuracy or completeness of the information concerning the Company furnished by
the Company or contained in such documents and records, or for any failure by
the Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Purchaser or Parent.
GENERAL. Established in 1946, the Company is a California corporation
which manufactures pneumatically (compressed air or gas) and hydraulically (oil)
driven, high-pressure low-flow, fixed displacement, reciprocating plunger,
liquid pumps, gas boosters, chemical injection pumps and air pressure amplifiers
("Haskel(R) Specialty Products") for industrial, commercial, aerospace and
military applications. The Company is one of the world's leading manufacturers
of pneumatically-driven, high-pressure liquid pumps and gas boosters, which
represent the vast majority of Haskel(R) Specialty Products manufactured by the
Company. The Company also manufactures high-pressure valves, metering valves,
metal seals, regulators, and accessories to complement these products. The
Company distributes third-party manufactured valves, actuators, and other
pneumatic and hydraulic devices throughout Europe and the Asia-Pacific regions.
The Company's principal executive offices are located at 100 East Graham Place,
Burbank, CA 91502 and its telephone number is (818) 843-4000.
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<PAGE> 13
FINANCIAL INFORMATION. Set forth below is certain selected summary
consolidated financial information relating to the Company and its subsidiaries
which has been excerpted or derived from the audited financial statements
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
May 30, 1998 (the "Company's 10-K") and the unaudited financial statements
contained in the Company's Quarterly Report on Form 10-Q for the quarter ended
November 28, 1998 (the "Company's 10-Q"). More comprehensive financial
information is included in the Company's 10-K, the Company's 10-Q and other
documents filed by the Company with the Commission. The financial information
that follows is qualified in its entirety by reference to such reports and other
documents, including the financial statements and related notes contained
therein. Such reports and other documents may be examined and copies may be
obtained from the offices of the Commission in the manner set forth below.
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
------------------ NOVEMBER 28,
MAY 31, MAY 30, ---------------------------
1997 1998 1997 1998
------- ------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues....................................... $51,400 $53,710 $24,850 $24,980
Income from continuing operations before
taxes(1)..................................... 7,775 7,477 3,802 3,278
Net income from continuing operations(1)....... 4,734 4,682 2,345 1,976
Diluted earnings per share from continuing
operations................................... $ .98 $ .93 $ .46 $ .40
</TABLE>
<TABLE>
<CAPTION>
AT AT AT
MAY 31, MAY 30, NOVEMBER 28,
1997 1998 1998
------- ------- ------------
<S> <C> <C> <C> <C>
FINANCIAL POSITION:
Cash & cash equivalents........................ $ 8,490 $ 9,710 $12,352
Working capital................................ 24,095 25,460 26,641
Total assets................................... 41,232 46,292 44,024
Long-term debt................................. 2,379 1,426 291
Shareholder's equity........................... 28,667 31,881 33,452
</TABLE>
- ---------------
(1) Financial results in 1998 include a $676,000 legal settlement with the
Company's insurance carriers regarding past environmental matters which
resulted in an increase in net income of $400,000 or $0.08 per share after
tax.
ADDITIONAL INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act, and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's shareholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and
also should be available for inspection at the Commission's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such materials may also be obtained by mail, upon payment
of the Commission's prescribed rates, by writing to its principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. Such material may also be accessed
electronically by means of the Commission's World Wide Web site on the Internet
at http://www.sec.gov.
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<PAGE> 14
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.
PURCHASER. Purchaser is a newly formed California corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. The principal offices of
Purchaser are located at 800 Third Avenue, 40th Floor, New York, NY 10022. All
interests in Purchaser are or will be owned by Parent.
Until immediately prior to the time that Purchaser purchases Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger.
PARENT. Parent is a newly formed Delaware corporation with its principal
executive offices located at 800 Third Avenue, 40th Floor, New York, NY 10022.
Parent was organized in connection with the Offer and the Merger. All interests
in Parent are or will be owned by Tinicum Capital Partners, L.P. and/or an
affiliate or affiliates thereof (collectively, "Tinicum"), Edmundson
International, Inc. ("Edmundson") and certain members of the Company's
management.
Tinicum Capital Partners, L.P., a Delaware limited partnership, is a
private investment partnership formed in December 1998 to acquire control of
companies through acquisitions or restructurings and to take minority stakes in
public or private companies through equity or debt securities. Its capital
commitments are in excess of $200 million.
Edmundson International, Inc. is a Westlake Village, California investment
firm. Through its subsidiaries, Edmundson is engaged in wholesale distribution
of construction and industrial supplies. While Edmundson intends to invest
almost 50% of the funds required to consummate the Offer and the Merger,
Edmundson has sufficient financial resources (either directly or through
affiliates) to satisfy Purchaser's obligations under the Offer and the Merger
Agreement, without bank financing or funds contributed to Purchaser by any other
investor.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of Parent and Purchaser are set forth in Schedule I hereto.
Except as set forth in this Offer to Purchase, neither Parent nor Purchaser
nor, to the best knowledge of Parent and Purchaser, any of the persons listed in
Schedule I hereto, or any associate or majority owned subsidiary of such
persons, beneficially owns any equity security of the Company, and none of
Parent nor Purchaser, nor, to the best knowledge of Parent and Purchaser, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as set forth in this Offer to Purchase, neither Parent nor
Purchaser, nor, to the best knowledge of Parent and Purchaser, any of the
persons listed in Schedule I hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss, or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, neither
Parent nor Purchaser, nor, to the best knowledge of Parent and Purchaser, any of
the persons listed in Schedule I hereto has had any transactions with the
Company, or any of its executive officers, directors or affiliates that would
require reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between Parent or Purchaser, or their respective
subsidiaries, or, to the best knowledge of Parent or Purchaser, any of the
persons listed in Schedule I hereto, on the one hand, and the Company or its
executive officers, directors or affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors, or a sale or other transfer of a material
amount of assets.
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<PAGE> 15
10. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Purchaser to consummate the Offer
and the Merger, including the net payment to holders of in-the-money options and
warrants, and to pay related fees and expenses, is estimated to be approximately
$69.7 million. The Offer and the Merger are not conditioned on Purchaser
obtaining financing. The Purchaser expects that it will obtain such funds from
capital contributions to Purchaser by the Parent and, to the extent available,
from bank financing sources.
The $69.7 million of funds required to consummate the Offer and the Merger
will be obtained from equity investments in Parent by its current and future
stockholders, including Tinicum and Edmundson. Tinicum and Edmundson are
currently in discussions with their bankers and are confident that they will be
able to obtain financing for the Purchaser, but no definitive agreement has been
reached as of the date of this Offer to Purchase. However, if bank financing is
not obtained, Tinicum and Edmundson have sufficient financial resources to
satisfy Purchaser's obligations under the Offer and the Merger Agreement.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
Certain information provided below on the background of the Offer regarding
the deliberations of the Company Board and the actions of the Company's
management and financial advisor is based upon information furnished by the
Company to Purchaser.
According to the Company, on January 26, 1999, Merchants Group
International Ltd., Inc. ("MGI"), a San Francisco investment bank, on behalf of
certain members of the Company's senior management, submitted a bid to purchase
the Company. The Company Board, on the advice of Schroder, rejected the bid
because it lacked sufficient financing. On January 28, 1999, David Colburn, a
representative of Edmundson, became aware that the Company was evaluating its
strategic alternatives, including a sale of the Company. On February 2, 1999,
Mr. Colburn spoke with Edward Holl of MGI. Mr. Holl and Mr. Colburn discussed
the Company and, based on those discussions, decided to have MGI submit an
expression of interest letter to the Company Board for the purchase of the
Company, with Edmundson to provide the financing for the purchase.
On or about February 4, 1999, Mr. Colburn and Eric Ruttenberg, the managing
member of the general partner of Tinicum, agreed that Edmundson and Tinicum
would evaluate and potentially invest together in the Company. Edmundson and
Tinicum are referred to collectively in this Section as "TCP".
By letter dated February 8, 1999, MGI requested that the Company Board
consider its all cash bid in the amount of $14.00 per share (the "February 8
Offer"). On February 10, 1999, the Company's legal counsel informed MGI by
letter that the Company had entered into an exclusive negotiating period with
another bidder and was not in a position to respond to MGI's offer. This offer
expired on February 10, 1999 and was not accepted before that date.
On February 19, 1999, Mr. Colburn and J.H.B. Kean (both representing
Edmundson), Putnam L. Crafts, Jr. (representing Tinicum) and Edward Holl
(representing MGI) met with Marvin Goodson (counsel for the Richard L. Hayman
and Dorothy M. Hayman Family Trusts, major shareholders of the Company (the
"Trusts")) and Michael O'Brien (Trust Officer at Mellon Bank, the corporate
trustee of the Trusts) to introduce TCP to the Trusts. TCP and MGI wanted to
better understand why the Company Board was not considering the February 8 Offer
and to discuss the possible purchase of the Trusts' Shares in the Company. No
agreement was reached at this meeting. On that same day, the Trusts requested
that the Company Board consider the February 8 Offer and grant MGI a short due
diligence period.
On or around February 20, 1999, MGI agreed to accept a finder's fee from
TCP in lieu of an equity participation in the Company and effectively turned
over the pursuit of an acquisition of the Company to TCP. On February 24, 1999,
the Company informed TCP that it would provide TCP access to its facilities and
personnel for a period ending March 5, 1999. From February 26 through March 5,
1999, TCP conducted due diligence.
After evaluating the Company and based on its due diligence investigations,
on March 5, 1999, at a meeting with the Company's Chairman, Edward Malkowicz,
TCP expressed its interest in acquiring the
15
<PAGE> 16
Company for an all cash price of $13.00 per share, subject to satisfactory
completion of due diligence with respect to certain specified matters (some of
which were brought to TCP's attention at that meeting) and to negotiation of
satisfactory definitive documents.
On March 8, 1999, the Company Board met to discuss TCP's offer, and
thereafter informed TCP that it would be willing to accept a price in the range
of $13.00 per share. The Company Board granted TCP an exclusive period ending on
March 11, 1999, to complete its due diligence and negotiate definitive
documents.
TCP completed its due diligence, and on March 13, 1999, TCP and the Company
agreed on the final outstanding business terms (which included the price per
share ($12.90) and a break-up fee) in the Merger Agreement. According to the
Company, on March 14, 1999, the Company Board met to review and discuss the
finalized terms of TCP's proposed acquisition of the Company. At the meeting,
the Company's legal counsel gave a presentation to the Company Board on the
terms of the Merger Agreement and related documents, the structure of the Offer
and the Merger and the Company Board's fiduciary duties to shareholders. The
Company Board received the written opinion of Schroder, dated March 14, 1999, at
the meeting that, as of such date and based upon and subject to certain matters
stated therein, the consideration to be received by the holders of Shares
pursuant to the Offer and the Merger as contemplated in the Merger Agreement was
fair from a financial point of view to such holders. According to the Company,
the Company Board members discussed the terms of the proposed acquisition and
asked questions of Schroder and the Company's legal counsel. Following this
discussion, the Company Board (a) determined that the Merger Agreement and the
transactions contemplated thereby, including each of the Offer and the Merger,
are fair to and in the best interests of the holders of the Shares, (b) approved
and adopted the Merger Agreement and the transactions contemplated thereby, and
(c) resolved to recommend that the shareholders of the Company accept the Offer
and approve and adopt the Merger Agreement and approve the transactions
contemplated thereby.
The Merger Agreement was executed and delivered at approximately 12:01
a.m., New York City time on March 15, 1999. The Company issued a press release
before the opening of the U.S. stock markets on March 15, 1999 announcing such
execution and delivery. On March 22, 1999, Purchaser commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; SHAREHOLDER AGREEMENT.
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer and the Merger is for Parent to acquire control
of, and the entire equity interest in, the Company. The purpose of the Merger is
for Parent to acquire all Shares not purchased pursuant to the Offer. Upon
consummation of the Merger, the Company will become a wholly owned subsidiary of
Parent. The Offer is being made pursuant to the Merger Agreement. The
acquisition of the entire equity interest in the Company has been structured as
a cash tender offer followed by a cash merger in order to provide a prompt and
orderly transfer of ownership of the equity interest in the Company held by
shareholders of the Company from such shareholders to Parent and to provide the
shareholders of the Company with cash for all of their Shares.
Under California Law and the Company's Articles of Incorporation, the
approval of the Company Board and, unless the Merger is consummated pursuant to
the short-form merger provisions under California Law described below, the
affirmative vote of the holders of a majority of the outstanding Shares is
required to approve the Merger Agreement. The Company Board (with R. Malcolm
Greaves and Terrence A. Noonan absent during the vote) has unanimously approved
the Merger Agreement.
Under California Law, the Merger may not be accomplished for cash paid to
the Company's shareholders if Purchaser or Parent owns directly or indirectly
more than 50% but less than 90% of the then outstanding Shares unless either all
the shareholders consent or the Commissioner of Corporations of the State of
California approves, after a hearing, the terms and conditions of the Merger and
the fairness thereof. If Purchaser and Parent would own directly or indirectly
in the aggregate 90% or more of the outstanding Shares,
16
<PAGE> 17
the Minimum Condition would be satisfied and, following the purchase of Shares
in the Offer, Purchaser would be able to effect a short-form merger under
California Law, subject to the terms and conditions of the Merger Agreement.
Purchaser currently intends to effect a short-form merger if it is able to do
so.
If the Minimum Condition is not satisfied and the Offer is terminated by
its terms, the Company has agreed to take, in accordance with applicable law and
its Articles of Incorporation and By-laws, all action necessary to convene a
meeting of holders of Shares to consider and vote upon the approval of the
Merger Agreement.
The Merger Agreement provides that, promptly following the purchase of and
payment for Shares by Purchaser pursuant to the Offer, Purchaser shall be
entitled to designate up to such number of directors, rounded up to the next
whole number, on the Company Board as will give Purchaser representation on the
Company Board equal to the product of the number of directors on the Company
Board (giving effect to any increase in the number of directors pursuant to the
Merger Agreement) and the percentage that number of Shares so purchased by
Purchaser bears to the total number of Shares then outstanding. In the Merger
Agreement, the Company has agreed to use its reasonable best efforts to cause
Purchaser's designees to be so appointed or elected to the Company Board. The
Company has agreed to use its reasonable best efforts to cause persons
designated by Purchaser to constitute the same percentage as is on the Company
Board of (i) each committee of the Company Board (other than any committee of
the Company Board established to take action under this Agreement), (ii) each
Company Board of each subsidiary of the Company and (iii) each committee of each
such Company Board.
If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement
provides that Purchaser will be entitled to designate representatives to serve
on the Company Board in proportion to Purchaser's ownership of Shares following
such purchase. Purchaser expects that such representation would permit Purchaser
to exert substantial influence over the Company's conduct of its business and
operations.
PLANS FOR THE COMPANY
It is expected that, initially following the Merger, the business and
operations of the Company will, except as set forth in this Offer to Purchase,
be continued by the Company substantially as they are currently being conducted.
Parent will continue to evaluate the business and operations of the Company
during the pendency of the Offer and after the consummation of the Offer and the
Merger, and will take such actions as it deems appropriate under the
circumstances then existing. Parent intends to seek additional information about
the Company during this period. Thereafter, Parent intends to review such
information as part of a comprehensive analysis of the Company's business,
operations, capitalization and management with a view to assisting management in
developing a plan to capitalize on the Company's potential.
It is anticipated that, upon the consummation of the Merger, the current
officers of the Company will maintain their respective positions with the
Surviving Corporation. Certain officers of the Company may become shareholders
of Parent. At the Effective Time, the directors of Purchaser will become the
directors of the Surviving Corporation.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or any
material change in the Company's capitalization or dividend policy or any other
material changes in the Company's corporate structure or business, or the
Company's management.
As a result of the Offer, the interest of Parent in the Company's net book
value and net earnings will increase in proportion to the number of Shares
acquired in the Offer. If the Merger is consummated, Parent's interest in such
items and in the Company's equity generally will increase to 100% and Parent
will be entitled to all benefits resulting from that interest, including all
income generated by the Company's operations and any future increase in the
Company's value. Similarly, Parent will also bear the risk of losses generated
by the Company's operations and any decrease in the value of the Company after
the Merger. Subsequent to the
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<PAGE> 18
Merger, current shareholders of the Company will cease to have any equity
interest in the Company, will not have the opportunity to participate in the
earnings and growth of the Company after the Merger and will not have any right
to vote on corporate matters. Similarly, shareholders will not face the risk of
losses generated by the Company's operations or decline in the value of the
Company after the Merger.
The Shares are currently traded on the Nasdaq National Market. See "Price
Range of Shares; Dividends". Following the consummation of the Merger, the
Shares will no longer be quoted on the Nasdaq National Market and the
registration of the Shares under the Exchange Act will be terminated.
Accordingly, after the Merger there will be no publicly traded equity securities
of the Company outstanding and the Company will no longer be required to file
periodic reports with the Commission. See "Effect of the Offer on the Market for
the Shares; Exchange Act Registration; Margin Regulations". It is expected that
if Shares are not accepted for payment by Purchaser pursuant to the Offer and
the Merger is not consummated, the Company's current management, under the
general direction of the Company Board, will continue to manage the Company as
an ongoing business.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement, a
copy of which is filed as an exhibit to the Tender Offer Statement on Schedule
14D-1 filed by Parent and Purchaser pursuant to Rule 14d-3 of the Exchange Act
with the Commission in connection with the Offer (together with any amendments,
supplements, schedules, annexes and exhibits thereto, the "Schedule 14D-1").
Such summary is qualified in its entirety by reference to the Merger Agreement.
THE OFFER. The Merger Agreement provides that if none of the events or
conditions set forth in "Certain Conditions to the Offer" (the "Conditions")
shall have occurred and be existing, as promptly as practicable after, but in no
event later then five (5) Business Days after, the public announcement of the
execution of the Merger Agreement by the parties thereto, Purchaser is required
to commence the Offer for all the outstanding Shares, at the Offer Price.
Purchaser is required to use all commercially reasonable efforts to consummate
the Offer. Purchaser shall accept for payment all outstanding Shares which have
been validly tendered and not withdrawn pursuant to the Offer at the earliest
time following the expiration of the Offer provided that all conditions to the
Offer shall have been satisfied or waived by Purchaser. The obligation of
Purchaser to accept for payment, purchase and pay for Shares tendered pursuant
to the Offer is subject only to the Conditions and to the Minimum Condition.
Purchaser has expressly reserved the right to increase the Offer Price or to
make any other changes in the terms and conditions of the Offer (provided that,
unless previously approved by the Company in writing, no change may be made
which decreases the Offer Price, which changes the form of consideration to be
paid in the Offer, which reduces the maximum number of Shares to be purchased in
the Offer, which imposes conditions to the Offer in addition to the Conditions
or which broadens the scope of such Conditions except as provided below, which
amends any other term of the Offer in a manner adverse to the holders of Shares,
which extends the Offer except as provided below or which amends the Minimum
Condition).
The Merger Agreement provides that the Offer Price is to be paid net to the
sellers of Shares in cash, less any required withholding of taxes, upon the
terms and subject to the Conditions of the Offer. No Shares held by the Company
or any of its subsidiaries will be tendered in the Offer.
The Merger Agreement provides that the Offer will expire at midnight, New
York City time, on the date that is twenty Business Days (which means any day
other than Saturday, Sunday or a federal holiday) after the Offer is commenced;
provided, however, that without the consent of the Company or the Company Board,
Purchaser may (i) extend the Offer, if at the scheduled expiration date of the
Offer any of the conditions to the Offer shall not have been satisfied or
waived, until such time as such conditions are satisfied or waived, (ii) extend
the Offer for any period required for any rule, regulation, interpretation or
position of the Commission or the staff thereof applicable to the Offer or (iii)
extend the Offer for any reason on one or more occasions for an aggregate period
of not more than ten Business Days beyond the latest expiration date that would
otherwise be permitted under clause (i) or (ii) of this sentence if on such
expiration date the Minimum Condition has not been satisfied. If all of the
Conditions to the Offer are not satisfied on any scheduled
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<PAGE> 19
expiration date of the Offer then, provided that all such Conditions are
reasonably capable of being satisfied prior to May 28, 1999, Purchaser is
required to extend the Offer from time to time until such Conditions are
satisfied or waived, provided that Purchaser will not be required to extend the
Offer beyond June 11, 1999. Subject to the terms and conditions of the Offer and
the Merger Agreement, Purchaser has agreed to accept for payment, and pay for,
all Shares validly tendered and not withdrawn pursuant to the Offer that
Purchaser becomes obligated to accept for payment and pay for pursuant to the
Offer, as promptly as practicable after the expiration of the Offer.
COMPANY ACTION. The Company has approved of and consented to the Offer.
The Company Board, at a meeting duly called and held, has, subject to the terms
and conditions set forth in the Merger Agreement, (i) determined that the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, are fair to, and in the best interests of, the shareholders of the
Company, (ii) approved the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, in all respects, such approval
constituting approval of the Offer, the Merger Agreement and the Merger for
purposes of Section 1101 of California Law, and similar provisions of any other
similar state statutes that might be deemed applicable to the transactions
contemplated by the Merger Agreement, and (iii) resolved to recommend that the
shareholders of the Company accept the Offer, tender their Shares to Purchaser
and approve and adopt the Merger Agreement and the Merger; provided, however,
that such recommendation may be withdrawn, modified or amended in accordance
with the Merger Agreement.
The Merger Agreement provides that the Company will file with the
Commission a Solicitation/ Recommendation Statement on Schedule 14D-9 containing
the recommendation described above, and promptly mail the Schedule 14D-9 to the
shareholders of the Company. Notwithstanding anything to the contrary in the
Merger Agreement, if in response to an acquisition proposal that the Company
Board reasonably believes to be more favorable from a financial point of view to
its shareholder than the Offer and the Merger taking into account at the time of
determination all factors relating to such proposed transaction deemed relevant
by the Company Board or as otherwise consistent with its fiduciary duties under
applicable law, the Company Board determines in accordance with the Merger
Agreement, that it is required in the exercise of its fiduciary duties to
withdraw, modify or amend its recommendation, such withdrawal, modification or
amendment shall not constitute a breach of the Merger Agreement.
COMPANY BOARDS OF DIRECTORS AND COMMITTEES. The Merger Agreement provides
that promptly upon the purchase by Purchaser of Shares pursuant to the Offer and
from time to time thereafter, subject to compliance with Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, Purchaser shall be entitled
to designate up to such number of directors, rounded up to the next whole
number, on the Company Board as will give Purchaser representation on the
Company Board equal to the product of the number of directors on the Company
Board (giving effect to any increase in the number of directors as provided in
the Merger Agreement) and the percentage that such number of Shares so purchased
bears to the total number of outstanding Shares on a fully diluted basis, and
the Company shall use its reasonable best efforts to, upon request by Purchaser,
promptly, at the Company's election, either increase the size of the Company
Board or secure the resignation of such number of directors as is necessary to
enable Purchaser's designees to be elected to the Company Board and to cause
Purchaser's designees to be so elected. At such times, the Company will use its
reasonable best efforts to cause persons designated by Purchaser to constitute
the same percentage as is on the Company Board to be represented on (i) each
committee of the Company Board (other than any committee of the Company Board
established to take action under the Merger Agreement), (ii) each Company Board
of each subsidiary of the Company and (iii) each committee of each such Company
Board.
THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions set forth in the Merger Agreement, and in accordance with
California Law, at the Effective Time, Purchaser will be merged with and into
the Company. The Merger Agreement provides that the Merger will become effective
upon the filing of the Merger Agreement and an officers' certificate of each
constituent corporation with the Secretary of State of the State of California
(the "Effective Time"). As a result of the Merger, the separate corporate
existence of Purchaser will cease, and the Company will continue as the
Surviving Corporation.
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Pursuant to the Merger Agreement, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares held by the Company,
its subsidiaries or by Parent, Purchaser or any other subsidiaries of Parent,
which will be canceled and extinguished without consideration, or Shares as to
which appraisal rights are exercised) shall be converted into the right to
receive an amount in cash equal to the Offer Price, without interest (the
"Merger Consideration"). In addition, each share of common stock of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one share of a class of capital stock of the Surviving
Corporation and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation. Each Share held by the Company as treasury stock or
its subsidiary, as Parent, Purchaser or any subsidiary of Parent or Purchaser
will be canceled and extinguished without consideration. Notwithstanding any
other provision of the Merger Agreement to the contrary, Shares outstanding
immediately prior to the Effective Time and held by shareholders who shall have
not voted in favor of the Merger or consented thereto in writing and who shall
be entitled to and shall have demanded properly in writing payment for such
Shares in accordance with Chapter 13 of California Law and who shall not have
withdrawn such demand or otherwise have forfeited appraisal rights shall not be
converted into or represent the right to receive cash pursuant to the Merger
Agreement.
The Merger Agreement provides that the directors of Purchaser at the
Effective Time will be the directors of the Surviving Corporation and that the
officers of the Purchaser at the Effective Time will be the officers of the
Surviving Corporation, in each case, until successors are duly elected or
appointed and qualified in accordance with applicable law. The Merger Agreement
also provides that the Articles of Incorporation of the Company in effect at the
Effective Time will be the Articles of Incorporation of the Surviving
Corporation, and that the By-Laws of the Company will be the By-Laws of the
Surviving Corporation, in each case, until amended in accordance with applicable
law.
SHARES OF DISSENTING HOLDERS. The Merger Agreement provides that
notwithstanding anything to the contrary contained in the Merger Agreement, any
holder of Shares with respect to which dissenters' rights, if any, are granted
by reason of the Merger under California Law and who does not vote in favor of
the Merger and who otherwise complies with Chapter 13 of California Law
("Company Dissenting Shares") shall not be entitled to receive any Merger
Consideration pursuant to the terms of the Merger Agreement, unless such holder
fails to perfect, effectively withdraws or loses his or her right to dissent
from the Merger under California Law. If any such holder so fails to perfect,
effectively withdraws or loses his or her dissenters' rights under California
Law, each Company Dissenting Share of such holder shall thereupon be deemed to
have been converted, as of the Effective Time, into the right to receive the
Offer Price.
Any payments relating to Company Dissenting Shares shall be made solely by
the Surviving Corporation and no funds or other property have been or will be
provided by Purchaser, Parent or any of Parent's other direct or indirect
subsidiaries for such payment, nor shall the Company make any payment with
respect to, or settle or offer to settle, any such demands.
EXCHANGE OF CERTIFICATES. The Merger Agreement provides that a bank or
trust company designated by Parent and reasonably acceptable to the Company,
shall act as the exchange agent (in such capacity, the "Exchange Agent"), for
the benefit of the holders of Shares, for the exchange of a certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "Certificates") that were converted into the right to receive the Offer
Price. The Merger Agreement provides that Parent will deposit, or will cause to
be deposited, with the Exchange Agent, for the benefit of the holders of Shares,
the Merger Consideration to be paid in respect of the Shares. The Depositary is
acting as the Exchange Agent.
Pursuant to the Merger Agreement, as soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of
Certificates: (i) 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 shall be in
such form and have such other provisions as Parent and the Company may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for a cash payment of the proper Merger
Consideration. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Parent and
Purchaser, together with such letter of transmittal, duly executed, the holder
of such Certificate
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shall be entitled to receive in exchange therefor by check an amount equal to
(A) the Offer Price, multiplied by (B) the number of Shares represented by such
Certificate, which such holder has the right to receive, and the Certificate so
surrendered shall forthwith be canceled. No interest shall be paid or accrued on
any Merger Consideration upon the surrender of any Certificates. In the event of
a transfer of ownership of Shares which is not registered in the transfer
records of the Company, payment of the proper Merger Consideration may be paid
to a transferee if the Certificate representing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer or other taxes
required as a result of such payment to a Person other than the registered
holder of such shares have been paid. Until surrendered and exchanged, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender an amount equal to (A) the Offer
Price, multiplied by (B) the number of Shares represented by such Certificate.
In the event that any Certificate shall have been lost, stolen or destroyed, the
Exchange Agent shall pay, upon the making of an affidavit of that fact by the
holder thereof, the proper Merger Consideration, provided, however, that Parent
may, in its discretion, require the delivery of a suitable bond and/or
indemnity.
The Merger Agreement further provides that the Merger Consideration paid
upon the surrender for exchange of Shares shall be deemed to have been paid in
full satisfaction of all rights pertaining to such Shares, subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by the Company on such Shares in accordance with the terms of
the Merger Agreement or prior to the date thereof and which remain unpaid at the
Effective Time, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged.
Pursuant to the Merger Agreement, any portion of the Merger Consideration
which remains undistributed to the shareholders of the Company for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
shareholders of the Company who have not theretofore complied with the terms of
the Merger Agreement shall thereafter look only to Parent for payment of their
claim for any Merger Consideration.
COMPANY STOCK OPTIONS. The Merger Agreement provides that at the Effective
Time, each outstanding, vested and exercisable Existing Stock Option issued
pursuant to the 1989 Incentive Stock Option Plan, the 1995 Incentive Stock
Option Plan, the 1995 Formula Stock Option Plan, the 1998 Long-Term Performance
Incentive Plan or the Non-Qualified Stock Option Plan of the Company (the
"Company Plans") or issued outside the Company Plans via special grants by the
Company's Stock Option Committee, shall be converted into and shall become the
right to receive a cash payment per Existing Stock Option, without interest,
determined by multiplying (i) the excess, if any, of the Offer Price over the
applicable per share exercise price of such Existing Stock Option by (ii) the
number of Shares into which such Existing Stock Option was exercisable
immediately prior to the Effective Time, provided that Parent and Purchaser may,
with the consent of the option holder, treat such options differently. At the
Effective Time, all Existing Stock Options (including those options that are not
exercisable at the time of the Merger) shall be canceled and be of no further
force or effect except for the right to receive cash to the extent provided in
the Merger Agreement.
WARRANTS. The Merger Agreement provides that the Effective Time, each
outstanding and exercisable warrant that entitles the holder to purchase Shares
(a "Warrant" or collectively "Warrants") sold pursuant to Company's initial
public offering of its common stock shall be converted into and shall become the
right to receive a cash payment per Warrant, without interest, determined by
multiplying (i) the excess, if any, of the Offer Price over the applicable per
share exercise price of such Warrant by (ii) the number of Shares into which the
Warrant was exercisable immediately prior to the Effective Time. At the
Effective Time, all outstanding Warrants shall be canceled and be of no further
force or effect except for the right to receive cash to the extent provided in
the Merger Agreement.
CONDUCT OF BUSINESS PRIOR TO CONSUMMATION OF THE MERGER. Pursuant to the
Merger Agreement, the Company Board has agreed not to permit the Company or its
subsidiaries to conduct its business in any
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manner other than in the ordinary course of business and in a manner consistent
with past practice. The Company has agreed that, among other things and subject
to certain exceptions, between the date of the Merger Agreement and the
Effective Time, other than with Parent's or Purchaser's prior written consent,
the Company and its subsidiaries shall not, voluntarily or involuntarily, take
any of the following actions:
(i) amend its Articles of Incorporation or By-Laws;
(ii) amend or modify (except as contemplated by the Merger Agreement) the
terms of the Company Plans or authorize for issuance, issue, sell, deliver or
agree or commit to issue (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights), except for the
issuance or sale of Shares pursuant to the exercise of Existing Stock Options;
(iii) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or redeem or otherwise acquire any securities of the Company or of its
subsidiaries;
(iv) except in connection with the exercise or purchase options under
existing leases, (A) incur or assume any long-term or short-term debt or issue
any debt securities, except for borrowings under existing lines of credit in the
ordinary course of business and in amounts not material to the Company and its
subsidiaries taken as a whole and except for indebtedness not exceeding $100,000
in the aggregate; (B) except as described in the Merger Agreement, assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary course of business consistent with past practice and in amounts not
material to the Company and its subsidiaries taken as a whole and except for
obligations of its subsidiaries; (C) except for investments not exceeding
$100,000 in the aggregate, make any loans, advances or capital contributions to,
or investments in, any other person (other than to subsidiaries of the Company
or customary loans or advances to employees in the ordinary course of business
consistent with past practice and in amounts not material to the maker of such
loan or advance); (D) except as described in the Merger Agreement, pledge or
otherwise encumber shares of capital stock of the Company or its subsidiaries;
or (E) except as described in the Merger Agreement, mortgage or pledge any of
its material assets, tangible or intangible, or create or suffer to exist any
material lien thereupon except for liens securing indebtedness not exceeding
$100,000 in the aggregate;
(v) except as may be required by law or as contemplated by the Merger
Agreement and except in connection with the hiring of officers (to replace at
compensation levels not to exceed those of the officers being replaced any
officer who retires or is terminated for any reason) or employees in the
ordinary course of business, enter into, adopt or amend or terminate any bonus,
profit sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent, stock
purchase agreement, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director, officer or employee in
any manner, provided that the Company may not, under any circumstance, issue any
stock option or stock option equivalents thereof to any person, or (except for
normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company, except as required under
existing agreements and except for the payment of bonuses and severance payments
in the ordinary course of business generally consistent with past practice)
increase in any manner the compensation or fringe benefits of any director,
officer, employee or agent or pay any benefit not required by any plan and
arrangement as in effect as of the date of the Merger Agreement (including,
without limitation, the granting of stock appreciation rights or performance
units or create, issue or increase any severance agreement or stay bonus with
any officer, director or employee);
(vi) except as described in the Merger Agreement or with the consent of
Parent or Purchaser, which consent will not be unreasonably withheld, acquire,
sell, lease or dispose of any assets outside the ordinary course of business or
any assets which have a value in excess of $250,000;
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(vii) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(viii) except in connection with the exercise of purchase options under
existing leases which must be exercised for the Company to retain possession of
the subject property, (A) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein (except for transactions having
an aggregate value not exceeding $100,000); (B) authorize or make any new
capital expenditure or expenditures which, individually, is in excess of
$100,000 or, in the aggregate, are in excess of $500,000; or (C) enter into or
amend any contract, agreement, commitment or arrangement providing for the
taking of any action that would be prohibited by clauses (A) or (B) of this
paragraph;
(ix) make any tax election or settle or compromise any income tax liability
material to the Company and its subsidiaries taken as a whole;
(x) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against, in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company and its
subsidiaries in the filings with the Commission made prior to the date of the
Merger Agreement and since the filing of the Company's most recent Annual Report
on Form 10-K (the "Recent SEC Reports") or incurred in the ordinary course of
business consistent with past practice;
(xi) settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated by the Merger Agreement;
(xii) alter through merger, liquidation, reorganization, restructuring or
in any other fashion the corporate structure or ownership of any subsidiary of
the Company;
(xiii) incur any expenses in connection with the transactions contemplated
hereby in excess of the amount set forth in the Merger Agreement without the
prior written consent of Parent or Purchaser;
(xiv) make any intercompany transfer of cash in excess of $500,000; or
(xv) take, or agree in writing or otherwise to take, any of the actions
which would make any of the representations or warranties of the Company
contained in the Merger Agreement untrue or incorrect as of the date when made.
OTHER POTENTIAL ACQUIRORS. The Merger Agreement provides that the Company,
its affiliates and their respective officers, directors, employees,
representatives and agents shall immediately cease any existing discussions or
negotiations, if any, with any parties (other than the parties to the Merger
Agreement) conducted with respect to any offer or proposal for a merger or other
business combination involving the Company or any of its subsidiaries or the
acquisition of all or any material portion of the assets of, or any equity
interest in, the Company or its subsidiaries or any business combination with
the Company or its subsidiaries (each an "Acquisition Proposal"). The Company
may, directly or indirectly, furnish information and access, in each case only
in response to unsolicited requests therefor, to any corporation, partnership,
limited liability company or other entity or group pursuant to confidentiality
agreements on terms no less favorable to the Company than the confidentiality
agreement that has been entered into by and between the Company and Parent, and
may participate in discussions and negotiate with such entity or group
concerning any merger, sale of assets, sale of shares of capital stock or
similar transaction involving the Company or any subsidiary or division thereof,
if such entity or group has submitted a bona fide written proposal to the
Company Board relating to any such transaction that is a proposal made by a
third party to acquire, directly or indirectly, all of the equity securities of
the Company entitled to vote generally in the election of directors or all or
substantially all of the assets of the Company for cash and on terms which the
Company Board reasonably believes (after consultation with a financial advisor
of nationally recognized reputation) to be more favorable from a financial point
of view to its shareholders than the Offer and the Merger, taking into account
at the time of determination all factors relating to such proposed transaction
deemed relevant by the Company
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Board, including, without limitation, the financing thereof, the proposed timing
thereof and all other conditions thereto and any changes to the financial terms
of this Agreement proposed by Parent and Purchaser (a "Superior Proposal") and
the Company Board shall immediately notify Parent and Purchaser after receipt of
any Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company or
any of its subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any subsidiary by any
person or entity that informs the Company Board or such subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice to Parent
and Purchaser shall be made orally and in writing, and, unless the Company Board
concluded that such disclosure is inconsistent with its fiduciary duties under
applicable law, shall indicate the identity of the person making the Acquisition
Proposal or intending to make the Acquisition Proposal or requesting nonpublic
information or access to the books and records of the Company, the terms of any
such Acquisition Proposal or modification or amendment to an Acquisition
Proposal, and whether the Company is providing or intends to provide the person
making the Acquisition Proposal with access to information concerning the
Company as provided in the Merger Agreement. The Company shall also immediately
notify Parent and Purchaser, orally and in writing, if it enters into
negotiations concerning any Acquisition Proposal. Except as set forth above,
neither the Company Board nor any committee thereof shall (i) withdraw or
modify, or indicate publicly its intention to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Company Board or such
committee of the Offer or the Merger, (ii) approve or recommend, or indicate
publicly its intention to approve or recommend, any Acquisition Proposal or
(iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, a "Company
Acquisition Agreement") related to any Acquisition Proposal. Notwithstanding the
foregoing, in the event that prior to the Effective Time the Company Board
reasonably determines in good faith, after discussions with its counsel, that it
is consistent with its fiduciary duties under applicable law, the Company Board
may (subject to this and the following sentences) approve or recommend a
Superior Proposal and, in connection therewith, withdraw or modify its approval
or recommendation of the Offer or the Merger and/or terminate the Merger
Agreement (and concurrently with or after such termination, if it so chooses,
cause the Company to enter into any Company Acquisition Agreement with respect
to any Superior Proposal), but only at a time that is after the third business
day following Parent's receipt of written notice advising Parent that the
Company Board has received a Superior Proposal and, in the case of any
previously received Superior Proposal that has been materially modified or
amended, such modification or amendment and specifying the material terms and
conditions of such Superior Proposal, modification or amendment. However,
nothing set forth above shall prevent the Company Board from taking, and
disclosing to the Company's shareholders, a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Exchange Act with regard to any tender offer;
and provided further, however, that nothing shall prevent the Company Board from
making such disclosure to the Company's shareholders as, in the good faith
judgment of the Company Board, is required in the exercise of its fiduciaries
duties under California Law, provided that the Company complies with the
termination provisions of the Merger Agreement; provided further, that neither
the Company nor the Company Board nor any committee thereof shall, except as
permitted above, withdraw or modify or indicate publicly its intention to
withdraw or modify, its position with respect to the Offer or the Merger or
approve or recommend, or indicate publicly its intention to approve or recommend
an Acquisition Proposal. The Company shall advise its officers and directors and
any investment banker or attorney retained by the Company in connection with the
transactions contemplated by the Merger Agreement of the restriction set forth
therein.
ACCESS TO INFORMATION. The Merger Agreement provides that until the
Effective Time, the Company will provide to Parent and Purchaser and their
authorized representatives reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records of the Company and
its subsidiaries, will permit Parent and Purchaser to make such inspections as
Parent and Purchaser may reasonably require and will cause the Company's
officers and those of its subsidiaries to furnish Parent and Purchaser with such
financial and operating data and other information with respect to the business
and properties of the Company and its subsidiaries as Parent or Purchaser may
from time to time reasonably request.
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Pursuant to the Merger Agreement, each of Parent and Purchaser has agreed
that it will hold and will cause its consultants and advisors to hold in
confidence all documents and information concerning the Company and its
subsidiaries furnished to Parent or Purchaser in connection with the
transactions contemplated by the Merger Agreement.
SHAREHOLDERS MEETING. The Merger Agreement provides that, if a vote of the
Company's shareholders is required by law, the Company will, as promptly as
practicable following (A) the acceptance for payment of Shares by Purchaser
pursuant to the Offer, or (B) the termination of the offer by its terms, take,
in accordance with applicable law and its Articles of Incorporation and By-Laws,
all action necessary to convene a meeting of holders of Shares (the
"Shareholders Meeting") to consider and vote upon the approval of the Merger
Agreement. The Company shall, as promptly as practicable, prepare and file with
the Commission the Proxy Statement which shall include the recommendation of the
Company Board that shareholders of the Company vote in favor of the approval and
adoption of the Merger Agreement and the written opinion of Schroder that the
cash consideration to be received by the shareholders of the Company pursuant to
the Merger is fair to such shareholders from a financial point of view. The
Company shall use all reasonable efforts to have the Proxy Statement cleared by
the Commission as promptly as practicable after such filing, and promptly
thereafter mail the Proxy Statement to the shareholders of the Company. The
Company shall also use its best efforts to obtain all necessary state securities
law or "blue sky" permits and approvals required in connection with the Merger
and to consummate the other transactions contemplated by the Merger Agreement
and will pay all expenses incident thereto. Notwithstanding the foregoing, the
Merger Agreement provides that if Parent, Purchaser and/or any other subsidiary
of Parent shall acquire at least 90% of the outstanding Shares, the parties
shall take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
Shareholders Meeting in accordance with Section 1110 of the California Law.
Parent and Purchaser have agreed to cause all Shares purchased pursuant to
the Offer and all other Shares owned by Parent, Purchaser or any subsidiary of
Parent to be voted in favor of the Merger.
ADDITIONAL AGREEMENTS; REASONABLE BEST EFFORTS. Subject to the terms and
conditions in the Merger Agreement, Parent, Purchaser and the Company agree to
use all reasonable best efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement, including, without
limitation, (a) cooperation in the preparation and filing of the Schedule 14D-1,
the Schedule 14D-9, the Schedule 13E-3, if any, the Proxy Statement, any filings
that may be required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act") and any amendments thereto; (b) the taking of all action
reasonably necessary, proper or advisable to secure any necessary consents under
existing debt obligations of the Company and its subsidiaries or to amend the
notes, indentures or agreements relating thereto to the extent required by such
notes, indentures or agreements or redeem or repurchase such debt obligations;
(c) contesting any legal proceeding relating to the Offer or the Merger and (d)
the execution of any additional instruments necessary to consummate the
transactions contemplated thereby. Subject to the terms and conditions of the
Merger Agreement, Parent and Purchaser agree to use all reasonable efforts to
cause the Effective Time to occur as soon as practicable after the shareholder
vote, if any, with respect to the Merger. In case at any time after the
Effective Time any further action is necessary to carry out the purposes of the
Merger Agreement, the proper officers and directors of each party shall take all
such necessary action.
CONSENTS. The Merger Agreement provides that Parent, Purchaser and the
Company each will use all commercially reasonable efforts to obtain consents of
all third parties and governmental entities necessary, proper or advisable for
the consummation of the transactions contemplated by the Merger Agreement.
PUBLIC ANNOUNCEMENTS. The Merger Agreement provides that Parent, Purchaser
and the Company, as the case may be, will consult with one another before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated by the Merger Agreement, including, without
limitation, the Offer or the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation and approval,
except as may be required by applicable law or by
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obligations pursuant to any listing agreement with The Nasdaq Stock Market, as
determined by Parent, Purchaser or the Company, as the case may be.
GUARANTEE OF PERFORMANCE. Pursuant to the Merger Agreement, Parent has
agreed to guarantee performance by Purchaser of its obligations under the Merger
Agreement and the indemnification obligations of the Surviving Corporation (as
described below).
FINANCING COMMITMENTS. Pursuant to the Merger Agreement, Tinicum and
Edmundson have executed a guarantee. The guarantee provides that Tinicum and
Edmundson (the "Guarantors") jointly and severally, unconditionally and
irrevocably guarantee to the Company that if Parent or Purchaser fail to pay any
damages due to the Company (the "Obligations") arising from a breach or
violation by Parent or Purchaser of their Obligations under the Merger
Agreement, then Guarantors shall forthwith, upon demand (which demand shall be
for the sole purpose of providing notice to the Guarantors and shall not require
the Company to exhaust any remedy before proceeding against the Guarantors),
discharge the Obligations. The Guarantors shall be liable to the Company for the
reasonable costs and expenses (including, without limitation, reasonable
out-of-pocket legal fees and expenses) incurred by the Company (following a
demand upon the Guarantor) in any proceeding brought by or on behalf of the
Company to enforce the guarantee, except in the event a court or adjudicatory
panel of competent jurisdiction determines that a good faith dispute existed
with respect to the amount owed by the Guarantors hereunder.
CONDITIONS TO THE MERGER. Under the Merger Agreement, the respective
obligations of the parties to effect the Merger are subject to the satisfaction
of the following conditions prior to the Effective Time: (a) if required by
California Law, the Merger Agreement shall have been approved and adopted by the
requisite vote of the shareholders of the Company; (b) no statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or enforced by any United States court or United
States governmental authority which prohibits, restrains, enjoins or restricts
the consummation of the Merger; (c) any waiting period applicable to the Merger
under the HSR Act shall have terminated or expired, and any other governmental
or regulatory notices or approvals required with respect to the transactions
contemplated by the Merger Agreement shall have been either filed or received;
(d) the number of holders of Company Dissenting Shares shall be less than five
percent of the total number of Shares; (e) the representations and warranties of
each of the parties set forth in the Merger Agreement are true and correct as of
the date of the Merger Agreement and as of the Closing Date; it being understood
that representations and warranties shall be deemed to be true and correct
unless the respects in which the representations and warranties are untrue or
incorrect in the aggregate is likely to have a Material Adverse Effect; and (f)
each of the parties shall have performed in all material respects all
obligations required to be performed by it under the Merger Agreement at or
prior to the Closing Date.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations by the Company as to the Company's corporate
organization and qualification, the Company's subsidiaries, capitalization,
authority, filings with the Commission and other governmental authorities,
financial statements, the absence of certain changes or events concerning the
Company's corporate organization and qualification, the absence of undisclosed
liabilities, the truth of information supplied by the Company, litigation, labor
matters, employee benefit matters and ERISA, taxes, compliance with applicable
laws, environmental matters, real property, intellectual property, year 2000
compliance, insurance, suppliers and customers, restrictions on business
activities, brokers, conduct of business, expenses, dividends, state takeover
statutes and related party transactions.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Pursuant to the
Merger Agreement, Parent and Purchaser have agreed that all rights to
indemnification or exculpation now existing in favor of the directors, officers,
employees and agents of the Company and its subsidiaries as provided in their
respective charters or By-Laws (or other similar governing instruments) or
otherwise in effect as of the date hereof with respect to matters occurring
prior to the Effective Time shall survive the Merger and shall continue in full
force and effect. To the maximum extent permitted by California Law, such
indemnification shall be mandatory rather than permissive, and the Surviving
Corporation shall advance expenses in connection with such indemnifica-
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tion (subject to the Surviving Corporation's receipt of an undertaking by the
indemnified party to return such advanced expenses to the Surviving Corporation
if it is determined by a final, non-appealable order of a court of competent
jurisdiction that such indemnified party is not entitled to retain such advanced
expenses).
The Merger Agreement further provides that Parent shall cause the Surviving
Corporation to maintain in effect for not less than five years from the
Effective Time the policies of the directors' and officers' liability and
fiduciary insurance most recently maintained by the Company (provided that the
Surviving Corporation may substitute policies of at least the same coverage
containing terms and conditions which are no less advantageous to the
beneficiaries thereof so long as such substitution does not result in gaps or
lapses in coverage) with respect to matters occurring prior to the Effective
Time; provided, however, that in satisfying its obligation, the Surviving
Corporation shall not be obligated to pay premiums in excess of $125,000 with
respect to such insurance.
In the event the Surviving Corporation or its successor (i) is consolidated
with or merges into another person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any other person in a single
transaction or a series of related transactions, Parent has agreed that it will
make or cause to be made proper provision so that the successor or transferee of
the Surviving Corporation shall comply in all material respect with these terms.
EMPLOYEE MATTERS. Under the Merger Agreement, employees of the Company and
its subsidiaries shall be treated after the Merger no less favorably under
Parent's ERISA plans, to the extent applicable, than other similarly situated
employees of Parent and its subsidiaries.
For a period of one year following the Merger, Parent has agreed to, and to
cause its subsidiaries to, maintain with respect to their employees who had been
employed by the Company or any of its subsidiaries prior to the Effective Time
and who remain employed following the Effective Time (i) base salary or regular
hourly wage rates for each such employee at not less than the rate applicable
immediately prior to the Merger to such employee, and (ii) employee benefits (as
defined for purposes of Section 3(3) of ERISA), which are substantially
comparable in the aggregate to such employee benefits provided by the Company
and its subsidiaries immediately prior to the Merger.
To the extent they participate under such plans, Parent and its
subsidiaries have agreed to credit employees of the Company and its Subsidiaries
for purposes of determining eligibility to participate or vesting under Parent's
ERISA Plans with their service prior to the Merger with the Company and its
subsidiaries to the same extent such service was counted under similar benefit
plans of the Company prior to the Merger.
Neither Parent nor the Surviving Corporation is required to continue any
specific plans or to continue the employment of any specific person.
TERMINATION. The Merger Agreement may be terminated and the Offer and the
Merger may be abandoned at any time prior to the Effective Time:
(a) by mutual written consent of Parent, Purchaser and the Company;
(b) by Parent or Purchaser or the Company if (i) any court of competent
jurisdiction in the United States or other United States governmental authority
shall have issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Offer or the Merger
and such order, decree, ruling or other action is or shall have become
nonappealable; or (ii) by October 31, 1999, the Merger has not been consummated
(unless otherwise extended by the parties); provided, however, that the right to
terminate the Merger Agreement pursuant to this clause (ii) shall not be
available to a party if such party's failure to fulfill any obligations under
the Merger Agreement shall have been the reason that the Effective Time shall
not have occurred on or before such date;
(c) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of Parent or Purchaser set forth in the
Merger Agreement, or if any representation or warranty of Parent or Purchaser
shall have become untrue, in either case which materially adversely affects the
consummation of the Offer, (ii) there shall have been a breach on the part of
Parent or Purchaser of any of their respective covenants or agreements set forth
in the Merger Agreement having a Material Adverse Effect on Parent or
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materially adversely affecting the consummation of the Offer, and Parent or
Purchaser, as the case may be, has not cured such breach prior to the earlier of
(A) ten days following notice by the Company thereof and (B) two Business Days
prior to the date on which the Offer expires, provided that the Company has not
breached any of its obligations in a manner that proximately contributed to such
breach by Parent or Purchaser, or (iii) prior to the purchase of Shares pursuant
to the Offer, the Company has received a Superior Proposal and the Company Board
by a majority vote shall have determined in its good faith judgment, on the
advice of counsel, that it is required to do so in the exercise of its fiduciary
duties under California Law; provided that, without limiting Parent's right to
liquidated damages, such termination under this clause shall not be effective
until payment of the required termination fee (see below); or
(d) by Parent or Purchaser prior to the purchase of Shares pursuant to the
Offer if (i) the Company Board withdraws or modifies in a manner materially
adverse to Parent or Purchaser its favorable recommendation of the Offer or the
approval or recommendation of the Merger or shall have recommended a Third Party
Acquisition (as defined below), (ii) a Third Party Acquisition occurs, (iii)
there shall have been a breach of any representation or warranty on the part of
the Company set forth in the Merger Agreement, or any representation or warranty
of the Company shall have become untrue, in either case if the respects in which
the representations and warranties made by the Company are inaccurate would in
the aggregate have a Material Adverse Effect on the Company or materially
adversely affect (or delay) the consummation of the Offer or the Merger, (iv)
there shall have been a breach on the part of the Company of its covenants or
agreements set forth in the Merger Agreement having, individually or in the
aggregate, a Material Adverse Effect on the Company or materially adversely
affecting (or materially delaying) the consummation of the Merger, and, with
respect to clauses (iii) and (iv) above, the Company has not cured such breach
prior to the earlier of (A) ten days following notice by the Parent or Purchaser
thereof and (B) two Business Days prior to the date on which the Offer expires,
provided that, with respect to clauses (iii) and (iv) above, neither Parent or
Purchaser has breached any of their respective obligations in a manner that
proximately contributed to such breach by the Company or (v) Parent or Purchaser
shall have discovered that any information supplied to Parent or Purchaser by
the Company (excluding, for such purposes, any projections or forecasts or other
forward looking information supplied by the Company), at the time provided to
Parent or Purchaser, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and such
misstatement or omission would have a Material Adverse Effect on the Company.
As used in the Merger Agreement, "Material Adverse Effect" means any effect
that is materially adverse to the financial condition, business, properties or
results of operations of the Company and its subsidiaries taken as whole, on the
one hand, or Parent and its subsidiaries taken as a whole on the other hand.
None of the following shall be deemed by itself or by themselves, either alone
or in combination, to constitute a Material Adverse Effect on the Company and
its subsidiaries taken as a whole: (i) a change in the market price or trading
volume of Shares, (ii) a failure by the Company to meet the revenue or earnings
predictions of equity analysts for any period ending (or for which earnings are
released) on or after the date of the Merger Agreement and prior to the
Effective Date, (iii) conditions affecting the U.S. economy as whole, or (iv)
conditions affecting the worldwide industrial equipment market. Additionally,
conditions affecting the U.S. economy as whole shall not be deemed to constitute
a Material Adverse Effect on Parent and its subsidiaries taken as a whole.
In the event of the termination of the Merger Agreement, the Merger
Agreement shall become void and have no effect, without any liability on the
part of any party or its affiliates, directors, officers or shareholders, other
than the provisions concerning fees and expenses (discussed below) and
confidentiality. Nothing shall relieve any party from liability for any breach
of the Merger Agreement prior to such termination.
FEES AND EXPENSES. As provided in the Merger Agreement, in the event that
the Merger Agreement is terminated pursuant to paragraph (c)(iii) above or
paragraph (d) above, and, within twelve months thereafter, a Third Party
Acquisition occurs, then Parent and Purchaser would suffer direct and
substantial damages, which damages cannot be determined with reasonable
certainty. To compensate Parent and Purchaser for such damages, the Company has
agreed to pay to Parent the amount of $2.0 million as liquidated damages (the
"Break-Up Fee").
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"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger or otherwise by any person
(which includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) or entity other than Parent, Purchaser or any affiliate thereof (a
"Third Party"); (ii) the acquisition by a Third Party of 50% or more of the
total assets of the Company and its subsidiaries, taken as a whole; (iii) the
acquisition by a Third Party of Shares resulting in such person holding at least
50% or more of the outstanding Shares; or (iv) the acquisition by a Third Party
of shares of the Company's capital stock resulting in such person being able to
elect a majority of the Company's directors.
Upon the termination of the Merger Agreement prior to the purchase of
Shares by Purchaser pursuant to the Offer pursuant to paragraph (c)(iii) above
or paragraph (d) above, the Company shall reimburse Parent, Purchaser and their
affiliates (not later than ten Business Days after submission of statements
therefor) for all documented out-of-pocket fees and expenses, not to exceed
$500,000, reasonably incurred by any of them or on their behalf in connection
with the Merger and the consummation of all transactions contemplated by the
Merger Agreement (including, without limitation, filing fees, printing and
mailing costs, fees payable to investment bankers, counsel to any of the
foregoing, and accountants). If Parent or Purchaser shall have submitted a
request for reimbursement, such party will provide the Company in due course
with invoices or other reasonable evidence of such expenses upon request. The
Company shall in any event pay the amount requested within ten Business Days of
such request, subject to the Company's right to demand a return of any portion
as to which invoices are not received in due course.
Upon the termination of the Merger Agreement pursuant to paragraph (e)(i)
or (e)(ii) above, Parent shall reimburse the Company and their affiliates (not
later than ten Business Days after submission of statements therefor) for all
documented out-of-pocket fees and expenses, not to exceed $500,000, reasonably
incurred by any of them or on their behalf in connection with the Merger and the
consummation of all transactions contemplated by the Merger Agreement
(including, without limitation, filing fees, printing and mailing costs, fees
payable to investment bankers, counsel to any of the foregoing, and
accountants). If the Company shall have submitted a request for reimbursement,
it will provide Parent in due course with invoices or other reasonable evidence
of such expenses upon request. Parent shall in any event pay the amount
requested within ten Business Days of such request, subject to Parent's right to
demand a return of any portion as to which invoices are not received in due
course.
Except as specifically provided in the Merger Agreement, each party has
agreed to bear its own expenses in connection with the Merger Agreement and the
transactions contemplated thereby.
AMENDMENT. The Merger Agreement may be amended by action taken by the
Company, Parent and Purchaser at any time before or after approval of the Merger
by the shareholders of the Company (if required by applicable law) but, after
any such approval, no amendment shall be made which requires the approval of
such shareholders under applicable law without such approval. The Merger
Agreement may not be amended except by an instrument in writing signed on behalf
of the parties.
EXTENSION. The Merger Agreement provides that at any time prior to the
Effective Time, each party may (a) extend the time for the performance of any of
the obligations or other acts of the other party or parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained therein or in any document, certificate or writing delivered pursuant
thereto or (c) waive compliance by the other parties with any of the agreements
or conditions contained therein. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to assert any
of its rights shall not constitute a waiver of such rights.
SHAREHOLDER AGREEMENT
On March 15, 1999, Parent, Purchaser and the Trusts entered into an
agreement (as amended as of March 18, 1999, the "Shareholder Agreement") with
respect to the voting of the Trusts' Shares (the "Subject Shares") in connection
with the Merger. The Trusts agreed to vote (or cause to be voted) the Subject
Shares (i) in favor of the Merger Agreement and the Merger and (ii) against any
Third Party Acquisition, or any amendment of the Company's Articles of
Incorporation, Bylaws, or any other proposal or transaction or any change in
management or the Company Board, that could reasonably be expected to impede, in
any material
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respect, prevent or nullify the Merger or Merger Agreement. As of the date of
the execution of the Shareholder Agreement, the Trusts beneficially owned
1,521,477 shares of Class A Common Stock and all 40,000 shares of Class B Common
Stock. The Trusts granted Purchaser a proxy to vote and an option to acquire all
of the Trusts' shares of Class A Common Stock upon the terms and subject to the
conditions set forth therein. As a result, Purchaser and Parent may be deemed to
beneficially own such Shares of Class A Common Stock. Additionally, the Trusts
agreed to tender the Subject Shares into the offer. As of March 10, 1999, the
Trusts' Shares of Class A Common Stock represent 31.9% of the total outstanding
Shares of Class A Common Stock.
EMPLOYMENT AGREEMENT
On March 15, 1999, Parent, Purchaser and R. Malcolm Greaves ("Greaves")
entered into a Letter Agreement which provides that upon Purchaser's purchase of
Shares pursuant to the Offer or the Merger, whichever occurs first, Greaves will
enter into an employment agreement with the Company (the "Employment
Agreement"), and pursuant to which Greaves agreed to forego the $180,000 "stay"
bonus that the Company had previously agreed to pay him. Under the Employment
Agreement, Greaves will continue to serve as President and Chief Executive
Officer of the Company. The Employment Agreement will contain customary
definitions of cause and good reason, a non-competition/non-solicitation
provision and other customary provisions.
13. DIVIDENDS AND DISTRIBUTIONS.
Pursuant to the Merger Agreement, the Company will not, prior to the
Merger, without the prior written consent of Parent or Purchaser, split, combine
or reclassify any shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem or otherwise
acquire any shares of capital stock of, securities convertible into or
exercisable for, or options to acquire equity securities of, the Company or any
securities of any of its subsidiaries.
Payment of dividends and distributions by the Company is subject to certain
restrictions contained in agreements in respect of the Company's credit
arrangements.
14. CERTAIN CONDITIONS OF THE OFFER.
Pursuant to Annex A of the Merger Agreement, Purchaser is not required to
accept for payment or pay for, and shall delay the acceptance for payment of, or
the payment for, any Shares and, if required pursuant to the terms of the Merger
Agreement, shall extend the Offer by one or more extensions until May 28, 1999,
and may terminate the Offer at any time after June 11, 1999, if (i) immediately
prior to the expiration of the Offer (as extended in accordance with the Offer),
the Minimum Condition shall not have been satisfied, (ii) any applicable waiting
period under the HSR Act shall not have expired or been terminated or (iii)
prior to the acceptance for payment of Shares, Purchaser makes a determination
(which shall be made in good faith) that any of the following conditions exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, enacted, entered,
enforced or deemed applicable to the Offer, or any other action shall have been
taken, by any state or federal government or governmental authority or by any U.
S. court, other than the routine application to the Offer or the Merger of
waiting periods under the HSR Act, that (i) restrains, prohibits, or makes
illegal the acceptance for payment of, or the payment for, some or all of the
Shares or otherwise prohibits consummation of the Offer or the Merger, (ii)
restrains, prohibits, or imposes material limitations on, the ability of
Purchaser to acquire or hold or to exercise effectively all rights of ownership
of the Shares, including, without limitation, the right to vote any Shares
purchased by Purchaser on all matters properly presented to the shareholders of
the Company, or effectively to control in any material respect the business,
assets or operations of the Company, its subsidiaries, Purchaser or any of their
respective affiliates, or (iii) otherwise has a Material Adverse Effect on the
Company, or there shall be any litigation or suit pending by any person or
governmental authority seeking to do any of the foregoing; or
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(b)(i) the representations and warranties of the Company set forth in the
Merger Agreement (without giving effect to any "materiality" limitations or
references to "Material Adverse Effect" set forth therein) shall not be true and
correct in any material respect as of the date of the Merger Agreement and as of
consummation of the Offer as though made on or as of such date, but only if the
respects in which the representations and warranties made by the Company are
inaccurate and would in the aggregate have a Material Adverse Effect on the
Company, (ii) the Company shall have breached or failed to comply in any
material respect with any of its obligations under the Merger Agreement or (iii)
any material adverse changes shall have occurred that have had or could
reasonably be expected to have a Material Adverse Effect on the Company; or
(c) it shall have been publicly disclosed that any person (which includes a
"person" as such term is defined in Section 13(d)(3) of the Exchange Act) other
than Parent, Purchaser, any of their affiliates, or any group of which any of
them is a member, shall have acquired beneficial ownership of more than 50% of
the outstanding Shares or shall have entered into a definitive agreement or an
agreement in principle with the Company with respect to a tender offer or
exchange offer for any Shares or a merger, consolidation or other business
combination with or involving the Company, any of its subsidiaries or any of
their material assets; or
(d) the Merger Agreement shall have been terminated in accordance with its
terms; or
(e) prior to the purchase of Shares pursuant to the Offer, the Company
Board shall have withdrawn or modified (including by amendment of the Schedule
14D-9) in a manner adverse to Purchaser its approval or recommendation of the
Offer, the Merger Agreement or the Merger or shall have recommended another
offer, or shall have adopted any resolution to effect any of the foregoing
which, in the good faith judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or omission by Purchaser) giving rise
to any such condition, makes it inadvisable to proceed with such acceptance for
payment; or
(f) there shall have occurred any general suspension of, or limitation on
prices for, trading in the Shares on The Nasdaq Stock Market; or
(g) the Company shall commence a case under any chapter of Title XI of the
United States Code or any similar law or regulation; or a petition under any
chapter of Title XI of the United States Code or any similar law or regulation
is filed against the Company which is not dismissed within two (2) business
days; or
(h) any authorizations, consents, orders or approvals of, or declarations
or filings with, or expirations of waiting periods imposed by, any governmental
entity required in order to consummate the Offer or the Merger or to permit the
Company and its subsidiaries to conduct their businesses after the Offer and the
Merger as currently conducted shall not have been filed, granted, given,
occurred or satisfied.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
GENERAL. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company,
neither Purchaser nor Parent is aware of any license or other regulatory permit
that appears to be material to the business of the Company and its subsidiaries,
taken as a whole, which might be adversely affected by the acquisition of Shares
by Purchaser pursuant to the Offer or, except as set forth below, of any
approval or other action by any domestic (federal or state) or foreign
governmental, administrative or regulatory authority or agency which would be
required prior to the acquisition of Shares by Purchaser pursuant to the Offer.
Should any such approval or other action be required, it is Purchaser's present
intention to seek such approval or action. Except as described under "Certain
Conditions to the Offer", Purchaser does not currently intend to delay the
purchase of Shares tendered pursuant to the Offer pending the outcome of any
such action or the receipt of any such approval (subject to Purchaser's right to
decline to purchase Shares if any of the conditions described under "Certain
Conditions to the Offer" shall have occurred). There can be no assurance that
any such approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
business of the Company, Purchaser or Parent or that certain parts of the
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businesses of the Company, Purchaser or Parent might not have to be disposed of
or held separate or other substantial conditions complied with in order to
obtain such approval or other action or in the event that such approval was not
obtained or such other action was not taken. Purchaser's obligation under the
Offer to accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed herein.
STATE TAKEOVER LAWS. The Company's principal executive offices are located
in, and the Company is incorporated under the laws of, the State of California,
which currently has no takeover statute that would apply to the Offer or to the
Merger. However, there can be no assurances that California will not, prior to
the completion of the Offer, adopt such a statute. Under California Law, the
Merger may not be accomplished for cash paid to the Company's shareholders if
Purchaser or Parent owns directly or indirectly more than 50% but less than 90%
of the then outstanding Shares of each class unless either all the shareholders
consent or the Commissioner of Corporations of the State of California approves,
after a hearing, the terms and conditions of the Merger and the fairness
thereof. The purpose of the Offer is to obtain 90% or more of each class of the
Shares and to enable Parent and Purchaser to acquire control of the Company.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining shareholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of shareholders in the state and were incorporated
there.
Purchaser does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws. Should
any person seek to apply any state takeover law, Purchaser will take such action
as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. If it is
asserted that one or more state takeover laws are applicable to the Offer or the
Merger, and an appropriate court does not determine that it is inapplicable or
invalid as applied to the Offer, Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities. In
addition, if enjoined, Purchaser might be unable to accept for payment any
Shares tendered pursuant to the Offer, or be delayed in continuing or
consummating the Offer and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See "Certain Conditions of
the Offer."
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. Purchaser believes that the acquisition of Shares by Purchaser
pursuant to the Offer are not subject to such requirements.
DISSENTERS' RIGHTS. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, in connection with the Merger, holders of Shares,
by complying with the provisions of Chapter 13 of California Law, may have
certain rights to dissent and to require the Company to purchase their Shares
for cash at fair market value. In general, holders of Shares will be entitled to
exercise "dissenters' rights" under California Law only if the holders of five
percent or more of the outstanding Shares properly file demands for payment or
if the Shares held by such holders are subject to any restriction on transfer
imposed by the Company or any law or regulation ("Restricted Shares").
Accordingly, any holder of Restricted Shares and, if the holders of five percent
or more of the Shares properly file demands for payment, all other such holders
who fully comply with all other applicable provisions of Chapter 13 of
California Law will be entitled to require the Company to purchase their Shares
for cash at their fair market value if the Merger is consummated. In addition,
if
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immediately prior to the Effective Time, the Shares are not listed on a national
securities exchange or on the list of OTC margin stocks issued by the Company
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
holders of Shares may likewise exercise their dissenters' rights as to any or
all of their Shares entitled to such rights. If the statutory procedures under
California Law relating to dissenters' rights were complied with, such rights
could lead to a judicial determination of the fair market value of the Shares.
The "fair market value" would be determined as of the day before the first
announcement of the terms of the proposed Merger, excluding any appreciation or
depreciation as a consequence of the Merger. The value so determined could be
more or less than the Merger Consideration. The foregoing summary of dissenters'
rights does not purport to be complete and is qualified in its entirety by
reference to the full text of Chapter 13 of California law included herewith as
Annex A.
16. FEES AND EXPENSES.
Except as set forth below, Purchaser will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer. Brokers, dealers, commercial banks and trust companies will, upon
request, be reimbursed by Purchaser for customary mailing and handling expenses
incurred and documented by them in forwarding offering materials to their
customers.
The Merger Agreement provides, except in certain cases in which the Merger
is not consummated, that all fees, costs and expenses incurred in connection
with the Merger Agreement and the transactions contemplated thereby shall be
paid by the party incurring such fees, costs and expenses, whether or not the
transactions contemplated by the Merger Agreement are consummated.
Purchaser and Parent have retained Georgeson & Company Inc. as the
Information Agent, and American Stock Transfer & Trust Company as the
Depositary, in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telex, telecopy, telegraph and personal
interview, and may request banks, brokers, dealers and other nominee
shareholders to forward materials relating to the Offer to beneficial owners.
As compensation for acting as Depositary and Information Agent,
respectively, Purchaser will pay a reasonable and customary fee and will also
reimburse American Stock Transfer & Trust Company and Georgeson & Company Inc.
for certain out-of-pocket expenses. Parent and the Purchaser have agreed to
indemnify the Depositary and Information Agent against certain liabilities and
expenses in connection with the Offer, including certain liabilities under the
United States federal securities laws.
17. MISCELLANEOUS.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid United
States state statute. If Purchaser becomes aware of any such valid United States
state statute prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto, Purchaser will make a good faith effort to comply with any
such United States state statute. If, after such good faith effort, Purchaser
cannot comply with any such United States state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT, PURCHASER OR THE COMPANY NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
33
<PAGE> 34
Parent and Purchaser have filed the Schedule 14D-1, together with all
exhibits thereto, and the Company has filed the Schedule 14D-9, together with
all exhibits thereto. Such statements, and any amendments thereto, including
exhibits, which furnish certain additional information with respect to the
Offer, may be examined and copies may be obtained at the same places and in the
same manner set forth in "Certain Information Concerning the Company" (except
that they will not be available at regional offices of the Commission).
HI MERGER SUBSIDIARY INC.
March 22, 1999
34
<PAGE> 35
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PURCHASER AND PARENT
1. Directors and Executive Officers of Purchaser. The following table
sets forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments, and business addresses thereof for the past five years of each
person currently expected to be a director or executive officer of Purchaser.
Each such individual is a citizen of the United States and has held the
positions as set forth below for the past five years. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with Purchaser.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL
NAME AND ADDRESS POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- ----------------------------------------------------
<S> <C> <C>
1. Eric M. Ruttenberg Mr. Ruttenberg is President of Purchaser and Parent.
Tinicum Incorporated He has served as the managing member of Tinicum
800 Third Avenue Lantern L.L.C., the general partner of Tinicum
40th Floor Capital Partners, L.P. since its formation in 1998.
New York, NY 10022 Mr. Ruttenberg has been a general partner of Tinicum
Investors, an investment management company, since
1994. He serves as a Director on the Boards of SPS
Technologies, Environmental Strategies Corp. and
Haynes Holdings, Inc. He is currently a trustee of
Mt. Sinai Hospital.
2. Seth M. Hendon Mr. Hendon is Vice President, Secretary and Director
Tinicum Incorporated of Purchaser and Parent. He has served as a
800 Third Avenue principal of Tinicum Lantern L.L.C., the general
40th Floor partner of Tinicum Capital Partners, L.P. since
New York, NY 10022 1998. Since 1996, Mr. Hendon has been a general
partner of Tinicum Investors, an investment
management company. Prior to that, Mr. Hendon was an
employee of Tinicum Incorporated, an investment
management company affiliated with Tinicum
Investors, since 1991.
3. Robert J. Kelly Mr. Kelly is Vice President and Treasurer of
Tinicum Incorporated Purchaser and Parent. He has served as a principal
800 Third Avenue of Tinicum Lantern L.L.C., the general partner of
40th Floor Tinicum Capital Partners, L.P. since 1998. Since
New York, NY 10022 1996, Mr. Kelly has been a general partner of
Tinicum Investors, an investment management company.
Prior to that, Mr. Kelly was an employee of Tinicum
Incorporated, an investment management company
affiliated with Tinicum Investors, since 1991. He
currently is a Director of Environmental Strategies
Corp.
</TABLE>
2. Directors and Executive Officers of Parent. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments, and business addresses thereof for the past five years of each
director and executive officer of Parent. Unless otherwise indicated, each such
individual is a citizen of the United States and has held his or her present
position as set forth below for the past five years. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to employment
with Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL
NAME AND ADDRESS POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- ----------------------------------------------------
<S> <C> <C>
1. Eric M. Ruttenberg See Part I of this Schedule I.
2. Seth M. Hendon See Part 1 of this Schedule I.
3. Robert J. Kelly See Part I of this Schedule I.
</TABLE>
35
<PAGE> 36
ANNEX A
CALIFORNIA BUSINESS CORPORATION LAW
1300. (a) If the approval of the outstanding shares (Section 152) of a
corporation is required for a reorganization under subdivisions (a) and (b) or
subdivision (e) or (f) of Section 1201, each shareholder of the corporation
entitled to vote on the transaction and each shareholder of a subsidiary
corporation in a short-form merger may, by complying with this chapter, require
the corporation in which the shareholder holds shares to purchase for cash at
their fair market value the shares owned by the shareholder which are dissenting
shares as defined in subdivision (b). The fair market value shall be determined
as of the day before the first announcement of the terms of the proposed
reorganization or short-form merger, excluding any appreciation or depreciation
in consequence of the proposed action, but adjusted for any stock split, reverse
stock split, or share dividend which becomes effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or
short-form merger either (A) listed on any national securities exchange
certified by the Commissioner of Corporations under subdivision (o) of
Section 25100 or (B) listed on the list of OTC margin stocks issued by the
Company Board of Governors of the Federal Reserve System, and the notice of
meeting of shareholders to act upon the reorganization summarizes this
section and Sections 1301, 1302, 1303 and 1304; provided, however, that
this provision does not apply to any shares with respect to which there
exists any restriction on transfer imposed by the corporation or by any law
or regulation; and provided, further, that this provision does not apply to
any class of shares described in subparagraph (A) or (B) if demands for
payment are filed with respect to 5 percent or more of the outstanding
shares of that class.
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted
in favor of the reorganization or, (B) if described in subparagraph (A) or
(B) of paragraph (1) (without regard to the provisos in that paragraph),
were voted against the reorganization, or which were held of record on the
effective date of a short-form merger; provided, however, that subparagraph
(A) rather than subparagraph (B) of this paragraph applies in any case
where the approval required by Section 1201 is sought by written consent
rather than at a meeting.
(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.
(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of record.
1301. (a) If, in the case of a reorganization, any shareholders of a
corporation have a right under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, to require the corporation to
purchase their shares for cash, such corporation shall mail to each such
shareholder a notice of the approval of the reorganization by its outstanding
shares (Section 152) within 10 days after the date of such approval, accompanied
by a copy of Sections 1300, 1302, 1303, 1304 and this section, a statement of
the price determined by the corporation to represent the fair market value of
the dissenting shares, and a brief description of the procedure to be followed
if the shareholder desires to exercise the shareholder's right under such
sections. The statement of price constitutes an offer by the corporation to
purchase at the price stated any dissenting shares as defined in subdivision (b)
of Section 1300, unless they lose their status as dissenting shares under
Section 1309.
(b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, and who desires the
corporation to purchase such shares shall make written demand upon the
corporation for the purchase of such shares and payment to the shareholder in
cash of their fair market value. The demand is not
A-1
<PAGE> 37
effective for any purpose unless it is received by the corporation or any
transfer agent thereof (1) in the case of shares described in clause (i) or (ii)
of paragraph (1) of subdivision (b) of Section 1300 (without regard to the
provisos in that paragraph), not later than the date of the shareholders'
meeting to vote upon the reorganization, or (2) in any other case within 30 days
after the date on which the notice of the approval by the outstanding shares
pursuant to subdivision (a) or the notice pursuant to subdivision (i) of Section
1110 was mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of
record by the shareholder which the shareholder demands that the corporation
purchase and shall contain a statement of what such shareholder claims to be the
fair market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price.
1302. Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder, the shareholder shall submit to the corporation at
its principal office or at the office of any transfer agent thereof, (a) if the
shares are certificated securities, the shareholder's certificates representing
any shares which the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or endorsed
or (b) if the shares are uncertificated securities, written notice of the number
of shares which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the corporation,
the new certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together with the name
of the original dissenting holder of the shares.
1303. (a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the fair
market value of any dissenting shares as between the corporation and the holders
thereof shall be filed with the secretary of the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount thereof
has been agreed or within 30 days after any statutory or contractual conditions
to the reorganization are satisfied, whichever is later, and in the case of
certificated securities, subject to surrender of the certificates therefor,
unless provided otherwise by agreement.
1304. (a) If the corporation denies that the shares are dissenting shares,
or the corporation and the shareholder fail to agree upon the fair market value
of the shares, then the shareholder demanding purchase of such shares as
dissenting shares or any interested corporation, within six months after the
date on which notice of the approval by the outstanding shares (Section 152) or
notice pursuant to subdivision (i) of Section 1110 was mailed to the
shareholder, but not thereafter, may file a complaint in the superior court of
the proper county praying the court to determine whether the shares are
dissenting shares or the fair market value of the dissenting shares or both or
may intervene in any action pending on such a complaint.
(b) Two or more dissenting shareholders may join as plaintiffs or be joined
as defendants in any such action and two or more such actions may be
consolidated.
(c) On the trial of the action, the court shall determine the issues. If
the status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of the dissenting shares is in
issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.
1305. (a) If the court appoints an appraiser or appraisers, they shall
proceed forthwith to determine the fair market value per share. Within the time
fixed by the court, the appraisers, or a majority of them, shall make and file a
report in the office of the clerk of the court. Thereupon, on the motion of any
party, the report shall be submitted to the court and considered on such
evidence as the court considers relevant. If the court finds the report
reasonable, the court may confirm it.
A-2
<PAGE> 38
(b) If a majority of the appraisers appointed fail to make and file a
report within 10 days from the date of their appointment or within such further
time as may be allowed by the court or the report is not confirmed by the court,
the court shall determine the fair market value of the dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market value
of each dissenting share multiplied by the number of dissenting shares which any
dissenting shareholder who is a party, or who has intervened, is entitled to
require the corporation to purchase, with interest thereon at the legal rate
from the date on which judgment was entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301).
1306. To the extent that the provisions of Chapter 5 prevent the payment
to any holders of dissenting shares of their fair market value, they shall
become creditors of the corporation for the amount thereof together with
interest at the legal rate on judgments until the date of payment, but
subordinate to all other creditors in any liquidation proceeding, such debt to
be payable when permissible under the provisions of Chapter 5.
1307. Cash dividends declared and paid by the corporation upon the
dissenting shares after the date of approval of the reorganization by the
outstanding shares (Section 152) and prior to payment for the shares by the
corporation shall be credited against the total amount to be paid by the
corporation therefor.
1308. Except as expressly limited in this chapter, holders of dissenting
shares continue to have all the rights and privileges incident to their shares,
until the fair market value of their shares is agreed upon or determined. A
dissenting shareholder may not withdraw a demand for payment unless the
corporation consents thereto.
1309. Dissenting shares lose their status as dissenting shares and the
holders thereof cease to be dissenting shareholders and cease to be entitled to
require the corporation to purchase their shares upon the happening of any of
the following:
(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys' fees.
(b) The shares are transferred prior to their submission for endorsement in
accordance with Section 1302 or are surrendered for conversion into shares of
another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.
1310. If litigation is instituted to test the sufficiency or regularity of
the votes of the shareholders in authorizing a reorganization, any proceedings
under Sections 1304 and 1305 shall be suspended until final determination of
such litigation.
A-3
<PAGE> 39
1311. This chapter, except Section 1312, does not apply to classes of
shares whose terms and provisions specifically set forth the amount to be paid
in respect to such shares in the event of a reorganization or merger.
1312. (a) No shareholder of a corporation who has a right under this
chapter to demand payment of cash for the shares held by the shareholder shall
have any right at law or in equity to attack the validity of the reorganization
or short-form merger, or to have the reorganization or short-form merger set
aside or rescinded, except in an action to test whether the number of shares
required to authorize or approve the reorganization have been legally voted in
favor thereof; but any holder of shares of a class whose terms and provisions
specifically set forth the amount to be paid in respect to them in the event of
a reorganization or short-form merger is entitled to payment in accordance with
those terms and provisions or, if the principal terms of the reorganization are
approved pursuant to subdivision (b) of Section 1202, is entitled to payment in
accordance with the terms and provisions of the approved reorganization.
(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash for
such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside or
rescinded, the shareholder shall not thereafter have any right to demand payment
of cash for the shareholder's shares pursuant to this chapter. The court in any
action attacking the validity of the reorganization or short-form merger or to
have the reorganization or short-form merger set aside or rescinded shall not
restrain or enjoin the consummation of the transaction except upon 10 days'
prior notice to the corporation and upon a determination by the court that
clearly no other remedy will adequately protect the complaining shareholder or
the class of shareholders of which such shareholder is a member.
(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of any party so controlled.
A-4
<PAGE> 40
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand or By Overnight Courier: By Facsimile:
40 Wall Street 40 Wall Street (718) 234-5001
46th Floor 46th Floor (For Eligible Institutions
New York, N.Y. 10005 New York, NY 10005 Only)
Attn: Reorganization Department
Confirm by Telephone:
(800) 937-5449
(718) 921-8200
</TABLE>
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at its telephone numbers and
location listed below. You may also contact your broker, dealer, bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
ALL OTHERS CALL TOLL-FREE (800) 223-2064
<PAGE> 1
Exhibit (a) (2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
HASKEL INTERNATIONAL, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 22, 1999,
BY
HI MERGER SUBSIDIARY INC.
A WHOLLY-OWNED SUBSIDIARY OF
HI HOLDINGS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, APRIL 19, 1999 UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand or By Overnight Courier: By Facsimile:
40 Wall Street (718) 234-5001
40 Wall Street 46th Floor (For Eligible Institutions Only)
46th Floor New York, NY 10005 Confirm by Telephone
New York, N.Y. 10005 Attn: Reorganization Department (800) 937-5449
(718) 921-8200
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders of Haskel
International, Inc. either if certificates (as defined below) are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase, dated March 22, 1999 (the "Offer to Purchase")) is utilized, if
delivery of Shares is to be made by book-entry transfer to an account maintained
by the Depositary at the Book-Entry Transfer Facility (as defined in Section 2
of the Offer to Purchase) pursuant to the procedures set forth in Section 3 of
the Offer to Purchase. Stockholders who deliver Shares by book-entry transfer
are referred to herein as "Book-Entry Stockholders" and other Stockholders are
referred to as "Certificate Stockholders." DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal must be accompanied by certificates for Shares
(the "Share Certificates") unless the holder complies with the procedures for
guaranteed delivery. Holders whose Share Certificates are not immediately
available or who cannot deliver their Share Certificates and all other required
documents to the Depositary on or prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase) or who cannot complete the procedures for
book-entry transfer on a timely basis, must tender their Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
See Instruction 2.
<PAGE> 2
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF TENDERED SHARES
- --------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES CERTIFICATE(S) TENDERED
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES TOTAL NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Total Shares
- --------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares Certificates delivered to the Depositary are being
tendered. See Instruction 4.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
Account Number:
Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
If delivered by Book-Entry Transfer check box [ ]
Account Number:
Transaction Code Number:
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to HI Merger Subsidiary Inc., a California
corporation (the "Purchaser") and a wholly-owned subsidiary of HI Holdings Inc.,
a Delaware corporation ("Parent"), the above described shares of common stock,
no par value per share (the "Shares"), of Haskel International, Inc., a
California corporation (the "Company"), net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated March 22, 1999 (the "Offer to Purchase"), and in this
Letter of Transmittal (which together with the Offer to Purchase constitute the
"Offer") receipt of which is hereby acknowledged. The undersigned understands
that the Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its subsidiaries or affiliates the right
to purchase all or any portion of the Shares tendered pursuant to the Offer.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of and payment for the Shares tendered herewith in accordance with the
terms of the Offer, the undersigned hereby sells, assigns, and transfers to, or
upon the order of, the Purchaser all right, title and interest in and to all of
the Shares that are being tendered hereby and any and all dividends,
distributions (including additional Shares) or rights declared, paid or issued
with respect to the tendered Shares on or after March 15, 1999 and payable or
distributable to the undersigned on a date prior to the transfer to the name of
the Purchaser or nominee or transferee of the Purchaser on the Company's stock
transfer records of the Shares tendered herewith, and constitutes and
irrevocably appoints American Stock Transfer & Trust Company (the "Depositary")
the true and lawful agent, attorney-in-fact and proxy of the undersigned to the
full extent of the undersigned's rights with respect to such Shares with full
power of substitution (such power of attorney and proxy being deemed to be an
irrevocable power coupled with an interest), to (a) deliver Share Certificates
(and any such other Shares or securities or rights), or transfer ownership of
such Shares (and any such other Shares or securities or rights) on the account
books maintained by the Book-Entry Transfer Facility, together in either such
case with all accompanying evidences of transfer and authenticity, to or upon
the order of the Purchaser, upon receipt by the Depositary, as the undersigned's
agent, of the purchase price, (b) present such Shares (and any such other Shares
or securities or rights) for transfer on the books of the Company and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares (and any such other Shares or securities or rights), all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Eric M. Ruttenberg, Seth M.
Hendon and Robert J. Kelly, and each of them, and any other designees of the
Purchaser as the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to vote in such manner as each such attorney and
proxy or his substitute shall, in his sole discretion, deem proper, and
otherwise act (including pursuant to written consent) with respect to all of the
Shares tendered hereby (and any and all other Shares or other securities or
rights issued or issuable in respect thereof on or after March 15, 1999) which
have been accepted for payment by the Purchaser prior to the time of such vote
or action which the undersigned is entitled to vote at any meeting of
stockholders (whether annual or special and whether or not an adjourned meeting)
of the Company, or by written consent in lieu of such meeting, or otherwise.
This power of attorney and proxy is coupled with an interest in the Company and
in the Shares and is irrevocable and is granted in consideration of, and is
effective upon, the acceptance for payment of such Shares by the Purchaser in
accordance with the terms of the Offer. Such acceptance for payment shall
revoke, without further action, any other power of attorney or proxy granted by
the undersigned at any time with respect to such Shares and no subsequent powers
of attorney or proxies will be given (and if given will be deemed not to be
effective) with respect thereto by the undersigned. The undersigned understands
that the Purchaser reserves the right to require that, in order for Shares to be
deemed validly tendered, immediately upon the Purchaser's acceptance for payment
of such Shares, the Purchaser is able to exercise full voting rights with
respect to such Shares and other securities, including voting at any meeting of
stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other Shares or other securities or rights
issued or issuable in respect thereof on or after March 15, 1999) and that, when
the same are accepted for payment by the Purchaser, the Purchaser will acquire
good, marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and the same will not be subject to any
adverse claim. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby (and any such other Shares or securities or rights).
<PAGE> 4
All authority herein conferred or herein agreed to be conferred shall not
be affected by, and shall survive, the death or incapacity of the undersigned
and any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto and acceptance for payment of such Shares will constitute a
binding agreement between the undersigned and the Purchaser upon the terms and
subject to the conditions set forth in the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or issue or return any Share
Certificates not tendered or accepted for payment in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates not tendered or accepted for payment (and any accompanying
documents, as appropriate) to the undersigned at the address(es) shown below the
undersigned's signature. In the event that both the "Special Delivery
Instructions" and the "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any Share Certificates not
tendered or accepted for payment in the name(s) of, and deliver said check
and/or return certificates to, the person or persons so indicated. Stockholders
tendering Shares by book-entry transfer may request that any Shares not accepted
for payment be returned by crediting such account maintained at such Book-Entry
Transfer Facility as such stockholder may designate by making an appropriate
entry under "Special Payment Instructions." The undersigned recognizes that the
Purchaser has no obligation pursuant to the "Special Payment Instructions" to
transfer any Shares from the name(s) of the registered holder(s) thereof if the
Purchaser does not accept for payment any of the Shares so tendered.
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if Share Certificates not tendered or not
purchased and/or the check for the purchase price of Shares purchased are
to be issued in the name of someone other than the undersigned, or if
Shares tendered by book-entry transfer which are not purchased are to be
returned by credit to an account maintained at a Book-Entry Transfer
Facility other than that designated on the front cover.
Issue: [ ] check and/or [ ] certificates to:
Name
----------------------------------------------------
(Please Print)
Address
--------------------------------------------------
------------------------------------------------------------
(Include Zip Code)
------------------------------------------------------------
(Taxpayer Identification or Social Security No.)
(See Substitute Form W-9 on Back Cover)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if Share Certificates not tendered or not
purchased and/or the check for the purchase price of Shares purchased are
to be sent to someone other than the undersigned, or to the undersigned at
an address other than that shown on the front cover.
Mail: [ ] check and/or [ ] certificates to:
Name
----------------------------------------------------
(Please Print)
Address
--------------------------------------------------
------------------------------------------------------------
(Include Zip Code)
------------------------------------------------------------
(Taxpayer Identification or Social Security No.)
(See Substitute Form W-9 on Back Cover)
------------------------------------------------------------
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated:
- ------------------------------, 1999
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the necessary information.
See Instruction 5.)
Name(s):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Tax Identification or Social Security No.:
- --------------------------------------------------------------------------------
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Dated:
- ------------------------------, 1999
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of the Shares tendered
herewith, unless such holder(s) has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
this Letter of Transmittal or (ii) if such Shares are tendered for the account
of a firm that is a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agent's Medallion Program (each, an "Eligible Institution"). In all other cases,
all signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined below) is utilized, if
tenders are to be made pursuant to the procedures for tender by book-entry
transfer set forth in Section 3 of the Offer to Purchase. Share Certificates, or
timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
such Shares into the Depositary's account at a Book-Entry Transfer Facility, as
well as this Letter of Transmittal (or a facsimile hereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
in the case of a book-entry delivery, and any other documents required by this
Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date. Stockholders whose
Share Certificates are not immediately available or who cannot deliver their
Share Certificates and all other required documents to the Depositary prior to
the Expiration Date or who cannot complete the procedures for delivery by
book-entry transfer on a timely basis may tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Purchaser,
must be received by the Depositary on or prior to the Expiration Date; and (iii)
the Share Certificates (or a Book-Entry Confirmation) representing all tendered
Shares, in proper form for transfer, together with a Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message) and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three NASDAQ National Market System
trading days after the date of execution of such Notice of Guaranteed Delivery,
as provided in Section 3 of the Offer to Purchase. If Share Certificates are
forwarded separately to the Depositary, a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) must accompany
each such delivery.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal or facsimile thereof, waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If
fewer than all the Shares evidenced by any certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such case, new Share Certificate(s) for
the remainder of the Shares that were evidenced by the old Share Certificate(s)
will be sent to the registered holder, unless otherwise provided in the
appropriate box marked "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal, as soon as practicable after the
acceptance for payment of, and payment for, the Shares tendered herewith. All
Shares represented by certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
<PAGE> 8
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Share Certificate(s) without alteration, enlargement
or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on Share
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Share
Certificates.
If this Letter of Transmittal or any Share Certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and should submit proper
evidence satisfactory to the Purchaser of their authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment is to be made to, or Share
Certificates for Shares not tendered or purchased are to be issued in, the name
of a person other than the registered owner(s). Signatures on such Share
Certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the Share Certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner(s) appear(s) on the Share
Certificates. Signatures on such Share Certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if Share
Certificates not tendered or purchased are to be registered in the name of, any
person other than the registered holder, or if tendered Share Certificates are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder or such person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares purchased is to be issued in the name of and/or Share
Certificates for unpurchased Shares are to be returned to a person other than
the person(s) signing this Letter of Transmittal or if a check is to be sent
and/or such Share Certificates are to be returned to someone other than the
signer of this Letter of Transmittal or to an address other than that shown on
the front cover hereof, the appropriate boxes on this Letter of Transmittal
should be completed. Stockholders tendering Shares by book-entry transfer may
request that Shares not purchased be credited to such account maintained at such
Book-Entry Transfer Facility as such stockholder may designate hereon. If no
such instructions are given, such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated above. See
Instruction 1.
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in whole
or in part, in the case of any Shares tendered.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase and this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address set forth below.
10. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal
income tax law, a stockholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, the Internal Revenue Service (the "IRS") may
subject the stockholder or other payee to a $50 penalty. In addition, payments
that are made to such stockholder or other payee with respect to Shares
purchased pursuant to the Offer may be subject to 31% backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
<PAGE> 9
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any Share
Certificate(s) has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the Share Certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed Share Certificates have been
followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF), TOGETHER
WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE AND ANY OTHER REQUIRED DOCUMENTS MUST BE RECEIVED
BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR
TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED
PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
<PAGE> 10
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR NAME, ADDRESS AND
FORM W-9 TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING Name
AND DATING BELOW.
Address
Social Security or Employer Identification
Number
--------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2 -- CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR (1) The number shown on this form is my correct Taxpayer Identification Number (or I am
TAXPAYER IDENTIFICATION waiting for a number to be issued to me) and
NUMBER (TIN)
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS")
that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- YOU MUST CROSS OUT ITEM (2) ABOVE IF YOU HAVE BEEN NOTIFIED
BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDER-REPORTING
INTEREST OR DIVIDENDS ON YOUR TAX RETURN. HOWEVER, IF AFTER BEING NOTIFIED BY THE IRS THAT
YOU WERE SUBJECT TO BACKUP WITHHOLDING YOU RECEIVED ANOTHER NOTIFICATION FROM THE IRS THAT
YOU ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING, DO NOT CROSS OUT SUCH ITEM (2).
--------------------------------------------------------------------------------------------
PART 3 [ ] Check this box if you have not been issued a TIN and have applied for one or
intend to apply for one in the near future.
SIGN HERE SIGNATURE: ---------------------------------------------- DATE:------------------- , 1999
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld, but that such amounts will be
refunded to me if I then provide a Taxpayer Identification Number within sixty
(60) days.
Signature:
- --------------------------------------------------------------------- Date:
- ------------------------, 1999
<PAGE> 11
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, Share Certificates and
any other required documents should be sent or delivered by each stockholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand or By Overnight Courier: By Facsimile:
40 Wall Street 40 Wall Street (718) 234-5001
46th Floor 46th Floor (For Eligible Institutions Only)
New York, N.Y. 10005 New York, NY 10005
Attn: Reorganization Department Confirm by Telephone
(800) 937-5449
(718) 921-8200
</TABLE>
Questions and requests for assistance may be directed to the Information Agent
at its address and telephone number listed below. Additional copies of this
Offer to Purchase, the Letter of Transmittal and other tender offer materials
may be obtained from the Information Agent as set forth below, and will be
furnished promptly at the Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
Georgeson & Company Inc. [LOGO]
Wall Street Plaza
New York, New York 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
ALL OTHERS CALL TOLL-FREE (800) 223-2064
<PAGE> 1
Exhibit (a) (3)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you
are in any doubt as to the action to be taken, you should seek your own
financial advice immediately from your own appropriately authorized independent
financial advisor.
If you have sold or transferred all of your registered holdings of Common
Stock of Haskel International, Inc., please forward this document and all
accompanying documents to the stockbroker, bank or other agent through whom the
sale or transfer was effected, for submission to the purchaser or transferee.
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF COMMON STOCK
OF
HASKEL INTERNATIONAL, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 22, 1999, BY
HI MERGER SUBSIDIARY INC.
A WHOLLY-OWNED SUBSIDIARY
OF
HI HOLDINGS INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially equivalent hereto,
must be used to accept the Offer (as defined below) if certificates representing
shares of common stock, no par value per share (the "Shares"), of Haskel
International, Inc., a California corporation (the "Company"), are not
immediately available or time will not permit all required documents to reach
American Stock Transfer & Trust Company (the "Depositary") on or prior to the
Expiration Date (as defined in the Offer to Purchase), or the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission or mail to the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand or By Overnight Courier: By Facsimile:
40 Wall Street (718) 234-5001
40 Wall Street 46th Floor (For Eligible Institutions Only)
46th Floor New York, NY 10005 Confirm by Telephone
New York, New York 10005 Attn: Reorganization Department (800) 937-5449
(718) 921-8200
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the Instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message (as defined in Section 2 of the Offer to Purchase) and
certificates representing the Shares to the Depositary within the time period
specified herein. Failure to do so could result in a financial loss to the
Eligible Institution.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to HI Merger Subsidiary Inc., a California
corporation (the "Purchaser") and a wholly-owned subsidiary of HI Holdings Inc.,
a Delaware corporation ("Parent"), upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated March 22, 1999 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, together with any
supplements or amendments thereto, collectively constitute the "Offer"), receipt
of each of which is hereby acknowledged, the number of Shares indicated below
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
Number of Shares:
--------------------------------------
Certificates No(s). (if available):
-----------------------------------------------------------
-----------------------------------------------------------
[ ] Check box if Shares will be tendered by Book-Entry Transfer
Name of Tendering Institution:
-----------------------------------------------------------
Account Number:
---------------------------------------
Dated:
---------------------------------------------, 1999
Name(s) of Record Holder(s):
- -----------------------------------------------------------
(Please Type or Print)
- -----------------------------------------------------------
Address(es):
- ---------------------------------------------
- -----------------------------------------------------------
Area Code and Telephone Number(s):
- -----------------------------------------------------------
Signature(s):
- ---------------------------------------------
- -----------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as defined in the Offer to
Purchase), hereby guarantees delivery to the Depositary, at one of its
addresses set forth above, certificates ("Share Certificates") evidencing the
tendered Shares hereby, in proper form for transfer, or confirmation of
book-entry transfer of such Shares into the Depositary's account at the
Depositary Trust Company with delivery of a Letter of Transmittal (or
facsimile thereof) properly completed and duly executed, or an Agent's Message
(as defined in the Offer to Purchase) in the case of a book-entry delivery,
and any other required documents, all within three days on which the National
Association of Securities Dealers Automated Quotation System, Inc. is open for
business after the date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
Share Certificates to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
- ------------------------------------------------------------
(Name of Firm)
- ------------------------------------------------------------
(Address)
- ------------------------------------------------------------
(Zip Code)
- ------------------------------------------------------------
(Area Code and Tel. No.)
- ----------------------------------------------------------
(Authorized Signature)
- ----------------------------------------------------------
(Title)
- ----------------------------------------------------------
(Please Print or Type)
Date:
- ---------------------------------------------, 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
<PAGE> 1
Exhibit (a) (4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HASKEL INTERNATIONAL, INC.
AT
$12.90 NET PER SHARE IN CASH
BY
HI MERGER SUBSIDIARY INC.
A WHOLLY-OWNED SUBSIDIARY
OF
HI HOLDINGS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, APRIL 19, 1999, UNLESS THE OFFER IS EXTENDED.
March 22, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by HI Merger Subsidiary Inc., a California
corporation (the "Purchaser") and a wholly-owned subsidiary of HI Holdings Inc.,
a Delaware corporation ("Parent"), to act as information agent in connection
with the Purchaser's offer to purchase all of the outstanding shares of common
stock, no par value per share (the "Shares"), of Haskel International, Inc., a
California corporation (the "Company"), at a price of $12.90 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated March 22, 1999 (the "Offer
to Purchase"), and the related Letter of Transmittal (which, together with any
supplements or amendments thereto, collectively constitute the "Offer"), copies
of which are enclosed herewith. The Offer is being made pursuant to the
Agreement and Plan of Merger, dated as of March 15, 1999 (the "Merger
Agreement"), by and among Parent, the Purchaser and the Company pursuant to
which, following the consummation of the Offer and the satisfaction or waiver of
certain conditions, Purchaser will be merged with and into the Company, with the
Company surviving the merger as a wholly-owned subsidiary of Parent (the
"Merger").
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES, WHICH, TOGETHER WITH THE SHARES THEN OWNED DIRECTLY OR INDIRECTLY BY
PURCHASER, WOULD CONSTITUTE NOT LESS THAN NINETY PERCENT (90%) OF EACH CLASS OF
THE SHARES THEN OUTSTANDING, AND (II) THE SATISFACTION OR WAIVER OF CERTAIN
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND THE COMPANY TO CONSUMMATE THE
OFFER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT.
<PAGE> 2
Enclosed herewith for your information and for forwarding to your clients
are copies of the following documents:
1. The Offer to Purchase;
2. The Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer. Facsimile copies of the Letter of Transmittal (with
manual signatures) may be used to tender Shares;
3. The Letter to Stockholders of the Company from the Chief Executive Officer
of the Company, accompanied by the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 filed by the Company with the Securities and
Exchange Commission and mailed to the stockholders of the Company;
4. A printed form of letter which may be sent to your clients for whose account
you hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. The Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available, or if such
certificates and all other required documents cannot be delivered to
American Stock Transfer & Trust Company (the "Depositary") by the Expiration
Date (as defined in the Offer to Purchase), or if the procedure for
book-entry transfer cannot be completed by the Expiration Date;
6. Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9; and
7. A return envelope addressed to the Depositary.
Please note the following:
1. The tender price is $12.90 per Share, net to you in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the
Offer.
2. The Board of Directors of the Company, by the unanimous vote of all
directors present (with R. Malcolm Greaves and Terrence A. Noonan absent
during the vote), has approved the Offer and the Merger (as defined below)
and determined that the terms of the Offer and the Merger are fair to, and
in the best interests of, the stockholders of the Company and recommends
that the stockholders of the Company accept the Offer and tender their
Shares.
3. The Offer is being made for all outstanding Shares.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New York City
time, on Monday, April 19, 1999, unless the Offer is extended in accordance
with the terms of the Merger Agreement.
5. The Offer is being made pursuant to the Merger Agreement. In the Merger,
each issued and outstanding Share (other than Shares owned directly or
indirectly by the Parent, Purchaser or any of their subsidiaries or by the
Company as treasury stock, or by stockholders, if any, who are entitled to
and who properly exercise rights of appraisal (if any) under California law)
will be converted into the right to receive $12.90 per Share, without
interest, as set forth in the Merger Agreement and described in the Offer to
Purchase.
6. The Offer is conditioned upon, among other things, (1) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer
such number of Shares which, together with the Shares then owned directly or
indirectly by Purchaser, would constitute not less than ninety percent (90%)
of each class of Shares then outstanding, and (2) the satisfaction or waiver
of certain conditions to the obligations of the Purchaser and the Company to
consummate the Offer and the transactions contemplated by the Merger
Agreement.
<PAGE> 3
7. Parent and the Purchaser have entered into a Shareholder Agreement, dated as
of March 15, 1999 (as amended as of March 18, 1999), with certain principal
stockholders of the Company (the "Stockholders"), pursuant to which the
Stockholders have agreed to tender into the Offer all the Shares that such
Stockholder owns, so long as the Board of Directors of the Company, Parent
or Purchaser has not terminated the Merger Agreement. These Shares represent
approximately 32.4% of the outstanding Shares as of March 10, 1999.
8. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. However, federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is
provided or unless required taxpayer identification information is provided.
See Instruction 9 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 19, 1999, UNLESS
THE OFFER IS EXTENDED.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (a) certificates
representing Shares (or a timely Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to such Shares) into the account maintained by
the Depositary at the Depository Trust Company, (the "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in Section 3 of the Offer to
Purchase, (b) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase), in connection with a
book-entry delivery, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment may not be made to all tendering stockholders
at the same time depending upon when certificates for or Book Entry
Confirmations into the Depositary's account at the Book-Entry Transfer Facility
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If holders of Shares wish to tender shares, but it is impracticable for
them to forward their Share certificates or other required documents on or prior
to the Expiration Date (as defined in the Offer to Purchase) or to comply with
the book-entry transfer procedures on a timely basis, a tender may be effected
by following the guaranteed delivery procedures specified in Section 3 of the
Offer to Purchase.
Neither the Purchaser nor the Parent will pay any commissions or fees to
any broker, dealer or other person (other than the Information Agent, as
described in the Offer to Purchase) for soliciting tenders of Shares pursuant to
the Offer. The Purchaser will, however, upon request, reimburse you for
customary clerical and mailing expenses incurred and documented by you in
forwarding any of the enclosed materials to your clients. The Purchaser will pay
or cause to be paid any stock transfer taxes payable on the transfer of Shares
to it, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent, at its address and telephone number set forth on the back
cover of the Offer to Purchase.
Very truly yours,
Georgeson & Company Inc. [LOGO]
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY
OTHER PERSON THE AGENT OF THE PURCHASER, THE COMPANY, THE DEPOSITARY OR THE
INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Exhibit (a) (5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HASKEL INTERNATIONAL, INC.
AT
$12.90 NET PER SHARE IN CASH
BY
HI MERGER SUBSIDIARY INC.
A WHOLLY-OWNED SUBSIDIARY
OF
HI HOLDINGS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, APRIL 19, 1999, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated March 22,
1999 (the "Offer to Purchase"), and a related Letter of Transmittal (which,
together with any supplements or amendments thereto, collectively constitute the
"Offer") relating to the offer by HI Merger Subsidiary Inc., a California
corporation (the "Purchaser") and a wholly-owned subsidiary of HI Holdings Inc.,
a Delaware corporation ("Parent"), to purchase all outstanding shares of common
stock, no par value per share (the "Shares"), of Haskel International, Inc., a
California corporation (the "Company"), at a price of $12.90 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account, pursuant to
the terms and subject to the conditions set forth in the Offer.
<PAGE> 2
Please note the following:
1. The tender price is $12.90 per Share, net to you in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the
Offer.
2. The Board of Directors of the Company, by the unanimous vote of all
directors present (with R. Malcolm Greaves and Terrence A. Noonan absent
during the vote), has approved the Offer and the Merger (as defined below)
and determined that the terms of the Offer and the Merger are fair to, and
in the best interests of, the stockholders of the Company and recommends
that the stockholders of the Company accept the Offer and tender their
Shares.
3. The Offer is being made for all outstanding Shares.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New York City
time, on Monday, April 19, 1999, unless the Offer is extended in accordance
with the terms of the Merger Agreement.
5. The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of March 15, 1999 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer
and the satisfaction or waiver of certain conditions, the Purchaser will be
merged with and into the Company, with the Company surviving the merger as a
wholly owned subsidiary of Parent (the "Merger"). In the Merger, each issued
and outstanding Share (other than Shares owned directly or indirectly by the
Parent, Purchaser or any of their subsidiaries or by the Company as treasury
stock, or by stockholders, if any, who are entitled to and who properly
exercise rights of appraisal (if any) under California law) will be
converted into the right to receive $12.90 per Share, without interest, as
set forth in the Merger Agreement and described in the Offer to Purchase.
6. The Offer is conditioned upon, among other things, (1) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer
such number of Shares which, together with the Shares then owned directly or
indirectly by Purchaser, constitutes not less than ninety percent (90%) of
each class of the Shares then outstanding, and (2) the satisfaction or
waiver of certain conditions to the obligations of the Purchaser and the
Company to consummate the Offer and the transactions contemplated by the
Merger Agreement.
7. Parent and the Purchaser have entered into a Shareholder Agreement, dated as
of March 15, 1999 (as amended as of March 18, 1999), with certain principal
stockholders of the Company (the "Stockholders"), pursuant to which the
Stockholders have agreed to tender into the Offer all the Shares that such
Stockholder owns, so long as the Board of Directors of the Company, Parent
or Purchaser has not terminated the Merger Agreement. These Shares represent
approximately 32.4% of the outstanding Shares as of March 10, 1999.
8. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. However, federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is
provided or unless required taxpayer identification information is provided.
See Instruction 9 of the Letter of Transmittal.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form contained in this letter. If you authorize the tender
of your Shares, all such Shares will be tendered unless otherwise specified in
such instruction form. An envelope to return your instructions to us is
enclosed. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US
AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE
EXPIRATION OF THE OFFER.
Holders of Shares whose Share Certificates (as defined in the Offer to
Purchase) are not immediately available or who cannot deliver their Certificates
and all other required documents to American Stock Transfer & Trust Company, as
depositary (the "Depositary"), or complete the procedures for book-entry
transfer prior to the expiration of the Offer must tender their Shares according
to the guaranteed delivery procedures set forth on Section 3 of the Offer to
Purchase.
<PAGE> 3
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment, and thereby purchased, tendered Shares, if, as and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares for payment. Upon the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer will
in all cases be made only after timely receipt by the Depositary of (a) Share
Certificates (or a timely Book-Entry Confirmation (as defined in the Offer to
Purchase) with respect to such Shares) into the account maintained by the
Depositary at the Depository Trust Company (the "Book-Entry Transfer Facility"),
pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (b)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees or an Agent's Message (as
defined in the Offer to Purchase), in connection with a book-entry delivery, and
(c) any other documents required by the Letter of Transmittal. Accordingly,
payment may not be made to all tendering stockholders at the same time depending
upon when Share Certificates for or Book Entry Confirmations into the
Depositary's account at the Book-Entry Transfer Facility are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and any supplements or amendments thereto and is being
made to all holders of Shares. The Purchaser is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action pursuant
to any valid state statute. If the Purchaser becomes aware of any valid state
statute prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, the Purchaser will make a good faith effort to comply with any such
state statute or seek to have such statute declared inapplicable to the Offer.
If after such good faith effort, the Purchaser cannot comply with such state
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares in such state. In any jurisdiction where
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by one or more registered brokers or dealers that are licensed under
the laws of such jurisdiction.
<PAGE> 4
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HASKEL INTERNATIONAL, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated March 22, 1999, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the offer by HI
Merger Subsidiary Inc., a California corporation (the "Purchaser") and a
wholly-owned subsidiary of HI Holdings Inc., a Delaware corporation, to purchase
all outstanding shares of common stock, no par value per share (the "Shares"),
of Haskel International, Inc., a California corporation, at a purchase price of
$12.90 per share net to seller in cash.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
- ------------------------------------------------------
Number of Shares to be Tendered:
Shares*
- ------------------------------------------------------
Dated: , 1999
- ------------------------------------------------------
SIGN HERE
----------------------------------------------------
----------------------------------------------------
Signature(s)
----------------------------------------------------
Account Number
----------------------------------------------------
----------------------------------------------------
Please Type or Print Name(s)
----------------------------------------------------
----------------------------------------------------
Please Type or Print Address(es)
----------------------------------------------------
----------------------------------------------------
Area Code and Telephone Number(s)
----------------------------------------------------
Tax Identification or Social Security
Number(s)
----------------------------------------------------
- ------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
Exhibit (a) (6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate, or pension Legal entity (Do
trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments
include the following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include
the following:
- Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments of mortgage interest to you.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding.
FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE
PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE
FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A. PRIVACY ACT NOTICE.-- Section 6109 requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers to
payers who must report the payments to IRS. IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Beginning January 1, 1993, payers
must generally withhold 31% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail
to include any portion of an includable payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 20% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE> 1
Exhibit (a)(7)
HASKEL INTERNATIONAL, INC. MAKES ANNOUNCEMENT
BURBANK, California - March 15, 1999 - Haskel International, Inc.
announced today that it has entered into a definitive agreement whereby an
entity controlled by Tinicum Capital Partners, L.P., a private investment fund,
and certain related parties will acquire all of Haskel's outstanding shares for
a cash price of $12.90 per share. The transaction is valued at approximately
$72.8 million. The tender offer for all of the shares will commence by Monday,
March 22, 1999 and will be scheduled to expire 20 business days thereafter,
unless extended. Purchase of the shares under the tender offer is subject to 90%
of the shares being tendered, the expiration of applicable waiting periods under
applicable antitrust laws, and other customary conditions. Subsequent to the
tender offer, the agreement provides for the merger of Haskel with HI Merger
Subsidiary, a subsidiary of HI Holdings, Inc., pursuant to which all remaining
shareholders of Haskel would receive $12.90 per share. If less than 90% of the
shares are tendered, the merger would be subject to approval by the shareholders
of Haskel at a meeting to be called and held after regulatory approvals have
been obtained. The deal is expected to be completed in May 1999 if 90% of the
shares are tendered or July 1999 if a merger approved by the shareholders is
required.
The Boards of Directors of both companies have approved the transaction,
and the Haskel Board of Directors has recommended that Haskel's shareholders
accept HI Holdings Inc.'s all-cash tender offer and vote in favor of the merger
if a vote is required.
Haskel International, Inc. is one of the world's leading manufacturers of
high-pressure liquid pumps and gas boosters, specializing in pressure technology
and systems integration. Haskel conducts its operations through facilities in
North America, Europe and the Pacific rim, as well as through distributors and
agents worldwide.
<PAGE> 1
Exhibit (a)(8)
This announcement is neither an offer to purchase nor a solicitation of
an offer to sell Shares. The Offer is made solely by the Offer to
Purchase, dated March 22, 1999, and the related Letter of Transmittal
and is being made to all holders of Shares. The Purchaser is not aware
of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute.
If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto,
the Purchaser will make a good faith effort to comply with any such
state statute or seek to have such statute declared inapplicable to the
Offer. If, after such good faith effort, the Purchaser cannot comply
with such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such
state. In any jurisdiction where securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of the Purchaser by one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HASKEL INTERNATIONAL, INC.
AT
$12.90 NET PER SHARE IN CASH
BY
HI MERGER SUBSIDIARY INC.
A WHOLLY OWNED SUBSIDIARY OF
HI HOLDINGS INC.
HI Merger Subsidiary Inc., a California corporation ("Purchaser") and a
wholly owned subsidiary of HI Holdings Inc., a Delaware corporation ("Parent"),
is offering to purchase all outstanding shares of common stock, no par value per
share (the "Shares"), of Haskel International, Inc., a California corporation
(the "Company"), at $12.90 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated March
22, 1999, and in the related Letter of Transmittal (which together constitute
the "Offer").
<PAGE> 2
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, APRIL 19, 1999 UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of Shares representing at least ninety percent (90%) of the outstanding
Shares of each class of common stock.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of March 15, 1999 (the "Merger Agreement"), among Parent, Purchaser and
the Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, Purchaser will be merged with and
into the Company (the "Merger"), with the Company surviving as a wholly owned
subsidiary of Parent. At the effective time of the Merger, each outstanding
Share (other than Shares held in the Company's treasury, or by any wholly owned
subsidiary of the Company, or owned by Parent, Purchaser or any other wholly
owned subsidiary of Parent or held by stockholders, if any, who are entitled to
and who properly exercise dissenters' rights under California law) will be
converted into the right to receive $12.90 in cash, without interest.
Concurrently with the execution of the Merger Agreement, Purchaser and
Parent entered into a Shareholder Agreement (the "Shareholder Agreement") with
certain shareholders of the Company (the "Option Shareholders") covering
1,521,477 Shares (the "Option Shares") collectively owned by the Option
Shareholders (representing approximately 31.9% of the outstanding Shares).
Pursuant to the Shareholder Agreement, each of the Option Shareholders has
granted to the Purchaser an irrevocable option to purchase such Option
Shareholder's Option Shares for $12.90 per Option Share in cash, as well as an
irrevocable proxy to vote such Option Shares. The Option Shareholders also
agreed to tender in the Offer such Shares.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (WITH TWO MEMBERS
BEING ABSENT DURING THE VOTE) APPROVED THE OFFER, THE MERGER AGREEMENT AND THE
MERGER, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, AND RECOMMENDS
THAT ALL HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES
PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to Purchaser and
not properly withdrawn as, if and when Purchaser gives oral or written notice to
American Stock Transfer & Trust Company (the "Depositary") of Purchaser's
acceptance for payment of such Shares. Upon the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering stockholders for the purpose of receiving
payment from the Purchaser and transmitting such payment to tendering
stockholders. In all cases, payment for Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
such Shares or timely confirmation of book-entry transfer of such Shares into
the Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase) pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (b) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase) and (c) any other documents required by the
Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY PURCHASER
ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
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The term "Expiration Date" means 12:00 Midnight, New York City time, on
Monday, April 19, 1999, unless and until Purchaser, in its sole discretion (but
subject to the terms of the Merger Agreement), shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as to extended by
Purchaser, shall expire. Purchaser expressly reserves the right, in its sole
discretion (but subject to the terms of the Merger Agreement), at any time or
from time to time, and regardless of whether or not any of the events set forth
in Section 14 of the Offer to Purchase shall have occurred or shall have been
determined by Purchaser to have occurred, to extend the period of time during
which the Offer is open and thereby delay acceptance for payment of, and the
payment for, any Shares, by giving oral or written notice of such extension to
the Depositary. Purchaser shall not have any obligation to pay interest on the
purchase price for tendered Shares in the event Purchaser exercises its right to
extend the period of time during which the Offer is open. There can be no
assurance that Purchaser will exercise its right to extend the Offer. Any such
extension will be followed by a public announcement thereof no later than 9:00
A.M., New York City time, on the next business day after the previously
scheduled Expiration Date. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering stockholder to withdraw such stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by
Purchaser pursuant to the Offer, may also be withdrawn at any time on or after
the Expiration Date. For a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution (as defined in Section 3 of the Offer to Purchase), the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals
of tenders of Shares may not be rescinded, and any Shares properly withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the stockholder lists or, if applicable who
are listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) under
the Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
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THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
Questions and requests for assistance, as well as requests for copies
of the Offer to Purchase and the Letter of Transmittal, may be directed to the
Information Agent as set forth below, and copies will be furnished promptly at
Purchaser's expense. Neither the Purchaser nor Parent will pay any commissions
or fees to any broker, dealer or other person (other than the Information Agent
and Depositary) for soliciting tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll-Free (800) 223-2064
March 22, 1999
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Exhibit(c)(1)
===============================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
HASKEL INTERNATIONAL, INC.
HI HOLDINGS INC.
AND
HI MERGER SUBSIDIARY INC.
DATED AS OF MARCH 15, 1999
==============================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE 1 THE OFFER 1
Section 1.1. The Offer 1
Section 1.2. Company Action 3
Section 1.3. Board of Directors and Committees;
Section 14(f) 5
ARTICLE 2 THE MERGER 6
Section 2.1. The Merger 6
Section 2.2. Effective Time 6
Section 2.3. Closing of the Merger 6
Section 2.4. Effects of the Merger 6
Section 2.5. Articles of Incorporation and Bylaws 6
Section 2.6. Directors 6
Section 2.7. Officers 7
Section 2.8. Conversion of Shares 7
Section 2.9. Shares of Dissenting Holders 7
Section 2.10. Exchange of Certificates 8
Section 2.11. Company Stock Options; Warrants 9
Section 2.12. Officers 10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 11
Section 3.1. Organization and Qualification; Subsidiaries 11
Section 3.2. Capitalization of the Company and its
Subsidiaries 12
Section 3.3. Authority Relative to this Agreement;
Consents and Approvals 13
Section 3.4. SEC Reports; Financial Statements 13
Section 3.5. Information Supplied 14
Section 3.6. Consents and Approvals; No Violations 14
Section 3.7. No Default 15
Section 3.8. No Undisclosed Liabilities; Absence of Changes 15
Section 3.9. Litigation 16
Section 3.10. Compliance with Applicable Law 16
Section 3.11. Employee Plans 17
Section 3.12. Environmental Laws and Regulations 17
Section 3.13. Intellectual Property; Software 18
Section 3.14. Certain Business Practices 19
Section 3.15. Vote Required 19
Section 3.16. Labor Matters 19
Section 3.17. Insurance 19
Section 3.18. Suppliers and Customers 20
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Section 3.19. Tax Matters 20
Section 3.20. Brokers 21
Section 3.21. Related Party Transactions 21
Section 3.22. Restrictions on Business Activities 21
Section 3.23. Year 2000 Compliance 21
Section 3.24. Real Estate 22
Section 3.25. Conduct of Business 23
Section 3.26. Expenses 23
Section 3.27. Dividends 23
Section 3.28. No Other Representations or Warranties 23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION 23
Section 4.1. Organization 24
Section 4.2. Authority Relative to this Agreement 24
Section 4.3. Information Supplied 24
Section 4.4. Consents and Approvals; No Violations 25
Section 4.5. No Default 25
Section 4.6. Availability of Financing; Parent Guarantee 26
Section 4.7. No Prior Activities 26
Section 4.8. Brokers 26
Section 4.9. No Other Representations or Warranties 26
ARTICLE 5 COVENANTS 26
Section 5.1. Conduct of Business of the Company 26
Section 5.2. Other Potential Acquirers 29
Section 5.3. Access to Information 31
Section 5.4. Shareholders Meeting 31
Section 5.5. Additional Agreements; Reasonable Best Efforts 32
Section 5.6. Consents 32
Section 5.7. Public Announcements 32
Section 5.8. Indemnification; Directors' and Officers'
Insurance 32
Section 5.9. Notification of Certain Matters 33
Section 5.10. Employee Matters 33
Section 5.11. SEC Filings 34
Section 5.12. Guarantee of Performance 34
Section 5.13. Notice of Certain Events 34
Section 5.14. Takeover Statutes 34
ARTICLE 6 CONDITIONS TO CONSUMMATION OF THE MERGER 35
Section 6.1. Conditions to Each Party's Obligations to
Effect the Merger 35
Section 6.2. Conditions to Obligations of Parent and
Acquisition 35
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Section 6.3. Conditions to Obligations of the Company 36
ARTICLE 7 TERMINATION; AMENDMENT; WAIVER 36
Section 7.1. Termination 36
Section 7.2. Effect of Termination 37
Section 7.3. Fees and Expenses 38
Section 7.4. Amendment 39
Section 7.5. Extension; Waiver 39
ARTICLE 8 MISCELLANEOUS 39
Section 8.1. Nonsurvival of Representations and Warranties 39
Section 8.2. Entire Agreement; Assignment 39
Section 8.3. Validity 39
Section 8.4. Notices 40
Section 8.5. Governing Law 40
Section 8.6. Construction; Interpretation 40
Section 8.7. Parties in Interest 41
Section 8.8. Severability 41
Section 8.9. Specific Performance 41
Section 8.10. Counterparts 41
4
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of the 15th day of March, 1999
(this "Agreement"), is made by and among Haskel International, Inc., a
California corporation (the "Company"), HI Holdings Inc., a Delaware corporation
("Parent") and HI Merger Subsidiary Inc., a California corporation and a wholly
owned subsidiary of Parent ("Acquisition").
R E C I T A L S
WHEREAS, the Board of Directors of the Company (the "Company Board") has,
in light of and subject to the terms and conditions set forth herein, (i)
determined that each of the Offer (as defined in the recitals) and the Merger
(as defined in Section 2.1) is fair to, and in the best interests of, its
shareholders and (ii) approved and adopted this Agreement and the transactions
contemplated hereby and resolved to recommend acceptance of the Offer and
approval and adoption of this Agreement by the shareholders of the Company; and
WHEREAS, in furtherance thereof, it is proposed that Acquisition shall
commence a tender offer (the "Offer") to acquire all of the outstanding shares
of common stock of the Company (the "Company Common Stock") at a price equal to
$12.90 per share (such amount, or any greater amount per share paid pursuant to
the Offer, being hereinafter referred to as the "Per Share Amount"), net to the
seller in cash, subject to reduction for any applicable federal back-up
withholding or stock transfer taxes payable by such seller, in accordance with
the terms and subject to the conditions provided herein;
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, Parent and
Acquisition hereby agree as follows:
ARTICLE 1
THE OFFER
Section 1.1. The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 7.1 and none of the events or conditions set forth in
Annex A shall have occurred and be existing, as promptly as practicable after,
but in no event later than five (5) Business Days after, the public announcement
of the execution of this Agreement by the parties hereto, Acquisition shall
commence (within the meaning of the Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) the Offer for all the outstanding
shares of Company Common Stock at the Per Share Amount. Acquisition shall use
all commercially reasonable efforts to consummate the Offer. Acquisition shall
accept for payment all outstanding shares of Company Common Stock which have
been validly tendered and not withdrawn
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pursuant to the Offer at the earliest time following the expiration of the Offer
that all conditions to the Offer shall have been satisfied or waived by
Acquisition. The obligation of Acquisition to accept for payment, purchase and
pay for shares of Company Common Stock tendered pursuant to the Offer shall be
subject only to the conditions set forth in Annex A and to the further condition
that a number of shares of Company Common Stock which, together with shares of
Company Common Stock then owned directly or indirectly by Acquisition, would
equal at least ninety percent (90%) of the shares of Company Common Stock then
outstanding shall have been validly tendered and not withdrawn prior to the
expiration date of the Offer (the "Minimum Condition"). Acquisition expressly
reserves the right to increase the price per share of Company Common Stock
payable in the Offer or to make any other changes in the terms and conditions of
the Offer (provided that, unless previously approved by the Company in writing,
no change may be made that (i) decreases the Per Share Amount payable in the
Offer, (ii) changes the form of consideration to be paid in the Offer, (iii)
reduces the maximum number of shares of Company Common Stock to be purchased in
the Offer, (iv) imposes conditions to the Offer in addition to those set forth
in Annex A or that broaden the scope of such conditions, (v) amends any other
term of the Offer in a manner adverse to the holders of the Company Common
Stock, (vi) extends the Offer except as provided in Section 1.1(b), or (vii)
amends the Minimum Condition). It is agreed that the conditions set forth in
Annex A are for the sole benefit of Acquisition and may be asserted by
Acquisition regardless of the circumstances giving rise to any such condition
(including any action or inaction by Acquisition) or may be waived by
Acquisition (other than the Minimum Condition) in whole or in part at any time
and from time to time, in its sole discretion, other than the Minimum Condition,
as to which prior written Company approval is required. The failure by
Acquisition at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Any determination
(which shall be made in good faith) by Acquisition with respect to any of the
foregoing conditions (including, without limitation, the satisfaction of such
conditions) shall be final and binding on the parties. The Company agrees that
no shares of Company Common Stock held by the Company or any of its Subsidiaries
(as defined in Section 3.1(b)) will be tendered in the Offer. "Business Day"
means any day other than Saturday, Sunday or a federal holiday.
(b) Subject to the terms and conditions hereof, the Offer shall
expire at midnight, New York City time, on the date that is twenty (20) Business
Days after the Offer is commenced; provided, however, that without the consent
of the Company or the Company Board, Acquisition may (i) extend the Offer, if at
the scheduled expiration date of the Offer any of the conditions to the Offer
shall not have been satisfied or waived, until such time as such conditions are
satisfied or waived, (ii) extend the Offer for any period required for any rule,
regulation, interpretation or position of the Securities and Exchange Commission
("SEC") or the staff thereof applicable to the Offer or (iii) extend the Offer
for any reason on one or more occasions for an aggregate period of not more than
ten (10) Business Days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence if on such expiration date
there shall not have been tendered that number of shares of Company Common Stock
which, together with shares of Company Common Stock then owned directly or
indirectly by Acquisition, would equal at least ninety percent (90%) of the
shares of Company
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<PAGE> 7
Common Stock. Acquisition agrees that if all of the conditions to the Offer set
forth in Annex A are not satisfied on any scheduled expiration date of the Offer
then, provided that all such conditions are reasonably capable of being
satisfied prior to May 28, 1999, Acquisition shall extend the Offer from time to
time until such conditions are satisfied or waived, provided that Acquisition
shall not be required to extend the Offer beyond June 11, 1999. Subject to the
terms and conditions of the Offer and this Agreement, Acquisition shall accept
for payment, and pay for, all shares of Company Common Stock validly tendered
and not withdrawn pursuant to the Offer that Acquisition becomes obligated to
accept for payment and pay for pursuant to the Offer as promptly as practicable
after the expiration of the Offer.
(c) As soon as practicable after commencement of the Offer,
Acquisition shall file with the SEC a Tender Offer Statement on Schedule 14D-l
with respect to the Offer which will reflect the existence of this Agreement
(together with any supplements or amendments thereto and any other related
documents, including, if required, a Schedule 13E-3, collectively the "Offer
Documents"). The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws. The information provided and
to be provided by the Company, Parent and Acquisition for use in the Offer
Documents shall not, on the date filed with the SEC and on the date first
published or sent or given to the Company's shareholders, as the case may be,
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, Acquisition and the Company each agrees to correct promptly
any information provided by it for use in the Offer Documents if and to the
extent that it shall have become false or misleading in any material respect,
and Acquisition further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities laws.
Section 1.2. Company Action.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Company Board, at a meeting duly called and
held, has, subject to the terms and conditions set forth herein, (i) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are fair to, and in the best interests of, the
shareholders of the Company, (ii) approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, in all respects and
that such approval constitutes approval of the Offer, this Agreement and the
Merger for purposes of Section 1101 of the California General Corporation Law
(the "CGCL"), and similar provisions of any other similar state statutes that
might be deemed applicable to the transactions contemplated hereby, and (iii)
resolved to recommend that the shareholders of the Company accept the Offer,
tender their shares of Company Common Stock thereunder to Acquisition and
approve and adopt this Agreement and the Merger; provided, however, that such
recommendation may be withdrawn, modified or amended in accordance with the
provisions of Section 5.2 of this Agreement. The Company consents to the
inclusion of such recommendation and approval in the Offer Documents. The
Company further represents and warrants that Schroder & Co. Inc. (the "Financial
Advisor") has delivered to the Company Board its written opinion, dated as of
the date
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<PAGE> 8
hereof, that the cash consideration to be received by the shareholders of the
Company pursuant to the Offer and the Merger is fair to such shareholders from a
financial point of view. The Company has been authorized by the Financial
Adviser to permit, subject to the prior review and consent by the Financial
Adviser (such consent not to be unreasonably withheld), the inclusion of the
fairness opinion (or a reference thereto) in the Schedule 14D-9 and, if
required, the Schedule 13E-3 (each, as defined in Section 1.2(b)).
(b) Contemporaneously with the commencement of the Offer as provided
in Section 1.1, the Company hereby agrees to file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 pertaining to the Offer
(together with any amendments or supplements thereto, the "Schedule 14D-9")
containing the recommendation described in Section 1.2(a) and to promptly mail
the Schedule 14D-9 to the shareholders of the Company. The Schedule 14D-9 will
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, sent or given to the Company's shareholders, 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
supplied by Parent or Acquisition in writing for inclusion in the Schedule
14D-9. The Company, Parent and Acquisition each agrees to correct promptly any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect, and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and disseminated to the holders of
shares of Company Common Stock, in each case as and to the extent required by
applicable federal securities laws. Acquisition and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 before it is
filed with the SEC, and the Company shall consider such comments in good faith.
Notwithstanding anything to the contrary in this Agreement, if the Company Board
withdraws, modifies or amends its recommendation in accordance with the
provisions of Section 5.2 of this Agreement, such withdrawal, modification or
amendment shall not constitute a breach of this Agreement.
(c) In connection with the Offer, the Company will cause its
transfer agent to promptly furnish to Parent and Acquisition mailing labels,
security position listings and any available listing or computer files
containing the names and addresses of the record holders of shares of Company
Common Stock as of a recent date and shall furnish Acquisition with such
additional information and assistance (including, without limitation, updated
lists of shareholders, mailing labels and lists of securities positions) as
Acquisition or its agents may reasonably request in communicating the Offer to
the record and beneficial holders of shares of Company Common Stock. Subject to
the requirements of applicable law, and except for such steps as are necessary
to disseminate the Offer Documents and any other documents necessary to
consummate the Merger, Parent, Acquisition and their affiliates, associates,
agents and advisors shall hold in confidence the information contained in any
such labels, listings and files and use such information only in connection with
the Offer and the Merger, and, if this Agreement shall be terminated, will
deliver to the Company all copies of such information then in their possession.
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Section 1.3. Board of Directors and Committees; Section 14(f).
(a) Promptly upon the purchase by Acquisition of shares of Company
Common Stock pursuant to the Offer and from time to time thereafter, Acquisition
shall be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Company Board as will give Acquisition representation
on the Company Board equal to the product of the number of directors on the
Board (giving effect to any increase in the number of directors pursuant to this
Section 1.3) and the percentage that such number of shares of Company Common
Stock so purchased bears to the total number of outstanding shares of Company
Common Stock on a fully diluted basis, and the Company shall use its reasonable
best efforts to, upon request by Acquisition, promptly, at the Company's
election, either increase the size of the Board or secure the resignation of
such number of directors as is necessary to enable Acquisition's designees to be
elected to the Company Board and to cause Acquisition's designees to be so
elected. At such times, the Company will use its reasonable best efforts to
cause persons designated by Acquisition to constitute the same percentage as is
on the Company Board of (i) each committee of the Company Board (other than any
committee of the Company Board established to take action under this Agreement),
(ii) each board of directors of each subsidiary of the Company and (iii) each
committee of each such board.
(b) The Company's obligation to appoint designees to the Company
Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all action required
pursuant to such Section and Rule in order to fulfill its obligations under this
Section 1.3 and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors as is required under such
Section and Rule in order to fulfill its obligations under this Section 1.3.
Acquisition will furnish to the Company in writing and be solely responsible for
any information with respect to itself and its nominees, officers, directors and
affiliates required by such Section and Rule.
(c) Following the election or appointment of Acquisition's designees
pursuant to this Section 1.3 and prior to the Effective Time, if there shall be
any directors of the Company who were directors as of the date hereof, any
amendment of this Agreement, any termination of this Agreement by the Company,
any extension by the Company of the time for the performance of any of the
obligations or other acts of Acquisition or Parent or waiver of any of the
Company's rights hereunder will require the concurrence of a majority of such
directors.
ARTICLE 2
THE MERGER
Section 2.1. The Merger. At the Effective Time (as defined below) and upon
the terms and subject to the conditions of this Agreement and in accordance with
the CGCL, Acquisition shall be merged with and into the Company (the "Merger").
Following the Merger, the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation"), and the separate corporate existence
of Acquisition shall cease.
Section 2.2. Effective Time. Subject to the terms and conditions set forth
in this
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Agreement, on the Closing Date (as defined in Section 2.3) or as soon thereafter
as is practicable, the Surviving Corporation shall file a copy of this Agreement
and an officers' certificate of each constituent corporation with the Secretary
of State of the State of California for filing pursuant to the CGCL, at which
time the Merger shall become effective (the time the Merger becomes effective
being referred to herein as the "Effective Time").
Section 2.3. Closing of the Merger. The closing of the Merger (the
"Closing") shall take place at a time and on a date to be specified by the
parties, which shall be no later than the second Business Day after satisfaction
(or waiver) of the latest to occur of the conditions precedent set forth in
Article 6 (the "Closing Date"), at the offices of Gibson, Dunn & Crutcher LLP,
333 South Grand Avenue, Los Angeles, California 90071, unless another time, date
or place is agreed to in writing by the parties.
Section 2.4. Effects of the Merger. The Merger shall have the effects set
forth in the CGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 2.5. Articles of Incorporation and Bylaws. The Articles of
Incorporation of Acquisition in effect at the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until amended in
accordance with applicable law. The Bylaws of Acquisition in effect at the
Effective Time shall be the Bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 2.6. Directors. The directors of Acquisition at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation until such director's successor is duly elected or appointed and
qualified.
Section 2.7. Officers. The officers of Acquisition at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
Section 2.8. Conversion of Shares.
(a) At the Effective Time, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (individually a "Share"
and, collectively, the "Shares") (other than (i) Shares held by the Company or
any subsidiary of the Company, (ii) Shares held by Parent, Acquisition or any
other subsidiary of Parent and (iii) Company Dissenting Shares (as defined in
Section 2.9(a), collectively the "Excluded Shares")) shall, by virtue of the
Merger and without any action on the part of Parent, Acquisition, the Company or
the holder thereof, be canceled and extinguished and be converted into and shall
become the right to receive a cash payment per Share, without interest, equal to
the Per Share Amount (the
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"Merger Consideration") upon the surrender of the certificate representing such
Share. From and after the Effective Time, the holders of certificates evidencing
ownership of Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares except as otherwise
provided for herein or by applicable law.
(b) At the Effective Time, each issued and outstanding share of the
common stock, par value $0.01 per share, of Acquisition shall be converted into
one share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(c) At the Effective Time, each Share held by the Company as
treasury stock or held by Parent, Acquisition or any subsidiary of Parent,
Acquisition or the Company immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of Parent, Acquisition,
the Company or the holder thereof, be canceled, retired and cease to exist, and
no consideration shall be delivered with respect thereto.
Section 2.9. Shares of Dissenting Holders.
(a) Notwithstanding anything to the contrary contained in this
Agreement, any holder of Shares with respect to which dissenters' rights, if
any, are granted by reason of the Merger under the CGCL and who does not vote in
favor of the Merger and who otherwise complies with the CGCL ("Company
Dissenting Shares") shall not be entitled to receive any Merger Consideration
pursuant to Section 2.8(a), unless such holder fails to perfect, effectively
withdraws or loses his or her right to dissent from the Merger under the CGCL.
If any such holder so fails to perfect, effectively withdraws or loses his or
her dissenters' rights under the CGCL, each Company Dissenting Share of such
holder shall thereupon be deemed to have been converted, as of the Effective
Time, into the right to receive the Per Share Amount pursuant to Section 2.8(a).
(b) Any payments relating to Company Dissenting Shares shall be made
solely by the Surviving Corporation, and no funds or other property have been or
will be provided by Acquisition, Parent or any of Parent's other direct or
indirect subsidiaries for such payment, nor shall the Company make any payment
with respect to, or settle or offer to settle, any such demands.
(c) The Company shall give Acquisition prompt notice of any demands
received by the Company for the payment of fair value for shares, and
Acquisition shall have the right to direct all negotiations and proceedings with
respect to such demands.
Section 2.10. Exchange of Certificates.
(a) American Stock Transfer or another bank or trust company
designated by Parent and reasonably acceptable to the Company shall act as the
exchange agent (in such capacity, the "Exchange Agent") for the benefit of the
holders of Shares for the exchange of a certificate or certificates which
immediately prior to the Effective Time represented Shares (the "Certificates")
that were converted into the right to receive the Per Share Amount pursuant to
Section 2.8(a), all in accordance with this Article 2. At the Effective Time,
Parent shall deposit,
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or shall cause to be deposited, with the Exchange Agent, for the benefit of the
holders of Shares, cash in U.S. dollars in an amount equal to the Merger
Consideration multiplied by the aggregate outstanding Shares (other than the
Excluded Shares) to be paid pursuant to Section 2.8(a).
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of Certificates: (i) 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 shall be in such form and have such other
provisions as Parent and the Company may reasonably specify); and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for a cash payment of the proper Merger Consideration pursuant to Section
2.8(a). Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Parent and Acquisition,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor by check an amount
equal to (A) the Per Share Amount, multiplied by (B) the number of Shares
represented by such Certificate, which such holder has the right to receive
pursuant to the provisions of this Article 2, and the Certificate so surrendered
shall forthwith be canceled. No interest shall be paid or accrued on any Merger
Consideration upon the surrender of any Certificates. In the event of a transfer
of ownership of Shares which is not registered in the transfer records of the
Company, payment of the proper Merger Consideration may be paid to a transferee
if the Certificate representing such Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer or other taxes required as a
result of such payment to a Person other than the registered holder of such
shares have been paid. Until surrendered and exchanged as contemplated by this
Section 2.10, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender an amount equal
to (A) the Per Share Amount, multiplied by (B) the number of Shares represented
by such Certificate, as contemplated by this Section 2.10.
(c) In the event that any Certificate shall have been lost, stolen
or destroyed, the Exchange Agent shall pay, upon the making of an affidavit of
that fact by the holder thereof in form and substance reasonably acceptable to
Parent, the proper Merger Consideration as may be required pursuant to this
Section 2.10; provided, however, that Parent may, in its discretion, require the
delivery of a suitable bond and/or indemnity.
(d) The Merger Consideration paid upon the surrender for exchange of
Shares in accordance with the terms hereof shall be deemed to have been paid in
full satisfaction of all rights pertaining to such Shares; subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by the Company on such Shares in accordance with the terms of
this Agreement, or prior to the date hereof, and which remain unpaid at the
Effective Time, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article 2.
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(e) Any portion of the Merger Consideration which remains
undistributed to the shareholders of the Company for six months after the
Effective Time shall be delivered to Parent, upon demand, and any shareholders
of the Company who have not theretofore complied with this Article 2 shall
thereafter look only to Parent for payment of their claim for any Merger
Consideration.
(f) Notwithstanding Section 2.11(e), neither Parent nor the Company
shall be liable to any holder of Shares for any Merger Consideration delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
(g) Any amounts remaining unclaimed by holders of Shares one year
after the Effective Time (or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of any governmental
entity) shall, to the extent permitted by applicable law, become the property of
Parent free and clear of any claim or interest of any Person previously entitled
thereto.
(h) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.10(a) to pay for shares for which
dissenters' rights have been perfected shall be returned to the Parent upon
demand.
Section 2.11. Company Stock Options; Warrants.
(a) At the Effective Time, each outstanding, vested and exercisable
option to purchase shares of Company Common Stock (including those options that
will become exercisable upon a change in control of the Company) (a "Company
Stock Option" or collectively "Company Stock Options") issued pursuant to the
1989 Incentive Stock Option Plan, the 1995 Incentive Stock Option Plan, the 1995
Formula Stock Option Plan, the 1998 Long-Term Performance Incentive Plan or the
Non-Qualified Stock Option Plan of the Company (collectively the "Company
Plans") or issued outside the Company Plans via special grants by the Company's
Stock Option Committee to certain employees shall be converted into and shall
become the right to receive a cash payment per Company Stock Option, without
interest, determined by multiplying (i) the excess, if any, of the Per Share
Amount over the applicable per share exercise price of such Company Stock Option
by (ii) the number of shares of Company Common Stock underlying the Company
Stock Options immediately prior to the Effective Time; provided that Parent and
Acquisition may, with the consent of the option holder, treat such options
differently. At the Effective Time, all outstanding options to purchase shares
of Company Common Stock (including those options that are not exercisable at the
time of the Merger) shall be canceled and be of no further force or effect
except for the right to receive cash to the extent provided in this Section
2.11. Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of any Company Plan) that are
necessary to give effect to the transactions contemplated by this Section 2.11.
(b) At the Effective Time, each outstanding and exercisable warrant
that entitles the holder to purchase shares of Company Common Stock, (a
"Warrant" or collectively "Warrants") sold pursuant to Company's initial public
offering of its common stock shall be converted into and shall become the right
to receive a cash payment per Warrant, without
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interest, determined by multiplying (i) the excess, if any, of the Per Share
Amount over the applicable per share exercise price of such Warrant by (ii) the
number of shares of Company Common Stock underlying the Warrants immediately
prior to the Effective Time. At the Effective Time, all outstanding Warrants
shall be canceled and be of no further force or effect except for the right to
receive cash to the extent provided in this Section 2.11. Prior to the Effective
Time, the Company shall take all actions that are necessary to give effect to
the transactions contemplated by this Section 2.11.
(c) As soon as practicable after the Effective Time (but no later
than thirty (30) days following the Effective Time), Parent shall establish a
procedure to effect the surrender of Company Stock Options and Warrants, as the
case may be, in exchange for the cash payment to which the holder of a Company
Stock Option or Warrant shall be entitled under Section 2.11(a) or (b), and,
upon surrender of such Company Stock Option or Warrant, Parent shall pay to the
holder thereof in cash the amount, if any, to which such holder shall be
entitled thereunder.
Section 2.12. Additional Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Acquisition or the Company or otherwise to carry
out this Agreement, the officers and directors of the Company and Acquisition
shall be authorized to execute and deliver, in the name and on behalf of
Acquisition or the Company, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of Acquisition or the
Company, 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.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Acquisition as
follows:
Section 3.1. Organization and Qualification; Subsidiaries.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its businesses as presently conducted.
(b) Except as set forth on Section 3.1(b) of the Disclosure Schedule
or as disclosed in filings with the SEC made prior to the date hereof and since
the filing of the Company's most recent Annual Report on Form 10-K (the "Recent
SEC Reports"), the Company has no equity interests in any corporations,
partnerships, limited liability companies, trusts or
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similar business entities. Each of the subsidiaries listed on Exhibit 21 to the
Company's Annual Report on Form 10-K for the fiscal year ended May 30, 1998
(each a "Subsidiary" and collectively "Subsidiaries") is a corporation or a
limited partnership, as the case may be, duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of its incorporation
or organization and has all requisite corporate or other power and authority to
own, lease and operate its respective properties and to carry on its respective
businesses as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority, both
individually and in the aggregate, would not have a Company Material Adverse
Effect (as defined below). When used in connection with the Company or its
Subsidiaries, the term "Company Material Adverse Effect" means a material
adverse effect on the financial condition, properties, business or results of
operations of the Company and its Subsidiaries taken as a whole, it being
understood that none of the following shall be deemed by itself or by
themselves, either alone or in combination, to constitute a Company Material
Adverse Effect (i) a change in the market price or trading volume of the Company
Common Stock, (ii) a failure by the Company to meet the revenue or earnings
predictions of equity analysts for any period ending (or for which earnings are
released) on or after the date of this Agreement and prior to the Effective
Date, (iii) conditions affecting the U.S. economy as whole, or (iv) conditions
affecting the worldwide industrial equipment market.
(c) Each of the Company and its Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it, or the nature of the business
conducted by it, makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have, individually or in the aggregate, a Company Material
Adverse Effect.
(d) The Company has heretofore delivered to Acquisition or Parent
accurate and complete copies of the Articles of Incorporation and Bylaws, each
as amended to date and currently in effect, of the Company.
Section 3.2. Capitalization of the Company and its Subsidiaries.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Class A common stock, of which, as of March 10, 1999,
4,772,205 shares were issued and outstanding, 40,000 shares of Class B common
stock, all of which, as of March 10, 1999, were issued and outstanding and
2,000,000 shares of preferred stock, no shares of which are issued or
outstanding (collectively the "Company Common Stock"). All of the shares of
Company Common Stock have been validly issued, and are fully paid, nonassessable
and free of preemptive rights. As of March 10, 1999, 834,640 shares of Company
Common Stock were reserved for issuance and issuable upon, or otherwise
deliverable in connection with, the exercise of outstanding Company Stock
Options. Since March 10, 1999, no shares of the Company's capital stock have
been issued other than pursuant to Company Stock Options already in existence on
such date, and, since March 10, 1999, no stock options have been granted. As of
March 10, 1999, 75,000 shares of Company Common Stock were reserved for issuance
and issuable upon, or otherwise deliverable in connection with, the exercise of
outstanding Warrants.
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Since March 10, 1999, no shares of the Company's capital stock have been issued
other than pursuant to Warrants already in existence on such date, and, since
March 10, 1999, no warrants have been issued. Section 3.2(a) of the Disclosure
Schedule sets forth the outstanding Company Stock Options and Warrants. Except
as set forth above, there are outstanding (i) no shares of capital stock or
other voting securities of the Company, (ii) no securities of the Company or its
Subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of the Company, (iii) no options or other rights to acquire
from the Company or its Subsidiaries, and no obligations of the Company or its
Subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company, and (iv) no equity equivalents, interests in the ownership or earnings
of the Company or its Subsidiaries or other similar rights (collectively
"Company Securities"). There are no outstanding obligations of the Company or
its Subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities.
(b) Except as set forth on Schedule 3.2(b) of the disclosure
schedule delivered by the Company to Parent concurrently herewith (the
"Disclosure Schedule"), or as publicly disclosed by the Company, all of the
issued and outstanding shares of capital stock of each Subsidiary have been duly
and validly authorized and issued, are fully paid and non-assessable, and are
owned by the Company, directly or indirectly, free and clear of any Lien (as
hereinafter defined) or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of law). There are no securities of the Company or its Subsidiaries
issued and outstanding that are convertible into or exchangeable for, no options
or other rights to acquire from the Company or its Subsidiaries, and no other
contract, understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital stock
or other ownership interests in, or any other securities of, any Subsidiary.
There are no outstanding contractual obligations of the Company or its
Subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares
of capital stock or other ownership interests in any Subsidiary. For purposes of
this Agreement, "Lien" means, with respect to any asset (including, without
limitation, any security) any mortgage, lien, pledge, charge, claim, security
interest or encumbrance of any kind in respect of such asset.
Section 3.3. Authority Relative to this Agreement; Consents and Approvals.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Company Board, and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the then
outstanding shares of Company Common Stock). This Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid, legal and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
(b) The Company Board has duly and validly approved, and taken all
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corporate actions required to be taken by the Company Board for the consummation
of, the transactions, including the Offer and the Merger, contemplated hereby
and resolved to recommend that the shareholders of the Company approve and adopt
this Agreement; provided, however, that such approval and recommendation may be
withdrawn, modified or amended in accordance with the provisions of Section 5.2
of this Agreement.
Section 3.4. SEC Reports; Financial Statements.
(a) The Company has filed all required forms, reports and documents
with the SEC since May 30, 1996 (the "SEC Reports"), each of which has complied
in all material respects with all applicable requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the Exchange Act, each as in
effect on the dates such forms, reports and documents were filed. The Company
has delivered to Acquisition or Parent, in the form filed with the SEC
(including any amendments thereto), (i) its Annual Reports on Form 10-K for each
of the fiscal years ended May 30, 1997 and 1998, (ii) all definitive proxy
statements relating to the Company's meetings of shareholders (whether annual or
special) held since May 30, 1997, (iii) its Quarterly Reports on Form 10-Q for
the quarters ended August 28, 1998 and November 30, 1998 and (iv) all other
reports or registration statements filed by the Company with the SEC since May
30, 1997. None of such forms, reports, registration statements or documents,
including, without limitation, any financial statements or schedules included or
incorporated by reference therein, contained, when filed, any untrue statement
of a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company and its
Subsidiaries included in the Annual Reports on Form 10-K referred to in the
second sentence of this Section 3.4(a) and the unaudited consolidated interim
financial statements of the Company and its Subsidiaries included in the
Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 1998 (A)
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, (B) have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods covered thereby, except as may be indicated in the notes thereto,
and (C) fairly present the consolidated financial position of the Company and
its Subsidiaries as of the dates thereof and their consolidated results of
operations, financial condition, cash flow and changes in financial position for
the periods then ended (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments).
(b) The Company has heretofore made available to Acquisition or
Parent a complete and correct copy of any amendments or modifications, which
have not yet been filed with the SEC, to agreements, documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Exchange Act.
Section 3.5. Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in the
Offer Documents, the Schedule 13E-3 or the Proxy Statement or provided by the
Company in the Schedule 14D-9 will,
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at the respective times that the Offer Documents, the Proxy Statement, the
Schedule 13E-3 and the Schedule 14D-9 or any amendments or supplements thereto
are filed with the SEC and are first published or sent or given to holders of
Shares, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
Section 3.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Hart Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the filing and recordation of this
Agreement and officers' certificates of each constituent corporation with the
Secretary of State of the State of California as required by the CGCL, no filing
with or notice to, and no permit, authorization, consent or approval of, or
order of, any court or tribunal or administrative, governmental or regulatory
body, agency or authority (a "Governmental Entity") is necessary for the
execution and delivery by the Company of this Agreement or the consummation by
the Company of the transactions contemplated hereby, except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings or give such notice would not have a Company Material Adverse Effect.
Neither the execution, delivery and performance of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby will
(a) conflict with or result in any breach of any provision of the Articles of
Incorporation or Bylaws (or similar governing documents) of the Company or any
of its Subsidiaries, (b) except as set forth on Schedule 3.6 of the Disclosure
Schedule, result in a violation or breach of, or cause acceleration, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
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 respective properties or assets may be bound, or (c)
violate any order, writ, injunction, decree, law, statute, rule or regulation of
any court, or any governmental agency or body having jurisdiction over the
Company or any of its Subsidiaries or any of their respective properties or
assets, except in the case of (b) or (c) for violations, breaches or defaults
which would not have, individually or in the aggregate, a Company Material
Adverse Effect.
Section 3.7. No Default. Except as set forth on Schedule 3.7 of the
Disclosure Schedule or as disclosed in the Recent SEC Reports, none of the
Company or its Subsidiaries is in default, in conflict with or violation (and no
event has occurred which, with notice or the lapse of time or both, would
constitute a default or violation) of any term, condition or provision of (a)
its Articles of Incorporation or Bylaws (or similar governing documents), (b)
any note, bond, mortgage, indenture, lease, license, permit, franchise,
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
respective properties or assets may be bound or affected or (c) any order, writ,
injunction, decree, law, judgment, statute, rule or regulation applicable to the
Company, its Subsidiaries or any of their respective properties or assets,
except in the case of (b) or (c) for violations, breaches or defaults that would
not have, individually or in the aggregate, a Company Material Adverse Effect.
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Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as set
forth on Schedule 3.8 of the Disclosure Schedule or as disclosed in the Recent
SEC Reports, as of November 30, 1998, none of the Company or its Subsidiaries
has any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required by GAAP to be reflected on a
consolidated balance sheet of the Company and its Subsidiaries (including the
notes thereto) or which would have, individually or in the aggregate, a Company
Material Adverse Effect. Except as set forth on Schedule 3.8 of the Disclosure
Schedule or as disclosed in the Recent SEC Reports, since November 30, 1998,
none of the Company or its Subsidiaries has incurred any liabilities of any
nature, whether or not accrued, contingent or otherwise, which would have, and
there have been no events, changes or effects with respect to the Company or its
Subsidiaries having, individually or in the aggregate, a Company Material
Adverse Effect. Except as set forth on Schedule 3.8 and Schedule 5.1 of the
Disclosure Schedule or as disclosed in the Recent SEC Reports, since November
30, 1998, the Company and its Subsidiaries have conducted their business in the
ordinary course consistent with past practice; there has not been any event,
occurrence or development or state of circumstances or facts as described in
Sections 5.1(a) through 5.1(m) and, as of the date hereof and at the Closing
Date, there has not been any event or occurrence of any condition that has had
or would reasonably be likely to result in a Company Material Adverse Effect.
The consummation of the transactions contemplated hereby will not give rise to
any liability of any nature, whether or not accrued, contingent or otherwise,
except as set forth herein.
Section 3.9. Litigation. Except as disclosed in the Recent SEC Reports,
there is no suit, litigation, arbitration, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries or any of their respective properties,
assets or business before any Governmental Entity which could reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect or would prevent or substantially delay the consummation of the
transactions contemplated by this Agreement. Except as disclosed in the Recent
SEC Reports, none of the Company or its Subsidiaries is subject to any
outstanding order, writ, injunction or decree that would have, individually or
in the aggregate, a Company Material Adverse Effect or would prevent or delay
the consummation of the transactions contemplated hereby. There are no actions,
suits or proceedings related to discrimination on the basis of age, sex,
religion, race or physical or mental disability, and no labor disturbance by the
employees of the Company or any Subsidiary exists or, to the knowledge of the
Company or any Subsidiary, is imminent which, in each case could reasonably be
expected to have a Company Material Adverse Effect.
Section 3.10. Compliance with Applicable Law. Except as disclosed in the
Recent SEC Reports, the Company and its Subsidiaries hold all permits, licenses,
consents, authorizations, certificates, variances, exemptions, orders and
approvals of and from all, and has made all declarations and filings with
Governmental Entities necessary for the lawful conduct of their respective
businesses and to own, lease, license and use its respective properties and
assets (the "Company Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which would not have,
individually or in the aggregate, a Company Material Adverse Effect. The Company
and its Subsidiaries are in compliance with the terms of the Company Permits,
except where the failure so to comply would not have a
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Company Material Adverse Effect. Except as disclosed in the Recent SEC Reports,
the activities or businesses of the Company and its Subsidiaries are not being
conducted in violation of or in conflict with any law, rule, order, judgment,
decree, ordinance or regulation of the United States, any foreign country, any
state, county or locality, or of any Governmental Entity of the United States,
any country, any state, county or locality or of any foreign jurisdiction,
except that no representation or warranty is made in this Section 3.10 with
respect to Environmental Laws (as defined in Section 3.12) and except for
violations or possible violations which do not, and, insofar as reasonably can
be foreseen, in the future will not have, individually or in the aggregate, a
Company Material Adverse Effect. Except as disclosed in the Recent SEC Reports,
no investigation or review by any Governmental Entity of the United States, any
country, any state, county or locality or of any foreign jurisdiction with
respect to the Company or its Subsidiaries is pending or, after reasonably
inquiry, to the knowledge of the Company and any Subsidiary, threatened, nor,
after reasonable inquiry, to the knowledge of the Company and any Subsidiary,
has any Governmental Entity of the United States, any country, any state, county
or locality or of any foreign jurisdiction indicated an intention to conduct the
same, other than, in each case, those which the Company reasonably believes will
not have a Company Material Adverse Effect.
Section 3.11. Employee Plans. Except as set forth on Schedule 3.11 of the
Disclosure Schedule or as disclosed in the Recent SEC Reports, there are no
employee benefit plans (including without limitation, retirement, savings,
thrift, deferred compensation, severance, stock ownership, stock purchase, stock
option, performance, bonus, incentive, vacation or holiday pay, travel, fringe
benefit, hospitalization or other medical, disability, life or other insurance,
and any other employee benefit policy, trust, understanding or arrangement of
any kind) maintained or contributed to by the Company or its Subsidiaries or
with respect to which the Company or its Subsidiaries has any actual or
potential liability (the "Employee Plans") except for liability that would not
have, individually or in the aggregate, a Company Material Adverse Effect. The
Employee Plans are in compliance with applicable law, including without
limitation, the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the Code, except for instances of non-compliance that would not
have, individually or in the aggregate, a Company Material Adverse Effect. None
of the Employee Plans are subject to Title IV of ERISA nor provide for medical
or life insurance benefits to retired or former employees of the Company or any
Subsidiary (other than as required under Code Section 4980B, or similar state
law). None of the Employee Plans have any material unfunded liabilities. Except
as set forth on Schedule 3.11 of the Disclosure Schedule or as disclosed in the
Recent SEC Reports, none of the Employee Plans obligates the Company to pay any
separation, severance, termination, bonus or similar benefit solely as a result
of any transaction contemplated by this Agreement or solely as a result of a
change in control or ownership. There are no pending or, to the knowledge of the
Company, threatened actions, suits, investigations or claims with respect to any
Employee Plan, and the Company has no knowledge of any facts that could result
in any actions, suits, investigations or claims that could reasonably be
expected to result in a Company Material Effect.
Section 3.12. Environmental Laws and Regulations.
(a) Except as set forth on Schedule 3.12 of the Disclosure Schedule
or as
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disclosed in the Recent SEC Reports, (i) each of the Company and its
Subsidiaries is in compliance with all applicable federal, state and local laws
and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) (collectively "Environmental Laws"),
except for non-compliance that would not have a Company Material Adverse Effect,
which compliance includes, but is not limited to, the possession by the Company
and its Subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof, (ii) since November 30, 1998, none of the
Company or its Subsidiaries has received written notice of, or, to the best
knowledge of the Company, is the subject of, any material action, cause of
action, claim, investigation, demand or notice by any person or entity alleging
liability under or non-compliance with any Environmental Law (an "Environmental
Claim"), and (iii) to the best knowledge of the Company, there are no
circumstances that are reasonably likely to prevent or interfere with such
material compliance, or give rise to material Environmental Claims, in the
future.
(b) Except as disclosed in the Recent SEC Reports, there are no
Environmental Claims which would have a Company Material Adverse Effect that are
pending or, to the best knowledge of the Company, threatened against the Company
or its Subsidiaries or, to the best knowledge of the Company, against any person
or entity whose liability for any Environmental Claim the Company or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law.
Section 3.13. Intellectual Property; Software.
(a) Each of the Company and its Subsidiaries owns, or possesses
valid and enforceable licenses to use, all existing United States and foreign
patents, trademarks, trade names, service marks, trade dress, Internet domain
names, together with all the goodwill associated therewith, copyrights, computer
software, data, databases and documentation thereof, trade secrets, know-how and
other confidential information, including any applications and registrations of
any of the foregoing necessary for the operation of the business of the Company
and its Subsidiaries as now conducted and as currently proposed to be conducted
(the "Company Intellectual Property Rights"), except where the failure to own or
possess valid rights to use such Company Intellectual Property Rights would not
have a Company Material Adverse Effect. The Company patents are set forth on
Section 3.13(a) of the Company Disclosure Schedule.
(b) Except for any of the following which would not reasonably be
expected to have a Company Material Adverse Effect,
(i) except as set forth on Schedule 3.13(b) of the Disclosure
Schedule, the validity, enforceability and use of the Company Intellectual
Property Rights and the title thereto of the Company or any Subsidiary as the
case may be is not being questioned in any litigation or other proceeding to
which the Company or any Subsidiary is a party, nor has any claim of
infringement or misappropriation (including, without limitation, any demand or
request that the Company or any Subsidiary license any intellectual property
rights from a third party)
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been alleged against the Company or any Subsidiary by any third party in
connection with such third party's intellectual property rights,
(ii) except as set forth on Schedule 3.13(b) of the Disclosure
Schedule, to the knowledge of the Company and its Subsidiaries, no third party
is infringing or misappropriating the Company Intellectual Property Rights, and
(iii) except as set forth on Schedule 3.13(b) of the
Disclosure Schedule, the conduct of the business of the Company and its
Subsidiaries as now conducted does not, to the knowledge of the Company,
infringe, misappropriate or otherwise conflict with any valid patents,
trademarks, trade names, service marks, copyrights or other intellectual
property rights of others. The consummation of the transactions completed hereby
will not result in the loss or impairment of any Company Intellectual Property
Rights.
Section 3.14. Certain Business Practices. To the knowledge of the Company
after due inquiry, none of the Company, any of its Subsidiaries or any
directors, officers, agents or employees of the Company or any of its
Subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii)
made any other unlawful payment.
Section 3.15. Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Class A common stock and a majority of the
holders of the outstanding shares of Class B common stock is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve the merger contemplated by this Agreement.
Section 3.16. Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is the Company or any of its Subsidiaries the subject of
any proceeding asserting that the Company or any of its Subsidiaries has
committed an unfair labor practice or seeking to compel it to bargain with any
labor union or labor organization, nor is there pending or, to the knowledge of
the Company, threatened any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Company or any of its Subsidiaries.
Section 3.17. Insurance. The Company maintains insurance policies (the
"Insurance Policies") against all risks of a character and in such amounts as
are usually insured against by similarly situated companies in the same or
similar businesses. Each Insurance Policy is in full force and effect and is
valid, outstanding and enforceable, and all premiums due thereon have been paid
in full. None of the Insurance Policies will terminate or lapse (or be affected
in any other materially adverse manner) by reason of the transactions
contemplated by this Agreement. The Company and its Subsidiaries have complied
in all material respects with provisions of each Insurance Policy under which it
is the insured party. No insurer under any Insurance Policy has canceled or
generally disclaimed liability under any such policy or, to the Company's
knowledge, indicated any intent to do so or not to renew any such policy. All
material claims under the
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Insurance Policies have been filed in a timely fashion.
Section 3.18. Suppliers and Customers. The documents and information
supplied by the Company to Parent and Acquisition in connection with this
Agreement with respect to the relationships and volumes of business done with
significant suppliers and customers and with respect to inventory aging and
reserves with respect thereto was accurate in all material respects. The Company
is not aware of any circumstances that would indicate that any significant
supplier or customer intends to materially alter its relationship with the
Company as a result of the Company's entering into this Agreement.
Section 3.19. Tax Matters.
(a) The Company and its Subsidiaries have accurately prepared and duly
filed with the appropriate federal, state, local and foreign taxing authorities
all tax returns, information returns and reports required to be filed with
respect to the Company and its Subsidiaries and have paid in full or made
adequate provision for the payment of all Taxes (as defined below). Neither the
Company nor any of its Subsidiaries is delinquent in the payment of any Taxes.
As used herein, the term "Taxes" means all federal, state, local and foreign
taxes, including, without limitation, income, profits, franchise, employment,
transfer, withholding, property, excise, sales and use taxes (including interest
and penalties thereon and additions thereto).
(b) Except as set forth on Section 3.19(b) of the Disclosure Schedule, no
claim has ever been made by an authority in a jurisdiction where the Company or
any Subsidiary does not file tax returns that the Company so not filing is or
may be subject to taxation by that jurisdiction.
(c) There are no security interests on any of the assets of the Company or
any Subsidiary that arose in connection with any failure (or alleged failure) to
pay any Tax.
(d) There is no dispute or claim concerning any Tax liability of the
Company or any Subsidiary either (i) claimed or raised by any authority in
writing or (ii) as to which any of the employees responsible for Tax matters of
the Company or any Subsidiary has knowledge based upon personal contact with any
agent of such authority. Schedule 3.19(d) sets forth those tax returns that
currently are the subject of audit.
(e) None of the Company or any Subsidiary has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(f) None of the Company nor any Subsidiary has filed a consent under Code
ss.341(f) concerning collapsible corporations. Except as set forth on Section
3.19(f) of the Disclosure Schedule, none of the Company nor any Subsidiary has
made any payments, is obligated to make payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Code ss.280G or Code ss.162(m). None of the Company
nor any Subsidiary has been a United States real property holding corporation
within the meaning of Code ss.897(c)(2) during the applicable period specified
in Code
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ss.897(c)(1)(A)(ii).
(g) None of the Company nor any Subsidiary has any liability for the Taxes
of any Person other than the Company or any Subsidiary (i) under Treas. Reg.
ss.1.1502-6 (or any similar provision of state, local or foreign law), or (ii)
by contract.
(h) None of the Company nor any Subsidiary owns an interest in an entity
either treated as a partnership or whose separate existence is ignored for
federal income tax purposes.
Section 3.20. Brokers. No broker, finder or investment banker (other than
the Financial Advisor pursuant to an arrangement (that may not be amended or
modified without the prior written consent of Parent) that has been disclosed to
Parent and Acquisition prior to the date hereof) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
the Company or any Subsidiary.
Section 3.21. Related Party Transactions. Since May 30, 1998, neither the
Company nor any officer or director of the Company has engaged in any
transactions required to be disclosed by the Company in its SEC Reports pursuant
to Item 404 of Regulation S-K promulgated under the Exchange Act, except as have
been publicly disclosed by the Company or disclosed herein.
Section 3.22. Restrictions on Business Activities. There is no judgment,
injunction, order or decree binding upon the Company or any of its Subsidiaries,
or, to the Company's knowledge, threatened, which has, or could reasonably be
expected to have, the effect of prohibiting or materially impairing any business
practice of the Company or any of its Subsidiaries, any acquisition of property
by the Company or any of its Subsidiaries or the conduct of business by the
Company or any of its Subsidiaries as currently conducted.
Section 3.23. Year 2000 Compliance. The Company and each of its
Subsidiaries are conducting a thorough inventory and assessment of the software,
hardware, databases and embedded control systems (microprocessor controlled,
robotic or other device) (collectively "Systems") used by the Company and its
Subsidiaries in connection with their business or in connection with the use,
operation or enjoyment of, any material tangible or intangible asset or real
property of the Company or its Subsidiaries, in order to determine which parts
of the Systems are not Year 2000 Compliant (as defined below) and to estimate
the cost of rendering such Systems Year 2000 Compliant prior to December 31,
1999 or such earlier date on which the Computer Systems may shut down or may
produce incorrect calculations or otherwise malfunction without becoming totally
inoperable. Based on the above inventory and assessment, the estimated total
cost of rendering the Systems Year 2000 Compliant is $200,000, which expenditure
has been included in the budget adopted by the Company. Year 2000 Compliant
means that the Systems will operate to accurately process date data (including
but not limited to calculating, comparing and sequencing) from, into and between
year 1999 and 2000, including leap-year calculations. To the knowledge of the
Company, after due inquiry, neither the Company nor any of its Subsidiaries will
incur material expenses arising from or relating to the failure of any of its
Systems as a result of the advent of the year 2000, the advent of the
twenty-
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first century or the transition from the twentieth century through the year
2000. Neither the Company nor any of its Subsidiaries has made any other
representations or warranties regarding the ability of any product or service
sold, licensed, rendered, or otherwise provided by the Company or by any of its
Subsidiaries in the conduct of their respective businesses to operate without
malfunction, to operate without ceasing to function, to generate correct data or
to produce correct results when processing, providing or receiving (i)
date-related data from, into and between the twentieth and twenty-first
centuries and (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
Section 3.24. Real Estate.
(a) Attached as Schedule 3.24(a) is the address and legal description of
each parcel of real property owned by the Company or any Subsidiary (the "Owned
Real Property"). The Company or its applicable Subsidiary has good and
marketable title in and to all of the Owned Real Property subject to no liens,
encroachments, encumbrances or other defects in title (collectively, "Liens"),
except as described on such Schedule.
(b) Attached as Schedule 3.24(b) is a list of all leases, subleases and
other occupancy agreements, including all amendments, extensions and other
modifications (the "Leases") for real property (the "Leased Real Property"; the
"Owned Real Property" and the "Leased Real Property" collectively the "Real
Property") to which the Company or any Subsidiary is a party. The Company or its
applicable Subsidiary has a good and valid leasehold interest in and to all of
the Leased Real Property, subject to no Liens except as described in such
Schedule. Each Lease is in full force and effect and is enforceable in
accordance with its terms. Except as disclosed on Schedule 3.24(b), there exists
no default or condition which, with the giving of notice, the passage of time or
both, could become a default under any Lease. The Company has previously
delivered to Parent true, complete, and correct copies of all the Leases.
(c) The Real Property constitutes all of the real property owned, leased,
occupied or otherwise used in connection with the business of the Company and
its Subsidiaries. Except as disclosed on Schedule 3.24(c), other than the
Company and the Subsidiaries, there are no parties in possession or parties
having any current or future right to occupy any of the Real Property. The Real
Property is in good condition and repair and is sufficient and appropriate for
the conduct of the business of the Company and the Subsidiaries. The Real
Property and all plants, buildings and improvements located thereon conform to
all applicable building, zoning and other laws, ordinances, rules and
regulations. All permits, licenses and other approvals necessary to the current
occupancy and use of the Real Property have been obtained, are in full force and
effect and have not been violated, except for violations that, individually or
in the aggregate, would not have a Company Material Adverse Effect. There exists
no violation of any covenant, condition, restriction, easement, agreement or
order affecting any portion of the Real Property (except for violations that,
individually or in the aggregate, would not have a Company Material Adverse
Effect). All improvements located on the Real Property have direct access to a
public road adjoining such Real Property. No such improvements or accessways
encroach on land not included in the Real Property and no such improvement is
dependent for its access, operation or utility on any land, building or other
improvement not included in the Real Property. There is no
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pending or, to the knowledge of the Company and its Subsidiaries, any threatened
condemnations proceeding affecting any portion of the Real Property. Except as
disclosed on Schedule 3.24(c), there are no outstanding options or rights of
first refusal with respect to the purchase or use of any of the Real Property,
any portion thereof or interest therein. Except as disclosed on Schedule
3.24(c), neither the Company nor any Subsidiary is obligated to purchase or
lease any real property.
Section 3.25. Conduct of Business. Since November 30, 1998, the Company
has conducted its operations in the ordinary course of business.
Section 3.26. Expenses. Section 3.26 of the Company Disclosure Schedule
sets forth the Company's estimated expenses incurred in connection with this
Agreement and the transaction contemplated hereby. Except as set forth in
Section 3.26 of the Disclosure Schedule, the Company has not incurred any
expenses or liabilities in connection with the transactions contemplated by this
Agreement or outside the ordinary course of business.
Section 3.27. Dividends. On December 16, 1998, the Company declared a
dividend of $0.07 per share, payable on January 15, 1999 to shareholders of
record as of January 4, 1999. The Company has not declared any dividends since
December 16, 1998.
Section 3.28. No Other Representations or Warranties. No representations
or warranties have been made by or on behalf of the Company or any of its
Subsidiaries in connection with the Merger and the transactions contemplated by
this Agreement other than those expressly set forth in this Article 3. Without
limiting the generality of the foregoing, no representations or warranties are
being made with respect to financial projections or the future financial
performance or prospects of the Company, its Subsidiaries or their respective
businesses.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the Company as
follows:
Section 4.1. Organization.
(a) Each of Parent and Acquisition is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its businesses as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
would not have a Parent Material Adverse Effect (as defined below). The term
"Parent Material Adverse Effect" means a material adverse effect on the
financial condition, properties, business or results of operations of the Parent
and its subsidiaries taken as a whole. It being understood that conditions
affecting the U.S. economy as whole shall not be deemed to constitute a Parent
Material Adverse Effect.
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(b) Parent has heretofore delivered to the Company accurate and
complete copies of the Articles of Incorporation and Bylaws, as currently in
effect, of Parent and Acquisition. Each of Parent and its subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not have a Parent Material Adverse Effect.
Section 4.2. Authority Relative to this Agreement. Each of Parent and
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Acquisition and by Parent as the sole
shareholder of Acquisition, and no other corporate proceedings on the part of
Parent or Acquisition are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Acquisition and constitutes a
valid, legal and binding agreement of each of Parent and Acquisition,
enforceable against each of Parent and Acquisition in accordance with its terms,
except (i) to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally and (ii) that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding thereof may be brought.
Section 4.3. Information Supplied. None of the information supplied or to
be supplied by Parent or Acquisition for inclusion or incorporation by reference
in the Offer Documents, the Schedule 14D-9, the Schedule 13E-3 or the Proxy
Statement (as defined in Section 5.4(a)) will, at the respective times that the
Offer Documents, the Schedule 14D-9, the Schedule 13E-3, the Proxy Statement or
any amendments or supplements thereto are filed with the SEC and are first
published or sent or given to holders of shares of Company Common Stock, 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 are made, not
misleading.
Section 4.4. Consents and Approvals; No Violations. Assuming the truth and
accuracy of the Company's representations and warranties contained in Section
3.6, except for filings, permits, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the Securities Act, the
Exchange Act, state securities or blue sky laws, the HSR Act and the filing and
recordation of this Agreement and officers' certificates of each constituent
corporation with the Secretary of State of the State of California as required
by the CGCL, no filing with or notice to, and no permit, authorization, consent
or approval of, any Governmental Entity is necessary for the execution and
delivery by Parent or Acquisition of this Agreement or the consummation by
Parent or Acquisition of the transactions contemplated hereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice would not have a Parent Material Adverse Effect
or have a material adverse affect on the ability of Parent or Acquisition to
consummate the Offer or the
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Merger. Neither the execution, delivery and performance of this Agreement by
Parent or Acquisition nor the consummation by Parent or Acquisition of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the respective certificate or articles of incorporation or
Bylaws (or similar governing documents) of Parent or Acquisition, (b) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) 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 Parent or Acquisition is a party or by
which any of them or any of their respective properties or assets may be bound
or (c) violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to Parent or Acquisition or any of Parent's subsidiaries
or any of their respective properties or assets, except in the case of (b) or
(c) for violations, breaches or defaults which would not have a Parent Material
Adverse Effect or have a material adverse effect on the ability of Parent or
Acquisition to consummate the Offer or the Merger.
Section 4.5. No Default. None of Parent or any of its subsidiaries is in
default or violation (and no event has occurred which, with notice or the lapse
of time or both, would constitute a default or violation) of any term, condition
or provision of (a) its certificate or articles of incorporation or Bylaws (or
similar governing documents), (b) any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which Parent
or any of its subsidiaries is now a party or by which any of them or any of
their respective properties or assets may be bound or (c) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to Parent, its
subsidiaries or any of their respective properties or assets, except in the case
of (b) or (c) for violations, breaches or defaults that would not have a Parent
Material Adverse Effect or have a material adverse effect on the ability of
Parent or Acquisition to consummate the Offer or the Merger.
Section 4.6. Availability of Financing; Parent Guarantee. Parent has
caused the attached guarantee to be executed by Tinicum Capital Partners, L.P.
and Edmundson International, Inc.
Section 4.7. No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization, the making of the Offer or
the negotiation and consummation of this Agreement and the transactions
contemplated hereby, Acquisition has neither incurred any obligation or
liability or engaged in any business or activity of any type or kind whatsoever
or entered into any agreement or arrangement with any person or entity.
Section 4.8. Brokers. Except for Merchants Group International Ltd., Inc.,
no broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of Parent or
Acquisition.
Section 4.9. No Other Representations or Warranties. No representations or
warranties are made by or on behalf of Parent or Acquisition in connection with
the transactions contemplated by this Agreement other than those expressly set
forth in this Article 4. Without
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limiting the generality of the foregoing, no representations or warranties are
being made with respect to financial projections or the future financial
performance or prospects of Parent, Acquisition or their businesses.
ARTICLE 5
COVENANTS
Section 5.1. Conduct of Business of the Company. Except as contemplated by
this Agreement, during the period from the date hereof to the Effective Time,
the Company Board will not permit the Company or its any of its Subsidiaries to
conduct their operations otherwise than in the ordinary course of business
consistent with past practice, and the Company shall, and shall cause its
Subsidiaries to, use its or their reasonable best efforts to preserve
substantially intact its business organization, to keep available the services
of its present officers and employees and to preserve the present commercial
relationships of the Company and its Subsidiaries with persons with whom the
Company or its Subsidiaries do business. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, prior
to the Effective Time, the Company will not, without the prior written consent
of Parent or Acquisition, and will not permit any of its Subsidiaries to:
(a) amend its Articles of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend or modify (except as required hereby) the terms of the
Company Plans or authorize for issuance, issue, sell, deliver or agree or commit
to issue (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights), except for the
issuance or sale of shares of Company Common Stock pursuant to the exercise of
Company Stock Options;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or redeem or otherwise acquire any Company Securities or any securities of its
Subsidiaries;
(d) except in connection with the exercise of purchase options under
existing leases, (i) incur or assume any long-term or short-term debt or other
liability (whether directly, contingently or otherwise) or issue any debt
securities, except for borrowings under existing lines of credit in the ordinary
course of business and in amounts not material to the Company and its
Subsidiaries taken as a whole and except for indebtedness not exceeding $100,000
in the aggregate, (ii) except as described in Schedule 5.1(d) of the Disclosure
Schedule, assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person, except in the ordinary course of business consistent with past practice
and in amounts not material to the Company and its Subsidiaries taken as a whole
and except for obligations of its Subsidiaries, (iii) except for investments not
exceeding $100,000 in the aggregate, make any loans, advances or capital
contributions to, or
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investments in, any other person (other than to Subsidiaries of the Company or
customary loans or advances to employees in the ordinary course of business
consistent with past practice and in amounts not material to the maker of such
loan or advance), (iv) except as described in Schedule 5.1(d) of the Disclosure
Schedule, pledge or otherwise encumber shares of capital stock of the Company or
its Subsidiaries, or (v) except as described in Schedule 5.1(d) of the
Disclosure Schedule, mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material Lien thereupon except for
Liens securing indebtedness not exceeding $100,000 in the aggregate;
(e) except as may be required by law or as contemplated by this
Agreement and except in connection with the hiring of officers (to replace at
compensation levels not to exceed those of the officers being replaced any
officer who retires or is terminated for any reason) or employees in the
ordinary course of business, enter into, adopt or amend or terminate any bonus,
profit sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent, stock
purchase agreement, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director, officer or employee in
any manner, provided that the Company may not, under any circumstance, issue any
stock option or stock option equivalents thereof to any person, or (except for
normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company, except as required under
existing agreements and except for the payment of bonuses and severance payments
in the ordinary course of business generally consistent with past practice)
increase in any manner the compensation or fringe benefits of any director,
officer or employee or agent or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof (including, without limitation,
the granting of stock appreciation rights or performance units) or create, issue
or increase any severance agreement or stay bonus with any officer, director or
employee;
(f) except as described in Schedule 5.1(f) of the Disclosure
Schedule or with the consent of Parent or Acquisition, which consent will not be
unreasonably withheld, acquire, sell, lease or dispose of any assets outside the
ordinary course of business or any assets which have a value in the aggregate in
excess of $250,000;
(g) except as may be required as a result of a change in law or in
GAAP, change any of the accounting principles or practices used by it;
(h) except in connection with the exercise of purchase options under
existing leases which must be exercised for the Company to retain possession of
the subject property, (i) acquire (by merger, consolidation or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein (except for transactions having
an aggregate value not exceeding $100,000), (ii) authorize or make any new
capital expenditure or expenditures which, individually, is in excess of
$100,000 or, in the aggregate, are in excess of $500,000 or (iii) enter into or
amend any contract, agreement, commitment or arrangement providing for the
taking of any action that would be prohibited hereunder;
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(i) make any tax election or settle or compromise any income tax
liability material to the Company and its Subsidiaries taken as a whole;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against, in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company and its
Subsidiaries in the Recent SEC Reports or incurred in the ordinary course of
business consistent with past practice;
(k) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any Subsidiary
or the Company;
(l) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(m) incur any expenses in connection with the transactions
contemplated hereby in excess of the amount set forth on Schedule 3.26 without
the prior written consent of Parent or Acquisition;
(n) make any intercompany transfers of cash in excess of $500,000;
or
(o) take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.1(a) through 5.1(n) or any action which would
make any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect as of the date when made.
Section 5.2. Other Potential Acquirers.
(a) The Company, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties (other than the parties to
this Agreement) conducted heretofore with respect to any offer or proposal for a
merger or other business combination involving the Company or any of its
Subsidiaries or the acquisition of all or any material portion of the assets of,
or any equity interest in, the Company or its Subsidiaries or any business
combination with the Company or its Subsidiaries (each an "Acquisition
Proposal"). The Company may, directly or indirectly, furnish information and
access, in each case only in response to unsolicited requests therefor, to any
corporation, partnership, limited liability company or other entity or group
pursuant to confidentiality agreements on terms no less favorable to the Company
than the confidentiality agreement that has been entered into by and between the
Company and Parent, and may participate in discussions and negotiate with such
entity or group concerning any merger, sale of assets, sale of shares of capital
stock or similar transaction involving the Company or any Subsidiary or division
thereof, if such entity or group has submitted a bona fide written proposal to
the Company Board relating to any such transaction that is a Superior Proposal.
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For purposes of this Agreement, a "Superior Proposal" means any proposal
made by a third party to acquire, directly or indirectly, all of the equity
securities of the Company entitled to vote generally in the election of
directors or all or substantially all of the assets of the Company for cash and
on terms which the Company Board reasonably believes (after consultation with a
financial advisor of nationally recognized reputation) to be more favorable from
a financial point of view to its shareholders than the Offer and the Merger,
taking into account at the time of determination all factors relating to such
proposed transaction deemed relevant by the Company Board, including, without
limitation, the financing thereof, the proposed timing thereof and all other
conditions thereto and any changes to the financial terms of this Agreement
proposed by Parent and Acquisition.
(b) The Company shall immediately notify Parent and Acquisition after
receipt of any Acquisition Proposal, or any modification of or amendment to any
Acquisition Proposal, or any request for nonpublic information relating to the
Company or any of its Subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company or any Subsidiary
by any person or entity that informs the Board of Directors of the Company or
such Subsidiary that it is considering making, or has made, an Acquisition
Proposal. Such notice to Parent and Acquisition shall be made orally and in
writing, and, unless the Company Board concluded that such disclosure is
inconsistent with its fiduciary duties under applicable law, shall indicate the
identity of the person making the Acquisition Proposal or intending to make the
Acquisition Proposal or requesting nonpublic information or access to the books
and records of the Company, the terms of any such Acquisition Proposal or
modification or amendment to an Acquisition Proposal, and whether the Company is
providing or intends to provide the person making the Acquisition Proposal with
access to information concerning the Company as provided in Section 5.2(a). The
Company shall also immediately notify Parent and Acquisition, orally and in
writing, if it enters into negotiations concerning any Acquisition Proposal.
(c) Except as set forth in this Section 5.2, neither the Company Board nor
any committee thereof shall (i) withdraw or modify, or indicate publicly its
intention to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Company Board or such committee of the Offer or the
Merger, (ii) approve or recommend, or indicate publicly its intention to approve
or recommend, any Acquisition Proposal or (iii) cause the Company to enter into
any letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, a "Company Acquisition Agreement") related to any
Acquisition Proposal. Notwithstanding the foregoing, in the event that prior to
the Effective Time the Company Board reasonably determines in good faith, after
discussions with its counsel, that it is consistent with its fiduciary duties
under applicable law, the Company Board may (subject to this and the following
sentences) approve or recommend a Superior Proposal and, in connection
therewith, withdraw or modify its approval or recommendation of the Offer or the
Merger and/or terminate this Agreement (and concurrently with or after such
termination, if it so chooses, cause the Company to enter into any Company
Acquisition Agreement with respect to any Superior Proposal), but only at a time
that is after the third business day following Parent's receipt of written
notice advising Parent that the Company Board has received a Superior Proposal
and, in the case of any previously received Superior Proposal that has been
materially modified or
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amended, such modification or amendment and specifying the material terms and
conditions of such Superior Proposal, modification or amendment.
(d) Nothing herein shall prevent the Company Board from taking, and
disclosing to the Company's shareholders, a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Exchange Act with regard to any tender offer,
and nothing herein shall prevent the Board from making such disclosure to the
Company's shareholders as, in the good faith judgment of the Company Board, is
done pursuant to the exercise of its fiduciary duties under the CGCL, provided
that the Company complies with the provisions of Section 7.3; provided further,
that neither the Company nor the Company Board nor any committee thereof shall,
except as permitted by Section 5.2(c), withdraw or modify, or indicate publicly
its intention to withdraw or modify, its position with respect to the Offer or
the Merger or approve or recommend, or indicate publicly its intention to
approve or recommend, an Acquisition Proposal.
(e) The Company shall advise its officers and directors and any investment
banker or attorney retained by the Company in connection with the transactions
contemplated by this Agreement of the restriction set forth in this Section 5.2.
Section 5.3. Access to Information.
(a) Between the date hereof and the Effective Time, the Company will
provide to Parent and Acquisition and their authorized representatives
reasonable access to all employees, plants, offices, warehouses and other
facilities and to all books and records of the Company and its Subsidiaries,
will permit Parent and Acquisition to make such inspections as Parent and
Acquisition may reasonably require and will cause the Company's officers and
those of its subsidiaries to furnish Parent and Acquisition with such financial
and operating data and other information with respect to the business and
properties of the Company and its Subsidiaries as Parent or Acquisition may from
time to time reasonably request.
(b) Each of Parent and Acquisition will hold and will cause its
consultants and advisors to hold in confidence all documents and information
concerning the Company and its Subsidiaries furnished to Parent or Acquisition
in connection with the transactions contemplated by this Agreement.
Section 5.4. Shareholders Meeting.
(a) If a vote of the Company's shareholders is required by law, the
Company will, as promptly as practicable following (i) the acceptance for
payment of shares of Company Common Stock by Acquisition pursuant to the Offer
or (ii) the termination of the offer by its terms, take, in accordance with
applicable law and its Articles of Incorporation and By-laws, all action
necessary to convene a meeting of holders of shares of Company Common Stock (the
"Shareholders Meeting") to consider and vote upon the approval of this
Agreement. The Company shall, as promptly as practicable, prepare and file with
the SEC a proxy statement for the solicitation of a vote of holders of shares of
Company Common Stock approving the Merger (the "Proxy Statement"), which shall
include the recommendation of the Company Board that shareholders of the Company
vote in favor of the approval and adoption of this Agreement and
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the written opinion of the Financial Advisor that the cash consideration to be
received by the shareholders of the Company pursuant to the Merger is fair to
such shareholders from a financial point of view. The Company shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC as promptly as
practicable after such filing and promptly thereafter mail the Proxy Statement
to the shareholders of the Company. The Company shall also use its best efforts
to obtain all necessary state securities law or "blue sky" permits and approvals
required in connection with the Merger and to consummate the other transactions
contemplated by this Agreement and will pay all expenses incident thereto.
Notwithstanding the foregoing, if Parent, Acquisition and/or any other
subsidiary of Parent shall acquire at least 90% of the outstanding shares of
Company Common Stock, the parties shall take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
expiration of the Offer without a Shareholders Meeting in accordance with
Section 1110 of the CGCL.
(b) Parent and Acquisition agree to cause all shares of Company
Common Stock purchased pursuant to the Offer and all other shares of Company
Common Stock owned by Parent, Acquisition or any Subsidiary of Parent to be
voted in favor of the Merger.
Section 5.5. Additional Agreements; Reasonable Best Efforts. Subject to
the terms and conditions herein provided, each party agrees to use all
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (a)
cooperation in the preparation and filing of the Offer Documents, the Schedule
14D-9, the Schedule 13E-3, the Proxy Statement, any filings that may be required
under the HSR Act and any amendments thereto, (b) the taking of all action
reasonably necessary, proper or advisable to secure any necessary consents under
existing debt obligations of the Company and its Subsidiaries or to amend the
notes, indentures or agreements relating thereto to the extent required by such
notes, indentures or agreements or redeem or repurchase such debt obligations,
(c) contesting any legal proceeding relating to the Offer or the Merger and (d)
the execution of any additional instruments necessary to consummate the
transactions contemplated hereby. Subject to the terms and conditions of this
Agreement, Parent and Acquisition agree to use all reasonable efforts to cause
the Effective Time to occur as soon as practicable after the shareholder vote,
if any, with respect to the Merger. In case at any time after the Effective Time
any further action is necessary to carry out the purposes of this Agreement, the
proper officers and directors of each party hereto shall take all such necessary
action.
Section 5.6. Consents. Parent, Acquisition and the Company each will use
all commercially reasonable efforts to obtain consents of all third parties and
Governmental Entities necessary, proper or advisable for the consummation of the
transactions contemplated by this Agreement.
Section 5.7. Public Announcements. Parent, Acquisition and the Company, as
the case may be, will consult with one another and seek one anothers approval
before issuing any press release, or otherwise making any public statements,
with respect to the transactions contemplated by this Agreement, including,
without limitation, the Offer or the Merger and shall
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not issue any such press release or make any such public statement prior to such
consultation and approval, except as may be required by applicable law or by
obligations pursuant to any listing agreement with the Nasdaq Stock Market, as
determined by Parent, Acquisition or the Company, as the case may be.
Section 5.8. Indemnification; Directors' and Officers' Insurance.
(a) Parent and Acquisition agree that all rights to indemnification
or exculpation now existing in favor of the directors, officers, employees and
agents of the Company and its Subsidiaries, as provided in their respective
charters or bylaws (or other similar governing instruments) or otherwise in
effect as of the date hereof with respect to matters occurring prior to the
Effective Time, shall survive the Merger and shall continue in full force and
effect. To the maximum extent permitted by the CGCL, such indemnification shall
be mandatory rather than permissive, and the Surviving Corporation shall advance
expenses in connection with such indemnification (subject to the Surviving
Corporation's receipt of an undertaking by the indemnified party to return such
advanced expenses to the Surviving Corporation if it is determined by a final,
non-appealable order of a court of competent jurisdiction that such indemnified
party is not entitled to retain such advanced expenses).
(b) Parent shall cause the Surviving Corporation to maintain in
effect for not less than five (5) years from the Effective Time the policies of
the directors' and officers' liability and fiduciary insurance most recently
maintained by the Company (provided, that the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous to the beneficiaries thereof so long
as such substitution does not result in gaps or lapses in coverage) with respect
to matters occurring prior to the Effective Time; provided, however, that in
satisfying its obligation under this Section, the Surviving Corporation shall
not be obligated to pay premiums in excess of $125,000 with respect to such
insurance.
(c) In the event the Surviving Corporation or its successor (i) is
consolidated with or merges into another person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any other
person in a single transaction or a series of related transactions, then in each
such case Parent shall make or cause to be made proper provision so that the
successor or transferee of the Surviving Corporation shall comply in all
material respect with the terms of this Section 5.8.
Section 5.9. Notification of Certain Matters. The Company shall give
prompt notice to Parent and Acquisition, and Parent and Acquisition shall give
prompt notice to the Company, of (a) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty of the notifying party contained in this Agreement to
be untrue or inaccurate in any material respect as if made at the Effective Time
and (b) any material failure of the notifying party to comply with or satisfy
any 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 5.9 shall not cure such breach or non-compliance or limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
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Section 5.10. Employee Matters.
(a) Employees of the Company and its Subsidiaries shall be treated
after the Merger no less favorably under Parent ERISA Plans, to the extent
applicable, than other similarly situated employees of Parent and its
subsidiaries.
(b) For a period of one year following the Merger, Parent shall and
shall cause its subsidiaries to maintain with respect to their employees who had
been employed by the Company or any of its Subsidiaries prior to the Effective
Time and who remain employed following the Effective Time (i) base salary or
regular hourly wage rates for each such employee at not less than the rate
applicable immediately prior to the Merger to such employee and (ii) employee
benefits (as defined for purposes of Section 3(3) of ERISA) that are
substantially comparable in the aggregate to such employee benefits provided by
the Company and its Subsidiaries immediately prior to the Merger.
(c) To the extent they participate under such plans, Parent and its
subsidiaries shall credit employees of the Company and its Subsidiaries for
purposes of determining eligibility to participate or vesting under Parent ERISA
Plans with their service prior to the Merger with the Company and its
Subsidiaries to the same extent such service was counted under similar benefit
plans of the Company prior to the Merger.
(d) Nothing contained herein shall be construed as requiring Parent
or the Surviving Corporation to continue any specific plans or to continue the
employment of any specific person.
Section 5.11. SEC Filings. Each of Parent and the Company shall promptly
provide the other party (or its counsel) with copies of all filings made by the
other party or any of its subsidiaries with the SEC or any other state or
federal Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
Section 5.12. Guarantee of Performance. Parent hereby guarantees the
performance by Acquisition of its obligations under this Agreement and the
indemnification obligations of the Surviving Corporation pursuant to Section
5.8(a).
Section 5.13. Notice of Certain Events. The Company shall promptly notify
Acquisition and Acquisition shall promptly notify the Company of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) with respect only to the Company, any actions, suits, claims,
investigations or proceedings commenced or, to the best of its knowledge,
threatened which, if
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pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 3.9 or 3.13 or which relate to the consummation of
the transactions contemplated by this Agreement.
Section 5.14. Takeover Statutes. If any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
enacted under state or federal laws in the United States (each a "Takeover
Statute") is or may become applicable to the Offer or the Merger, the Company
will use reasonable best efforts to grant such approvals and take such actions
as are necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act so as to eliminate or minimize the effects of any Takeover Statute
on any of the transactions contemplated hereby.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1. Conditions to Each Party's Obligations to Effect the Merger.
The respective obligations of each party to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) if required by applicable law, this Agreement shall have been
approved and adopted by the requisite vote of the shareholders of the Company;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
(c) any waiting period applicable to the Merger and the other
transactions described in the recitals to this Agreement under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices or
approvals required with respect to the transactions contemplated hereby shall
have been either filed or received; and
Section 6.2. Conditions to Obligations of Parent and Acquisition. The
obligations of Parent and Acquisition to effect the Merger are also subject to
the satisfaction or waiver by Parent prior to the Effective Time of the
following conditions:
(a) The representations and warranties of the Company set forth in
this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date, as though made on and as of the Closing Date; it
being understood that representations and warranties shall be deemed to be true
and correct unless the respects in which the representations and warranties
(without giving effect to any "materiality" limitations or references to
"material adverse effect" set forth therein) are untrue or incorrect in the
aggregate is likely to have a Company Material Adverse Effect.
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(b) The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date.
(c) The number of Company Dissenting Shares shall be less than five
percent (5%) of the total number of shares of Company Common Stock.
Section 6.3. Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is also subject to the satisfaction or waiver
by the Company prior to the Effective Time of the following conditions:
(a) The representations and warranties of Parent and Acquisition set
forth in this Agreement shall be true and correct as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date) as of the Closing Date, as though made on and as of the
Closing Date; it being understood that representations and warranties shall be
deemed to be true and correct unless the respects in which the representations
and warranties (without giving effect to any "materiality" limitations or
references to "material adverse effect" set forth therein) are untrue or
incorrect in the aggregate is likely to have a Parent Material Adverse Effect.
(b) Each of Parent and Acquisition shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
Section 7.1. Termination. This Agreement may be terminated and the Offer
and the Merger may be abandoned at any time prior to the Effective Time:
(a) by mutual written consent of Parent, Acquisition and the
Company;
(b) by Parent or Acquisition or the Company if (i) any court of
competent jurisdiction in the United States or other United States governmental
authority shall have issued a final order, decree or ruling or taken any other
final action restraining, enjoining or otherwise prohibiting the Offer or the
Merger and such order, decree, ruling or other action is or shall have become
nonappealable or (ii) the Merger has not been consummated by October 31, 1999
(unless otherwise extended by the parties; provided that no party may terminate
this Agreement pursuant to this clause (ii) if such party's failure to fulfill
any of its obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date;
(c) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of Parent or Acquisition set forth in
this Agreement, or if any representation or warranty of Parent or Acquisition
shall have become untrue, in either case which materially adversely affects the
consummation of the Offer, (ii) there shall have been a breach on the part of
Parent or Acquisition of any of their respective covenants or agreements
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hereunder having a Parent Material Adverse Effect or materially adversely
affecting the consummation of the Offer, and Parent or Acquisition, as the case
may be, has not cured such breach prior to the earlier of (A) ten (10) days
following notice by the Company thereof and (B) two (2) Business Days prior to
the date on which the Offer expires; provided, however, that the Company has not
breached any of its obligations hereunder in a manner that proximately
contributed to such breach by Parent or Acquisition or (iii) prior to the
purchase of Shares pursuant to the Offer, the Company has received a Superior
Proposal and the Company Board by a majority vote shall have determined in its
good faith judgment, on advice of counsel, that it must do so in the exercise of
its fiduciary duties under the CGCL; provided, however, that, without limiting
Parent's rights under Section 7.3(a), such termination under this clause (iii)
shall not be effective until payment of the amount required by Section 7.3(b);
or
(d) by Parent or Acquisition prior to the purchase of shares of
Company Common Stock pursuant to the Offer if (i) the Company Board withdraws or
modifies in a manner materially adverse to Parent or Acquisition its favorable
recommendation of the Offer or the approval or recommendation of the Merger or
shall have recommended a Third Party Acquisition (as defined below), (ii) a
Third Party Acquisition occurs, (iii) there shall have been a breach of any
representation or warranty on the part of Company set forth in this Agreement,
or any representation or warranty of the Company shall have become untrue, in
either case if the respects in which the representations and warranties made by
the Company are inaccurate would in the aggregate have a Company Material
Adverse Effect or materially adversely affect (or delay) the consummation of the
Offer or the Merger, (iv) there shall have been a breach on the part of the
Company of its covenants or agreements hereunder having, individually or in the
aggregate, a Company Material Adverse Effect or materially adversely affecting
(or materially delaying) the consummation of the Merger, and, with respect to
clauses (iii) and (iv) above, the Company has not cured such breach prior to the
earlier of (A) ten (10) days following notice by the Parent or Acquisition
thereof and (B) two (2) Business Days prior to the date on which the Offer
expires; provided that, with respect to clauses (iii) and (iv) above, neither
Parent or Acquisition has breached any of their respective obligations hereunder
in a manner that proximately caused such breach by the Company or (v) Parent or
Acquisition shall have discovered that any information supplied to Parent or
Acquisition by the Company (excluding, for such purposes, any projections or
forecasts or other forward looking information supplied by the Company), at the
time provided to Parent or Acquisition, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and such misstatement or omission would have a Company Material
Adverse Effect.
Section 7.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void (except for the provisions of this Section 7.2 and Sections 5.3(b) and
7.3), and there shall be no liability or obligation on the part of any party or
its affiliates, directors, officers or shareholders, other than (a) the
provisions of this Section 7.2 and Sections 5.3(b) and 7.3 and (b) any liability
of any party for any breach of this Agreement prior to such termination.
Section 7.3. Fees and Expenses.
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(a) In the event that this Agreement shall be terminated pursuant to
Section 7.1(c)(iii) or Section 7.1(d) and, within twelve (12) months thereafter,
a Third Party Acquisition occurs, then Parent and Acquisition would suffer
direct and substantial damages, which damages cannot be determined with
reasonable certainty. To compensate Parent and Acquisition for such damages, the
Company shall pay to Parent the amount of $2.0 million as liquidated damages. It
is specifically agreed that the amount to be paid pursuant to this Section
7.3(a) represents liquidated damages and not a penalty.
"Third Party Acquisition" means the occurrence of any of the
following events (i) the acquisition of the Company by merger or otherwise by
any person (which includes a "person" as such term is defined in Section
13(d)(3) of the Exchange Act) or entity other than Parent, Acquisition or any
affiliate thereof (a "Third Party"), (ii) the acquisition by a Third Party of
50% or more of the total assets of the Company and its Subsidiaries, taken as a
whole, (iii) the acquisition by a Third Party of shares of Company Common Stock
resulting in such person holding at least 50% or more of the outstanding shares
of Company Common Stock or (iv) the acquisition by a Third Party of shares of
the Company's capital stock resulting in such person being able to elect a
majority of the Company's directors.
(b) Upon the termination of this Agreement prior to the purchase of
Shares by Acquisition pursuant to the Offer pursuant to Section 7.1(c)(iii) or
7.1(d), the Company shall reimburse Parent, Acquisition and their affiliates
(not later than ten (10) Business Days after submission of statements therefor)
for all documented out-of-pocket fees and expenses, not to exceed $500,000,
reasonably incurred by any of them or on their behalf in connection with the
Merger and the consummation of all transactions contemplated by this Agreement
(including, without limitation, filing fees, printing and mailing costs, fees
payable to investment bankers, counsel to any of the foregoing, and
accountants). If Parent or Acquisition shall have submitted a request for
reimbursement hereunder, such party will provide the Company in due course with
invoices or other reasonable evidence of such expenses upon request. The Company
shall in any event pay the amount requested within ten (10) Business Days of
such request, subject to the Company's right to demand a return of any portion
as to which invoices are not received in due course. Nothing in this Section
7.3(b) shall relieve any party from any liability for breach of this Agreement.
(c) Upon the termination of this Agreement pursuant to Sections
7.1(e)(i) or (ii), Parent shall reimburse the Company and its affiliates (not
later than ten (10) Business Days after submission of statements therefor) for
all documented out-of-pocket fees and expenses, not to exceed $500,000,
reasonably incurred by any of them or on their behalf in connection with the
Merger and the consummation of all transactions contemplated by this Agreement
(including, without limitation, filing fees, printing and mailing costs, fees
payable to investment bankers, counsel to any of the foregoing, and
accountants). If the Company shall have submitted a request for reimbursement
hereunder, such party will provide Parent in due course with invoices or other
reasonable evidence of such expenses upon request. Parent shall in any event pay
the amount requested within ten (10) Business Days of such request, subject to
Parent's right to demand a return of any portion as to which invoices are not
received in due course. Nothing in this Section 7.3(c) shall relieve any party
from any liability for breach of this Agreement.
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<PAGE> 41
(d) Except as specifically provided in this Section 7.3, each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
Section 7.4. Amendment. This Agreement may be amended by action taken by
the Company, Parent and Acquisition at any time before or after approval of the
Merger by the shareholders of the Company (if required by applicable law) but,
after any such approval, no amendment shall be made which requires the approval
of such shareholders under applicable law without such approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of the
parties.
Section 7.5. Extension; Waiver. At any time prior to the Effective Time,
each party may (a) extend the time for the performance of any of the obligations
or other acts of the other party or parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained herein or in any
document, certificate or writing delivered pursuant hereto or (c) waive
compliance by the other parties with any of the agreements or conditions
contained herein. Any agreement on the part of any party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to assert any of its rights
hereunder shall not constitute a waiver of such rights.
ARTICLE 8
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement, except for Sections 3.12,
3.13, 3.23 and 8.1 hereunder.
Section 8.2. Entire Agreement; Assignment. This Agreement (a) constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof and (b) shall
not be assigned by operation of law or otherwise; provided, however, that
Acquisition may assign any or all of its rights and obligations under this
Agreement to any wholly owned subsidiary of Parent, but no such assignment shall
relieve Acquisition of its obligations hereunder if such assignee does not
perform such obligations.
Section 8.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
Section 8.4. 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 given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested) to the other party as follows:
if to Parent or Acquisition: Tinicum Incorporated
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<PAGE> 42
800 Third Avenue, 40th Floor
New York, NY 10022
Attention: Eric Ruttenberg
with a copy to: Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: John Kuehn, Esq.
if to the Company to: Haskel International, Inc.
100 E. Graham Place
Burbank, CA 91502
Attention: R. Malcolm Greaves
Chief Executive Officer
with a copy to: Gibson, Dunn & Crutcher LLP
333 S. Grand Avenue
Los Angeles, CA 90071
Attention: Richard A. Strong, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 8.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without regard
to the principles of conflicts of law thereof.
Section 8.6. Construction; Interpretation. The headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement. Article, section, exhibit,
schedule, annex, party, preamble and recital references are to this Agreement
unless otherwise stated. No party, nor its respective counsel, shall be deemed
the drafter of this Agreement for purposes of construing the provisions hereof,
and all provisions of this Agreement shall be construed according to their fair
meaning and not strictly for or against any party.
Section 8.7. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party and its successors and permitted
assigns and, except as provided in Section 8.2, nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 8.8. Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
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<PAGE> 43
Section 8.9. Specific Performance. The parties acknowledge that
irreparable damage would result if this Agreement were not specifically
enforced, and they therefore consent that the rights and obligations of the
parties under this Agreement may be enforced by a decree of specific performance
issued by a court of competent jurisdiction. Such remedy shall, however, not be
exclusive and shall be in addition to any other remedies, including arbitration,
which any party may have under this Agreement or otherwise.
Section 8.10. Counterparts. This Agreement may be executed in one 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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<PAGE> 44
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
HASKEL INTERNATIONAL, INC., a California
corporation
By: /s/ EDWARD MALKOWICZ
------------------------------------
Name: Edward Malkowicz
Title: Chairman
HI HOLDINGS INC., a Delaware corporation
By: /s/ SETH HENDON
------------------------------------
Name: Seth Hendon
Title:
HI MERGER SUBSIDIARY INC., a California
corporation
By: /s/ SETH HENDON
-----------------------------------
Name: Seth Hendon
Title:
44
<PAGE> 45
GUARANTEE
THE CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS SET FORTH IN THE
AGREEMENT AND PLAN OF MERGER TO WHICH THIS GUARANTEE IS ATTACHED.
Tinicum Capital Partners, L.P. and Edmundson International, Inc. (the
"Guarantors") hereby jointly and severally, unconditionally and irrevocably
guarantee to the Company that if Parent or Acquisition fail to pay any damages
due to the Company (the "Obligations") arising from a breach or violation by
Parent or Acquisition of their Obligations under the Agreement and Plan of
Merger by and among Haskel International, Inc., HI Holdings Inc. and HI Merger
Subsidiary, Inc. (the "Agreement"), then the Guarantors shall forthwith, upon
demand (which demand shall be for the sole purpose of providing notice to the
Guarantors and shall not require the Company to exhaust any remedy before
proceeding against the Guarantors), discharge the Obligations. The Guarantors
shall be liable to the Company for the reasonable costs and expenses (including,
without limitation, reasonable out-of-pocket legal fees and expenses) incurred
by the Company (following a demand upon the Guarantor) in any proceeding brought
by or on behalf of the Company to enforce this guarantee, except in the event a
court or adjudicatory panel of competent jurisdiction determines that a good
faith dispute existed with respect to the amount owed by the Guarantors
hereunder.
To the maximum extent permitted by applicable law, the Guarantors hereby
waive notice of acceptance of this guarantee, notice of any Obligations, notice
of protest, notice of dishonor or nonpayment of any Obligations, and any other
notice to the Guarantors (other than the demand referred to above). One or more
successive or concurrent actions may be brought hereon against the Guarantors,
either in the same action in which any obligor is sued or in separate actions.
To the maximum extent permitted by applicable law, the obligations of the
Guarantors under this guarantee shall not be affected by (i) any merger or
consolidation of the Company or any Subsidiary, (ii) any change in the direct or
indirect ownership of the Guarantors, (iii) any increase in the Obligations,
except for changes, amendments, waivers, or consents effected in accordance with
the Agreement.
45
<PAGE> 46
This guarantee shall be governed by, and construed in accordance with, the laws
of the State of California. This guarantee is entered into for the sole and
exclusive benefit of the Company, and no other Person shall have any rights with
respect hereto. This guarantee shall be binding on the Guarantors' successors.
Executed as of March 15, 1999.
TINICUM CAPITAL PARTNERS, L.P., a
Delaware partnership
By: TINICUM LANTERN LLC, its General
Partner
By: /s/ SETH HENDON
-------------------------------
Name: Seth Hendon
Title:
EDMUNDSON INTERNATIONAL, INC, a
California Corporation
By: /s/ JOHN D. PARISH
-------------------------------
Name: John D. Parish
Title: Vice President
HASKEL INTERNATIONAL, INC., a California
corporation
By: /s/ EDWARD MALKOWICZ
-------------------------------
Name: Edward Malkowicz
Title: Chairman
46
<PAGE> 47
ANNEX A
THE CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS SET FORTH IN THE
AGREEMENT AND PLAN OF MERGER TO WHICH THIS ANNEX A IS ATTACHED.
Notwithstanding any other provisions of the Offer, Acquisition shall not
be required to accept for payment or pay for, and shall delay the acceptance for
payment of, or the payment for, any Shares and, if required pursuant to Section
1.1(b) of the Agreement, shall extend the Offer by one or more extensions until
May 28, 1999 and may terminate the Offer at any time after June 11, 1999 if (i)
immediately prior to the expiration of the Offer (as extended in accordance with
the Offer), the Minimum Condition shall not have been satisfied, (ii) any
applicable waiting period under the HSR Act shall not have expired or been
terminated or (iii) prior to the acceptance for payment of Shares, Acquisition
makes a determination (which shall be made in good faith) that any of the
following conditions exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, enacted, entered,
enforced or deemed applicable to the Offer, or any other action shall have been
taken, by any state or federal government or governmental authority or by any
U.S. court, other than the routine application to the Offer or the Merger of
waiting periods under the HSR Act, that (i) restrains, prohibits, or makes
illegal the acceptance for payment of, or the payment for, some or all of the
Shares or otherwise prohibits consummation of the Offer or the Merger, (ii)
restrains, prohibits, or imposes material limitations on the ability of
Acquisition or Parent to acquire or hold or to exercise effectively all rights
of ownership of the Shares, including, without limitation, the right to vote any
Shares purchased by Acquisition on all matters properly presented to the
shareholders of the Company or effectively to control in any material respect
the business, assets or operations of the Company, its subsidiaries, Acquisition
or any of their respective affiliates or (iii) otherwise has a Company Material
Adverse Effect or there shall be any litigation or suit pending by any person or
governmental authority seeking to do any of the foregoing; or
(b) (i) the representations and warranties of the Company set forth in the
Agreement (without giving effect to any "materiality" limitations or references
to "Material Adverse Effect" set forth therein) shall not be true and correct in
any material respect as of the date of the Agreement and as of consummation of
the Offer as though made on or as of such date, but only if the respects in
which the representations and warranties made by the Company are inaccurate and
would in the aggregate have a Company Material Adverse Effect, (ii) the Company
shall have breached or failed to comply in any material respect with any of its
obligations under the Agreement or (iii) any material adverse changes shall have
occurred that have had, or could reasonably be expected to have, a Company
Material Adverse Effect; or
(c) it shall have been publicly disclosed that any person (which includes
a "person" as such term is defined in Section 13(d)(3) of the Exchange Act)
other than Parent, Acquisition, any of their affiliates, or any group of which
any of them is a member, shall have acquired beneficial ownership of more than
50% of the outstanding Shares or shall have entered into a definitive
47
<PAGE> 48
agreement or an agreement in principle with the Company with respect to a tender
offer or exchange offer for any Shares or a merger, consolidation or other
business combination with or involving the Company, any of its subsidiaries or
any of their material assets; or
(d) the Agreement shall have been terminated in accordance with its terms;
or
(e) prior to the purchase of Shares pursuant to the Offer, the Company
Board shall have withdrawn or modified (including by amendment of the Schedule
14D-9) in a manner adverse to Acquisition its approval or recommendation of the
Offer, this Agreement or the Merger or shall have recommended another offer, or
shall have adopted any resolution to effect any of the foregoing which, in the
good faith judgment of Acquisition in any such case, and regardless of the
circumstances (including any action or omission by Acquisition) giving rise to
any such condition, makes it inadvisable to proceed with such acceptance for
payment; or
(f) there shall have occurred any general suspension of, or limitation on
prices for, trading in the Shares on the Nasdaq Stock Market; or
(g) the Company shall commence a case under any chapter of Title XI of the
United States Code or any similar law or regulation; or a petition under any
chapter of Title XI of the United States Code or any similar law or regulation
is filed against the Company which is not dismissed within two (2) business
days; or
(h) any authorizations, consents, orders or approvals of, or declarations
or filings with, or expirations of waiting periods imposed by, any governmental
entity required in order to consummate the Offer or the Merger or to permit the
Company and its Subsidiaries to conduct their businesses after the Offer and the
Merger as currently conducted shall not have been filed, granted, given,
occurred or satisfied.
48
<PAGE> 1
Exhibit (c)(2)
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of March 15, 1999 (this "Agreement")
is made by and among HI Holdings Inc., a Delaware corporation, ("Parent"), HI
Merger Subsidiary Inc., a California corporation and a wholly owned subsidiary
of Parent ("Acquisition"), and the Hayman Non-Exempt Trust FBO Sandra Nelson,
the Hayman Non-Exempt Trust FBO Sheryl Evertt, the Hayman Non-Exempt Trust FBO
Rick Hayman, the Hayman Exempt Trust FBO Sandra Nelson, the Hayman Exempt Trust
FBO Sheryl Evertt and the Hayman Exempt Trust FBO Rick Hayman, all established
under the Richard L. Hayman and Dorothy M. Hayman Trust No. 1 (collectively, the
"Shareholder").
RECITALS
Parent, Acquisition and Haskel International, Inc. (the "Company")
propose to enter into an Agreement and Plan of Merger, dated as of the date
hereof (as the same may be amended or supplemented, the "Merger Agreement")
providing for the merger of Acquisition with and into the Company, upon the
terms and subject to the conditions set forth in the Merger Agreement.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Merger Agreement as entered into on the date hereof.
As of the date hereof, the Shareholder is the beneficial owner of
1,465,002 shares of Class A Common Stock and 40,000 shares of Class B Common
Stock (the "Existing Shares" and, together with any shares of Class A Common
Stock or Class B Common Stock acquired by the Shareholder after the date hereof,
whether upon the exercise of warrants, options or rights, the conversion or
exchange of any Existing Shares or convertible or exchangeable securities or by
means of purchase, dividend, distribution or otherwise, the "Subject Shares").
As an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholder agree, and the Shareholder
has agreed, to enter into this Agreement.
The Shareholder and Parent desire to set forth their agreement with
respect to the voting of the Subject Shares and the election of Merger
Consideration in connection with the Merger and the Shareholder desires to grant
to Acquisition an option to acquire the Subject Shares, in each case upon the
terms and subject to the conditions set forth herein.
AGREEMENT
<PAGE> 2
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Covenants of the Shareholder. Until the termination of this Agreement in
accordance with Section 6, the Shareholder agrees as follows:
(a) Agreement to Vote. At any meeting of Shareholders of the Company
called for purposes that include approval of the Merger and the Merger
Agreement, however called, or at any adjournment thereof, or in connection with
any written consent of the holders of Shares or in any other circumstances in
which the Shareholder is entitled to vote, consent or give any other approval
with respect to the Merger and the Merger Agreement, the Shareholder shall vote
(or cause to be voted) the Subject Shares in favor of adoption and approval of
the Merger Agreement and the Merger and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and this
Agreement and any amendments hereto or, with the Shareholder's written consent,
thereto.
At any meeting of Shareholders of the Company, however called, or at
any adjournment thereof, or in connection with any written consent of the
holders of Shares or in any other circumstances in which the Shareholder is
entitled to vote, consent or give any other approval, except as otherwise agreed
to in writing in advance by Parent, the Shareholder shall vote (or cause to be
voted) the Subject Shares against the following actions:
(i) any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or of the
Shareholder hereunder; or
(ii) any action or agreement that could reasonably be expected
to impede, interfere with, delay, postpone or attempt to discourage the Merger,
including, but not limited to: (A) the adoption by the Company of a proposal
regarding (1) the acquisition of the Company by merger, tender offer or
otherwise by any person other than Parent, Acquisition or any designee thereof
(a "Third Party"), or any other merger, combination or similar transaction with
any Third Party; (2) the acquisition by a Third Party of 10% or more of the
assets of the Company and its subsidiaries, taken as a whole (whether by the
acquisition of assets or securities of, or any merger, consolidation or other
business combination involving, the Company or any of its subsidiaries); (3) the
acquisition by a Third Party of 10% or more of the outstanding Shares; or (4)
the repurchase by the Company or any of its subsidiaries of 10% or more of the
outstanding Shares; (B) any amendment of the Company's Articles of Incorporation
or Bylaws or other proposal or transaction involving the Company or any of its
subsidiaries, which amendment or other proposal or transaction could in any
manner reasonably be expected to impede, in any material respect, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement or change in any manner the rights
<PAGE> 3
and privileges, including, without limitation, voting rights of any class of the
Company's capital stock; (C) any change in the management or board of directors
of the Company that could in any manner reasonably be expected to impede, in any
material respect, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement; (D) any material
change in the present capitalization or dividend policy of the Company; or (E)
any other material change in the Company's corporate structure or business. The
Shareholder further agrees not to commit or agree to take any action
inconsistent with the foregoing agreements.
(b) Proxies. As security for the agreements of the Shareholder
provided for herein, the Shareholder hereby grants to Acquisition a proxy to
vote all shares of Class A Common Stock that are part of the Subject Shares (the
"Proxy Shares"). The Shareholder agrees that this proxy shall be irrevocable
during the term of this Agreement and coupled with an interest and each of the
Shareholder and Acquisition will take such further action or execute such other
instruments as may be necessary to effectuate the intent of this proxy and
hereby revokes any proxy previously granted by the Shareholder with respect to
the Proxy Shares.
(c) Transfer Restrictions. The Shareholder agrees not to (I) sell,
transfer, pledge, encumber, assign or otherwise dispose of or hypothecate
(including by gift or by contribution or distribution to any trust or similar
instrument or to any beneficiaries of the Shareholder (collectively,
"Transfer")), or enter into any contract, option or other arrangement or
understanding (including any profit sharing arrangement) with respect to the
Transfer of, any of the Subject Shares other than pursuant to the terms hereof
and the Merger Agreement, (ii) enter into any voting arrangement or
understanding with respect to the Subject Shares, whether by proxy, voting
agreement or otherwise, or (iii) take any action that could reasonably be
expected to make any of its representations or warranties contained herein
untrue or incorrect or could reasonably be expected to have the effect of
preventing or disabling the Shareholder from performing any of its obligations
hereunder.
(d) Stop Transfer. The Shareholder hereby authorizes and requests
the Company and its counsel to notify the Company's transfer agent that there is
a stop transfer order with respect to all of the Subject Shares (and that this
Agreement places limits on the voting of the Subject Shares). The Shareholder
agrees with, and covenants to, Parent that the Shareholder shall not request
that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of the Subject Shares,
unless such transfer is made in compliance with this Agreement. In the event of
a stock dividend or distribution, or any change in the Shares by reason of any
stock dividend or distribution, or any change in the Shares by reason of any
stock dividend, split-up, recapitalization, combination, exchange of shares or
the like, the term "Subject Shares" shall be deemed to refer to and include the
Subject Shares as well as all such stock dividends and distributions and any
shares into which or for which any or all of the
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<PAGE> 4
Subject Shares may be changed or exchanged and the Subject Shares Purchase Price
shall be accordingly adjusted. The Shareholder shall be entitled to receive and
retain any cash dividend paid by the Company during the term of this Agreement
until the Subject Shares are canceled in the Merger or purchased hereunder.
(e) Merger Consideration. The Shareholder agrees and hereby
acknowledges that the Merger Consideration to be received by the Shareholder
will consist solely of a cash payment per Share.
(f) Appraisal Rights. The Shareholder hereby irrevocably waives any
and ail rights which it may have as to appraisal, dissent or any similar or
related matter with respect to the Merger.
2. Option.
(a) Grant of Option. The Shareholder hereby grants to Acquisition
(or its designee) an irrevocable option (the "Option") to purchase the Proxy
Shares at an exercise price of $12.90 per share (the "Exercise Price"). In the
event of any change in the Proxy Shares by reason of stock dividends, split-ups,
recapitalizations or the like, the type and number of shares or securities
subject to the Option and the Exercise Price shall be adjusted appropriately to
preserve the respective rights of the Shareholder and Acquisition hereunder.
(b) Exercise of Option. The Option may be exercised by Acquisition,
as a whole and not in part, at any time during the twelve-month period
commencing upon the occurrence of any of the following events:
(i) the Merger Agreement shall have been terminated or become
terminable pursuant to Section 7.1(c)(iii) or Section 7.1(d) thereof; or
(ii) any failure by the Shareholder to perform its obligations
hereunder.
If the Merger Agreement shall have been terminated pursuant to
Section 7.1(a), (b), (c)(I) or (c)(ii) thereof, the Option may not be exercised
by Acquisition.
(c) Notice of Exercise. If Acquisition wishes to exercise the
Option, Acquisition shall send a written notice to the Shareholder of its
intention to exercise the Option, specifying the place, and, if then known, the
time and the date (the "Option Closing Date") of the closing (the "Option
Closing") of the purchase. The Option Closing Date shall occur on the fifth
business day or such longer period as may be required by
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<PAGE> 5
applicable law or regulation, after the later of (I) the date on which such
notice is delivered and (ii) the satisfaction of the conditions set forth in
Section 2(f).
(d) Closing Deliveries by Shareholder. At the Option Closing, the
Shareholder shall deliver to Acquisition (or its designee) all of the Proxy
Shares by delivery of a certificate or certificates evidencing the Proxy Shares
in the denominations designated by Acquisition in its exercise notice delivered
pursuant to Section 2(c), duly endorsed to Acquisition or accompanied by stock
powers duly executed in favor of Acquisition, with all necessary stock transfer
stamps affixed.
(e) Closing Deliveries by Acquisition. At the Option Closing,
Acquisition shall pay, and Parent shall cause Acquisition to pay, to the
Shareholder the aggregate Exercise Price for the Proxy Shares by delivery to the
Shareholder of cash in the amount of the aggregate Exercise Price for the number
of Proxy Shares purchased pursuant to the exercise of the Option.
(f) Conditions. The Option Closing shall be subject to the
satisfaction of each of the following conditions:
(i) no court, arbitrator or governmental body, agency or
official shall have issued any order, decree or ruling that is in effect, and
there shall not be any statute, rule or regulation, which in either case
restrains, enjoins or prohibits the consummation of the purchase and sale of the
Proxy Shares pursuant to the exercise of the Option;
(ii) any waiting period applicable to the consummation of the
purchase and sale of the Proxy Shares pursuant to the exercise of the Option
under the HSR Act shall have expired or been terminated; and
(iii) all actions by or in respect of, and any filing with,
any governmental body, agency, official, or authority required to permit the
consummation of the purchase and sale of the Proxy Shares pursuant to the
exercise of the Option shall have been obtained or made and shall be in full
force and effect.
(g) Termination of Option. The Option, the Proxy provided for in
Section 1(b) of this Agreement and the stop transfer restrictions provided for
in Section 1(d) shall each terminate at such time of Third Party Acquisition at
a price per share which is less than $12.90.
3. Representations and Warranties of the Shareholder. The Shareholder hereby
represents and warrants to Parent and Acquisition as of the date hereof as
follows:
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<PAGE> 6
(a) Organization. The Shareholder are trusts duly organized, validly
existing and in good standing under the laws of the jurisdictions of their
organization.
(b) Authorization; Validity of Agreement; Necessary Action. The
Shareholder has full power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by it of this
Agreement and the consummation by it of the transactions contemplated hereby
have been duly and validly authorized by the Shareholder and no other trust
action or proceedings on the part of the Shareholder are necessary to authorize
the execution and delivery by it of this Agreement and the consummation by it of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Shareholder, and, assuming this Agreement constitutes a valid
and binding obligation of Parent and Acquisition, constitutes a valid and
binding obligation of the Shareholder, enforceable against it in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law), an implied covenant of good
faith and fair dealing and considerations of public policy.
(c) Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, the HSR
Act and any applicable state takeover laws, neither the execution, delivery or
performance of this Agreement by the Shareholder nor the consummation by it of
the transactions contemplated hereby nor compliance by it with any of the
provisions hereof will (I) conflict with or result in any breach of any
provision of the trust documents; (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity (except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings would not materially impair the ability of the Shareholder to
consummate the transactions contemplated hereby), (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 any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, guarantee, other evidence of indebtedness, lease,
license, contract, agreement or other instrument or obligation to which the
Shareholder is a party or by which it or any of its properties or assets may be
bound or (iv) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to it or any of its properties or assets, except in the
case of clauses (iii) and (iv) for violations, breaches or defaults, or rights
of termination, amendment, cancellation or acceleration, which would not
materially impair the ability of the Shareholder to consummate the transactions
contemplated hereby.
(d) Shares. The Existing Shares are, and the Subject Shares on the
Option Closing Date will be, owned beneficially by the Shareholder. The Existing
Shares
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<PAGE> 7
constitute all of the Shares owned beneficially by the Shareholder. All of the
Existing Shares are issued and outstanding and the Shareholder does not own,
beneficially, any warrants, options or other rights to acquire any Shares. The
Shareholder has sole voting power, sole power of disposition, sole power to
issue instructions with respect to the matters set forth in Sections 1 and 2
hereof, sole power of conversion, sole power to demand appraisal rights and sole
power to agree to all of the matters set forth in this Agreement, in each case
with respect to all of the Existing Shares and will have sole voting power, sole
power of disposition, sole power to issue instructions with respect to the
matters set forth in Sections 1 and 2 hereof, sole power of conversion, sole
power to demand appraisal rights and sole power to agree to all of the matters
set forth in this Agreement, with respect to all of the Subject Shares on the
Option Closing Date, with no limitations, qualifications or restrictions on such
rights, subject to applicable federal securities laws and the terms of this
Agreement. The Shareholder has good and valid title to the Existing Shares and
at all times during the term hereof and on the Option Closing Date will have
good and valid title to the Subject Shares, free and clear of all Liens and free
of any other limitation or restriction, and, upon delivery thereof to
Acquisition against delivery of the consideration therefor pursuant to this
Agreement, good and valid title thereto, free and clear of all Liens and free of
any other limitation or restriction (other than any arising as a result of
actions taken or omitted by Parent or Acquisition or any arising under this
Agreement), will pass to Acquisition.
(e) No Finder's Fees. Except as disclosed in the Merger Agreement,
no broker, investment banker, financial advisor 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 the Shareholder.
4. Representations and Warranties of Parent and Acquisition. Parent and
Acquisition, jointly and severally, hereby represent and warrant to the
Shareholder as of the date hereof as follows:
(a) Organization. Each of Parent and Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Corporate Authorization; Validity of Agreement; Necessary
Action. Each of Parent and Acquisition has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent of this
Agreement and the consummation by Parent of the transactions contemplated hereby
have been duly and validly authorized by its Board of Directors and the
execution, delivery and performance by Acquisition of this Agreement and the
consummation by Acquisition of the transactions contemplated hereby
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<PAGE> 8
have been duly and validly authorized by its Board of Directors, and no other
corporate action or proceedings on the part of Parent or Acquisition are
necessary to authorize the execution and delivery by Parent or Acquisition of
this Agreement, and the consummation by Parent or Acquisition of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Acquisition, and, assuming this Agreement constitutes a
valid and binding obligation of the Shareholder, constitutes valid and binding
obligations of Parent and Acquisition, enforceable against them in accordance
with its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law), an implied covenant of good
faith and fair dealing and considerations of public policy.
(c) Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the HSR Act and any applicable state takeover
laws, neither the execution, delivery or performance of this Agreement by Parent
or Acquisition nor the consummation by Parent or Acquisition of the transactions
contemplated hereby nor compliance by Parent or Acquisition with any of the
provisions hereof will (I) conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of Parent or Acquisition,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not
materially impair the ability of Parent and Acquisition to consummate the
transactions contemplated hereby), (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 any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, guarantee, other evidence of indebtedness, lease, license, contract,
agreement or other instrument or obligation to which Parent or Acquisition is a
party or by which it or any of its properties or assets may be bound or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its subsidiaries or any of their properties or
assets, except in the case of clauses (iii) and (iv) for violations, breaches or
defaults, or rights of termination, amendment, cancellation or acceleration,
which would not materially impair the ability of Parent and Acquisition to
consummate the transactions contemplated hereby.
5. Further Assurances. From time to time prior to the Option Closing, at any
other party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement.
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<PAGE> 9
6. Tender of Subject Shares. Shareholder hereby agrees to tender its Subject
Shares into the Offer.
7. Termination. Except as set forth in Section 2, this Agreement shall
terminate, and no party shall have any rights or obligations hereunder and this
Agreement shall become null and void and have no further effect upon the
earliest to occur of (a) the Effective Time, (b) twelve months following the
termination of the Merger Agreement pursuant to Section 7.1(c)(iii) or Section
7.1(d) thereof or (c) termination of the Merger Agreement pursuant to Section
7.1(a), (b), (c)(I) or (c)(ii) thereof. Notwithstanding the foregoing, in the
event the Option shall have been exercised in accordance with Section 2, but the
Option Closing shall not have occurred, this Agreement shall not terminate.
Nothing in this Section 6 shall relieve any party of liability for breach of
this Agreement.
8. General Provisions.
(a) Costs and Expenses. All costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses.
(b) Amendment. This Agreement may not be amended except by an
instrument in writing signed by the party to be charged therewith.
(c) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to Parent or Acquisition, to:
Tinicum Incorporated
800 Third Avenue
New York, NY 10022
Attention: Eric Ruttenberg
Telephone No.: (212) 446-9300
Telecopy No.: (212) 750-9264
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022
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<PAGE> 10
Attention: John L. Kuehn
Telephone No.: (212) 446-4821
Telecopy No.: (212) 446-4900
(ii) if to the Shareholder, to:
Mellon Trust of California
400 So. Hope Street
Suite 400
Los Angeles, CA 90071
Attention: Michael O'Brien
Telephone No.: (213) 553-9600
Telecopy No.: (213) 629-0495
with a copy to:
Goodson and Wachtel
10940 Wilshire Blvd.
Suite 1400
Los Angeles, CA 90024
Attention: Marvin Goodson
Telephone No.: (310) 208-8282
Telecopy No.: (310) 208-8582
(d) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof," and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to March 15, 1999.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
(f) Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and is
-10-
<PAGE> 11
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
(g) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
(h) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
(i) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder, except as specifically provided herein with
respect to the rights of Acquisition under the Option, shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties, except that Parent and Acquisition
may assign, in Parent's sole discretion, any or all of their respective rights,
interests and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent; provided, however, that no such assignment shall relieve
Parent from any of its obligations hereunder. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors (including the Company as
successor to Acquisition pursuant to the Merger), heirs, agents,
representatives, trust beneficiaries, attorneys, affiliates and associates and
all of their respective predecessors, successors, permitted assigns, heirs,
executors and administrators.
(j) Enforcement; Consent to Jurisdiction; Waiver of Jury Trial.
(i) 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 in the United States District Court
for the District of Delaware to the extent such court would have subject matter
jurisdiction with respect to such dispute, and the Chancery or other Courts of
the
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<PAGE> 12
State of Delaware this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto:
(A) consents to submit itself to the personal
jurisdiction of (x) the United States District Court for the District of
Delaware in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement to the extent such court would have
subject matter jurisdiction with respect to such dispute and (y) the Chancery or
other Courts of the State of Delaware otherwise;
(B) agrees that it will not attempt to deny or defeat
such personal jurisdiction or venue by motion or other request for leave from
any such court;
(C) agrees that it will not bring any action relating to
this Agreement or any of the transactions contemplated by this Agreement in any
court other than such courts;
(D) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to a party at
its address set forth in Section 7(c) or at such other address of which a party
shall have been notified pursuant thereto; and
(E) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction.
(ii) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING IN RELATION TO THIS
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(iii) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party.
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<PAGE> 13
IN WITNESS WHEREOF, Parent, Acquisition and the Shareholder have caused this
Agreement to be signed by their respective officers or other authorized person
thereunto duly authorized as of the date first written above.
HI HOLDINGS INC.
By: /s/ SETH HENDON
-----------------------
Name: Seth Hendon
Title:
HI MERGER SUBSIDIARY INC.
By: /s/ SETH HENDON
-----------------------
Name: Seth Hendon
Title:
HAYMAN NON-EXEMPT TRUST FBO
SANDRA NELSON, HAYMAN NON-EXEMPT
TRUST FBO SHERYL EVERTT, HAYMAN
NON-EXEMPT TRUST FBO RICK HAYMAN,
HAYMAN EXEMPT TRUST FBO SANDRA
NELSON, HAYMAN EXEMPT TRUST FBO
SHERYL EVERTT, HAYMAN EXEMPT
TRUST FBO RICK HAYMAN, ALL
ESTABLISHED UNDER THE RICHARD L.
HAYMAN AND DOROTHY M. HAYMAN
TRUST NO. 1
By: MELLON TRUST OF CALIFORNIA, AS
CO-TRUSTEE
By: /s/ MICHAEL D. O'BRIEN
--------------------------
Name: Michael D. O'Brien
Title: Vice President
<PAGE> 14
AMENDMENT NO.1 TO SHAREHOLDER AGREEMENT
AMENDMENT NO. 1 TO SHAREHOLDER AGREEMENT, dated as of March 18, 1999 (this
"AGREEMENT") is made by and among HI HOLDINGS INC., a Delaware corporation,
("PARENT"), HI MERGER SUBSIDIARY INC., a California corporation and a wholly
owned subsidiary of Parent ("ACQUISITION"), and the Hayman Non-Exempt Trust FBO
Sandra Nelson, the Hayman Non-Exempt Trust FBO Sheryl Everett, the Hayman
Non-Exempt Trust FBO Rick Hayman, the Hayman Exempt Trust FBO Sandra Nelson, the
Hayman Exempt Trust FBO Sheryl Everett and the Hayman Exempt Trust FBO Rick
Hayman, all established under the Richard L. Hayman and Dorothy M. Hayman Trust
No. 1 (collectively, the "ORIGINAL SHAREHOLDER"), and Hayman Trust No.6 for
Sheryl Everett and Hayman Trust No.5 for Sandra Nelson (collectively, the
"ADDITIONAL SHAREHOLDER" and together with the Original Shareholder, the
"SHAREHOLDER").
RECITALS
Parent, Acquisition and the Original Shareholder entered into
the Shareholder Agreement dated as of March 15, 1999 (the "AGREEMENT").
Capitalized terms used but not defined herein shall have the meanings set forth
in the Agreement.
Parent, Acquisition and the Original Shareholder desire to
amend the Agreement to, among other things, add the Additional Shareholder, and
the Additional Shareholder desires to become a party to the Agreement.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Amendments.
A. The term "Shareholder", as used throughout the Agreement,
shall mean, collectively, the Original Shareholder and the
Additional Shareholder.
B. The number "1,465,002" appearing in the first line of the
second paragraph under "Recitals" in the Agreement is hereby
amended in its entirety to read:
"1,521,477"
C. In all other respects, the Agreement remains in full force and
effect.
2. General Provisions.
(a) Counterparts. This Amendment No. 1 to the Agreement may be executed
in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to
the other parties, it being understood that all parties need not sign
the same counterpart.
(b) Governing Law. This Amendment No. 1 to the Agreement shall be
governed and construed in accordance with the laws of the State of
Delaware without giving effect to the principles of conflicts of law
thereof.
<PAGE> 15
IN WITNESS WHEREOF, Parent, Acquisition and the Shareholder have caused this
Amendment No. 1 to Agreement to be signed by their respective officers or other
authorized person thereunto duly authorized as of the date first written above.
HI HOLDINGS INC.
By: /s/ SETH HENDON
-----------------------
Name: Seth Hendon
Title: Vice President
HI MERGER SUBSIDIARY INC.
By: /s/ SETH HENDON
-----------------------
Name: Seth Hendon
Title: Vice President
HAYMAN NON-EXEMPT TRUST FBO SANDRA NELSON,
HAYMAN NON-EXEMPT TRUST FBO SHERYL EVERETT,
HAYMAN NON-EXEMPT TRUST FBO RICK HAYMAN, HAYMAN
EXEMPT TRUST FBO SANDRA NELSON, HAYMAN EXEMPT
TRUST FBO SHERYL EVERETT, HAYMAN EXEMPT TRUST
FBO RICK HAYMAN, ALL ESTABLISHED UNDER THE
RICHARD L. HAYMAN AND DOROTHY M. HAYMAN TRUST
NO. 1, HAYMAN TRUST NO.6 FOR SHERYL EVERETT,
HAYMAN TRUST NO.5 FOR SANDRA NELSON
By: MELLON TRUST OF CALIFORNIA, AS CO-TRUSTEE
By: /s/ MICHAEL D. O'BRIEN
--------------------------
Name: Michael D. O'Brien
Title: Vice President
